<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from. . . .to.
Commission file number 1-13274
Mack-Cali Realty Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 22-3305147
- ------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016-3501
- -------------------------------------------------------------------------------
(Address of principal executive office)
(Zip Code)
(908) 272-8000
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or such shorter period that the
Registrant was required to file such report) YES X NO and (2) has been subject
to such filing requirements for the past ninety (90) days YES X NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of July 31, 1998, there were 57,974,947 shares of $0.01 par value common
stock outstanding.
Page 1 of 34
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MACK-CALI REALTY CORPORATION
Form 10-Q
INDEX
<TABLE>
<CAPTION>
Part I Financial Information Page
<S> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1998
and December 31, 1997 ..................................................... 4
Consolidated Statements of Operations for the three and six month
periods ended June 30, 1998 and 1997 ...................................... 5
Consolidated Statement of Changes in Stockholders' Equity for the
six months ended June 30, 1998 ............................................ 6
Consolidated Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 .............................................. 7
Notes to Consolidated Financial Statements .................................... 8 - 24
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................................. 25 - 30
Item 3. Quantitative and Qualitative Disclosures about Market Risk .................... 30
Part II Other Information and Signatures
Item 1. Legal Proceedings ............................................................. 31
Item 2. Changes in Securities and Use of Proceeds...................................... 31
Item 3. Defaults Upon Senior Securities................................................ 31
Item 4. Submission of Matters to a Vote of Security Holders............................ 31
Item 5. Other Information ............................................................. 32
Item 6. Exhibits .............................................................. 33
Signatures .............................................................. 34
</TABLE>
Page 2 of 34
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MACK-CALI REALTY CORPORATION
Part I - Financial Information
Item I: Financial Statements
The accompanying unaudited consolidated balance sheets,
statements of operations, of changes in stockholders' equity,
and of cash flows and related notes, have been prepared in
accordance with generally accepted accounting principles
("GAAP") for interim financial information and in conjunction
with the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, they do not include all of
the disclosures required by GAAP for complete financial
statements. The financial statements reflect all adjustments
consisting only of normal, recurring adjustments, which are,
in the opinion of management, necessary for a fair
presentation for the interim periods.
The aforementioned financial statements should be read in
conjunction with the notes to the aforementioned financial
statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations and the
financial statements and notes thereto included in the
Company's Annual Report on Form 10-K and Form 10-K/A for the
fiscal year ended December 31, 1997.
The results of operations for the three and six month periods
ended June 30, 1998 are not necessarily indicative of the
results to be expected for the entire fiscal year or any other
period.
Page 3 of 34
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1998 1997
- ------ ------------- -------------
<S> <C> <C>
Rental property
Land $ 494,161 $ 374,242
Buildings and improvements 2,788,978 2,206,462
Tenant improvements 55,753 44,596
Furniture, fixtures and equipment 4,987 4,316
------------- -------------
3,343,879 2,629,616
Less - accumulated depreciation and amortization (136,568) (103,133)
------------- -------------
Total rental property 3,207,311 2,526,483
Cash and cash equivalents 16,595 2,704
Investments in partially-owned entities 46,460 --
Unbilled rents receivable 33,777 27,438
Deferred charges and other assets, net 30,322 18,989
Restricted cash 5,483 6,844
Accounts receivable, net of allowance for doubtful accounts
of $547 and $327 5,529 3,736
Mortgage note receivable 7,250 7,250
------------- -------------
Total assets $ 3,352,727 $ 2,593,444
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages and loans payable $ 1,350,996 $ 972,650
Dividends and distributions payable 36,532 28,089
Accounts payable and accrued expenses 31,502 31,136
Rents received in advance and security deposits 29,820 21,395
Accrued interest payable 2,013 3,489
------------- -------------
Total liabilities 1,450,863 1,056,759
------------- -------------
Minority interest of unitholders in Operating Partnership 456,242 379,245
------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, 5,000,000 shares authorized, none issued -- --
Common stock, $0.01 par value, 190,000,000 shares authorized,
57,971,447 and 49,856,289 shares outstanding 580 499
Additional paid-in capital 1,535,374 1,244,883
Dividends in excess of net earnings (90,332) (87,942)
------------- -------------
Total stockholders' equity 1,445,622 1,157,440
------------- -------------
Total liabilities and stockholders' equity $ 3,352,727 $ 2,593,444
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4 of 34
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
REVENUES 1998 1997 1998 1997
- -------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Base rents $ 105,861 $ 50,389 $ 198,777 $ 93,180
Escalations and recoveries from tenants 12,358 7,667 22,715 14,279
Parking and other 2,906 2,054 4,913 3,598
Interest income 916 432 1,459 1,640
--------- -------- ---------- ---------
Total revenues 122,041 60,542 227,864 112,697
--------- -------- ---------- ---------
EXPENSES
Real estate taxes 11,854 6,496 21,926 11,929
Utilities 9,115 4,215 17,417 7,940
Operating services 15,629 7,357 28,321 13,773
General and administrative 6,394 3,754 12,591 6,927
Depreciation and amortization 19,093 8,799 35,324 16,292
Interest expense 21,786 9,884 40,265 17,704
--------- -------- ---------- ---------
Total expenses 83,871 40,505 155,844 74,565
--------- -------- ---------- ---------
Income before minority interest
and extraordinary item 38,170 20,037 72,020 38,132
Minority interest 7,782 2,012 15,089 3,648
--------- -------- ---------- ---------
Income before extraordinary item 30,388 18,025 56,931 34,484
Extraordinary item - loss on early retirement of debt
(net of minority interest's share of $297 in 1998) 2,373 -- 2,373 --
--------- -------- ---------- ---------
Net income $ 28,015 $ 18,025 $ 54,558 $ 34,484
--------- -------- ---------- ---------
--------- -------- ---------- ---------
Net income per share - Basic:
Income before extraordinary item $ 0.53 $ 0.49 $ 1.05 $ 0.95
Extraordinary item - loss on early
retirement of debt (0.04) -- (0.04) --
--------- -------- ---------- ---------
Net income $ 0.49 $ 0.49 $ 1.01 $ 0.95
--------- -------- ---------- ---------
--------- -------- ---------- ---------
Net income per share - Diluted:
Income before extraordinary item $ 0.53 $ 0.49 $ 1.04 $ 0.93
Extraordinary item - loss on early
retirement of debt (0.04) -- (0.04) --
--------- -------- ---------- ---------
Net income $ 0.49 $ 0.49 $ 1.00 $ 0.93
--------- -------- ---------- ---------
--------- -------- ---------- ---------
Dividends declared per common share $ 0.50 $ 0.45 $ 1.00 $ 0.90
--------- -------- ---------- ---------
--------- -------- ---------- ---------
Weighted average shares outstanding - basic 57,019 36,489 54,207 36,475
--------- -------- ---------- ---------
Weighted average shares outstanding - diluted 64,626 41,213 61,671 41,016
--------- -------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 5 of 34
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Retained
Earnings
Additional (Dividends in Total
Common Stock Paid-In Excess of Stockholders'
Shares Par Value Capital Net Earnings) Equity
------------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 49,856 $499 $1,244,883 $(87,942) $1,157,440
Net income -- -- -- 54,558 54,558
Dividends -- -- -- (56,948) (56,948)
Net proceeds from common stock offerings 7,835 78 284,375 -- 284,453
Conversion of common units to shares of
common stock 22 -- 848 -- 848
Proceeds from stock options exercised 258 3 5,268 -- 5,271
------ ---- ---------- -------- ----------
Balance at June 30, 1998 57,971 $580 $1,535,374 $(90,332) $1,445,622
------ ---- ---------- -------- ----------
------ ---- ---------- -------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 6 of 34
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 54,558 $ 34,484
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 35,324 16,292
Amortization of stock compensation -- 1,057
Amortization of deferred financing costs 654 552
Minority interest 15,089 3,648
Extraordinary item - loss on early retirement of debt 2,373 --
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (6,339) (3,944)
Increase in deferred charges and other assets, net (4,569) (2,976)
Increase in accounts receivable, net (1,793) (1,472)
Increase in accounts payable and
accrued expenses 366 5,514
Increase in rents received in advance and
security deposits 8,425 5,498
(Decrease) increase in accrued interest payable (1,476) 588
----------- ----------
Net cash provided by operating activities $ 102,612 $ 59,241
----------- ----------
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to rental property $ (625,434) $(308,531)
Issuance of mortgage note receivable (20,000) (11,600)
Repayment of mortgage note receivable 20,000 --
Investments in partially-owned entities (38,126) --
Decrease (increase) in restricted cash 1,361 (301)
----------- ----------
Net cash used in investing activities $ (662,199) $(320,432)
----------- ----------
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages and loans payable $ 1,307,452 $ 132,876
Repayments of mortgages and loans payable (949,815) (32,482)
Repurchase of common stock -- (4,680)
Repurchase of common units (3,163) --
Payment of financing costs (7,492) --
Net proceeds from common stock offerings 284,453 --
Proceeds from stock options exercised 5,271 2,503
Payment of dividends and distributions (63,228) (35,743)
----------- ----------
Net cash provided by financing activities $ 573,478 $ 62,474
----------- ----------
----------- ----------
Net increase (decrease) in cash and cash equivalents $ 13,891 $(198,717)
Cash and cash equivalents, beginning of period $ 2,704 $ 204,807
----------- ----------
Cash and cash equivalents, end of period $ 16,595 $ 6,090
----------- ----------
----------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 7 of 34
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share/unit amounts)
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Mack-Cali Realty Corporation, a Maryland corporation, and subsidiaries (the
"Company"), is a fully-integrated, self-administered, self-managed real estate
investment trust ("REIT") providing leasing, management, acquisition,
development, construction and tenant-related services for its portfolio of
properties. As of June 30, 1998, the Company's portfolio was comprised of 242
properties plus developable land (collectively, the "Properties"). The
Properties aggregate approximately 27.0 million square feet, and are comprised
of 230 office and office/flex buildings totaling approximately 26.6 million
square feet, six industrial/warehouse buildings totaling approximately 387,400
square feet, two multi-family residential complexes consisting of 453 units, two
stand-alone retail properties and two land leases. The Properties are located in
11 states, primarily in the Northeast and Southwest, plus the District of
Columbia.
Basis of Presentation
The accompanying consolidated financial statements include all accounts of the
Company and its majority-owned subsidiaries, which consist principally of
Mack-Cali Realty, L.P. (the "Operating Partnership"). See Investments in
Partially-Owned Entities in Note 2 for the Company's treatment of unconsolidated
partnership interests. All significant intercompany accounts and transactions
have been eliminated.
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
Rental
Property Rental properties are stated at cost less accumulated
depreciation and amortization. Costs directly related to
the acquisition and development of rental properties are
capitalized. Capitalized development costs include
interest, property taxes, insurance and other project
costs incurred during the period of construction.
Ordinary repairs and maintenance are expensed as
incurred; major replacements and betterments, which
improve or extend the life of the asset, are capitalized
and depreciated over their estimated useful lives.
Fully-depreciated assets are removed from the accounts.
Depreciation and amortization is computed on a
straight-line basis over the estimated useful lives of
the assets as follows:
Buildings and improvements 5 to 40 years
--------------------------------------------------------
Tenant improvements The shorter of the term of
the related lease or useful life
--------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
--------------------------------------------------------
On a periodic basis, management assesses whether there
are any indicators that the value of the real estate
properties may be impaired. A property's value is
impaired only if management's estimate of the aggregate
future cash flows (undiscounted and without interest
charges) to be generated by the property are less than
the carrying value of the property. To the extent an
impairment has occurred, the loss shall be measured as
the excess of the carrying amount of the property over
the fair value of the property. Management does not
believe that the value of any of its rental properties
is impaired.
Page 8 of 34
<PAGE>
Investments in
Partially-Owned
Entities The Company accounts for its investments in
partially-owned entities under the equity method of
accounting as the Company exercises significant
influence. These investments are recorded initially at
cost, as Investments in Partially-Owned Entities, and
subsequently adjusted for net equity in income (loss)
and cash contributions and distributions. Net equity in
income (loss) is included in parking and other in the
Consolidated Statements of Operations for the three and
six month periods ended June 30, 1998 (see Note 4).
Cash and Cash
Equivalents All highly liquid investments with a maturity of three
months or less when purchased are considered to be cash
equivalents.
Deferred
Financing Costs Costs incurred in obtaining financing are
capitalized and amortized on a straight-line basis,
which approximates the effective interest method, over
the term of the related indebtedness. Amortization of
such costs is included in interest expense and was $400
and $281 for the three months ended June 30, 1998 and
1997, respectively, and $654 and $552 for the six months
ended June 30, 1998 and 1997, respectively.
