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) June 12, 1998
Mack-Cali Realty Corporation
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(Exact name of registrant as specified in its charter)
Maryland 1-13274 22-3305147
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(state or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016
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Registrant's telephone number, including area code (908) 272-8000
N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
During the period January 1, 1998 through June 8, 1998, Mack-Cali Realty
Corporation and subsidiaries (the "Company") acquired, or entered into contracts
to acquire, a 21-building office/flex portfolio, an 18- building office
portfolio, a six-building office complex, a three-building office portfolio, a
two-building office portfolio and seven separate buildings through 12 individual
transactions with separate sellers (to be collectively referred to as the "1998
Acquisitions"). Additionally, during the same period, the Company completed five
separate stock offerings (collectively, the "1998 Offerings"), issuing an
aggregate of 7,834,878 shares of common stock for total net proceeds of
aproximately $284.6 million. The 1998 Acquisitions and the 1998 Offerings are to
be hereinafter collectively referred to as the "Reported Events".
The following is a brief description of the Reported Events:
1998 Acquisitions:
On January 30, 1998, the Company acquired a 17-building office/flex portfolio,
aggregating approximately 748,660 square feet located in the Moorestown West
Corporate Center in Moorestown, Burlington County, New Jersey and in Bromley
Commons in Burlington, Burlington County, New Jersey. The 17 properties were
acquired for a total cost of approximately $47.5 million. The Company is under
contract with the same seller to acquire an additional four office/flex
properties, aggregating 199,400 square feet, for a total cost of approximately
$12.0 million, in the same locations. The 17 acquired properties and four
pending building acquisitions are to be collectively referred to as the
"McGarvey Portfolio". The Company also has an option to purchase an additional
property following completion of construction and required lease-up for
approximately $3.7 million. The purchase contract also provides the Company a
right of first refusal to acquire up to six additional office/flex properties
totaling 202,000 square feet upon their development and lease-up. The initial
transaction was funded primarily from drawing on one of the Company's credit
facilities, as well as the assumption of mortgage debt with an estimated fair
value of $8.4 million (the "McGarvey Mortgages"). The McGarvey Mortgages
currently have a weighted average annual effective interest rate of 6.24 percent
and are secured by five of the office/flex properties acquired.
On February 5, 1998, the Company acquired 500 West Putnam Avenue ("500 West
Putnam"), a 121,250 square-foot office building located in Greenwich, Fairfield
County, Connecticut. The property was acquired for a total cost of approximately
$20.1 million, funded from drawing on one of the Company's credit facilities, as
well as the assumption of mortgage debt with an estimated fair value of $12.1
million, which bears interest at an annual effective rate of 6.52 percent.
The McGarvey Portfolio and 500 West Putnam acquisitions were previously included
as Reported Events in the Company's Current Report on Form 8-K, dated January
16, 1998. They are included in this filing as a result of the inclusion of more
current financial statements.
On February 25, 1998, the Company acquired 10 Mountainview Road
("Mountainview"), a 192,000 square-foot office property, located in Upper Saddle
River, Bergen County, New Jersey. The property was acquired for approximately
$24.7 million, which was made available from proceeds received from the
Company's February 1998 offering of common stock.
On March 12, 1998, the Company acquired 1250 Capital of Texas Highway South
("Cielo Center"), a 270,703 square-foot office building in Austin, Travis
County, Texas. Cielo Center was acquired for a total cost of approximately $37.1
million, which was made available from drawing on one of the Company's credit
facilities.
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On March 27, 1998, the Company acquired 10 office properties located in suburban
Denver and Colorado Springs, Colorado from Pacifica Holding Company
("Pacifica"), a private real estate owner and operator in Denver, Colorado. The
properties were acquired for a total cost of approximately $74.7 million, funded
by drawing approximately $68.2 million from the Company's credit facilities,
from the issuance of approximately $3.8 million in common operating partnership
units and $2.7 million from the Company's cash reserves. These acquired
buildings comprised approximately 620,017 square feet of Pacifica's entire 1.2
million square-foot office portfolio, which consists of 18 office buildings and
related operations (collectively, the "Pacifica Portfolio"). On June 8, 1998 the
Company acquired six of the remaining eight office buildings, encompassing
514,427 square feet, and 2.5 acres of vacant land, located in the Denver Tech
Center, from Pacifica for an aggregate purchase price of approximately $80.7
million, funded by drawing approximately $59.9 million from one of the Company's
credit facilities and the issuance of approximately $20.8 million in common
operating partnership units. The Company currently is a party to a contract to
acquire the remaining two office buildings, encompassing 95,360 square feet,
from Pacifica for an aggregate purchase price of approximately $11.9 million.
William L. Mack, a director and equity holder of the Company, was an indirect
owner of an interest in certain of the buildings contained in the Pacifica
Portfolio.
Also, on March 27, 1998, the Company acquired four office buildings and a day
care center, plus land parcels, and a 50 percent interest in a fifth office
building, all of such properties aggregating 859,946 square-feet and located in
the Prudential Business Campus office complex in Parsippany and East Hanover,
Morris County, New Jersey (collectively, the "Prudential Business Campus").
Prudential Business Campus was acquired for a total cost of approximately $175.9
million, which funds were made available from the Company's cash reserves (made
available in part from the proceeds of the sale of 2,705,628 shares of the
Company's common stock to Prudential Insurance Company of America, Strategic
Value Investors, LLC and Strategic Value Investors International, LLC) and from
drawing on one of the Company's credit facilities.
On March 30, 1998, the Company acquired Morris County Financial Center, a
308,215 square-foot, two-building office complex located in Parsippany, Morris
County, New Jersey. The property was acquired for approximately $52.8 million,
which was made available from drawing on one of the Company's credit facilities.
On May 13, 1998, the Company acquired 3600 South Yosemite ("3600 S. Yosemite"),
a 133,743 square-foot office building located in Denver, Denver County, Colorado
for approximately $13.5 million, which was made available from drawing on one of
the Company's credit facilities.
On May 14, 1998, the Company acquired One Ramland Road ("Ramland Road"), a
232,000 square-foot vacant office/flex building located in Orangeburg, Rockland
County, New York, for approximately $6.7 million, which was made available from
the Company's cash reserves. The Company intends to redevelop the property.
On May 22, 1998, the Company acquired 500 College Road East ("500 College
Road"), a 158,235 square-foot office building located in Plainsboro, Middlesex
County, New Jersey, for approximately $21.2 million, which was made available
from drawing on one of the Company's credit facilities.
On June 1, 1998, the Company acquired 1709 New York Avenue Northwest and 1400 L
Street Northwest, two individual office buildings aggregating approximately
325,000 square feet located in Washington, D.C. The properties were acquired for
approximately $90.0 million, which was made available from drawing on one of the
Company's credit facilities. Additionally, the Company also entered into a
contract with the same seller to acquire a third office building located at 4200
Parliament Drive and vacant land in Lanham, Prince Georges County, Maryland. The
122,000 square-foot office building, in addition to adjacent developable
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land, is expected to be acquired for approximately $15.5 million. The completed
building acquisitions, and pending building and land acquisitions are to be
collectively referred to as the "D.C. Portfolio".
On June 3, 1998, the Company acquired 400 South Colorado Boulevard ("400 South
Colorado"), a 125,415 square-foot office building located in Denver, Denver
County, Colorado, for approximately $12.0 million, which was made available from
drawing on one of the Company's credit facilities.
Further information regarding the 1998 Acquisitions is attached on SCHEDULE A.
Each of the 1998 Acquisitions was, or will be, pursuant to individual agreements
for the sale and purchase of each property or group of 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 takes 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, or will be, obtained in connection with the
acquisition of properties by the Company. The Company, after investigation of
the properties, is not aware of any material factors, other than those
enumerated above, that would cause the financial information reported not to be
necessarily indicative of future operating results.
1998 Offerings:
On February 25, 1998, the Company completed an underwritten public offer and
sale of 2,500,000 shares of its common stock and used the net proceeds, which
totaled approximately $92.2 million (after offering costs) to pay down a portion
of its outstanding borrowings under the Company's credit facilities and fund the
acquisition of Mountainview.
On March 18, 1998, in connection with the Company's acquisition of Prudential
Business Campus, the Company completed an offer and sale of 2,705,628 shares of
its common stock using the net proceeds of approximately $99.9 million (after
offering costs) in the funding of such acquisition.
On March 27, 1998, the Company completed an underwritten public offer and sale
of 650,407 shares of its common stock and used the net proceeds, which totaled
approximately $23.7 million (after offering costs), to pay down a portion of its
outstanding borrowings under the Company's credit facilities.
On April 29, 1998, the Company completed an underwritten public offer and sale
of 994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34.7 million (after offering costs), primarily to pay down a
portion of its outstanding borrowings under the Company's credit facilities.
On May 29, 1998, the Company completed an underwritten public offer and sale of
984,615 shares of its common stock and used the net proceeds, which totaled
approximately $34.2 million (after offering costs) primarily to pay down a
portion of its outstanding borrowings under the Company's credit facilities.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements
The special-purpose financial statements included in this report encompass
the following:
o Audited Statement of Revenue and Certain Expenses for the McGarvey
Portfolio for the year ended December 31, 1997 and unaudited interim
financial information for the period January 1, 1998 to January 29,
1998,
o Audited Statement of Revenue and Certain Expenses for 500 West
Putnam for the year ended December 31, 1997 and unaudited interim
financial information for the period January 1, 1998 to February 4,
1998,
o Audited Statement of Revenue and Certain Expenses for Mountainview
for the year ended December 31, 1997 and unaudited interim financial
information for the period January 1, 1998 to February 24, 1998,
o Audited Statement of Revenue and Certain Expenses for Cielo Center
for the year ended December 31, 1997 and unaudited interim financial
information for the period January 1, 1998 to March 11, 1998,
o Audited Statements of Revenue and Certain Expenses for the Pacifica
Portfolio for the years ended December 31, 1997, 1996, and 1995 and
unaudited interim financial information for the period January 1,
1998 to March 26, 1998,
o Audited Historical Statement of Gross Income and Direct Operating
Expenses for Prudential Business Campus for the year ended December
31, 1997 and unaudited interim financial information for the period
January 1, 1998 to March 26, 1998,
o Audited Historical Statement of Gross Income and Direct Operating
Expenses for the Morris County Financial Center for the year ended
December 31, 1997 and unaudited interim financial information for
the period January 1, 1998 to March 29, 1998,
o Audited Statement of Revenue and Certain Expenses for 3600 S.
Yosemite for the year ended December 31, 1997 and unaudited interim
financial information for the three months ended March 31, 1998,
o Audited Statement of Revenue and Certain Expenses for 500 College
Road East for the year ended December 31, 1997 and unaudited interim
financial information for the three months ended March 31, 1998,
o Audited Statement of Revenue and Certain Expenses for the D.C.
Portfolio for the year ended December 31, 1997 and unaudited interim
financial information for the three months end March 31, 1998, and
o Audited Statement of Revenue and Certain Expenses for 400 South
Colorado for the year ended December 31, 1997 and unaudited interim
financial information for the three months ended March 31, 1998.
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(b) Pro Forma Financial Information (unaudited)
Unaudited pro forma financial information for the Company is presented as
follows:
o Condensed consolidated balance sheet as of March 31, 1998,
o Condensed consolidated statements of operations for the three months
ended March 31, 1998 and the year ended December 31, 1997, and
o Estimated twelve-month pro forma statement of taxable net operating
income and operating funds available for the twelve month period
ended March 31, 1998.
(c) Exhibits
10.162 Agreement for Purchase and Sale of Real Estate by and between
Bayer Corporation, as Seller, and Mack-Cali Realty Acquisition
Corporation, as Purchaser, dated March 31, 1998 [Ramland Road]
10.163 Agreement of Sale and Purchase by and between SI Princeton,
Inc., as Seller, and Mack- Cali Realty Acquisition
Corporation, as Purchaser, dated April 29, 1998 [500 College
Road]
10.164 Purchase and Sale Agreement by and between 1709 L.P., as
Seller, and Mack-Cali Realty Acquisition Corp., as Purchaser,
dated June 1, 1998 [D.C. Portfolio]
10.165 Purchase and Sale Agreement by and between 14L Associates, as
Seller, and Mack-Cali Realty Acquisition Corp., as Purchaser,
dated June 1, 1998 [D.C. Portfolio]
10.166 Contribution and Exchange Agreement between and among G&G
Martco, Lawrence W. Feldman, The Lawrence W. And Marie N.
Feldman Trust, Alvin Dworman and Plentitude Partners, L.P. and
Mack-Cali Realty, L.P., dated April 30, 1998 [Convention
Plaza]
10.167 Underwriting Agreement, dated May 27, 1998, between Mack-Cali
Realty Corporation and PaineWebber Incorporated.
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SCHEDULE A:
MACK-CALI REALTY CORPORATION
Summary of 1998 Acquisitions
<TABLE>
<CAPTION>
DATE PERCENT ACQUIS.
ACQUIRED RENTABLE OCCUPIED COST TO
(for completed SQUARE AS OF YEAR COMPANY PRINCIPAL TENANTS
PROPERTY acquisitions) FEET CLOSING COMPLETED (in thousands) (based on percentage of property leased)
<S> <C> <C> <C> <C> <C> <C>
McGarvey Portfolio 1/30/98 748,660 98% 1985 $47,452 Color Graphics Inc. (7%),
(21 Properties) (17 Properties) to Standard Register Co. (5%)
Moorestown and Pending: 199,400 N/A 1997 $11,997 Computer Science Corp. (5%)
Burlington, (4 Properties)
Burlington County,
New Jersey
500 West Putnam 2/05/98 121,250 100% 1973 $20,125 Hachette Magazines, Inc. (27%),
500 West Putnam Ave. Great Brands of Europe (12%),
Greenwich, Winklevoss Consultants, Inc. (12%),
Fairfield County, Orthopaedics Associates, P.C. (11%)
Connecticut
Mountainview 2/25/98 192,000 98% 1986 $24,725 Thomson Minwax Company (23%),
10 Mountainview Road Corning Life Sciences Inc. (15%),
Upper Saddle River, ITT Fluid Technology (14%),
Bergen County, Neuromedical Systems Inc. (14%),
New Jersey Professional Detailing Inc. (14%),
Innapharma Inc. (10%)
Cielo Center 3/12/98 270,703 92% 1985 $37,062 Executive Environments Inc. (16%),
1250 Capital of Texas Intelliquest Inc. (14%)
Highway South
Austin,
Travis County,
Texas
Pacifica Portfolio 3/27/98 620,017 98% 1982 $74,712 Evolving Systems, Inc. (11%),
(18 Properties and (10 Properties) to Sun Microsystems, Inc. (9%),
vacant parcel) 6/8/98 514,427 89% 1997 $80,701 TRW Inc. (9%),
Denver and (6 Properties First Tennessee Bank, N.A. (6%)
Colorado Springs, and vacant
Colorado parcel)
2 Properties 95,360 N/A $11,866
Pending
Prudential Business 3/27/98 859,946 97% 1982 $175,856 Nabisco Inc. (34%),
Campus (6 Properties to Deloitte & Touche LLP (14%),
and vacant parcel) 1991 Prudential Insurance Co. (11%),
Parsippany and Bay Networks (7%)
East Hanover,
Morris County,
New Jersey
Morris County 3/30/98 308,215 97% 1989 $52,753 Coopers & Lybrand LLP (41%),
Financial Center Integrated Communications (25%),
(2 Properties) Experian Information Solutions (8%)
Parsippany,
Morris County,
New Jersey
</TABLE>
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SCHEDULE A:
MACK-CALI REALTY CORPORATION
Summary of 1998 Acquisitions (continued)
<TABLE>
<CAPTION>
DATE PERCENT ACQUIS.
ACQUIRED RENTABLE OCCUPIED COST TO
(for completed SQUARE AS OF YEAR COMPANY PRINCIPAL TENANTS
PROPERTY acquisitions) FEET CLOSING COMPLETED (in thousands) (based on percentage of property leased)
<S> <C> <C> <C> <C> <C> <C>
3600 S. Yosemite 5/13/98 133,743 100% 1974 $13,500 M.D.C. Holdings, Inc. (100%)
3600 S. Yosemite Rd,
Denver,
Denver County,
Colorado
Ramland Road 5/14/98 232,000 0% 1987 $6,700 N/A
One Ramland Road
Orangeburg,
Rockland County,
New York
500 College Road East 5/22/98 158,235 100% 1984 $21,200 Merrill Lynch Asset Management
500 College Road East (73%),
Plainsboro, Buchanan Ingersoll P.C. (17%),
Middlesex County, PNC Bank N.A. (10%)
New Jersey
D.C. Portfolio 6/1/98 325,000 93% 1972 $90,000 Board of Gov./Federal Reserve (21%),
(3 Properties and (2 Properties) to Winston & Strawn (20%),
vacant parcel) Pending: 122,000 N/A 1989 $15,450 Comnet Corporation (11%),
1709 New York Ave. (1 Property) The United States of America (7%),
and World Resources Institute (6%)
1400 L Street
Washington, D.C.;
4200 Parliament Drive
Lanham, Prince
Georges County,
Maryland
400 South Colorado 6/3/98 125,415 94% 1983 $12,000 Community Health Plan (12%),
400 South Colorado Department of Revenue (12%),
Boulevard Northwest Bank, N.A. (11%),
Denver, Senter, Goldfarb & Rice (10%)
Denver County,
Colorado
TOTAL 5,026,371 $696,099
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Mack-Cali
Realty Corporation has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MACK-CALI REALTY CORPORATION
June 12, 1998 By: /s/ Thomas A. Rizk
------------------
Thomas A. Rizk
Chief Executive Officer
June 12, 1998 By: /s/ Barry Lefkowitz
-------------------
Barry Lefkowitz
Executive Vice President and
Chief Financial Officer
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MACK-CALI REALTY CORPORATION
Index to Financial Information
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Page
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McGARVEY PORTFOLIO
Report of Independent Accountants........................................ 12
Combined Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1997, and................................. 13
The Period January 1, 1998 to January 29, 1998 (unaudited)............ 17
Notes to Statements of Revenue and Certain Expenses...................... 14-16
500 WEST PUTNAM
Report of Independent Accountants........................................ 18
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1997, and................................. 19
The Period January 1, 1998 to February 4, 1998 (unaudited)............ 22
Notes to Statements of Revenue and Certain Expenses...................... 20-21
MOUNTAINVIEW
Report of Independent Accountants........................................ 23
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1997, and................................. 24
The Period January 1, 1998 to February 24, 1998 (unaudited)........... 27
Notes to Statements of Revenue and Certain Expenses...................... 25-26
CIELO CENTER
Report of Independent Accountants........................................ 28
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1997 and.................................. 29
The Period January 1, 1998 to March 11, 1998 (unaudited).............. 32
Notes to Statements of Revenue and Certain Expenses...................... 30-31
PACIFICA PORTFOLIO
Report of Independent Accountants........................................ 33
Statements of Revenue and Certain Expenses for:
The Years Ended December 31, 1997, 1996, and 1995, and................ 34
The Period January 1, 1998 to March 26, 1998 (unaudited).............. 38
Notes to Statements of Revenue and Certain Expenses...................... 35-37
PRUDENTIAL BUSINESS CAMPUS
Report of Independent Accountants........................................ 39
Historical Statements of Gross Income and Direct Operating Expenses for:
The Year Ended December 31, 1997, and................................. 40
The Period January 1, 1998 to March 26, 1998 (unaudited).............. 44
Notes to Historical Statements of Gross Income and
Direct Operating Expenses.. ............................................. 41-43
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MACK-CALI REALTY CORPORATION
Index to Financial Information (continued)
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Page
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MORRIS COUNTY FINANCIAL CENTER
Report of Independent Accountants........................................ 45
Historical Statements of Gross Income and Direct Operating Expenses for:
The Year Ended December 31, 1997, and................................. 46
The Period January 1, 1998 to March 29, 1998 (unaudited).............. 49
Notes to Historical Statements of Gross Income and
Direct Operating Expenses.. ............................................. 47-48
3600 S. YOSEMITE
Report of Independent Accountants........................................ 50
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1997, and................................. 51
The Three Months Ended March 31, 1998 (unaudited)..................... 54
Notes to Statements of Revenue and Certain Expenses...................... 52-53
500 COLLEGE ROAD EAST
Report of Independent Accountants........................................ 55
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1997, and................................. 56
The Three Months Ended March 31, 1998 (unaudited)..................... 59
Notes to Statements of Revenue and Certain Expenses...................... 57-58
D.C. PORTFOLIO
Report of Independent Accountants........................................ 60
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1997, and................................. 61
The Three Months Ended March 31, 1998 (unaudited)..................... 64
Notes to Statements of Revenue and Certain Expenses...................... 62-63
400 SOUTH COLORADO
Report of Independent Accountants........................................ 65
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1997, and................................. 66
The Three Months Ended March 31, 1998 (unaudited)..................... 69
Notes to Statements of Revenue and Certain Expenses...................... 67-68
MACK-CALI REALTY CORPORATION
Pro Forma (unaudited):
Condensed Consolidated Balance Sheet as of March 31, 1998................ 70-71
Condensed Consolidated Statements of Operations for:
The Three Months Ended March 31, 1998, and............................ 72-76
The Year Ended December 31, 1997...................................... 77-81
Estimated Twelve-Month Pro Forma Statement of Taxable Net
Operating Income and Operating Funds Available for
the Twelve Months Ended March 31, 1998................................ 82
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Combined Statement of Revenue and Certain
Expenses for the properties known as the McGarvey Portfolio, as more fully
described in Note 1, for the year ended December 31, 1997. The combined
financial statement is the responsibility of the McGarvey Portfolio's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the combined financial statement. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying Combined Statement of Revenue and Certain Expenses was
prepared as described in Note 2, for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the Form
8-K of Mack-Cali Realty Corporation) and is not intended to be a complete
presentation of McGarvey Portfolio's revenues and expenses.
In our opinion, the combined financial statement referred to above
presents fairly, in all material respects, the revenue and certain expenses of
the McGarvey Portfolio for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
----------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
April 6, 1998
12
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McGARVEY PORTFOLIO
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue
Base rents (Note 2) $5,002,423
Escalations and recoveries from tenants 1,009,119
----------
6,011,542
----------
Certain Expenses
Real estate taxes 779,904
Utilities 89,624
Operating services (Note 4) 375,870
General and administrative 2,126
----------
1,247,524
----------
Revenue in excess of certain expenses $4,764,018
==========
The accompanying notes are an integral part of this Combined Statement of
Revenue and Certain Expenses.
13
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McGARVEY PORTFOLIO
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
McGarvey Development Company ("McGarvey") is engaged in the development,
ownership and operation of office/flex buildings located in New Jersey. On
January 30, 1998 McGarvey sold 17 office/flex buildings to certain
subsidiaries of Mack-Cali Realty Corporation (the "Company") totaling
approximately 748,660 square feet. McGarvey is under contract to sell to
the Company four additional office/flex buildings, aggregating 199,400
square feet. The Company also has an option to purchase an office/flex
property, as well as rights of first refusal to purchase up to six
additional properties. There is no assurance that the purchases of the
properties indicated in the preceding two sentences will be consummated or
that certain conditions or purchase terms will not be modified or amended.
The combined statements of revenue and certain expenses include the 17
acquired buildings and the four buildings under contract, totaling 21
office/flex buildings which are collectively referred to as the "McGarvey
Portfolio" or the "Properties".
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Statement of Revenue and Certain Expenses has 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.
The following table sets forth the Properties included in the
Combined Statement of Revenue and Certain Expenses:
Properties Acquired by the Company on January 30, 1998:
Partnership Property Address
- ----------- -------- -------
Bromley Commons 3 Terri Lane 3 Terri Lane, Burlington
5 Terri Lane 5 Terri Lane, Burlington
Cambridge Management Garlock Building 1451 Metropolitan Avenue,
West Deptford
McGarvey Development Flex III 201 Commerce Drive, Moorestown
Color Graphics 101 Commerce Drive, Moorestown
Flex VII 1 Executive Drive, Moorestown
Flex IX 102 Executive Drive, Moorestown
Moorestown West Flex VIII 101 Executive Drive, Moorestown
Flex XI 225 Executive Drive, Moorestown
Flex X 1256 N. Church Street, Moorestown
Lenola Flex Flex XII and 840 N. Lenola Road, Moorestown
Flex XIV 844 N. Lenola Road, Moorestown
14
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McGARVEY PORTFOLIO
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
a. Basis of Presentation (Continued)
Properties Acquired by the Company on January 30, 1998 (Continued):
Partnership Property Address
- ----------- -------- -------
Twosome Flex Flex XV 30 Twosome Drive, Moorestown
Flex XVI 40 Twosome Drive, Moorestown
Flex XVII 50 Twosome Drive, Moorestown
Foster Flex Assoc. Flex XXII 97 Foster Road, Moorestown
Lancer Associates Flex XXIV 1507 Lancer Drive, Moorestown
Properties Under Contract as of This Report Date:
Partnership Property Address
- ----------- -------- -------
McGarvey Development Flex II 2 Commerce Drive, Moorestown
Flex IV 102 Commerce Drive, Moorestown
Flex V 202 Commerce Drive, Moorestown
Flex VI 2 Executive Drive, Moorestown
The accompanying Combined Statement of Revenue and Certain Expenses
has been prepared on the accrual basis of accounting. The
accompanying financial statement is not representative of the actual
operations for the period presented as revenue and certain expenses,
which may not be comparable to the revenue and certain expenses to
be earned or incurred by the Company in the future operations of the
Properties, have been excluded. Revenue excluded consists of
interest and other revenue unrelated to the continuing operations of
the Properties. Expenses excluded consist of depreciation of the
building and improvements, and amortization of organization and
other intangible costs and other expenses not directly related to
the future operations of the Properties.
b. Use of Estimates
The preparation of the combined financial statements in accordance
with generally accepted accounting principles requires management to
make estimates and assumptions that affect disclosures of contingent
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
15
<PAGE>
McGARVEY PORTFOLIO
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
3. LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2009. Minimum rental amounts for certain leases
increase as set forth under the terms of each lease. In addition to base
rents, the leases provide for the tenants to pay their proportionate share
of, and/or increase in, real estate taxes, operating expenses, and
utilities.
Future minimum rentals to be received under noncancellable operating
leases at December 31, 1997 are as follows:
1998 $ 4,062,739
1999 3,404,851
2000 2,979,711
2001 2,276,969
2002 1,597,634
Thereafter 3,640,606
------------
$17,962,510
============
For the year ended December 31, 1997 and for the period of January 1, 1998
through January 29, 1998 (unaudited) no individual tenant contributed more
than 10% of base rent.
4. RELATED PARTY TRANSACTIONS
The Properties incurred landscaping, snow removal and repair and
maintenance expenses paid to related parties which totaled $40,891 for the
year ended December 31, 1997.
5. INTERIM FINANCIAL STATEMENT
The interim financial data for the period January 1, 1998 through January
29, 1998 are unaudited. However, in the opinion of management, the interim
data includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire year or any other
period.
16
<PAGE>
McGARVEY PORTFOLIO
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE PERIOD JANUARY 1, 1998 TO JANUARY 29, 1998
(unaudited)
Revenue
Base rents (Note 2) $423,130
Escalations and recoveries from tenants 71,581
--------
494,711
--------
Certain Expenses
Real estate taxes 66,092
Utilities 8,392
Operating services (Note 4) 7,433
General and administrative 87
--------
82,004
--------
Revenue in excess of certain expenses $412,707
========
The accompanying notes are an integral part of this Combined Statement of
Revenue and Certain Expenses.
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Statement of Revenue and Certain
Expenses, for the property known as 500 West Putnam, as more fully described in
Note 1, for the year ended December 31, 1997. The financial statement is the
responsibility of 500 West Putnam's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared as
described in Note 2, for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission (for inclusion in the Form 8-K of
Mack-Cali Reality Corporation) and is not intended to be a complete presentation
of 500 West Putnam's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses of 500 West Putnam
for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
----------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
March 29, 1998
18
<PAGE>
500 WEST PUTNAM
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue
Base rents (Note 2) $2,269,855
Escalation and recoveries from tenants 481,910
----------
2,751,765
----------
Certain Expenses
Real estate taxes 169,749
Utilities 268,560
Operating services 313,872
General and administrative (Note 4) 166,900
----------
919,081
----------
Revenue in excess of certain expenses $1,832,684
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
19
<PAGE>
500 WEST PUTNAM
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying Statement of Revenue and Certain
Expenses, 500 West Putnam (the "Property") is an office building totaling
approximately 121,250 square feet in Greenwich, Fairfield County,
Connecticut, which was acquired by a subsidiary of Mack-Cali Realty
Corporation on February 5, 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Statement of Revenue and Certain Expenses has been
prepared on the accrual basis of accounting. The accompanying
financial statement is not representative of the actual operations
for the period presented as revenue and certain expenses, which may
not be comparable to the revenue and certain expenses to be earned
or incurred by the Company in the future operations of the Property,
have been excluded. Revenue excluded consists of interest and other
revenues unrelated to the continuing operations of the Property.
Expenses excluded consist of depreciation of the building and
improvements, amortization of organization and other intangible
costs and other expenses not directly related to the future
operations of the Property.
b. Use of Estimates
The preparation of the 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
revenue and expenses during the reported period. Actual results
could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
3. LEASES
Leases for the Property have various remaining lease terms up to 13 years
with options to certain tenants for renewal. Minimum rental amounts for
certain leases increase as set forth under the terms of each lease. In
addition to base rents, the leases provide for the tenants to pay their
proportionate share of, and/or increases in, real estate taxes, operating
expenses and utilities.
20
<PAGE>
500 WEST PUTNAM
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
3. LEASES (Continued)
Future minimum rentals to be received under non-cancelable operating
leases at December 31, 1997 are as follows:
1998 $ 2,271,990
1999 2,258,878
2000 2,000,824
2001 1,299,182
2002 944,756
Thereafter 5,928,321
------------
$14,703,951
============
For the year ended December 31, 1997, four tenants contributed 62.5% of
base rents comprised of: 24.2% for Hachette, Inc., 15.6% for Great Brands,
Inc., 11.6% for Orthopedic Associates, P.C. and 11.1% for Winklevoss, Inc.
For the period January 1, 1998 to February 4, 1998 (unaudited), four
tenants contributed 60.7% of base rents comprised of: 23.5% for Hachette,
Inc., 15.1% for Great Brands, Inc., 11.3% for Orthopedic Associates, P.C.
and 10.8% for Winklevoss, Inc.
4. GENERAL AND ADMINISTRATIVE
The Property incurred management fees of 5.7% of total revenues for both
1997 and for the period of January 1, 1998 to February 4, 1998. Management
fee expense for the property was $156,752 for 1997 and $15,207 (unaudited)
for the period January 1, 1998 to February 4, 1998.
5. INTERIM STATEMENT
The interim financial data for the period of January 1, 1998 to February
4, 1998 is unaudited. However, in the opinion of management, the interim
data includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire year or any other
period.
21
<PAGE>
500 WEST PUTNAM
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE PERIOD JANUARY 1, 1998 TO FEBRUARY 4, 1998
(unaudited)
Revenue
Base rents (Note 2) $229,677
Escalation and recoveries from tenants 38,132
--------
267,809
--------
Certain Expenses
Real estate taxes 17,244
Utilities 26,152
Operating services 27,076
General and administrative (Note 4) 15,384
--------
85,856
--------
Revenue in excess of certain expenses $181,953
========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Statement of Revenue and Certain Expenses
for the property known as Mountainview, as more fully described in Note 1, for
the year ended December 31, 1997. The financial statement is the responsibility
of the property's management. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared as
described in Note 2, for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission (for inclusion in the Form 8-K of
Mack-Cali Realty Corporation) and is not intended to be a complete presentation
of Mountainview's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses for Mountainview for
the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
----------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
March 27, 1998
23
<PAGE>
MOUNTAINVIEW
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue
Base rents (Note 2) $2,653,925
Escalations and recoveries from tenants 210,922
Other income 3,562
----------
2,868,409
----------
Certain Expenses
Real estate taxes 221,427
Utilities 421,110
Operating services 508,280
General and administrative (Note 4) 110,307
----------
1,261,124
----------
Revenue in excess of certain expenses $1,607,285
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
24
<PAGE>
MOUNTAINVIEW
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying Statement of Revenue and Certain
Expenses, Mountainview (the "Property") is an office building totaling
approximately 192,000 square feet in Upper Saddle River, Bergen County,
New Jersey which was acquired by a subsidiary of Mack-Cali Realty
Corporation, (the "Company") on February 25, 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Statement of Revenue and Certain Expenses has been
prepared on the accrual basis of accounting. The accompanying
financial statement is not representative of the actual operations
for the period presented, as revenue and certain expenses, which may
not be comparable to the revenue and certain expenses to be earned
or incurred by the Company in the future operations of the Property
have been excluded. Revenue excluded consists of interest and other
revenue unrelated to the continuing operations of the Property.
Expenses excluded consist of depreciation of the building and
improvements, and amortization of organization and other intangible
costs and other expenses not directly related to the future
operations of the Property.
b. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and certain expenses during the reporting period.
Actual results could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
3. LEASES
Leases for the Property have various remaining lease terms up to ten years
with options to certain tenants for renewal. Minimum rental amounts for
certain leases increase as set forth under the terms of each lease. In
addition to base rents, the leases provide for the tenants to pay their
proportionate share of, and/or increases in, real estate taxes, operating
expenses, and utilities.
25
<PAGE>
MOUNTAINVIEW
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
3. LEASES (Continued)
Future minimum rentals to be received under non-cancelable operating
leases at December 31, 1997 are as follows:
1998 $ 3,227,095
1999 3,643,536
2000 3,691,848
2001 3,662,848
2002 3,190,766
Thereafter 9,059,546
------------
$26,475,639
============
For the year ended December 31, 1997, four tenants contributed 87.6
percent of base rents, comprised of: 34.5 percent for Thompson Minwax
Company, Inc., 21.0 percent for Neuromedical Systems, Inc., 19.5 percent
for Corning Life Sciences, Inc. and 12.6 percent for Innapharma, Inc.
For the period of January 1, 1998 to February 24, 1998 (unaudited) four
tenants contributed 86.8 percent of base rents, comprised of: 34.2 percent
for Thompson Minwax, Inc., 20.8 percent for Neuromedical, Inc., 19.3
percent for Corning Life Sciences, Inc. and 12.5 percent for Innapharma,
Inc.
4. GENERAL AND ADMINISTRATIVE
The Property incurred management fees based on two percent of gross
revenues which totaled $58,778 for the year ended December 31, 1997 and
$8,867 (unaudited) for the period of January 1, 1998 to February 24, 1998.
5. INTERIM STATEMENT
The interim financial data for the period of January 1, 1998 to February
24, 1998 is unaudited. However, in the opinion of management, the interim
data includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire fiscal year or any
other period.
26
<PAGE>
MOUNTAINVIEW
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE PERIOD JANUARY 1, 1998 TO FEBRUARY 24, 1998
(unaudited)
Revenue
Base rents (Note 2) $421,974
Escalation and recoveries from tenants 33,573
--------
455,547
--------
Certain Expenses
Real estate taxes 35,028
Utilities 67,880
Operating services 69,726
General and administrative (Note 4) 14,435
--------
187,069
--------
Revenue in excess of certain expenses $268,478
========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Statement of Revenue and Certain
Expenses, for the properties known as Cielo Center, as more fully described in
Note 1, for the year ended December 31, 1997. The financial statement is the
responsibility of Cielo Center's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared as
described in Note 2, for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission (for inclusion in the Form 8-K of
Mack-Cali Reality Corporation) and is not intended to be a complete presentation
of Cielo Center's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses of Cielo Center for
the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ Schonbraun Safris McCann Bekritsy & Co., L.L.C.
---------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
March 30, 1998
28
<PAGE>
CIELO CENTER
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue
Base rents (Note 2) $3,976,912
Escalation and recoveries from tenants 205,862
Parking and other 105,890
----------
4,288,664
----------
Certain Expenses
Real estate taxes 596,834
Utilities 491,554
Operating services 848,825
General and administrative (Note 4) 264,364
----------
2,201,577
----------
Revenue in excess of certain expenses $2,087,087
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
29
<PAGE>
CIELO CENTER
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying Statement of Revenue and Certain
Expenses, Cielo Center (the "Property") is an office property totaling
approximately 270,703 square feet in Austin, Texas, which was acquired by
a subsidiary of Mack-Cali Realty Corporation (the "Company") on March 12,
1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Statement of Revenue and Certain Expenses has been
prepared on the accrual basis of accounting. The accompanying
financial statement is not representative of the actual operations
for the period presented as certain revenue and operating expenses,
which may not be comparable to the revenue and certain expenses to
be earned or incurred by the Company in the future operations of the
Property have been excluded. Revenue excluded consists of interest
and other revenue unrelated to the continuing operations of the
Property. Expenses excluded consist of depreciation of the building
and improvements, amortization of organization and other intangible
costs and other expenses not directly related to the future
operations of the Property.
b. Use of Estimates
The preparation of the 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
revenue and expenses during the reported period. Actual results
could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
3. LEASES
Leases for the Property have various remaining lease terms up to six years
with options to certain tenants for renewal. Minimum rental amounts for
certain leases increase as set forth under the terms of each lease. In
addition to base rents, the leases provide for the tenants to pay their
proportionate share of, and/or increases in, real estate taxes, operating
expenses and utilities.
30
<PAGE>
CIELO CENTER
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
3. LEASES (Continued)
Future minimum rentals to be received under non-cancelable operating
leases at December 31, 1997 are as follows:
1998 $ 4,912,707
1999 4,988,500
2000 4,291,747
2001 3,390,066
2002 1,280,066
2003 596,890
------------
$19,459,976
============
For the year ended December 31, 1997 and for the period of January 1, 1998
to March 11, 1998 (unaudited) one tenant contributed more than 10.0
percent of base rents. Intelliquest, Inc. contributed 14.3 and 12.6
percent of base rents, respectively.
4. GENERAL AND ADMINISTRATIVE
The Property incurred management fees based on four percent of gross
revenues which totaled $175,900 for the year ended December 31, 1997 and
$38,570 (unaudited) for the period January 1, 1998 to March 11, 1998.
5. INTERIM STATEMENT
The interim financial data for the period of January 1, 1998 to March 11,
1998 is unaudited. However, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire year or any other
period.
31
<PAGE>
CIELO CENTER
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE PERIOD JANUARY 1, 1998 TO MARCH 11, 1998
(unaudited)
Revenue
Base rents (Note 2) $ 943,309
Escalation and recoveries from tenants 42,638
Parking and other 19,532
-----------
1,005,479
-----------
Certain Expenses
Real estate taxes 124,340
Utilities 88,929
Operating services 137,961
General and administrative (Note 4) 73,375
-----------
424,605
-----------
Revenue in excess of certain expenses $ 580,874
===========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Combined Statements of Revenue and
Certain Expenses for the properties known as the Pacifica Portfolio, as more
fully described in Note 1, for the years ended December 31, 1997, 1996 and 1995.
The combined financial statements are the responsibility of the Pacifica
Portfolio's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
The accompanying Combined Statements of Revenue and Certain Expenses were
prepared as described in Note 2, for the purpose of complying with the rules and
regulations of the Security and Exchange Commission (for inclusion in the Form
8-K of Mack-Cali Realty Corporation) and is not intended to be a complete
presentation of the Pacifica Portfolio's revenue and expenses.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the revenue and certain expenses of
the Pacifica Portfolio for the years ended December 31, 1997, 1996 and 1995 in
conformity with generally accepted accounting principles.
/s/ Schonbraun Safris McCann Bekrtisky & Co., L.L.C.
----------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
April 8, 1998
33
<PAGE>
PACIFICA PORTFOLIO
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenue
Base rents (Note 2) $7,824,679 $2,919,402 $2,066,367
Escalation and recoveries from tenants 791,363 116,788 98,331
Parking and other 52,773 16,507 6,055
---------- ---------- ----------
8,668,815 3,052,697 2,170,753
---------- ---------- ----------
Certain Expenses
Real estate taxes 1,084,022 271,824 216,750
Utilities 494,821 354,919 356,041
Operating services 808,182 515,424 433,538
General and administrative (Note 4) 263,093 153,066 108,726
---------- ---------- ----------
2,650,118 1,295,233 1,115,055
---------- ---------- ----------
Revenue in excess of certain expenses $6,018,697 $1,757,464 $1,055,698
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these Combined Statements of
Revenue and Certain Expenses.
34
<PAGE>
PACIFICA PORTFOLIO
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
The Pacifica Portfolio (not a legal entity) is engaged in the ownership
and operation of commercial office buildings located in the state of
Colorado (the "Properties"). The Properties consist of 18 office buildings
comprising approximately 1.2 million square feet and a parcel of
undeveloped land. Management, leasing and construction services with
respect to the Properties have been historically provided by Pacifica
Holding Company LLC, which is affiliated with the Properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Combined Statements of Revenue and Certain Expenses
of the Properties 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.
The following table sets forth the Properties included in these
Combined Statements of Revenue and Certain Expenses:
Square Year Placed
Property (A) Address Footage in Service
- ------------ ------- ------- ----------
Pacifica Progress 141 Union / Lakewood 63,600 1986
Pacifica Place 5350 S. Roslyn / Englewood 63,754 1982
384 Inverness 384 Inverness / Englewood 52,647 1985
ESI Building 9777 Mt. Pyramid / Parker 120,281 1996
Pacifica Pointe 5975 S. Quebec / Englewood 102,877 1996
67 Inverness 67 Inverness / Englewood 54,280 1996
TRW Building 750 W. Richfield / Aurora 108,240 1997
Interlocken I 303 Technology / Broomfield 74,870 1997
Centennial Valley I 1172 Century Drive / Louisville 49,566 1997
Centennial Valley I 248 Centennial Pkwy / Louisville 39,266 1997
Centennial Valley II 285 Century Place / Louisville 69,145 1997
--------
Total square footage 798,526
========
Certain properties included in the Pacifica Portfolio have begun
rental activity during various years, as indicated by the above
schedule. Inclusion of such rental activity in the combined
statements was based on the initial year of activity. Other
properties have been excluded from the combined statements as they
were under various stages of development as of December 31, 1997.
(A) All of the above listed properties have been acquired by
subsidiaries of Mack-Cali Realty Corporation, with the
exception of Centennial Valley II which is currently under
contract.
35
<PAGE>
PACIFICA PORTFOLIO
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Continued)
a. Basis of Presentation (Continued)
The following table sets forth the properties under development and
the land parcel, which are excluded from the combined statements:
Square
Property Address Footage
- -------- ------- -------
Interlocken II 105 Technology Court / Broomfield 37,574 (a)
Pacifica Inverness 400 Inverness / Englewood 111,798 (b)
Pacifica Highland 9359 E. Nichols Ave. / Arapahoe 72,610
Pacifica Tech Briargate 2375 Telstar Drive / Colorado Springs 46,400
Pacifica Tech Briargate 8415 Explorer Drive / Colorado Springs 46,400
Pacifica Pointe Briargate 1975 Research Pkway / Colorado Springs 115,250
DTC Land 4501 S. Tamarac Pkway / Denver -- (c)
-------
Total square footage 430,032
=======
(a) Included in combined statements for the period January 1, 1998
to March 26, 1998. Property began rental activity on March 1,
1998.
(b) Included in combined statements for the period January 1, 1998
to March 26, 1998. Property began rental activity on January
1, 1998.
(c) Vacant land parcel.
The accompanying Combined Statements of Revenue and Certain Expenses
have been prepared on the accrual basis of accounting for those
properties which had rental activity during the years ended December
31,1997, 1996 and 1995. The accompanying combined financial
statements are not representative of the actual operations for the
period presented as revenue and certain expenses, which may not be
comparable to the revenue and certain expenses to be earned or
incurred by the Company in the future operations of the Properties
because certain expenses have been excluded. Revenue excluded
consists of interest and other revenue unrelated to the continuing
operations of the Properties. Expenses excluded consist of
depreciation of the building and improvements, amortization of
organization and other intangible costs and other expenses not
directly related to the future operations of the Properties.
b. Use of Estimates
The preparation of the combined financial statements in accordance
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the period. Actual results
could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
36
<PAGE>
PACIFICA PORTFOLIO
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
3. LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2016. Substantially all of these 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, 1997 are as follows:
1998 $ 13,178,000
1999 13,808,000
2000 13,773,000
2001 12,504,000
2002 10,221,000
Thereafter 41,232,000
-------------
$104,716,000
=============
For the year ended December 31, 1995, two tenants contributed 23.7 percent
of base rent, comprised of: 12.6 percent for Quickpen International, Inc.
and 11.1 percent for Tom Brown, Inc.
For the year ended December 31, 1996, Northern Telecom, Inc. contributed
13.9 percent of base rent.
For the year ended December 31, 1997, two tenants contributed 31.1 percent
of base rent, comprised of: 18.6 percent for Evolving Systems, Inc. and
12.5 percent for Northern Telecom, Inc.
For the period of January 1, 1998 to March 26, 1998 (unaudited), two
tenants contributed 32.9 percent of base rent, comprised of: 22.0 percent
for TRW, Inc. and 10.9 percent for Evolving Systems, Inc.
4. RELATED PARTY TRANSACTIONS
General and Administrative
The Properties incurred management fees based on various rates of
approximately 1.5 to 4 percent of gross revenues which totaled $219,294,
$125,928 and $87,533 for the years 1997, 1996 and 1995, respectively. For
the period January 1, 1998 to March 26, 1998, the Properties incurred
management fees which totaled $85,390 (unaudited).
5. INTERIM STATEMENT
The interim financial data for the period January 1, 1998 to March 26,
1998 are unaudited. However, in the opinion of management, the interim
data includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire fiscal year or any
other period.
37
<PAGE>
PACIFICA PORTFOLIO
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE PERIOD JANUARY 1, 1998 TO MARCH 26, 1998
(unaudited)
Revenue
Base rents (Note 2) $3,226,647
Escalation and recoveries from tenants 371,762
Parking and other 19,742
----------
3,618,151
----------
Certain Expenses
Real estate taxes 326,646
Utilities 168,749
Operating services 246,103
General and administrative (Note 4) 98,179
----------
839,677
----------
Revenue in excess of certain expenses $2,778,474
==========
The accompanying notes are an integral part of this Combined Statement of
Revenue and Certain Expenses.
38
<PAGE>
Report of Independent Accountants
To the Board of Directors and
Shareholders of Mack-Cali Realty Corporation
We have audited the accompanying Historical Statement of Gross Income and Direct
Operating Expenses of the property known as the Prudential Business Campus (the
"Property") for the year ended December 31, 1997. This historical statement is
the responsibility of the Property's management. Our responsibility is to
express an opinion on this historical statement based on our audit.
We conducted our audit of this historical statement in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the historical statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the historical statement. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall historical statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying historical statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Form 8-K of Mack-Cali Realty Corporation) as described in Note
2, and is not intended to be a complete presentation of the Property's revenues
and expenses.
In our opinion, the historical statement referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in Note 2 for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
New York, New York
April 16, 1998
39
<PAGE>
PRUDENTIAL BUSINESS CAMPUS
HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Gross income
Base rents $ 12,224,598
Escalations and recoveries from tenants 1,081,852
Parking and other 463,952
Interest income 141,136
Equity in earnings of investee 1,554,274
-------------
Total gross income 15,465,812
-------------
Direct operating expenses
Real estate taxes 2,530,728
Utilities 941,485
Operating services 828,286
General and administrative 948,623
Loss on assumption of lease 683,219
-------------
Total direct operating expenses 5,932,341
-------------
Gross income in excess of direct operating expenses $ 9,533,471
=============
The accompanying notes are an integral part of these Combined Statements of
Revenue and Certain Expenses.
40
<PAGE>
PRUDENTIAL BUSINESS CAMPUS
NOTES TO HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
1. Organization
For the purpose of the accompanying historical statement of gross income
and direct operating expenses, the property known as the Prudential
Business Campus (the "Property") consists of four wholly-owned office
buildings (known as Hilton Court West, Arbor Circle North, Arbor Circle
South and Two Hilton Court), a 50% joint venture interest in a fifth
office building (9 Campus Drive or the "Investee"), a day care center and
approximately 312 acres of developable land located in Parsippany and East
Hanover, New Jersey. The Property was acquired by a subsidiary of
Mack-Cali Realty Corporation (the "Company") on March 27, 1998.
2. Summary of Significant Accounting Policies
Significant accounting principles and practices used in the preparation of
the accompanying historical statement of gross income and direct operating
expenses are summarized below.
Basis of presentation
The accompanying historical statement of gross income and direct operating
expenses has been prepared on the accrual basis of accounting.
The historical statement is not representative of the actual operations
for the period presented, as certain revenues and expenses, which may not
be comparable to the revenues and expenses to be earned or incurred by the
Company in the future operations of the Property have been excluded.
Income excluded consists of interest income earned on cash balances and
short-term investments. Expenses excluded consist of expenses unrelated to
the continuing operations of the Property, namely certain general and
administrative expenses, depreciation, amortization and interest expense.
Use of 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 revenues and expenses
during the period. Actual results could differ from those estimates.
Equity in earnings of Investee
Earnings are recognized on the equity method, reflected by the Property's
share of the current year's gross income earned over direct operating
expenses incurred by the Investee.
Revenue recognition
Leases with tenants of the Property are classified as operating leases.
Base rents are recognized on a straight-line basis over the term of the
respective lease.
The Property receives reimbursements from tenants for certain costs as
provided in the lease agreements. These costs generally include real
estate taxes, utilities, insurance, common area maintenance and other
recoverable costs (see Note 5).
41
<PAGE>
PRUDENTIAL BUSINESS CAMPUS
NOTES TO HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
3. Related Party Transactions
The Property entered into an Asset Management Agreement with the
Prudential Insurance Company of America (the "Asset Manager"). The Asset
Manager provides the Property with executive, supervisory and managerial
services in connection with the operation, management, maintenance and
leasing of the Property and the Investee. The Asset Manager is paid an
annual fee, which is increased annually based on increases in the Consumer
Price Index. The Property incurred asset management fees of $220,605 in
1997 which are excluded from these financial statements as they will not
be continuing.
The Property has also entered into development agreements with The
Prudential Insurance Company of America (the "Development Manager") and
U.S. West Real Estate, Inc. (the "Development Director") in relation to
development of infrastructure improvements to the Tract. The Development
Manager and Development Director earn fees equal to 4.25 percent and 0.75
percent, respectively, of approved project costs for the development of
the land, which amounted to $14,181 and $2,502, respectively, in 1997.
Approximately 26,400 sq. ft. of the 53,500 sq. ft. of the Assumed Lease
(see Note 4) space is sub-leased to two affiliates of Prudential. The
sub-leases run contemporaneously with the Assumed Lease which expires in
2000. Revenue recognized from the space sub-leased to the affiliates
amounted to $782,460 in 1997.
Approximately 66,600 sq. ft. of the Arbor Circle South building is leased
to a Prudential affiliate, with a lease term of ten years which runs until
2005. Revenue recognized from the space leased to this affiliate amounted
to $1,520,017 in 1997.
4. Loss on Assumption of Lease
During 1990, the Property agreed to lease, to a third party, office space
in the property known as Two Hilton Court. The tenant agreed to pay
$3,000,000 over a ten year period at 10 percent interest and the Property
assumed the tenant's pre-existing lease (the "Assumed Lease") with a
related party. At December 31, 1997, the Assumed Lease requires future
lease payments (excluding escalations) of approximately $4,500,000 through
the year 2000. The Property has estimated future rental income exclusive
of the payments on the Assumed Lease to be approximately $3,700,000. The
estimated loss on the Assumed Lease is recognized on a straight-line basis
over the remaining term of the lease at Two Hilton Court.
5. Leases
Leases for the Property have various remaining lease terms which expire
over periods ranging from one to eight years and contain various renewal
options. 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.
42
<PAGE>
PRUDENTIAL BUSINESS CAMPUS
NOTES TO HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
The future minimum rentals to be received under non-cancelable leases in
effect at December 31, 1997, excluding the Investee, are as follows:
Year ending December 31,
1998 $ 14,661,872
1999 14,347,410
2000 14,399,152
2001 5,306,760
2002 3,579,476
Thereafter 4,316,700
---------------
$ 56,611,370
===============
6. Major Tenants
For the year ended December 31, 1997 and the period January 1, 1998 to
March 26, 1998, Nabisco, Inc. accounted for approximately 24 percent of
total rental revenues.
7. Equity in Earnings of Investee
The Investee's gross income in excess of direct operating expenses for the
year ended December 31, 1997 and the period January 1, 1998 to March 26,
1998 are summarized as follows:
January 1, 1998 to
March 26, 1998
1997 (unaudited)
---- -----------
Gross income $ 4,604,637 $ 1,161,157
Direct operating expenses (1,496,089) (382,981)
-------------- ------------
Gross income in excess of direct
operating expenses $ 3,108,548 $ 778,176
============== ===========
8. Interim Statement
The interim financial data for the period January 1, 1998 to March 26,
1998 is unaudited. However, in the opinion of management, the interim data
includes all adjustments consisting of only normal, recurring adjustments
necessary for a fair statement of the results of the interim period. The
results for the period presented are not necessarily indicative of the
results to be expected for the entire fiscal year or for any other period.
43
<PAGE>
PRUDENTIAL BUSINESS CAMPUS
HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES (unaudited)
FOR THE PERIOD JANUARY 1, 1998 TO MARCH 26, 1998
Gross income
Base rents $ 3,032,760
Escalations and recoveries from tenants 252,295
Parking and other 195,421
Interest income 51,390
Equity in earnings of investee 389,088
-------------
Total gross income 3,920,954
-------------
Direct operating expenses
Real estate taxes 611,709
Utilities 285,117
Operating services 168,348
General and administrative 345,378
Loss on assumption of lease 150,777
-------------
Total direct operating expenses 1,561,329
-------------
Gross income in excess of direct operating expenses $ 2,359,625
=============
The accompanying notes are an integral part of these Combined Statements of
Revenue and Certain Expenses.
44
<PAGE>
Report of Independent Accountants
To the Board of Directors and
Shareholders of Mack-Cali Realty Corporation
We have audited the accompanying Historical Statement of Gross Income and Direct
Operating Expenses of the property known as Morris County Financial Center (the
"Property"), for the year ended December 31, 1997. This historical statement is
the responsibility of the Property's management. Our responsibility is to
express an opinion on this historical statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the historical statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the historical
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying historical statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Form 8-K of Mack-Cali Realty Corporation) as described in Note
2, and is not intended to be a complete presentation of the Property's revenues
and expenses.
In our opinion, the historical statement referred to above presents fairly, in
all material respects, the gross income and direct operating expenses described
in Note 2, for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
New York, New York
April 2, 1998
45
<PAGE>
MORRIS COUNTY FINANCIAL CENTER
HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Gross income
Base rents $ 6,043,448
Escalations and recoveries from tenants 1,793,817
Other income 56,036
------------
Total gross income 7,893,301
------------
Direct operating expenses
Real estate taxes 788,676
Utilities 938,955
Operating services 1,229,191
General and administrative 329,184
------------
Total direct operating expenses 3,286,006
------------
Gross income in excess of direct operating expenses $ 4,607,295
============
The accompanying notes are an integral part of these Combined Statements of
Revenue and Certain Expenses.
46
<PAGE>
MORRIS COUNTY FINANCIAL CENTER
NOTES TO HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
1. Organization
For the purpose of the accompanying historical statement of gross income
and direct operating expenses, the property known as Morris County
Financial Center, is comprised of two office buildings, One Sylvan Way and
Five Sylvan Way (collectively, the "Property") located in Parsippany, New
Jersey. The buildings contain 154,832 and 153,383 square feet,
respectively. The Property was acquired by a subsidiary of Mack-Cali
Realty Corporation ("the Company") on March 30, 1998.
2. Summary of Significant Accounting Policies
Significant accounting principles and practices used in preparation of the
accompanying historical statement of gross income and direct operating
expenses are summarized below.
Basis of presentation
The accompanying historical statement of gross income and direct operating
expenses has been prepared on the accrual basis of accounting.
The historical statement is not representative of the actual operations
for the period presented, as certain revenues and expenses, which may not
be comparable to the revenues and expenses to be earned or incurred by the
Company in the future operations of the Property, have been excluded.
Expenses excluded consist of expenses unrelated to the continuing
operations of the Property, namely certain general and administrative
expenses, depreciation, amortization and interest expense.
Use of 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
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
Revenue recognition
Leases with tenants of the Property are classified as operating leases.
Base rents are recognized on a straight-line basis over the term of the
respective lease.
The Property receives reimbursements from tenants for certain costs as
provided in the lease agreements. These costs generally include real
estate taxes, utilities, insurance, common area maintenance and other
recoverable costs (see Note 3).
Expense allocation
The Property is part of a three-building complex in the Morris County
Financial Center complex. A portion of the expenses included herein are
based on allocation of complex-wide common charges based on each
building's proportionate square footage of the total complex square
footage.
47
<PAGE>
MORRIS COUNTY FINANCIAL CENTER
HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
3. Leases
Leases for the Property have various remaining lease terms which expire
over periods ranging from one to seven years and contain various renewal
options. 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 pass-through of charges for electrical
usage.
The future minimum rentals to be received under non-cancellable leases in
effect at December 31, 1997 are as follows:
Year ending December 31,
1998 $ 5,936,522
1999 3,283,032
2000 1,832,984
2001 1,711,599
2002 1,675,502
Thereafter 1,403,151
------------
$ 15,842,790
============
4. Major Tenants
For the year ended December 31, 1997 and the period January 1, 1998 to
March 29, 1998 (unaudited), Coopers & Lybrand, LLP and Integrated
Communications accounted for 42 percent and 24 percent of total rental
revenues, respectively.
5. Interim Statement
The interim financial data for the period ended March 29, 1998 is
unaudited. However, in the opinion of the Property's management, the
interim data includes all adjustments, consisting only of normally
recurring adjustments, necessary for a fair statement of the results for
the interim period. The results for the period presented are not
necessarily indicative of the results to be expected for the entire fiscal
year or any other period.
48
<PAGE>
MORRIS COUNTY FINANCIAL CENTER
HISTORICAL STATEMENT OF GROSS INCOME AND
DIRECT OPERATING EXPENSES (unaudited)
FOR THE PERIOD JANUARY 1, 1998 TO MARCH 29, 1998
Gross income
Base rents $ 1,510,862
Escalations and recoveries from tenants 498,552
Other income 2,319
--------------
Total gross income 2,011,733
--------------
Direct operating expenses
Real estate taxes 192,787
Utilities 252,155
Operating services 322,251
General and administrative 85,834
--------------
Total direct operating expenses 853,027
--------------
Gross income in excess of direct operating expenses $ 1,158,706
==============
The accompanying notes are an integral part of these Combined Statements of
Revenue and Certain Expenses.
49
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Statement of Revenue and Certain Expenses
for the property known as 3600 S. Yosemite, as more fully described in Note 1,
for the year ended December 31, 1997. The financial statement is the
responsibility of 3600 S. Yosemite's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared as
described in Note 2, for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission (for inclusion in the Form 8-K of
Mack-Cali Realty Corporation) and is not intended to be a complete presentation
of 3600 S. Yosemite's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses for 3600 S. Yosemite
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
----------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
June 4, 1998
50
<PAGE>
3600 S. YOSEMITE
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue
Base rents (Note 2) $1,677,516
Escalations and recoveries from tenants 9,872
Parking and other 69,486
----------
1,756,874
----------
Certain Expenses
Real estate taxes 119,000
Utilities 195,128
Operating services 315,800
General and administrative (Note 4) 48,803
----------
678,731
----------
Revenue in excess of certain expenses $1,078,143
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
51
<PAGE>
3600 S. YOSEMITE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying Statement of Revenue and Certain
Expenses, 3600 S. Yosemite (the "Property") is an office building totaling
approximately 133,743 square feet in Denver, Denver County, Colorado which
was acquired by a subsidiary of Mack-Cali Realty Corporation (the
"Company") on May 13, 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Statement of Revenue and Certain Expenses has been
prepared on the accrual basis of accounting. The accompanying
financial statement is not representative of the actual operations
for the period presented, as revenue and certain expenses, which may
not be comparable to the revenue and certain expenses to be earned
or incurred by the Company in the future operations of the Property
have been excluded. Revenue excluded consists of interest and other
revenue unrelated to the continuing operations of the Property.
Expenses excluded consist of depreciation of the building and
improvements, and amortization of organization and other intangible
costs and other expenses not directly related to the future
operations of the Property.
b. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and certain expenses during the reporting period.
Actual results could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
52
<PAGE>
3600 S. YOSEMITE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
3. LEASES
Leases for the Property have various remaining lease terms up to three
years with options to certain tenants for renewal. Minimum rental amounts
for certain leases increase as set forth under the terms of each lease. In
addition to base rents, the leases provide for the tenants to pay their
proportionate share of, or increases in, real estate taxes, operating
expenses, and utilities.
Future minimum rentals to be received under non-cancelable operating
leases at December 31, 1997 are as follows:
1998 $ 1,545,683
1999 406,873
2000 96,930
-----------
$ 2,049,486
===========
For the year ended December 31, 1997, three tenants contributed 80.5
percent of base rents, comprised of: 55.3 percent for MDC Holdings, Inc.,
14.8 percent for Key Bank of Colorado, N.A., and 10.4 percent for Sevo
Miller.
For the three months ended March 31, 1998 (unaudited) three tenants
contributed 83.5 percent of base rents, comprised of: 57.4 percent for MDC
Holdings, Inc., 15.3 percent for Key Bank of Colorado, N.A., and 10.8
percent for Sevo Miller.
4. GENERAL AND ADMINISTRATIVE
The Property incurred management fees based on two percent of gross
revenues which approximated $36,000 for the year ended December 31, 1997
and $9,000 for the three months ended March 31, 1998 (unaudited).
5. INTERIM STATEMENT
The interim financial data for the three months ended March 31, 1998 is
unaudited. However, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire fiscal year or any
other period.
53
<PAGE>
3600 S. YOSEMITE
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
Revenue
Base rents (Note 2) $404,883
Parking and other 18,243
--------
423,126
--------
Certain Expenses
Real estate taxes 29,750
Utilities 51,832
Operating services 81,589
General and administrative (Note 4) 9,767
--------
172,938
--------
Revenue in excess of certain expenses $250,188
========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
54
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Statement of Revenue and Certain
Expenses, for the property known as 500 College Road East, as more fully
described in Note 1, for the year ended December 31, 1997. The financial
statement is the responsibility of the property's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared as
described in Note 2, for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission (for inclusion in the Form 8-K of
Mack-Cali Realty Corporation) and is not intended to be a complete presentation
of 500 College Road East revenue and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses of 500 College Road
East for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
----------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
May 29, 1998
55
<PAGE>
500 COLLEGE ROAD EAST
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue
Base rents (Note 2) $2,828,316
Escalation and recoveries from tenants 437,249
----------
3,265,565
----------
Certain Expenses
Real estate taxes 317,854
Utilities 479,607
Operating services 407,250
General and administrative (Note 4) 160,659
----------
1,365,370
----------
Revenue in excess of certain expenses $1,900,195
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
56
<PAGE>
500 COLLEGE ROAD EAST
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying Statement of Revenue and Certain
Expenses, 500 College Road East (the "Property") is an office building
located at 500 College Road East, Princeton, Middlesex County, New Jersey
consisting of approximately 158,235 square feet which was acquired by a
subsidiary of Mack-Cali Realty Corporation (the "Company") on May 22,
1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Statement of Revenue and Certain Expenses has been
prepared on the accrual basis of accounting. The accompanying
financial statement is not representative of the actual operations
for the period presented, as certain revenue and expenses, which may
not be comparable to the revenue and certain expenses to be earned
or incurred by the Company in the future operations of the Property
have been excluded. Revenue excluded consists of interest and other
revenue unrelated to the continuing operations of the Property.
Expenses excluded consist of depreciation of the buildings and
improvements, amortization of organization and other intangible
costs and other expenses not directly related to the future
operations of the Property.
b. Use of Estimates
The preparation of the financial statement in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statement and the reported amounts of
revenue and expenses during the reported period. Actual results
could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
3. LEASES
Leases for the Property have various remaining lease terms up to seven
years with options to certain tenants for renewal. Minimum rental amounts
for certain leases increase as set forth under the terms of each lease. In
addition to base rents, the leases provide for the tenants to pay their
proportionate share of, and/or increases in, real estate taxes, operating
expenses, and utilities.
Future minimum rents to be received over the next five years and
thereafter from tenants as of December 31, 1997 are as follows:
1998 $ 3,064,758
1999 2,831,400
2000 2,877,251
2001 2,988,237
2002 3,099,818
Thereafter 5,558,758
------------
$ 20,420,222
============
57
<PAGE>
500 COLLEGE ROAD EAST
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
3. LEASES (Continued)
For the year ended December 31, 1997, three tenants contributed 100.0
percent of base rents comprised of: 70.0 percent for Merrill Lynch Asset
Management, L.P., 17.1 percent for Buchanan Ingersoll Professional
Corporation, and 12.9 percent for Chemical Bank of New Jersey.
For the three months ended March 31, 1998 (unaudited), three tenants
contributed 100.0 percent of base rents comprised of: 70.0 percent for
Merrill Lynch Asset Management, L.P., 17.1 percent for Buchanan Ingersoll
Professional Corporation, and 12.9 percent for Chemical Bank of New
Jersey.
4. GENERAL AND ADMINISTRATIVE
The Property incurred management fees based on two percent of gross
revenues which totaled $81,889 for the year ended December 31, 1997 and
$17,206 (unaudited) for the three months ended March 31, 1998.
5. INTERIM STATEMENT
The interim financial data for the three months ended March 31, 1998 is
unaudited. However, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire year or any other
period.
58
<PAGE>
500 COLLEGE ROAD EAST
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(unaudited)
Revenue
Base rents (Note 2) $707,079
Escalation and recoveries from tenants 117,056
--------
824,135
--------
Certain Expenses
Real estate taxes 79,464
Utilities 152,505
Operating services 85,673
General and administrative (Note 4) 33,199
--------
350,841
--------
Revenue in excess of certain expenses $473,294
========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
59
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Combined Statement of Revenue and Certain
Expenses, for the properties known as the D.C. Portfolio, as more fully
described in Note 1, for the twelve months ended December 31, 1997. The
financial statement is the responsibility of the property's management. Our
responsibility is to express an opinion on this combined financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Combined Statement of Revenue and Certain Expenses was
prepared as described in Note 2, for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for the inclusion in the
Form 8-K of Mack-Cali Realty Corporation) and is not intended to be a complete
presentation of the D.C. Portfolio revenue and expenses.
In our opinion, the combined statement referred to above presents fairly,
in all material respects, the revenue and certain expenses of the D.C. Portfolio
for the twelve months ended December 31, 1997 in conformity with generally
accepted accounting principles.
/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
----------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
May 29, 1998
60
<PAGE>
D.C. PORTFOLIO
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue
Base rents (Note 2) $ 12,738,992
Escalations and recoveries from tenants 999,789
Parking and other 577,408
------------
14,316,189
------------
Certain Expenses
Real estate taxes 1,486,685
Utilities 898,757
Operating services 2,361,524
General and administrative (Note 4) 486,415
------------
5,233,381
------------
Revenue in excess of certain expenses $ 9,082,808
============
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
61
<PAGE>
D.C. PORTFOLIO
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying Combined Statement of Revenue and
Certain Expenses, the properties known as the D.C. Portfolio (the
"Property") is comprised of three office buildings totaling approximately
447,000 square feet and is expected to be acquired by a subsidiary of
Mack-Cali Realty Corporation (the "Company"). The address and approximate
square footage of the buildings are as follows:
Square
Property Address Footage
-------- ------- -------
1709 New York 1709 New York Avenue, Washington, DC 166,000
1400 L Street 1400 L Street, Washington, DC 159,000
East Pointe I and II 4200 Parliament Place, Lanham, MD 122,000
-------
447,000
=======
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Combined Statement of Revenue and Certain Expenses
has been prepared on the accrual basis of accounting. The
accompanying combined financial statement is not representative of
the actual operations for the period presented, as certain revenue
and expenses, which may not be comparable to the revenue and
expenses to be earned or incurred by the Company in the future
operations of the Property have been excluded. Revenue excluded
consist of interest and other revenue unrelated to the continuing
operations of the Property. Expenses excluded consist of
depreciation of the buildings and improvements, amortization of
organization and other intangible costs and other expenses not
directly related to the future operations of the Property.
b. Use of Estimates
The preparation of the financial statement in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statement and the reported amounts of
revenue and expenses during the reported period. Actual results
could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
3. LEASES
Leases for the Property have various remaining lease terms up to eight
years with options to certain tenants for renewal. Minimum rental amounts
for certain leases increase as set forth under the terms of each lease. In
addition to base rents, the leases provide for the tenants to pay their
proportionate share of, or increases in, real estate taxes, operating
expenses, and utilities.
62
<PAGE>
D.C. PORTFOLIO
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
3. LEASES (Continued)
Future minimum rents to be received over the next five years and
thereafter from tenants as of December 31, 1997 are as follows:
1998 $13,783,949
1999 11,795,707
2000 11,177,599
2001 10,334,032
2002 9,584,735
Thereafter 12,012,875
-----------
$68,688,897
===========
For the year ended December 31, 1997, two tenants contributed 38.2 percent
of base rents comprised of: 24.9 percent for Winston & Strawn and 13.3
percent for the Board of Governors.
For the three months ended March 31, 1998 (unaudited) two tenants
contributed 38.4 percent of base rents comprised of: 25.0 percent for
Winston & Strawn and 13.4 percent for the Board of Governors.
4. GENERAL AND ADMINISTRATIVE
The Property incurred management fees based on three percent of gross
revenues, which totaled $440,068 for the year ended December 31, 1997 and
$108,609 (unaudited) for the three monthds ended March 31, 1998.
5. RELATED PARTY TRANSACTIONS
The owner of the Property is an affiliate of the management company, which
operates the parking garage at 1400 L Street pursuant to the terms of an
operating agreement, and which charged the Property approximately $21,000
for the year ended December 31, 1997 and approximately $5,400 (unaudited)
for the three months ended March 31, 1998.
6. INTERIM STATEMENT
The interim financial data for the three months ended March 31, 1998 is
unaudited. However, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire year or any other
period.
63
<PAGE>
D.C. PORTFOLIO
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE PERIOD JANUARY 1, 1998 TO MARCH 31, 1998
(unaudited)
Revenue
Base rents (Note 2) $3,032,099
Escalation and other recoveries from tenants 251,391
Parking income, net 150,793
----------
3,434,283
----------
Certain Expenses
Real estate taxes 370,700
Utilities 186,181
Operating services 509,259
General and administrative (Note 4) 123,333
----------
1,189,473
----------
Revenue in excess of certain expenses $2,244,810
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
64
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Statement of Revenue and Certain
Expenses, for the property known as 400 South Colorado Boulevard, as more fully
described in Note 1, for the year ended December 31, 1997. The financial
statement is the responsibility of the property's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared as
described in Note 2, for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission (for the inclusion in the Form 8-K of
Mack-Cali Realty Corporation) and is not intended to be a complete presentation
of 400 South Colorado Boulevard's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses of 400 South Colorado
Boulevard for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
----------------------------------------------------
SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
May 30, 1998
65
<PAGE>
400 SOUTH COLORADO
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
Revenue
Base rents (Note 2) $ 1,388,722
Escalation and recoveries from tenants 95,215
-----------
1,483,937
-----------
Certain Expenses
Real estate taxes 184,796
Utilities 231,061
Operating services 381,923
General and administrative (Note 4) 108,521
-----------
906,301
-----------
Revenue in excess of certain expenses $ 577,636
===========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
66
<PAGE>
400 SOUTH COLORADO
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying Statement of Revenue and Certain
Expenses, 400 South Colorado (the "Property") is an office building
located at 400 South Colorado Boulevard, Denver, Denver County, Colorado
consisting of approximately 125,415 square feet which was acquired by a
subsidiary of Mack-Cali Realty Corporation (the "Company") on June 3,
1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying Statement of Revenue and Certain Expenses has been
prepared on the accrual basis of accounting. The financial statement
is not representative of the actual operations for the period
presented, as certain revenue and expenses, which may not be
comparable to the revenue and expenses to be earned or incurred by
the Company in the future operations of the Property have been
excluded. Revenue excluded consists of interest and other revenue
unrelated to the continuing operations of the Property. Expenses
excluded consist of depreciation of the buildings and improvements,
amortization of organization and other intangible costs and other
expenses not directly related to the future operations of the
Property.
b. Use of Estimates
The preparation of the financial statement in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statement and the reported amounts of
revenue and expenses during the period. Actual results could differ
from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the term of
the respective lease.
3. LEASES
Leases for the Property have various remaining lease terms up to 21 years
with options to certain tenants for renewal. Minimum rental amounts for
certain leases increase as set forth under the terms of each lease. In
addition to base rents, the leases provide for the tenants to pay their
proportionate share of, or increases in, real estate taxes, operating
expenses, and utilities.
Future minimum rentals to be received under non-cancelable operating
leases at December 31, 1997 are as follows:
1998 $1,696,511
1999 1,623,520
2000 1,081,199
2001 658,201
2002 322,020
Thereafter 977,825
----------
$6,359,276
==========
67
<PAGE>
400 SOUTH COLORADO
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
3. LEASES (Continued)
For the year ended December 31, 1997, two tenants contributed 28.5 percent
of base rent comprised of: 16.7 percent for Norwest Bank and 11.8 percent
for Community Health Plan of the Rockies.
For the three months ended March 31, 1998 (unaudited) two tenants
contributed 33.3 percent of base rent comprised of: 20.7 percent for
Colorado Department of Revenue and 12.6 percent for Norwest Bank.
4. GENERAL AND ADMINISTRATIVE
The Property incurred management fees based on three percent of gross
revenues, which totaled $78,834 for the year ended December 31, 1997 and
$16,628 for the three months ended March 31, 1998 (unaudited).
5. INTERIM STATEMENT
The interim financial data for the three months ended March 31, 1998 is
unaudited. However, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the interim
period. The results for the period presented are not necessarily
indicative of the results to be expected for the entire year or any other
period.
68
<PAGE>
400 SOUTH COLORADO
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(unaudited)
Revenue
Base rents (Note 2) $438,900
Escalation and recoveries from tenants 26,550
--------
465,450
--------
Certain Expenses
Real estate taxes 48,564
Utilities 49,584
Operating services 99,920
General and administrative (Note 4) 25,537
--------
223,605
--------
Revenue in excess of certain expenses $241,845
========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
69
<PAGE>
MACK-CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
As of March 31, 1998 (in thousands)
- --------------------------------------------------------------------------------
The following unaudited pro forma condensed consolidated balance sheet is
presented as if the completion by the Company of the acquisitions of the
remaining properties in the McGarvey Portfolio (not yet acquired), the remaining
properties in the Pacifica Portfolio not yet acquired at March 31, 1998, 3600 S.
Yosemite, Ramland Road, 500 College Road, D.C. Portfolio and 400 South Colorado,
(collectively, the "Second Quarter 1998 Acquisitions"), as well as the Company's
1998 stock offerings from April 1, 1998 through May 29, 1998, had all occurred
on March 31, 1998. 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-Q for the
three months ended March 31, 1998.
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 acquisitions and stock offerings actually
occurred on March 31, 1998, nor does it purport to represent the future
financial position of the Company.
<TABLE>
<CAPTION>
Pro Forma
Adjustments for
Company the Second Quarter Company
ASSETS Historical 1998 Acquisitions Pro Forma
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental property, net $2,965,384 $263,414(a) $3,228,798
Cash and cash equivalents 11,717 (6,700)(b) 5,017
Investment in partially-owned entity 18,034 -- 18,034
Unbilled rents receivable 30,641 -- 30,641
Deferred charges and other assets, net 21,672 -- 21,672
Restricted cash 6,791 -- 6,791
Accounts receivable, net 3,826 -- 3,826
Mortgage note receivable 27,250 -- 27,250
- ------------------------------------------------------------------------------------------------------
Total assets $3,085,315 $256,714 $3,342,029
======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------
Mortgages and loans payable $1,207,592 $167,146(c) $1,374,734
Dividends and distributions payable 35,139 -- 35,139
Accounts payable and accrued expenses 31,510 -- 31,510
Accrued interest payable 1,935 -- 1,935
Rents received in advance
and security deposits 29,651 -- 29,651
- ------------------------------------------------------------------------------------------------------
Total liabilities 1,305,827 167,146 1,472,973
- ------------------------------------------------------------------------------------------------------
Minority interest of unitholders in
Operating Partnership 404,830 20,753(d) 425,583
- ------------------------------------------------------------------------------------------------------
Stockholders' equity
Common stock, $0.01 par value 558 20(e) 578
Other stockholders' equity 1,374,100 68,795(e) 1,442,895
- ------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,374,658 68,815 1,443,473
- ------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $3,085,315 $256,714 $3,342,029
======================================================================================================
</TABLE>
See accompanying footnotes on subsequent page
70
<PAGE>
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Balance Sheet (unaudited)
As of March 31, 1998 (in thousands, except share/unit amounts )
- --------------------------------------------------------------------------------
(a) Represents the approximate aggregate cost of the Second Quarter 1998
Acquisitions, comprised of: the remaining properties in the McGarvey
Portfolio not yet acquired ($11,997), remaining properties in the Pacifica
Portfolio not yet acquired at March 31, 1998 ($92,567), 3600 S. Yosemite
($13,500), Ramland Road ($6,700), 500 College Road ($21,200), D.C.
Portfolio ($105,450) and 400 S. Colorado ($12,000).
(b) Represents the acquisition of Ramland Road on May 14, 1998 funded from
the Company's cash reserves.
(c) Represents the Company's approximate aggregate pro forma drawings on the
Company's credit facilities of $167,146, which are to be, or have been
used, as the primary means in funding the cash portion of the Second
Quarter 1998 Acquisitions.
(d) Represents the issuance of approximately 567,024 common operating
partnership units, valued at approximately $20,753, in connection with the
acquisition of certain of the Pacifica Portfolio properties.
(e) Represents the issuance of 1,978,843 shares of common stock in two stock
offerings, raising total net proceeds of approximately $68,815, which
proceeds were used, for pro forma purposes, as part of the funding of the
Second Quarter 1998 Acquisitions.
71
<PAGE>
MACK-CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
And the Year Ended December 31, 1997
- --------------------------------------------------------------------------------
The unaudited pro forma condensed consolidated statements of operations for the
three months ended March 31, 1998 and for the year ended December 31, 1997 are
presented as if each of the following had occurred on January 1, 1997: (i) the
completion by the Company of the Robert Martin Company transaction (the "RM
Transaction"), (ii) the acquisition by the Company of the properties known as
1345 Campus Parkway, Westlakes Office Park, Moorestown Buildings, Shelton Plaza,
200 Corporate Boulevard, Three Independence Way, The Trooper Building, Princeton
Overlook and Concord Plaza, (iii) the completion by the Company of the October
1997 13 million share stock offering, (iv) the completion by the Company of the
acquisition of the properties of the Mack Company and Patriot American Office
Group (the "Mack Transaction") and (v) the completion by the Company of the 1998
Offerings and the 1998 Acquisitions (collectively, the "Reported Events"). Items
(i), (ii), (iii) and (iv) are to be collectively hereinafter referred to as the
1997 Events.
Such pro forma information is based upon the historical consolidated results of
operations of the Company for the three months ended March 31, 1998 and for the
year ended December 31, 1997, 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 three months ended March 31,
1998, and in the Company's Form 10-K for the year ended December 31, 1997.
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.
72
<PAGE>
MACK-CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma Adj.
Company for Reported Company
REVENUES Historical Events Pro Forma
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Base rents $92,916 $15,808(a) $108,724
Escalations and recoveries from tenants 10,357 1,797(a) 12,154
Parking and other 2,006 825(a) 2,831
Interest income 544 -- 544
- ------------------------------------------------------------------------------------------
Total revenues 105,823 18,430 124,253
- ------------------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------------------
Real estate taxes 10,073 1,945(a) 12,018
Utilities 8,301 1,340(a) 9,641
Operating services 12,693 1,782(a) 14,475
General and administrative 6,196 974(a) 7,170
Depreciation and amortization 16,231 2,972(a) 19,203
Interest expense 18,480 6,590(b) 25,070(b)
- ------------------------------------------------------------------------------------------
Total expenses 71,974 15,603 87,577
- ------------------------------------------------------------------------------------------
Income before minority interest 33,849 2,827 36,676
Minority interest 7,306 248(c) 7,554(c)
- ------------------------------------------------------------------------------------------
Net income $26,543 $2,579 $29,122
==========================================================================================
Basic weighted average common shares
outstanding (d) 51,363 57,768(d)
------- -------
Net income per basic and diluted
common share (e) $ 0.52 $ 0.50
------- -------
</TABLE>
73
<PAGE>
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands)
- --------------------------------------------------------------------------------
(a) Reflects:
Revenues and expenses for the 1998 Acquisitions for the period from January 1,
1998 through the earlier of the date of acquisition or March 31, 1998, as
follows:
<TABLE>
<CAPTION>
Parking Real
Base Escalations/ and Estate Operating General and
Property (1) Acquis. Date Rents(2) Recoveries Other Taxes Utilities Services Administrative Depreciation(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
McGarvey Portfolio Jan. 30, 1998(4) $ 731 $ 146 -- $ 109 $ 11 $ 34 $ 1 $ 109
500 West Putnam Feb. 5, 1998 244 38 -- 17 26 27 15 35
Mountainview Feb. 25, 1998 425 34 -- 35 68 70 14 88
Cielo Center Mar. 12, 1998 1,031 43 $19 124 89 138 73 172
Pacifica Portfolio Mar. 27, 1998(5) 3,278 372 19 326 168 246 98 736
Prudential Bus. Campus Mar. 27, 1998 3,496 252 636 612 285 168 496 743
Morris County Fin. Ctr Mar. 30, 1998 1,484 499 -- 193 252 322 86 280
3600 S. Yosemite May 13, 1998 388 18 -- 30 52 82 10 72
500 College Road East May 22, 1998 759 117 -- 79 153 86 33 113
D.C. Portfolio June 1, 1998(6) 3,548 251 151 371 186 509 123 560
400 S. Colorado June 3, 1998 424 27 -- 49 50 100 25 64
- ------------------------------------------------------------------------------------------------------------------------------------
Total Pro Forma Adj.
for Reported Events $15,808 $1,797 $825 $1,945 $1,340 $1,782 $974 $2,972
====================================================================================================================================
</TABLE>
(1) 2115 Linwood, Ramland Road and certain of the properties in the Pacifica
Portfolio (aggregate cost of $26,761) were not in operation, due to being
vacant and/or under development, during the three months ended March 31,
1998.
(2) Pro forma base rents are presented on a straight-line basis calculated from
January 1, 1997 forward.
(3) Depreciation is based on the building-related portion of the purchase price
and associated costs (for those properties in operation during the period),
depreciated using the straight-line method over a 40-year useful life.
(4) Acquisition of four of the 21 properties in this portfolio has not yet been
completed: results for period include full quarter operations for those
pending acquisitions.
(5) Acquisition of six of the 18 properties was completed on June 8, 1998 and
acquisition of two of the 18 properties in this portfolio has not yet been
completed: results for period include full quarter operations for those
pending acquisitions.
(6) Acquisition of one of the three properties in this portfolio has not yet
been completed: results for period include full quarter operations for those
pending acquisitions.
74
<PAGE>
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands)
- --------------------------------------------------------------------------------
(b) Pro forma adjustment to interest expense for the three months ended March
31,1998 reflects interest on mortgage debt assumed with certain
acquisitions and additional borrowings from the Company's credit
facilities to fund certain acquisitions. Pro forma interest expense for
the three months ended March 31, 1998 is computed as follows:
Interest expense on loan assumed with Fair Lawn acquisition on $ 371
March 3, 1995 (fixed interest rate of 8.25 percent on
average outstanding principal balance of approximately
$18,185)
Interest expense on mortgages assumed in connection with the 2,708
Harborside acquisition in 1996 (fixed interest rate of
7.32 percent on $107,912 and initial rate of 6.99 percent
on $42,088)
Interest expense on the Teachers Mortgage assumed with the RM 3,326
Transaction on January 31, 1997 (fixed interest rate of
7.18 percent on $185,283)
Interest expense on the Mack Transaction Assumed Debt during the 5,288
period
Interest expense on West Putnam Mortgage ($12,104) with an 197
effective interest rate of 6.52 percent
Interest expense on McGarvey Mortgages ($8,354) with a weighted 130
average effective interest rate of 6.24 percent
Interest expense on Prudential Term Loan ($200,000) with an 3,395
interest rate of 6.79 percent
Interest expense on pro forma drawings on the Company's credit 9,401
facilities of $545,772 at a weighted average interest rate
of 6.89 percent
Historical amortization of deferred mortgage, finance and title 254
costs for the three months ended March 31,1998 ------
Pro forma interest expense for the three months ended 25,070
March 31, 1998:
Company historical interest expense: 18,480
------
Pro Forma Adjustment $6,590
======
Interest expense can be effected by increases and decreases in the
variable interest rates under the Company's various floating rate debt.
