CALI REALTY CORP /NEW/, 8-K, 1997-09-19

CALI REALTY CORP /NEW/
8-K, 1997-09-19
REAL ESTATE INVESTMENT TRUSTS

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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) SEPTEMBER 19, 1997

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CALI REALTY CORPORATION

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
MARYLAND 1-13274 22-3305147
(state or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification
Number)
</TABLE>

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)

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<PAGE>
ITEM 5. OTHER EVENTS

On September 18, 1997, Cali Realty Corporation and its subsidiary, Cali
Realty, L.P. (collectively, the "Company") entered into a Contribution and
Exchange Agreement (the "Agreement") with certain contributing partnerships and
other entities affiliated with The Mack Company and Patriot American Office
Group (collectively, "The Mack Group"). The Agreement provides for, among other
things, the Company to acquire 55 office properties, aggregating approximately
9.4 million square feet, (the "Mack Properties") for a total cost of
approximately $1.2 billion. According to terms of the Agreement, the cost of the
transaction (the "Transaction") will be financed through: (i) the assumption of
an aggregate of $302.1 million in long-term mortgage financing (the "Mack
Assumed Debt"); (ii) approximately $476.1 million in cash (which the Company
plans to obtain through net proceeds to be received from a public offering of
its common stock, with the remainder to be obtained through drawing on the
Company's revolving credit facilities); (iii) the issuance of 3,931,048 common
units ("Common Units") in Cali Realty, L.P. (the "Operating Partnership"); (iv)
the issuance of 249,656 preferred units ("Preferred Units") in the Operating
Partnership convertible into Common Units; and (v) the issuance of two million
warrants ("Warrants") to purchase Common Units.

As more fully described in the Company's Current Report on Form 8-K/A, dated
January 31, 1997, and the Company's Current Report on Form 8-K, dated September
18, 1997, from the period January 1, 1997 through September 19, 1997, the
Company acquired a total of 75 properties, aggregating 5.1 million square feet,
for a total cost of approximately $578.3 million (including the $450.0 million
Robert Martin transaction in January 1997). These properties consist of 24
office buildings aggregating 2.4 million square feet, 40 office/flex buildings
aggregating 2.3 million square feet, six industrial/warehouse buildings
aggregating 387,000 square feet, two stand-alone retail properties aggregating
17,000 square feet, two land leases, and a multi-family residential property.
The acquisitions and related activities referred to above are to be collectively
referred to as the "Pre-Mack Events."

Prior to the completion of the Transaction, the Company intends to commence
and complete a public offering and sale of 10 million shares of its Common Stock
(subject to increase based on the Company's option and/or underwriters' exercise
of its over allotment option). The Company expects to receive approximately
$365.1 million in net proceeds from such offering (the "1997 Offering"), which
it intends to use primarily to fund the cash portion of the Transaction. No
assurances can be given that the 1997 Offering will be completed based on these
terms, or at all.

The following summary of the material provisions of the Agreement is
qualified in its entirety by reference to a copy of such Agreement, which is
attached hereto as Exhibit 10.98.

The Mack Properties to be acquired in the Transaction consist of 25 office
buildings in New Jersey aggregating 4.8 million square feet, 17 office buildings
in Texas aggregating 2.5 million square feet, five office buildings in Arizona
aggregating 609,000 square feet, three office buildings in New York aggregating
381,000 square feet, a 320,000 square-foot office building in Nebraska, a
297,000 square-foot building in Florida, a 267,000 square-foot office building
in California, a 168,000 square-foot office building in Pennsylvania, and a
72,000 square-foot office building in Iowa. The Mack Properties were constructed
between 1894 and 1994 and range in size from 40,000 to 475,000 net rentable
square feet. As of June 30,
1997, the Mack Properties had a weighted average occupancy rate of approximately
94.8 percent and were leased to over 1,000 tenants.

Following the completion of the Transaction, the Company's total portfolio
will consist of 187 properties, primarily office and office/flex buildings,
aggregating approximately 21.6 million square feet, located in ten states.

Based on terms in the Agreement, the Cali Realty Corporation name will be
changed, subject to shareholder approval, to Mack-Cali Realty Corporation, and
the name of the Operating Partnership will be changed from Cali Realty, L.P. to
Mack-Cali Realty, L.P. If such shareholder approval is not obtained

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the Company will operate under its new name pursuant to a fictitious name
certificate, and continue to seek to obtain shareholder approval in the future.

With the completion of the Transaction, the composition of the Company's
13-member Board of Directors will also change. The Mack Group will be permitted
to name three designees to the Board, who will be: William Mack, currently
Senior Managing Partner of the Mack Company, Mitchell Hersh, currently Partner
and Chief Operating Officer of the Mack Company, and Earle Mack, all of whom
will be considered "inside" members of the Board because of their relationship
with the Company's management. The other inside members of the Board will be
John J. Cali, who will remain as Chairman of the Board, Thomas A. Rizk, and
Robert Weinberg. The remaining seven independent directors will include three
current independent Board members: Brendan Byrne, Irvin Reid and Alan
Philibosian; with four additional independent Board members to be selected by
the Mack Group, subject to the Company's reasonable approval.

Additionally, Thomas A. Rizk will remain Chief Executive Officer and will
resign as President of the Company, with Mitchell Hersh being appointed
President and Chief Operating Officer. The Company's other existing officers
will retain their current positions and responsibilities, except that Brant Cali
will resign as Chief Operating Officer and John R. Cali will resign as Chief
Administrative Officer. Brant Cali and John R. Cali will remain as officers of
the Company as Executive Vice Presidents.

Additionally, the Agreement calls for the Company to enter into
non-competition agreements with each of William, Earle, David and Frederick
Mack, which will restrict the business dealings of such individuals relative to
their involvement in commercial real estate activities to those specified in the
Agreement. The agreements are to have a term of the later of (a) three years
from the completion of the Transaction, or (b) the occurrence of specified
circumstances including, but not limited to, the removal of William, Earle,
David or Frederic Mack, respectively, from the Company's Board of Directors and
a decrease in certain ownership levels.

The 3,931,048 Common Units to be issued in the Transaction will be
redeemable, after one year, for shares of Common Stock of the Company. Following
completion of the Transaction, there will be 8,021,219 Common Units in the
Operating Partnership issued and outstanding.

The 249,956 Preferred Units to be issued in the Transaction will contain
anti-dilution protection and have voting rights similar to those of Common
Units. The Preferred Units would be able to be converted to 7,205,079 Common
Units immediately following their issuance upon completion of the Transaction.
Pursuant to the Agreement, the Common Units underlying 209,656 of the Preferred
Units may be redeemed for shares of Common Stock of the Company after three
years and the Common Units underlying 40,000 of the Preferred Units may be
redeemed for shares of Common Stock after one year. The distribution on each
Preferred Unit will be paid quarterly at an annual rate of 6.75 percent of the
stated value ($1,000) of each unit, or $67.50 per Preferred Unit annually,
subject to certain restrictions if such Preferred Units are converted to common
units. The Company will have the right to cause the conversion of any or all of
the Preferred Units into common units, at any time after the seven and one-half
year anniversary of the completion of the Transaction at their stated value plus
accrued but unpaid distributions, subject to restrictions based on the price of
the Company's Common Stock. The Preferred Units are also subject to various
other provisions as described in the Agreement.

The Warrants to be issued in the Transaction will be exercisable over a
four-year period commencing with the first anniversary of the completion of the
Transaction, and upon exercise, provide for the purchase of a Common Unit in the
Operating Partnership at a price of $37.80 per Common Unit, subject to
adjustment for customary anti-dilution rights.

On or before December 12, 1997, the Company may terminate the Agreement for
any reason. On or before October 27, 1997, the Mack Group may terminate the
Agreement for any reason. During the period beginning October 28, 1997 and
through December 12, 1997, the Mack Group may terminate the

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Agreement under certain situations and conditions relative to material adverse
changes in the activities and stock price of the Company during that period.

The completion of the Transaction is subject to certain conditions,
including approval by the Company's stockholders. There can be no assurance that
the Transaction will be consummated or that the Agreement will not be modified
or amended. Subject to the foregoing, the Company expects the Transaction to be
completed in or about December 1997.

The Transaction is pursuant to an agreement for the sale and purchase of the
Properties between each selling entity and the Company. The factors considered
by the Company in determining the price to be paid for the Properties include
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 is 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 pending
acquisition of the Properties by the Company. The Company has retained
Prudential Securities Incorporated to provide certain financial advisory
services in connection with the Transaction. The Company 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.

(a) Financial Statements

Audited Combined Financial Statements of the Mack Group as of December 31,
1996 and 1995 and for the three years in the period ended December 31, 1996
and Unaudited Financial Information as of June 30, 1997 and for the six
months ended June 30, 1997 and 1996.

(b) Pro Forma Financial Information (unaudited)

Unaudited pro forma financial information for the Company is presented as
follows:

Condensed consolidated balance sheet as of June 30, 1997.

Condensed consolidated statements of operations for the six months ended
June 30, 1997 and the year ended December 31, 1996.

10.98-Contribution and Exchange Agreement among The MK Contributors, The MK
Entities, The Patriot Contributors, The Patriot Entities, Patriot American
Management and Leasing Corp., Cali Realty, L.P. and Cali Realty Corporation,
dated September 18, 1997.

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MACK PROPERTIES

The following tables set forth certain historical information relating to
each of the Mack Properties which were owned by Mack as of June 30, 1997.
<TABLE>
<CAPTION>
NET PERCENTAGE PERCENTAGE 1996 1996
RENTABLE LEASED LEASED BASE EFFECTIVE
YEAR AREA AS OF AS OF RENT RENT
PROPERTY/LOCATION BUILT (SQ. FT.) 12/31/96(%)(1) 6/30/97(%)(2) ($000)(3) ($000)(4)
- ---------------------------- ------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ROCHELLE PARK, BERGEN
COUNTY, NJ
Mack Centre I -- 365 West
Passaic Street............ 1976 212,578 81.0 86.2 3,297 2,682
120 Passaic Street........ 1972 52,000 100.0 100.0 575 551
PARAMUS, BERGEN COUNTY, NJ
Mack Centre II -- 650 From
Road...................... 1978 348,510 90.0 100.0 6,066 4,993
Mack Centre III -- 140
East Ridgewood Avenue..... 1981 239,680 90.9 99.1 4,806 4,009
Mack Centre IV -- 61 South
Paramus Road.............. 1985 269,191 75.8 78.8 5,177 4,249
Mack Centre VI -- 461 From
Road...................... 1988 253,554 98.3 100.0 5,087 4,762
Mack Centre VII -- 15 East
Midland Avenue............ 1988 259,823 100.0 100.0 4,493 3,758
UPPER SADDLE RIVER, BERGEN
COUNTY, NJ
Mack Saddle River -- One
Lake Street............... 1973/94(8) 474,801 100.0 100.0 7,144 6,234
MONTVALE, BERGEN COUNTY, NJ
Mack Montvale I -- 95
Chestnut Ridge Road....... 1975 47,700 100.0 100.0 507 290
Mack Montvale II -- 135
Chestnut Ridge Road....... 1981 66,150 100.0 100.0 1,217 973
WOODCLIFF LAKE, BERGEN
COUNTY, NJ
400 Chestnut Ridge Road... 1982 89,200 100.0 100.0 1,814 1,813
470 Chestnut Ridge Road... 1987 52,500 100.0 100.0 1,051 1,051
530 Chestnut Ridge Road... 1986 57,204 100.0 100.0 1,083 1,082

<CAPTION>
PERCENTAGE
OF 1996 1996 AVG. TENANTS LEASING
1996 AVERAGE EFFECTIVE 10% OR MORE OF
TOTAL BASE RENT RENT PER. NET RENTABLE AREA
BASE RENT PER SQ. SQ. FT. PER PROPERTY
PROPERTY/LOCATION (%) FT.($)(5) ($)(6) AS OF 6/30/97(7)
- ---------------------------- --------- -------------- --------- ----------------------------
<S> <C> <C> <C> <C>
ROCHELLE PARK, BERGEN
COUNTY, NJ
Mack Centre I -- 365 West
Passaic Street............ 2.57 19.15 15.58 Sizes Unlimited Inc. (26%)
Financial Telesis Inc. (10%)
Catalina Marketing Corp.
(10%)
120 Passaic Street........ 0.45 11.06 10.60 Electronic Data
Systems Corp. (100%)
PARAMUS, BERGEN COUNTY, NJ
Mack Centre II -- 650 From
Road...................... 4.74 19.34 15.92 Western Union Financial
Services, Inc. (38%)
Mack Centre III -- 140
East Ridgewood Avenue..... 3.75 22.05 18.40 AT&T Wireless
Services (41%), Smith Barney
Inc. (19%)
Mack Centre IV -- 61 South
Paramus Road.............. 4.04 25.37 20.82 Dunn & Bradstreet Software
Services, Inc. (10%)
Mack Centre VI -- 461 From
Road...................... 3.97 20.41 19.11 Toys 'R' Us, Inc. (89%)
Mack Centre VII -- 15 East
Midland Avenue............ 3.51 17.29 14.46 AT&T Wireless Services (98%)
UPPER SADDLE RIVER, BERGEN
COUNTY, NJ
Mack Saddle River -- One
Lake Street............... 5.58 15.05 13.13 Prentice-Hall, Inc. (100%)
MONTVALE, BERGEN COUNTY, NJ
Mack Montvale I -- 95
Chestnut Ridge Road....... 0.40 10.63 6.08 ArgEvo E.H. (100%)
Mack Montvale II -- 135
Chestnut Ridge Road....... 0.95 18.40 14.70 Alliance Funding Company
(100%)
WOODCLIFF LAKE, BERGEN
COUNTY, NJ
400 Chestnut Ridge Road... 1.42 20.34 20.33 Timeplex, Inc. (100%)
470 Chestnut Ridge Road... 0.82 20.02 20.01 Timeplex, Inc. (100%)
530 Chestnut Ridge Road... 0.85 18.93 18.92 KPMG Peat Marwick, LLP
(100%)
</TABLE>

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<TABLE>
<CAPTION>
NET PERCENTAGE PERCENTAGE 1996 1996
RENTABLE LEASED LEASED BASE EFFECTIVE
YEAR AREA AS OF AS OF RENT RENT
PROPERTY/LOCATION BUILT (SQ. FT.) 12/31/96(%)(1) 6/30/97(%)(2) ($000)(3) ($000)(4)
- ---------------------------- ------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
LITTLE FERRY, BERGEN COUNTY,
NJ
Mack Airport -- 200 Riser
Road...................... 1974 286,628 100.0 100.0 991 896
MORRIS PLAINS, MORRIS
COUNTY, NJ
Mack Lakeview Plaza -- 201
Littleton Road............ 1979 88,369 89.0 89.0 1,414 1,135
Mack Morris Plains -- 250
Johnson Road.............. 1977 75,000 100.0 100.0 1,125 782
MORRIS TOWNSHIP, MORRIS
COUNTY, NJ
Kemble Plaza I -- 340 Mt.
Kemble Ave................ 1985 387,000 100.0 100.0 5,244 5,198
Kemble Plaza II -- 412 Mt.
Kemble Ave................ 1986 475,100 100.0 100.0 7,499 7,311
WAYNE, PASSAIC COUNTY, NJ
Mack Willowbrook -- 201
Willowbrook Boulevard..... 1970 178,329 100.0 100.0 2,214 1,894
BRIDGEWATER, SOMERSET
COUNTY, NJ
Mack Bridgewater I -- 721
Route 202/206............. 1989 192,741 100.0 100.0 3,631 2,558
CRANFORD, UNION COUNTY, NJ
Mack Cranford -- 12
Commerce Drive............ 1967 72,260 87.3 87.3 552 492
NEW PROVIDENCE, UNION
COUNTY, NJ
Mack Murray Hill -- 890
Mountain Road............. 1977 80,000 100.0 59.2 1,538 1,437

<CAPTION>
PERCENTAGE
OF 1996 1996 AVG. TENANTS LEASING
1996 AVERAGE EFFECTIVE 10% OR MORE OF
TOTAL BASE RENT RENT PER. NET RENTABLE AREA
BASE RENT PER SQ. SQ. FT. PER PROPERTY
PROPERTY/LOCATION (%) FT.($)(5) ($)(6) AS OF 6/30/97(7)
- ---------------------------- --------- -------------- --------- ----------------------------
<S> <C> <C> <C> <C>
LITTLE FERRY, BERGEN COUNTY,
NJ
Mack Airport -- 200 Riser
Road...................... 0.77 3.46 3.13 Ford Motor Co. (34%)
Sanyo Fisher Service Corp.
(33%)
Dassault Falcon Jet Corp.
(33%)
MORRIS PLAINS, MORRIS
COUNTY, NJ
Mack Lakeview Plaza -- 201
Littleton Road............ 1.10 17.98 14.43 Poppe Tyson Inc. (34%) Xerox
Corp. (29%) Willis Corroon
Corp. of New Jersey (20%)
Mack Morris Plains -- 250
Johnson Road.............. 0.88 15.00 10.43 Electronic Data Systems
Corp. (100%)
MORRIS TOWNSHIP, MORRIS
COUNTY, NJ
Kemble Plaza I -- 340 Mt.
Kemble Ave................ 4.09 13.55 13.43 AT&T Corp. (100%)
Kemble Plaza II -- 412 Mt.
Kemble Ave................ 5.86 15.78 15.39 AT&T Corp. (100%)
WAYNE, PASSAIC COUNTY, NJ
Mack Willowbrook -- 201
Willowbrook Boulevard..... 1.73 12.42 10.62 The Grand Union Co. (76%)
Woodward-Clyde Consultants
(24%)
BRIDGEWATER, SOMERSET
COUNTY, NJ
Mack Bridgewater I -- 721
Route 202/206............. 2.84 18.84 13.27 Allstate Insurance Company
(37%) Norris, McLaughlin &
Marcus, PA (30%) Lucent
Technologies, Inc. (20%)
CRANFORD, UNION COUNTY, NJ
Mack Cranford -- 12
Commerce Drive............ 0.43 8.75 7.80 Dames & Moore (42%)
Registrar & Transfer Co.
(23%) Body Connections, Inc.
(20%)
NEW PROVIDENCE, UNION
COUNTY, NJ
Mack Murray Hill -- 890
Mountain Road............. 1.20 19.23 17.97 Allstate Insurance Company
(59%)
</TABLE>

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<TABLE>
<CAPTION>
NET PERCENTAGE PERCENTAGE 1996 1996
RENTABLE LEASED LEASED BASE EFFECTIVE
YEAR AREA AS OF AS OF RENT RENT
PROPERTY/LOCATION BUILT (SQ. FT.) 12/31/96(%)(1) 6/30/97(%)(2) ($000)(3) ($000)(4)
- ---------------------------- ------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
MILLBURN, ESSEX COUNTY, NJ
Mack Short Hills -- 150
J.F. Kennedy Parkway...... 1980 247,476 100.0 100.0 5,241 4,965
EAST BRUNSWICK, MIDDLESEX
COUNTY, NJ
Mack East Brunswick -- 377
Summerhill Road........... 1977 40,000 100.0 100.0 363 359
WOODBRIDGE, MIDDLESEX
COUNTY, NJ
Mack Woodbridge II -- 581
Main Street............... 1991 200,000 92.3 95.5 3,688 2,916
NORTH HEMPSTEAD, NASSAU
COUNTY, NY
Mack Manhasset -- 111 East
Shore Road................ 1980 55,575 100.0 100.0 1,612 1,591
Mack North Hills -- 600
Community Drive........... 1983 206,274 100.0 100.0 4,379 4,102
FISHKILL, DUTCHESS COUNTY,
NY
Westage Business Center --
300 South Lake Drive.... 1987 118,727 91.2 99.8 1,471 1,228
TAMPA, HILLSBOROUGH COUNTY,
FL
One Mack Centre -- 501
Kennedy Boulevard......... 1982 297,429 88.8 90.5 3,852 3,480
PLYMOUTH MEETING, MONTGOMERY
COUNTY, PA
Mack Plymouth Meeting --
1150 Plymouth Meeting
Mall...................... 1970 167,748 99.7 98.4 2,451 2,317

<CAPTION>
PERCENTAGE
OF 1996 1996 AVG. TENANTS LEASING
1996 AVERAGE EFFECTIVE 10% OR MORE OF
TOTAL BASE RENT RENT PER. NET RENTABLE AREA
BASE RENT PER SQ. SQ. FT. PER PROPERTY
PROPERTY/LOCATION (%) FT.($)(5) ($)(6) AS OF 6/30/97(7)
- ---------------------------- --------- -------------- --------- ----------------------------
<S> <C> <C> <C> <C>
MILLBURN, ESSEX COUNTY, NJ
Mack Short Hills -- 150
J.F. Kennedy Parkway...... 4.09 21.18 20.06 KPMG Peat Marwick, LLP (44%)
Budd Larner Gross Rosenbaum
Greenberg & Sade, PC (22%)
Coldwell Banker Residential
Real Estate (13%)
EAST BRUNSWICK, MIDDLESEX
COUNTY, NJ
Mack East Brunswick -- 377
Summerhill Road........... 0.28 9.08 8.97 Greater New York Mutual
Insurance Company (100%)
WOODBRIDGE, MIDDLESEX
COUNTY, NJ
Mack Woodbridge II -- 581
Main Street............... 2.88 19.98 15.80 First Investors Management
Company, Inc.(46%) CIBA
Consumer Pharmaceuticals
(39%)
NORTH HEMPSTEAD, NASSAU
COUNTY, NY
Mack Manhasset -- 111 East
Shore Road................ 1.26 29.01 28.63 Administrations for the
Professions, Inc. (100%)
Mack North Hills -- 600
Community Drive........... 3.42 21.23 19.89 CMP Media, Inc. (100%)
FISHKILL, DUTCHESS COUNTY,
NY
Westage Business Center --
300 South Lake Drive.... 1.14 13.59 11.34 Allstate Insurance Company
(15%)
TAMPA, HILLSBOROUGH COUNTY,
FL
One Mack Centre -- 501
Kennedy Boulevard......... 3.01 14.58 13.17 Raytheon Engineers &
Constructors, Inc.(31%)
Fowler, White, Gillen Boggs,
Villareal & Banker, PA (30%)
PLYMOUTH MEETING, MONTGOMERY
COUNTY, PA
Mack Plymouth Meeting --
1150 Plymouth Meeting
Mall...................... 1.91 14.66 13.85 Smith Enviromental
Technologies Corp. (42%)
Ken Crest Services (16%)
Computer Learning Centers,
Inc. (12%)
</TABLE>

7
<PAGE>
<TABLE>
<CAPTION>
NET PERCENTAGE PERCENTAGE 1996 1996
RENTABLE LEASED LEASED BASE EFFECTIVE
YEAR AREA AS OF AS OF RENT RENT
PROPERTY/LOCATION BUILT (SQ. FT.) 12/31/96(%)(1) 6/30/97(%)(2) ($000)(3) ($000)(4)
- ---------------------------- ------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PHOENIX, MARICOPA COUNTY, AZ
Beardsley Corporate Center
-- 20002 North 19th
Ave..................... 1986 119,301 100.0 100.0 673 389
Patriot Biltmore Plaza --
6001 North 24th
Street.................. 1987 124,690 100.0 100.0 1,604 1,335
Mack Beardsley -- 19640
North 31st Street....... 1990 124,171 100.0 100.0 1,396 1,396
SCOTTSDALE, MARICOPA COUNTY,
AZ
9060 E. Via Linda
Boulevard................. 1984 111,200 100.0 100.0 1,276 1,276
GLENDALE, MARICOPA COUNTY,
AZ
Mack Glendale -- 5551 West
Talavi Boulevard.......... 1991 130,000 100.0 100.0 1,087 1,076
EULESS, TARRANT
COUNTY, TX
Landmark Centre -- 150
West Park Way............. 1984 74,429 98.8 96.6 856 738
RICHARDSON, DALLAS COUNTY,
TX
Santa Fe Building -- 1122
Alma Road................. 1977 82,576 100.0 100.0 599 446
IRVING, DALLAS COUNTY, TX
Metroport -- 2300 Valley
View...................... 1985 142,634 89.6 100.0 1,688 1,304
DALLAS, DALLAS COUNTY, TX
3100 Monticello........... 1984 173,837 65.7 83.8 1,908 1,746

<CAPTION>
PERCENTAGE
OF 1996 1996 AVG. TENANTS LEASING
1996 AVERAGE EFFECTIVE 10% OR MORE OF
TOTAL BASE RENT RENT PER. NET RENTABLE AREA
BASE RENT PER SQ. SQ. FT. PER PROPERTY
PROPERTY/LOCATION (%) FT.($)(5) ($)(6) AS OF 6/30/97(7)
- ---------------------------- --------- -------------- --------- ----------------------------
<S> <C> <C> <C> <C>
PHOENIX, MARICOPA COUNTY, AZ
Beardsley Corporate Center
-- 20002 North 19th
Ave..................... 0.53 5.64 3.26 American Express Travel
Related Services Co., Inc.
(100%)
Patriot Biltmore Plaza --
6001 North 24th
Street.................. 1.25 12.86 10.71 Del Webb Corporation (68%)
Wrigley Mansion Club, Inc.
(24%)
Mack Beardsley -- 19640
North 31st Street....... 1.09 11.24 11.24 American Express Travel
Related Services Co., Inc.
(100%)
SCOTTSDALE, MARICOPA COUNTY,
AZ
9060 E. Via Linda
Boulevard................. 1.00 11.47 11.47 Sentry Insurance A Mutual
Company (100%)
GLENDALE, MARICOPA COUNTY,
AZ
Mack Glendale -- 5551 West
Talavi Boulevard.......... 0.85 8.36 8.28 Honeywell, Inc. (100%)
EULESS, TARRANT
COUNTY, TX
Landmark Centre -- 150
West Park Way............. 0.67 11.64 10.04 Warrantech Corporation (34%)
Mike Bowman Realtors/Century
21 (17%)
Landmark Bank-Mid Cities
(16%)
RICHARDSON, DALLAS COUNTY,
TX
Santa Fe Building -- 1122
Alma Road................. 0.47 7.25 5.40 MCI Telecommunications Corp.
(100%)
IRVING, DALLAS COUNTY, TX
Metroport -- 2300 Valley
View...................... 1.32 13.21 10.20 Nokia, Inc. (52%)
Computer Task Group, Inc.
(12%)
Alltell Information
Services, Inc.(12%)
DALLAS, DALLAS COUNTY, TX
3100 Monticello........... 1.49 16.71 15.28 Insignia Financial Group,
Inc.(18%)
Time Marketing Corporation
(11%)
</TABLE>

8
<PAGE>
<TABLE>
<CAPTION>
NET PERCENTAGE PERCENTAGE 1996 1996
RENTABLE LEASED LEASED BASE EFFECTIVE
YEAR AREA AS OF AS OF RENT RENT
PROPERTY/LOCATION BUILT (SQ. FT.) 12/31/96(%)(1) 6/30/97(%)(2) ($000)(3) ($000)(4)
- ---------------------------- ------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Preston Centre Plaza --
8214 Westchester.......... 1983 95,509 88.9 89.3 1,096 944
Tri West Plaza -- 3030 LBJ
Freeway................... 1984 367,018 98.9 96.0 4,660 4,059
PLANO, COLLIN COUNTY, TX
555 Republic Place........ 1986 97,889 100.0 97.5 1,039 765
HOUSTON, HARRIS COUNTY, TX
Cornerstone Regency --
14511 Falling Creek....... 1982 70,999 96.4 87.4 584 466
Katy Plaza -- 5225 Katy
Freeway................... 1983 112,213 88.1 92.0 899 646

5300 Memorial............. 1982 155,099 95.1 96.0 1,634 1,321
1717 St. James Place...... 1975 109,574 94.9 96.0 988 796
1770 St. James Place...... 1973 103,689 96.3 95.2 1,082 775
10497 Town & Country
Way....................... 1981 148,434 99.3 99.0 1,564 1,293
SAN ANTONIO, BEXAR COUNTY,
TX
Bexar Plaza -- 1777 N.E.
Loop 410................ 1986 256,137 92.4 94.0 2,754 2,252

Century Building -- 84
N.E. Loop 410........... 1971 187,312 95.1 91.4 2,032 1,470
Riverview -- 111
Soledad................. 1918 248,153 54.7 60.0 1,269 999

<CAPTION>
PERCENTAGE
OF 1996 1996 AVG. TENANTS LEASING
1996 AVERAGE EFFECTIVE 10% OR MORE OF
TOTAL BASE RENT RENT PER. NET RENTABLE AREA
BASE RENT PER SQ. SQ. FT. PER PROPERTY
PROPERTY/LOCATION (%) FT.($)(5) ($)(6) AS OF 6/30/97(7)
- ---------------------------- --------- -------------- --------- ----------------------------
<S> <C> <C> <C> <C>
Preston Centre Plaza --
8214 Westchester.......... 0.86 12.91 11.12 State Bank & Trust (10%)
Preston Business Center,
Inc. (15%)
Malone Mortgage Company
America, Inc. (11%)
Tri West Plaza -- 3030 LBJ
Freeway................... 3.64 12.84 11.18 Club Corporation
International (29%)
PLANO, COLLIN COUNTY, TX
555 Republic Place........ 0.81 10.61 7.81 William Smith Enterprises
(19%)
Kaiser Foundation Health
Plan of Texas (17%)
Dayton Hudson Corporation
(14%)
HOUSTON, HARRIS COUNTY, TX
Cornerstone Regency --
14511 Falling Creek....... 0.46 8.53 6.81 Nationwide Mutual Insurance
Company (11%)
Katy Plaza -- 5225 Katy
Freeway................... 0.70 9.09 6.53
5300 Memorial............. 1.28 11.08 8.96 Drypers Corporation (20%)
HCI Chemicals USA, Inc.(14%)
Datavox, Inc. (17%)
1717 St. James Place...... 0.77 9.50 7.65 Mississippi Chemical
Express, Inc. (14%)
1770 St. James Place...... 0.84 10.84 7.76 Gateway Homes, Inc. (10%)
10497 Town & Country
Way....................... 1.22 10.61 8.77 Texas Ohio Gas, Inc. (11%)
Vastar Resources, Inc.(22%)
SAN ANTONIO, BEXAR COUNTY,
TX
Bexar Plaza -- 1777 N.E.
Loop 410................ 2.15 11.64 9.52
Century Building -- 84
N.E. Loop 410........... 1.59 11.41 8.25 KBL Cable, Inc. (26%)
Pacificare of Texas, Inc.
(30%)
Kraft General Foods, Inc.
(25%)
Riverview -- 111
Soledad................. 0.99 9.35 7.36
</TABLE>

9
<PAGE>
<TABLE>
<CAPTION>
NET PERCENTAGE PERCENTAGE 1996 1996
RENTABLE LEASED LEASED BASE EFFECTIVE
YEAR AREA AS OF AS OF RENT RENT
PROPERTY/LOCATION BUILT (SQ. FT.) 12/31/96(%)(1) 6/30/97(%)(2) ($000)(3) ($000)(4)
- ---------------------------- ------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
AMARILLO, POTTER COUNTY, TX
Atrium at Coulter Ridge --
6900 IH-40 West......... 1986 71,771 82.4 80.0 583 464
SAN FRANCISCO, SAN FRANCISCO
COUNTY, CA
Phelan Building -- 760
Market Street........... 1908 267,446 81.6 83.1 4,078 3,726
OMAHA, DOUGLAS COUNTY, NE
Brandeis Building -- 210
South 16th Street....... 1894 319,535 94.3 94.4 2,326 2,210
WEST DES MOINES, POLK
COUNTY, IA
Century III -- 2600
Westown Parkway......... 1988 72,265 95.3 95.4 809 689
--------- ----- ----- --------- ---------
Total Mack Properties..... 9,357,428 93.7 94.8 128,066 111,689
--------- ----- ----- --------- ---------
--------- --------- ---------

- ------------------------
(1) Based on all leases in effect as of December 31, 1996.

(2) Based on all leases in effect as of June 30, 1997.

(3) Total base rent for 1996, determined in accordance with GAAP. Substantially
all of the leases provide for annual base rents plus recoveries and
escalation charges based upon the tenant's proportionate share of and/or
increases in real estate taxes utilities and certain operating costs, as
defined.

(4) Total base rent for 1996 minus total 1996 amortization of tenant
improvements, leasing commissions and other concessions and costs,
determined in accordance with GAAP.

(5) Base rent for 1996 divided by net rentable square feet leased at December
31, 1996.

(6) Effective rent for 1996 divided by net rentable square feet leased at
December 31, 1996.

(7) Excludes office space leased subsequent to June 30, 1997.

(8) A 130,000 square foot building addition was completed in 1994.

10
<PAGE>
MACK'S SIGNIFICANT TENANTS

The following table sets forth a schedule of Mack's ten largest tenants as
of June 30, 1997, based upon annualized contractual base rents for the month of
June 1997.

<TABLE>
<CAPTION>
PERCENTAGE
AVERAGE OF MACK'S TOTAL LEASE
RENT PER ANNUALIZED BASE EXPIRATION
TENANT NAME SQUARE FOOT (2) RENTAL REVENUE DATE
- ----------------------------------------------- TENANT ------------------ ------------------- ----------
ANNUALIZED
BASE RENTAL
REVENUE (000) (1)
-----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
AT&T Corp...................................... $13,491 $15.65 10.21% Jan. 2008(3)
AT&T Wireless Services......................... 7,653 21.76 5.79 March 2007(4)
Prentice Hall, Inc............................. 5,795 12.21 4.39 Dec. 2014
CMP Media, Inc................................. 4,823 21.75 3.65 Oct. 2014
Toys 'R' Us, Inc............................... 4,308 19.18 3.26 Dec. 2012
Timeplex, Inc.................................. 2,780 19.62 2.10 June 2004(5)
KPMG Peat Marwick, LLP......................... 2,535 22.46 1.92 Sept. 2002
Western Union Financial Services, Inc.......... 2,434 18.50 1.84 Nov. 2000
Union Pacific Railroad Company................. 2,394 10.79 1.81 May 2002
American Express Company....................... 2,266 8.97 1.72 July 2000(6)
------- -----
Total.................................. $48,479 36.69%
------- -----
------- -----
</TABLE>

- ------------------------

(1) Annual base rental revenue is based on actual June 1997 billings annualized
and is not derived from historical GAAP results. The historical results for
the 12 months ended December 31, 1997 may differ from those set forth above.

(2) Represents tenant's annualized base rent divided by the respective tenant's
leased square feet as of June 30, 1997.

(3) Represents leases at two office properties. AT&T Corp.'s lease of (i)
475,100 net rentable square feet at Kemble Plaza II, Morris Township, New
Jersey expires in January 2008 and (ii) 387,000 net rentable square feet at
Kemble Plaza I, Morris Township, New Jersey expires in January 2009.

(4) Represents leases at three office properties. AT&T Wireless Services' leases
of (i) 255,536 net rentable square feet at Mack Centre VII, Paramus, New
Jersey expires in March 2007 and (ii) 85,976 net rentable square feet in
Mack Centre III, Paramus, New Jersey expires in March 2007, and (iii) 10,113
net rentable square feet in Mack Centre I, Rochelle Park, New Jersey expires
in May 1998.

(5) Represents leases at two office properties. Timeplex, Inc.'s lease of (i)
89,200 net rentable square feet at 400 Chestnut Ridge Road, Woodcliff Lake,
New Jersey expires in June 2004 and (ii) 52,500 net rentable square feet at
470 Chestnut Ridge Road, Woodcliff Lake, New Jersey expires in December
2005.

(6) Represents leases at three office properties. American Express Travel
Related Services Co., Inc.'s leases of (i) 124,171 net rentable square feet
at 19640 No. 31st St., Phoenix, Arizona expires in July 2000 and (ii)
119,301 net rentable square feet at 20002 No. 19th Ave., Phoenix, Arizona
expires in February 2004. American Express Financial Advisors, Inc.'s lease
of 9,175 net rentable square feet at Mack Centre IV, Paramus, New Jersey
expires in September, 1999.

11
<PAGE>
MACK PROPERTIES: SCHEDULE OF LEASE EXPIRATIONS

The following table sets forth a schedule of the lease expirations for the
Mack Properties beginning with the six months ending December 31, 1997 and
annually thereafter, assuming that none of the tenants exercises renewal
options:

<TABLE>
<CAPTION>
NET
RENTABLE AVERAGE ANNUAL
AREA RENT PER NET
SUBJECT TO PERCENTAGE OF TOTAL ANNUAL BASE RENT RENTABLE SQ. FT.
EXPIRING LEASED UNDER EXPIRING REPRESENTED BY
YEAR OF NUMBER OF LEASES SQ. FT. REPRESENTED LEASES EXPIRING LEASES
EXPIRATION LEASES EXPIRING(1) (SQ.FT.) BY EXPIRING LEASES(%) ($000'S)(2) ($)
- -------------------------------- ------------------- ----------- ----------------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
7/1/97-12/31/97................. 112 243,827 2.75 4,346 17.82
1998............................ 258 710,955 8.01 9,563 13.45
1999............................ 206 808,502 9.11 13,336 16.49
2000............................ 162 1,279,712 14.42 18,190 14.21
2001............................ 104 790,246 8.90 10,807 13.68
2002............................ 86 951,378 10.72 16,247 17.08
2003............................ 25 586,730 6.61 7,277 12.40
2004............................ 20 706,770 7.96 10,908 15.43
2005............................ 13 303,678 3.42 5,631 18.54
2006............................ 7 159,085 1.79 3,052 19.18
2007 & thereafter............... 16 2,335,817 26.31 38,445 16.46
----- ----------- -------- ------- -----
Total/Weighted Average.... 1,009 8,876,700 100.00 137,802 15.52
----- ----------- -------- ------- -----
----- ----------- -------- ------- -----
</TABLE>

- ------------------------

(1) Includes office tenants only. Excludes leases for amenity, retail, parking
and month-to-month office tenants. Some tenants have multiple leases.

(2) Based upon aggregate base rent, determined in accordance with GAAP, for all
leases dated on or before June 30, 1997.

12
<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
September 19, 1997 By: /s/ THOMAS A. RIZK
------------------------------------------
Thomas A. Rizk
PRESIDENT AND CHIEF EXECUTIVE OFFICER

September 19, 1997 By: /s/ BARRY LEFKOWITZ
------------------------------------------
Barry Lefkowitz
CHIEF FINANCIAL OFFICER

13
<PAGE>
CALI REALTY CORPORATION
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE MACK GROUP
Reports of Independent Accountants:
Report of Price Waterhouse LLP.........................................................................
Report of Ernst & Young LLP............................................................................
Combined Balance Sheets as of June 30, 1997 (unaudited), December 31, 1996 and 1995......................
Combined Statements of Operations for the Six Months Ended June 30, 1997 and 1996 (unaudited), and for
the Three Years in the Period Ended December 31, 1996..................................................
Combined Statements of Partners' Deficit for the Period January 1, 1994 through December 31, 1996, and
through June 30, 1997 (unaudited)......................................................................
Combined Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996 (unaudited) and the
Three Years in the Period Ended December 31, 1996......................................................
Notes to Combined Financial Statements...................................................................
Financial Statement Schedule III--Real Estate and Accumulated Depreciation and Amortization............
</TABLE>

14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Cali Realty Corporation
and the Partners and Members of
The Mack Group

In our opinion, based upon our audits and the report of other auditors, the
accompanying combined balance sheets and the related combined statements of
operations, of partners' deficit and of cash flows, including financial
statement Schedule III, present fairly, in all material respects, the financial
position of The Mack Group at December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31 1996, in conformity with generally accepted accounting
principles. These financial statements and schedule are the responsibility of
the management of The Mack Group; our responsibility is to express an opinion on
these financial statements and schedule based on our audits. We did not audit
the combined financial statements and schedule of the Patriot American Office
Group, part of the combined Mack Group, which statements reflect total assets of
$136,855,000 and $135,063,000 at December 31, 1996 and 1995, respectively, and
total revenues of $40,118,000, $36,776,000 and $31,583,000 for the years ended
December 31, 1996, 1995 and 1994, respectively. Those statements were audited by
other auditors whose report thereon has been furnished to us, and our opinion
expressed herein, insofar as it relates to the amounts included for the Patriot
American Office Group, is based solely on the report of the other auditors. We
conducted our audits of these statements and schedule in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements and
schedule are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for the opinion expressed above.

/s/ PRICE WATERHOUSE LLP
- --------------------------
PRICE WATERHOUSE LLP

New York, New York
September 15, 1997

15
<PAGE>
REPORT OF INDEPENDENT AUDITORS

To the Partners and Owners
Patriot American Office Group:

We have audited the accompanying combined balance sheets of the Patriot
American Office Group, more fully described in Note 1, as of December 31, 1996
and 1995, and the related combined statements of operations, partners' and
owners' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 1996 (not presented separately herein). We have also
audited the accompanying financial statement schedule (not presented separately
herein). These financial statements and schedule are the responsibility of the
Patriot American Office Group's management. Our responsibility is to express an
opinion of these financial statements and schedule based on our audits.

We conducted our audits 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 statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the Patriot
American Office Group as of December 31, 1996 and 1995, and the combined results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information
required to be set forth therein.