Deferred
Leasing Costs Costs incurred in connection with leases are capitalized
and amortized on a straight-line basis over the terms of
the related leases and included in depreciation and
amortization. Unamortized deferred leasing costs are
charged to amortization expense upon early termination
of the lease. Certain employees of the Operating
Partnership provide leasing services to the Properties
and receive fees as compensation ranging from 0.667
percent to 2.667 percent of adjusted rents. Such fees,
which are capitalized and amortized, approximated $659
and $334 for the three months ended June 30, 1998 and
1997, respectively, and $1,236 and $540 for the six
months ended June 30, 1998 and 1997, respectively.
Revenue
Recognition The Company recognizes base rental revenue on a
straight-line basis over the terms of the respective
leases. Unbilled rents receivable represents the amount
by which straight-line rental revenue exceeds rents
currently billed in accordance with the lease
agreements. Parking revenue includes income from parking
spaces leased to tenants. Rental income on residential
property under operating leases having terms generally
of one year or less is recognized when earned.
The Company 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 12).
Income and
Other Taxes The Company has elected to be taxed as a REIT under
Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"). As a REIT, the Company
generally will not be subject to federal income tax to
the extent it distributes at least 95 percent of its
REIT taxable income to its shareholders and satisfies
certain other requirements. REITs are subject to a
number of organizational and operational requirements.
If the Company fails to qualify as a REIT in any taxable
year, the Company will be subject to federal income tax
(including any applicable alternative minimum tax) on
its taxable income at regular corporate tax rates. The
Company is subject to certain state and local taxes.
Interest Rate
Contracts Interest rate contracts are utilized by the Company to
reduce interest rate risks. The Company does not hold or
issue derivative financial instruments for trading
purposes.
The differentials to be received or paid under contracts
designated as hedges are recognized in income over the
life of the contracts as adjustments to interest
expense. Gains and losses are deferred and amortized to
interest expense over the remaining life of the
associated debt to the extent that such debt remains
outstanding.
Page 9 of 34
<PAGE>
Earnings
Per Share In accordance with the Statement of Financial Accounting
Standards No. 128 ("FASB No. 128"), the Company presents
both basic and diluted earnings per share ("EPS"). Basic
EPS excludes dilution and is computed by dividing net
income available to common stockholders by the weighted
average number of shares outstanding for the period.
Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common
stock were exercised or converted into common stock,
where such exercise or conversion would result in a
lower EPS amount.
Dividends and
Distributions
Payable The dividends and distributions payable at June 30, 1998
represents dividends payable to shareholders of record
on July 6, 1998 (57,973,447 shares), distributions
payable to minority interest common unitholders
(7,675,081 common units) on that same date and preferred
distributions to preferred unitholders (248,055
preferred units) for the second quarter 1998. The second
quarter 1998 dividends and common unit distributions of
$0.50 per share and per common unit (pro-rated for units
issued during the quarter), as well as the second
quarter preferred unit distribution of $16.875 per
preferred unit (pro-rated for units issued during the
quarter), were approved by the Board of Directors on
June 24, 1998 and were paid on July 22, 1998.
Underwriting
Commissions
and Costs Underwriting commissions and costs incurred in
connection with the Company's stock offerings are
reflected as a reduction of additional paid-in-capital.
Stock Options The Company accounts for stock-based compensation using
the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations ("APB
No. 25"). Under APB No. 25, compensation cost is
measured as the excess, if any, of the quoted market
price of the Company's stock at the date of grant over
the exercise price of the option granted. Compensation
cost for stock options, if any, is recognized ratably
over the vesting period. The Company's policy is to
grant options with an exercise price equal to the quoted
closing market price of the Company's stock on the
business day preceding the grant date. Accordingly, no
compensation cost has been recognized for the Company's
stock option plans. See Note 13.
Reclassifications Certain reclassifications have been made to prior period
balances in order to conform with current period
presentation.
3. ACQUISITIONS/TRANSACTIONS
On January 31, 1997, the Company acquired 65 properties ("RM Properties") from
Robert Martin Company, LLC and affiliates ("RM") for a total cost of
approximately $450,000. The cost of the transaction (the "RM Transaction") was
financed through the assumption of $185,283 of mortgage indebtedness, the
payment of approximately $220,000 in cash, substantially all of which
was obtained from the Company's cash reserves, and the issuance of
1,401,225 common units, valued at $43,788. The RM Properties consist primarily
of 54 office and office/flex properties, aggregating approximately 3.7 million
square feet, and six industrial/warehouse properties, aggregating approximately
387,000 square feet.
In connection with the RM Transaction, the Company was granted a three-year
option to acquire two properties (the "Option Properties"), under certain
conditions, one of which was acquired in 1997. The purchase price for the
remaining Option Property, under the agreement, is subject to adjustment
based on different formulas and is payable in cash or common units. The Company
holds a $7,250 mortgage loan ("RM Note Receivable") secured by the remaining
Option Property (see Note 7).
On December 11, 1997, the Company acquired 54 office properties, aggregating
approximately 9.2 million square feet, (the "Mack Properties") from the Mack
Company and Patriot American Office Group (the "Mack Transaction"),
Page 10 of 34
<PAGE>
pursuant to a Contribution and Exchange Agreement (the "Agreement"), for a total
cost of approximately $1,102,024.
The total cost of the Mack Transaction was financed as follows: (i) $498,757 in
cash made available from the Company's cash reserves and from the $200,000
Prudential Term Loan (see Note 8), (ii) $291,879 in debt assumed by the Company
(the "Mack Mortgages"), (iii) the issuance of 1,965,886 common units, valued at
approximately $66,373, (iv) the issuance of 15,237 Series A preferred units and
215,325 Series B preferred units, valued at approximately $236,491
(collectively, the "Preferred Units"), (v) warrants to purchase 2,000,000 common
units (the "Unit Warrants"), valued at approximately $8,524, and (vi) the
issuance of Contingent Units, as described below.
The 2,006,432 contingent common units, 11,895 Series A contingent preferred
units and 7,799 Series B contingent preferred units (collectively, the
"Contingent Units") were issued as contingent non-participating units. Such
Contingent Units have no voting, distribution or other rights until such time as
they are redeemed into common units, Series A preferred units, and Series B
preferred units, respectively. Redemption of such Contingent Units shall occur
upon the achievement of certain performance goals relating to certain of the
Mack Properties, specifically the achievement of certain leasing activity.
On account of the achievement of certain of the performance goals during the six
months ended June 30, 1998, certain of the Contingent Units were redeemed for a
specified amount of common and preferred units (see Note 9).
With the completion of the Mack Transaction, the Cali Realty Corporation name
was changed to Mack-Cali Realty Corporation, and the name of the Operating
Partnership was changed from Cali Realty, L.P. to Mack-Cali Realty, L.P.
In 1997, the Company also acquired 13 office and office/flex properties,
aggregating 1,495,950 square feet, in nine separate transactions with separate
sellers, for an aggregate cost of approximately $204,446. Such acquisitions were
funded primarily from drawings on the Company's credit facilities.
On January 23, 1998, the Company acquired 10 acres of vacant land in the
Stamford Executive Park, located in Stamford, Fairfield County, Connecticut for
approximately $1,341, funded from the Company's cash reserves. The vacant land,
on which the Company has commenced development of a 40,000 square-foot
office/flex property, was acquired from RMC Development Co., LLC. In conjunction
with the acquisition of the developable land, the Company signed a 15-year
lease, on a triple-net basis, with a single tenant to occupy the entire property
being developed.
On January 30, 1998, the Company acquired a 17-building office/flex portfolio,
aggregating 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
("McGarvey Properties") were acquired for a total cost of approximately $47,526.
The Company is under contract to acquire an additional four office/flex
properties in the same locations. The Company also obtained an option to
purchase a property for approximately $3,700, which was subsequently acquired by
the Company on July 14, 1998. 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 approximately $8,354 (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 2, 1998, the Company acquired 2115 Linwood Avenue, a 68,000
square-foot vacant office building located in Fort Lee, Bergen County, New
Jersey. The building was acquired for approximately $5,164, which was made
available from drawing on one of the Company's credit facilities. The Company is
currently redeveloping the property for future lease-up and operation.
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
$20,125, 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 approximately
$12,104, which bears interest at an annual effective interest rate of 6.52
percent.
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
$24,754, which was made available from proceeds received from the Company's
February 1998 offering of common stock.
Page 11 of 34
<PAGE>
On March 12, 1998, the Company acquired 1250 Capital of Texas Highway South, a
270,703 square-foot office building in Austin, Travis County, Texas. The
property was acquired for a total cost of approximately $37,167, which was made
available from drawing on one of the Company's credit facilities.
On March 27, 1998, the Company acquired four office buildings, a day care
center, plus land parcels, and a 50 percent interest in another office building,
all of such properties aggregating 859,946 square feet and located in the
Prudential Business Campus office complex in Parsippany and Hanover Township,
Morris County, New Jersey. The properties and land parcels were acquired for a
total cost of approximately $175,895, which funds were made available
from the Company's cash reserves (provided in part from the proceeds received
from the sale of 2,705,628 shares of the Company's common stock pursuant to a
Stock Purchase Agreement with The 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.
Also, on March 27, 1998, the Company acquired ten office properties (the
"Pacifica I Acquisition"), located in suburban Denver and Colorado Springs,
Colorado, and 2.5 acres of vacant land, located in the Denver Tech Center, from
Pacifica Holding Company ("Pacifica"), a private real estate owner and operator
in Denver, Colorado, for a total cost of approximately $74,818. Such funds were
made available from drawing on one of the Company's credit facilities and the
issuance of common units (see Note 9). The Pacifica I Acquisition comprises an
aggregate of 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. On June 8, 1998, the Company acquired six of the remaining office
buildings as part of the second phase of the Pacifica acquisition (the "Pacifica
II Acquisition"). The Pacifica II Acquisition is comprised of an aggregate of
approximately 514,427 square feet and was acquired for a total cost of
approximately $80,841, which was made available from drawing on one of the
Company's credit facilities and the issuance of common units (see Note 9). The
Company currently is a party to a letter of intent to acquire the remaining two
office buildings, encompassing 95,360 square feet from Pacifica for an aggregate
purchase price of approximately $11,866.
On March 30, 1998, the Company acquired two office buildings, aggregating
303,940 square feet, in the Morris County Financial Center located in
Parsippany, Morris County, New Jersey. The properties were acquired for a total
cost of approximately $52,763, which was made available from drawing on one of
the Company's credit facilities.
On May 13, 1998, the Company acquired 3600 South Yosemite, a 133,743 square-foot
office building located in Denver, Denver County, Colorado. The property was
acquired for approximately $13,519, which was made available from drawing on one
of the Company's credit facilities.
On May 14, 1998, the Company acquired One Ramland Road, a 232,000 square-foot
vacant office/flex building plus developable land, located in Orangeburg,
Rockland County, New York. The property and land were acquired for a total cost
of approximately $7,000, which was made available from the Company's cash
reserves. The Company is currently redeveloping the property for future lease-up
and operation.
On May 22, 1998, the Company acquired 500 College Road East, a 158,235
square-foot office building, located in Princeton, Mercer County, New Jersey.
The property was acquired for approximately $21,334, which was made available
from drawing on one of the Company's credit facilities.
On June 1, 1998, the Company acquired two office buildings and entered into a
contract to acquire a third office building and developable land, all from the
same seller, as further described below. The Company acquired on June 1, 1998,
1709 New York Avenue Northwest and 1400 L Street Northwest, two office
properties aggregating 325,000 square feet located in Washington, D.C. The
properties were acquired for a total cost of approximately $90,347, which was
made available from drawing on one of the Company's credit facilities.
Subsequently, on July 16, 1998, the Company acquired 4200 Parliament Drive, a
122,000 square-foot office property, plus adjacent developable land, located in
Lanham, Prince George's County, Maryland. The property and land were acquired
for a total cost of approximately $15,650, which was made available from drawing
on one of the Company's credit facilities.
On June 3, 1998, the Company acquired 400 South Colorado Boulevard, a 125,415
square-foot office building, located in Denver, Denver County, Colorado. The
property was acquired for approximately $12,015, which was made available from
drawing on one of the Company's credit facilities.
On June 8, 1998, the Company completed construction of Two Center Court, a
30,600 square-foot office/flex building, located in the Company's Commercenter
Office Park, in Totowa, Passaic County, New Jersey. The property was constructed
for a cost of approximately $2,124.
Page 12 of 34
<PAGE>
On July 14, 1998, the Company acquired 1510 Lancer Road, an 88,000 square-foot
office/flex building, located in Moorestown West Corporate Center in Moorestown,
Burlington County, New Jersey for approximately $3,700, which was made available
from drawing on one of the Company's credit facilities. The property was
acquired through the Company's exercise of a purchase option obtained
simultaneous with the acquisition of 17 office/flex buildings from the same
seller on January 30, 1998.