For example, a one-eighth percent change in such variable interest rates
will result in a $264 change for the three months ended March 31, 1998.
75
<PAGE>
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands)
- --------------------------------------------------------------------------------
(c) Represents minority interest computed as follows:
Income before minority interest $36,676
Preferred unit dividend $ 3,911
Income allocable to common stockholders of the $32,765
Company and unitholders in the Operating -------
Partnership
Allocation to minority interest based upon 3,643
weighted average percentage of Common --------
Units outstanding of 11.12 percent
Pro forma minority interest for the three 7,554
months ended March 31, 1998 --------
Company historical 7,306
Pro Forma Adjustment: $ 248
========
(d) The following is a reconciliation of the historical basic weighted average
common shares outstanding to the pro forma basic weighted average common
shares outstanding (shares in thousands):
Historical basic weighted average common shares 51,363
outstanding
Effect of pro forma adjustment for shares issued 6,405
in connection with the 1998 stock ------
offerings
Pro forma basic weighted average common shares 57,768
outstanding ======
(e) Diluted pro forma net income per share is not presented since common stock
equivalents and the Preferred Units are not dilutive.
76
<PAGE>
MACK-CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement Of Operations (unaudited)
For the Year Ended December 31, 1997
(in thousands, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pro Forma Pro Forma Pro Forma
Company Adj. for Adj. for Company
Historical 1997 Events Reported Events Pro Forma
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Base rents $206,215 $152,770 (a) $63,800 (b) $422,785
Escalations and recoveries
from tenants 31,130 18,632 (a) 7,117 (b) 56,879
Parking and other 6,910 7,152 (a) 3,016 (b) 17,078
Interest income 5,546 (835)(g) -- 4,711
- ---------------------------------------------------------------------------------------------------------------
Total revenues 249,801 177,719 73,933 501,453
- ---------------------------------------------------------------------------------------------------------------
EXPENSES
- ---------------------------------------------------------------------------------------------------------------
Real estate taxes 25,992 17,674 (a) 8,281 (b) 51,947
Utilities 18,246 14,884 (a) 5,451 (b) 38,581
Operating services 30,912 21,585 (a) 8,379 (b) 60,876
General and administrative 15,862 8,250 (a) 3,572 (b) 27,684
Depreciation and amortization 36,825 24,372 (a) 13,062 (b) 74,259
Interest expense 39,078 -- 66,589 (c) 105,667 (c)
Non-recurring merger -
related charges 46,519 (46,519)(h) -- --
- ---------------------------------------------------------------------------------------------------------------
Total expenses 213,434 40,246 105,334 359,014
- ---------------------------------------------------------------------------------------------------------------
Income before minority
interest and extraordinary item 36,367 137,473 (31,401) 142,439
Minority interest 31,379 -- (2,456)(d) 28,923 (d)
- ---------------------------------------------------------------------------------------------------------------
Income before extraordinary
item $4,988 $ 137,473 $(28,945) $113,516
===============================================================================================================
Basic weighted average common
shares outstanding (e) 39,266 57,510 (e)
------ ------
Income before extraordinary
item per basic and diluted
common share (f) $ 0.13 $ 1.97
------ ------
</TABLE>
77
<PAGE>
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997 (in thousands)
- --------------------------------------------------------------------------------
(a) Reflects:
Revenues and expenses for the 1997 Events for the year ended December 31,
1997, as follows:
<TABLE>
<CAPTION>
Real
Base Escalations/ Other Estate Operating General and
Transaction (1) Date Completed Rents(2) Recoveries Income Taxes Utilities Services Administrative Depreciation(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1345 Campus Parkway Jan. 28, 1997 $ 58 $ 19 -- $ 7 $ 1 $ 4 $ 1 $ 12
RM Transaction Jan. 31, 1997 5,209 195 $ 524 817 379 858 410 864
Westlakes May 8, 1997 3,126 866 -- 258 362 449 246 607
Shelton Place July 31, 1997 1,146 123 -- 94 168 162 57 192
200 Corporate Blvd Aug. 15, 1997 482 15 -- 68 6 91 1 106
Three Independence Way Sept. 3, 1997 1,309 2 -- 163 72 147 28 189
The Trooper Buildings Nov. 19, 1997 1,396 537 -- 113 228 172 54 303
The Mack Transaction Dec. 11, 1997 133,007 16,099 6,500 15,099 13,210 18,679 7,043 20,797
Princeton Overlook Dec. 19, 1997 3,315 265 -- 436 209 302 183 578
Concord Plaza Dec. 19, 1997 3,722 511 128 619 249 721 227 724
- ------------------------------------------------------------------------------------------------------------------------------------
Total Pro Forma Adj
for 1997 Events $152,770 $18,632 $7,152 $17,674 $14,884 $21,585 $8,250 $24,372
====================================================================================================================================
</TABLE>
(b) Reflects:
Revenues and expenses for the 1998 Events for the year ended December 31,
1997, as follows:
<TABLE>
<CAPTION>
Real
Base Escalations/ Other Estate Operating General and
Acquisition (1) Date Acquired Rents(2) Recoveries Income Taxes Utilities Services Administrative Depreciation(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
McGarvey Portfolio Jan. 30, 1998(4) $ 5,309 $ 1,009 -- $ 780 $ 90 $ 376 $ 2 $ 1,308
500 West Putnam Feb. 5, 1998 2,420 482 -- 170 269 314 167 426
Mountainview Feb. 25, 1998 2,664 211 $ 4 221 421 508 110 525
Cielo Center Mar. 12, 1998 4,603 206 106 597 492 849 264 825
Pacifica Portfolio Mar. 27, 1998(5) 8,049 791 53 1,084 495 808 263 2,470
Prudential Bus. Campus Mar. 27, 1998 14,138 1,082 2,159 2,531 941 828 1,632 3,153
Morris County Fin. Ctr. Mar. 30, 1998 6,048 1,794 48 789 939 1,229 329 1,121
3600 S. Yosemite May 13, 1998 1,661 10 69 119 195 316 49 287
500 College Road East May 22, 1998 3,036 437 -- 318 479 407 161 451
D.C. Portfolio June 1, 1998 (6) 14,460 1,000 577 1,487 899 2,362 486 2,241
400 S. Colorado June 3, 1998 1,412 95 -- 185 231 382 109 255
- -----------------------------------------------------------------------------------------------------------------------------------
Total Pro Forma Adj.
for 1998 Events $63,800 $7,117 $3,016 $8,281 $5,451 $8,379 $3,572 $13,062
====================================================================================================================================
</TABLE>
See footnotes to this page on subsequent page
78
<PAGE>
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997
(in thousands)
- --------------------------------------------------------------------------------
Notes to Footnote "(a)" and Footnote "(b)"
- ----------
(1) Moorestown Properties, 2115 Linwood, Ramland Road and certain of the
properties in the Pacifica Portfolio (aggregate cost of $49,047) were not
in operations, due to being vacant and/or under development, during the
year ended December 31, 1997.
(2) Pro forma base rents are presented on a straight-line basis calculated
from January 1, 1997 forward.
(3) Depreciation is based on the building-related portion of the purchase
price and associated costs (for those properties operation during the
period) depreciated using the straight-line method over a 40-year life.
(4) Acquisition of four of the 21 properties in this portfolio has not yet
been completed.
(5) Acquisition of six of the 18 properties was completed on June 8, 1998 and
acquisition of two of the 18 properties in this portfolio has not yet
been completed.
(6) Acquisition of one of the three properties in this portfolio has not yet
been completed.
- ----------
(c) The pro forma adjustment to interest expense for the year ended December
31, 1997 reflects interest on mortgage debt assumed with certain
acquisitions and additional borrowings from the Company's credit
facilities to fund certain acquisitions. Pro forma interest expense for
the year ended December 31, 1997 is computed as follows:
Interest expense on the Initial Mortgage Financing, after the $4,858
Partial Pre- payment (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)
Interest expense on loan assumed with Fair Lawn acquisition on 1,500
March 3, 1995 (fixed interest rate of 8.25 percent on average
outstanding principal balance of approximately $18,185)
Interest expense on mortgages in connection with the Harborside 10,841
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)
Interest expense on Teachers Mortgage assumed with the RM 13,303
Transaction on January 31, 1997 (fixed interest rate of 7.18
percent on $185,283)
Interest expense on Mack Assumed Debt ($291,883) with a weighted 22,530
average interest rate of 7.72 percent
Interest expense on West Putnam Mortgage ($12,104) with an 789
effective interest rate of 6.52 percent
Interest expense on McGarvey Mortgage ($8,354) with a weighted 519
average effective interest rate of 6.24 percent
Interest expense on Prudential Term Loan ($200,000) at a 13,700
weighted average interest rate of 6.85 percent
79
<PAGE>
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997
(in thousands)
- --------------------------------------------------------------------------------
Interest expense on pro forma drawings on the 36,644
Company's credit facilities of $523,486 at a weighted
average rate of 7.00 percent
Historical amortization of deferred mortgage, finance 983
and title costs for the year ended December 31, 1997
-------
Pro forma interest expense for the year ended December 105,667
31, 1997:
Company historical interest expense 39,078
-------
Pro Forma Adjustment: $66,589
=======
Interest expense can be effected by increases and decreases in the
variable rates under the Company's various floating rate debt. For
example, a one-eight percent change in such variable interest rates will
result in a $1,055 change for the year ended December 31, 1997.
(d) Represents minority interest computed as follows:
Income before extraordinary item and minority interest $142,439
Pro forma dividend yield of 6.75 percent on the $15,563
Preferred Units with a par value of $230,562
Income allocable to common stockholders of the Company 126,876
and unitholders in the Operating Partnership --------
Allocation to minority interest based upon weighted 13,360
average percentage of Common Units outstanding of -------
10.53 percent
Pro Forma minority interest for the Year Ended 28,923
December 31, 1997
Company historical including amount related to the 31,379
beneficial conversion feature of the Preferred -------
Units of $26,801(h)
Pro Forma Adjustment: $(2,456)
=======
(e) The following is a reconciliation of the historical basic weighted average
common shares outstanding to the pro forma basic weighted average common
shares outstanding (shares in thousands):
Historical basic weighted average shares outstanding 39,266
Effect of shares issued in connection with the 1997 18,045
and 1998 stock offerings
Effect of vesting of 199 shares on an accelerated 199
basis as a result of the Mack Transaction -------
Pro forma basic weighted average shares outstanding 57,510
=======
80
<PAGE>
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997
(in thousands)
- --------------------------------------------------------------------------------
(f) Diluted pro forma net income before extraordinary item per share is not
presented since common stock equivalents and the Preferred Units are not
dilutive
(g) Represents reduction for interest income earned on investments of proceeds
from the Company's November 1996 stock offering ($835)
(h) The charge related to the beneficial conversion feature of the preferred
units ($26,801) and the non-recurring merger-related charges ($46,519)
were excluded for pro forma purposes
81
<PAGE>
MACK-CALI REALTY CORPORATION
Estimated Twelve Month Pro Forma Statement of (unaudited)
Taxable Net Operating Income and Operating Funds Available
- --------------------------------------------------------------------------------
The following unaudited statement is a Pro Forma estimate for a twelve month
period of taxable income and funds available from operations of the Company. The
Pro Forma statement is based on the Company's historical operating results for
the twelve month period ended March 31, 1998, adjusted for historical operations
of the properties acquired or to be acquired during the period April 1, 1997 to
June 5, 1998 (as reported in this Current Report and previous Form 8-K and 8-K/A
filings of the Company dated January 16, 1998, December 11, 1997, September 19,
1997, and September 18, 1997) and certain items related to operations which can
be factually supported. This statement does not purport to forecast actual
operating results for any period in the future.
This statement should be read in conjunction with (i) the financial statements
of the Company and (ii) the Pro Forma financial statements of the Company.
Estimate of Taxable Net Operating Income (in thousands):
Mack-Cali Realty Corporation Pro Forma income before minority interest for the
twelve month period ended March 31, 1998,
exclusive of depreciation and amortization (Note 1)................. 218,403
Net adjustment for tax basis revenue recognition (Note 2)............. (1,121)
Estimated tax deduction from the exercise and sale of stock
options under the Company's Employee Stock Option Plan.............. (5,158)
Estimated tax depreciation and amortization (Note 3).................. (67,560)
---------
Pro Forma taxable income before allocation to minority interest and...
dividends deduction................................................. 144,564
Estimated allocation to minority interest (Note 4).................... (30,766)
Estimated dividends deduction (Note 5)................................ (115,629)
---------
$ (1,831)
=========
Pro Forma taxable net operating income $ 0
=========
Estimate of Operating Funds Available (in thousands):
Pro Forma taxable operating income before allocation to minority
interests and dividends deduction $ 144,564
Add: Pro Forma depreciation and amortization 67,560
---------
Estimated Pro Forma operating funds available (Note 6) $ 212,124
=========
- ----------
Note 1 - The Pro Forma income before minority interest represents the
Company's income before minority interest for the twelve month
period ended March 31, 1998.
Note 2 - Represents the net adjustment to (i) recognize prepaid rent and (ii)
reverse the effect of rental revenue recognition on a straight line
basis.
Note 3 - Tax depreciation for the Company is based upon the original cost or
purchase price allocated to the buildings, depreciated on a
straight-line method over their respective tax lives..
Note 4 - Estimated allocation of taxable income to minority interests is
based on a 18.84 percent minority interest in the operating
partnership after certain gross income and depreciation adjustments,
with a special allocation of depreciation on properties included in
the Initial Public Offering and subsequent acquisitions where
Operating Units were issued as part of the consideration in the
transaction.
Note 5 - Estimated dividends deduction is based on 57,814,529 shares
outstanding at the dividend rate of $2.00 per share. Shares
outstanding, on a Pro Forma basis, are 57,814,529.
Note 6 - Operating funds available does not represent cash generated from
operating activities in accordance with generally accepted
accounting principles and is not necessarily indicative of cash
available to fund cash needs.
82
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Mack-Cali Realty Corporation on Forms S-3 (File Nos. 333-44433, 333-44441,
333-25475, 333-09875, 333-19101, 333-09081, 33-96542, and 33-96538) and Forms
S-8 (File Nos. 333-44443, 33-91822, 333-18725, 333-19831 and 333-32661) of our
report dated April 6, 1998 on our audit of the Statement of Revenue and Certain
Expenses for McGarvey Portfolio, of our report dated March 29, 1998 on our audit
of the Statement of Revenue and Certain Expenses for 500 West Putnam, of our
report dated March 27, 1998 on our audit of the Statement of Revenue and Certain
Expenses for Mountainview, of our report dated March 30, 1998 on our audit of
the Statement of Revenue and Certain Expenses for Cielo Center, of our report
dated April 8, 1998 on our audit of the Statement of Revenue and Certain
Expenses for the Pacifica Portfolio, of our report dated May 29, 1998 on our
audit of the Statement of Revenue and Certain Expenses for 500 College Road
East, of our report dated May 29, 1998 on our audit of the Statement of Revenue
and Certain Expenses for the D.C. Portfolio, of our report dated May 30, 1998 on
our audit of the Statement of Revenue and Certain Expenses for 400 South
Colorado, and of our report dated June 4, 1998 on our audit of the Statement of
Revenue and certain expenses for 3600 S. Yosemite, which reports are included in
this Current Report on Form 8-K.
/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
- ----------------------------------------------------
Schonbraun Safris McCann Bekritsky & Co., L.L.C.
Roseland, New Jersey
June 8, 1998
83
<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. 333-44433,
333-44441, 333-25475, 333-09875, 333-19101, 333-09081, 33-96542, and 33-96538)
and Forms S-8 (Nos. 33-91822, 333-18725, 333-19831, 333-32661 and 333-44443) of
Mack-Cali Realty Corporation of our report dated April 16, 1998, relating to the
Historical Statement of Gross Income and Direct Operating Expenses for
Prudential Business Campus, and of our report dated April 2, 1998 relating to
the Historical Statement of Gross Income and Direct Operating Expenses for
Morris County Financial Center, appearing in this Current Report on Form 8-K.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
New York, New York
June 8, 1998
84
AGREEMENT FOR
PURCHASE AND SALE OF REAL ESTATE
by and between
BAYER CORPORATION
an Indiana corporation
Seller
and
MACK-CALI REALTY ACQUISITION CORPORATION
a Delaware corporation
Purchaser
Dated: March 31, 1998
<PAGE>
* * * * *
The mailing, delivery or negotiation of this Agreement by Seller or its agent or
attorney shall not be deemed an offer by Seller to enter into any transaction or
to enter into any other relationship with Purchaser, whether on the terms
contained herein or on other terms. This Agreement shall not be binding upon
Seller, nor shall Seller have any obligations or liabilities or Purchaser any
rights with respect thereto, or with respect to the Property, unless and until
Seller has executed and delivered this Agreement. Until such execution and
delivery of this Agreement, Seller may terminate all negotiations and discussion
of the subject matter hereof, without cause and for any reason or no reason,
without recourse or liability.
* * * * *
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Purchase and Sale; Certain Defined Terms...................1
Section 2. Closing....................................................2
Section 3. Price......................................................4
Section 4. Conditions Precedent.......................................4
Section 5. Contingencies..............................................5
Section 6. Access Prior to Closing....................................8
Section 7. Obligations of Seller......................................8
Section 8. Obligations of Purchaser..................................10
Section 9. Termination...............................................10
Section 10. Representations and Warranties............................11
Section 11. Costs Connected with Conveyances..........................15
Section 12. Apportionments............................................16
Section 13. Default...................................................17
Section 14. Assessments...............................................17
Section 15. Title.....................................................17
Section 16. Condemnation..............................................18
Section 17. Indemnification...........................................19
Section 18. Assignment................................................20
Section 19. "AS IS" Condition.........................................20
Section 20. Intentionally Omitted.....................................21
Section 21. Entire Agreement..........................................21
Section 22. Binding Effect............................................21
Section 23. No Modification...........................................21
Section 24. Notices...................................................21
Section 25. Captions; Gender..........................................23
Section 26. Counterparts..............................................24
Section 27. Governing Law.............................................24
Section 28. Singular and Plural Usage.................................24
Section 29. Escrow Agent..............................................24
Section 30. Risk of Loss..............................................26
Section 31. Publication. Confidentiality..............................26
LIST OF EXHIBITS
Exhibit A - Legal Description of Property
Exhibit B - Permitted Encumbrances
Exhibit C - Existing Contract
Exhibit D - Title Exclusions
Exhibit E - List of Environmental Documents
<PAGE>
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE (hereinafter
referred to as "this Agreement") is entered into and effective as of this _____
day of March, 1998, by and between BAYER CORPORATION, an Indiana corporation,
having an office at 100 Challenger Road, Ridgefield Park, New Jersey
(hereinafter referred to as "Seller") and MACK-CALI REALTY ACQUISITION
CORPORATION, a Delaware corporation, having an office at 11 Commerce Drive,
Cranford, New Jersey 07016 (hereinafter referred to as "Purchaser").
("Purchaser" and "Seller" are hereinafter referred to collectively as the
"parties".)
W I T N E S S E T H:
WHEREAS, Seller owns, in fee simple, that certain parcel of land at
One Ramland Road, designated as Lot 24 in Block 1, on the official tax map of
the Town of Orangetown, Rockland County, New York, on which there is situated an
approximately 232,339 square foot office building including certain improvements
and fixtures located thereon and adjacent parking area(s), which parcel is more
particularly described on Exhibit A attached hereto together with all rights,
easements and appurtenances pertaining thereto (the "Property");
WHEREAS, Purchaser desires to acquire the Property, subject to the
conditions hereinafter stated, and Seller desires to convey the Property to
Purchaser upon the terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements contained in this Agreement, the parties hereby
covenant and agree as follows:
Section 1. Purchase and Sale; Certain Defined Terms.
1.1. Subject to the terms and conditions set forth in this Agreement,
Seller shall sell and convey the Property to Purchaser, and Purchaser shall
purchase from Seller a fee simple estate in the Property, together with all
rights, easements and appurtenances belonging thereunto, and all of Seller's and
the record owner's right, title and interest in and to any and all streets or
public ways adjacent thereto, before or after vacation thereof.
1.2. As used in this Agreement, the following capitalized terms shall have
the meaning indicated below:
1.2.1. "Effective Date" means the date on which this Agreement has
been fully executed by the parties and an original counterpart has been
delivered to the parties.
-2-
<PAGE>
1.2.2. "Section" means a numbered part of this Agreement captioned
as a "Section" and all paragraphs and subparagraphs included within the
referenced Section; the term "paragraph" means a numbered paragraph which is
included within a Section of this Agreement and all subparagraphs included
within the referenced paragraph; and the term "subparagraph" means a numbered
subparagraph which is included within a paragraph of this Agreement.
1.3 As used in this Agreement, the following capitalized terms shall have
the meaning indicated in the paragraph indicated below:
"Contaminants" - paragraph 10.4.
"Closing" - paragraph 2.1.
"Closing Date" - paragraph 2.1.
"Deposit" - subparagraph 3.2.1.
"Discharge" - paragraph 10.4.
"Environmental Documents" - paragraph 10.4.
"Environmental Laws" - paragraph 10.4.
"Escrow Agent" - subparagraph 3.2.1.
"Governmental Authorities" - paragraph 10.1.13.
"Investigation Period" - paragraph 5.1.
"Investigation Termination Date" - paragraph 5.1.
"Permitted Encumbrances" - paragraph 15.1.
"Purchase Price" - paragraph 3.1.
"Reports" - paragraph 10.4.
"Tank Laws" - paragraph 10.4.
"Underground Storage Tanks" - paragraph 10.4
Section 2. Closing.
2.1. Provided that all conditions precedent to closing, as set forth in
Section 4, have been satisfied or waived as provided for herein, the closing of
title to the Property (the "Closing") shall take place within fifteen (15) days
following the Inspection Termination Date, as hereinafter defined (the "Closing
Date").
2.2. Notwithstanding the Closing Date specified in this Section 2,
provided any contingencies of Seller's have been complied with or waived in
writing by Seller and Purchaser, Purchaser may elect to accelerate the Closing
Date for the Property on five (5) business days prior notice to Seller.
2.3. The Closing shall take place at the offices of Pryor, Cashman,
Sherman & Flynn ("Purchaser's Counsel"), 410 Park Avenue, New York, New York, or
such other location as may be mutually agreed to by the parties.
-3-
<PAGE>
Section 3. Price.
3.1. The purchase price for the Property (the "Purchase Price") shall be
the sum of SEVEN MILLION DOLLARS ($7,000,000.00) (the "Purchase Price").
3.2. Purchaser shall pay the Purchase Price as follows:
3.2.1. The sum of Two Hundred Fifty Thousand Dollars ($250,000.00)
(the "Deposit") shall be paid by Purchaser on the Effective Date and shall be
held in escrow in an interest-bearing Merrill Lynch Government Fund trust
account by Seller's Counsel (the "Escrow Agent"), until the Closing Date or
sooner termination of this Agreement, with all interest earned thereon following
the Deposit.
3.2.2. In the event this Agreement is terminated by Purchaser on or
before the Inspection Termination Date, as defined in subparagraph 5.1.,
pursuant to the provisions of subparagraphs 5.1 or 5.2 or for any of the other
reasons recited in paragraph 9.1, the Deposit and all interest earned thereon
shall be returned to Purchaser. If this Agreement is not terminated, upon the
closing of title hereunder, Seller will receive the Deposit and the interest
earned thereon, which interest will not be credited toward the Purchase Price.
In the event the Agreement is terminated, the Deposit and all interest accrued
thereon will be forwarded by the Escrow Agent to the party set forth in the
Agreement as being entitled to same. Purchaser represents that its tax
identification number, for purposes of reporting the interest earnings is
22-3340547. Seller represents that its tax identification number for purposes of
reporting the interest earnings is 25-1339219.
3.2.3. The balance of the Purchase Price in the amount of Six
Million Seven Hundred Fifty Thousand Dollars ($6,750,000.00), subject to
adjustment pursuant to the terms of this Agreement, shall be payable to Seller
at Closing by a wire transfer of immediately available funds through the Federal
Reserve System to a bank account designated in writing by Seller. Seller shall
provide Purchaser with wire transfer instructions, no fewer than three (3)
business days prior to Closing.
Section 4. Conditions Precedent.
4.1. The following are conditions precedent to the obligations of
Purchaser to close title to the Property hereunder:
4.1.1. All representations and warranties of Seller contained herein
shall be true, accurate and correct on the Closing Date.
4.1.2. All of the obligations of Seller under this Agreement to be
performed from and after the Effective Date through the Closing Date shall have
been performed by Seller.
-4-
<PAGE>
4.1.3. The title company is prepared to issue to Purchaser a title
policy for title which is insurable at standard rates (without special premium)
by the title company without exception other than the standard pre-printed title
exclusions from coverage as set forth on Exhibit D attached hereto, the
Permitted Encumbrances and/or such other conditions as are acceptable to
Purchaser.
4.1.4. Seller shall have delivered to Purchaser all of the documents
provided herein for said delivery.
4.1.5. There shall not be any sewer moratorium affecting the
Property.
4.1.6. The contingencies set forth in Section 5 shall have been
satisfied within the time period specified therein or the same have been waived
pursuant to the terms thereof.
4.2. The following are conditions precedent to the obligations of Seller
to close title to the Property hereunder:
4.2.1. All representations and warranties of Purchaser contained
herein shall be true, accurate and correct on the Closing Date.
4.2.2. All of the obligations of Purchaser under this Agreement to
be performed from and after the Effective Date through the Closing Date shall
have been performed by Purchaser.
Section 5. Contingencies.
5.1. From the Effective Date through and including the thirtieth (30th)
day after the same ("the Inspection Period"), Purchaser may conduct, at
Purchaser's expense, an investigation of the Property in order to determine that
same is in all respects satisfactory to Purchaser in its sole discretion. During
the Inspection Period, Purchaser's investigation may also include, but not be
limited to, an examination of: (i) the quality of the soil and groundwater on or
beneath the Property including the performance of percolation tests and borings,
(ii) surveys, architectural, engineering, subdivision, access and financial
matters, market analysis, development and market feasibility studies or such
other studies as Purchaser, in its sole discretion, determines is necessary or
desirable in connection with the Property and may inspect the physical and
financial conditions of the Property, including, but not limited to, any service
contracts, leases, engineering and environmental reports, development approval
agreements, permits and approvals, which inspection shall be satisfactory to
Purchaser in its sole discretion; (iii) the existence of any storage tanks on,
beneath or within the Property; and (iv) the nature and extent of wetlands,
floodplains, steep slopes or other environmentally sensitive areas on the
Property. Purchaser's ability to conduct any sampling during the Inspection
Period is specifically conditioned upon the following: (a) Purchaser provides
Seller with a sampling plan before engaging in any sampling, (b) Seller approves
the sampling plan which approval will not be unreasonably withheld or delayed,
and (c) Purchaser provides Seller with an
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opportunity to split samples and reasonable prior notice of any sampling
proposed so that Seller may have a representative of Seller present at the
sampling. Purchaser's ability to enter the Property for any purposes prior to
Closing is specifically conditioned upon the following: (a) Purchaser hereby
agrees that any such entry onto the Property shall not materially interfere with
the use of the Premises by Seller and Purchaser agrees to restore the condition
of the Property as near as reasonably possible to that existing prior to such
entry and inspections and agrees to repair any damage caused as a result of such
entry and/or inspections, and (b) Purchaser further agrees and acknowledges that
Purchaser shall keep the results of all its inspections and any written material
provided to it by or on behalf of Seller in strict confidence and shall not
disclose any aspect thereof to any third party other than to those persons who
are employees of Purchaser or consultants retained by Purchaser or have a need
to know such information in order to perform necessary work in connection with
said purchase; provided, however, that Purchaser shall advise such persons of
the aforementioned confidentiality restrictions and obtain their agreement to
abide by the same unless such disclosure shall occur after the Closing in which
event the confidentiality restrictions shall no longer apply. Notwithstanding
the above, Purchaser shall have the right to disclose any information which is
discovered as a result of Purchaser's due diligence or which is provided to
Purchaser by or on behalf of Seller if such disclosure is specifically required
to be made by Purchaser pursuant to law.
As hereinbefore stated, Purchaser shall have a period of thirty (30) days
from the Effective Date in order to conduct all of the investigations which it
desires in accordance with this paragraph 5.1. The thirtieth (30th) day after
the Effective Date shall be the "Inspection Termination Date." Time shall be of
the essence as to this thirty day period and the Inspection Termination Date. If
prior to the Inspection Termination Date, Purchaser determines, in its sole
discretion, that the results of any investigation, examination, tests, borings,
inspection or study are in any way unsatisfactory to Purchaser, then Purchaser
shall have the right to terminate this Agreement by notice in writing to Seller
provided on or before the Inspection Termination Date and given in accordance
with Section 24. Upon such timely given notice of termination, this Agreement
shall be deemed terminated the Deposit and all interest earned thereon shall be
promptly returned to Purchaser and promptly thereafter Purchaser shall deliver
to Seller all copies of the Reports, as hereinafter defined,. If Purchaser does
not give notice of termination as provided herein, then its right to terminate
under this Section 5 for any matter disclosed or which could have been disclosed
by its inspections shall expire at 11:59 p.m. on the Inspection Termination
Date.
5.2. During the Inspection Period, Seller shall, upon Purchaser's request,
provide Purchaser and Purchaser's representatives with access to the Property at
reasonable times, during Seller's business hours and in a manner so as not to
disrupt Seller's business at the Property, in order to perform such inspections
of the Property relating to: (i) such studies, tests, borings, investigations
and inspections described in Section 5.1; (ii) the structural integrity of the
building(s) on the Property; (iii) the mechanical, engineering and HVAC systems
associated with the building(s) on the Property; and (iv) such other inspections
and investigations of zoning, violations and searches as Purchaser in its
discretion deems necessary or desirable to determine whether it will purchase
the Property. Seller shall cooperate with Purchaser in facilitating its due
diligence of the
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Property and shall obtain, and use commercially reasonable efforts to obtain and
provide, any consents that may be necessary in order for Purchaser to perform
the same. Notwithstanding the foregoing, Purchaser shall be obligated to obtain
any permits or approvals from Governmental Authorities, if the same are required
due to the nature of Purchaser's investigation. In addition, Seller will (a)
deliver to Purchaser, promptly after request, copies of the "Final Report Phase
I Environmental Assessment of Agfa Division, Miles, Inc. One Ramland Road
Orangeburg, New York" prepared by Burns and Roe Environmental Services, Inc.
(the "Phase I Report"), (b) deliver or make available to Purchaser any
Environmental Documents, as hereinafter defined, in the actual possession or
control of Seller and (c) respond to reasonable inquiries from Purchaser
relating to the Property. In the event any additional materials relating to the
environmental condition of the Property come within Seller's possession or
control after the date of this Agreement, Seller shall promptly submit complete
copies of same to Purchaser. Purchaser acknowledges that, with respect to
Seller's delivery of the aforementioned report and any other documentation
provided or made available to Purchaser, Seller is not warranting nor
representing as to the accuracy or completeness of the information contained
therein nor as to Purchaser's ability to rely upon the accuracy or completeness
of the same.
As hereinbefore stated, Purchaser shall have a period of thirty (30) days
from the Effective Date in order to conduct all of the inspections and/or
investigations which it desires in accordance with this paragraph 5.2. Such
right of inspection and the exercise of such right shall not constitute a waiver
by Purchaser of the breach of any representation, warranty, covenant or
agreement of Seller as specifically set forth elsewhere in this Agreement. Time
shall be of the essence as to this thirty (30) day period and the Inspection
Termination Date. If prior to the Inspection Termination Date, Purchaser
determines that the results of the inspections referenced herein are in any way
unsatisfactory to Purchaser in its sole discretion, then Purchaser shall have
the right to terminate this Agreement by notice in writing to Seller provided on
or before the Inspection Termination Date and given in accordance with Section
24, which notice shall be followed promptly by Purchaser's delivery to Seller of
copies of all Reports and Purchaser shall also promptly return to Seller all
Environmental Documents provided by Seller to Purchaser. Upon such timely given
notice of termination, this Agreement shall be deemed terminated and the Deposit
and all interest earned thereon shall be returned to Purchaser and this
Agreement shall be null and void and the parties hereto shall be relieved of all
further obligations hereunder except as otherwise provided herein. If Purchaser
does not give notice of termination as provided herein, then its right to
terminate pursuant to this Section 5 for any reason or for any matter disclosed
or which could have been disclosed by its inspection shall expire at 11:59 p.m.
on the Inspection Termination Date.
Section 6. Access Prior to Closing.
Purchaser and Purchaser's agents, employees, representatives, contractors
and consultants shall have the right to enter the Property at any reasonable
time for the purpose of (i) inspecting the Property, conducting any and all of
the investigation(s) and testing as are permitted hereunder, or (ii) making
surveys or other measurements required in order to facilitate its inspection of
the
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Property. Purchaser agrees that the access provided herein is contingent upon
Purchaser first obtaining public liability insurance, including worker's
compensation insurance, with a limit of at least $1,000,000.00 covering its
liability hereunder listing Seller as a certificate holder and the
certificate(s) of such insurance shall be delivered to Seller prior to such
entry.
Section 7. Obligations of Seller.
7.1. Upon the Effective Date, Seller shall have the following obligations:
7.1.1. Seller shall give Purchaser prompt Notice, as hereinafter
defined, (within three (3) business days after its receipt of Notice of same) of
(i) any rezoning or threatened rezoning of the Property; (ii) actual or
threatened taking or condemnation of all or any portion of the Property; (iii)
any actual or threatened enforcement action by any governmental agency or
authority relating to the use, condition or environmental quality of the
Property; or (iv) the commencement of any action by any party seeking relief
which would result in the imposition of a lien on the Property, including,
without limitation, an action to foreclose any mortgage on the Property.
7.1.2. Seller shall not, from the Effective Date until the closing
of title or earlier termination of this Agreement, further mortgage, convey, or
encumber, or perform any act which would result in an encumbrance on the
Property.
7.1.3. Seller shall not, from the Effective Date until the closing
of title or earlier termination of this Agreement: (i) enter into any leases or
agreements which would extend beyond the Closing Date; or (ii) allow occupancy
or use of any portion of the Property under any license or other agreement
without the prior written consent of Purchaser.
7.1.4. Seller shall continue to maintain the Property in its
condition as of the Effective Date through the Closing, subject to reasonable
wear and tear.
7.1.5. Seller shall promptly notify Purchaser of, and promptly
deliver to Purchaser, a complete copy of any Notice Seller may receive on or
before the Closing Date, from any Governmental Authority concerning a violation
of Environmental Laws or Discharge of Contaminants. All capitalized terms not
previously defined shall have the meanings as hereinafter provided.
7.2. At the Closing, Seller shall have the following obligations:
7.2.1. Seller shall execute, acknowledge and deliver to Purchaser a
bargain and sale deed, with covenants against grantor's acts, in sufficient and
recordable form to convey title to the Property in accordance with the terms of
this Agreement. Such deed shall contain a metes and bounds description of the
Property which, if Purchaser elects to obtain a survey, shall be prepared at
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Purchaser's expense by Purchaser's surveyor. Said survey and metes and bounds
description shall be certified to the parties by the surveyor and shall be
provided to Seller at least five (5) business days prior to the Closing Date. In
no event shall the deed contain a notification pursuant to New York
Environmental Conservation Law ("ECL") ss.27-0918 or the regulations promulgated
thereunder, or any other Environmental Law.
7.2.2. Seller shall execute, acknowledge and deliver to Purchaser an
affidavit of title in such form required by Purchaser's title insurer to insure
title to the Property in accordance with the terms of this Agreement, and such
other documents as are reasonably required by Purchaser's title insurer and
which are customarily required in similar commercial transactions in New York to
insure title to the Property in accordance with the terms of this Agreement.
7.2.3. Seller shall deliver to Purchaser copies of the current real
estate tax bills.
7.2.4. Seller shall execute, acknowledge and deliver to Purchaser
affidavits in form reasonably satisfactory to Purchaser's attorney for the
purpose of complying with the Foreign Investment in Real Property Tax Act.
7.2.5. Seller shall execute a closing statement reflecting the
payment and disbursement of the Purchase Price in accordance with this
Agreement.
7.2.6. Seller shall deliver to Purchaser discharges, in sufficient
and recordable form, for all liens and/or mortgages affecting the Property or a
pay-off letter from the financial institution holding such lien or mortgage in
form and substance reasonably satisfactory to Purchaser's title insurance
company.
7.2.7. Seller shall execute, acknowledge and delivery a New York
State TP 584 Tax Form and an Equalization Form (if the same are required by
law).
Section 8. Obligations of Purchaser.
8.1 At the Closing, Purchaser shall have the following obligations:
8.1.1 Purchaser shall deliver to Seller the portion of the Purchase
Price required under subparagraph 3.2.3. after application of a portion thereof,
if any, necessary for the release, satisfaction and cancellation of the
aforementioned liens or mortgages, if any, on the Property.
8.1.2. Purchaser shall execute a closing statement reflecting the
payment and disbursement of the Purchase Price in accordance with this
Agreement.
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Section 9. Termination.
9.1. Purchaser shall have the right to terminate this Agreement upon
written notice to Seller given in accordance with Section 24 hereof under any of
the following circumstances:
9.1.1. If any of the conditions precedent set forth in paragraph 4.1
shall not have been satisfied as of the Closing Date or if the contingencies set
forth in Section 5 have not been satisfied or waived pursuant to the terms
hereof.
9.1.2. If Seller shall be unable to convey title in accordance with
Section 15.
9.1.3. Pursuant to Section 16 or 30.
9.1.4. If any of Seller's representations under Section 10 are not
true, accurate and complete as of the Closing Date.
9.1.5. If Seller is in default of its obligations hereunder and if
the default is susceptible of cure, has not remedied the default after written
notice and a reasonable opportunity to cure not to exceed thirty (30) days.
9.2. Upon receipt by Seller of any written notice of termination of this
Agreement by Purchaser prior to the end of the Inspection Period or pursuant to
paragraph 9.1, Seller shall cause the return of the Deposit and all interest
earned thereon to Purchaser and this Agreement shall cease and terminate and be
null and void and of no further force and effect; provided, however, that if
Purchaser exercises the right to terminate this Agreement in accordance with
subparagraph 9.1.5 by reason of a default by Seller, then Purchaser shall
nonetheless be entitled to the remedies provided in paragraph 13.1.
9.3. If Purchaser is in default of its obligations hereunder and, if the
default is susceptible of cure, Purchaser has not remedied the default within
ten (10) days following written notice and Seller is ready, willing and able to
close, Seller shall have the right to terminate this Agreement upon written
notice to Purchaser given in accordance with Section 24 hereof.
9.4. Upon receipt by Purchaser of any written notice of termination of
this Agreement by Seller for any reason recited in paragraph 9.3, this Agreement
shall cease and terminate and be null and void and of no further force and
effect provided that (i) Purchaser's obligations to restore the Property and
repair any damages pursuant to Section 5 shall survive the Closing and (ii)
Seller shall nonetheless be entitled to the remedy provided in paragraph 13.2.
9.5. In the event that this Agreement is terminated by either party and
becomes null and void, such termination shall not relieve Purchaser of its
obligation to restore the Property and repair any damage to same pursuant to
Section 5 hereof nor shall such termination relieve Purchaser of its obligation
to indemnify Seller pursuant to the provisions of Section 17.
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Section 10. Representations and Warranties.
10.1. Seller represents and warrants the following:
10.1.1. Seller is an Indiana corporation, qualified to do business
in the State of New York, validly formed and having full power, authority and
legal right to enter into and perform this Agreement. The execution, delivery
and performance of this Agreement will not require approval or consent of any
trustee or holders of any indebtedness or obligations of Seller, and will not
contravene any law, governmental rule, regulation or order binding on Seller or
contravene the provisions of, or constitute a default under, or result in the
creation of any lien or encumbrance upon the property of Seller under any
indenture, mortgage, contract, or other agreement to which Seller is a party, or
by which it may be bound or affected.
10.1.2. Seller does not have knowledge of any pending or threatened
actions or proceedings before any court or administrative agency which will
materially adversely affect the ability of Seller to perform Seller's
obligations under this Agreement.
10.1.3. Seller does not have knowledge of any pending condemnation
or similar proceeding affecting the Property or any portion thereof.
10.1.4. Seller does not have knowledge of any notices, actions,
labor disputes, legal actions, suits, claims and demands or other legal or
administrative proceedings or judgments relating to any violations, currently
pending or threatened against the Property including those relating to the
environmental condition thereof, or the operation thereof, nor that any such
action, suit, proceeding or claim has been threatened or asserted against all or
any part of the Property, nor that there is any proceeding pending or presently
being prosecuted for the reduction of the assessed valuation of taxes or other
impositions payable in respect of any portion of the Property.
10.1.5. Seller has granted no leases or licenses, nor created any
tenancies, affecting the Property and there are no parties in possession of any
portion of the Property as trespassers or otherwise and there are no leasing
commission obligations affecting the Property.
10.1.6. Seller does not have knowledge of any pending or threatened
governmental or private proceedings which would impair or result in the
termination of access from the Property to abutting public highways, streets,
and roads.
10.1.7. Seller is not a "foreign person" as such term is defined
under Section 1445 (f)(3) of the United States Internal Revenue Code.
10.1.8. Seller has made no agreements to pay any commissions or
other compensation to any brokers or agents in connection with this Agreement
other than Team
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Resources, Inc. ("Broker") or as Broker shall direct, and has had no dealings
with any broker or agent with respect to the Property upon which any such broker
or agent would be entitled to a commission or other compensation. Seller shall
pay the Broker, or as Broker shall direct, a commission pursuant to a separate
agreement between Seller and Broker.
10.1.9. No one other than Purchaser has a contract, option or right
of first refusal to purchase the Property or any part thereof.
10.1.10. At the Closing, there will be no unpaid bills or claims
against Seller which may give rise to a lien against the Property. Seller does
not have knowledge of any work performed at the building which would require an
amendment to the certificate of occupancy (unless same was obtained), and any
work performed at the Property by Seller to the date hereof and the Closing Date
has been and will be in accordance with the rules, laws and regulations of all
applicable authorities. All bills and claims for labor performed and materials
furnished to or for the benefit of the Property will be paid in full on the
Closing Date.
10.1.11. There are no service contracts, union contracts, employment
agreements or other agreements affecting the Property or the operation thereof,
except as set forth on EXHIBIT "C".
10.1.12. Seller has provided or made available to Purchaser all
reports, including, without limitation, the Environmental Documents in Seller's
actual possession or under its control related to the physical condition of the
Property.
10.1.13. Seller has no knowledge of any notices, suits,
investigations or judgments relating to any violations including, without
limitation, Environmental Laws or any laws, ordinances or regulations affecting
the Property, and there are no outstanding orders, judgments, injunctions,
decrees or writ of any agency, board, bureau, governmental unit, or any
subdivision thereof, having, asserting or acquiring jurisdiction over all or any
part of the Property or the management, operation, use or improvement thereof
(collectively, the "Governmental Authorities") against or involving the
Property.
10.1.14. Seller has no knowledge of any federal or state liens as
referred to under CERCLA or the New York Navigation Law ss.181 a to 3, or any
other Environmental Laws, that have attached to the Property.
10.1.15. Seller has no knowledge of any confirmed or pending
assessment or special assessment for public improvements affecting the Property.
10.2.1. In addition to the provisions of Section 10.1., Seller hereby
warrants and represents, to the best of Seller's knowledge, without independent
inquiry or investigation having been undertaken by Seller:
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(a) Except as has been disclosed to Purchaser in the documents set
forth on Exhibit E attached hereto and made a part hereof, which were provided
to or made available to Purchaser pursuant to this Agreement:
(i) there are no Contaminants on, under, at or emanating from the
Property, except those in compliance with all applicable Environmental Laws;
(ii) no Contaminants have been Discharged onto the Property by
Seller or during Seller's ownership of the Property in violation of any
Environmental Law which would allow a Governmental Authority to require that a
cleanup be undertaken;
(iii) no ss.104(e) informational request has been received by Seller
issued pursuant to CERCLA with respect to the Property;
(iv) there are no above ground storage tanks or Underground Storage
Tanks, as hereinafter defined, at the Property and there were no such tanks at
the Property, regardless of whether such tanks are regulated or not;
(v) the Property has not been used as a solid waste management
facility as defined in the ECL ss.27-0701 et seq.
10.2.2. Contemporaneously with the execution of this Agreement, and
subsequently promptly upon receipt by Seller or Seller's representatives, Seller
shall deliver or make available to Purchaser: (i) all Environmental Documents
concerning the Property generated by or on behalf of Seller, whether currently
existing or hereafter existing; (ii) all existing maps, diagrams and other
documentation to the extent in Seller's actual possession or under its control
relating to the physical lay-out and structural aspects of the Property.
10.2.3. As used in this Section 10, "to the best of Seller's knowledge" or
"Seller does not have knowledge" shall be limited to the actual knowledge of Mr.
Robert Hoffman who is the individual currently employed by Seller who is in a
position to have knowledge of the Property.
10.2.4. A document shall be considered to be in Seller's actual possession
or under its control if it is now, or was during the last ten (10) years, in the
possession or control of either Mr. Robert Hoffman or Mr.
Vincent Opalka.
10.2.5. To Seller's knowledge, there are no engineering or institutional
controls at the Property, including without limitation, any deed notice,
declaration of environmental restriction, groundwater classification exception
area or well restriction area.
10.3. All of the foregoing representations and warranties of Seller
are true, accurate and complete as of the Effective Date and shall be true,
accurate and complete as of the
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Closing Date and shall survive the Closing Date for a period of one year, and
any claim(s) brought thereon by Purchaser must be instituted within one (1) year
of the Closing Date.
10.4. The following terms shall have the following meaning when used
in this Agreement:
(i) "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 "Tank Laws" as
defined below; the ECL; the New York State Navigation Law; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901 et seq. ("RCRA");
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. ss.9601 et seq. ("CERCLA"); the Water Pollution and Control
Act, 33 U.S.C. ss.1251 et seq.; together with any amendments thereto,
regulations promulgated thereunder and all substitutions thereof, as well as
words of similar meaning referred to in any other applicable federal, state,
county or municipal environmental statute, ordinance, code, rule or regulation,
including, without limitation, radon, asbestos, polychlorinated biphenyls, urea
formaldehyde and petroleum products and petroleum based derivatives. Where a
statute, ordinance, code, rule or regulation defines any of these terms more
broadly than another, the broader definition shall apply.
(ii) "Discharge" shall mean the releasing, spilling, leaking,
leaching, disposing, pumping, pouring, emitting, emptying, treating or dumping
of Contaminants at, into, onto or migrating from the Property, regardless of
whether the result of an intentional or unintentional action or omission.
(iii) "Environmental Documents" shall mean all environmental
documentation in the actual possession or under the control of Seller relating
to the Property including, without limitation, all sampling plans, cleanup
plans, preliminary assessment plans and reports, site investigation plans and
reports, remedial investigation plans and reports, or the equivalent, sampling
results, sampling results reports, data, diagrams, charts, maps, analysis,
conclusions, quality assurance/quality control documentation, and directives and
orders issued by any Governmental Authority.
(iv) "Environmental Laws" shall mean each and every applicable
federal, state, county or municipal statute, ordinance, rule, regulation, order,
code, directive or requirement, together with all successor statutes,
ordinances, rules, regulations, orders, codes, directives or requirements, of
any Governmental Authority in any way related to Contaminants.
(v) "Reports" shall mean the results of all investigations performed
by third parties on behalf of Purchaser hereunder, including, without
limitation, all copies of reports, studies, surveys, plans and other
documentation resulting from Purchaser's investigation prepared by third parties
on behalf of Purchaser.
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(vi) "Tank Laws" shall mean the New York Bulk Storage Law, ECL
ss.17-1743, the New York Hazardous Substances Bulk Storage Act, ECL ss.40-0101
et seq., and the federal underground storage tank law (Subtitle I) of RCRA,
together with any amendments thereto, regulations promulgated thereunder, and
all substitutions thereof, and any successor legislation and regulations.
(vii) "Underground Storage Tanks" shall mean each and every
"underground storage tank" whether or not subject to the Tank Laws, as well as
the "monitoring systems", the "leak detection system", the "discharge protection
system" and the "tank system" associated with the "underground storage tank" as
those terms are defined by the Tank Laws.
10.4. Purchaser represents and warrants the following:
10.4.1. Purchaser is a corporation validly formed and having full
power, authority and legal right to enter into and perform this Agreement. The
execution, delivery and performance of this Agreement will not require approval
or consent of any trustee or holders of any indebtedness or obligations of
Purchaser, and will not contravene any law, governmental rule, regulation or
order binding on Purchaser or contravene the provisions of, or constitute a
default under, or result in the creation of any lien or encumbrance upon the
property of Purchaser under any indenture, mortgage, contract, or other
agreement to which Purchaser is a party, or by which it may be bound or
affected.
10.4.2. Purchaser does not have knowledge of any pending or
threatened actions or proceedings before any court or administrative agency
which will materially adversely affect the ability of Purchaser to perform its
obligations under this Agreement.
10.4.3. Purchaser has made no agreement to pay any commission or
other compensation to any brokers or agents in connection with this Agreement
and has not had dealings with any broker or agent, other than Broker and
Friedland Realty, Inc., with respect to the Property upon which any such broker
or agent would be entitled to a commission or other compensation.
Section 11. Costs Connected With Conveyances.
The costs of the conveyances described in this Agreement shall be paid in
accordance with the terms hereof and in accordance with the following schedule:
Broker's commission Seller
New York State Transfer Tax Seller
Cost of survey Purchaser
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Cost of title examination and
title insurance Purchaser
Attorneys' fees - Each party shall pay its own attorney's fees
Recording fees - deed Purchaser
Section 12. Apportionments.
The following shall be apportioned as of midnight on the date preceding
the Closing Date:
(i) Utility charges payable by Seller, including, without limitation,
electricity, water charges and sewer charges. If there are meters on the
Property, Seller will cause readings of all said meters to be performed not more
than five (5) days prior to the Closing Date.
(ii) Amounts payable under any service contracts other than those which
Purchaser has elected to assume.
(iii) Real estate taxes due and payable for the calendar year. 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 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 Property should be determined to be higher or lower than
those that are apportioned, a new computation shall be made and Seller agrees to
pay Purchaser any increase shown by such recomputation and vice versa. Seller
shall be responsible for the charges attributable to the Property to the Closing
Date.
(iv) The value of any heating fuel stored for use at any of the Property,
at Seller's most recent cost, including taxes, on the basis of a reading made
within ten (10) days prior to the Closing Date by Seller's supplier.
(v) 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.
(vi) Any errors in calculations or adjustments shall be corrected or
adjusted as soon as practicable after the Closing.
(vii) The provisions of this Section 12 shall survive the Closing Date.
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Section 13. Default.
13.1. Anything in this Agreement to the contrary notwithstanding, if
Seller fails to perform any obligation on its part to be performed pursuant to
the terms and conditions of this Agreement (except for the inability to convey
good and marketable title in accordance with Section 15 of this Agreement), then
following notice and the expiration of the applicable cure period as provided
for in paragraph 9.1.5., unless such obligation is waived by Purchaser, such
failure to perform shall constitute a default under this Agreement, and
Purchaser shall have available to it any and all rights and remedies that may be
provided under the laws of the State of New York. In the event Purchaser elects
not to seek specific performance then it shall terminate this Agreement pursuant
to Section 9 and, other than its rights to seek a money judgment against Seller
which shall specifically survive, this Agreement would terminate and be null and
void.
13.2. If Purchaser fails timely to close title to the Property (except as
a result of a termination by Purchaser pursuant to paragraph 9.1) pursuant to
the terms and conditions of this Agreement, or if Purchaser otherwise fails to
perform any of its obligations under this Agreement, then unless such obligation
is waived in writing by Seller, such failure shall constitute a default of this
Agreement, and Seller may terminate this Agreement pursuant to Section 9.
Purchaser acknowledges that such default under this Agreement would cause harm
to Seller that is incapable of accurate estimation. Therefore, in the event of
such default, Seller's damages shall be limited to the sum of the Deposit paid
or payable at the time of such default, which shall be retained by Seller or
paid over to Seller by Purchaser, as the case may be. Notwithstanding the
foregoing, nothing contained herein shall limit or restrict Seller's ability to
enforce the provisions of Section 9.5 hereof even following termination of this
Agreement.
Section 14. Assessments.
If the Property is affected by any special assessment or assessment for
public improvements prior to the Closing Date, which assessments are or may
become payable, in installments or otherwise, then for the purpose of this
Agreement the unpaid installments of any such assessments which are due during
the calendar year in which the Closing occurs shall be paid on a pro-rata basis
based upon each party's period of ownership during said calendar year.
Section 15. Title.
15.1. Title to the Property to be conveyed by Seller pursuant to this
Agreement shall be good and marketable title, insurable at regular rates by
Purchaser's title insurance company, and shall be conveyed by Seller to
Purchaser free and clear of all liens, encumbrances and rights of any nature
except those set forth on Exhibit B attached to this Agreement (the "Permitted
Encumbrances") and the exclusions set forth on Exhibit D attached to this
Agreement. Seller acknowledges that Matrix Corporation is the record owner of
the Property, and agrees to provide
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Purchaser's title company with such information and documentation as is
reasonably requested to evidence that Seller is the legal and beneficial owner
of the Property.
15.2. Purchaser shall, at its own expense, obtain a title search and
survey of the Property. Purchaser may notify Seller prior to the expiration of
the Evaluation Period of any objections it may have to title based on its title
search or survey. If Purchaser notifies Seller of objections to title, then
Seller shall have the right to cure such defects before the Closing Date. Seller
shall use commercially reasonable efforts to cure such defects provided such
efforts do not require that Seller expend any sums in doing so except as
specifically provided for hereafter with respect to mortgages, judgments, tax
liens and other liens pursuant to the terms hereof. If Seller elects not to cure
the defects because to do so would require the expenditure of money by Seller or
Seller cannot cure the defects within fifteen (15) days of the originally
anticipated Closing Date, or such subsequent date as is mutually agreed upon by
the parties, Purchaser shall have the option to: (i) elect to proceed with this
Agreement and waive its objection to the title defect; or (ii) terminate this
Agreement in accordance with Section 9. Anything in this Agreement to the
contrary notwithstanding, Seller shall be required to discharge mortgages,
judgments (subject to the provisions in the following sentence), tax liens and
other liens which are dischargeable by the payment of a sum certain at the
Closing up to an aggregate amount equal to the Purchase Price to be received by
Seller at the Closing and to provide at Closing documents in recordable and
sufficient form to discharge such liens and/or mortgages of record, or, if the
lien is held by a New Jersey, New York or national banking institution, a
current mortgage pay-off letter from such institution in form and substance
reasonably acceptable to the title company, together with the cost of recording
or filing such instrument. In the event a judgment is entered against Seller in
an amount which exceeds $500,000, Seller will not be obligated to pay-off said
judgment but shall: (i) offer to indemnify Purchaser's title company (without
Seller being required to post a bond but with a written indemnification in form
and substance acceptable to both Seller and the title company) in order for the
title company to omit such judgment as an exception to title or, if not
acceptable to Purchaser's title company, Seller shall (ii) offer to indemnify
Purchaser (without Seller being required to post a bond but with a written
indemnification in form and substance acceptable to both Seller and Purchaser)
in order for Purchaser to accept title subject to said judgment. In the event
neither Purchaser's title company nor Purchaser agree to accept said
indemnification, then Seller shall have the right to terminate this Agreement
upon written notice to Purchaser. In the event Seller elects not to cure title
defects raised by Purchaser or cannot cure the same, pursuant to the provisions
of this paragraph 15.2, and Purchaser or Seller exercises its right to terminate
this Agreement, again pursuant to the provisions of this paragraph 15.2., then
Seller agrees to reimburse Purchaser for reasonable costs incurred by Purchaser
in connection with its title search, survey and due diligence investigation(s)
and testing, including without limitation attorneys' fees, engineering fees and
environmental costs, but in no event shall said reimbursement exceed the sum of
Thirty Thousand Dollars ($30,000.00).
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Section 16. Condemnation.
In the event of an actual or threatened condemnation of any portion of the
Property which in Purchaser's reasonable judgment would materially interfere
with the use of the Property as commercial office space, Purchaser shall have
the option to elect to terminate this Agreement by serving written notice
thereof on Seller in accordance with Section 23 hereof, whereupon the Deposit
and all interest earned thereon shall be returned to Purchaser and neither party
shall thereafter have any further rights or obligations under this Agreement. If
Purchaser does not terminate this Agreement in accordance with this Section 16,
Seller shall allow Purchaser a credit against the Purchase Price at the Closing
equal to such portion of the condemnation awards or other compensation received,
as the same relate to the Property and not to Seller's personal property, before
the Closing Date and Seller shall assign to Purchaser all of Seller's right,
title and interest in any condemnation award or other compensation for such
condemnation or taking by eminent domain and the parties shall proceed to
Closing. Seller acknowledges that an actual or threatened condemnation would
materially interfere with Purchaser's use of the Property if such condemnation
would include the taking of any part of the building, any parking areas or any
areas necessary for access, ingress or egress to or from the building to the
parking areas and the street abutting the Property.
Section 17. Indemnification.
17.1. As used in this Section 17: (a) the verb "indemnify" means
indemnify, defend, save and hold harmless, and the noun "claims" means claims,
costs, expenses (including reasonable attorneys' fees and the reasonable fees of
engineering and other required experts or professional consultants), penalties,
obligations and liabilities of any nature; (b) "Environmental Claims" include
all losses, costs, damages, allegations, demands, claims (including without
limitation, claims for personal injury or real or personal property damage),
liabilities, expenses, judgments, orders or investigations or remediation
measures required by the governmental entities having jurisdiction over the
Property (including, but not limited to the cost of any remedial work performed
on the Property), that arise directly or indirectly from or in connection with
the operation or the condition of the Property prior to the Closing Date,
including but not limited to the presence, suspected presence, release or
suspected release of any Hazardous Substances of any kind, whether into the air,
soil, groundwater, pavement, structures, fixtures, equipment, tanks, containers
or other personalty at the Property or any other real property in which
Purchaser has or may acquire any interest; and (c) "Third-Party Environmental
Claims" shall mean any Environmental Claims which: (A) are asserted or commenced
by persons or entities, other than the Purchaser or a governmental entity and or
successor of Purchaser (B) relate to the Property or real property that is
adjacent to or in the vicinity of the Property.
17.2. Purchaser shall indemnify Seller with respect to any claims,
including but not limited to claims environmental in nature, due to the acts or
omissions of Purchaser or Purchaser's agents, employees, subcontractors and/or
invitees arising from entry onto the Property by Purchaser
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or Purchaser's agents, employees, subcontractors and invitees pursuant to
Section 6. Notwithstanding the foregoing, Purchaser shall not indemnify Seller
on account of any existing environmental conditions which are discovered as a
result of Purchaser's due diligence except to the extent the environmental
condition is exacerbated by any act or omission of Purchaser, its agents,
employees or invitees.
17.3. To the extent permitted by law, Purchaser hereby waives all
Environmental Claims it may have against Seller and releases Seller from same.
Notwithstanding the foregoing, Purchaser shall not be prohibited from impleading
Seller into any litigation with respect to any Third Party Environmental Claims
which arise directly or indirectly or in connection with Seller's prior use,
possession or occupancy of the Property prior to Closing or which arose during
Seller's ownership of the Property.
17.4. The parties agree to indemnify each other with respect to any claims
by any broker or other person, in connection with this Agreement, other than
Broker, where such claim is based solely upon the acts or alleged acts of the
indemnifying party.
17.5. Seller shall indemnify Purchaser with respect to any claims for a
commission in connection with the transaction contemplated by this Agreement by
Broker.
17.6. For the purposes of this Section 17 only, the term "Purchaser" shall
include Purchaser, Mack-Cali Realty Corporation, any Permitted Assignee, as
hereinafter defined, and such entity, if any, as Purchaser may
designate as its nominee pursuant to this Agreement.
17.7. The provisions of this Section 17 shall survive the delivery of the
deed at the Closing.
Section 18. Assignment.
This Agreement may not be assigned by Purchaser except to a directly or
indirectly wholly-owned subsidiary or subsidiaries of Mack-Cali Realty
Corporation, or to a partnership, corporation, limited liability company or
other entity in which Mack-Cali Realty Corporation and/or any such wholly-owned
subsidiary or subsidiaries owns, either directly or indirectly in the aggregate,
at least fifty (50%) percent of the profits, losses and cash flow thereof and
controls the management of the affairs of such entity (any such entity, a
"Permitted Assignee") and any other assignment or attempted assignment by
Purchaser without Seller's consent shall constitute a default by Purchaser
hereunder and shall be deemed null and void and of no force and effect. In
addition, at Closing, Purchaser shall have the right to cause Seller to direct
the deed and other closing instruments to such party as Purchaser shall direct.
No assignment or direction of the closing instruments shall relieve Purchaser
from Purchaser's obligations under this Agreement specifically including those
which survive the Closing or termination of this Agreement.
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<PAGE>
Section 19. "AS IS" Condition.
Purchaser represents that after the Inspection Period, Purchaser will have
made a thorough inspection of the Property and that after the Inspection Period,
Purchaser will be proceeding with this Agreement is entered into with full
knowledge as to its value, character, quality and condition. Notwithstanding the
foregoing, Purchaser retains its right to further inspect the Property pursuant
to the terms of Section 5 of this Agreement and all rights set forth therein.
Seller represents that water, sewer, electric and gas service are present at the
Property but Seller makes no representation as to the sufficiency of said
utilities to service the Property for the current use of Purchaser nor for any
intended use of Purchaser. Furthermore, Seller makes no representation as to
Purchaser's ability to use the Property for its intended use. It is therefore
understood and agreed by and between the parties to this Agreement that, except
as may otherwise be specifically provided for in this Agreement, the Property
shall be taken by Purchaser at closing of title in its condition as of the date
of this Agreement, normal wear and tear excepted. Except as may be expressly set
forth in Section 10, SELLER MAKES ABSOLUTELY NO REPRESENTATIONS OR WARRANTIES
WITH RESPECT TO THE PHYSICAL CONDITION OF THE PROPERTY, THE AVAILABILITY OF
UTILITIES NOR WITH RESPECT TO THE ENVIRONMENTAL CONDITION OF THE PROPERTY.
Section 20. (Intentionally Omitted)
Section 21. Entire Agreement.
All understandings and agreements heretofore had between the parties
hereto with respect to the transaction contemplated by this Agreement are merged
in this Agreement, which embodies their entire agreement, and the same is
entered into after full investigation, neither party relying upon any statement
or representation not contained herein.
Section 22. Binding Effect.
This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective heirs, executors, legal representatives,
administrators, successors and assigns.
Section 23. No Modification.
This Agreement may not be changed or terminated orally by either party; it
may be amended only by a writing which is executed by Purchaser and Seller. No
course of conduct or course of dealing by the parties shall be construed to
constitute a waiver, modification, or amendment of any provision of this
Agreement in the absence of a writing executed in accordance
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with this Section 23. The requirement set forth in this Section 23 that
amendments to this Agreement must be in writing shall not itself be waived or
amended by any oral agreement of the parties.
Section 24. Notices.
All notices and other communications hereunder shall be in writing
(including wire, telefax or similar writing) (a "Notice") and shall be sent,
delivered or mailed, addressed or telefaxed:
If given to Seller: Bayer Corporation
100 Challenger Road
Ridgefield Park, NJ 07660-2199
ATTN: Vice President and General Counsel
Telephone: (201) 440-0111 ext. 4706
Telefax: (201) 440-4056
with a copy to: Agfa Division
Bayer Corporation
100 Challenger Road
Ridgefield Park, NJ 07660-2199
ATTN: General Services and Facility
Telephone: (201) 440-0111 ext. 4711
Telefax: (201) 440-4376
with a copy to: Colleen R. Donovan, Esq.
Pitney, Hardin, Kipp & Szuch
MAIL TO: P.O. Box 1945
Morristown, NJ 07962-1945
DELIVER TO: 200 Campus Drive
Florham Park, NJ 07932
Telephone: (973) 966-6300
Telefax: (973) 966-1550
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<PAGE>
If given to Purchaser: MACK-CALI REALTY ACQUISITION
CORPORATION
11 Commerce Drive
Cranford, NJ 07016
ATTN: Mr. Thomas Rizk
Telephone: (908) 272-8000
Telefax: (908) 272-6755
and to: MACK-CALI REALTY ACQUISITION
CORPORATION
11 Commerce Drive
Cranford, NJ 07016
ATTN: Mr. Roger W. Thomas
Telephone: (908) 272-8000
Telefax: (908) 272-6755
and to: MACK-CALI REALTY CORPORATION
100 Clearbrook Road
Elmsford, NY 10523
ATTN: Mr. Andrew Greenspan
Telephone: (914) 592-4800
Telefax: (914) 592-4836
with a copy to: Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
ATTN: Andrew S. Levine, Esq.
Telephone: (212) 326-0414
Telefax: (212) 326-0806
Each such notice, request or other written communication shall be given (i) by
hand delivery, (ii) nationally recognized overnight courier service or (iii) by
telefax, receipt confirmed. Each such notice, request or communication shall be
effective (i) if delivered by hand or by nationally recognized overnight courier
service, when delivered by overnight delivery at the address specified in this
Section 24 (or in accordance with the latest unrevoked written direction from
such party) and (ii) if given by telefax, it 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.
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<PAGE>
Section 25. Captions; Gender.
The section headings and table of contents set forth in this Agreement are
for the convenience of the parties only, do not form a part of this Agreement,
and are not to be considered a part of this Agreement for the purposes of
interpretation, or otherwise. All references herein to the neuter gender shall
be deemed to include the masculine and feminine genders, and all references
herein to the singular shall be deemed to include the plural, all as the context
may require.
Section 26. Counterparts.
This Agreement may be executed in counterparts, all of which shall be
deemed originals.
Section 27. Governing Law.
This Agreement shall be governed by and construed according to the laws of
the State of New York.
Section 28. Singular and Plural Usage.
If two or more persons or entities constitute either the seller or the
purchaser, the word "Seller" or the word "Purchaser", and pronouns referring
thereto, shall be construed in the singular or plural usage whenever the sense
of this Agreement so requires and the obligations of such persons and entities
hereunder shall be both joint and several.
Section 29. Escrow Agent.
29.1. The duties and obligations of Escrow Agent hereunder shall be
determined solely by the express provisions of this Agreement, and Escrow Agent
shall have no duties other than those expressly imposed hereby, nor shall Escrow
Agent be required to take any action other than in accordance with the terms
hereof. The duties of Escrow Agent hereunder are entirely ministerial, and
Escrow Agent shall have no responsibility for the content, validity or
genuineness of or otherwise in respect of any document or instrument delivered
to Escrow Agent hereunder. Escrow Agent shall not be liable, whether in acting
or failing to act, for any error in judgment or for any mistake in fact or in
law, or for any loss suffered by any of the parties hereto or herein referred
to, except for a loss resulting from willful malfeasance or bad faith on the
part of Escrow Agent in performing its duties hereunder. Escrow Agent may rely
conclusively upon, and shall be protected in acting or failing to act upon, any
agreement, notice, demand, document or instrument believed by Escrow Agent in
good faith to be genuine. Purchaser and Seller hereby jointly and severally
agree
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<PAGE>
to indemnify Escrow Agent and hold it harmless from and against all loss, cost,
damage and expense (including, but not limited to, reasonable attorneys' fees
and disbursements) which Escrow Agent may incur arising out of or in connection
herewith, except for willful misfeasance or bad faith on the part of Escrow
Agent, as aforesaid.
29.2. Escrow Agent is acting as a stakeholder only with respect to the
Deposit. If there is any dispute as to whether Escrow Agent is obligated to
deliver the Deposit or as to whom said Deposit is to be delivered, Escrow Agent
shall continue to hold the same until receipt by Escrow Agent of an
authorization in writing, signed by all the parties having any interest in such
dispute, directing the disposition of the Deposit. In the absence of such
authorization, Escrow Agent may hold the Deposit until the final determination
of the rights of the parties in an appropriate judicial proceeding. If such
written authorization is not given, or proceedings for such determination are
not begun within thirty (30) days after the date set forth herein for the
Closing (as the same may have been changed by agreement of the parties) and
diligently continued, Escrow Agent may, but is not required to, bring an
appropriate action or proceeding for leave to deposit the Deposit in a court of
competent jurisdiction pending such determination. Escrow Agent shall be
reimbursed for all costs and expenses of such action or proceeding including,
without limitation, reasonable attorneys' fees and disbursements, by the party
determined not to be entitled to the Deposit, or if the Deposit is shared
between the parties hereto, such costs of Escrow Agent shall be shared pro rata,
between Seller and Purchaser, based upon the amount of Deposit received by each.
Upon making delivery of the Deposit in the manner provided in this Agreement,
Escrow Agent shall have no further liability hereunder.
29.3. Upon the filing of a written demand for the Deposit by Purchaser or
Seller, the Escrow Agent shall promptly mail a copy thereof to the other party.
The other party shall have the right to object to the delivery of the Deposit by
filing written notice of such objection with the Escrow Agent at any time within
five (5) business days after the mailing of such copy to it, but not thereafter.
Such notice shall set forth the basis for objecting to the delivery of the
Deposit. Upon receipt of such notice, the Escrow Agent shall promptly mail a
copy thereof to the party who filed the written demand.
29.4. Escrow Agent may resign at any time by giving two (2) business days'
written notice to Seller and Purchaser. In the event of such resignation, Escrow
Agent shall deliver the Deposit to another escrow agent designated by Seller and
Purchaser to serve hereunder who shall be a practicing attorney or to a court of
competent jurisdiction, whereupon Escrow Agent shall be discharged from its
duties and obligations hereunder. The new escrow agent, if any, shall execute
and deliver to each of Seller and Purchaser as written notice acknowledging that
such new escrow agent is subject to and shall comply with the terms hereof as
fully and completely and with the same legal force and effect as if new escrow
agent had been originally named as the "Escrow Agent" hereunder.
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<PAGE>
29.5. Any notice, demand or other communication to Escrow Agent hereunder
shall be in writing and sent by certified mail, return receipt requested, with
all postage and fees prepaid, addressed in accordance with Section 24 or to such
address as shall be specified by Escrow Agent by written notice to Seller and
Purchaser.
29.6. Escrow Agent shall have the right to represent Seller in any dispute
between Seller and Purchaser with respect to the Deposit, this Agreement or
otherwise.
Section 30. Risk of Loss.
The risk of loss or damage to the Property by fire or otherwise shall
remain with the Seller up to the Closing Date. In the event that the Property
shall suffer damage, other than reasonable wear and tear, Seller may repair such
damage or shall allow Purchaser to take an agreed upon reduction in the Purchase
Price to reflect the reasonable cost of repairs, or, in Seller's discretion,
Seller shall assign to Purchaser any and all rights to insurance proceeds with
respect to the Property for any such loss or damage by fire or otherwise and, in
such event, shall allow Purchaser a credit at Closing in the amount of Seller's
deductible under its insurance, and shall cooperate with Purchaser, as
reasonably necessary, to pursue claims to such proceeds. Notwithstanding the
above, if the reasonable cost of repairs is in excess of $200,000.00, Purchaser
shall have the right to terminate this Agreement upon written notice to Seller
within twenty-one (21) days of its receipt of notice of said loss or damage and,
in the event Purchaser terminates pursuant to the provisions hereof, the Deposit
and accrued interest shall be returned to Purchaser and this Agreement shall be
null and void and of no further force and effect except as may be specifically
provided herein.
Section 31. Publication. Confidentiality.
31.1. After the Deposit has been paid by Purchaser hereunder, Purchaser
shall have the right to make such public announcements or filings with respect
to the proposed transaction as Purchaser may deem reasonably prudent except that
Purchaser shall not make public the Purchase Price until after the Closing
hereof. Purchaser shall not issue any such announcement prior to the Closing
without the prior approval of Seller as to the text of the announcement, which
approval shall not be unreasonably withheld or delayed; provided, however, that
Purchaser shall be entitled to make such filings or announcements upon advice of
counsel as may be necessary or required.
31.2. Without the prior written consent of the other party, until
Purchaser shall make a public announcement as provided in Section 31.1, neither
Purchaser nor Seller shall disclose, and Seller and Purchaser will direct their
respective representatives, employees, agents and consultants not to disclose,
to any person or entity the fact that Purchaser and Seller have entered into an
agreement to acquire the Property or any of the terms, conditions or other facts
with respect to this Agreement. Notwithstanding the foregoing, either party may
disclose those terms and conditions which are required to be disclosed pursuant
to any law or in order to comply with this Agreement; provided, however, that
the disclosing party shall use its best efforts to limit the disclosure to the
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<PAGE>
information necessary, and unless such disclosure is to a governmental entity or
subdivision thereof, the disclosing party shall also advise any party to whom
disclosure is made that said terms and conditions are subject to a
confidentiality requirement and shall obtain the agreement of said party to keep
any information disclosed to it as confidential. In the event of a breach of the
provisions of this Section 31.2., the same shall constitute a default by the
disclosing party and the non-disclosing party shall be entitled to terminate
this Agreement pursuant to the provisions herein on fourteen (14) days prior
written notice. Unless the Closing occurs prior to the expiration of the
fourteen (14) day period, this Agreement shall then be deemed terminated and
null and void.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals or caused these presents to be signed by their proper corporate officers
and caused their proper corporate seal to be hereto affixed, the day and year
first above written.
ATTEST: SELLER:
BAYER CORPORATION,
an Indiana corporation
By: By:
---------------------------- -------------------------------
Name: Name:
Title: Title:
Date Signed by Seller:
---------------
ATTEST: PURCHASER:
MACK-CALI REALTY ACQUISITION
CORPORATION
a Delaware corporation
By: By:
---------------------------- -------------------------------
Name: Name:
Title: Title:
Date Signed by Purchaser:
---------
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EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
ALL that certain tract or parcel of land and premises, hereinafter
particularly described, situate, lying and being in the _______________ of
Orangeburg, of ________________ County and State of New York.
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
(a) Outstanding rights in any road, street, path or right of way
abutting the Property.
(b) Zoning and building regulations, ordinances or requirements
adopted by any government or municipal authority having jurisdiction thereof and
amendments and additions thereto now in force and effect which relate to the
Property, provided same are not presently violated.
(c) Any state of facts as an accurate survey of the Property would
disclose, provided same does not prevent Purchaser from obtaining good and
marketable title to the Property.
(d) The lien 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.
(e) Easements and restrictions of record provided same are not
presently violated, provided same will not interfere with the use and occupancy
of the Property for commercial purposes, provided same does not require the
payment of money, and provided no portion of the building is situated on an
easement area.
(f) Any and all laws, statutes, ordinances, codes, rules,
regulations, requirements, or executive mandates affecting the Property as of
the date hereof, provided same are not currently violated.
<PAGE>
EXHIBIT C
EXISTING CONTRACTS
1. Contract with security company (copy of contract being obtained and more
specifics will be provided).
<PAGE>
EXHIBIT D
TITLE EXCLUSIONS
<PAGE>
EXHIBIT E
LIST OF ENVIRONMENTAL DOCUMENTS
AGREEMENT OF
SALE AND PURCHASE
BETWEEN
SI PRINCETON, INC.,
AS SELLER,
AND
MACK-CALI REALTY ACQUISITION CORPORATION,
AS PURCHASER,
DATED: APRIL 29, 1998
PROPERTY: 500 COLLEGE ROAD EAST
PRINCETON, NEW JERSEY
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION PAGE
1. Definitions.......................................................1
2. Sale of the Property..............................................6
3. Title and Survey..................................................7
4. Matters to Which the Sale is Subject..............................9
5. Purchase Price and Payment; the Deposit..........................10
6. Adjustments......................................................13
7. Closing; Closing Date; Conditions Precedent......................19
8. Documents at Closing.............................................22
9. Obligations Pending Closing......................................26
10. Inspection; Restoration; Indemnity...............................30
11. Risk of Fire and Condemnation Prior to Closing...................36
12. Notices and Other Communications.................................38
13. Default..........................................................39
14 Representations and Warranties of Seller.........................41
15. Representations, Warranties and Agreements of Purchaser..........49
16. Third Party Beneficiaries........................................49
17. Assignment.......................................................49
18. Time of the Essence..............................................50
19. AS IS............................................................50
20. Miscellaneous....................................................51
21. Broker...........................................................52
21. Township's Requirements..........................................53
i
<PAGE>
EXHIBITS
LETTER TITLE
------ -----
A Legal Description of the Property
B Permitted Exceptions
C Form of Deed
D Form of Title Affidavit
E Form of Bill of Sale
F Form of Assignment of Space Leases
G Form of Assignment & Assumption of Service
Contracts
H Form of Space Tenant Notice Letter
I Rent Roll
J Service Contracts
J-1 Elected Service Contracts
K Litigation
L1, L2, L3, L4 Forms of Assignment of Ground Lease
M Tax Protests
N Financial Statements
O1, 02, 03 Forms of Land Lessor's Consent
P Form of Space Tenant Estoppel Certificates
Q Union and Collective Bargaining Agreements
SCHEDULES
---------
15.B Environmental Matters
15.4 Lease Issues
15.22 Requirements of Insurance Underwriters
15.23 Governmental Actions
15.24 Leasing Commissions
15.28 Audits and Proceedings
ii
<PAGE>
AGREEMENT OF
SALE AND PURCHASE
THIS AGREEMENT is made and entered into as of the 29th day of April, 1998,
by and between SI PRINCETON, INC., a Delaware corporation (hereinafter referred
to as the "Seller"), and MACK-CALI REALTY ACQUISITION CORPORATION, a New Jersey
corporation, or its permitted assignee (hereinafter referred to as the
"Purchaser").
W I T N E S S E T H:
For and in consideration of the mutual covenants and agreements herein
contained, Seller agrees to sell and convey to Purchaser, and Purchaser agrees
to purchase from Seller, subject to the terms and conditions hereof, all of
Seller's right, title and interest in and to the Property (as hereinafter
defined).
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions.
The terms defined in this Section 1 shall have the respective
meanings stated in this Section 1 for all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
Additional Title Matters shall have the meaning set forth in Section
3.2.
Affiliate shall mean, with respect to either of the parties, an
entity or person directly or indirectly controlling, controlled by, or under
common control with such party.
Assignments of Ground Lease shall mean the instruments, in the form
of Exhibits L, 1, 2, 3 and 4 attached hereto and made a part hereof, whereby,
subject to the Permitted Exceptions, and with covenants against Seller's acts
only, at and as of the Closing, Seller shall assign and transfer to Purchaser
all of Seller's right, title and interest in, to and under (i) the First Ground
Lease, as amended by its First Amendment, Second Amendment and Third Amendment
and the Second Ground Lease, as amended by its First Amendment and the Sublease
and (ii) the rest of the Property, and Purchaser shall assume all of Seller's
obligations under the First Ground Lease, as amended, the Second Ground Lease,
as amended and the Sublease.
Assignment of Other Seller Interests shall have the meaning set
forth in Section 8.1(s).
Business Day shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday, except for such days on which commercial banks doing business in the
State of New Jersey are required to be closed for the transaction of business.
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Closing shall mean the action whereby Seller conveys and assigns to
Purchaser legal title to Seller's right, title and interest in the Property, and
Purchaser purchases and accepts legal title to Seller's right, title and
interest in the Property, and Purchaser, assumes the obligations of the tenant
under the Ground Lease thereafter accruing.
Closing Date shall mean the date of Closing as defined in Section
7.2.
Deed shall mean the instrument, in the form of Exhibit C attached
hereto and made a part hereof, whereby, subject to the Permitted Exceptions, and
with quit claim covenants only, at and as of the Closing, Seller shall remise
and quit-claim to Purchaser all of Seller's right, title and interest in and to
the Improvements.
Deposit shall mean a deposit of $500,000.00 and all interest accrued
(if any) on the Deposit or the Letter of Credit.
Escrow Agent shall mean Commonwealth Land Title Insurance Company.
Ground Lease shall mean collectively (a) that certain Lease
Agreement, dated December 9, 1980, between the Trustees of Princeton University
("Land-Lessor"), as the Landlord, and Live Oak Associates-Princeton, a New
Jersey limited partnership ("Live-Oak"), as the Tenant (the"First Ground
Lease"), a memorandum of which was recorded in the records of the County Clerk
of Middlesex County in Mortgage Book 2151, Page 344, and re-recorded in Deed
Book 3175, Page 564, as amended by that certain First Amendment to Lease
Agreement, dated February 26, 1981, between Land-Lessor, as the Landlord and
Live-Oak, as the Tenant (the "First Amendment to First Ground Lease"), as
further amended by that certain Second Amendment to Lease Agreement, dated
August 26, 1983, between Land-Lessor, as the Landlord, and Live-Oak, as the
Tenant (the "Second Amendment to First Ground Lease"), a memorandum of which was
recorded in the records of the County Clerk of Middlesex County in Deed Book
3306, Page 462, as further amended by that certain Third Amendment to Lease
Agreement dated August 10, 1988, between Land-Lessor and Seller (the "Third
Amendment to First Ground Lease"), the First Ground Lease, its First Amendment,
Second Amendment and Third Amendment being assigned to Seller by Live Oak by an
Assignment and Assumption of Ground Lease dated as of August 10, 1988 and
recorded in the Middlesex County Clerk's Office on August 10, 1988 in Deed Book
3721, Page 707; (b) that certain Lease Agreement, dated June 17, 1981, between
Land-Lessor, as Landlord, and Live Oak Associates-West, a New Jersey limited
partnership ("Live-Oak West"), as Tenant (the "Second Ground Lease"), a
memorandum of which was recorded in the records of the County Clerk of Middlesex
County in Deed Book 3200, Page 840 on July 28, 1981, as amended by a First
Amendment to Lease Agreement between Land-Lessor, as Landlord, and Seller, as
Tenant, dated as of August 10, 1988 (the "First Amendment to Second Ground
Lease"), the Second Ground Lease and its First Amendment being assigned to
Seller by Live-Oak West by an Assignment and Assumption of Ground Lease dated as
of August 10, 1988 and recorded in the Middlesex County Clerk's Office on August
10, 1988 in Deed Book 3721, Page 718; and (c) that certain Sublease Agreement
dated August 9, 1983 ("Sublease") between Live Oak-West (formerly
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called Viewpoint Ranches) and Live Oak pursuant to which Live Oak West, as
Sublandlord, subleased to Live-Oak certain premises which were leased to Live
Oak-West by Land-Lessor under the Second Ground Lease, as amended by the First
Amendment to Second Ground Lease, a memorandum of which Sublease was recorded in
the records of the County Clerk of Middlesex County in Deed Book 3303, Page 164
on August 10, 1983, and which Sublease was assigned to Seller by Live Oak-West
by Assignment and Assumption of Sublease Agreement dated as of August 10, 1988
and recorded in the County Clerk's Office of Middlesex County on August 10, 1988
in Deed Book 3721, Page 727 and which Sublease and the Improvements on the lease
premises were assigned to Seller by Live Oak by Assignment and Assumption of
Ground Lease Agreement dated as of August 10, 1988 and recorded in the records
of the County Clerk of Middlesex County in Deed Book 3721, Page 736 on August
10, 1988.
Ground Lease Estoppel Certificates shall have the meaning set forth
in Section 7.5(e).
Hazardous Materials shall mean petroleum products, petroleum based
derivatives, polychlorinated biphenyls, asbestos, and any other material,
substance or item that is radioactive or that is either regulated by, or
designated as a hazardous or toxic material, substance or waste or pollutant or
contaminant by, any Legal Requirement now or hereafter enacted, including
Section 101(14) of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601(14), as said section may be amended from
time to time, the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6921, et seq., as same may be amended from time to time, the Industrial
Site Recovery Act, NJSA 13:K-6 et seq., as same may be amended from time to
time, and all regulations promulgated in respect of any thereof and any other
similar or analogous federal, state, county or municipal statute, ordinance,
code, rule or regulation.