/s/ ERNST & YOUNG LLP
----------------------------------------------------------------
ERNST & YOUNG LLP

Dallas, Texas
March 19, 1997, except for Note 9,
for which the date is August 4, 1997

16
<PAGE>
THE MACK GROUP

COMBINED BALANCE SHEETS

(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
JUNE 30, ----------- -----------
1997
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Rental property
Land..................................................................... $ 67,917 $ 67,917 $ 67,917
Buildings and improvements............................................... 489,755 489,030 488,106
Tenant improvements...................................................... 140,291 126,591 112,307
Furniture, fixtures, and equipment....................................... 2,464 2,446 2,398
----------- ----------- -----------
700,427 685,984 670,728
Less-accumulated depreciation and amortization........................... (208,712) (196,790) (172,622)
----------- ----------- -----------
Total rental property................................................ 491,715 489,194 498,106
Cash and cash equivalents.................................................. 8,291 13,486 8,628
Unbilled rents receivable.................................................. 19,105 21,352 20,839
Deferred charges and other assets, net..................................... 21,846 23,348 20,459
Restricted cash............................................................ 7,685 3,911 7,676
Accounts receivable........................................................ 2,237 2,943 2,678
Due from affiliate......................................................... 1,948 4,366 6,169
----------- ----------- -----------
Total assets......................................................... $ 552,827 $ 558,600 $ 564,555
----------- ----------- -----------
----------- ----------- -----------

LIABILITIES AND PARTNERS' DEFICIT
<S> <C> <C> <C>

Mortgages and bond payable, net of discount of $2,314, $2,721 and
$39,865.................................................................. $ 654,031 $ 659,339 $ 640,063
Loans payable--partners, includes accrued interest......................... 8,307 8,222 8,603
Accounts payable and accrued expenses...................................... 10,669 11,815 10,538
Rents received in advance and security deposits............................ 10,465 9,269 8,767
Accrued interest payable................................................... 1,655 2,283 2,904
----------- ----------- -----------
Total liabilities...................................................... 685,127 690,928 670,875
Commitments and contingencies
Partners' deficit.......................................................... (132,300) (132,328) (106,320)
----------- ----------- -----------
Total liabilities and partners' deficit................................ $ 552,827 $ 558,600 $ 564,555
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

17
<PAGE>
THE MACK GROUP

COMBINED STATEMENTS OF OPERATIONS

(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
-------------------- ------------------------------------------
1997 1996 1996 1995 1994
--------- --------- ---------- ------------------ ----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
REVENUES
Base rents, including amounts from related
parties of $3,760, $3,832, $7,593, $7,603 and
$7,606....................................... $ 64,521 $ 63,013 $ 128,066 $ 124,493 $ 114,843
Escalation and recoveries from tenants,
including amounts from related parties of
$149, $140, $337, $348 and $603.............. 7,774 8,232 16,984 14,823 14,964
Other income................................... 5,587 2,356 3,233 2,838 2,296
Interest income................................ 350 218 469 194 275
--------- --------- ---------- -------- ----------
Total revenues............................. 78,232 73,819 148,752 142,348 132,378
--------- --------- ---------- -------- ----------
EXPENSES
Real estate taxes.............................. 7,833 7,431 15,367 14,407 14,320
Utilities...................................... 6,782 6,726 14,143 13,387 13,220
Operating services............................. 9,960 9,616 19,507 18,254 18,032
General and administrative..................... 3,531 3,777 7,309 7,885 7,995
Depreciation and amortization.................. 13,717 13,799 28,069 26,833 25,188
Interest expense............................... 29,975 30,228 58,621 59,813 56,889
--------- --------- ---------- -------- ----------
Total expenses............................. 71,798 71,577 143,016 140,579 135,654
--------- --------- ---------- -------- ----------
Income (loss) before extraordinary item........ 6,434 2,242 5,736 1,769 (3,276)
Extraordinary item-
loss on extinguishment of debt, net........ -- -- (19,285) -- --
--------- --------- ---------- -------- ----------
Net income (loss).............................. $ 6,434 $ 2,242 $ (13,549) $ 1,769 $ (3,276)
--------- --------- ---------- -------- ----------
--------- --------- ---------- -------- ----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

18
<PAGE>
THE MACK GROUP

COMBINED STATEMENTS OF PARTNERS' DEFICIT

(IN THOUSANDS)

<TABLE>
<S> <C>
Partners' deficit at January 1, 1994............................................. $(132,938)
Contributions.................................................................. 28,983
Distributions.................................................................. (7,353)
Net loss....................................................................... (3,276)
---------
Partners' deficit at December 31, 1994........................................... (114,584)
Contributions.................................................................. 16,696
Distributions.................................................................. (10,201)
Net income..................................................................... 1,769
---------
Partners' deficit at December 31, 1995........................................... (106,320)
Contributions.................................................................. 6,340
Distributions.................................................................. (18,799)
Net loss....................................................................... (13,549)
---------
Partners' deficit at December 31, 1996........................................... (132,328)
Contributions.................................................................. 2,204
Distributions.................................................................. (8,610)
Net income..................................................................... 6,434
---------
Partners' deficit at June 30, 1997 (unaudited)................................... $(132,300)
---------
---------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

19
<PAGE>
THE MACK GROUP

COMBINED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, DECEMBER 31,
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994
--------- --------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)........................................... $ 6,434 $ 2,242 $ (13,549) $ 1,769 $ (3,276)
Adjustments to reconcile net income (loss) to net cash flows
provided by operating activities
Depreciation and amortization............................... 13,717 13,799 28,069 26,833 25,188
Amortization of deferred financing costs.................... 1,232 382 899 828 962
Amortization of interest discount on mortgage loans......... 407 2,735 5,466 5,390 5,163
Amortization of profit participation discount on mortage
loans..................................................... -- 647 1,294 1,029 812
Loss on extinguishment of debt, net......................... -- -- 19,285 -- --
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable................ 706 (251) (265) 29 761
(Increase) decrease in unbilled rents receivable.......... 2,247 (356) (513) (4,112) (2,177)
(Increase) decrease in due from Mack Company.............. 2,418 358 1,803 (2,261) (3,909)
(Increase) decrease in deferred charges and other assets,
net..................................................... (1,469) (943) (5,212) (1,987) (5,123)
Increase (decrease) in accounts payable and accrued
expenses................................................ (1,611) 944 737 (6,362) 2,139
Increase (decrease) in accrued interest payable and
accrued interest on partner loans....................... (469) 1,736 1,989 4,882 1,810
Increase (decrease) in rents received in advance and
security deposits....................................... 1,196 (2,383) 502 1,778 (1,142)
--------- --------- --------- --------- ---------
Cash flows provided by operating activities............... 24,808 18,910 40,505 27,816 21,208
--------- --------- --------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to rental properties.............................. (13,900) (4,744) (15,301) (27,070) (49,700)
(Increase) decrease in restricted cash...................... (3,774) 628 3,764 (3,611) (1,103)
--------- --------- --------- --------- ---------
Cash flows used in investing activities................... (17,674) (4,116) (11,537) (30,681) (50,803)
--------- --------- --------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages..................................... -- 3,300 131,700 7,500 10,900
Repayments of mortgages..................................... (5,788) (10,073) (139,997) (13,565) (11,377)
Proceeds from loans payable partners........................ -- -- -- -- 7,000
Payment of financing costs.................................. (135) (547) (3,354) (402) (631)
Cash contributions from partners............................ 2,204 807 6,340 16,696 28,983
Cash distributions to partners.............................. (8,610) (7,152) (18,799) (10,201) (7,353)
--------- --------- --------- --------- ---------
Cash flows (used in) provided by financing activities..... (12,329) (13,665) (24,110) 28 27,522
--------- --------- --------- --------- ---------
Net (decrease) increase in cash and cash equivalents...... (5,195) 1,129 4,858 (2,837) (2,073)
Cash and cash equivalents, beginning of period................ 13,486 8,628 8,628 11,465 13,538
--------- --------- --------- --------- ---------
Cash and cash equivalents, end of period...................... $ 8,291 $ 9,757 $ 13,486 $ 8,628 $ 11,465
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Supplemental Cash Flow Information
Cash paid for interest expense.............................. $ 28,862 $ 23,304 $ 48,821 $ 49,020 $ 47,710
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Non-Cash Investing Activites
Accruals for property additions............................. $ 942 $ 712 $ 477 $ 521 $ 767
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

20
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS)

1. ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION

The Mack Group (not a legal entity) is engaged in the ownership and
operation of commercial office buildings located in the United States (the
"Properties"). The Properties are held through two portfolios: The Mack Company
and Patriot American Office Group ("PAO") portfolios. The Mack Company's office
property portfolio consists of 32 office properties comprising approximately 5.9
million square feet located principally in New Jersey and Arizona. The PAO
portfolio consists of 23 office properties comprising approximately 3.5 million
square feet located principally in Texas and Arizona. The Mack Company and PAO
are collectively hereinafter referred to as The Mack Group. Management, leasing
and construction services with respect to the Properties have been historically
provided by affiliates of The Mack Group.

BASIS OF PRESENTATION

The accompanying combined financial statements of The Mack Group have been
presented on a combined basis, which is considered to be the most meaningful,
due to the common general partners in partnerships or managing members in
limited liability companies and common management. In addition, the entities are
expected to be the subject of a business combination with Cali Realty
Corporation and subsidiaries ("Cali"), a fully integrated, self administered,
self managed real estate investment trust. The business combination involves the
planned acquisition by Cali of 100 percent of the interests of the partners and
members of the partnerships and limited liability companies (hereinafter
referred to as "partnership or partnerships") included in The Mack Group who
will receive cash, limited partnership interests, warrants to acquire limited
partnership interests, or a combination thereof in Cali Realty, LP.

Certain other properties and operations affiliated with The Mack Group have
been excluded from these financial statements as they are not included in the
anticipated business combination described above.

All significant intercompany accounts and transactions have been eliminated
in combination.

The following table sets forth the Properties included in The Mack Group:

<TABLE>
<CAPTION>
PROPERTY LOCATION PROPERTY LOCATION
- --------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
NEW JERSEY NEW JERSEY
Mack Centre I Rochelle Park Mack Airport Little Ferry
Mack Centre II Paramus Kemble Plaza I Morris Township
Mack Centre III Paramus 120 Passaic Street Rochelle Park
Mack Centre IV Paramus Kemble Plaza II Morris Township
Mack Centre VI Paramus Mack Montvale I Montvale
Mack Centre VII Paramus Mack Cranford Cranford
Willowbrook Wayne Mack Short Hills Short Hills
Woodbridge II Woodbridge Mack Montvale II Montvale
Bridgewater I Bridgewater Mack Morris Plains Morris Plains
Mack Lakeview Plaza Morris Plains Timeplex HQ Woodcliff Lake
Mack Murray Hill New Providence Timeplex 470 Woodcliff Lake
Mack East Brunswick East Brunswick Timeplex 530 Woodcliff Lake
Mack Saddle River Upper Saddle River
</TABLE>

21
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

<TABLE>
<CAPTION>
PROPERTY LOCATION PROPERTY LOCATION
- --------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
TEXAS TEXAS
Atrium at Coulter Ridge Amarillo St. James I Houston
Monticello Dallas St. James II Houston
Preston Center Dallas Town & Country Houston
TriWest Dallas Metroport Irving
Landmark Euless Republic Place Plano
Cornerstone Houston Santa Fe Richardson
Katy Plaza Houston Bexar San Antonio
Memorial Houston Century San Antonio
Commerce Plaza San Antonio
ARIZONA ARIZONA
Beardsley Phoenix Mack Beardsley Phoenix
Glendale Glendale Biltmore Phoenix
Linda Blvd Scottsdale
NEW YORK NEW YORK
North Hills North Hills Westage Fishkill
Mack Manhasset Manhasset
CALIFORNIA NEBRASKA
Phelan San Francisco Brandeis Omaha
IOWA FLORIDA
Century III. Des Moines One Mack Center Tampa
PENNSYLVANIA
Mack Plymouth Meeting Plymouth Meeting
</TABLE>

All of the Properties have been owned by The Mack Group for the three year
period ended December 31, 1996, with the exception of the 120 Passaic Street,
Rochelle Park, New Jersey property, which was acquired in 1995.

UNAUDITED FINANCIAL STATEMENTS

The combined financial statements including the note disclosures included
herein as of June 30, 1997 and for the six months ended June 30, 1997 and 1996
are unaudited; however, in the opinion of The Mack Groups' management, all
adjustments (consisting solely of normal recurring adjustments) necessary for a
fair presentation of the combined financial statements for these interim periods
have been included. The results for the interim periods are not necessarily
indicative of the results to be obtained for the full fiscal year.

22
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

2. SIGNIFICANT ACCOUNTING POLICIES

RENTAL PROPERTY

Rental properties are stated at cost less accumulated depreciation. Costs
include interest, property taxes, insurance and other project costs incurred
during the period of construction. Ordinary repairs and maintenance are expensed
as incurred; major replacements and betterments are capitalized. Depreciation is
computed on a straight-line basis over the estimated useful lives of the assets
as follows:

<TABLE>
<S> <C>
Buildings and improvements................... 40 years
Tenant improvements.......................... The shorter of the term of the related lease
or useful life
Furniture, fixtures and equipment............ 5 to 10 years
</TABLE>

On a periodic basis, management assesses whether there are any indicators
that the value of the real estate properties may be impaired. A property's value
is impaired only if management's estimate of the aggregate future cash flows
(undiscounted and without interest charges) to be generated by the property are
less than the carrying value of the property. Management does not believe that
the value of any of its real estate properties is impaired.

DEFERRED CHARGES AND OTHER ASSETS

DEFERRED FINANCING COSTS

Costs incurred to obtain financing are capitalized and amortized on a
straight-line basis, which approximated the effective interest method, over the
term of the related indebtedness. Amortization of such costs was $1,232, $382,
$899, $828, and $962 for the six months ended June 30, 1997 and 1996 and years
ended December 31, 1996, 1995 and 1994, respectively.

DEFERRED LEASING COSTS

Direct costs, principally commissions and legal costs, incurred in
connection with leases are capitalized and amortized on a straight-line basis
over the terms of the related leases. Unamortized deferred leasing costs are
charged to amortization expense upon early termination of the lease.

DEBT DISCOUNTS

In connection with the initial acquisition and RTC financing of 22 of the
Properties (see Note 5), the carrying amount of the real estate and mortgage
notes payable were initially discounted by $44,082 using an effective interest
rate of 9.0 percent. The discount is amortized to interest expense over the
terms of the mortgage loans using the effective interest method.

As more fully described in Note 5, The Mack Group determines the fair value
of the participation feature of the RTC participating mortgage at the inception
of the loan and records an increase in the mortgage note payable with a
corresponding debt discount. The debt discount is amortized into interest
expense using the effective interest method over the life of the loan. The
liability and debt discount are adjusted for subsequent changes in the fair
value of the participation feature and the revised debt discount is amortized
prospectively over the remaining life of the loan.

23
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION

The Mack Group recognizes base rental revenue on a straight-line basis over
the terms of the respective leases. Unbilled rents receivable represents the
amount by which straight-line rental revenue exceeds rents currently billed in
accordance with the lease agreements.

CASH AND CASH EQUIVALENTS

All highly liquid investments with a maturity of three months or less when
purchased are considered to be cash equivalents. At June 30, 1997 and December
31, 1996, cash and cash equivalents included investments in overnight reverse
repurchase agreements ("Overnight Investments") totaling $4,491 and $2,172,
respectively. Investments in Overnight Investments are subject to the risks that
the counter-party will default and the collateral will decline in market value.
The Overnight Investments matured on July 1, 1997 and on January 2, 1997, and
the entire balance, including interest income earned, was realized by The Mack
Group.

INTEREST RATE SWAP AND CAP AGREEMENTS

The Mack Group has entered into interest rate swap and cap agreements to
reduce the impact of changes in interest rates on its floating rate mortgages.
The effect of these agreements is included in interest expense as incurred.

EXTRAORDINARY ITEM

The extraordinary item represents the net effects resulting from the early
settlement of certain mortgage obligations, including accrued interest, net of
write-offs of related deferred financing costs.

PARTNERS' CAPITAL CONTRIBUTIONS, DISTRIBUTIONS AND PROFIT AND LOSS ALLOCATIONS

The individual partnership agreements specify the required capital
contributions of the partners and the procedures for the allocation of profits,
losses, distributions and the return of capital to the partners. Generally,
these items are allocated in proportion to the respective ownership percentages
of the partners.

INCOME TAXES

The entities included in the combined financial statements are partnerships
which are not subject to federal and state income taxes. The partners are
required to report in their individual federal and state income tax returns
their distributed share of income or loss and other amounts. Accordingly, income
taxes have not been provided for in the accompanying financial statements.

ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

24
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

3. RESTRICTED CASH

Restricted cash includes escrow and reserve funds for debt service, real
estate taxes, property insurance, capital and tenant improvements, and leasing
costs established pursuant to certain mortgage and bond financing arrangements.
At December 31, 1995, restricted cash also included $1,653 of restricted
deposits made by a partner.

4. DEFERRED CHARGES AND OTHER ASSETS

<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
JUNE 30, --------------------
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Deferred leasing costs......................................................... $ 36,046 $ 34,419 $ 29,246
Deferred financing costs....................................................... 10,621 10,486 8,200
----------- --------- ---------
Total deferred charges....................................................... 46,667 44,905 37,446
Less--accumulated amortization................................................. (25,921) (22,989) (18,719)
Deferred charges, net.......................................................... 20,746 21,916 18,727
Prepaid expenses and other assets.............................................. 1,100 1,432 1,732
----------- --------- ---------
Total deferred charges and other assets........................................ $ 21,846 $ 23,348 $ 20,459
----------- --------- ---------
----------- --------- ---------
</TABLE>

5. MORTGAGES AND BOND PAYABLE

The Mack Group has non-recourse mortgages and bond payable each of which is
collateralized by one or more of the Properties included in these financial
statements. The mortgages and bond are generally due in monthly installments of
interest and in certain cases principal based on amortization periods of 15 to
35 years, and mature at various dates through January 2009. The mortgages and
bond outstanding as of June 30, 1997 and December 31, 1996 and 1995 are as
follows:

<TABLE>
<CAPTION>
(UNAUDITED) DECEMBER 31,
JUNE 30, ----------------------
MORTGAGES AND BOND 1997 1996 1995
- ---------------------------------------------------------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
Paine Webber Mortgages...................................................... $ 126,000 $ 126,000 --
RTC Mortgages............................................................... 3,410 3,264 $ 57,628
Fixed Rate Mortgages........................................................ 344,465 347,854 396,317
Variable Rate Mortgages..................................................... 172,156 174,221 178,118
Industrial Development Bond................................................. 8,000 8,000 8,000
----------- ---------- ----------
$ 654,031 $ 659,339 $ 640,063
----------- ---------- ----------
----------- ---------- ----------
</TABLE>

PAINE WEBBER MORTGAGES

In December 1996, The Mack Group, in connection with the PAO portfolio,
entered into a $126,000 mortgage loan agreement with Paine Webber Incorporated
("Paine Webber"). Proceeds from the loan were used to repay the RTC mortgages
and other loans, and accrued interest as discussed below. The loan, which is
collateralized by 21 Properties and a pledge of equity interest in one
partnership, an assignment of leases, and a cash collateral account, bears
interest at 250 basis points over the London Interbank Offer Rate ("LIBOR") for
the first six months, 300 basis points over LIBOR for the following six months
and

25
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

5. MORTGAGES AND BOND PAYABLE (CONTINUED)
350 basis points over LIBOR thereafter until maturity in June 1998. LIBOR at
June 30, 1997 and December 31, 1996 was 5.53 percent and 5.69 percent,
respectively, and averaged 5.61 percent for the six months ended June 30, 1997.
At maturity, The Mack Group has the option to extend the loan to a seven-year
fixed rate mortgage, which would bear interest at the seven-year Treasury rate
plus 350 basis points. The loan may be prepaid in whole or part without penalty.
Additionally, The Mack Group has the option to borrow an additional $7,000 to
fund renovation costs at one of the Properties, subject to the approval of Paine
Webber.

Under the terms of the loan, The Mack Group is required to deposit
substantially all revenues from the Properties into a cash collateral account
under the sole control of Paine Webber. Funds from the cash collateral account
are to be used to fund reasonable operating expenses, debt service, real estate
taxes, insurance and approved capital improvements. On a monthly basis, 70
percent of the remaining funds in the account are to be used to repay principal
on the Paine Webber mortgage loan and 30 percent are available to the The Mack
Group.

RESOLUTION TRUST CORPORATION (RTC)

In connection with the acquisition of 22 of the PAO Properties in 1992, The
Mack Group obtained seller financing from the RTC in the form of individual
mortgage loans which aggregated $93,543. The mortgage loans matured from August
to December 2004, and were non-interest bearing for the first seven years, after
which time the loans bore interest at 9 percent per annum, payable quarterly. In
addition, the RTC was entitled to receive quarterly principal payments based on
operating income, as defined. Under the terms of the mortgage loans, the RTC was
also entitled to a 30 percent profit participation upon sale or refinancing of
the mortgage loans. The profit participation initially recorded in 1993 of
$6,287, was subsequently adjusted to $8,692 at December 31, 1994, $10,645 at
December 31, 1995 and $12,762 at December 27, 1996. The amortization of the
corresponding discount resulted in additional interest expense related to the
profit participation for the six months ended June 30, 1996 and the years ended
December 31, 1996, 1995 and 1994 of approximately $647, $1,294, $1,029 and $812,
respectively.

In December 1996, 21 of the 22 RTC mortgage loans, along with the unpaid
additional interest, were repaid with the proceeds of the Paine Webber mortgage
loan. As a result, The Mack Group recognized an extraordinary loss from early
extinguishment of debt of $33,390, which consisted primarily of the write-off of
the remaining unamortized debt discount of $23,454, the write-off of the
remaining unamortized discount related to the profit participation of $9,056 and
the write-off of deferred financing costs of $673. At June 30, 1997 and December
31, 1996, one RTC mortgage loan remains with a carrying amount of $3,410 and
$3,264, net of discount of $927 and $1,073, respectively.

FIXED RATE MORTGAGES

Interest rates on fixed rate mortgages aggregating $344,465, $347,854 and
$396,317 at June 30, 1997, and December 31, 1996 and 1995, respectively, range
from 7 percent to 14 percent, excluding the cash flow participation discussed
below. The effective interest rate at June 30, 1997 and December 31, 1996 and
1995 on such fixed rate mortgages was 8.84 percent, 9.05 percent and 10.60
percent, respectively.

In addition to the stated rates of interest, at June 30, 1997 and December
31, 1996 and 1995, a $4,750 mortgage on one Property includes provisions for
additional interest based on 25 percent of cash flows, as

26
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

5. MORTGAGES AND BOND PAYABLE (CONTINUED)
defined, of the underlying property pledged under the mortgage. Additional
interest for the six months ended June 30, 1997, and 1996 and years ended
December 31, 1996, 1995, and 1994 was $98, $93, $276, $244, and $230,
respectively.

On July 3, 1996, a second mortgage on the One Mack Center, Tampa, FL
property with an outstanding balance of $15,555 including unpaid interest of
$1,955 was canceled for a payment of $1,450 to the lender, which after the
write-off of related deferred financing costs resulted in an extraordinary gain
of $14,105.

VARIABLE RATE MORTGAGES

The interest rate on variable rate mortgage payables of $12,470, $12,750 and
$15,816 at June 30, 1997 and December 31, 1996 and 1995, respectively, is at the
banks' prime rate or at prime plus one percent. The average effective interest
rate at June 30, 1997 and December 31, 1996 and 1995 was 8.50 percent, 8.25
percent and 6.68 percent, respectively.

The interest rate on variable rate mortgage payables of $159,686, $161,471
and $162,302 at June 30, 1997 and December 31, 1996 and 1995, respectively, is
0.55 percent to 2.25 percent above LIBOR. The average effective interest rate at
June 30, 1997 and December 31, 1996 and 1995 was 7.27 percent, 7.24 percent and
8.11 percent, respectively. The average effective interest rate for all variable
rate mortgage payables for the six months ended June 30, 1997 and years ended
December 31, 1996 and 1995 was 7.47 percent, 7.89 percent and 7.82 percent,
respectively.

Substantially all of the loans may not be prepaid until specified dates with
prepayment fees ranging from 1/2 percent to 2 percent of the outstanding
principal balance, or yield maintenance, as defined in the respective mortgage
loan agreement.

INDUSTRIAL DEVELOPMENT BONDS

The Mack Manhasset, NY property is financed through the issuance of $8,000
of Nassau County IDA Bonds bearing interest at a bank's TENR rate (4.1 percent
at June 30, 1997 and 4.0 percent and 5.0 percent at December 31, 1996 and 1995,
respectively) and maturing on December 1, 1999. These bonds are secured by an
$8.4 million letter of credit issued by a bank. Pursuant to the terms of the
letter of credit, the net cash flow of the Property is required to be deposited
into a sinking fund maintained by the bank as additional collateral; such
deposits, including interest totaled $556, $441 and $216 at June 30, 1997, and
December 31, 1996 and 1995, respectively.

INTEREST RATE SWAP AND CAP AGREEMENTS

The Mack Group has entered into interest rate swap and cap agreements to
reduce the impact of changes in interest rates on its floating rate mortgages.
At December 31, 1996, The Mack Group had two outstanding swap agreements with
financial institutions, having an aggregate notional principal amount of
$54,875. Those agreements effectively change The Mack Group's interest rate
exposure on its $11,875 floating rate (LIBOR + 1.15 percent) mortgage due
September 1999 to a fixed 7.08 percent through September 1998, and $43,000 of
its $53,000 floating rate (LIBOR + 0.55 percent) mortgage due January 2009 to a
fixed 8.029 percent through August 1997.

27
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

5. MORTGAGES AND BOND PAYABLE (CONTINUED)
At December 31, 1996, The Mack Group also has an outstanding interest rate
cap agreement with a financial institution, having a notional amount of $8,500.
This cap agreement effectively changes The Mack Group's interest rate exposure
on its $8,090 floating rate (LIBOR + 1.15 percent) mortgage due September 1999
to a maximum 9.65 percent through September 1998.

The Mack Group is exposed to credit loss in the event of non-performance by
the other parties to the interest rate swap and cap agreements. However, The
Mack Group does not anticipate non- performance by the counter-parties.

REPAYMENT SCHEDULE

Scheduled principal repayments for the above mortgages and bond at December
31, 1996 are as follows:

<TABLE>
<S> <C>
1997.............................................................................. $ 12,527
1998.............................................................................. 218,332
1999.............................................................................. 98,671
2000.............................................................................. 18,739
2001.............................................................................. 82,304
Thereafter........................................................................ 231,487
---------
662,060
Less amount representing interest................................................. (2,721)
---------
Total............................................................................. $ 659,339
---------
---------
</TABLE>

6. LOAN PAYABLE--PARTNERS

In accordance with a partnership agreement, partner loans of $7,000 were
provided to a property. The loan bears interest at 10 percent per annum until
such time as the aggregate outstanding balance has been reduced to $2,500 at
which time the interest rate shall be reduced to 9 percent. Interest is payable
monthly, in arrears, commencing on March 1, 1994. The loan matures on December
1, 1999. Interest on these loans totaled $482 and $480 for the six months ended
June 30, 1997 and 1996, and $949, $854 and $365 for the years ended December 31,
1996, 1995 and 1994, respectively. Unpaid interest at June 30, 1997 and December
31, 1996 and 1995 totaled $1,307, $1,222 and $1,019, respectively.

7. RELATED PARTY TRANSACTIONS

LEASES WITH AFFILIATES

An affiliate of a partner of the Mack North Hills, NY property occupies, as
of December 31, 1996, 100 percent of the space in the North Hills property.
Total rent income, including escalations and recoveries from this affiliate for
the six months ended June 30, 1997 and 1996 and years ended December 31, 1996,
1995 and 1994 approximated $2,364, $2,360, $4,751, $4,728, and $4,734,
respectively.

An affiliate of a partner of the Mack Manhasset, NY property occupies, as of
December 31, 1996, 100 percent of the space in the Mack Manhasset property.
Total rent income, including escalations and

28
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

7. RELATED PARTY TRANSACTIONS (CONTINUED)
recoveries from this affiliate for the six months ended June 30, 1997 and 1996
and years ended December 31, 1996, 1995 and 1994, approximated $880, $909,
$1,808, $1,803, and $1,851, respectively.

An affiliate of a partner of the Bridgewater, NJ property occupies, as of
December 31, 1996, 30 percent of the space in the Bridgewater property. Total
rent income, including escalations and recoveries from this affiliate for the
six months ended June 30, 1997 and 1996 and years ended December 31, 1996, 1995
and 1994 approximated $620, $658, $1,280, $1,330 and $1,535, respectively.

A partner with interests in 5 property partnerships occupies as of December
31, 1996, 3 percent of the space in the Mack Center I property. Total rent
income, including escalations and recoveries from this partner for the six
months ended June 30, 1997 and 1996 and years ended December 31, 1996, 1995 and
1994 approximated $45, $46, $90, $90, and $90, respectively.

OPERATING AND ADMINISTRATIVE SERVICES

Certain affiliates of The Mack Group provides operating, leasing and
management services to and charges the Properties for the expenses associated
with such services, comprising principally of employee costs and office
expenses. For the six months ended June 30, 1997 and 1996, and years ended
December 31, 1996, 1995 and 1994, the amount of such charges included in
operating services was $1,753, $1,411, $2,900, $2,735 and $2,755, respectively,
and the amount included in general and administrative expenses for such services
was $2,765, $3,038, $6,325, $6,305 and $5,988, respectively. Included in the
expense charged were contributions made by The Mack Group to employee profit
sharing and 401(k) plans sponsored by the affiliates, which amounted to $73,
$85, $172, $127 and $160 for the six months ended June 30, 1997 and 1996, and
years ended December 31, 1996, 1995 and 1994, respectively.

LEASING COMMISSIONS

Employees of an affiliate provide leasing services to the Properties and, in
certain situations, receive additional compensation based on executed leases.
For the six months ended June 30, 1997 and 1996 and the years ended December
1996, 1995 and 1994, the additional amounts paid to these employees, which are
capitalized and amortized, approximated $178, $108, $275, $280 and $329,
respectively. In 1995, an affiliate of The Mack Group was paid a leasing
commission of $400 relating to the SaddleMack Property which is capitalized and
amortized.

CASH PROCESSING

The Properties' rent receipts are deposited into a centralized receipt
account of an affiliate and the Properties' cash payments are disbursed from a
centralized disbursement account of that affiliate. At June 30, 1997 and
December 31, 1996 and 1995, the net amount due from affiliate was $1,948,
$4,366, and $6,169, respectively.

8. INCOME TAXES

The entities included in the combined financial statements are partnerships
which are not subject to federal and state income taxes. Accordingly, no
recognition has been given to income taxes in the accompanying financial
statements since the income or loss of the entities are to be included in the
tax returns of the individual partners. The tax returns of the entities are
subject to examination by federal and

29
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

8. INCOME TAXES (CONTINUED)
state taxing authorities. If such examinations result in adjustments to
distributive shares of taxable income or loss, the tax liability of the partners
would be adjusted accordingly.

The tax attributes of the partnerships' net assets flow directly to each
individual partner. Individual partners will have different investment bases
depending upon the timing and prices of their acquisition of partnership units.
Furthermore each partner's tax accounting, which is partially dependent upon
their individual tax position, may differ from the accounting followed in the
financial statements. Accordingly, there could be significant differences
between each individual partner's tax basis and their proportionate share of the
net assets reported in the financial statements.

9. DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of estimated fair value was determined by
management using available market information and appropriate valuation
methodologies. However, considerable judgment is necessary to interpret market
data and develop estimated fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts The Mack Group could
realize on disposition of the financial instruments at December 31, 1996. The
use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.

Cash equivalents, receivables, accounts payable, and accrued expenses and
other liabilities are carried at amounts which reasonably approximate their fair
values.

Mortgages and bond payable have an aggregate carrying value of $659,339 at
December 31, 1996, which approximates their estimated aggregate fair value
(excluding prepayment penalties) based upon then current interest rates for debt
with similar terms and remaining maturities.

Based on the value of The Mack Group's interest rate swap and cap agreements
at December 31, 1996, the cost to The Mack Group to settle such agreements would
have been approximately $620.

Disclosure about fair value financial instruments is based on pertinent
information available to management as of December 31, 1996. Although management
is not aware of any factors that would significantly affect the fair value
amounts, such amounts have not been comprehensively revalued for purposes of
these financial statements since December 31, 1996 and current estimates of fair
value may differ significantly from the amounts presented herein.

10. COMMITMENTS AND CONTINGENCIES

The Mack Group has outstanding letters of credit issued by various banks
pledged as security for certain mortgages and bond payable. Letters of credit
outstanding as of June 30, 1997, and December 31, 1996 and 1995, aggregated
$15,577, $15,620 and $19,965, respectively, and are not reflected on the
accompanying financial statements.

30
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Mack Group leases certain land under ground leases expiring in various
times through December 2076. The future minimum lease payments under the ground
leases at December 31, 1996 are as follows:

<TABLE>
<S> <C>
1997............................................................................... $ 288
1998............................................................................... 288
1999............................................................................... 291
2000............................................................................... 291
2001............................................................................... 291
Thereafter......................................................................... 21,220
---------
Total............................................................................ $ 22,669
---------
---------
</TABLE>

One ground lease which expires December 2011 also provides additional rent
based 25 percent of cash flow, as defined, of the Property subject to the ground
lease. Such additional rents were $131, $105, $150, $201 and $169 for the six
months ended June 30, 1997 and 1996 and years ended December 31, 1996, 1995 and
1994, respectively. Another ground lease which expires in February 2076 provides
for additional rent beginning February 1997 based on 11 percent of cash flow, as
defined, of the Property subject to the ground lease. There was no such
additional rent due for the six months ended June 30, 1997.

11. TENANT LEASES

The Properties are leased to tenants under operating leases with various
expiration dates through 2014. Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the tenant's
proportionate share of and/or increases in real estate taxes and certain
operating costs as defined and the pass through of charges for electrical usage.
Future minimum rentals to be received under non-cancelable operating leases at
December 31, 1996 are as follows:

<TABLE>
<S> <C>
1997.............................................................................. $ 127,708
1998.............................................................................. 122,141
1999.............................................................................. 113,581
2000.............................................................................. 99,937
2001.............................................................................. 84,671
Thereafter........................................................................ 422,544
---------
Total............................................................................. $ 970,582
---------
---------
</TABLE>

31
<PAGE>
THE MACK GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS)

11. TENANT LEASES (CONTINUED)
The geographic concentration of the Properties' base rental income for the
year ended December 31, 1996 and property net book value as of December 31, 1996
are as follows:

<TABLE>
<CAPTION>
REGION BASE RENTAL INCOME % PROPERTY NET BOOK VALUE %
- ----------------------------------------------------------------- ------------------------- -----------------------------
<S> <C> <C>
Northeast........................................................ 66 68
Southwest........................................................ 25 24
Other............................................................ 9 8
--- ---
100% 100%
--- ---
--- ---
</TABLE>

Other income for the six months ended June 30, 1997 and 1996 and years ended
December 31, 1996, 1995 and 1994 included lease cancellation income of $4,462 ,
$1,293, $1,413, $589 and $571, respectively.

Fourteen properties with aggregate rental income (base rent plus escalations
and recoveries) of $17,312 and $34,652 for the six months ended June 30, 1997
and year ended December 31, 1996 are subject to purchase options, rights of
first refusal, or right of first offer, or a combination thereof, granted to
certain tenants.

32
<PAGE>
SCHEDULE III
PAGE 1 OF 4

THE MACK GROUP

REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION

(IN THOUSANDS)

DECEMBER 31, 1996
<TABLE>
<CAPTION>
GROSS
AMOUNT
CARRIED
INITIAL COSTS AT
--------------------------------------- CLOSE OF
COSTS PERIOD
CAPITALIZED (2)
SUBSEQUENT ---------
DATE RELATED BUILDING AND TO
PROPERTY NAME/LOCATION ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND
- ---------------------------------------- ----------- ------------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
ROCHELLE PARK, NJ
Mack Centre I......................... 1976 $ 7,070 $ 1,269 $ -- $ 14,647 $ 1,269
120 Passaic Street.................... 1995 2,710 646 1,788 -- 646

PARAMUS, NJ
Mack Centre II........................ 1978 16,247 2,008 -- 25,515 2,008
Mack Centre III....................... 1981 13,344 1,059 -- 25,007 1,059
Mack Centre IV........................ 1985 27,080 -- -- 35,402 --
Mack Centre VI........................ 1988 30,413 2,391 -- 27,983 2,391
Mack Centre VII....................... 1988 28,512 5,222 -- 32,702 5,222

UPPER SADDLE RIVER, NJ
Mack Saddle River..................... 1973 27,460 6,198 24,765 27,535 6,198

MORRIS PLAINS, NJ
Mack Lakeview Plaza................... 1979 4,091 512 -- 5,453 512
Mack Morris Plains.................... 1977 2,400 442 -- 4,756 442
171 Littleton Road.................... -- 100 -- -- 100

MORRIS TOWNSHIP, NJ
Kemble Plaza I........................ 1985 53,000 1,164 -- 11,060 1,164
Kemble Plaza II....................... 1986 67,000 3,815 -- 44,158 3,815

MONTVALE, NJ
Mack Montvale I....................... 1975 1,203 360 -- 3,774 360
Mack Montvale II...................... 1981 3,256 689 -- 5,916 689

WOODCLIFF LAKE, NJ
400 Chestnut Ridge Road............... 1982 15,490 1,074 6,085 -- 1,074
470 Chestnut Ridge Road............... 1987 6,375 1,189 6,720 -- 1,189
530 Chestnut Ridge Road............... 1986 6,375 1,234 6,976 -- 1,234

WAYNE, NJ
Mack Willowbrook...................... 1970 13,699 513 -- 9,894 513
Willowbrook--Peripheral Land.......... -- 440 -- -- 440

WOODBRIDGE, NJ
Mack Woodbridge II.................... 1991 24,707 1,408 -- 30,632 1,408

BRIDGEWATER, NJ
Mack Bridgewater I.................... 1989 24,458 693 21,806 6,963 693

DEPRECIABLE
BUILDING AND ACCUMULATED LIVES
PROPERTY NAME/LOCATION IMPROVEMENT TOTAL DEPRECATION (YEARS)
- ---------------------------------------- ------------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
ROCHELLE PARK, NJ
Mack Centre I......................... $ 14,647 $ 15,916 $ 9,723 (1)
120 Passaic Street.................... 1,788 2,434 506 (1)
PARAMUS, NJ
Mack Centre II........................ 25,515 27,523 14,364 (1)
Mack Centre III....................... 25,007 26,066 10,515 (1)
Mack Centre IV........................ 35,402 35,402 11,228 (1)
Mack Centre VI........................ 27,983 30,374 9,571 (1)
Mack Centre VII....................... 32,702 37,924 13,036 (1)
UPPER SADDLE RIVER, NJ
Mack Saddle River..................... 52,300 58,498 7,028 (1)
MORRIS PLAINS, NJ
Mack Lakeview Plaza................... 5,453 5,965 1,374 (1)
Mack Morris Plains.................... 4,756 5,198 2,542 (1)
171 Littleton Road.................... -- 100 -- (1)
MORRIS TOWNSHIP, NJ
Kemble Plaza I........................ 11,060 12,224 3,882 (1)
Kemble Plaza II....................... 44,158 47,973 13,986 (1)
MONTVALE, NJ
Mack Montvale I....................... 3,774 4,134 2,038 (1)
Mack Montvale II...................... 5,916 6,605 4,886 (1)
WOODCLIFF LAKE, NJ
400 Chestnut Ridge Road............... 6,085 7,159 1,138 (1)
470 Chestnut Ridge Road............... 6,720 7,909 1,014 (1)
530 Chestnut Ridge Road............... 6,976 8,210 1,053 (1)
WAYNE, NJ
Mack Willowbrook...................... 9,894 10,407 5,065 (1)
Willowbrook--Peripheral Land.......... -- 440 -- (1)
WOODBRIDGE, NJ
Mack Woodbridge II.................... 30,632 32,040 4,974 (1)
BRIDGEWATER, NJ
Mack Bridgewater I.................... 28,769 29,462 8,644 (1)
</TABLE>

33
<PAGE>
SCHEDULE III
PAGE 2 OF 4

THE MACK GROUP

REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION

(IN THOUSANDS)

DECEMBER 31, 1996
<TABLE>
<CAPTION>
GROSS
AMOUNT
CARRIED
INITIAL COSTS AT
--------------------------------------- CLOSE OF
COSTS PERIOD
CAPITALIZED (2)
SUBSEQUENT ---------
DATE RELATED BUILDING AND TO
PROPERTY NAME/LOCATION ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND
- ---------------------------------------- ----------- ------------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
CRANFORD, NJ
Mack Cranford......................... 1967 -- 219 -- 2,722 219

MILLBURN , NJ
Mack Short Hills...................... 1980 29,908 1,943 -- 14,939 1,943

LITTLE FERRY, NJ
Mack Airport.......................... 1974 7,128 -- -- 8,708 --
200 Riser Road........................ -- 800 -- -- 800

NEW PROVIDENCE, NJ
Mack Murray Hill...................... 1977 8,961 595 -- 3,435 595

EAST BRUNSWICK, NJ
Mack East Brunswick................... 1977 944 382 -- 1,487 382

NORTH HEMPSTEAD, NY
Mack Manhasset........................ 1980 8,000 710 -- 7,340 710
Mack North Hills...................... 1983 31,951 4,324 -- 21,694 4,324

TAMPA, FL
One Mack Centre....................... 1982 17,698 1,203 -- 28,908 1,203

PLYMOUTH MEETING, PA
Mack Plymouth Meeting................. 1970 769 -- -- 5,172 --

SCOTTSDALE, AZ
9060 E. Via Linda..................... 1988 10,637 3,814 8,392 -- 3,814

GLENDALE, AZ
Mack Glendale......................... 1991 8,090 1,241 7,540 -- 1,241

DALLAS, TX
3100 Monticello....................... 1992 6,903 698 3,747 1,525 698
Preston Center Plaza.................. 1992 5,213 529 2,117 1,048 529
TriWest Plaza......................... 1992 15,540 5,319 21,274 2,119 5,319

EULESS, TX
Landmark Centre....................... 1992 2,965 294 1,175 520 294

IRVING, TX
Metroport............................. 1992 6,126 626 2,504 1,565 626

DEPRECIABLE
BUILDING AND ACCUMULATED LIVES
PROPERTY NAME/LOCATION IMPROVEMENT TOTAL DEPRECATION (YEARS)
- ---------------------------------------- ------------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
CRANFORD, NJ
Mack Cranford......................... 2,722 2,941 1,897 (1)
MILLBURN , NJ
Mack Short Hills...................... 14,939 16,882 9,004 (1)
LITTLE FERRY, NJ
Mack Airport.......................... 8,708 8,708 2,571 (1)
200 Riser Road........................ -- 800 --
NEW PROVIDENCE, NJ
Mack Murray Hill...................... 3,435 4,030 2,880 (1)
EAST BRUNSWICK, NJ
Mack East Brunswick................... 1,487 1,869 1,186 (1)
NORTH HEMPSTEAD, NY
Mack Manhasset........................ 7,340 8,050 2,646 (1)
Mack North Hills...................... 21,694 26,018 9,000 (1)
TAMPA, FL
One Mack Centre....................... 28,908 30,111 12,859 (1)
PLYMOUTH MEETING, PA
Mack Plymouth Meeting................. 5,172 5,172 3,066 (1)
SCOTTSDALE, AZ
9060 E. Via Linda..................... 8,392 12,206 1,783 (1)
GLENDALE, AZ
Mack Glendale......................... 7,540 8,781 959 (1)
DALLAS, TX
3100 Monticello....................... 5,272 5,970 754 (1)
Preston Center Plaza.................. 3,165 3,694 534 (1)
TriWest Plaza......................... 23,393 28,712 3,542 (1)
EULESS, TX
Landmark Centre....................... 1,695 1,989 313 (1)
IRVING, TX
Metroport............................. 4,069 4,695 929 (1)
</TABLE>

34
<PAGE>
SCHEDULE III
PAGE 3 OF 4

THE MACK GROUP

REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION

(IN THOUSANDS)

DECEMBER 31, 1996
<TABLE>
<CAPTION>
GROSS
AMOUNT
CARRIED
INITIAL COSTS AT
--------------------------------------- CLOSE OF
COSTS PERIOD
CAPITALIZED (2)
SUBSEQUENT ---------
DATE RELATED BUILDING AND TO
PROPERTY NAME/LOCATION ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND
- ---------------------------------------- ----------- ------------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
PLANO, TX
Republic Place........................ 1992 3,969 314 1,257 967 314

RICHARDSON, TX
Santa Fe Building..................... 1992 3,186 130 520 1,460 130

HOUSTON, TX
Cornerstone Regency................... 1992 1,842 124 498 608 124
Katy Plaza............................ 1992 4,649 126 1,673 1,413 126
5300 Memorial......................... 1992 6,764 856 3,424 1,355 856
1717 St. James........................ 1992 4,004 195 782 1,963 195
1770 St. James........................ 1992 2,961 152 609 1,501 152
Town & Country........................ 1992 5,525 584 2,338 1,389 584

PHOENIX, AZ
Beardsley Corporate Ctr............... 1992 8,051 373 1,491 2,401 373
Patriot Biltmore Plaza................ 1992 9,354 829 3,314 2,006 829
Mack Beardsley........................ 11,875 856 -- 13,160 856

SAN ANTONIO, TX
Bexar Plaza........................... 1992 11,590 907 4,689 2,544 907
Century Building...................... 1992 7,818 400 1,605 6,974 400
Commerce Plaza........................ 1992 3,264 383 2,354 1,503 383

SAN FRANCISCO, CA
Phelan Building....................... 1992 17,341 4,710 8,741 1,527 4,710

AMARILLO, TX
Atrium at Coulter Ridge............... 1992 1,063 67 270 578 67

OMAHA, NE
Brandeis Building..................... 1992 5,917 799 3,198 813 799

WEST DES MOINES, IA
Century III........................... 1992 3,823 689 2,760 521 689

FISHKILL, NY
Westage Business Center............... 1992 6,936 300 4,698 1,249 300

Furniture, Fixtures & Equipment......... -- -- -- 2,446 --
------------- --------- ------------- ------------- ---------
TOTALS.............................. $ 655,655 $ 67,917 $ 159,110 $ 458,957 $ 67,917
------------- --------- ------------- ------------- ---------
------------- --------- ------------- ------------- ---------

DEPRECIABLE
BUILDING AND ACCUMULATED LIVES
PROPERTY NAME/LOCATION IMPROVEMENT TOTAL DEPRECATION (YEARS)
- ---------------------------------------- ------------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
PLANO, TX
Republic Place........................ 2,224 2,538 520 (1)
RICHARDSON, TX
Santa Fe Building..................... 1,980 2,110 521 (1)
HOUSTON, TX
Cornerstone Regency................... 1,106 1,230 253 (1)
Katy Plaza............................ 3,086 3,212 669 (1)
5300 Memorial......................... 4,779 5,635 762 (1)
1717 St. James........................ 2,745 2,940 574 (1)
1770 St. James........................ 2,110 2,262 503 (1)
Town & Country........................ 3,727 4,311 724 (1)
PHOENIX, AZ
Beardsley Corporate Ctr............... 3,892 4,265 707 (1)
Patriot Biltmore Plaza................ 5,320 6,149 802 (1)
Mack Beardsley........................ 13,160 14,016 1,988 (1)
SAN ANTONIO, TX
Bexar Plaza........................... 7,233 8,140 1,289 (1)
Century Building...................... 8,579 8,979 1,083 (1)
Commerce Plaza........................ 3,857 4,240 656 (1)
SAN FRANCISCO, CA
Phelan Building....................... 10,268 14,978 1,337 (1)
AMARILLO, TX
Atrium at Coulter Ridge............... 848 915 224 (1)
OMAHA, NE
Brandeis Building..................... 4,011 4,810 547 (1)
WEST DES MOINES, IA
Century III........................... 3,281 3,970 416 (1)
FISHKILL, NY
Westage Business Center............... 5,947 6,247 788 (1)
Furniture, Fixtures & Equipment......... 2,446 2,446 1,937 (1)
------------- --------- ------------
TOTALS.............................. $ 618,067 $ 685,984 $ 196,790
------------- --------- ------------
------------- --------- ------------
</TABLE>

- ------------------------
(1) Building and Improvements--5 to 40 years
(2) The aggregate cost for federal income tax purpose was approximately $492,809

35
<PAGE>
SCHEDULE III
PAGE 4 OF 4

THE MACK GROUP

REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION

(IN THOUSANDS)

A summary of activity for real estate and accumulated depreciation and
amortization is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ----------
REAL ESTATE:
Balance at beginning of year................................................. $ 670,726 $ 643,894 $ 595,850
Improvements................................................................. 15,258 24,398 48,044
Acquisition of real estate................................................... -- 2,436 --
---------- ---------- ----------
Balance at end of year....................................................... $ 685,984 $ 670,728 $ 643,894
---------- ---------- ----------
---------- ---------- ----------
ACCUMULATED DEPRECIATION AND AMORTIZATION:
Balance at beginning of year................................................. $ 172,622 $ 148,155 $ 126,220
Depreciation and amortization expense........................................ 24,168 24,467 21,935
---------- ---------- ----------
Balance at end of year....................................................... $ 196,790 $ 172,622 $ 148,155
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

36
<PAGE>
CALI REALTY CORPORATION

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 1997 (DOLLARS IN THOUSANDS)

(UNAUDITED)

The following unaudited pro forma condensed consolidated balance sheet is
presented as if the acquisition by the Company of the Moorestown Buildings,
Shelton Place, 200 Corporate, Three Independence (collectively, the "Pre-Mack
Events," which are discussed more fully in the Company's Current Report on Form
8-K, dated September 18, 1997), and the Transaction and related 1997 Offering
had occurred on June 30, 1997. 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, 1996 and the Company's Form 10-Q for the six
month period ended June 30, 1997, 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 acquisition actually occurred on June 30,
1997, nor does it purport to represent the future financial position of the
Company.