4. INVESTMENTS IN PARTIALLY-OWNED ENTITIES
On March 27, 1998, the Company acquired a 50 percent interest in an existing
joint venture, which owns Nine Campus Drive, a 156,495 square-foot office
building, located in the Prudential Business Campus office complex in
Parsippany, Morris County, New Jersey, as previously mentioned (see Note 3).
On April 23, 1998, the Company entered into a joint venture agreement with HCG
Development, L.L.C. and Summit Partners I, L.L.C. to form HPMC Development
Partners, L.P. The venture was formed with the purpose of investing in, holding,
rehabilitating, developing, managing, maintaining, and operating real estate
investments, primarily in California. Initially, the venture's efforts have
focused on two development projects, commonly referred to as Summit Continental
Grand and Summit Ridge. Summit Continental Grand is a 4.2 acre site located on
El Segundo, Los Angeles County, California, where the venture owns and has
commenced construction of a 237,000 square-foot office property. Summit Ridge is
a 7.3 acre site located in San Diego, San Diego County, California, which the
venture plans to acquire and build a 132,000 square-foot office/flex property.
The Company is required to make capital contributions to the venture totaling up
to $19,200, pursuant to the partnership agreement. Through June 30, 1998, the
Company has invested approximately $7,044 in the venture. Amongst other things,
the partnership agreement provides for a preferred return on the Company's
invested capital in the venture, in addition to the Company's proportionate
share of the venture's profit, as defined in the agreement.
On April 30, 1998, the Company acquired a 49.9 percent interest in an existing
joint venture, which owns Convention Plaza, a 305,000 square-foot office
building, located in San Francisco, San Francisco County, California. The
Company acquired its interest in the venture for a total initial investment of
approximately $11,818, through the issuance of common units (see Note 9) and
funds drawn from the Company's credit facilities.
On May 20, 1998, the Company entered into a joint venture agreement with
Columbia Development Corp. to form American Financial Exchange L.L.C. The
venture was formed to initially acquire land for future development, located on
the Hudson River waterfront in Jersey City, Hudson County, New Jersey, adjacent
to the Company's Harborside property. The Company invested approximately $9,917
in the joint venture through June 30, 1998 and holds a 50 percent interest.
Amongst other things, the partnership agreement provides for a preferred return
on the Company's invested capital in the venture, in addition to the Company's
proportionate share of the venture's profit, as defined in the agreement. The
joint venture has acquired land on which it has constructed a parking
facility, which is currently leased to a parking operator under a 10-year
lease. Such parking facility serves the recently-commenced ferry service
between the Harborside property and Manhattan.
The following is a combined summary of the financial position of the
partially-owned entities in which the Company has investment interests:
<TABLE>
<CAPTION>
June 30,
1998
<S> <C>
Assets:
Rental property, net $56,066
Other assets 12,720
------
Total assets $68,786
------
------
Liabilities and partners' equity:
Mortgage payable $39,000
Other liabilities 2,131
Partners' equity 27,655
------
Total liabilities and partners' equity $68,786
------
------
</TABLE>
Page 13 of 34
<PAGE>
The following is a combined summary of the results of operations of the
partially-owned entities in which the Company has investment interests (from the
date of the Company's initial investment through the end of the period for
existing joint ventures) for the three and six month periods ended June 30,
1998:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
------------- -------------
<S> <C> <C>
Rental and other revenues $ 1,776 $ 1,806
Operating and other expenses (652) (658)
Interest expense (505) (505)
Depreciation and amortization (479) (479)
------ -----
Net income $ 140 $ 164
------ -----
------ -----
Company's share of net income $ 70 $ 95
------ -----
</TABLE>
5. DEFERRED CHARGES AND OTHER ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
Deferred leasing costs $ 25,789 $ 20,297
Deferred financing costs 7,894 3,640
------ -------
33,683 23,937
Accumulated amortization (10,690) (9,535)
------- ------
Deferred charges, net 22,993 14,402
Prepaid expenses and other assets 7,329 4,587
------ ------
Total deferred charges and other assets, net $ 30,322 $ 18,989
------ ------
------ ------
</TABLE>
6. RESTRICTED CASH
Restricted cash includes security deposits for the Company's residential
properties and certain commercial properties, and escrow and reserve funds for
debt service, real estate taxes, property insurance, capital improvements,
tenant improvements, and leasing costs established pursuant to certain mortgage
financing arrangements, and is comprised of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
Escrow and other reserve funds $ 310 $ 1,278
Security deposits 5,173 5,566
----- -----
Total restricted cash $ 5,483 $ 6,844
----- -----
----- -----
</TABLE>
7. MORTGAGE NOTE RECEIVABLE
In connection with the RM Transaction on January 31, 1997, the Company provided
a $11,600 non-recourse mortgage loan (the "RM Note Receivable") to entities
controlled by the RM principals, bearing interest at an annual rate of 450 basis
points over one-month LIBOR (5.66 percent at June 30, 1998). The RM Note
Receivable, which is secured by the Option Properties and guaranteed by certain
of the RM principals, matures on February 1, 2000. In conjunction with the
acquisition of one of the Option Properties on August 15, 1997, the sellers of
the property, certain RM principals, prepaid $4,350 of the RM Note Receivable,
leaving a principal balance of $7,250 secured by the remaining Option Property.
On March 6, 1998, prior to the completion of the Pacifica I Acquisition, the
Company provided a $20,000 mortgage loan to an entity controlled by certain
principals of Pacifica. Such mortgage loan was secured by an office property in
California and bore interest at an annual rate of 9.25 percent. The mortgage
loan was subsequently prepaid in full by the borrower on June 10, 1998. The
Company received a prepayment fee of $200 with the retirement of the mortgage
loan.
Page 14 of 34
<PAGE>
8. MORTGAGES AND LOANS PAYABLE
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
Prudential Mortgages $ 211,221 $ 262,205
TIAA Mortgage 185,283 185,283
Harborside Mortgages 150,000 150,000
Mitsubishi Mortgages 72,204 72,204
CIGNA Mortgages 47,721 86,650
Other Mortgages 79,184 88,474
Revolving Credit Facilities 599,441 122,100
Contingent Obligation 5,942 5,734
--------- --------
Total mortgages and loans payable $ 1,350,996 $ 972,650
--------- --------
--------- --------
</TABLE>
PRUDENTIAL MORTGAGES
The Company has mortgage debt from The Prudential Insurance Company of America
and its subsidiaries (the "Prudential Mortgages") aggregating $211,221 and
$262,205 as of June 30, 1998 and December 31, 1997, respectively, comprised of
the following:
The Company has certain non-recourse mortgage debt, aggregating $61,221 in
principal as of June 30, 1998, with The Prudential Insurance Company of
America ("Prudential"), substantially all of which was assumed in the Mack
Transaction. Such mortgages, which are secured by three properties, bear
interest at a weighted average fixed rate of 8.31 percent, all of which
requiring monthly payments of interest. Certain of the mortgages require
monthly payments of principal, in addition to interest, on various term
amortization schedules. The mortgages mature between October 2003 and
July 2004.
On December 10, 1997, the Company obtained a $200,000 term loan (the "Prudential
Term Loan") from Prudential Securities Corp. ("PSC"). The proceeds of the loan
were used to fund a portion of the cash consideration in completion of the Mack
Transaction. The loan had a one-year term and interest payments were required
monthly at an interest rate of 110 basis points over one-month LIBOR. The loan
was a recourse loan secured by 11 properties owned by the Company and located in
New Jersey. The Prudential Term Loan was retired in April 1998, simultaneous
with the Company obtaining the $150,000 Prudential Mortgage Loan, as described
below.
On April 30, 1998, the Company obtained a $150,000, interest-only, non-recourse
mortgage loan from Prudential ("$150,000 Prudential Mortgage Loan"). The
loan, which is secured by 12 of the Company's properties, has an effective
annual interest rate of 7.10 percent and a seven-year term. The Company, at
its option, may convert the mortgage loan to unsecured debt upon achievement
by the Company of a credit rating of Baa3/BBB - or better. The mortgage loan
is prepayable in whole or in part subject to certain provisions, including
yield maintenance. The proceeds of the new loan were used, along with funds
drawn from one of the Company's credit facilities, to retire the Prudential
Term Loan, as well as approximately $48,224 of the Mack Mortgages.
TIAA MORTGAGE
In connection with the RM Transaction, on January 31, 1997, the Company assumed
a $185,283 non-recourse mortgage loan with Teachers Insurance and Annuity
Association of America ("TIAA"), with interest only payable monthly at a fixed
annual rate of 7.18 percent (the "TIAA Mortgage"). The TIAA Mortgage is secured
and cross-collateralized by 43 of the RM Properties and matures on December 31,
2003. The Company, at its option, may convert, without any yield maintenance
obligation or prepayment premium, the TIAA Mortgage to unsecured public debt
upon achievement by the Company of a credit rating of Baa3/BBB- or
better. The TIAA Mortgage is prepayable in whole or in part subject to certain
provisions, including yield maintenance which is generally 100 basis points over
United States Treasury obligations or similar maturity to the remaining maturity
of the TIAA Mortgage at the time prepayment is being sought.
Page 15 of 34
<PAGE>
HARBORSIDE MORTGAGES In connection with the acquisition of Harborside
Financial Center ("Harborside"), on November 4, 1996, the Company assumed
existing mortgage debt and was provided seller-financed mortgage debt
aggregating $150,000. The existing non-recourse mortgage financing, with a
principal balance of $103,337 and $104,768 as of June 30, 1998 and December
31, 1997, respectively, bears interest at a fixed rate of 7.32 percent and
matures on January 1, 2006. The seller-provided mortgage financing, with a
principal balance of $46,663 and $45,232 as of June 30, 1998 and December 31,
1997, respectively, matures on January 1, 2006 and initially bears interest
at an annual rate of 6.99 percent. The interest rate on the seller-provided
financing will be reset at the end of the third and sixth loan years based on
the yield of the three-year treasury obligation at that time, with spreads of
110 basis points in years four through six and 130 basis points in years
seven through maturity.
MITSUBISHI MORTGAGES In connection with the Mack Transaction, the Company
assumed non-recourse, variable-rate mortgage debt (the "Mitsubishi Mortgages")
aggregating $72,204 in principal as of June 30, 1998 and December 31, 1997
with Mitsubishi Trust and Banking Corporation. Such mortgages, which are
secured by two of the Mack Properties, bear interest at a variable rate of 65
basis points over LIBOR and mature between January 2008 and January 2009.
CIGNA MORTGAGES In connection with the Mack Transaction, the Company assumed
non-recourse mortgage debt (the "CIGNA Mortgages") aggregating $47,721 and
$86,650 in principal as of June 30, 1998 and December 31, 1997, respectively,
with Connecticut General Life Insurance Company (CIGNA). Such mortgages,
which are secured by five of the Mack Properties, bear interest at a weighted
average annual fixed rate of 7.85 percent and require monthly payments of
interest and principal on various term amortization schedules. The various
mortgages mature between October 1998 and October 2003. In April 1998,
simultaneous with the Company obtaining the $150,000 Prudential Mortgage Loan,
as described above, the Company retired one of the CIGNA Mortgages with a
principal balance of $27,835.
OTHER MORTGAGES The Company has mortgage debt ("Other Mortgages") aggregating
$79,184 and $88,474 in principal as of June 30, 1998 and December 31, 1997,
respectively, with eight different lenders, all of which were assumed in the
Mack Transaction as well as the 1998 acquisitions of the McGarvey Properties
and 500 West Putnam, and are secured by 14 individual properties. As of June
30, 1998, the Other Mortgages bear interest at a weighted average annual fixed
effective rate of 7.59 percent, and require monthly payments of principal and
interest on various term amortization schedules. The Other Mortgages mature
between February 1999 and October 2010. Variable rate debt included in Other
Mortgages, aggregating $20,338, which bore interest at 115 basis points over
LIBOR, was retired in April 1998, simultaneous with the Company obtaining the
$150,000 Prudential Mortgage Loan, as described above.
REVOLVING CREDIT FACILITIES
Original Unsecured Facility
On August 6, 1997, the Company obtained an unsecured revolving credit
facility (the "Original Unsecured Facility") in the amount of $400,000
from a group of 13 lender banks. The facility carried a three-year term
and bore interest at 125 basis points over one-month LIBOR.
The terms of the Original Unsecured Facility included certain restrictions
and covenants which limited, among other things, dividend payments and
additional indebtedness and which required compliance with specified
financial ratios and other financial measurements. The facility also
required a fee on the unused balance payable quarterly in arrears, at a rate
ranging from one-eighth of one percent to one-quarter of one percent of such
balance, depending on the level of borrowings outstanding in relation to the
total facility commitment.