Improvements shall mean the four (4) story office building situated
on the Land containing approximately 157,135 net rentable square feet (including
certain retail space on the ground level), commonly known as 500 College Road
East, Princeton, New Jersey, and all other buildings and structures now or at
the Closing Date (as hereinafter defined) situated upon the Land (as hereinafter
defined), including, without limitation, all improvements, fixtures, equipment,
machinery and personalty (other than Excluded Personal Property), appurtenant to
or used in connection therewith which are located thereat and owned by Seller on
the Closing Date.
Land shall mean those certain tracts or parcels of land lying and
being in Princeton New Jersey and more particularly described in Exhibit A
attached hereto and made a part hereof.
Land Lessor shall have the meaning above set forth.
Land Lessor's Consent shall have the meaning set forth in Section
7.5(f).
Land Lessor Outside Date shall mean March 21, 1998, which is the
date of
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expiration of the First Refusal Period, as defined in Section 18.01(b) of the
First Ground Lease and Section 18.01(b) of the Second Ground Lease.
Leasehold Estate shall mean the right, title and interest of the
tenant in and to the leasehold estate created by the Ground Lease.
Legal Requirements shall have the meaning set forth in Section 4.1.
Letter of Credit shall mean an irrevocable and unconditional,
domestic letter of credit issued by a financial institution reasonably
acceptable to Seller for the account of Purchaser and naming Escrow Agent as
beneficiary, in the sum of Five Hundred Thousand Dollars ($500,000), payable on
May 22, 1998, in form reasonably acceptable to Seller.
Notices shall have the meaning set forth in Section 13.
Other Seller Interests shall mean all of the right, title and
interest, if any, of Seller in and to the following (however any conveyance
thereof shall be made by Seller without representation or warranty by or
recourse to Seller):
(a) any easements, appurtenances, hereditaments, privileges,
licenses, grants of right or other agreements benefitting the Property;
(b) any land lying in the bed of any street, road, alley or
avenue, opened or proposed, abutting the Property, any award to be made in lieu
thereof, and any unpaid award for damages to said Property by reason of change
of grade of any street;
(c) freely transferable Permits, if any;
(d) freely transferable warranties or guaranties (other that
guaranties of obligations under Space Leases) respecting the Property, if any;
(e) all Tangible Personal Property;
(f) all trademarks and tradenames used in connection with the
Real Property, including without limitation, the name "College Centre" and any
other name by which the Real Property is commonly known, and all goodwill, if
any, related to said names, all for which Purchaser shall have the sole and
exclusive rights;
(g) all promotional material, marketing materials, brochures,
photographs, books, records, 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 Seller which are or may be used by Seller
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in the use and operation of the Improvements or Tangible Personal Property; and
(h) all other rights, privileges and appurtenances owned by
Seller, if any, and in any way related to the rights and interests described
above in this definition.
Pass-Through Charges shall have the meaning set forth in Section
6.3.
Permits shall have the meaning set forth in Section 6.5.
Permitted Exceptions shall mean collectively those restrictions,
covenants, agreements, easements, matters and things of fact or of record
affecting title to the Property set forth on Schedule B annexed hereto and made
a part hereof, those matters set forth in Section 4, and the other matters
subject to which title to the Property is to be sold by Seller and purchased by
Purchaser pursuant to this Agreement.
Property shall mean Seller's right, title and interest in and to the
Ground Lease, the Leasehold Estate, the Improvements, the Space Leases, the
Elected Service Contracts, and the Other Seller Interests.
Purchaser's Casualty shall have the definition set forth in Section
12.1.
Purchase Price shall have the meaning set forth in Section 5.1.
Rent Roll shall have the meaning set forth in Section 15.3.
Repair shall have the meaning set forth in Section 9.19(b).
Service Contracts shall mean those contracts relating to or
affecting the use or operation of the Property, such as service, maintenance,
labor, parking operator and similar agreements, which are set forth in Exhibit J
annexed hereto and made a part hereof; and Elected Service Contracts shall mean
those Service Contracts which Purchaser elects to assume pursuant to Section
10.5 and which shall, subsequently, be set forth on Exhibit J-1 and attached
hereto.
Settlement Statement shall have the meaning set forth in Section
8.1(c).
Space Leases shall have the meaning set forth in Section 15.3.
Space Rent shall have the meaning set forth in Section 6.3.
Space Tenant Estoppel Certificates shall have the meaning set forth
in Section 7.5(h).
Survey shall mean the survey described in Section 3.3.
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Substantial shall have the meaning set forth in Section 12.2.
Tangible Personal Property shall mean all property, fixtures,
inventory and equipment owned by Seller and used exclusively in the operation
and maintenance of the Property.
Title Company shall mean Commonwealth Land Title Insurance Company.
Title and Survey Date shall have the meaning set forth in Section
3.1.
Title Policy shall mean an owner's polity of title insurance, issued
by the Title Company, in the amount of the Purchase Price.
Title Report shall have the meaning set forth in Section 3.1.
Title and Survey Objections shall have the meaning set forth in
Section 3.1.
2. Sale of the Property.
Upon and subject to the terms and conditions contained in this
Agreement, Seller agrees to sell, assign and convey to Purchaser, and Purchaser
agrees to purchase and accept from Seller, the Property, subject to the terms
and provisions of this Agreement.
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3. Title and Survey.
3.1 Simultaneously with or prior to the execution of this Agreement,
Seller has delivered to Purchaser a copy of a report of the title to the Land,
the Improvements and the Ground Lease, dated August 8, 1988, as confirmed by a
report dated March 2, 1998, prepared by Lawyers Title Insurance. Purchaser
agrees that such delivery by Seller is without representation or warranty by
Seller, and without recourse to Seller. Purchaser (at Purchaser's expense,
except as otherwise expressly provided herein) shall obtain from the Title
Company, an ALTA 1972 Form B with extended coverage title insurance commitment
issued by the Title Company reporting on the condition of title to the Land,
Improvements and Ground Lease, and committing to ensure Purchaser in the amount
of the Purchase Price, together with legible copies of all items shown as
exceptions to such title (the "Title Report"). Purchaser shall deliver to Seller
a copy of the Title Report, together with notice of all survey objections,
liens, encumbrances, title objections, financing statements, covenants or
easements to which Purchaser objects (the "Title and Survey Objections"), on or
before 5:00 p.m. (New York City time) on the date (the "Title and Survey Date")
which is the earliest to occur of (i) the date ten (10) days after Purchaser
receives both the Title Report and the Survey described in Section 3.3, and (ii)
the date fifteen (15) days after the date of this Agreement. If Purchaser fails
to give written notice of Title and Survey Objections on or before the Title and
Survey Date, such Title and Survey Objections shall be considered waived and
accepted by Purchaser and shall constitute Permitted Exceptions hereunder.
Except as set forth in the next sentence, Seller may, but shall not be required
to, cure all or any such Title and Survey Objections (which cure may, at the
option of Seller, be by means of affirmative insurance or endorsement from the
Title Company, in form and substance reasonably satisfactory to Purchaser,
insuring over and providing that any covenants, easements or other matters which
are not Permitted Exceptions shall not be collected out of, or enforced against,
Purchaser or the Property). In any event, Seller shall cure, at its expense, (i)
judgments against Seller, and (ii) mortgages or other liens which can be
satisfied by payment of a liquidated amount (collectively the "Monetary
Objections"). Notwithstanding any other provision of this Agreement to the
contrary (other than Section 3.2), in no event shall Seller be obligated to
incur any expense, liability or obligation, or to commence or continue any suit
or other action, to cure or remove any Title and Survey Objections, or any other
encumbrance upon or defect in title to the Property, except the Monetary
Objections and Section 9.2(i)(4) Title Objections, as hereinafter defined, and
failure or omission by Seller to cure any such Title and Survey Objections or
other encumbrance upon or defect in title to the Property other than a Monetary
Objection or a Section 9.2(i)(4) Title Objection, shall not be a default by
Seller hereunder, nor give rise to any rights or remedies on the part of
Purchaser, except that, upon notice by Seller to Purchaser that Seller has
failed to cure such Title and Survey Objections or other encumbrance upon or
defect in title to the Property Purchaser, as its sole remedies (to be exercised
by written notice to Seller within five (5) days after receipt by Purchaser of
Seller's notice), may either (a) terminate this Agreement, receive the return of
the Deposit and all accrued interest and this Agreement shall be null and void,
each party having no further obligation to the other except for Purchaser's
obligations which this Agreement expressly provides shall survive the
termination of this Agreement, or (b) purchase the Property subject to such
Title and Survey Objections or other encumbrance upon or defect in title to the
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Property (which shall be deemed Permitted Exceptions), in which case this
Agreement shall remain in full force and effect, otherwise subject to
satisfaction of all of the other terms and conditions hereof, and the parties
shall proceed to Closing hereunder without reduction in the Purchase Price or
other obligation on the part of Seller by reason of such Title and Survey
Objections or other encumbrance upon or defect in title to the Property (and if
Purchaser fails to deliver the aforesaid notice within such five (5) day period
Purchaser shall be deemed to have elected the option set forth in clause (b)).
3.2 In the event that prior to the Closing Date Purchaser becomes
aware of and objects to additional title matters (other than the Permitted
Exceptions established pursuant to Section 3.1) not disclosed in the Title
Report (the "Additional Title Matters"), then Purchaser shall give written
notice thereof to Seller not later than five (5) days after becoming aware of
such Additional Title Matters (and in all events prior to the Closing). If
Purchaser fails to give written notice of Additional Title Matters as set forth
in the preceding sentence, such Additional Title Matters shall be considered
waived and accepted by Purchaser and shall constitute Permitted Exceptions
hereunder. Purchaser and Seller shall have the same duties and obligations and
rights with respect to Additional Title Matters that they respectively have with
respect to Title and Survey Objections and Monetary Objections, except that
Seller shall cause to be removed any Additional Title Objections placed of
record after the date hereof in violation of Section 9.2(i)(4) ("Section
9.2(i)(4) Title Objections").
3.3 Purchaser, upon the full execution of this Agreement, shall
order a survey of the Property (the "Survey") prepared in accordance with the
"Minimum Detail Requirements for ALTA/ACSM Land Title Surveys" including,
without limitation, plotting all easements and restrictions of record by book
and page, and shall cause an original of same to be delivered to Seller not
later than the date that is fifteen (15) days after the date of this Agreement.
The Survey shall be certified to Purchaser, its designee, Seller, and the Title
Company.
3.4 Anything in this Agreement to the contrary notwithstanding,
Purchaser shall not have a right to object to any of the matters set forth on
Exhibit B, or referred to in Sections 4.1, 4.2, 4.4, 4.5 and/or 4.6, and such
matters shall not constitute Survey or Title Objections, and Purchaser shall
accept title to the Property subject to all thereof.
3.5 If Seller, in its sole discretion, elects to cure any Title and
Survey Objection or Additional Title Matters shall have the right (but not the
obligation) to adjourn the Closing Date for period or periods not to exceed
ninety (90) days in the aggregate in order to make such attempt or attempts to
cure any Title and Survey Objections or Additional Title Matters other than
Monetary Objections which, if not cured prior to Closing, shall be cured at
Closing by application of the Closing proceeds.
3.6 It shall be a condition to Closing that Seller convey, and that
the Title Company insure, title to the Land, Improvements and Ground Lease in
the amount of the Purchase Price (at a standard rate for such insurance) in the
name of Purchaser or its designee, after delivery
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of the Deed, by a standard 1992 ALTA Owners Policy, with ALTA endorsements Form
3.1, Form 8.1, Form 9 and any other endorsements as required by Purchaser
attached, free and clear of all liens, encumbrances and other matters, other
than the Permitted Exceptions. 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) Purchaser's contemplated use of the Property will not violate the
Permitted Exceptions; (iii) the existing use of the Property complies with all
applicable zoning ordinances and regulations as may affect the Property; and
(iv) the exception for taxes shall apply only to the current taxes not yet due
and payable. 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 Exceptions.
4. Matters to Which the Sale is Subject.
The sale of the Property and any other items (if any) sold hereunder
shall be subject to each and all of the following, which shall constitute
Permitted Exceptions:
4.1 All Federal, State, County, Municipal and other laws,
ordinances, orders and governmental or quasi-governmental rules, requirements
and regulations (including but not limited to building and zoning laws,
ordinances, or regulations and Environmental Laws and regulations) affecting the
Property, its use, occupancy, development, construction or maintenance ("Legal
Requirements").
4.2 The Permitted Exceptions.
4.3 The Space Leases as to the rights of the Space Tenants, as
Tenants only, and Elected Service Contracts.
4.4 Terms, provisions and conditions of this Agreement.
4.5 Terms, provisions and conditions of the Ground Lease; and all
amounts due or payable to the Land Lessor under the Ground Lessor which are not
due as of the Closing, or which are apportioned under this Agreement.
4.6 Taxes, sewer and water charges and assessments (and installments
thereof), and the liens thereof, not due as of the date of Closing, but subject
to apportionment under this Agreement.
The provisions of this Section 4 shall survive Closing and the
Permitted Exceptions shall be set forth in the Assignment of Ground Lease and
Deed as exceptions to title; but whether or not recited as exceptions to or
encumbrances upon title in the Assignment of Ground Lease and/or the Deed, all
of the Permitted Exceptions shall survive the Closing.
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5. Purchase Price and Payment; the Deposit.
5.1 The purchase price for the Property to be sold to Purchaser
pursuant to this Agreement (the "Purchase Price") shall be an amount equal to
TWENTY ONE MILLION ONE HUNDRED NINETY THOUSAND DOLLARS (United States Currency)
($21,190,000.00). The Purchase Price shall be payable by Purchaser to Seller at
Closing as follows:
(a) The principal amount of the Deposit, if in cash, shall be
released by Escrow Agent to Seller, and wired to and received by Seller on the
date of Closing by wire transfer of same day, federal funds (United States legal
tender), at such account as Seller shall designate in writing to Escrow Agent;
or, if by Letter of Credit, Purchaser shall pay or cause to be paid at Closing
in addition to amounts due under Paragraph 5.1(b) below, Five Hundred Thousand
Dollars ($500,000) in the same manner as provided therein.
(b) Purchaser shall pay or cause to be paid at Closing to
Seller by same day, federal funds (United States legal tender) wired to and
received by Seller, at such account as Seller shall designate in writing to
Purchaser, an additional amount equal to TWENTY MILLION SIX HUNDRED NINETY
THOUSAND DOLLARS ($20,690,000.00), plus or minus the net additions and
subtractions as shown on the Settlement Statement drawn by Seller in accordance
with the provisions of this Agreement and approved by Purchaser.
5.2 (a) The Deposit shall be deposited by Purchaser with Escrow
Agent (by wire transfer of same day, federal funds (United States legal tender)
wired to and received by Escrow Agent, at such account as Escrow Agent shall
designate in writing or by delivery of an executed Letter of Credit) not later
than three (3) days after the execution and delivery of this Agreement by all
parties (with TIME OF THE ESSENCE AS AGAINST PURCHASER IN RESPECT OF MAKING SUCH
DEPOSIT). In the event Purchaser does not make the Deposit as required
hereunder, the Agreement automatically (and without need of notice to Purchaser
or any other party) shall be deemed terminated, and neither party shall have any
further rights one against the other under this Agreement. Escrow Agent will
hold the Deposit in accordance with the provisions of Section 5.3 of this
Agreement. The parties agree to direct Escrow Agent to release the Deposit to
Seller or return the Deposit to Purchaser, as the case may be, as provided in
this Agreement. Escrow Agent at all times shall keep Seller and Purchaser
advised in writing of the bank or other institution (and the location thereof),
and the account name and number, in which Escrow Agent has deposited the Deposit
while holding same.
5.3 The parties agree that the Deposit, when and if delivered, shall
be held by the Escrow Agent in escrow and disposed of only in accordance with
the provisions of this Section 5.3. The parties agree that the Deposit, if in
cash, shall be invested in an assignable interest-bearing certificate of
deposit, money market fund, treasury bill or other similar security approved by
Seller and Purchaser, and all interest accruing thereon shall be paid to
Purchaser, except as otherwise provided herein. The party receiving the Deposit
shall be responsible for the payment of any taxes due on the interest earned, if
any, on the Deposit.
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(a) The Escrow Agent will deliver the Deposit to Seller or to
Purchaser, as the case may be, under the following conditions:
(1) If not in the form of the Letter of Credit, to
Seller on the Closing Date for the account of Purchaser provided Closing is
completed;
(2) If in the form of the Letter of Credit, to Purchaser
on the Closing Date provided Closing is completed;
(3) If Purchaser defaults hereunder, to Seller, upon
receipt of written demand therefor, such demand stating that Purchaser has
defaulted in the performance of this Agreement and specifically setting forth
the basis for such default. The Escrow Agent shall not honor such demand until
more than ten (10) days have elapsed after the Escrow Agent has mailed a copy of
such demand to Seller or Purchaser, as the case may be, nor thereafter if the
Escrow Agent shall have received written notice of objection from Purchaser in
accordance with the provisions of clause (b) of this Section 5.3; or
(4) To Purchaser upon receipt of written demand
therefor, such demand stating that this Agreement has been terminated in
accordance with the provisions hereof, or Seller has defaulted in the
performance of this Agreement, and specifically setting forth the basis for the
same. The Escrow Agent shall not honor such demand until more than ten (10) days
have elapsed after the Escrow Agent has mailed a copy of such demand to Seller
or Purchaser, as the case may be, nor thereafter, if the Escrow Agent shall have
received written notice of objection from the other party in accordance with the
provisions of clause (b) of this Section 5.3.
(b) Upon the filing of a written demand for the Deposit by
Purchaser or Seller, pursuant to subclause 3 or 4 of clause (a) of this Section
5.3, the Escrow Agent shall promptly mail a copy thereof to the other party. The
other party shall have the right to object to the delivery of the Deposit by
filing written notice of such objection with the Escrow Agent at any time within
ten (10) days after the mailing of such copy to it, but not thereafter. Such
notice shall set forth the basis for objecting to the delivery of the Deposit.
Upon receipt of such notice, the Escrow Agent shall promptly mail a copy thereof
to the party who filed the written demand. In the event that Closing is not
completed by May 22, 1998, then Escrow Agent shall thereafter promptly make
demand upon the issuer of the Letter of Credit for payment thereof. Upon receipt
of the proceeds, Escrow Agent shall deposit the same in an account as specified
in the first paragraph of this Section 5.3 and shall hold such proceeds in
accordance with the provisions hereof. In the event that the issuer of the
Letter of Credit refuses to honor payment thereof, Escrow Agent shall promptly
notify Purchaser and Seller, who jointly shall enforce collection thereof.
(c) In the event the Escrow Agent shall have received the
notice of objection provided for in clause (b) above and within the time therein
prescribed, the Escrow Agent shall continue to hold the Deposit until (i) the
Escrow Agent receives written notice from
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Seller and Purchaser directing the disbursement of said Deposit, in which case,
the Escrow Agent shall then disburse said Deposit in accordance with said
direction, or (ii) in the event of litigation between Seller and Purchaser, the
Escrow Agent shall deliver the Deposit to the Clerk of the Court or the office
of Judicial Support, as the case may be, in which said litigation is pending, or
(iii) the Escrow Agent takes such affirmative steps as the Escrow Agent may, in
the Escrow Agent's reasonable opinion, elect in order to terminate the Escrow
Agent's duties including, but not limited to, depositing the Deposit with the
Court and bringing an action for interpleader, the costs thereof to be borne by
whichever of Seller or Purchaser is the losing party.
(d) The Escrow Agent may act upon any instrument or other
writing believed by it in good faith to be genuine and to be signed and
presented by the proper person and it shall not be liable in connection with the
performance of any duties imposed upon the Escrow Agent by the provisions of
this Agreement, except for damage caused by the Escrow Agent's own negligence or
willful default. The Escrow Agent shall have no duties or responsibilities
except those set forth herein. The Escrow Agent shall not be bound by any
modification of this Agreement, unless the same is in writing and signed by
Purchaser and Seller, and, if the Escrow Agent's duties hereunder are affected,
unless the Escrow Agent shall have given prior written consent thereto. In the
event that the Escrow Agent shall be uncertain as to the Escrow Agent's duties
or rights hereunder, or shall receive instructions from Purchaser or Seller
which, in the Escrow Agent's opinion, are in conflict with any of the provisions
hereof, the Escrow Agent shall be entitled to hold and apply the Deposit
pursuant to clause (c) above and may decline to take any other action. The
Escrow Agent shall not charge a fee for its services as escrow agent.
(e) The Escrow Agent shall not be:
(1) Responsible for any loss or delay occasioned by the
closure or insolvency or the financial institution into which it deposited the
Deposit;
(2) Responsible for the dishonor of any check, money
order, draft, negotiable instrument, or other financial document, received as
the Deposit; and
(3) Liable for any error of judgement or for any act
done or omitted in good faith, or for anything which it may in good faith do or
refrain from doing in connection herewith.
(f) Purchaser and Seller hereby indemnify and agree to save
the Escrow Agent harmless from all liability, loss, damage, reasonable
attorney's fees and expenses, arising out of this Paragraph and its duties
hereunder; save and except however any liability, loss, damage, attorney's fees
and/or expenses caused by Escrow Agent's fraud, negligence or willful default.
6. Adjustments.
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The items of income and expense arising from the ownership or operation of
the Property set forth hereinafter shall be prorated and adjusted as of 11:59
p.m. Eastern time on the date preceding the Closing Date, as follows:
6.1 (a) Additional Rent for the current calendar year or fiscal year
as may be applicable with respect to such item, under the Ground Lease (as
defined in the Ground Lease);
(b) all other additional rent, sums and credits, if any, due
under the Ground Lease; provided, in no event shall Purchaser be responsible for
all or any part of, and no adjustment shall be made as to the Single Rent
Payments (as defined in the Ground Lease) or the Annual Rent (as defined in the
Sublease).
6.2 (a) General real estate taxes, assessments and public
improvement liens (if any) upon the Property for the year of Closing. If the
amount of such taxes and/or assessments and/or liens is not known at the time of
Closing, then to the extent not known the proration shall be based upon the
final bill for the immediately preceding fiscal year for such charge, provided
that, if the actual charges for such items for the current year are more or less
than the charges for the preceding year, Seller and Purchaser shall adjust the
proration of such items and Seller or Purchaser, as the case may be, shall pay
to the other any amount required as a result of such adjustment and this
covenant shall not merge with the Assignment of Ground Lease and/or Deed but
shall survive the Closing. Taxes, assessments, and liens for public improvements
for prior years due to change in land usage or ownership, which are due or
payable in any tax year after the year in which the Closing occurs even if
assessed prior to the Closing Date, shall be assumed by Purchaser and the
Property shall be sold subject thereto. Anything herein to the contrary
notwithstanding, if on the Closing Date any assessment is a lien on all or part
of the Property, and such assessment is or may be payable in installments, of
which the first installment is then a charge or lien, or has been paid, then for
purposes of this Agreement, Seller shall pay all the unpaid installments of any
such assessment due and payable prior to Closing and Purchaser shall accept the
Property subject to all installments of any such assessment that are to become
due and payable after the Closing Date.
(b) If, subsequent to the Closing Date, any proceeding shall
result in a reduction of any assessment, tax or other charge for the applicable
fiscal year in which the Closing occurs, the amount of the savings or refund for
such fiscal year, less the reasonable expenses (including reasonable fees and
disbursements payable to attorneys or consultants) incurred in connection with
such proceedings (but less any refunds or other amounts which are due to Space
Tenants as a result of such reduction, which amounts shall be paid to such Space
Tenants) shall be apportioned between Seller and Purchaser as of the Closing
Date as if the reduction had been known as of that date. Neither Seller nor
Purchaser will withdraw, settle or compromise any reduction proceeding affecting
the Property without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed, except that the consent of Seller shall
not be required for the fiscal years after that in which the Closing Date
occurs, and the consent of Purchaser shall not be required for fiscal years in
which the Closing Date occurs and prior thereto.
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The party benefited by the reduction shall promptly pay the other party said
party's share of such reduction. Purchaser is hereby authorized by Seller, in
Purchaser's sole discretion, following Closing, to file any applicable
proceeding for any tax years following the last tax year 1997. The net refund of
taxes, if any, for any tax year for which Seller or Purchaser shall be entitled
to share in the refund shall be divided between Seller and Purchaser in
accordance with the apportionment of taxes pursuant to the provisions hereof.
All expenses in connection therewith, including counsel fees, shall be paid for
by the party entitled to the benefits thereof, with a pro-rata sharing between
Seller and Purchaser for any tax year in which both parties are entitled to a
portion of the refund. This provision shall survive the Closing.
6.3 All fixed rents, additional rent, operating escalations, tax
escalations, CPI and other Pass-Through Charges (hereinafter defined), and
escalations, if any (collectively, "Space Rent"), on the Space Leases. To the
extent that Seller receives, after the Closing Date, Space Rent payments
attributable to any period from or after the Closing, the same shall be held in
trust and immediately paid to Purchaser. Promptly on receiving any Space Rent
after the Closing Date attributable to the period after the Closing, Seller
shall provide to Purchaser notice thereof. The foregoing notwithstanding, in the
event that any tenant under a Space Lease (a "Space Tenant") prior to the
Closing has failed to pay Space Rent as and when due under its Space Lease, then
payments on account of Space Rent received from such Space Tenant after the
Closing shall be applied in the following order of priority: (i) first, to the
then current installment of Space Rent of such Space Tenant and to other
installments of Space Rent due from such Space Tenant for months subsequent to
the month in which Closing occurs; (ii) second, to the month in which the
Closing occurred; and (iii) third (to the extent of available funds), to the
period prior to the month in which the Closing occurred, if Space Rent from such
Space Tenant was not paid for any of such months provided; however, that to the
extent PassThrough Charges are collected in arrears, then notwithstanding the
provisions of the first clause of this sentence Pass-Through Charges shall be
adjusted and apportioned as hereinafter provided in this paragraph. To the
extent that Space Rent payments on account of Pass-Through Charges are received
by Purchaser after the Closing Date which are attributable to a period prior to
the Closing Date, or cannot be determined on the Closing Date, then, provided
Space Tenant is current with respect to Pass-Through Charges owed to Purchaser,
the amount of such Space Rents for the period ending on the date preceding the
Closing Date, and a calculation showing the determination thereof, shall be paid
(and furnished) to Seller by Purchaser as, if and when received after the
Closing Date within fifteen (15) days after receipt by Purchaser; and provided,
however, that if it shall subsequently be determined that any refund on account
of such amount shall be due any Space Tenants, or that a Space Tenant is
entitled to a refund of a portion of the Pass-Through Charges previously paid by
Space Tenant to Seller, then Seller, immediately upon demand of Purchaser, shall
pay its allocable share of such refund to Purchaser. At Closing, Seller shall
furnish to Purchaser a statement certified by an officer of Seller, with a cost
category breakdown (and which shall be subject to amendment to correct errors or
omissions), of all expenses commonly referred to as pass-through expenses or
charges, operating expenses or charges, operating escalations, tax expenses or
charges or tax escalations, which are the obligation of Space Tenants under the
Space Leases ("Pass-Through Charges"), owed and unpaid by Space Tenants up to
the Closing Date as reasonably estimated by
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Seller, together with supporting evidence of same reasonably acceptable to
Purchaser. If Purchaser receives after the Closing any Space Rents in payment or
reimbursement of any Pass-Through Charges attributable to any period prior to
the Closing, Purchaser shall upon receipt of such Space Rents immediately pay to
Seller the amount of the Pass-Through Charges attributable to the period prior
to the Closing subject to refund as provided above. The portion of Space Rents
consisting of Pass-Through Charges for the fiscal year of the Property in which
the Closing occurs shall be apportioned on a calendar basis so that the amount
thereof under any Space Lease to which Seller shall be entitled shall be an
amount which bears the same ratio to the total Pass-Through Charges due under
that Space Lease for the fiscal year in which the Closing occurs, as the number
of days in said year which have elapsed prior to the Closing Date bears to the
total numbers of days in said year. For example, if the fiscal year in which the
Closing occurs and for which such Pass-Through Charges are to be paid runs from
January 1, 1998 through December 31, 1998, Seller shall be entitled to the
number of days from and including January 1, 1998 to the date preceding the
Closing Date divided by 365 and multiplied by the total Pass-Through Charges for
such year. Seller shall have the right to commence litigation against any Space
Tenants or their successors under any Space Lease as to which any Space Rent
payments were in arrears on the Closing Date. Seller shall not be obligated to
Purchaser for any Space Rent which is in default, unpaid or otherwise has not
been actually collected by Seller. Seller acknowledges its obligation to each
Space Tenant with respect to any claims of overpayment of Pass-Through Charges
for any period up to the date of Closing, and that such obligation shall survive
Closing. In the event that a Space Tenant subsequently disputes the amount of
such expenditures by Seller, Seller shall provide Purchaser with copies of the
invoices and evidence of payment of the invoices for the purposes of resolving
such dispute. In the event Purchaser is unable to resolve such dispute amicably,
Purchaser may request Seller to provide counsel for any litigation which may
ensue. This provision shall survive the Closing.
6.4 At the Closing Seller shall transfer to Purchaser, by bank,
cashier's or certified check, an amount equal to, or allow a credit to Purchaser
against the Purchase Price of an amount equal to, the sum of all security and
other deposits and any prepaid rents from Space Tenants under the Space Leases,
other than those Seller has applied prior to the Closing against defaulted
obligations of Space Tenants under the Space Leases together with accrued
interest, if any, due Space Tenants on the security deposits, and Purchaser
shall assume all obligations and responsibilities concerning such security
deposits and indemnify Seller from and against all claims and liabilities
arising in connection with such security deposits and interest actually received
by Purchaser.
6.5 Current payments (that is, attributable to the year or other
applicable period in which the Closing occurs) of fees and charges (other than
those directly payable by Space Tenants) under any licenses, permits,
certificates, warranties and guarantees, or approvals relating to the Property,
or the use or occupancy thereof (the "Permits"), if any, which are assigned to
Purchaser at the Closing.
6.6 Fees and charges under Elected Service Contracts assigned to
Purchaser.
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6.7 Except as otherwise provided in this Agreement, the adjustments
shall be made in accordance with the customs in respect to closings in the State
of New Jersey. Any errors in calculations or adjustments shall be corrected or
adjusted as soon as practicable after the Closing.
6.8 Water, sewer, electric and other utility charges for the
Property (other than such charges as are the obligation of Space Tenants to
pay). If consumption of any of the foregoing is measured by meters, no more than
five (5) days prior to the Closing Date Seller shall obtain a reading of each
such meter and a final bill as of the Closing Date. If there is no such meter or
if the bill for any of the foregoing will not have been issued as of the Closing
Date, the charges therefor shall be adjusted as of Closing Date on the basis of
the charges of the prior period for which such bills were issued and shall be
further adjusted between the parties when the bills for the correct period are
issued (and this obligation shall survive the Closing). Any utility security
deposits or bonds to be refunded or returned to Seller shall be obtained by
Seller from the utility company and Purchaser shall make its own deposit with
such companies. All water, sewer, electric and other utility charges for the
Property, if any, which are the obligation of Space Tenants to pay shall not be
apportioned, but Purchaser shall accept the Property subject to such charges,
and shall look solely to the respective Space Tenants for payment thereof.
6.9 All Leasing commissions and Space Tenant Inducements other than
the Merrill Lynch Allowance, as hereinafter defined, due on account of the
original term or any extension of such term currently effective shall be paid
and satisfied in full by Seller on or before the Closing Date and Seller shall
indemnify, defend and hold Purchaser harmless in respect thereof, including
without limitation, the Merrill Lynch Allowance, and the provisions hereof shall
survive the Closing. Brokerage commissions under the Space Leases shall be paid
by Seller (not including commissions due in connection with any renewal,
extension or expansion of any such Space Lease which has not been exercised on
the date hereof, whether or not such renewal, extension or expansion is pursuant
to a right or option set forth in the Space Lease, and not including brokerage
commissions with respect to new Space Leases entered into after the date of this
Agreement). Seller acknowledges that under the terms of the Merrill Lynch Space
Lease, upon submission to Seller by Merrill Lynch of documentation supporting
certain tenant improvements made by Merrill Lynch prior to the date hereof, and
other costs incurred by Merrill Lynch in connection therewith, Seller is
obligated to pay to Merrill Lynch approximately One Hundred Twenty-Five Thousand
Fifty-Eight Dollars ($125,058) (the "Merrill Lynch Allowance"). Seller agrees
that upon submission by Merrill Lynch of the documentation required under the
Merrill Lynch Space Lease by Merrill Lynch to either Seller or Purchaser for
payment of the (the "Merrill Lynch Allowance"), Seller shall promptly, but in
any event within twenty-five (25) days after receipt of such request, pay the
amount of the Merrill Lynch Allowance due to Merrill Lynch under the Merrill
Lynch Space Lease. Notwithstanding the foregoing, in the event any request for
payment of the Merrill Lynch Allowance is made by Merrill Lynch prior to
Closing, Seller shall make the payment due prior to Closing. Any amount of
Merrill Lynch Allowance due which is not paid within such twenty-five (25) day
period shall incur interest at the rate of twelve percent (12%) per annum until
paid. In the event Seller fails to timely make any such payment due,
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Purchaser may, but shall not be obligated to, make such payment to Merrill
Lynch. In the event Purchaser pays any part of the Merrill Lynch Allowance due
to Merrill Lynch, Seller shall pay such amount to Purchaser, within ten (10)
days after written demand therefor, together with interest thereon at an annual
rate of twelve percent (12%). In the event Purchaser incurs any cost or expense
in enforcing the obligations of Seller under this Section 6.09, in addition to
the foregoing, Seller agrees to reimburse to Purchaser all such costs and
expenses, including without limitation, the cost of suit and reasonable
attorneys fees. If the Closing shall occur, brokerage commissions due in
connection with any renewal, expansion or extension of any Space Lease exercised
after the date hereof, and/or with respect to new Space Leases entered into
after the date of this Agreement in accordance with Section 9.2(b), shall be
paid by Purchaser (and if, at the option of Seller, any of same are paid by
Seller prior to the Closing, then at the Closing Purchaser shall reimburse such
amounts to Seller upon delivery by Seller to Purchaser of reasonable
substantiation of the amounts thereof) and Purchaser shall indemnify, defend and
hold harmless Seller in respect thereof, and the provisions hereof shall survive
the Closing. If the Closing shall occur, costs of Space Tenant improvements,
Space Tenant finishing, Space Tenant fit-up and/or Space Tenant fixturing, and
other "Space Tenant Inducements" in connection with any renewal, expansion or
extension of any Space Lease exercised after the date hereof, and/or with
respect to new Space Leases entered into after the date of this Agreement, shall
be paid by Purchaser (and if, at the option of Seller, any of same are paid by
Seller prior to the Closing, then at the Closing Purchaser shall reimburse such
amounts to Seller upon delivery by Seller to Purchaser of reasonable
substantiation of the amounts thereof), and Purchaser shall indemnify, defend
and hold harmless Seller in respect thereof. The provisions of this Section 6.09
shall survive the Closing.
6.10 Revenues, deposits and expenses generated from any parking at
the Property.
6.11 Purchaser shall pay all costs of recording the Assignment of
Ground Lease and Deed.
6.12 At Closing Seller shall pay the State of New Jersey and/or
other real estate transfer taxes, if any, which are required in connection with
the Assignment of Ground Lease and/or Deed.
6.13 Seller and Purchaser at the Closing each shall pay one-half
(1/2) the costs of Escrow Agent, if any, for providing services as escrow agent.
6.14 Purchaser and Seller shall each pay their respective attorney's
fees.
6.15 Except as otherwise herein provided, any fee, cost, charge or
expense incurred by either party hereto or for which either party hereto may be
liable in connection with the negotiation, examination and consummation of this
Agreement, shall be paid by the party hereto incurring, or liable for, such fee,
cost, charge or expense.
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6.16 The cost of preparation of the Title Report, the Survey and the
premiums and charges for the Title Policy (other than the premium for
affirmative insurance or endorsements insuring against a Title and Survey
Objection or Additional Title Matter which Seller, in its sole discretion,
elects to obtain) shall be borne by Purchaser. Purchaser shall also bear all
other costs and expenses relating to any and all searches, investigations and/or
inspections by or for Purchaser.
6.17 Premiums on insurance policies will not be adjusted. Seller
shall terminate its insurance coverage as of Closing and Purchaser will effect
its own insurance coverage.
The provisions of this Section 6 shall survive the Closing Date.
7. Closing; Closing Date; Conditions Precedent/Other Matters.
7.1 The Closing shall take place at the offices of Seller's counsel,
St. John & Wayne, LLC, Two Penn Plaza, Newark, New Jersey, or at such other
place as the parties shall agree in writing, at 10:00 a.m. (New York City time)
on the Closing Date.
7.2 The "Closing Date" shall be May 22, 1998, or (b) such earlier
date to which the parties may agree in writing. TIME SHALL BE OF THE ESSENCE AS
AGAINST THE PARTIES AS TO THE CLOSING DATE, SUBJECT TO SELLER'S RIGHT TO ADJOURN
CLOSING AS PROVIDED HEREIN.
7.3 It is a condition of Closing that Seller and Purchaser shall
have each complied in all material respects with each of their respective
obligations specified in this Agreement to be complied with as of the Closing
Date, except as those obligations may have been waived in writing by the party
for whose benefit such obligations are undertaken.
7.4 It is agreed by Purchaser and Seller that the day of Closing
shall be a day of income and expense to Purchaser.
7.5 Purchaser's obligations to close hereunder shall be conditioned
upon the occurrence of each of the following conditions. If any of the following
conditions are not satisfied, then Purchaser, as its sole remedies, may elect to
(1) terminate this Agreement and receive a refund of the Deposit and accrued
interest, (2) waive noncompliance with any such condition, or (3) with respect
to a default by Seller under the terms of Sections 7.5(a), (b), and (c) only
(but not Sections 7.5 (d), (e), (f), (g) or (h)) , exercise the remedies
available to Purchaser for a breach by Seller as set forth in Section 14.1
hereof:
(a) The representations and warranties of Seller as set forth
herein shall be true in all material respects on and as of the Closing Date with
the same force and effect as if such representations and warranties had been
made on and as of the Closing Date; provided, however, that if the
representation and warranties of Seller as set forth herein are not true in all
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material respects on and as of the Closing Date due to acts of third parties
beyond Seller's reasonable control, then Purchaser shall only be entitled to (i)
terminate this Agreement and receive back the Deposit and accrued interest; or
(ii) close hereunder without an abatement of the Purchase Price.
(b) Seller shall have performed, observed and complied in all
material respects with all the covenants, agreements and conditions required by
this Agreement to be performed, observed and complied with, prior to or as of
the Closing Date.
(c) Seller shall not have made a general assignment for the
benefit of creditors, nor have admitted in writing its inability to pay its
debts as they become due, nor have filed, or have had filed against it, a
petition in bankruptcy or been adjudicated a bankrupt or insolvent or have filed
a petition seeking any reorganization, arrangement, composition, readjustment
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, nor have filed any answer admitting or failing to reasonably
contest the material allegations of a petition filed against it in any such
proceeding or seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of Seller for any material part of Seller's property.
(d) Title Company unconditionally shall be prepared to issue
to Purchaser a Title Policy meeting the requirements set forth in Section 3(6).
(e) Seller shall have delivered to Purchaser all of the
documents provided herein for said delivery.
(f) Land Lessor shall not have exercised its right of first
refusal under Section 18.01 (b) of the First Ground Lease, as amended or Section
18.01 (b) of the Second Ground Lease, as amended, within the time periods
provided therefore, and Seller shall have obtained and delivered to Purchaser,
not later than the Closing Date, agreements in substantially the form attached
hereto as Exhibits "01, "02", and "03", between Land Lessor and Purchaser
evidencing the consent of Land Lessor to the assignment of the Ground Lease
(including the First Ground Lease, as amended, Second Ground Lease, as amended,
and the Sublease) to Purchaser or its Permitted Assignee, as hereinafter
defined, as contemplated in this Agreement and providing estoppels dated as of
the Closing Date, in favor of Purchaser, and its Permitted Assignee, in
accordance with the provisions of Section 24.02 of the First Ground Lease and
Section 24.02 of the Second Ground Lease (collectively the "Land Lessor's
Consent").
(g) Seller shall have obtained and delivered to Purchaser on
or before the Closing Date estoppel certificates addressed to Purchaser (herein
called "Space Tenant Estoppel Certificates") dated not more than thirty (30)
days prior to the Closing Date from all Space Tenants in substantially the form
attached hereto as Exhibit "P", completed to reflect each Space Tenant's
particular Space Lease status, and not materially inconsistent with Space
Tenant's Space Lease, except in the case of Buchanan Ingersoll with respect to a
claim with respect to
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electricity charges as noted on Schedule 15.4. Seller agrees to use its best
efforts to obtain from all Space Tenants a Space Tenant Estoppel Certificate in
such form; provided, however, that if any Space Tenant shall refuse to execute
an estoppel certificate in such form, Seller shall nevertheless be obligated to
obtain a Space Tenant Estoppel Certificate in the form in which such Space
Tenant is obligated to deliver same as provided in its Space Lease. Seller shall
have the right to adjourn Closing for up to fifteen (15) days in the event
Seller cannot deliver any Space Tenant Estoppel Certificates by the Closing Date
so that Seller may continue its efforts to obtain such items.
7.6 Seller's obligations to close hereunder shall be conditioned
upon the occurrence of each of the following conditions. If any of the following
conditions are not satisfied, then Seller may elect to (1) terminate this
Agreement, (2) waive noncompliance with any such condition, or (3) with respect
to a default by Purchaser under the terms of Sections 7.6(a), (b) or (c),
exercise the remedies available to Seller for a breach by Purchaser as set forth
in Section 14.2 hereof:
(a) The representations and warranties of Purchaser as set
forth herein shall be true in all material respects on and as of the Closing
Date with the same force and effect as if such representations and warranties
had been made on and as of the Closing Date; provided, however, that if the
representation and warranties of Purchaser as set forth herein are not true in
all material respects on and as of the Closing Date due to acts of third parties
beyond Purchaser's reasonable control, then Seller shall only be entitled to (i)
terminate this Agreement (ii) close hereunder without an adjustment to the
Purchase Price.
(b) Purchaser shall have performed, observed and complied in
all material respects with all the covenants, agreements and conditions required
by this Agreement to be performed, observed and complied with, prior to or as of
the Closing Date.
(c) Purchaser shall not have made a general assignment for the
benefit of creditors, nor have admitted in writing its inability to pay its
debts as they become due, nor have filed, or have had filed against it, a
petition in bankruptcy or been adjudicated a bankrupt or insolvent or have filed
a petition seeking any reorganization, arrangement, composition, readjustment
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, nor have filed any answer admitting or failing to reasonably
contest the material allegations of a petition filed against it in any such
proceeding or seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator for any material part of Purchaser's property.
(d) Seller shall have obtained the Land Lessor's Consent.
(e) Seller shall have obtained the Ground Lease Estoppel
Certificate.
7.7 At Closing, Seller shall deliver to Purchaser possession of the
Property, subject to the Permitted Exceptions.
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7.8 Promptly after the full execution of this Agreement, Seller
shall request from Land Lessor the Land Lessor's Consent. Seller shall use its
best efforts in attempting to obtain same from Land Lessor, but in no event
shall Seller be obligated to incur any expense, liability or obligation, or to
commence or continue any suit or other action, in order to obtain issuance by
Land Lessor of the Land Lessor's Consent, nor shall Seller be required to accept
any Land Lessor's Consent which shall be conditioned on the payment by Seller of
any consideration therefor. The failure, omission or inability of Seller,
despite its best efforts, to obtain issuance by Land Lessor of the Land Lessor's
Consent and deliver same to Purchaser shall not be a default by Seller under
this Agreement, nor shall same give rise to any rights or remedies on the part
of Purchaser (except that Purchaser shall have the right to terminate this
Agreement in accordance with the provisions of Section 7.5). Notwithstanding
anything to the contrary set forth above, in the event Seller delivers an
executed Land Lessor's Consent that is in substantially the form of Exhibits 01,
02 and 03, but does not include any provision with respect to the purported
encroachment of the Improvements into a certain twenty foot wide drainage
easement or any other provision not required to be given by Land Lessor under
the Ground Lease, then for purposes of this Agreement the Land Lessor's Consent
shall be deemed delivered.
7.9 Promptly after the full execution of this Agreement, Seller
shall request from Space Tenants the Space Tenant Estoppel Certificates. Seller
shall use good faith in attempting to obtain same from the required Space
Tenants under this Agreement, but in no event shall Seller be obligated to incur
any expense, liability or obligation, or to commence or continue any suit or
other action, in order to obtain same, nor shall Seller be required to accept
any Space Tenant Estoppel Certificates which shall be conditioned on the payment
by Seller of any consideration therefor. The failure, omission or inability of
Seller, despite Seller's best efforts, to obtain issuance of the Space Tenant
Estoppel Certificates and to deliver same to Purchaser shall not be a default by
Seller under this Agreement, nor shall same give rise to any rights or remedies
on the part of Purchaser (except that Purchaser shall have the right to
terminate this Agreement in accordance with the provisions of Section 7.5).
8. Documents at Closing/Merger.
8.1 Subject to compliance by Purchaser with all Purchaser's
obligations to be kept, observed or performed by Purchaser under this Agreement,
Seller shall execute and/or deliver to Purchaser at Closing, the following
instruments (and other items), all of which, unless the form thereof shall be
attached as an Exhibit or Schedule to this Agreement, shall be in form and
substance as may be reasonably acceptable to the parties:
(a) The Assignment of Ground Lease (including assignment and
assumption of the First Ground Lease, the Second Ground Lease and the Sublease).
(b) An affidavit of Seller setting forth the tax
identification number of Seller and certifying that, (i) it is not a foreign
person as that term is used and defined in Section
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1455 and 7701 of the U.S. Internal Revenue Code of 1986, as amended; (ii) it is
a United States tax resident; (iii) it intends to file a United States Tax
return with respect to the transactions contemplated by this Agreement, and (iv)
it understands that such certification is being made under penalty of perjury.
(c) A settlement statement (the "Settlement Statement")
documenting the Closing and reflecting the Purchase Price, charges, credits,
adjustments and prorations.
(d) Certified copies or originals of certificates of good
standing, incumbency certificates, and corporate or partnership consents and
resolutions and other required or appropriate organic documents and consents and
approvals to the within transaction and articles of incorporation and bylaws.
(e) A certificate of Seller stating (to the extent so) that
all representations and warranties of Seller contained in Section 15 of this
Agreement are true and correct in all material respects on and as of the Closing
Date with the same force and effect as if such representations and warranties
had been made on and as of the Closing Date or if different, in what respect. To
the extent, if any, that such representations or warranties shall be made to the
"knowledge" or "best knowledge" of Seller in this Agreement, then such
certificate shall also be made to the "knowledge" or "best knowledge" of Seller.
(f) An affidavit as to title to the Property in the form of
Exhibit D annexed hereto and made a part hereof.
(g) An unitemized bill of sale conveying all Tangible Personal
Property to be conveyed pursuant to this Agreement, without representation,
warranty or recourse, in the form attached hereto as Exhibit E.
(h) Originals, to the extent available to Seller using its
best efforts, of all Space Leases (including, without limitation, all guarantees
thereof, if any), or true and correct copies of originals if originals are not
available, and an assignment and assumption of Space Leases (the "Space Lease
Assignment") in the form of Exhibit F attached hereto and made a part hereof.
(i) Originals, to the extent available, of all Elected Service
Contracts, or true and correct copies of originals if originals are not
available, and an assignment and assumption of Elected Service Contracts (the
"Service Contract Assignment") in the form of Exhibit G attached hereto and made
a part hereof.
(j) Notices to the Space Tenants ("Space Tenant Notices")
executed by Seller, in the form of Exhibit H attached hereto and made a part
hereof, indicating the sale of the Property to Purchaser and Purchaser's
liability for all Space Tenant security deposits to the extent delivered to
Purchaser, and directing rent to be paid to Purchaser or its designee.
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(k) Originals of the Space Tenant Estoppel Certificates.
(l) An updated Rent Roll, certified by an officer of Seller to
be true and correct in all respects.
(m) An original of the Land Lessor's Consent.
(n) An original of the Ground Lease Estoppel Certificate..
(o) An original, if available, of the Ground Lease, or a true
and correct copy of the Ground Lease, if the original is not available,
certified by Seller to be so.
(p) The Deed.
(q) To the extent in the possession of Seller, originals or
copies of all maintenance records, operating manuals, as-built and other and
plans pertaining to the Property, tax bills, historical operating statements and
property records, and the books and records of Seller in respect of the
Leasehold Estate and the Property insofar as the same may be reasonably required
by Purchaser in its operation of the Leasehold Estate and the Property following
the Closing Date, including, without being limited to, Seller's books and
records in respect of payments or performance under the Land Lease, Space Leases
and the Service Contracts, any proceedings for the reduction of real estate
taxes and assessments, and any outstanding claims by or against utility
companies servicing the Property; all of the foregoing to be deemed delivered to
Purchaser without representation or warranty by Seller, and without recourse to
Seller, except as may otherwise be expressly provided in this Agreement.
(r) All keys to the Property appropriately tagged for
identification.
(s) An assignment by Seller to Purchaser, without
representation or warranty by Seller, and without recourse to Seller, and only
to the extent freely assignable, of the Other Seller Interests, and assumption
by thereof by Purchaser (the "Assignment of Other Seller Interests").
(t) Written confirmation by Seller to Purchaser that Land
Lessor has not exercised its Right of First Refusal pursuant to Section 18.01(b)
of the First Ground Lease and Section 18.01(b) of the Second Ground Lease.
(u) A Letter of Non-Applicability pursuant to ISRA from the
Element (as defined in Section 15.B(e)(ii)) below.
(v) All such transfer and other tax declarations and returns,
duly
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executed and sworn to by Seller as may be required by law in connection
with the conveyance of the Property to Purchaser.
(w) Such additional documents as Seller and Purchaser shall
mutually agree are necessary to carry out the provisions of this Agreement,
provided that such additional documents do not expand Seller's liability beyond
the liability of Seller described in or under this Agreement, and do not
diminish any rights or remedies of Seller.
8.2 In addition to payment of the Purchase Price as provided in
Section 5 hereof, Purchaser shall execute and deliver to Seller at Closing,
subject to compliance by Seller with all Seller's obligations to be kept,
observed and performed by Seller under this Agreement:
(a) The Assignment of Ground Lease.
(b) The Settlement Statement.
(c) A certificate of Purchaser stating that all
representations and warranties of Purchaser contained in Section 16 of this
Agreement are true and correct in all material respects on and as of the Closing
Date with the same force and effect as if such representations and warranties
had been made on and as of the Closing Date or if different, in what respect.
(d) Certified copies or originals of certificates of good
standing, incumbency certificates, partnership consents and resolutions,,
partnership agreements, and resolutions, and other required or appropriate
organic documents and consents and approvals to the within transaction.
(e) The Space Lease Assignment.
(f) The Service Contract Assignment.
(g) The Space Tenant Notices.
(h) The Assignment of Other Seller Interests.
(i) Such additional documents, as Seller and Purchaser shall
mutually agree are necessary to carry out the provisions of this Agreement,
provided that such additional documents do not expand Purchaser's liability
beyond the liability of Purchaser described in or under this Agreement, and do
not diminish Purchaser's rights and remedies.
8.3 The parties shall make reasonable efforts so that and all
documents which are not attached hereto as Exhibits may be prepared and
submitted at least five (5) days prior to Closing for review and approval.
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8.4 Except as otherwise expressly provided in this Agreement, (i)
all warranties, representations, covenants and agreements of Seller set forth in
this Agreement or made pursuant to this Agreement shall merge in the Assignment
of Ground Lease and the Deed delivered by Seller at Closing, and none shall
survive Closing, and (ii) the acceptance by Purchase of the Assignment of Ground
Lease and the Deed shall be deemed full performance by Seller of all of Seller's
covenants, agreements, representations and warranties under this Agreement.
9. Obligations Pending Closing
9.1 (a) Between the date hereof and the date of Closing, Seller
shall be obligated to maintain the Property, and improvements thereon, in their
present condition (reasonable wear and tear excluded), and cure all violations
of which Seller has been notified of Legal Requirements affecting the Property,
or any improvements thereon, whether or not such violations are now noted in the
records of, or have been issued by any governmental authorities, until the
Closing Date, provided, however, anything in this Agreement to the contrary
notwithstanding, including, without limitation, the representations and
warranties of Seller concerning violations of law or any other matter, in no
event shall Seller have any obligation to incur any expenses, costs, liabilities
or obligations to alter, repair, change or improve the Property or any part
thereof, (a) in excess of One Hundred Forty Thousand Dollars ($140,000.00), in
the aggregate. In the event Seller undertakes any repair, improvement,
compliance with law or other matters which are the obligation of a Space Tenant
under a Space Lease, after the date hereof, Seller, may after Closing, bring
suit against such space Tenant to recover Seller's expense and cost incurred in
connection therewith. Purchaser shall cooperate with Seller, as may reasonably
be requested by Seller, but in no event shall Purchaser be required to
participate in any litigation as a party or suffer any costs or expenses. Seller
shall maintain in force until Closing the current insurance covering the
Property (or comparable coverage).
(b) Notwithstanding anything to the contrary, the provisions
of subparagraph (a), if during the period commencing after the End of the
Feasibility Period but prior to the Closing Date, any Repair (hereinafter
defined) shall be required, Seller, at its option, may cause the repair to be
made at its expense prior to Closing (and Seller shall be entitled to adjourn
the Closing Date for up to sixty (60) days in order to perform the Repair);
provided, however, if Seller shall elect not to make the Repair prior to
Closing, Purchaser, as its sole remedies, may either (i) terminate this
Agreement, receive the return of its Deposit (and all interest accrued thereon),
and thereafter this Agreement shall be null and void and neither party shall
have any obligations hereunder, except for such obligations specified herein to
survive the termination of this Agreement, or (ii) purchase the Property and
receive from Seller a One Hundred Forty Thousand Dollar ($140,000.00) credit
against the Purchase Price, and assume the obligation for making all repairs at
its sole expense (and Seller shall have no liability or responsibility for such
Repairs). "Repairs" shall mean all repairs to the Property in excess in the
aggregate of $140,000.00 cost for all repairs that would be required (1) to
cause the Property to be in its condition existing as of the End of the
Feasibility Period, and (2) to correct any violation of Legal
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Requirements set forth in a written notice from a public authority and received
by Seller after the End of the Feasibility Period, (i) reasonable wear and tear
and (ii) any damage caused by Purchaser or any of Purchaser's agents, employees
or contractors excluded. Purchaser shall have no rights under this paragraph
relating to any condition existing as of the End of the Feasibility Period,
except as set forth in clause (ii) of the second preceding sentence.
Furthermore, the provisions of this Section 9.1(b) shall not apply to any damage
or destruction by fire or other casualty.
9.2 Subject to the provisions of this Section 9, Seller hereby
covenants and agrees with Purchaser that:
(a) After the date of this Agreement, Seller shall duly comply
with all terms, conditions and covenants, and duly perform all of its
obligations and duties, under the Ground Lease and shall not amend, modify,
supplement, extend, terminate or alter the Ground Lease, nor intentionally waive
any of the rights of the tenant under the Ground Lease.
(b) After the date of this Agreement, Seller shall not enter
into any material service contracts or personal property leases which would
continue for a period subsequent to the Closing Date, or which would not be
terminable on the Closing Date without penalty or premium, without the prior
written approval of Purchaser, which consent shall not be unreasonably withheld
or delayed and shall cancel any Service Contract that is not an Elected Service
Contract. Seller hereby agrees to indemnify Purchaser from and against any
claims made under any such non-Elected Service Contract.
(c) After the date of this Agreement Seller shall not have the
right to (A) enter into new Space Leases at the Property, (B) extend, amend,
modify and/or supplement Space Leases at the Property, and/or (C) to terminate
Space Leases at the Property unless Seller shall have first obtained the written
consent of Purchaser in Purchaser's reasonable discretion, which consent
Purchaser agrees not to unreasonably withhold or delay and which consent shall
be deemed given if Purchaser fails to respond to Seller's request for consent
within five (5) Business Days after Purchaser receives Seller's request for
consent; and any new Space Leases; any amendments, modifications or supplements
to Space Leases, which Seller shall enter into pursuant to the provisions
hereof, shall be included in the term "Space Leases." Except as herein provided,
Seller shall not extend, amend, modify and/or supplement Space Leases at the
Property, and/or to terminate Space Leases at the Property, except that Seller
shall have the right to enter into renewals, extensions or other documents
evidencing or reflecting the exercise by Space Tenants of any rights or options,
the terms of which are fixed or determinable as of the date hereof, under Space
Leases identified in this Agreement.
(d) After the date of this Agreement, Seller shall neither
transfer nor remove any material personal property or fixtures owned by Seller
from the Property, except for any of such personal property as is replaced by
Seller by an article of equal suitability and value, free and clear of any lien
or security interest. Seller shall not make any material alterations to any
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portion of the Property or any material alterations to the electrical, plumbing,
mechanical or other systems servicing the Building, except that Seller, at its
option, may make any such alterations (provided such is free and clear of any
liens and encumbrances and undertaken in conformity with all Legal
Requirements), (i) to the extent, if any, that a Space Tenant may have under its
Space Lease an existing right to make or have made any such alteration, or (ii)
if required by law or by any of its insurers providing coverage in connection
with the Property, or (iii) if required to prevent possible damage to property
or injury to person.
(e) After the date of this Agreement, Seller will not initiate
or seek or agree to any zoning reclassification of the Property or seek any
variance under existing zoning ordinances applicable to the Property to use or
permit the use of the Property in such a manner which would result in such use
becoming a nonconforming use under applicable zoning ordinances or other Legal
Requirements. Seller will not impose any restrictive covenants or encumbrances
on the Property or execute or file any subdivision plat affecting the Property
without the prior written consent of Purchaser, which consent Purchaser agrees
not to unreasonably withhold or delay, unless same shall be released, terminated
or discharged prior to the Closing.
(f) Seller hereby agrees that from the date hereof until the
Closing, it will maintain in full force and effect fire and extended coverage
insurance upon the Property and public liability insurance with respect to
damage or injury to persons or property occurring on the Property in such
amounts as is maintained by Seller on the date of this Agreement.
(g) Seller will perform all material obligations of Seller
which under the Service Contracts are to be performed prior to the Closing Date
and will not renew, change or modify any Elected Service Contract in any manner
(if such modification or change shall apply to any period subsequent to the
Closing) without the prior written consent of Purchaser, which consent Purchaser
agrees not to unreasonably withhold or delay (and which consent shall be deemed
given if Purchaser fails to respond to Seller's request for consent within three
(3) Business Days after Purchaser receives Seller's request for consent).
(h) Seller will perform all material obligations of Seller as
landlord under the Space Leases which under the Space Leases are to be performed
prior to the Closing Date.
(i) Seller shall not:
(1) Enter into any agreement requiring the landlord to
do work for any Space Tenant after the Closing Date without first obtaining the
prior written consent of Purchaser, which such consent shall not be unreasonably
withheld, conditioned or delayed. Purchaser shall inform Seller of its consent
or objection to any request for consent with respect to such work within five
(5) days after its receipt of such request or be deemed to have consented
thereto;
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(2) Accept the surrender of any Space Lease, or grant
any concession, rebate, allowance or free rent, except as to any new Space
Lease;
(3) Apply any Security Deposits with respect to any
Space Tenant in occupancy on the Closing Date; and
(4) Cause or permit the Property, or any interest
therein, to be alienated, mortgaged, licensed, encumbered or otherwise be
transferred.
(j) Upon request of Purchaser at any time after the date
hereof, Seller shall assist Purchaser, without any cost to Seller, in its
preparation of audited financial statements, statements of income and expense,
and such other documentation as Purchaser may reasonably request, covering the
period of Seller's ownership of the Property.
(k) Seller shall permit Purchaser and its authorized
representatives to inspect the books and records of the operations of the
Property operations at all reasonable times. All books and records not conveyed
to Purchaser hereunder shall be maintained for the three year period following
Closing for Purchaser's inspection at Seller's address as set forth above. Such
items are normally maintained in New York City or Washington, D.C. ("Seller's
Offices").
(l) Seller shall operate and maintain the Property in the
ordinary course of business and use reasonable efforts to reasonably preserve
for Purchaser the relationships of Seller and Seller's tenants, suppliers,
manager, employees having ongoing relationships with the Property. Seller will
not otherwise manage the Property differently due to this proposed sale of the
Property.
(m) Seller shall promptly notify Purchaser of, and promptly
deliver to Purchaser, a certified true and complete copy of any notice Seller
may receive, on or before the Closing date, from any Governmental Authority,
concerning a violation of Environmental Laws or Discharge of Hazardous
Materials.
(n) Seller shall, within three (3) days after the signing and
delivery of this Agreement, and subsequently, promptly upon receipt by Seller or
its representatives, deliver to Purchaser a certified true and complete copy of
all Environmental Documents.
10. Inspection; Restoration; Indemnity.
10.1 (a) For a period from the date hereof until the Closing Date,
Purchaser, at Purchaser's expense, shall (subject to the provisions of this
Agreement) have the right to inspect the Property, personally or through agents,
employees or contractors, and in pursuance thereof Purchaser may go upon the
Property at reasonable times with reasonable prior notice to Seller to make
boundary line or topographical surveys and to conduct such inspections, tests,
investigations,
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and analyses of the Property as Purchaser deems desirable, provided Purchaser
shall give Seller notice before going on the Property, and provided that
Purchaser shall not materially or unreasonably interfere with the use,
operation, or occupancy of the Property, or any part thereof, or unreasonably
disturb or interfere with any of the Space Tenants. Seller (at no cost to
Seller) shall provide reasonable cooperation to Purchaser to facilitate
Purchaser's inspections of the Property. Seller, at Seller's option, shall be
permitted to accompany Purchaser and its agents and observe all or any
inspections, tests, and investigations performed by or for Purchaser at or upon
the Property. It this Agreement is terminated for any reason other than a
default by Seller, Purchaser shall make available to Seller for copying (at
Seller's expense), at Purchaser's offices in Cranford, New Jersey during normal
business hours, all surveys and investigative reports, all applications,
inquiries, written communications, and submissions made by Purchaser to any
public authority with respect to conditions of the Property and all responses
thereto, to the extent Purchaser has the authority to disclose such information
to Seller. Seller shall make available for Purchaser's inspection and copying
(at Purchaser's expense) at the Property or at Seller's Offices all books,
records, documents and lease files concerning the Property (other than matters
relating to privileged or confidential matters relative to the Seller's other
sale negotiations and internal, confidential or proprietary matters which would
not be relevant and material to a purchaser). Purchaser shall pay all costs
incurred in making such surveys, tests, analyses, and investigations, and in
making such applications and submissions to public authorities (except for the
cost of the Survey); and Purchaser shall indemnify, defend, and hold Seller
harmless from any claims, demands, losses, costs, and expenses (including
reasonable attorney's fees and court cost) incurred by Seller in connection with
any negligent acts or omissions of Purchaser its agents, employees, contractors,
and invitees with respect to any inspections and tests performed on the Property
by or on behalf of Purchaser, except for those caused in whole or in part by
Seller or its agents, or employees. Prior to coming or entering upon the
Property Purchaser shall provide to Seller evidence of liability insurance
coverage in form, with carriers and in amounts reasonably acceptable to Seller.
Further, Purchaser shall restore the portions of the Property affected by
Purchaser's surveys, analysis, and other investigations to substantially the
same condition as existed prior to such disturbance. Notwithstanding any
contrary provision contained in this Agreement, Purchaser shall have no
obligation to defend, indemnify or hold Seller harmless with respect to any
existing environmental matters which are discovered by Purchaser during its
performance of any inspections or tests unless, and only to the extent, such
matters are exacerbated by the actions of Purchaser, its employees, agents,
contractors or invitees. Seller shall notify Purchaser of any dangerous
conditions on the Property of which Seller has knowledge.
10.2 Purchaser shall not, prior to the Closing, disclose, directly
or indirectly, any information of a proprietary nature obtained in connection
with this Agreement and the transaction contemplated hereby (including, without
limitation, any tests, inspections, analysis or investigations conducted by
Purchaser), and in addition to and not in limitation of the foregoing, Purchaser
will keep confidential until the Closing any information or data received or
discovered in its analyses, tests and inspections regarding the Property or at
any other time prior to the Closing. Notwithstanding the foregoing, Purchaser
may disclose such information or data:
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(a) to its lenders, attorneys, consultants, directors,
shareholders or Affiliates, to extent reasonably necessary in connection with
Purchaser's evaluation and effectuation of the transaction contemplated in this
Agreement, provided that all such lenders, attorneys, consultants and Affiliates
shall be required to hold and keep such information and data confidential, and
Purchaser shall be responsible for such attorneys, consultants, directors,
shareholders and Affiliates holding and keeping such information and data
confidential; and
(b) if (and then only to the extent that) any such disclosure
is required by law or court order (and promptly upon receiving such an order, or
any notice that disclosure is required by law, Purchaser shall provide a copy
thereof to Seller), then prior to making any such required disclosure, Purchaser
shall provide to Seller not less than five (5) days written notice (or, if
shorter, such advance notice as may be possible concerning a court-ordered
disclosure on less than five (5) days prior notice to Purchaser), and in any
such events Seller, at its sole discretion, shall have the right to challenge
and contest (by legal action or otherwise) such required disclosure, and
Purchaser, at no expense to it, fully and freely shall cooperate with
Seller in making such contest and attempting to keep such information and data
confidential. Failure of omission by Seller to contest or challenge shall not be
a waiver by Seller of the provisions of this Paragraph.
10.3 Pursuant to a certain Letter of Intent, dated February 13,
1998, between Seller and Purchaser, Seller has made, or will make, available to
Purchaser, certain information, items and materials respecting the Property, as
set forth on Exhibit A to such Letter of Intent. Except as otherwise expressly
provided in this Agreement, all such information, materials and items furnished
by Seller to Purchaser conclusively shall be deemed furnished without
representation or warranty by Seller, and without recourse to Seller.
10.4 The provisions of this Section 10 shall survive Closing or
termination of this Agreement for any reason; except that Purchaser's rights to
enter upon the Property and/or to perform interviews, tests, reviews,
inspections and/or other studies shall terminate immediately upon termination or
cancellation of this Agreement.
10.5 Purchaser has elected to assume only the service contract for
the elevator service with Security Elevator Co.
11. Ground Lease Assumption/Indemnities.
11.1 At the Closing, Purchaser shall accept the Leasehold Estate
from Seller and shall assume all obligations of Seller as the tenant under the
Ground Lease accruing on or after the Closing Date.
11.2 Subject to the provisions of Section 15. C hereof, Seller
shall, and hereby does, jointly and severally, indemnify, defend and hold
harmless Purchaser from and against:
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(a) Any and all claims or demands made by third parties and
arising out of any and all acts or omissions of Seller relating to the Property,
or any other rights, properties or interests sold by Seller hereunder and any
and all liabilities and obligations of Seller to third parties including,
without limitation, any and all liabilities or obligations of the Seller in
respect of which claims are asserted against Purchaser or the Property (or any
part thereof) by third parties by reason of Seller's (or Seller's agents',
employees' or contractors') acts or omissions with respect to the Property (or
any part thereof), or any other rights, properties or interests sold by Seller
hereunder, the Ground Lease, the Space Leases, the Elected Service Contracts, or
other agreements relating to the Property, by reason of events which occurred or
causes of action which accrued prior to the Closing Date, specifically excluding
all claims and causes of action caused by Purchaser, its agents, employees or
contractors;
(b) Any misrepresentation, breach of warranty, or
nonfulfillment of any express representation or warranty on the part of Seller
under this Agreement (except those waived or deemed waived by Purchaser), or in
any certificate other instrument furnished or to be furnished by or for Seller
to Purchaser under this Agreement (expressly excluding all materials,
information and items furnished or to be furnished without representation or
warranty by Seller, or without recourse to Seller); and
(d) All claims, actions, suits, proceedings, demands,
assessments, judgments, costs and expenses (including reasonable attorneys'
fees) incident to any of the foregoing.
Seller's obligations under this Section 11.2 shall be subject to and
conditioned upon the performance and satisfaction of all of the following
provisions and conditions:
(a) Within fifteen (15) days (and within ten (10) days in the
event of service of judicial process or other court pleadings or documents)
after Purchaser has received written notice of a claim for which Seller may be
responsible under this Section 11.2, Purchaser shall deliver a complete copy of
such notice to Seller, but the failure to notify Seller of a particular claim
within that period of time shall not defeat or terminate the rights of the
Purchaser under this Section 11.2 with respect to that claim, unless (and then
only to the extent that) such failure or delay of notice prejudiced or adversely
affected Seller in some material respect.
(b) If, by the first to occur of (1) the thirtieth day after
Seller has received written notice of a claim for indemnification and defense
under this Section 11.2, and (2) the date prior to the date on which will occur
the entry of a judgment against Purchaser with respect to that claim, Seller
notifies Purchaser that Seller will defend such claims, then Seller shall defend
such claim at Seller's sole expense and Seller and Purchaser shall jointly
select and retain counsel to defend such claim. Seller and Purchaser shall
jointly make all decisions relating to the defense, contest, conduct and
settlement of such claim. In connection with the defense, contest, conduct
and/or settlement of any such claim Seller in a timely manner shall keep
Purchaser informed concerning the status of all such matters (which shall
include, without limitation, providing to
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Purchaser copies of all claims, pleadings and other material documents and
instruments, and notification of the content of all material conversations,
discussions, meetings and hearings (which Purchaser, at its option, may attend
and participate in). In connection with any such defense, contest, conduct
and/or settlement, provided that Seller shall keep Purchaser informed
sufficiently in advance so that Purchaser may discuss with Seller any proposed
action or decision of the Seller, then (i) provided that Seller shall exercise
its discretion in a reasonable manner and in a manner which shall not unduly
prejudice the interests or rights of Purchaser or the Property, Seller shall
have the right, in its reasonable discretion, to make all decisions and
determinations which shall be of a routine, non-strategic, and minor nature, and
(ii) provided that Seller shall exercise its discretion in a reasonable manner
and in a manner which shall not unduly prejudice the interests or rights of
Purchaser or the Property, Seller shall have the right, subject to the prior
written consent of Purchaser (which Purchaser agrees not to unreasonably
withhold or delay), to make all other decisions and determinations. If within
such time Seller fails to notify Purchaser that it will defend such claim, then
Purchaser may, upon notice to Seller, retain a single joint counsel reasonably
satisfactory to Seller to defend, contest and settle such claim, the reasonable
fees, costs and expenses of which will be paid by Seller, and, in addition, even
if Seller does timely notify the Purchaser and engage counsel and defend such
claim, Purchaser may, at its sole cost and expense, also retain separate legal
counsel to advise Purchaser with respect to any such claim. Seller shall, at
reasonable intervals, advise the Purchaser of the status of such claim and
Seller's actions pertaining thereto.
(c) Upon Seller's written request, Purchaser shall cooperate
with Seller in the contest of such claim, provided that Seller shall reimburse
Purchaser for any out-of-pocket costs and expenses (not including fees or
expenses of the Purchaser's separate legal counsel or any other outside
consultants or advisers) reasonably incurred by Purchaser in connection
therewith.
11.3 Purchaser shall, and hereby does, indemnify, defend and hold
harmless Seller from and against:
(a) Any and all claims or demands made by third parties and
arising out of any and all acts or omissions of Purchaser relating to the
Property, or any other rights, properties or interests sold by Seller hereunder
and any and all liabilities and obligations of Purchaser to third parties
including, without limitation, any and all liabilities or obligations of the
Purchaser in respect of which claims are asserted against Seller by third
parties by reason of Purchaser's (or Purchaser's agents', employees' or
contractors') acts or omissions with respect to the Property (or any part
thereof), or any other rights, properties or interests sold by Seller hereunder,
the Ground Lease, the Space Leases, the Elected Service Contracts, or other
agreements relating to the Property, by reason of events which occurred or
causes of action which accrue or accrued on or after the Closing Date,
specifically excluding all claims and causes of action caused by Seller, its
agents, employees or contractors;
(b) Any misrepresentation, breach of warranty, or
nonfulfillment of any express representation or warranty on the part of
Purchaser under this Agreement (except those
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waived or deemed waived by Seller), or in any certificate other instrument
furnished or to be furnished to Seller by or for Purchaser under this Agreement.
(c) All claims, actions, suits, proceedings, demands,
assessments, judgments, costs and expenses (including reasonable attorneys'
fees) incident to any of the foregoing.
Purchaser's obligations under this Section 11.3 shall be subject to
and conditioned upon the performance and satisfaction of all of the following
provisions and conditions:
(a) Within fifteen (15) days (and within ten (10) days in the
event of service of judicial process or other court pleadings or documents)
after Seller has received written notice of a claim for which Purchaser may be
responsible under this Section 11.3, Seller shall deliver a complete copy of
such notice to Purchaser, but the failure to notify Purchaser of a particular
claim within that period of time shall not defeat or terminate the rights of the
Seller under this Section 11.3 with respect to that claim, unless (and then only
to the extent that) such failure or delay of notice prejudiced or adversely
affected Purchaser in some material respect.
(b) If, by the first to occur of (1) the thirtieth day after
Purchaser has received written notice of a claim for indemnification and defense
under this Section 11.3, and (2) the date prior to the date on which will occur
the entry of a judgment against Seller with respect to that claim, Purchaser
notifies the Seller that Purchaser will defend such claims, then Purchaser shall
defend such claim at Purchaser's sole cost and expense, and Seller and Purchaser
shall jointly select and retain counsel to defend such claim. Seller and
Purchaser shall jointly make all decisions relating to the defense, contest,
conduct and settlement of such claim. In connection with the defense, contest,
conduct and/or settlement of any such claim Purchaser in a timely manner shall
keep Seller informed concerning the status of all such matters (which shall
include, without limitation, providing to Seller copies of all claims, pleadings
and other material documents and instruments, and notification of the content of
all material conversations, discussions, meetings and hearings (which Seller, at
its option, may attend and participate in). In connection with any such defense,
contest, conduct and/or settlement, provided that Purchaser in a timely manner
shall keep Seller fully informed sufficiently in advance so that Seller may
discuss with Purchaser any proposed action or decision of the Purchaser, then
(i) provided that Purchaser shall exercise its discretion in a reasonable manner
and in a manner which shall not unduly prejudice the interests or rights of
Seller or the Property, Purchaser shall have the right, in its reasonable
discretion, to make all decisions and determinations which shall be of a
routine, non-strategic, and minor nature, and (ii) provided that Purchaser shall
exercise its discretion in a reasonable manner and in a manner which shall not
unduly prejudice the interests or rights of Seller or the Property, Purchaser
shall have the right, subject to the prior written consent of Seller (which
Seller agrees not to unreasonably withhold or delay), to make all other
decisions and determinations. If within such time Purchaser fails to notify
Seller that it will defend such claim, then Seller may, upon notice to
Purchaser, retain a single joint counsel reasonably satisfactory to Purchaser to
defend, contest and settle such claim, the reasonable fees, costs and expenses
of which will be paid by
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Purchaser, and, in addition, even if Purchaser does timely notify the Seller and
engage counsel and defend such claim, Seller may, at its sole cost and expense,
also retain separate legal counsel to advise Seller with respect to any such
claim. Purchaser shall, at reasonable intervals, advise the Seller of the status
of such claim and Purchaser's actions pertaining thereto.
(c) Upon Purchaser's written request, Seller shall cooperate
with Purchaser in the contest of such claim, provided that Purchaser shall
reimburse the Seller for any out-of-pocket costs and expenses (not including
fees or expenses of the Seller's separate legal counsel or any other outside
consultants or advisers) reasonably incurred by the Seller in connection
therewith.
11.4 The provisions of this Section 11 shall survive the Closing for
a period of two (2) years.
12. Risk of Fire and Condemnation Prior to Closing.
12.1 In the event (a) the entire Property or any substantial part
thereof (as defined in Section 12.2) is substantially damaged or destroyed by
fire or other casualty, except if such casualty shall arise from the act or
negligence of Purchaser, any Affiliate of Purchaser, or any agent, employee,
servant, or director of either, or shall otherwise arise from the use or
occupancy of the Property or entry upon the Property by Purchaser or an
Affiliate or representative of Purchaser (a "Purchaser's Casualty") or (b)
condemnation or eminent domain proceedings (or private purchase in lieu thereof)
shall be pending or shall be commenced by any public or quasi-public authority
having jurisdiction against all or any part of the Property and/or the Leasehold
Estate, then Seller shall upon receipt of knowledge of such casualty or
proceedings promptly notify Purchaser. Purchaser may, as its sole options, by
giving written notice to Seller within fourteen (14) Business Days after receipt
of notice from Seller of such casualty or condemnation proceedings, either (i)
terminate this Agreement or (ii) proceed to close without an abatement of the
Purchase Price and without any obligation or liability of Seller, and without
any credit to Purchaser as a result thereof, except as hereinafter set forth in
Section 12.2 and Section 12.3. The failure of Purchaser to give notice to Seller
electing an option within such fourteen (14) Business Day period conclusively
shall be deemed an election by Purchaser to close title as described in the
preceding clause (ii). In the event Purchaser elects to terminate this
Agreement, Purchaser shall be entitled to the return of the Deposit and all
accrued interest and thereafter neither Purchaser nor Seller shall have any
liability to the other hereunder except for the obligations specifically set
forth to survive termination of this Agreement.
12.2 In the event Purchaser does not thus elect to terminate this
Agreement notwithstanding any such substantial casualty damage (or in the event
of any damage which is not "substantial" as herein provided or in the event the
damage results from a Purchaser's Casualty), then all insurance proceeds, if
any, as well as all unpaid claims and rights to insurance proceeds in connection
with such casualty plus the amount of any deductible, will be assigned to
Purchaser (without representation or warranty by or recourse to Seller, except
that Seller has not settled,
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compromised, assigned or otherwise transferred such award or damages) at the
Closing or, if paid to Seller prior thereto, shall be retained by Seller and
together with the amount of the deductible credited dollar for dollar against
the unpaid balance of the Purchase Price due at Closing. Seller shall give
Purchaser evidence of such amount reasonably satisfactory to Purchaser. For
purposes of this Section 11, a "substantial" damage shall mean such damage to
the Property that shall require in excess of $500,000.00 to repair, as
determined by Seller's insurance carrier(s).
12.3 In the event Purchaser does not thus elect to terminate this
Agreement, notwithstanding that such condemnation proceedings are pending or
have commenced, then the condemnation award, or damages of any kind arising from
such condemnation, shall at Closing be the property solely of Purchaser and
Seller shall execute and deliver at Closing such instruments reasonably required
to effect such assignment to Purchaser (without representation or warranty by or
recourse to Seller, except that Seller has not settled, compromised, assigned or
otherwise transferred such award or damages), and the parties shall otherwise
proceed to Closing as if such proceedings were not pending or commenced. If
Seller receives any condemnation award for any portion of the Property prior to
the Closing Seller shall retain the same and the Purchase Price hereunder shall
be reduced by the same amount. Seller shall give Purchaser evidence of such
amount reasonably satisfactory to Purchaser. In the event Purchaser elects to
contest the condemnation and/or the amount of the condemnation award (in which
event Purchaser irrevocably shall be deemed to have elected to proceed to
close), Purchaser shall so notify Seller by giving written notice to Seller
within fourteen (14) Business Days after receipt from Seller of notice of the
condemnation proceedings, and thereafter, Purchaser, at its expense, will join
Seller to contest the condemnation and/or the condemnation award. Nothing herein
shall require Seller to contest any condemnation and/or the amount of the award
unless (a) Purchaser elects to proceed to close and (b) Purchaser bears all
expenses of such contest.
12.4 In consideration of the provisions of this Section 12, Seller
agrees to continue to maintain its present insurance with risks generally known
as extended coverage, at Seller's cost and expense until Closing.
12.5 In the event that any casualty damage occurs that is not
substantial and does not result from a Purchaser's Casualty, this Agreement
shall remain in full force and effect. In the event Seller expends any money in
repairing any such casualty damage prior to Closing, then Seller shall be
entitled to a portion of insurance proceeds equal to Seller's actual
expenditures incurred in connection with such repairs. Prior to Closing, Seller
shall provide Purchaser evidence of such expenditures. All remaining insurance
proceeds shall be assigned to Purchaser and all remaining sums received by
Seller in connection therewith shall be paid over to Purchaser, and all rights
to claims shall be assigned to Purchaser.
12.6 Seller shall not settle or compromise any claims, or undertake
any repairs following any casualty, except if necessary to secure and safeguard
the Property, without obtaining Purchaser's prior written consent, which such
consent shall not be unreasonably withheld, conditioned or delayed.
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13. Notices and Other Communications.
All notices, demands, requests, consents, approvals and other
communications (collectively, "Notices") required or permitted to be given
hereunder or which are to be given with respect to this Agreement shall be in
writing and shall be given by (a) hand delivery, (b) Express Mail, Federal
Express or any other similar form of airborne/overnight delivery service which
provides for delivery receipt, or (c) certified or registered mail, return
receipt requested, postage prepaid, addressed to the party to be so notified at
the following address (or at such other address as may be specified by such
party by appropriate Notice) (receipt to be evidenced by Federal Express or
other overnight delivery service receipt, or certified or registered mail
receipt as the case may be [no return receipt required for hand delivery]):
If to Seller: c/o Sibag Holding Corporation
1201 Market Street, Suite 1402
Wilmington, Delaware 19801
with simultaneous copies sent to:
Sibag Investments, Inc.
5335 Wisconsin Avenue, NW
Suite 490
Washington, D.C. 20015
Attn: Eileen M. Blaker, Vice President
and
St. John & Wayne, L.L.C.
Two Penn Plaza East
Newark, New Jersey 07105
Attn: Robert A. Wayne, Esq.
If to Purchaser:
Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
Attn: Roger Thomas, Esquire,
Vice President and General Counsel
with a simultaneous copy sent to:
Stephan K. Pahides, Esquire
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McCausland, Keen & Buckman
Radnor Court - Suite 160
259 Radnor-Chester Road
Radnor, PA 19087-5240
If to Escrow Agent: Commonwealth Land Title Ins. Co.
655 Third Avenue, 11th Floor
New York, New York 10017
Attention: William Deatly
Notices shall be deemed given (a) on the date of hand delivery, (b) on the first
regular business delivery day after the date of mailing by Federal Express or
other overnight delivery service, and (c) three (3) days after mailing by
certified or registered mail. Notices given by an attorney for a party hereto
shall be deemed to be a Notice given by such party.
14. Default.
14.1 Seller's Default. (a) Subject to Section 7.5 and Section
14.1(b) hereof, if Seller shall default (other than an insignificant or
immaterial default) in the performance of its obligation hereunder (including
without limitation, a default in Seller's obligations set forth in Sections 3.1,
3.2, 8.1 (a), (b), (c), (d), (e), (g), (h), (i), (j), (l), (p) and (s) and 9.2
or to make settlement on the Closing Date in accordance with the terms hereof)
and Purchaser shall not have defaulted hereunder (other than an insignificant or
immaterial default), Purchaser, following receipt by Seller of ten (10) Business
Days prior written notice from Purchaser stating that Seller is in default
hereunder, unless Seller shall have cured such default during such ten (10)
Business-Day period, may, as its sole remedies, avail itself of (i) the right to
terminate this Agreement and to bring suit for all of Purchaser's costs and
expenses incurred in connection with this Agreement and the transaction
contemplated hereby, including without limitation, reasonable attorneys' fees
(both in-house and outside counsel) and fees of engineers and consultants, up to
One Hundred Fifty Thousand Dollars ($150,000) and to a prompt return of the
Deposit and all interest earned thereon; or (ii) the remedy of specific
performance (which shall be limited to the right to compel Seller to convey to
Purchaser such title as Seller is able to convey without incurring any material
expense to cure any Title and Survey Objections, (except for Seller's
obligations pursuant to Section 3.1 and Section 3.2)), with an abatement of the
Purchase Price in an amount equal to Purchaser's costs and expenses incurred in
enforcing its remedy of specific performance, including without limitation,
reasonable attorneys' fee, plus an amount equal to four percent (4%) of
$21,190,000 per annum from the date initially scheduled for Closing hereunder to
the date on which Closing subsequently occurs. Except as provided for above,
Purchaser shall not be entitled to avail itself of any remedy at law or equity
to recover monetary damages from Seller arising from a default by Seller. This
Section 14.1(a) sets forth remedies for failure to close and is not intended to
apply to remedies Purchaser may have with respect to Seller's obligations (i)
which survive Closing or termination of this Agreement, or (ii) which are set
forth in or result from any instruments or documents executed and delivered by
Seller at Closing.