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA ADJ. FOR THE
ADJUSTMENTS TRANSACTION
COMPANY FOR PRE-MACK PRE-MACK EVENT AND 1997 COMPANY
ASSETS HISTORICAL EVENTS PRO FORMA OFFERING PRO FORMA (L)
------------ ------------ --------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Rental property, net............................. $ 1,307,365 $ 46,850(a) $ 1,354,215 $ 1,205,573(d) $ 2,559,788
Cash and cash equivalents........................ 6,090 -- 6,090 -- (e) 6,090
Unbilled rents receivable........................ 23,648 -- 23,648 -- 23,648
Deferred charges and other assets, net........... 13,224 -- 13,224 -- 13,224
Restricted cash.................................. 8,218 -- 8,218 -- 8,218
Accounts receivable, net......................... 3,547 -- 3,547 -- 3,547
Mortgage note receivable......................... 11,600 (4,350)(b) 7,250 -- 7,250
------------ ------------ --------------- ------------ --------------
Total assets..................................... $ 1,373,692 $ 42,500 $ 1,416,192 1,205,573 $ 2,621,765
------------ ------------ --------------- ------------ --------------
------------ ------------ --------------- ------------ --------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages and loans payable...................... $ 553,961 $ 42,500(c) $ 596,461 $ 464,690(f) $ 1,061,151
Dividends and distributions payable.............. 18,334 -- 18,334 -- 18,334
Accounts payable and accrued expenses............ 10,582 -- 10,582 (422 (g) 10,160
Accrued interest payable......................... 1,916 -- 1,916 -- 1,916
Rents received in advance and security
deposits....................................... 16,280 -- 16,280 10,465(h) 26,745
------------ ------------ --------------- ------------ --------------
Total liabilities................................ 601,073 42,500 643,573 474,733 1,118,306
------------ ------------ --------------- ------------ --------------
Minority interest of unitholders in
Operating Partnership.......................... 70,911 -- 70,911 391,218(i) 462,129
------------ ------------ --------------- ------------ --------------
Stockholders' equity
Common stock, $.01 par value................... 366 -- 366 100(j) 466
Other stockholders' equity....................... 701,342 -- 701,342 339,522(k) 1,040,864
------------ ------------ --------------- ------------ --------------
Total stockholders' equity....................... 701,708 -- 701,708 339,622 1,041,330
------------ ------------ --------------- ------------ --------------
Total liabilities and stockholders' equity....... $ 1,373,692 $ 42,500 $ 1,416,192 $ 1,205,573 $ 2,621,765
------------ ------------ --------------- ------------ --------------
------------ ------------ --------------- ------------ --------------
</TABLE>

See accompanying footnotes on subsequent pages.

37
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 1997 (IN THOUSANDS)

(UNAUDITED)

(a) Represents the approximate aggregate cost of the acquisitions completed
subsequent to June 30, 1997, consisting of the Moorestown Buildings on July
21, 1997 for $10,200; Shelton Place on August 1, 1997 for $15,500; 200
Corporate on August 15, 1997 for $8,000; and Three Independence on September
3, 1997 for $13,150. (See the Company's Current Report on Form 8-K, dated
September 18, 1997 for additional information.)

(b) Represents the partial prepayment of the RM Mortgage Note Receivable
received from the sellers of 200 Corporate, certain RM principals, in
conjunction with the Company's acquisition of such property. (See the
Company's Current Report on Form 8-K, dated September 18, 1997 for
additional information.)

(c) Represents the approximate aggregate pro forma drawings on the Company's
credit facilities, which were used as the primary means in funding the
acquisitions subsequent to June 30, 1997, as listed in note (a) above. (See
the Company's Current Report on Form 8-K, dated September 18, 1997 for
additional information.)

(d) Represents the estimated aggregate acquisition cost to be incurred by the
Company to acquire the Mack Properties based upon the estimated market price
of the consideration to be paid as of the time the Transaction was agreed to
and announced. The total costs approximate the fair value of the rental
property to be acquired and include the following:

<TABLE>
<S> <C>
Cash............................................................ $ 476,106
Mack Assumed Debt............................................... 302,147
Common Units.................................................... 132,721
Preferred Units................................................. 256,075
Warrants........................................................ 8,524
Estimated Transaction-related costs............................. 30,000
---------
$1,205,573
---------
---------
</TABLE>

(e) The following schedule summarizes the pro forma sources and uses of funds in
connection with the Transaction:

<TABLE>
<S> <C>
Net proceeds to be received from the 1997 Offering after estimated
underwriting discount and issuance costs of $21,811............. $ 365,064

Pro forma drawing on the Company's credit facilities.............. 162,543

Cash consideration paid (including estimated Transaction-related
costs of $30,000)............................................... (506,106)

Cash paid for executive compensation, bonuses and related tax
obligation payments............................................. (31,966)

Net cash from estimated closing adjustments at completion of
Transaction..................................................... 10,465
---------
$ 0
---------
---------
</TABLE>

38
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)

AS OF JUNE 30, 1997 (IN THOUSANDS)

(UNAUDITED)

(f) Represents the Mack Assumed Debt expected to be assumed by the Company and
additional drawings on the Company's credit facilities in connection with
the consummation of the Transaction, as follows:

<TABLE>
<S> <C>
Expected assumed debt with an estimated weighted average interest
rate of 7.23 percent............................................ $ 302,147

Additional drawings on the Company's credit facilities............ 162,543
---------
$ 464,690
---------
---------
</TABLE>

(g) Represents amounts that were accrued in the Company's historical accounts as
of June 30, 1997 for tax obligation payments in connection with the
Company's executive compensation agreements, which are to be paid in
connection with completion of the Transaction (see Note (1) below).

(h) Represents adjustments for rents received in advance ($7,278) and security
deposits ($3,187) to be received by the Company at the closing of the
Transaction.

(i) Reflects the adjustment to minority interest of the unitholders in the
Operating Partnership computed as follows:

<TABLE>
<S> <C>
Common Units...................................................... $ 132,721
Preferred Units................................................... 256,075
Warrants.......................................................... 8,524
Minority interest share of non-recurring charges [see Note (k)
below].......................................................... (6,102)
---------
$ 391,218
---------
---------
</TABLE>

(j) Reflects the issuance of 10 million shares of the Company's Common Stock
with a par value of $.01 per share.

39
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)

AS OF JUNE 30, 1997 (IN THOUSANDS)

(UNAUDITED)

(k) Reflects the issuance of 10 million shares of the Company's Common Stock
with a par value of $.01 per share, at the assumed offering price of
$38.6875 per share. The following table sets forth the adjustments to Other
stockholders' equity:

<TABLE>
<S> <C>
Net proceeds to be received from the 1997 Offering after estimated
underwriting discount and issuance costs of $21,811, (net of
$100 for par value)............................................. $ 364,964

Recording of the financial accounting value ascribed to the
beneficial conversion feature inherent in the Preferred Units
upon issuance. The Preferred Units are immediately convertible
into Common Units at $34.65 per Common Unit, which is an amount
that is expected to be less than the market price of the Common
Stock (assumed to be $38.6875 per share for purposes of this pro
forma information) as of the date the Preferred Units are
issued.......................................................... 29,091

Recording of amortization for the beneficial conversion feature
inherent in the Preferred Units as they are immediately
convertible into Common Units upon consummation of the
Transaction (1)................................................. (29,091)

Expensing of previously unamortized stock compensation recorded in
connection with the Company's executive compensation agreements,
which will fully vest on an accelerated basis as a result of the
consummation of the Transaction (1)............................. (10,063)

Tax obligation payments related to stock compensation (net of $422
previously accrued) (1)......................................... (4,559)

Elimination of unamortized stock compensation previously recorded
in equity....................................................... 10,063

Additional executive compensation and bonuses to be paid only upon
consummation of the Transaction (1)............................. (26,985)

Allocation to minority interest based upon post-Transaction
ownership....................................................... 6,102
---------
$ 339,522
---------
---------
</TABLE>

(l) See following Estimated Pro Forma Results for Permitted Transaction
Alternatives.

- ------------------------

(1) Reflects the adjustments to historical net earnings for non-recurring
charges, which will be incurred in connection with the Transaction and will
be recorded in the Company's statement of operations for the period in which
they are incurred.

40
<PAGE>
CALI REALTY CORPORATION

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 1997

AND THE YEAR ENDED DECEMBER 31, 1996

The unaudited pro forma condensed consolidated statements of operations for
the six months ended June 30, 1997 and for the year ended December 31, 1996 are
presented as if each of the following had occurred on January 1, 1996: (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 the properties known as 103 Carnegie, Rose Tree, the Mount
Airy Road Buildings , Five Sentry Parkway, Harborside, Whiteweld Centre, One
Bridge Plaza and Airport Center 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 Offering"), (v) the net proceeds received by the Company
as a result of the Company common stock offering of 17,537,500 shares on
November 22, 1996 (the "November Offering"), (vi) completion by the Company of
the Pre-Mack Events, (which are more fully discussed in the Company's Current
Report on Form 8-K, dated September 18, 1997), and (vii) completion by the
Company of the Transaction and related 1997 Offering. Items (i) through (v)
above are to be collectively referred to as the "1996 Events."

Such pro forma information is based upon the historical consolidated results
of operations of the Company for the six months ended June 30, 1997 and for the
year ended December 31, 1996, 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-Q for the six months ended June 30,
1997 and in the Company's Form 10-K for the year ended December 31, 1996.

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.

41
<PAGE>
CALI REALTY CORPORATION

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 1997

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
ADJ. FOR
THE TRANS-
ACTION AND
PRO FORMA ADJ. PRE-MACK HISTORICAL 1997
COMPANY FOR PRE-MACK EVENTS THE MACK OFFERING COMPANY
REVENUES HISTORICAL EVENTS PRO FORMA GROUP (G) PRO FORMA(M)
----------- -------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Base rents....................... $ 93,180 $ 10,734(a) $ 103,914 $ 64,521 $ 3,963(e) $ 172,398
Escalations and recoveries from
tenants........................ 14,279 1,198(a) 15,477 7,774 -- 23,251
Parking and other................ 3,598 524(a) 4,122 5,587 -- 9,709
(956) (350)
Interest income.................. 1,640 (b) 684 350 (f) 684
----------- ------- ----------- ----------- ----------- -------------
Total revenues................... 112,697 11,500 124,197 78,232 3,613 206,042
----------- ------- ----------- ----------- ----------- -------------

EXPENSES
Real estate taxes................ 11,929 1,339(a) 13,268 7,833 -- 21,101
Utilities........................ 7,940 939(a) 8,879 6,782 -- 15,661
Operating services............... 13,773 1,634(a) 15,407 9,960 -- 25,367
General and administrative....... 6,927 730(a) 7,657 3,531 -- 11,188
(1,661)
Depreciation and amortization.... 16,844 1,873(a) 18,717 13,717 (h) 30,773
(13,597)
Interest expense................. 17,152 2,058(c) 19,210(c) 29,975 (i) 35,588
----------- ------- ----------- ----------- ----------- -------------
Total expenses................... 74,565 8,573 83,138 71,798 (15,258) 139,678
----------- ------- ----------- ----------- ----------- -------------
Income before minority
interest....................... 38,132 2,927 41,059 6,434 18,871 66,364
Minority interest................ 3,648 491(d) 4,139 -- 12,784(j) 16,923
----------- ------- ----------- ----------- ----------- -------------
Net income....................... $ 34,484 $ 2,436 $ 36,920 $ 6,434 $ 6,087 $ 49,441
----------- ------- ----------- ----------- ----------- -------------
----------- ------- ----------- ----------- ----------- -------------
Weighted average common shares
outstanding (k)................ 36,475 46,674
----------- -------------
Net income per common share
(l)............................ $ 0.95 $ 1.06
----------- -------------
</TABLE>

42
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 1997

(IN THOUSANDS)

(a) Reflects:

Revenues and expenses for the properties acquired in 1997 by the Company (as
reported by the Company on previously-filed Current Reports on Form 8-K and
8-K/A) for the period January 1, 1997 through the earlier of the date of
acquisition/completion or June 30, 1997, as follows:
<TABLE>
<CAPTION>
REAL
ACQUISITION/ BASE ESCALATIONS/ OTHER ESTATE OPERATING
PROPERTY/TRANSACTION (1) COMPLETION DATE RENTS (2) RECOVERIES INCOME TAXES UTILITIES SERVICES
- ---------------------------- ----------------- ----------- ------------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1345 Campus Parkway......... January 28, 1997 $ 58 $ 19 -- $ 7 $ 1 $ 4
RM Transaction.............. January 31, 1997 5,209 195 $ 524 817 379 858
Westlakes................... May 8, 1997 3,126 866 -- 258 362 449
Shelton Place (4)........... July 31, 1997 982 105 -- 80 138 141
200 Corporate............... August 15, 1997 386 12 -- 55 5 73
Three Independence.......... September 3, 1997 973 1 -- 122 54 109
----------- ------ ----- --------- ----- -----------
Total Pro Forma Adj. for
1997 Events............... $ 10,734 $ 1,198 $ 524 $ 1,339 $ 939 $ 1,634
----------- ------ ----- --------- ----- -----------
----------- ------ ----- --------- ----- -----------

GENERAL AND
PROPERTY/TRANSACTION (1) ADMINISTRATIVE DEPRECIATION (3)
- ---------------------------- ----------------- -----------------
<S> <C> <C>
1345 Campus Parkway......... $ 1 $ 12
RM Transaction.............. 410 864
Westlakes................... 246 607
Shelton Place (4)........... 51 165
200 Corporate............... 1 85
Three Independence.......... 21 140
----- ------
Total Pro Forma Adj. for
1997 Events............... $ 730 $ 1,873
----- ------
----- ------
</TABLE>

- ------------------------

(1) The Moorestown Buildings were vacant during 1996 and for the six months
ended June 30, 1997.

(2) Pro forma base rents are presented on a straight-line basis calculated from
January 1, 1996 forward.

(3) 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.

(4) Total revenues of $444 and Revenue in excess of certain expenses of $234 for
the three months ended March 31, 1997 have been included in both the Pro
Forma Condensed Consolidated Statements of Operations for the six months
ended June 30, 1997 and year ended December 31, 1996.

43
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)

FOR THE SIX MONTHS ENDED JUNE 30, 1997

(IN THOUSANDS)

(b) Represents reduction for (i) interest income earned on investments of
proceeds from the November 1996 offering ($835) and (ii) interest income
earned on the RM Mortgage Receivable as a result of the prepayment in
connection with the 200 Corporate acquisition ($121).

(c) The Pre-Mack Events pro forma adjustment to interest expense for the six
months ended June 30, 1997 reflects interest on mortgage debt assumed with
certain acquisitions and additional borrowings from the Company's credit
facilities to fund certain acquisitions. Pre-Mack Events pro forma interest
expense for the six months ended June 30, 1997 is computed as follows:

<TABLE>
<S> <C>
Interest expense on the Initial Mortgage Financing, after the
Partial 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 6.60 percent)...... $ 2,443

Interest expense on loan assumed with Fair Lawn acquisition on
March 3, 1995 (fixed interest rate of 8.25 percent on average
outstanding principal balance of approximately $18,605)............ 767

Interest expense on mortgages in connection with the Harborside
acquisition in 1996 (fixed interest rate of 7.32 percent on
$107,912 and initial rate of 6.99 percent on $42,088).............. 5,421

Interest expense on outstanding borrowings on the Company's credit
lines (a variable rate of 30-day LIBOR plus 125 basis points during
the period on $114,655; weighted average interest rate used is 6.85
percent)........................................................... 3,927

Interest expense on the Teachers Mortgage assumed with the RM
Transaction on January 31, 1997 (fixed interest rate of 7.18
percent on $185,283)............................................... 6,652
---------

Total Pre-Mack Events pro forma interest expense for the six months
ended June 30, 1997:............................................... $ 19,210
---------
---------
</TABLE>

(d) Represents Pre-Mack Events pro forma income allocated to the pro forma
weighted average minority interest (Units) in Cali Realty L.P. (the
Operating Partnership) for the period of 10.08 percent.

(e) Represents adjustment necessary to reflect rental income for the Mack
Properties on a straight lined basis assuming that the Transaction was
consummated as of January 1, 1996.

(f) Represents reduction of interest income, which was recorded in the Mack
Group Historical Financial Statements.

(g) In connection with the consummation of the Transaction, the Company
estimates that it will also recognize the following non-recurring charges,
before minority interest, in the Company's Statements

44
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)

FOR THE SIX MONTHS ENDED JUNE 30, 1997

(IN THOUSANDS)

of Operations for the period in which the Transaction is completed, which
have been excluded from the Company's pro forma operating results:

Related tax obligation payments (net of $422 previously accrued)... 4,559

Additional executive compensation and bonuses to be paid only upon
consummation of the Transaction.................................... 26,985

Amortization of the beneficial conversion feature inherent in the
Preferred Units (as an allocation to minority interest) as they are
immediately convertible into Common Units upon consummation of the
Transaction........................................................ 29,091
---------
$ 70,698
---------
---------
</TABLE>

(h) Represents adjustment to reflect depreciation expense related to the Mack
Properties to be acquired by the Company based on estimated relative fair
value of buildings and improvements ($964,458) as of the date of
acquisition, as follows:

<TABLE>
<CAPTION>
<S> <C>
Pro forma depreciation expense..................................................... $ 12,056

Mack Group Historical.............................................................. 13,717
---------
$ 1,661
---------
---------
</TABLE>

(i) Reflects reduction of interest expense relating to the Transaction. Proforma
interest expense is computed as follows:

<TABLE>
<CAPTION>
<S> <C>
Interest on expected assumed debt ($302,147) with a weighted average interest rate
of 7.23 percent.................................................................... $ 10,923

Interest on drawings on the Company's credit facilities of $162,543 at a weighted
average interest rate of 6.71 percent.............................................. 5,455
---------
$ 16,378

Mack Group Historical.............................................................. $ 29,975
---------
$ 13,597
---------
---------
</TABLE>

45
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)

FOR THE SIX MONTHS ENDED JUNE 30, 1997

(IN THOUSANDS)

(j) Represents minority interest computed as follows:

<TABLE>
<CAPTION>
<S> <C> <C>
Income before extraordinary item and minority interest.................. $ 66,364

Dividend yield of 6.75 percent on the Preferred Units with a par value
of $249,656............................................................. $ 8,426

Income allocable to common stockholders in the Company and unitholders
in the Operating Partnership............................................ $ 57,938
---------

Allocation to minority interest based upon weighted average percentage
of Common Units outstanding of 14.67 percent............................ 8,497
---------

Total minority interest................................................. 16,923
---------

Pre-Mack Events pro forma............................................... 4,139
---------

$ 12,784
---------
---------
</TABLE>

(k) The following is a reconciliation of the historical weighted average shares
outstanding to the pro forma primary weighted average shares outstanding
(shares in thousands):

<TABLE>
<CAPTION>
<S> <C>
Historical weighted average shares outstanding....................................... 36,475

Shares to be issued in connection with the 1997 Offering............................. 10,000

Vesting of 199 shares on an accelerated basis as a result of the Transaction......... 199
---------

Pro forma weighted average shares outstanding........................................ 46,674
---------
---------
</TABLE>

(l) Fully-diluted pro forma net income per share is not presented since common
stock equivalents and the Preferred Units are not dilutive.

(m) See following Estimated Pro Forma Results for Permitted Transaction
Alternatives.

46
<PAGE>
CALI REALTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA PRO FORMA THE MACK ADJ. FOR THE
ADJ. FOR ADJ. FOR PRE-MACK GROUP TRANSACTION AND COMPANY
COMPANY 1996 PRE-MACK EVENTS HISTORICAL 1997 OFFERING PRO FORMA
HISTORICAL EVENTS (A) EVENTS (B) PRO FORMA (C) (H) (N)
----------- ----------- ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Base rents..................... $ 76,922 $ 49,087 $ 76,655 $ 202,664 $ 128,066 $ 7,559(f) $ 338,289
Escalations and recoveries from
tenants...................... 14,429 8,870 8,230 31,529 16,984 -- 48,513
Parking and other.............. 2,204 190 4,428 6,822 3,233 -- 10,055
Interest income................ 1,917 -- (738)(c) 1,179 469 (469)(g) 1,179
----------- ----------- ----------- ----------- ------------ --------------- -----------
Total revenues................. 95,472 58,147 88,575 242,194 148,752 7,090 398,036
----------- ----------- ----------- ----------- ------------ --------------- -----------
EXPENSES
Real estate taxes.............. 9,395 5,144 11,039 25,578 15,367 -- 40,945
Utilities...................... 8,138 3,313 6,619 18,070 14,143 -- 32,213
Operating Services............. 12,129 6,452 12,277 30,858 19,507 -- 50,365
General and administrative..... 5,800 3,020 4,965 13,785 7,309 -- 21,094
Depreciation and
amortization................. 15,812 8,133 13,021 36,966 28,069 (3,958)(i) 61,077
Interest expense............... 12,677 -- 25,608(d) 38,285(d) 58,621 (26,171)(j) 70,735
----------- ----------- ----------- ----------- ------------ --------------- -----------
Total expenses........... 63,951 26,062 73,529 163,542 143,016 (30,129) 276,429
----------- ----------- ----------- ----------- ------------ --------------- -----------
Income before gain on sale of
rental property, minority
interest and extraordinary
item......................... 31,521 32,085 15,046 78,652 5,736 37,219 121,607
Gain on sale of rental
property..................... 5,658 (5,658) -- -- -- -- --
----------- ----------- ----------- ----------- ------------ --------------- -----------
Income before minority interest
and extraordinary item....... 37,179 26,427 15,046 78,652 5,736 37,219 121,607
Minority interest.............. 4,760 -- 3,263(e) 8,023(e) -- 24,304(k) 32,327
----------- ----------- ----------- ----------- ------------ --------------- -----------
Income before extraordinary
item......................... $ 32,419 $ 26,427 $ 11,783 $ 70,629 $ 5,736 $ 12,915 $ 89,280
----------- ----------- ----------- ----------- ------------ --------------- -----------
----------- ----------- ----------- ----------- ------------ --------------- -----------
Weighted average common shares
outstanding (l).............. 18,461 46,400
----------- -----------
Income before extraordinary
item per common share (m).... $ 1.76 $ 1.92
----------- -----------
</TABLE>

47
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)

(a) Reflects:

Revenues and expenses of the properties acquired in 1996 for the period
January 1, 1996 through the date of acquisition, (as reported by the Company on
previously-filed Current Reports on Form 8-K) as follows:
<TABLE>
<CAPTION>
REAL
ACQUIS./COMPLETION BASE ESCALATIONS/ OTHER ESTATE
PROPERTY/TRANSACTION DATE RENTS (2) RECOVERIES INCOME TAXES
- -------------------------------------------------- ----------------- ----------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Carnegie.......................................... March 20, 1996 $ 386 $ 31 -- $ 54
Rose Tree......................................... May 2, 1996 1,312 115 -- 165
Mt. Airy Bldgs. .................................. July 23, 1996 665 101 -- 101
Harborside........................................ November 4, 1996 30,884 7,037 $ 166 3,096
Five Sentry....................................... November 7, 1996 1,663 -- -- 148
December 10,
Whiteweld......................................... 1996 3,890 326 -- 430
December 16,
One Bridge Plaza.................................. 1996 3,597 293 -- 420
December 17,
Airport Center.................................... 1996 6,953 1,004 24 780
----------- ------ ----- ---------
Total Pro Forma Adj. for 1996 acquisitions........ $ 49,350 $ 8,907 $ 190 $ 5,194
----------- ------ ----- ---------

Revenues and expenses of the property disposed of in 1996 for the period January 1, 1996 through the date of disposition,
as follows:

Essex Road........................................ March 20, 1996 (263) (37) -- (50)
----------- ------ ----- ---------

Reduction of expense as a result of the Partial Prepayment in 1996, for the period January 1, 1996 through the Partial
Payment date, as follows:

Partial Prepayment................................ March 12, 1996 -- -- -- --
----------- ------ ----- ---------
Total Pro Forma Adj. for 1996 Events.............. $ 49,087 $ 8,870 $ 190 $ 5,144
----------- ------ ----- ---------
----------- ------ ----- ---------

OPERATING GENERAL AND
PROPERTY/TRANSACTION UTILITIES SERVICES ADMINISTRATIVE DEPRECIATION (3)
- -------------------------------------------------- ----------- ----------- --------------- -----------------
<S> <C> <C> <C> <C>
Carnegie.......................................... $ 56 $ 58 $ 11 $ 49
Rose Tree......................................... 180 179 43 215
Mt. Airy Bldgs. .................................. -- 4 51 107
Harborside........................................ 906 3,633 2,048 5,332
Five Sentry....................................... 32 325 88 246

Whiteweld......................................... 748 543 158 733

One Bridge Plaza.................................. 412 659 237 585

Airport Center.................................... 1,035 1,129 395 953
----------- ----------- ------ ------
Total Pro Forma Adj. for 1996 acquisitions........ $ 3,369 $ 6,530 $ 3,031 $ 8,220
----------- ----------- ------ ------
Revenues and expenses of the property disposed of in 1996 for the period January 1, 1996 through the date of disposition,
as follows:
Essex Road........................................ (56) (78) (11) (81)
----------- ----------- ------ ------
Reduction of expense as a result of the Partial Prepayment 1996, for the period January 1, 1996 through the Partial
Payment date, as follows:
Partial Prepayment................................ -- -- -- (6)
----------- ----------- ------ ------
Total Pro Forma Adj. for 1996 Events.............. $ 3,313 $ 6,452 $ 3,020 $ 8,133
----------- ----------- ------ ------
----------- ----------- ------ ------
</TABLE>

48
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)

(b) Reflects:

Revenues and expenses for the properties acquired in 1997 by the Company (as
reported by the Company on previously-filed Current Reports on Form 8-K and
8-K/A), for the year ended December 31, 1996, as follows:
<TABLE>
<CAPTION>
REAL
AQUIS./COMPLETION BASE ESCALATIONS/ OTHER ESTATE
PROPERTY/TRANSACTION (1) DATE RENTS (2) RECOVERIES INCOME TAXES
- ----------------------------------- -------------------------------- ----------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1345 Campus Parkway................ January 28, 1997 $ 698 $ 165 -- $ 90
RM Transaction..................... January 31, 1997 63,083 5,483 $ 4,393 9,870
Westlakes.......................... May 8, 1997 8,659 2,347 -- 610
Shelton Place (4).................. July 31, 1997 2,180 193 -- 161
200 Corporate...................... August 15, 1997 850 38 35 85
Three Independence................. September 3, 1997 1,185 4 -- 223
----------- ------ ----------- ---------
Total Pro Forma Adj. for Pre-Mack
Events........................... $ 76,655 $ 8,230 $ 4,428 $ 11,039
----------- ------ ----------- ---------
----------- ------ ----------- ---------

OPERATING GENERAL AND DEPRECIATION
PROPERTY/TRANSACTION (1) UTILITIES SERVICES ADMINISTRATIVE (3)
- ----------------------------------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
1345 Campus Parkway................ $ 25 $ 103 $ 20 $ 143
RM Transaction..................... 4,944 9,876 3,997 10,364
Westlakes.......................... 1,216 1,627 772 1,734
Shelton Place (4).................. 320 292 93 329
200 Corporate...................... -- 146 36 170
Three Independence................. 114 233 47 281
----------- ----------- ------ -------
Total Pro Forma Adj. for Pre-Mack
Events........................... $ 6,619 $ 12,277 $ 4,965 $ 13,021
----------- ----------- ------ -------
----------- ----------- ------ -------
</TABLE>

- ------------------------

(1) The Moorestown Buildings were vacant during 1996.

(2) Pro Forma base rents are presented on a straight-line basis calculated from
January 1, 1996 forward.

(3) 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.

(4) Revenues and certain expenses for Shelton Place reasonably reflect the
operations of the property for the period April 1, 1996 through March 31,
1997. Total revenues of $444 and Revenue in excess of certain expenses of
$234 for the three months ended March 31, 1997 have been included in both
the Pro Forma Condensed Consolidated Statements of Operations for the six
months ended June 30, 1997 and year ended December 31, 1996.

49
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1996

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(c) Represents reduction for interest income earned on investments of proceeds
from the November 1996 Offering ($1,463), net of additional interest income
earned on the RM Mortgage Receivable ($725).

(d) The pro forma adjustment to interest expense for the year ended December 31,
1996 (for the Pre-Mack Events) reflects interest on mortgage debt assumed
with certain acquisitions and additional borrowings from the Company's
credit facilities to fund acquisitions. Pro forma interest expense for the
year ended December 31, 1996 is computed as follows:

<TABLE>
<S> <C>
Interest expense on the Initial Mortgage Financing, after the
Partial 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 6.46
percent)......................................................... $ 4,867
Interest expense on loan assumed with Fair Lawn acquisition on
March 3, 1995 (fixed interest rate of 8.25 percent on average
outstanding principal balance of approximately $18,605).......... 1,535
Interest expense on mortgages in connection with the Harborside
acquisition on November 4, 1996 (fixed interest rate of 7.32
percent on $107,912 and initial rate of 6.99 percent on
$42,088)......................................................... 10,841
Interest expense on outstanding borrowings on the Company's credit
lines (a variable rate of 30-day LIBOR plus 125 basis points
during the period on $114,655; weighted average interest rate
used is 6.75 percent)............................................ 7,739
Interest expense on Teachers Mortgage assumed with the RM
Transaction on January 31, 1997 (fixed interest rate of 7.18
percent on $185,283)............................................. 13,303
---------
Pre-Mack Events pro forma interest expense for the year ended
December 31, 1996................................................ $ 38,285
---------
---------
</TABLE>

(e) Represents pro forma income for 1996 Events and Pre-Mack Events allocated to
the pro forma weighted average minority interest (Units) in Cali Realty L.P.
(the Operating Partnership) of 10.20 percent.

(f) Represents adjustment necessary to reflect rental income on a straight line
basis assuming that the Transaction was consummated as of January 1, 1996.

(g) Represents reduction of interest income, which was recorded in the Mack
Group Historical Financial Statements.

(h) In connection with the consummation of the Transaction, the Company
estimates that it will also recognize the following non-recurring charges
before minority interest in the Company's Statement of

50
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1996

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Operations for the period in which the Transaction is completed, which have
been excluded from the Company's pro forma operating results:

<TABLE>
<S> <C>
Expensing of previously unamortized stock compensation recorded in
connection with the Company's executive compensation plans which
will vest on an accelerated basis as a result of the consummation
of the Transaction............................................... $ 10,063
Related tax obligation payments (net of $422 previously accrued)... 4,559
Additional executive compensation and bonuses to be paid only upon
consummation of the Transaction.................................. 26,985
Amortization of the beneficial conversion feature inherent in the
Preferred Units (as an allocation to minority interest) as they
are immediately convertible into Common Units upon consummation
of the Transaction............................................... 29,091
---------
$ 70,698
---------
---------
</TABLE>

(i) Represents adjustment to reflect depreciation expense related to the Mack
Properties to be acquired by the Company based on estimated relative fair
value of buildings and improvements ($964,458) as of the date of acquisition
as follows:

<TABLE>
<CAPTION>
<S> <C>
Pro forma depreciation expense..................................................... $ 24,111
Mack Group Historical.............................................................. 28,069
---------
$ 3,958
---------
---------
</TABLE>

(j) Reflects reduction of interest expense relating to the Transaction. Proforma
interest expense is computed as follows:

<TABLE>
<CAPTION>
<S> <C>
Interest on expected assumed debt ($302,147) with an estimated weighted average
interest rate of 7.23 percent.................................................... $ 21,845
Interest on drawings on the Company's credit facilities of $162,543 at a weighted
average interest rate of 6.52 percent............................................ 10,605
---------
32,450
Mack Group Historical.............................................................. 58,621
---------
$ 26,171
---------
---------
</TABLE>

51
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1996

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(k) Represents minority interest computed as follows:

<TABLE>
<CAPTION>
<S> <C> <C>
Income before extraordinary item and minority interest................. $ 121,607
Dividend yield of 6.75 percent on the preferred units with a par value
of $249,656............................................................ $ 16,852
Income allocable to common stockholders in the Company and unitholders
in the Operating Partnership........................................... $ 104,755
----------
Allocation to minority interest based upon weighted average percentage
of Common Units outstanding of 14.77 percent, respectively............. 15,475
---------
Minority interest...................................................... 32,327
Pre-Mack Events pro forma.............................................. 8,023
---------
$ 24,304
---------
---------
</TABLE>

(l) The following is a reconciliation of the historical primary weighted average
shares outstanding to the pro forma weighted average shares outstanding
(shares in thousands):

<TABLE>
<CAPTION>
<S> <C>
Historical weighted average shares outstanding..................................... 18,461
Shares issued in connection with the the November 1996 offering.................... 17,538
Issued in connection with the August 1996 offering................................. 3,450
Adjustment for period of year during which shares issued with the 1996 offerings
were outstanding................................................................... (3,248)
Shares to be issued in connection with the 1997 Offering........................... 10,000
Vesting of 199 shares on an accelerated basis as a result of the Transaction....... 199
---------
Pro forma weighted average shares outstanding...................................... 46,400
---------
---------
</TABLE>

(m) Fully-diluted pro forma income before extraordinary item per share is not
presented since common stock equivalents and the Preferred Units are not
dilutive.

(n) See following Estimated Pro Forma Results for Permited Transaction
Alternatives.

52
<PAGE>
CALI REALTY CORPORATION

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1996

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

ESTIMATED PRO FORMA RESULTS FOR PERMITTED TRANSACTION ALTERNATIVES

Consummation of the transaction is conditioned upon, among other things, the
receipt by Mack of certain partner, tenant and third party consents. To the
extent Mack cannot obtain such consents, Mack may eliminate certain properties
from the Transaction. Such eliminated properties are not to exceed 20 percent of
the aggregate value of the Mack properties.

If the maximum amount of such properties (20 percent) were excluded from the
Transaction, estimated pro forma total assets, total liabilities, minority
interest and stockholders' equity as of June 30, 1997 may approximate
$2,387,937, $930,793, $416,122 and $1,041,022, respectively. Under the
Agreement, a reduction in the purchase price due to exclusion of properties is
allocated to (1) reduce debt assumed by the greater of 26 percent of the
allocated purchase price for such property or the outstanding debt on such
property to be assumed (assumed to be 26 percent for this pro forma), (2) reduce
cash paid up to $79,904, subject to certain elections by Mack to lower the cash
reduction and take fewer Preferred and Common Units ($79,904 cash reduction
assumed for this pro forma) and (3) reduce cash paid, Preferred and Common Units
by 51.5 percent, 32.3 percent and 16.2 percent of the remaining price reduction.
In this situation, estimated total revenues, income before minority interest,
net income and net income per common share may be $189,673, $64,465, $49,097 and
$1.05, respectively for the six months ended June 30, 1997 and $366,867,
$119,255, $89,758 and $1.93, respectively for the year ended December 31, 1996.

Also, as described in the Agreement, Mack may elect to further reduce the
amount of cash consideration, in exchange for additional debt assumption, up to
$60,429. Such a situation would result in lower borrowings under the Company's
credit facility.

53
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Forms S-3 (Nos. 333-09875,
333-19101, 333-09081, 33-96542, 333-25475, and 33-96538) and Forms S-8 (Nos.
33-91822, 333-18275, 333-19831, 333-32661) of Cali Realty Corporation of our
report dated September 15, 1997, relating to the combined financial statements
of The Mack Group, appearing in this Current Report on Form 8-K.

/s/ PRICE WATERHOUSE LLP
- -------------------------------------------
Price Waterhouse LLP
New York, New York
September 19, 1997

54
<PAGE>
CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 33-96538) and related Prospectus of Cali Realty Corporation, as
amended, on October 6, 1995, the Registration Statement (Form S-3 No. 33-96542)
and related Prospectus of Cali Realty Corporation, as amended on October 10,
1995, the Registration Statement (Form S-3 No. 333-09081) and related Prospectus
of Cali Realty Corporation, as amended on August 9, 1996, the Registration
Statement (Form S-3 No. 333-09875) and related Prospectus of Cali Realty
Corporation dated August 9, 1996, the Registration Statement (Form S-8 No.
33-91822) pertaining to the 1994 Employee and Director Stock Option Plans, as
amended on September 29, 1996, the Registration Statement (Form S-3 No.
333-19101) of Cali Realty Corporation dated December 31, 1996, the Registration
Statement (Form S-8 No. 333-19831) dated January 15, 1997, pertaining to the
Cali Realty Corporation Restricted Stock Award Plan for Senior Executive and
Officers in the Cali Realty Corporation Stock Purchase Program for Senior
Executives and Officers, the Registration Statement (Form S-8 No. 333-18275)
dated December 19, 1996, pertaining to the Employee Stock Option Plan and the
Director Stock Option Plan, the Registration Statement (Form S-8 No. 333-32661)
dated August 1, 1997, pertaining to the Employee Stock Option Plan and the
Director Stock Option Plan, and the Registration Statement (Form S-3 No.
333-25475) and related Prospectus of Cali Realty Corporation dated April 18,
1997 of our report dated March 19, 1997, except for Note 9, for which the date
is August 4, 1997, with respect to the Combined Financial Statements of the
Patriot American Office Group, as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996, included in the Current
Report on Form 8-K of Cali Realty Corporation dated September 19, 1997, filed
with the Securities and Exchange Commission. We also consent to the reference to
our firm under the caption "Experts" in the Prospectus Supplement dated
September 19, 1997 to the Registration Statement (Form S-3 No. 333-19101) and
related Prospectus of Cali Realty Corporation dated December 31, 1996 for the
registration of $1,000,000,000 of Preferred Stock, Common Stock and Warrants.

/s/ ERNST & YOUNG LLP
---------------------

Ernst & Young LLP

Dallas, Texas
September 18, 1997

<PAGE>

Exhibit 10.98

CONTRIBUTION AND EXCHANGE AGREEMENT

AMONG

THE MK CONTRIBUTORS,

THE MK ENTITIES,

THE PATRIOT CONTRIBUTORS,

THE PATRIOT ENTITIES,

PATRIOT AMERICAN MANAGMENT AND LEASING CORP.,

CALI REALTY, L.P.

AND

CALI REALTY CORPORATION

Date: September 18, 1997

<PAGE>

TABLE OF CONTENTS
-----------------

INDEX OF DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INDEX OF SCHEDULES AND EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . .

1. SUBJECT OF CONVEYANCE. . . . . . . . . . . . . . . . . . . . . . . . . .

2. PAYMENT TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. INSPECTION PERIOD; RIGHTS OF TERMINATION
AND REJECTION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . .

4. TITLE; MATTERS TO WHICH THIS EXCHANGE IS SUBJECT . . . . . . . . . . . .

5. REPRESENTATIONS AND WARRANTIES OF MACK . . . . . . . . . . . . . . . . .

6. REPRESENTATIONS AND WARRANTIES OF CALI
AND CRLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. COVENANTS OF MACK. . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. OPTION PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . .

9. ESTOPPEL CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . .

10. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11. ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12. CONDITIONS PRECEDENT TO CLOSING. . . . . . . . . . . . . . . . . . . . .

13. LEASING COMMISSIONS AND TENANT IMPROVEMENT OBLIGATIONS . . . . . . . . .

14. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15. BROKER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16. CASUALTY LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE>

17. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18. TRANSFER RESTRICTIONS; RIGHT OF FIRST OFFER. . . . . . . . . . . . . . .

19. LIMITED GUARANTY OF MACK . . . . . . . . . . . . . . . . . . . . . . . .

20. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21. PUBLICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23. EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24. NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25. INTENTIONALLY DELETED. . . . . . . . . . . . . . . . . . . . . . . . . .