The Company had outstanding borrowings of $122,100 at December 31, 1997,
under the Original Unsecured Facility. The Original Unsecured Facility was
repaid in full and retired in connection with the Company obtaining the 1998
Unsecured Facility in April 1998, as described below.
1998 Unsecured Facility
On April 17, 1998, the Company repaid in full and terminated the Original
Unsecured Facility and obtained a new unsecured revolving credit facility
(the "1998 Unsecured Facility") in the amount of $870,000 from a group of
25 lender banks, led by The Chase Manhattan Bank and Fleet National Bank.
In July 1998, the 1998 Unsecured Facility was expanded to $900,000 with
the addition of two new lender banks into the facility, bringing the
total number of participants to 27 banking institutions. The 1998
Unsecured Facility has a three-year term and currently bears interest at
110 basis points over LIBOR, a reduction of 15 basis points from the
retired Original Unsecured Facility. Based upon the Company's achievement
of an investment grade unsecured debt rating, the interest rate will be
reduced, on a sliding scale, and a competitive bid option will become
available.
Page 16 of 34
<PAGE>
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the
incurrence of liens and the disposition of assets, and which require
compliance with financial ratios relating to the maximum leverage ratio,
the maximum amount of secured indebtedness, the minimum amount of
tangible net worth, the minimum amount of debt service coverage, the
minimum amount of fixed charge coverage, the maximum amount of unsecured
indebtedness, the minimum amount of unencumbered property debt service
coverage and certain investment limitations. The dividend restriction
referred to above provides that, except to enable the Company to continue
to qualify as a REIT under the Code, the Company will not during any four
consecutive fiscal quarters make distributions with respect to common
stock or other equity interests in an aggregate amount in excess of
90 percent of funds from operations for such period, subject to certain
other adjustments. The 1998 Unsecured Facility also requires a 17.5 basis
point fee on the unused balance payable quarterly in arrears.
The lending group for the 1998 Unsecured Facility consists of: The Chase
Manhattan Bank, as administrative agent; Fleet National Bank, as
syndication agent; PNC Bank, N.A., as documentation agent; Bankers Trust,
Commerzbank, AG, The First National Bank of Chicago, First Union National
Bank and NationsBank, as managing agents; Creditanstalt Corporate
Finance, Inc., Dresdner Bank, AG, European American Bank, Hypo Bank,
Societe Generale and Summit Bank, as co-agents; and Kredietbank, N.V.,
Key Bank, Mellon Bank, N.A., The Bank of New York, Citizens Bank,
Crestar, DG Bank, Tokai Bank, US Trust, Bayerische Landesbank, Erste
Bank, BankLeumi USA and Bank One, Arizona, NA.
Prudential Facility
The Company has a revolving credit facility (the "Prudential Facility")
from PSC in the amount of $100,000, which currently bears interest at 110
basis points over one-month LIBOR, with a maturity date of March 31, 1999.
In July 1998, the Prudential Facility's maturity date was extended to
June 30, 1999. The Prudential Facility is a recourse liability of the
Operating Partnership and is secured by the Company's equity interest in
Harborside. The Prudential Facility limits the ability of the Operating
Partnership to make any distributions during any fiscal quarter in an
amount in excess of 100 percent of the Operating Partnership's available
funds from operations for the immediately preceding fiscal quarter
(except to the extent such excess distributions or dividends are
attributable to gains from the sale of the Operating Partnership's assets
or are required for the Company to maintain its status as a REIT under
the Code); provided, however, that the Operating Partnership may make
distributions and pay dividends in excess of 100 percent of available
funds from operations for the preceding fiscal quarter for not more than
three consecutive quarters. In addition to the foregoing, the Prudential
Facility limits the liens placed upon the subject property and certain
collateral, the use of proceeds from the Prudential Facility, and the
maintenance of ownership of the subject property and assets derived from
said ownership. The Company had no outstanding borrowings at June 30,
1998 and December 31, 1997 under the Prudential Facility.
CONTINGENT OBLIGATION
As part of the Harborside acquisition, the Company agreed to make payments
(with an estimated net present value of approximately $5,252 at acquisition
date) to the seller for development rights ("Contingent Obligation") if and
when the Company commences construction on the acquired site during the next
several years. However, the agreement provides, among other things, that even
if the Company does not commence construction, the seller may nevertheless
require the Company to acquire these rights during the six-month period after
the end of the sixth year. After such period, the seller's option lapses, but
any development in years 7 through 30 will require a payment, on an
increasing scale, for the development rights. The Company is currently in the
pre-development phase of a long-range plan to develop the Harborisde site on
a multi-property, multi-use basis.
For the six months ended June 30, 1998, interest was imputed on the
Contingent Obligation, thereby increasing the balance of the Contingent
Obligation from $5,734 as of December 31, 1997 to $5,942 as of June 30, 1998.
INTEREST RATE CONTRACTS
On May 24, 1995, the Company entered into an interest rate swap agreement
with a commercial bank. The swap agreement fixes the Company's one-month
LIBOR base for 6.285 percent per annum on a notional amount of $24,000
through August 1999.
On January 23, 1996, the Company entered into another interest rate swap
agreement with a commercial bank. This swap agreement has a three-year term
and a notional amount of $26,000, which fixes the Company's one-month LIBOR
base to 5.265 percent per annum.
Page 17 of 34
<PAGE>
The Company is exposed to credit loss in the event of non-performance by the
other parties to the interest rate contracts. However, the Company does not
anticipate non-performance by either of the counter parties.
CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the six months ended June 30, 1998 and 1997 was
$61,440 and $16,563, respectively. Interest capitalized by the Company for
the six months ended June 30, 1998 and 1997 was $1,085 and none, respectively.
9. MINORITY INTEREST
Minority interest in the accompanying consolidated financial statements
relates to common units in the Operating Partnership, in addition to Preferred
Units and Unit Warrants issued in connection with the Mack
Transaction, held by parties other than the Company.
Preferred Units
As described in Note 3, in connection with the funding of the Mack
Transaction, the Company issued 15,237 Series A Preferred Units and 215,325
Series B Preferred Units, with an aggregate value of $236,491. The Preferred
Units have a stated value of $1,000 per unit and are preferred as to assets
over any class of common units or other class of preferred units of the
Company, based on circumstances per the applicable unit certificates.
The quarterly distribution on each Preferred Unit (representing 6.75 percent
of the Preferred Unit stated value of $1,000 on an annualized basis) is an
amount equal to the greater of (i) $16.875 or (ii) the quarterly distribution
attributable to a Preferred Unit determined as if such unit had been
converted into common units, subject to adjustment for customary
anti-dilution rights. Each of the Series A Preferred Units may be converted
at any time into common units at a conversion price of $34.65 per unit, and,
after the one year anniversary of the date of the Series A Preferred Units'
initial issuance, common units received pursuant to such conversion may be
redeemed into common stock. Each of the Series B Preferred Units may be
converted at any time into common units at a conversion price of $34.65 per
unit, and, after the three year anniversary of the date of the Series B
Preferred Units' initial issuance, common units received pursuant to such
conversion may be redeemed into common stock. Each of the common units are
redeemable after one year for an equal number of shares of common stock.
The Preferred Units, issued in the Mack Transaction, are convertible into
common units at $34.65 per common unit, which is an amount less than the
$39.0625 closing stock price on the date of closing of the Mack Transaction.
Accordingly, the Company recorded, on December 11, 1997, the financial value
ascribed to the beneficial conversion feature inherent in the Preferred Units
upon issuance, which totaled $26,801 ($29,361, before allocation to minority
common unitholders) and was recorded as beneficial conversion feature in
stockholders' equity. The beneficial conversion feature was amortized in full
as the Preferred Units were immediately convertible upon issuance; such
amortization was included in minority interest for the year ended December
31, 1997.
During the six months ended June 30, 1998, the Company issued 17,493
additional Preferred Units (10,565 of Series A and 6,928 of Series B), valued
at approximately $17,943, in connection with the achievement of certain
performance goals at the Mack Properties in redemption of an equivalent
number of Contingent Units. Such Preferred Units carry the identical terms as
those issued in the Mack Transaction.
Common Units
Certain individuals and entities own common units in the Operating
Partnership. A common unit and a share of common stock of the Company have
substantially the same economic characteristics in as much as they
effectively share equally in the net income or loss of the Operating
Partnership.
Common units are redeemable by the common unitholders at their option,
subject to certain restrictions, on the basis of one common unit for either
one share of common stock or cash equal to the fair market value of a share
at the time of the redemption. The Company has the option to deliver shares
of common stock in exchange for all or any portion of the cash requested.
When a unitholder redeems a common unit, minority interest is reduced and the
Company's investment in the Operating Partnership is increased.
During the six months ended June 30, 1998, the Operating Partnership redeemed
a total of 82,880 common units in exchange for an aggregate of $3,163 in
cash. Additionally, the Operating Partnership redeemed an aggregate of 22,300
common units for an equivalent number of shares of common stock in the
Company.
Page 18 of 34
<PAGE>
As described in Note 3, the Company issued an aggregate of 3,408,532 common
units in 1997 in connection with the completion of the RM Transaction, the
Mack Transaction and a 1997 single-property acquisition.
On March 26, 1998, in connection with the Pacifica I Acquisition, the Company
issued 100,175 common units, valued at approximately $3,779.
On April 30, 1998, in connection with the acquisition of a 49.9 percent
interest in a joint venture (see Note 4), the Company issued 218,105 common
units, valued at approximately $8,334.
On June 8, 1998, in connection with the Pacifica II Acquisition, the Company
issued 585,263 common units, valued at approximately $20,753.
During the six months ended June 30, 1998, the Company also issued 779,241
common units, valued at approximately $30,129, in connection with the
achievement of certain performance goals at the Mack Properties in redemption
of an equivalent number of contingent common units.
Contingent Common & Preferred Units
In conjunction with the completion of the Mack Transaction (see Note 3),
2,006,432 contingent common units, 11,895 Series A contingent Preferred Units
and 7,799 Series B contingent Preferred Units were issued as contingent
non-participating units. Such Contingent Units have no voting, distribution
or other rights until such time as they are redeemed into common units,
Series A Preferred Units, and Series B Preferred Units, respectively.
Redemption of such Contingent Units shall occur upon the achievement of
certain performance goals relating to certain of the Mack Properties,
specifically the achievement of certain leasing activity. When Contingent
Units are redeemed for common and Preferred Units, an adjustment to the
purchase price of certain of the Mack Properties is recorded, based on the
value of the units issued. On account of certain of the performance goals
having been achieved during the six months ended June 30, 1998, the Company
redeemed 779,241 contingent common units and 17,493 contingent Preferred
Units and issued an equivalent number of common and Preferred Units, as
indicated above.
Unit Warrants
As described in Note 3, in connection with the funding of the Mack
Transaction, the Company granted warrants to purchase 2,000,000 common units.
The Unit Warrants are exercisable at any time after one year from the date of
their issuance and prior to the fifth anniversary date thereof at an exercise
price of $37.80 per common unit.
Minority Ownership
As of June 30, 1998 and December 31, 1997, the minority interest common
unitholders owned 11.7 percent (20.4 percent, including the effect of the
conversion of Preferred Units into common units) and 10.9 percent (20.4
percent including the effect of the conversion of Preferred Units into common
units) of the Operating Partnership, respectively (excluding any effect for
the exercise of Unit Warrants).
10. EMPLOYEE BENEFIT PLAN
All employees of the Company who meet certain minimum age and period of
service requirements are eligible to participate in a 401(k) defined
contribution plan (the "Plan"). The Plan allows eligible employees to defer
up to 15 percent of their annual compensation. The amounts contributed by
employees are immediately vested and non-forfeitable. The Company, at
management's discretion, may match employee contributions, although no
employer contributions have been made to date.
11. COMMITMENTS AND CONTINGENCIES
Tax Abatement Agreements
Grove Street Property
Pursuant to an agreement with the City of Jersey City, New Jersey, as
amended, expiring in 2004, the Company is required to make payments in lieu
of property taxes ("PILOT") on its property at 95 Christopher Columbus Drive,
Jersey City, Hudson County, New Jersey. Such PILOT, as defined, is $1,267 per
annum through May 31, 1999 and $1,584 per annum through May 31, 2004.
Page 19 of 34
<PAGE>
Harborside Financial Center Property
Pursuant to an agreement with the City of Jersey City, New Jersey obtained by
the former owner of the Harborside property in 1988 and assumed by the
Company as part of the acquisition of the property in November 1996, the
Company is required to make PILOT payments on its Harborside property. The
agreement, which commenced in 1990, is for a term of 15 years. Such PILOT is
equal to two percent of Total Project Costs, as defined, in year one and
increases by $75 per annum through year fifteen. Total Project Costs, as
defined, are $148,712.