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(b) Anything in this Agreement to the contrary notwithstanding
(including without limitation the foregoing provisions of Section 14.1(a)), the
parties expressly agreed that (i) failure or omission by Seller to discharge,
clear or remedy any Title and Survey Objection or Additional Title Matter,
except as specifically set forth in Section 3.1 and 3.2, shall not be a default
or breach by Seller under this Agreement, nor give rise to any rights or
remedies of Purchaser, except for the right of Purchaser to terminate this
Agreement and receive a return of the Deposit (and the interest thereon)
pursuant to Sections 3.1, 3.2, and 3.6, and (ii) failure of omission by Seller,
despite its best efforts, to deliver the Land Lessor Consent, the Ground Lease
Estoppel Certificate, and/or any or all of the Space Tenant Estoppel
Certificates shall not be a default or breach by Seller under this Agreement,
nor give rise to any rights or remedies of Purchaser, except for the right of
Purchaser to terminate this Agreement and receive a return of the Deposit (and
the interest thereon) pursuant to Section 7.5.
14.2 Purchaser's Default. Purchaser and Seller acknowledge that it
would be extremely impracticable and difficult to ascertain the actual damages
which would be suffered by Seller if Purchaser defaults under this Agreement.
Accordingly, if Purchaser has defaulted (other than an insignificant or
immaterial default) in the performance of its obligations hereunder (including
without limitation, a default in Purchaser's obligation to deliver to Seller
those documents and other items required under Section 8.2 hereof or to make
settlement on the Closing Date) and Seller shall have not defaulted hereunder
(other than an insignificant or immaterial default), then at the end of the ten
(10) Business Day period following the receipt by Purchaser of a written
statement from Seller stating that Purchaser is in default hereunder, unless
Purchaser shall have cured such default during such ten (10) Business Day
period, as Seller's sole and exclusive remedy, the Deposit (together with all
interest thereon) shall be by Escrow Agent paid over, transferred and assigned
to Seller as full, complete, agreed and liquidated damages, and thereupon this
Agreement shall terminate and neither party shall have any further obligations
hereunder, except for those specifically set forth in this Agreement to survive
termination. Seller's retention of the Deposit (and interest) is intended not as
a penalty, but as full liquidated damages, and is Seller's sole and exclusive
remedy in the event of default by Purchaser in its obligation to close title
hereunder, and (respecting a default by Purchaser in its obligations to close
title as provided in this Agreement) Seller hereby waives and releases any right
to (and hereby covenants that it shall not) sue Purchaser (i) for specific
performance of this Agreement or (ii) to recover actual damages for default by
Purchaser in its obligation to close title as provided in this Agreement. This
Section 14.2 sets forth remedies for failure to close and it not intended to
apply to remedies Seller may have with respect to Purchaser's obligations (i)
which survive Closing or termination of this Agreement, or (ii) which are set
forth in or result from any instruments or documents executed and delivered by
Purchaser at Closing.
15. Representations and Warranties of Seller. To induce Purchaser to enter
into this Agreement, Seller makes only the following representations and
warranties to Purchaser, all of which are made as of the date of this Agreement:
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15.1 Seller is a duly organized and validly existing corporation
under the laws of the State of Delaware and is duly authorized to transact
business in the State of New Jersey. All requisite corporate action has been or
will be taken by Seller in connection with Seller entering into this Agreement
and the instruments and documents referenced herein, and the consummation by
Seller of the transaction contemplated hereby, and Seller has the legal power,
right and authority to enter into this Agreement and the instruments and
documents referenced herein, and to consummate the transaction contemplated
hereby; the representations and warranties set forth in this Section 15.1 shall
survive the Closing for a period of three (3) years.
15.2 Neither the execution of this Agreement nor the consummation of
the transaction contemplated hereby shall result in a breach of, or constitute a
default under, any agreement, document, instrument, order, rule, writ or other
obligation to which Seller is a party or by which Seller or the Property may be
bound. Other than this Agreement or as provided in the Ground Lease, the
Property is not subject to any option to purchase or contract of sale.
15.3 Annexed hereto as Exhibit I is a rent roll (the "Rent Roll")
containing a complete and correct (as of the date of this Agreement) list of all
Space Leases and amendments and modifications thereof, in effect on the date of
this Agreement in respect of the Property (the "Space Leases") and setting forth
with respect to each of such Space Leases (as of the date of this Agreement):
(i) the name of the Space Tenant and the general identification and rentable
square footage of the space purported to be covered thereby: (ii) the date
thereof: (iii) the commencement date thereof: (iv) renewal and expansion options
and whether any have been exercised by the Space Tenant: (v) the brokerage or
leasing commissions or other compensations, if any, which are due with respect
to or on account of any of the Space Leases: (vi) whether or not, to the
knowledge of Seller, any Space Tenant is in material default under the terms of
its Space Lease: (vii) whether or not any currently effective notice from any
Space Tenant under a Space Lease has been received by Seller claiming that the
landlord is in material default under a Space Lease (not including notices, if
any, which have been withdrawn, mooted, discharged or resolved): (viii) whether
any rent concessions, free rent or other allowances have been given the Space
Tenant, and the amount thereof, and the amount thereof, if any, and the periods
to which same apply; (ix) the current monthly Space Rent (including fixed or
basic rent and PassThrough Charges), and the dates through which such rent is
paid, (x) any existing defaults by any Space Tenant in payment of Space Rent
(including Pass-Through Charges), including any arrearages in payment of Space
Rent; (xi) any prepaid Space Rent or other charges, and the amounts thereof;
(xii) any outstanding tenant improvement or build-out allowances or obligations
of Landlord, the amounts thereof, and the periods to which same apply; (xiii)
utilities, the costs of which are included in the Space Rent; and (xiv) whether
or not any Space Tenant has given currently effective notice to Seller of such
Space Tenant's intention of instituting litigation with respect to its Space
Lease.
15.4 Except as disclosed in the Rent Roll or in the Space Leases, or
as set forth on Schedule 15.4 with respect to Buchanan Ingersoll: no Space Lease
has been modified or amended in any respect; the Space Lease is the sole
agreement between the Space Tenant under the Space Lease and the Seller in
respect of the Property; no brokerage or leasing commissions or
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other compensations are due with respect to or on account of any of the Space
Leases or any extensions or renewals thereof; to the knowledge of Seller, the
Space Leases are valid and enforceable in accordance with their terms; no Space
Tenant is in material default under the terms of its Space Lease; and no notice
from any Space Tenant under a Space Lease has been received by Seller claiming
that the landlord is in material default under a Space Lease (not including
notices, if any, which have been withdrawn, mooted, discharged or resolved); no
Space Tenant has given any currently effective notice to Seller of such Space
Tenant's intention of instituting litigation with respect to its Space Lease,
except as may be set forth in the Rent Roll; and all alterations, construction
and improvements required to be made by the Landlord under the existing Space
Leases have been fully completed, and paid for.
15.5 True and complete copies of all Space Leases (including,
without limitation, all riders, modifications, guarantees, and work letters
relating thereto) and commission agreements in effect or extant have been
delivered by Seller to Purchaser.
15.6 A true and complete copy of the Ground Lease has been delivered
by Seller to Purchaser. The Ground Lease represents the complete agreement
between Seller and the Land Lessor as to all rights and obligations of Seller
and Land Lessor in and to the Property.
15.7 The Ground Lease is a valid and subsisting lease and is in full
force and effect in accordance with the terms thereof and has not been further
modified, amended, supplemented, extended, renewed or terminated; all of the
rent, additional rent and other amounts and charges due and payable by the
tenant under the Ground Lease prior to the execution hereof have been paid
directly to the Land Lessor; no defaults exist under the Ground Lease. Seller
has not received any notice of default pursuant to the Ground Lease. There are
no actions or proceedings pending or threatened by Seller against Land Lessor;
and there are no actions or proceedings pending or (to the knowledge of Seller)
threatened against Seller or against the Leasehold Estate by Land Lessor.
15.8 Except for the Sublease Seller has not assigned or transferred
the Leasehold Estate, and Seller has not subleased any of the Leasehold Estate
except for the Sublease and the Space Leases.
15.9 The rent and additional rent payable pursuant to the Ground
Lease has been paid through March 31, 1998, and Seller has not prepaid any rent
or additional rent.
15.10. There is no security deposit under the Ground Lease.
15.11 True and complete copies of all Permits extant or effective as
of the date of this Agreement (not including any Permits issued to or obtained
by Space Tenants, or relating to the particular business of any Tenant, or for
the obtainment or issuance of which Space Tenants otherwise are responsible )
have been delivered by Seller to Purchaser.
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15.12 True and complete copies of all Service Contracts in effect or
extant as of the date of this Agreement have been delivered by Seller to
Purchaser. To Seller's knowledge neither Seller nor any vendor under a Service
Contract is in material default thereunder.
15.13 Seller has not received any written notice from a governmental
body or governmental agency that the Property is in material default with
respect to building codes or fire department regulations which has not been
withdrawn, mooted, discharged or resolved.
15.14 Except as set forth on the Rent Roll or on Exhibit K attached
hereto and made a part hereof, Seller is not involved in any litigation or other
proceedings involving or respecting the Property, and to the best of Seller's
knowledge no actions, suits, litigation or proceedings are threatened against
the Property.
15.15 Other than this Agreement or as provided in the Ground Lease,
the Property is not subject to any option to purchase or contract of sale.
15.16 There are no union or collective bargaining contracts or
employment agreements binding upon Seller with respect to the Property except as
set forth on Exhibit Q attached hereto and made a part hereof.
15.17. Except as provided in Exhibit M, attached hereto and made a
part hereof, Seller has not retained any person to file notices of protest
against, or to commence actions to review, real property tax assessments against
the Property; and to Seller's knowledge, no such action has been taken by or on
behalf of any of the Space Tenants.
15.18 The financial statements of the operation of the Property
covering the fiscal year from October 1, 1996 to September 30, 1997, including
the statements of income, expenses, and escalatable operating costs, attached
hereto and made a part hereof as Exhibit N are complete, true and accurate in
all material respects as of the respective dates thereof, are in accordance with
the books and records of the Property and fairly present the financial position,
cash flow, equity and results of operations of the Property with respect to such
period. To Seller's knowledge, there have not been any material adverse changes
in the income or expenses or other items set forth on the financial statements
between the date thereof and the date of this Agreement.
15.19 Seller has provided Purchaser with or given Purchaser the
opportunity to inspect in Seller's Offices with all reports, including, without
limitation, the Environmental Documents (as defined in Section 15.B(e)(iii)) in
Seller's possession, which to the knowledge of Seller are all of the reports and
Environmental Documents related to the physical condition of the Property.
15.20 Except as set forth in Schedule 15.20, attached hereto Seller
has no knowledge of any notices, suits, investigations or judgments relating to
any violations of Legal Requirements, including without limitation,
Environmental Laws (as defined in Section
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15.B(e)(iv)) affecting the Property and, to Seller's knowledge, it has not
received notice of any violations from any agency, board, bureau, commission,
department, office or body of any municipal, county, state or federal
governmental unit, or any subdivision thereof, having, asserting or acquiring
jurisdiction over all or any part of the Property or the management, operation,
use or improvement thereof (collectively, the "Governmental Authorities") or
that any Governmental Authorities contemplate the issuance thereof, and there
are no outstanding orders, judgments, injunctions, decrees, directives or writ
of any Governmental Authorities against or involving Seller or the Property.
15.21 [Intentionally Deleted]
15.22 Seller has not received any notice of, and has no knowledge
of, outstanding requirements or recommendations by (i) the insurance company(s)
currently insuring the Property; (ii) any board of fire underwriters or other
body exercising similar functions, or (iii) the holder of any mortgage
encumbering any of the Property, which require or recommend any repairs or work
to be done on the Property, except as set forth in Schedule 15.22, attached
hereto.
15.23 Seller has not received any notice of, 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 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 Property, (iii) any proposed
or pending special assessments affecting the Property or any portion thereof,
(iv) any penalties or interest due with respect to real estate taxes assessed
against the 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 Property,
except as set forth in Section 15.23, attached hereto. Seller agrees to furnish
Purchaser with a copy of any such notice received within two (2) days after
receipt.
15.24 Annexed hereto as Schedule 15.24 is a schedule of all leasing
commission obligations affecting the Property. The respective obligations of
Seller and Purchaser with respect to said commissions are set forth in Section
6.9.
15.26 Seller has not made a general assignment for the benefit of
creditors, filed any voluntary petition in bankruptcy or suffered the filing of
any involuntary petition by Seller's creditors, suffered the appointment of a
receiver to take possession of all, or substantially all, of such Seller's
assets, suffered the attachment or other judicial seizure of all, or
substantially all, of such Seller's assets, admitted in writing its inability to
pay its debts as they come due or made an offer of settlement, extension or
composition to its creditors generally.
15.27 The Improvements and Other Seller Interests are now owned and
will on the Closing Date be owned by Seller free and clear of any conditional
bills of sale, chattel mortgages, security agreements or financing statements or
other security interests of any kind.
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15.28 Seller has paid all Taxes (as defined in this Section 15.28)
due and payable prior to the Closing and filed all returns and reports required
to be filed prior to the Closing with respect to the ownership and operation of
the Property (by it or any predecessor entity) for which Purchaser could be held
liable or a claim made against the acquired property. Except as set forth in
Schedule 15.28, there are no audits or other proceedings by any Governmental
Authorities pending or, to the knowledge of Seller, threatened with respect to
the Taxes resulting from the ownership and operation of the Property (by it or
any predecessor entities) for which Purchaser could be held liable or a claim
made against the acquired property. No assessment of Taxes is proposed against
Seller (including any predecessor entities), the Property. Seller is not party
to, and has no liability under (including liability with respect to a
predecessor entity), any indemnification, allocation or sharing agreement with
respect to Taxes. "Taxes" mean all federal, state, county, local, foreign and
other taxes of any kind whatsoever (including, without limitation, income,
profits, premium, estimated, excise, sales, use, occupancy, gross receipts,
franchise, ad valorem, severance, capital levy, production, transfer, license,
stamp, environmental, withholding, employment, unemployment compensation,
payroll related and property taxes, import duties and other governmental charges
or assessments), whether or not measured in whole or in part by net income, and
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.
15.B In addition to the provisions of Section 15.A, Seller hereby
warrants and represents the following with respect to environmental matters:
(a) Except as disclosed on Schedule 15.B or in the Environmental Documents
delivered to Purchaser by Seller:
(i) to the knowledge of the Seller, there are no Hazardous Materials
on, under, at, emanating from or affecting the Property, other than reasonably
small quantities of household cleaning and office supplies and the typical waste
products resulting from the use thereof, used and disposed of in accordance with
Environmental Laws; and except those in compliance with all applicable
Environmental Laws;
(ii) to the knowledge of the Seller, no portion of the Property has
ever been used by Seller or, to the knowledge of the Seller, any former owner or
current or former occupant to generate, manufacture, refine, produce, treat,
store, handle, dispose of, transfer or process Hazardous Materials;
(iii) to the knowledge of the Seller, no ss.104(e) informational
request has been received by Seller or any current or former owner or occupant
of the Property issued pursuant to CERCLA (as defined in Section 15.B(e)) with
respect to the Property or any property in the vicinity of the Property;
(iv) to the knowledge of the Seller, there are no aboveground
storage tanks or
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Underground Storage Tanks at the Property and to the knowledge of Seller there
were no above ground storage tanks or Underground Storage Tanks at the Property;
(v) to the knowledge of the Seller, the Property has not been used
as a sanitary landfill facility as defined in the Solid Waste Management Act,
N.J.S.A. 13:1E-1 et seq.;
(vi) To Seller's knowledge, Seller has all environmental
certificates, licenses and permits ("Permit") required to operate the Property
and except as set forth in Schedule 15.B(a)(vi), Seller has no notice of any
violation of any statute, ordinance, rule, regulation, order, code, directive or
requirement, including, without limitation, Environmental Laws, with respect to
any Permit, nor any pending application for any Permit; and
(vii) To Seller's knowledge, there are no engineering or
institutional controls at the Property, including without limitation, any deed
notice, declaration of environmental restriction, groundwater classification
exception area or well restriction area pursuant to N.J.S.A. ss.13:1E-56 or
N.J.S.A. 58:10B-13.
(b) Notwithstanding anything to the contrary contained in this Agreement,
the obligation of Purchaser to pay the Purchase Price and otherwise proceed to
Closing shall be subject to the condition that Seller obtain a Letter of
Non-Applicability pursuant to ISRA from the Element (as defined in Section
15.B(e)(ii)), on or before the date (hereinafter called the "ISRA Compliance
Date") that is twenty (20) days after this Agreement is executed by Seller. Upon
Purchaser's request, Seller shall provide Purchaser with all information,
reports, studies and analysis which Seller delivered to the NJDEP with the
application for, or otherwise in connection with, the issuance of the Letter of
Non-Applicability. If the requirements of this Section are not satisfied on or
before the ISRA Compliance Date, Purchaser shall have the right to extend the
ISRA Compliance Date or to terminate this Agreement, in which latter event this
Agreement shall be rendered null and void and of no further force or effect, the
Deposit shall promptly be paid to Purchaser, and neither party shall have any
further liability or obligation to the other under or by virtue of this
Agreement.
(c) Within three (3) days of the date of the execution of this Agreement,
and subsequently promptly upon receipt by Seller or Seller's representatives,
Seller shall deliver to Purchaser copies of: (i) all Environmental Documents
concerning the Property generated by or on behalf of predecessors in title or
former occupants of the Property to the extent in Seller's possession; (ii) all
Environmental Documents concerning the Property generated by or on behalf of
Seller, whether currently or hereafter existing; (iii) all Environmental
Documents concerning the Property generated by or on behalf of current or future
occupants of the Property to the extent in Seller's possession, whether
currently or hereafter existing; and (iv) existing maps, diagrams and other
documentation to the extent in Seller's possession or control designating the
location of past and present operations at the Property and past and present
storage of Hazardous Materials above or below ground, on, under, at, emanating
from or affecting the Property or its environs.
44
<PAGE>
(d) Seller shall notify Purchaser in advance of all meetings scheduled
between Seller or Seller's representatives and NJDEP, and Purchaser, and
Purchaser's representatives shall have the right, without obligation, to attend
and participate in all such meetings.
(e) The following terms shall have the following meanings when used in
this Agreement:
(i) "Discharge" shall mean the releasing, spilling, leaking,
leaching, disposing, pumping, pouring, emitting, emptying, treating or dumping
of Hazardous Materials at, into, onto or migrating from or onto the Property,
regardless of whether the result of an intentional or unintentional action or
omission.
(ii) "Element" shall mean the Industrial Site Evaluation Element or
its successor of the NJDEP.
(iii) "Environmental Documents" shall mean all environmental
documentation in the possession of Seller which to the knowledge of Seller is
all environmental documentation concerning the Property, or its environs,
including without limitation, all sampling plans, cleanup plans, preliminary
assessment plans and reports, site investigation plans and reports, remedial
investigation plans and reports, remedial action plans and reports, or the
equivalent, sampling results, sampling result reports, data, diagrams, charts,
maps, analysis, conclusions, quality assurance/quality control documentation,
correspondence to or from any Governmental Authority, submissions to any
Governmental Authority and directives, orders, approvals and disapprovals issued
by any Governmental Authority.
(iv) "Environmental Laws" shall mean each and every applicable
federal, state, county or municipal statute, ordinance, rule, regulation, order,
code, directive or requirement, together with all successor statutes,
ordinances, rules, regulations, orders, codes, directives or requirements, of
any Governmental Authority in any way related to Hazardous Materials.
(v) "NJDEP" shall mean the New Jersey Department of Environmental
Protection or its successor.
(vi) "Tank Laws" shall mean the New Jersey Underground Storage of
Hazardous Substances Act, N.J.S.A. 58:10A-21 et seq., and the federal
underground storage tank law (Subtitle I) of the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. ss.6901 et seq., together with any
amendments thereto, regulations promulgated thereunder, and all substitutions
thereof, and any successor legislation and regulations.
(vii) "Underground Storage Tank" shall mean each and every
"underground storage tank", whether or not subject to the Tank Laws, as well as
the "monitoring system", the "leak detection system", the "discharge detection
system" and the "tank system" associated with the "underground storage tank", as
those terms are defined by the Tank Laws.
45
<PAGE>
15.C For the purposes of this Agreement, the term "knowledge of Seller"
shall mean only and solely the actual knowledge or knowledge of any written
information, notice or demand of Eileen M. Blaker, Judy Lasley or William
Adelson at the time Seller shall make the representation, after reasonable due
diligence, with respect to such referenced fact, condition or circumstance, but
without duty to independently investigate beyond Seller's books, records, plans
and files.
15.D Limitation of Survival Liability. Except as otherwise expressly set
forth herein, the representations and warranties of Seller set forth in the
Agreement shall survive only for a period of two (2) years from the date of
Closing and, upon the expiration of such two (2) year period, all such
representations and warranties shall terminate and may not be asserted (and any
and all claims and causes of action resulting from or on account of a breach
thereto, for which Purchaser has not served Seller theretofore with written
notice of claim, shall terminate and may not be asserted).
16. Representations, Warranties and Agreements of Purchaser. Purchaser
makes the following representations and warranties to Seller, and the following
agreements with Seller.
16.1 Purchaser has the legal power, right and authority to enter
into this Agreement and the instruments and documents referenced herein, and to
consummate the transaction contemplated hereby. The representations and
warranties set forth in this Section 16.1 shall survive the Closing for a period
of three (3) years.
16.2 All requisite corporate and/or partnership and/or other action
has been taken by Purchaser and all requisite consents have been obtained in
connection with Purchaser entering into this Agreement and the instruments and
documents referenced herein, and the consummation by Purchaser of the
transaction contemplated hereby. The representations and warranties set forth in
this Section 16.1 shall survive the Closing for a period of three (3) years.
16.3 Neither the execution of this Agreement nor the consummation of
the transaction contemplated hereby shall result in a material breach of, or
constitute a material default under, any agreement, document, instrument, order,
rule, writ or other obligation to which Purchaser is a party or by which
Purchaser may be bound.
17. Third Party Beneficiaries.
Nothing in this Agreement is intended or shall be construed to
confer upon or to give to any person, firm or corporation other than the parties
hereto any right, remedy, or claim under or by reason of this Agreement. All
terms and conditions in this Agreement shall be for the sole and exclusive
benefit of the parties herein.
18. Assignment.
46
<PAGE>
This Agreement may be assigned by Purchaser only if and provided
that (a) Purchaser shall give Seller written notice of the assignment prior to
on the effective date of the assignment, (b) the assignee shall agree in writing
(by instrument in form and substance reasonably acceptable to Seller) to assume
all obligations of Purchaser hereunder, and an executed original of said
instrument shall be delivered to Seller prior to on the effective date of the
assignment, (c) the original signatory to this Agreement as "Purchaser" shall
remain jointly and severally liable with such assignee for all obligations of
"Purchaser" under this Agreement, (d) the assignment includes an assignment to
the assignee of Purchaser's interest in the Deposit, (e) the Land Lessor Consent
shall not be affected, invalidated, or rendered ineffective or inapplicable by
reason of such assignment, and (f) the assignee shall be (i) an entity
controlled by or controlling or under common control with Purchaser ("control"
meaning the ownership of more than fifty (50%) percent of the equity interests
in such entity), or (ii) a limited partnership, the general partner of which
shall be Purchaser (a "Permitted Assignee").
19. Time of the Essence.
TIME IS OF THE ESSENCE AS AGAINST BOTH PARTIES UNDER THIS AGREEMENT.
20. AS IS. EXCEPT AS SPECIFICALLY SET FORTH TO THE CONTRARY IN THIS
AGREEMENT OR IN THE INSTRUMENTS DELIVERED BY SELLER AT CLOSING, SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO (I) THE PRESENT
OR FUTURE PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF
THE PROPERTY, (II) ITS PRESENT OR PERMISSIBLE USES, (III) THE INCOME OR EXPENSES
OF THE PROPERTY, (IV) THE GROUND LEASE, (V) THE SPACE LEASES, (VI) THE
COMPLIANCE OF THE PROPERTY, ITS OPERATION OR OCCUPANCY, WITH ANY LEGAL
REQUIREMENTS, OR (VII) ANY OTHER MATTERS CONCERNING THE CONDITION (INCLUDING,
WITHOUT LIMITATION, ENVIRONMENTAL CONDITION), STATE OF REPAIR, TITLE, OR ANY
OTHER MATTER CONCERNING THE GROUND LEASE, THE LEASEHOLD ESTATE, THE PROPERTY,
ITS OWNERSHIP, OPERATION, DEVELOPMENT, FINANCES, CONSTRUCTION, OR OCCUPANCY, AND
PURCHASER ACKNOWLEDGES THAT BEFORE CLOSING IT WILL HAVE THOROUGHLY INSPECTED THE
GROUND LEASE, THE LEASEHOLD ESTATE AND THE PROPERTY AND IS AND WILL BE FAMILIAR
WITH THE PHYSICAL CONDITION OF THE PROPERTY AND ALL SUCH OTHER MATTERS,
INCLUDING BUT NOT LIMITED TO ENVIRONMENTAL CONDITIONS RESPECTING THE PROPERTY,
AND ITS PRESENT AND PERMISSIBLE USES. PURCHASER FURTHER ACKNOWLEDGES THAT
PURCHASER WILL HAVE A FULL OPPORTUNITY TO INSPECT AND REVIEW THE GROUND LEASE,
THE LEASEHOLD ESTATE AND PROPERTY, AND ALL MATTERS RELATING THERETO, AND THAT
EXCEPT AS
47
<PAGE>
EXPRESSLY OTHERWISE PROVIDED IN THIS AGREEMENT, PURCHASER WILL ACCEPT THE GROUND
LEASE, THE LEASEHOLD ESTATE AND THE PROPERTY AND ITS USES "AS-IS", "WHERE-IS",
AND "WITH ALL FAULTS" AS OF THE CLOSING DATE, INCLUDING, WITHOUT LIMITATION, THE
EXISTENCE OF ANY HAZARDOUS MATERIAL ON OR ABOUT THE PROPERTY. EXCEPT AS
EXPRESSLY OTHERWISE PROVIDED IN THIS AGREEMENT AND THE INSTRUMENTS DELIVERED BY
SELLER AT CLOSING, AND TO THE MAXIMUM EXTENT PERMISSIBLE BY LAW, PURCHASER
IRREVOCABLY WAIVES ANY REPRESENTATIONS OR WARRANTIES IMPLIED BY LAW, INCLUDING,
WITHOUT LIMITATION, ANY REPRESENTATIONS OR WARRANTIES AS TO MERCHANTABILITY,
FITNESS, QUANTITY, QUALITY OR SUITABILITY. PURCHASER HEREBY ACKNOWLEDGES AND
AGREES THAT EXCEPT AS MAY OTHERWISE BE PROVIDED BY THE EXPRESS TERMS OF THIS
AGREEMENT, SELLER HAS NO OBLIGATION WHATSOEVER TO UNDERTAKE ANY REPAIRS,
ALTERATIONS OR OTHER WORK OF ANY KIND WITH RESPECT TO ANY PORTION OF THE
PROPERTY. PURCHASER WAIVES ANY RIGHT IT NOW OR IN THE FUTURE MAY HAVE TO AVOID
THE CONVEYANCE OR ASSIGNMENT OF THE PROPERTY BY SELLER TO PURCHASER EXCEPT AS
EXPRESSLY PROVIDED BY THIS AGREEMENT.. THE AGREEMENTS AND PROVISIONS CONTAINED
IN THIS SECTION 20 SHALL SURVIVE THE CLOSING.
21. Miscellaneous.
21.1 The captions in this Agreement are inserted for convenience of
reference only and in no way define, describe or limit the scope or intent of
this Agreement or any of the provisions hereof.
21.2 This Agreement shall not be binding or effective until properly
executed and delivered by Seller and Purchaser. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
and all of which shall constitute one and the same Agreement, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such fully executed counterpart.
21.3 This Agreement may not be changed or terminated orally. This
Agreement shall be deemed to merge with the conveyance of title and all
covenants, agreement, indemnities, representations and warranties shall not
survive the Closing except as may be otherwise specifically provided herein.
21.4 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their respective successors, personal
representatives, heirs and assigns (subject to the provisions of Section 18).
21.5 This Agreement shall be governed by and construed in accordance
with
48
<PAGE>
the laws of the State of New Jersey.
21.6 This Agreement contains the entire agreement between the
parties and any and all understandings and dealings heretofore had are merged
herein and any agreement hereafter made shall be ineffective to change, modify,
or discharge this Agreement in whole or in part unless such agreement hereafter
made is in writing and signed by the parties hereto.
21.7 Except as provided to the contrary in this Agreement, the
failure by Purchaser or Seller to insist upon or enforce any rights herein shall
not constitute a waiver thereof. Seller and Purchaser each shall have the right
to waive any one or more of the terms and conditions of this Agreement which are
for its benefit, by express written notice of such waiver to the other party.
21.8 The Schedules and Exhibits (if any) attached hereto are hereby
made a part of this Agreement as fully as if set forth in the text of this
Agreement.
21.9 Neither this Agreement, nor any memorandum or notice thereof,
may be recorded by Purchaser. The recordation of this Agreement, or any
memorandum or notice thereof by Purchaser shall be a default by Purchaser under
this Agreement, and, at the option of Seller, shall render this Agreement null
and void.
21.10 All captions, headings, Section numbers and other references
are solely for the purpose of facilitating reference to this Agreement and shall
not supplement, limit or otherwise vary in any respect the text of this
Agreement.
21.11 Except as expressly provided by the terms of this Agreement,
all rights, powers and privileges conferred hereunder shall be cumulative and
not restrictive of those given by law.
21.12 All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the person or persons or entity or entities in question may require.
21.13 In connection with any litigation arising under this
Agreement, the prevailing party shall be entitled to attorneys fees and other
legal costs, including but not limited to attorneys fees and costs incurred in a
bankruptcy proceeding.
21.14 Purchaser shall not, prior to the Closing, make or give any
press release or any other public announcement respecting the transaction
contemplated in this Agreement, nor otherwise publicly disclose or disseminate
any information respecting such transaction, including, without limitation, the
Purchase Price and/or the other terms and provisions of this Agreement, without
the prior written consent of Seller in each case, except as otherwise may be
required by law or court order. The provisions of this paragraph shall survive
the termination or cancellation
49
<PAGE>
of this Agreement
50
<PAGE>
22. Broker.
Purchaser hereby represents to Seller that Purchaser has not dealt
with any real estate broker, finder agent or salesman in connection with the
negotiation of this Agreement other than Broker, as hereinafter defined. Seller
hereby represents to Purchaser that Seller has not dealt with any real estate
broker, finder agent or salesman in connection with the negotiation of this
Agreement other than Eastdil Properties ("Broker"). Seller shall pay a
commission to Broker pursuant to a separate agreement between Seller and Broker
and shall indemnify Purchaser against, and hold Purchaser harmless from, any and
all claims (and all expenses incurred in defending any such claims or in
enforcing this indemnity, including attorneys' fees and court costs) by Broker
and by any broker or finder for a real estate commission or similar fee arising
out of or in any way connected with any claimed relationship between such broker
or finder and Seller, including without limitation Merrill Lynch Locations
Services or any Merrill Lynch related entity. Purchaser shall indemnify Seller
against, and hold Seller harmless from, any and all claims (and all expenses
incurred in defending any such claims or in enforcing this indemnity, including
attorneys' fees and court costs) by any broker or finder for a real estate
commission or similar fee arising out of or in any way connected with any
claimed relationship between such broker or finder and Purchaser. The provisions
of this Section 22 shall survive the Closing or the termination of this
Agreement.
23. Township's Requirements.
23.1 Seller and the Township of Plainsboro (the "Township") are
parties to a certain Bus Shelter Escrow Agreement dated November 30, 1995, (the
"Bus Shelter Agreement"), pursuant to which Seller has deposited into escrow
with the Township Seven Thousand Five Hundred Dollars ($7,500). Seller has
provided to Purchaser a true and complete copy of said agreement. The parties
agree that following Closing the Bus Shelter Agreement, and the funds deposited
into escrow pursuant thereto, shall remain in place, in accordance with the
terms thereof. Seller shall not seek to withdraw from such agreement because of
the Closing of the transactions contemplated hereby. Seller shall be entitled to
the return by the Township of the escrow funds not expended and interest earned
thereon, in accordance with the terms of the Bus Shelter Agreement and Purchaser
shall have no right to or make any claim for such funds.
23.2 In connection with certain construction to the parking areas of
the Property (the "Prior Work"), Seller has pre-paid to the Township Two
Thousand Six Hundred NinetyThree Dollars ($2,693) for inspection fees (the
"Pre-Paid Amount"). The Pre-Paid Amount shall remain with the Township after
Closing to pay for any inspection fees charged by the Township in connection
with the Prior Work. After Closing Seller shall be entitled to make application
for return to it of the Pre-Paid Amount and to receive from the Township any
balance remaining after application by the Township of any remaining inspection
fees for the Prior Work.
23.3 In connection with and as required by certain approvals granted
by Plainsboro Township with respect to the extension of the parking area of the
Improvements, Seller
51
<PAGE>
has posted with Plainsboro Township a maintenance bond (the "Bond") in the
amount of Sixteen Thousand Two Hundred Twenty-One Dollars and Fifty-One Cents
($16,221.51) (the "Bond Amount"). To the extent permitted by law and acceptable
to Plainsboro Township, Purchaser agrees to post with Plainsboro Township a
substitute bond in the Bond Amount. Purchaser shall have no obligation and not
be in default hereof on account of any refusal or delay by Plainsboro Township
in accepting such a substitute bond. In addition, Purchaser shall have no
obligation to provide a substitute bond on any terms or conditions different
from those applicable to the Bond. Seller, at its sole cost, shall be
responsible for obtaining any necessary approvals of Plainsboro Township with
respect to the release of the Bond in connection with the substitution of a new
bond. Purchaser shall reasonably cooperate with Seller in connection with
obtaining such approvals.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLER:
SI PRINCETON, INC.
Attest: By: Name:
--------- ------------------------------ ------
EILEEN M. BLAKER, PRESIDENT
Title: By:
-------- -----------------------------
Seller's Tax Identification No.:
---------
PURCHASER:
MACK-CALI REALTY ACQUISITION
CORPORATION
Attest: By: Name:
--------- ------------------------------ ------
ROGER THOMAS, ESQUIRE
VICE PRESIDENT
Purchaser's Tax Identification No.:
--------
ESCROW AGENT (as to Section 5 only):
COMMONWEALTH LAND TITLE INS. CO.
Attest: By:
------------------ ------------------------------
Name: WILLIAM DEATLY
--------------------
52
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
<PAGE>
EXHIBIT J
SERVICE CONTRACTS
================================================
SERVICE VENDOR
------------------------------------------------
CLEANING Unicco
------------------------------------------------
ELEVATOR Security Elevator
MAINTENANCE Co.
------------------------------------------------
FIRE SPRINKLERS AFA Protective
Systems, Inc.
------------------------------------------------
FIRE SYSTEM Standard Electric
------------------------------------------------
SECURITY (see access
control)
------------------------------------------------
HVAC Sass-Moore Svc.
Corp.
------------------------------------------------
INTERIOR & Pennick Arrimour
EXTERIOR
LANDSCAPING
------------------------------------------------
TRASH REMOVAL Waste Management
of Central New
Jersey
------------------------------------------------
RECYCLING Waste Mgmt.
------------------------------------------------
WINDOW CLEANING LWC Services,
Inc.
------------------------------------------------
MARBLE MAINTENANCE Not provided
------------------------------------------------
METAL MAINTENANCE Not provided
------------------------------------------------
ACCESS CONTROL STI
------------------------------------------------
EXTERMINATING Cooper Pest
Control
------------------------------------------------
SNOW REMOVAL Penninck
Arrimour, Inc.
------------------------------------------------
SWEEPING Reilly Sweeping,
Inc.
================================================
<PAGE>
EXHIBIT J-1
ELECTED SERVICE CONTRACTS
ELEVATOR MAINTENANCE - SECURITY ELEVATOR CO.
<PAGE>
EXHIBIT K
LITIGATION
NONE
<PAGE>
EXHIBIT M
TAX PROTESTS
NONE
<PAGE>
EXHIBIT Q
UNION AND COLLECTIVE BARGAINING AGREEMENTS
NONE
<PAGE>
SCHEDULE 15.B
ENVIRONMENTAL MATTERS
Phase I Environmental Site Assessment Report of Dames and Moore
dated June 18, 1996.
<PAGE>
SCHEDULE 15.4
LEASE ISSUES
Matters raised with respect to charges for electrical usage in that
certain letter dated April 8, 1998 from Mark I. Goldberg, of Buchanan Ingersoll.
<PAGE>
SCHEDULE 15.22
REQUIREMENTS OF INSURANCE UNDERWRITERS
July 17, 1997 letter from Industrial Risk Insurers to William
Adelson and attached Loss Prevention Survey.
<PAGE>
SCHEDULE 15.23
GOVERNMENTAL ACTIONS
See New Jersey Authority Application attached regarding proposed
Route 92.
<PAGE>
SCHEDULE 15.24
LEASING COMMISSIONS
Commission Agreement with Grubb & Ellis Company and Merrill Lynch
Location Services with respect to the Merrill Lynch Asset Management, L.P. lease
(copy attached).
Also attached hereto is a copy of the leasing commission provisions
of the Management Agreement with Carr Real Estate Services which Management
Agreement shall be terminated by Seller effective as of the date of Closing.
There are no leasing commissions due to Carr Real Estate Services as of the date
hereof or hereafter.
<PAGE>
SCHEDULE 15.28
AUDITS AND PROCEEDINGS
NONE
PURCHASE AND SALE AGREEMENT
by and between
1709 L.P.
(as Seller)
and
MACK-CALI REALTY ACQUISITION CORP.
(as Purchaser)
Dated: June 1, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions............................................................1
2. Sale of the Property...................................................6
3. Matters to Which the Sale is Subject...................................6
4. Purchase Price and Payment.............................................6
4.1 Amount...........................................................6
4.2 Deposit..........................................................6
4.3 Payment..........................................................7
4.4 Disposition of Deposit...........................................8
4.5 Interpleader.....................................................8
4.6 Escrow Agent as Stakeholder......................................8
5. Closing Adjustments and Prorations.....................................9
5.1 General..........................................................9
5.2 Rent and Security Deposits.......................................9
5.3 Taxes and Assessments...........................................11
5.4 Operating Expenses..............................................12
5.5 Utility Deposits................................................13
5.6 Tenant-related expenses.........................................13
5.7 Final Closing Adjustment........................................14
6. Closing Date and Costs................................................15
6.1 Closing Date....................................................15
6.2 Closing Costs and Transfer Taxes................................15
7. Closing Documents.....................................................16
7.1 Seller's Deliveries.............................................16
7.2 Purchaser's Deliveries..........................................18
7.3 Delivery in Escrow..............................................18
8. Obligations Pending Closing...........................................18
8.1 Continued Care and Maintenance..................................18
8.2 Other Covenants.................................................20
9. Conditions to Closing.................................................20
9.1 Inspection Period...............................................20
9.2 Title or Survey Exceptions......................................21
9.3 Encumbrances Subsequent to Inspection Period....................22
9.4 Representations and Warranties True.............................23
9.5 Estoppel Certificates...........................................24
9.6 Other Conditions to Closing.....................................25
9.7 Approvals and Permits not a Condition to
Purchaser's Performance.........................................25
<PAGE>
10. Brokerage.............................................................25
11. Risk of Casualty and Condemnation Pending Closing.....................26
12. Notices and Other Communications......................................28
12.1 Manner of Giving Notice.........................................28
12.2 Addresses for Notices...........................................28
13. Default and Remedies..................................................29
13.1 Purchaser......................................................29
13.2 Seller.........................................................29
13.3 Legal Fees.....................................................29
13.4 Documents......................................................29
14. Environmental Condition...............................................30
15. Seller's Representations and Warranties...............................30
15.1 United States Person...........................................30
15.2 Management Agreement...........................................30
15.3 Condemnation...................................................30
15.4 Litigation.....................................................30
15.5 Seller's Authority.............................................31
15.6 Leases.........................................................31
15.7 Service Contracts..............................................32
15.8 Notices of Violations..........................................32
15.9 No Remediation Programs........................................32
16. Purchaser's Authority.................................................32
17. Third Party Beneficiaries.............................................33
18. Further Assurances....................................................33
19. No Assignment.........................................................33
20. Confidentiality.......................................................34
21. Assumption or Cancellation of Service Contracts.......................34
22. Exclusivity...........................................................35
23. Miscellaneous.........................................................35
23.1 Captions and Execution.........................................35
23.2 Press Release..................................................35
23.3 Recording......................................................35
23.4 Amendment and Merger...........................................35
23.5 Binding........................................................36
23.6 Governing Law and Limitation Date..............................36
ii
<PAGE>
23.7 Entire Agreement...............................................36
23.8 Time of Essence................................................36
23.9 No Waiver......................................................36
23.10 Partial Invalidity.............................................36
23.11 Waiver of Jury Trial...........................................37
23.12 No Cross Default...............................................37
23.13 Soil Characteristics...........................................37
iii
<PAGE>
TABLE OF SCHEDULES AND EXHIBITS
Schedules
A Legal Description
B Leases and Security Deposits
C Service Contracts
D Permitted Encumbrances
E Intentionally Omitted
F Pending Litigation
5.2(b) Delinquency Report
5.6 New Leases, Lease Amendments and Commission
Agreements
Exhibits
A Form of Deed
B Form of Assignment and Assumption of Leases and
Service Contracts
C Form of Assignment of Intangible Property and
Warranties
D Form of Notice to Tenants
E Form of Affidavit
F Form of Estoppel Certificate
G Form of Escrow Agreement
iv
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into this 1st day of June, 1998 (the "Effective Date"), by and between 1709
L.P., a District of Columbia limited partnership ("Seller") and MACK-CALI REALTY
ACQUISITION CORP., a Delaware corporation ("Purchaser").
RECITALS
A. Seller owns a certain parcel of land and the improvements thereon,
located at 1709 New York Avenue, N. W., Washington, D. C.
B. Seller has agreed to sell to Purchaser, and Purchaser has agreed to
purchase from Seller, all land, improvements, furniture, furnishings, fixtures,
equipment and other tangible and intangible assets and properties owned by
Seller and used by it in connection with the management, operation, maintenance
and repair of such land and improvements.
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 agree as follows:
1. Definitions.
The terms defined in this Section 1 shall have the respective meanings
stated in this Section 1 for all purposes of this Agreement. For purposes of
this Agreement, except as otherwise expressly provided or unless the context
otherwise requires, (i) the terms defined in this Section 1 shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include the other gender; (ii) accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with generally accepted
accounting principles; (iii) references herein to "Sections" and other
subdivisions without reference to a document shall be to designated Sections and
other subdivisions of this Agreement; (iv) a reference to an Exhibit or a
Schedule without a further reference to the document to which the Exhibit or
Schedule is attached shall be a reference to an Exhibit or Schedule to this
Agreement; (v) the words "herein," "hereof," "hereunder" and other words of
similar import shall refer to this Agreement as a whole and not to any
particular provision; and (vi) the word "including" shall mean "including, but
not limited to."
1.1 Additional Rent shall mean all reimbursements of Operating Expenses
and administrative charges, common area
<PAGE>
maintenance charges, reimbursements of real estate taxes, rent escalations based
on increases in the consumer price index or any other measures of inflation,
retroactive rent escalations, insurance cost reimbursements, parking charges,
antenna rents, license fees and all other amounts and charges payable by Tenants
to Seller, as landlord, under their Leases (other than Basic Rent), but shall
not include security deposits under the Leases.
1.2 Affiliate shall mean, with respect to any entity, any natural
person or firm, corporation, partnership, association, trust or other entity
that controls, is controlled by, or is under common control with, the subject
entity; a natural person or entity that controls an Affiliate under the
foregoing shall also be deemed to be an Affiliate of such entity. For purposes
hereof, the term "control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of any
such entity, or the power to veto major policy decisions of any such entity,
whether through the ownership of voting securities, by contract or otherwise.
1.3 AS IS CONDITION WITH ALL FAULTS shall mean as is, with all
faults, including defects seen and unseen and all conditions natural and
artificial without right of set-off or reduction in the Purchase Price and
without representation or warranty of any kind, express or implied, except for
such representations or warranties as are expressly provided for herein.
1.4 Basic Rent shall mean all base rent or basic rent payable in
fixed installments and fixed amounts for stated periods by Tenants under their
Leases.
1.5 Building shall mean collectively all of the buildings and
structures now or on the Closing Date erected or situated upon the Land,
including all improvements and fixtures, appurtenant to or used in connection
therewith, that are owned by Seller presently or on the Closing Date and any
interest of Seller in and to alterations and installations in the buildings and
structures that may now or hereafter, by lease or operation of law, become the
property of Seller.
1.6 Business Day shall mean those days of the week that are not a
Saturday, Sunday or a federal holiday.
1.7 Closing shall have the meaning set forth in Section 4.3.
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1.8 Closing Date shall mean the Effective Date.
1.9 Closing Statement shall have the meaning set forth in Section
5.1.
1.10 Delinquent Rent shall mean rent that is due and payable by a
Tenant on or before the Closing Date but that has not been paid by the Closing
Date.
1.11 Deposit. No deposit is required of Purchaser hereunder. All
references to a "Deposit" under this Agreement, and all provisions of this
Agreement dealing with a "Deposit", shall be deemed to be inoperative and of no
force or effect.
1.12 Effective Date shall be the date set forth in the preamble to
this Agreement.
1.13 End of the Inspection Period shall mean the Effective Date.
1.14 Escrow Agent shall mean Commercial Settlements, Inc.
1.15 Final Closing Adjustment shall have the meaning set forth in
Section 5.7.
1.16 Inspection Period shall have the meaning set forth in Section
9.1.
1.17 Intangible Property shall mean the contract rights, licenses,
permits, certificates of occupancy, guaranties, warranties, approvals, rights to
use trademarks, any name by which the Property is commonly known, trade names,
telephone numbers in use at the Property by Seller or its managing agent, logos,
designs, graphics or artwork, architectural drawings and as-built plans, and all
similar items, each to the extent owned by Seller and to the extent they are in
Seller's possession and used in connection with the operation of the Property,
but shall not include bank accounts or cash held in the name of Seller or its
managing agent.
1.18 Land shall mean that certain parcel of land situate and lying
in the District of Columbia, as more particularly described in Schedule A.
1.19 Leases shall mean the leases of space in the Building as
described in Schedule B and any other leases or occupancy agreements to which
Seller is a party, with amendments
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and guaranties thereof and other amendments permitted by this Agreement or
otherwise agreed to by Purchaser.
1.20 Operating Expenses shall mean all costs, expenses, charges and
fees relating to the ownership, management, operation, maintenance and repair of
the Property, including electricity, gas, water and sewer charges, telephone and
other public utilities, common area maintenance charges, vault charges, personal
property taxes, and periodic charges payable under Service Contracts, but not
including any costs, expenses, charges or fees that are the direct
responsibility of a Tenant under a Lease.
1.21 Other Seller Interests shall mean all of the right, title and
interest of Seller pertaining to the Land, including all hereditaments and
appurtenances thereunto belonging or in any way appertaining, including the
following:
(a) all of the right, title and interest of Seller in and to
any easements, privileges, grants of right or other agreements affecting the
Property or comprising the Permitted Encumbrances, including any structures or
improvements erected pursuant to such easements, grants of right or other
agreements whether or not situated upon the Land;
(b) all of the right, title and interest of Seller in and to
any land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Property, to the center line thereof, and to any
strips or gores adjoining the Property or any part thereof, and all right, title
and interest of Seller in and to any award made or to be made in lieu thereof,
and in and to any unpaid award for damages to the Property by reason of change
of grade of any street;
(c) all of the right, title and interest of Seller in and to
any mineral and water rights, if any; and
(d) tenant data, leasing material and forms, past and current
rent rolls, tenant files, and other similar information and materials used by
Seller in the use and operation of the Property, all to the extent in Seller's
possession, with the exception of appraisals, forecasts and other owner-oriented
or confidential information.
1.22 Permitted Encumbrances shall mean those items or matters
affecting title to the Property which are set forth on Schedule D attached
hereto, and those items or matters otherwise
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deemed to be Permitted Encumbrances pursuant to the provisions of this
Agreement.
1.23 Personal Property shall mean all personal property, fixtures,
equipment and inventory owned by Seller and located at the Building.
1.24 Property shall mean collectively the Land, the Site
Improvements, the Building, the Personal Property, the landlord's rights under
the Leases, the Seller's rights under the Service Contracts, the Intangible
Property and the Other Seller Interests.
1.25 Purchase Price shall mean the purchase price for the Property
specified in Section 4.1.
1.26 Service Contracts shall mean all of the service, operation,
maintenance, labor and similar agreements entered into by Seller in respect of
the Property that are described in Schedule C; provided, however, that Service
Contracts shall not include any management contracts or exclusive agency
agreements for leasing of office and/or retail space in the Building.
1.27 Site Improvements shall mean the parking garage, driveway
pavings, access cuts, lighting, bumpers, drainage systems and landscaping
situated upon the Land.
1.28 Tenant shall mean the holder of any right to occupy, possess,
or use all or any part of the Property pursuant to a Lease.
1.29 Title Commitment shall have the meaning set forth in Section
9.2.
1.30 Title Company shall mean Lawyers Title Insurance Corporation.
At Purchaser's election, Purchaser may cause the Title Commitment to be issued
by an abstract agency writing for Purchaser's title company. In addition,
Purchaser shall have the right to cause the Title Commitment to be issued by one
or more title companies.
2. Sale of the Property.
Upon and subject to the terms and conditions contained in this
Agreement, Seller agrees to sell the Property to Purchaser, and Purchaser agrees
to purchase the Property from Seller.
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3. Matters to Which the Sale is Subject.
The sale of the Property shall be subject to each and all of the
following:
(a) all laws, ordinances, statutes, orders, requirements and
regulations to which the Property is subject, including zoning, building and
environmental laws and requirements;
(b) any state of facts that a new or updated survey or physical
inspection of the Property might disclose;
(c) the Permitted Encumbrances;
(d) all covenants, encumbrances or restrictions approved (or deemed
approved) by Purchaser;
(e) all terms, provisions and conditions of the Leases; and
(f) the Service Contracts and any other agreements affecting the
Property that Purchaser assumes pursuant to Section 21 hereof.
4. Purchase Price and Payment.
4.1 Amount. The purchase price for the Property shall be the sum of
Forty-Nine Million Dollars ($49,000,000) (the "Purchase Price"), which shall be
payable all in cash at the Closing. No part of the Purchase Price is allocable
to the Personal Property.
4.2 Deposit. Purchaser shall place the Deposit in escrow with the
Escrow Agent simultaneously with Purchaser's execution of this Agreement. The
Deposit shall be subject to disposition as provided for elsewhere in this
Agreement. If the Deposit is in cash or is converted into cash in accordance
with this Section, Escrow Agent shall promptly after receipt invest the Deposit
in an interest-bearing account in a commercial bank acceptable to both Purchaser
and Seller. If Purchaser elects to deliver a letter of credit ("LOC") as the
Deposit, the LOC shall be (i) unconditional and irrevocable, (ii) issued to
Escrow Agent as beneficiary by a commercial bank acceptable to Seller, (iii) for
a term of not less than one year from the date of issuance, and (iv) otherwise
acceptable to Seller in all respects. In the event that the Deposit is in the
form of an LOC and there is any dispute between Seller and Purchaser regarding
the disposition of
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the Deposit, Seller shall have the unilateral right, at its sole discretion, to
instruct Escrow Agent to cash the LOC and to hold the proceeds of the LOC as a
cash deposit under the provisions of this Agreement. Purchaser agrees that if
Seller so instructs Escrow Agent, Purchaser will not interpose any objection to
such instruction and will permit Escrow Agent to cash the LOC pursuant to such
instruction.
4.3 Payment. On the Closing Date, and subject to the terms and
conditions of this Agreement, Purchaser shall pay the Purchase Price to, or for
the account of, Seller in the manner provided for in this Section 4.3, subject
to the adjustments and prorations set forth in Section 5. Not later than 11:00
a.m. Eastern Time on the Closing Date, Purchaser shall effect a wire transfer of
federal funds to the Title Company's designated escrow account in an amount
equal to the sum of (i) the Purchase Price and (ii) the net amount (if any) of
the costs, expenses, prorations and adjustments payable by Purchaser under this
Agree ment. The amount of the funds to be wired to the Title Company's account
shall be reduced by the Deposit, if the Deposit is in cash. After the Title
Company's receipt of the wire transfer of funds in the amount required by this
Agreement, and immediately following Purchaser's confirmation that all
conditions precedent to Purchaser's obligation to close hereunder have been
satisfied, Purchaser or its counsel shall instruct the Title Company to (i)
disburse to Seller an amount equal to the Purchase Price, reduced by the net
amount of the costs, expenses, prorations and adjustments payable by Seller
under this Agreement; (ii) deliver to Purchaser all other documents and
instruments received by the Title Company that, in accordance with the terms of
this Agreement, are to be delivered by Seller to Purchaser at the closing of the
purchase and sale of the Property (the "Closing"); and (iii) deliver to Seller
all other documents and instruments received by the Title Company that, in
accordance with the terms of this Agreement, are to be delivered by Purchaser to
Seller at the Closing. Simultaneously with giving the instruction set forth in
the previous sentence, Purchaser shall instruct Escrow Agent to disburse the
Deposit to Seller. If the Deposit is in the form of an LOC, Seller shall
instruct Escrow Agent to deliver the LOC to Purchaser promptly after completion
of the Closing, and Escrow Agent shall execute a release of Seller and Purchaser
(in the customary form) relating to the performance by Escrow Agent of its
obligations hereunder.
4.4 Disposition of Deposit. If this Agreement is terminated pursuant
to Section 13 and thereafter either Seller or Purchaser makes a demand on the
Escrow Agent for the return of the Deposit (if the demand is made by Purchaser)
or for the
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payment of the Deposit (if the demand is made by Seller), the Escrow Agent shall
give notice of such demand to the other party. If the Escrow Agent does not
receive an objection from the other party to the proposed payment or return of
the Deposit within ten (10) days after the giving of such notice, the Escrow
Agent shall pay the Deposit to the party making the demand. If the Escrow Agent
receives an objection from the other party within the ten (10)-day period, the
Escrow Agent shall continue to hold the Deposit until otherwise directed by
instructions from Seller and Purchaser or until otherwise directed by a court of
competent jurisdiction. If a demand is made for either the return or payment of
the Deposit and if the Deposit is in the form of a LOC, and the Escrow Agent
continues to hold the Deposit, either of the Seller or the Purchaser may, by
notice in writing to the Escrow Agent, require the Escrow Agent to cash the LOC
and hold the proceeds in accordance with the terms of this Agreement. If the
Deposit is in the form of an LOC, Escrow Agent shall effect any payment of the
Deposit to Seller by cashing the LOC and paying the proceeds to Seller.
4.5 Interpleader. In the event of a dispute concerning the
disposition of the Deposit, the Escrow Agent shall have the right at any time to
deposit any cash funds held by it under this Agreement, or the LOC (in the event
Seller has not instructed Escrow Agent to cash the LOC in accordance with the
provisions of Sections 4.2 or 4.4 hereof), with the clerk of the court having
jurisdiction. The Escrow Agent shall give notice of such deposit to Seller and
Purchaser. Upon such deposit, the Escrow Agent shall be relieved and discharged
of all further obligations and responsibilities hereunder.
4.6 Escrow Agent as Stakeholder. The parties acknowledge that the
Escrow Agent is acting solely as a stakeholder at their request and for their
convenience; that the Escrow Agent shall not be deemed to be the agent of either
of the parties; and that the Escrow Agent shall not be liable to either of the
parties for any act or omission on its part unless taken or suffered in bad
faith, in willful disregard of this Agreement or involving gross negligence.
Seller and Purchaser shall jointly and severally indemnify and hold the Escrow
Agent harmless from and against all costs, claims, and expenses, including
reasonable attorneys' fees, incurred in connection with the performance of the
Escrow Agent's duties hereunder, except with respect to actions or omissions
taken or suffered by the Escrow Agent in bad faith, in willful disregard of this
Agreement or involving gross negligence on the part of the Escrow Agent.
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5. Closing Adjustments and Prorations.
5.1 General. All Additional Rent, Basic Rent, and other rentals,
revenues and other income generated by the Property ("Rent") and all utilities,
real estate taxes, maintenance charges and other Operating Expenses incurred in
connection with the ownership, management and operation of the Property shall be
paid or shall be prorated between Seller and Purchaser in accordance with the
provisions of this Section 5. For purposes of the prorations and adjustments to
be made pursuant to this Section 5, Purchaser shall be deemed to own the
Property and therefore be entitled to any revenues and be responsible for any
expenses for the entire day upon which the Closing occurs. Any apportionments
and prorations that are not expressly provided for in this Section 5 shall be
made in accordance with the customary practice in the metropolitan Washington
D.C. area. Seller and Purchaser shall cause their accountants to prepare a
schedule of prorations (the "Closing Statement") in draft form to be finalized
on the Business Day immediately prior to the Closing Date. Any net adjustment in
favor of Purchaser shall be credited against the Purchase Price at the Closing.
Any net adjustment in favor of Seller shall be paid in cash at the Closing by
Purchaser to Seller.
5.2 Rent and Security Deposits. Rent shall be prorated at the
Closing in accordance with the following provisions:
(a) Basic and Additional Rent. Subject to Section 5.2(b),
Seller shall be entitled to all Basic Rent and Additional Rent that accrues
before the Closing Date and Purchaser shall be entitled to all Basic Rent and
Additional Rent that accrues on and after the Closing Date. Basic Rent and
Additional Rent that Seller has collected for the month in which Closing occurs
shall be prorated between Seller and Purchaser as of the Closing Date based on
the actual number of days in the month during which the Closing Date occurs. For
purposes hereof, Additional Rent shall be prorated as of the Closing Date based
on Seller's current estimates thereof which have been collected from Tenants and
shall be readjusted in the Final Closing Adjustment.
(b) Delinquent Rent. Delinquent Rent, after reasonable, actual
expenses of collection, shall be promptly paid by Purchaser to Seller as
provided in the balance of this paragraph if, as and when actually collected by
Purchaser after the Closing, it being understood and agreed that Purchaser shall
be obligated only to use commercially reasonable efforts to collect Delinquent
Rent on behalf of Seller, and shall not be
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obligated to commence litigation or to terminate a Tenant's Lease in order to
collect Delinquent Rent. Purchaser hereby agrees that Seller or its agents may
attempt to collect Delinquent Rent at Seller's expense, including commencing
litigation to collect such Delinquent Rent, but Seller agrees that after the
Closing Date it shall not (i) initiate any action that would terminate a
Tenant's Lease or affect such Tenant's right to occupy the premises or use the
parking spaces leased under its Lease, or (ii) seek to apply such Tenant's
security deposit against the Delinquent Rent of such Tenant. If a Tenant has 60
days or less of Delinquent Rent which is Basic Rent ("Delinquent Basic Rent"),
Rent collected by Purchaser after the Closing Date in respect of such Tenant
shall be applied first to Delinquent Basic Rent to the extent of thirty (30)
days of Delinquent Basic Rent attributable to the thirty (30)-day period
immediately preceding the Closing Date, then to Rent currently due (including
unpaid Rent accruing after the Closing Date), and then to any other unpaid
Delinquent Rent. If a Tenant has more than 60 days of Delinquent Basic Rent,
Rent collected by Purchaser after the Closing Date in respect of such Tenant
shall be applied first to Rent currently due (including unpaid Rent accruing
after the Closing Date), and then to Delinquent Rent. All Rent received by
Purchaser which is required to be applied as a credit to, or for the benefit of,
Seller pursuant to this Agreement shall be promptly paid by Purchaser to Seller
upon Purchaser's receipt of the same. Attached as Schedule 5.2(b) is a schedule
of Delinquent Rent compiled as of May 29, 1998 (it being understood that Seller
makes no representation or warranty concerning the accuracy of such delinquency
report). Schedule 5.2(b) attached hereto shall be the basis of making the
payments referred to in this Section, absent manifest error.
(c) Security Deposits. Purchaser shall receive, as a credit
against the Purchase Price, an amount equal to all cash security deposits set
forth in the Leases, together with interest required to be paid thereon, to the
extent not applied by Seller, as landlord, under such Leases on or prior to the
Effective Date, and any prepaid Rent. The security deposits held by Seller as of
the Effective Date are set forth on Schedule B attached hereto (it being
understood and agreed that Seller makes no representation or warranty concerning
such security deposits or the accuracy of Schedule B regarding such security
deposits). At Closing, Schedule B shall be the basis of making the credit to
Purchaser referred to in this Section, absent manifest error.
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5.3 Taxes and Assessments.
(a) Proration of Taxes at Closing. All non-delinquent real
estate taxes and special assessments, if any, assessed against the Property
shall be prorated between Seller and Purchaser as of the Closing Date in the
customary fashion, based upon the actual current tax bill. If the most recent
tax bill received by Seller before the Closing Date is not the actual current
tax bill, then Seller and Purchaser shall initially prorate the real estate
taxes at the Closing by applying the tax rate indicated on the most recent tax
bill received by Seller to the latest assessed valuation, and shall re-prorate
the real estate taxes retroactively at the Final Closing Adjustment. All real
estate taxes accruing before the Closing Date shall be the obligation of Seller
and all real estate taxes accruing on and after the Closing Date shall be the
obligation of Purchaser. Any delinquent real estate taxes assessed against the
Property shall be paid (together with any interest and penalties) by Seller at
the Closing. Any general or special assessments, if any, assessed against the
Property for work which has been completed prior to the Closing shall be paid
for in full by Seller at or prior to the Closing; provided, however that if any
such assessment is payable in installments, Seller shall pay all of such
installments due through the day prior to the Closing, and Purchaser shall be
responsible for the balance of such installments. All other assessments shall be
paid by Purchaser when due (and if due prior to Closing, shall be paid at or
prior to Closing).
(b) Post-Closing Supplemental Taxes. If, after the Closing
Date, any additional or supplemental real estate taxes are assessed against the
Property by reason of back assessments, corrections of previous tax bills or
other events (including, without limitation, imposition of any special
assessments) occurring before the Closing Date, Seller and Purchaser shall
re-prorate the real estate taxes within thirty (30) days after the final
determination thereof, but in no event later than at the Final Closing
Adjustment.
(c) Post-Closing Refunds of Taxes. Any refunds of real estate
taxes made after the Closing shall first be applied to the reasonable
unreimbursed costs incurred in obtaining the refund (including, but not limited
to, any legal fees paid by Seller or Purchaser), then paid to any Tenants who
are entitled to the same, and the balance, if any, shall be paid (within thirty
(30) days after the final determination of such amount) to Seller (with respect
to real estate taxes for the period prior to the Closing Date) and to Purchaser
(with respect
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to real estate taxes for the period commencing on and after the Closing Date).
The parties understand and agree that there are pending claims and/or
proceedings pursuant to which Seller is pursuing a reduction in the assessed
valuation of the Property for real estate tax purposes or a claim for refund of
real estate taxes. Seller agrees that, without obtaining the prior consent of
Purchaser (not to be unreasonably withheld), Seller will not make any
commitments to the taxing authority regarding real estate taxes for periods
after the Closing Date in connection with the resolution of such pending claims
and/or proceedings.
5.4 Operating Expenses. Seller shall be responsible for all
Operating Expenses attributable to the period before the Closing Date and
Purchaser shall be responsible for all Operating Expenses attributable to the
period on and after the Closing Date. All Operating Expenses shall be prorated
between Seller and Purchaser in the customary fashion as of the Closing Date,
based on the actual number of days in the month during which the Closing Date
occurs for monthly expenses, and based on a 365-day year for annual expenses. To
the extent commercially reasonable and practicable, Seller shall obtain final
billings for meter readings made as of the Business Day preceding the Closing
Date, and Seller shall pay such final billings when Seller receives the same. If
Seller is able to obtain final meter readings and billings, there shall be no
adjustment at Closing for the costs, expenses, charges or fees shown thereon. If
billings or meter readings as of the Business Day preceding the Closing Date are
not available for any utility service, the charges therefor shall be adjusted at
the Closing on the basis of the per diem charges for the most recent prior
period for which bills were issued, and shall be further adjusted within thirty
(30) days after receipt of the necessary bills or meter readings, but in no
event later than at the Final Closing Adjustment on the basis of the actual
bills for the current period.
5.5 Utility Deposits. Seller shall be entitled to retain any or all
utility deposits and all interest accrued thereon. If any utility deposit is not
refundable to Seller without replacement by Purchaser, Purchaser shall deliver
the requisite replacement utility deposit to the utility company on or before
the Closing Date.
5.6 Tenant-related expenses.
(a) Leasing Commissions. Purchaser shall be responsible for
the payment of all leasing commissions due in respect of (i) new Leases of space
in the Building or amendments to existing Leases approved by Purchaser, which
new leases and
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amendments are listed on Schedule 5.6 attached hereto, and (ii) renewals of
Leases or expansions of the space leased by Tenants under Leases, which renewals
and expansions are to be effective after the date hereof, so long as and to the
extent that any leasing commissions covered by this clause (ii) are not in
excess of market rate commissions. All other leasing commissions shall be paid
by Seller. It is understood and agreed that Seller makes no representation or
warranty concerning the amount of leasing commissions payable by Purchaser under
this Section 5.6(a). The agreements pursuant to which leasing commissions are
owing on the new Leases and/or amendments to Leases referenced in clause (i)
above are listed on Schedule 5.6.
(b) Other Lease Costs. Purchaser shall be responsible for the
payment and performance of any tenant improvements to be paid for and/or
performed by landlord under Leases from and after the date hereof (including but
not limited to tenant improvements to be made under new Leases of space in the
Building or amendments to existing Leases approved by Purchaser that are listed
on Schedule 5.6 attached hereto). Purchaser shall also accept (and shall not
seek compensation from Seller by reason of) any rental abatements provided for
in Leases or in the new Leases or amendments to Leases listed on Schedule 5.6.
It is understood and agreed that Seller makes no representation or warranty
concerning the amount of tenant improvements to be paid for by Purchaser under
this Section 5.6(b). Seller shall be responsible for the payment of all tenant
improvements not to be paid for by Purchaser under the provisions of this
Section 5.6(b).
(c) Federal Reserve. In furtherance, but not in limitation of
the foregoing provisions of this Sections 5.6, it is understood and agreed that
The Board of Governors of the Federal Reserve System (the "Federal Reserve") has
been granted the option to expand the premises leased by the Federal Reserve in
the Building onto the 6th and/or the 7th floors of the Building, and that such
option is contained in the Federal Reserve Leases described in items 1 - 3 of
Schedule B attached hereto. Under such Leases, the Federal Reserve must exercise
such option on or before June 1, 1998, if the expansion will be onto both the
6th and 7th floors or onto the 7th floor only, or on or before July 1, 1998 if
the expansion will be onto the 6th floor only. Any tenant improvement costs
associated with the expansion of the premises leased by the Federal Reserve
pursuant to such Leases will be paid by Purchaser.
5.7 Final Closing Adjustment. No later than April 30, 1999, Seller
and Purchaser shall make a final adjustment to the
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prorations made pursuant to this Section 5 (the "Final Closing Adjustment"). The
Final Closing Adjustment shall be made in the following manner:
(a) General. Subject to Section 5.7(b) and (c) hereof, all
adjustments or prorations that could not be determined at the Closing because of
the lack of actual statements, bills or invoices for the current period, or any
other reason shall be made within thirty (30) days after the receipt of the
applicable statement, bill or invoice, but in no event later than as a part of
the Final Closing Adjustment. Any net adjustment in favor of Purchaser shall be
paid in cash by Seller to Purchaser no later than thirty (30) days after said
adjustment is made, but in no event later than thirty (30) days after the Final
Closing Adjustment. Any net adjustment in favor of Seller shall be paid in cash
by Purchaser to Seller no later than thirty (30) days after said adjustment is
made, but in no event later than thirty (30) days after the Final Closing
Adjustment. The parties shall correct any manifest error in the prorations and
adjustments made at Closing promptly after such error is discovered (but in no
event later than April 30, 1999).
(b) Additional Rent Adjustment. Seller and Purchaser shall
prorate the actual amount of Additional Rent paid by each Tenant for the 1998
calendar year as follows (it being understood and agreed that all Tenants are on
a calendar year basis of accounting with respect to Additional Rent payments):
(1) Seller shall be entitled to the portion of the
actual amount of Additional Rent for calendar year 1998 paid by the Tenant equal
to the product obtained by multiplying such amount by a fraction, the numerator
of which is the number of days in 1998 preceding the Closing Date and the
denominator of which is 365; and
(2) Purchaser shall be entitled to the balance of the
Additional Rent paid by the Tenant.
If a Tenant has made payments of Additional Rent on an estimated basis during
1998, such estimated payments shall be taken into account in prorating
Additional Rent under this Section 5.7(b). Seller shall pay any Tenant, as
required under its Lease, from any Additional Rent adjustment made in Seller's
favor under this Section, any overpayment of Additional Rent such Tenant may
have made for periods prior to the Closing Date. In order to assure Purchaser
that there will be sufficient cash to repay Tenants any overpayments of
Additional Rent such Tenants may have made for the period during 1998 prior to
the Closing Date, Seller will
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establish an escrow at Closing in accordance with the provisions of the Escrow
Agreement attached hereto as Exhibit G. Purchaser shall pay any Tenant, as
required under its Lease, from any Additional Rent adjustment made in
Purchaser's favor under this Section, any overpayment of Additional Rent such
Tenant may make for periods on or after the Closing Date.
(c) No Further Adjustments. Except for: (i) additional or
supplemental real estate taxes, real estate tax credits or rebates, or other
adjustments to real estate taxes due to back assessments, corrections to
previous tax bills or real estate tax appeals or contests or (ii) manifest
errors, the Final Closing Adjustment shall be conclusive and binding upon Seller
and Purchaser, and Seller and Purchaser hereby waive any right to contest after
the Final Closing Adjustment any prorations, apportionments or adjustments to be
made pursuant to this Section 5. In no event shall Purchaser have the right to
recover any adjustments not brought to Seller's attention in writing prior to
April 30, 1999.
6. Closing Date and Costs.
6.1 Closing Date. The Closing shall take place at the offices of
Arent Fox Kintner Plotkin & Kahn, 1050 Connecticut Avenue, Washington D.C.
20036, at 10:00 a.m., Eastern Daylight Time, on the Closing Date.
6.2 Closing Costs and Transfer Taxes. All District of Columbia
transfer and recordation taxes, and other recording charges, payable in
connection with the recording of the special warranty deed (whether imposed in
the form of transfer taxes, documentary stamps or otherwise), and any charges of
the Escrow Agent for holding the Deposit, shall be divided equally between
Seller and Purchaser. Purchaser shall pay for all expenses of examination of
title, the cost of an owner's title insurance policy, survey, and all other
Closing expenses. Each party shall pay its own legal fees and other expenses
incurred by it prior to Closing. Seller shall pay all costs incurred in
connection with the repayment or satisfaction of any liens on the Property
except for any liens caused by the acts of Purchaser or any of its agents or
representatives. The provisions of this Section 6.2 shall survive the Closing
Date.
7. Closing Documents.
7.1 Seller's Deliveries. Seller shall execute and/or deliver to
Purchaser on the Closing Date the following:
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(a) a special warranty deed in the form attached hereto as
Exhibit A;
(b) an assignment and assumption of leases and service
contracts in the form attached hereto as Exhibit B;
(c) an assignment of all Intangible Property and warranties
related to the Property in the form attached hereto as Exhibit C;
(d) letters in the form attached hereto as Exhibit D to each
Tenant under the Leases;
(e) an affidavit in the form attached hereto as Exhibit E;
(f) an owner's affidavit signed by Seller, addressed to the
Title Company designated by Purchaser, with respect to the absence of claims
caused by Seller that would give rise to mechanics' liens, the absence of
parties in possession of the Property other than Tenants under the Leases (and
other than subtenants of Tenants) and the absence of unrecorded easements
granted by Seller, in the form reasonably required by the Title Company to
eliminate the exceptions for those matters from Purchaser's title insurance
policy;
(g) the Closing Statement referred to in Section 5.1 signed by
Seller;
(h) all keys to the Property, if any, that are in Seller's
possession;
(i) Intentionally Omitted;
(j) Tenant estoppel certificates in accordance with the
provisions of Section 9.5;
(k) such additional documents as Seller and Purchaser shall
mutually agree are necessary to consummate the sale of the Property to
Purchaser;
(l) to the extent in Seller's possession, all original Leases,
together with any guarantees thereof and any other amendments permitted to be
executed pursuant to this Agreement or otherwise used in connection the use and
operation of the Property;
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(m) such evidence of authority of the parties executing any
closing documents on behalf of Seller, as reasonably requested by the Title
Company;
(n) to the extent in Seller's possession, all plans and
specifications with respect to the initial construction of the Property and any
subsequent changes or authorization thereto, all manuals, guarantees, security
codes and other information with respect to operating any of the equipment at
the Property or which was provided at the time such equipment was purchased or
installed, and all maintenance records, in all cases to the extent in Seller's
possession;
(o) a computer diskette containing this Purchase Agreement as
finally agreed to and executed by the parties; and
(p) a certificate stating that the representations and
warranties made by Seller in Section 15 hereof are true, correct and complete in
all material respects as of the Closing, subject to changes therein caused by
changed circumstances since the Effective Date.
In addition to the foregoing, Seller shall make available to Purchaser at
Seller's offices any books and records relating to the Property in Seller's
possession should Purchaser require such access in connection with any review or
audit of the income and expenses of the Property for any period of Seller's
ownership thereof; provided, however, that any such review and/or audit shall be
made at Purchaser's sole expense, with the least disruption possible to Seller's
business, and upon not less than seven (7) days' written notice; and provided,
further, that Seller shall not be required to make available to Purchaser any
such books or records which are more than three (3) years old. The provisions of
this paragraph shall survive Closing for a period of three (3) years.
7.2 Purchaser's Deliveries. Purchaser shall execute and deliver to
Seller on the Closing Date the following:
(a) an assignment and assumption of leases and service
contracts in the form attached hereto as Exhibit B;
(b) the Closing Statement referred to in Section 5.1 signed by
Purchaser; and
(c) all documents reasonably required by Seller's attorneys or
the Title Company to determine that Purchaser is
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authorized to buy the Property and to execute all documents in connection
therewith.
7.3 Delivery in Escrow. The delivery to the Title Company of the
Purchase Price, the executed special warranty deed described in Section 7.1(a)
and all other documents and instruments required to be delivered by either party
to the other by the terms of this Agreement, and the performance by all parties
to this Agreement of all material obligations to be so performed, shall be
deemed to be a good and sufficient tender of performance of the terms hereof.
Seller shall be deemed to have delivered voluminous or cumbersome materials
(such as the items described in Sections 7.1(l) and 7.1(n)) by making them
available at the office of the managing agent for the Property.
8. Obligations Pending Closing.
8.1 Continued Care and Maintenance. During the period between the
Effective Date and the Closing Date, Seller agrees to operate and maintain the
Property in the ordinary course of business and use reasonable efforts to
reasonably preserve for Purchaser the relationships between Seller and the
Tenants, suppliers, managers, employees and others having ongoing relationships
with the Property. Further, during the period between the Effective Date and the
Closing Date, Seller agrees: (i) not to change, amend or modify the Leases, or
any of the instruments affecting, or with respect to, the title to the Property
except as required by law or the document involved (provided, however, that the
Seller may, at its option, eliminate any financing and/or other encumbrances
which are not Permitted Encumbrances); (ii) not to change, amend or modify,
except in a de minimis respect, any of the Service Contracts or other rights,
obligations or agreements related to use, ownership or operation of the Property
without Purchaser's prior approval, where such changes, amendments or
modifications would (x) materially increase Seller's obligations, liability or
expenses thereunder, (y) modify in any respect Purchaser's obligations,
liability or expenses as set forth in such Service Contracts or other rights,
obligations or agreements as they exist as of the date hereof (except in
emergency situations) or (z) result in such Service Contracts or other rights,
obligations or agreements not being cancelable upon thirty (30) days' notice or
only being cancelable upon payment of a fee or penalty, or both; (iii) not to
make alterations or changes to the Property other than de minimis alterations or
changes or ordinary and necessary maintenance and repairs, without Purchaser's
prior approval (provided, however, that Seller may make any alterations or
changes to the Property that are required by any Lease or applicable law without
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Purchaser's prior approval), Seller agreeing that it shall give Purchaser notice
of any alterations or changes made to the Property on or about the date it
performs same, whether or not Purchaser's prior approval is necessary; (iv) to
maintain in effect all policies of casualty and liability insurance or similar
policies of insurance, with no less than the limits of coverage now carried with
respect to the Property; and (v) to cure all material violations of law
affecting the Property for which a written notice of violation was issued by the
local governmental authorities prior to the Effective Date (provided, however,
that the cost to cure such violations shall not exceed $25,000 in the aggregate,
or if such violations are not cured prior to the Closing Date, at Closing
Purchaser shall be entitled to a credit not to exceed $25,000 and shall not be
entitled to refuse to close on account of the existence of any such violations).
Where an approval of Purchaser is required under the foregoing provisions,
Purchaser agrees not to unreasonably withhold or delay any such approval, and
such approval shall be deemed given if Purchaser has not objected in writing
within five (5) days after notice of the matter on which Purchaser's approval is
sought, which notice is to include notification from Seller that Purchaser's
failure to so approve as provided in this Section 8.1 shall be deemed an
approval. Nothing contained herein shall prevent Seller from acting to prevent
loss of life, personal injury or property damage in emergency situations, or
prevent Seller from performing any act with respect to the Property that may be
required by any Lease, applicable law, rule or governmental regulations.
8.2 Other Covenants. In addition to the matters set forth in Section
8.1, during the period between the Effective Date and the Closing Date, Seller
agrees: (a) that, at any time prior to Closing, it shall terminate, at its own
cost and expense, any and all management agreements and any exclusive leasing
agency agreements for the Property, subject, however in the case of leasing
agreements, to the provisions of Section 5.6 hereof); (b) that it shall not
terminate any Lease, apply any security deposits posted thereunder, or accept
the surrender of any Lease, or grant any concession, rebate, allowance or free
rent thereunder (except pursuant to the provisions of a Lease in existence on
the Effective Date or approved or deemed approved by Purchaser); (c) not to
mortgage or transfer the Property, or any interest therein; (d) to permit
Purchaser and its representatives to continue to inspect the Property as more
particularly provided in Section 9.1 below notwithstanding the termination of
the Inspection Period; and (e) to deliver to Purchaser any notice of violation
of law Seller may receive from any governmental agency having jurisdiction over
the Property. Seller will give
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Purchaser notice (promptly after Seller becomes aware of the same) of any liens
placed on the Property by a Tenant or a creditor of a Tenant, but Seller shall
not be obligated to remove or caused to be removed any such liens.
9. Conditions to Closing.
9.1 Inspection Period.
(a) Seller shall provide or make available to Purchaser all
information related to the Property in Seller's possession, except for
confidential and proprietary information concerning the partnership that owns
the Property, the financing of the Property, and confidential and proprietary
information belonging to any third party (including the property manager). In
addition to the foregoing, Seller shall provide a copy of or make available all
Leases and Lease amendments and Service Contracts in its possession, leasing
commission agreements, test borings, environmental reports, surveys, title
materials and engineering and architectural data and the like relating to the
Property that are in Seller's possession. Purchaser agrees that Seller and
Seller's agents make no warranty or representation, either express or implied,
concerning the matters disclosed in such information, including the completeness
or accuracy thereof.
(b) During the period prior to the Effective Date (such period
being hereinafter called the "Inspection Period"), Purchaser has made, or caused
to be made, at Purchaser's own risk and expense, such investigation of the
Property as it elected, including physical inspections of the Property, review
of the Leases, Service Contracts, laws and ordinances, and approval of survey
and condition of title. Purchaser agrees that it has investigated the Property
and that any further investigation of the Property by Purchaser will not disrupt
normal operations of the Property or any Tenant's quiet enjoyment of its demised
premises. Purchaser shall not undertake any structural, physical, mechanical,
environmental or other testing which will cause damage to the Property, or
undertake any other invasive testing of the Property. Subject to the foregoing,
Purchaser has conducted studies on the Property to determine the environmental
condition of the Property. By Purchaser's execution of this Agreement, Purchaser
shall be deemed to have accepted the Property at Closing in an AS IS CONDITION
WITH ALL FAULTS, subject to the provisions of Section 11 hereof. Seller makes no
representations or warranties as to the physical condition of the Property, and
specifically Seller does not warrant against latent defects or defects of any
kind or nature.
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(c) Purchaser hereby indemnifies and holds Seller harmless
from any loss, damage, cost or expense incurred by Seller and arising (directly
or indirectly) out of the activities at the Property by Purchaser or its
designated representatives, including any loss, damage, cost or expense arising
out of damage to the Property or personal injury. Notwithstanding the foregoing,
Purchaser shall not indemnify Seller nor hold Seller harmless on account of any
existing environmental matters discovered as a result of Purchaser's due
diligence. This indemnity shall survive Closing and any termination of this
Agreement prior to Closing. Purchaser agrees that all information received from
Seller is Seller's confidential work product unless otherwise indicated in
writing, unless the Closing occurs, or unless such information is already
public, and Purchaser agrees that it will maintain the confidentiality of all
information received as set forth in Section 20 hereof.
9.2 Title or Survey Exceptions. Purchaser, at its own cost and
expense, has ordered, received and reviewed, and delivered to Seller, a title
commitment covering the Property (the "Title Commitment"), and an updated survey
on the Property prior to the Effective Date. Simultaneously with Purchaser's
execution hereof, Purchaser shall notify Seller of such objections as Purchaser
may have to anything contained on the survey or in the Title Commitment. Such
objections shall not include any exceptions to title set forth in Schedule B -
Section 2 to the Title Commitment which are set forth on Schedule D annexed
hereto. Any title or survey matter so objected to by Purchaser are herein
referred to as "Objections." If there are Objections by Purchaser, Seller shall
have the option, at its sole discretion, to satisfy them prior to the Closing
Date and, if Seller so elects and so notifies Purchaser, to adjourn the Closing
Date for up to 60 days to attempt to do so. If Seller elects to satisfy the
Objections, it shall be a condition precedent to Closing that such Objections
are satisfied, which condition precedent Purchaser shall have the right to
waive. If Seller elects not to satisfy the Objections, or if Seller is not
successful in satisfying such Objections, as the case may be, then Seller shall
deliver as soon as practicable written notice of such circumstance to Purchaser
and Purchaser shall, within five (5) Business Days after receipt thereof, either
(i) waive the Objections and accept such title as Seller is able to convey and
by such waiver of the Objections Purchaser shall be deemed to have waived any
and all claims and/or causes of action against Seller for damages or any other
remedies relating to the Objections or any other matter relating to title to the
Property, or (ii) terminate this Agreement, in which event the Deposit shall be
returned to Purchaser and the parties hereto shall be
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released of further liability hereunder except as otherwise provided herein. Any
Objections waived by Purchaser under the foregoing provisions shall be deemed to
be Permitted Encumbrances. Notwithstanding any provision of this Section 9.2 to
the contrary, Seller shall be required to remove prior to the Closing Date any
Objection that is a monetary lien placed on the Property by Seller or any
judgment lien against Seller (either by payment, by causing the Title Company to
insure over such matter or by posting a bond in an amount to cover the estimated
cost of removing the same).