26. CORPORATE NAME CHANGE; MANAGEMENT CHANGES;
OTHER ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .

27. RESTRICTIONS ON SALE OF THE PROPERTY . . . . . . . . . . . . . . . . . .

28. SPECIAL ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . .

29. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE>

INDEX OF DEFINED TERMS
----------------------

DEFINED TERM SECTION
------------ -------

1. Acceptance Notice. . . . . . . . . . . . . . . .Section 18.6(b)
2. Act. . . . . . . . . . . . . . . . . . . . . . .Section 5.2
3. Additional Mack Inspection Period. . . . . . . .Section 3.1(a)(c)
4. Additional Rents . . . . . . . . . . . . . . . .Section 11.2
5. Additional Termination Rights. . . . . . . . . .Section 3.1(a)(c)
6. Additional Title Exceptions. . . . . . . . . . .Section 4.1(c)
7. Agreement. . . . . . . . . . . . . . . . . . . .Preface
8. Allocated Property Values. . . . . . . . . . . .Section 2.1
9. Assignment of Contributed Interest . . . . . . .Section 10.2(b)(i)
10. Board. . . . . . . . . . . . . . . . . . . . . .Section 10.3(c)
11. Books and Records. . . . . . . . . . . . . . . .Section 1(g)
12. Built-in-Gain. . . . . . . . . . . . . . . . . .Section 27.1
13. Cali . . . . . . . . . . . . . . . . . . . . . .Preface
14. Cali Board Members . . . . . . . . . . . . . . .Section 26.2(i)
15. Cali Debt Amount . . . . . . . . . . . . . . . .Section 19.1
16. Cali Financials. . . . . . . . . . . . . . . . .Section 6.1(f)
17. Cali 401(k) Plans. . . . . . . . . . . . . . . .Section 6.1(r)(ii)
18. Cali Group . . . . . . . . . . . . . . . . . . .Section 19.1
19. Cali Inspection Period . . . . . . . . . . . . .Section 3.1(a)
20. Cali Property. . . . . . . . . . . . . . . . . .Section 3.1(d)
21. Cali Rent Roll. . . . . . . . . . . . . . . . .Section 6.1(t)
22. Cali Securities. . . . . . . . . . . . . . . . .Section 18.1
23. Cash Payment . . . . . . . . . . . . . . . . . .Section 2.2
24. Casualty . . . . . . . . . . . . . . . . . . . .Section 16.2
25. Casualty Notice. . . . . . . . . . . . . . . . .Section 16.2
26. CERCLA . . . . . . . . . . . . . . . . . . . . .Section 5.1(y)(x)(A)
27. Closing. . . . . . . . . . . . . . . . . . . . .Section 10.1
28. Closing Date . . . . . . . . . . . . . . . . . .Section 10.1
29. Code . . . . . . . . . . . . . . . . . . . . . .Section 5.1(w)(ii)
30. Common Stock . . . . . . . . . . . . . . . . . .Section 2.3(a)
31. Common Units . . . . . . . . . . . . . . . . . .Recitals
32. Consulting Agreement . . . . . . . . . . . . . .Section 12.2(n)
33. Contaminants . . . . . . . . . . . . . . . . .Section 5.1(y)(x)(A)
34. Contributed Entities . . . . . . . . . . . . . .Recitals

iii

<PAGE>

35. Contributed Interests. . . . . . . . . . . . . .Section 1.2
36. CRLP . . . . . . . . . . . . . . . . . . . . . .Preface
37. Damaged Property . . . . . . . . . . . . . . . .Section 16.2
38. Deeds. . . . . . . . . . . . . . . . . . . . . .Section 10.2(a)(i)
39. Discharge. . . . . . . . . . . . . . . . . . . .Section 5.1(y)(x)(B)
40. Easement Rights. . . . . . . . . . . . . . . . .Section 1.1(b)
41. Eliminated Property. . . . . . . . . . . . . . .Section 3.4(c)
42. Encumbered Property. . . . . . . . . . . . . . .Section 3.4(c)
43. Environmental Documents. . . . . . . . . . . . .Section 5.1(y)(x)(C)
44. Environmental Laws . . . . . . . . . . . . . . .Section 5.1(y)(x)(D)
45. EP Acceptance Notice . . . . . . . . . . . . . .Section 3.5(b)
46. EP Offer Notice. . . . . . . . . . . . . . . . .Section 3.5(a)
47. EP Offer Period. . . . . . . . . . . . . . . . .Section 3.5(b)
48. EP Offer Price . . . . . . . . . . . . . . . . .Section 3.5(a)
49. EP Offer Terms . . . . . . . . . . . . . . . . .Section 3.5(a)
50. ERISA. . . . . . . . . . . . . . . . . . . . . .Section 5.1(w)(ii)
51. Estate Units . . . . . . . . . . . . . . . . . .Section 5.2(d)
52. Estoppel Certificates. . . . . . . . . . . . . .Section 9.1
53. Exchange Act . . . . . . . . . . . . . . . . . .Section 5.2(b)
54. Exchange Consideration . . . . . . . . . . . . .Section 2.1
55. Exchange Property. . . . . . . . . . . . . . . .Section 1.3
56. Excluded Properties. . . . . . . . . . . . . . .Section 5.1(r)
57. Executive Committee. . . . . . . . . . . . . . .Section 10.3(c)
58. Expansion Space. . . . . . . . . . . . . . . . .Section 25
59. First American . . . . . . . . . . . . . . . . .Section 4.2(a)
60. GAAP . . . . . . . . . . . . . . . . . . . . . .Section 5.1(v)
61. Governmental Authorities . . . . . . . . . . . .Section 5.1(k)
62. Ground Leases. . . . . . . . . . . . . . . . . .Section 1.1(a)
63. Holding Period . . . . . . . . . . . . . . . . .Section 18.3
64. Honeywell Building . . . . . . . . . . . . . . .Section 25
65. Honeywell Consideration. . . . . . . . . . . . .Section 25
66. Improvements . . . . . . . . . . . . . . . . . .Section 1.1(a)
67. Inspection Period. . . . . . . . . . . . . . . .Section 3.1(b)
68. Insurance Policies . . . . . . . . . . . . . . .Section 16.1
69. Intangible Property. . . . . . . . . . . . . . .Section 1.1(f)
70. Land . . . . . . . . . . . . . . . . . . . . . .Section 1.1(a)
71. Leases . . . . . . . . . . . . . . . . . . . . .Section 1.1(d)
72. MACK . . . . . . . . . . . . . . . . . . . . . .Preface
73. Mack Board Members . . . . . . . . . . . . . . .Section 26.2(i)

<PAGE>

74. Mack-Cali. . . . . . . . . . . . . . . . . . . .Section 26.1 & Recital
75. Mack Common Units. . . . . . . . . . . . . . . .Section 2.3(a)
76. Mack Contributors. . . . . . . . . . . . . . . .Preface
77. Mack Debt Amount . . . . . . . . . . . . . . . .Section 19.1
78. Mack Entities. . . . . . . . . . . . . . . . . .Preface
79. Mack Group . . . . . . . . . . . . . . . . . . .Section 5.1(dd)
80. Mack Inspection Period . . . . . . . . . . . . .Section 3.1(b)
81. Mack 401(K) Plan . . . . . . . . . . . . . . . .Section 5.1(w)(ii)
82. Mack Securities. . . . . . . . . . . . . . . . .Section 5.2
83. Mack Security Holders. . . . . . . . . . . . . .Section 5.2(a)
84. Mack's Significant Interest. . . . . . . . . . .Section 26.2(v)
85. Mack Unit Group. . . . . . . . . . . . . . . . .Section 19.1
86. Mack Unit Holders. . . . . . . . . . . . . . . .Section 2.2
87. Material Taking. . . . . . . . . . . . . . . . .Section 17
88. MK Contributors. . . . . . . . . . . . . . . . .Preface
89. MK Entities. . . . . . . . . . . . . . . . . . .Preface
90. Mortgage Debt Amount . . . . . . . . . . . . . .Section 2.2
91. Mortgages. . . . . . . . . . . . . . . . . . . .Section 2.2
92. New Cali Employees . . . . . . . . . . . . . . .Section 5.1(w)(i)
93. Notice of Offer. . . . . . . . . . . . . . . . .Section 18.6(a)
94. Offer Period . . . . . . . . . . . . . . . . . .Section 18.6(b)
95. Offer Price. . . . . . . . . . . . . . . . . . .Section 18.6(a)
96. Offer Securities . . . . . . . . . . . . . . . .Section 18.6(a)
97. Offer Terms. . . . . . . . . . . . . . . . . . .Section 18.6(a)
98. Offering Notice. . . . . . . . . . . . . . . . .Section 27.4
99. Omnibus Assignment . . . . . . . . . . . . . . .Section 10.2(a)(vi)
100. OP Agreement . . . . . . . . . . . . . . . . . .Section 5.2(a)
101. Option Agreement . . . . . . . . . . . . . . . .Section 8.1
102. Option Properties. . . . . . . . . . . . . . . .Section 8.1
103. Original Allocation Formula. . . . . . . . . . .Section 2.6(b)
104. PAM. . . . . . . . . . . . . . . . . . . . . . .Recital
105. PAM 401(k) Plan. . . . . . . . . . . . . . . . .Section 5.1(w)(ii)
106. Partner Property . . . . . . . . . . . . . . . .Section 3.4(b)
107. Patriot Contributors . . . . . . . . . . . . . .Preface
108. Patriot Entities . . . . . . . . . . . . . . . .Preface
109. PCBs . . . . . . . . . . . . . . . . . . . . . .Section 5.1(y)(vi)
110. Permits. . . . . . . . . . . . . . . . . . . . .Section 5.1(y)(vii)
111. Permits and Licenses . . . . . . . . . . . . . .Section 1.1(f)
112. Permitted Assignee . . . . . . . . . . . . . . .Section 14

<PAGE>

113. Permitted Encumbrances . . . . . . . . . . . . .Section 4.1
114. Permitted Transferees. . . . . . . . . . . . . .Section 18.5
115. Person . . . . . . . . . . . . . . . . . . . . .Section 18.2
116. Personal Property. . . . . . . . . . . . . . . .Section 1.1(c)
117. Phase I Reports. . . . . . . . . . . . . . . . .Section 3.3
118. Preferred Stock. . . . . . . . . . . . . . . . .Section 6.1(l)(i)
119. Preferred Unit Holders . . . . . . . . . . . . .Section 2.2
120. Preferred Units. . . . . . . . . . . . . . . . .Recitals
121. Pro Forma Rent Roll. . . . . . . . . . . . . . .Section 5.1(f)
122. Property . . . . . . . . . . . . . . . . . . . .Section 1.1(h)
123. Property Financials. . . . . . . . . . . . . . .Section 5.1(v)
124. Real Property. . . . . . . . . . . . . . . . . .Section 1(b)
125. REIT . . . . . . . . . . . . . . . . . . . . . .Section 6.1(m)(i)
126. Rent Roll. . . . . . . . . . . . . . . . . . . .Section 5.1(e)
127. Representation Holding Period. . . . . . . . . .Section 5.4(b)
128. Resolved Property. . . . . . . . . . . . . . . .Section 3.4(d)
129. Restricted Period. . . . . . . . . . . . . . . .Section 27.1
130. RM Debt Amount . . . . . . . . . . . . . . . . .Section 19.1
131. RM Group . . . . . . . . . . . . . . . . . . . .Section 19.1
132. SEC Documents. . . . . . . . . . . . . . . . . .Section 5.2(b)
133. Security Deposit . . . . . . . . . . . . . . . .Section 1.1(d)
134. Selling Holder . . . . . . . . . . . . . . . . .Section 18.6(a)
135. Service Contracts. . . . . . . . . . . . . . . .Section 1.1(f)
136. Stock Option Plan. . . . . . . . . . . . . . . .Section 10.3(c)
137. Subsidiaries . . . . . . . . . . . . . . . . . .Section 6.1(f)
138. Subsidiary Partnership . . . . . . . . . . . . .Recitals
139. Tainted Property . . . . . . . . . . . . . . . .Section 3.4(a)
140. Taxes. . . . . . . . . . . . . . . . . . . . . .Section 20.4
141. Tenants. . . . . . . . . . . . . . . . . . . . .Section 4.1(b)
142. Threshold Amount . . . . . . . . . . . . . . . .Section 7.1(m)
143. Title Commitments. . . . . . . . . . . . . . . .Section 4.2(a)
144. Title Company. . . . . . . . . . . . . . . . . .Section 4.2(a)
145. Title Documents. . . . . . . . . . . . . . . . .Section 4.2(a)
146. Title Policy . . . . . . . . . . . . . . . . . .Section 4.3
147. Tradenames . . . . . . . . . . . . . . . . . . .Section 1.1(e)
148. Transfer . . . . . . . . . . . . . . . . . . . .Section 5.2(a)
149. Transfer Securities. . . . . . . . . . . . . . .Section 18.6
150. Underlying Shares. . . . . . . . . . . . . . . .Section 18.1
151. Underlying Units . . . . . . . . . . . . . . . .Section 18.4

<PAGE>

152. Unit Holders . . . . . . . . . . . . . . . . . .Section 2.2
153. Units. . . . . . . . . . . . . . . . . . . . . .Recitals
154. Warrant Holders. . . . . . . . . . . . . . . . .Section 2.2
155. Warrants . . . . . . . . . . . . . . . . . . . .Section 2.5

vii

<PAGE>

SCHEDULES

Schedule 1.1(a)(i) Land, Property Addresses, Block and Lot Numbers
Schedule 1.1(a)(ii) Ground Leases
Schedule 1.1(c) Excluded Personal Property
Schedule 2.1 Allocated Property Values
Schedule 3.4(d) Put/Call Procedures
Schedule 4.1(c) Existing Title Policies
Schedule 4.1(e) Surveys of Real Property
Schedule 5.1(a) Mack Limited Liability Companies, By State
Schedule 5.1(b) Mack Limited Partnerships, By State
Schedule 5.1(c) Non-Consenting Partners By Property
Schedule 5.1(d) Leases as of July 31, 1997
Schedule 5.1(e) Rent Roll as of July 31, 1997
Schedule 5.1(f) Pro Forma Rent Roll
Schedule 5.1(g) Contracts
Schedule 5.1(h) Litigation and Disputes Affecting Exchange Property or
Option Property
Schedule 5.1(i) Proceedings related to the Real Property
Schedule 5.1(j) Third Party Reports related to Physical Condition of
the Real Property and Option Properties/Engineering
Reports
Schedule 5.1(k) Violations affecting the Real Property or Option
Properties
Schedule 5.1(l) Personnel
Schedule 5.1(m-1) Capital Expenditure Obligations Affecting Exchange
Property - MACK's Responsibility
Schedule 5.1(m-2) Capital Expenditure Obligations Affecting Exchange
Property - Mack-Cali's Responsibility
Schedule 5.1(o) Encumbered Personal Property
Schedule 5.1(q) Exchange Property Generating Revenue/Income Other than
the Leases
Schedule 5.1(r) Excluded Properties
Schedule 5.1(t) Storage Tanks or Vessels on Real Property or Option
Property
Schedule 5.1(u) Repair Work Recommended by Insurance Companies, Fire
Underwriters or Mortgage Holders
Schedule 5.1(v) Year-End Adjustments
Schedule 5.1(w)(i) All Existing Mack Entities and PAM Benefit Plans and
Agreements
Schedule 5.1(y)(ii) Environmental Discharges
Schedule 5.1(y)(iv) Storage Tanks and Vessels
Schedule 5.1(y)(v) Asbestos
Schedule 5.1(y)(vi) PCB Items
Schedule 5.1(y)(vii) Missing Permits
Schedule 5.1(y)(viii) Property Previously Used as a Transfer Station,
Incinerator, Landfill or Resource Recovery Facility
Schedule 5.1(z) Tax Audits Regarding Exchange Property or Option
Property
Schedule 5.1(aa) Tax Basis of Exchange Property
Schedule 5.1(bb) Maintenance Organization Delinquencies, Late Payments,
etc.

viii

<PAGE>

Schedule 5.1(ff)(i) Additional Services Provided to Tenants
Schedule 5.1(ff)(ii) Tenant Rent Based on Income/Profits of Any Person
Schedule 5.1(ff)(iii) Agreements in Which Tenant Rent Attributable to
Personal Property Exceeds 15% of Total Rent
Schedule 5.1(gg) Mack Material Liabilities and Obligations
Schedule 6.1(a) Cali Non-Consenting Partners
Schedule 6.1(i) Cali Subsidiaries, Partnerships and Trusts
Schedule 6.1(j) Extraordinary Cali Business Transactions
Schedule 6.1(k) Cali Material Liabilities and Obligations
Schedule 6.1(l)(iii) Conversion/Exchange Rights Regarding Warrants, Options
and Convertible Securities
Schedule 6.1(m)(ii) Cali Tax Proceedings
Schedule 6.1(m)(iv) Individual Owners of Cali Interests in Excess of 9.8%
Schedule 6.1(q) Cali Board Committees
Schedule 6.1(r)(i) Agreements with Certain Cali Executives
Schedule 6.1(s) Agreements Regarding Sale or Voting of Units or Common
Stock
Schedule 6.1(t) Cali Rent Roll
Schedule 6.1(v) Litigation, Suits Affecting Cali Property
Schedule 6.1(w) Condemnation Notices Affecting Cali Property
Schedule 6.1(x) Notices of Violation Regarding Cali Property
Schedule 6.1(y) Storage Tanks and Vessels on Cali Property
Schedule 7.1(m) Threshold Amount
Schedule 7.2 Exchange Property Charts and Tables
Schedule 8.1 Option Properties
Schedule 10.2(b)(vi) Exchange Property Insurance Policies
Schedule 12.2(n) MACK Properties
Schedule 18.4 Agreement Regarding Common Stock Trading Blocks of One
Million Shares or Less
Schedule 19.1(a) Cali Group Guarantors/Indemnitors
Schedule 19.1(b) RM Group Guarantors/Indemnitors
Schedule 20.3 Reduction of Assessed Valuation of the Real Property
and the Option Properties
Schedule 26.2(v) Mack Significant Interest Attribution Rules
Schedule 27.1 7-1/2 Year Average Restricted Property
Schedule 28.1 Special Environmental Matters

<PAGE>

EXHIBITS

Exhibit A MK Contributors
Exhibit A-1 MK Entities
Exhibit A-2 Patriot Contributors
Exhibit A-3 Patriot Entities
Exhibit 2.4(a)(i) Series A Preferred Unit/Certificate of Designation
Exhibit 2.4(a)(ii) Series B Preferred Unit/Certificate of Designation
Exhibit 2.5 Warrants to Purchase Common Units
Exhibit 9.1 Form of Estoppel Certificate
Exhibit 10.2(a)(vi) Omnibus Assignment
Exhibit 10.2(b)(i) Assignment of Contributed Interest
Exhibit 10.2(c)(ix) Tradenames Assignment Agreement
Exhibit 10.2(c)(x)-1 Non-Competition Agreements/Earle Mack, David Mack and
Frederick Mack
Exhibit 10.2(c)(x)-2 Non-Competition Agreement/William Mack
Exhibit 10.3(j) Registration Rights Agreement
Exhibit 10.3(o) Summary of Principal Terms of Amendment to the OP
Agreement

<PAGE>

CONTRIBUTION AND EXCHANGE AGREEMENT

THIS CONTRIBUTION AND EXCHANGE AGREEMENT (the "AGREEMENT") made this 18th
day of September, 1997 by and among the parties set forth on EXHIBIT A annexed
hereto and made a part hereof (collectively, the "MK CONTRIBUTORS"), the parties
set forth on EXHIBIT A-1 annexed hereto and made a part hereof (collectively,
the "MK ENTITIES"), each having an address at 370 West Passaic Street, Rochelle
Park, New Jersey 07662, the parties set forth on EXHIBIT A-2 annexed hereto and
made a part hereof (collectively, the "PATRIOT CONTRIBUTORS"), the parties set
forth on EXHIBIT A-3 annexed hereto and made a part hereof (collectively, the
"PATRIOT ENTITIES"), and Patriot American Management and Leasing Corporation
("PAM"), each having an address at 3030 LBJ Freeway, Suite 1500, Dallas, Texas
75234; (the MK Contributors and the Patriot Contributors shall collectively be
referred to as the "MACK CONTRIBUTORS" and each individually a "MACK
CONTRIBUTOR"); (the MK Entities and the Patriot Entities shall collectively be
referred to as the "MACK ENTITIES" and each individually a "MACK ENTITY"); (the
Mack Contributors and the Mack Entities shall collectively be referred to as
"MACK") and CALI REALTY, L.P., a Delaware limited partnership ("CRLP") and CALI
REALTY CORPORATION, a Maryland corporation ("CALI"), each having an address at
11 Commerce Drive, Cranford, New Jersey 07016.

RECITALS

A. The Mack Contributors and their respective partners are, collectively,
the owners of one-hundred (100%) percent of their respective partnership,
limited liability company and/or other ownership interests in and to the Mack
Entities (to the extent any of the Mack Entities are contributed to CRLP by
assignment of partnership interest as is contemplated by Section 1.2 hereof,
such Mack Entities are hereinafter referred to as the "CONTRIBUTED ENTITIES").
The Mack Entities own one-hundred (100%) percent of the respective properties
and one-hundred (100%) percent of the respective ground lessees' interests in
the ground leases set forth in SCHEDULES 1.1(A)(I) and 1.1(A)(II), respectively.

B. MACK owns, develops and manages various commercial properties located
throughout New Jersey, New York, Texas, Arizona, Florida, Pennsylvania,
Nebraska, Iowa and California. Cali, through CRLP and certain affiliated
entities of CRLP, similarly owns, develops and manages various commercial
properties located throughout New Jersey, New York, Pennsylvania and
Connecticut.

C. MACK, CRLP and Cali have determined that it is in the best interests
of the parties' long term strategic growth to combine their respective
properties and related assets. In order to effectuate this combination, MACK
has agreed (i) to contribute certain properties, ground leases and/or
one-hundred (100%) percent of its partnership, limited liability company and/or
other ownership interests in and to certain Mack Entities to CRLP or, at CRLP's
direction,

<PAGE>

to an entity (1) owned by (a) CRLP, (b) Cali and/or (c) Cali's one-hundred
(100%) percent owned subsidiaries and (2) which for federal income tax purposes
is (i) taxed as a partnership or (ii) disregarded as an entity distinct from its
owners (each a "SUBSIDIARY PARTNERSHIP" and collectively, the "SUBSIDIARY
PARTNERSHIPS"), and (ii) to cause certain key executives of MACK to become part
of the management of Cali. Such contribution shall be treated as a contribution
by MACK to CRLP followed by a subsequent contribution from CRLP to such
Subsidiary Partnership and any reference in this Agreement to a contribution to
CRLP or a Subsidiary Partnership shall be so treated. Cali shall manage and
operate the properties and/or the Mack Entities being contributed by MACK. The
Mack Contributors shall provide, in the amounts and terms as the Mack
Contributors shall determine, certain resources, management expertise, personnel
and management facilities to assist in the management and operation of the
properties to be contributed. The Mack Contributors have been granted certain
rights with respect to appointing members of the Board of Directors of Cali,
which is the sole general partner of CRLP. Cali has agreed to seek shareholder
approval to amend its corporate charter to change its name to "Mack-Cali Realty
Corporation" ("MACK-CALI"). Any reference herein to Mack-Cali shall be deemed
to be the entity subsequent to the merger contemplated by this Agreement.

D. In consideration of MACK's contribution of certain properties, ground
leases and certain ownership interests in the Mack Entities to designees of
CRLP, Cali and CRLP collectively have agreed to exchange with MACK a combination
of (i) cash, (ii) common operating partnership units of CRLP ("COMMON UNITS"),
(iii) Series A preferred operating partnership units of CRLP ("SERIES A
PREFERRED UNITS"), (iv) Series B preferred operating partnership units of CRLP
("SERIES B PREFERRED UNITS" and together with Series A Preferred Units,
sometimes hereinafter referred to collectively as "PREFERRED UNITS") (Mack
Common Units (as hereinafter defined) and Preferred Units, are sometimes
referred to collectively as the "UNITS"), and (v) warrants to purchase Common
Units. In addition, CRLP will accept certain exchange of the property and
ownership interests subject to certain debt of the Mack Entities.

NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, do hereby agree as follows:

1. SUBJECT OF CONVEYANCE.

1.1 In accordance with the terms and conditions of this Agreement
and subject to Cali and CRLP's performance and satisfaction of the conditions,
covenants and obligations contained herein, the Mack Contributors and the Mack
Entities agree that the assets set forth in paragraphs (a) through (h) of this
Section 1.1 shall be directly or indirectly the subject of conveyance of this
transaction and shall be contributed in accordance with Sections 1.2 and 1.3
hereof:

<PAGE>

(a) (i) those certain parcels of real property situate, lying
and being in the States of New Jersey, New York, Texas, Arizona, Florida,
Nebraska, Iowa and California and being more particularly described on SCHEDULE
1.1(A)(I), which sets forth the property addresses and blocks and lots, if
applicable, for each parcel (the "LAND"); (ii) all right, title and interest of
the lessees in and to the ground leases described on SCHEDULE 1.1(A)(II), which
sets forth the names of each party to each of the ground leases, the dates
thereof and any amendments thereto, as well as the name, state of organization
and type of entity of each ground lessee (the "GROUND LEASES"); and (iii) all
improvements located on the Land or subject to the Ground Leases (the
"IMPROVEMENTS");

(b) all rights, privileges, grants and easements appurtenant to the
Mack Entities' interest in the Land, Improvements and Ground Leases, including
without limitation, all of the Mack Entities' right, title and interest in and
to all land lying in the bed of any public street, road or alley, all mineral
and water rights and all easements, licenses, covenants and rights-of-way or
other appurtenances used in connection with the beneficial use and enjoyment of
the Land, the Improvements and the Ground Leases (collectively, the "EASEMENT
RIGHTS"); the Land, the Ground Leases, the Improvements and the Easement Rights
shall hereinafter be collectively referred to as the "REAL PROPERTY";

(c) except as set forth on SCHEDULE 1.1(C), all personal property
owned or licensed by the Mack Entities for use in connection with any of the
Real Property, including without limitation fixtures, equipment, inventory and
computer programming and software (the "PERSONAL PROPERTY");

(d) all leases and other agreements with respect to the use and
occupancy of the Real Property, together with all amendments and modifications
thereto and any guaranties provided thereunder (the "LEASES"), and rents,
additional rents, reimbursements, profits, income, receipts and the amount
deposited (the "SECURITY DEPOSIT") under any Lease in the nature of security for
the performance of the Tenant's obligations under such Lease;

(e) subject to the limitations and exceptions described in Section
7.4, the sole and exclusive right to the tradenames "The Mack Companies" and
"Mack", and any trademark applicable thereto, and/or any name by which any of
the Real Property is commonly known, and all goodwill, if any, related to said
names excluding, however, the names of "Patriot" and "Patriot American"
(collectively, the "TRADENAMES");

(f) all permits, licenses, guaranties, approvals, certificates and
warranties relating to the Real Property and the Personal Property
(collectively, the "PERMITS AND LICENSES"), all of the Mack Entities' right,
title and interest in and to those contracts and agreements for the servicing,
maintenance and operation of the Real Property (the "SERVICE CONTRACTS") and
telephone numbers in use at any of the Real Property or the management offices
and corporate headquarters of the Mack Entities (together with the Permits and
Licenses and the Service Contracts, are collectively referred to as the
"INTANGIBLE PROPERTY");

<PAGE>

(g) all books, records, promotional material, tenant data, leasing
material and forms, past and current rent rolls, files, statements, tax returns,
market studies, keys, plans, specifications, reports, tests and other materials
of any kind owned by or in the possession of MACK which are or may be used in
the operation of the Real Property or Personal Property (collectively, the
"BOOKS AND RECORDS"); and

(h) all other rights, privileges and appurtenances owned by MACK,
if any, and in any way related to the rights and interests described above in
this Section.

The Real Property, the Personal Property, the Leases, the Security
Deposits, the Tradenames, the Intangible Property, the Books and Records, the
property rights set forth in subparagraph (h) above and all other property
interests being conveyed hereunder are hereinafter collectively referred to as
the "PROPERTY".

1.2 With respect to the Property to be contributed by assignment of
partnership interest, the Mack Contributors shall contribute and shall cause
their respective partners to contribute to CRLP or, at CRLP's direction, to its
Subsidiary Partnerships, the Contributed Entities to be designated by the Mack
Contributors by assignment of one-hundred (100%) percent of their rights, title
and interests, in all of their ownership rights and interests in and to the
Contributed Entities free and clear of any and all liens, mortgages,
encumbrances or security interests (the "CONTRIBUTED INTERESTS").

1.3 In the event the Mack Contributors determine, in their sole
discretion, not to contribute or are otherwise unable to contribute a Mack
Entity by the assignment of Contributed Interest pursuant to Section 1.2, the
Mack Entities owning all remaining Property shall, subject to Section 3.4,
contribute the Property owned by such Mack Entities to CRLP or, at CRLP's
direction, to its Subsidiary Partnerships, by deed transfer or assignment of
Ground Lease at Closing.

The Property conveyed by deed transfer or assignment of Ground Lease
pursuant to Section 1.3 and/or the Property contributed by assignment of the
Contributed Interests pursuant to Section 1.2 and all other property interests
being contributed and conveyed hereunder shall hereinafter collectively be
referred to as the "EXCHANGE PROPERTY".

2. PAYMENT TERMS.

2.1 The aggregate consideration for the Exchange Property (the
"EXCHANGE CONSIDERATION") is One Billion One-Hundred Fifty-One Million
Seven-Hundred Thirty-Seven Thousand and Twelve ($1,151,737,012) Dollars to be
paid by CRLP in accordance with Section 2.2 plus the Warrants (as defined in
Section 2.5). The Exchange Consideration shall be allocated among the Exchange
Property as set forth on SCHEDULE 2.1 (the "ALLOCATED PROPERTY VALUES").

<PAGE>

2.2 At Closing, and upon satisfaction of the terms and conditions
provided herein, MACK agrees to contribute the Exchange Property to CRLP or its
Permitted Assignees (hereinafter defined) and CRLP (and Cali where applicable)
agrees, subject to adjustment as set forth herein, (a) to pay to MACK or their
designees an amount of Four-Hundred Seventy-Six Million One-Hundred Six Thousand
($476,106,000.00) Dollars (the "CASH PAYMENT"), (b) to issue the Mack Common
Units (hereinafter defined) to such persons as MACK shall direct in writing as
soon as practicable following the date hereof (the "MACK UNIT HOLDERS") and in
accordance with Section 2.3 hereof, (c) to issue the Preferred Units to such
persons as MACK shall direct in writing as soon as practicable following the
date hereof (the holders of Series A Preferred Units and Series B Preferred
Units sometimes hereinafter referred collectively to as the "PREFERRED UNIT
HOLDERS") and in accordance with Section 2.4 hereof (the Mack Unit Holders and
the Preferred Unit Holders may sometimes collectively be referred to as "UNIT
HOLDERS"), (d) to issue the Warrants to such persons as MACK shall direct in
writing as soon as practicable following the date hereof (the "WARRANT HOLDERS")
and in accordance with Section 2.5 hereof and (e) to take title to certain
Exchange Property subject to certain mortgages to be agreed upon by the parties
and which mortgages are to have an anticipated average weighted annual interest
rate of not more than seven and twenty-three one hundredths (7.23%) percent or
such other average weighted annual interest rate as is mutually acceptable to
CRLP and the Mack Contributors (collectively, the "MORTGAGES"), which Mortgages
shall have an aggregate outstanding principal balance immediately following the
Closing, subject to adjustment as set forth in this Section 2, of Three-Hundred
and Two Million One-Hundred Forty-Seven Thousand ($302,147,000.00) Dollars (the
"MORTGAGE DEBT AMOUNT").

2.3 (a) Simultaneous with CRLP accepting the Exchange Property,
CRLP shall issue, subject to adjustments as set forth herein, 3,931,048 Common
Units ( the "MACK COMMON UNITS" ) convertible into Cali Common Stock ("COMMON
STOCK"); PROVIDED, HOWEVER, that the Mack Unit Holders shall be issued and shall
hold the Mack Common Units in accordance with the provisions of Section 5.4.

(b) With respect to the first Partnership Record Date, on
or after the Closing, the Mack Unit Holders shall receive distributions payable
with respect to the Mack Common Units on a PRO-RATA basis based upon the number
of days during the calendar quarter preceding such Partnership Record Date that
the Mack Unit Holders held Mack Common Units.

2.4 (a) Simultaneous with CRLP accepting the Exchange Property,
CRLP shall issue, subject to adjustments as set forth herein, 40,000 Series A
Preferred Units more fully described in the Certificate of Designation set forth
on EXHIBIT 2.4(A)(I) and 209,656 Series B Preferred Units more fully described
in the Certificate of Designation set forth on EXHIBIT 2.4(A)(II) annexed
hereto; PROVIDED, HOWEVER, that the Preferred Unit Holders shall be issued and
shall hold the Preferred Units in accordance with the provisions of Section 5.5.

(b) With respect to the first Partnership Record Date (as
defined in the OP Agreement), on or after the Closing, the Preferred Unit
Holders shall receive distributions

<PAGE>

payable with respect to the Preferred Units on a PRO-RATA basis based upon the
number of days during the calendar quarter preceding such Partnership Record
Date that the Preferred Unit Holders held Preferred Units.

2.5 Simultaneous with CRLP's accepting the Exchange Property, CRLP
shall issue 2,000,000 warrants to purchase Common Units (the "WARRANTS") the
form of which is annexed hereto as EXHIBIT 2.5.

2.6 The particular items and types of consideration comprising the
Exchange Consideration shall be subject to the following adjustments and
modifications:

(a) MACK shall have the right to increase or decrease the
Mortgage Debt Amount by an amount equal to 20% of the Mortgage Debt. The
parties acknowledge that they expect MACK to exercise its right in the foregoing
sentence no later than November 1, 1997 although it may be exercised after such
date, but in no event later than the mailing of the definitive Cali proxy
statement to its shareholders. The Cash Payment shall be decreased or
increased, respectively, by any increase or decrease made to the Mortgage Debt
Amount pursuant to this Section 2.6(a). Any increase or decrease in the
Mortgage Debt Amount pursuant to this Section 2.6 (a) may be effected by (i)
placing Industrial Development Agency financing in connection with certain
leasing requirements, (ii) substituting other mortgages encumbering Exchange
Property for all or a portion of one or more of the Mortgages, or (iii) a
combination of the foregoing.

(b) To the extent that any Exchange Property has been
eliminated from the transaction contemplated by this Agreement pursuant to
Section 3.4 or Section 28, then the Mortgage Debt Amount (as determined after
any increase or decrease pursuant to Section 2.6(a)) shall be reduced by the
greater of (i) the principal amount of any Mortgage encumbering that particular
Eliminated Property (as defined in section 3.4(c)) or (ii) 26% of the Allocated
Property Value for such Eliminated Property. After the Mortgage Debt Amount has
been reduced with respect to each such Eliminated Property, then the aggregate
remaining reduction in the Exchange Consideration with respect to all of the
Eliminated Properties shall be allocated first to the Cash Payment up to a
maximum reduction of $79,903,860 which amount may be reduced in MACK's sole and
absolute discretion and thereafter any further reduction of the Exchange
Consideration shall be allocated in accordance with the following formula (the
"ORIGINAL ALLOCATION FORMULA"): 51.4758% to the Cash Payment, 16.1747% to the
Mack Common Units and 32.3495% to the Preferred Units. The Mortgage Debt Amount
as reduced pursuant to this Section 2.6(b) shall be referred to hereinafter as
the "ADJUSTED MORTGAGE DEBT AMOUNT".

(c) At the Closing, MACK shall have the right to increase
the Adjusted Mortgage Debt Amount by an additional amount (the "EXCESS MORTGAGE
AMOUNT") not to exceed $476,106,000 (reduced or increased by the net amount of
any adjustments made to the Cash Payment pursuant to Sections 2.6(a) and (b)).
The Cash Payment shall be reduced by an amount equal to the Excess Mortgage
Amount. Notwithstanding the previous two sentences

<PAGE>

in this Section 2.6(c) to the contrary, MACK's right to increase the Adjusted
Mortgage Debt Amount shall be limited to the amount of Mortgages for which the
Mack Contributors shall have delivered to CRLP at the Closing all necessary
consents to the reduction or satisfaction of such Mortgages.

(d) Any restructuring or modification by MACK of any of the
Mortgages, the Mortgage Debt Amount or the Adjusted Mortgage Debt Amount
pursuant to this Section 2.6 shall not result in additional costs, either direct
or indirect, to Cali, CRLP or Mack-Cali and MACK hereby agrees to pay for any
and all costs associated with the debt adjustment and restructuring efforts
requested by MACK at or prior to Closing (including without limitation
prepayment penalties, mortgage recording fees, lender "consent" fees, commitment
fees, points, administrative fees, legal fees, additional debt service
requirements or any other costs or expenses) related to the Mortgages, the
adjustments to the Mortgage Debt Amount, the Excess Mortgage Amount, the
Adjusted Mortgage Debt Amount, the repayment of the Excess Mortgage Amount or
otherwise arising from the adjustments contemplated by this Section 2.6.

3. INSPECTION PERIOD; RIGHTS OF TERMINATION
AND REJECTION PRIOR TO CLOSING

3.1 (a) Starting with the date hereof through the period ending
at 5:00 p.m. on December 12, 1997 (the "CALI INSPECTION PERIOD"), time being of
the essence as to such date, CRLP may terminate this Agreement for any reason by
written notice given to MACK.

(b) Starting with the date hereof through the period ending
at 5:00 p.m. on October 27, 1997 (the "MACK INSPECTION PERIOD"), time being of
the essence as to such date, MACK may terminate this Agreement for any reason by
written notice given to CRLP (the Cali Inspection Period and the Mack Inspection
Period are hereinafter sometimes collectively referred to as the "INSPECTION
PERIOD").

(c) MACK shall have an additional right to terminate this
Agreement (the "ADDITIONAL TERMINATION RIGHT") through the expiration of the
Cali Inspection Period (the "ADDITIONAL MACK INSPECTION PERIOD") if and only if
(i) there shall occur a material adverse change to the business, properties,
results of operations or financial condition of CRLP, Cali and its Subsidiaries,
taken as a whole, and/or (ii) the stock price of Cali, as reported in the Wall
Street Journal, shall have an average closing price below $31.50 calculated as
of any given day based upon such day's closing price and the preceding four (4)
consecutive trading days' closing price. Notwithstanding the foregoing, in the
event Cali waives any remaining time under the Cali Inspection Period, it shall
provide MACK ten (10) days prior written notice thereof; the expiration of such
ten (10) day period shall be the date on which the Additional Termination Right
shall automatically terminate. Notwithstanding the notice provisions of Section
24 of this Agreement, for the purposes of this Section 3 only, a notice of
termination executed by counsel for either party and telecopied to the other
party and its counsel no later than 5:00 p.m. on the date of expiration of the
Cali Inspection Period, the Mack Inspection Period or the Additional

<PAGE>

Mack Inspection Period, as the case may be, shall be deemed effective for
purposes of terminating this Agreement. In the event either party terminates
this Agreement pursuant to this Section 3.1, this Agreement shall be null and
void and the parties hereto shall be relieved of all further obligations
hereunder except as otherwise provided herein. In the event neither party
terminates this Agreement pursuant to this Section 3.1, then the parties shall
be deemed to have elected not to terminate this Agreement.

(d) During the parties' respective Inspection Periods, the
parties hereto may perform or cause to be performed certain tests, studies and
investigations of or related to the Exchange Property, the Option Properties (as
defined in Section 8 hereof) and any real property owned by CRLP or its
affiliates (the "CALI PROPERTY"). The tests and studies contemplated hereunder
shall include but not be limited to, soil tests and borings, ground water tests
and investigations, percolator tests, surveys, architectural, engineering,
subdivision, environmental, access, financial, market analysis, development and
economic feasibility studies and other tests, investigations or studies as the
parties, in each party's sole discretion, determines is necessary or desirable
in connection with this transaction and may inspect the physical (including
environmental) and financial condition of the Exchange Property, the Option
Properties and the Cali Property. Such inspection may include but shall not be
limited to the Ground Leases, Leases, Service Contracts, copies of the Mack
Entities' tax returns (to the extent such returns have been filed), (and the
corresponding documentation related to the Cali Property) and the Property
Financials and the Cali Financials as of and for the years ending December 31,
1994, 1995 and 1996 and for the period of January 1, 1997 through June 30, 1997
(and September 30, 1997 if the termination of any Inspection Period occurs on or
after November 14, 1997), engineering and environmental reports, development
approval agreements, permits and approvals, which inspection shall be
satisfactory to each party in its sole discretion. Each party agrees to
cooperate with the other party in such review and inspection and to the extent
not yet delivered, shall deliver said documents and information to the other
promptly.

3.2 Cali, CRLP, MACK, their agents, advisors and contractors, shall
have reasonable access to the Real Property, the Option Properties and the Cali
Property and other information pertaining thereto in the possession or within
the control of the other party including, without limitation, all Securities and
Exchange Commission filings of CRLP and Cali and federal, state, and local
income, excise, franchise, and all other tax filings of Cali, CRLP and the Mack
Entities, for the purpose of performing its due diligence review described in
Section 3.1 above. Any inspection of the Real Property, the Option Properties
or the Cali Property shall be performed in accordance with the access agreements
previously entered into by CRLP and MACK. Such right of inspection and the
exercise of such right shall not constitute a waiver by either party of the
breach of any representation or warranty of either party which might, or should,
have been disclosed by such inspection. The parties shall cooperate with each
other in facilitating its due diligence inquiry and shall obtain, and use
commercially reasonable efforts to obtain, any consents that may be necessary in
order for the parties to perform same. In addition, each party shall notify the
other party of any dangerous conditions on the Real Property, the Cali Property
and the Option Properties of which any party has knowledge, including, without

<PAGE>

limitation, conditions which due to the nature of the borings, studies,
investigations, inspections or testing to be performed by or on behalf of either
party may pose a dangerous condition to either party or to either party's agents
or contractors.

3.3 If CRLP shall determine, in its sole discretion, that (i) any
new environmental "Phase I" study is required for any Real Property or (ii) an
existing environmental "Phase I" study is required to be updated (collectively,
the "PHASE I REPORTS"), all costs and expenses in connection with the Phase I
Reports shall be borne equally by MACK and CRLP. If CRLP determines that
environmental investigations beyond a Phase I Report is warranted, CRLP shall
bear the costs and expenses relating to the additional environmental studies to
be so prepared. CRLP shall have the right, in its sole discretion, to choose
the environmental engineers and professionals necessary to prepare such
additional environmental studies.

3.4 (a) If, at any time prior to the Closing Date, CRLP
determines in its sole discretion that any of the Real Property is subject to
materially adverse environmental conditions including without limitation, any
environmental condition that has a material adverse effect on the property value
of any Real Property, on the current use of any Real Property, on groundwater
at, on, under, about or emanating from any Real Property or on the ability of
CRLP to finance any Real Property ("TAINTED PROPERTY"), CRLP may eliminate such
Tainted Property from this transaction, upon written notice to MACK, and CRLP
shall proceed to consummate this transaction provided such Tainted Property and
any Real Property eliminated pursuant to Section 28 shall in the aggregate
constitute less than five (5%) percent of the aggregate Allocated Property Value
for the Exchange Property. In such event, the Exchange Consideration shall be
reduced by the Allocated Property Value attributable to such Tainted Property in
accordance with Section 2.6(b). Notwithstanding the foregoing, if CRLP
determines to eliminate any Tainted Property from this transaction, but MACK
nonetheless desires to include any or all such Tainted Property in the
transaction, then MACK shall so notify CRLP. Thereafter, CRLP and MACK shall,
prior to Closing, negotiate in good faith with each other to seek to reach an
agreement on the cleanup standards to be used in connection with curing the
adverse environmental condition at, on, under, about or emanating from the
Tainted Property as well as any other issues related to curing such adverse
environmental condition, including without limitation, post closing access. If
CRLP and MACK shall be unable to agree upon the cleanup standards for a Tainted
Property and on any other issues related to curing such adverse environmental
condition, prior to Closing, then such Tainted Property shall be eliminated from
the transaction. If CRLP and MACK are able to agree upon the cleanup standards
or on any other issues related to curing such adverse environmental condition,
prior to Closing, then MACK shall either: (i) cure such adverse environmental
condition at its sole cost and expense prior to Closing or (ii) (a) cure such
adverse environmental conditions subsequent to Closing at its own cost and
expense and (b) escrow funds, post a letter of credit or pledge Units in
sufficient amount to secure such obligation, in either instance (i) or (ii) in
accordance with the agreed upon standard and any other agreement reached between
the parties. Notwithstanding the immediately preceding sentence, if MACK
requires that a Tainted Property be included in the transaction contemplated by
this Agreement, MACK shall be obligated to cure such adverse environmental
condition after the Closing at its

<PAGE>

sole cost and expense, even if the amount of security escrowed, pledged or
posted by MACK shall be insufficient to pay the costs required to cure such
environmental condition. If CRLP chooses not to eliminate a Tainted Property
from this transaction, Mack-Cali and CRLP agree to waive all of its rights under
this Agreement or Environmental Law to require MACK to clean up such adverse
environmental condition on such Tainted Property, including, without limitation
its rights under CERCLA or any analogous state laws. However, notwithstanding
the preceding sentence, if a claim is made or action instituted against
Mack-Cali or CRLP by any third party, including without limitation any
Governmental Authority, with respect to such adverse environmental condition,
then CRLP shall have the right to involve any or all of the Mack Entities which
held title to such Tainted Property or the Mack Contributors which owned such
Mack Entity on or prior to the date hereof, in the claim or action whether
through litigation or any other proceeding.