Ground Lease Agreements
Future minimum rental payments under the terms of all non-cancelable ground
leases, under which the Company is the lessee, as of June 30, 1998, are as
follows:
<TABLE>
<CAPTION>
Period Amount
- ------- --------
<S> <C>
July 1, 1998 to December 31, 1998 $ 240
1999 479
2000 479
2001 479
2002 479
Thereafter 20,923
- ---------- ---------
Total $23,079
- ---------- ---------
- ---------- ---------
</TABLE>
Other Contingencies
On December 10, 1997, a Shareholder's Derivative Action was filed in Maryland
Court on behalf of a shareholder. The complaint questioned certain executive
compensation decisions made by the Company's Board of Directors in connection
with the Mack Transaction. The Board's compensation decisions were discussed
in the proxy materials distributed in connection with the Mack Transaction
and were approved by in excess of 99 percent of the voting shareholders.
Although the Company believes that this lawsuit was factually and legally
baseless, the Company on May 4, 1998 agreed to a settlement which included
making certain changes to employment agreements of certain of its executive
officers. The Company incurred $750 in costs associated with this action,
which was provided for at December 31, 1997.
The Company is a defendant in other certain litigation arising in the normal
course of business activities. Management does not believe that the
resolution of these matters will have a materially adverse effect upon the
Company.
12. TENANT LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2020. 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.
13. STOCKHOLDERS' EQUITY
To maintain its qualification as a REIT, not more than 50 percent in value of
the outstanding shares of the Company may be owned, directly or indirectly,
by five or fewer individuals at any time during the last half of any taxable
year of the Company, other than its initial taxable year (defined to include
certain entities), applying certain constructive ownership rules. To help
ensure that the Company will not fail this test, the Company's Articles of
Incorporation provide for, among other things, certain restrictions on the
transfer of the common stock to prevent further concentration of stock
ownership. Moreover, to evidence compliance with these requirements, the
Company must maintain records that disclose the actual ownership of its
outstanding common stock and will demand written statements each year from
the holders of record of designated percentages of its common stock
requesting the disclosure of the beneficial owners of such common stock.
On May 15, 1997, the stockholders approved an increase in the authorized
shares of common stock in the Company to 190,000,000.
Page 20 of 34
<PAGE>
On October 15, 1997, the Company completed an underwritten public offer and
sale of 13,000,000 shares (the "1997 Offering") of its common stock. The
Company received approximately $489,116 in net proceeds (after offering
costs) from the 1997 Offering. The Company used $160,000 of such proceeds to
repay outstanding borrowings on its Original Unsecured Facility and the
remainder of the proceeds to fund a portion of the purchase price of the Mack
Transaction, for other potential acquisitions, and for general corporate
purposes.
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 $92,194 (after offering costs) to pay down a portion of
its outstanding borrowings under the Company's credit facilities and fund the
acquisition of Moutainview (see Note 3).
On March 18, 1998, in connection with the 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 $99,899 (after offering
costs) in the funding of such acquisition (see Note 3).
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 $23,690 (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 offer and sale of
994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34,570 (after offering costs), primarily to pay down a portion
of its outstanding borrowings under the Company's credit facilities.
On May 29, 1998, the Company completed an underwritten offer and sale of
984,615 shares of its common stock and used the net proceeds, which totaled
approximately $34,100 (after offering costs), primarily to pay down a portion
of its outstanding borrowings under the Company's credit facilities.
On August 6, 1998, the Board of Directors of the Company authorized a share
repurchase program ("Repurchase Program") under which the Company was
permitted to purchase up to $100,000 of the Company's common stock. Purchases
could be made from time to time in open market transactions at prevailing
prices or through privately negotiated transactions. Subsequently, through
August 12, 1998, the Company purchased, for constructive retirement, 215,200
shares of its outstanding common stock for an aggregate cost of approximately
$6,586. Concurrent with this purchase, the Company sold to the Operating
Partnership 215,200 common units for approximately $6,586.
Stock Option Plans
In 1994, and as subsequently amended, the Company established the Cali
Employee Stock Option Plan ("Employee Plan") and the Cali Director Stock
Option Plan ("Director Plan") under which a total of 5,380,188 shares
(subject to adjustment) of the Company's common stock have been reserved for
issuance (4,980,188 shares under the Employee Plan and 400,000 shares under
the Director Plan). Stock options granted under the Employee Plan in 1994 and
1995 become exercisable over a three-year period and those options granted
under the Employee Plan in 1996 and 1997 become exercisable over a five-year
period. All stock options granted under the Director Plan become exercisable
in one year. All options were granted at the fair market value at the dates
of grant and have terms of ten years. As of June 30, 1998, and December 31,
1997, the stock options outstanding had a weighted average remaining
contractual life of approximately 8.9 and 9.0 years, respectively.
Page 21 of 34
<PAGE>
Information regarding the Company's stock option plans is summarized below:
<TABLE>
<CAPTION>
Weighted
Shares Average
Under Exercise
Options Price
-------- -----------
<S> <C> <C>
Outstanding at January 1, 1995 625,000 $17.23
Granted 230,200 17.69
Exercised -- --
Lapsed or canceled 3,588 17.25
-------- -----------
Outstanding at December 31, 1995 851,612 17.36
Granted 809,700 23.97
Exercised 126,041 17.25
Lapsed or canceled 7,164 19.52
-------- -----------
Outstanding at December 31, 1996 1,528,107 20.86
Granted 2,126,538 37.35
Exercised 337,282 21.33
Lapsed or canceled 30,073 22.62
-------- -----------
Outstanding at December 31, 1997 3,287,290 31.47
Granted 901,150 37.31
Exercised 257,980 20.42
Lapsed or canceled 55,714 36.17
--------- -----------
Outstanding at June 30, 1998 3,874,746 $33.49
========= ===========
Options exercisable at December 31, 1997 1,004,618 $25.22
Options exercisable at June 30, 1998 1,185,047 $26.33
--------- -----------
Available for grant at December 31, 1997 1,629,575
Available for grant at June 30, 1998 784,139
---------
</TABLE>
Stock Warrants
On January 31, 1997, in conjunction with the completion of the RM
Transaction, the Company granted a total of 400,000 warrants to purchase an
equal number of shares of common stock ("Stock Warrants") at $33 per share
(the market price at date of grant) to Timothy Jones, Brad Berger and certain
other Company employees formerly with RM. Such warrants vest equally over a
three-year period and have a term of ten years.
On December 12, 1997, in conjunction with the completion of the Mack
Transaction, the Company granted a total of 491,756 Stock Warrants to
purchase an equal number of shares of common stock at $38.75 per share (the
market price at date of grant) to Mitchell Hersh, and certain Company
executives formerly with the Patriot American Office Group. Such warrants
vest equally over a five-year period and have a term of ten years.
Stock Compensation
In January 1997, the Company entered into employment contracts with seven of
its key executives which provided for, among other things, compensation in
the form of stock awards ("Restricted Stock Awards") and Company-financed
stock purchase rights ("Stock Purchase Rights"), and associated tax
obligation payments. In connection with the Restricted Stock Awards, the
executives were to receive 199,070 shares of the Company's common stock
vesting over a five-year period contingent on the Company meeting certain
performance objectives. Additionally, pursuant to the terms of the Stock
Purchase Rights, the Company provided fixed rate, non-recourse loans,
aggregating $4,750, to such executives to finance their purchase of 152,000
shares of the Company's common stock, which the Company agreed to forgive
ratably over five years, subject to continued employment. Such loans were for
amounts equal to the fair market value of the associated shares at the date
of grant. Subsequently, from April 18, 1997 through April 24, 1997, the
Company purchased, for constructive retirement, 152,000 shares of its
outstanding common stock for $4,680. The excess of the purchase price over
par value was recorded as a reduction to additional paid-in capital.
Concurrent with this purchase, the Company sold to the Operating Partnership
152,000 common units for $4,680.
The value of the Restricted Stock Awards and the balance of the loans related
to the Stock Purchase Rights at the grant date were recorded as unamortized
stock compensation in stockholders' equity. As a result of provisions
contained in certain of the Company's executive officers' employment
agreements, which were triggered by the Mack Transaction on December 11,
1997, the loans provided by the Company under the Stock Purchase Rights were
forgiven by the
Page 22 of 34
<PAGE>
Company, and the vesting and issuance of the restricted stock issued under the
Restricted Stock Awards was accelerated, and related tax obligation payments
were made.
Earnings Per Share
- ------------------
FASB No. 128 requires a dual presentation of basic and diluted earnings per
share ("EPS") on the face of the income statement for all companies with complex
capital structures even where the effect of such dilution is not material. Basic
EPS excludes dilution and is computed by dividing net income available to common
stockholders by the weighted average number of shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock.
The following information presents the Company's results for the three and six
month periods ended June 30, 1998 and 1997 in accordance with FASB No. 128.
<TABLE>
<CAPTION>
Three Months
Ended June 30,
1998 1997
---- ----
Basic EPS Diluted EPS Basic EPS Diluted EPS
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Net income $ 28,015 $ 28,015 $ 18,025 $ 18,025
Add: Net income attributable
to potentially dilutive
securities -- 3,500 -- 2,012
-------- --------- --------- ---------
Adjusted net income $ 28,015 $ 31,515 $ 18,025 $ 20,037
-------- --------- --------- ---------
-------- --------- --------- ---------
Weighted average shares 57,019 64,626 36,489 41,213
-------- --------- --------- ---------
Per Share $ 0.49 $ 0.49 $ 0.49 $ 0.49
-------- --------- --------- ---------
-------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1998 1997
---- ----
Basic EPS Diluted EPS Basic EPS Diluted EPS
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Net income $ 54,558 $ 54,558 $ 34,484 $ 34,484
Add: Net income attributable
to potentially dilutive
securities -- 6,895 -- 3,648
-------- --------- --------- ---------
Adjusted net income $ 54,558 $ 61,453 $ 34,484 $ 38,132
-------- --------- --------- ---------
-------- --------- --------- ---------
Weighted average shares 54,207 61,671 36,475 41,016
-------- --------- --------- ---------
Per Share $ 1.01 $ 1.00 $ 0.95 $ 0.93
-------- --------- --------- ---------
-------- --------- --------- ---------
</TABLE>
The following schedule reconciles the shares used in the basic EPS calculation
to the shares used in the diluted EPS calculation.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic EPS Shares: 57,019 36,489 54,207 36,475
Add: Operating Partnership units 7,126 4,091 6,848 3,859
Stock options 444 434 529 483
Restricted Stock Awards -- 199 -- 199
Stock Warrants 37 -- 87 --
------ ------ ------ ------
Diluted EPS Shares: 64,626 41,213 61,671 41,016
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
Pursuant to the Repurchase Program, from August 7, 1998 through August 12, 1998,
the Company purchased for constructive retirement, 215,200 shares of its
outstanding common stock for approximately $6,586.
Page 23 of 34
<PAGE>
14. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
The Company has adopted Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income ("FASB No. 130"), which establishes standards for
the reporting and display of comprehensive income and its components; however
the adoption of this statement had no impact on the Company's financial
statement presentation. The Company does not currently have any items of
comprehensive income requiring separate reporting and disclosure.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131, Disclosures about Segments of an Enterprise and Related Information, ("FASB
No. 131"), which establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and require that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. This
statement is effective for financial statements for annual periods beginning
after December 15, 1997 and interim periods a year later, and requires that
comparative information from earlier years be restated to conform to the
requirements of this standard.
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("FASB No.
133"). FASB No. 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999 (January 1, 2000 for the Company). FASB No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. Management of the Company anticipates that, due to its
limited use of derivative instruments, the adoption of FASB No. 133 will not
have a significant effect on the Company's results of operations or its
financial position.
15. PRO FORMA FINANCIAL INFORMATION (unaudited)
The following proforma financial information for the three and six month periods
ended June 30, 1998 and 1997 are presented as if the RM Transaction, the Mack
Transaction and all other acquisitions and common stock offerings completed in
1997, and all acquisitions and common stock offerings completed during the six
month period ended June 30, 1998 had all occurred on January 1, 1997. In
management's opinion, all adjustments necessary to reflect the effects of these
transactions have been made.
This pro forma financial information is not necessarily indicative of what the
actual results of operations of the Company would have been assuming such
transactions had been completed as of January 1, 1997, nor do they represent the
results of operations of future periods.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total revenues $ 127,156 $ 127,655 $ 251,359 $ 250,686
Operating and other expenses 37,534 42,965 73,668 80,367
General and administrative 6,615 9,100 13,785 15,497
Depreciation and amortization 19,797 19,686 39,007 37,861
Interest expense 25,869 26,832 50,903 53,619
---------- ---------- ----------- ----------
Income before minority interest
and extraordinary item 37,341 29,072 73,996 63,342
Minority interest 7,867 6,623 15,525 13,812
---------- ---------- ----------- ----------
Income before extraordinary item $ 29,474 $ 22,449 $ 58,471 $ 49,530
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Basic earnings per common share $ 0.51 $ 0.39 $ 1.01 $ 0.86
Diluted earnings per common share $ 0.50 $ 0.39 $ 1.00 $ 0.85
---------- ---------- ----------- ----------
</TABLE>
Page 24 of 34
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
Item 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Mack-Cali Realty Corporation and the notes thereto.