9.3 Encumbrances Subsequent to Inspection Period. In the event that,
during the period between the End of the Inspection Period and the Closing Date,
title to the Property should become affected by any encumbrance, lien,
outstanding interest or question of title that is not a Permitted Encumbrance,
that is not disclosed by the Title Commitment or survey described in Section 9.2
and that is not created or caused to be created by Purchaser or by any Tenant (a
"New Objection"), then, provided that the New Objection is capable of being
satisfied by the payment of a sum certain (i.e., determinable with certainty by
Seller), Seller may (but shall not be obligated to) elect (by notice to
Purchaser) to remove such New Objection either by payment on or prior to
Closing, by causing the Title Company to insure over such encumbrance or by
posting a bond in an amount to cover the estimated cost of removing the same,
and Seller shall be entitled, for such purpose, to postpone the Closing Date for
a reasonable period of time. In the event that Seller elects not to remove such
New Objection, Seller shall so notify Purchaser as soon as practicable,
whereupon Purchaser shall elect, by giving Seller notice thereof within five (5)
days of receiving Seller's notice, either (i) waive the New Objection and accept
such title as Seller can convey notwithstanding the existence of any such New
Objection, or (ii) terminate this Agreement. In the event that Seller elects to
remove such New Objection but is unable to do so within sixty (60) days after
the End of the Inspection Period, then either party hereto may elect to
terminate this Agreement by giving the other party written notice thereof;
provided, however, that if Seller elects to terminate this Agreement under this
sentence, Purchaser shall have the right to nullify such election by notifying
Seller (within five (5) Business Days after receipt of such termination notice
from Seller) that Purchaser will accept any such New Objection and close
hereunder. If this Agreement is terminated pursuant to the provisions of this
Section 9.3, then the Deposit shall be returned to Purchaser and the parties
hereto shall be released of any further liability hereunder except as otherwise
provided herein. Any title matter waived by Purchaser under this
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Section 9.3 shall be deemed a Permitted Encumbrance. Notwithstanding any
provision of this Section 9.3 to the contrary, Seller shall be required to
remove prior to the Closing Date any New Objection that is a monetary lien
placed on the Property by Seller or any judgment lien against Seller (either by
payment, by causing the Title Company to insure over such New Objection or by
posting a bond in an amount to cover the estimated cost of removing the same).
9.4 Representations and Warranties True. It shall be a condition of
Purchaser's obligation to close hereunder that Seller's representations and
warranties set forth in Section 15 shall be true and correct in all material
respects on the Closing Date. In the event that Purchaser believes that Seller's
representations and warranties set forth in Section 15 are not true and correct
in all material respects on or prior to the Closing Date, Purchaser may deliver
notice thereof to Seller, which notice shall (i) specify which representation
and warranty is believed not to be true and (ii) provide evidence of the untruth
of the representation and warranty and of its materiality. Seller shall have
five (5) days from its receipt of Purchaser's notice described in the preceding
sentence to notify Purchaser that Seller (a) will attempt to cure such failed
representation or warranty within a period not to exceed sixty (60) days, in
which event the Closing Date shall be extended by sixty (60) days or such lesser
period of time as may be elected by Seller, or (b) does not elect to cure such
alleged failed representation or warranty. In the event that Seller either (x)
elects to cure pursuant to the provisions of clause (a) of the preceding
sentence but has not effected such cure on or before the extended Closing Date
or (y) does not elect to cure pursuant to the provisions of clause (b) of the
preceding sentence, then Purchaser may terminate this Agreement by giving notice
thereof to Seller within five (5) Business Days after Purchaser receives notice
of either (x) or (y) above, in which event the Deposit shall be returned to
Purchaser and the parties hereto shall be relieved of any further liability
hereunder except as otherwise provided herein. Notwithstanding any provision to
the contrary herein, if Purchaser proceeds to Closing and David Parisier, as
Purchaser's representative, has actual knowledge of any uncured breach of a
representation and warranty made by Seller in Section 15, Purchaser shall be
deemed to have waived any remedy for Seller's breach of such representation or
warranty.
9.5 Estoppel Certificates. Seller shall use reasonable efforts to
obtain from each Tenant an estoppel certificate, dated no earlier than April 10,
1998, substantially in the form of Exhibit F hereto, it being agreed that
Purchaser
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will accept as conforming to Exhibit F an estoppel certificate in the form (or
containing the statements) contemplated under each Tenant's Lease or as may
required by law or regulation (as, for example, in the case of a governmental
tenant) ("Estoppel Certificate"). It shall be a condition of Purchaser's
obligation to close hereunder that Seller deliver at Closing Estoppel
Certificates signed by Tenants occupying at least seventy-five percent (75%) of
the leased office space in the Building (the "Required Tenants"). If a Tenant
occupies less than 5,000 square feet of office space in the Property and such
Tenant delivers an Estoppel Certificate not conforming to the requirements of
this Section because of statements in the Estoppel Certificate relating to the
operation or physical condition of the Building, then such Tenant shall
nevertheless be included in the calculation of the foregoing 75% threshold of
leased office space in the Building. Furthermore, an Estoppel Certificate shall
be deemed to conform to the requirements of this Section if the facts set forth
therein are substantially consistent with the terms of such Tenant's Lease and
there is no statement asserting a material default (not relating to the
operation or physical condition of the Building) on the part of the Seller, as
landlord, under such Lease. If Seller is not able to obtain Estoppel
Certificates consistent with the foregoing from the Required Tenants prior to
the Closing Date, the Closing Date may, at Seller's or Purchaser's option, be
adjourned for thirty (30) days in order to give Seller the opportunity to
acquire Estoppel Certificates consistent with the foregoing from the Required
Tenants. Seller does not warrant or represent that any particular Tenant will be
a tenant of the Property on the Closing Date, and it shall not be a condition of
Closing that all Tenants of the Property on the Effective Date shall continue to
be tenants on the Closing Date; provided, however, that if Tenants occupying (in
the aggregate) more than 15,000 square feet of office space in the Building as
of the Effective Date vacate their demised premises prior to the Closing Date in
violation of their Leases and are in default in the payment of Basic Rent under
their Leases, Purchaser shall not be obligated to close. To the extent that a
statement in an Estoppel Certificate delivered to Purchaser at Closing covers a
subject matter that is the same as the subject matter of a representation or
warranty of Seller hereunder, such representation or warranty of Seller shall be
deemed superceded by such Estoppel Certificate and shall have no further force
or effect. A failure to obtain Estoppel Certificates consistent with the
provisions of this Section from the Required Tenants shall not be deemed a
default of Seller's obligations hereunder and will not give rise to the remedies
of Purchaser contained in clauses (ii) or (iii) of Section 13.1. In the event
that an Estoppel Certificate does not conform to the
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requirements of this Section, Seller shall have a reasonable period to cure the
defect or defects therein (not to exceed thirty (30) days), and the Closing Date
shall be extended in order to allow Seller time to effectuate such cure.
9.6 Other Conditions to Closing. It shall be a further condition of
Purchaser's obligation to close hereunder (which condition may be waived by
Purchaser) as follows:
(a) Seller shall have performed all covenants and obligations
undertaken by Seller herein in all material respects.
(b) Seller shall have delivered to Purchaser all of the
documents provided herein for said delivery.
9.7 Approvals and Permits not a Condition to Purchaser's
Performance. Purchaser's duty to perform is expressly not contingent upon
Purchaser's ability to obtain (i) any governmental or quasi-governmental
approval as to changes or modifications in use or zoning or modification to any
existing land use restriction, (ii) service provider consents to assignments of
any Service Contracts or (iii) financing of any portion of the Purchase Price
from any source.
10. Brokerage.
Seller and Purchaser expressly acknowledge that Cassidy &
Pinkard/Sonnenblick Goldman (the "Broker") is due a commission for this
transaction upon the consummation of the sale of the Property in accordance with
this Agreement, and the same shall be paid by Seller in accordance with the
provisions of a separate agreement between Seller and the Broker. Purchaser
represents that it has not engaged any brokers in this transaction. As to any
broker other than the Broker, Seller and Purchaser agree to hold each other
harmless and indemnify each other from and against any and all claims, demands,
loss or damage (including reasonable attorneys' fees, court costs and amounts
paid in settlement of any claims) arising out of a claim or demand for any
brokerage commission, fee or other compensation due or alleged to be due as a
result of the indemnifying party's actions in connection with the transaction
contemplated by this Agreement. The provisions of this Section 10 shall survive
the Closing Date or termination of this Agreement prior to the Closing Date for
any reason whatsoever.
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11. Risk of Casualty and Condemnation Pending Closing.
(a) If, prior to the Closing Date, all or part of the Property is
damaged by fire or by any other cause whatsoever, Seller shall promptly give
Purchaser written notice of such damage and shall thereafter (to the extent
practical) give Purchaser written notice of its estimated cost of repairing such
damage (such notice to be given as soon as practicable) and advising Purchaser
that based upon such cost, Purchaser shall be obligated to make an election as
provided in this Section 11. If the cost of repairing such damage is less than
Three Hundred Thousand Dollars ($300,000) (as determined by Seller's independent
insurer), then (i) Purchaser shall at Closing receive, to the extent such sums
have not been expended on repair work, the amount of the deductible plus all
insurance proceeds payable as a result of such loss; (ii) this Agreement shall
continue in full force and effect with no reduction in the Purchase Price and
(iii) Seller shall have no obligation to repair such damage. If the cost of
repairing damage from such casualty is Three Hundred Thousand Dollars ($300,000)
or more (as determined by Seller's independent insurer), then Purchaser shall
have the right, for a period of ten (10) days from the date of notice of the
amount of damage caused by the casualty, to terminate this Agreement by giving
written notice of termination to Seller within such period. Upon such
termination, the Deposit shall be returned to Purchaser and the parties hereto
shall be released of any further liability hereunder except as otherwise
provided herein. If Purchaser fails to notify Seller within such period of
Purchaser's exercise of its right to terminate this Agreement, then Purchaser
shall be deemed to have terminated this Agreement, in which event the foregoing
provisions of this Section 11(a) regarding a termination by Purchaser shall
apply. If the cost of repairing damage from such casualty is Three Hundred
Thousand Dollars ($300,000) or more (as determined by Seller's independent
insurer), and Purchaser notifies Seller (within a period of ten (10) days from
the date of notice of the amount of damage caused by the casualty) that
Purchaser elects to continue this Agreement, then the parties shall proceed to
Closing and, to the extent such sums have not been expended on repair work
performed upon Purchaser's consent, not to be unreasonably withheld, all
insurance proceeds received by Seller as a result of such casualty loss plus the
amount of the deductible shall be paid to Purchaser at Closing. If such proceeds
have not yet been received by Seller, then Seller's rights to such proceeds
shall be assigned to Purchaser at Closing upon payment of the full Purchase
Price to Seller by Purchaser, less the amount of Seller's deductible, and Seller
shall have no obligation to repair such damage.
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(b) If, prior to the Closing Date, any condemnation or eminent
domain proceedings shall be threatened in writing or commenced by any competent
public authority against the Property, Seller shall promptly give Purchaser
written notice thereof. Within ten (10) Business Days after receipt of notice of
the written threat or commencement of any such proceedings from Seller and in
the event that the taking of such property shall materially interfere with the
operation of the Property, Purchaser shall have the right to terminate this
Agreement by giving written notice to Seller to that effect within ten (10)
Business Days from the date Purchaser receives notice of the proceedings or
written threat. If this Agreement is terminated by Purchaser as aforesaid, then
the Deposit shall be returned to Purchaser and the parties hereto shall have no
further liability hereunder except as otherwise provided herein. In the event
Purchaser fails to notify Seller within such period of Purchaser's exercise of
its right to terminate this Agreement, then Purchaser shall be deemed to have
terminated this Agreement, in which event the foregoing provisions of this
Section 11(b) regarding a termination by Purchaser shall apply. Purchaser shall
also have the right, in the circumstance described above in this Section 11(b),
to accept the Property (by notice to Seller given within the ten (10)-Business
Day period aforesaid) subject to the condemnation proceedings or written threat
without abatement of the Purchase Price. In the event that Purchaser elects to
accept the Property in accordance with the foregoing provisions of this Section
11(b), or the taking of a portion of the Property shall not materially interfere
with the operation of the Property, Purchaser shall accept the Property subject
to the proceedings or written threat of condemnation without abatement of the
Purchase Price, whereupon any award (minus any reasonable legal fees incurred by
Seller in connection therewith) shall be paid to Purchaser and Seller shall
deliver to Purchaser at Closing all assignments and other documents reasonably
requested by Purchaser to vest such award in Purchaser. For purposes of this
Section 11(b), a taking shall be deemed to materially interfere with the
operation of the Property if the Building or any portion thereof shall be taken,
if the taking shall have any material effect on any ingress or egress, or if a
portion of the parking for the Property shall be taken such that the remaining
parking area does not comply with applicable building or zoning law.
12. Notices and Other Communications.
12.1 Manner of Giving Notice. Each notice, request, demand, consent,
approval, objection or other communication
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(hereafter in this Section 12 referred to collectively as "notices" and referred
to singly as a "notice") which Seller, Purchaser or Escrow Agent is required or
permitted to give pursuant to this Agreement shall be in writing and shall be
deemed to have been duly given if hand delivered with receipt therefor, or sent
by Federal Express or other overnight courier service. Any such notice shall be
deemed given when received or when delivery is refused. The records of the
courier service shall be conclusive with respect to the date of receipt or
refusal of delivery.
12.2 Addresses for Notices. All notices shall be addressed to the
parties at the following addresses:
(1) if to Purchaser: 11 Commerce Drive, Cranford, New Jersey
07016, with separate notice to the attention of Roger W. Thomas, Esq. and David
Parisier, with an additional separate notice to go to Pryor, Cashman, Sherman
and Flynn, 410 Park Avenue, New York, NY 10022, Attention: Andrew S. Levine,
Esq.
(2) if to Seller: c/o Quadrangle Development Corporation, 1001
G Street, N.W., Suite 700, Washington, D.C. 20001, Attention: Legal Department,
with a copy to: The Taylor Simpson Group, One Rockefeller Plaza, Twenty-Third
Floor, New York, New York 10020, Attention: Paul E. Taylor III and Jeffrey
Feldman, Esq.
Either party may, by notice given pursuant to this Section 12,
change the person or persons and/or address or addresses, or designate an
additional person or persons or an additional address or addresses, for its
notices.
13. Default and Remedies.
13.1 Purchaser. If Seller fails to perform any of its obligations or
agreements contained herein in any material respect and if Purchaser is not then
in default of any of its obligations and agreements contained herein, then
Purchaser may elect one of the following as Purchaser's sole and exclusive
remedy: either (i) terminate this Agreement by giving notice of termination and
the reasons therefor to Seller, in which event neither Seller nor Purchaser
shall have any further obligations or liabilities one to the other except as
otherwise provided herein and the Deposit shall be returned to Purchaser; or
(ii) hereby waiving all other actions, rights or claims for damages, Purchaser
may bring an equitable action for specific performance of the terms of this
Agreement for conveyance of the Property to Purchaser; or (iii) in the event
Seller wilfully and
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<PAGE>
intentionally conveys title to a third party in violation of this Agreement, in
lieu of the remedy of specific performance, Purchaser, upon proper proof, may
assert a claim or claims for compensatory damages in an amount not to exceed
Four Hundred Sixty-Nine Thousand Dollars ($469,000) in the aggregate.
13.2 Seller. If Purchaser fails to close on the purchase of the
Property when required to do so under the provisions hereof, and Seller is not
then in default of any of its obligations or agreements contained herein in any
material respect, then Seller's sole remedy hereunder shall be to terminate this
Agreement and to receive the Deposit as liquidated damages, and thereafter
Seller and Purchaser shall have no further obligations or liabilities one to the
other except as otherwise provided herein. Seller's right to receive the Deposit
as liquidated damages is agreed to due to the difficulty, inconvenience and
uncertainty of ascertaining actual damages for such breach by Purchaser, and
Purchaser agrees that the same is a reasonable and fair estimate of damages.
13.3 Legal Fees. In any action or proceeding brought to enforce a
party's remedies under this Agreement, the prevailing party shall be entitled to
reimbursement of its reasonable legal fees and expenses.
13.4 Documents. Within five (5) Business Days after any termination
of this Agreement in accordance with the foregoing provisions of this Section
13, or pursuant to any other provision of this Agreement, Purchaser shall
deliver to Seller, without charge, all documents or studies prepared by third
party environmental, structural and mechanical engineers whose reports are not
otherwise confidential or proprietary, and all documents provided to Purchaser
by Seller or Seller's agents.
14. Environmental Condition.
In addition to, and not by way of limitation of, the sale of the
Property on an AS IS CONDITION WITH ALL FAULTS basis under this Agreement,
Purchaser agrees that Seller makes no representations or warranties whatsoever
to Purchaser regarding the presence or absence of hazardous or toxic materials
or chemicals in, at, or under the Property, except as otherwise provided in
Section 15.9 hereof. During the Inspection Period, Purchaser has made such
studies and investigations, conducted such tests and surveys and engaged such
specialists as Purchaser deemed appropriate (and in the manner described in
Section 9.1 hereof) to fairly evaluate the Property and its environmental risks.
By its execution of this Agreement, Purchaser hereby
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<PAGE>
releases Seller from any and all liability to Purchaser and Purchaser's
successors in interest attributable to the presence, discovery, or removal of
any hazardous or toxic materials or chemicals in, at, or under the Property,
subject to the provisions of Section 15.9 hereof. Notwithstanding anything
herein to the contrary, the agreements of Purchaser set forth in this Section 14
shall survive the Closing and shall be enforceable at any time.
15. Seller's Representations and Warranties
Seller hereby represents and warrants to Purchaser the following:
15.1 United States Person. Seller is a "United States person" within
the meaning of Sections 1445(f)(3) and 7701(a)(30) of the Internal Revenue Code
of 1986, as amended.
15.2 Management Agreement. On the Closing Date, there will be no
agreement in effect for the management of the Property nor will there be any
exclusive leasing agency agreement applicable to the Property.
15.3 Condemnation. To the best of Seller's knowledge, Seller has not
received notice of any actual or threatened condemnation proceeding or special
assessment with regard to the Property.
15.4 Litigation. To the best of Seller's knowledge, there are no
actions, suits or other litigation (including governmental proceedings) pending
or threatened in writing against Seller that would materially and adversely
affect the Property, or its continued operation, or that would materially and
adversely affect the ability of Seller to perform its obligations under this
Agreement, except as set forth on Schedule F.
15.5 Seller's Authority.
As of the Closing Date:
(a) Seller has the full right, power and authority and
has taken all requisite action to enter into this Agreement, to sell the
Property and to carry out its obligations as set forth hereunder.
(b) No consent or approval of any person, entity or
governmental agency or authority is required with
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<PAGE>
respect to the execution and delivery of this Agreement by Seller or the
consummation by Seller of the transaction contemplated hereby or the performance
by Seller of its obligations hereunder.
(c) There are no attachments, executions, assignments
for the benefit of creditors, receiverships, conservatorship or voluntary or
involuntary proceedings in bankruptcy or pursuant to any debtor relief laws
filed by Seller or against Seller.
(d) Seller is the sole owner of the Property.
15.6 Leases. To Seller's knowledge, Schedule B attached hereto sets
forth a true, correct and complete list of all Leases as of the Effective Date.
Copies of such Leases have been initialed by the parties and delivered to
Purchaser. To Seller's knowledge, the Leases constitute all of the leases,
tenancies or occupancies affecting the Building on the Effective Date to which
Seller is a party, and, except as provided in the Leases or as may be contained
in any Permitted Encumbrance, there are no agreements to which Seller is a party
which confer on any Tenant or any other person or entity any rights of
possession with respect to the Property. To Seller's knowledge, Seller has not
received, within the two hundred seventy (270)-day period prior to the Effective
Date, written notice from any Tenant asserting that Seller, as landlord, is in
default under such Tenant's Lease, which default remains substantially uncured
as of the Effective Date.
15.7 Service Contracts. To Seller's knowledge, there are no service
contracts affecting the Property or the operation thereof, except the Service
Contracts.
15.8 Notices of Violations. To Seller's knowledge, within the two
hundred seventy (270)-day period prior to the Effective Date, Seller has not
received a notice of any material violations, or of any notices, suits,
investigations or judgments relating to any material violations, of any laws,
ordinances or regulations affecting the Property. If Seller receives any such
notice after the Effective Date, Seller will promptly deliver a copy of such
notice to Purchaser.
15.9 No Remediation Program. To Seller's knowledge, no clean-up or
remediation program that may have been required by any environmental law
applicable to the Property is ongoing in respect of the Property.
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<PAGE>
All references in this Agreement to the "knowledge" of Seller shall refer only
to actual knowledge of the Designated Employees (as hereinafter defined) and
shall not be construed to refer to the knowledge of any other officer, agent or
employee of Seller or any Affiliate thereof or to impose upon such Designated
Employees any duty to investigate the matter to which such actual knowledge, or
the absence thereof, pertains, including the contents of the files, documents
and materials made available to or disclosed to Purchaser. Seller affirmatively
states that neither it nor the Designated Employees has reviewed such files,
documents, or materials and that Seller's representations and warranties
hereunder are not based on the contents of any such files, documents, materials.
For purposes of this Agreement, the term "Designated Employees" shall refer only
to Christopher D. Gladstone.
16. Purchaser's Authority.
Purchaser hereby represents and warrants to Seller that the
following statements are true and correct as of the date hereof and shall be
true and correct as of the Closing Date:
(a) Purchaser has the full right, power and authority and has
taken all requisite action to enter into this Agreement, to purchase the
Property and to carry out its obligations as set forth hereunder.
(b) Unless otherwise provided herein, no consent or approval
of any person, entity or governmental agency or authority is required with
respect to the execution and delivery of this Agreement by Purchaser or the
consummation by Purchaser of the transaction contemplated hereby or the
performance by Purchaser of its obligations hereunder.
(c) There are no attachments, executions, assignments for the
benefit of creditors, receiverships, conservatorship or voluntary or involuntary
proceedings in bankruptcy or pursuant to any debtor relief laws filed by
Purchaser or against Purchaser.
17. Third Party Beneficiaries.
Nothing in this Agreement is intended or shall be construed to
confer upon or to give to any person, firm or corporation other than the parties
hereto any right, remedy, or claim under or by reason of this Agreement. All
terms and conditions in this Agreement shall be for the sole and exclusive
benefit of the parties hereto. This Section 17 shall survive the
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<PAGE>
Closing or termination of this Agreement prior to the Closing Date for any
reason whatsoever.
18. Further Assurances.
Purchaser and Seller each agree to execute and deliver to the other
such further documents or instruments as may be reasonable and necessary in
furtherance of the performance of the terms, covenants and conditions of this
Agreement; provided, however, that no such documents or instruments shall
contain any warranty or representation from, or recourse to, Seller. This
Section 18 shall survive the Closing Date.
19. No Assignment.
Purchaser shall not assign its rights or delegate its duties under
this Agreement, in whole or in part, without the prior consent of Seller, which
Seller may withhold in its sole and absolute discretion. Consent by Seller to
any assignment or delegation of Purchaser's rights or duties under this
Agreement shall not relieve Purchaser of its obligations under this Agreement,
regardless of whether such assignment includes an assumption of liability by
Purchaser's assigns. Notwithstanding the foregoing, Purchaser shall have the
right to assign this Agreement to Mack-Cali Realty, L.P. (which is the entity
which controls Mack-Cali Realty Acquisition Corp.), or any other entity which is
controlled by Mack-Cali Realty, L.P., directly or indirectly, provided that
Purchaser provides Seller with evidence that the assignee is such a controlled
entity.
20. Confidentiality
Prior to Closing and except as may reasonably be required in
connection with the consummation of the transactions contemplated hereby, or as
required by law or opinion of counsel, each party shall keep confidential the
details of the transactions contemplated hereby and all documents and other
information provided to the other party, and will not identify Purchaser or
Seller of the Property without the prior consent of the other. Each party shall
instruct all of its employees, officers, Affiliates, professionals and others
engaged by it in connection with the transactions contemplated hereby to abide
by the foregoing confidentiality provisions.
21. Assumption or Cancellation of Service Contracts.
Purchaser has notified Seller in writing as to which of the Service
Contracts Purchaser desires to assume. Any Service
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<PAGE>
Contracts that are assignable and that Purchaser has elected to assume shall be
included in the assignment and assumption described in Section 7.1(b) and any
costs or fees charged by the service provider in connection with such assignment
shall be paid by Purchaser at or prior to Closing. Any Service Contract that
Purchaser does not elect to assume shall be terminated by Seller on or before
the Closing Date if such termination may be accomplished without payment of any
fee therefor. Seller shall have no obligation to terminate any Service Contract
that is not terminable by its terms on or before the Closing Date without
payment and Seller shall have no obligation to pay any fees in respect of
contract termination. If Purchaser elects to terminate any Service Contract
whose termination causes payment therefor, Seller shall obtain a credit at
closing for the full amount of such payment. If any Service Contract is to be
terminated by Seller under the foregoing provisions, Seller shall give the
service provider a termination notice as soon possible after receiving notice
from Purchaser that Purchaser does not elect to assume such Service Contract.
If, because of the termination provisions in such Service Contract, it cannot be
terminated prior to the Closing Date, Purchaser shall assume such Service
Contract at Closing, but only in respect of any period that may remain on such
Service Contract after the delivery of such termination notice by Seller.
22. Exclusivity.
So long as this Agreement has not been terminated, Seller agrees not
to negotiate with, discuss or further pursue any other offers or proposals
relating to the sale of the Property with any party other than Purchaser.
23. Miscellaneous.
23.1 Captions and Execution. The captions in this Agreement are
inserted for convenience of reference only and in no way define, describe or
limit the scope or intent of this Agreement or any of the provisions hereof.
This Agreement shall not be binding or effective until properly executed and
delivered by Seller and Purchaser. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same Agreement, and it shall not be necessary
that each party to this Agreement execute each counterpart.
23.2 Press Release. Seller and Purchaser each agrees that before the
Closing Date it will not issue any press release, advertisement or other public
communication with respect to this
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<PAGE>
Agreement or the transactions contemplated hereby without the prior consent of
the other party hereto, except to the extent required by law. If Seller or
Purchaser is required by law to issue such a press release or other public
communication before the Closing Date, at least one Business Day before the
issuance of the same such party shall deliver a copy of the proposed press
release or other public communication to the other party hereto for its review
and approval, which approval shall not be unreasonably withheld or delayed.
23.3 Recording. This Agreement shall not be recorded in any office
legally established for the purpose of giving public notice of real estate
records. If Purchaser records or causes this Agreement to be recorded, Purchaser
shall be in default hereunder, giving Seller the right to terminate this
Agreement, to retain the Deposit and collect liquidated damages according to the
terms of Section 13.2 hereof, or to exercise any other rights and remedies
available by reason of Purchaser's default. Purchaser hereby appoints Seller as
its true and lawful attorney in fact for the purpose of executing any form of
release or termination required to remove this Agreement from public record.
23.4 Amendment and Merger. This Agreement may not be changed or
terminated orally. This Agreement shall be deemed to merge with the conveyance
of title and all covenants, agreements, indemnities, representations and
warranties shall not survive the Closing except as may be otherwise specifically
provided herein.
23.5 Binding. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, their respective successors, personal
representatives, heirs and permitted assigns.
23.6 Governing Law and Limitation Date. This Agreement shall be
governed by and construed in accordance with the laws of the District of
Columbia. Purchaser and Seller agree that any claim or litigation arising out of
this Agreement, or the transaction contemplated hereby, shall be made or brought
no later than December 31, 1998 ("Limitation Date"), and that any litigation
shall be brought in the courts of the District of Columbia or in the courts of
the United States for the District of Columbia, Seller and Purchaser consenting
to the venue of such courts. The warranties, representations and agreements of
Seller and Purchaser set forth herein shall survive until the Limitation Date,
and no action based thereon shall be commenced after the Limitation Date.
Notwithstanding the foregoing, (i) Section 14 (Environmental Condition) shall
survive both the Closing and the
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<PAGE>
Limitation Date and shall not merge into the special warranty deed delivered
pursuant to Section 7.1(a), but shall be enforceable at any time by Seller, and
(ii) the obligations of the parties under Section 5.7 hereof shall survive until
April 30, 1999.
23.7 Entire Agreement. This Agreement contains the entire agreement
between the parties and any and all prior understandings and agreements are
merged herein and any agreement hereafter made shall be ineffective to change,
modify, or discharge this Agreement in whole or in part unless such agreement
hereafter made is in writing and signed by the parties hereto.
23.8 Time of Essence. Purchaser and Seller each agree that time is
of the essence with respect to this Agreement.
23.9 No Waiver. Except as otherwise provided in this Agreement,
failure by Purchaser or Seller to insist upon or enforce any rights herein shall
not constitute a waiver thereof.
23.10 Partial Invalidity. If any term or provision of this Agreement
or the application thereof to any persons or circumstances shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
23.11 Waiver of Jury Trial. Seller and Purchaser waive trial by jury
in any action, proceeding or counterclaim brought by either of them against the
other on any matter arising out of or in any way connected with this Agreement.
23.12 No Cross-Default. If Purchaser, or any Affiliate, is also the
purchaser under a Purchase and Sale Agreement (this Agreement and such Purchase
and Sale Agreement being collectively referred to as the "Agreements") with 14L
Associates, then (i) any default by the seller under such other Agreement shall
not be a default hereunder, (ii) any default by Seller hereunder shall not be a
default under such other Agreement, (iii) any default by Purchaser and
Purchaser's failure to close under either of the Agreements shall be deemed a
default under both of the Agreements and Purchaser shall forfeit its Deposit and
the deposits under both Agreements, at Seller's option, (iv) if there is any
default and failure to close by Seller under either one of the Agreements,
Purchaser shall still
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<PAGE>
have the right (but not the obligation) to close on the Agreement not involved
in Seller's default and failure to close, and (v) if either one of the
Agreements is terminated by virtue of a failure of a condition precedent or a
casualty giving a right of termination under one of the Agreements, the
obligations of Seller and Purchaser under the Agreement where the failed
condition is not applicable or the casualty has not so occurred shall not be
affected.
23.13 Soil Characteristics. The characteristics of the soil of the
Property, as described by the Soil Conservation Service of the U.S. Department
of Agriculture in the Soil Survey Book of the District of Columbia (Area 11),
published in July, 1976, and as shown on the soil maps of the District of
Columbia at the back of that publication is Urban Land. For further information,
Purchaser may contact the Soil Testing Laboratory, the District of Columbia
Department of Environmental Services, or the Soil Conservation Service of the
U.S. Department of Agriculture. The foregoing is set forth pursuant to the
District of Columbia Code and is not intended as, and should not be construed
as, limiting the conditions set forth herein with respect to Purchaser's
investigations, tests and studies and the absence of representations and
warranties by Seller with respect to the condition of the Property.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
SELLER:
1709 L.P.
By: Q 1709 L.L.C., General Partner
By: Quadrangle Development Corporation,
Managing Member
By /s/ Christopher D. Gladstone
-----------------------------------
Christopher D. Gladstone,
President
PURCHASER:
MACK-CALI REALTY ACQUISITION CORP.
By /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
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<PAGE>
SCHEDULE A
Legal Description
Lot Forty (40) in the subdivision made by Rekab, Inc. of Lots in Square
One Hundred Seventy (170), as per plat recorded in Liber 157 at folio 29 in the
Office of the Surveyor for the District of Columbia.
<PAGE>
SCHEDULE B
Leases and Security Deposits
1. Board of Governors of the Federal Reserve System -- Amended and Restated
Office Lease dated April 28, 1995; Option to Lease and Amendment to
Original Lease, Office Lease No. 2 and Office Lease No. 3 dated December
30, 1997; First Amendment to Option to Lease and Amendment to Original
Lease, Office Lease No. 2 and Office Lease No. 3 dated April 28, 1998.
2. Board of Governors of the Federal Reserve System -- Amended and Restated
Office Lease No. 2 dated April 28, 1995; Option to Lease and Amendment to
Original Lease, Office Lease No. 2 and Office Lease No. 3 dated December
30, 1997; First Amendment to Option to Lease and Amendment to Original
Lease, Office Lease No. 2 and Office Lease No. 3, dated April 28, 1998.
3. Board of Governors of the Federal Reserve System -- Office Lease No. 3
dated March 29, 1995; Option to Lease and Amendment to Original Lease,
Office Lease No. 2 and Office Lease No. 3 dated December 30, 1997; First
Amendment to Option to Lease and Amendment to Original Lease, Office Lease
No. 2 and Office Lease No. 3, dated April 28, 1998.
4. Board of Governors of the Federal Reserve System -- Storage Space dated
June 14, 1994 for 1,406 square feet of storage space on the First Basement
Level; First Amendment to Storage Space Lease dated May 13, 1998.
5. Board of Governors of the Federal Reserve System -- Storage Space Lease
(undated) for 690 square feet of storage in Garage Level C; First
Amendment to Storage Space Lease dated May 13, 1998.
6. Diplomat Parking Corporation -- Lease Agreement dated June 20, 1972; First
Amendment dated May 28, 1991; Second Amendment dated April 30, 1996;
another Second Amendment dated April 30, 1996; Consent to Assignment and
Agreement dated October 1, 1997;
7. General Services Administration-- Lease dated December 2, 1988;
Supplemental Lease Agreement No. 1 dated May 11, 1990; Supplemental Lease
Agreement No. 2 dated May 11, 1990; Supplemental Lease Agreement No. 3
dated November 16, 1990; Supplemental Lease Agreement No. 4 dated November
16, 1990; Supplemental Lease Agreement No. 5 dated March 22, 1991;
Supplemental Lease Agreement No. 6 dated January 10, 1992; Supplemental
Lease Agreement No. 7 dated January 10, 1992; Supplemental Lease Agreement
No. 8 dated April 7, 1992; Supplemental Lease Agreement No. 9, undated
(signed by Tenant only); Supplemental Lease Agreement No. 10 dated June
23, 1993 (signed by Tenant
<PAGE>
only); Supplemental Lease Agreement No. 11, undated; Supplemental Lease
Agreement No. 12, undated; Supplemental Lease Agreement No. 13, undated;
Supplemental Lease Agreement No. 14 dated May 31, 1996; Supplemental Lease
Agreement No. 15 dated June 20, 1996 (signed by Tenant only);
Supplemental Lease Agreement No. 16 dated June 20, 1996 (signed by Tenant
only); Supplemental Lease Agreement No. 17 dated June 20, 1996 (signed by
Tenant only); and Supplemental Lease Agreement No. 18 dated June 3, 1997
(signed by Tenant only).
8. D.C. Fish Co., Inc. -- Lease dated June 26, 1979; Assignment dated October
8, 1980 assigning the lease to Tae Kyong Chung, Yong Whi Ching, Tae Rhin
Chung and Chung Ok Chung; Agreement dated March 16, 1989; First Amendment
to Lease dated November 20, 1992; Second Amendment to Lease dated December
20, 1993.
9. Group Health Association. Inc. -- Lease Agreement dated July 19, 1991;
First Amendment to Lease dated March 16, 1993; Landlord's Sublease Consent
for Results Educational Fund (not yet signed by Landlord or Tenant).
Tenant now known as Humana Group Health Plan, Inc.
10. World Resources Institute -- Lease Agreement dated October 17, 1988;
First Amendment to Lease dated February 23, 1993; Second Amendment to
Lease dated April 28, 1993.
11. American Institute of Architects -- Lease Agreement dated March 1, 1989;
Amendment to Lease dated November 27, 1989; Second Amendment to Lease
dated July 23, 1993; Third Amendment to Lease dated September 2, 1993.
12. Ducks Unlimited -- License Agreement for a current subtenant of American
Institute of Architects that has not yet been signed by Landlord or
Tenant.
NOTE: The above list does not include Guarantees
Security Deposits as of May 15, 1998:
Principal Accrued Less Ending
Tenant Amount Interest Payments Balance
------ --------- -------- -------- -------
1. DC Fish Co. $ 4,800.00 $ 0.00 $ 0.00 $ 4,800.00
<PAGE>
SCHEDULE C
Service Contracts
Contractor Services Rendered Date of Contract
- ---------- ----------------- ----------------
American/Valcourt
Building Service Window cleaning January 1, 1998
Aargon Corporation Trash removal services January 1, 1998
Classic Concierge Concierge service January 1, 1998
Creative Plantscape Landscaping January 1, 1998
Empire Recylcing Recycling January 1, 1998
Home Paramount Pest control January 1, 1998
Kastle Systems Electronic Security January 1, 1998
Landis & Gyr Computer energy management January 1, 1994
Montgomery Elevator Elevator maintenance May 1994
Oneil M. Banks Air quality survey January 1, 1998
Stuart Dean Metal refinishing January 1, 1998
Vance Uniformed Protective
Services Lobby host services January 1, 1998
USSI Janitorial services January 1, 1998
<PAGE>
SCHEDULE D
Permitted Encumbrances
1. Taxes subsequent to March 31, 1998, a lien, not yet due and payable.
2. Water rent and sewer service charges subsequent to closing date, a lien,
not yet due and payable.
3. Agreement(s) with the District of Columbia relating to projection of
sub-surface vaults into public space abutting the property as set forth in
instrument recorded January 27, 1971 in Liber 13182 at folio 64.
4. Rights of parties in possession as commercial tenants only as set forth on
Schedule B.
5. Minor encroachments of building along north property line as shown on Plat
of Survey of Bernard F. Locraft dated February 24, 1992, last revised May
13, 1998.
<PAGE>
SCHEDULE F
Pending Litigation
Susan Friedman v. 1709 L.P. et al. -- Civil Action No. 2758-98 in the Superior
Court of the District of Columbia.
<PAGE>
Schedule 5.2(b)
034201 Page - 1
1709 L.P. 1709 LP Date - 5/29/98
Detailed Accounts Receivable As of - 05/29/98
<TABLE>
<CAPTION>
Address Document Reference Balance Discount Remark
Number Name Co Ty Number Inv Date Original Open
- ------- ----------------------------- --- --- ----------- --------- ----------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
34948 GROUP HEALTH ASSOCIATION, INC.
089 RD 108514 003 12/01/97 398.02 398.02 CPI - Office
------------ ------------
34948 Humana, Inc. 398.02 398.02
35490 U.S. SECRET SRVC GS-11B-80415
089 RN 106822 001 10/01/97 1,852.72 1,852.72 GSA 1997 R/E TAX
089 RD 114354 001 05/01/98 74,639.19 74,639.19 Base Rent - Office
089 RN 114540 001 04/24/98 320.70 320.70 3/98 PRORATED EXC
089 RN 114540 002 04/24/98 662.74 662.74 4/98 ESC
089 RN 114540 003 04/24/98 662.74 662.74 5/98
------------ ------------
35490 U.S. SECRET SRVC GS-11B-8 78,138.09 78,138.09
34905 WORLD RESOURCES INSTITUTE
089 RN 114720 001 04/30/98 56,034.00 56,034.00 '97 FINAL OP EXP
------------ ------------
34905 WORLD RESOURCES INSTITUTE 56,034.00 56,034.00
------------ ------------
089 1709 L.P. 134,570.11 134,570.11
------------ ------------
Grand Total - 134,570.11 134,570.11
</TABLE>
<PAGE>
SCHEDULE 5.6
New Leases, Amendments to Leases and Broker Commission Agreements
Federal Reserve Board:
a) Option to Lease and Amendment to Original Lease, Office Lease No. 2 and
Office Lease No. 3 dated December 30, 1997.
b) First Amendment to Option to Lease and Amendment to Original Lease,
Office Lease No. 2 and Office Lease No. 3 dated April 28, 1998.
c) First Amendment to Storage Space Lease dated May 13, 1998. This is an
amendment to the Storage Space Lease for 1,406 square feet.
d) First Amendment to Storage Space Lease dated May 13, 1998. This is an
amendment to the Storage Space Lease for 690 square feet.
Ducks Unlimited -- License Agreement that extends the term of a subtenant for
two months beyond the lease expiration date of the tenant, American Institute of
Architects (July 1 through August 31, 1998). The License Agreement is under
review by Licensee and has not yet been signed.
Humana Group Health Plan -- Landlord's Consent to Sublease, undated. This
document is under review by tenant and has not yet been signed by Landlord or
Tenant.
<PAGE>
EXHIBIT A
DEED
AFTER RECORDING,
PLEASE RETURN TO:
Andrew S. Levine, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
DEED
THIS DEED is made and entered into on this ____ day of June, 1998, by and
between 1709 L.P., a District of Columbia limited partnership ("Grantor"), whose
address is c/o Quadrangle Development Corporation, 1001 G Street, N.W.,
Washington, D.C. 20001, and MACK-CALI REALTY ACQUISITION CORP., a Delaware
corporation ("Grantee"), whose address is 11 Commerce Drive, Cranford, New
Jersey 07016.
W I T N E S S E T H:
For Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor does hereby
GRANT, BARGAIN, SELL and CONVEY, with Special Warranty, unto Grantee, its
successors and assigns, in fee simple, the parcel of land located in the
District of Columbia, described on Exhibit A attached hereto.
TOGETHER with all buildings, fixtures and other improvements located in or
on such parcel of land; and
TOGETHER with all easements, rights-of-way, appurtenances, licenses and
privileges belonging or appurtenant to such land; and
TOGETHER with all mineral, gas, oil and water rights, sewer rights, other
utility rights, and development rights now or hereafter allocated or allocable
to such land; and
TOGETHER with all right, title and interest of Grantor in and to any land
lying in the bed of any street, road, avenue or alley, open or closed, adjacent
to such land, to the center line thereof.
<PAGE>
TO HAVE AND TO HOLD all of the aforesaid property (the "Property") unto
the use and benefit of Grantee, its successors and assigns, in fee simple
forever.
This conveyance is expressly made subject to easements, covenants,
conditions, agreements, and restrictions of record.
Grantor covenants that it has the right to convey the Property to Grantee
and that Grantor will execute such further assurances of the Property as may be
required.
IN WITNESS WHEREOF, Grantor has caused this Deed to be executed by its
general partner, Q 1400 L.L.C., which has caused this Deed to be executed by its
Managing Member, Quadrangle Development Corporation, which has caused this Deed
to be executed by Christopher D. Gladstone, its President, and its corporate
seal to be affixed hereto, and does hereby constitute and appoint Christopher D.
Gladstone its true and lawful attorney-in-fact for it and in its name to
acknowledge and deliver said Deed on behalf of Quadrangle Development
Corporation, the managing member of Q 1400 L.L.C., the general partner of
Grantor.
GRANTOR:
1709 L.P.
By: Q 1709 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
-----------------------------
Christopher D. Gladstone,
President
-2-
<PAGE>
)
) ss:
)
I, ____________________________, a Notary Public for the jurisdiction
aforesaid, do certify that Christopher D. Gladstone, who is personally well
known to me as (or proved by the oath of credible witnesses to be) the person
named as attorney-in-fact in the foregoing and annexed Deed bearing date on the
___ day of June, 1998, personally appeared before me in said jurisdiction and as
attorney-in-fact as aforesaid, and by virtue of the authority vested in him as
aforesaid, acknowledged the same to be the true act and deed of Quadrangle
Development Corporation, the managing member of Q 1709 L.L.C., in its capacity
as the general partner of the Grantor therein.
Given under my hand and official seal on this ___ day of June, 1998.
--------------------------------
Notary Public
My Commission Expires:
-----------
-3-
<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION OF LEASES AND SERVICE CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF LEASES AND SERVICE CONTRACTS (this
"Assignment") is entered into on this ____ day of June, 1998, between 1709 L.P.,
a District of Columbia limited partnership ("Assignor"), whose address is c/o
Quadrangle Development Corporation, 1001 G Street, N.W., Washington, D.C. 20001,
and MACK-CALI REALTY ACQUISITION CORP., a Delaware corporation ("Assignee"),
whose address is 11 Commerce Drive, Cranford, New Jersey 07016.
1. Reference to Purchase Agreement. Reference is made to a Purchase and
Sale Agreement dated June ___, 1998 between Assignor, as seller, and Assignee,
as purchaser, pursuant to which Assignor has agreed to sell to Assignee, and
Assignee has agreed to purchase from Assignor, the improved real property and
other assets described therein (the "Purchase Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Purchase Agreement.
2. Assignment. For good and valuable consideration received by Assignor,
the receipt and sufficiency of which are hereby acknowledged, Assignor hereby
grants, transfers and assigns to Assignee all right, title and interest of
Assignor (i) in and to each of the contracts listed on Exhibit A attached hereto
(the "Accepted Contracts"), to the extent assignable, (ii) as landlord in and to
each of the leases listed on Exhibit B attached hereto, including any amendments
and guaranties thereof (the "Leases"), (iii) any and all licenses to occupy
space at the Property and (iv) the security deposits held by landlord under the
Leases. Assignor is not assigning any right to receive Delinquent Rent, and any
Delinquent Rent as of the date hereof shall be collected and paid to Seller to
the extent and in the manner provided by the Purchase Agreement.
3. Assumption. Assignee hereby assumes, and agrees to be bound by, all of
the covenants, agreements and obligations of Assignor (i) under the Accepted
Contracts, and (ii) as landlord under the Leases, that shall arise or be
incurred, or that are required to be performed, on and after the date of this
Assignment, and Assignee further assumes all liability of Assignor for the
proper refund or return of the security deposits actually delivered or credited
to Assignee on the date hereof and held under the Leases if, when and as
required by the Leases or otherwise by law.
4. Indemnity. Assignee agrees to indemnify, defend and hold harmless
Assignor from any loss, cost, claim, liability,
<PAGE>
expense or demand of whatever nature under the Leases and Accepted Contracts
arising or accruing as a result of any acts which occur on or after the date
hereof. Assignor agrees to indemnify, defend and hold harmless Assignee from any
loss, cost, claim, liability, expense or demand of whatever nature under the
Leases and Accepted Contracts arising or accruing prior to the date hereof, but
only in respect of any claim under the indemnity contained in this sentence made
by Assignee prior to April 30, 1999.
5. Binding Effect. This Assignment shall inure to the benefit of, and be
binding upon, each of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment on
the day and year first above written.
ASSIGNOR:
1709 L.P.
By: Q 1709 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
-----------------------------
Christopher D. Gladstone,
President
ASSIGNEE:
MACK-CALI REALTY ACQUISITION CORP.
By
----------------------------------------
Name:
Title:
-2-
<PAGE>
EXHIBIT C
ASSIGNMENT OF INTANGIBLE PROPERTY AND WARRANTIES
THIS ASSIGNMENT OF INTANGIBLE PROPERTY AND WARRANTIES (this "Assignment")
is entered into on this ____ day of June, 1998, by 1709 L.P., a District of
Columbia limited partnership ("Assignor"), whose address is c/o Quadrangle
Development Corporation, 1001 G Street, N.W., Washington, D.C. 20001, for the
benefit of MACK-CALI REALTY ACQUISITION CORP., a Delaware corporation
("Assignee"), whose address is 11 Commerce Drive, Cranford, New Jersey 07016.
1. Reference to Purchase Agreement. Reference is made to a Purchase and
Sale Agreement dated June ___, 1998 between Assignor, as seller, and Assignee,
as purchaser, pursuant to which Assignor has agreed to sell to Assignee, and
Assignee has agreed to purchase from Assignor, the improved real property and
other assets described therein (the "Purchase Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Purchase Agreement.
2. Assignment. For good and valuable consideration received by Assignor,
the receipt and sufficiency of which are hereby acknowledged, Assignor hereby
grants, transfers and assigns, without any warranty, representation, or recourse
of any kind, to Assignee all right, title and interest of Assignor in and to (i)
the Intangible Property, and (ii) all warranties or guaranties presently in
effect from contractors, suppliers or manufacturers of personal property
installed in or used in connection with the Property or any work performed or
improvements included as a part of the Property (the "Warranties"). This
Assignment shall not be effective as to any Intangible Property or Warranty
that, by its terms or as a matter of law, cannot be assigned.
3. Binding Effect. This Assignment shall inure to the benefit of, and be
binding upon, each of the parties hereto and their respective successors and
assigns.
[The signature of Assignor is set forth on the next page.]
<PAGE>
IN WITNESS WHEREOF, Assignor has executed this Assignment effective as of
the day and year first above written.
ASSIGNOR:
1709 L.P.
By: Q 1709 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
-----------------------------
Christopher D. Gladstone,
President
-2-
<PAGE>
EXHIBIT D
Notice to Tenants
1709 L.P.
c/o do Quadrangle Development Corporation
1001 G Street, N.W.
Washington, DC 20001
May___, 1998
Tenant Name
Tenant Address
Re: Sale of 1709 New York Avenue, N.W., Washington, DC
Dear Tenant:
Please be advised that, as of the date hereof, 1709 L.P. has sold the referenced
premises to M-C Capitol Associates L.L.C. In connection with such sale, 1709
L.P. has assigned all of its right, title and interest as landlord under your
lease to M-C Capitol Associates L.L.C. Your security deposit, if any, has also
been assigned to M-C Capitol Associates L.L.C.
You are instructed to pay all rents, additional rents and all other charges and
payments due under your lease as follows:
M-C Capitol Associates L.L.C.
P.O. Box 23229
Newark, New Jersey 07189
You will receive from M-C Capitol Associates L.L.C. monthly invoices for all
rents due under your lease. In order for M-C Capitol Associates L.L.C. to
process your payments quickly and accurately, kindly return the payment stub
attached to each invoice.
In addition, all correspondence relating to the monthly billings should be sent
to Alicia Friedman, M-C Capitol Associates L.L.C., 11 Commerce Drive, Cranford,
New Jersey 07016.
<PAGE>
I am please to inform you that, for the immediate future, QDC Property
Management, Inc. is remaining as property manager for the building. We have
appreciated the chance to work with you and serve your space needs over the
years.
Very truly yours,
1709 L.P.
By: Q 1709 L.L.C.,
general partner
By: Quadrangle Development Corporation,
managing member
By:
----------------------------------
Christopher D. Gladstone
President
<PAGE>
EXHIBIT E
AFFIDAVIT
Section 1445 of the Internal Revenue Code provides that a transferee of a
United States real property interest must withhold tax if the transferor is a
foreign person. To inform the transferee that withholding of tax is not required
upon the disposition of a United States real property interest by 1709 L.P., a
District of Columbia limited partnership ("the Partnership"), the undersigned
hereby certifies the following on behalf of the Partnership:
1. The Partnership is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations); and
2. The Partnership's U.S. employer tax identification number is
52-1784850; and
3. The Partnership's office address is 1001 G Street, N.W., Suite 700,
Washington, D.C. 20001.
The Partnership understands that this certification may be disclosed to
the Internal Revenue Service by transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The undersigned officer of the Partnership declares that he has examined
this certification and to the best of his knowledge and belief it is true,
correct and complete, and he further declares that he has authority to sign this
document on behalf of the Partnership.
Dated: June ___, 1998.
1709 L.P.
By: Q 1709 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
-----------------------------
Christopher D. Gladstone,
President
<PAGE>
EXHIBIT F
TENANT ESTOPPEL CERTIFICATE
<PAGE>
TENANT ESTOPPEL CERTIFICATE
______________, 1998
Mack-Cali Realty Acquisition Corp.
c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
1709 L.P. ("Landlord")
c/o Quadrangle Development Corporation
1001 G Street, N.W.
Suite 700W
Washington, DC 20001
Premises: 1709 New York Avenue, N.W., Washington, DC (the "Property")
Ladies and Gentlemen:
The undersigned, as Tenant under that certain lease dated
__________________ (the "Lease"), made with 1709 L.P. does hereby certify to
Landlord, Mack-Cali Realty Acquisition Corp. and its assigns and successors (the
"Purchaser") and to any lender or mortgagee of Purchaser with respect to
Purchaser's acquisition of the property of which the Demised Premises (as
hereinafter defined) form a part:
1. That the premises leased by Tenant (the "Demised Premises") pursuant to
the Lease are described as ____ square feet on the _______floor at the Premises;
2. That the Lease has not been modified, changed, altered or amended in
any respect, except as set forth below, and is the only Lease or agreement
between the undersigned and the Lessor affecting the Demised Premises. If none,
state "none." A true and complete copy of the Lease, together with any and all
modifications, amendments and/or assignments thereto, are annexed hereto as
Exhibit A. There are no subleases for any of the Demised Premises, except
__________________;
3. That the full name and current mailing address for Tenant, and the
address for all notices to Tenant, are set forth below:
4. That the Demised Premises have been completed in accordance with the
terms of the Lease and that Tenant has accepted possession of the Demised
Premises. All improvements,
<PAGE>
alterations or additions to be constructed on the Demised Premises by Landlord
pursuant to the Lease have been completed and accepted by Tenant. All
contributions now or previously required from Landlord for improvements to the
Demised Premises have been paid in full to Tenant;
5. That the original Lease term began on ____________________ and will
expire on ______________________; that Tenant has paid rent through
_____________________; that no rent has been paid by Tenant for more than one
month in advance; that the rent payable under the Lease is the amount of fixed
rent provided thereunder, which is annual fixed rent payable to Landlord of
$___________; that as of the date hereof, additional rent of $__________________
is payable to Landlord on account of utility costs, real estate taxes and
operating expenses; that the base year for such additional rent is _______,
which has a base amount of $________________ [or the expense stop for such
additional rent is $______/SF]; that there is no claim or basis for an
adjustment thereto; and that the amount of additional rent has been paid through
______________;
6. That Tenant has not given Landlord any notice of any claim arising
under the Lease nor any notice of a default on the part of Landlord under the
Lease which have not been cured. To Tenant's knowledge, there are no defaults by
Landlord under the Lease as of the date hereof. As of the date hereof, the
undersigned is entitled to no credit, no free rent and no offset, counterclaim
or deduction in rent except ________________;
7. That the Lease is now in full force and effect and has not been
amended, modified or assigned except as may be indicated above; the Lease is the
only agreement between Landlord and the undersigned regarding the Demised
Premises; and, to Tenant's knowledge, Tenant is not in default under the Lease;
8. That Tenant has paid to Landlord a security deposit of $_______, and
Tenant has no knowledge of any claim made by Landlord against the security
deposit;
9. That Tenant has _________ option(s) to renew the Lease for a period of
_____ years upon the terms set forth in the Lease, and that none of such options
have been exercised except ________________;
10. That, except as set forth in the Lease, Tenant has no (i) option to
expand into additional space in the Property; (ii) right of first refusal of any
space in the Property; or (iii) option to acquire all or any part of the
Property in which the Demised Premises are located;
11. That no actions, whether voluntary or otherwise, are pending against
the undersigned under the bankruptcy laws of the United States or any State
thereof.
(tenant's signature on next page)
2
<PAGE>
Dated: , 1998
-----------
TENANT:
[TENANT NAME],
a
By:
--------------------------------
Name:
Title:
Address:
3
<PAGE>
EXHIBIT A
(Copy of the Lease to be attached, including all
amendments, modifications, assignments, etc.)
4
<PAGE>
EXHIBIT G
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into on this _____ day of May,
1998 by and among (i) 1709 L.P., a District of Columbia limited partnership
("Seller"), (ii) M-C CAPITOL ASSOCIATES L.L.C., a Delaware limited liability
company ("Purchaser") and (iii) LAWYERS TITLE INSURANCE CORPORATION ("Escrow
Agent").
RECITALS:
A. Seller and a predecessor of Purchaser have entered into a Purchase and
Sale Agreement dated June __, 1998 (the "Purchase Agreement") with respect to
the sale by Seller to Purchaser of certain improved real property located at
1709 New York Avenue, N.W., Washington, D.C. (the "Property").
B. The Purchase Agreement contemplates that Seller and Purchaser shall
execute this Escrow Agreement at the Closing on the sale of the Property to
Purchaser under the provisions of the Purchase Agreement. Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, Seller, Purchaser and Escrow Agent hereby covenant and agree
as follows:
1. Appointment of Escrow Agent. Seller and Purchaser hereby designate and
appoint Escrow Agent as escrow agent, and Escrow Agent hereby accepts such
designation and appointment.
2. On the date hereof, Seller has placed in escrow a portion of the
proceeds from the sale of the Property in the amount of Sixty-Four Thousand
Dollars ($64,000) (the "Escrow Amount") in cash with Escrow Agent, as escrowee,
to secure Seller's obligations under Section 5.7(b) of the Purchase Agreement,
relating to Seller's undertaking to repay to Tenants any overpayments of
Additional Rent such Tenants may have made in calendar year 1998 that is
attributable to periods prior to the Closing Date ("Overpayments"). Escrow Agent
shall hold the Escrow Amount pursuant to the terms of this Escrow Agreement. The
Escrow Amount shall be held and maintained by Escrow Agent in an
interest-bearing account approved by Seller and Purchaser. Neither Seller nor
Purchaser shall have the right to substitute another escrow agent for Escrow
Agent or to cause the Escrow Amount to be held or controlled by any other person
or party except by mutual agreement of Seller and Purchaser.
<PAGE>
3. Earned Interest. All interest which accrues on the Escrow Amount shall
be paid by Escrow Agent to Seller on the termination of this Escrow Agreement.
4. Disbursement of Escrow. At such time as a determination is made
(pursuant to the provisions of Section 5.7 of the Purchase Agreement) that a
Tenant has made an Overpayment, Seller shall so notify Escrow Agent (with a copy
to Purchaser), stating in such notice the name and address of the Tenant and the
amount to be reimbursed to such Tenant. Within five (5) days after receipt of
such notice, Escrow Agent shall make the requested payment to the Tenant
specified in Seller's notice out of the Escrow Amount.
5. Termination of Escrow. This Escrow Agreement and the escrow created
hereby shall terminate on the earlier to occur of (i) disbursement of the entire
Escrow Amount pursuant to the provisions hereof, or (ii) May 31, 1999. If the
entire Escrow Amount has not been disbursed prior to May 31, 1999, then on and
as of such date Escrow Agent shall disburse to Seller any remaining funds in the
Escrow Amount, whereupon this escrow shall terminate.
6. Notices. Each notice, request, demand, consent, approval, objection or
other communication (hereafter in this Section 6 referred to collectively as
"notices" and referred to singly as a "notice") which Seller, Purchaser or
Escrow Agent is required or permitted to give pursuant to this Agreement shall
be in writing and shall be deemed to have been duly given if hand delivered with
receipt therefor, or sent by Federal Express or other overnight courier service.
Any such notice shall be deemed given when received or when delivery is refused.
The records of the courier service shall be conclusive with respect to the date
of receipt or refusal of delivery. All notices shall be addressed to the parties
at the following addresses:
(a) if to Purchaser: 11 Commerce Drive, Cranford, New Jersey 07016,
with separate notice to the attention of Roger W. Thomas, Esq. and David
Parisier, with an additional separate notice to go to Pryor, Cashman, Sherman
and Flynn, 410 Park Avenue, New York, NY 10022, Attention: Andrew S. Levine,
Esq.
(b) if to Seller: c/o Quadrangle Development Corporation, 1001 G
Street, N.W., Suite 700, Washington, D.C. 20001, Attention: Legal Department,
with a copy to: The Taylor Simpson Group, One Rockefeller Plaza, Twenty-Third
Floor, New York, New York 10020, Attention: Paul E. Taylor III and Jeffrey
Feldman, Esq.
(c) if to Escrow Agent: 708 Third Avenue, New York, New York 10017,
Attention: Kathryn Andriko
-2-
<PAGE>
Any party may, by notice given pursuant to this Section 6, change the person or
persons and/or address or addresses, or designate an additional person or
persons or an additional address or addresses, for its notices.
7. Assignment. Neither Seller, Purchaser nor Escrow Agent shall have any
right, power, or authority to transfer, sell, hypothecate, assign or otherwise
convey any of its rights or obligations under this Escrow Agreement. However,
Escrow Agent shall have the right to resign as escrow agent hereunder. If Escrow
Agent does resign, Seller and Purchaser shall promptly appoint a substitute
escrow agent approved by each of them, such approval not to be unreasonably
withheld.
8. Indemnity. Seller and Purchaser hereby indemnify and hold Escrow Agent
harmless from and against any loss, damage, cost or expense incurred by Escrow
Agent in connection with or in any way related to Escrow Agent's performance of
its obligations hereunder, unless such loss, damage, cost or expense results
from Escrow Agent's negligence, fraud or dishonest conduct.
9. Liability of Escrow Agent. It is understood and agreed that in no event
shall Escrow Agent be liable for any loss or damage resulting from:
(a) Any defaults, error, action or omission of any other party;
(b) Any loss or impairment of funds deposited in escrow in the
course of collection or while on deposit with a commercial bank resulting from
failure, insolvency or suspension of such institution;
(c) Escrow Agent's compliance with any and all legal process, writs,
orders, judgments and decrees of any court where issued with or without
jurisdiction, and whether or not subsequently vacated, modified, set aside or
reversed;
(d) Any good faith act or forbearance by Escrow Agent as long as
such act or forbearance is reasonable and consistent with Escrow Agent's
ordinary course of business; or
(e) Escrow Agent's asserting or failing to assert any cause of
action or defense in any judicial, administrative or other proceeding either in
Escrow Agent's own interest or in the interest of any other party.
10. Remedies Cumulative. The Escrow Amount is intended as security for the
payment by Seller to Tenants of any Overpayments by such Tenants. This Escrow
Agreement is not a limit on Seller's liability to such Tenants for any such
Overpayments, and Seller shall make such payments as may be due Tenants for any
-3-
<PAGE>
Overpayments made by them in accordance with the provisions of such Tenants'
Leases and the Purchase Agreement.
11. Entire Agreement. This Escrow Agreement contains the entire agreement
among the parties hereto with respect to the subject matter hereof, and there
are no agreements or understandings among them with respect to the subject
matter hereof other than as set forth herein and in the Purchase Agreement.
12. Escrow Agent's Fee. Escrow Agent shall not charge any fee in
connection with the services to be performed by it under this Escrow Agreement.
13. Miscellaneous. This Escrow Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and permitted
assigns. This Escrow Agreement shall be governed by the laws of the District of
Columbia.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the day and year first above-written.
SELLER:
1709 L.P.
By: Q 1709 L.L.C., General Partner
By: Quadrangle Development Corporation,
Managing Member
By
-----------------------------
Christopher D. Gladstone,
President
PURCHASER:
M-C CAPITOL ASSOCIATES L.L.C.
By: Mack-Cali Property Trust, its Member
By
-----------------------------------
Name:
Title:
ESCROW AGENT:
LAWYERS TITLE INSURANCE CORPORATION
By:
-----------------------------------
-4-
PURCHASE AND SALE AGREEMENT
by and between
14L ASSOCIATES
(as Seller)
and
MACK-CALI REALTY ACQUISITION CORP.
(as Purchaser)
Dated: June 1, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions............................................................1
2. Sale of the Property...................................................6
3. Matters to Which the Sale is Subject...................................6
4. Purchase Price and Payment.............................................6
4.1 Amount...........................................................6
4.2 Deposit..........................................................6
4.3 Payment..........................................................7
4.4 Disposition of Deposit...........................................8
4.5 Interpleader.....................................................8
4.6 Escrow Agent as Stakeholder......................................8
5. Closing Adjustments and Prorations.....................................9
5.1 General..........................................................9
5.2 Rent and Security Deposits.......................................9
5.3 Taxes and Assessments...........................................11
5.4 Operating Expenses..............................................12
5.5 Utility Deposits................................................13
5.6 Tenant-related expenses.........................................13
5.7 Final Closing Adjustment........................................13
6. Closing Date and Costs................................................15
6.1 Closing Date....................................................15
6.2 Closing Costs and Transfer Taxes................................15
7. Closing Documents.....................................................16
7.1 Seller's Deliveries.............................................16
7.2 Purchaser's Deliveries..........................................17
7.3 Delivery in Escrow..............................................18
8. Obligations Pending Closing...........................................18
8.1 Continued Care and Maintenance..................................18
8.2 Other Covenants.................................................19
9. Conditions to Closing.................................................20
9.1 Inspection Period...............................................20
9.2 Title or Survey Exceptions......................................21
9.3 Encumbrances Subsequent to Inspection Period....................22
9.4 Representations and Warranties True.............................23
9.5 Estoppel Certificates...........................................24
9.6 Other Conditions to Closing.....................................25
9.7 Approvals and Permits not a Condition to
Purchaser's Performance.........................................25
i
<PAGE>
10. Brokerage.............................................................25
11. Risk of Casualty and Condemnation Pending Closing.....................26
12. Notices and Other Communications......................................28
12.1 Manner of Giving Notice........................................28
12.2 Addresses for Notices..........................................28
13. Default and Remedies..................................................28
13.1 Purchaser......................................................28
13.2 Seller.........................................................29
13.3 Legal Fees.....................................................29
13.4 Documents......................................................29
14. Environmental Condition...............................................29
15. Seller's Representations and Warranties...............................30
15.1 United States Person...........................................30
15.2 Management Agreement...........................................30
15.3 Condemnation...................................................30
15.4 Litigation.....................................................30
15.5 Seller's Authority.............................................30
15.6 Leases.........................................................31
15.7 Service Contracts..............................................31
15.8 Notices of Violations..........................................31
15.9 No Remediation Programs........................................32
16. Purchaser's Authority.................................................32
17. Third Party Beneficiaries.............................................33
18. Further Assurances....................................................33
19. No Assignment.........................................................33
20. Confidentiality.......................................................33
21. Assumption or Cancellation of Service Contracts.......................34
22. Exclusivity...........................................................34
23. Miscellaneous.........................................................34
23.1 Captions and Execution.........................................34
23.2 Press Release..................................................35
23.3 Recording......................................................35
23.4 Amendment and Merger...........................................35
23.5 Binding........................................................35
23.6 Governing Law and Limitation Date..............................35
ii
<PAGE>
23.7 Entire Agreement...............................................36
23.8 Time of Essence................................................36
23.9 No Waiver......................................................36
23.10 Partial Invalidity.............................................36
23.11 Waiver of Jury Trial...........................................36
23.12 No Cross Default...............................................36
23.13 Soil Characteristics...........................................37
iii
<PAGE>
TABLE OF SCHEDULES AND EXHIBITS
-------------------------------
Schedules
- ---------
A Legal Description
B Leases and Security Deposits
C Service Contracts
D Permitted Encumbrances
E Intentionally Omitted
F Pending Litigation
5.2(b) Delinquency Report
5.6 New Leases, Lease Amendments and Commission
Agreements
Exhibits
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A Form of Deed
B Form of Assignment and Assumption of Leases and
Service Contracts
C Form of Assignment of Intangible Property and
Warranties
D Form of Notice to Tenants
E Form of Affidavit
F Form of Estoppel Certificate
G Form of Escrow Agreement
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into this ___ day of June, 1998 (the "Effective Date"), by and between 14L
ASSOCIATES, a District of Columbia limited partnership ("Seller") and MACK-CALI
REALTY ACQUISITION CORP., a Delaware corporation ("Purchaser").
RECITALS
A. Seller owns a certain parcel of land and the improvements thereon,
located at 1400 L Street, N. W., Washington, D. C.
B. Seller has agreed to sell to Purchaser, and Purchaser has agreed to
purchase from Seller, all land, improvements, furniture, furnishings, fixtures,
equipment and other tangible and intangible assets and properties owned by
Seller and used by it in connection with the management, operation, maintenance
and repair of such land and improvements.
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 agree as follows:
1. Definitions.
The terms defined in this Section 1 shall have the respective meanings
stated in this Section 1 for all purposes of this Agreement. For purposes of
this Agreement, except as otherwise expressly provided or unless the context
otherwise requires, (i) the terms defined in this Section 1 shall include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include the other gender; (ii) accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with generally accepted
accounting principles; (iii) references herein to "Sections" and other
subdivisions without reference to a document shall be to designated Sections and
other subdivisions of this Agreement; (iv) a reference to an Exhibit or a
Schedule without a further reference to the document to which the Exhibit or
Schedule is attached shall be a reference to an Exhibit or Schedule to this
Agreement; (v) the words "herein," "hereof," "hereunder" and other words of
similar import shall refer to this Agreement as a whole and not to any
particular provision; and (vi) the word "including" shall mean "including, but
not limited to."
1.1 Additional Rent shall mean all reimbursements of Operating
Expenses and administrative charges, common area
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maintenance charges, reimbursements of real estate taxes, rent escalations based
on increases in the consumer price index or any other measures of inflation,
retroactive rent escalations, insurance cost reimbursements, parking charges,
antenna rents, license fees and all other amounts and charges payable by Tenants
to Seller, as landlord, under their Leases (other than Basic Rent), but shall
not include security deposits under the Leases.
1.2 Affiliate shall mean, with respect to any entity, any natural
person or firm, corporation, partnership, association, trust or other entity
that controls, is controlled by, or is under common control with, the subject
entity; a natural person or entity that controls an Affiliate under the
foregoing shall also be deemed to be an Affiliate of such entity. For purposes
hereof, the term "control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of any
such entity, or the power to veto major policy decisions of any such entity,
whether through the ownership of voting securities, by contract or otherwise.
1.3 AS IS CONDITION WITH ALL FAULTS shall mean as is, with all
faults, including defects seen and unseen and all conditions natural and
artificial without right of set-off or reduction in the Purchase Price and
without representation or warranty of any kind, express or implied, except for
such representations or warranties as are expressly provided for herein.
1.4 Basic Rent shall mean all base rent or basic rent payable in
fixed installments and fixed amounts for stated periods by Tenants under their
Leases.
1.5 Building shall mean collectively all of the buildings and
structures now or on the Closing Date erected or situated upon the Land,
including all improvements and fixtures, appurtenant to or used in connection
therewith, that are owned by Seller presently or on the Closing Date and any
interest of Seller in and to alterations and installations in the buildings and
structures that may now or hereafter, by lease or operation of law, become the
property of Seller.
1.6 Business Day shall mean those days of the week that are not a
Saturday, Sunday or a federal holiday.
1.7 Closing shall have the meaning set forth in Section 4.3.
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1.8 Closing Date shall mean the Effective Date.
1.9 Closing Statement shall have the meaning set forth in Section
5.1.
1.10 Delinquent Rent shall mean rent that is due and payable by a
Tenant on or before the Closing Date but that has not been paid by the Closing
Date.
1.11 Deposit. No deposit is required of Purchaser hereunder. All
references to a "Deposit" under this Agreement, and all provisions of this
Agreement dealing with a "Deposit", shall be deemed to be inoperative and of no
force or effect.
1.12 Effective Date shall be the date set forth in the preamble to
this Agreement.
1.13 End of the Inspection Period shall mean the Effective Date.
1.14 Escrow Agent shall mean Commercial Settlements, Inc.
1.15 Final Closing Adjustment shall have the meaning set forth in
Section 5.7.
1.16 Inspection Period shall have the meaning set forth in Section
9.1.
1.17 Intangible Property shall mean the contract rights, licenses,
permits, certificates of occupancy, guaranties, warranties, approvals, rights to
use trademarks, any name by which the Property is commonly known, trade names,
telephone numbers in use at the Property by Seller or its managing agent, logos,
designs, graphics or artwork, architectural drawings and as-built plans, and all
similar items, each to the extent owned by Seller and to the extent they are in
Seller's possession and used in connection with the operation of the Property,
but shall not include bank accounts or cash held in the name of Seller or its
managing agent.
1.18 Land shall mean that certain parcel of land situate and lying
in the District of Columbia, as more particularly described in Schedule A.
1.19 Leases shall mean the leases of space in the Building as
described in Schedule B and any other leases or occupancy agreements to which
Seller is a party, with amendments
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and guaranties thereof and other amendments permitted by this Agreement or
otherwise agreed to by Purchaser.
1.20 Operating Expenses shall mean all costs, expenses, charges and
fees relating to the ownership, management, operation, maintenance and repair of
the Property, including electricity, gas, water and sewer charges, telephone and
other public utilities, common area maintenance charges, vault charges, personal
property taxes, and periodic charges payable under Service Contracts, but not
including any costs, expenses, charges or fees that are the direct
responsibility of a Tenant under a Lease.
1.21 Other Seller Interests shall mean all of the right, title and
interest of Seller pertaining to the Land, including all hereditaments and
appurtenances thereunto belonging or in any way appertaining, including the
following:
(a) all of the right, title and interest of Seller in and to
any easements, privileges, grants of right or other agreements affecting the
Property or comprising the Permitted Encumbrances, including any structures or
improvements erected pursuant to such easements, grants of right or other
agreements whether or not situated upon the Land;
(b) all of the right, title and interest of Seller in and to
any land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Property, to the center line thereof, and to any
strips or gores adjoining the Property or any part thereof, and all right, title
and interest of Seller in and to any award made or to be made in lieu thereof,
and in and to any unpaid award for damages to the Property by reason of change
of grade of any street;
(c) all of the right, title and interest of Seller in and to
any mineral and water rights, if any; and
(d) tenant data, leasing material and forms, past and current
rent rolls, tenant files, and other similar information and materials used by
Seller in the use and operation of the Property, all to the extent in Seller's
possession, with the exception of appraisals, forecasts and other owner-oriented
or confidential information.
1.22 Permitted Encumbrances shall mean those items or matters
affecting title to the Property which are set forth on Schedule D attached
hereto, and those items or matters otherwise
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deemed to be Permitted Encumbrances pursuant to the provisions of this
Agreement.
1.23 Personal Property shall mean all personal property, fixtures,
equipment and inventory owned by Seller and located at the Building.
1.24 Property shall mean collectively the Land, the Site
Improvements, the Building, the Personal Property, the landlord's rights under
the Leases, the Seller's rights under the Service Contracts, the Intangible
Property and the Other Seller Interests.
1.25 Purchase Price shall mean the purchase price for the Property
specified in Section 4.1.
1.26 Service Contracts shall mean all of the service, operation,
maintenance, labor and similar agreements entered into by Seller in respect of
the Property that are described in Schedule C; provided, however, that Service
Contracts shall not include any management contracts or exclusive agency
agreements for leasing of office and/or retail space in the Building.
1.27 Site Improvements shall mean the parking garage, driveway
pavings, access cuts, lighting, bumpers, drainage systems and landscaping
situated upon the Land.
1.28 Tenant shall mean the holder of any right to occupy, possess,
or use all or any part of the Property pursuant to a Lease.
1.29 Title Commitment shall have the meaning set forth in Section
9.2.
1.30 Title Company shall mean Lawyers Title Insurance Corporation.
At Purchaser's election, Purchaser may cause the Title Commitment to be issued
by an abstract agency writing for Purchaser's title company. In addition,
Purchaser shall have the right to cause the Title Commitment to be issued by one
or more title companies.
2. Sale of the Property.
Upon and subject to the terms and conditions contained in this
Agreement, Seller agrees to sell the Property to Purchaser, and Purchaser agrees
to purchase the Property from Seller.
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3. Matters to Which the Sale is Subject.
The sale of the Property shall be subject to each and all of the
following:
(a) all laws, ordinances, statutes, orders, requirements and
regulations to which the Property is subject, including zoning, building and
environmental laws and requirements;
(b) any state of facts that a new or updated survey or physical
inspection of the Property might disclose;
(c) the Permitted Encumbrances;
(d) all covenants, encumbrances or restrictions approved (or deemed
approved) by Purchaser;
(e) all terms, provisions and conditions of the Leases; and
(f) the Service Contracts and any other agreements affecting the
Property that Purchaser assumes pursuant to Section 21 hereof.
4. Purchase Price and Payment.
4.1 Amount. The purchase price for the Property shall be the sum of
Forty Million Dollars ($40,000,000) (the "Purchase Price"), which shall be
payable all in cash at the Closing. No part of the Purchase Price is allocable
to the Personal Property.
4.2 Deposit. Purchaser shall place the Deposit in escrow with the
Escrow Agent simultaneously with Purchaser's execution of this Agreement. The
Deposit shall be subject to disposition as provided for elsewhere in this
Agreement. If the Deposit is in cash or is converted into cash in accordance
with this Section, Escrow Agent shall promptly after receipt invest the Deposit
in an interest-bearing account in a commercial bank acceptable to both Purchaser
and Seller. If Purchaser elects to deliver a letter of credit ("LOC") as the
Deposit, the LOC shall be (i) unconditional and irrevocable, (ii) issued to
Escrow Agent as beneficiary by a commercial bank acceptable to Seller, (iii) for
a term of not less than one year from the date of issuance, and (iv) otherwise
acceptable to Seller in all respects. In the event that the Deposit is in the
form of an LOC and there is any dispute between Seller and Purchaser regarding
the disposition of
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the Deposit, Seller shall have the unilateral right, at its sole discretion, to
instruct Escrow Agent to cash the LOC and to hold the proceeds of the LOC as a
cash deposit under the provisions of this Agreement. Purchaser agrees that if
Seller so instructs Escrow Agent, Purchaser will not interpose any objection to
such instruction and will permit Escrow Agent to cash the LOC pursuant to such
instruction.
4.3 Payment. On the Closing Date, and subject to the terms and
conditions of this Agreement, Purchaser shall pay the Purchase Price to, or for
the account of, Seller in the manner provided for in this Section 4.3, subject
to the adjustments and prorations set forth in Section 5. Not later than 11:00
a.m. Eastern Time on the Closing Date, Purchaser shall effect a wire transfer of
federal funds to the Title Company's designated escrow account in an amount
equal to the sum of (i) the Purchase Price and (ii) the net amount (if any) of
the costs, expenses, prorations and adjustments payable by Purchaser under this
Agree ment. The amount of the funds to be wired to the Title Company's account
shall be reduced by the Deposit, if the Deposit is in cash. After the Title
Company's receipt of the wire transfer of funds in the amount required by this
Agreement, and immediately following Purchaser's confirmation that all
conditions precedent to Purchaser's obligation to close hereunder have been
satisfied, Purchaser or its counsel shall instruct the Title Company to (i)
disburse to Seller an amount equal to the Purchase Price, reduced by the net
amount of the costs, expenses, prorations and adjustments payable by Seller
under this Agreement; (ii) deliver to Purchaser all other documents and
instruments received by the Title Company that, in accordance with the terms of
this Agreement, are to be delivered by Seller to Purchaser at the closing of the
purchase and sale of the Property (the "Closing"); and (iii) deliver to Seller
all other documents and instruments received by the Title Company that, in
accordance with the terms of this Agreement, are to be delivered by Purchaser to
Seller at the Closing. Simultaneously with giving the instruction set forth in
the previous sentence, Purchaser shall instruct Escrow Agent to disburse the
Deposit to Seller. If the Deposit is in the form of an LOC, Seller shall
instruct Escrow Agent to deliver the LOC to Purchaser promptly after completion
of the Closing, and Escrow Agent shall execute a release of Seller and Purchaser
(in the customary form) relating to the performance by Escrow Agent of its
obligations hereunder.
4.4 Disposition of Deposit. If this Agreement is terminated pursuant
to Section 13 and thereafter either Seller or Purchaser makes a demand on the
Escrow Agent for the return of the Deposit (if the demand is made by Purchaser)
or for the
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payment of the Deposit (if the demand is made by Seller), the Escrow Agent shall
give notice of such demand to the other party. If the Escrow Agent does not
receive an objection from the other party to the proposed payment or return of
the Deposit within ten (10) days after the giving of such notice, the Escrow
Agent shall pay the Deposit to the party making the demand. If the Escrow Agent
receives an objection from the other party within the ten (10)-day period, the
Escrow Agent shall continue to hold the Deposit until otherwise directed by
instructions from Seller and Purchaser or until otherwise directed by a court of
competent jurisdiction. If a demand is made for either the return or payment of
the Deposit and if the Deposit is in the form of a LOC, and the Escrow Agent
continues to hold the Deposit, either of the Seller or the Purchaser may, by
notice in writing to the Escrow Agent, require the Escrow Agent to cash the LOC
and hold the proceeds in accordance with the terms of this Agreement. If the
Deposit is in the form of an LOC, Escrow Agent shall effect any payment of the
Deposit to Seller by cashing the LOC and paying the proceeds to Seller.
4.5 Interpleader. In the event of a dispute concerning the
disposition of the Deposit, the Escrow Agent shall have the right at any time to
deposit any cash funds held by it under this Agreement, or the LOC (in the event
Seller has not instructed Escrow Agent to cash the LOC in accordance with the
provisions of Sections 4.2 or 4.4 hereof), with the clerk of the court having
jurisdiction. The Escrow Agent shall give notice of such deposit to Seller and
Purchaser. Upon such deposit, the Escrow Agent shall be relieved and discharged
of all further obligations and responsibilities hereunder.
4.6 Escrow Agent as Stakeholder. The parties acknowledge that the
Escrow Agent is acting solely as a stakeholder at their request and for their
convenience; that the Escrow Agent shall not be deemed to be the agent of either
of the parties; and that the Escrow Agent shall not be liable to either of the
parties for any act or omission on its part unless taken or suffered in bad
faith, in willful disregard of this Agreement or involving gross negligence.
Seller and Purchaser shall jointly and severally indemnify and hold the Escrow
Agent harmless from and against all costs, claims, and expenses, including
reasonable attorneys' fees, incurred in connection with the performance of the
Escrow Agent's duties hereunder, except with respect to actions or omissions
taken or suffered by the Escrow Agent in bad faith, in willful disregard of this
Agreement or involving gross negligence on the part of the Escrow Agent.
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5. Closing Adjustments and Prorations.
5.1 General. All Additional Rent, Basic Rent, and other rentals,
revenues and other income generated by the Property ("Rent") and all utilities,
real estate taxes, maintenance charges and other Operating Expenses incurred in
connection with the ownership, management and operation of the Property shall be
paid or shall be prorated between Seller and Purchaser in accordance with the
provisions of this Section 5. For purposes of the prorations and adjustments to
be made pursuant to this Section 5, Purchaser shall be deemed to own the
Property and therefore be entitled to any revenues and be responsible for any
expenses for the entire day upon which the Closing occurs. Any apportionments
and prorations that are not expressly provided for in this Section 5 shall be
made in accordance with the customary practice in the metropolitan Washington
D.C. area. Seller and Purchaser shall cause their accountants to prepare a
schedule of prorations (the "Closing Statement") in draft form to be finalized
on the Business Day immediately prior to the Closing Date. Any net adjustment in
favor of Purchaser shall be credited against the Purchase Price at the Closing.
Any net adjustment in favor of Seller shall be paid in cash at the Closing by
Purchaser to Seller.
5.2 Rent and Security Deposits. Rent shall be prorated at the
Closing in accordance with the following provisions:
(a) Basic and Additional Rent. Subject to Section 5.2(b),
Seller shall be entitled to all Basic Rent and Additional Rent that accrues
before the Closing Date and Purchaser shall be entitled to all Basic Rent and
Additional Rent that accrues on and after the Closing Date. Basic Rent and
Additional Rent that Seller has collected for the month in which Closing occurs
shall be prorated between Seller and Purchaser as of the Closing Date based on
the actual number of days in the month during which the Closing Date occurs. For
purposes hereof, Additional Rent shall be prorated as of the Closing Date based
on Seller's current estimates thereof which have been collected from Tenants and
shall be readjusted in the Final Closing Adjustment.
(b) Delinquent Rent. Delinquent Rent, after reasonable, actual
expenses of collection, shall be promptly paid by Purchaser to Seller as
provided in the balance of this paragraph if, as and when actually collected by
Purchaser after the Closing, it being understood and agreed that Purchaser shall
be obligated only to use commercially reasonable efforts to collect Delinquent
Rent on behalf of Seller, and shall not be
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obligated to commence litigation or to terminate a Tenant's Lease in order to
collect Delinquent Rent. Purchaser hereby agrees that Seller or its agents may
attempt to collect Delinquent Rent at Seller's expense, including commencing
litigation to collect such Delinquent Rent, but Seller agrees that after the
Closing Date it shall not (i) initiate any action that would terminate a
Tenant's Lease or affect such Tenant's right to occupy the premises or use the
parking spaces leased under its Lease, or (ii) seek to apply such Tenant's
security deposit against the Delinquent Rent of such Tenant. If a Tenant has 60
days or less of Delinquent Rent which is Basic Rent ("Delinquent Basic Rent"),
Rent collected by Purchaser after the Closing Date in respect of such Tenant
shall be applied first to Delinquent Basic Rent to the extent of thirty (30)
days of Delinquent Basic Rent attributable to the thirty (30)-day period
immediately preceding the Closing Date, then to Rent currently due (including
unpaid Rent accruing after the Closing Date), and then to any other unpaid
Delinquent Rent. If a Tenant has more than 60 days of Delinquent Basic Rent,
Rent collected by Purchaser after the Closing Date in respect of such Tenant
shall be applied first to Rent currently due (including unpaid Rent accruing
after the Closing Date), and then to Delinquent Rent. All Rent received by
Purchaser which is required to be applied as a credit to, or for the benefit of,
Seller pursuant to this Agreement shall be promptly paid by Purchaser to Seller
upon Purchaser's receipt of the same. Attached as Schedule 5.2(b) is a schedule
of Delinquent Rent compiled as of May 29, 1998 (it being understood that Seller
makes no representation or warranty concerning the accuracy of such delinquency
report). Schedule 5.2(b) attached hereto shall be the basis of making the
payments referred to in this Section, absent manifest error.