(b) MACK shall take all commercially reasonable action to
obtain the requisite consents and approvals from its third-party partners to
consummate the transactions contemplated hereby. In the event that MACK is
unable to obtain the requisite consent or approval from any third-party partners
as contemplated by Section 7.1(o), MACK may eliminate any of the Exchange
Property in which such objecting third-party partner has an interest
(individually a "PARTNER PROPERTY" and collectively the "PARTNER PROPERTIES")
and shall proceed to consummate this transaction provided such Partner Property
or Partner Properties, in the aggregate, constitute less than twenty (20%)
percent of the aggregate of the Allocated Property Value of the Exchange
Property. In such event, the Exchange Consideration shall be reduced by the
Allocated Property Value attributable to such Partner Property in accordance
with Section 2.6(b). The failure of MACK to obtain such requisite consents and
approvals, after taking all commercially reasonable action, shall not constitute
a "willful default" as that term is used in Section 22.2.

(c) MACK shall take all commercially reasonable action in
negotiating prepayment premiums and/or restructuring certain debt encumbering
the Exchange Property. In the event MACK determines that certain of the
indebtedness encumbering the Exchange Property cannot be reasonably satisfied,
negotiated or restructured, MACK may eliminate any of the Exchange Property from
the transaction (individually an "ENCUMBERED PROPERTY" and collectively the
"ENCUMBERED PROPERTIES") and shall proceed to consummate the transaction,
provided that an Encumbered Property or the Encumbered Properties, in the
aggregate, constitute less than fifteen (15%) percent of the aggregate of the
Allocated Property Value of the Exchange Property. In such case, the Exchange
Consideration shall be reduced by the Allocated Property Value attributable to
such Encumbered Property in accordance with Section 2.6(b). In no event shall a
combination of Tainted Property, Real Property eliminated pursuant to Section
28, Partner Property and Encumbered Property (collectively, the "ELIMINATED
PROPERTY") be eliminated from this transaction which, in the aggregate,
constitutes more than twenty (20%) percent of the aggregate of the Allocated
Property Value of the Exchange Property. Cali acknowledges that the continued
ownership by MACK of an Eliminated Property or of any Real Property pursuant to
the terms of Article 27 hereof shall not

<PAGE>

violate the restrictions on competition contained in the Non-Compete Agreements
or the Hersh Employment Agreement.

(d) In the event that subsequent to Closing, MACK resolves
to the satisfaction of CRLP any issue which caused any Exchange Property to
become an Eliminated Property (the "RESOLVED PROPERTY"), MACK shall have the
option to "put" to Mack-Cali and/or Mack-Cali shall have the option to "call" a
Resolved Property at the Allocated Property Value allocated to such Resolved
Property in accordance with the "put"/"call" procedures set forth in SCHEDULE
3.4(D), provided (i) no material adverse condition has affected such Resolved
Property, including without limitation any materially adverse environmental
condition, including without limitation, any environmental condition that has a
material adverse effect on the property value of any Resolved Property, on the
current use of any Resolved Property, on groundwater, at, on, under, about or
emanating from any Resolved Property or on the ability of CRLP to finance any
Resolved Property; (ii) the applicable representations and warranties set forth
in Section 5.1 hereof including without limitation those set forth in Sections
5.1(h), (k), (s), (t) and (y) shall be true and correct as to such Resolved
Property as of the date of purchase by Mack-Cali of a Resolved Property; (iii)
there shall not have been any Discharge of Contaminants at such Resolved
Property, which has not been investigated and remediated in accordance with
Environmental Laws (provided, nothing contained herein shall require MACK to
remediate any Discharge of Contaminants, other than in the event where cleanup
standards and other issues relating to curing the Discharge have been agreed
upon by Cali and MACK, and if no agreement is reached, such Eliminated Property
shall not be deemed a Restored Property unless and until MACK remediates it, if
it so desires); and (iv) the provisions of Section 12.2(j)-(m) shall have been
complied with as to any Resolved Property located in the applicable states, as
well as any other applicable Environmental Law governing the transfer of any
Resolved Property. The net amount of Exchange Consideration payable pursuant to
such "Put" or "Call" option in the preceding sentence above any Mortgage to
which such Resolved Property shall be taken subject to, shall be in proportion
to the Cash Payment, the Mack Units and the Preferred Units in accordance with
the Original Allocation Formula. The Put/Call provisions of this Section 3.4(d)
shall remain in effect for a period of two (2) years from the Closing Date.
Upon the second anniversary of the Closing Date, the Put/Call provision shall
expire and any remaining Eliminated Property shall be subject to a right of
first offer in favor of Mack-Cali as more particularly described in Section 3.5
hereof. All Eliminated Property shall be subject to the provisions of this
Section 3.4(d) as evidenced by the recordation of a declaration of "put/call"
provisions against the Eliminated Property in the appropriate real property
records. Notwithstanding anything to the contrary contained in this Section 3,
the restrictions set forth herein shall not apply to any Eliminated Property
which shall have been transferred to a lender through a foreclosure, deed in
lieu of foreclosure or pursuant to a plan of reorganization.

3.5 (a) If, any time after the second anniversary of the
Closing Date and through the date on which the Mack Group fails to maintain a
Mack Significant Interest (as defined in Section 26.2), MACK should desire to
sell an Eliminated Property, MACK shall first deliver written notice to CRLP
(the "EP OFFER NOTICE"), which EP Offer Notice shall specify (i)

<PAGE>

the proposed selling price for the Eliminated Property (the "EP OFFER PRICE");
(ii) the method of payment of the EP Offer Price (e.g., payment in Common Units,
cash or a combination of the two); and (iii) all other material terms and
conditions of the offer including without limitation the proposed method of
conveyance (the "EP OFFER TERMS"). The EP Offer Notice shall constitute an
irrevocable offer by MACK to sell to CLRP the Eliminated Property at the EP
Offer Price and on the EP Offer Terms.

(b) Within ten (10) business days following CRLP's receipt
of the EP Offer Notice (the "EP OFFER PERIOD"), CRLP may elect to purchase the
Eliminated Property by delivering to MACK a notice that CRLP is electing to
purchase such Eliminated Property pursuant to the terms of the EP Offer Notice
(an "EP ACCEPTANCE NOTICE"). Should CRLP fail to deliver an EP Acceptance
Notice within the EP Offer Period, CRLP shall be deemed to have irrevocably
declined to purchase such Eliminated Property. A duly delivered EP Acceptance
Notice shall be deemed to be an irrevocable commitment by CRLP to purchase from
MACK such Eliminated Property indicated in the EP Acceptance Notice.

(c) CRLP shall be obligated to purchase such Eliminated
Property, in accordance with the EP Offer Notice, as it elected to purchase in
the EP Acceptance Notice, at a closing pursuant to Section 3.5(e) of this
Agreement.

(d) If CRLP (i) notifies MACK that it is electing not to
purchase such Eliminated Property or (ii) does not deliver an EP Acceptance
Notice prior to the expiration of the EP Offer Period, MACK may sell the
Eliminated Property to a third-party purchaser; PROVIDED, HOWEVER, that any such
sale of the Eliminated Property to such third-party purchaser must be made
substantially on the same terms and conditions as those set forth in the EP
Offer Notice, including without limitation, a purchase price that is no less
than ninety-five percent (95%) of the EP Offer Price; PROVIDED, FURTHER, that
any such sale of such Eliminated Property to such third-party purchaser must be
consummated no later than one-hundred twenty (120) days following the original
delivery of the EP Offer Notice. If MACK wishes to sell such Eliminated
Property on terms more favorable than ninety-five (95%) percent of the EP Offer
Price to a third-party purchaser or does not sell such Eliminated Property on
substantially the terms and conditions contained in the EP Offer Notice (within
ninety-five (95%) percent of the EP Offer Price) within the aforementioned
one-hundred twenty (120) day period (it being understood that if the EP Offer
Terms contemplate Common Units to MACK, a sale by MACK to a third party may
include as consideration the issuance of operating partnership units to MACK
issued by another entity), MACK shall again be obligated to make a new offer to
CRLP, in accordance with this Section 3.5, before it shall be permitted to
consummate a sale of such Eliminated Property, or any part thereof.

(e) The closing of the purchase of Eliminated Property by
CRLP pursuant to this Section 3.5 shall take place within fifteen (15) days
following the delivery of the EP Acceptance Notice by CRLP to MACK at the
offices of Pryor, Cashman, Sherman & Flynn located at 410 Park Avenue, New York,
NY 10022, or at such other date, time or place as the

<PAGE>

parties to the sale may agree. At such closing, MACK shall sell, transfer and
deliver to CRLP full right, title and interest in and to such Eliminated
Property purchased by CRLP, free and clear of all liens, security interests or
adverse claims of any kind and nature, except for the Permitted Encumbrances,
and shall deliver to CRLP a deed, assignment of Ground Lease or assignment of
partnership interest, duly executed and acknowledged conveying, such Eliminated
Property sold to CRLP. Simultaneously with delivery of such deed, assignment of
Ground Lease or assignment of partnership interest, CRLP shall deliver to MACK
an amount of cash or other consideration equal to the EP Offer Price as set
forth in the EP Offer Notice, equal to the EP Offer Price, in full payment of
the purchase price of the such Eliminated Property purchased by CRLP.

4. TITLE; MATTERS TO WHICH THIS EXCHANGE IS SUBJECT.

4.1 The Exchange Property is to be contributed to CRLP subject to
the following (collectively, the "PERMITTED ENCUMBRANCES"):

(a) The liens of real estate taxes, personal property
taxes, water charges, and sewer charges provided same are not due and payable,
but subject to adjustment as provided herein;

(b) the rights of those parties occupying space at any of
the Improvements (collectively, "TENANTS"), as tenants only;

(c) (i) those restrictions, covenants, agreements,
easements, matters and things affecting title to the Real Property as of the
date hereof and more particularly described in the title insurance policies
listed on SCHEDULE 4.1(C); annexed hereto and by this reference made a part
hereof; provided however, if CRLP discovers any exception on such title policies
which affects the value or marketability of the Real Property or materially
impairs the use of the Real Property for its current use, then such exception
shall not be deemed a Permitted Encumbrance and such exception shall be subject
to the provisions of Section 4.2(b); and such other easements, covenants and
restrictions which are entered into with the consent of CRLP after the date
hereof, such consent not to be unreasonably withheld, delayed or conditioned and
any additional title exceptions on the Title Commitments (as hereinafter
defined) not objected to by CRLP (the "ADDITIONAL TITLE EXCEPTIONS") in
accordance with Section 4.2 below;

(d) any and all laws, statutes, ordinances, codes, rules,
regulations, requirements, or executive mandates affecting the Real Property
including, without limitation, those related to zoning and land use, as of the
date hereof;

(e) the state of facts shown on the surveys listed on
SCHEDULE 4.1(E) for each of the individual properties comprising the Real
Property and any other state of facts which a recent and accurate survey of the
Real Property would actually show, provided same do

<PAGE>

not materially impair the use of the Real Property as it is currently being used
and do not render title uninsurable at standard rates;

(f) the Service Contracts;

(g) any installment not yet due and payable of assessments
imposed after the date hereof and affecting the Real Property or any portion
thereof;

(h) any utility company rights, easements and franchises to
maintain poles, lines, wires, cables, pipes, boxes and other fixtures and
facilities in, over, under or upon the Real Property, provided same do not
impair in other than a DE MINIMUS manner the present use of the Real Property;

(i) prohibition against the interference with the natural
and unobstructed flow of any applicable brook crossing the Real Property or
other riparian rights, provided same does not materially impair the use of the
Real Property as it is currently being used and do not render title uninsurable
at standard rates;

(j) such matters as the Title Company shall be willing,
without special premium, to omit as exceptions to coverage including minor
variations between record lines and tax lot lines; and

(k) the lien of the Mortgages on those parcels of Real
Property encumbered by the Mortgages as of the date hereof (but on the terms and
conditions of this Agreement).

4.2 (a) CRLP has, prior to the date hereof, directed First
American Title Insurance Company ("FIRST AMERICAN") to prepare title insurance
searches and commitments for owner's title insurance policies for each of the
Real Properties (the "TITLE COMMITMENTS"). CRLP shall cause First American, or
such other or additional title insurance companies as may be selected by CRLP
(collectively, the "TITLE COMPANY"), to deliver to the Mack Contributors and its
counsel copies of the Title Commitments and the documents describing the title
exceptions shown on the Title Commitments (collectively, the "TITLE DOCUMENTS")
which are to be delivered to CRLP and its counsel. All Additional Title
Exceptions not objected to by CRLP shall be conclusively deemed to be acceptable
to CRLP and such items shall be deemed to be Permitted Encumbrances.

(b) If any defects, objections or exceptions in the title
to the Real Property appear in the Title Commitments (other than the Permitted
Encumbrances) which CRLP is not required to accept under the terms of this
Agreement, MACK may, at its election, undertake to eliminate such unacceptable
defects, objections or exceptions, it being agreed that other than (i) judgments
against MACK, (ii) mortgages or other liens which can be satisfied by payment of
a liquidated amount, other than the Mortgages, (iii) defects, objections or
exceptions which can be

<PAGE>

removed by payments not to exceed $1,000,000 for each Real Property and not to
exceed $10,000,000 in the aggregate for all title defects, and (iv) payments to
the mortgagees which are currently required pursuant to existing loan documents
in order to cause the mortgagees to consent to Cali taking subject to the
Mortgages, and except as provided below, MACK shall have no obligation to incur
any expense in connection with curing such defects, objections or exceptions.
MACK, in its discretion, may adjourn the Closing for up to sixty (60) days in
order to eliminate unacceptable defects, objections or exceptions. Other than
the items described in (i)-(iv) above, which MACK agrees to cure at its sole
cost and expense without regard to the cost thereof (other than as expressly set
forth in items (iii) and (iv)), if, after complying with the foregoing
requirements, MACK is unable to eliminate all unacceptable defects, objections
or exceptions in accordance with the terms of this Agreement on or before such
adjourned date for the Closing, CRLP shall elect either (w) to terminate this
Agreement by notice given to the Mack Contributors in which event the provisions
of Section 22.2 shall apply, or (x) to accept title subject to such unacceptable
defects, objections or exceptions and receive no credit against or reduction of
the consideration to be given hereunder for the Exchange Property. MACK agrees
and covenants that it shall not voluntarily place any encumbrances or
restrictions to title to any of the Exchange Properties from and after the date
of the first issuance of the Title Commitment for each Exchange Property. Cali
and CRLP agree that they shall conduct any due diligence with any governmental
entities with a view toward maintaining the confidentiality of the transaction
contemplated by this Agreement.

4.3 It shall be a condition to Closing that MACK contribute and
convey, and that the Title Company insure, title to each Real Property conveyed
by deed or assignment of Ground Lease and title to each Real Property conveyed
through the contribution of the Contributed Interests, in the amount of the
Allocated Property Value thereof (at a standard rate for such insurance) in the
name of CRLP or its designees, after delivery of the Deeds, assignments of
Ground Leases or assignments of the Contributed Interests, by a standard 1992
ALTA Owners Policy, with such ALTA endorsements (including without limitation a
comprehensive owner's endorsement and a non-imputation endorsement, where
available, for each Real Property) as are available in each applicable state
where the Real Property is located and as required by CRLP attached, free and
clear of all liens, encumbrances and other matters, other than the Permitted
Encumbrances (the "TITLE POLICY"). The Title Company shall provide affirmative
insurance that any (i) Permitted Encumbrances have not been violated, and that
any future violation thereof will not result in a forfeiture or reversion of
title; (ii) CRLP's contemplated use of the Real Property will not violate the
Permitted Encumbrances; and (iii) the exception for taxes shall apply only to
the current taxes not yet due and payable. MACK shall provide such affidavits
and undertakings as the Title Company insuring title to the Real Property may
reasonably require and shall cure all other defects and exceptions other than
the Permitted Encumbrances and as required pursuant to Section 4.2. 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 without exception other than the Permitted Encumbrances, and
standard printed policy exceptions.

<PAGE>

4.4 Any unpaid taxes, water charges, sewer rents and assessments,
together with the interest and penalties thereon to a date not less than seven
(7) business days following the Closing Date (in each case subject to any
applicable apportionment), and any mortgages or other liens created by MACK,
which MACK is obligated to pay and discharge pursuant to the terms of this
Agreement, together with the cost of recording or filing of any instruments
necessary to discharge such liens and such judgments, shall be paid at the
Closing by MACK. MACK shall deliver to CRLP, on the Closing Date, instruments
in recordable form sufficient to discharge any such mortgages or other liens
which MACK is obligated to pay and discharge pursuant to the terms of this
Agreement.

4.5 If the Title Commitments disclose judgments, bankruptcies or
other returns against other persons having names the same as or similar to that
of MACK or the Contributed Entities, MACK, on request, shall deliver to the
Title Company affidavits showing that such judgments, bankruptcies or other
returns are not against MACK, the Contributed Entities or any affiliates. Upon
request by CRLP, MACK shall deliver any affidavits and documentary evidence as
are reasonably required by the Title Company to eliminate the standard or
general exceptions on the ALTA form Owner's Policy. The Mack Contributors
further agree to deliver to the Title Company the requisite indemnities or
affidavits necessary for the Title Company to issue a non-imputation endorsement
for each Real Property, where available.

5. REPRESENTATIONS AND WARRANTIES OF MACK.

5.1 In order to induce CRLP and Cali to perform as required
hereunder, MACK hereby warrants and represents the following with respect to the
Exchange Property and the Option Properties:

(a) Each Mack Entity set forth in SCHEDULE 5.1(A) is a duly
organized and validly existing limited liability company organized under the
laws of the State set forth in SCHEDULE 5.1(A), is duly authorized to transact
business in the States set forth in SCHEDULE 5.1(A), has all requisite power and
authority to execute and deliver this Agreement and all other documents and
instruments to be executed and delivered by it hereunder, and except as set
forth on SCHEDULE 5.1(C) to perform its obligations hereunder and under such
other documents and instruments in order to contribute the Exchange Property in
accordance with the terms and conditions hereof. Each Mack Entity set forth in
SCHEDULE 5.1(A) is for federal income tax purposes either (i) taxed as a
partnership or (ii) disregarded as an entity separate from its owner. None of
the Mack Entities have filed, prior to the date hereof or will file prior to the
Closing Date, any election with any taxing authority to be taxed as a
corporation. All necessary actions of the members of the Mack Entities set
forth in SCHEDULE 5.1(A) to confer such power and authority upon the persons
executing this Agreement and all documents which are contemplated by this
Agreement on its behalf have been taken.

(b) Each Mack Entity set forth in SCHEDULE 5.1(B) is a duly
organized and validly existing limited partnership organized under the laws of
the State set forth in

<PAGE>

SCHEDULE 5.1(B), is duly authorized to transact business in the State set forth
in SCHEDULE 5.1(B), has all requisite power and authority to execute and deliver
this Agreement and all other documents and instruments to be executed and
delivered by it hereunder, and except as set forth in SCHEDULE 5.1(C) to perform
its obligations hereunder and under such other documents and instruments in
order to contribute the Exchange Property in accordance with the terms and
conditions hereof. None of the Mack Entities have filed, prior to the date
hereof or will file prior to the Closing Date, any election with any taxing
authority to be taxed as a corporation. Each Mack Entity set forth in SCHEDULE
5.1(B) is taxed as a partnership for federal income tax purposes. All necessary
actions of the Mack Entities set forth in SCHEDULE 5.1(B) to confer such power
and authority upon the persons executing this Agreement and all documents which
are contemplated by this Agreement on its behalf have been taken.

(c) Except as set forth in SCHEDULE 5.1(C), this Agreement,
when duly executed and delivered, will be the legal, valid and binding
obligation of the Mack Contributors and the Mack Entities, enforceable in
accordance with the terms of this Agreement. Except as set forth in SCHEDULE
5.1(C), the performance by the Mack Contributors and the Mack Entities of their
duties and obligations under this Agreement and the documents and instruments to
be executed and delivered by them hereunder will not conflict with, or result in
a breach of, or default under, any provision of any of the organizational
documents of the Mack Entities or any agreements, instruments, decrees,
judgments, injunctions, orders, writs, laws, rules or regulations, or any
determination or award of any court or arbitrator, to which any Mack Contributor
or any Mack Entity is a party or by which its assets are or may be bound.

(d) Annexed hereto as SCHEDULE 5.1(D) is a true, complete
and correct schedule of all of the Leases as of July 31, 1997. Annexed hereto
as SCHEDULE 1.1(A)(II) is a true, complete and correct schedule of all of the
Ground Leases. The Leases are valid and bona fide obligations of the landlord
thereunder and, to MACK's knowledge, the tenants thereunder, and are in full
force and effect. The Ground Leases are valid and bona fide obligations of the
tenant thereunder and, to MACK's knowledge, the landlords thereunder, and are in
full force and effect. To MACK's knowledge, except as set forth in SCHEDULE
5.1(D), no defaults remain uncured pursuant to notices of default sent to any
Tenants and no condition exists which, solely with the passage of time or the
giving of notice or both, will become a default; MACK has not received any
notices of default under the Leases or the Ground Leases; the Leases and the
Ground Leases constitute all of the leases, tenancies or occupancies affecting
the Real Property on the date hereof; all Tenants have commenced occupancy;
except as set forth in the Leases there are no agreements which confer upon any
Tenant or any other person or entity any rights with respect to acquiring all or
a portion of the Exchange Property, nor has any claim been asserted by any
Tenant in writing for an offset to its rent, nor is any Tenant currently
asserting, in writing, a concession, rebate, allowance or free rent.

(e) Annexed hereto as SCHEDULE 5.1(E) is a listing (THE
"RENT ROLL") of the following as of July 31, 1997, which is true, complete and
correct in all material respects for the Exchange Property: (i) the name of each
Tenant; (ii) the fixed rent actually being

<PAGE>

collected; (iii) the expiration date or status of each Lease (including all
rights or options to renew); (iv) the Security Deposit, if any; (v) whether
there is any guaranty of a Tenant's obligations from a third party, and if so
the nature of said guaranty; (vi) arrangements under which any Tenant is
occupying space on the date hereof or will in the future, occupy such space;
(vii) any written notices given by any Tenant of an intention to vacate space in
the future; (viii) the base year(s) and base year amounts for all items of rent
or additional rent billed to each Tenant on that basis; and (ix) any arrearages
of any Tenant beyond thirty (30) days.

(f) Annexed hereto as SCHEDULE 5.1(F) is a true and
complete estimated pro-forma rent roll (the "PRO FORMA RENT ROLL") dated as of
January 1, 1998.

(g) There are no service contracts, equipment leases, union
contracts, employment agreements or other agreements applicable to employees of
PAM or affecting the Exchange Property or the operation thereof, except the
Service Contracts and the contracts set forth on SCHEDULE 5.1(G) annexed hereto.
To MACK's knowledge, all of the Service Contracts are and will on the Closing
Date be unmodified (except in the ordinary course of business) and in full force
and effect without any material default or claim of material default by the Mack
Entities. All sums presently due and payable by the Mack Entities under the
Service Contracts have been fully paid and all sums which become due and payable
between the date hereof and the Closing Date shall be fully paid by MACK within
customary time periods, not to exceed forty-five (45) days from the receipt of
an invoice by MACK. There are no employees of any Mack Entity, PAM, or any
affiliate thereof working at or in connection with the Real Property pursuant to
any of the Service Contracts and contracts set forth on SCHEDULE 5.1(G).

(h) Except as set forth on SCHEDULE 5.1(H) annexed hereto
and except as covered by insurance, there are no actions, suits, labor disputes,
litigation or proceedings currently pending or, to the knowledge of MACK,
threatened against or related to MACK, the Mack Entities (with respect to the
Exchange Property being contributed) or PAM or to all or any part of the
Exchange Property or the Option Properties, the environmental condition thereof,
or the operation thereof. MACK shall be permitted to continue to prosecute
suits set forth on SCHEDULE 5.1(H) and may initiate suits or actions against
former tenants who are no longer in occupancy at any of the Real Property.

(i) Except as set forth on SCHEDULE 5.1(I) annexed hereto,
MACK has received no written notice and has no knowledge of (i) any pending or
contemplated annexation or condemnation proceedings, or private purchase in lieu
thereof, affecting or which may affect the Real Property, or any part thereof,
(ii) any proposed or pending proceeding to change or redefine the zoning
classification of all or any part of the Real Property, (iii) any proposed or
pending special assessments affecting the Real Property or any portion thereof,
(iv) any penalties or interest due with respect to real estate taxes assessed
against the Real Property and (v) any proposed change(s) in any road or grades
with respect to the roads providing a means of ingress and egress to the Real
Property. MACK agrees to furnish CRLP with a copy of any such notice received
within two (2) business days after receipt.

<PAGE>

(j) MACK has provided CRLP with the reports set forth on
SCHEDULE 5.1(J) annexed hereto, which constitute all third-party reports in
MACK's possession or under its control related to the physical condition of the
Real Property and the Option Properties which have been prepared within the last
four (4) years.

(k) Except as set forth on SCHEDULE 5.1(K) annexed hereto,
MACK has no knowledge of any notices, suits, or judgments relating to any
violations (including environmental) of any laws, ordinances or regulations
affecting the Real Property or the Option Properties, or any violations or
conditions that may give rise thereto, and has no reason to believe that any
agency, board, bureau, commission, department or body of any municipal, county,
state or federal governmental unit, or any subdivision thereof, having,
asserting or acquiring jurisdiction over all or any part of the Real Property or
the Option Properties or the management, operation, use or improvement thereof
(collectively, the "GOVERNMENTAL AUTHORITIES") contemplates the issuance
thereof, and there are no outstanding orders, judgments, injunctions, decrees or
writ of any Governmental Authorities against or involving MACK, the Real
Property or the Option Properties.

(l) There are no employees of any Mack Entity, PAM or any
affiliate thereof working at or in connection with the Real Property except as
set forth on SCHEDULE 5.1(L). Said Schedule also sets forth a true and complete
list of all employees presently employed by the Mack Entities, PAM or any
affiliate thereof working at the Real Property and their respective union
affiliations (if any), accrued vacation days and other fringe benefits
(including social security, unemployment compensation, employee disability
insurance, accrued sick days, "welfare" and pension fund contributions, payments
and deposits, if any).

(m) To the knowledge of MACK, the Mack Entities have
performed all of the material obligations and observed all of the material
covenants required of each landlord under the terms of the Leases. Except as
set forth on SCHEDULES 5.1(M-1) and 5.1(M-2) annexed hereto, all work,
alterations, improvements or installations required to be made for or on
behalf of all Tenants under all of the Leases have or will prior to Closing
in all respects been carried out, performed and complied with, and there is
no agreement with any Tenant for the performance of any work to be done in
the future other than that which is required pursuant to its Lease. No work
has been performed at any Exchange Property which would require an amendment
to the certificate of occupancy for such Exchange Property for which an
amendment has not been obtained or is in the process of being obtained, and
any and all work performed at the Exchange Property to the date hereof and to
the Closing Date has been and will be in accordance with the rules, laws and
regulations of all applicable authorities. All undisputed bills and claims
for labor performed and materials furnished to or for the benefit of the
Exchange Property arising prior to the Closing Date will be paid in full by
MACK within customary time periods, not to exceed forty-five (45) days from
the receipt of an invoice by MACK. To the extent any bills and claims for
labor performed and materials furnished to or for the benefit of the Exchange
Property prior to the Closing Date are disputed, MACK shall commence any
actions related to such bills and

<PAGE>

claims promptly, such commencement being no later than forty-five (45) days
from the receipt of an invoice by MACK, and shall diligently prosecute same
to its conclusion. If such action results in either (i) a lien on the
Exchange Property which lien remains unbonded for thirty (30) days, or (ii)
any vendor providing unique services or services at a below market price
refusing to service the Real Property, MACK shall cause payment of same to be
made to remedy same within ten (10) days thereafter. Except as set forth on
SCHEDULES 5.1(M-1) and 5.1(M-2) annexed hereto, all leasing commission
obligations affecting the Exchange Property shall have been paid prior to
Closing. The respective obligations of MACK and CRLP with respect to capital
expenditures, tenant improvement obligations, tenant fit-ups and leasing
commissions relating to the Exchange Property are set forth in Section 13.

(n) MACK has not made a general assignment for the benefit
of creditors, filed any voluntary petition in bankruptcy or suffered the filing
of any involuntary petition by MACK's creditors, suffered the appointment of a
receiver to take possession of all, or substantially all, of MACK's assets,
suffered the attachment or other judicial seizure of all, or substantially all,
of MACK's assets, admitted in writing its inability to pay its debts as they
come due or made an offer of settlement, extension or composition to its
creditors generally.

(o) Except as set forth on SCHEDULE 5.1(O), the Personal
Property will on the Closing Date be owned by the Mack Entities free and clear
of any conditional bills of sale, chattel mortgages, security agreements or
financing statements or other security interests of any kind, other than liens
created by CRLP.

(p) (i) Each Mack Contributor has or will have at
Closing legal and beneficial title to one-hundred (100%) percent of the
Contributed Interests to be contributed hereunder, free of all liens and
encumbrances whatsoever. Each Mack Contributor has the power and authority to
own its respective Contributed Interests. The contribution of the Contributed
Interests pursuant to this Agreement is or will be authorized and within the
power of each Mack Contributor on or prior to the Closing.

(ii) Each Mack Entity has the power and authority to
own its respective Property and to conduct and transact its partnership/LLC
business.

(q) Except as set forth on SCHEDULE 5.1(Q), there are no
agreements relating to the Exchange Property which generate revenue or income,
other than the Leases.

(r) All of the commercial office-service/office properties
actually controlled, directly or indirectly, and legally or beneficially, by
MACK or any one or more of them is included in the Exchange Property other than
the Option Properties, the Eliminated Property and the office-service/office
properties set forth on SCHEDULE 5.1(R) (collectively, the "EXCLUDED
PROPERTIES").

<PAGE>

(s) The Mack Contributors have no knowledge that any part
of the improved portion of the Real Property or the Option Properties has been
designated as a wetland, or any word of similar purport or meaning, under the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 ET SEQ., or any
other applicable federal, state, county or municipal statute, ordinance, rule,
regulation, order or code.

(t) There are no aboveground or underground storage tanks
or vessels which contain any Contaminants at the Real Property or the Option
Properties, regardless of whether such tanks or vessels are regulated tanks or
vessels or not, except as set forth on SCHEDULE 5.1(T).

(u) Except as set forth in SCHEDULE 5.1(U), the Mack
Contributors have no knowledge of outstanding requirements or recommendations by
(i) the insurance company(s) currently insuring the Real Property; (ii) any
board of fire underwriters or other body exercising similar functions, or (iii)
the holder of any mortgage encumbering any of the Real Property, which require
or recommend any repairs or work to be done on the Real Property of a material
nature.

(v) The combined financial statements, including the income
and expense statements and the balance sheets of the Mack Entities and their
affiliates, excluding only those assets, liabilities and operations not
contemplated to be contributed pursuant to this Agreement relating to the
ownership and operation of the Exchange Property and the related combined
statement of income, partners' capital and cash flows, including the footnotes
thereto (the "PROPERTY FINANCIALS") as of and for the years ending December 31,
1994, 1995 and 1996 by Price Waterhouse LLP and for the period of January 1,
1997 through June 30, 1997 (or the most recent fiscal quarter ending date if
later), and reviewed by such accountants (it being understood that such audit or
review relied upon the reports of certain other auditors with respect to the
Patriot Entities), fairly present the combined financial position of the Mack
Entities relating to the Exchange Property as at such dates and the combined
results of operations and combined cash flows of the Mack Entities relating to
the ownership and operation of the Exchange Property for such respective
periods, in each case in accordance with generally accepted accounting
principles ("GAAP") consistently applied for the periods covered thereby. The
Property Financials from January 1, 1997 through June 30, 1997 (or the most
recent fiscal quarter ending date if later) are subject to the normal year-end
adjustments described in SCHEDULE 5.1(V). There has been no material adverse
change in the financial condition of the Exchange Property between June 30, 1997
and the date hereof and same shall be true and correct as of the Closing Date.

(w) (i) Annexed hereto as SCHEDULE 5.1(W)(I) is a true
and complete list of all Mack Entities' and PAM's collective bargaining
agreements, employment and consulting agreements, non-competition agreements,
executive compensation plans, bonus plans, directors' fee arrangements, deferred
compensation agreements, employee pension plans or retirement plans, employee
profit sharing plans, 401(k) savings plans, multiemployer plans,

<PAGE>

employee stock purchase and stock option plans, employee welfare plans,
severance plans, group life insurance, hospitalization insurance or other
similar plans or arrangements (either written or oral, but only to the extent an
oral plan provides material benefits) providing for benefits to any employees of
the Mack Entities or PAM who are offered employment with Mack-Cali as of the
Closing Date and who accept the offer ("NEW CALI EMPLOYEES") or with respect to
which a New Cali Employee is a party.

(ii) The Mack Entities have complied and currently
are in compliance in all material respects, both as to form and operation, with
the applicable provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the Internal Revenue Code of 1986, as amended
(the "CODE"), with respect to the 401(k) Savings Plan (the "MACK 401(K) PLAN").
With respect to the Mack 401(k) Plan, MACK has supplied CRLP with the most
recent determination letter issued by the Internal Revenue Service. PAM has
complied and currently is in compliance in all material respects, both as to
form and operation, with the applicable provisions of ERISA and the Code, with
respect to its 401(k) Savings Plan (the "PAM 401(K) PLAN"). With respect to the
PAM 401(k) Plan, PAM has supplied CRLP with the most recent determination letter
issued by the Internal Revenue Service. With respect to collective bargaining
agreements which cover New Cali Employees, MACK and PAM have supplied CRLP with
a true and complete copy of each collective bargaining agreement currently in
effect including all amendments thereto.

(x) The Mack Group beneficially owns, either directly or
indirectly, after applying the attribution rules set forth on SCHEDULE 26.2(V)
in the aggregate, zero (0) shares of Common Stock.

(y) (i) MACK does not own or operate any property which
any Governmental Authority has demanded in writing, addressed to and received by
MACK or any of its affiliates, counsel or agents, be cleaned up or
environmentally remediated and which has not been cleaned up or environmentally
remediated.

(ii) Except as disclosed in SCHEDULE 5.1(Y)(II), to
the Mack Contributors' knowledge, no Contaminants have been Discharged which
relate to the Real Property and the Option Properties which would allow a
Governmental Authority to demand that a cleanup be undertaken.

(iii) To the knowledge of the Mack Contributors, no
Section 104(e) informational request has been received by MACK issued pursuant
to CERCLA, with respect to the Real Property or the Option Properties.

(iv) To the knowledge of the Mack Contributors, all
pre-existing aboveground and underground storage tanks and vessels, if any, at
the Real Property and the Option Properties have been removed and their contents
disposed of in accordance with and pursuant to all applicable Environmental
Laws, except as set forth on SCHEDULE 5.1(Y)(IV).

<PAGE>

(v) To the knowledge of the Mack Contributors, there is no
asbestos or asbestos containing material requiring remediation under
Environmental Laws on the Real Property or the Option Properties, except as set
forth on SCHEDULE 5.1(Y)(V).

(vi) To the knowledge of the Mack Contributors, all
transformers and capacitors containing polychlorinated biphenyls ("PCBS") , and
all "PCB Items", as defined in 40 CFR, Section 761.3, located on or affecting
the Real Property or the Option Properties, are identified in SCHEDULE
5.1(Y)(VI) and are in compliance with all Environmental Laws.

(vii) To the knowledge of MACK, the Mack Entities are in
possession of all material certificates, licenses and permits (the "PERMITS"),
including, without limitation, environmental Permits, required to operate the
Real Property and the Option Properties, except as set forth in SCHEDULE
5.1(Y)(VII). To the Mack Contributors' knowledge, there is no violation of any
Environmental Laws with respect to any Permits, all Permits are in full force
and effect, are transferable with the Exchange Property or the Option
Properties, as the case may be, without additional payment by CRLP, and shall,
upon closing, be transferred to CRLP by MACK.

(viii) Except as set forth in SCHEDULE 5.1(Y)(VIII), the Real
Property and Option Properties have not been used during the period of the
respective Mack Entities' ownership, or to the knowledge of the Mack
Contributors, previously, as a transfer station, incinerator, resource recovery
facility, landfill or other similar facility for receiving or treating, storing
or disposing of waste, garbage, refuse and other discarded materials resulting
from, without limitation, industrial, commercial, agricultural, domestic and
community activities, including without limitation sanitary, hazardous, medical,
special or other waste.

(ix) MACK has not knowingly permitted, and shall not
knowingly permit any person or entity to engage in any activity on the Real
Property or the Option Properties, in violation of Environmental Laws.

(x) There are no engineering or institutional controls
designed to address the Discharge of Contaminants or required by Environmental
Laws or Governmental Authorities at any Real Property or any of the Option
Properties, including without limitation any deed notice, declaration of
environmental restriction, groundwater classification exception area, well
restriction area, or other notice or use limitations pursuant to Ariz. Stat.
Ann. Section 49-922, Cal. Health & Safety Code Section 25159, Fla. Stat. Ann.
Section 403.704, Iowa Code Ann. Section 455B.481, Neb. Rev. Stat. Section
81-1505, N.J. Stat. Ann. Section 13:1E-56, N.J. Stat. Ann. Section 58:10B-13,
N.Y. Envtl. Conserv. Law Section 27-0918, 35 Pa. Cons. Stat. Ann. Section
6018.104, 35 Pa. Cons. Stat. Ann. Section 6018.405, 35 Pa. Cons. Stat. Ann.
Section 6020.512, Tex. Health & Safety Code Ann. Section 361.017 and the
regulations promulgated thereunder, as well as any other applicable federal,
state, county or municipal statute, ordinance, rule, regulation, order or code.

<PAGE>

(xi) There are no federal or state liens, as referenced
under CERCLA or Ariz. Rev. Stat. Ann. Section 49-295, Cal. Water Code Section
13305, Cal. Health & Safety Code Section 25365.6, Fla. Stat. Ann. Section
376.308, Iowa Code Ann. Sections 455B.396, N.J. Stat. Ann. Section 13:1K-9.3,
N.J. Stat. Ann. Section 58:10-23.11f(f), N.Y. Nav. Law Section 181-a to -e, 35
Pa. Cons. Stat. Ann. Section 6020.509, 35 Pa. Cons. Stat. Ann. Section 6021.702,
Tex. Health & Safety Code Ann. Section 361.194 and the regulations promulgated
thereunder, as well as any other applicable Environmental Law that have attached
to the Real Property or Option Properties.

(xii) MACK has provided CRLP with all environmental site
assessments, investigations, and documents related to Contaminants and to prior
operations which operations or Contaminants are reasonably likely to have
impacted the environment, and all other material "Environmental Documents", (as
that term is defined below) relating to the physical condition of the Real
Property and the Option Properties in their possession or under their control
and shall continue to do so after the execution of this Agreement promptly upon
their receipt.

(xiii) For purposes of this Agreement, the following words
shall have the respective meaning set forth below:

(A) "CONTAMINANTS" shall include, without
limitation, any regulated substance, toxic substance, hazardous substance,
hazardous waste, pollution, pollutant or contaminant, as defined or referred to
in the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section
6901 ET SEQ.; the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601 ET SEQ. ("CERCLA"); the
Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 ET SEQ.;
together with any amendments thereto, regulations promulgated thereunder and all
substitutions thereof, as well as words of similar purport or meaning referred
to in any other applicable federal, state, county or municipal environmental
statute, ordinance, rule or regulation, including, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde and petroleum products and
petroleum-based derivatives.

(B) "DISCHARGE" shall mean the releasing, spilling,
leaking, leaching, disposing, pumping, pouring, emitting, emptying, treating or
dumping of Contaminants at, into, onto or from the Real Property or the Option
Properties, as the case may be, regardless of whether the result of an
intentional or unintentional action or omission.

(C) "ENVIRONMENTAL DOCUMENTS" shall mean all
environmental documentation in the possession or under the control of MACK
concerning the Real Property or the Option Properties, as the case may be, or
their environs, including, without limitation, all sampling plans, cleanup
plans, preliminary assessment plans and reports, site investigation plans and
reports, remedial investigation plans and reports, remedial action plans and
reports, or the equivalent, sampling results, sampling result reports, data,
diagrams, charts,

<PAGE>

maps, analysis, conclusions, quality assurance/quality control documentation,
correspondence to or from any Governmental Authority, submissions to any
Governmental Authority and directives, orders, approvals and disapprovals issued
by any Governmental Authority.

(D) "ENVIRONMENTAL LAWS" means each and every
applicable federal, state, county or municipal statute, ordinance, rule,
regulation, order, code, directive or requirement of any Governmental Authority
in any way related to Contaminants.

(z) MACK and each of their affiliated entities have paid
all Taxes (as hereinafter defined) due and payable prior to the Closing and
timely filed all returns and reports required to be filed prior to the Closing
with respect to its business and the ownership and operation of the Exchange
Property and Option Properties (by it or any predecessor entity) for which CRLP
could be held liable or a claim made against the acquired property. Each such
tax return or report is complete and accurate in all material respects. MACK
and each of their affiliated entities either has paid or will pay, or has
provided or will provide for a cash reserve, for all Taxes related to the period
ending on the Closing Date but required to be paid after the Closing Date with
respect to its business and the operation of the Exchange Property and the
Option Properties (by it or any predecessor entity) for which CRLP could be held
liable or a claim made against the acquired property. True and complete copies
of all Federal, State and local tax returns and reports that have been filed by
the Mack Entities (or a predecessor entity) for 1994, 1995, 1996 and 1997 and
all written communications with a taxing authority relating thereto have or
will, upon request, be delivered to CRLP during the Cali Inspection Period. To
MACK's knowledge, no claim has been made by a taxing authority in a jurisdiction
in which the Mack Entities do not file tax returns. Except as set forth in
SCHEDULE 5.1(Z), there are no audits or other proceedings by any taxing
authority pending or, to the knowledge of MACK and each of its affiliated
entities, threatened with respect to the Taxes resulting from the Mack Entities'
business and the ownership and operation of the Exchange Property and the Option
Properties (by it or any predecessor entities) for which CRLP could be held
liable or a claim made against the acquired property and no agreement extending
the period for assessment and collection has been executed with respect thereto.
To the knowledge of MACK and each of its affiliated entities, no assessment of
Taxes is proposed against the Mack Entities (including any predecessor
entities), the Exchange Property or the Option Properties. There are no
agreements or waivers extending the statutory period of limitations applicable
to any return or report filed or required to be filed by MACK or any of
affiliated entities with respect to any Taxes. No Mack Entity is a party to,
and has no liability under (including liability with respect to a predecessor
entity), any indemnification, allocation or sharing agreement with respect to
Taxes.