The following comparisons for the three and six month periods ended June 30,
1998 ("1998"), as compared to the three and six month periods ended June 30,
1997 ("1997") make reference to the following: (i) the effect of the "Same-Store
Properties," which represents all properties owned by the Company at March 31,
1997 (for the three-month period comparisons), and which represents all
properties owned by the Company at December 31, 1996 (for the six-month period
comparisons), (ii) the effect of the acquisition of the RM Properties on January
31, 1997, (iii) the effect of the acquisition of the Mack Properties on December
11, 1997, and (iv) the effect of the "Acquired Properties," which represents all
properties acquired by the Company from April 1, 1997 through June 30, 1998,
excluding Mack Properties (for the three-month period comparisons), and which
represents all properties acquired by the Company from January 1, 1997 through
June 30, 1998, excluding RM Properties and Mack Properties (for the six-month
period comparisons).
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997
Total revenues increased $61.5 million, or 101.6 percent, for the three months
ended June 30, 1998 over the same period in 1997. Base rents increased $55.5
million, or 110.1 percent, of which an increase of $19.4 million, or 38.5
percent, was attributable to the Acquired Properties, and an increase of $36.4
million, or 72.2 percent, due to the Mack Properties, offset by a decrease of
$0.3 million, or 0.6 percent, due to occupancy and rental rate changes at the
Same-Store Properties. Escalations and recoveries increased $4.7 million, or
61.2 percent, of which an increase of $2.3 million, or 30.3 percent, was
attributable to the Acquired Properties, and an increase of $2.4 million, or
30.9 percent, due to the Mack Properties. Parking and other income increased
$0.8 million, or 41.5 percent, of which $0.5 million, or 28.8 percent, was
attributable to the Mack Properties, $0.2 million, or 9.3 percent, was
attributable to the Acquired Properties, and $0.1 million, or 3.4 percent, due
to the Same-Store Properties. Interest income increased $0.5 million, or 112.0
percent, due primarily to interest received in connection with the Company's
$20.0 million mortgage note receivable in 1998.
Total expenses for the three months ended June 30, 1998 increased $43.4 million,
or 107.1 percent, as compared to the same period in 1997. Real estate taxes
increased $5.4 million, or 82.5 percent, for 1998 over 1997, of which an
increase of $2.2 million, or 33.0 percent, was attributable to the Acquired
Properties, an increase of $2.9 million, or 44.7 percent, due to the Mack
Properties, and an increase of $0.3 million, or 4.8 percent, attributable to the
Same-Store Properties. Additionally, operating services increased $8.3 million,
or 112.4 percent, and utilities increased $4.9 million, or 116.3 percent, for
1998 over 1997. The aggregate increase in operating services and utilities of
$13.2 million, or 113.8 percent, consists of $4.6 million, or 39.9 percent,
attributable to the Acquired Properties, and an increase of $8.9 million, or
76.6 percent, due to the Mack Properties, offset by a decrease of $0.3 million,
or 2.7 percent, attributable to the Same-Store Properties. General and
administrative expense increased $2.7 million, or 70.3 percent, of which $2.0
million, or 52.0 percent, is due primarily to an increase in payroll and related
costs as a result of the Company's expansion, and $0.7 million, or 18.3 percent,
due to additional costs related to the Mack Properties. Depreciation and
amortization increased $10.0 million, or 110.3 percent, for 1998 over 1997, of
which $3.8 million, or 42.3 percent, relates to depreciation on the Acquired
Properties, an increase of $5.8 million, or 63.3 percent, due to the Mack
Properties, and an increase of $0.4 million, or 4.7 percent, due to the
Same-Store Properties. Interest expense increased $12.1 million, or 126.9
percent, for 1998 over 1997, of which $0.3 million, or 3.4 percent, was
attributable to assumed mortgages on Acquired Properties, an increase of $6.0
million, or 63.1 percent, due to assumed mortgages from the Mack Properties, and
an increase of $5.8 million, or 60.4 percent, due to net additional drawings
from the Company's credit facilities as a result of Company acquisitions and the
$200 million Prudential Term Loan obtained in December 1997, as well as changes
in LIBOR.
Income before minority interest and extraordinary item increased to $38.1
million in 1998 from $20.0 million in 1997. The increase of $18.1 million was
due to the factors discussed above.
Net income increased $10.0 million for 1998, from $18.0 million in 1997 to $28.0
million in 1998. This increase was a result of an increase in income before
minority interest and extraordinary item of $18.1 million, offset by an increase
of $5.7 million in minority interest, primarily attributable to distributions on
Preferred Units in 1998 of $4.0 million, and an extraordinary item of $2.4
million (net of minority interest), related to early retirement of debt.
Page 25 of 34
<PAGE>
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Total revenues increased $115.2 million, or 102.2 percent, for the six months
ended June 30, 1998 over the same period in 1997. Base rents increased $105.6
million, or 113.3 percent, of which an increase of $27.9 million, or 29.9
percent, was attributable to the Acquired Properties, an increase of $5.6
million, or 6.0 percent, due to the RM Properties, and an increase of $72.1
million, or 77.4 percent, due to the Mack Properties. Escalations and recoveries
increased $8.5 million, or 59.1 percent, of which an increase of $3.4 million,
or 23.9 percent, was attributable to the Acquired Properties, an increase of
$0.5 million, or 2.9 percent, due to the RM Properties, and an increase of $4.7
million, or 32.7 percent, due to the Mack Properties, offset by a decrease of
$0.1 million, or 0.4 percent, due to occupancy changes at the Same-Store
Properties. Parking and other income increased $1.3 million, or 36.5 percent, of
which $0.9 million, or 25.7 percent, was due to the Mack Properties, and $0.3
million, or 9.0 percent, was attributable to the Acquired Properties, and an
increase of $0.3 million, or 7.2 percent, due to the Same-Store Properties,
offset by a decrease of $0.2 million, or 5.4 percent, due to the RM Properties.
Interest income decreased $0.2 million, or 11.0 percent, due primarily to the
use of funds held in 1997 to fund the RM Transaction, partially offset by
interest received in connection with the Company's $20.0 million mortgage note
receivable in 1998.
Total expenses for the six months ended June 30, 1998 increased $81.3 million,
or 109.0 percent, as compared to the same period in 1997. Real estate taxes
increased $10.0 million, or 83.8 percent, for 1998 over 1997, of which an
increase of $3.0 million, or 24.7 percent, was attributable to the Acquired
Properties, an increase of $0.8 million, or 7.0 percent, due to the RM
Properties, an increase of $5.8 million, or 48.6 percent, due to the Mack
Properties, and an increase of $0.4 million, or 3.5 percent, attributable to the
Same-Store Properties. Additionally, operating services increased $14.5 million,
or 105.6 percent, and utilities increased $9.5 million, or 119.4 percent, for
1998 over 1997. The aggregate increase in operating services and utilities of
$24.0 million, or 110.6 percent, consists of $0.8 million, or 3.7 percent,
attributable to the RM Properties, an increase of $6.4 million, or 29.5 percent,
due to the Acquired Properties, and an increase of $17.2 million, or 79.1
percent, due to the Mack Properties, offset by a decrease of $0.4 million, or
1.7 percent, attributable to the Same-Store Properties. General and
administrative expense increased $5.7 million, or 81.8 percent, of which $4.1
million, or 59.6 percent, is due primarily to an increase in payroll and related
costs as a result of the Company's expansion, $1.5 million, or 20.8 percent, due
to additional costs related to the Mack Properties, and $0.1 million, or 1.4
percent, attributable to additional costs related to the RM Properties.
Depreciation and amortization increased $18.5 million, or 109.7 percent, for
1998 over 1997, of which $5.4 million, or 32.1 percent, relates to depreciation
on the Acquired Properties, an increase of $1.4 million, or 8.3 percent,
attributable to the RM Properties, an increase of $11.3 million, or 67.2
percent, due to the Mack Properties, and an increase of $0.4 million, or 2.1
percent, due to the Same-Store Properties. Interest expense increased $23.1
million, or 134.8 percent, for 1998 over 1997, of which $1.1 million, or 6.5
percent, was attributable to the TIAA Mortgage, $0.5 million, or 3.1 percent,
due to assumed mortgages on Acquired Properties, an increase of $11.4 million,
or 66.1 percent, due to assumed mortgages from the Mack Properties, and an
increase of $10.1 million, or 59.1 percent, due to net additional drawings from
the Company's credit facilities as a result of Company acquisitions and the $200
million Prudential Term Loan obtained in December 1997, as well as changes in
LIBOR.
Income before minority interest and extraordinary item increased to $72.0
million in 1998 from $38.1 million in 1997. The increase of $33.9 million was
due to the factors discussed above.
Net income increased $20.1 million for 1998, from $34.5 million in 1997 to $54.6
million in 1998. This increase was a result of an increase in income before
minority interest and extraordinary item of $33.9 million, offset by an increase
of $11.4 million in minority interest, primarily attributable to distributions
on preferred units in 1998 of $7.9 million, and an extraordinary item of $2.4
million (net of minority interest), related to early retirement of debt.
Liquidity and Capital Resources
Statement of Cash Flows
During the six months ended June 30, 1998, the Company generated $102.6 million
in cash flows from operating activities, and together with $1.3 billion in
borrowings from the Company's credit facilities and additional mortgage
financings, $284.5 million in net proceeds from the Company's common stock
offerings during the period, $20.0 million received from a repayment of a
mortgage note receivable, and $5.3 million in proceeds from stock options
exercised, $1.4 million from the Company's cash reserves, used an aggregate of
$1.7 billion to acquire 51 properties and pay for other tenant improvements and
building improvements for $625.4 million, repay outstanding borrowings on its
credit facilities and other mortgage debt of $949.8 million, pay quarterly
dividends and distributions of $63.2 million, invest $38.1 million in
partially-owned entities, provide $20.0 million for a mortgage note receivable,
pay financing costs of $7.5 million and repurchase 20,000 common units for $3.2
million.
Capitalization
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 Moutainview.
Page 26 of 34
<PAGE>
On March 18, 1998, in connection with the 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 26, 1998, in connection with the Pacifica I Acquisition, the Company
issued 100,175 common units, valued at approximately $3.8 million.
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 offer and sale of
994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34.6 million (after offering costs) primarily to pay down a
portion of its outstanding borrowings under the Company's credit facilities.
On April 30, 1998, in connection with the acquisition of a 49.9 percent interest
in a joint venture, the Company issued 218,105 common units, valued at
approximately $8.3 million.
On May 29, 1998, the Company completed an underwritten offer and sale of 984,615
shares of its common stock and used the net proceeds, which totaled
approximately $34.1 million (after offering costs) primarily to pay down a
portion of its outstanding borrowings under the Company's credit facilities.
On June 8, 1998, in connection with the Pacifica II Acquisition, the Company
issued 585,263 common units, valued at approximately $20.8 million.
During the six months ended June 30, 1998, the Company also issued 779,241
common units and 17,493 preferred units, valued at approximately $48.1 million,
in connection with the achievement of certain performance goals at the Mack
Properties, with an equivalent number of Contingent Units being redeemed.
On August 6, 1998, the Board of Directors of the Company authorized a share
repurchase program ("Repurchase Program") under which the Company was
permitted to purchase up to $100.0 million of the Company's common stock.
Purchases could be made from time to time in open market transactions at
prevailing prices or through privately negotiated transactions. Subsequently,
through August 12, 1998, the Company purchased, for constructive retirement,
215,200 shares of its outstanding common stock for an aggregate cost of
approximately $6.6 million. Concurrent with this purchase, the Company sold
to the Operating Partnership 215,200 common units for approximately $6.6
million.
On April 17, 1998, the Company repaid in full and terminated its $400 million
unsecured revolving credit facility, led by Fleet National Bank, and obtained a
new unsecured revolving credit facility (the "1998 Unsecured Facility") in the
amount of $870.0 million from a group of 25 lender banks, led by The Chase
Manhattan Bank and Fleet National Bank. In July 1998, the 1998 Unsecured
Facility was expanded to $900.0 million with the addition of two new lender
banks into the facility, bringing the total number of participants to 27 banking
institutions. The 1998 Unsecured Facility has a three-year term and currently
bears interest at 110 basis points over LIBOR, a reduction of 15 basis points
from the retired Original Unsecured Facility. Based upon the Company's
achievement of an investment grade unsecured debt rating, the interest rate will
be reduced, on a sliding scale, and a competitive bid option will become
available.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common
stock or other equity interests in an aggregate amount in excess of 90 percent
of funds from operations for such period, subject to certain other adjustments.