(c) Security Deposits. Purchaser shall receive, as a credit
against the Purchase Price, an amount equal to all cash security deposits set
forth in the Leases, together with interest required to be paid thereon, to the
extent not applied by Seller, as landlord, under such Leases on or prior to the
Effective Date, and any prepaid Rent. The security deposits held by Seller as of
the Effective Date are set forth on Schedule B attached hereto (it being
understood and agreed that Seller makes no representation or warranty concerning
such security deposits or the accuracy of Schedule B regarding such security
deposits). At Closing, Schedule B shall be the basis of making the credit to
Purchaser referred to in this Section, absent manifest error.
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5.3 Taxes and Assessments.
(a) Proration of Taxes at Closing. All non-delinquent real
estate taxes and special assessments, if any, assessed against the Property
shall be prorated between Seller and Purchaser as of the Closing Date in the
customary fashion, based upon the actual current tax bill. If the most recent
tax bill received by Seller before the Closing Date is not the actual current
tax bill, then Seller and Purchaser shall initially prorate the real estate
taxes at the Closing by applying the tax rate indicated on the most recent tax
bill received by Seller to the latest assessed valuation, and shall re-prorate
the real estate taxes retroactively at the Final Closing Adjustment. All real
estate taxes accruing before the Closing Date shall be the obligation of Seller
and all real estate taxes accruing on and after the Closing Date shall be the
obligation of Purchaser. Any delinquent real estate taxes assessed against the
Property shall be paid (together with any interest and penalties) by Seller at
the Closing. Any general or special assessments, if any, assessed against the
Property for work which has been completed prior to the Closing shall be paid
for in full by Seller at or prior to the Closing; provided, however that if any
such assessment is payable in installments, Seller shall pay all of such
installments due through the day prior to the Closing, and Purchaser shall be
responsible for the balance of such installments. All other assessments shall be
paid by Purchaser when due (and if due prior to Closing, shall be paid at or
prior to Closing).
(b) Post-Closing Supplemental Taxes. If, after the Closing
Date, any additional or supplemental real estate taxes are assessed against the
Property by reason of back assessments, corrections of previous tax bills or
other events (including, without limitation, imposition of any special
assessments) occurring before the Closing Date, Seller and Purchaser shall
re-prorate the real estate taxes within thirty (30) days after the final
determination thereof, but in no event later than at the Final Closing
Adjustment.
(c) Post-Closing Refunds of Taxes. Any refunds of real estate
taxes made after the Closing shall first be applied to the reasonable
unreimbursed costs incurred in obtaining the refund (including, but not limited
to, any legal fees paid by Seller or Purchaser), then paid to any Tenants who
are entitled to the same, and the balance, if any, shall be paid (within thirty
(30) days after the final determination of such amount) to Seller (with respect
to real estate taxes for the period prior to the Closing Date) and to Purchaser
(with respect
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to real estate taxes for the period commencing on and after the Closing Date).
The parties understand and agree that there are pending claims and/or
proceedings pursuant to which Seller is pursuing a reduction in the assessed
valuation of the Property for real estate tax purposes or a claim for refund of
real estate taxes. Seller agrees that, without obtaining the prior consent of
Purchaser (not to be unreasonably withheld), Seller will not make any
commitments to the taxing authority regarding real estate taxes for periods
after the Closing Date in connection with the resolution of such pending claims
and/or proceedings.
5.4 Operating Expenses. Seller shall be responsible for all
Operating Expenses attributable to the period before the Closing Date and
Purchaser shall be responsible for all Operating Expenses attributable to the
period on and after the Closing Date. All Operating Expenses shall be prorated
between Seller and Purchaser in the customary fashion as of the Closing Date,
based on the actual number of days in the month during which the Closing Date
occurs for monthly expenses, and based on a 365-day year for annual expenses. To
the extent commercially reasonable and practicable, Seller shall obtain final
billings for meter readings made as of the Business Day preceding the Closing
Date, and Seller shall pay such final billings when Seller receives the same. If
Seller is able to obtain final meter readings and billings, there shall be no
adjustment at Closing for the costs, expenses, charges or fees shown thereon. If
billings or meter readings as of the Business Day preceding the Closing Date are
not available for any utility service, the charges therefor shall be adjusted at
the Closing on the basis of the per diem charges for the most recent prior
period for which bills were issued, and shall be further adjusted within thirty
(30) days after receipt of the necessary bills or meter readings, but in no
event later than at the Final Closing Adjustment on the basis of the actual
bills for the current period.
5.5 Utility Deposits. Seller shall be entitled to retain any or all
utility deposits and all interest accrued thereon. If any utility deposit is not
refundable to Seller without replacement by Purchaser, Purchaser shall deliver
the requisite replacement utility deposit to the utility company on or before
the Closing Date.
5.6 Tenant-related expenses.
(a) Leasing Commissions. Purchaser shall be responsible for
the payment of all leasing commissions due in respect of (i) new Leases of space
in the Building or amendments to existing Leases approved by Purchaser, which
new leases and
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amendments are listed on Schedule 5.6 attached hereto, and (ii) renewals of
Leases or expansions of the space leased by Tenants under Leases, which renewals
and expansions are to be effective after the date hereof, so long as and to the
extent that any leasing commissions covered by this clause (ii) are not in
excess of market rate commissions. All other leasing commissions shall be paid
by Seller. It is understood and agreed that Seller makes no representation or
warranty concerning the amount of leasing commissions payable by Purchaser under
this Section 5.6(a). The agreements pursuant to which leasing commissions are
owing on the new Leases and/or amendments to Leases referenced in clause (i)
above are listed on Schedule 5.6.
(b) Other Lease Costs. Purchaser shall be responsible for the
payment and performance of any tenant improvements to be paid for and/or
performed by landlord under Leases from and after the date hereof (including but
not limited to tenant improvements to be made under new Leases of space in the
Building or amendments to existing Leases approved by Purchaser that are listed
on Schedule 5.6 attached hereto). Purchaser shall also accept (and shall not
seek compensation from Seller by reason of) any rental abatements provided for
in Leases or in the new Leases or amendments to Leases listed on Schedule 5.6.
It is understood and agreed that Seller makes no representation or warranty
concerning the amount of tenant improvements to be paid for by Purchaser under
this Section 5.6(b). Seller shall be responsible for the payment of all tenant
improvements not to be paid for by Purchaser under the provisions of this
Section 5.6(b).
5.7 Final Closing Adjustment. No later than April 30, 1999, Seller
and Purchaser shall make a final adjustment to the prorations made pursuant to
this Section 5 (the "Final Closing Adjustment"). The Final Closing Adjustment
shall be made in the following manner:
(a) General. Subject to Section 5.7(b) and (c) hereof, all
adjustments or prorations that could not be determined at the Closing because of
the lack of actual statements, bills or invoices for the current period, or any
other reason shall be made within thirty (30) days after the receipt of the
applicable statement, bill or invoice, but in no event later than as a part of
the Final Closing Adjustment. Any net adjustment in favor of Purchaser shall be
paid in cash by Seller to Purchaser no later than thirty (30) days after said
adjustment is made, but in no event later than thirty (30) days after the Final
Closing Adjustment. Any net adjustment in favor of Seller shall be paid in cash
by Purchaser to Seller no later
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than thirty (30) days after said adjustment is made, but in no event later than
thirty (30) days after the Final Closing Adjustment. The parties shall correct
any manifest error in the prorations and adjustments made at Closing promptly
after such error is discovered (but in no event later than April 30, 1999).
(b) Additional Rent Adjustment. Seller and Purchaser shall
prorate the actual amount of Additional Rent paid by each Tenant for the 1998
calendar year as follows (it being understood and agreed that all Tenants are on
a calendar year basis of accounting with respect to Additional Rent payments):
(1) Seller shall be entitled to the portion of the
actual amount of Additional Rent for calendar year 1998 paid by the Tenant equal
to the product obtained by multiplying such amount by a fraction, the numerator
of which is the number of days in 1998 preceding the Closing Date and the
denominator of which is 365; and
(2) Purchaser shall be entitled to the balance of the
Additional Rent paid by the Tenant.
If a Tenant has made payments of Additional Rent on an estimated basis during
1998, such estimated payments shall be taken into account in prorating
Additional Rent under this Section 5.7(b). Seller shall pay any Tenant, as
required under its Lease, from any Additional Rent adjustment made in Seller's
favor under this Section, any overpayment of Additional Rent such Tenant may
have made for periods prior to the Closing Date. In order to assure Purchaser
that there will be sufficient cash to repay Tenants any overpayments of
Additional Rent such Tenants may have made for the period during 1998 prior to
the Closing Date, Seller will establish an escrow at Closing in accordance with
the provisions of the Escrow Agreement attached hereto as Exhibit G. Purchaser
shall pay any Tenant, as required under its Lease, from any Additional Rent
adjustment made in Purchaser's favor under this Section, any overpayment of
Additional Rent such Tenant may make for periods on or after the Closing Date.
(c) No Further Adjustments. Except for: (i) additional or
supplemental real estate taxes, real estate tax credits or rebates, or other
adjustments to real estate taxes due to back assessments, corrections to
previous tax bills or real estate tax appeals or contests or (ii) manifest
errors, the Final Closing Adjustment shall be conclusive and binding upon Seller
and Purchaser, and Seller and Purchaser hereby waive any right to contest after
the Final Closing Adjustment any prorations, apportionments or adjustments to be
made pursuant to this Section
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5. In no event shall Purchaser have the right to recover any adjustments not
brought to Seller's attention in writing prior to April 30, 1999.
6. Closing Date and Costs.
6.1 Closing Date. The Closing shall take place at the offices of
Arent Fox Kintner Plotkin & Kahn, 1050 Connecticut Avenue, Washington D.C.
20036, at 10:00 a.m., Eastern Daylight Time, on the Closing Date.
6.2 Closing Costs and Transfer Taxes. All District of Columbia
transfer and recordation taxes, and other recording charges, payable in
connection with the recording of the special warranty deed (whether imposed in
the form of transfer taxes, documentary stamps or otherwise), and any charges of
the Escrow Agent for holding the Deposit, shall be divided equally between
Seller and Purchaser. Purchaser shall pay for all expenses of examination of
title, the cost of an owner's title insurance policy, survey, and all other
Closing expenses. Each party shall pay its own legal fees and other expenses
incurred by it prior to Closing. Seller shall pay all costs incurred in
connection with the repayment or satisfaction of any liens on the Property
except for any liens caused by the acts of Purchaser or any of its agents or
representatives. The provisions of this Section 6.2 shall survive the Closing
Date.
7. Closing Documents.
7.1 Seller's Deliveries. Seller shall execute and/or deliver to
Purchaser on the Closing Date the following:
(a) a special warranty deed in the form attached hereto as
Exhibit A;
(b) an assignment and assumption of leases and service
contracts in the form attached hereto as Exhibit B;
(c) an assignment of all Intangible Property and warranties
related to the Property in the form attached hereto as Exhibit C;
(d) letters in the form attached hereto as Exhibit D to each
Tenant under the Leases;
(e) an affidavit in the form attached hereto as Exhibit E;
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(f) an owner's affidavit signed by Seller, addressed to the
Title Company designated by Purchaser, with respect to the absence of claims
caused by Seller that would give rise to mechanics' liens, the absence of
parties in possession of the Property other than Tenants under the Leases (and
other than subtenants of Tenants) and the absence of unrecorded easements
granted by Seller, in the form reasonably required by the Title Company to
eliminate the exceptions for those matters from Purchaser's title insurance
policy;
(g) the Closing Statement referred to in Section 5.1 signed by
Seller;
(h) all keys to the Property, if any, that are in Seller's
possession;
(i) Intentionally Omitted;
(j) Tenant estoppel certificates in accordance with the
provisions of Section 9.5;
(k) such additional documents as Seller and Purchaser shall
mutually agree are necessary to consummate the sale of the Property to
Purchaser;
(l) to the extent in Seller's possession, all original Leases,
together with any guarantees thereof and any other amendments permitted to be
executed pursuant to this Agreement or otherwise used in connection the use and
operation of the Property;
(m) such evidence of authority of the parties executing any
closing documents on behalf of Seller, as reasonably requested by the Title
Company;
(n) to the extent in Seller's possession, all plans and
specifications with respect to the initial construction of the Property and any
subsequent changes or authorization thereto, all manuals, guarantees, security
codes and other information with respect to operating any of the equipment at
the Property or which was provided at the time such equipment was purchased or
installed, and all maintenance records, in all cases to the extent in Seller's
possession;
(o) a computer diskette containing this Purchase Agreement as
finally agreed to and executed by the parties; and
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(p) a certificate stating that the representations and
warranties made by Seller in Section 15 hereof are true, correct and complete in
all material respects as of the Closing, subject to changes therein caused by
changed circumstances since the Effective Date.
In addition to the foregoing, Seller shall make available to Purchaser at
Seller's offices any books and records relating to the Property in Seller's
possession should Purchaser require such access in connection with any review or
audit of the income and expenses of the Property for any period of Seller's
ownership thereof; provided, however, that any such review and/or audit shall be
made at Purchaser's sole expense, with the least disruption possible to Seller's
business, and upon not less than seven (7) days' written notice; and provided,
further, that Seller shall not be required to make available to Purchaser any
such books or records which are more than three (3) years old. The provisions of
this paragraph shall survive Closing for a period of three (3) years.
7.2 Purchaser's Deliveries. Purchaser shall execute and deliver to
Seller on the Closing Date the following:
(a) an assignment and assumption of leases and service
contracts in the form attached hereto as Exhibit B;
(b) the Closing Statement referred to in Section 5.1 signed by
Purchaser; and
(c) all documents reasonably required by Seller's attorneys or
the Title Company to determine that Purchaser is authorized to buy the Property
and to execute all documents in connection therewith.
7.3 Delivery in Escrow. The delivery to the Title Company of the
Purchase Price, the executed special warranty deed described in Section 7.1(a)
and all other documents and instruments required to be delivered by either party
to the other by the terms of this Agreement, and the performance by all parties
to this Agreement of all material obligations to be so performed, shall be
deemed to be a good and sufficient tender of performance of the terms hereof.
Seller shall be deemed to have delivered voluminous or cumbersome materials
(such as the items described in Sections 7.1(l) and 7.1(n)) by making them
available at the office of the managing agent for the Property.
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8. Obligations Pending Closing.
8.1 Continued Care and Maintenance. During the period between the
Effective Date and the Closing Date, Seller agrees to operate and maintain the
Property in the ordinary course of business and use reasonable efforts to
reasonably preserve for Purchaser the relationships between Seller and the
Tenants, suppliers, managers, employees and others having ongoing relationships
with the Property. Further, during the period between the Effective Date and the
Closing Date, Seller agrees: (i) not to change, amend or modify the Leases, or
any of the instruments affecting, or with respect to, the title to the Property
except as required by law or the document involved (provided, however, that the
Seller may, at its option, eliminate any financing and/or other encumbrances
which are not Permitted Encumbrances); (ii) not to change, amend or modify,
except in a de minimis respect, any of the Service Contracts or other rights,
obligations or agreements related to use, ownership or operation of the Property
without Purchaser's prior approval, where such changes, amendments or
modifications would (x) materially increase Seller's obligations, liability or
expenses thereunder, (y) modify in any respect Purchaser's obligations,
liability or expenses as set forth in such Service Contracts or other rights,
obligations or agreements as they exist as of the date hereof (except in
emergency situations) or (z) result in such Service Contracts or other rights,
obligations or agreements not being cancelable upon thirty (30) days' notice or
only being cancelable upon payment of a fee or penalty, or both; (iii) not to
make alterations or changes to the Property other than de minimis alterations or
changes or ordinary and necessary maintenance and repairs, without Purchaser's
prior approval (provided, however, that Seller may make any alterations or
changes to the Property that are required by any Lease or applicable law without
Purchaser's prior approval), Seller agreeing that it shall give Purchaser notice
of any alterations or changes made to the Property on or about the date it
performs same, whether or not Purchaser's prior approval is necessary; (iv) to
maintain in effect all policies of casualty and liability insurance or similar
policies of insurance, with no less than the limits of coverage now carried with
respect to the Property; and (v) to cure all material violations of law
affecting the Property for which a written notice of violation was issued by the
local governmental authorities prior to the Effective Date (provided, however,
that the cost to cure such violations shall not exceed $25,000 in the aggregate,
or if such violations are not cured prior to the Closing Date, at Closing
Purchaser shall be entitled to a credit not to exceed $25,000 and shall not be
entitled to refuse to close on account of the existence of any such
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violations). Where an approval of Purchaser is required under the foregoing
provisions, Purchaser agrees not to unreasonably withhold or delay any such
approval, and such approval shall be deemed given if Purchaser has not objected
in writing within five (5) days after notice of the matter on which Purchaser's
approval is sought, which notice is to include notification from Seller that
Purchaser's failure to so approve as provided in this Section 8.1 shall be
deemed an approval. Nothing contained herein shall prevent Seller from acting to
prevent loss of life, personal injury or property damage in emergency
situations, or prevent Seller from performing any act with respect to the
Property that may be required by any Lease, applicable law, rule or governmental
regulations.
8.2 Other Covenants. In addition to the matters set forth in Section
8.1, during the period between the Effective Date and the Closing Date, Seller
agrees: (a) that, at any time prior to Closing, it shall terminate, at its own
cost and expense, any and all management agreements and any exclusive leasing
agency agreements for the Property, subject, however in the case of leasing
agreements, to the provisions of Section 5.6 hereof); (b) that it shall not
terminate any Lease, apply any security deposits posted thereunder, or accept
the surrender of any Lease, or grant any concession, rebate, allowance or free
rent thereunder (except pursuant to the provisions of a Lease in existence on
the Effective Date or approved or deemed approved by Purchaser); (c) not to
mortgage or transfer the Property, or any interest therein; (d) to permit
Purchaser and its representatives to continue to inspect the Property as more
particularly provided in Section 9.1 below notwithstanding the termination of
the Inspection Period; and (e) to deliver to Purchaser any notice of violation
of law Seller may receive from any governmental agency having jurisdiction over
the Property. Seller will give Purchaser notice (promptly after Seller becomes
aware of the same) of any liens placed on the Property by a Tenant or a creditor
of a Tenant, but Seller shall not be obligated to remove or caused to be removed
any such liens.
9. Conditions to Closing.
9.1 Inspection Period.
(a) Seller shall provide or make available to Purchaser all
information related to the Property in Seller's possession, except for
confidential and proprietary information concerning the partnership that owns
the Property, the financing of the Property, and confidential and proprietary
information belonging to any third party (including the property manager).
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In addition to the foregoing, Seller shall provide a copy of or make available
all Leases and Lease amendments and Service Contracts in its possession, leasing
commission agreements, test borings, environmental reports, surveys, title
materials and engineering and architectural data and the like relating to the
Property that are in Seller's possession. Purchaser agrees that Seller and
Seller's agents make no warranty or representation, either express or implied,
concerning the matters disclosed in such information, including the completeness
or accuracy thereof.
(b) During the period prior to the Effective Date (such period
being hereinafter called the "Inspection Period"), Purchaser has made, or caused
to be made, at Purchaser's own risk and expense, such investigation of the
Property as it elected, including physical inspections of the Property, review
of the Leases, Service Contracts, laws and ordinances, and approval of survey
and condition of title. Purchaser agrees that it has investigated the Property
and that any further investigation of the Property by Purchaser will not disrupt
normal operations of the Property or any Tenant's quiet enjoyment of its demised
premises. Purchaser shall not undertake any structural, physical, mechanical,
environmental or other testing which will cause damage to the Property, or
undertake any other invasive testing of the Property. Subject to the foregoing,
Purchaser has conducted studies on the Property to determine the environmental
condition of the Property. By Purchaser's execution of this Agreement, Purchaser
shall be deemed to have accepted the Property at Closing in an AS IS CONDITION
WITH ALL FAULTS, subject to the provisions of Section 11 hereof. Seller makes no
representations or warranties as to the physical condition of the Property, and
specifically Seller does not warrant against latent defects or defects of any
kind or nature.
(c) Purchaser hereby indemnifies and holds Seller harmless
from any loss, damage, cost or expense incurred by Seller and arising (directly
or indirectly) out of the activities at the Property by Purchaser or its
designated representatives, including any loss, damage, cost or expense arising
out of damage to the Property or personal injury. Notwithstanding the foregoing,
Purchaser shall not indemnify Seller nor hold Seller harmless on account of any
existing environmental matters discovered as a result of Purchaser's due
diligence. This indemnity shall survive Closing and any termination of this
Agreement prior to Closing. Purchaser agrees that all information received from
Seller is Seller's confidential work product unless otherwise indicated in
writing, unless the Closing occurs, or unless such information is already
public, and
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Purchaser agrees that it will maintain the confidentiality of all information
received as set forth in Section 20 hereof.
9.2 Title or Survey Exceptions. Purchaser, at its own cost and
expense, has ordered, received and reviewed, and delivered to Seller, a title
commitment covering the Property (the "Title Commitment"), and an updated survey
on the Property prior to the Effective Date. Simultaneously with Purchaser's
execution hereof, Purchaser shall notify Seller of such objections as Purchaser
may have to anything contained on the survey or in the Title Commitment. Such
objections shall not include any exceptions to title set forth in Schedule B -
Section 2 to the Title Commitment which are set forth on Schedule D annexed
hereto. Any title or survey matter so objected to by Purchaser are herein
referred to as "Objections." If there are Objections by Purchaser, Seller shall
have the option, at its sole discretion, to satisfy them prior to the Closing
Date and, if Seller so elects and so notifies Purchaser, to adjourn the Closing
Date for up to 60 days to attempt to do so. If Seller elects to satisfy the
Objections, it shall be a condition precedent to Closing that such Objections
are satisfied, which condition precedent Purchaser shall have the right to
waive. If Seller elects not to satisfy the Objections, or if Seller is not
successful in satisfying such Objections, as the case may be, then Seller shall
deliver as soon as practicable written notice of such circumstance to Purchaser
and Purchaser shall, within five (5) Business Days after receipt thereof, either
(i) waive the Objections and accept such title as Seller is able to convey and
by such waiver of the Objections Purchaser shall be deemed to have waived any
and all claims and/or causes of action against Seller for damages or any other
remedies relating to the Objections or any other matter relating to title to the
Property, or (ii) terminate this Agreement, in which event the Deposit shall be
returned to Purchaser and the parties hereto shall be released of further
liability hereunder except as otherwise provided herein. Any Objections waived
by Purchaser under the foregoing provisions shall be deemed to be Permitted
Encumbrances. Notwithstanding any provision of this Section 9.2 to the contrary,
Seller shall be required to remove prior to the Closing Date any Objection that
is a monetary lien placed on the Property by Seller or any judgment lien against
Seller (either by payment, by causing the Title Company to insure over such
matter or by posting a bond in an amount to cover the estimated cost of removing
the same).
9.3 Encumbrances Subsequent to Inspection Period. In the event that,
during the period between the End of the Inspection Period and the Closing Date,
title to the Property
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should become affected by any encumbrance, lien, outstanding interest or
question of title that is not a Permitted Encumbrance, that is not disclosed by
the Title Commitment or survey described in Section 9.2 and that is not created
or caused to be created by Purchaser or by any Tenant (a "New Objection"), then,
provided that the New Objection is capable of being satisfied by the payment of
a sum certain (i.e., determinable with certainty by Seller), Seller may (but
shall not be obligated to) elect (by notice to Purchaser) to remove such New
Objection either by payment on or prior to Closing, by causing the Title Company
to insure over such encumbrance or by posting a bond in an amount to cover the
estimated cost of removing the same, and Seller shall be entitled, for such
purpose, to postpone the Closing Date for a reasonable period of time. In the
event that Seller elects not to remove such New Objection, Seller shall so
notify Purchaser as soon as practicable, whereupon Purchaser shall elect, by
giving Seller notice thereof within five (5) days of receiving Seller's notice,
either (i) waive the New Objection and accept such title as Seller can convey
notwithstanding the existence of any such New Objection, or (ii) terminate this
Agreement. In the event that Seller elects to remove such New Objection but is
unable to do so within sixty (60) days after the End of the Inspection Period,
then either party hereto may elect to terminate this Agreement by giving the
other party written notice thereof; provided, however, that if Seller elects to
terminate this Agreement under this sentence, Purchaser shall have the right to
nullify such election by notifying Seller (within five (5) Business Days after
receipt of such termination notice from Seller) that Purchaser will accept any
such New Objection and close hereunder. If this Agreement is terminated pursuant
to the provisions of this Section 9.3, then the Deposit shall be returned to
Purchaser and the parties hereto shall be released of any further liability
hereunder except as otherwise provided herein. Any title matter waived by
Purchaser under this Section 9.3 shall be deemed a Permitted Encumbrance.
Notwithstanding any provision of this Section 9.3 to the contrary, Seller shall
be required to remove prior to the Closing Date any New Objection that is a
monetary lien placed on the Property by Seller or any judgment lien against
Seller (either by payment, by causing the Title Company to insure over such New
Objection or by posting a bond in an amount to cover the estimated cost of
removing the same).
9.4 Representations and Warranties True. It shall be a condition of
Purchaser's obligation to close hereunder that Seller's representations and
warranties set forth in Section 15 shall be true and correct in all material
respects on the Closing Date. In the event that Purchaser believes that Seller's
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representations and warranties set forth in Section 15 are not true and correct
in all material respects on or prior to the Closing Date, Purchaser may deliver
notice thereof to Seller, which notice shall (i) specify which representation
and warranty is believed not to be true and (ii) provide evidence of the untruth
of the representation and warranty and of its materiality. Seller shall have
five (5) days from its receipt of Purchaser's notice described in the preceding
sentence to notify Purchaser that Seller (a) will attempt to cure such failed
representation or warranty within a period not to exceed sixty (60) days, in
which event the Closing Date shall be extended by sixty (60) days or such lesser
period of time as may be elected by Seller, or (b) does not elect to cure such
alleged failed representation or warranty. In the event that Seller either (x)
elects to cure pursuant to the provisions of clause (a) of the preceding
sentence but has not effected such cure on or before the extended Closing Date
or (y) does not elect to cure pursuant to the provisions of clause (b) of the
preceding sentence, then Purchaser may terminate this Agreement by giving notice
thereof to Seller within five (5) Business Days after Purchaser receives notice
of either (x) or (y) above, in which event the Deposit shall be returned to
Purchaser and the parties hereto shall be relieved of any further liability
hereunder except as otherwise provided herein. Notwithstanding any provision to
the contrary herein, if Purchaser proceeds to Closing and David Parisier, as
Purchaser's representative, has actual knowledge of any uncured breach of a
representation and warranty made by Seller in Section 15, Purchaser shall be
deemed to have waived any remedy for Seller's breach of such representation or
warranty.
9.5 Estoppel Certificates. Seller shall use reasonable efforts to
obtain from each Tenant an estoppel certificate, dated no earlier than April 10,
1998, substantially in the form of Exhibit F hereto, it being agreed that
Purchaser will accept as conforming to Exhibit F an estoppel certificate in the
form (or containing the statements) contemplated under each Tenant's Lease or as
may required by law or regulation (as, for example, in the case of a
governmental tenant) ("Estoppel Certificate"). It shall be a condition of
Purchaser's obligation to close hereunder that Seller deliver at Closing
Estoppel Certificates signed by Tenants occupying at least seventy-five percent
(75%) of the leased office space in the Building (the "Required Tenants"). If a
Tenant occupies less than 5,000 square feet of office space in the Property and
such Tenant delivers an Estoppel Certificate not conforming to the requirements
of this Section because of statements in the Estoppel Certificate relating to
the operation or physical condition of the Building, then such Tenant shall
nevertheless be included in the
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calculation of the foregoing 75% threshold of leased office space in the
Building. Furthermore, an Estoppel Certificate shall be deemed to conform to the
requirements of this Section if the facts set forth therein are substantially
consistent with the terms of such Tenant's Lease and there is no statement
asserting a material default (not relating to the operation or physical
condition of the Building) on the part of the Seller, as landlord, under such
Lease. If Seller is not able to obtain Estoppel Certificates consistent with the
foregoing from the Required Tenants prior to the Closing Date, the Closing Date
may, at Seller's or Purchaser's option, be adjourned for thirty (30) days in
order to give Seller the opportunity to acquire Estoppel Certificates consistent
with the foregoing from the Required Tenants. Seller does not warrant or
represent that any particular Tenant will be a tenant of the Property on the
Closing Date, and it shall not be a condition of Closing that all Tenants of the
Property on the Effective Date shall continue to be tenants on the Closing Date;
provided, however, that if Tenants occupying (in the aggregate) more than 15,000
square feet of office space in the Building as of the Effective Date vacate
their demised premises prior to the Closing Date in violation of their Leases
and are in default in the payment of Basic Rent under their Leases, Purchaser
shall not be obligated to close. To the extent that a statement in an Estoppel
Certificate delivered to Purchaser at Closing covers a subject matter that is
the same as the subject matter of a representation or warranty of Seller
hereunder, such representation or warranty of Seller shall be deemed superceded
by such Estoppel Certificate and shall have no further force or effect. A
failure to obtain Estoppel Certificates consistent with the provisions of this
Section from the Required Tenants shall not be deemed a default of Seller's
obligations hereunder and will not give rise to the remedies of Purchaser
contained in clauses (ii) or (iii) of Section 13.1. In the event that an
Estoppel Certificate does not conform to the requirements of this Section,
Seller shall have a reasonable period to cure the defect or defects therein (not
to exceed thirty (30) days), and the Closing Date shall be extended in order to
allow Seller time to effectuate such cure.
9.6 Other Conditions to Closing. It shall be a further condition of
Purchaser's obligation to close hereunder (which condition may be waived by
Purchaser) as follows:
(a) Seller shall have performed all covenants and obligations
undertaken by Seller herein in all material respects.
(b) Seller shall have delivered to Purchaser all of the
documents provided herein for said delivery.
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9.7 Approvals and Permits not a Condition to Purchaser's
Performance. Purchaser's duty to perform is expressly not contingent upon
Purchaser's ability to obtain (i) any governmental or quasi-governmental
approval as to changes or modifications in use or zoning or modification to any
existing land use restriction, (ii) service provider consents to assignments of
any Service Contracts or (iii) financing of any portion of the Purchase Price
from any source.
10. Brokerage.
Seller and Purchaser expressly acknowledge that Cassidy &
Pinkard/Sonnenblick Goldman (the "Broker") is due a commission for this
transaction upon the consummation of the sale of the Property in accordance with
this Agreement, and the same shall be paid by Seller in accordance with the
provisions of a separate agreement between Seller and the Broker. Purchaser
represents that it has not engaged any brokers in this transaction. As to any
broker other than the Broker, Seller and Purchaser agree to hold each other
harmless and indemnify each other from and against any and all claims, demands,
loss or damage (including reasonable attorneys' fees, court costs and amounts
paid in settlement of any claims) arising out of a claim or demand for any
brokerage commission, fee or other compensation due or alleged to be due as a
result of the indemnifying party's actions in connection with the transaction
contemplated by this Agreement. The provisions of this Section 10 shall survive
the Closing Date or termination of this Agreement prior to the Closing Date for
any reason whatsoever.
11. Risk of Casualty and Condemnation Pending Closing.
(a) If, prior to the Closing Date, all or part of the Property is
damaged by fire or by any other cause whatsoever, Seller shall promptly give
Purchaser written notice of such damage and shall thereafter (to the extent
practical) give Purchaser written notice of its estimated cost of repairing such
damage (such notice to be given as soon as practicable) and advising Purchaser
that based upon such cost, Purchaser shall be obligated to make an election as
provided in this Section 11. If the cost of repairing such damage is less than
Three Hundred Thousand Dollars ($300,000) (as determined by Seller's independent
insurer), then (i) Purchaser shall at Closing receive, to the extent such sums
have not been expended on repair work, the amount of the deductible plus all
insurance proceeds payable as a result of such loss; (ii) this Agreement shall
continue in full force and effect with no reduction in the
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Purchase Price and (iii) Seller shall have no obligation to repair such damage.
If the cost of repairing damage from such casualty is Three Hundred Thousand
Dollars ($300,000) or more (as determined by Seller's independent insurer), then
Purchaser shall have the right, for a period of ten (10) days from the date of
notice of the amount of damage caused by the casualty, to terminate this
Agreement by giving written notice of termination to Seller within such period.
Upon such termination, the Deposit shall be returned to Purchaser and the
parties hereto shall be released of any further liability hereunder except as
otherwise provided herein. If Purchaser fails to notify Seller within such
period of Purchaser's exercise of its right to terminate this Agreement, then
Purchaser shall be deemed to have terminated this Agreement, in which event the
foregoing provisions of this Section 11(a) regarding a termination by Purchaser
shall apply. If the cost of repairing damage from such casualty is Three Hundred
Thousand Dollars ($300,000) or more (as determined by Seller's independent
insurer), and Purchaser notifies Seller (within a period of ten (10) days from
the date of notice of the amount of damage caused by the casualty) that
Purchaser elects to continue this Agreement, then the parties shall proceed to
Closing and, to the extent such sums have not been expended on repair work
performed upon Purchaser's consent, not to be unreasonably withheld, all
insurance proceeds received by Seller as a result of such casualty loss plus the
amount of the deductible shall be paid to Purchaser at Closing. If such proceeds
have not yet been received by Seller, then Seller's rights to such proceeds
shall be assigned to Purchaser at Closing upon payment of the full Purchase
Price to Seller by Purchaser, less the amount of Seller's deductible, and Seller
shall have no obligation to repair such damage.
(b) If, prior to the Closing Date, any condemnation or eminent
domain proceedings shall be threatened in writing or commenced by any competent
public authority against the Property, Seller shall promptly give Purchaser
written notice thereof. Within ten (10) Business Days after receipt of notice of
the written threat or commencement of any such proceedings from Seller and in
the event that the taking of such property shall materially interfere with the
operation of the Property, Purchaser shall have the right to terminate this
Agreement by giving written notice to Seller to that effect within ten (10)
Business Days from the date Purchaser receives notice of the proceedings or
written threat. If this Agreement is terminated by Purchaser as aforesaid, then
the Deposit shall be returned to Purchaser and the parties hereto shall have no
further liability hereunder except as otherwise provided herein. In the event
Purchaser fails to notify Seller within such period of
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Purchaser's exercise of its right to terminate this Agreement, then Purchaser
shall be deemed to have terminated this Agreement, in which event the foregoing
provisions of this Section 11(b) regarding a termination by Purchaser shall
apply. Purchaser shall also have the right, in the circumstance described above
in this Section 11(b), to accept the Property (by notice to Seller given within
the ten (10)-Business Day period aforesaid) subject to the condemnation
proceedings or written threat without abatement of the Purchase Price. In the
event that Purchaser elects to accept the Property in accordance with the
foregoing provisions of this Section 11(b), or the taking of a portion of the
Property shall not materially interfere with the operation of the Property,
Purchaser shall accept the Property subject to the proceedings or written threat
of condemnation without abatement of the Purchase Price, whereupon any award
(minus any reasonable legal fees incurred by Seller in connection therewith)
shall be paid to Purchaser and Seller shall deliver to Purchaser at Closing all
assignments and other documents reasonably requested by Purchaser to vest such
award in Purchaser. For purposes of this Section 11(b), a taking shall be deemed
to materially interfere with the operation of the Property if the Building or
any portion thereof shall be taken, if the taking shall have any material effect
on any ingress or egress, or if a portion of the parking for the Property shall
be taken such that the remaining parking area does not comply with applicable
building or zoning law.
12. Notices and Other Communications.
12.1 Manner of Giving Notice. Each notice, request, demand, consent,
approval, objection or other communication (hereafter in this Section 12
referred to collectively as "notices" and referred to singly as a "notice")
which Seller, Purchaser or Escrow Agent is required or permitted to give
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given if hand delivered with receipt therefor, or sent by Federal Express
or other overnight courier service. Any such notice shall be deemed given when
received or when delivery is refused. The records of the courier service shall
be conclusive with respect to the date of receipt or refusal of delivery.
12.2 Addresses for Notices. All notices shall be addressed to the
parties at the following addresses:
(1) if to Purchaser: 11 Commerce Drive, Cranford, New Jersey
07016, with separate notice to the attention of Roger W. Thomas, Esq. and David
Parisier, with an additional separate
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<PAGE>
notice to go to Pryor, Cashman, Sherman and Flynn, 410 Park Avenue, New York, NY
10022, Attention: Andrew S. Levine, Esq.
(2) if to Seller: c/o Quadrangle Development Corporation, 1001
G Street, N.W., Suite 700, Washington, D.C. 20001, Attention: Legal Department,
with a copy to: The Taylor Simpson Group, One Rockefeller Plaza, Twenty-Third
Floor, New York, New York 10020, Attention: Paul E. Taylor III and Jeffrey
Feldman, Esq.
Either party may, by notice given pursuant to this Section 12,
change the person or persons and/or address or addresses, or designate an
additional person or persons or an additional address or addresses, for its
notices.
13. Default and Remedies.
13.1 Purchaser. If Seller fails to perform any of its obligations or
agreements contained herein in any material respect and if Purchaser is not then
in default of any of its obligations and agreements contained herein, then
Purchaser may elect one of the following as Purchaser's sole and exclusive
remedy: either (i) terminate this Agreement by giving notice of termination and
the reasons therefor to Seller, in which event neither Seller nor Purchaser
shall have any further obligations or liabilities one to the other except as
otherwise provided herein and the Deposit shall be returned to Purchaser; or
(ii) hereby waiving all other actions, rights or claims for damages, Purchaser
may bring an equitable action for specific performance of the terms of this
Agreement for conveyance of the Property to Purchaser; or (iii) in the event
Seller wilfully and intentionally conveys title to a third party in violation of
this Agreement, in lieu of the remedy of specific performance, Purchaser, upon
proper proof, may assert a claim or claims for compensatory damages in an amount
not to exceed Three Hundred Eighty-five Thousand Dollars ($385,000) in the
aggregate.
13.2 Seller. If Purchaser fails to close on the purchase of the
Property when required to do so under the provisions hereof, and Seller is not
then in default of any of its obligations or agreements contained herein in any
material respect, then Seller's sole remedy hereunder shall be to terminate this
Agreement and to receive the Deposit as liquidated damages, and thereafter
Seller and Purchaser shall have no further obligations or liabilities one to the
other except as otherwise provided herein. Seller's right to receive the Deposit
as liquidated damages is agreed to due to the difficulty, inconvenience and
uncertainty of ascertaining actual damages for
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<PAGE>
such breach by Purchaser, and Purchaser agrees that the same is a reasonable and
fair estimate of damages.
13.3 Legal Fees. In any action or proceeding brought to enforce a
party's remedies under this Agreement, the prevailing party shall be entitled to
reimbursement of its reasonable legal fees and expenses.
13.4 Documents. Within five (5) Business Days after any termination
of this Agreement in accordance with the foregoing provisions of this Section
13, or pursuant to any other provision of this Agreement, Purchaser shall
deliver to Seller, without charge, all documents or studies prepared by third
party environmental, structural and mechanical engineers whose reports are not
otherwise confidential or proprietary, and all documents provided to Purchaser
by Seller or Seller's agents.
14. Environmental Condition.
In addition to, and not by way of limitation of, the sale of the
Property on an AS IS CONDITION WITH ALL FAULTS basis under this Agreement,
Purchaser agrees that Seller makes no representations or warranties whatsoever
to Purchaser regarding the presence or absence of hazardous or toxic materials
or chemicals in, at, or under the Property, except as otherwise provided in
Section 15.9 hereof. During the Inspection Period, Purchaser has made such
studies and investigations, conducted such tests and surveys and engaged such
specialists as Purchaser deemed appropriate (and in the manner described in
Section 9.1 hereof) to fairly evaluate the Property and its environmental risks.
By its execution of this Agreement, Purchaser hereby releases Seller from any
and all liability to Purchaser and Purchaser's successors in interest
attributable to the presence, discovery, or removal of any hazardous or toxic
materials or chemicals in, at, or under the Property, subject to the provisions
of Section 15.9 hereof. Notwithstanding anything herein to the contrary, the
agreements of Purchaser set forth in this Section 14 shall survive the Closing
and shall be enforceable at any time.
15. Seller's Representations and Warranties
Seller hereby represents and warrants to Purchaser the following:
15.1 United States Person. Seller is a "United States person" within
the meaning of Sections 1445(f)(3) and 7701(a)(30) of the Internal Revenue Code
of 1986, as amended.
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<PAGE>
15.2 Management Agreement. On the Closing Date, there will be no
agreement in effect for the management of the Property nor will there be any
exclusive leasing agency agreement applicable to the Property.
15.3 Condemnation. To the best of Seller's knowledge, Seller has not
received notice of any actual or threatened condemnation proceeding or special
assessment with regard to the Property.
15.4 Litigation. To the best of Seller's knowledge, there are no
actions, suits or other litigation (including governmental proceedings) pending
or threatened in writing against Seller that would materially and adversely
affect the Property, or its continued operation, or that would materially and
adversely affect the ability of Seller to perform its obligations under this
Agreement, except as set forth on Schedule F.
15.5 Seller's Authority.
As of the Closing Date:
(a) Seller has the full right, power and authority and
has taken all requisite action to enter into this Agreement, to sell the
Property and to carry out its obligations as set forth hereunder.
(b) No consent or approval of any person, entity or
governmental agency or authority is required with respect to the execution and
delivery of this Agreement by Seller or the consummation by Seller of the
transaction contemplated hereby or the performance by Seller of its obligations
hereunder.
(c) There are no attachments, executions, assignments
for the benefit of creditors, receiverships, conservatorship or voluntary or
involuntary proceedings in bankruptcy or pursuant to any debtor relief laws
filed by Seller or against Seller.
(d) Seller is the sole owner of the Property.
15.6 Leases. To Seller's knowledge, Schedule B attached hereto sets
forth a true, correct and complete list of all Leases as of the Effective Date.
Copies of such Leases have been initialed by the parties and delivered to
Purchaser. To
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<PAGE>
Seller's knowledge, the Leases constitute all of the leases, tenancies or
occupancies affecting the Building on the Effective Date to which Seller is a
party, and, except as provided in the Leases or as may be contained in any
Permitted Encumbrance, there are no agreements to which Seller is a party which
confer on any Tenant or any other person or entity any rights of possession with
respect to the Property. To Seller's knowledge, Seller has not received, within
the two hundred seventy (270)-day period prior to the Effective Date, written
notice from any Tenant asserting that Seller, as landlord, is in default under
such Tenant's Lease, which default remains substantially uncured as of the
Effective Date.
15.7 Service Contracts. To Seller's knowledge, there are no service
contracts affecting the Property or the operation thereof, except the Service
Contracts.
15.8 Notices of Violations. To Seller's knowledge, within the two
hundred seventy (270)-day period prior to the Effective Date, Seller has not
received a notice of any material violations, or of any notices, suits,
investigations or judgments relating to any material violations, of any laws,
ordinances or regulations affecting the Property. If Seller receives any such
notice after the Effective Date, Seller will promptly deliver a copy of such
notice to Purchaser.
15.9 No Remediation Program. To Seller's knowledge, no clean-up or
remediation program that may have been required by any environmental law
applicable to the Property is ongoing in respect of the Property.
All references in this Agreement to the "knowledge" of Seller shall refer only
to actual knowledge of the Designated Employees (as hereinafter defined) and
shall not be construed to refer to the knowledge of any other officer, agent or
employee of Seller or any Affiliate thereof or to impose upon such Designated
Employees any duty to investigate the matter to which such actual knowledge, or
the absence thereof, pertains, including the contents of the files, documents
and materials made available to or disclosed to Purchaser. Seller affirmatively
states that neither it nor the Designated Employees has reviewed such files,
documents, or materials and that Seller's representations and warranties
hereunder are not based on the contents of any such files, documents, materials.
For purposes of this Agreement, the term "Designated Employees" shall refer only
to Christopher D. Gladstone.
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<PAGE>
16. Purchaser's Authority.
Purchaser hereby represents and warrants to Seller that the
following statements are true and correct as of the date hereof and shall be
true and correct as of the Closing Date:
(a) Purchaser has the full right, power and authority and has
taken all requisite action to enter into this Agreement, to purchase the
Property and to carry out its obligations as set forth hereunder.
(b) Unless otherwise provided herein, no consent or approval
of any person, entity or governmental agency or authority is required with
respect to the execution and delivery of this Agreement by Purchaser or the
consummation by Purchaser of the transaction contemplated hereby or the
performance by Purchaser of its obligations hereunder.
(c) There are no attachments, executions, assignments for the
benefit of creditors, receiverships, conservatorship or voluntary or involuntary
proceedings in bankruptcy or pursuant to any debtor relief laws filed by
Purchaser or against Purchaser.
17. Third Party Beneficiaries.
Nothing in this Agreement is intended or shall be construed to
confer upon or to give to any person, firm or corporation other than the parties
hereto any right, remedy, or claim under or by reason of this Agreement. All
terms and conditions in this Agreement shall be for the sole and exclusive
benefit of the parties hereto. This Section 17 shall survive the Closing or
termination of this Agreement prior to the Closing Date for any reason
whatsoever.
18. Further Assurances.
Purchaser and Seller each agree to execute and deliver to the other
such further documents or instruments as may be reasonable and necessary in
furtherance of the performance of the terms, covenants and conditions of this
Agreement; provided, however, that no such documents or instruments shall
contain any warranty or representation from, or recourse to, Seller. This
Section 18 shall survive the Closing Date.
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<PAGE>
19. No Assignment.
Purchaser shall not assign its rights or delegate its duties under
this Agreement, in whole or in part, without the prior consent of Seller, which
Seller may withhold in its sole and absolute discretion. Consent by Seller to
any assignment or delegation of Purchaser's rights or duties under this
Agreement shall not relieve Purchaser of its obligations under this Agreement,
regardless of whether such assignment includes an assumption of liability by
Purchaser's assigns. Notwithstanding the foregoing, Purchaser shall have the
right to assign this Agreement to Mack-Cali Realty, L.P. (which is the entity
which controls Mack-Cali Realty Acquisition Corp.), or any other entity which is
controlled by Mack-Cali Realty, L.P., directly or indirectly, provided that
Purchaser provides Seller with evidence that the assignee is such a controlled
entity.
20. Confidentiality
Prior to Closing and except as may reasonably be required in
connection with the consummation of the transactions contemplated hereby, or as
required by law or opinion of counsel, each party shall keep confidential the
details of the transactions contemplated hereby and all documents and other
information provided to the other party, and will not identify Purchaser or
Seller of the Property without the prior consent of the other. Each party shall
instruct all of its employees, officers, Affiliates, professionals and others
engaged by it in connection with the transactions contemplated hereby to abide
by the foregoing confidentiality provisions.
21. Assumption or Cancellation of Service Contracts.
Purchaser has notified Seller in writing as to which of the Service
Contracts Purchaser desires to assume. Any Service Contracts that are assignable
and that Purchaser has elected to assume shall be included in the assignment and
assumption described in Section 7.1(b) and any costs or fees charged by the
service provider in connection with such assignment shall be paid by Purchaser
at or prior to Closing. Any Service Contract that Purchaser does not elect to
assume shall be terminated by Seller on or before the Closing Date if such
termination may be accomplished without payment of any fee therefor. Seller
shall have no obligation to terminate any Service Contract that is not
terminable by its terms on or before the Closing Date without payment and Seller
shall have no obligation to pay any fees in respect of contract termination. If
Purchaser elects to terminate any Service Contract whose termination causes
payment
-33-
<PAGE>
therefor, Seller shall obtain a credit at closing for the full amount of such
payment. If any Service Contract is to be terminated by Seller under the
foregoing provisions, Seller shall give the service provider a termination
notice as soon possible after receiving notice from Purchaser that Purchaser
does not elect to assume such Service Contract. If, because of the termination
provisions in such Service Contract, it cannot be terminated prior to the
Closing Date, Purchaser shall assume such Service Contract at Closing, but only
in respect of any period that may remain on such Service Contract after the
delivery of such termination notice by Seller.
22. Exclusivity.
So long as this Agreement has not been terminated, Seller agrees not
to negotiate with, discuss or further pursue any other offers or proposals
relating to the sale of the Property with any party other than Purchaser.
23. Miscellaneous.
23.1 Captions and Execution. The captions in this Agreement are
inserted for convenience of reference only and in no way define, describe or
limit the scope or intent of this Agreement or any of the provisions hereof.
This Agreement shall not be binding or effective until properly executed and
delivered by Seller and Purchaser. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same Agreement, and it shall not be necessary
that each party to this Agreement execute each counterpart.
23.2 Press Release. Seller and Purchaser each agrees that before the
Closing Date it will not issue any press release, advertisement or other public
communication with respect to this Agreement or the transactions contemplated
hereby without the prior consent of the other party hereto, except to the extent
required by law. If Seller or Purchaser is required by law to issue such a press
release or other public communication before the Closing Date, at least one
Business Day before the issuance of the same such party shall deliver a copy of
the proposed press release or other public communication to the other party
hereto for its review and approval, which approval shall not be unreasonably
withheld or delayed.
23.3 Recording. This Agreement shall not be recorded in any office
legally established for the purpose of giving public notice of real estate
records. If Purchaser records or
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<PAGE>
causes this Agreement to be recorded, Purchaser shall be in default hereunder,
giving Seller the right to terminate this Agreement, to retain the Deposit and
collect liquidated damages according to the terms of Section 13.2 hereof, or to
exercise any other rights and remedies available by reason of Purchaser's
default. Purchaser hereby appoints Seller as its true and lawful attorney in
fact for the purpose of executing any form of release or termination required to
remove this Agreement from public record.
23.4 Amendment and Merger. This Agreement may not be changed or
terminated orally. This Agreement shall be deemed to merge with the conveyance
of title and all covenants, agreements, indemnities, representations and
warranties shall not survive the Closing except as may be otherwise specifically
provided herein.
23.5 Binding. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, their respective successors, personal
representatives, heirs and permitted assigns.
23.6 Governing Law and Limitation Date. This Agreement shall be
governed by and construed in accordance with the laws of the District of
Columbia. Purchaser and Seller agree that any claim or litigation arising out of
this Agreement, or the transaction contemplated hereby, shall be made or brought
no later than December 31, 1998 ("Limitation Date"), and that any litigation
shall be brought in the courts of the District of Columbia or in the courts of
the United States for the District of Columbia, Seller and Purchaser consenting
to the venue of such courts. The warranties, representations and agreements of
Seller and Purchaser set forth herein shall survive until the Limitation Date,
and no action based thereon shall be commenced after the Limitation Date.
Notwithstanding the foregoing, (i) Section 14 (Environmental Condition) shall
survive both the Closing and the Limitation Date and shall not merge into the
special warranty deed delivered pursuant to Section 7.1(a), but shall be
enforceable at any time by Seller, and (ii) the obligations of the parties under
Section 5.7 hereof shall survive until April 30, 1999.
23.7 Entire Agreement. This Agreement contains the entire agreement
between the parties and any and all prior understandings and agreements are
merged herein and any agreement hereafter made shall be ineffective to change,
modify, or discharge this Agreement in whole or in part unless such agreement
hereafter made is in writing and signed by the parties hereto.
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<PAGE>
23.8 Time of Essence. Purchaser and Seller each agree that time is
of the essence with respect to this Agreement.
23.9 No Waiver. Except as otherwise provided in this Agreement,
failure by Purchaser or Seller to insist upon or enforce any rights herein shall
not constitute a waiver thereof.
23.10 Partial Invalidity. If any term or provision of this Agreement
or the application thereof to any persons or circumstances shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
23.11 Waiver of Jury Trial. Seller and Purchaser waive trial by jury
in any action, proceeding or counterclaim brought by either of them against the
other on any matter arising out of or in any way connected with this Agreement.
23.12 No Cross-Default. If Purchaser, or any Affiliate, is also the
purchaser under a Purchase and Sale Agreement (this Agreement and such Purchase
and Sale Agreement being collectively referred to as the "Agreements") with 1709
L.P., then (i) any default by the seller under such other Agreement shall not be
a default hereunder, (ii) any default by Seller hereunder shall not be a default
under such other Agreement, (iii) any default by Purchaser and Purchaser's
failure to close under either of the Agreements shall be deemed a default under
both of the Agreements and Purchaser shall forfeit its Deposit and the deposits
under both Agreements, at Seller's option, (iv) if there is any default and
failure to close by Seller under either one of the Agreements, Purchaser shall
still have the right (but not the obligation) to close on the Agreement not
involved in Seller's default and failure to close, and (v) if either one of the
Agreements is terminated by virtue of a failure of a condition precedent or a
casualty giving a right of termination under one of the Agreements, the
obligations of Seller and Purchaser under the Agreement where the failed
condition is not applicable or the casualty has not so occurred shall not be
affected.
23.13 Soil Characteristics. The characteristics of the soil of the
Property, as described by the Soil Conservation Service of the U.S. Department
of Agriculture in the Soil Survey Book of the District of Columbia (Area 11),
published in July, 1976, and as shown on the soil maps of the District of
Columbia
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<PAGE>
at the back of that publication is Urban Land. For further information,
Purchaser may contact the Soil Testing Laboratory, the District of Columbia
Department of Environmental Services, or the Soil Conservation Service of the
U.S. Department of Agriculture. The foregoing is set forth pursuant to the
District of Columbia Code and is not intended as, and should not be construed
as, limiting the conditions set forth herein with respect to Purchaser's
investigations, tests and studies and the absence of representations and
warranties by Seller with respect to the condition of the Property.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
SELLER:
14L ASSOCIATES
By: Q 1400 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By /s/ Christopher D. Gladstone,
------------------------------
Christopher D. Gladstone,
President
PURCHASER:
MACK-CALI REALTY ACQUISITION CORP.
By /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
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<PAGE>
SCHEDULE A
Legal Description
Lot numbered Fifty-two (52) in Square numbered Two Hundred Seventeen
(217), as per Plat recorded in the Office of the Surveyor for the District of
Columbia in Liber 176 at folio 157.
<PAGE>
SCHEDULE B
Leases and Security Deposits
1. Gourmet Deli and Salad. Inc. -- Retail Lease dated November 27, 1990;
First Amendment dated February 25, 1991; Second Amendment dated as of
February 17, 1998. This lease includes 537 square feet of storage space.
2. Bishop, Cook Purcell & Reynolds -- Office Lease dated August 14, 1987;
First Amendment dated January 27, 1988; Second Amendment dated February
2, 1988; Third Amendment dated March 14, 1989; Fourth Amendment dated
September 3, 1997. Tenant is now known as Winston & Strawn.
3. Winston & Strawn -- Storage Space Lease dated April 1, 1996 (3,042 square
feet); Storage Space Lease dated April 1, 1996 (56 square feet); Storage
Space Lease dated March 2, 1988 (655 square feet); and Storage Space Lease
dated May 15, 1997 (787 square feet).
4. General Services Administration -- Office Lease dated May 11, 1994:
Supplemental Lease Agreement No.1 dated April 12, 1995; Supplemental Lease
Agreement No. 2 dated May 6, 1996; Supplemental Lease Agreement No. 3
dated April 3, 1997 (signed by Tenant only).
5. William Duvall -- Retail Lease dated April 15, 1994; First Amendment dated
November 22, 1994.
6. District of Columbia Retirement Board -- Office Lease dated June 29, 1990.
7. Shane Floral, Inc. -- Retail Lease dated July 10, 1989; Addendum dated
July 10, 1989; First Amendment dated December 12, 1989; Second Amendment
dated April 17, 1996; Third Amendment to Lease dated April 12, 1996; and
Consent to Assignment and Agreement dated February 27, 1998 assigning the
lease from Florescence.
8. Dow Jones & Company, Inc. -- Office Lease dated July 23, 1994; First
Amendment dated August 31, 1994; Second Amendment dated December 29, 1994;
and Assignment of Lease dated May 17, 1994 assigning the lease to Dow
Jones Telerate, Inc.; Third Amendment to Lease dated July 31, 1996; and a
Rooftop License Agreement dated August 28, 1995.
9. ERISA Industry Committee -- Office Lease dated September 28, 1990; First
Amendment dated June 11, 1995.
<PAGE>
10. ERISA Industry Committee -- Storage Space Lease dated April 23, 1997.
11. Ripley Communications, Inc. -- Office Lease dated October 28, 1992; First
Amendment dated November 5, 1996; Second Amendment dated November 5, 1996.
12. Sin Ae Kim, Daniel Chae K. Park and Yong 0. Park -- Retail Lease dated May
25, 1990; Consent to Assignment and Agreement assigning lease from
Extremeties dated December 30, 1993.
13 United Parcel Service -- Commercial Lease dated October 1, 1987; First
Amendment dated February 23, 1988; Second Amendment dated February 28,
1992; Third Amendment dated March 2, 1998.
14. U.S. Postal Service -- Lease dated August 1, 1989.
15. U.S. ASEAN Council for Business and Technology, Inc. -- Office Lease dated
May 19, 1992; First Amendment dated August 24, 1992; Second Amendment to
Lease, undated, that has not yet been signed by Landlord or Tenant.
16. Exercise Facility -- Lease dated November 25, 1988. (TO BE TERMINATED)
17. OuikPark -- Lease dated January 1, 1989
NOTE: The above list does not include Guarantees
Security Deposits as of May 28, 1998:
Less
Principal Accrued Amounts Ending
Tenant Amount Interest Applied Balance
------ ------ -------- ------- -------
1. Extremities $9,578.10 $0.00 $0.00 $9,578.10
2. ERISA Industry $8,453.96 $0.00 $0.00 $8,453.96
3. Gourmet Deli $7,017.50 $0.00 $0.00 $7,017.50
4. US ASEAN Council $8,707.50 $0.00 $0.00 $8,707.50
5. Shane Floral, Inc. $3,000.00 $0.00 $0.00 $3,000.00
6. Ripley Communications $1,210.00 $0.00 $0.00 $1,210.00
7. William V. Duvall $6,060.00 $0.00 $5,035.72 $1,024.28
<PAGE>
SCHEDULE C
Service Contracts
Date of
Contractor Services Rendered Contract
- ---------- ----------------- --------
ARC Water treatment January 1, 1998
Browning-Ferris Industries Trash Removal January 1, 1998
Cliffhanger Retail canopy cleaning January 30, 1998
Empire Recycling Recycling January 1, 1998
Fitness Industries Exercise equipment maintenance January 1, 1998
Home Paramount Pest control January 1, 1998
Kastle Systems Electronic security January 1, 1998
Lerch, Bates Elevator inspections January 1, 1998
Oneil M. Banks Air quality surveys January 1, 1998
Positive Services Partners Night cleaning January 1, 1998
Rentokil, Inc. Indoor landscaping January 1, 1998
Schindler Elevator Co. Elevator maintenance April 1, 1998
Service Machine Shop Vane axial fan maintenance January 1, 1998
Valcourt Building Services Window cleaning January 1, 1998
Vance Uniformed Protection
Services Lobby Host October 1, 1998
<PAGE>
SCHEDULE D
Permitted Encumbrances
1. Taxes subsequent to March 31, 1998, not yet due and payable.
2. Water rent and sewer service charges subsequent to the closing date, a
lien, not yet due and payable.
3. Agreement(s) with the District of Columbia relating to projection of
sub-surface vaults into public space abutting the property as set forth in
instrument recorded September 11, 1985, as Instrument No. 33520.
4. Specifications of the National Capital Planning Commission Downtown Urban
Renewal Plan/Area recorded April 29, 1969 as Instrument No. 8043 in Liber
12987 at folio 621, among the Land Records of the District of Columbia, as
amended.
5. Rights of parties in possession as commercial tenants only as set forth on
Schedule B.
6. Projections as shown on Plat of Survey of Bernard F. Locraft dated
December 4, 1987, last revised May 13, 1998:
a. Awnings into L Street N.W. and 14th Street, N.W.
b. Minor building projections into L Street, N.W.
<PAGE>
SCHEDULE F
Pending Litigation
No pending litigation.
<PAGE>
SCHEDULE 5.2(b)
034201 14L Associates Page - 1
14L Associates Detailed Accounts Receivable Date - 5/29/98
As of - 05/29/98
<TABLE>
<CAPTION>
...Address.... .....Document Reference.... .......Balance..... Discount Remark
Number Name Co Ty Number Inv Date Original Open
- ---------- ----------------------- --- -- ------------- -------- -------------- -------------- -------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
22808 DC Retirement Board
073 RD 114387 001 05/01/98 19,995.35 19,995.35 Base Rent - Office
073 RD 114387 002 05/01/98 890.00 890.00 Est. Ep - Office
-------------- ----------- --------
22808 District of Columbia 20,885.35 20,885.35
54148 Enterprise Leasing
073 RI 114602 000 05/01/98 34.36 34.36 3/98 WATER USE-14L GARAGE
-------------- ----------- --------
54148 Enterprise Leasing 34.36 34.36
23018 ERISA
073 RD 114388 003 05/01/98 4.70 4.70 Base Rent - Storage Space
-------------- ----------- --------
23018 The ERISA Industry Commit 4.70 4.70
14138 GEN. SVCS ADMIN.-EEOC
073 RD 114383 001 05/01/98 24,061.42 24,061.42 Base Rent Office
073 RD 114383 002 05/01/98 663.11 663.11 Est EP - Office
-------------- ----------- --------
14138 General Services Administ 24,724.53 24,724.53
25048 GOURMET DELI & SALAD, INC
073 RD 114391 001 05/01/98 989.00 252.02 Est EP - Retail
-------------- ----------- --------
25048 GOURMET DELI & SALAD, INC. 989.00 252.02
37719 Ripley Communications, Inc.
073 RD 107221 001 11/01/97 440.84 12.50 Base Rent - Storage Space
073 RD 111392 001 03/01/98 440.84 .84 Base Rent - Storage Space
-------------- ----------- --------
37719 Mr. Chris Styga 881.68 13.34
14066 Shane Floral, Inc.
073 RD 114382 001 05/01/98 1,485.46 1,485.46 Base Rent - Retail
073 RD 114382 002 05/01/98 35.00 35.00 Est Ep - Retail
-------------- ----------- --------
14066 Shane Floral, Inc. 1,520.46 1,520.46
14774 UNITED PARCEL SERVICE
073 RD 111383 002 03/01/98 1,812.00 25.45 Base Rent - Retail
073 RD 112586 001 04/01/98 18.00 18.00 Est Ep - Retail
073 RD 112586 002 04/01/98 1,812.33 7.78 Base Rent - Retail
073 RD 114384 001 05/01/98 18.00 18.00 Est Ep - Retail
-------------- ----------- --------
14744 UNITED PARCEL SERVICE 3,660.33 69.23
14841 UNITED STATES POSTAL SERVICE
073 RD 114385 001 05/01/98 11,638.67 11,638.67 Base Rent - Retail
073 RD 114385 002 05/01/98 1,354.00 1,354.00 Est Ep - Retail
-------------- ----------- --------
14841 United States Postal Serv 12,992.67 12,992.67
</TABLE>
<PAGE>
034201 14L Associates Page - 2
14L Associates Detailed Accounts Receivable Date - 5/29/98
As of - 05/29/98
<TABLE>
<CAPTION>
...Address.... .....Document Reference.... .......Balance..... Discount Remark
Number Name Co Ty Number Inv Date Original Open
- ---------- ----------------------- --- -- ------------- -------- -------------- -------------- -------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
24862 Winstron & Strawn
073 RN 114852 001 05/06/98 212.50 212.50 EXTRA HVAC 4/27
073 RN 114853 001 05/06/98 100.00 100.00 EXTRA HVAC 4/27
073 RN 114853 002 05/06/98 100.00 100.00 EXTRA HVAC 4/28
073 RN 114853 003 05/06/98 100.00 100.00 EXTRA HVAC 4/29
073 RN 114888 001 05/06/98 100.00 100.00 EXTRA HVAC 4/25
073 RN 114888 002 05/06/98 250.00 250.00 EXTRA HVAC 4/26
-------------- ----------- --------
24862 Winston & Strawn 862.50 862.50
-------------- ----------- --------
073 14L Associates 66,555.58 61,359.16
-------------- ----------- --------
Grand Total - 66,555.58 61,359.16
</TABLE>
<PAGE>
SCHEDULE 5.6
New Leases, Amendments to Leases and Broker Commission Agreements
U.S. Asean Council for Business and Technology, Inc. -- A Second Amendment to
Lease has been sent to the Tenant for review and signature, but tenant has not
yet signed the amendment.
Gourmet Deli and Salad, Inc. -- Second Amendment to Lease dated as of February
17, 1998.
Broker Commission Agreement between 14L Associates and The Rome Group for U.S.
ASEAN Council for Business and Technology, Inc. dated May 8, 1998.
<PAGE>
EXHIBIT A
DEED
AFTER RECORDING,
PLEASE RETURN TO:
Andrew S. Levine, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
DEED
THIS DEED is made and entered into on this ____ day of June, 1998, by and
between 14L ASSOCIATES, a District of Columbia limited partnership ("Grantor"),
whose address is c/o Quadrangle Development Corporation, 1001 G Street, N.W.,
Washington, D.C. 20001, and MACK-CALI REALTY ACQUISITION CORP., a Delaware
corporation ("Grantee"), whose address is 11 Commerce Drive, Cranford, New
Jersey 07016.
W I T N E S S E T H:
For Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor does hereby
GRANT, BARGAIN, SELL and CONVEY, with Special Warranty, unto Grantee, its
successors and assigns, in fee simple, the parcel of land located in the
District of Columbia, described on Exhibit A attached hereto.
TOGETHER with all buildings, fixtures and other improvements located in or
on such parcel of land; and
TOGETHER with all easements, rights-of-way, appurtenances, licenses and
privileges belonging or appurtenant to such land; and
TOGETHER with all mineral, gas, oil and water rights, sewer rights, other
utility rights, and development rights now or hereafter allocated or allocable
to such land; and
TOGETHER with all right, title and interest of Grantor in and to any land
lying in the bed of any street, road, avenue or alley, open or closed, adjacent
to such land, to the center line thereof.
<PAGE>
TO HAVE AND TO HOLD all of the aforesaid property (the "Property") unto
the use and benefit of Grantee, its successors and assigns, in fee simple
forever.
This conveyance is expressly made subject to easements, covenants,
conditions, agreements, and restrictions of record.
Grantor covenants that it has the right to convey the Property to Grantee
and that Grantor will execute such further assurances of the Property as may be
required.
IN WITNESS WHEREOF, Grantor has caused this Deed to be executed by its
general partner, Q 1400 L.L.C., which has caused this Deed to be executed by its
Managing Member, Quadrangle Development Corporation, which has caused this Deed
to be executed by Christopher D. Gladstone, its President, and its corporate
seal to be affixed hereto, and does hereby constitute and appoint Christopher D.
Gladstone its true and lawful attorney-in-fact for it and in its name to
acknowledge and deliver said Deed on behalf of Quadrangle Development
Corporation, the managing member of Q 1400 L.L.C., the general partner of
Grantor.
GRANTOR:
14L ASSOCIATES
By: Q 1400 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
----------------------------
Christopher D. Gladstone,
President
-2-
<PAGE>
)
) ss:
)
I, ____________________________, a Notary Public for the jurisdiction
aforesaid, do certify that Christopher D. Gladstone, who is personally well
known to me as (or proved by the oath of credible witnesses to be) the person
named as attorney-in-fact in the foregoing and annexed Deed bearing date on the
___ day of June, 1998, personally appeared before me in said jurisdiction and as
attorney-in-fact as aforesaid, and by virtue of the authority vested in him as
aforesaid, acknowledged the same to be the true act and deed of Quadrangle
Development Corporation, the managing member of Q 1400 L.L.C., in its capacity
as the general partner of the Grantor therein.
Given under my hand and official seal on this ___ day of June, 1998.
____________________________________
Notary Public
My Commission Expires:________________
-3-
<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION OF LEASES AND SERVICE CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF LEASES AND SERVICE CONTRACTS (this
"Assignment") is entered into on this ____ day of June, 1998, between 14L
ASSOCIATES, a District of Columbia limited partnership ("Assignor"), whose
address is c/o Quadrangle Development Corporation, 1001 G Street, N.W.,
Washington, D.C. 20001, and MACK-CALI REALTY ACQUISITION CORP., a Delaware
corporation ("Assignee"), whose address is 11 Commerce Drive, Cranford, New
Jersey 07016.
1. Reference to Purchase Agreement. Reference is made to a Purchase and
Sale Agreement dated June ___, 1998 between Assignor, as seller, and Assignee,
as purchaser, pursuant to which Assignor has agreed to sell to Assignee, and
Assignee has agreed to purchase from Assignor, the improved real property and
other assets described therein (the "Purchase Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Purchase Agreement.
2. Assignment. For good and valuable consideration received by Assignor,
the receipt and sufficiency of which are hereby acknowledged, Assignor hereby
grants, transfers and assigns to Assignee all right, title and interest of
Assignor (i) in and to each of the contracts listed on Exhibit A attached hereto
(the "Accepted Contracts"), to the extent assignable, (ii) as landlord in and to
each of the leases listed on Exhibit B attached hereto, including any amendments
and guaranties thereof (the "Leases"), (iii) any and all licenses to occupy
space at the Property and (iv) the security deposits held by landlord under the
Leases. Assignor is not assigning any right to receive Delinquent Rent, and any
Delinquent Rent as of the date hereof shall be collected and paid to Seller to
the extent and in the manner provided by the Purchase Agreement.
3. Assumption. Assignee hereby assumes, and agrees to be bound by, all of
the covenants, agreements and obligations of Assignor (i) under the Accepted
Contracts, and (ii) as landlord under the Leases, that shall arise or be
incurred, or that are required to be performed, on and after the date of this
Assignment, and Assignee further assumes all liability of Assignor for the
proper refund or return of the security deposits actually delivered or credited
to Assignee on the date hereof and held under the Leases if, when and as
required by the Leases or otherwise by law.
4. Indemnity. Assignee agrees to indemnify, defend and hold harmless
Assignor from any loss, cost, claim, liability,
<PAGE>
expense or demand of whatever nature under the Leases and Accepted Contracts
arising or accruing as a result of any acts which occur on or after the date
hereof. Assignor agrees to indemnify, defend and hold harmless Assignee from any
loss, cost, claim, liability, expense or demand of whatever nature under the
Leases and Accepted Contracts arising or accruing prior to the date hereof, but
only in respect of any claim under the indemnity contained in this sentence made
by Assignee prior to April 30, 1999.
5. Binding Effect. This Assignment shall inure to the benefit of, and be
binding upon, each of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment on
the day and year first above written.
ASSIGNOR:
14L ASSOCIATES
By: Q 1400 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
----------------------------
Christopher D. Gladstone,
President
ASSIGNEE:
MACK-CALI REALTY ACQUISITION CORP.
By
--------------------------------
Name:
Title:
-2-
<PAGE>
EXHIBIT C
ASSIGNMENT OF INTANGIBLE PROPERTY AND WARRANTIES
THIS ASSIGNMENT OF INTANGIBLE PROPERTY AND WARRANTIES (this "Assignment")
is entered into on this ____ day of June, 1998, by 14L ASSOCIATES, a District of
Columbia limited partnership ("Assignor"), whose address is c/o Quadrangle
Development Corporation, 1001 G Street, N.W., Washington, D.C. 20001, for the
benefit of MACK-CALI REALTY ACQUISITION CORP., a Delaware corporation
("Assignee"), whose address is 11 Commerce Drive, Cranford, New Jersey 07016.
1. Reference to Purchase Agreement. Reference is made to a Purchase and
Sale Agreement dated June ___, 1998 between Assignor, as seller, and Assignee,
as purchaser, pursuant to which Assignor has agreed to sell to Assignee, and
Assignee has agreed to purchase from Assignor, the improved real property and
other assets described therein (the "Purchase Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Purchase Agreement.
2. Assignment. For good and valuable consideration received by Assignor,
the receipt and sufficiency of which are hereby acknowledged, Assignor hereby
grants, transfers and assigns, without any warranty, representation, or recourse
of any kind, to Assignee all right, title and interest of Assignor in and to (i)
the Intangible Property, and (ii) all warranties or guaranties presently in
effect from contractors, suppliers or manufacturers of personal property
installed in or used in connection with the Property or any work performed or
improvements included as a part of the Property (the "Warranties"). This
Assignment shall not be effective as to any Intangible Property or Warranty
that, by its terms or as a matter of law, cannot be assigned.
3. Binding Effect. This Assignment shall inure to the benefit of, and be
binding upon, each of the parties hereto and their respective successors and
assigns.
[The signature of Assignor is set forth on the next page.]
<PAGE>
IN WITNESS WHEREOF, Assignor has executed this Assignment effective as of
the day and year first above written.
ASSIGNOR:
14L ASSOCIATES
By: Q 1400 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
----------------------------
Christopher D. Gladstone,
President
-2-
<PAGE>
EXHIBIT D
NOTICE TO TENANTS
________________, 1998
[Name and Notice Address of Tenant]
RE: Notice of Change of Ownership of
[address]
Dear [Name of Tenant Contact]:
You are hereby notified as follows:
(1) That as of the date hereof, 14L Associates has transferred,
sold, assigned, and conveyed all of its interest in and to
1400 L Street, N. W. (the "Property") to Mack-Cali Realty
Acquisition Corp. (the "New Owner").
(2) Future rental payments with respect to your lease premises at the
Property should be made to the New Owner in accordance with your lease
terms at the following address:
Your security deposit in the amount of $__________ has been transferred to
the New Owner and as such the New Owner shall be responsible for holding the
same in accordance with the terms of your lease.
<PAGE>
We have appreciated the opportunity to work with you and serve your space
needs over the years.
Very truly yours,
14L Associates
By: Q 1400 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
-------------------------
Christopher D. Gladstone,
President
-2-
<PAGE>
EXHIBIT D
Notice to Tenants
14L Associates
c/o Quadrangle Development Corporation
1001 G Street, N.W.
Washington, DC 20001
May ___, 1998
Tenant Name
Tenant Address
Re: Sale of 1400 L Street, N.W., Washington, DC
Dear Tenant:
Please be advised that, as of the date hereof, 14L Associates has sold the
referenced premises to M-C Capitol Associates L.L.C. In connection with such
sale, 14L Associates has assigned all of its right, title and interest as
landlord under your lease to M-C Capitol Associates L.L.C. Your security
deposit, if any, has also been assigned to M-C Capitol Associates L.L.C.
You are instructed to pay all rents, additional rents and all other charges and
payments due under your lease as follows:
M-C Capitol Associates L.L.C.
P.O. Box 23229
Newark, New Jersey 07189
You will receive from M-C Capitol Associates L.L.C. monthly invoices for all
rents due under your lease. In order for M-C Capitol Associates L.L.C. to
process your payments quickly and accurately, kindly return the payment stub
attached to each invoice.
In addition, all correspondence relating to the monthly billings should be sent
to Alicia Friedman, M-C Capitol Associates L.L.C., 11 Commerce Drive, Cranford,
New Jersey 07016.
<PAGE>
I am please to inform you that, for the immediate future, QDC Property
Management, Inc. is remaining as property manager for the building. We have
appreciated the chance to work with you and serve your space needs over the
years.
Very truly yours,
14L ASSOCIATES
By: Q 1400 L.L.C.,
general partner
By: Quadrangle Development
Corporation, managing member
By:
--------------------------
Christopher D. Gladstone
President
<PAGE>
EXHIBIT E
AFFIDAVIT
Section 1445 of the Internal Revenue Code provides that a transferee of a
United States real property interest must withhold tax if the transferor is a
foreign person. To inform the transferee that withholding of tax is not required
upon the disposition of a United States real property interest by 14L
Associates, a District of Columbia limited partnership ("the Partnership"), the
undersigned hereby certifies the following on behalf of the Partnership:
1. The Partnership is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations); and
2. The Partnership's U.S. employer tax identification number is
52-1398693; and
3. The Partnership's office address is 1001 G Street, N.W., Suite 700,
Washington, D.C. 20001.
The Partnership understands that this certification may be disclosed to
the Internal Revenue Service by transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The undersigned officer of the Partnership declares that he has examined
this certification and to the best of his knowledge and belief it is true,
correct and complete, and he further declares that he has authority to sign this
document on behalf of the Partnership.
Dated: June ___, 1998.
14L Associates
By: Q 1400 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
-------------------------
Christopher D. Gladstone,
President
<PAGE>
EXHIBIT F
TENANT ESTOPPEL CERTIFICATE
<PAGE>
TENANT ESTOPPEL CERTIFICATE
______________, 1998
Mack-Cali Realty Acquisition Corp.
c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
14 L Associates ("Landlord")
c/o Quadrangle Development Corporation
1001 G Street, N.W.
Suite 700W
Washington, DC 20001
Premises: 1400 L Street, N.W., Washington, DC (the "Property")
Ladies and Gentlemen:
The undersigned, as Tenant under that certain lease dated_________________
(the "Lease"), made with 14L ASSOCIATES does hereby certify to Landlord,
Mack-Cali Realty Acquisition Corp. and its assigns and successors (the
"Purchaser") and to any lender or mortgagee of Purchaser with respect to
Purchaser's acquisition of the property of which the Demised Premises (as
hereinafter defined) form a part:
1. That the premises leased by Tenant (the "Demised Premises") pursuant to
the Lease are described as _____ square feet on the _____ floor at the Premises;
2. That the Lease has not been modified, changed, altered or amended in
any respect, except as set forth below, and is the only Lease or agreement
between the undersigned and the Lessor affecting the Demised Premises. If none,
state "none." A true and complete copy of the Lease, together with any and all
modifications, amendments and/or assignments thereto, are annexed hereto as
Exhibit A. There are no subleases for any of the Demised Premises, except
___________;
3. That the full name and current mailing address for Tenant, and the
address for all notices to Tenant, are set forth below:
4. That the Demised Premises have been completed in accordance with the
terms of the Lease and that Tenant has accepted possession of the Demised
Premises. All improvements,
<PAGE>
alterations or additions to be constructed on the Demised Premises by Landlord
pursuant to the Lease have been completed and accepted by Tenant. All
contributions now or previously required from Landlord for improvements to the
Demised Premises have been paid in full to Tenant;
5. That the original Lease term began on ____________________ and will
expire on ______________________; that Tenant has paid rent through
____________________; that no rent has been paid by Tenant for more than one
month in advance; that the rent payable under the Lease is the amount of fixed
rent provided thereunder, which is annual fixed rent payable to Landlord of
$____________; that as of the date hereof, additional rent of
$__________________ is payable to Landlord on account of utility costs, real
estate taxes and operating expenses; that the base year for such additional rent
is _______, which has a base amount of $________________ [or the expense stop
for such additional rent is $______/SF]; that there is no claim or basis for an
adjustment thereto; and that the amount of additional rent has been paid through
____________;
6. That Tenant has not given Landlord any notice of any claim arising
under the Lease nor any notice of a default on the part of Landlord under the
Lease which have not been cured. To Tenant's knowledge, there are no defaults by
Landlord under the Lease as of the date hereof. As of the date hereof, the
undersigned is entitled to no credit, no free rent and no offset, counterclaim
or deduction in rent, except _________________;
7. That the Lease is now in full force and effect and has not been
amended, modified or assigned except as may be indicated above; the Lease is the
only agreement between Landlord and the undersigned regarding the Demised
Premises; and, to Tenant's knowledge, Tenant is not in default under the Lease;
8. That Tenant has paid to Landlord a security deposit of $ ____________,
and Tenant has no knowledge of any claim made by Landlord against the security
deposit;
9. That Tenant has _________ option(s) to renew the Lease for a period of
_____ years upon the terms set forth in the Lease, and that none of such options
have been exercised except ___________________;
10. That, except as set forth in the Lease, Tenant has no (i) option to
expand into additional space in the Property; (ii) right of first refusal of any
space in the Property; or (iii) option to acquire all or any part of the
Property in which the Demised Premises are located;
11. That no actions, whether voluntary or otherwise, are pending against
the undersigned under the bankruptcy laws of the United States or any State
thereof.
(tenant's signature on next page)
2
<PAGE>
Dated: _________________, 1998
TENANT:
[TENANT NAME]
a
By:
--------------------------
Name:
Title:
Address:
3
<PAGE>
EXHIBIT A
(Copy of the Lease to be attached, including all
amendments, modifications, assignments, etc.)
4
<PAGE>
EXHIBIT G
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into on this ___ day of May,
1998 by and among (i) 14L ASSOCIATES, a District of Columbia limited partnership
("Seller"), (ii) M-C CAPITOL ASSOCIATES L.L.C., a Delaware limited liability
company ("Purchaser") and (iii) LAWYERS TITLE INSURANCE CORPORATION ("Escrow
Agent").
RECITALS:
A. Seller and a predecessor of Purchaser have entered into a Purchase and
Sale Agreement dated June __, 1998 (the "Purchase Agreement") with respect to
the sale by Seller to Purchaser of certain improved real property located at
1400 L Street, N. W., Washington, D. C. (the "Property").
B. The Purchase Agreement contemplates that Seller and Purchaser shall
execute this Escrow Agreement at the Closing on the sale of the Property to
Purchaser under the provisions of the Purchase Agreement. Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, Seller, Purchaser and Escrow Agent hereby covenant and agree
as follows:
1. Appointment of Escrow Agent. Seller and Purchaser hereby designate and
appoint Escrow Agent as escrow agent, and Escrow Agent hereby accepts such
designation and appointment.
2. Escrow. On the date hereof, Seller has placed in escrow a portion of
the proceeds from the sale of the Property in the amount of Fifty-Three Thousand
Dollars ($53,000) (the "Escrow Amount") in cash with Escrow Agent, as escrowee,
to secure Seller's obligations under Section 5.7(b) of the Purchase Agreement,
relating to Seller's undertaking to repay to Tenants any overpayments of
Additional Rent such Tenants may have made in calendar year 1998 that is
attributable to periods prior to the Closing Date ("Overpayments"). Escrow Agent
shall hold the Escrow Amount pursuant to the terms of this Escrow Agreement. The
Escrow Amount shall be held and maintained by Escrow Agent in an
interest-bearing account approved by Seller and Purchaser. Neither Seller nor
Purchaser shall have the right to substitute another escrow agent for Escrow
Agent or to cause the Escrow Amount to be held or controlled by any other person
or party except by mutual agreement of Seller and Purchaser.
<PAGE>
3. Earned Interest. All interest which accrues on the Escrow Amount shall
be paid by Escrow Agent to Seller on the termination of this Escrow Agreement.
4. Disbursement of Escrow. At such time as a determination is made
(pursuant to the provisions of Section 5.7 of the Purchase Agreement) that a
Tenant has made an Overpayment, Seller shall so notify Escrow Agent (with a copy
to Purchaser), stating in such notice the name and address of the Tenant and the
amount to be reimbursed to such Tenant. Within five (5) days after receipt of
such notice, Escrow Agent shall make the requested payment to the Tenant
specified in Seller's notice out of the Escrow Amount.
5. Termination of Escrow. This Escrow Agreement and the escrow created
hereby shall terminate on the earlier to occur of (i) disbursement of the entire
Escrow Amount pursuant to the provisions hereof, or (ii) May 31, 1999. If the
entire Escrow Amount has not been disbursed prior to May 31, 1999, then on and
as of such date Escrow Agent shall disburse to Seller any remaining funds in the
Escrow Amount, whereupon this escrow shall terminate.
6. Notices. Each notice, request, demand, consent, approval, objection or
other communication (hereafter in this Section 6 referred to collectively as
"notices" and referred to singly as a "notice") which Seller, Purchaser or
Escrow Agent is required or permitted to give pursuant to this Agreement shall
be in writing and shall be deemed to have been duly given if hand delivered with
receipt therefor, or sent by Federal Express or other overnight courier service.
Any such notice shall be deemed given when received or when delivery is refused.
The records of the courier service shall be conclusive with respect to the date
of receipt or refusal of delivery. All notices shall be addressed to the parties
at the following addresses:
(a) if to Purchaser: 11 Commerce Drive, Cranford, New Jersey 07016,
with separate notice to the attention of Roger W. Thomas, Esq. and David
Parisier, with an additional separate notice to go to Pryor, Cashman, Sherman
and Flynn, 410 Park Avenue, New York, NY 10022, Attention: Andrew S. Levine,
Esq.