(aa) Annexed hereto as SCHEDULE 5.1(AA) is a listing of the
following, which is true, complete and correct in all material aspects for each
Real Property contributed to CRLP: (i) its adjusted basis for federal income tax
purposes as of June 30, 1997; (ii) the date placed in service; (iii) the cost
recovery method; and (iv) the remaining useful life for federal income tax
purposes.

<PAGE>

(bb) Except as set forth in SCHEDULE 5.1(BB), to MACK's
knowledge no maintenance association affiliated with the Real Property (i) is
delinquent in any payment to any contractor performing services on the Real
Property, (ii) has failed to collect any monthly maintenance premiums or
assessment from any member, (iii) has borrowed any money, (iv) has committed or
is in the process of performing any work in the nature of a capital expenditure
program relating to any Building, (v) has failed to file any local, state or
federal tax return, or (vi) is currently involved in any form of litigation,
mediation, arbitration or is subject to any judgment or suit of any nature.

(cc) No representation or warranty made by MACK contained in
this Agreement, and no statement contained in any document, certificate,
Schedule or Exhibit furnished or to be furnished by or on behalf of MACK to CRLP
or any of its designees or affiliates pursuant to this Agreement (including,
without limitation, any information supplied in writing by MACK to CRLP or Cali
for inclusion in the proxy statement to solicit Cali's stockholder approval for
the transactions contemplated herein) contains or will contain any untrue
statement of a material fact (taking into account any knowledge, materiality or
other similar qualifiers contained therein) or, to MACK's knowledge, omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading or necessary in order to fully and fairly provide the
information required to be provided in any such document, certificate, Schedule
or Exhibit.

(dd) As used throughout this Agreement, the phrases "to
MACK's knowledge," "to the knowledge of MACK", "to the Mack Contributors'
knowledge" or any similar derivation thereof, shall mean the actual knowledge of
William Mack, Frederick Mack, David Mack, Earle Mack (collectively, the "MACK
GROUP"), James Mertz and Mitchell Hersh , after due inquiry and investigation.

(ee) MACK is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code, and MACK will furnish to CRLP, if requested by
CRLP, an affidavit in form satisfactory to CRLP confirming the same.

(ff) Other than as specifically set forth in the Leases and
the property questionnaires, (i) the only services provided by MACK (or any
other Person acting as lessor or landlord for any of the Real Property) to the
Tenants of the Real Properties are listed on SCHEDULE 5.1(FF)(I); (ii) except as
set forth in SCHEDULE 5.1(FF)(II), no Tenant pays rent based on the income or
profits of any person; and (iii) except as set forth in SCHEDULE 5.1(FF) (III),
there is no agreement with any Tenant pursuant to which more than fifteen (15%)
percent of the total rent payable by such Tenant for both real and personal
property is attributable to personal property (as determined in accordance with
Section 856(d)(i)(C) of the Code).

(gg) Except as set forth on SCHEDULE 5.1(GG), no Mack Entity
has any material liabilities or obligations of any nature (whether absolute,
accrued, contingent or

<PAGE>

otherwise) except for (a) liabilities or obligations reflected or reserved
against in its June 30, 1997 unaudited consolidated balance sheet, (b)
liabilities and obligations relating to outstanding leases that are not required
to be disclosed under GAAP, (c) current liabilities incurred in the ordinary
course of business since the date of such balance sheet and (d) the Mortgages.

5.2 In order to induce Cali and CRLP to issue the Mack Common
Units, the Preferred Units and the Warrants (collectively, the "MACK
SECURITIES"), MACK hereby acknowledges its understanding that the issuance of
the Mack Common Units, the Preferred Units and the Warrants is intended to be
exempt from registration under the Securities Act of 1933, as amended, and the
rules and regulations in effect thereunder (the "ACT"). In furtherance thereof,
MACK represents and warrants to CRLP to as follows:

(a) The Mack Unit Holders, the Preferred Unit Holders and
the Warrant Holders (collectively, the "MACK SECURITY HOLDERS") are acquiring
the Mack Securities, solely for their own account for the purpose of investment
and not as a nominee or agent for any other person and not with a view to, or
for offer or sale in connection with, any distribution of any thereof. The Mack
Security Holders agree and acknowledge that they are not permitted to offer,
transfer, sell, assign, pledge, hypothecate or otherwise encumber or in any
manner dispose of (each a "TRANSFER") any of the Mack Securities except as
provided in this Agreement and the Agreement of Limited Partnership of CRLP as
amended through the Closing Date and as it may be amended in the future in
accordance with its terms (the "OP AGREEMENT").

(b) The Mack Security Holders are knowledgeable,
sophisticated and experienced in business and financial matters; the Mack
Security Holders fully understand the limitations on Transfer described in this
Agreement and the OP Agreement. The Mack Security Holders are able to bear the
economic risk of holding the Mack Securities for an indefinite period and are
able to afford the complete loss of their investment in the Mack Securities; the
Mack Security Holders have received and reviewed the OP Agreement and copies of
the documents filed by Cali since its inception under the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), and all registration statements
and related prospectuses and supplements filed by Cali and declared effective
under the Securities Act of 1933, as amended, since its inception (collectively,
the "SEC DOCUMENTS") and have been given the opportunity to obtain any
additional information or documents and to ask questions and receive answers
about such documents, Cali and CRLP and the business and prospects of Cali and
CRLP which Mack Security Holders deem necessary to evaluate the merits and risks
related to its investment in the Mack Securities; and the Mack Security Holders
understand and have taken cognizance of all risk factors related to the purchase
of the Mack Securities.

(c) The Mack Security Holders acknowledge that they have
been advised that (i) except as permitted by this Agreement or the OP Agreement,
the Mack Securities must be held indefinitely, and the Mack Security Holders
will continue to bear the economic risk of the investment in the Mack
Securities, unless they are redeemed, converted or exercised

<PAGE>

pursuant to the OP Agreement or are subsequently registered under the Act or an
exemption from such registration is available, (ii) it is not anticipated that
there will be any public market for the Units at anytime, (iii) Rule 144
promulgated under the Act may not be available with respect to the sale of any
securities of CRLP (and that upon redemption of the Mack Common Units and the
Underlying Units (as defined in Section 18.4) and upon exercise of the Warrants
for Common Units, a new holding period under Rule 144 may commence), and CRLP
has made no covenant, and makes no covenant, to make Rule 144 available with
respect to the sale of any securities of CRLP (although Cali and CRLP have
agreed to register the Common Stock underlying all of the securities issued to
MACK hereunder pursuant to the Registration Rights Agreement), (iv) a
restrictive legend as set forth in Section 5.4(a) below shall be placed on the
certificates or instruments representing the Mack Securities, and (v) a notation
shall be made in the appropriate records of CRLP indicating that the Mack
Securities are subject to restrictions on transfer.

(d) The Mack Security Holders also acknowledge that (i) the
redemption, conversion or exercise of the Mack Securities into shares of Common
Stock is subject to certain restrictions contained in the OP Agreement and in
Section 18 of this Agreement; and (ii) the shares of said Common Stock which may
be received upon such a redemption may, under certain circumstances, be
restricted securities and be subject to limitations as to transfer, and
therefore subject to the risks referred to in Section 5.2(c) above.
Notwithstanding anything herein or in the OP Agreement to the contrary, the Mack
Security Holders hereby acknowledge and agree and covenant that they may not and
will not (i) exercise the Redemption Rights (as defined in the OP Agreement)
until after the date which is one (1) year from the Closing Date with respect to
the Mack Common Units and Common Units received pursuant to the conversion of
Series A Preferred Units; (ii) exercise the Redemption Rights until after the
date which is three (3) years from the Closing Date with respect to Common Units
received pursuant to the conversion of Series B Preferred Units (with the
exception of Common Units received pursuant to the conversion of the Series B
Preferred Units which may pass to an estate as a result of a death occurring
after the Closing Date (the "ESTATE UNITS"), as to which Redemption Rights may
be exercised after the first anniversary of the Closing Date); and (iii)
exercise the Warrants until a date which is one (1) year after the Closing Date.

(e) Each of the Mack Security Holders is an "accredited
investor" (as such term is defined in Rule 501 (a) of Regulation D under the
Act) and each Mack Security Holder has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the prospective investment.

5.3 All representations and warranties made by MACK in this
Agreement shall survive the Closing Date for a period of one (1) year, except
that the representations and warranties set forth in clauses (a), (b), (c) and
(z) of Section 5.1 shall survive the Closing Date for the applicable period of
the statute of limitations (unless otherwise specified herein), and shall not be
merged in the delivery of the Deed, assignment of Ground Lease or the Assignment
of Contributed Interests. Notwithstanding the foregoing, to the extent that a
Tenant shall certify

<PAGE>

in its Estoppel Certificate as to any of the matters which are contained in the
representations and warranties made by MACK in Section 5.1(e) of this Agreement,
then MACK's representations and warranties as to such matters shall terminate.
MACK agrees to indemnify and defend CRLP, and to hold CRLP harmless, from and
against any and all claims, liabilities, losses, deficiencies and damages as
well as reasonable expenses (including attorney's, consulting and engineering
fees), and interest and penalties related thereto, incurred by CRLP, by reason
of or resulting from any breach, inaccuracy, incompleteness or nonfulfillment of
the representations, warranties, covenants and agreements of MACK contained in
this Agreement to the extent same was not actually known at Closing by any
senior officer of Cali or CRLP, up to a maximum liability of $50,000,000 except
that such maximum liability is subject to the provisions of Section 5.7. In
addition, CRLP shall not have a right to bring a claim against MACK by virtue of
any of the representations or warranties being false or misleading unless (i)
such claim is brought on or prior to the date through which such representation
or warranty survives, (ii) and until notice of the false or misleading
representation or warranty has been given to a Mack Contributor and a Mack
Contributor has had a reasonable opportunity to cure same and (iii) the
aggregate damages to CRLP resulting from such false, misleading or untrue
representations and warranties are reasonably expected to exceed $1,500,000, but
thereafter CRLP may bring a claim against MACK for the entire amount of its
aggregate damages up to $50,000,000. The MK Contributors and MK Entities shall
only be liable for any damages hereunder related to such Exchange Property owned
by them and such liability shall be joint and several among the MK Contributors
and the MK Entities. The Patriot Contributors and the Patriot Entities shall
only be liable for any damages hereunder with respect to any Exchange Property
owned by them and such liability shall be joint and several among the Patriot
Contributors and the Patriot Entities.

5.4 (a) The Mack Unit Holders hereby acknowledges that each
Unit Certificate representing the Mack Common Units shall bear the following
legend:

"THE UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES
WITH THE PROVISIONS OF THE AMENDED AND RESTATED PARTNERSHIP AGREEMENT DATED AS
OF JANUARY 16, 1997 AS AMENDED AS OF _______________ __, 1997 (A COPY OF WHICH
IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN
SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER. IN ADDITION, THE

<PAGE>

UNITS ARE SUBJECT TO THE PROVISIONS OF SECTION 18.1 OF A CERTAIN CONTRIBUTION
AND EXCHANGE AGREEMENT DATED __________________ ___, 1997 (A COPY OF WHICH IS ON
FILE WITH THE OPERATING PARTNERSHIP)."

(b) The Mack Unit Holders shall continue to hold legal and
beneficial title (subject to the permitted activities in clauses (A) and (B) of
Section 18.5 hereof and transfers to Permitted Transferees as defined therein)
to the Mack Common Units for a period of one (1) year following the Closing (the
"REPRESENTATION HOLDING PERIOD").

5.5. (a) The Preferred Unit Holders hereby acknowledge that the
certificates representing the Series A Preferred Units and the Series B
Preferred Units shall bear the following legend:

"THE PREFERRED UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE AMENDED AND RESTATED PARTNERSHIP
AGREEMENT DATED AS OF JANUARY 16, 1997 AS AMENDED AS OF ________________ ___,
1997 (A COPY OF WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS
OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE PREFERRED UNITS REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF
THE OPERATING PARTNERSHIP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF
COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
THE ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER. IN ADDITION, THE
PREFERRED UNITS ARE SUBJECT TO THE PROVISIONS OF SECTION 18.1 OF A CERTAIN
CONTRIBUTION AND EXCHANGE AGREEMENT DATED __________________ ___, 1997 (A COPY
OF WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP)."

(b) The Preferred Unit Holders shall continue to hold legal
and beneficial title to the Preferred Units (or if such Preferred Units have
been converted, the Common Units received pursuant to such conversion) for the
Representation Holding Period (subject to the permitted activities in clauses
(A) and (B) of Section 18.5 hereof and transfers to Permitted Transferees as
defined therein).

(c) The Warrant Holders shall continue to hold legal and
beneficial title to the Warrants for the Representation Holding Period (subject
to the permitted activities in

<PAGE>

clauses (A) and (B) of Section 18.5 hereof and transfers to Permitted
Transferees as defined therein).

5.6 MACK acknowledges that it is not in a significantly disparate
bargaining position with respect to CRLP in connection with the transaction
contemplated by this Agreement and that MACK was represented by legal counsel in
connection with this transaction.

5.7 Notwithstanding anything to the contrary contained in Section
5.3, the right of CRLP to pursue a claim for a failure of MACK to perform the
obligations set forth in Sections 3.4(a), 3.4(d), 7.5, 11.2, 13.1, 15, and any
agreement entered into pursuant to Section 28 shall be without regard to a
minimum in damages suffered, and shall not be subject to the cap on damages, as
provided in Section 5.3, nor shall any recovery on account of a failure to
perform in accordance with said Sections apply to the $50,000,000 cap.

6. REPRESENTATIONS AND WARRANTIES OF CALI AND CRLP.

6.1 In order to induce MACK to perform as required hereunder, Cali
and CRLP hereby jointly and severally warrant and represent the following:

(a) (i) CRLP is a duly organized and validly existing
limited partnership organized and in good standing under the laws of the
State of Delaware, has all requisite power and authority to execute and
deliver this Agreement and all other documents and instruments to be executed
and delivered by it hereunder, and except as set forth on Schedule 6.1(a) to
perform its obligations hereunder and under such other documents and
instruments in order to acquire the Exchange Property in accordance with the
terms and conditions hereof. All necessary actions of the partners of CRLP
to confer such power and authority upon the persons executing this Agreement
and all documents which are contemplated by this Agreement on its behalf have
been taken.

(ii) Cali is a duly organized and validly existing
corporation organized and in good standing under the laws of the State of
Maryland, has all requisite power and authority to execute and deliver this
Agreement and all other documents and instruments to be executed and
delivered by it hereunder, and except as set forth on Schedule 6.1(a) to
perform its obligations hereunder and under such other documents and
instruments in order to permit CRLP to acquire the Exchange Property in
accordance with the terms and conditions hereof. All necessary actions of
the board of directors of Cali to confer such power and authority upon the
persons executing this Agreement and all documents which are contemplated by
this Agreement on its behalf have been taken.

(b) Except as set forth on Schedule 6.1(a), this
Agreement and the agreements and other documents to be executed and delivered
by each of Cali and CRLP hereunder, when duly executed and delivered, will be
the legal, valid and binding obligation of each of Cali and CRLP, enforceable
in accordance with the terms of this Agreement. Except as set forth on
Schedule 6.1(a), the performance by each of Cali and CRLP of each of its
duties and obligations under this Agreement and the documents and instruments
to be executed and delivered by each of them hereunder will not conflict
with, or result in a breach of,

<PAGE>

or default under, any provision of any of the organizational documents of each
of Cali and CRLP or any agreements, instruments, decrees, judgments,
injunctions, orders, writs, laws, rules or regulations, or any determination or
award of any court or arbitrator, to which each of Cali and CRLP is a party or
by which each of its assets are or may be bound.

(c) The Mack Securities to be issued to the Mack Security
Holders and any Units to be issued upon the conversion of the Preferred Units or
exercise of the Warrants are duly authorized and, when issued by CRLP, will be
fully paid and non-assessable, free and clear of any mortgage, pledge, lien,
encumbrance, security interest, claim or rights of interest of any third party
of any nature whatsoever. The shares of Common Stock to be issued by Cali upon
redemption of the Mack Common Units, or the Common Units underlying the
Preferred Units or issued upon exercise of the Warrants or upon redemption of
the Common Units received upon the exercise of the Warrants, are authorized and
will be reserved for future listing with the New York Stock Exchange prior to
the date upon which any of the same become exercisable or redeemable for Common
Stock, and, upon such issuance, will be fully paid and non-assessable, free and
clear of any mortgage, pledge, lien, encumbrance, security interest, claim or
rights of interest of any third party of any nature whatsoever.

(d) CRLP has furnished to the Mack Contributors a true and
complete copy of the OP Agreement, as amended to date.

(e) Cali has caused to be delivered to the Mack
Contributors copies of the SEC Documents and will cause to be delivered to the
Mack Contributors copies of such additional documents as may be filed by Cali
pursuant to the Act or the Exchange Act on or prior to the Closing Date. The
SEC Documents were, and those additional documents filed between the date hereof
and the Closing will be, prepared and filed in compliance with the rules and
regulations promulgated by the SEC, and do not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein in order to make the statements contained therein, in light of
the circumstances under which they were made or will be made, not misleading
(excluding any and all information supplied in writing by MACK to Cali and/or
CRLP for inclusion in the proxy statement to solicit Cali's stockholder approval
for the transactions contemplated herein).

(f) The consolidated financial statements (the "CALI
FINANCIALS") included in the SEC Documents have been prepared in accordance with
GAAP applied on a consistent basis during the period involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q) and present fairly (subject, in the case of the
unaudited statements, to normal, recurring year-end audit adjustments) the
consolidated financial position of Cali and its Subsidiaries at the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended. For purposes of this Agreement, the terms "Subsidiary" and
"Subsidiaries" shall mean (i) any entity of which Cali (or other specified
entity) shall own directly or indirectly through a subsidiary, a nominee
arrangement or otherwise (x) at least a majority of the outstanding capital
stock (or other shares

<PAGE>

of beneficial interest) or (y) at least a majority of the partnership, joint
venture or similar interests, and (ii) any entity in which Cali (or other
specified entity) is a general partner or joint partner, including without
limitation CRLP; for purposes of Section 6.1(f) only, the terms "Subsidiary" or
"Subsidiaries" shall specifically exclude Cali Services, Inc. and Grove Street
Urban Renewal Corp., which are the only non-qualified REIT subsidiaries of Cali
as of the date hereof.

(g) No action, suit, claim, investigation or proceeding,
whether legal or administrative or in mediation or arbitration, is pending or,
to the best of each of Cali's and CRLP's knowledge, threatened, at law or in
equity, against either of Cali or CRLP before or by any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality which would prevent either of Cali or CRLP from performing its
respective obligations pursuant to this Agreement. There are no judgments,
decrees or orders entered on a suit or proceeding against Cali or CRLP, an
adverse decision which might, or which judgment, decree or order does, adversely
affect Cali's and CRLP's ability to perform its respective obligations pursuant
to, or MACK's rights under, this Agreement, or which seeks to restrain,
prohibit, invalidate, set aside, rescind, prevent or make unlawful this
Agreement or the carrying out of this Agreement or the transactions contemplated
hereby.

(h) The execution and delivery of this Agreement and the
performance by each of Cali and CRLP of its respective obligations hereunder do
not and will not conflict with or violate any law, rule, judgment, regulation,
order, writ, injunction or decree of any court or governmental or
quasi-governmental entity with jurisdiction over Cali or CRLP, including,
without limitation, the United States of America, the States of New York, New
Jersey, Pennsylvania, Connecticut, Delaware and Maryland or any political
subdivision of any of the foregoing, or any decision or ruling of any arbitrator
to which Cali or CRLP is a party or by which Cali or CRLP is bound or affected.

(i) Except for CRLP and as set forth on SCHEDULE 6.1(I),
Cali and CRLP have no Subsidiaries and no interests or investments in any
partnership, trust or other entity or organization. Each Subsidiary of Cali and
CRLP listed on SCHEDULE 6.1(I) has been duly organized, is validly existing and
in good standing under the laws of the jurisdiction of its organization, has the
corporate power and authority to own its properties and to conduct its business
and is duly registered, qualified and authorized to transact business and is in
good standing in each jurisdiction in which the conduct of its business or the
nature of its properties requires such registration, qualification or
authorization, except where the failure to be so registered, qualified or
authorized and in good standing would not have a material adverse effect on Cali
and its Subsidiaries, taken as a whole; all of the outstanding equity or other
participating interests of each Subsidiary listed on SCHEDULE 6.1(I) have been
duly authorized and validly issued, are fully paid and non-assessable.

(j) Except as disclosed in the SEC Documents filed with the
SEC prior to the date hereof or in SCHEDULE 6.1(J), since June 30, 1997, Cali
and each of its

<PAGE>

Subsidiaries has conducted its business only in the ordinary course of such
business and has not (i) sold or acquired any real estate or interest therein or
(ii) leased all or substantially all of any property or (iii) entered into any
financing arrangements in connection therewith or (iv) granted an option to
purchase or lease all or substantially all of any property or (v) entered into a
contract, letter of intent, term sheet or other similar instrument to do any of
the foregoing and there has not been any change, circumstance or event that has
resulted in a material adverse effect on the business, properties, results of
operations or financial condition of Cali and its Subsidiaries, taken as a
whole.

(k) Except as set forth on SCHEDULE 6.1(K), neither Cali
nor any Subsidiary has any material liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise) except for (i) liabilities
or obligations reflected or reserved against in its June 30, 1997 unaudited
consolidated balance sheet, (ii) liabilities and obligations relating to
outstanding leases that are not required to be disclosed under GAAP and (iii)
current liabilities incurred in the ordinary course of business since the date
of such balance sheet.

(l) (i) As of the second business day immediately
preceding the date hereof: (A) the authorized capital stock of Cali consisted
of 190,000,000 shares of its Common Stock and 5,000,000 shares of preferred
stock, par value $.01 per share (the "PREFERRED STOCK"); (B) the issued and
outstanding shares of capital stock of Cali consisted of 36,622,012 shares of
Common Stock; (C) no shares of Preferred Stock were outstanding; and (D) all
the outstanding shares of capital stock of Cali have been duly and validly
issued and are fully paid and non-assessable.

(ii) As of the second business day immediately
preceding the date hereof the issued and outstanding Units consist of 4,090,170
Common Units and no Preferred Units.

(iii) Except for the Mack Common Units, the Preferred
Units, the Warrants and the conversion or exchange rights which attach to the
warrants, options and convertible securities which are listed on SCHEDULE
6.1(L)(III), as of the date hereof and except for the existing outstanding Units
and options granted under the Cali Employee and Director Stock Option Plans (as
to which 1,858,259 shares are issuable as of the second business day immediately
preceding the date hereof subject, in certain cases, to vesting requirements),
there are no shares of Common Stock or any other equity security of Cali
issuable upon conversion or exchange of any security of Cali as of the date
hereof. As of the date hereof, no stockholder of Cali is entitled to any
preemptive or similar rights to subscribe for shares of capital stock of Cali.

(m) (i) Cali (A) intends to file its federal income tax
return for the tax year that ended on December 31, 1996 as a real estate
investment trust within the meaning of Sections 856 and 857 of the Code
("REIT"), (B) has complied with all applicable provisions of the Code relating
to a REIT for 1994, 1995, and 1996 (C) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for 1997 and thereafter and
(D) has not taken

<PAGE>

or omitted to take any action which would reasonably be expected to result in a
challenge to its status as a REIT, and no such challenge is pending or, to
Cali's knowledge, threatened.

(ii) Cali has timely filed with the appropriate
taxing authorities all tax returns required to be filed by it or has timely
requested extensions and any such request has been granted and has not expired.
Each such tax return is complete and accurate in all material aspects. All
taxes shown as owed by Cali or any of its Subsidiaries on any tax return have
been paid or accrued, except for taxes being contested in good faith and for
which adequate reserves have been taken. None of Cali or any of its
Subsidiaries has executed or filed with the Internal Revenue Service or any
other taxing authority any agreement now in effect extending the period for
assessment or collection of any Tax. Except as set forth in SCHEDULE
6.1(M)(II), none of Cali or any of its Subsidiaries is a party to any material
pending action or proceedings by any taxing authority for assessment or
collection of any Tax, and no material claim for assessment or collection of any
Tax has been asserted against it. True and complete copies of all federal,
state and local income or franchise tax returns that have been filed by Cali and
each of its Subsidiaries for 1994, 1995 and 1996 and all written communications
with a taxing authority relating thereto will be delivered to the Mack
Contributors or have been or will hereafter promptly be made available to
representatives of the Mack Contributors. To Cali's knowledge, no claim has been
made by a taxing authority in a jurisdiction where Cali or any of its
Subsidiaries does not file tax returns that it is or may be subject to taxation
by the jurisdiction. Except as set forth in SCHEDULE 6.1(M)(II), there is no
material dispute or claim concerning any Tax liability of Cali or any of its
Subsidiaries, (A) claimed or raised by any taxing authority in writing or (B) as
to which Cali or any of its Subsidiaries has knowledge, and neither Cali nor any
of its Subsidiaries has entered into or intends to enter into any agreements
with any taxing authority, including but not limited to closing agreements.

(iii) To its knowledge, as of the date hereof, Cali is
a "domestically-controlled" REIT within the meaning of Code Section
897(h)(4)(B).

(iv) Cali represents and warrants that to its
knowledge, except as set forth in SCHEDULE 6.1(M)(IV), no person or entity which
would be treated as an "individual" for purposes of Section 542(a)(2) of the
Code (as modified by Section 856(h) of the Code) owns or would be considered to
own (taking into account the ownership attribution rules under Section 544 of
the Code, as modified by Section 856(h) of the Code) in excess of 9.8% of the
value of the outstanding equity interest in Cali.

(v) Cali represents and warrants that (A) each
Subsidiary organized as a partnership including, without limitation, CRLP (and
any other Subsidiary that files tax returns as a partnership for federal income
tax purposes) was and continues to be classified as a partnership for federal
income tax purposes; and (B) each corporation or association which is taxable as
a corporation for federal income tax purposes and in which Cali has a direct or
indirect interest is either (i) a "qualified REIT subsidiary", as such term is
defined in Code Section 856(i), or (ii) a corporation of which less than ten
(10%) percent of the voting

<PAGE>

securities are owned by Cali and of which the total securities owned by Cali
represent less than five percent of the value of the total assets of Cali,
within the meaning of Code Section 856(c)(5).

(n) Neither Cali nor any of its Subsidiaries is in default
under, or in violation of, any provision of its organizational documents.

(o) The Cali Property and other material assets are owned
by Cali directly or indirectly through its ownership of CRLP, the Partnership
Subsidiaries and CRLP's Subsidiaries.

(p) Neither Cali nor CRLP has made a general assignment for
the benefit of creditors, filed any voluntary petition in bankruptcy or suffered
the filing of any involuntary petition by either of Cali's or CRLP's creditors,
suffered the appointment of a receiver to take possession of all, or
substantially all, of Cali's or CRLP's assets, suffered the attachment or other
judicial seizure of all, or substantially all, of Cali's or CRLP's assets,
admitted in writing its inability to pay its debts as they come due or made an
offer of settlement, extension or composition to its creditors generally.

(q) SCHEDULE 6.1(Q) annexed hereto sets forth a true and
complete list of all committees established by the Board of Directors of Cali
(the "BOARD").

(r) (i) Annexed hereto as SCHEDULE 6.1(R)(I) is a
true and complete list of all Cali and CRLP collective bargaining agreements,
employment and consulting agreements or understandings related to same,
non-competition agreements, executive compensation plans, bonus plans,
directors' fee arrangements, deferred compensation agreements, employee
pension plans or retirement plans, employee profit sharing plans, 401(k)
savings plans, multiemployer plans, employee stock purchase and stock option
plans, employee welfare plans, severance plans, group life insurance,
hospitalization insurance or other similar plans or arrangements (either
written or oral, but only to the extent an oral plan provides material
benefits) providing for benefits to Cali employees or with respect to which a
Cali employee is a party, including without limitation, bonus programs, new
employment agreements and amended and restated employment agreements
implemented pursuant to resolutions of the Board adopted on September 3, 1997.

(ii) Cali and CRLP have complied and currently are
in compliance in all material respects, both as to form and operation, with
the applicable provisions of the Employee Retirement Income Security Act of
1974, as amended, and the Internal Revenue Code of 1986, as amended, with
respect to the Cali 401(k) Savings Plan (the "CALI 401(K) PLAN"). With
respect to the Cali 401(k) Plan, Cali has supplied the Mack Contributors with
the most recent determination letter issued by the Internal Revenue Service.
With respect to collective bargaining agreements which cover Cali employees,
Cali has supplied the Mack

<PAGE>

Contributors with a true and complete copy of each collective bargaining
agreement currently in effect including all amendments thereto.

(s) Except for the OP Agreement, this Agreement and as set
forth on SCHEDULE 6.1(S) annexed hereto, there are no stockholders' agreements,
partners' agreements, voting trust agreements or other restrictive agreements
relating to the sale or voting of the Units or the Common Stock to which Cali or
CRLP is a party.

(t) Annexed hereto as SCHEDULE 6.1(T) is a listing (THE
"CALI RENT ROLL") of the following as of June 30, 1997, which is true, complete
and correct in all material respects for the Cali Property: (i) the name of each
tenant; (ii) the fixed rent actually being collected; (iii) the expiration date
of each lease; and (iv) any arrearages of any tenant beyond thirty (30) days.

(u) To the knowledge of CRLP, Cali and CRLP have performed
all of the material obligations and observed all of the covenants required of
each landlord under the terms of the leases.

(v) Except as set forth on SCHEDULE 6.1(V) annexed hereto
and except as covered by insurance, there are no actions, suits, labor disputes,
litigation or proceedings currently pending or, to the knowledge of Cali,
threatened against or related to Cali (with respect to the Cali Property) or to
all or any part of the Cali Property, the environmental condition thereof, or
the operation thereof.

(w) Except as set forth on SCHEDULE 6.1(W) annexed hereto,
Cali has received no written notice and has no knowledge of (i) any pending or
contemplated annexation or condemnation proceedings, or private purchase in lieu
thereof, affecting or which may affect the Cali Property, or any part thereof,
(ii) any proposed or pending proceeding to change or redefine the zoning
classification of all or any part of the Cali Property, (iii) any proposed or
pending special assessments affecting the Cali Property or any portion thereof,
(iv) any penalties or interest due with respect to real estate taxes assessed
against the Cali Property and (v) any proposed change(s) in any road or grades
with respect to the roads providing a means of ingress and egress to the Cali
Property.

(x) Except as set forth on SCHEDULE 6.1(X) annexed hereto,
Cali has no knowledge of any material notices, suits, or judgments relating to
any material violations (including environmental) of any laws, ordinances or
regulations affecting the Cali Property, or any violations or conditions that
may give rise thereto, and has no reason to believe that any agency, board,
bureau, commission, department or body of any municipal, county, state or
federal governmental unit, or any subdivision thereof, having, asserting or
acquiring jurisdiction over all or any part of the Cali Property or the
management, operation, use or improvement thereof contemplates the issuance
thereof, and there are no outstanding orders, judgments,

<PAGE>

injunctions, decrees or writ of any Governmental Authorities against or
involving Cali or the Cali Property.

(y) There are no aboveground or underground storage tanks
or vessels which contain any Contaminants at any Cali Property, regardless of
whether such tanks or vessels are regulated tanks or vessels or not, except as
set forth on SCHEDULE 6.1(Y).

(z) Cali has no knowledge of outstanding requirements or
recommendations by (i) the insurance company(s) currently insuring the Cali
Property; (ii) any board of fire underwriters or other body exercising similar
functions, or (iii) the holder of any mortgage encumbering any of the Cali
Property, which require or recommend any repairs or work to be done on the Cali
Property of a material nature.

(aa) To the knowledge of Cali, there are no Contaminants or
Discharges on any Cali Property that would have a material adverse effect on
CRLP, its affiliates, Cali and its subsidiaries.

(bb) As used throughout this Agreement, the phrases "to
Cali's knowledge", "to CRLP's knowledge", or "to the knowledge of Cali or CRLP"
or any similar derivation thereof, shall mean the actual knowledge of Thomas A.
Rizk, John R. Cali, Brant Cali, Roger W. Thomas and Barry Lefkowitz, after due
inquiry and investigation.

6.2 Each of Cali and CRLP acknowledges that it is not in a
significantly disparate bargaining position with respect to MACK in connection
with the transaction contemplated by this Agreement and that Cali and CRLP were
represented by legal counsel in connection with this transaction.

6.3 All representations and warranties made by Cali and CRLP in
this Agreement shall survive the Closing Date for a period of one (1) year,
except that (a) the representations and warranties set forth in clauses (a),
(b), (c), (d) and (l) of Section 6.1 shall survive the Closing Date for the
applicable period of the statute of limitations (unless otherwise specified
herein), and shall not be merged in the delivery of the Deed or the Assignment
of Contributed Interests; and (b) the representations and warranties set forth
in clauses m(ii) and (iii), (t), (u), (v), (w), (x), (y), (z) and (aa) of
Section 6.1 shall not survive the Closing Date. Cali and CRLP agree to
indemnify and defend MACK, and to hold MACK harmless, from and against any and
all claims, liabilities, losses, deficiencies and damages as well as reasonable
expenses (including attorney's, consulting and engineering fees), and interest
and penalties related thereto, incurred by MACK, by reason of or resulting from
any breach, inaccuracy, incompleteness or nonfulfillment of the representations,
warranties, covenants and agreements of Cali and CRLP contained in this
Agreement to the extent same was not actually known at Closing by any senior
executive officers of the Mack Entities, up to a maximum liability of
$50,000,000, except that such maximum liability is subject to the provisions of
Section 6.4. In addition, MACK shall not have a right to bring a claim against
Cali or CRLP by virtue of any of

<PAGE>

the representations or warranties being false or misleading unless (i) such
claim is brought on or prior to the date through which such representation or
warranty survives, (ii) and until notice of the false or misleading
representation or warranty has been given to CRLP and CRLP has had a reasonable
opportunity to cure same and (iii) the aggregate damages to MACK resulting from
such false, misleading or untrue representations and warranties are reasonably
expected to exceed $1,500,000, but thereafter MACK may bring a claim against
Cali or CRLP for the entire amount of its aggregate damages up to $50,000,000.
Cali and CRLP shall be jointly and severally liable for any damages hereunder.

6.4 Notwithstanding anything to the contrary contained in Section
6.3, the right of MACK to pursue a claim for a failure of CRLP or Cali to
perform the obligations set forth in Sections 2.2(a), 2.2(b), 2.2(c), 2.2(d),
the last sentence of 11.1(a), 13.1, 15, 19 and 27 shall be without regard to a
minimum in damages suffered, and shall not be subject to the cap on damages, as
provided in Section 6.3, nor shall any recovery on account of a failure to
perform in accordance with said Sections apply to the $50,000,000 cap.

7. COVENANTS OF MACK.

7.1 MACK covenants and agrees that between the date hereof and the
Closing Date it shall perform or observe, or cause to be performed or observed,
the following with respect to the Real Property:

(a) The Mack Entities will operate and maintain the Real
Property in the ordinary course of business and use reasonable efforts to
reasonably preserve for CRLP their relationships with their Tenants, suppliers,
and others having on-going relationships with the Real Property. The Mack
Entities will complete any capital expenditure program currently in process and
anticipated to be completed at or prior to Closing. The Mack Entities will not
defer taking any actions or spending any of its funds, or otherwise manage the
Real Property differently, due to the transaction contemplated by this
Agreement.

(b) The Mack Entities as landlords, will not enter into any
new leases with respect to the Real Property, or renew or modify any Lease,
without CRLP's prior written consent; provided, however that they shall be
permitted to enter into new leases, renewals or modifications upon prior notice
to, but without the prior written consent of, CRLP so long as such lease,
renewal or modification is on market terms and conditions with bona fide third
parties and is the type of transaction which they currently enter into in the
ordinary course of its business.

(i) Enter into any agreement requiring them to do
work for any Tenant after the Closing Date without first obtaining the prior
written consent of CRLP unless such agreement, in the respective Mack Entities'
reasonable opinion, is on market terms and

<PAGE>

conditions with bona fide third parties and is the type of agreement which the
respective Mack Entities currently enters into in the ordinary course of its
business, in which case no consent of CRLP will be required; or

(ii) Accept the surrender of any Service Contract or
Lease, or grant any concession, rebate, allowance or free rent, except in its
ordinary course of business on market terms, with bona fide third parties and
upon prior written notice to CRLP.

(iii) Establish, adopt or amend any employee benefit
plans (severance or otherwise) or collective bargaining agreement, grant any
options, or increase in any manner the compensation or fringe benefits of any
director, officer or employee or other personnel (whether employees or
independent contractors) or pay any benefit not payable under any existing
agreement or Mack Plan, except (A) in the ordinary course of business and
consistent with past practices and as required by law, provided that, before
entering into any employment agreement or increasing or agreeing to increase the
compensation, bonuses or other benefits of any employee in the ordinary course
of business and as required by law, MACK shall first have consulted in good
faith with Cali and/or CRLP with respect to the terms of any such employment
agreement or increase in compensation, bonuses or other benefits; or (B) in
connection with the transactions contemplated by this Agreement for which Cali
or CRLP would not have any liability.

(d) No Mack Entity shall, between the date hereof and the
Closing Date, apply any Security Deposits with respect to any Tenant in
occupancy on the Closing Date, except in its ordinary course of business.

(e) Between the date hereof and the Closing Date, no Mack
Entity shall renew, extend or modify any of the Service Contracts without the
prior written consent of CRLP unless such is done by such Mack Entity in the
ordinary course of its business and such Service Contracts contain a right to
terminate on thirty (30) days' notice with no material cost to exercise such
right, in which case no consent of CRLP will be required.

(f) MACK shall not remove any Personal Property located in
or on the Real Property, except as may be required for repair and replacement or
as set forth in Schedule 5.1(o). All replacements shall be free and clear of
liens and encumbrances except to the extent the original Personal Property was
so encumbered and shall be of quality at least equal to the replaced items and
shall be deemed included in this sale, without cost or expense to CRLP, other
than expressly provided herein.

(g) MACK shall, upon request of CRLP at any time after the
date hereof, assist CRLP in its preparation of audited financial statements,
statements of income and expense, and such other documentation as CRLP may
reasonably request, covering the period of their ownership of the Real Property.

<PAGE>

(h) Between the date hereof and the Closing Date, the Mack
Entities will make all required payments under any mortgage affecting the Real
Property (other than payments due at stated maturity) within any applicable
grace period, but without reimbursement by CRLP therefor. The Mack Entities
shall also comply with all other material terms covenants, and conditions of any
mortgage on the Real Property.

(i) MACK shall not cause or permit the Exchange Property,
or any interest therein, to be alienated, mortgaged, licensed, encumbered or
otherwise be transferred.

(j) The Mack Entities agree to maintain and keep in full
force and effect the hazard, liability and casualty insurance policies it is
currently maintaining on the Real Property.

(k) MACK shall permit CRLP and its authorized
representatives to inspect the Books and Records of its operations at all
reasonable times upon reasonable notice. All Books and Records not conveyed to
CRLP hereunder shall be maintained for CRLP's inspection at MACK's address as
set forth above.

(l) MACK shall:

(i) promptly notify CRLP of, and promptly deliver
to CRLP, a certified true and complete copy of any notice they may receive, on
or before the Closing Date, from any Governmental Authority, concerning a
violation of Environmental Laws or Discharge of Contaminants.

(ii) contemporaneously with the signing and delivery
of this Agreement, and subsequently promptly upon receipt by MACK or its
representatives, deliver to CRLP a certified true and complete copy of all
environmental site assessments, investigations, and documents related to
Contaminants and to prior operations, which operations or Contaminants are
reasonably likely to have impacted the environment, and all other material
Environmental Documents.

(m) MACK hereby acknowledges and agrees that the rental
amount set forth in SCHEDULE 7.1(M) (the "THRESHOLD AMOUNT") was the
underlying basis for determining the amount of the Exchange Consideration. The
parties hereto assume that the Threshold Amount will be the approximate net
operating income of the Exchange Property for the calendar year ending
December 31, 1998. MACK shall use its best efforts to enter into new leases
or renewals of existing Leases on market terms and conditions with bona fide
third parties and of the type which each respective Mack Entity enters into
in the ordinary course of its business in order to achieve the Threshold
Amount.

(n) The Mack Entities, at their sole cost and expense,
shall complete all work under construction at the Real Property and complete all
tenant improvement work and capital expenditure programs which have been
commenced by the Mack Entities as of the date

<PAGE>

hereof, related to all leasing activity and otherwise in accordance with the
obligation giving rise to such work having to be performed, and shall obtain and
deliver to CRLP, as soon as practical, all final certificates of completion and
occupancy, or other documentation reasonably satisfactory to CRLP, evidencing
the acceptance of said work by all appropriate governmental authorities having
jurisdiction thereover and the party for whom the work is being so performed;
said obligations shall survive Closing.

(o) MACK shall take all commercially reasonable action to
obtain the requisite consents and approvals from their partners and mortgagees
to consummate the transactions contemplated by this Agreement. Notwithstanding
anything to the contrary contained herein, the failure of MACK to obtain such
requisite consents and approvals, after taking all commercially reasonable
action, shall not constitute a "willful default" as that term is used in Section
22.2.

7.2 No later than thirty (30) days from the date hereof, MACK shall
deliver to CRLP a comfort letter covering the Exchange Property charts and
tables contemplated by Section 7.5 and described on SCHEDULE 7.2, which letter
shall be revised, modified or updated as the case may be as reasonably requested
by CRLP. By November 14, 1997, MACK shall deliver to Cali unaudited Property
Financials for the period from July 1, 1997 through September 30, 1997, reviewed
by the same accountants.

7.3 MACK covenants and agrees that it shall timely provide CRLP
with drafts of any pertinent documentation in connection with leasing matters,
Service Contracts and agreements for work to be done on behalf of Tenants and
shall keep CRLP informed of all substantive negotiations and discussions with
respect to the foregoing matters on an on-going basis.

7.4 As soon as is practicable after the Closing, MACK covenants and
agrees to take all necessary action to ensure that Cali possesses the sole and
exclusive right to use the names "The Mack Company" and "Mack" except as
follows: (i) the Mack Group shall have the right to use the name "Mack" for any
non-competing business purpose as of the date hereof, except in a public real
estate company where the "Mack" name is prominent, and (ii) the Mack Group shall
have the right to use the name "Mack" for current competing business not
included as part of the Exchange Property, the Eliminated Properties and the
Option Properties.

7.5 MACK covenants and agrees to assist Cali by providing the
necessary information concerning MACK and the Exchange Property in connection
with the filing of Cali's proxy statement for the solicitation of its
shareholder approval of the transactions contemplated hereby, including without
limitation all federal, state and local income, excise, franchise and all other
tax filing and financial statements required in connection therewith. The costs
of gathering, providing and reporting all the information relating to the
Exchange Property and necessary for such filings and proxy solicitations shall
be paid for by MACK.

<PAGE>

7.6 MACK covenants and agrees that until the earlier of the
termination of this Agreement or the Closing Date, MACK will not, and will use
all reasonable efforts to ensure that MACK's officers, directors, shareholders,
partners, affiliates, representatives, agents and advisors, do not, directly or
indirectly, institute, pursue, enter into or encourage (including by way of
furnishing information) any discussions, negotiations or agreements
contemplating or providing for any merger, acquisition, purchase or sale of the
Exchange Property or any interest therein or other business combination with any
person or entity other than Cali. In the event MACK receives an unsolicited
BONA FIDE third party offer relating to such a transaction, MACK shall provide
Cali with immediate written notice thereof, which notice will include the
identity of the offeror and the terms of the offer.

7A. COVENANTS OF CRLP.