The 1998 Unsecured Facility also requires a 17.5 basis point fee on the
unused balance payable quarterly in arrears.
The lending group for the 1998 Unsecured Facility consists of: The Chase
Manhattan Bank, as administrative agent; Fleet National Bank, as syndication
agent; PNC Bank, N.A., as documentation agent; Bankers Trust, Commerzbank, AG,
The First National Bank of Chicago, First Union National Bank and NationsBank,
as managing agents; Creditanstalt Corporate Finance, Inc., Dresdner Bank, AG,
European American Bank, Hypo Bank, Societe Generale and Summit Bank, as
co-agents; and Kredietbank, N.V., Key Bank, Mellon Bank, N.A.,
Page 27 of 34
<PAGE>
The Bank of New York, Citizens Bank, Crestar, DG Bank, Tokai Bank, US Trust,
Bayerische Landesbank, Erste Bank, Bank Leumi USA, and Bank One, Arizona, N.A.
The new unsecured facility, together with the Company's previously-existing
$100.0 million revolving credit facility with Prudential Securities Corp.,
provides the Company with total credit lines borrowing capacity of $1.0 billion.
On April 30, the Company obtained a $150.0 million, interest-only, non-recourse
mortgage loan from The Prudential Insurance Company of America ("$150.0 Million
Prudential Mortgage Loan"). The loan, which is secured by 12 of the Company's
properties, has an effective annual interest rate of 7.10 percent and a
seven-year term. The Company, at its option, may convert the mortgage loan to
unsecured debt upon achievement by the Company of a credit rating of
Baa3/BBB- or better. The mortgage loan is prepayable in whole or in part subject
to certain provisions, including yield maintenance. The proceeds of the new loan
were used, along with funds drawn from one of the Company's credit facilities,
to retire a $200.0 million term loan with Prudential, as well as approximately
$48.2 million of the Mack Mortgages.
As of June 30, 1998, the Company has 164 unencumbered properties, totaling 16.4
million square feet, representing 60.6 percent of the Company's total portfolio
on a square footage basis.
On June 18, 1998, the Company and the Operating Partnership filed a registration
statement on Form S-3 for an aggregate of $2.0 billion in debt securities,
preferred stock and preferred stock represented by depositary shares. The
registration statement has not yet been declared effective by the SEC and
neither the Company nor the Operating Partnership has a current intention to
issue securities therefrom.
Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures. Management believes that the Company will
have access to the capital resources necessary to expand and develop its
business. To the extent that the Company's cash flow from operating activities
is insufficient to finance its non-recurring capital expenditures such as
property acquisition costs and other capital expenditures, the Company expects
to finance such activities through borrowings under its credit facilities and
other debt and equity financing.
The Company expects to meet its short-term liquidity requirements generally
through its working capital and net cash provided by operating activities,
along with the Prudential facility and the 1998 Unsecured Facility. The
Company is frequently examining potential property acquisitions and, at any
one given time, one or more of such acquisitions may be under consideration.
Accordingly, the ability to fund property acquisitions is a major part of the
Company's financing requirements. The Company expects to meet its financing
requirements through funds generated from operating activities, long-term or
short term borrowings (including draws on the Company's credit facilities)
and the issuance of debt securities or additional equity securities. In
addition, the Company anticipates utilizing the Prudential facility and the
1998 Unsecured Facility primarily to fund property acquisition activities.
The Company does not intend to reserve funds to retire the existing TIAA
mortgage, Harborside mortgages, $150.0 Million Prudential Mortgage Loan, its
various other property mortgages, and borrowings under the revolving credit
facilities or other long-term mortgages and loans payable upon maturity.
Instead, the Company will seek to refinance such debt at maturity or retire such
debt through the issuance of additional equity or debt securities. The Company
anticipates that its available cash and cash equivalents and cash flows from
operating activities, together with cash available from borrowings and other
sources, will be adequate to meet the Company's capital and liquidity needs both
in the short and long-term. However, if these sources of funds are insufficient
or unavailable, the Company's ability to make the expected distribution
discussed below may be adversely affected.
To maintain its qualification as a REIT, the Company must make annual
distributions to its stockholders of at least 95 percent of its REIT taxable
income, determined without regard to the dividends paid deduction and by
excluding net capital gains. Moreover, the Company intends to continue to make
regular quarterly distributions to its stockholders which, based upon current
policy, in the aggregate would equal approximately $115.9 million on an
annualized basis. However, any such distribution, whether for federal income tax
purposes or otherwise, would only be paid out of available cash after meeting
both operating requirements and scheduled debt service on mortgages and loans
payable.
Funds from Operations
The Company considers funds from operations ("FFO"), after adjustment for
straight-lining of rents, one measure of REIT performance. Funds from operations
is defined as net income (loss) before minority interest of unitholders,
computed in accordance with generally accepted accounting principles
("GAAP"), excluding gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and sales of property, plus
real estate-related depreciation and amortization. Funds from operations should
not be considered as an alternative to net income as an indication of the
Company's performance or to cash flows as a measure of liquidity. Funds from
operations presented herein is not necessarily comparable to funds from
operations presented by other real estate companies due to
Page 28 of 34
<PAGE>
the fact that not all real estate companies use the same definition. However,
the Company's funds from operations is comparable to the funds from operations
of real estate companies that use the current definition of the National
Association of Real Estate Investment Trusts ("NAREIT"), after the adjustment
for straight-lining of rents.
NAREIT's definition of funds from operations indicates that the calculation
should be made before any extraordinary item (determined in accordance with
GAAP), and before any deduction of significant non-recurring events that
materially distort the comparative measurement of the Company's performance.
Funds from operations for the three and six month periods ended June 30, 1998
and 1997, as calculated in accordance with the NAREIT's definition published
in March 1995, are summarized in the following table (in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Income before minority interest and extraordinary item $38,170 $20,037 $ 72,020 $38,132
Add: Real estate-related depreciation and
amortization (1) 19,211 8,786 35,330 16,265
Deduct: Rental income adjustment for
straight-lining of rents (1) (3,142) (2,337) (6,345) (3,944)
--------- ---------- --------- ---------
Funds from operations, after adjustment
for straight-lining of rents $54,239 $26,486 $101,005 $50,453
Less: Distributions to preferred unitholders 3,985 -- 7,896 --
--------- ---------- --------- ---------
Funds from operations, after adjustment for
straight-lining of rents, after distributions
to preferred unitholders $50,254 $26,486 $ 93,109 $50,453
--------- ---------- --------- ---------
--------- ---------- --------- ---------
Basic weighted average shares/units outstanding (2) 64,145 40,579 61,055 40,334
--------- ---------- --------- ---------
Diluted weighted average shares/units outstanding (2) 71,444 41,013 68,425 40,817
--------- ---------- --------- ---------
</TABLE>
(1) Includes FFO adjustments in 1998 related to the Company's investments in
partially-owned entitites.
(2) See calculation for the amounts presented in the reconciliation below.
The following schedule reconciles the Company's basic weighted average shares to
the basic and diluted weighted average shares/units presented above.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Basic weighted average shares: 57,019 36,489 54,207 36,475
Add: Weighted average common units 7,126 4,090 6,848 3,859
------- ------- ------- -------
Basic weighted average shares/units: 64,145 40,579 61,055 40,334
Add: Weighted average preferred units
(after conversion to common units) 6,818 -- 6,754 --
Stock options 444 434 529 483
Stock warrants 37 -- 87 --
------- ------- ------- -------
Diluted weighted average share/units: 71,444 41,013 68,425 40,817
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Inflation
The Company's leases with the majority of its tenants provide for recoveries and
escalation charges based upon the tenant's proportionate share of, and/or
increases in, real estate taxes and certain operating costs, which reduce the
Company's exposure to increases in operating costs resulting from inflation.
Year 2000
Many computer systems experience problems handling dates beyond the year 1999.
Therefore, some computer hardware and software will need to be modified prior to
the year 2000 in order to remain functional. The Company is assessing both the
internal readiness of its systems as well as the compliance of its vendors for
the handling of the year 2000. The Company expects to implement successfully the
Page 29 of 34
<PAGE>
systems and programming changes necessary to address year 2000 issues, and does
not believe that the cost of such actions will have a material effect on the
Company's results of operations or financial condition. There can be no
assurance, however, that there will not be a delay in, or increased costs
associated with, the implementation of such changes, and the Company's inability
to implement such changes could have an adverse effect on future results of
operations.
Disclosure Regarding Forward-Looking Statements
The Company considers portions of this information to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of The Securities Exchange Act of 1934. Although the Company
believes that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, it can give no assurance that its
expectations will be achieved.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
Page 30 of 34
<PAGE>
MACK-CALI REALTY CORPORATION
Part II -- Other Information
Item 1. Legal Proceedings
Reference is made to "Other Contingencies" in Note 11 (Commitments and
Contingencies) to the Consolidated Financial Statements, which is
specifically incorporated by reference herein.
Item 2. Changes in Securities and Use of Proceeds
(c) Reference is made to the sixth, seventh and eighth paragraphs under
"Common Units" and "Contingent Common and Preferred Units" in Note 9
(Minority Interest) to the Consolidated Financial Statements, which are
specifically incorporated by reference herein.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On May 21, 1998, the Company held its Annual Meeting of Stockholders to
elect four directors to the Board of Directors of the Company, among
other things. At the Annual Meeting, the shareholders re-elected the
following Class I directors to serve until the Annual Meeting of
Stockholders to be held in 2001: Brendan T. Byrne (Number of shares
for: 42,988,183, Number of shares against: 6,416,881), Martin D.
Gruss (Number of shares for: 43,011,747, Number of shares
against: 6,393,317), Jeffrey B. Lane (Number of shares for: 43,004,942,
Number of shares against: 6,400,122) and Vincent Tese (Number of
shares for: 43,001,727, Number of shares against: 6,403,337).
The remaining members of the 13 member Board of Directors
and their respective terms of offices are as follows:
Class II directors, William L. Mack, Earle I. Mack, Paul A.
Nussbaum and Alan G. Philibosian, whose terms expire at the Annual
Meeting of Stockholders to be held in 1999 and Class III directors,
John J. Cali, Thomas A. Rizk, Mitchell E. Hersh, Irvin D. Reid and
Robert F. Weinberg, whose terms expire at the Annual Meeting of
Stockholders to be held in 2000. At the Annual Meeting, the
shareholders also voted upon and approved the following proposals: (i)
the ratification of the appointment of Price Waterhouse LLP (currently
known as PricewaterhouseCoopers LLP), independent accountants, as the
Company's independent accountants for the ensuing year (Number of
shares for: 49,306,961, Number of shares against: 50,817, Number of
shares abstained: 47,207, Number of shares of broker non-votes: 79) and
(ii) the adoption of an amendment to the Company's Amended and Restated
Articles of Incorporation to decrease the number of affirmative votes
necessary to effect an admendment thereto from two-thirds to a majority
of the shares outstanding (Number of shares for: 41,489,309, Number of
shares against: 1,239,783, Number of shares abstained: 213,667, Number
of shares of broker non-votes 6,462,305).
Page 31 of 34
<PAGE>
MACK-CALI REALTY CORPORATION
Part II -- Other Information (continued)
Item 5. Other Information
A recent change in the proxy rules of the Securities and Exchange
Commission limits the circumstances under which the proxy voting card
distributed by registered companies to their shareholders may permit
those companies to cast the votes represented by the proxy voting
cards in their sole discretion. As applied to the Company, the most
important limitation is as follows: For proposals made by a
shareholder at the 1999 annual meeting that were not properly
submitted by the shareholder for inclusion in the Company's own
proxy materials, the Company may vote proxies in its discretion
about those proposals only if it has not received notice from the
shareholder by February 14, 1999 at the latest that the shareholder
intends to make those proposals at the meeting.
Page 32 of 34
<PAGE>
MACK-CALI REALTY CORPORATION
Part II -- Other Information (continued)
Item 6 - Exhibits
(a) The following exhibits are filed herewith:
Exhibit No. Exhibit Title
- ----------- -------------
10.168 Real Estate Purchase and Sale Agreement between
JAD Properties LLC. as Seller, and Mack-Cali
Realty, L.P., as Purchaser, dated April 1998.
10.169 Operating Agreement of American Financial Exchange L.L.C.
between M-C Harsimus Partners L.P and Columbia Development
Company, L.L.C., dated as of May 20, 1998.