(b) if to Seller: c/o Quadrangle Development Corporation, 1001 G
Street, N.W., Suite 700, Washington, D.C. 20001, Attention: Legal Department,
with a copy to: The Taylor Simpson Group, One Rockefeller Plaza, Twenty-Third
Floor, New York, New York 10020, Attention: Paul E. Taylor III and Jeffrey
Feldman, Esq.
(c) if to Escrow Agent: 708 Third Avenue, New York, New York 10017,
Attention: Kathryn Andriko
-2-
<PAGE>
Any party may, by notice given pursuant to this Section 6, change the person or
persons and/or address or addresses, or designate an additional person or
persons or an additional address or addresses, for its notices.
7. Assignment. Neither Seller, Purchaser nor Escrow Agent shall have any
right, power, or authority to transfer, sell, hypothecate, assign or otherwise
convey any of its rights or obligations under this Escrow Agreement. However,
Escrow Agent shall have the right to resign as escrow agent hereunder. If Escrow
Agent does resign, Seller and Purchaser shall promptly appoint a substitute
escrow agent approved by each of them, such approval not to be unreasonably
withheld.
8. Indemnity. Seller and Purchaser hereby indemnify and hold Escrow Agent
harmless from and against any loss, damage, cost or expense incurred by Escrow
Agent in connection with or in any way related to Escrow Agent's performance of
its obligations hereunder, unless such loss, damage, cost or expense results
from Escrow Agent's negligence, fraud or dishonest conduct.
9. Liability of Escrow Agent. It is understood and agreed that in no event
shall Escrow Agent be liable for any loss or damage resulting from:
(a) Any defaults, error, action or omission of any other party;
(b) Any loss or impairment of funds deposited in escrow in the
course of collection or while on deposit with a commercial bank resulting from
failure, insolvency or suspension of such institution;
(c) Escrow Agent's compliance with any and all legal process, writs,
orders, judgments and decrees of any court where issued with or without
jurisdiction, and whether or not subsequently vacated, modified, set aside or
reversed;
(d) Any good faith act or forbearance by Escrow Agent as long as
such act or forbearance is reasonable and consistent with Escrow Agent's
ordinary course of business; or
(e) Escrow Agent's asserting or failing to assert any cause of
action or defense in any judicial, administrative or other proceeding either in
Escrow Agent's own interest or in the interest of any other party.
10. Remedies Cumulative. The Escrow Amount is intended as security for the
payment by Seller to Tenants of any Overpayments by such Tenants. This Escrow
Agreement is not a limit on Seller's liability to such Tenants for any such
Overpayments, and Seller shall make such payments as may be due Tenants for any
-3-
<PAGE>
Overpayments made by them in accordance with the provisions of such Tenants'
Leases and the Purchase Agreement.
11. Entire Agreement. This Escrow Agreement contains the entire agreement
among the parties hereto with respect to the subject matter hereof, and there
are no agreements or understandings among them with respect to the subject
matter hereof other than as set forth herein and in the Purchase Agreement.
12. Escrow Agent's Fee. Escrow Agent shall not charge any fee in
connection with the services to be performed by it under this Escrow Agreement.
13. Miscellaneous. This Escrow Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and permitted
assigns. This Escrow Agreement shall be governed by the laws of the District of
Columbia.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the day and year first above-written.
SELLER.
14L ASSOCIATES
By: Q 1400 L.L.C., General Partner
By: Quadrangle Development
Corporation, Managing Member
By
---------------------------
Christopher D. Gladstone,
President
PURCHASER:
M-C CAPITOL ASSOCIATES L.L.C.
By: Mack-Cali Property Trust, its Member
By
---------------------------
Name:
Title:
ESCROW AGENT:
LAWYERS TITLE INSURANCE CORPORATION
-4-
<PAGE>
By:
--------------------------------------
-5-
CONTRIBUTION AND EXCHANGE AGREEMENT
between and among
G&G MARTCO,
LAWRENCE W. FELDMAN,
THE LAWRENCE W. AND MARIE N. FELDMAN TRUST,
ALVIN DWORMAN,
PLENITUDE PARTNERS, L.P.
and
MACK-CALI REALTY, L.P.
Date: April 30, 1998
<PAGE>
TABLE OF CONTENTS
ss. Section Heading Page
- --- --------------- ----
INDEX OF DEFINED TERMS...............................................iv
SCHEDULES..........................................................viii
EXHIBITS.............................................................ix
RECITALS..............................................................1
1. CONTRIBUTION AND EXCHANGE.............................................2
2. CONSIDERATION.........................................................3
3. INSPECTION RIGHTS.....................................................4
4. TITLE; MATTERS TO WHICH THIS SALE IS SUBJECT..........................6
5. REPRESENTATIONS AND WARRANTIES OF THE OWNERS..........................9
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................20
7. COVENANTS OF THE OWNERS..............................................23
8. LEASING COMMISSIONS AND TENANT IMPROVEMENT OBLIGATIONS...............26
9. ESTOPPEL CERTIFICATES................................................27
10. CLOSING..............................................................27
11. ADJUSTMENTS..........................................................31
12. "AS-IS" ACQUISITION..................................................33
13. MORTGAGE DEBT........................................................33
14. CONDITIONS PRECEDENT TO CLOSING......................................33
15. INTENTIONALLY DELETED PRIOR TO EXECUTION.............................35
16. BROKER...............................................................35
17. CASUALTY LOSS........................................................36
18. CONDEMNATION.........................................................36
19. TRANSFER RESTRICTIONS; RIGHT OF FIRST REFUSAL........................37
20. PUBLICATION; CONFIDENTIALITY.........................................38
21. REMEDIES.............................................................39
22. NOTICE...............................................................40
ii
<PAGE>
23. DEBT MAINTENANCE.....................................................41
24. SALE OF THE PROPERTY.................................................44
25. TAX MATTERS..........................................................45
26. INTEREST PURCHASE OPTION.............................................45
27. MISCELLANEOUS........................................................46
iii
<PAGE>
INDEX OF DEFINED TERMS
Page No.
A
Act.........................................................................14
Additional Rents............................................................32
Adjustment Units............................................................32
Adjustments.................................................................32
Agreement....................................................................1
Amended Partnership Agreement...............................................30
Assignment of Contributor's Interest........................................27
Audit.......................................................................13
Audits......................................................................13
B
Basket......................................................................19
Beneficiaries................................................................1
Books and Records............................................................3
Building.....................................................................2
Built-in Gain...............................................................44
C
Casualty....................................................................36
Casualty Notice.............................................................36
CERCLA......................................................................17
Certificates.................................................................4
Closing.....................................................................27
Closing Date................................................................27
Closing Price................................................................4
Code........................................................................29
Common Stock.................................................................4
Company......................................................................1
Condemnation Notice.........................................................36
Consideration................................................................3
Contaminants................................................................17
Contributor..................................................................1
Contributor Debt............................................................42
Contributor Debt Amount.....................................................42
Contributor Party...........................................................37
Contributor Units............................................................3
Contributor's Interest.......................................................1
Contributor's Withheld Interest.............................................45
iv
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Current Market Value Per Unit................................................4
D
Debt Amount.................................................................42
Discharge...................................................................18
Disposition Notice..........................................................37
Disposition Securities......................................................37
Dworman......................................................................1
E
Election Period.............................................................45
Environmental Documents.....................................................18
Environmental Laws..........................................................18
Estoppel Certificate........................................................27
Estoppel Certificates.......................................................27
Excess Adjustment Amount....................................................32
Exchange.....................................................................4
Excluded Liabilities........................................................14
Exercise Notice.............................................................37
Existing Mortgage Debt.......................................................3
Existing Principal Amount...................................................33
F
First Tier Portion..........................................................42
G
Governmental Authorities....................................................11
H
Holding Period..............................................................45
I
Improvements.................................................................2
Initial Indemnity...........................................................42
Initial Indemnity Amount....................................................42
Inspection Period............................................................4
Intangible Property..........................................................3
L
Land.........................................................................2
Lease........................................................................2
Leases.......................................................................2
Letter Agreement............................................................45
Liabilities.................................................................13
Liability...................................................................13
LWF..........................................................................1
v
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M
MCRC.........................................................................4
N
New Bank Account............................................................32
New Leases..................................................................26
Notice......................................................................18
Notice Period...............................................................37
O
OP Agreement................................................................14
Owners.......................................................................1
P
Partnership Recourse Debt...................................................42
Permits and Licenses.........................................................2
Permitted Encumbrances.......................................................6
Personal Property............................................................2
Plenitude....................................................................1
Pre-Closing Period..........................................................25
Promotional Materials........................................................3
Property.....................................................................3
Property Financials.........................................................13
Property Value...............................................................3
Proposed Disposition........................................................37
Purchase Option.............................................................37
PWC art. 20.................................................................35
R
Real Property................................................................2
Reconstituted Partnership....................................................3
Rent Roll....................................................................9
Repair Cost.................................................................36
Replacement Loan............................................................33
Reserve Fund................................................................32
Restricted Period...........................................................41
S
SEC Documents...............................................................14
Second Tier Portion.........................................................43
Security Deposit.............................................................2
Service Contracts............................................................3
Straddle Period.............................................................25
vi
<PAGE>
T
Tank Laws...................................................................18
Tax.........................................................................12
Tax Authorities.............................................................13
Tax Authority...............................................................13
Tax Return..................................................................13
Tax Returns.................................................................13
Taxes.......................................................................12
Tenant.......................................................................2
Tenants......................................................................2
Third Tier Portion..........................................................42
Title Commitment.............................................................6
Title Company................................................................6
Title Policy.................................................................7
Tradenames...................................................................2
Trading Day..................................................................4
Transfer....................................................................14
Transferred.................................................................37
U
Underground Storage Tank....................................................18
Underlying Shares...........................................................37
Undisclosed Liability.......................................................13
Union Agreements............................................................11
Unit Holders.................................................................3
Units........................................................................3
W
Withheld Consideration......................................................45
vii
<PAGE>
SCHEDULES
Schedule 1.1(a) Land
Schedule 1.1(c) Personal Property
Schedule 1.1(f) Service Contracts
Schedule 2.1(b) Unit Holders
Schedule 4.1(c) Permitted Encumbrances
Schedule 4.1(e) Survey
Schedule 4.3(a)(i) Non-Imputation Endorsement
Schedule 4.3(a)(ii) Fairway Endorsement
Schedule 5.1(c)(i) G&G Partnership Agreement
Schedule 5.1(c)(ii) Certificate of Partnership
Schedule 5.1(d) Leases
Schedule 5.1(e) Rent Roll
Schedule 5.1(h) Permits and Licenses
Schedule 5.1(j) Leasing Commissions
Schedule 5.1(n)-1 Union Agreement
Schedule 5.1(n)-2 Union Letter Re: Un-Funded Liabilities
Schedule 5.1(t) Basis, Depreciation & Useful Life of Real Property
Contributed to the Company
Schedule 5.1(w) Property Financials
Schedule 5.4(a) Environmental Matters
Schedule 6.1(g) List of Form 8-K's Filed Since December 31, 1997
Schedule 7.4 Assessed Valuation Proceedings
Schedule 24.1 Built-In Gain
viii
<PAGE>
EXHIBITS
Exhibit 9.1 Form of Estoppel Certificate
Exhibit 10.2(a) Assignment of Contributor's Interest
Exhibit 10.4(f) Registration Rights Agreement
ix
<PAGE>
CONTRIBUTION AND EXCHANGE AGREEMENT
THIS CONTRIBUTION AND EXCHANGE AGREEMENT (this "Agreement") made April 30,
1998 by and between G&G MARTCO ("G&G"), a general partnership organized under
the laws of the State of California, having an address at 201 Third Street, San
Francisco, California, LAWRENCE W. FELDMAN, an individual having an address at
2027 Paradise Drive, Tiburon, California ("LWF"), THE LAWRENCE W. AND MARIE N.
FELDMAN TRUST, a California trust having an address at 2027 Paradise Drive,
Tiburon, California ("Contributor"), ALVIN DWORMAN, an individual having an
address at 645 Fifth Avenue, Eighth Floor, New York, New York, 10022
("Dworman"), and PLENITUDE PARTNERS, L.P., a Delaware limited partnership having
an address at 645 Fifth Avenue, Eighth Floor, New York, New York, 10022
("Plenitude", and hereinafter G&G, Contributor, Dworman and Plenitude shall
collectively be referred to as the "Owners") and MACK-CALI REALTY, L.P., a
Delaware limited partnership having an address at 11 Commerce Drive, Cranford,
New Jersey 07016 (the "Company").
RECITALS
A. G&G is the owner in fee simple of that certain property located
in the City and County of San Francisco and State of California, commonly known
as Convention Plaza. Contributor and Dworman, along with those certain entities,
such as Plenitude, and other trusts and individuals listed on Schedule 2.1(b)
annexed hereto (collectively, the "Beneficiaries"), each own a fifty (50%)
percent interest in the profits and capital of G&G. Together, Contributor,
Dworman, Plenitude and the Beneficiaries own all of G&G.
B. Contributor and the Beneficiaries hereby desire to contribute a
forty-nine and 9/10 (49.9%) percent interest in the profits and capital of G&G
("Contributor's Interest"), and the Company desires to accept the contribution
of Contributor's Interest, on and subject to, the terms, covenants and
conditions set forth herein.
C. Subsequent to Contributor's contribution of Contributor's
Interest, the Company, Contributor, Dworman and Plenitude desire to continue to
operate the property referenced above, and in connection therewith, to amend and
restate the partnership agreement for G&G on and subject to the terms, covenants
and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and for Ten Dollars ($10.00) and other good and valuable consideration,
the mutual receipt and legal sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, do hereby agree as
follows:
<PAGE>
1. CONTRIBUTION AND EXCHANGE.
1.1 Upon, and subject to, the terms, covenants and conditions of
this Agreement, on the Closing Date (as hereinafter defined), Contributor shall
contribute and convey to the Company Contributor's Interest in G&G, which is the
owner and possesses all right, title and interest in, to and under the
following:
(a) that certain plot, piece or parcel of land situate, lying
and being in the City and County of San Francisco and State of California, and
being more particularly described on Schedule 1.1(a) (the "Land"), the building
or buildings constructed on the Land (the "Building") and all of the other
improvements located on the Land (together with the Building, the
"Improvements");
(b) all rights, privileges, grants and easements appurtenant
to the Land and Improvements including, without limitation, all of G&G's 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 and Improvements (the Land and
Improvements, and all such rights, privileges, easements, grants and
appurtenances, are sometimes referred to herein as the "Real Property");
(c) all personal property, fixtures, equipment, inventory and
computer programming and software owned or licensed by G&G and located on the
Real Property or used in connection with or in relation to the sale, management,
leasing, promotion, ownership, operation, development, maintenance, use or
occupancy of the Real Property including, without limitation, the items, if any,
described on Schedule 1.1(c) (collectively 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 (each a "Lease",
and collectively the "Leases"), and all rents, additional rents, reimbursements,
profits, income, receipts and the amount deposited under any Lease in the nature
of security (plus any accrued interest) (the "Security Deposit") for the
performance by any entity or person(s) using or occupying space at the Property
(each a "Tenant", and collectively the "Tenants") pursuant to a Lease;
(e) all trademarks and tradenames used or useful in connection
with the Real Property, including without limitation the names Convention Plaza
and G&G Martco and any other name by which the Real Property is commonly known,
and all goodwill, if any, related to said names, all for which G&G shall have
the sole and exclusive rights (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"), those contracts and agreements for
the servicing, maintenance and operation of
2
<PAGE>
the Real Property, to the extent the Company has elected to continue same as
provided herein (the "Service Contracts") as set forth on the annexed Schedule
1.1(f), and the telephone numbers in use at any of the Real Property (together
with the Permits and Licenses and the Service Contracts, collectively the
"Intangible Property");
(g) all promotional materials, brochures, prints and/or
pictures of the Land and Improvements (collectively, "Promotional Materials"),
books, records, 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 G&G which are or may be used by G&G in the use and operation
of the Real Property or Personal Property (together with the Promotional
Materials, collectively the "Books and Records"); and
(h) all other rights, privileges and appurtenances owned by G
& G, if any, and in any way related to the rights and interests described above
in this Section.
1.2. The Real Property, the Personal Property, the Leases, the
Security Deposits, the Tradenames, the Intangible Property, the Books and
Records and the other property interests being conveyed hereunder are
hereinafter collectively referred to as the "Property".
1.3. For all periods prior to the Closing, G&G and all references to
it herein shall be deemed to be the partnership composed of Contributor,
Dworman, the Beneficiaries and Plenitude. From and after the Closing, G&G shall
be deemed to be the partnership inclusive of the Company, composed as more
particularly set forth in the Amended Partnership Agreement (as hereinafter
defined). All references herein to the "Reconstituted Partnership" shall be to
G&G as it shall be composed from and after the Closing, which is herein
considered to be a separate and distinct entity from G&G prior to the Closing.
2. CONSIDERATION.
2.1 (a) Contributor shall contribute Contributor's Interest to the
Company or its designee at Closing (as hereinafter defined). The consideration
("Consideration") for the contribution of Contributor's Interest shall be equal
to forty-nine and 9/10 (49.9%) percent, multiplied by the difference between
$58,000,000.00 and the outstanding principal balance of mortgage debt existing
on the Property as of the Closing Date (as hereinafter defined)(the "Mortgage
Debt"). The mortgage debt existing on the Property as of the date hereof shall
hereinafter be referred to as the "Existing Mortgage Debt". The Owners and the
Company hereby agree that the value of the Property is $58,000,000.00 (the
"Property Value").
(b) The Consideration shall be paid at Closing by the issuance
of operating partnership units of the Company ("Units"). The Units shall be
subject to the terms and conditions of the OP Agreement (as hereinafter
defined). The Units shall be issued at Closing by the Company to Contributor and
the individuals listed on Schedule 2.1(b) (the "Unit Holders") in such amounts
as Contributor shall direct the Company in writing no less than five (5) days
prior to Closing. The aggregate number of such Units (the "Contributor Units")
to be
3
<PAGE>
issued to the Unit Holders shall be calculated by dividing (i) the
Consideration, by (ii) the Current Market Value Per Unit (as hereinafter
defined).
2.2 [INTENTIONALLY DELETED PRIOR TO EXECUTION]
2.3 At Closing, the Company shall issue to Contributor and/or the
Unit Holders certificates ("Certificates") representing the Contributor Units,
which Certificates shall contain the legend set forth in Section 5.6. All rights
and benefits incidental to the ownership of the Contributor Units as set forth
in the OP Agreement (as hereinafter defined) including, but not limited to, the
right to receive distributions, voting rights and the right to exchange the
Contributor Units for shares of Common Stock (as hereinafter defined), shall,
subject to the provisions of Sections 5.3 and 19, accrue for the benefit of the
Contributor and/or the Unit Holders commencing on the Closing Date.
2.4 With respect to the first Partnership Record Date (as defined in
the OP Agreement) on or after the Closing, the Unit Holders shall receive
distributions payable with respect to the Contributor Units on a pro rata basis
based upon the number of days during the calendar quarter preceding such
Partnership Record Date that the Unit Holders held the Contributor Units.
2.5 For purposes of this Agreement, the following terms shall have
the following meanings:
(a) "Closing Price" means, on any date, with respect to a
share of common stock of Mack-Cali Realty Corporation ("MCRC"), the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, for one share of
Common Stock in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange (the "Exchange").
(b) "Common Stock" means the shares of common stock of MCRC.
(c) "Current Market Value Per Unit" means the average of the
Closing Price for a share of Common Stock for twenty (20) consecutive Trading
Days ending on, and including, April 27, 1998, which the parties hereby agree is
$38.2094.
(d) "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business.
3. INSPECTION RIGHTS.
3.1. Through the period ending on the date hereof (the
"Inspection Period"), the Company, at its own cost and expense, may perform, or
cause to be performed, tests, investigations and studies of or related to the
Property including, but not limited to, soil tests and
4
<PAGE>
borings, ground water tests and investigations, percolation tests, surveys,
architectural, engineering, subdivision, environmental, access, financial,
market analysis, development and economic feasibility studies and other tests,
investigations or studies as the Company, in its sole discretion, determines is
necessary or desirable in connection with the Property and may inspect the
physical (including environmental) and financial condition of the Property,
including but not limited to the Leases, Service Contracts, engineering and
environmental reports, development approval agreements, permits and approvals,
which inspection shall be satisfactory to the Company in its sole discretion.
The Company shall conduct any tests and studies in a manner which does not
unreasonably impede the day-to-day operations of the Property, and shall repair
and restore any portion of the surface of the Premises disturbed by the Company,
its agents or contractors during the conduct of any tests and studies to the
same condition as existed prior to such disturbance. Such right of inspection
and the exercise of such right shall not constitute a waiver by the Company of
the breach of any representation, warranty, covenant or agreement of the Owners
which might, or should, have been disclosed by such inspection. The Owners
acknowledge that no consents are required for the Company to conduct its
investigations of the Property as provided herein.
3.2. During the Inspection Period, the Company, its agents and
contractors, shall have unlimited access to the Property and other information
pertaining thereto in the possession or within the control of the Owners for the
purpose of performing such studies, tests, borings, investigations and
inspections for the purposes described in this Section 3. The Owners shall
cooperate with the Company in facilitating its due diligence inquiry and will
deliver to the Company, promptly after request, true and complete copies of all
test borings, Environmental Documents (as defined in Section 5.4(f)), surveys,
title materials and engineering and architectural data and the like relating to
the Property that are in the Owners' possession or under their control. In the
event any additional materials or information come within the Owners' possession
or control after the date of this Agreement, the Owners shall promptly submit
true and complete copies of the same to the Company. The Owners shall notify the
Company of any dangerous conditions on the Property, including, without
limitation, conditions which due to the nature of the borings, studies,
investigations, inspections or testing to be performed by or on behalf of the
Company may pose a dangerous condition to the Company or the Company's agents
and contractors.
3.3. In the event the inspection is not satisfactory, for any
reason, the Company may terminate this Agreement prior to the expiration of the
Inspection Period. If, prior to the expiration of the Inspection Period, the
Company shall have failed to notify Dworman and Contributor of its election to
terminate this Agreement, then the Company shall be deemed to have not
terminated this Agreement.
3.4. The Company's right of inspection and the exercise of such
right shall not constitute a waiver by the Company of the breach of any
representation, warranty covenant or agreement of the Owners which might, or
should, have been disclosed by such inspection.
5
<PAGE>
3.5. Notwithstanding the expiration of the Inspection Period, the
Company shall continue to have the rights provided it in this Section 3, other
than the right to terminate this Agreement.
3.6. In the event that the Closing does not occur, the Company will
provide Contributor and Dworman with copies of those reports and studies in the
Company's possession which pertain to the Property and are neither proprietary
nor privileged.
4. TITLE; MATTERS TO WHICH THIS SALE IS SUBJECT.
4.1 At Closing, the Property is to be subject only 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 Tenants, as tenants only;
(c) those restrictions, covenants, agreements, easements,
matters and things affecting title to the Real Property as of the date hereof
and more particularly described in Schedule 4.1(c) annexed hereto and by this
reference made a part hereof;
(d) any and all laws, statutes, ordinances, codes, rules,
regulations, requirements, or executive mandates affecting the Property,
including, without limitation, those related to zoning and land use, as of the
date hereof;
(e) the state of facts shown on the survey, if any, described
on Schedule 4.1(e), and any other state of facts which an accurate survey of the
Real Property would actually show, provided same do not 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; and
(g) leases, leasing commissions and construction obligations
approved in writing by the Company.
4.2. (a) The Company shall cause any title company licensed to do
business in the State in which the Real Property is located (the "Title
Company") to prepare a title insurance search and commitment for an owner's
title insurance policy for the Real Property (the "Title Commitment") and shall
cause a copy of same to be delivered to counsel for Contributor and Dworman. If
any defects, objections or exceptions in the title to the Real Property appear
in the Title Commitment (other than the Permitted Encumbrances) which the
Company is not required to accept under the terms of this Agreement, the Owners
agree to use good faith efforts to cure, prior to Closing and at their expense,
(i) judgments of which
6
<PAGE>
Contributor, as of the date hereof, has knowledge or which arise out of
Contributor's actions, up to $150,000.00, (ii) mortgages or other liens of which
Contributor, as of the date hereof, has knowledge or which Contributor has
executed or consented to which can be satisfied by payment of a liquidated
amount and (iii) any other defects, objections or exceptions which can be
removed by payments not to exceed $50,000.00. The Owners, in their discretion,
may adjourn the Closing for up to sixty (60) days in order to eliminate
unacceptable defects, objections or exceptions. If after complying with the
foregoing requirements, the Owners are unable or unwilling 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, the Company may
elect either (w) to terminate this Agreement by notice given to the Owners, in
which event the provisions of Section 4.7 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. The Owners agree and covenant
that they shall not voluntarily place any encumbrances or exceptions to title to
the Real Property from and after the date of the first issuance of the Title
Commitment for the Real Property.
4.3. (a) It shall be a condition to Closing that the Title Company
insure title to the Real Property in the amount of the Property Value (at a
standard rate for such insurance) in the name of G&G, and/or the name of the
Reconstituted Partnership if the name of the Reconstituted Partnership shall be
different, by a standard 1992 ALTA Owners Policy, with ALTA endorsements Form
3.1, Form 8.1, Form 9 and any other endorsements as required by the Company,
free and clear of all liens, encumbrances and other matters, other than the
Permitted Encumbrances (the "Title Policy"). In addition, the Title Company, at
Contributor's and Dworman's expense, shall issue to the Company and the
Reconstituted Partnership both a non-imputation endorsement and a Fairway
endorsement in the forms annexed hereto as Schedules 4.3(a)(i) and (ii)
respectively. 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) the
contemplated use of the Property will not violate the Permitted Encumbrances;
(iii) the existing use of the Property complies with all applicable zoning
ordinances and regulations as may affect the Property; and (iv) the exception
for taxes shall apply only to the current taxes not yet due and payable.
(b) The Owners shall provide such affidavits, including title
affidavits and survey affidavits of no change, and undertakings as the Title
Company insuring title to the Property may require. In addition, if the Title
Commitments disclose judgments, bankruptcies or other returns against other
persons having names the same as or similar to that of the Owners, the Owners,
on request, shall deliver to the Title Company affidavits showing that such
judgments, bankruptcies or other returns are not against the Owners, or any of
their affiliates. Upon request by the Company, the Owners 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.
(c) 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.
7
<PAGE>
4.4 Prior to Closing, the Owners shall cause one or more surveyors
reasonably acceptable to the Company (a) to certify and warrant to the Company,
and/or its designee(s), G&G and the Title Company the square footage and acreage
of the Land (to the nearest one-one hundredth (1/100)), (b) to certify that the
survey is a complete and accurate representation of the Real Property, (c) to
certify that there are no gores, gaps or strips, and such other facts that are
customarily required by the Title Company, (d) to provide to the Company and the
Title Company a metes and bounds description of the Land and any off-site
private easements benefiting the Real Property, and (e) otherwise prepare the
survey in accordance with the customary requirements of a lending institution
financing such a transaction. The Owners shall cause the surveyor to update the
survey as of the Closing Date and have the general survey exception removed from
the Title Policy (and replaced by a specific exception based on the survey) and
the survey affirmatively insured to both the Company and G&G.
4.5 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 day following the Closing Date (in each case subject to any
applicable apportionment), and any mortgages or other liens created by the
Owners, which the Owners are 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 the Owners. The Owners shall deliver to the Company, on the
Closing Date, instruments in recordable form sufficient to discharge any such
mortgages or other liens which the Owners are obligated to pay and discharge
pursuant to the terms of this Agreement, or, if acceptable to the Title Company,
the Owners shall deliver payoff letters from the lien holders.
4.6 If, on the date of this Agreement, 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, of which the first
installment is either then a charge or lien or has been paid, then for the
purposes of this Agreement all the unpaid installments of any such assessment,
including those which are to become due and payable after the Closing Date,
shall be deemed to be due and payable and to be liens upon the Real Property and
shall be paid and discharged by the Owners on the Closing Date.
4.7 If the Owners are unable to present title in accordance with the
terms of this Agreement, the Company shall have the right to terminate this
Agreement. In such event, neither party shall have any further rights or
obligations hereunder other than those obligations set forth in this Section 4.7
and Section 16.1, which are expressly stated herein to survive any such
termination, and Contributor shall refund to the Company all charges made for
(i) canceling the title commitment ordered with respect to the Real Property,
(ii) any appropriate additional municipal searches made in accordance with this
Agreement, and (iii) survey and survey inspection charges, which refund
obligation shall survive said termination.
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5. REPRESENTATIONS AND WARRANTIES OF THE OWNERS
5.1 In order to induce the Company to perform as required hereunder,
Contributor hereby warrants and represents the following:
(a) G&G is a duly organized and validly existing general
partnership organized under the laws of the State of California, is duly
authorized to transact business in the State in which the Property is located,
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 to perform its obligations hereunder. All necessary actions of
the partners of G&G 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) This Agreement, when duly executed and delivered, will be
the legal, valid and binding obligation of G&G and Contributor, separately and
collectively, and will be enforceable in accordance with the terms of this
Agreement. The performance by G&G and Contributor 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 G&G 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 G&G and Contributor are a party or by
which any of their respective assets are or may be bound.
(c) Annexed hereto as Schedule 5.1(c)(i) is a true, complete
and correct copy of G&G's partnership agreement, as amended to date, and same
shall be unchanged and in effect on the Closing Date. Annexed hereto as Schedule
5.1(c)(ii) is a filed copy of the certificate of partnership of G&G.
(d) Annexed hereto as Schedule 5.1(d) is a true, complete and
correct schedule of all of the Leases. The Leases are valid and bona fide
obligations of the landlord and are in full force and effect. Except with
relation to the Existing Mortgage Debt, the Leases have not been sold,
transferred, pledged, hypothecated or assigned. To Contributor's knowledge, no
default and/or condition exists which, solely with the passage of time or the
giving of notice or both, will become a material default by G&G under the
Leases. To Contributor's knowledge, there are no agreements which confer upon
any Tenant or any other person or entity any rights with respect to the use and
occupancy of the Property other than the Leases. All Tenants have commenced
occupancy. Except for a general right contained in the Leases to offset rent in
the event of a breach or default, no Tenant is presently entitled to any offset
to its rent, nor is any Tenant currently asserting a concession, rebate,
allowance or free rent for any period.
(e) The rent roll annexed hereto as Schedule 5.1(e) (the "Rent
Roll") is a true, complete and correct listing of the information contained
therein in all material respects. The Rent Roll shall contain the following
information: (i) the name of each Tenant; (ii) the fixed rent actually being
collected; (iii) the commencement and expiration date or status of each Lease
(including all rights or options to renew); (iv) the Security Deposit, if any;
(v) whether there is
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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.
(f) To Contributor's knowledge, G&G has performed all of the
material obligations and observed all of the material covenants required of the
landlord under the terms of the Leases. Except for work, alterations,
improvements or installations required to be performed under leases entered into
after the date hereof and approved in writing by the Company, all work,
alterations, improvements or installations required to be performed under the
Leases have been or prior to Closing will be performed in all material respects.
To G&G's knowledge, all work performed by G&G, or through its employees, agents
or contractors, at the Real Property to the date hereof and to the Closing Date
has been performed in accordance with the rules, laws and regulations of all
applicable authorities and any certificate of occupancy or completion, or
amendments thereto, to be issued on account of such work, have been so issued.
(g) To Contributor's knowledge, there are no service
contracts, equipment leases, employment agreements or other agreements to which
G&G is a party and affecting the Property or the operation thereof, except the
Service Contracts. True, accurate and complete copies of the Service Contracts
have been delivered by G&G to the Company. All of the Service Contracts are and
will on the Closing Date be unmodified and in full force and effect, and to the
knowledge of G&G, are without any default or claim of default by any of the
parties thereto. All sums due and payable as of the date hereof by G&G under the
Service Contracts have been paid. All of the Service Contracts may be terminated
on not more than thirty (30) days notice without the payment of any fee or
penalty.
(h) To Contributor's knowledge, the Permits and Licenses
include all certificates, licenses, permits and authorizations, including
without limitation any Permits and Licenses relating to any environmental
matters, necessary to operate and occupy the Building or customarily obtained in
operating and occupying buildings similar to the Building, all of which Permits
and Licenses are listed on Schedule 5.1(h), along with the expiration date of
same. G&G and Contributor have not received any notice that any of the Permits
and Licenses are subject to, or in jeopardy of, revocation or non-renewal. To
Contributor's knowledge, G&G is current in the payment of any fees required to
be paid for the Permits and Licenses and all Permits and Licenses are in full
force and effect.
(i) To Contributor's knowledge, there are no actions, suits,
labor disputes, litigation or proceedings currently pending or, to the knowledge
of G&G, threatened against or related to G&G or to all or any part of the
Property, the environmental condition thereof, or the operation thereof.
(j) Annexed hereto as Schedule 5.1(j) is a schedule of all
leasing commission obligations affecting the Property. The respective
obligations of G&G and the Reconstituted Partnership with respect to said
commissions are set forth in Section 8.
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(k) Contributor 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 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 Property,
(iii) any proposed or pending special assessments affecting the Property or any
portion thereof, (iv) any penalties or interest due with respect to real estate
taxes assessed against the 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 Property. G&G and Contributor agree to furnish the Company with a copy of
any such notice received within two (2) days after receipt.
(l) G&G and Contributor have provided or made available to the
Company all reports, including without limitation, the Environmental Documents,
in the possession or under the control of G&G or Contributor related to the
physical condition of the Property and all Books and Records necessary for the
Company to conduct its due diligence of the Property.
(m) To Contributor's knowledge, no violations exist, nor does
Contributor have any knowledge of any written notices, suits, investigations or
judgments relating to any violations of any laws, ordinances or regulations
affecting the Property, (including, without limitation, Environmental Laws (as
hereinafter defined)), or any violations or conditions that may give rise
thereto, and has no reason to believe that any agency, board, bureau,
commission, department, office or body of any municipal, county, state or
federal governmental unit, or any subdivision thereof, having, asserting or
acquiring jurisdiction over all or any part of the Property or the management,
operation, use or improvement thereof (collectively, the "Governmental
Authorities") contemplates the issuance thereof, and there are no outstanding
orders, judgments, injunctions, decrees, directives or writs of any Governmental
Authorities against G&G, Contributor or the Property; provided, however, the
Company acknowledges that certain alterations or improvements to the Property
may be necessary in order to comply with the Americans with Disabilities Act and
life safety laws required by Governmental Authorities as a condition of the
issuance of any new building permits for tenant improvements or other
construction at the Property.
(n) There are no employees of G&G working at, in connection
with or on behalf of G&G, nor are there any union or collective bargaining
agreements affecting the Property, except those listed on Schedule 5.1(n)-1 (the
"Union Agreement"), which expire no later than August 31, 1998. No un-funded
vested liabilities exist under the pension plan created pursuant to the Union
Agreement, as indicated by that certain letter from Stationary Engineers Local
39, dated April 21, 1998, annexed hereto as Schedule 5.1(n)-2.
(o) To Contributor's knowledge, there are no outstanding
requirements or recommendations communicated to G&G in writing by (i) the
insurance company(s) currently insuring the Property; (ii) any board of fire
underwriters or other body exercising similar functions, or (iii) the holder of
any mortgage encumbering any of the Property, which require or recommend any
repairs or work to be done on the Property.
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(p) Neither G&G nor Contributor have made a general assignment
for the benefit of creditors, filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by G&G's or Contributor's
creditors, suffered the appointment of a receiver to take possession of all, or
substantially all, of G&G's or Contributor's assets, suffered the attachment or
other judicial seizure of all, or substantially all, of the Owners' 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) Subject to the security interest created by the mortgagee
under the Existing Mortgage Debt and the security interest to be placed on the
Property at Closing as a result of the Replacement Loan (as hereinafter
defined), the Personal Property is now owned and will on the Closing Date be
owned by G&G free and clear of any conditional bills of sale, chattel mortgages,
security agreements or financing statements or other security interests of any
kind.
(r) No portion of the Property is located in a flood plain.
(s) (i) G&G, Contributor, the Unit Holders and their
affiliated entities have timely paid all Taxes (as hereinafter defined) due and
payable by each of them on or prior to the Closing Date and have timely filed
all Tax Returns (as hereinafter defined) required to be filed by each of them on
or prior to the Closing Date. Each such Tax Return is complete and accurate in
all material respects.
(ii) True and complete copies of all Tax Returns filed
by G&G for taxable periods beginning on or after January 1, 1994, and all
written communications with any Tax Authorities relating thereto will be, upon
request, delivered to the Company during the Inspection Period. G&G has also
provided, or will also provide, to the Company during the Inspection Period
copies of: (i) any letter ruling, determination letter or similar document
issued to G&G by any Tax Authority (as hereinafter defined), and (ii) any
closing or other agreement entered into by G&G with any Tax Authority. To
Contributor's knowledge, there are no ongoing Audits (as hereinafter defined) or
Audits pending or threatened against the Property, G&G or the Contributor. To
Contributor's knowledge, no claim has ever been made by a Tax Authority in a
jurisdiction where G&G or Contributor do not file Tax Returns that they are or
may be subject to taxation by that jurisdiction. To Contributor's knowledge, no
assessment of Taxes, other than current Taxes for which adjustment is being made
hereunder, is proposed against G&G, Contributor or any of the Property. To
Contributor's knowledge, there are no agreements or waivers extending the
statutory period of limitations with respect to any Tax Return of G&G, or for
the assessment or collection of any Taxes attributable to G&G or the Property.
To Contributor's knowledge, G&G is not, nor has it ever been a party to, or has,
or has ever had liability under, any indemnification, allocation or sharing
agreement with respect to Taxes. "Taxes" or "Tax" means 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),
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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. "Tax Returns" or "Tax Return" means
all original and amended Federal, state, local and foreign returns,
declarations, statements, reports, schedules, forms, information returns and
other filings relating to Taxes. "Audits" or "Audit" means any audit,
assessment, other examination or claim by any Tax Authority, judicial,
administrative or other proceeding or litigation (including any appeal of any
such judicial, administrative or other proceeding or litigation) relating to
Taxes and/or Tax Returns. "Tax Authorities" or "Tax Authority" means the
Internal Revenue Service and any other federal, state, local or foreign taxing
authority.
(t) Annexed hereto as Schedule 5.1(t) is a schedule setting
forth, for federal and state income tax purposes and with respect to each item
of the Property, the following information: (i) such item's adjusted basis as of
the first day of G&G's taxable year which includes the Closing Date; (ii) the
date that such item was placed in service; (iii) the depreciation method with
respect to such item; and (iv) such item's remaining useful life. The
information set forth on Schedule 5.1(t) is true, complete and correct in all
material respects.
(u) To Contributor's knowledge, (i) no representation or
warranty made by G&G or Contributor contained in this Agreement, and (ii) no
statement contained in any Environmental Documents, Tax Returns, Rent Roll,
Permits and Licenses, Promotional Materials, Service Contracts, Schedule or
Exhibit furnished by or on behalf of G&G or Contributor to the Company or any of
its designees or affiliates pursuant to this Agreement (taking into account any
knowledge, materialty or similar qualifiers contained in this Agreement), when
taken as a whole, contains or will contain any untrue statement of a material
fact or 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 therein.
(v) Contributor and the Unit Holders have good and marketable
title to one-hundred (100%) percent of Contributor's Interest, free of all liens
and encumbrances whatsoever. Contributor has all requisite consent of the Unit
Holders to convey Contributor's Interest.
(w) Except as set forth on Schedule 5.1(w) (the "Property
Financials") or as provided in Section 11, there are no liabilities of G&G that
are accrued, and are attributable to periods, prior to the Closing Date, whether
known or unknown, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise,
whether or not of a kind required by GAAP to be set forth on the Property
Financials or the notes thereto, including, without limitation, indebtedness for
borrowed money (individually a "Liability", and collectively, "Liabilities").
Notwithstanding the terms and conditions of Section 5.5, in the event that a
Liability is not set forth on the Property Financials (an "Undisclosed
Liability") but (i) such Undisclosed Liability is the subject of other
provisions of this Agreement or (ii) is of a nature that, if known, would have
had to have been disclosed under other provisions of this Agreement ((i) and
(ii) being collectively referred to as
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the "Excluded Liabilities"), such other provisions shall govern and control and
the provisions of this Section 5.1(w) shall not apply to such Excluded
Liabilities. Subject to the Basket (as hereinafter defined), Contributor shall
be liable to the Company for its entire loss or damage arising out of an
Undisclosed Liability, other than Excluded Liabilities, up to a maximum of the
lesser of (x) $8,000,000, or (y) one-half (1/2) of any loss or damage suffered
by the Reconstituted Partnership as a result thereof.
(x) After the Closing Contributor shall not be entitled,
except as otherwise herein provided, to receive from either G&G or the
Reconstituted Partnership any distribution or payment of indebtedness or for any
other reason whatsoever.
5.2. [INTENTIONALLY DELETED PRIOR TO EXECUTION]
5.3 In order to induce the Company to issue the Contributor Units,
Contributor and the Unit Holders hereby acknowledge their understanding that the
issuance of the Contributor Units 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, Contributor and the Unit
Holders represent and warrant to the Company to as follows:
(a) Contributor and the Unit Holders are acquiring the
Contributor Units 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 other than to
the Unit Holders. Contributor agrees and acknowledges that it is not permitted
to offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
("Transfer") any of the Contributor Units except as provided in this Agreement
and the Amended and Restated Agreement of Limited Partnership of the Company,
dated as of December 11, 1997 (the "OP Agreement").
(b) Contributor and the Unit Holders are knowledgeable,
sophisticated and experienced in business and financial matters. Contributor and
the Unit Holders fully understand the limitations on transfer described in this
Agreement and the OP Agreement. Contributor and the Unit Holders are able to
bear the economic risk of holding the Contributor Units for an indefinite period
and are able to afford the complete loss of their investment in the Contributor
Units. Contributor and the Unit Holders have received and reviewed the OP
Agreement and copies of the most recent 10K, (collectively, the "SEC Documents")
and have been given the opportunity to obtain any and all additional information
and/or documents and to ask questions and receive answers about such documents,
as well as MCRC and the Company and the business and prospects of MCRC and the
Company which Contributor and the Unit Holders deem necessary to evaluate the
merits and risks related to its investment in the Contributor Units. Contributor
and the Unit Holders understand and have taken cognizance of all risk factors
related to the purchase of the Contributor Units.
(c) Contributor and the Unit Holders acknowledge that they
have been advised that (i) the Contributor Units must be held indefinitely, and
Contributor and the Unit Holders will continue to bear the economic risk of the
investment in the Contributor Units,
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unless they are redeemed 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 the Company (and that upon redemption
of the Contributor Units in the Company for shares of Common Stock a new holding
period under Rule 144 may commence), and the Company has made no covenant, and
makes no covenant, to make Rule 144 available with respect to the sale of any
securities of the Company (although MCRC and the Company have agreed to register
the Common Stock pursuant to the Registration Rights Agreement, as hereinafter
defined), (iv) a restrictive legend as set forth in Section 5.6 below shall be
placed on the Certificates representing the Contributor Units, and (v) a
notation shall be made in the appropriate records of the Company indicating that
the Contributor Units are subject to restrictions on transfer.
(d) Contributor and the Unit Holders also acknowledge that (i)
the redemption of Contributor Units for shares of Common Stock is subject to
certain restrictions contained in the OP 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 subsection (c)
above. Notwithstanding anything herein or in the OP Agreement to the contrary,
Contributor hereby acknowledges and agrees that it and the Unit Holders may not
exercise the Redemption Rights (as defined in the OP Agreement) until after the
date which is one year from the Closing Date.
(e) Contributor and each of the Unit Holders is either an
"accredited investor" (as such term is defined in Rule 501 (a) of Regulation D
under the Act) or Contributor and each of the Unit Holders either alone or with
its representative(s) has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
prospective investment.
5.4 In addition to the provisions of Section 5.1, 5.2 and 5.3,
Contributor hereby warrants and represents the following with respect to
environmental matters:
(a) To Contributor's knowledge, except as disclosed on
Schedule 5.4(a):
(i) there are no Contaminants (as defined in Section
5.4(f)) on, under, at, emanating from or affecting the Real Property, except
those in compliance with all applicable Environmental Laws (as defined in
Section 5.4(f));
(ii) neither G&G, Contributor, nor any current occupant
or any prior owner or occupant, of the Property has received any Notice (as
defined in Section 5.4(f)) or advice from any Governmental Authority (as defined
in Section 5.4(f)) or any other third party with respect to Contaminants on,
under, at, emanating from or affecting the Property, and no Contaminants have
been Discharged (as defined in Section 5.4(f)) which would allow a Governmental
Authority to demand that a cleanup be undertaken;
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<PAGE>
(iii) no portion of the Property has ever been used by
G&G or any former owner or current or former occupant, to generate, manufacture,
refine, produce, treat, store, handle, dispose of, transfer or process
Contaminants, whether or not any of those parties has received Notice or advice
from any Governmental Authority or any other third party with respect thereto;
(iv) G&G has not transported any Contaminants, nor has
any current or former occupant or former owner transported any Contaminants,
from the Property to another location which was not done in compliance with all
applicable Environmental Laws;
(v) no ss.104(e) informational request has been received
by the Owners issued pursuant to CERCLA (as defined in Section 5.4(f));
(vi) there is no asbestos or asbestos containing
material in any friable state or otherwise in violation of Environmental Laws on
the Property;
(vii) there are no above ground storage tanks or
Underground Storage Tanks (as defined in Section 5.4(f)) at the Property,
regardless of whether such tanks are regulated or not;
(viii) all pre-existing above ground storage tanks and
Underground Storage Tanks at the Property have been removed and their contents
disposed of in accordance with and pursuant to Environmental Laws;
(ix) the Property has not been used as a transfer
station, incinerator, resource recovery facility, landfill or other similar
facility, for receiving or treating, storing or disposing of Contaminants,
garbage and refuse, and other discarded materials resulting from, without
limitation, industrial, commercial, agricultural, domestic or community
activities, including, without limitation, sanitary, hazardous, medical, special
or other waste.
(x) there is no violation of any statute, ordinance,
rule, regulation, order, code, directive or requirement, including, without
limitation, Environmental Laws with respect to any environmental certificates,
and Licenses and Permits, nor any pending application for any Licenses and
Permits;
(xi) the Property is not subject to any wetlands
regulations, administered by the United States of America, Army Corps of
Engineers, the Environmental Protection Agency, or any other Governmental
Authority;
(xii) there are no federal or state liens as referred to
under CERCLA, or Cal. Water Code ss.13305, Cal Health & Safety Code ss.25365.6,
or any other applicable Environmental Laws that have attached to the Property;
(xiii) Contributor has not, and has not permitted any
occupant to engage in any activity on the Property in violation of Environmental
Laws; and
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(xiv) the Property is in material compliance with
Environmental Laws.
(b) [INTENTIONALLY DELETED PRIOR TO EXECUTION]
(c) G&G shall notify the Company in advance of all meetings
scheduled between G&G or G&G's representatives, and any Governmental Authority
regarding the Property and environmental matters, and the Company, and the
Company's representatives, shall have the right, without obligation, to attend
and participate in all such meetings.
(d) Contemporaneously with the execution of this Agreement,
and subsequently promptly upon receipt by G&G's representatives, G&G shall
deliver to the Company: (i) all Environmental Documents concerning the Property
generated by or on behalf of predecessors in title or former occupants of the
Property to the extent in G&G's possession or control, if any; (ii) all
Environmental Documents concerning the Property generated by or on behalf of
G&G, whether currently or hereafter existing, if any; (iii) all Environmental
Documents concerning the Property generated by or on behalf of current or future
occupants of the Property to the extent in G&G's possession or control, whether
currently or hereafter existing, if any; and (iv) a description of all known
operations, past and present, undertaken at the Property while owned by G&G,
which G&G represents and warrants consisted of construction activities and
office and retail operations, and (v) any existing maps, diagrams and other
documentation known to G&G to be in G&G's possession or control designating the
location of past and present operations at the Property and past and present
storage of Contaminants above or below ground, on, under, at, emanating from or
affecting the Property or its environs.
(e) [INTENTIONALLY DELETED PRIOR TO EXECUTION].
(f) The following terms shall have the following meanings when
used in this Agreement:
(i) "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 "Tanks
Laws" as defined below; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. ss.6901 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. ss.9601 et seq.
("CERCLA"); the Water Pollution and Control Act, 33 U.S.C. ss.1251 et seq.;
together with any amendments thereto, regulations promulgated thereunder and all
substitutions thereof, as well as words of similar purport or meaning referred
to in any other applicable federal, state, county or municipal environmental
statute, ordinance, code, rule or regulation, including, without limitation,
radon, asbestos, polychlorinated biphenyls, urea formaldehyde and petroleum
products and petroleum based derivatives. Where a statute, ordinance, code, rule
or regulation defines any of these terms more broadly than another, the broader
definition shall apply.
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(ii) "Discharge" shall mean the releasing, spilling,
leaking, leaching, disposing, pumping, pouring, emitting, emptying, treating or
dumping of Contaminants at, into, onto or migrating from or onto the Real
Property, regardless of whether the result of an intentional or unintentional
action or omission.
(iii) "Environmental Documents" shall mean all
environmental documentation in the possession or under the control of
Contributor concerning the Real Property, or its environs, including without
limitation, all sampling plans, cleanup plans, preliminary assessment plans and
reports, site investigation plans and reports, remedial investigation plans and
reports, remedial action plans and reports, or the equivalent, sampling results,
sampling result reports, data, diagrams, charts, maps, analysis, conclusions,
quality assurance/quality control documentation, correspondence to or from any
Governmental Authority, submissions to any Governmental Authority and
directives, orders, approvals and disapprovals issued by any Governmental
Authority.
(iv) "Environmental Laws" shall mean each and every
applicable federal, state, county or municipal statute, ordinance, rule,
regulation, order, code, directive or requirement, together with all successor
statutes, ordinances, rules, regulations, orders, codes, directives or
requirements, of any Governmental Authority in any way related to Contaminants.
(v) "Notice" shall mean, in addition to its ordinary
meaning, any written communication of any nature, whether in the form of
correspondence, memoranda, order, directive or otherwise.
(vi) "Tank Laws" shall mean Cal. Health & Safety Code
ss.25280 et seq., the federal underground storage tank law (Subtitle I) of the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901 et seq.,
and any other applicable state, county or municipal statute, ordinance, code,
rule or regulation applicable to underground or above ground tanks, together
with any amendments thereto, regulations promulgated thereunder, and all
substitutions thereof, and any successor legislation and regulations.
(vii) "Underground Storage Tank" shall mean each and
every "underground storage tank", whether or not subject to the Tank Laws, as
well as the "monitoring system", the "leak detection system", the "discharge
detection system" and the "tank system" associated with the "underground storage
tank", as those terms are defined by the Tank Laws.
5.5. All representations and warranties made by Contributor in this
Agreement shall survive the Closing Date for a period of one (1) year, except
that the representations and warranties set forth in Section 5.1(a), (b), (s),
(t) and (w) and Section 5.4 shall survive the Closing Date for the applicable
period of statute of limitations, and shall not be merged in the delivery of the
Certificates to Contributor and the Unit Holders. Contributor agrees to
indemnify and defend the Company, and to hold the Company 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
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(collectively, a "loss"), incurred by the Company to the extent of such loss, by
reason of or resulting directly or indirectly, wholly or partly, from any breach
of the representations and warranties of Contributor and G&G contained in this
Agreement to the extent same was not actually known at Closing by Timothy Jones
or John Kropke, up to a maximum liability of $8,000,000.00 except that such
maximum liability is subject to the provisions of Section 5.8. The Company shall
not have a right to bring a claim against Contributor by virtue of any of the
representations and 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 the party against whom such claim is to be made and
said party has had a reasonable opportunity to cure same, and (iii) the
aggregate damages to the Company resulting from such false, misleading or untrue
representations and warranties are reasonably expected to exceed $50,000.00 (the
"Basket"), but thereafter the Company may bring a claim against G&G and/or
Contributor, or all or some of them, for any amount in excess of the Basket up
to $8,000,000.00. The Company's sole recourse in the event of a breach of this
Agreement, as against Contributor, shall be against the Units, and in such event
Contributor hereby authorizes the Company to attach and/or take recourse against
the Units, and any distributions appurtenant thereto. This paragraph shall
survive the termination of this Agreement or Closing.
5.6. Contributor hereby acknowledges that each Certificate
representing the Contributor Units shall bear the following legend:
REFERENCE IS MADE TO THE SECOND AMENDED AND RESTATED LIMITED
PARTNERSHIP AGREEMENT DATED AS OF DECEMBER 11, 1997 OF MACK-CALI
REALTY, L.P. (THE "SECOND AMENDED AND RESTATED PARTNERHSIP
AGREEMENT") FOR THE RIGHTS OF THE COMMON UNITS REPRESENTED BY THIS
CERTIFICATE.
THE COMMON 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
PROVISONS OF THE SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT
(A COPY OF WHICH IS ON FILE WITH MACK-CALI REALTY, L.P.). EXCEPT AS
OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE UNITS COMMON 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 MACK-CALI REALTY, L.P. HAS
BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER
THAT
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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
COMMON UNITS ARE SUBJECT TO THE PROVISIONS OF A CERTAIN CONTRIBUTION
AND EXCHANGE AGREEMENT DATED APRIL ___, 1998 (A COPY OF WHICH IS ON
FILE WITH THE OPERATING PARTNERSHIP).
MACK-CALI REALTY, L.P. WILL FURNISH TO EACH HOLDER WHO SO
REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH
CLASS OF UNITS OR SERIES THEREOF WHICH MACK-CALI REALTY, L.P. IS
AUTHORIZED TO ISSUE AND OF THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ANY SUCH REQUEST IS
TO BE ADDRESSED TO MACK-CALI REALTY, L.P. AT ITS PRINCIPAL PLACE OF
BUSINESS.
5.7. Contributor, Dworman, Plenitude and G&G acknowledge that they
are not in a significantly disparate bargaining position with respect to the
Company in connection with the transaction contemplated by this Agreement and
that Contributor, Dworman, Plenitude and G&G were represented by legal counsel
in connection with this transaction.
5.8. Notwithstanding anything to the contrary contained in Section
5.5, the right of the Company to pursue a claim for a failure of Feldman,
Dworman, the Owners, Plenitude, G&G or all or some of them to perform the
obligations set forth in Sections 8.1, 11.2, 11.3 and 16 shall be without regard
to a minimum in damages suffered, nor shall any recovery on account of a failure
to perform in accordance with said Sections apply to the $8,000,000.00 cap on
damages.
5.9. As used throughout this Agreement, the phrases "to
Contributor's knowledge", "to the best of Contributor's knowledge" or any
similar derivation thereof, shall mean the actual knowledge of Contributor or
Allen Cooper.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
6.1 In order to induce Contributor and the Unit Holders to perform
as required hereunder, the Company hereby warrants and represents the following:
(a) (i) The Company 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 to perform its obligations
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hereunder and under such other documents and instruments in order to acquire
Contributor's Interest in accordance with the terms and conditions hereof. All
necessary actions of the partners of the Company 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) MCRC 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 the
Registration Rights Agreement annexed hereto as Exhibit 10.4(f) and all other
documents and instruments to be executed and delivered by it thereunder, and to
perform its obligations thereunder. All necessary actions of the Executive
Committee of MCRC to confer such power and authority upon the persons executing
the Registration Rights Agreement and all documents which are contemplated
thereunder on its behalf have been taken.
(b) This Agreement and the agreements and other documents to
be executed and delivered by the Company hereunder, when duly executed and
delivered, will be the legal, valid and binding obligation of each of the
Company, enforceable in accordance with the terms of this Agreement. The
performance by the Company of its duties and obligations under this Agreement
and the documents and instruments to be executed and delivered by the Company
hereunder will not conflict with, or result in a breach of, or default under,
any provision of any of the organizational documents of the Company 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 the Company is a party or by which each of its assets are or may be
bound.
(c) The Contributor Units to be issued to Contributor and the
Unit Holders are duly authorized and, when issued by the Company, will be fully
paid and non-assessable, free and clear of any mortgage, pledge, lien,
encumbrance, security interest, claim or right of interest of any third party of
any nature whatsoever. The shares of Common Stock to be issued upon redemption
of the Contributor Units are authorized and will be reserved for future listing
with the Exchange no later than the date upon which the Units become 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) The Company has furnished to Contributor a true and
complete copy of the OP Agreement.
(e) The execution and delivery of this Agreement and the
performance by the Company of its 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 the Company or MCRC.
(f) The Company has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary
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petition by the Company's creditors, suffered the appointment of a receiver to
take possession of all, or substantially all, of the Company's assets, suffered
the attachment or other judicial seizure of all, or substantially all, of the
Company'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.
(g) Schedule 6.1(g) lists any Form 8-K's filed by MCRC with
the Commission since December 31, 1997.
(h) MCRC qualified as a real estate investment trust under the
Code for the calendar year ended December 31, 1997, and the Company has no
reason to believe that MCRC will not qualify as a real estate investment trust
for the calendar year ending December 31, 1998.
(i) Other than as set forth in the Company's most recent 10-K,
there is no existing, or to the knowledge of the Company, threatened legal
action or governmental proceedings of any kind involving the Company which, if
determined adversely to the Company, would have a material adverse affect on the
consolidated financial position, results of operation, business or prospects of
the Company or which would interfere with the Company's ability to execute,
deliver, or perform its obligations under this Agreement or the Registration
Rights Agreement.
6.2 All representations and warranties made by the Company in this
Agreement shall survive the Closing Date for a period of one (1) year, except
that the representations and warranties set forth in Section 6.1(a), (b), (c),
(d) and (e) shall survive the Closing Date for the applicable period of statute
of limitations, and shall not be merged in the delivery of the Certificates to
Contributor and the Unit Holders. All other covenants, obligations, liabilities
and acknowledgments of the Company contained in this Agreement and not otherwise
expressly stated to survive, shall be merged in the delivery of the Certificates
to Contributor and the Unit Holders. The Company agrees to indemnify and defend
Contributor and the Unit Holders, and to hold Contributor and the Unit Holders
harmless, from and against any and all claims, liabilities, losses, deficiencies
and damages as well as reasonable expenses (including reasonable attorney's
fees), and interest and penalties related thereto, incurred by Contributor and
the Unit Holders, by reason of or resulting from any breach of the
representations, warranties, covenants and agreements of the Company, contained
in this Agreement to the extent same was not actually known at Closing by
Contributor or Allen Cooper, up to a maximum liability of $8,000,000.00. In
addition, Contributor and the Unit Holders shall not have a right to bring a
claim against the Company by virtue of any of the representations and 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
the Company and the Company has had a reasonable opportunity to cure same, and
(iii) the aggregate damages to Contributor and/or the Unit Holders, resulting
from such false, misleading or untrue representations and warranties are
reasonably expected to exceed the Basket, but thereafter the Contributor and/or
the Unit Holders, may bring a claim
22
<PAGE>
against the Company for any amount in excess of the Basket up to $8,000,000.00.
The Company shall be liable for any damages hereunder.
7. COVENANTS OF THE OWNERS.
7.1 G&G covenants and agrees that between the date hereof and the
Closing Date it shall perform or observe the following with respect to the
Property:
(a) G&G will operate and maintain the Real Property in the
ordinary course of business and use reasonable efforts to reasonably preserve
for the Reconstituted Partnership and the Company the relationships of G&G and
G&G's Tenants, suppliers, managers, employees and others having on-going
relationships with the Real Property. G&G will complete any capital expenditure
program currently in process or anticipated to be completed at or prior to
Closing. G&G 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) G&G will not enter into any new leases with respect to the
Real Property, renew or modify any Lease, or enter into any agreement with any
Tenants, without the Company's prior written consent, which will not be
unreasonably withheld or delayed.
(c) G&G shall not:
(i) agree to terminate any Service Contract or Lease, or
grant any concession, rebate, allowance or free rent;
(ii) apply any Security Deposits with respect to any
Tenant in occupancy on the Closing Date;
(iii) renew, extend or modify any of the Service
Contracts; or
(iv) remove any Personal Property, except as may be
required for repair and replacement. All replacements shall be free and clear of
liens and encumbrances and shall be of quality at least equal to the replaced
items;
(d) G&G shall, upon request of the Company at any time after
the date hereof and at the Company's sole expense, assist the Company in its
preparation of audited financial statements, statements of income and expense,
and such other documentation as the Company may reasonably request, covering the
period of Contributor's ownership of the Real Property. This Section 7.1(d)
shall survive the Closing;
(e) G&G shall make all required payments under any mortgage
affecting the Real Property within any applicable grace period, but without
reimbursement by the Company therefor. G&G shall also comply with all other
material terms covenants, and conditions of any mortgage on the Real Property.
Nothing herein shall create any personal
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<PAGE>
liability for Contributor, Dworman or Plenitude for any obligations under any
mortgage affecting the Property or any indebtedness secured thereby;
(f) G&G shall maintain and keep those hazard, liability and
casualty insurance policies presently held on the Property in full force and
effect;
(g) [INTENTIONALLY DELETED PRIOR TO EXECUTION];
(h) G&G shall permit the Company and its authorized
representatives to inspect the Books and Records of its operations at all
reasonable times. All Books and Records not delivered to the Company hereunder
shall be maintained for the Company's inspection at G&G's address as set forth
above;
(i) G&G shall:
(i) promptly notify the Company of, and promptly deliver
to the Company, a certified true and complete copy of any Notice G&G may
receive, on or before the Closing Date, from any Governmental Authority,
concerning a violation of Environmental Laws or Discharge of Contaminants, or
any other matter;
(ii) promptly deliver or cause to be delivered to the
Company a certified true and complete copy of all Environmental Documents which
shall come into the possession or under the control of G&G or their
representatives between the signing of this Agreement and the Closing;
(j) G&G, at its sole cost and expense, shall complete all work
under construction by G&G, its agent(s) or contractor(s) at the Property as of
the date hereof, if any, in accordance with the obligation giving rise to such
work having to be performed, and shall obtain and deliver to the Company, as
soon as practical, all final certificates of completion and occupancy, or other
documentation reasonably satisfactory to the Company, 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. The obligations
set forth in this paragraph shall survive Closing.
(k) If the cost of compliance with the provisions of Section
14.2(h) shall exceed the sum of Fifty Thousand ($50,000) Dollars, then either
party shall have the right to terminate this Agreement. If this Agreement is so
terminated, this Agreement shall be rendered null and void and of no further
force or effect and neither party shall have any further liability or obligation
to the other under or by virtue of this Agreement. Notwithstanding the
foregoing, the Company shall have the right to proceed to closing, even if the
other party shall elect to terminate this Agreement, on notice to the other
party; provided, however, that neither G&G, Dworman, Contributor nor the Unit
Holders shall be liable or responsible pursuant to this Agreement for any excess
cost of such compliance.
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<PAGE>
7.2 To the extent that any of the Promotional Materials are not in
the possession of G&G, G&G shall use reasonable efforts to cause the holders or
owners of same to deliver such Promotional Materials to the Company. The
obligations set forth in this paragraph shall survive Closing.
7.3 G&G covenants and agrees that it shall timely provide the
Company 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 the Company informed of all substantive negotiations and
discussions with respect to the foregoing matters on an on-going basis. This
Section 7.3 shall survive the Closing.
7.4. To G&G's knowledge, except as set forth on Schedule 7.4 there
are no proceedings now pending or anticipated for a reduction in the assessed
valuation of the Property or for a refund or recovery of business taxes
(including interest and penalties) paid with respect to the Property. G&G is
hereby authorized to continue the proceedings set forth on Schedule 7.4, and
except as provided in the next sentence, to litigate or settle the same in G&G's
discretion. Notwithstanding the foregoing, the Owners shall not litigate or
settle any such matters without the Company's prior written consent, not to be
unreasonably withheld, if such litigation or settlement shall affect the current
tax year or any future tax year. The Company is hereby authorized by G&G, in the
Company's sole discretion, to file any applicable proceeding on behalf of the
Reconstituted Partnership for any tax years following the last tax year set
forth on Schedule 7.4. The net refund of taxes, if any, for any tax year for
which G&G or the Reconstituted Partnership shall be entitled to share in the
refund shall be divided between G&G and the Reconstituted Partnership in
accordance with the apportionment of taxes pursuant to the provisions hereof.
All expenses in connection therewith, including counsel fees, shall be paid for
by the party entitled to the benefits thereof, with a pro-rata sharing between
G&G and the Company for any tax year in which both parties are entitled to a
portion of the refund. The provisions of this Section 7.4 shall survive the
Closing Date.
7.5. To the extent of any Taxes that are a liability or obligation
of G&G arising as a result of the operations of G&G which have not been paid and
are attributable to taxable periods which end prior to the Closing Date (a
"Pre-Closing Period"), Contributor and Dworman shall each pay one-half (1/2) of
same no later than the Closing Date (and provide Company with reasonably
acceptable evidence thereof) or shall establish with the Company at Closing a
cash reserve equal to the reasonably estimated Taxes that will be due, with such
cash reserve being applied by the Company to pay same or the Company agreeing to
make such reserve available to Contributor and Dworman to pay same, promptly
upon request. With respect to taxable periods of G&G which end on or after the
Closing Date (a "Straddle Period"), Contributor will establish with the Company
a cash reserve at Closing equal to one-half (1/2) of the reasonably estimated
Taxes arising as a result of the operations of G&G attributable to Contributor's
Interest or the Unit Holders (pro rated based on the respective ownership
periods of Contributor and Unit Holders, on the one hand, and the Company, on
the other hand). Dworman and Contributor acknowledge that any cash reserves
established herein do not constitute a limitation as to the Taxes that will be
due, and that such parties shall continue to be liable from and after the
Closing for all such Taxes that are due. The provisions of this Section 7.5
shall
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<PAGE>
survive the Closing. This Section 7.5 shall not apply to any Taxes otherwise
adjusted pursuant to Section 11.
7.6. As of December 31, 1997, no un-funded vested liabilities
existed under the pension plan created pursuant to the Union Agreement, as
indicated by that certain letter from Stationary Engineers Local 39, dated April
21, 1998, annexed hereto as Schedule 5.1(n)-2. In the event that any un-funded
liabilities shall become due and payable which are attributable to the 1998
calendar year, G&G shall be liable for its pro rata share, based upon its period
of ownership in the 1998 calendar year. The provisions of this Section 7.6 shall
survive the Closing.
7.7. To the extent of any breach of any covenant or agreement by
G&G, Contributor shall be liable for the entire loss suffered by the Company, up
to a maximum of the lesser of (i) one-half (1/2) of the loss suffered by the
Reconstituted Partnership, or (ii) $8,000,000.00, in the aggregate for all
losses hereunder. The $8,000,000.00 cap on Contributor's liability set forth in
this Section 7.6 shall not apply to Section 7.5. In the event that the Closing
does not occur as a result of a breach of any covenant or agreement by G&G, then
the provisions of Section 21.2 shall apply.
8. LEASING COMMISSIONS AND TENANT IMPROVEMENT OBLIGATIONS.
8.1 (a) All leasing commissions due on account of the original term
of all Leases made before the date of this Agreement as well as any extension
and renewal terms which are presently effective (but not renewals or extensions
of such Leases which are exercised after the Closing Date or otherwise with the
written approval of the Company) shall be paid by G&G prior to the Closing Date.
The Reconstituted Partnership shall pay to Cushman & Wakefield the leasing
commissions set forth on Schedule 5.1(j), provided the leases for the tenants on
Schedule 5.1(j) (the "New Leases") in fact commence and the Closing occurs. G&G
hereby represents that it has not dealt with any brokers, finders or salesmen in
connection with the New Leases, other than Cushman & Wakefield. G&G hereby
agrees to indemnify, defend and hold the Reconstituted Partnership harmless from
and against any and all loss, cost, damage, liability or expense, including
reasonable attorneys' fees, which the Reconstituted Partnership may sustain,
incur or be exposed to by reason of any claim for fees or commissions made on
account of the New Leases.
(b) All tenant improvement obligations in connection with
original Lease terms or extensions and renewals made prior to the Closing shall
be satisfied by G&G prior to the Closing Date. All tenant improvement
obligations in connection with the New Leases, or renewals or extensions of
Leases entered into prior to Closing with the prior written approval of the
Company shall be paid by the Reconstituted Partnership provided the Closing
occurs.
(c) The provisions of this Section 8 shall survive the
Closing.
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9. ESTOPPEL CERTIFICATES.
9.1. On or prior to the date hereof, the Owners agree to deliver to
each Tenant 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. The Owners agree to use its best 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, the Owners shall nevertheless
be obligated to obtain estoppel certificates in the form in which each Tenant is
obligated to deliver same as provided in its Lease. The Owners agree to deliver
to the Company, upon receipt, copies of all estoppel letters received from
Tenants, in the form received by the Owner. The estoppel certificates required
to be obtained pursuant to this Section 9.1 are collectively referred to as the
"Estoppel Certificates", and individually as an "Estoppel Certificate".
9.2. As a condition to Closing, the Owners shall deliver (a) an
Estoppel Certificate from each Tenant that leases space at the Real Property in
excess of 10,000 square feet or more in the aggregate, and (b) Estoppel
Certificates from the remaining Tenants leasing, in the aggregate, at least
seventy-five (75%) percent of the remaining square footage of the Real Property.
9.3 For an Estoppel Certificate to be deemed delivered for purposes
of this Agreement, it must certify that the Tenant's most recent rental payment
under its Lease was made not more than one (1) month prior to the month in which
the Closing occurs and that no material default of either landlord or tenant
exists under that tenant's lease.
10. CLOSING.
10.1 The consummation of the transactions contemplated hereunder
(the "Closing") shall take place through the mail, on or about April 28, 1998
(the "Closing Date"), time being of the essence, provided the Company has not
terminated or been deemed to terminate this Agreement prior thereto. In the
event that the Closing has not occurred by April 28, 1998 or any date thereafter
on which Contributor is ready, willing and able to perform all of its
obligations and requirements set forth herein which are conditions precedent to
the Company's obligations to perform, Contributor may terminate this Agreement
within five (5) days thereafter. Notwithstanding such termination, Contributor
shall retain any rights it has against the Company pursuant to Section 21.
10.2 On the Closing Date, Contributor, at its sole cost and expense,
will duly execute and acknowledge, where applicable, and deliver or cause to be
delivered to the Company or such place as directed the following documents:
(a) an assignment and assumption of Contributor's Interest
(the "Assignment of Contributor's Interest"), in the form annexed hereto as
Exhibit 10.2(a), to the Company or its designee, as assignee, together with all
applicable and requisite partnership consents, partner consents, mortgagee
consents and resolutions by the general partners of G&G authorizing this
assignment and transaction;
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(b) all original Leases and all other documents pertaining
thereto, and certified copies of such Leases or other documents where
Contributor, using its best efforts, is unable to deliver originals of same;
(c) all other original documents or instruments referred to
herein, including, without limitation, the Service Contracts, Permits and
Licenses, and Books and Records, and certified copies of same where Contributor,
using its best efforts, is unable to deliver originals;
(d) a letter to Tenants, in a form acceptable to the Company,
advising the Tenants of the transaction hereunder and directing that rent and
other payments thereafter be sent to the Reconstituted Partnership or, as the
Reconstituted Partnership shall so direct;
(e) the title affidavit required by Section 4.3(b), and an
affidavit, and such other documents or instruments required by the Title
Company, executed by G&G certifying (i) against any work done or supplies
delivered to the Property which might be grounds for a materialman's or
mechanic's lien under or pursuant to California Law, in form sufficient to
enable the Title Company to affirmatively insure G&G, the Reconstituted
Partnership or its designee(s) against any such lien, (ii) that the signatures
on the Assignment of Contributor's Interest is sufficient to bind Contributor
and convey Contributor's Interest to the Company and (iii) the Rent Roll;
(f) affidavits and other instruments, including but not
limited to, all organizational documents of G&G including partnership agreements
and good standing certificates (or its equivalent), reasonably requested by the
Company and the Title Company evidencing the power and authority of G&G and its
partners to enter into this Agreement and any documents to be delivered
hereunder, and the enforceability of same;
(g) the original Estoppel Certificates;
(h) a list of all cash Security Deposits and all non-cash
Security Deposits (including letters of credit) delivered by Tenants under the
Leases;
(i) a certificate indicating that the representations and
warranties of the Owners made in this Agreement are true and correct in all
material respects as of the Closing Date;
(j) a Rent Roll for the Real Property current as of the
Closing Date, certified by Contributor and G&G as being true and correct in all
material respects, and showing no adverse change from the Rent Roll annexed
hereto;
(k) subject to Section 18, all proper instruments as shall be
reasonably required for the conveyance to the Company of all right, title and
interest, if any, of Contributor in and to any award or payment made, or to be
made, (i) for any taking in condemnation, eminent
28
<PAGE>
domain or agreement in lieu thereof of land adjoining all or any part of the
Improvements, (ii) for damage to the Land or Improvements 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 Land or Improvements;
(l) a certificate signed by Contributor and the Unit Holders
to the effect that neither Contributor nor any of the Unit Holders is a "foreign
person" as that term is defined in Section 1445(f)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"), in order to avoid the imposition of the
withholding tax payment pursuant to Section 1445 of the Code;
(m) all transfer and other tax declarations and returns and
information returns, duly executed and sworn to by Contributor as may be
required of Contributor by law in connection with the conveyance of
Contributor's Interest to the Company, including, but not limited to, Internal
Revenue Service Forms;
(n) a statement setting forth all adjustments and prorations
shown thereon;
(o) letter of direction regarding the issuance of the
Contributor Units to the Unit Holders from the legal and beneficial owners of
Contributor's Interest. The signatories of said letter are also to acknowledge
that they are the legal and beneficial owners of same;
(p) evidence of compliance with PWC art. 20, the California
Carpenter-Presley-Turner Hazardous Substance Account Act and the Cal. Health &
Safety Code ss.ss.25359.7, or the affidavit described in Section 14.2(h);
(q) a computer diskette containing any closing or other
documents executed in connection with this transaction and prepared by the
Owners or its counsel, in WordPerfect or Microsoft Word format;
(r) the Reserve Fund (as hereinafter defined);
(s) the legal opinions of Stein & Lubin, LLP and Greene
Radovsky Maloney & Share, LLP, in such forms as are mutually agreed upon by the
parties;
(t) a counterpart to the OP Agreement duly executed by
Contributor and each of the Unit Holders; and
(u) 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, Contributor, Dworman and Plenitude, at
their sole cost and expense, shall duly execute and acknowledge an amended and
restated partnership
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agreement reflecting the Reconstituted Partnership (the "Amended Partnership
Agreement"), which shall provide, in part and as more particularly set forth
therein, that (i) the Company is to be the managing general partner of the
Reconstituted Partnership, and shall have sole and exclusive control and
authority over the management of the Property, and (ii) subject to the
provisions of Section 24, both the Company and Dworman shall have the option to
purchase or sell their respective partnership interests to or from the other at
any time after three (3) years from the Closing Date.
10.4 On the Closing Date, the Company, at its sole cost and expense,
will deliver or cause to be delivered to Contributor the following documents:
(a) the Certificates representing the Contributor Units;
(b) duly executed and acknowledged Assignment of Contributor's
Interest;
(c) a certificate indicating that the representations and
warranties of the Company made in this Agreement are true and correct as of the
Closing Date;
(d) a Registration Rights Agreement substantially in the form
of Exhibit 10.4(f);
(e) an acknowledgment by the general partner of the Company
reflecting the admission of Contributor as a limited partner;
(f) duly executed and acknowledged Amended Partnership
Agreement; and,
(g) such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions contemplated by
this Agreement.
10.5 Contributor and Dworman, severally and not jointly, shall each
be liable for one-half of all state or county documentary stamps or transfer
taxes on the Assignment of Contributor's Interest. Each party shall be
responsible for its own attorney's fees. Except for Contributor's obligation to
pay any additional fees or premiums incurred by the Restructured Partnership as
a result of the non-imputation endorsement and Fairway endorsement, the
Reconstituted Partnership shall be responsible for all title insurance premiums
and title examination fees. The provisions of this Section 10.5 shall survive
the Closing.
10.6 [INTENTIONALLY DELETED PRIOR TO EXECUTION]
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11. ADJUSTMENTS.
11.1 The following items with respect to the Real Property are to be
apportioned between the Reconstituted Partnership, on the one hand, and
Contributor, Dworman and Plenitude, on the other hand, 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 and attributable
to periods from and after the Closing shall belong to the Reconstituted
Partnership and shall be applied by the Reconstituted Partnership to current
rents and other charges under the Leases. After application of such moneys to
current rents and charges, the Reconstituted Partnership shall remit to
Contributor Dworman and Plenitude any excess amounts paid by a Tenant to the
extent that such Tenant was in arrears in the payment of any amount due under
the Leases prior to the Closing;
(b) any prepaid rents, together with interest required to be
paid thereon, as well as the amount of all cash Security Deposits;
(c) utility charges payable by G&G including, without
limitation, electricity, water charges and sewer charges. If there are meters on
the Real Property, G&G will cause readings of all said meters to be performed
not more than five (5) days prior to the Closing Date;
(d) amounts payable under the Service Contracts other than
those Service Contracts which the Reconstituted Partnership 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 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 Contributor agrees to pay the Company any
increase shown by such recomputation and vice versa;
(f) the value of heating, fuel or petroleum stored at and used
for the Real Property, at G&G's most recent cost, including taxes, on the basis
of a reading made within ten (10) days prior to the Closing by G&G's supplier;
(g) all sums due and payable by G&G pursuant to bills and
claims for labor performed and materials furnished to or for the benefit of the
Property by or on behalf of G&G; and
(h) any other items of income or expense of a recurring nature
that are incurred in connection with the ownership or operation of the Property.
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11.2 .At the Closing, G&G shall deliver to the Company a list of
additional rent, however characterized, under each Lease, including without
limitation, real estate taxes, electrical charges, utility costs and operating
expenses (collectively, "Additional Rents") being billed to Tenants for the
calendar year in which the Closing occurs (both on a monthly basis and in the
aggregate), the basis for which the monthly amounts are being billed, and the
amounts incurred by G&G on account of the components of Additional Rent for such
calendar year. Upon the reconciliation by the Company of the Additional Rents
billed to Tenants, and the amounts actually incurred for such calendar year,
Contributor, Dworman and Plenitude, on the one hand, and the Reconstituted
Partnership, on the other, shall be liable for or entitled to their respective
shares of overpayments or underpayments, as the case may be, of Additional
Rents, and shall be entitled to such payments from Tenants, as the case may be,
on a pro-rata basis based upon each party's period of ownership during such
calendar year.
11.3 Prior to Closing, the Reconstituted Partnership shall establish
a bank account at a bank selected by the Company (the "New Bank Account"), and
shall advise G&G of same. Contributor and Dworman shall, simultaneous with the
Closing, deposit into the New Bank Account a reserve fund (the "Reserve Fund").
The Reserve Fund is to be used by the Reconstituted Partnership, or its
successors and assigns, for tenant improvements, leasing commissions, rent
incentives on account of leasing any vacant space at the Property or for any
other purpose the Reconstituted Partnership may deem appropriate. The Reserve
Fund shall be equal to $500,000.00, which shall be increased or decreased by the
net amount of all adjustments and apportionments provided for in Section 11 and
the remainder of this Agreement, and shall be increased by the amount due to the
Reconstituted Partnership as a result of those certain closing costs with regard
to title described in Section 4.3(a) (collectively, the "Adjustments"). In the
event that the net sum of the Adjustments in favor of G&G are in excess of
$500,000.00, then one-half (1/2) of the amount in excess of $500,000.00 (the
"Excess Adjustment Amount") shall be paid by the Company to Contributor in Units
(the "Adjustment Units"); the remaining one-half (1/2) shall be paid by, and
shall belong to, Dworman and Plenitude. The aggregate number of the Adjustment
Units to be issued to Contributor and the Unit Holders shall be calculated by
dividing (i) the Excess Adjustment Amount, by (ii) the Current Market Value Per
Unit. So long as the Excess Adjustment Amount is known at least two (2) days
prior to Closing, the Company shall at Closing issue to Contributor and the Unit
Holders, according to their pro rata share of the Consideration, Certificates
representing the Adjustment Units. In the event that the Excess Adjustment
Amount is not known at least two (2) days prior to Closing the Company shall
issue to Contributor and the Unit Holders as soon thereafter as practicable, but
in no event later than two (2) days after Closing, the Certificates representing
the Adjustment Units. Except with regard to the New Bank Account, Dworman,
Plenitude and Contributor shall maintain exclusive control, right and access to
any other bank accounts bearing the name "G&G Martco"; provided, however,
Dworman, Plenitude and Contributor hereby covenant and agree to close all such
accounts or otherwise change the name thereon within fifteen (15) days of the
Closing Date.
11.4 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 California.
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11.5 Any and all errors in the adjustments will be corrected as soon
as practicable after the Closing. Any amounts paid to G&G following the Closing
on account of any provisions of this Agreement after the Closing Date shall be
treated as, and deemed to have been, paid to Contributor, Dworman and Plenitude
as distributions prior to the Closing Date pursuant to Section 6.2(c) of the
Amended Partnership Agreement.
11.6 The provisions of this Section 11 shall survive the Closing
Date.
12. "AS-IS" ACQUISITION
12.1 The Company acknowledges that by the end of the Inspection
Period and provided this Agreement has not been terminated, that the Company has
had an opportunity to review all the information it desires regarding
Contributor's Interest and the Real Property, that the Company understands the
risks of, and other considerations relating to, Contributor's Interest and the
Real Property, that the Company has performed all diligence desired by the
Company with respect to Contributor's Interest and the Real Property and that
the Company is acquiring Contributor's Interest, subject to the representations
and warranties of G&G and Contributor contained in this Agreement, in its
"as-is", "with all faults" condition.
13. MORTGAGE DEBT.
13.1 (a) Subject to Section 23, the Company and Dworman agree to use
all commercially reasonable efforts to refinance the Existing Mortgage Debt on
terms and conditions acceptable to both the Company and Dworman in their sole
discretion (the "Replacement Loan"). Contributor and Dworman, jointly and
severally, shall be responsible and pay for any and all accrued and unpaid
interest, prepayment penalties, expenses, late charges, legal fees, protective
advances and all other costs and fees which are attributable to the Existing
Mortgage Debt, due to the holder of the Existing Mortgage Debt other than the
outstanding principal amount thereof (the "Existing Principal Amount"). The
Replacement Loan shall be subject to the provisions of Section 23.
(b) In the event that the amount of the initial advance under
the Replacement Loan that is used to satisfy the Mortgage Debt, which shall not
be less than $35,000,000.00, is less than the Existing Principal Amount, then
(i) the difference between the Existing Principal Amount and $40,000,000.00
shall be shared equally by the Company and Dworman, and (ii) the difference
between the amount of the initial advance under the Replacement Loan that is
used to satisfy the Mortgage Debt and $40,000,000.00 shall be advanced by the
Company. The Company shall thereafter be entitled to a preferred return of 9.5%
on the amount so advanced under clause (ii) of this Section 13.1(b), as more
particularly set forth in the Amended Partnership Agreement.
14. CONDITIONS PRECEDENT TO CLOSING
14.1 The obligations of Contributor to deliver an executed and
acknowledged Assignment of Contributor's Interest, and the Owners to provide
insurable title to the Property,
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and to perform the other covenants and obligations to be performed by the Owners
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 the Owners):
(a) the representations and warranties made by the Company
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;
(b) the Company shall have executed and delivered to
Contributor all of the documents provided herein for said delivery;
(c) there shall not have been any material adverse change in
the Company between the date hereof and Closing. Contributor acknowledges that
any decrease, regardless of amount, in the price of the Common Stock shall not
be considered a material adverse change. The provisions of this Section 14.1(c)
shall be merged into the Company's delivery of the Certificates to Contributor
and the Unit Holders; and
(d) the Company shall have performed all material covenants
and material obligations undertaken by the Company herein in all respects and
complied with all material conditions required by this Agreement to be complied
with or performed by it on or before the Closing Date.