7A.1 Cali covenants and agrees that within thirty (30) days of the
date hereof and subject to satisfaction by MACK of the obligations set forth in
Section 7.5 in a manner reasonably satisfactory to Cali, it shall, at its sole
cost and expense, file with the SEC an initial proxy statement in order to
conduct any proxy solicitations as are necessary for shareholder approval of the
transaction contemplated by this Agreement (including an amendment to the
certificate of incorporation of Cali to modify the corporate name to Mack-Cali).

7A.2 Cali covenants and agrees not to issue any class of capital
stock senior to the Preferred Units (as if the Preferred Units of CRLP were
preferred stock of Cali) without the consent of 66.7% of the holders of the
Series B Preferred Units, voting as a single class.

7A.3 CRLP agrees that (a) the Mack Contributors shall have access to
the Books and Records, after Closing, for inspection or duplication, at the
offices of CRLP at reasonable times and upon reasonable notice and (b) through
the eighth (8th) anniversary of the Closing Date, before any of the Cali Records
are destroyed or disposed of by CRLP, CRLP shall offer to return such Books and
Records to the Mack Contributors, at the Mack Contributors' cost and expense,
and the Mack Contributors shall respond to such offer within ten (10) business
days of receipt of same. This obligation of CRLP shall not require CLRP to
maintain any computer equipment or programs in order to access or retrieve any
of said Books and Records.

7A.4 Cali covenants and agrees that it shall not hire any current or
former employee of a Mack Entity or PAM without the prior consent of Mitchell
Hersh, which consent shall be at his sole and absolute discretion.

7A.5 Between the date hereof and the Closing, Cali covenants and
agrees that it shall keep Mitchell Hersh apprised of any acquisitions it may be
contemplating in the future. In the event Cali desires to either (a) enter into
a line of business substantially different from its present business or (b)
enter into a transaction involving an acquisition greater than $100,000,000, it
shall, in either instance, seek the consent of Mitchell Hersh on behalf of MACK,
which consent may be withheld in his sole discretion. The withholding of such
consent will not

<PAGE>

prohibit Cali from entering into any such transactions, but will permit MACK to
terminate this Agreement if it so desires.

8. OPTION PROPERTIES.

8.1 At the Closing, each of the owner(s) of certain option
properties set forth in SCHEDULE 8.1 (the "OPTION PROPERTIES") and CRLP or
its designee shall enter into an agreement (the "OPTION AGREEMENT") in
recordable form, which form shall include without limitation, a right of
inspection provision similar to Section 3.1(d) with the due diligence period
to be agreed upon by the parties, and all the applicable representations and
warranties set forth in Section 5 of this Agreement and which form shall be
mutually agreed upon by the parties hereto. An Option Agreement shall be
recorded against each of the Option Properties at Closing in the county land
records in which such Option Properties are located.

9. ESTOPPEL CERTIFICATES.

9.1 MACK agrees to deliver to each Tenant, no later than thirty
(30) days from the date hereof, an estoppel certificate in the form annexed
hereto as EXHIBIT 9.1 for Tenant's execution, completed to reflect the Tenant's
particular Lease status. MACK agrees to use commercially reasonable efforts to
obtain from all Tenants the estoppel certificates in such form; PROVIDED,
HOWEVER, that if any Tenant shall refuse to execute an estoppel letter in such
form, MACK shall nevertheless use commercially reasonable efforts to obtain
estoppel certificates in the form in which each Tenant is obligated to deliver
same as provided in its Lease. MACK agrees to deliver to CRLP copies of all
estoppel letters received by Tenants in the form received by MACK. The estoppel
certificates required to be obtained pursuant to this Section 9 are collectively
referred to as the "ESTOPPEL CERTIFICATES".

9.2 As a condition to Closing, MACK shall deliver (a) an Estoppel
Certificate from all Tenants which occupy an entire building, (b) an Estoppel
Certificate from each of the Tenants which lease space at the Real Property in
excess of 25,000 square feet in the aggregate and (c) Estoppel Certificates from
the remaining Tenants leasing at least seventy-five (75%) percent of the square
footage of the Real Property, including the Tenants set forth in clauses 9.2(a)
and (b) above.

10. CLOSING.

10.1 The consummation of the transactions contemplated hereunder
(the "CLOSING") shall take place at the offices of Pryor, Cashman, Sherman &
Flynn, 410 Park Avenue, New York, New York 10022 on or about five (5) business
days following the later to occur of (a) Cali's shareholder approval of the
transactions contemplated hereby and (b) completion of the Cali Inspection
Period (the "CLOSING DATE").

<PAGE>

10.2 (a) On the Closing Date, the Mack Entities, at their sole
cost and expense, will deliver or cause to be delivered to CRLP the following
documents with respect to the contribution and exchange of the Property conveyed
pursuant to Section 1.3 fully executed by all parties thereto other than CRLP or
parties claiming by, through or under CRLP:

(i) Bargain and sale deeds or their equivalent and
applicable assignments of Ground Lease (collectively, the "DEEDS") with covenant
in proper statutory form for recording so as to convey to CRLP or its Subsidiary
Partnerships good and marketable title to the Real Property, free and clear of
all liens and encumbrances, except the Permitted Encumbrances. The delivery of
each Deed shall also be deemed to constitute a transfer of the Personal Property
associated with the Real Property conveyed by the Deed; the delivery of all of
the Deeds shall be deemed to constitute a transfer of the balance of the
Personal Property to CRLP. No portion of the Exchange Consideration is
attributable to the Personal Property.

(ii) All original Leases and Ground Leases and all
other documents pertaining thereto, and certified copies of such Leases or other
documents where MACK, using its best efforts, is unable to deliver originals of
same.

(iii) All other original documents or instruments
referred to herein, including without limitation the Service Contracts, Licenses
and Permits and Books and Records, and certified copies of same where MACK,
using its commercially reasonable efforts, is unable to deliver originals.

(iv) A letter to Tenants advising the Tenants of the
transaction hereunder and directing that rent and other payments thereafter be
sent to CRLP or its designee, as CRLP shall so direct.

(v) Duly executed and acknowledged assignment and
assumption of all Leases, Rents and Security Deposits substantially in the form
previously agreed to by the parties.

(vi) Duly executed and acknowledged omnibus
assignment substantially in the form of EXHIBIT 10.2(A)(VI) annexed hereto
("OMNIBUS ASSIGNMENT").

(vii) An affidavit, and such other document or
instruments required by the Title Company, executed by each Mack Entity
certifying (i) against any work done or supplies delivered to the Real Property
which might be grounds for a materialman's or mechanic's lien, in form
sufficient to enable the Title Company to affirmatively insure CRLP against any
such lien, (ii) that the signatures on the Deed are sufficient to bind each Mack
Entity and convey the Property to CRLP and (iii) the Rent Roll.

(viii) Affidavits and other instruments, including but
not limited to all organizational documents of each Mack Entity and its general
partner or managing

<PAGE>

member, as applicable, including operating agreements, filed copies of limited
liability certificates, articles of organization, and good standing
certificates, reasonably requested by CRLP and the Title Company evidencing the
power and authority of the Mack Entities to enter into this Agreement and any
documents to be delivered hereunder, and the enforceability of same.

(b) On the Closing Date, the Mack Contributors, at their
sole cost and expense, will deliver or cause to be delivered to CRLP the
following documents, with respect to the contribution and exchange of the
Contributed Interests conveyed pursuant to Section 1.2, fully executed by all
parties thereto other than CRLP or parties claiming by, through or under CRLP:

(i) Duly executed and acknowledged assignments of
the Contributed Interests from each Mack Contributor (collectively, the
"ASSIGNMENT OF CONTRIBUTED INTEREST"), in the form of EXHIBIT 10.2(B)(I) annexed
hereto, to CRLP as assignee, together with all the applicable and requisite
partnership consents, partner consents, limited liability company consents,
mortgagee consents and resolutions by the general partner or managing member of
each Contributed Entity authorizing said transaction.

(ii) All original Leases and Ground Leases and all
other documents pertaining thereto, and certified copies of such Leases or other
documents where the Mack Contributors, using its best efforts, are unable to
deliver originals of same.

(iii) All other original documents or instruments
referred to herein, including without limitation the Service Contracts, Licenses
and Permits and Books and Records, and certified copies of same where the Mack
Contributors, using their best efforts, are unable to deliver originals.

(iv) All original organizational documents relating
to each Contributed Entity and all statements of accounts, books and records,
insurance policies and other documentation.

(v) Affidavits and other instruments, including but
not limited to all organizational documents of each Contributed Entity and its
general partner or managing member, as applicable, including operating
agreements, filed copies of limited liability certificates, articles of
organization, and good standing certificates, reasonably requested by CRLP and
the Title Company evidencing the power and authority of the Mack Contributors to
enter into this Agreement and any documents to be delivered hereunder, and the
enforceability of same.

(vi) All original insurance policies related to any
Exchange Property and set forth in SCHEDULE 10.2(B)(VI).

<PAGE>

(c) On the Closing Date, MACK, at its sole cost and
expense, will deliver or cause to be delivered to CRLP the following documents,
with respect to the contribution and exchange of the Exchange Property, fully
executed by all parties thereto other than CRLP or parties claiming by, through
or under CRLP:

(i) The original Estoppel Certificates required to
be obtained pursuant to Section 9 hereof.

(ii) A list of all cash security deposits and all
non-cash security deposits (including letters of credit) delivered by Tenants
under the Leases, together with other instruments of assignment, transfer or
consent as may be necessary to permit CRLP to realize upon same.

(iii) A certificate indicating that the
representations and warranties of MACK made in this Agreement are true and
correct in all material respects as of the Closing Date, or if there have been
any changes, a description thereof.

(iv) A Rent Roll for each Real Property and each
Option Property, current as of the Closing Date, certified by MACK as being true
and correct in all material respects.

(v) All proper instruments as shall be reasonably
required for the conveyance to CRLP of all right, title and interest, if any, of
MACK in and to any award or payment made, or to be made, (i) for any taking in
condemnation, eminent domain or agreement in lieu thereof of land adjoining all
or any part of the Real Property, (ii) for damage to the Real Property, or
Ground Leases or any part thereof by reason of change of grade or closing of any
such street, road, highway or avenue, and (z) for any taking in condemnation or
eminent domain of any part of the Real Property or Ground Leases.

(vi) In order to avoid the imposition of the
withholding tax payment pursuant to Section 1445 of the Code, a certificate
signed by an officer of MACK to the effect that MACK is not a "foreign person"
as that term is defined in Section 1445(f)(3) of the Code.

(vii) All such transfer and other tax declarations and
returns and information returns, duly executed and sworn to by MACK as may be
required of MACK by law in connection with the conveyance of the Exchange
Property to CRLP, including but not limited to, Internal Revenue Service forms.

(viii) A statement setting forth all adjustments and
prorations shown thereon.

<PAGE>

(ix) A Tradenames Assignment Agreement substantially
in the form of EXHIBIT 10.2(C)(IX) annexed hereto.

(x) Non-Competition Agreements from Earle Mack,
David Mack and Frederick Mack substantially in the form of EXHIBIT 10.2(C)(X)-1
and a Non-Competition Agreement from William Mack substantially in the form of
EXHIBIT 10-2(C)(X)-2.

(xi) Employment agreement with Mitchell Hersh as
described in Section 26.2(iii) of this Agreement.

(xii) Estoppel certificate addressed to CRLP from each
mortgagee in form and substance reasonably acceptable to CRLP.

(xiii) The Option Agreement described in Section
8.1.

(xiv) The guaranties, if any, undertaken at the Mack
Contributors' option, as provided for in Section 19 with respect to the
Mortgages.

(xv) Duly executed and acknowledged assignment and
assumption of all Ground Leases substantially in the form previously agreed to
by the parties.

(xvi) Such other documents as may be reasonably
required by the mortgagees providing for the restructure or modification of the
Mortgages as provided herein.

(xvii) Letter of direction regarding the issuance of
the Mack Securities to the Mack Contributors from the legal and beneficial
owners of the Exchange Property. The signatories of said letter are also to
acknowledge that they are the legal and beneficial owners of same.

(xviii) Estoppel letters addressed to the respective
Mack Entities, their successors and assigns from the lessors under the Ground
Leases in form and substance reasonably acceptable to CRLP.

(xix) Waivers of rights of first refusal, or evidence
of the lapse of said rights, in form reasonable satisfactory to CRLP, with
respect to any of the Exchange Property which is subject to said rights.

(xx) Evidence of compliance with the various State
transfer tax laws.

(xxi) Opinion of Battle Fowler LLP in a form to be
mutually agreed upon by the parties.

<PAGE>

(xxii) The Letters of Non-Applicability described in
Section 12.2(j).

(xxiii) Evidence of compliance with the Iowa
Environmental Quality Act and Iowa Code Ann. Section 558.69, or the affidavit
described in Section 12.2(k).

(xxiv) Evidence of compliance with the San Francisco,
California PWC art. 20, the California Carpenter-Presley-Turner Hazardous
Substance Account Act and Cal. Health & Safety Code Sections 25915-25919.7, or
the affidavit described in Section 12.2(l).

(xxv) Evidence of compliance with Ariz. Rev. Stat.
Ann. Section 33-434.01, or the affidavit described in Section 12.2(m).

(xxvi) The Consulting Agreement among Mack-Cali and the MK
Contributors described in Section 12.2(n) of this Agreement.

(xxvii) Such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
this Agreement.

10.3 On the Closing Date, Cali and CRLP, at their sole cost and
expense, will deliver or cause to be delivered to MACK the following payments,
instruments and documents, fully executed by all parties thereto other than MACK
or parties claiming by, through or under MACK:

(a) The Cash Payment, net of adjustments and prorations.

(b) The Unit Certificates and Preferred Certificates and
Warrants representing, in the aggregate, the Mack Securities.

(c) Resolutions of the Board of Directors of Cali (the
"BOARD"), effective as of the Closing Date, (i) reconstituting the Board so that
three (3) of the members shall be designated by the Mack Group, seven (7) shall
be independent members, four (4) of which shall be suggested by the Mack Group
and reasonably approved by Cali and three (3) of such independent members shall
be designated by the current members of the Board; all such seven (7) members to
be independent of control by Cali or the Mack Group and three (3) directors
nominated by Cali which shall be John J. Cali, Thomas A. Rizk and Robert
Weinberg; (ii) appointing Mitchell Hersh as President and Chief Operating
Officer; (iii) establishing a four (4) person Executive Committee which shall
consist of William Mack, Mitchell Hersh, Thomas A. Rizk and John J. Cali (the
"EXECUTIVE COMMITTEE"); (iv) approving the issuance of the Mack Securities to be
issued to the Mack Security Holders; (v) amending Cali's stock option plans (the
"STOCK OPTION PLAN") (subject to subsequent stockholder approval) to increase
the maximum number of shares of Common Stock reserved for issuance of awards by
at least 1,500,000; and (vi) changing the name of Cali and CRLP subject to
Section 26.1.

<PAGE>

(d) Duly executed and acknowledged assignment and
assumption of all Leases, Rents and Security Deposits substantially in the form
previously agreed to by the parties.

a) (e) Duly executed and acknowledged Omnibus Assignment.

(f) A certificate indicating that the representations and
warranties of Cali and CRLP made in this Agreement are true and correct as of
the Closing Date, or if there have been any changes, a description thereof.

(g) Employment agreement with Mitchell Hersh as described
in Section 26.2(iii) of this Agreement.

(h) Affidavits and other instruments, including but not
limited to all organizational documents of Cali and CRLP including limited
partnership agreements, filed copies of limited partnership certificates,
articles of organization, and good standing certificates, reasonably requested
by the Mack Contributors evidencing the power and authority of Cali and CRLP to
enter into this Agreement and any documents to be delivered hereunder, and the
enforceability of same.

(i) An opinion of counsel of Pryor, Cashman, Sherman &
Flynn in a form to be mutually agreed to by the parties.

(j) A Registration Rights Agreement substantially in the
form of EXHIBIT 10.3(J).

(k) Amendment to Exhibit A of the OP Agreement reflecting
admission of MACK, or its designees, as limited partners.

(l) The Tradenames Assignment Agreement substantially in
the form previously agreed to by the parties and annexed hereto as EXHIBIT
10.2(C)(IX).

(m) Duly executed and acknowledged assignment and
assumption of all Ground Leases substantially in the form previously agreed to
by the parties.

(n) Duly executed and acknowledged Assignments of
Contributed Interest in the form of EXHIBIT 10.2(B)(I).

(o) Amendment to the OP Agreement to cover the issues set
forth on EXHIBIT 10.3(O) which amendment shall be mutually agreed upon by the
parties hereto.

<PAGE>

(p) A statement setting forth all adjustments and
prorations shown thereon.

(q) Such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
this Agreement.

10.4 All transfer taxes and expenses on the Deeds and any state or
county documentary stamps or transfer taxes on the Deeds or the Contributed
Interest shall be paid by MACK. MACK shall pay all customary recordation
charges, clerk's fees, taxes, transfer and recording charges. CRLP shall pay
all title insurance premiums, title examination fees and survey costs. Each
party shall be responsible for its own attorney's fees. The provisions of this
Section 10.4 shall survive the Closing.

10.5 The Closing shall be consummated without compliance with bulk
sales laws. If by reason of any applicable bulk sales law, any claims are
asserted by creditors of MACK related to periods prior to the Closing, such
claims shall be the responsibility of MACK, and MACK shall jointly and severally
indemnify, defend and hold harmless CRLP (and their respective directors,
officers, employees, affiliates, successors and assigns) from and against all
losses or liabilities (including reasonable attorneys fees and costs), if any,
based upon, arising out of or otherwise in respect of the failure to comply with
such bulk sales laws.

10.6 (a) Cali and CRLP acknowledge and agree that, except as set
forth in this Agreement, CRLP is acquiring the Exchange Property in its "as is"
condition "subject to all faults" and specifically and expressly without any
warranties, representations or guarantees, either express or implied, of any
kind, nature, or type whatsoever from or on behalf of MACK. Cali and CRLP
acknowledge that, except as set forth in this Agreement, and except for
documents, reports and information related to the environmental integrity of the
Real Property, the Option Properties, or both, neither Cali nor CRLP has relied
and is not relying on any information, document, reports, sales brochure or
other literature, maps or sketches, financial information, projections,
proformas or statements, that may have been given by or made by or on behalf of
MACK. CRLP and Cali further acknowledge that, except as otherwise set forth
herein, all materials relating to the Real Property which have been provided by
MACK, including but not limited to, the Phase I Reports, have been provided
without any warranty or representation, expressed or implied as to their
content, suitability for any purpose, accuracy, truthfulness or completeness and
neither CRLP nor Cali shall have any recourse against MACK or its counsel,
advisors, agents, officers, directors or employees for any information in the
event of any errors therein or omissions therefrom.

(b) Cali and CRLP hereby acknowledge and agree that, except
as set forth herein, they are not entitled to, and do not, rely on MACK or its
agents as to (i) the quality, nature, adequacy or physical condition, whether
latent or patent, of the Real Property including, but not limited to, the
structural elements, foundation, roof, appurtenances, access, landscaping
parking facilities or the electrical, mechanical, HVAC, plumbing, sewage or
utility system,

<PAGE>

facilities or appliances at or in connection with the Real Property, if any;
(ii) the existence, quality, nature, adequacy, physical condition, or location
of any utilities serving the Real Property; (iii) the development potential of
the Real Property, its habitability, merchantability or fitness, suitability or
adequacy of the Real Property for any particular purpose; (iv) the zoning or
other legal status of the Real Property or the potential use of the Real
Property; (v) the Real Property's or its operations' compliance with any
applicable codes, laws, building codes, fire codes, regulations, statutes,
ordinances, covenants, conditions or restrictions of, or agreements with any
governmental or quasi-governmental entity or of any other person or entity;
(vi) the quality of any labor or materials relating in any way to the Real
Property; or (vii) the condition of title to the Real Property or the nature,
status and extent of any right, encumbrance, license, reservation, covenant,
condition, restriction or any other matter affecting title to the Real Property.

11. ADJUSTMENTS.

11.1 The following items under (a) through (f) with respect to the
Real Property and under (g) are to be apportioned as of midnight on the date
preceding the Closing:

(a) Rents, escalation charges and percentage rents payable
by Tenants as and when collected. All moneys received from Tenants from and
after the Closing shall belong to CRLP and shall be applied by CRLP to current
rents and other charges under the Leases. After application of such moneys to
current rents and charges, CRLP agrees to remit to MACK any excess amounts paid
by a Tenant to the extent that such Tenant was in arrears in the payment of rent
prior to the Closing, but subject to the provisions of Section 11.2 with respect
to Additional Rents.

(b) Upon sufficient advance notice, a cashier's or
certified check or wire transfer to the order of CRLP in the amount of all cash
Security Deposits and any prepaid rents, together with interest required to be
paid thereon. Upon prior notice to MACK, at the election of CRLP, such amount
may be allotted to CRLP as a credit against the Cash Payment.

(c) Utility charges payable by MACK, including, without
limitation, electricity, water charges and sewer charges. If there are meters
on the Real Property, MACK will cause readings of all said meters to be
performed not more than ten (10) days prior to the Closing Date. To the extent
said meters are not read prior to Closing, CRLP will cause same to be read
promptly thereafter and a PRO-RATA adjustment shall be made upon said reading.

(d) Amounts payable under the Service Contracts other than
those Service Contracts which CRLP has elected not to assume.

(e) Real estate taxes due and payable for the calendar year
or fiscal year, as applicable. If the Closing Date shall occur before the tax
rate is fixed, the apportionment of real estate taxes shall be upon the basis of
the tax rate for the preceding year applied to the

<PAGE>

latest assessed valuation. If subsequent to the Closing Date, real estate taxes
(by reason of change in either assessment or rate or for any other reason) for
the Real Property should be determined to be higher or lower than those that are
apportioned, a new computation shall be made, and MACK agrees to pay CRLP any
increase shown by such recomputation and vice versa.

(f) The value of fuel stored at any of the Real Property,
at the Mack Entities' or the Contributed Entities' most recent cost, including
taxes, on the basis of a reading made within fifteen (15) days prior to the
Closing by their supplier. To the extent said reading is not made prior to
Closing, CRLP will cause same to be read promptly thereafter and a PRO-RATA
adjustment shall be made upon said reading.

(g) Amounts incurred or accrued prior to the Closing Date
or payable to or with respect to any New Cali Employees or other personnel (i.e.
independent contractors of MACK or an affiliate of MACK) for services performed
or otherwise, including, without limitation, costs related to accrued vacation
time.

11.2 Promptly following request by CRLP, MACK shall deliver to CRLP
a list of additional rent, however characterized, under a Lease, including
without limitation, real estate taxes, electrical charges, utility costs and
operating expenses (collectively, "ADDITIONAL RENTS") billed to Tenants for the
calendar year 1997 (both on a monthly basis and in the aggregate), the basis for
which the monthly amounts are being billed and the amounts incurred by MACK on
account of the components of Additional Rent for calendar year 1997.

11.3 All amounts due and owing under the Mortgages other than the
outstanding principal balance thereof, including by way of example accrued and
unpaid interest, deferred interest, late charges, default interest, prepayment
fees or penalties, and other fees and charges, shall be paid by MACK on or
before the Closing.

11.4 If, on the Closing Date, the Real Property or any part thereof
shall be or shall have been affected by an assessment or assessments which are
or may become payable in annual installments, all the unpaid installments of any
such assessment due and payable on or prior to the Closing Date shall be paid
and discharged by MACK on the Closing Date.

11.5 At the Closing, the parties shall adjust for certain
unperformed tenant improvement work, as more particularly described in Section
13.2 hereof, and CRLP shall, if appropriate, receive a credit therefor.

11.6 At the Closing, CRLP shall be credited with those unpaid
leasing commissions, tenant improvement obligations and other capital
expenditures related to Exchange Property set forth on SCHEDULE 5.1(M-1) and
which are the obligation of MACK.

<PAGE>

11.7 Except as otherwise provided in this Agreement, the adjustments
shall be made in accordance with the customs in respect to title closings in the
State of New York.

11.8 Any errors in calculations or adjustments shall be corrected or
adjusted as soon as practicable after the Closing.

11.9 The credits set forth in Sections 11.5 and 11.6 shall be made
against the Cash Payment.

11.10 The provisions of this Section 11 shall survive the Closing
Date.

12. CONDITIONS PRECEDENT TO CLOSING.

12.1 The obligations of MACK to deliver title to the Exchange
Property and to perform the other covenants and obligations to be performed by
MACK on the Closing Date shall be subject to the following conditions (all or
any of which may be waived, in whole or in part, by MACK):

(a) The representations and warranties made by CRLP and
Cali herein shall be true and correct in all material respects with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date. For the purposes of the Closing condition described
in this Section 12.1(a), any limitation to the knowledge, best knowledge, or
actual knowledge in any representation, warranty, covenant or agreement made by
CRLP or Cali herein shall be inapplicable.

(b) CRLP and Cali shall have executed and delivered to MACK
all of the documents provided herein for said delivery.

(c) Cali and CRLP shall have performed all covenants and
obligations undertaken by Cali and CRLP herein in all respects and complied with
all conditions required by this Agreement to be performed or complied with by
them on or before the Closing Date.

(d) The resolutions of the Board set forth in Section
10.3(c) shall have been approved and implemented.

(e) Cali shall not have revoked its prior election pursuant
to Section 856(c)(1) of the Code to be taxed as a REIT, and shall be in
compliance with all applicable federal income tax laws, rules and regulations,
including the Code, necessary to permit it to be taxed as a REIT. Cali shall
not have taken any action or have failed to take any action which would
reasonably be expected to, alone or in conjunction with any other factors,
result in the loss of its status as a REIT for federal income tax purposes.

<PAGE>

(f) Cali shall have issued the Mack Common Units and the
Preferred Units to the Mack Unit Holders and Mack Preferred Unit Holders,
respectively, in the case of the Preferred Units pursuant to the Certificates of
Designation which shall be substantially in the form of EXHIBITS 2.4(A)(I) and
EXHIBIT 2.4(A)(II) annexed hereto.

(g) Cali shall have issued an aggregate amount of 2,000,000
Warrants to the Mack Warrant Holders, which Warrants shall be substantially in
the form of EXHIBIT 2.5 annexed hereto.

(h) Cali shall have received shareholder approval for the
transactions contemplated by this Agreement as contemplated by the rules of The
New York Stock Exchange, Inc.

(i) The Board shall have accepted the resignations of (i)
the following existing Board members: Angelo Cali, Brant Cali, Brad Berger,
Kenneth DeGehetto, James Hughes and Alan Turtletaub, (ii) Thomas A. Rizk as
President, (iii) Brant Cali as Chief Operating Officer and (iv) John R. Cali as
Chief Administrative Officer.

(j) The OP Agreement shall have been amended pursuant to
the amendment set forth in EXHIBIT 10.3(O) annexed hereto.

12.2 The obligations of Cali and CRLP to accept title to the
Exchange Property and Cali and CRLP's obligation to perform the other covenants
and obligations to be performed by Cali and CRLP on the Closing Date shall be
subject to the following conditions (all or any of which may be waived, in whole
or in part, by Cali or CRLP):

(a) The representations and warranties made by MACK shall
be true and correct in all material respects with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date. For the purposes of the Closing condition described in this
Section 12.2(a), any limitation to the knowledge, best knowledge, or actual
knowledge in any representation, warranty, covenant or agreement made by MACK
herein shall be inapplicable.

(b) MACK shall have performed all covenants and obligations
undertaken by them herein in all respects and complied with all conditions
required by this Agreement to be performed or complied with by it on or before
the Closing Date.

(c) The Title Company is unconditionally prepared to issue
to CRLP a Title Policy meeting the requirements set forth in Section 4 hereof
for an "insurable title".

(d) The mortgagees and the Mack Entities shall have entered
into such documents as shall be acceptable to each of the parties for the
modification or restructure of the

<PAGE>

Mortgages with an outstanding principal balance of Three Hundred Two Million One
Hundred and Forty Seven Thousand ($302,147,000) Dollars subject to the provision
of Section 2.6.

(e) All options to purchase which are triggered by the
transactions contemplated by this Agreement and all rights of first refusal
and rights of first offer, with respect to the Real Property shall have been
waived, either pursuant to a specific waiver executed by the beneficiary
thereof or by the lapse of time as provided in the instrument setting forth
such right. If the waiver is based upon the lapse of time, MACK shall
certify compliance with the relevant instrument.

(f) MACK shall have executed and delivered to CRLP all of
the documents provided for herein for said delivery.

(g) All new and amended and restated employment agreements,
bonus and severance packages which are applicable to Cali officers, including
without limitation, any payments to be made on or after the Closing Date with
respect thereto as approved by the Board on September 3, 1997 shall be
implemented and with appropriate payment to be made immediately prior to or
contemporaneously at the Closing and such Board approval shall remain unmodified
and in full force and effect

(h) Cali shall have received shareholder approval for the
transactions contemplated by this Agreement as contemplated by the rules of The
New York Stock Exchange, Inc.

(i) MACK shall have received the requisite consent or
approval from all necessary mortgagees and third-party partners in order to
contribute and convey the Exchange Property. The parties acknowledge that they
expect MACK to have completed its obligations in the foregoing sentence prior to
November 1, 1997, although such obligations may be completed after such date,
but in no event later than the mailing of the definitive Cali proxy statement to
its shareholders.

(j) MACK shall, prior to the closing, at its sole cost and
expense, obtain Letters of Non-Applicability pursuant to New Jersey's Industrial
Site Recovery Act, N.J.S.A. 13:1K-6 ET SEQ., and the regulations promulgated
thereunder ("ISRA") from the New Jersey Department of Environmental Protection
("NJDEP"), with respect to the Real Property located in the State of New Jersey.
Upon CRLP's request, the Mack Contributors and the Mack Entities shall provide
CRLP with all information, reports, studies and analysis which the Mack
Contributors and the Mack Entities delivered to NJDEP with the application for,
or otherwise in connection with, the issuance of the Letters of
Non-Applicability.

(k) MACK shall, prior to the closing, at its sole cost and
expense, comply with the Iowa Environmental Quality Act, Iowa Code Ann. Section
455B.430, and Iowa Code Ann. Section 558.69 and the regulations promulgated
thereunder and any amending and successor legislation and regulations now or
hereafter existing, with respect to the Real Property located in the State of
Iowa. The Mack Contributors and the Mack Entities shall, at their sole cost and

<PAGE>

expense, make all submissions to, provide all information to, and comply with
all requirements of the Iowa Department of Natural Resources or its successor.
In the event that the Iowa Real Property is not subject to the Iowa
Environmental Quality Act or Iowa Code Ann. Section 558.69, or both, then, prior
to closing, the Mack Contributors shall, at its sole cost and expense, provide
to CRLP an affidavit stating that the Iowa Real Property is not subject to the
provisions of Iowa Environmental Quality Act or the Iowa Code Ann. Section
558.69, or both.

(l) MACK shall, prior to the closing, at its sole cost and
expense, comply with San Francisco, California Public Works Code art. 20,
Sections 1001-1015 ("PWC art. 20"); Cal. Health & Safety Code Section 25359.7;
the California Carpenter-Presley-Turner Hazardous Substance Account Act, Cal.
Health & Safety Code Sections 25915-25919.7 any regulations promulgated
thereunder and any amending or successor legislation and regulations now or
hereafter existing with respect to the Real Property located in San Francisco,
California. In the event that the San Francisco, California Real Property is
not subject to PWC art. 20, the California Carpenter-Presley-Turner Hazardous
Substance Account Act, Cal. Health & Safety Code Sections 25915-25919.7, or any
combination thereof, then prior to closing, the Mack Contributors shall, at its
sole cost and expense, provide to CRLP an affidavit stating that the San
Francisco, California Real Property is not subject to the provisions of PWC art.
20, the California Carpenter-Presley-Turner Hazardous Substances Account Act,
Cal. Health & Safety Code Sections 25915-25919.7, or any combination thereof.

(m) MACK shall, prior to the Closing, at its sole cost and
expense, comply with Ariz. Rev. Stat. Ann. Section 33-434.01, and the
regulations promulgated thereunder and any amending and successor legislation
and regulations now or hereafter existing with respect to the Real Property
located in the State of Arizona. In the event that the Arizona Real Property is
not subject to Ariz. Rev. Stat. Ann. Section 33-434.01, then prior to closing,
the Mack Contributors shall, at its sole cost and expense, provide to CRLP an
affidavit stating that the Arizona Real Property is not subject to the
provisions of Ariz. Rev. Stat. Ann. Section 33-434.01.

(n) The MK Contributors shall have executed and delivered
to CRLP a consulting and management agreement mutually acceptable to the parties
thereto (the "CONSULTING AGREEMENT") dated as of the Closing Date among the MK
Contributors and Mack-Cali whereby Mack-Cali shall provide management and
consulting services in connection with the properties set forth on SCHEDULE
12.2(N) which shall be retained by the MK Contributors. In consideration for
such services, the MK Contributors agree to pay Mack-Cali an annual consulting
fee of $1,000,000 for a period of three (3) years and as more fully described in
said Consulting Agreement.

(o) MACK shall have entered into a sufficient number of
new leases and/or extensions or renewals of existing Leases so that the rents
generated by the Exchange Property for the year ending December 31, 1998 are
anticipated to equal or exceed the Threshold Amount.

13. LEASING COMMISSIONS AND

<PAGE>

TENANT IMPROVEMENT OBLIGATIONS.

13.1 All leasing commissions, tenant improvement obligations,
capital expenditures and other costs associated with the Leases and any
leasing activity through the Closing Date shall be the obligation of MACK and
shall have been paid for or otherwise satisfied prior to Closing; provided,
however, (1) any leasing commissions or tenant improvement obligations
associated with leasing activity which results in any incremental net
operating income generated by the Exchange Property above the Threshold
Amount shall be the obligation of Mack-Cali and (2) any leasing commissions
or tenant improvement obligations associated with renewals of Leases
scheduled to expire after January 1, 1998 shall also be the obligation of
Mack-Cali including, but not limited to, those costs set forth on SCHEDULE
5.1(M-2). All leasing commissions and tenant improvement obligations set
forth on SCHEDULE 5.1(M-1) for which CRLP shall receive a credit at Closing
pursuant to Section 11.6 of this Agreement shall be the post-closing
obligation of Mack-Cali.

13.2 MACK and CRLP agree to proceed in good faith in establishing
all of the amounts to be adjusted pursuant to Section 13.1, including the cost
of all tenant improvement obligations and leasing commissions with respect to
the Exchange Property which were to have been performed, completed and paid for
prior to the Closing.

13.3 The provisions of this Section 13 shall survive the Closing.

14. ASSIGNMENT.

This Agreement may not be assigned by Cali or CRLP except to a
directly or indirectly wholly-owned subsidiary or subsidiaries of Cali or CRLP,
or to a partnership in which any such wholly-owned subsidiary or subsidiaries
owns, either directly or indirectly, at least seventy-five (75%) percent of the
profits, losses and cash flow thereof and controls the management of the affairs
of such partnership (any such entity, a "PERMITTED ASSIGNEE") and any other
assignment or attempted assignment by Cali or CRLP shall constitute a default by
Cali or CRLP hereunder and shall be deemed null and void and of no force and
effect. Notwithstanding anything to the contrary contained herein, Cali or CRLP
may assign the right to purchase individual portions of the Real Property to
various entities provided that each of such entities is a Permitted Assignee. A
copy of any assignment permitted hereunder, together with an agreement of the
assignee assuming all of the terms and conditions of this Agreement to be
performed by Cali or CRLP with respect to the portion of the applicable Real
Property, in form reasonably satisfactory to counsel for MACK, shall be
delivered to the attorneys for MACK prior to the Closing, and in any event no
such assignment shall relieve Cali and CRLP from their obligations under this
Agreement.

15. BROKER.

<PAGE>

15.1 Cali, CRLP and MACK represent and warrant that they have not
dealt with any brokers, finders or salesmen, in connection with this
transaction. Cali, CRLP and MACK agree to indemnify, defend and hold each other
harmless from and against any and all loss, cost, damage, liability or expense,
including reasonable attorneys' fees, which they may sustain, incur or be
exposed to by reason of any claim for fees or commissions. The provisions of
this Section shall survive the Closing or other termination of this Agreement.

16. CASUALTY LOSS.

16.1 MACK and the Contributed Entities shall continue to maintain,
in all material respects, the fire and extended coverage insurance policies with
respect to the Real Property (the "INSURANCE POLICIES") which are currently in
effect, through the date that said coverage currently expires or the Closing,
whichever is later, which obligation shall survive the Closing.

16.2 If at any time prior to the Closing Date all or any portion of
the Real Property is destroyed or damaged (a "DAMAGED PROPERTY") as a result of
fire or any other casualty (a "CASUALTY"), MACK shall promptly give written
notice ("CASUALTY NOTICE") thereof to CRLP. CRLP shall have the right to
exclude a Real Property if the following have not been satisfied (a) the
Insurance Policies fully cover the damage resulting from the Casualty, (b)
subject to the rights of any mortgagee, the proceeds of any insurance, together
with a credit equal to MACK's deductible under the Insurance Policies, shall be
paid to CRLP at the time of the Closing, (c) all unpaid claims and rights in
connection with losses to the Damaged Property shall be assigned to CRLP at
Closing without in any manner affecting the consideration hereunder, (d) the
Tenants comprising ninety (90%) percent of the Damaged Property do not have a
right (or have waived their right) to terminate their Leases as a result of the
Casualty, (e) there is adequate rent interruption insurance in place for a
period of at least one (1) year and (f) all governmental approvals are available
to permit the Damaged Property to be rebuilt. If any of the provisos set forth
in the preceding sentence are not met, CRLP shall have the right to eliminate
such Real Property from the transaction contemplated by this Agreement, and any
such Real Property eliminated pursuant to this Section 16.2 shall be considered
an Eliminated Property.

16.3 If a Real Property is the subject of a Casualty but CRLP does
not terminate this Agreement pursuant to the provisions of this Section, then
MACK shall, prior to the Closing Date, cause all temporary repairs to be made to
the Damaged Property as shall be required to prevent further deterioration and
damage to the Damaged Property and to protect public health and safety,
provided, the cost of any such repairs shall not exceed the amount of proceeds
made available to MACK. MACK shall have the right to be reimbursed from the
proceeds of any insurance with respect to the Damaged Property for the cost of
such temporary repairs.

17. CONDEMNATION.

<PAGE>

In the event of a material taking (as defined in this Section 17),
CRLP shall have the right, at its sole option, to either (a) terminate this
Agreement by giving MACK written notice to such effect at any time after its
receipt of written notification of any such occurrence, or (b) accept title to
the remainder of the Real Property without reduction of any consideration given
hereunder and eliminate the affected property in its entirety from this
transaction. Should CRLP so terminate this Agreement in accordance with this
Section, neither party shall have any further liability or obligations to the
other. In the event CRLP shall accept title to the remainder of the affected
property, MACK shall, subject to the rights of the holder of any existing
mortgage, assign all proceeds of such taking to CRLP, and same shall be CRLP's
sole property, and CRLP shall have the sole right to settle any claim in
connection with the Real Property. If CRLP elects to eliminate the affected
property in its entirety, the Exchange Consideration shall be reduced by the
Allocated Property Value allocated to such affected property in proportion to
the Cash Payment, the Mortgage Debt Amount, the Mack Common Units, the Preferred
Units and the Warrants. The term "MATERIAL TAKING" shall be defined to mean the
institution of any proceedings, judicial, administrative or otherwise which
would (a) reasonably be expected to reduce the aggregate useable square footage
of the Real Property by at least a full floor, (b) entitle a Tenant occupying at
least a full floor to terminate its Lease and such Tenant does not waive such
right prior to Closing, (c) cause access to the Real Property to be taken or
materially diminished (I.E., such taking does not provide access to a publicly
dedicated street or is an impediment to traffic flow from and to the Real
Property), or (d) result in parking no longer being in compliance with
applicable zoning laws and MACK is unable to remedy such non-compliance prior to
Closing.

18. TRANSFER RESTRICTIONS; RIGHT OF FIRST OFFER.

18.1 None of (i) the Mack Common Units, (ii) the Preferred Units,
(iii) the Warrants, (iv) the Common Units underlying the Preferred Units or the
Warrants, and/or (v) the shares of Common Stock underlying the Mack Common Units
and/or the Preferred Units (the "UNDERLYING SHARES") (items (i) through (v),
collectively "CALI SECURITIES") shall be Transferred except in accordance with
or as otherwise specifically permitted by the provisions of this Agreement. Any
Transfer effected in violation of this Agreement shall be void AB INITIO.

18.2 In addition to any other restriction on Transfer contained in
this Agreement, no holder of Cali Securities shall Transfer any such Cali
Securities to any individual, corporation, partnership or any other entity (each
a "PERSON"), unless (a) the certificates representing such Cali Securities bear
appropriate legends reflecting the restrictions on Transfer contained in this
Agreement, and (b) such person shall have executed and delivered to CRLP, as a
condition to the Transfer of Cali Securities to such person, an appropriate
document approved by CRLP confirming that such person takes such Cali Securities
subject to, and agrees to comply with all the terms and conditions of, this
Agreement and the OP Agreement. CRLP shall not record on its books and records
any purported Transfer of any such Cali Securities in violation of this
Agreement and any such purported Transfer shall have no force or effect.

<PAGE>

18.3 Notwithstanding anything herein to the contrary, each of the
Mack Security Holders hereby agrees that neither they nor any of their
respective designees of transferees may (i) with respect to the Warrants, the
Mack Common Units and the Series A Preferred Units, exercise all or part of the
Warrants and/or convert all or part of the Mack Common Units and/or the Common
Units received pursuant to the conversion of Series A Preferred Units prior to
the first anniversary of the Closing Date, and (ii) with respect to the Series B
Preferred Units convert all or part of the Common Units received pursuant to the
conversion of the Series B Preferred Units (other than the Estate Units) prior
to the third anniversary of the Closing Date (such respective dates hereinafter
sometimes referred to in this Section 18 as the "HOLDING PERIOD").

18.4 Each of the Mack Contributors hereby agrees that (i) upon
expiration of the respective Holding Period, the Mack Common Units, the
Preferred Units, the Warrants, the Underlying Shares and the Common Units
underlying the Preferred Units and the Warrants (the "UNDERLYING UNITS") may be
Transferred privately in accordance with the terms of the OP Agreement (if
applicable) and this Section 18 and (ii) upon conversion of the Mack Common
Units or the Underlying Units to shares of Common Stock, they will execute the
agreement with CRLP attached hereto as SCHEDULE 18.4 which provides that the
Underlying Shares may be Transferred publicly (subject to the restrictions of
the Act and the rules and regulations promulgated thereunder) in trading blocks
of 1,000,000 shares of Common Stock or less, subject to certain conditions set
forth therein.

18.5 Subject to Sections 18.2, 18.3, 18.7, 5.4 and 5.5, the
restrictions contained in Sections 18.1, 18.4 and 18.6 of this Agreement shall
not apply to: (i) bona-fide pledges of, or encumbrances on, Cali Securities made
in favor of (A) an institutional lender or financial institution having gross
assets in excess of $3,000,000,000 or (B) to a "bulge bracket" investment bank
(as that term is generally defined), including, without limitation, equity swaps
and derivative transactions, as security for debt; PROVIDED, HOWEVER, that in no
event may the value of such pledged or encumbered Cali Securities during the
applicable Holding Period equal or exceed fifty (50%) percent of the total value
of the Cali Securities held by the individual holder or group of holders
pledging such Cali Securities or otherwise encumbering them as of the Closing
Date (it being understood that at the end of the Holding Period with respect to
a specific security comprising the Cali Securities, the foregoing limitation
shall not be applicable) (such fifty (50%) percent determination made at the
date of the pledge or granting of the encumbrance without consideration for any
reduction in value of the Cali Securities after the borrowing is effected); and
(ii) Transfers of Cali Securities to Permitted Transferees (as hereinafter
defined), made in accordance with the procedures set forth in the OP Agreement.
"PERMITTED TRANSFEREES" means (A) any entity or individual comprising MACK or
the Mack Security Holders; (B) any direct or indirect equity owner of MACK or
the Mack Security Holders; (C) members of the Immediate Family (as defined in
the OP Agreement) of the Mack Group or the Mack Security Holders (or any direct
or indirect equity owner thereof) and trusts for the benefit of one or more
members of the Immediate Family of the Mack Group or the Mack Security

<PAGE>

Holders (or any direct or indirect equity owner thereof) created for estate
and/or gift tax purposes and/or (D) any public charity, private foundation or
charitable institution as defined in Section 501(c)(3) of the Code.
Notwithstanding anything herein to the contrary, no Transfer made pursuant to
this Section 18.5 shall be effective until such Permitted Transferee,
transferee, pledgee or other secured party signs a counterpart to the OP
Agreement and this Agreement, whereby such individual or entity agrees that the
terms and conditions of the OP Agreement and this Agreement, are applicable to
the Cali Securities in which such Permitted Transferee, transferee, pledgee or
other secured party has an interest.