14.2 The obligations of the Company to deliver the Certificates to
the Unit Holders and the Company's obligation to perform the other covenants and
obligations to be performed by the Company 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 the Company):
(a) the representations and warranties made by the Owners
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;
(b) the Owners shall have performed all material covenants and
material obligations undertaken by the Owners herein in all respects and
complied with all material conditions required by this Agreement to be complied
with or performed by any of them on or before the Closing Date;
(c) the Title Company is unconditionally prepared to issue to
the Company a Title Policy meeting the requirements set forth in Section 4
hereof for an "insurable title";
(d) the Owners shall have executed and delivered to the
Company all of the documents provided for herein for said delivery;
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(e) the Property shall be in compliance in all material
respects with all statutes, ordinances, rules, regulations, orders, codes,
directives or requirements of all Governmental Authorities, and Environmental
Laws, affecting the Property;
(f) the Reconstituted Partnership shall have closed the
Replacement Loan;
(g) all of the representations and warranties made in Section
5.1 shall be true and complete, without regard to knowledge, in all material
respects as though such representations and warranties had been made on and as
of the Closing Date. In the event that any of said representations and
warranties are not true and complete, without regard to knowledge, in all
material respects, then the Company may, at its election, terminate this
Agreement; and
(h) the Property shall be in compliance with the San
Francisco, California Public Works Code art. 20, ss.ss.1001-1015 ("PWC art.
20"), Cal. Health & Safety Code ss.25359.7, the California
Carpenter-Presley-Turner Hazardous Substance Account Act, the Cal. Health &
Safety Code ss.ss.25915-25919.7, any regulations promulgated thereunder and any
amending or successor legislation and regulations now or hereafter existing with
respect to the Property. In the event that the Property is not in compliance
with PWC art. 20, Cal. Health & Safety Code ss.25359.7, the California
Carpenter-Presley-Turner Hazardous Substance Account Act, the Cal. Health &
Safety Code ss.ss.25915-25919.7, any regulations promulgated thereunder and any
amending or successor legislation and regulations now or hereafter existing with
respect to the Property, then the Company's sole remedies shall be limited to
either terminating this Agreement or waiving the compliance requirements set
forth herein. If this Agreement is so terminated, this Agreement shall be
rendered null and void and of no further force or effect and neither party shall
have any further liability or obligation to the other under or by virtue of this
Agreement. In the event that the Property is not subject to the provisions of
PWC art. 20, Cal. Health & Safety Code ss.25359.7, the California
Carpenter-Presley-Turner Hazardous Substance Account Act, the Cal. Health &
Safety Code ss.ss.25915-25919.7, any regulations promulgated thereunder, then
G&G shall, at its sole cost and expense, provide to the Company an affidavit
stating that the Property is not subject to the provisions of PWC art. 20, Cal.
Health & Safety Code ss.25359.7, the California Carpenter-Presley-Turner
Hazardous Substance Account Act, the Cal. Health & Safety Code
ss.ss.25915-25919.7, any regulations promulgated thereunder.
15. [INTENTIONALLY DELETED PRIOR TO EXECUTION]
16. BROKER.
16.1 The Company, MCRC and the Owners represent that they have not
dealt with any brokers, finders or salesmen in connection with this transaction.
The Company and the Owners 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
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sustain, incur or be exposed to by reason of any claim for fees or commissions
made through the other party. The provisions of this Section shall survive the
Closing or other termination of this Agreement.
17. CASUALTY LOSS.
17.1 If at any time prior to the Closing Date any portion of the
Property is destroyed or damaged as a result of fire or any other casualty (a
"Casualty"), the Owners shall promptly give written notice ("Casualty Notice")
thereof to the Company along with the Owners' estimate, given in good faith, of
the cost to repair as a result of the Casualty (the "Repair Cost"). If the
Repair Cost is in excess of three percent (3%) of the Property Value, then
within ten (10) days after the receipt of the Casualty Notice, the Company shall
have the right, at its sole option, of terminating this Agreement by written
notice to the Owners given within ten (10) days after receipt of the Casualty
Notice. If the Company does not terminate this Agreement or if the Repair Cost
is less than three percent (3%) of the Consideration, then the proceeds of any
insurance with respect to the Property paid between the date of this Agreement
and the Closing Date plus the amount of G&G's deductible under the policy
insuring the Casualty shall be paid to the Reconstituted Partnership at Closing.
Notwithstanding the foregoing, in the event of an earthquake, all of the terms
and conditions of this Section 17.1 shall apply, except that G&G need not pay
over to the Reconstituted Partnership the amount of G&G's deductible under the
policy insuring the earthquake.
17.2 To the extent of available insurance proceeds, the Owners shall
cause all temporary repairs to be made to the Property as shall be required to
prevent further deterioration and damage to the Property prior to the Closing
Date provided, however, that any such repairs shall first be approved by the
Company. Contributor shall have the right to be reimbursed from the proceeds of
any insurance with respect to the Real Property paid between the date of this
Agreement and the Closing Date for the cost of all such repairs.
18. CONDEMNATION.
18.1 In the event, that prior to Closing, the Owners receive notice
of the institution or threatened institution of any proceedings, judicial,
administrative or otherwise, by eminent domain or otherwise, which propose to
affect a material portion of the Property, the Owners shall give notice (a
"Condemnation Notice") to the Company promptly thereafter. Within fifteen (15)
days following receipt of the Condemnation Notice, the Company shall have the
right and option to terminate this Agreement by giving the Owners written notice
thereof. Any damage to or destruction of the Property as a result of a taking by
eminent domain shall be deemed "material" for purposes of this Section if the
estimate of the damage, which estimate shall be performed by an insurance
adjuster and the Company's architect, shall exceed three percent (3%) of the
Property Value. Should the Company so terminate this Agreement in accordance
with this Section, neither party shall have any further liability or obligations
to the other. In the event the Company shall not elect to cancel this Agreement,
Contributor shall assign Contributor's Interest in such proceeds to the Company,
the same shall be the Company's
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sole property, and the Company shall have the sole right to settle any claim in
connection with the Property, and there shall be no reduction in the
Consideration.
19. TRANSFER RESTRICTIONS; RIGHT OF FIRST REFUSAL.
19.1 Contributor agrees that the Contributor Units may not be sold,
assigned, transferred, pledged, encumbered or in any manner disposed of
(collectively, "Transferred") or redeemed for shares of Common Stock until after
the first anniversary of the Closing Date. Thereafter, the Contributor Units
and/or the shares of Common Stock underlying the Contributor Units (the
"Underlying Shares") may only be Transferred in accordance with the terms of the
OP Agreement and this Section 19.
19.2 (a) If Contributor or the Unit Holders (each a "Contributor
Party") receives a bona fide written offer to purchase part or all of its
Contributor Units or Underlying Shares in a privately negotiated transaction
which it desires to accept, such Contributor Party shall not sell, transfer, or
otherwise dispose of (the "Proposed Disposition") such Units or Underlying
Shares (the "Disposition Securities") to a third party unless, prior to such
Proposed Disposition, such Contributor Party shall have promptly reduced the
terms and conditions, if any, of the Proposed Disposition to a reasonably
detailed writing and shall have delivered written notice (the "Disposition
Notice") of such Proposed Disposition to the Company. All offers to purchase
Contributor Units or Underlying Shares must be for cash. The Disposition Notice
shall contain an irrevocable offer to sell all, but not less than all, the
Disposition Securities to the Company upon the same terms (including price) and
subject to the same conditions, if any, as those contemplated by the Proposed
Disposition, and shall be accompanied by a true and correct copy of the
agreement embodying the terms and conditions, if any, of the Proposed
Disposition (which shall identify the Company, the Disposition Securities, the
consideration and method of payment contemplated by the Proposed Disposition and
all other terms and conditions, if any, of the Proposed Disposition).
(b) The Company shall have the irrevocable right and option
(the "Purchase Option"), within five (5) business days after receipt of the
Disposition Notice (the "Notice Period"), to accept such irrevocable offer to
purchase all, but not less than all, of the Disposition Securities which are
subject to the Proposed Disposition. If the Company determines to exercise such
Purchase Option, it shall deliver to the Contributor Party written notice of the
exercise of its Purchase Option with respect to the Disposition Securities (an
"Exercise Notice") prior to the expiration of the Notice Period.
(c) If the Company shall have timely delivered its Exercise
Notice with respect to the Disposition Securities, all certificates for the
Disposition Securities shall be delivered to the Company at a closing to be held
on the later of the date on which the Proposed Disposition, if accepted, would
close or five (5) business days after such Exercise Notice is given, at the
offices of Pryor, Cashman, Sherman & Flynn located at 410 Park Avenue, New York,
New York 10022. At such closing, the Company shall deliver to the Contributor
Party in immediately available funds the amount of the purchase price set forth
in the Disposition Notice due against the simultaneous delivery of certificates
representing the Disposition Securities so
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disposed of, duly endorsed in blank or accompanied by a stock power or powers
duly endorsed in blank, and in proper form for transfer, together with any
necessary stock-transfer stamps, and such Disposition Securities shall be
delivered free and clear of all liens, security interests and encumbrances
whatsoever.
(d) If the Company (i) notifies the Contributor Party that it
is not exercising its Purchase Option or (ii) does not deliver an Exercise
Notice prior to the expiration of the Notice Period, the Company shall be deemed
to have waived its Purchase Option in which event Contributor Party may sell the
Disposition Securities to the proposed transferee for a period of sixty (60)
days after the expiration of the Notice Period in which event the proposed
transferee shall take free and clear of the restrictions set forth in this
Section 19; provided, however, that such Disposition Securities are sold to the
proposed transferee at a price not less than that contained in the Disposition
Notice and on terms and conditions, if any, not more favorable to the proposed
transferee than those contained in the Disposition Notice. If Contributor Party
wishes to sell all or any part of the Disposition Securities on terms more
favorable to the proposed transferee than those set forth in the Disposition
Notice or does not sell such Disposition Securities on the terms and conditions
contained in the Disposition Notice within the aforementioned sixty (60) day
period, it shall again be obligated to make new offers to the Company, in
accordance with this Section 19, before it shall be permitted to consummate a
Proposed Disposition of the Disposition Securities, or any part thereof, in a
privately negotiated transaction.
20. PUBLICATION; CONFIDENTIALITY.
20.1 The Company shall have the right to make such public
announcements or filings with respect to the Exchange or the Securities and
Exchange Commission as the Company may deem reasonably prudent, and shall be
entitled to make such filings or announcements upon advice of counsel as may be
otherwise be deemed necessary or required by law.
20.2. Without the prior written consent of the other party, until
the Company shall make a public announcement as provided in Section 20.1,
neither the Company nor the Owners shall disclose, and the Owners and the
Company will direct their respective representatives, employees, agents and
consultants not to disclose, to any person or entity the fact that the Company
and the Owners have entered into this Agreement to acquire the Property nor any
of the terms, conditions or other facts with respect to this Agreement.
Notwithstanding the foregoing, either party may disclose those terms and
conditions which are required to be disclosed pursuant to law or in order to
comply with this Agreement; provided, however, that the disclosing party shall
use its best efforts to limit the disclosure to the information necessary, shall
advise any party to whom disclosure is made that said terms and conditions are
subject to a confidentiality requirement and shall obtain the agreement of said
party to keep any information disclosed to it as confidential. In the event of a
breach of the provisions of this Section 20.2, either party shall be entitled to
all of its rights and remedies at law or in equity.
20.3 The Owners shall not disclose to any third party any
information that is not public information concerning MCRC, the Company or any
transaction or potential
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transaction the Owners may become aware of involving MCRC or the Company without
the Company's prior written consent.
21. REMEDIES.
21.1 (i) In the event of any breach by the Company of any
representation, warranty, covenant or agreement in any material respect, which
breach was neither willful nor intentional, the Owner's sole recourse shall be
limited to terminating this Agreement, whereupon the parties hereto shall have
no further liabilities and obligations hereunder, and this Agreement shall be of
no further force and effect, except for the obligations set forth in Section
16.1.
(ii) In the event of a willful breach by the Company of any
representation, warranty, covenant or agreement, in any material respect (except
for a breach of the time of the essence closing obligation set forth in Section
10.1, in which case the provisions of Section 21.1(i) shall apply), the Company
shall pay as liquidated damages and as its sole liability, the sum of
$250,000.00. The Owners waive any other claim, at law or in equity, either
against the Company, MCRC or against any person, known or unknown, disclosed or
undisclosed, and hereby acknowledge and agree that said liquidated sum
constitutes a reasonable forecast of damages which would be sustained by the
Owners in the event of a willful breach by the Company.
21.2 (i) In the event of any breach by Contributor of any
representation or warranty, or the Owners of any covenant or agreement in any
material respect, which breach was neither willful nor intentional, the
Company's sole recourse shall be limited to terminating this Agreement,
whereupon the parties hereto shall have no further liabilities and obligations
hereunder, and this Agreement shall be of no further force and effect, except
for the obligations set forth in Sections 4.7 and 16.1.
(ii) In the event of a willful breach by Contributor of any
representation or warranty, or the Owners of any covenant or agreement in any
material respect, the Company shall be entitled to any and all of its rights and
remedies, at law or in equity, including without limitation, a termination of
this Agreement, in which event the provisions of Section 4.7 shall govern and
control, or an action seeking specific performance.
21.3 The acceptance of the Assignment of Contributor's Interest by
the Company shall be deemed a full performance and discharge of every agreement
and obligation of Contributor to be performed under this Agreement, except
those, if any, which are specifically stated in this Agreement to survive the
Closing or those which, by their terms, cannot be performed or complied with
until after the Closing.
21.4 The provisions of this Section 21 shall survive the Closing or
earlier termination of this Agreement.
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22. 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 the Company: c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
with two (2) separate copies
of the notice sent to the attention of:
Thomas A. Rizk, CEO
and
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: Andrew S. Levine, Esq.
(212) 326-0414 (tele.)
(212) 326-0806 (fax)
If to Contributor: Lawrence W. Feldman
2027 Paradise Drive
Tiburon, CA 94920
(415) 435-3131 (tele.)
(415) 435-1898 (fax)
with a copy to: Greene Radovsky Maloney & Share LLP
Four Embarcadero Center, 40th Floor
San Francisco, CA 94111
Attn: Joseph Radovsky, Esq.
(415) 981-1400 (tele.)
(415) 777-4961 (fax)
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and a copy to: Allen B. Cooper
1750 Montgomery Street
San Francisco, CA 94111
(415) 943-8511 (tele.)
(415) 954-8598 (fax)
If to Dworman ADCO Group
or Plenitude: 645 Fifth Avenue, 8th Floor
New York, New York 10022
Attn: Alvin Dworman
(212) 848-0219 (tele.)
(212) 355-5057 (fax)
with a copy to: ADCO Group
645 Fifth Avenue, 8th Floor
New York, New York 10022
Attn: Martin Kimelman, Esq.
(212) 848-0219 (tele.)
(212) 355-5057 (fax)
and a copy to: Mark D. Lubin
Stein & Lubin LLP
600 Montgomery Street, 14th Floor
San Francisco, CA 94111
(415) 981-0500 (tele.)
(415) 981-4343 (fax)
or to such other address as either party may from time to time designate by
written notice to the other. Notices given by (i) overnight delivery service as
aforesaid shall be deemed received and effective upon actual receipt provided a
delivery receipt is obtained 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. Eastern Standard time 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.
23. DEBT MAINTENANCE
23.1 Subject to (i) the Company's right to sell, transfer or dispose
of its interest in the Reconstituted Partnership, or the Reconstituted
Partnership's right to sell, transfer or dispose of the Property, in accordance
with the terms and conditions of Section 24, and (ii) Section 23.2 below, for a
period of six (6) years following the Closing (the "Restricted Period"), (A) the
Reconstituted Partnership shall maintain not less than $35,000,000.00 (the
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"Debt Amount") of nonrecourse mortgage debt (the "Contributor Debt") on the
Property and which debt is not guaranteed by any person, and (B) Contributor and
the Unit Holders shall be permitted to guarantee or indemnify (the "Initial
Indemnity") the Company or MCRC for up to $3,800,000.00 in the aggregate (the
"Initial Indemnity Amount") of the most risky portion ("Third Tier Portion") of
any available Partnership Recourse Debt (as hereinafter defined). For purposes
of this Section 23, "Partnership Recourse Debt" shall mean such debt that the
Company has incurred, and may hereafter incur, on a recourse basis, which may or
may not be secured in whole or in part by property owned directly or indirectly
by the Company and which may or may not be guaranteed by MCRC and/or any
subsidiary of the Company that owns or becomes the owner of property. Upon the
expiration of the Restricted Period, the Company is under no obligation to
permit Contributor and the Unit Holders to guarantee or indemnify the Initial
Indemnity Amount or the Contributor Debt. Upon the expiration of the Restricted
Period, (x) if the Company terminates the Initial Indemnity, and/or (y) in the
event that the Reconstituted Partnership (I) does not maintain any of the
Contributor Debt on the Property, or (II) in the event that the Reconstituted
Partnership maintains all or any portion of the Contributor Debt on the Property
(as the Reconstituted Partnership and/or the Company) may or may not do in their
sole discretion) and the amount of such Contributor Debt that is then allocated
to the Contributor and the Unit Holders under Section 752 of the Code and the
Treasury Regulations thereunder, as of the date hereof, is reduced so as to
result in the recognition of income or gain to the Contributor and the Unit
Holders (and provided further that the Contributor and the Unit Holders shall be
required to establish, annually, and to the reasonable satisfaction of the
Company, the amount of any such income or gain that would be so recognized as a
result of the foregoing), the Company shall, if and only if requested by the
Unit Holders, permit Contributor and/or the Unit Holders to guarantee or
indemnify the Company for the Third Tier Portion of any Partnership Recourse
Debt which is then available up to an amount (the "Contributor Debt Amount")
equal to the lesser of $21,500,000.00, or an amount necessary to keep
Contributor and/or the Unit Holders from recognizing any income or gain as a
result of a reduction in liabilities allocated to them under Section 752 of the
Code and the Treasury Regulations thereunder; provided, however, that, as noted
below, it is expressly understood and agreed that MCRC and/or the Company shall
be under no obligation (either express or implied) to have or maintain debt
outstanding for the Contributor and/or the Unit Holders to indemnify or
guarantee at any time after the Restricted Period. It is expressly understood
and agreed that MCRC and/or the Company has prior and present commitments to
permit other persons to guaranty or indemnify MCRC and/or the Company for the
least risky portion ("First Tier Portion") of the Partnership Recourse Debt in
the amount of, in the aggregate, up to $508,000,000.00. It is further expressly
understood and agreed that MCRC and/or the Company, in their sole discretion,
reserve the right, at any time in the future to make additional commitments, in
connection with the issuance of additional Units in exchange for other
properties to unrelated third parties in tax deferred transactions, to permit
persons to guaranty or indemnify MCRC and/or the Company for (i) the First Tier
Portion of Partnership Recourse Debt, pari passu with other persons then
guaranteeing or indemnifying the First Tier Portion of Partnership Recourse
Debt; provided, however, that if the persons being permitted by MCRC and/or the
Company to guaranty or indemnify for the First Tier Portion of Partnership
Recourse Debt would have also been permitted, pursuant to clause (iii) below, to
guaranty or indemnify MCRC and/or the Company for the Second Tier Portion (as
defined below) of the Partnership Recourse Debt, then such guaranty or indemnity
by such persons may
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or may not be pari passu (as MCRC and/or the Company shall determine in
their sole discretion) with other persons then guaranteeing or indemnifying the
First Tier Portion of Partnership Recourse Debt, (ii) the Third Tier Portion of
Partnership Recourse Debt, pari passu with other persons then guaranteeing or
indemnifying the Third Tier Portion of Partnership Recourse Debt (which includes
the Contributors and/or the Units Holders pursuant hereto with respect to the
Contributor Debt Amount) or (iii) with respect to significant transactions or
transactions involving more than one property, the portion of the Partnership
Recourse Debt which is more risky than the First Tier Portion of the Partnership
Recourse Debt but less risky than the Third Tier Portion ("Second Tier Portion")
of the Partnership Recourse Debt. In addition to the foregoing, the Company
reserves the right, at any time after the Restricted Period and in its sole
discretion, to refinance, payoff or paydown any of the Partnership Recourse Debt
or permit new partners of the Company to guarantee or indemnify MCRC and/or the
Company for a portion or portions of the Partnership Recourse Debt and to
designate the portion or portions of the Partnership Recourse Debt (i.e., First
Tier Portion, Second Tier Portion or Third Tier Portion) which will be
guaranteed or for which MCRC and/or the Company will be indemnified, as MCRC
and/or the Company shall determine in their sole discretion, thereby making no
debt available for Contributor and/or the Unit Holders to guarantee or
indemnify, or altering the priority or level of then-available Partnership
Recourse Debt, in terms of risk and amount, that Contributor and the Unit
Holders may guarantee or indemnify. Subject to and in accordance with this
Section 23.1, Contributor and the Unit Holders and Company agree to execute and
deliver duly acknowledged agreements in order for Contributor and the Unit
Holders to recognize basis for Federal income tax purposes.
23.2 In the event that the Contributor or any Unit Holder (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 MCRC or the Company in the amount described in Section 24.1 hereof (or
corresponding provisions of other agreements to which members of Contributor or
any Unit Holder 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 Treasury Regulations
Section 1.704-3(b) that reduces the amount of any Built-in-Gain (as defined in
Section 24.1 hereof), then the Initial Indemnity Amount or the Contributor Debt
Amount, as the case may be, shall be commensurately reduced.
23.3 In addition to the other rights of the Company as provided
herein, at the Company's election, the Reconstituted Partnership shall have the
right, from time to time during the Restricted Period, to refinance any mortgage
debt encumbering the Property. If such new mortgage debt provides for payments
of principal, then Contributor and the Unit Holders shall have the same rights
to guaranty or indemnify the Company for the amount of such principal payments
as are applicable to Contributor and/or the Unit Holders during the Restricted
Period, to the extent there is any Partnership Recourse Debt which both (i)
constitutes the Third Tier Portion of Partnership Recourse Debt, and (ii) at
that time, has not been committed to any limited partner of the Company. If such
new mortgage debt provides for payments of principal, then the Company shall
provide notice to Allen Cooper, at least twenty-five (25) days prior to the
first
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payment under such new mortgage debt, of the amortization schedule for such new
mortgage debt.
23.4 If, as and when the Reconstituted Partnership elects to
decrease the nonrecourse mortgage debt on the Property subsequent to the
Restricted Period to an amount below $35,000,000.00 (as adjusted by Section
23.2), the Company shall endeavor to give Allen Cooper (and no one else,
notwithstanding the notice provisions contained in Section 22) sixty (60) days
prior written notice of the intended reduction in debt; provided, however,
Contributor and the Unit Holders shall have no recourse, and the Company shall
have no liability whatsoever, in the event that the Company shall fail to give
such notice. The notice to Allen Cooper shall be sent to that address provided
for Allen Cooper in Section 22.
23.5 The provisions of this Section 23 shall survive the Closing.
24. SALE OF THE PROPERTY.
24.1 During the Restricted Period the Reconstituted Partnership may
not sell or dispose of the Real Property, and the Company, its designees,
subsidiaries or affiliates, may not sell or dispose of its interest in the
Reconstituted Partnership, at any time except (i) in an entirely tax-free
like-kind exchange which satisfies the requirements of Code Section 1031 and the
Treasury Regulations promulgated thereunder, (ii) if a sale or disposition of
the Real Property would not result in recognition of all or any part of the
Built-in Gain (as hereinafter defined) by Contributor or any Unit Holders, (iii)
in accordance with Section 24.2, or (iv) if the Company pays to Contributor an
amount which, after the payment of all federal, state and local taxes payable
with respect to such amount, would be equal to the federal, state, and local
income taxes payable by the Contributor resulting from the recognition of the
Built-in Gain triggered by such sale. After the Restricted Period, the
restrictions contemplated by this Section 24 shall terminate in their entirety.
For purposes of this Agreement, the term "Built-in Gain" for Contributor's
Interest shall mean the excess, if any, of $29,000,000.00 over the adjusted
basis for Federal income tax purposes on the Closing Date of Contributor's
Interest as set forth on Schedule 24.1.
24.2 Notwithstanding Section 24.1 above, during the Restricted
Period, the Reconstituted Partnership may dispose of the Real Property, or the
Company, its designees, subsidiaries or affiliates, may dispose of its interest
in the Reconstituted Partnership, at any time in connection with (a) the sale,
transfer or disposition of all or substantially all of the properties owned by
the Company, which in the Company's sole judgment, is determined to be in the
best interests of MCRC and its public stockholders, (b) a foreclosure or deed in
lieu of foreclosure, or (c) a government taking or condemnation of all or
substantially all of the Property.
24.3 After the expiration of the Restricted Period, the
Reconstituted Partnership may sell or dispose of the Real Property, and/or the
Company may sell, transfer or dispose of its interest in the Reconstituted
Partnership, at any time and in the manner that the Reconstituted Partnership
and/or the Company may so choose. Subsequent to the Restricted Period, if, as
and when the Company and/or the Reconstituted Partnership may elect to sell,
transfer or dispose of its interest in the Reconstituted Partnership or to sell,
transfer or dispose of the Property, as the
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case may be, the Company shall endeavor to give Contributor (and no one else,
notwithstanding the notice provisions contained in Section 22) sixty (60) days
prior written notice of the intended sale, transfer or disposition; provided,
however, Contributor and the Unit Holders shall have no recourse, and the
Company shall have no liability, whatsoever, in the event that the Company shall
fail to give such notice.
24.4 The provisions of this Section 24 shall survive the Closing.
25. TAX MATTERS
25.1 The Company shall use the traditional method without curative
allocations in the manner set forth in Treasury Regulations issued under Section
704(c) of the Code, as amended, with respect to the contribution of
Contributor's Interest and Contributor's Interest in the Real Property or in
connection with any re-evaluation of the same.
25.2 Using the exact method of accounting, G&G's taxable year shall
be treated as closed as of the Closing Date with respect to Contributor and the
Unit Holders, and allocations shall be made to Contributor and the Unit Holders
in accordance with Section 706 of the Code and the Treasury Regulations
thereunder (as shall be determined by the Company).
26. INTEREST PURCHASE OPTION
26.1 Commencing one year and a day after the Closing Date (the
"Holding Period") and ending six (6) months thereafter (the "Election Period"),
the Company has the sole and exclusive option to purchase the 1/10 (.1%) percent
interest ("Contributor's Withheld Interest") in G&G which Contributor is not
transferring pursuant to this Agreement. At the Closing, Contributor and the
Company shall enter into a letter agreement (the "Letter Agreement") setting
forth the number of Units due on account of Contributor's Withheld Interest (the
"Withheld Consideration"); the number of such Units issued to Contributor shall
be equal to (x) 1/10 (.1%) percent, multiplied by the difference between the
Property Value and the Mortgage Debt, divided by (y) the Current Market Value
Per Unit. In the event that the Company elects to exercise its purchase option,
the Company shall (i) deliver written notice to Contributor of its election
prior to the expiration of the Election Period, and (ii) in conjunction with
said notice, deliver Certificates representing the Withheld Consideration to the
Company's counsel to be held in escrow, and which is to be released according to
the provisions of Section 26.2. Notwithstanding the provisions of Section 26.2,
the Company's delivery of the notice and Certificates to the Company's counsel,
as set forth in (i) and (ii) above, shall immediately effectuate the assignment
of Contributor's Withheld Interest, and no further action need be taken by
Contributor, the Reconstituted Partnership or the Company to effectuate same.
26.2 In order to obtain the release of the Certificates representing
the Withheld Consideration from the Company's counsel, Contributor hereby agrees
to execute an assignment of Contributor's Withheld Interest in a form
substantially similar to the Assignment of Contributor's Interest. Upon receipt
of the assignment required in this Section 26.2, the
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Company's counsel shall immediately release the Certificates representing the
Withheld Consideration to Contributor.
26.3 The provisions of this Section 26 shall survive the Closing.
27. MISCELLANEOUS.
27.1 If any instrument is necessary in order to obviate a defect in
or objection or exception to title, the following shall apply: (a) 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, (b) any such instrument shall be deposited with the Title Company, and
(c) Contributor agrees to execute, acknowledge and deliver any such instrument
and to make any such deposit.
27.2 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 permitted 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.
27.3 This Agreement cannot be amended, waived or terminated orally,
but only by an agreement in writing signed by the party to be charged.
27.4 This Agreement shall be interpreted and governed by the laws of
the State of California and shall be binding upon the parties hereto and their
respective successors and assigns. The parties hereto hereby submit, and waive
any objections, to the jurisdiction of the courts of the State of New York and
of the courts of The United States of America situated in the State of New York.
27.5 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.
27.6 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.
27.7 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. 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
Contributor, the Company or the party whose counsel drafted this Agreement. The
provisions of this Section shall survive the Closing.
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27.8 This Agreement shall not be effective or binding until such
time as it has been executed and delivered by all parties hereto.
27.9 This Agreement may be executed by the parties hereto in
counterparts, all of which together shall constitute a single Agreement.
27.10 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.
27.11 In the event of any litigation or alternative dispute
resolution between the Company and Contributor 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 shall survive the Closing.
27.12 All references herein to the Owners shall apply to the Owners
both singularly and collectively, and all liability of the Owners shall be joint
and several.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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27.13 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
MACK-CALI REALTY, L.P., a Delaware limited
partnership
By: Mack-Cali Realty Corporation, its General Partner
By:
-------------------------------------
Name: Roger W. Thomas, Esq.
Title: Executive Vice President and General
Counsel
G&G MARTCO, a California general partnership
By:
-------------------------------------
Name: Alvin Dworman
Title: Partner
By:
-------------------------------------
Name: Lawrence W. Feldman
Title: Partner
By: PLENITUDE PARTNERS, L.P., a Delaware
limited partnership
By: Plenitude Corporation, its General
Partner
By:
-------------------------------------
Name: Alvin Dworman
Title: President
48
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THE LAWRENCE W. AND MARIE N. FELDMAN
TRUST, a California trust
By:
-------------------------------------
Name: Lawrence W. Feldman
Title: Trustee
By:
-------------------------------------
Name: Marie N. Feldman
Title: Trustee
----------------------------------------
LAWRENCE W. FELDMAN
----------------------------------------
ALVIN DWORMAN
PLENITUDE PARTNERS, L.P., a Delaware limited
partnership
By: Plenitude Corporation, its General Partner
By:
-------------------------------------
Name: Alvin Dworman
Title: President
49
MACK-CALI REALTY CORPORATION
UNDERWRITING AGREEMENT
May 27, 1998
To the Representatives named in Schedule 1 hereto of the
several Underwriters named in Schedule 2 hereto
Ladies and Gentlemen:
Mack-Cali Realty Corporation, a Maryland corporation qualified as a
real estate investment trust (the "Company"), hereby confirms its agreement with
the several underwriters named in Schedule 2 hereto (the "Underwriters"), for
whom you have been duly authorized to act as representatives (in such
capacities, the "Representatives"), as set forth below. If you are the only
Underwriter, all references herein to the Representatives and the Underwriters
shall be deemed to be to the Underwriter.
The Underwriter intends to deposit the Shares with the trustee of
PaineWebber Equity Trust REIT Series I (A Unit Investment Trust) (the "Trust"),
a registered unit investment trust under the Investment Company Act of 1940, as
amended, for which PaineWebber Incorporated acts as sponsor and depositor, in
exchange for units in the Trust.
1. Securities. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the several Underwriters certain
securities of the Company identified in Schedule 1 hereto (the "Securities").
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"). A registration
statement (the file number of which is set forth in Schedule 1 hereto) on such
Form with respect to the Securities, including a basic prospectus, has been
filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Act, and one or more amendments to such registration
statement
<PAGE>
may also have been so filed. Such registration statement, as so amended, has
been declared by the Commission to be effective under the Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. Such registration
statement, as amended at the date of this Agreement as specified in Schedule 1
hereto, meets the requirements set forth in Rule 415(a)(1)(x) under the Act and
complies in all other material respects with said Rule. The Company will next
file with the Commission either (A) if the Company relies on Rule 434 under the
Act, a Term Sheet (as hereinafter defined) relating to the Securities, that
shall identify the Preliminary Prospectus (as hereinafter defined) that it
supplements and, if required to be filed pursuant to Rules 434(c)(2) and 424(b),
an Integrated Prospectus (as hereinafter defined), in either case, containing
such information as is required or permitted by Rules 434, 430A, and 424(b)
under the Act or (B) if the Company does not rely on Rule 434 under the Act,
pursuant to Rule 424(b) under the Act a final prospectus supplement to the basic
prospectus included in such registration statement, as so amended, describing
the Securities and the offering thereof, in such form as has been provided to,
or discussed with, and approved by the Representatives as provided in section
4(a) of this Agreement. As used in this Agreement, the term "Registration
Statement" means such registration statement, as amended at the time when it was
declared effective, including (i) all financial schedules and exhibits thereto,
(ii) all documents incorporated by reference or deemed to be incorporated by
reference therein and (iii) any information omitted therefrom pursuant to Rule
430A under the Act and included in the Prospectus (as hereinafter defined) or,
if required to be filed pursuant to Rules 434(c)(2) and 424(b), in the
Integrated Prospectus; the term "Basic Prospectus" means the prospectus included
in the Registration Statement; the term "Preliminary Prospectus" means any
preliminary form of the Prospectus (as defined herein) specifically relating to
the Securities, in the form first filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 of the Rules and Regulations; the term
"Prospectus Supplement" means any prospectus supplement specifically relating to
the Securities, in the form first filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 under the Securities Act; the term "Prospectus"
means: (A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule 424(b)(7) under
the Act, together with the Preliminary Prospectus identified therein that such
Term Sheet supplements; (B) if the Company does not rely on Rule 434 under the
Act, the Preliminary Prospectus; or (C) if the Company does not rely on Rule 434
under the Act and if no prospectus is required to be filed pursuant to Rule 424
under the Act, the Basic Prospectus, including, in each case, the Prospectus
Supplement; "Basic Prospectus," "Prospectus," "Preliminary Prospectus" and
"Prospectus Supplement" shall include in each case the documents, if any, filed
by the Company with the Commission pursuant to the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by
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<PAGE>
reference therein; the term "Integrated Prospectus" means a prospectus first
filed with the Commission pursuant to Rules 434(c)(2) and 424(b) under the Act;
and the term "Term Sheet" means any abbreviated term sheet that satisfies the
requirements of Rule 434 under the Act. Any reference in this Agreement to an
"amendment" or "supplement" to any Preliminary Prospectus, the Prospectus, or
any Integrated Prospectus or an "amendment" to any registration statement
(including the Registration Statement) shall be deemed to include any document
incorporated by reference therein that is filed with the Commission under the
Exchange Act after the date of such Preliminary Prospectus, Prospectus,
Integrated Prospectus or registration statement, as the case may be. For
purposes of the preceding sentence, any reference to the "effective date" of an
amendment to a registration statement shall, if such amendment is effected by
means of the filing with the Commission under the Exchange Act of a document
incorporated by reference in such registration statement, be deemed to refer to
the date on which such document was so filed with the Commission; any reference
herein to the "date" of a Prospectus that includes a Term Sheet shall mean the
date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any Preliminary
Prospectus was filed with the Commission it (i) contained all statements
required to be stated therein in accordance with, and complied in all material
respects with the requirements of, the Act, the Exchange Act and the respective
rules and regulations of the Commission thereunder and (ii) did not include any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective, it (i) contained or will contain
all statements required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of, the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any Term Sheet that is
a part thereof or any Integrated Prospectus or any amendment or supplement to
the Prospectus is filed with the Commission pursuant to Rule 424(b), on the date
when the Prospectus is otherwise amended or supplemented and on the Closing
Date, each of the Prospectus and, if required to be filed pursuant to Rules
434(c)(2) and 424(b) under the Act, the Integrated Prospectus, as amended or
supplemented at any such time, (i) contained or will contain all statements
required to be stated therein in accordance with, and complied or will comply in
all material respects with the requirements of, the Act and the Exchange Act and
the respective rules and regulations of the Commission thereunder and (ii) did
not or will not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (b) do not apply to statements or
omissions made in any Preliminary Prospectus
3
<PAGE>
or any amendment or supplement thereto, the Registration Statement or any
amendment thereto, the Prospectus or, if required to be filed pursuant to Rules
434(c)(2) and 424(b) under the Act, the Integrated Prospectus or any amendment
or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(c) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Maryland and is duly qualified to transact business and is in good standing
under the laws of all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified does not amount to a material liability or
disability to the Company and its subsidiaries, taken as a whole.
(d) Each of the subsidiaries of the Company (the
"Subsidiaries") has been duly organized and is validly existing as a general or
limited partnership or corporation in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to transact business and
is in good standing under the laws of all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified does not amount
to a material liability or disability to the Company and its subsidiaries, taken
as a whole. The issued shares of capital stock of each of the Subsidiaries that
is a corporation are duly authorized, validly issued, fully paid and
nonassessable, and all of the partnership interests in each Subsidiary that is a
partnership are validly issued and fully paid. Except as described in the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus), all of such shares and interests in the Subsidiaries owned by the
Company are owned beneficially by the Company or another Subsidiary free and
clear of any security interests, mortgages, pledges, grants, liens,
encumbrances, equities or claims.
(e) There are no outstanding (A) securities or obligations of
the Company or any of the Subsidiaries convertible into or exchangeable for any
capital stock of the Company or any Subsidiary, (B) warrants, rights or options
to subscribe for or purchase from the Company or any Subsidiary any such capital
stock or any such convertible or exchangeable securities or obligations, or (C)
obligations of the Company or any such Subsidiary to issue any shares of capital
stock, any such convertible or exchangeable securities or obligations, or any
such warrants, rights or options, except as described in the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus).
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(f) The Company and each of the Subsidiaries has full power,
corporate or other, to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement, the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus); and the Company has full power, corporate or other, to enter into
this Agreement and any other agreement pursuant to which the Securities are
issued as specified in Schedule 1 to this Agreement (the "Securities Documents")
and to carry out all the terms and provisions hereof and thereof to be carried
out by it.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus and any Integrated Prospectus (or,
if the Prospectus and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus). All of the capital stock of the Company
has been duly authorized and the capital stock of the Company outstanding is
validly issued, fully paid and nonassessable.
(h) The Securities have been duly authorized, and, when such
securities are issued and delivered as contemplated by the terms of this
Agreement and the applicable Securities Document such securities will be validly
issued, fully paid and non-assessable.
(i) The execution and delivery of the Securities have been
duly authorized by all necessary corporate action, and, at the Closing Date the
Securities will have been duly executed and delivered by the Company, and if
applicable, assuming due authorization, execution and delivery of the Securities
by parties other than the Company, will be the legal, valid, binding and
enforceable obligations of the Company, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
relating to creditors' rights generally and to the application of equitable
principles in any proceeding, whether at law or in equity.
(j) The securities of the Company issuable in exchange for or
upon conversion of the Securities as specified in Schedule 1 to this Agreement
(the "Underlying Securities") have been duly authorized and reserved, and, when
such securities are issued and delivered as contemplated by the terms of the
applicable Securities Document, such securities will be validly issued, fully
paid and non-assessable.
(g) The execution and delivery of the Securities Documents has
been duly authorized by all necessary corporate action of the Company, and, at
the Closing Date such agreements will have been duly executed and delivered by
the Company, and assuming due authorization, execution and delivery of the
Securities Documents by parties other than the Company as specified in the
applicable Securities Documents, and, if required, such Securities
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<PAGE>
Documents have been filed with the Secretary of State of the State of Maryland
or any other applicable jurisdiction, and such agreements will constitute valid
and binding instruments of the Company enforceable against the Company in
accordance with their respective terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
relating to creditors' rights generally and to the application of equitable
principles in any proceeding, whether at law or in equity.
(k) No holders of outstanding shares of capital stock of the
Company are entitled as such to any preemptive or other rights to subscribe for
any of the Securities or Underlying Securities, and no holder of securities of
the Company or any Subsidiary has any right which has not been waived to require
the Company to register the offer or sale of any securities owned by such holder
under the Act in the public offering contemplated by this Agreement.
(l) The Securities and Underlying Securities conform to their
description contained in the Prospectus and any Integrated Prospectus (or, if
the Prospectus and any required Integrated Prospectus are not in existence, the
most recent Preliminary Prospectus).
(m) The combined financial statements and schedules of the
Company and the Cali Group (as defined in the Registration Statement) and the
consolidated financial statements and schedules of the Company and its
consolidated subsidiaries included in or incorporated by reference in the
Registration Statement, the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus) fairly present the combined financial position of
the Company and the Cali Group and fairly present the consolidated financial
position of the Company and its consolidated subsidiaries, as the case may be,
and the results of operations and changes in financial condition as of the dates
and periods therein specified. Such combined and consolidated financial
statements and schedules have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein).
(n) The selected financial data set forth under the caption
"Selected Financial Data" in the Prospectus and any Integrated Prospectus (or,
if the Prospectus and any required Integrated Prospectus are not in existence,
the most recent Preliminary Prospectus) fairly present, on the basis stated in
the Prospectus and any Integrated Prospectus (or such Preliminary Prospectus)
and such Annual Report, the information included therein. The pro forma
financial statements and other pro forma financial information included in or
incorporated therein in the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus) present fairly and comply in all material
respects with the applicable requirements of Rule 11-02 of Regulation S-X of the
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Commission and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of such statements and the assumptions
used in the preparation thereof are, in the opinion of the Company, reasonable.
(o) Price Waterhouse LLP, which has certified certain
financial statements of the Company and its consolidated subsidiaries and of the
Cali Group and delivered its reports with respect to the audited consolidated
financial statements and schedules, and any other accounting firm that has
certified financial statements and delivered its reports with respect thereto,
included or incorporated by reference in the Registration Statement, the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus), are independent public accountants as required by the Act, the
Exchange Act and the respective rules and regulations thereunder.
(p) The execution and delivery of this Agreement has been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company, and is the valid and binding agreement of the Company
enforceable against the Company in accordance with the terms hereof, subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws relating to creditors' rights generally and to
the application of equitable principles in any proceeding, whether at law or in
equity and except as rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or principles of public policy.
(q) No legal or governmental proceedings are pending to which
the Company or any of the Subsidiaries or to which the property of the Company
or any of the Subsidiaries is subject, that are required to be described in the
Registration Statement, the Prospectus or any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus) and are not described therein, and no such
proceedings have been threatened against the Company or any of the Subsidiaries;
and no contract or other document is required to be described in the
Registration Statement, the Prospectus or any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus) or to be filed as an exhibit to the Registration
Statement that is not described therein or filed as required.
(r) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement and the Securities
Documents, the compliance by the Company with the other provisions of this
Agreement, the Securities and the Securities Documents and the consummation of
the other transactions herein and therein contemplated do not (i) require the
consent, approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may be
required under state securities or
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<PAGE>
blue sky laws and, if the registration statement filed with respect to the
Securities (as amended) is not effective under the Act as of the time of
execution hereof, such as may be required (and shall be obtained as provided in
this Agreement) under the Act, or (ii) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of the properties or assets of the Company or any of the Subsidiaries
pursuant to any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any other of their respective
properties are bound, or the Articles of Incorporation, By-laws or other
organizational documents, as the case may be, of the Company or any of the
Subsidiaries, or any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator applicable to the
Company or any of the Subsidiaries or any of their properties.
(s) The Company has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(t) Subsequent to the respective dates as of which information
is given in the Registration Statement, the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus), (1) neither the Company
nor any of the Subsidiaries has incurred any material liability or obligation,
direct or contingent, or entered into any material transaction, which is not in
the ordinary course of business; (2) except for regular quarterly distribution
payments, the Company has not purchased any of its outstanding capital stock,
nor declared, paid or otherwise made any dividend or distribution of any kind on
its capital stock; (3) there has not been any material change in the capital
stock, short-term debt or long-term debt of the Company or the Subsidiaries; and
(4) there has been no material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries, taken as a whole, except in each case as described
in or contemplated by the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus).
(u) The Company or the Subsidiaries have good and indefeasible
title in fee simple to all of the Properties (as defined in the Prospectus) and
marketable title to all other property owned by each of them, in each case free
and clear of any security interest, lien,
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<PAGE>
mortgage, pledge, encumbrance, equity, claim and other defect, except liens
which do not materially and adversely affect the value of such property and will
not interfere with the use made or proposed to be made of such property by the
Company or such Subsidiary, and any and all real property and buildings held
under lease by the Company or any such Subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as are not material and
do not interfere with the use made or proposed to be made of such property and
buildings by the Company or such Subsidiary, in each case except as described in
the Prospectus and any Integrated Prospectus (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(v) No labor dispute with the employees of the Company or any
of the Subsidiaries exists or is threatened or imminent that could result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole, except as described in the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus).
(w) The Company and the Subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, trademarks, service marks,
trade names, licenses, copyrights and proprietary and other confidential
information currently employed by them in connection with their respective
businesses, and neither the Company nor any of the Subsidiaries has received any
notice of infringement of or conflict with asserted rights of any third party
with respect to the foregoing which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a material
adverse change in the condition (financial or otherwise), business prospects,
net worth or results of operations of the Company and the Subsidiaries, taken as
a whole, except as described in the Prospectus and any Integrated Prospectus
(or, if the Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus).
(x) The Company and each of the Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
will be engaged; neither the Company nor any of the Subsidiaries has been
refused any insurance coverage sought or applied for; and neither the Company
nor any of the Subsidiaries has any reason to believe that any of them will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have material adverse effect
on the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and the Subsidiaries, taken as a whole,
except as described in the Prospectus and any Integrated Prospectus (or, if the
Prospectus
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<PAGE>
and any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(y) None of the Subsidiaries is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock or other equity interest, from
repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary's property or assets to the
Company or any of the other Subsidiaries, except as described in the Prospectus
and any Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus).
(z) The Company and each of the Subsidiaries has complied with
all laws, regulations and orders applicable to it or its respective business and
properties except where the failure to so comply would not result in a material
adverse change in the condition (financial or otherwise), business prospects,
net worth or results of operations of the Company and the Subsidiaries, taken as
a whole; the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, municipal
or foreign regulatory authorities necessary to conduct their respective
businesses except where the failure to possess the same would not result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole; and neither the Company nor any of the
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a material adverse change in the condition (financial
or otherwise), business prospects, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole, except as described in the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(aa) The Company will conduct its operations in a manner that
will not subject it to registration as an investment company under the
Investment Company Act of 1940, as amended, and the transactions contemplated by
this Agreement will not cause the Company to become an investment company
subject to registration under such Act.
(ab) The Company and each of the Subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed or
have requested extensions thereof (except in any case in which the failure so to
file would not have a material adverse effect on the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole) and has paid all taxes required
to be paid
10
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by it and any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except for any such assessment,
fine or penalty that is currently being contested in good faith or as described
in the Prospectus and any Integrated Prospectus (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(ac) The Company is organized in conformity with the
requirements for qualification as a real estate investment trust (a "REIT")
under the Internal Revenue Code of 1986, as amended (the "Code"), and the
present and contemplated method of operation of the Company and the Subsidiaries
does and will enable the Company to meet the requirements for taxation as a REIT
under the Code.
(ad) Neither the Company nor any of the Subsidiaries is in
violation of any federal or state law or regulation relating to occupational
safety and health and the Company and the Subsidiaries have received all
permits, licenses or other approvals required of them under applicable federal
and state occupational safety and health and environmental laws and regulations
to conduct their respective businesses, and the Company and each of the
Subsidiaries is in compliance with all terms and conditions of any such permit,
license or approval, except any such violation of law or regulation, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals which would not,
singly or in the aggregate result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company and the Subsidiaries, taken as a whole, except as described in
the Prospectus and any Integrated Prospectus (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(ae) Except for the shares of capital stock of each of the
Subsidiaries owned by the Company or another Subsidiary, neither the Company nor
any of the Subsidiaries owns any shares of stock or any other equity securities
of any corporation or has any equity interest in any firm, partnership,
association or other entity, except as described in or contemplated by the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(af) The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded
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<PAGE>
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(ag) Neither the Company nor any of the Subsidiaries is in
violation of any term or provision of its Articles of Incorporation, By-laws,
partnership agreements or other organizational documents, as the case may be; no
default exists, and no event has occurred which, with notice or lapse of time or
both, would constitute a default, and the consummation of the transactions by
this Agreement and under the Securities Documents will not result in any default
in the due performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or instrument to
which the Company or any Subsidiary is a party or by which the Company, the
Subsidiaries or the Properties or any of their respective other properties is
bound or may be affected except such as would not result in any material adverse
effect in the condition (financial or otherwise), business prospects, net worth
or results of operations of the Company and the Subsidiaries, taken as a whole.
(ah) If required as set forth in Schedule 1 hereto, the
Securities and any Underlying Securities have been approved for listing on the
New York Stock Exchange, subject to official notice of issuance.
(ai) (A) Neither the Company nor any Subsidiary knows of any
violation of any municipal, state or federal law, rule or regulation (including
those pertaining to environmental matters) concerning the Properties or any part
thereof which would have a material adverse effect in the condition (financial
or otherwise), business prospects, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole; (B) each of the Properties
complies with all applicable zoning laws, ordinances, regulations and deed
restrictions or other covenants in all material respects and, if and to the
extent there is a failure to comply, such failure does not materially impair the
value of any of the Properties and will not result in a forfeiture or reversion
of title; (C) neither the Company nor any Subsidiary has received from any
governmental authority any written notice of any condemnation of or zoning
change affecting the Properties or any part thereof, and neither the Company nor
any Subsidiary knows of any such condemnation or zoning change which is
threatened and which if consummated would have a material adverse effect in the
condition (financial or otherwise), business prospects, net worth or results of
operations of the Company and the Subsidiaries, taken as a whole; (D) all liens,
charges, encumbrances, claims, or restrictions on or affecting the properties
and assets (including the Properties) of the Company or any of the Subsidiaries
that are required to be described in the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus) are disclosed therein; (E)
no lessee of any portion of any of the Properties is in default under any of the
leases governing such properties and there is no event which, but for the
passage of time or the giving of notice or
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<PAGE>
both would constitute a default under any of such leases, except such defaults
that would not have a material adverse effect in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole; and (F) no tenant under any
lease pursuant to which the Company or any of the Subsidiaries leases the
Properties has an option or right of first refusal to purchase the premises
leased thereunder or the building of which such premises are a part, except as
such options or rights of first refusal which, if exercised, would not have a
material adverse effect in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole, and except as provided by law.
(aj) Except as otherwise disclosed in the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus) or in
the Phase I Environmental Audits prepared by Environmental Waste Management
Associates, Inc. previously delivered to the Representatives (the "Audits"), (i)
neither the Company, any of the Subsidiaries nor, to the best knowledge of the
Company, any other owners of the property at any time or any other party has at
any time, handled, stored, treated, transported, manufactured, spilled, leaked,
or discharged, dumped, transferred or otherwise disposed of or dealt with,
Hazardous Materials (as hereinafter defined) on, to or from the Properties,
other than by any such action taken in compliance with all applicable
Environmental Statutes or by the Company, any of the Subsidiaries or any other
party in connection with the ordinary use of residential, retail or commercial
properties owned by the Company; (ii) the Company does not intend to use the
Properties or any subsequently acquired properties for the purpose of handling,
storing, treating, transporting, manufacturing, spilling, leaking, discharging,
dumping, transferring or otherwise disposing of or dealing with Hazardous
Materials other than by any such action taken in compliance with all applicable
Environmental Statues or by the Company, any of the Subsidiaries or any other
party in connection with the ordinary use of residential, retail or commercial
properties owned by the Company; (iii) neither the Company nor any of the
Subsidiaries knows of any seepage, leak, discharge, release, emission, spill, or
dumping of Hazardous Materials into waters on or adjacent to the Properties or
any other real property owned or occupied by any such party, or onto lands from
which Hazardous Materials might seep, flow or drain into such waters; (iv)
neither the Company nor any of the Subsidiaries has received any notice of, or
has any knowledge of any occurrence or circumstance which, with notice or
passage of time or both, would give rise to a claim under or pursuant to any
federal, state or local environmental statute or regulation or under common law,
pertaining to Hazardous Materials on or originating from any of the Properties
or any assets described in the Prospectus and any Integrated Prospectus (or, if
the Prospectus and any required Integrated Prospectus are not in existence, the
most recent Preliminary Prospectus) or any other real property owned or occupied
by any such party or arising out of the conduct of any such party, including
without limitation a claim under or pursuant to any Environmental Statute
(hereinafter
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<PAGE>
defined); (v) neither the Properties nor any other land owned by the Company or
any of the Subsidiaries is included or, to the best of the Company's knowledge,
proposed for inclusion on the National Priorities List issued pursuant to CERCLA
(as hereinafter defined) by the United States Environmental Protection Agency
(the "EPA") or, to the best of the Company's knowledge, proposed for inclusion
on any similar list or inventory issued pursuant to any other Environmental
Statute or issued by any other Governmental Authority (as hereinafter defined).
As used herein, "Hazardous Material" shall include, without
limitation any flammable explosives, radioactive materials, hazardous materials,
hazardous wastes, toxic substances, or related materials, asbestos or any
hazardous material as defined by any federal, state or local environmental law,
ordinance, rule or regulation including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. ss.ss. 9601-9675 ("CERCLA"), the Hazardous Materials Transportation Act,
as amended, 49 U.S.C. ss.ss. 1801-1819, the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. ss.ss. 6901-6992K, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. ss.ss. 11001-11050, the Toxic
Substances Control Act, 15 U.S.C. ss.ss. 2601-2671, the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. ss.ss. 136-136y, the Clean Air Act, 42
U.S.C. ss.ss. 7401-7642, the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. ss.ss. 1251-1387, the Safe Drinking Water Act, 42 U.S.C. ss.ss.
300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. ss.ss.
651-678, as any of the above statutes may be amended from time to time, and in
the regulations promulgated pursuant to each of the foregoing (individually, an
"Environmental Statute") or by any federal, state or local governmental
authority having or claiming jurisdiction over the properties and assets
described in the Prospectus (a "Governmental Authority").
(ak) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(al) The Company has not distributed and, prior to the later
of (i) the Closing Date and (ii) the completion of the distribution of the
Securities, will not distribute any material in connection with the offering and
sale of the Securities other than the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus or any Integrated Prospectus
or any amendment or supplement thereto, or other materials, if any, permitted by
the Act.
3. Purchase, Sale and Delivery of the Securities.
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(a) On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company, at the purchase price specified in Schedule 1 hereto,
the number of Securities set forth opposite the name of such Underwriter in
Schedule 2 hereto. One or more certificates in definitive form for the
Securities that the several Underwriters have agreed to purchase hereunder, and
in such denomination or denominations and registered in such name or names as
the Representatives request upon notice to the Company at least 48 hours prior
to the Closing Date, shall be delivered by or on behalf of the Company to the
Representatives for the respective accounts of the Underwriters, against
payment by or on behalf of the Underwriters of the purchase price therefor to
the Company in such funds as are specified in Schedule 1 hereto. Such delivery
of and payment for the Securities shall be made at the date, time and place
identified in Schedule 1 hereto, or at such other date, time or place as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 8 hereof, such date and time of delivery against
payment being herein referred to as the "Closing Date". The Company will make
such certificate or certificates for the Securities available for checking and
packaging by the Representatives at the offices in New York, New York of the
Company's transfer agent or registrar or warrant agent or of Prudential
Securities Incorporated at least 24 hours prior to the Closing Date.
4. Covenants of the Company. The Company covenants and agrees with
each of the Underwriters that:
(a) The Company will file the Prospectus or any Term Sheet
that constitutes a part thereof, any Integrated Prospectus or the Prospectus
Supplement, as the case may be, and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the Exchange Act and
the respective rules and regulations of the Commission thereunder to the extent
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and of the Prospectus and any Integrated
Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission the Prospectus, Term Sheet, any Integrated Prospectus or any
amendment or supplement thereto or any amendment to the Registration Statement
of which the Representatives shall not previously have been advised and
furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Representatives shall not have given their
consent. The Company will prepare and file with the Commission, in accordance
with the rules and regulations of the Commission, promptly upon request by the
Representatives or counsel for the Underwriters, any amendment to the
Registration Statement or amendment or
15
<PAGE>
supplement to the Prospectus and any Integrated Prospectus that may be necessary
or advisable in connection with the distribution of the Securities by the
several Underwriters, and will use its best efforts to cause any such amendment
to the Registration Statement to be declared effective by the Commission as
promptly as possible. The Company will advise the Representatives, promptly
after receiving notice thereof, of the time when any amendment to the
Registration Statement has been filed or declared effective or the Prospectus,
any Integrated Prospectus or any amendment or supplement thereto has been filed
and will provide evidence satisfactory to the Representatives of each such
filing or effectiveness.
(b) The Company will advise the Representatives, promptly
after receiving notice or obtaining knowledge thereof, of (i) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
directed at any document incorporated by reference in the Registration
Statement, the Prospectus or any Integrated Prospectus or any amendment or
supplement thereto or any order preventing or suspending the use of any
Preliminary Prospectus, the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto, (ii) the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, (iii) the institution,
threatening or contemplation of any proceeding for any such purpose or (iv) any
request made by the Commission for amending the Registration Statement, for
amending or supplementing any Preliminary Prospectus, the Prospectus or any
Integrated Prospectus or for additional information. The Company will use its
best efforts to prevent the issuance of any such stop order and, if any such
stop order is issued, to obtain the withdrawal thereof as promptly as possible.
(c) If required by applicable law, the Company will arrange
for the qualification of the Securities and any Underlying Securities for
offering and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and will continue such qualifications in
effect for as long as may be necessary to complete the distribution of the
Securities and any Underlying Securities; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to execute a general consent to service of process in any jurisdiction.
(d) If at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which the Prospectus or any Integrated Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the
Prospectus or any Integrated Prospectus to comply with the Act or Exchange Act
or the respective rules or regulations of the Commission thereunder, the Company
will promptly notify the Representatives thereof and,
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subject to Section 4(a) of this Agreement, will prepare and file with the
Commission, at the Company's expense, an amendment to the Registration Statement
or an amendment or supplement to the Prospectus and any Integrated Prospectus
that corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters, a conformed copy of the
registration statement originally filed with respect to the Securities and any
amendment thereto (in each case including exhibits thereto), (ii) to each other
Underwriter, a conformed copy of such registration statement and any amendment
thereto relating to the Securities (in each case without exhibits thereto) and
(iii) so long as a prospectus relating to the Securities is required to be
delivered under the Act, as many copies of each Preliminary Prospectus, the
Prospectus or any Integrated Prospectus or any amendment or supplement thereto
as the Representatives may reasonably request; without limiting the application
of clause (iii) of this sentence, the Company, not later than (A) 6:00 p.m., New
York city time, on the date of determination of the public offering price, if
such determination occurred at or prior to 10:00 AM, New York City time, on such
date or (B) 12:00 Noon, New York City time, on the business day following the
date of determination of the public offering price, if such determination
occurred after 10:00 AM, New York city time, on such date, will deliver to the
Representatives, without charge, as many copies of the Prospectus or any
Integrated Prospectus and any amendment or supplement thereto as the
Representatives may reasonably request for purposes of confirming orders that
are expected to settle on the Closing Date.
(f) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representatives a consolidated
earning statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of
the Securities as set forth under "Use of Proceeds" in the Prospectus and any
Integrated Prospectus.
(h) [Intentionally omitted].
(i) If required as set forth in Schedule 1 hereto, the Company
will obtain the agreements described in Section 6(g) hereof prior to the Closing
Date.
(j) The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any
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compensation for soliciting purchases of the Securities or (B) pay or agree to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
(k) If at any time during the 25-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus or any Integrated
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, forthwith prepare, consult with you
concerning the substance of, and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(l) If required as set forth in Schedule 1 hereto, the Company
will cause the Securities and any Underlying Securities to be duly authorized
for listing by the New York Stock Exchange.
(m) The Company will continue to use its best efforts to meet
the requirements to qualify as a REIT under the Code.
5. Expenses. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including all costs and expenses incident to (i)
the printing or other production of documents with respect to the transactions,
including any costs of printing the registration statement originally filed with
respect to the Securities and any amendment thereto, any Preliminary Prospectus,
the Prospectus and any Integrated Prospectus and any amendment or supplement
thereto, this Agreement, the Securities Documents and any blue sky memoranda,
(ii) all arrangements relating to the delivery to the Underwriters of copies of
the foregoing documents, (iii) the fees and disbursements of counsel,
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including the fees and expenses of the transfer
agent, exchange agent or registrar, (v) the qualification, if any, of the
Securities and any Underlying Securities under state securities and blue sky
laws and real estate syndication laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto and relating to
the preparation of a blue sky memoranda, (vi) the filing fees of the Commission
relating to the Securities, (vii) any listing of the Securities and Underlying
Securities on the New York Stock Exchange, (viii) any meetings with prospective
investors in the Securities arranged by the Company (other than as shall have
been specifically approved by the Representatives to be paid for by the
Underwriters) and (ix) advertising relating
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<PAGE>
to the offering of the Securities requested by the Company (other than as shall
have been specifically approved by the Representatives to be paid for by the
Underwriters). If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 of this Agreement is not satisfied, because this Agreement is
terminated pursuant to Section 10 of this Agreement or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder other
than by reason of a default by and of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including counsel fees and disbursements) that shall have been incurred by them
in connection with the proposed purchase and sale of the Securities. The Company
shall not in any event be liable to any of the Underwriters for the loss of
anticipated profits from the transactions covered by this Agreement.
6. Conditions of the Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Securities shall be subject, in the
Representatives' sole discretion, to the accuracy of the representations and
warranties of the Company contained herein as of the date of this Agreement as
specified in Schedule 1 hereto and as of the Closing Date, as if made on and as
of the Closing Date, to the accuracy of the statements of the Company's officers
made pursuant to the provisions hereof, to the performance by the Company of its
covenants and agreements hereunder and to the following additional conditions:
(a) The Prospectus, any Integrated Prospectus or the
Prospectus Supplement, as the case may be, and any amendment or supplement
thereto shall have been filed with the Commission in the manner and within the
time period required by Rules 434 and 424(b) under the Act; no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement, the Prospectus or any Integrated Prospectus or otherwise).
(b) The Representatives shall have received an opinion, dated
the Closing Date, from Pryor Cashman Sherman & Flynn LLP counsel for the
Company, to the effect that:
(i) the Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Maryland and is duly
19
<PAGE>
qualified to transact business and is in good standing under the laws of
all other jurisdictions where the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where
the failure to be so qualified does not amount to a material liability or
disability to the Company and the Subsidiaries, taken as a whole. Each of
the Subsidiaries has been duly organized and is validly existing as a
general or limited partnership or corporation in good standing under the
laws of the jurisdiction of its organization, and is duly qualified to
transact business and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to the Company and the Subsidiaries, taken as a whole;
(ii) the Company and each of the Subsidiaries have full
power, corporate or other, to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement, the Prospectus and any Integrated Prospectus and each of the
Company and the Subsidiaries have full power, corporate or other, to enter
into this Agreement and the Securities Documents and to carry out all the
terms and provisions hereof and thereof to be carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries that is a corporation are duly authorized, validly issued,
fully paid and nonassessable, and all of the partnership interests in each
Subsidiary that is a partnership are validly issued and fully paid. Except
as described in the Registration Statement, the Prospectus and any
Integrated Prospectus, all of such shares and interests owned by the
Company or another Subsidiary are owned beneficially by the Company or
such Subsidiary free and clear of any security interest, mortgage, pledge,
lien, encumbrance, equity or claim;
(iv) As of May 15, 1998, the Company had an authorized
capitalization consisting of (A) 5,000,000 preferred shares of beneficial
interest, of which 0 shares were issued and outstanding, and (B)
190,000,000 Common Shares, of which 56,981,742 shares were issued and
outstanding (excluding 18,173,403 Common Shares reserved for issuance (x)
upon the exercise of outstanding options and (y) upon the conversion of
13,433,572 outstanding units in the Operating Partnership. All of the
capital stock of the Company has been duly authorized and the capital
stock of the Company outstanding is validly issued, fully paid and
nonassessable;
(v) the Securities have been duly authorized, and when
executed and delivered against payment therefor in accordance with the
Underwriting Agreement, will be validly issued, fully paid and
non-assessable, and the execution and delivery of the
20
<PAGE>
Securities (other than any Contract Securities) have been duly authorized
by all necessary corporate action, and the Securities have been duly
executed and delivered by the Company, and assuming due authorization,
execution and delivery of the Securities by parties other than the
Company, are, and any Contract Securities, when executed and delivered in
the manner provided in the Securities Documents, will be, the legal,
valid, binding and enforceable obligations of the Company, subject to the
effect of bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws relating to creditors' rights generally
and to the application of equitable principles in any proceeding, whether
at law or in equity;
(vi) the Underlying Securities have been duly authorized
and reserved, and, when such securities are issued and delivered as
contemplated by the terms of the applicable Securities Document such
securities will be validly issued, fully paid and non-assessable;
(vii) the execution and delivery of the Securities
Documents has been duly authorized by all necessary corporate action of
the Company, and have been duly executed and delivered by the Company, and
assuming due authorization, execution and delivery of the Securities
Documents by parties other than the Company as specified in the applicable
Securities Documents, such agreements are valid and binding instruments of
the Company enforceable against the Company in accordance with their
respective terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization and similar laws
relating to creditors' rights generally and to the application of
equitable principles in any proceeding, whether at law or in equity;
(viii) no holders of outstanding shares of capital stock
of the Company are entitled as such to any preemptive or other rights to
subscribe for any of the Securities or Underlying Securities, and no
holder of securities of the Company or any Subsidiary has any right which
has not been waived to require the Company to register the offer or sale
of any securities owned by such holder under the Act in the public
offering contemplated by this Agreement;
(ix) the statements set forth under the heading
"Description of Common Stock", "Description of Preferred Stock" and
"Description of Warrants" in the Prospectus and any Integrated Prospectus
insofar as such statements purport to summarize certain provisions of the
Securities of the Company, provide a fair summary of such provisions; and
the statements set forth under the headings "Restrictions on Ownership of
Offered Securities" and "Certain United States Federal Income Tax
Considerations to the Company of its REIT Election" in the Prospectus and
"Risk Factors", "Certain United
21
<PAGE>
States Federal Income Tax Considerations to Holders of Common Stock" and
"Underwriting", in the Prospectus Supplement, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, provide a fair summary of such legal matters,
documents and proceedings;
(x) the execution and delivery of this Agreement has
been duly authorized by all necessary corporate action of the Company and
this Agreement has been duly executed and delivered by the Company, and
are the valid and binding agreements of the Company, enforceable against
the Company in accordance with their respective terms, subject to the
effect of bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws relating to creditors' rights generally
and to the application of equitable principles in any proceeding, whether
at law or in equity and except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or principles
of public policy;
(xi) (A) no legal or governmental proceedings are
pending to which the Company, any of the Subsidiaries, or any of their
respective directors or officers in their capacity as such, is a party or
to which the Properties or any other property of the Company or any of the
Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein,
and, to the best knowledge of such counsel, no such proceedings have been
threatened against the Company or any of the Subsidiaries or with respect
to the Properties or any of their respective other properties and (B) no
contract or other document is required to be described in the Registration
Statement, the Prospectus or any Integrated Prospectus or to be filed as
an exhibit to the Registration Statement that is not described therein or
filed as required;
(xii) the issuance, offering and sale of the Securities
to the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement, any
Securities Documents and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority,
except such as have been obtained and such as may be required under state
securities or blue sky laws (as to which such counsel need not opine) or
(B) conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
Properties or any other properties or assets of the Company or any of the
Subsidiaries pursuant to any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the
22
<PAGE>
Company or any of its Subsidiaries or the Properties or any other of their
respective properties are bound, or the Articles of Incorporation, By-laws
or other organizational documents, as the case may be, of the Company or
any of the Subsidiaries, or any statute or any judgment, decree, order,
rule or regulation of any court or other governmental authority or (to the
best knowledge of such counsel) any arbitrator applicable to the Company
or any of the Subsidiaries or any of the Properties;
(xiii) none of the Subsidiaries is currently
contractually prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such
subsidiary's capital stock or other equity interests, from repaying to the
Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or
any of the other Subsidiaries, except as described in the Prospectus and
any Integrated Prospectus;
(xiv) to the best knowledge of such counsel, the Company
and the Subsidiaries possess all certificates, authorizations, licenses
and permits issued by the appropriate federal, state, municipal or foreign
regulatory authorities necessary to conduct their respective businesses
except for such certificates, authorizations, licenses and permits the
failure of which to possess would not be expected to result in a material
adverse change in the condition (financial or otherwise), business,
prospects, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole, and neither the Company nor any of the
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization, license
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material
adverse change in the condition (financial or otherwise), business,
prospects, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole, except as described in the Prospectus and
any Integrated Prospectus;
(xv) the Company is not subject to registration as an
investment company under the Investment Company Act of 1940, as amended,
and the transactions contemplated by this Agreement will not cause the
Company to become an investment company subject to registration under such
Act;
(xvi) neither the Company nor any of the Subsidiaries is
in violation of any term or provision of its articles of incorporation,
bylaws, partnership agreements or other organizational documents, as the
case may be; no default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default, and the
issuance, offering and sale of the Securities to the Underwriters by the
Company pursuant
23
<PAGE>
to this Agreement and the Securities Documents the compliance by the
Company with the other provisions of this Agreement, the Securities and
the Securities Documents and the consummation of the other transactions
herein and therein contemplated will not result in any default, in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage or deed of trust, or any material lease or other
agreement or instrument known to such counsel after due inquiry to which
the Company or any of the Subsidiaries is a party or by which the Company,
any of the Subsidiaries, any of the Properties or any of their respective
other properties is bound or may be affected except such as would not
result in any material adverse effect in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries, taken as a whole;
(xvii) as set forth in Schedule 1 hereto, the Securities
and any Underlying Securities have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance;
(xviii) the Registration Statement is effective under
the Act; the Prospectus or any Term Sheet that constitutes a part thereof
and any Integrated Prospectus or the Prospectus Supplement, as the case
may be, has been filed with the Commission in the manner and within the
time period required by Rules 434 and 424(b); and no stop order suspending
the effectiveness of the Registration Statement or any post-effective
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement, the Prospectus, any Integrated
Prospectus or any amendment or supplement thereto has been issued, and no
proceedings for that purpose have been instituted or, to the best
knowledge of such counsel, threatened by the Commission; and
(xix) the Registration Statement originally filed with
respect to the Securities and each amendment thereto, the Prospectus and
any Integrated Prospectus (in each case, including the documents
incorporated by reference therein but not including the financial
statements and other financial and statistical data contained therein, as
to which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and the
Exchange Act and the respective rules and regulations of the Commission
thereunder.
Such counsel shall also state that they have no reason to believe
that the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus or any Integrated Prospectus, as of the date of the
Prospectus Supplement or any required Integrated Prospectus and the date of such
24
<PAGE>
opinion, included or includes any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the States of New York, New
Jersey and Delaware or the United States, to the extent satisfactory in form and
scope to counsel for the Underwriters, upon the opinion of local counsel. The
foregoing opinion shall also state that the Underwriters are justified in
relying upon such opinion of local counsel, and copies of such opinion shall be
delivered to the Representatives and counsel for the Underwriters.
References to the Registration Statement, the Prospectus and any
Integrated Prospectus in this paragraph (b) shall include any amendment or
supplement thereto at the date of such opinion.
(c) The Representatives shall have received an opinion, dated
the Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Underwriters, with respect to the issuance and sale of the Securities, the
Registration Statement, the Prospectus, and any Integrated Prospectus and such
other related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(d) The Representatives shall have received from Price
Waterhouse LLP and each other accounting firm that has certified financial
statements, and delivered its report with respect thereto, included or
incorporated by reference in the Registration Statement, the Prospectus and any
Integrated Prospectus, a letter or letters dated, respectively, the date of this
Agreement as specified in Schedule 1 hereto and the Closing Date, in form and
substance satisfactory to the Representatives, to the effect that:
(i) they are independent accountants with respect to the
Company and its subsidiaries within the meaning of the Act, the Exchange
Act and the applicable published rules and regulations thereunder;
(ii) in their opinion, the financial statements audited
by them and incorporated by reference in the Registration Statement, the
Prospectus and any Integrated Prospectus comply as to form in all material
respects with the applicable accounting
25
<PAGE>
requirements of the Act, the Exchange Act and the related published rules
and regulations thereunder;
(iii) a reading of the minute books of the shareholders,
the board of directors and any committees thereof of the Company and each
of its consolidated subsidiaries, and inquiries of certain officials of
the Company and its consolidated subsidiaries who have responsibility for
financial and accounting matters, nothing came to their attention that
caused them to believe that:
(A) (i) any unaudited consolidated condensed financial
statements of the Company and its consolidated subsidiaries
included in the Registration Statement, the Prospectus and
any Integrated Prospectus do not comply as to form in all
material respects with the applicable accounting require ments
of the Act, the Exchange Act and the related published rules
and regulations thereunder, or (ii) any material modification
should be made to the unaudited consolidated condensed
financial statements for them to be in conformity with
generally accepted accounting principles;
(B) at a specific date not more than five business days
prior to the date of such letter, there were any changes in
the common stock or increase in mortgages and loans payable of
the Company and its consolidated subsidiaries, in each case
compared with amounts shown on the most recent consolidated
balance sheet included in the Registration Statement, the
Prospectus and any Integrated Prospectus, except for such
changes set forth in such letter;
(iv) they have carried out certain specified procedures,
not constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general accounting
records of the Company and its consolidated subsidiaries and are included
in the Registration Statement, the Prospectus and any Integrated
Prospectus and in Exhibit 12 to the Registration Statement, including the
information included or incorporated in the Company's most recent Annual
Report on Form 10-K under the captions "Business" (Item 1), "Selected
Financial Data" (Item 6) and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" (Item 7) and the
information included or incorporated in the Company's Quarterly Reports on
Form 10-Q under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations,"and have compared such
amounts, percentages and financial information with such records and with
information
26
<PAGE>
derived from such records and have found them to be in agreement,
excluding any questions of legal interpretation; and
(v) on the basis of a reading of any unaudited pro forma
consolidated condensed financial statements included in the Registration
Statement, the Prospectus and any Integrated Prospectus, carrying out
certain specified procedures that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph (v),
inquiries of certain officials of the Company, its consolidated
subsidiaries and any acquired company who have responsibility for
financial and accounting matters and proving the arithmetic accuracy of
the application of the pro forma adjustments to the historical amounts in
the unaudited pro forma consolidated condensed financial statements,
nothing came to their attention that caused them to believe that the
unaudited pro forma consolidated condensed financial statements do not
comply in form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of such statements.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied
by a written explanation of the Company as to the significance thereof,
unless the Representatives deem such explanation unnecessary, and (B) such
changes, decreases or increases do not, in the sole judgment of the
Representatives, make it impractical or inadvisable to proceed with the
purchase and delivery of the Securities as contemplated by the
Registration Statement.
References to the Registration Statement, the Prospectus and any
Integrated Prospectus in this paragraph (d) with respect to either letter
referred to above shall include any amendment or supplement thereto at the
date of such letter.
(e) The Representatives shall have received a certificate,
dated the Closing Date, of the chief executive officer and the chief financial
or accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the Closing
Date; the Registration Statement, as amended as of the Closing Date, does
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading, and
the Prospectus or any Integrated Prospectus, as amended or supplemented as
of the Closing Date, does not include any untrue statement of a material
27
<PAGE>
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and the Company has performed all covenants and
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference in the
Registration Statement, the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto has been issued, and no proceedings for
that purpose have been instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement, the Prospectus and any
Integrated Prospectus, neither the Company nor any of its subsidiaries has
sustained any material loss or interference with their respective
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not been any
material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or otherwise),
management, business prospects, net worth or results of operations of the
Company or any of its subsidiaries, except in each case as described in or
contemplated by the Prospectus or any Integrated Prospectus (exclusive of
any amendment or supplement thereto).
(f) On or before the Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(g) [Intentionally omitted].
(h) If applicable, prior to the commencement of the offering
of the Securities, the Securities and any Underlying Securities shall have been
approved for listing on the New York Stock Exchange, subject to official notice
of issuance.
(i) No stop order suspending the effectiveness of the
PaineWebber Equity Trust REIT Series I Unit Investment Trust registration
statement (the file number of which is set forth in Schedule 1 hereto) (the "UIT
Registration Statement") or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the UIT Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been
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instituted or threatened or, to the knowledge of the Representatives, shall be
contemplated by the Commission.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold the Underwriter harmless, its directors, officers, employees
and agents and each person, if any, who controls it within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and against any and
all losses, claims, liabilities, expenses and damages (including, but not
limited to, any and all investigative, legal and other expenses reasonably
incurred in connection with, and any and all amounts paid in settlement of, any
action, suit or proceeding between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third party, or
otherwise, or any claim asserted), as and when incurred to which the
Underwriter, or any such person, may become subject under the Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or in any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Prospectus, or
in any application or other document executed by or on behalf of the Company or
based on written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the securities or blue sky
laws thereof or filed with the Commission, (ii) the omission or alleged omission
to state in such document a material fact required to be stated in it or
necessary to make the statements in it, in the light of the circumstances under
which they were made, not misleading or (iii) any act or failure to act or any
alleged act or failure to act by the Underwriter in connection with, or relating
in any manner to, the Shares or the offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable under this clause (iii) to the
extent it is finally judicially determined by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by the
Underwriter through their gross negligence or willful misconduct); provided that
the Company will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Shares in the public offering to
any
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<PAGE>
person and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to the Underwriter furnished in writing to the Company by the
Underwriter expressly for inclusion in the Registration Statement or the
Prospectus. This indemnity agreement will be in addition to any liability that
the Company might otherwise have.
(b) The Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signed the Registration Statement to
the same extent as the foregoing indemnity from the Company to the Underwriter,
but only insofar as losses, claims, liabilities, expenses or damages (or actions
in respect thereof) arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Underwriter furnished in writing to
the Company by the Underwriter expressly for use in the Registration Statement
or the Prospectus. This indemnity will be in addition to any liability that the
Underwriter might otherwise have; provided, however, that in no case shall the
Underwriter be liable or responsible for any amount in excess of the
underwriting discounts and commissions received by the Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section 7 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 7, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 7 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that it
elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel reasonably satisfactory to the indemnified
party, and after notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will not be liable to
the indemnified party for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii)
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<PAGE>
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(iii) a conflict or potential conflict exists (based on advice of counsel of the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate counsel (in addition to local counsel) at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld); provided, however, no indemnifying party shall, without the prior
written consent of each indemnified party, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated by this Section 7 (whether or
not any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising or that may arise out of such claim, action or
proceeding. Notwithstanding any other provision of this Section 7(c), if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Underwriter, the
Company and the Underwriter will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contributions received by the Company from person other than the
Underwriter, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration
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Statement and directors of the Company, who also may be liable for contribution)
to which the Company and the Underwriter may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriter on the other. The relative benefits received by
the Company on the one hand and the Underwriter on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriter, in each case as set forth
in the table on the cover page of the Prospectus Supplement. If, but only if,
the allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Underwriter, on the other, with respect to the statement or omissions
which resulted in such loss, claims, liability, expense or damage, or action or
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company or the Underwriter, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriter agree that it would not
be just and equitable if contributions pursuant to this Section 7(d) were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to above in
this Section 7(d) shall be deemed to include, for purpose of this Section 7(d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), the Underwriter shall not
be required to contribute any amount in excess of the underwriting discounts and
commissions received by the Underwriter and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(d), any person who controls a
party to this Underwriting Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(d). Except for a settlement entered
into pursuant to the last sentence of
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Section 7(c) hereof, no party will be liable for contribution with respect to
any action or claim settled without its written consent (which consent will not
be unreasonably withheld).
(e) The indemnity and contribution agreements contained in
this Section 7 and the representations and warranties of the Company contained
in this Underwriting Agreement shall remain operative and in full force and
effect regardless of (i) any investigation made by or on behalf of the
Underwriter, (ii) acceptance of the Shares and payment therefor or (iii) any
termination of this Underwriting Agreement.
8. [Intentionally omitted].
9. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 7 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 5 and 7 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
10. Termination. (a) This Agreement may be terminated with respect
to the Securities in the sole discretion of the Representatives by notice to the
Company given prior to the Closing Date in the event that the Company shall have
failed, refused or been unable to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date
(i) the Company or any of the Subsidiaries shall have,
in the sole judgment of the Representatives, sustained any material loss
or interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or any
development involving a prospective material adverse change (including
without limitation a change in management or control of the Company, which
includes the termination of the employment of Thomas A. Rizk), in the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and the Subsidiaries, except in each
case as described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto);
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(ii) the Company shall have failed, refused or been
unable, at or prior to the Closing Date, to perform any agreement on its
part to be performed hereunder;
(iii) any condition of the Underwriter's obligations
specified in "Conditions of the Underwriters' Obligations" hereof is not
fulfilled when due;
(iv) trading in the Common Stock shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been
suspended or minimum or maximum prices for the Common Stock shall have
been established on such exchange;
(v) there shall have been any downgrading in the rating
of any debt securities or preferred stock of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that
any such organization has under surveillance or review its rating of any
debt securities or preferred stock of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating);
(vi) a banking moratorium shall have been declared by
New York or United States authorities; or
(vii) there shall have been (A) an outbreak or
escalation of hostilities between the United States and any foreign power,
(B) an outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or inadvisable
to (x) commence or continue with the offering of the units of the Trust to
the Public, or (y) enforce contracts for the sale of the Units of the
Trust.
(b) Termination of this Agreement pursuant to this Section 10
shall be without liability of any party to any other party except as provided in
Section 9 hereof. If the Underwriter elects to terminate this Agreement as
provided in this Section, the Company shall be notified promptly by the
Underwriter by telephone, telex or telecopy and confirmed by letter.
11. Information Supplied by Underwriters. The statements set forth
in the last paragraph on the front cover page of the Prospectus Supplement and
under the heading
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"Underwriting" in the Prospectus Supplement (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(b) and 7(b) hereof. The Underwriters confirm that such statements (to
such extent) are correct.
12. Notices. All communications hereunder shall be in writing and,
if sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to PaineWebber Incorporated at
1285 Avenue of the Americas, New York, New York 10019, Attention: Corporate
Finance Department; and if sent to the Company, shall be delivered or sent by
mail, telex or facsimile transmission and confirmed in writing to the Company at
11 Commerce Drive, Cranford, New Jersey, 07016, Attention: Thomas A. Rizk.
13. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 7 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 7 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement as amended at
the date of this Agreement as specified in Schedule 1 hereto and any person or
persons who control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Securities from any Underwriter
shall be deemed a successor because of such purchase.
14. Applicable Law. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and each
of the several Underwriters.
Very truly yours,
MACK-CALI REALTY CORPORATION
By: /s/ Roger W. Thomas
------------------------------------------
Name: Roger W. Thomas
Title: Executive Vice President & General Counsel
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PAINEWEBBER INCORPORATED
By: /s/ David Jarvis
--------------------------
Authorized Signatory
<PAGE>
SCHEDULE 1
DESCRIPTION OF SECURITIES; TERMS OF OFFERING
1. Registration Statement:
File No. 333-19101
2. Date of Underwriting Agreement:
May 27, 1998
3. Underwriters:
PaineWebber Incorporated
4. Title of Securities:
Common Stock, par value $.01 per share
5. Aggregate Number of Securities:
Common Stock, par value $.01 per share: 984,615 shares
6. Price to Public:
Common Stock, par value $.01 per share: $ 36.5625 per share
7. Purchase Price by Underwriters:
Common Stock, par value $.01 per share: $ 34.7344 per share
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8. Specified Funds for Payment of Purchase Price:
Wire Transfer of Same Day Funds
9. Terms of Securities:
Preferred Stock: N/A
Warrants: N/A
Other Provisions: N/A
10. Lock-up Requirements:
None
11. Delivery of Securities:
PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York
on or about May 29, 1998
12. Pre-Closing Location:
Pryor Cashman Sherman & Flynn LLP, 410 Park Avenue, New York, New York on
May 28, 1998
13. Closing Location:
Pryor Cashman Sherman & Flynn LLP, 410 Park Avenue, New York, New York on
May 29, 1998
15. Stock Exchange Listing:
The Securities shall be approved for listing on the New York Stock
Exchange, subject to official notice of issuance, at or prior to the date
hereof.
16. UIT Registration Statement:
File No. 333-38255
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17. Miscellaneous:
The Company is advised by you that the Underwriter proposes to
deposit the Shares with the trustee of the Trust, a registered unit investment
trust under the Investment Company Act of 1940, as amended, for which
PaineWebber Incorporated acts as sponsor and depositor, in exchange for units in
the Trust as soon after the execution and delivery hereof as in the judgement of
the Underwriter is advisable (and, if necessary, any post-effective amendment to
the Registration Statement).
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SCHEDULE 2
UNDERWRITERS
Number of
Shares to
Underwriter be Purchased
- ----------- ------------
PaineWebber Incorporated
984,615
-------
Total 984,615
=======
4