18.6 Except as otherwise specifically permitted by Section 18.5,
a holder of Preferred Units, Mack Common Units, Underlying Shares or Underlying
Units (for purposes of this subsection 18.6, collectively, "TRANSFER
SECURITIES") may Transfer only in compliance with the provisions of this
Section 18.6.

(a) If any holder of Transfer Securities should desire to
sell all or any part of its Transfer Securities (for purposes of this subsection
18.6, a "SELLING HOLDER"), the Selling Holder shall first deliver written notice
to CRLP (the "NOTICE OF OFFER"), which Notice of Offer shall specify (i) the
nature and class of such Transfer Securities; (ii) the number of Transfer
Securities owned by the Selling Holder; (iii) the number of Transfer Securities
that such Selling Holder desires to sell (the "OFFER SECURITIES"); (iv) the
proposed cash selling price for the Offer Securities (the "OFFER PRICE"); and
(v) all other material terms and conditions of the offer (the "OFFER TERMS").
The Notice of Offer shall constitute an irrevocable offer by the Selling Holder
to sell to CRLP all of the Offer Securities at the Offer Price and on the Offer
Terms.

(b) Within ten days following the CRLP's receipt of the
Notice of Offer (the "OFFER PERIOD"), CRLP may elect to purchase all Offer
Securities by delivering to the Selling Holder notice of the number of the Offer
Shares that CRLP is electing to purchase (an "ACCEPTANCE NOTICE"). Should CRLP
fail to deliver an Acceptance Notice within the Offer Period, it shall be deemed
to have declined to purchase any of the Offer Securities. A duly delivered
Acceptance Notice shall be deemed to be an irrevocable commitment by CRLP to
purchase from the Selling Holder the number of Offer Shares indicated in the
Acceptance Notice.

(c) CRLP shall be obligated to purchase the Offer
Securities, in accordance with the Offer Notice, as it elected to purchase in
the Acceptance Notice, at a closing pursuant to Section 18.6(e) of this
Agreement.

(d) If CRLP (i) notifies the Selling Holder that it is
electing not to purchase the Offer Securities or (ii) does not deliver an
Acceptance Notice prior to the expiration of the Offer Period, the Selling
Holder may sell the Offer Securities to a third-party purchaser; PROVIDED,
HOWEVER, that any such sale of the Offer Securities to such third-party
purchaser must be made substantially on the same terms and conditions as those
set forth in the Notice of Offer, including without limitation, a purchase price
that is no less than ninety-five percent (95%) of the

<PAGE>

Offer Price; PROVIDED, FURTHER, that any such sale of the Offer Securities to
such third-party purchaser must be consummated no later than ninety (90) days
following the original delivery of the Notice of Offer. If the Selling Holder
wishes to sell all or any part of the Offer Securities on terms more favorable
than ninety-five (95%) percent of the Offer Price to a third-party purchaser or
does not sell the Offer Securities on substantially the terms and conditions
contained in the Notice of Offer (within ninety-five (95%) percent of the Offer
Price) within the aforementioned ninety (90) day period, the Selling Holder
shall again be obligated to make a new offer to CRLP, in accordance with this
Section 18, before it shall be permitted to consummate a sale of the Offer
Securities or other Transfer Securities, or any part thereof, in a privately
negotiated transaction.

(e) The closing of purchases of the Offer Securities by
CRLP pursuant to this Section 18.6 shall take place within fifteen (15) days
following the delivery of the Acceptance Notice by CRLP to the Selling Holder at
the offices of Pryor, Cashman, Sherman & Flynn located at 410 Park Avenue, New
York, NY 10022, or at such other date, time or place as the parties to the sale
may agree. At such closing, the Selling Holder shall sell, transfer and deliver
to CRLP full right, title and interest in and to the Offer Securities purchased
by CRLP, free and clear of all liens, security interests or adverse claims of
any kind and nature and shall deliver to CRLP a certificate or certificates
representing the Offer Securities sold to CRLP, duly endorsed for transfer or
accompanied by appropriate stock transfer powers duly endorsed with signatures
guaranteed by a commercial bank, trust company or registered broker-dealer and
with the appropriate transfer tax stamps affixed in exchange for the Offer
Price. Simultaneously with delivery of such certificates, CRLP shall deliver to
the Selling Holder an amount of cash equal to the Offer Price, in full payment
of the purchase price of the Offer Securities purchased by CRLP.

18.7 Notwithstanding anything herein to the contrary, no holder of
Cali Securities may transfer, convert and/or exercise any such Cali Securities
unless (a) such transfer, conversion and/or exercise is exempt from the
requirements of registration under the Act and any applicable state securities
law (or, in the case of conversion and/or exercise of Cali Securities, the
Underlying Shares to be issued pursuant to such conversion and/or exercise are
exempt from the requirements of registration under the Act and any applicable
state securities law) or (b) upon registration of such Cali Securities and/or
Underlying Shares in compliance therewith.

19. LIMITED GUARANTY OF MACK.

19.1 In order to allow MACK and/or the Unit Holders (the "MACK UNIT
GROUP") to defer the recognition of gain for federal income tax purposes
resulting from the contribution of property to CRLP, at Closing, or at any time
subsequent thereto in accordance with the terms hereof, CRLP and its affiliates
will permit the Mack Unit Group to guarantee, or indemnify CRLP or Cali for the
bottom portion (i.e. the least risky portion) of the Mortgage Debt Amount in the
aggregate amount of up to $241,000,000 (the "MACK DEBT AMOUNT"). Those persons
identified on SCHEDULE 19.1(A) (the "CALI GROUP") are currently permitted to
guarantee or indemnify Cali or CRLP for the bottom portion (i.e. the least risky
portion) of the debt of CRLP or its affiliates in the amount of up to
$83,000,000 (pari passu with the RM Group) (the "CALI

<PAGE>

DEBT AMOUNT"). Those persons identified on SCHEDULE 19.1(B) (the "RM GROUP")
are currently permitted to guarantee or indemnify Cali or CRLP for the bottom
portion (i.e. the least risky portion) of the debt of CRLP or its affiliates in
the amount of up to $184,000,000 (pari passu with the Cali Group) (the "RM DEBT
AMOUNT"). Subject to Section 19.2 below, Cali, CRLP and their affiliates agree
to maintain at all times (1) an amount of liabilities equal to the Mack Debt
Amount solely for the Mack Unit Group to guarantee (or indemnify Cali or CRLP
for); (2) an amount of liabilities equal to the Cali Debt Amount solely for the
Cali Group to guarantee (or indemnify Cali or CRLP for); and (3) an amount of
liabilities equal to the RM Debt Amount solely for the RM Group to guarantee (or
indemnify Cali or CRLP for). CRLP and Cali agree to take any and all action
necessary so that the execution of each guarantee or indemnity by the Mack Unit
Group, the Cali Group or the RM Group results in basis for such groups for
federal income tax purposes.

19.2 In the event that any member of the Mack Unit Group, the Cali
Group or the RM Group (i) obtains a tax-free step-up in the basis of their Units
for federal income tax purposes (e.g., upon the death of a member); (ii) sells,
transfers or otherwise disposes of their Units in a taxable transaction; (iii)
receives a "tax" payment from CRLP or Cali in the amount described in Section
27.1 hereof (or corresponding provisions of other agreements to which members of
the Cali Group or the RM Group are parties) in reimbursement of taxes triggered
to such member as a result of the sale, transfer or other disposition of
property contributed by such member, or (iv) receives an allocation under Treas.
Reg. Section 1.704-3(b) using the "traditional method" without curative
allocation that reduces the amount of any Built-in-Gain (as defined in Section
27.1 hereof), then the Mack Debt Amount, the Cali Debt Amount or the RM Debt
Amount, as the case may be, shall be commensurately reduced.

20. TAX MATTERS.

20.1 MACK will pay or provide for payment of all Taxes due and
payable on or after the Closing and, to the extent allowed by law, will timely
file all returns and reports required to be filed on or after the Closing with
respect to Taxes imposed in connection with its business and the ownership and
operation of the Exchange Property and the Option Property for all taxable
periods (or portions thereof) ending on or prior to the Closing, for which CRLP
could be held liable on a claim made against CRLP. MACK will provide CRLP with a
copy of such returns promptly after filing. CRLP or Cali will file all tax
returns required to be filed with respect to the Exchange Property after the
Closing Date for all taxable periods beginning before the Closing Date and
ending after the Closing Date and such Taxes shall be allocated between MACK and
CRLP in accordance with their respective periods of ownership of the Exchange
Properties. The provisions of this Section shall survive the Closing Date until
the applicable period of any statute of limitation on assessments of any of such
Taxes has expired.

20.2 MACK shall pay any and all Taxes including, without limitation,
Taxes imposed with respect to its business and the ownership or operation of the
Real Property and the Option Property for all taxable periods (or portions
thereof) ending on or prior to the Closing,

<PAGE>

imposed upon CRLP based, in whole or in part, upon the failure to comply with
the bulk sales laws.

20.3 MACK is hereby authorized to continue any proceeding now
pending for the reduction of the assessed valuation of the Real Property and the
Option Properties as set forth on SCHEDULE 20.3 and to litigate or settle the
same in MACK's discretion. CRLP is hereby authorized by MACK, in CRLP's sole
discretion, to file any applicable proceeding for the 1997 tax roll for the
reduction of the assessed valuation of the Real Property and the Option
Properties. The net refund of taxes, if any, for any tax year for which MACK or
CRLP shall be entitled to share in the refund shall be divided between MACK and
CRLP in accordance with the apportionment of taxes pursuant to the provisions
hereof. All expenses in connection therewith, including counsel fees, shall be
borne by MACK and CRLP in proportion to their ownership period of the asset in
question. MACK and CRLP each agree to grant to the other a power of attorney or
other authorization necessary to carry out the intention of this Section 20.3.

20.4 "TAXES" mean all federal, state, county, local, foreign and
other taxes of any kind whatsoever (including, without limitation, income,
profits, premium, estimated, excise, sales, use, occupancy, gross receipts,
franchise, ad valorem, severance, capital levy, production, transfer, license,
stamp, environmental, withholding, employment, unemployment compensation,
payroll related and property taxes, import duties and other governmental charges
or assessments), whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions to tax or interest, and penalties
with respect thereto, and including expenses associated with contesting any
proposed adjustment related to any of the foregoing.

20.5 Cali, as the general partner of CRLP, covenants and agrees that
CRLP and its affiliates will use the "traditional method" without curative
allocations (as defined in Treas. Reg. Section 1.704-3(b)) of allocating income,
gain, loss and deduction to account for the variation between the fair market
value and adjusted basis of the Exchange Property for federal income tax
purposes with respect to (i) the contribution of the Exchange Property, and (ii)
any revaluation of the Exchange Property in accordance with the provisions of
Treas. Reg. Sections 1.704-1(b)(2)(iv)(F), 1.704-1(b)(2)(iv)(G) and
1.704-3(a)(6). The provisions of this Section shall survive the Closing Date.

21. PUBLICATION.

21.1 CRLP shall have the right to make such public announcements or
filings with respect to the exchange as CRLP may deem reasonably prudent
(provided that prior to any such announcement or filing, CRLP shall submit the
text of the announcement or filing to Mitchell Hersh for his approval on behalf
of MACK, such approval not to be unreasonably withheld or delayed). CRLP shall
not issue any such announcement without the prior reasonable written approval of
Mitchell Hersh on behalf of MACK as to the text of the announcement; provided,
however, that CRLP shall be entitled to make such filings or announcements upon
advice of counsel as may be necessary or required by law. CRLP and MACK agree
that any

<PAGE>

public announcements will refer to the exchange contemplated herein as a merger
of the entities. CRLP agrees to use commercially reasonable efforts to
coordinate with the Mack Contributors and jointly make any public announcements
with regard to the agreements contained herein. The Mack Contributors' right to
approve public announcements or filings as set forth in this Section 21 shall
not survive the Closing.

22. REMEDIES

22.1 If the obligations set forth in Section 12.2 have been
satisfied (unless the failure or inability to be so satisfied is due to Cali or
CRLP) and if CRLP or Cali is not ready, willing and able to perform its
obligations hereunder on the Closing Date due to a willful default of CRLP or
Cali or CRLP's or Cali's willful failure to comply with any representation,
warranty, covenant or agreement set forth herein, then MACK shall be entitled to
either (a) terminate this Agreement upon notice to CRLP, following which neither
party shall thereafter have any further obligations under this Agreement; or (b)
pursue all of its available remedies at law.

22.2 If the obligations set forth in Section 12.1 have been
satisfied (unless the failure or inability to be so satisfied is due to MACK)
and if MACK is not ready, willing and able to perform its obligations hereunder
on the Closing Date due to a willful default on the part of MACK or MACK's
willful failure to comply with any representation, warranty, covenant or
agreement set forth herein, CRLP shall be entitled to either (a) terminate this
Agreement upon notice to MACK, following which neither party shall thereafter
have any further obligations under this Agreement; or (b) pursue all of its
available remedies at law.

22.3 The acceptance of the Deeds and/or the Contributed Interests by
CRLP shall be deemed a full performance and discharge of every agreement and
obligation of MACK to be performed under this Agreement; PROVIDED, HOWEVER, that
any agreements and obligations of MACK, CRLP and Cali to each other which are
specifically stated in this Agreement to survive the Closing or which by their
terms are to be, or may only be, performed after the Closing, shall survive the
Closing. The provisions of this Section 22.3 shall survive Closing.

23. EMPLOYEE MATTERS.

23.1 With respect to the Cali plans, programs and arrangements
listed on SCHEDULE 6.1(R)(I) and any vacation, sick time or other compensation
policy of Cali, which takes into account an employee's length of service, Cali
shall grant all New Cali Employees on and after the Closing Date credit for all
service with the Mack Entities, PAM and any affiliates thereof and their
respective predecessors prior to the Closing Date for purposes for which such
service was recognized by the Mack Entities, PAM, and any affiliates thereof
under the plans or programs listed on SCHEDULE 5.1(W)(I), including without
limitation the Cali 401(k) Plan. Cali shall have no liability to any current or
former employees of the Mack Entities, PAM, or any affiliate thereof who are not
New Cali Employees, including without limitation any liabilities which may arise
as a result of the consummation of the transactions contemplated by this

<PAGE>

Agreement, under any plans or programs listed on SCHEDULE 5.1(W)(I), or arising
under applicable federal or state law including without limitation under the
Worker Adjustment and Retraining Notification Act (WARN) and Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA). The provisions of this
Section 23.1 shall survive the Closing.

23.2 Upon commencement of employment, New Cali Employees shall be
covered by the employee welfare plans maintained by Cali, including without
limitation, medical and health plans as described in this Section. Upon
commencement of participation by New Cali Employees in the Cali medical and
health plans, Cali shall (i) credit all New Cali Employees on and after the
Closing Date with any employee payments made under any medical or health plans
of any Mack Entity or PAM which have been paid in partial or full satisfaction
of deductible requirements under such medical or health plans for purposes of
satisfying deductible requirements under the corresponding Cali medical and
health plans, and (ii) waive any preexisting condition exclusion and
actively-at-work requirements (other than for New Cali Employees not
actively-at-work due to a disability which is expected to last more than five
(5) days) under the Cali plans and programs set forth on SCHEDULE 6.1(R)(I).
The Mack Entities and PAM shall provide Cali or shall cause its insurance
carrier to provide Cali with the applicable payment information as soon as
practicable following the Closing Date. Cali may, at its option, for a period
which ends no later than the December 31 following the Closing Date continue to
provide to New Cali Employees medical and health benefits substantially similar
to and on the same terms and conditions as some or all of such benefits
previously provided to New Cali Employees prior to the Closing Date by their
respective former employers.

23.3 The New Cali Employees will be hired directly by Cali and their
employment with any Mack Entity, PAM or any affiliate thereof shall terminate
and their employment with Cali shall begin as of the Closing Date. Cali shall
not be liable to any independent contractor of the Mack Entity, PAM or any
affiliate thereof or to any New Cali Employee or to any Mack Entity, PAM or any
affiliate thereof for any compensation, benefits or other liabilities related to
any employment or services performed, or otherwise, which were incurred or
accrued prior to the Closing Date, except for vacation time and any wages for
which an adjustment pursuant to Section 11.1(g) of this Agreement is being made.
Neither the Mack Entities nor PAM shall be liable to any New Cali Employees or
other personnel (i.e., independent contractors of the Mack Entities, PAM or any
affiliate thereof) for vacation time and wages pursuant to which CRLP receives a
credit under Section 11.1(g).

23.4 Cali shall not be required to assume with respect to any New
Cali Employee any agreement related to employment, compensation or benefits.
Cali shall cause its 401(k) Plan to accept transfers of account balances from
the Mack 401(k) Plan and the PAM 401(k) Plan by way of direct rollover. Except
as otherwise provided herein with respect to New Cali Employees, all liabilities
with respect to current or former employees of the Mack Entities, PAM or any
affiliate thereof, whether incurred under a plan or program listed on SCHEDULE
5.1(W)(I) or otherwise, are the sole responsibility of the Mack Entities, PAM or
any affiliate thereof. The provisions of this Section 23.4 shall survive the
Closing.

<PAGE>

23.5 Cali will credit New Cali Employees with any unused vacation
time as of the Closing Date.

24. NOTICE.

All notices, demands, requests, or other writings in this Agreement
provided to be given or made or sent, or which may be given or made or sent, by
either party hereto to the other, shall be in writing and shall be delivered by
depositing the same with any nationally recognized overnight delivery service,
or by telecopy or fax machine, in either event with all transmittal fees
prepaid, properly addressed, and sent to the following addresses:

If to Cali or CRLP: c/o Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
Attn: Roger W. Thomas, Esq.
(908) 272-8000 (tele.)
(908) 272-6755 (fax)

with a copy to: Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attn: Jonathan A. Bernstein, Esq.
(212) 326-0425 (tele.)
(212) 326-0806 (fax)

If to MACK: The Mack Companies
370 West Passaic Street
Rochelle Park, New Jersey 07662
Attn: Mr. Mitchell Hersh
(201) 368-0900 (tele.)
(201) 368-0349 (fax)

and

If to PAM: Patriot American Management and Leasing Corporation
3030 LBJ Freeway
Suite 1500
Dallas, Texas 75634
Attn: John Bohlmann

<PAGE>

(972) 888-8000 (tele.)
(972) 888-8029 (fax)

with a copy to: Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Martin L. Edelman, Esq.
(212) 856-7000 (tele.)
(212) 856-7808 (fax)

or to such other address as either party may from time to time designate by
written notice to the other or to the Escrow Agent. Notices given by (i)
overnight delivery service as aforesaid shall be deemed received and effective
on the first business day following such dispatch and (ii) telecopy or fax
machine shall be deemed given at the time and on the date of machine transmittal
provided same is sent prior to 4:00 p.m. on a business day (if sent later, then
notice shall be deemed given on the next business day) and if the sending party
receives a written send confirmation on its machine and forwards a copy thereof
by regular mail accompanied by such notice or communication. Notices may be
given by counsel for the parties described above, and such Notices shall be
deemed given by said party, for all purposes hereunder.

25. DEVELOPMENT PROPERTY/HONEYWELL BUILDING.

The parties hereto acknowledge that a Mack Entity is contemplating
construction of an approximately 50,000 square foot expansion of a building (the
"EXPANSION SPACE") located on an Exchange Property, such building being commonly
known as the Honeywell Building (the "HONEYWELL BUILDING"). Notwithstanding the
fact that the Honeywell Building will be contributed to CRLP at the Closing,
MACK hereby covenants and agrees to complete the construction of the Expansion
Space in a manner consistent with the Honeywell Building as it exists on the
date hereof, at its own cost and expense (including obtaining all requisite
building department sign-offs and other municipal approvals or amendments) and
utilizing its own personnel. In consideration for such completion of the
Expansion Space, Cali will pay to a designee of MACK the quotient of the annual
operating income on a stabilized basis of the Expansion Space in dollars,
divided by eight and ninety-three one hundredths (8.93%) percent. The Expansion
Space shall be deemed completed and the additional consideration payable (the
"HONEYWELL CONSIDERATION"), upon the later to occur of (i) receipt of an amended
certificate of occupancy for the Honeywell Building covering the Expansion Space
and (ii) the date on which Honeywell accepts possession of the Expansion Space
pursuant to a fully executed lease (or amendment, modification or expansion of
an existing lease) for the Expansion Space and has commenced paying rent
thereunder. CRLP agrees to cooperate with MACK, at MACK's cost and expense, in
all reasonable respects, for obtaining all building department sign-offs and all
municipal approvals, or amendments thereto, required in connection with the
Expansion Space. All tenant leasing commissions and tenant improvement
obligations related to the Expansion

<PAGE>

Space shall be paid by MACK. The Honeywell Consideration shall be paid by
Mack-Cali to MACK, at MACK's option, in either cash, Common Units or a
combination of the two; provided, however, Common Units paid to MACK as part
of the Honeywell Consideration shall be valued at ninety (90%) percent of the
average closing price of the common stock of Mack-Cali, as reported in the
Wall Street Journal, calculated as of the payment date of the Honeywell
Consideration based upon the preceding five (5) consecutive trading days'
closing price.

26. CORPORATE NAME CHANGE; CHANGE IN MANAGEMENT; OTHER
ARRANGEMENTS.

26.1 Prior to Closing, Cali and CRLP shall, at their own expense,
make such filings and proxy solicitations as are necessary to effect the
transactions contemplated herein and to change their respective names to
"Mack-Cali Realty Corporation" and "Mack-Cali Realty, L.P." For purposes of
this Section 26, Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. are
collectively referred to as "Mack-Cali". If Cali shareholders do not approve of
the name changes described herein, Cali shall operate as a "d/b/a" under the
name "Mack-Cali" and such shareholder approval shall be sought at each annual
shareholder meeting and as part of any proxy solicitation at a special meeting
for so long as it takes to obtain the requisite consent. Mack-Cali shall, at
Cali's option, continue to trade under the New York Stock Exchange symbol "CLI."

26.2 Because this Agreement contemplates the exchange of Units and
Warrants representing a substantial equity interest, the parties hereto have
agreed as follows:

(i) As of the Closing, the Board shall be comprised of
thirteen (13) directors. Three (3) of such members of the Board shall be
designated by the Mack Group and shall initially be William Mack, Earle Mack and
Mitchell Hersh (the "MACK BOARD MEMBERS"). William Mack and Earle Mack shall
serve initial terms which shall expire in May 1999. Mitchell Hersh shall serve
an initial term which shall expire in May 2000. If any Mack Board Member shall
withdraw for any reason, the Mack Group shall have the right to designate such
withdrawing director's replacement on behalf of the Mack Group. The Mack Group,
shall have the right to re-nominate such three (3) members of the Board or
replacements selected by the Mack Group for re-election to the Board when their
terms expire so long as Mack's Significant Interest (as defined below) is
maintained by the Mack Group. Three (3) of such members of the Board shall be
designated by Cali and shall initially be Thomas A. Rizk, John J. Cali and
Robert Weinberg (the "CALI BOARD MEMBERS"). John J. Cali shall remain the
Chairman of the Board. It is understood that if any Cali Board Member shall
withdraw for any reason, Cali shall have the right to designate such withdrawing
director's replacement. The remaining seven (7) directors shall be independent
outside directors. They shall include three (3) existing members of Cali's
Board: Brendan Byrne, Irvin Reid and Alan Philibosian; and four (4) independent
members suggested by the Mack Group and reasonably approved by Cali.

<PAGE>

(ii) As of the Closing, the Board shall create an Executive
Committee. William Mack will serve as Chairman of the Executive Committee. The
Executive Committee will consist of William Mack, Mitchell Hersh, Thomas A. Rizk
and John J. Cali. John J. Cali and William Mack (or, if either individual shall
not be alive, his respective successor) shall have the right respectively to
appoint a replacement for any Executive Committee member designated by them who
shall withdraw from the Executive Committee.

(iii) Thomas A. Rizk shall remain Chief Executive Officer and
Mitchell Hersh shall be appointed President and Chief Operating Officer by the
Board. Mitchell Hersh shall execute at Closing an employment agreement with
Cali on substantially the same terms, compensation package and options as
provided to Thomas A. Rizk and otherwise mutually agreeable to Mitchell Hersh
and Mack-Cali.

(iv) Cali's existing executive officers will retain their
current positions and responsibilities; except that Thomas A. Rizk shall resign
as President, but will remain Chief Executive Officer, Brant Cali shall resign
as Chief Operating Officer and John R. Cali shall resign as Chief Administrative
Officer, provided, however, Brant Cali and John R. Cali shall remain senior
executive officers of the Mack-Cali with appropriate titles to be determined by
the parties hereto.

(v) The special rights granted to the Mack Group under this
Section 26 are specifically conditioned on the continuation of Mack's
Significant Interest. "MACK'S SIGNIFICANT INTEREST" shall mean legal and
beneficial ownership, in the aggregate, of not less than 3,174,603 shares of
Common Stock and/or Units (on a fully converted basis) by Earl Mack, David Mack,
Frederick Mack and William Mack, after applying the attribution rules set forth
on SCHEDULE 26.2(V), subject to adjustment for stock splits, stock dividends and
other customary and similar stock dilutions. Such legal and beneficial
ownership may not include Units subject to any of the arrangements contemplated
by Section 18.5(i) hereof unless such arrangements result in recourse liability
to any member of the Mack Group. In the event that Mack's Significant Interest
shall no longer be retained, the Mack Group and/or its designees shall be
entitled only to those rights accorded to every other shareholder of Mack-Cali,
and each of two (2) of the Mack Board Members (other than Mitchell Hersh) shall,
at the option of the Cali Board Members, resign from the Board of Directors of
Mack-Cali on the three (3) month and six (6) month anniversary respectively, of
the date on which the Mack Significant Interest is no longer retained; PROVIDED,
HOWEVER, notwithstanding anything contained herein to the contrary any such
modification to Mack's Significant Interest shall have no effect on Mitchell
Hersh or his management status and he shall not be required to resign from the
Board of Directors of Mack-Cali.

(vi) So long as the Mack Group retains Mack's Significant
Interest, Cali shall support the renomination of William Mack, Earle Mack and
Mitchell Hersh (and any successor appointed by the Mack Group) for successive
three-year terms upon the

<PAGE>

expiration of each three-year term. In addition, if either William Mack, Earle
Mack or Mitchell Hersh, or any of them, die, voluntarily resign or otherwise
become unable to serve so long as the Mack Group retains the Mack Significant
Interest, Cali shall support the nomination of the individual selected by the
survivors of William Mack, Earle Mack or Mitchell Hersh to fill the vacancy
created by such death, resignation or inability serve. If either John J. Cali,
Thomas A. Rizk or Robert Weinberg, or any of them, die, voluntarily resign or
otherwise become unable to serve so long as the Mack Group retains the Mack
Significant Interest, the Mack Board Members (to the extent any remain) shall
support the nomination of the individual selected by the survivors of John J.
Cali, Thomas A. Rizk or Robert Weinberg to fill the vacancy created by such
death, resignation or inability serve.

27. RESTRICTIONS ON SALE OF THE PROPERTY

27.1 CRLP, Cali and their Subsidiaries and affiliates (including,
without limitation, any Permitted Assignee) may not dispose of or distribute any
of the Exchange Property prior to the dates (the "RESTRICTED PERIOD") set forth
on SCHEDULE 27.1 with respect to each Exchange Property (which schedule provides
for an average of approximately seven and one-half years following the Closing
Date) without the express written consent of William Mack (or, if he shall not
be alive, his successor) (it being understood that if any Exchange Property
listed on SCHEDULE 27.1 becomes an Eliminated Property, such schedule shall not
be amended and if such property is thereafter acquired by CRLP pursuant to
Section 3.4 of this Agreement, the date on SCHEDULE 27.1 shall apply to such
property) except (i) in connection with a tax-free transaction which does not
result in recognition of Built-in-Gain (as defined below) by any holders of the
Units; (ii) in the event a taxable sale or disposition of any of the Exchange
Property would not result in recognition of Built-in-Gain; (iii) in case of a
disposition that is otherwise in compliance with the provisions of this Section
27; or (iv) if CRLP promptly pays to the Mack Contributors or holders of the
Units an amount equal to the sum of (A) the federal, state, and local income
taxes payable by the holders of the Units resulting from the recognition of the
Built-in Gain triggered by such sale or disposition and (B) an additional
payment in an amount equal to the amount such that after payment by the holders
of the Units of all taxes (including interest or penalties) on amounts received
under Section 27.1 (iv)(A) and this Section (iv)(B) the holders of the Units
retain an amount equal to the amount described in Section 27.1(iv)(A). For
purposes of calculating the amounts payable pursuant to clause (iv) of the
preceding sentence, the amount of taxes payable by a holder of Units shall be
calculated by assuming a tax rate equal to the highest combined marginal rate of
federal, state and local tax applicable to an individual in the jurisdiction in
which such holder of Units is a taxpayer (and if such taxpayer, either directly
or indirectly, is subject to tax in more than one state or local jurisdiction,
the state or local tax rate to be used in the foregoing combined marginal rate
shall be the highest rate of tax in such jurisdiction) and by assuming that such
individual has no tax attributes that would otherwise reduce such tax payments.
For purposes of this Agreement, the term "Built-in Gain" for any Exchange
Property shall mean the excess, if any, of the fair market value of such
Exchange Property on the Closing Date over such Exchange Property's adjusted tax
basis for federal income tax purposes on such date. MACK agrees to cooperate
with Cali and CRLP regarding the calculation of the amount of

<PAGE>

actual Built-in Gain attributable to any Exchange Property recognized upon any
transfer. In the event an Exchange Property is sold with the consent of William
Mack (or, if he shall not be alive, his successor) prior to the Restricted
Period set forth on SCHEDULE 27.1 for such Exchange Property, then the
Restricted Period for other Exchange Property (set forth in SCHEDULE 27.1 and
designated by William Mack) having an Allocated Property Value approximately
equal to the Allocated Property Value of the first Exchange Property being sold
shall be extended for a time period equal to the period from the date on which
the sale of such Exchange Property closes to the end of the Restricted Period
for such Exchange Property. The provisions of this Section 27.1 shall survive
the Closing.

27.2 During the Restricted Period, CRLP, Cali and their Subsidiaries
(including, without limitation, any Permitted Assignee), may dispose of any of
the Exchange Property at any time in connection with (i) the sale of all or
substantially all of the properties owned by CRLP under such terms and
conditions which the Board, in its sole judgment, determines to be in the best
interests of Cali and its public stockholders, or (ii) a sale (including without
limitation a transfer to a secured lender in lieu of foreclosure) which the
Board, in its sole judgment, determines is reasonably necessary (1) to satisfy
any material monetary default on any unsecured debt, judgment or liability of
CRLP, Cali or any Subsidiary Partnership when they become due (at maturity or
otherwise) or (2) to cure or satisfy any material monetary default on any
mortgage, secured by the Exchange Property; provided, however, that no such
sales will be made under clause (ii) unless CRLP is unable to settle or
refinance any such debts, judgments or liabilities, or cure or satisfy any such
defaults, after making commercially reasonable efforts to do so under then
prevailing market conditions. In the event the Board, after CRLP has made the
commercially reasonable efforts described in the preceding sentence, in its sole
judgment, determines that it is reasonably necessary to dispose of any of the
Exchange Property to satisfy a material monetary default on any unsecured debt,
judgment or liability of CRLP when it becomes due (at maturity or otherwise),
CRLP covenants and agrees that it shall treat all of its properties
proportionately, including the Exchange Property, in its determination of what
properties to dispose of to satisfy such material debt, judgment or liability
and shall use commercially reasonable efforts to minimize any adverse tax
consequences to holders of the Units and all members of the Cali Group or the
MACK Group. Such proportionate treatment shall mean that the ratio of the
unencumbered fair market value of the Exchange Property that is sold over the
unencumbered fair market value of the total amount of property that is sold
shall be no greater than the ratio of the unencumbered fair market value of the
total Exchange Property over the unencumbered fair market value of the total
CRLP/Cali portfolio. In the case of any disposition of any of the Exchange
Property pursuant to this Section 27.2, holders of the Units may attempt to
obtain title to the Exchange Property in question so long as any equity in the
Exchange Property which CRLP may otherwise be seeking to preserve is not lost or
jeopardized. Moreover, in the event of an anticipated transfer of any of the
Exchange Property to a secured lender in lieu of foreclosure or foreclosure,
CRLP shall use commercially reasonable efforts to provide holders of the Units
the right to (a) cure the default including the right to loan CRLP the funds
necessary to cure the default on an unsecured basis, as well as the right to
limit such funds to CRLP and to receive security for any such loan from CRLP (or
its appropriate affiliate) in the

<PAGE>

form of a second mortgage secured solely by such Exchange Property (but only if
the lender or lenders holding any prior mortgage or mortgages on the relevant
Exchange Property expressly consent in writing to the grant of the second
mortgage, provided that neither such loan, whether secured or unsecured by the
holders of the Units nor the granting of any such second mortgage to such
holders violates any covenant in any loan agreement of CRLP or any of its
affiliates); (b) acquire, for one Unit (if the value of a Unit at the time of
such acquisition is not more than one-thousand ($1,000.00) dollars or, if so,
then for a fraction of a Unit, such fraction's value being equal to one-thousand
($1,000) dollars), such Exchange Property from CRLP subject to the debt or
liability; or (c) permit holders of the Units to exercise CRLP's right of
redemption with respect to such Exchange Property; PROVIDED, HOWEVER, that CRLP
shall not have any obligation to grant holders of the Units the rights described
in clauses (a) and/or (b) of this sentence until holders of the Units (whose
financial position and resources as determined by CRLP using commercially
reasonable standards to be satisfactory for the purpose of acting as indemnitors
pursuant to this proviso) have agreed with CRLP in writing to indemnify and hold
harmless CRLP, Cali and their affiliates from and against all costs (including
reasonable attorneys fees), expenses, taxes (including without limitation any
deed, mortgage or real estate transfer taxes), claims, judgments, liabilities or
damages incurred or arising from or in connection with or attributable to or
resulting from the grant or exercise of such rights, or the acquisition of such
Exchange Property by holders of the Units, but only to the extent such costs
would not have been incurred otherwise.

27.3 After the expiration of the Restricted Period, CRLP, Cali may
dispose of any of the Exchange Property at any time; PROVIDED HOWEVER, that,
CRLP, Cali and their Subsidiaries shall use commercially reasonable efforts to
prevent any such sale, transfer or other disposition of the Exchange Property,
or any distribution of the Exchange Property which is treated as a taxable
disposition, from resulting in the recognition of Built-in-Gain by holders of
the Units, and PROVIDED FURTHER that holders of the Units shall have a right of
first offer as set forth in Section 27.4 below.

27.4 In the event CRLP desires to sell or otherwise desires to
dispose of, or receives an offer to purchase any of, the Exchange Property
pursuant to Section 27.2 or 27.3 above, CRLP shall give notice (the "OFFERING
NOTICE") thereof to holders of the Units. The Offering Notice shall specify the
nature of the sale, and the consideration and other terms upon which it intends
to undertake such sale. Within thirty (30) days thereafter, holders of the
Units may elect, by notice to CRLP, to purchase the Exchange Property which is
the subject of the Offering Notice. If holders of the Units elect to so
purchase, then such purchase shall be consummated on the terms and conditions
set forth in the Offering Notice; PROVIDED, HOWEVER, to the extent that the
Exchange Property in question is then subject to separately allocated debt and
the lender thereof consents to holders of the Units assuming such debt, or
acquiring such Exchange Property subject to such debt, at no cost, expense or
liability to CRLP (or if there is any such cost, liability or expense, holders
of the Units shall have reimbursed CRLP for all such cost, liabilities or
expenses and agreed in writing with CRLP to indemnify and hold harmless CRLP
from and against any additional costs, liabilities or expenses arising from or
in connection

<PAGE>

with or attributable to (i) such assumption, (ii) the acquisition of the
Exchange Property subject to such debt or (iii) the payment of any such costs,
liabilities or expenses, but only to the extent such costs would not have been
incurred otherwise), CRLP will convey the Exchange Property subject to such
debt. Holders of the Units may use their Units as currency, in whole or in
part, in connection with the purchase of any of the Exchange Property from CRLP
pursuant to this Section 27.4. In addition, as part of a transfer of any
Exchange Property pursuant to Section 27.2(ii) (1) or (2), if holders of the
Units can cause the third party which is otherwise to obtain title to any
Exchange Property to accept Units, in whole or in part, in lieu of obtaining
title to such Exchange Property, holders of the Units shall have the right to do
so provided that such third party agrees to be bound by all of the terms and
conditions of the OP Agreement and performs in accordance therewith, including,
without limitation, performing the requirements pertaining to a transfer of
Units (other than the need to obtain the consent of the general partner of CRLP,
which consent is deemed to be given pursuant to the terms of Section 27.4); in
such event, title to the Exchange Property which would otherwise have been
transferred to such third party shall be transferred to holders of the Units.
If within the thirty (30) day period during which holders of the Units have the
right to elect to purchase the Exchange Property for sale under the Offering
Notice, holders of the Units do not make the election or fail to respond to the
Offering Notice, then CRLP may undertake to sell such Exchange Property on such
terms and conditions as it shall elect; PROVIDED, HOWEVER, that the sale of any
of the Exchange Property to which this Section 27.4 applies shall not be
consummated at less than 95% of the price as specified in the Offering Notice
unless CRLP again offers the Exchange Property to holders of the Units upon such
more favorable terms and conditions (in which case the thirty (30) day period
described above shall be reduced to ten (10)). If holders of the Units notify
CRLP of their intention not to purchase the Exchange Property as set forth in
the revised Offering Notice, then CRLP may consummate the sale at any time
thereafter, provided that such sale shall not be consummated at less than 95% of
the price specified in the revised Offering Notice unless CRLP again complies
with the provisions of this Section 27.4.

27.5 In the event that holders of the Units elect to purchase an
Exchange Property pursuant to this Section 27, CRLP agrees to cooperate with
holders of the Units, at no cost, expense or liability to CRLP, to cause debt to
be placed on the Property immediately prior the closing of the conveyance of
said Exchange Property, provided that (i) holders of the Units arrange for such
debt at their sole cost and expense, (ii) holders of the Units are
unconditionally prepared to close such conveyance immediately after said closing
of the loan, (iii) holders of the Units agree to assume the debt and thereafter
assume same at the closing and (iv) CRLP is released of all liability thereunder
immediately following the closing of the conveyance of the Exchange Property.

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28. SPECIAL ENVIRONMENTAL MATTERS

To the extent that an environmental condition is discovered at any
Real Property, prior to the Closing Date, which is not a material adverse
environmental condition (as set forth in Section 3.4(a)), CRLP and MACK shall
negotiate in good faith with each other to reach an agreement for MACK to
correct, investigate, remediate or cleanup such environmental condition or
conditions, including without limitation, the cleanup standards to be used as
well as potential limitations on the rights and remedies of the parties, which
agreement shall be incorporated in SCHEDULE 28.1 prior to the Closing and shall
be executed by the parties at the Closing. If CRLP and MACK are unable to reach
an agreement, CRLP may, eliminate any such Real Property from the transaction
upon written notice to MACK, and CRLP shall proceed to consummate this
transaction provided that the Tainted Property eliminated pursuant to Section
3.4(a) and any Real Property eliminated pursuant to this Section shall in the
aggregate constitute less than five (5%) percent of the aggregate Allocated
Property Value for the Exchange Property. In such event, the Exchange
Consideration shall be reduced by the Allocated Property Value attributable to
each such eliminated Real Property in accordance with Section 2.6(b).

29. MISCELLANEOUS

29.1 If any instrument or deposit is necessary in order to obviate a
defect in or objection or exception to title, the following shall apply: (i)
any such instrument shall be in such form and shall contain such terms and
conditions as may be required by the Title Company to omit any defect, objection
or exception to title, (ii) any such deposit shall be made with the Title
Company, and (iii) MACK agrees to execute, acknowledge and deliver any such
instrument and to make any such deposit.

29.2 This Agreement constitutes the entire agreement between the
parties and incorporates and supersedes all prior negotiations and discussions
between the parties. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their successors and assigns, and nothing
in the Agreement express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.

29.3 This Agreement cannot be amended, waived or terminated orally,
but only by an agreement in writing signed by the party to be charged.

29.4 This Agreement shall be interpreted and governed by the laws of
the State of New York and shall be binding upon the parties hereto and their
respective successors and assigns.

29.5 The caption headings in this Agreement are for convenience only
and are not intended to be part of this Agreement and shall not be construed to
modify, explain or alter any of the terms, covenants or conditions herein
contained.

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29.6 If any term, covenant or condition of this Agreement is held to
be invalid, illegal or unenforceable in any respect, this Agreement shall be
construed without such provision.

29.7 Prior to and after the Closing, each party shall, from time to
time, execute, acknowledge and deliver such further instruments, in recordable
form, if necessary, and perform such additional acts, as the other party may
reasonably request in order to effectuate the intent of this Agreement, within
thirty (30) days of the request. Nothing contained in this Agreement shall be
deemed to create any rights or obligations of partnership, joint venture or
similar association between MACK and CRLP. This Agreement shall be given a fair
and reasonable construction in accordance with the intentions of the parties
hereto, and without regard to or aid of canons requiring construction against
MACK, CRLP or the party whose counsel drafted this Agreement. The provisions of
this Section 29.7 shall survive the Closing.

29.8 This Agreement shall not be effective or binding until such
time as it has been executed and delivered by all parties hereto. This
Agreement may be executed by the parties hereto in counterparts, all of which
together shall constitute a single Agreement.

29.9 All references herein to any Section, Schedule or Exhibit shall
be to the Sections of this Agreement and to the Schedules and Exhibits annexed
hereto unless the context clearly dictates otherwise. All of the Schedules and
Exhibits annexed hereto are, by this reference, incorporated herein.

29.10 In the event of any litigation or alternative dispute
resolution between CRLP and MACK in connection with this Agreement or the
transaction contemplated herein, the non-prevailing party in such litigation or
alternative dispute resolution shall be responsible for payment of all expenses
and reasonable attorneys' fees incurred by the prevailing party. The provisions
of this Section 29.10 shall survive the Closing.

29.11 The parties agree that MACK shall not be required to
contibute to CRLP any individual Property by deed, assignment of Ground Lease
or assignment of partnership interest unless and until it has received the
requisite partner consent to contribute the Property in accordance with
Sections 1.2 or 1.3.

29.12 Whenever used herein, the singular number shall include the
plural, the plural shall include the singular, and the use of any gender shall
be applicable to all genders.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

CALI REALTY, L.P.

By: Cali Realty Corporation

By:
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Thomas A. Rizk, Chief Executive Officer

CALI REALTY CORPORATION

By:
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Thomas A. Rizk, Chief Executive Officer

THE MK CONTRIBUTORS

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William Mack

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David Mack

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Earle Mack

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Fredric Mack

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Mitchell Hersh

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Mack Passaic Street Property Co.
By: Mack Rochelle Park, its general partner