10.170 First Amendment to Contribution and Exchange Agreement among
Pacifica Holding Company LLC and Apollo Real Estate Investment
Fund II, L.P., as Contributors, Mack-Cali Realty, L.P. and
Mack-Cali Realty Corporation dated June 8, 1998.
10.171 Agreement of Sale between Lancer Associates, L.L.C. and
Mack-Cali Realty, L.P. dated January 1998.
(b) On June 12, 1998, the Company filed a Current Report on Form 8-K which
reported certain acquisitions and filed special purpose financial statements
and unaudited pro forma financial information. A Current Report on Form
8-K/A, amending the June 12, 1998 8-K, was filed with the SEC on August 5, 1998.
Page 33 of 34
<PAGE>
MACK-CALI REALTY CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Mack-Cali Realty Corporation
(Registrant)
Date: August 14, 1998 /s/ Thomas A. Rizk
-----------------------------
Thomas A. Rizk
Chief Executive Officer
Date: August 14, 1998 /s/ Barry Lefkowitz
-----------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
Page 34 of 34
<PAGE>
Exhibit 10.168
REAL ESTATE PURCHASE AND SALE AGREEMENT
BETWEEN
JAD PROPERTIES, LLC
"SELLER"
AND
MACK-CALI REALTY L.P.
"PURCHASER"
FOR
400 SOUTH COLORADO BOULEVARD
GLENDALE, COLORADO
<PAGE>
TABLE OF CONTENTS
1. Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase Price; Earnest Money. . . . . . . . . . . . . . . . . 1
3. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Conditions to Closing. . . . . . . . . . . . . . . . . . . . . 5
5. Permitted Title Exceptions . . . . . . . . . . . . . . . . . . 8
6. Representations and Warranties of Seller . . . . . . . . . . . 8
7. Representations and Warranties of Purchaser. . . . . . . . . . 11
8. Seller's Covenants . . . . . . . . . . . . . . . . . . . . . . 11
9. Delivery of Due Diligence Investigation Reports. . . . . . . . 12
10. Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11. Transfer Taxes; Title Charges. . . . . . . . . . . . . . . . . 14
12. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . 14
13. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . 14
14. Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
15. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16. Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . 16
17. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 16
18. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 16
19. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
20. Assignability. . . . . . . . . . . . . . . . . . . . . . . . . 16
21. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 16
22. Modifications; Waiver. . . . . . . . . . . . . . . . . . . . . 16
23. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 16
24. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . 17
25. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
26. No Personal Liability of Members or Managers of Parties. . . . 17
27. No Third Party Rights. . . . . . . . . . . . . . . . . . . . . 17
28. Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
29. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 17
30. Non-business Days. . . . . . . . . . . . . . . . . . . . . . . 17
31. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 17
32. Recordation. . . . . . . . . . . . . . . . . . . . . . . . . . 17
33. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . 17
34. Disclosure - Special Taxing Districts - General Obligation
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 17
35. Disclosure of Environmental Report . . . . . . . . . . . . . . 18
36. Termination of Service Contracts . . . . . . . . . . . . . . . 18
37. Environmental Provision. . . . . . . . . . . . . . . . . . . . 18
38. 1031 Exchange. . . . . . . . . . . . . . . . . . . . . . . . . 19
39. Purchaser's Obligations After Termination. . . . . . . . . . . 19
40. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 19
41. Information and Audit Cooperation. . . . . . . . . . . . . . . 19
42. Further Assurances . . . . . . . . . . . . . . . . . . . . . . 19
43. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
44. Indemnifications . . . . . . . . . . . . . . . . . . . . . . . 20
i
<PAGE>
EXHIBIT INDEX
EXHIBIT REFERENCE
Exhibit A - Legal Description
Exhibit B - Permitted Exceptions
Exhibit C - Building Service Agreements
Exhibit D - Personal Property
Exhibit E - Escrow Instructions
Exhibit F - Special Warranty Deed
Exhibit G - Bill of Sale
Exhibit H - Assignment and Assumption of Contracts
Exhibit I - Tenant Estoppel Certificate Form
Exhibit J - Standard Lien Affidavit
Exhibit K - Special Warranty Assignment and Assumption of Ground Lease
Exhibit L - Cissell Estoppel Certificate
Exhibit M - Rent Roll
ii
<PAGE>
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS REAL ESTATE PURCHASE AND SALE AGREEMENT ("AGREEMENT") is entered
into as of this day of April, 1998, between JAD PROPERTIES, LLC, A
COLORADO LIMITED LIABILITY COMPANY ("SELLER") and MACK-CALI REALTY L.P., A
DELAWARE LIMITED PARTNERSHIP. ("PURCHASER").
1. PURCHASE AND SALE. In consideration of their mutual covenants
set forth in this Agreement, Seller agrees to sell to Purchaser and Purchaser
agrees to buy for the Purchase Price $11,975,000 and on the terms and conditions
set forth herein, the following:
(a) That certain parcel of land situated in the County of
Arapahoe, State of Colorado, described on EXHIBIT A attached hereto and made a
part hereof, and commonly known as the 400 SOUTH COLORADO BOULEVARD, GLENDALE,
COLORADO 80 (the "OWNED LAND").
(b) The Seller's leasehold interest as lessee (the "CISSELL
LEASEHOLD") granted by a certain lease dated September 21, 1977, by and between
Vincent J. Cissell and Shaaron K. Cissell, as the original lessors, and George
Irvin Chevrolet Co., a Colorado corporation, as the original lessee, as amended
(the "CISSELL LEASE").
(c) All existing improvements and fixtures (collectively, the
"IMPROVEMENTS") located on the Owned Land and on the real property which is the
subject of the Cissell Lease (the "CISSELL PARCEL"), and including, but only to
the extent of any right thereto upon lease termination, the improvements and
fixtures located on the Real Property which is demised by a certain Ground Lease
Agreement dated January 24, 1992 by and between the Seller as lessor and RCI
West, Inc., a Colorado corporation, as tenant, as amended (the "RCI LEASE").
(d) All personal property owned by Seller located on or in
the Owned Parcel, the Cissell Parcel or Improvements and used in connection with
the ownership, operation of the Owned Parcel or Improvements as is described on
EXHIBIT D attached hereto and made a part hereof including without limitation
furniture, art work, furnishings, office equipment and supplies, and all
supplies, and construction and finish materials not incorporated in the
Improvements and stored on site for repairs and replacements ("PERSONAL
PROPERTY").
(e) Seller's interest in all leases, licenses and other
agreements to occupy or use the Owned Parcel, the Cissell Parcel and/or the
Improvements, or any contiguous land, or any portion thereof, as amended from
time to time, in effect on the date of Closing, as hereinafter defined, together
with all security deposits (cash or non-cash) made with respect thereto (all
such leases and agreements being collectively referred to herein as "LEASES").
(f) All Intangible Property owned by Seller and used in
connection with the Owned Land, Improvements and Personal Property, including,
without limitation, any and all trademarks and trade names, logos and trade
colors used in connection with any part of the Owned Land, the Cissell Parcel
and Improvements, and all plans, specifications, and studies, if any, in the
possession of Seller in connection with the Improvements, all rights, interests,
claims, minerals and mineral rights, water and water rights, if any,
hereditaments, privileges, tenements and appurtenances belonging to the Owned
Land and the Cissell Parcel, all right, title and interest of Seller in and to
all open or proposed highways, streets, roads, avenues, alleys, curb cuts,
sidewalks, sewers, utilities, easements, strips, gores and rights-of-way in, on,
across, in front of, contiguous to, abutting or adjoining the Owned Land and the
Cissell Parcel, licenses, certificates of occupancy, permits and warranties now
in effect with respect to the Owned Land, the Cissell Parcel, Improvements and
Personal Property, all Service Contracts in effect at Closing, in any way
relating to the Premises (as hereinafter defined), and all equipment leases and
all rights of Seller thereunder relating to equipment or property located upon
the Premises, which will survive the Closing ("INTANGIBLE PROPERTY").
The Owned Land and the Cissell Leasehold, along with their appurtenant
Improvements, Personal Property, Leases and Intangible Property (but not
including the improvements and fixtures located on the real property which is
demised by the RCI Lease (the "RCI PARCEL"), except to the extent of any right
thereto upon termination of the RCI Lease), are referred to herein as the
"PREMISES".
2. PURCHASE PRICE: EARNEST MONEY. The purchase price for the
Premises shall be Eleven Million Nine Hundred Seventy Five Thousand and 00/100
Dollars ($11,975,000.00) ("PURCHASE PRICE") which is to be paid as follows:
(a) No later than April 20, 1998, $500,000.00 shall be
deposited as earnest money by Purchaser in the form of cash or by federal funds
wire transfer, cashier's or certified check made payable to Stewart Title of
Denver, Inc. at its offices located at 50 So. Steele Street, Suite 600, Denver,
Colorado 80209 (the "TITLE AGENT") as agent for Stewart Title Guaranty Company
(the "TITLE COMPANY"). The $500,000.00 and any interest thereon shall be
referred to herein as the "EARNEST MONEY". The Earnest Money shall be applied
to the Purchase Price at Closing (as hereinafter defined). The Earnest Money
shall be deposited with and held by the Title Agent in accordance with Escrow
Instructions and this Agreement in the form attached hereto as EXHIBIT E, to be
executed by Seller and Purchaser (the "ESCROW INSTRUCTIONS").
(b) Not later than 12:00 p.m. (Noon), Mountain Time, on the
Closing Date (as herein defined), Purchaser shall deposit with the Title Agent,
in immediately available funds, the sum necessary, along with the Earnest Money,
to make the total consideration paid to Seller at Closing equal to the Purchase
Price, plus or minus prorations as hereinafter provided.
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3. CLOSING.
(a) Subject to the terms and conditions of this Agreement,
the consummation of the purchase and sale of the Premises (the "CLOSING") shall
take place commencing at 10:00 a.m. Mountain Time at the office of the Title
Agent, and shall be conducted by the Title Agent on May 29, 1998 (the "CLOSING
DATE"), or on such other earlier date as may be mutually agreed by the parties.
(b) In order to facilitate the Closing, both parties shall
use diligent efforts to have all unsigned documents necessary for the
consummation of this transaction delivered to the Title Agent and the other
party, on the day before the Closing Date, and Seller shall deliver possession
of the Premises to Purchaser on the Closing Date. Closing shall occur through
an escrow with the Title Agent. Upon satisfaction or completion of all closing
conditions and deliveries, the parties shall direct the Title Agent to
immediately record and deliver the Closing Documents to the appropriate parties
and make disbursements according to the closing statements executed by Seller
and Purchaser. The Title Agent shall agree in writing with Seller and Purchaser
that (1) recordation of the Deed constitutes its representation that it is
holding the Closing Documents, closing funds and closing statement and is
prepared and irrevocably committed to disburse the closing funds in accordance
with the closing statements and (2) release of funds to the Seller shall
irrevocably commit it, as agent for the Title Company to issue the Title Policy
in accordance with this Agreement. Provided such supplemental Escrow
Instructions are not in conflict with this Agreement as it may be amended in
writing from time to time, Seller and Purchaser agree to execute such
supplemental Escrow Instructions as may be appropriate to enable Title Agent to
comply with the terms of this Agreement. All prorations shall be calculated as
of the Closing Date and the Closing Date shall be a date of income and expense
to the Seller.
(c) SELLER'S CLOSING DOCUMENTS. At Closing, Seller shall
execute, (and if required, acknowledge) and shall deliver the following
documents ("CLOSING DOCUMENTS") at its expense:
(1) A Special Warranty Deed for the Owned Land ("DEED") in
recordable form executed on behalf of Seller, conveying to Purchaser the Real
Estate and Improvements, subject only to the Permitted Exceptions, as
hereinafter defined, in the form of EXHIBIT F attached hereto and incorporated
herein by this reference;
(2) A Special Warranty Assignment and Assumption of the
Cissell Lease in the form attached hereto as EXHIBIT K.
(3) A Special Warranty Bill of Sale making no warranty of
condition or fitness, conveying to Purchaser the Personal Property, in the form
of EXHIBIT G attached hereto and incorporated herein by this reference;
(4) An Assignment and Assumption of Contracts assigning and
conveying to Purchaser, without warranty or representation except as set forth
in this Agreement and EXHIBIT H, the Seller's interest in, to and under the
Leases and containing an assumption by Purchaser of the Seller's obligations
under the Leases for the Owned Land, from and after the Closing Date (including
any obligations relating to security deposits), and Seller's interest in all
Service Contracts (which Purchaser elects to assume under this Agreement)
pursuant to Paragraph 36 hereof and all Intangible Property in the form of
EXHIBIT H attached hereto and incorporated herein by this reference;
(5) An affidavit sworn by an officer of Seller to the effect
that Seller is not a "foreign person" as that term is defined in Section
1445(f)(3) of the Internal Revenue Code of 1954, as amended, which affidavit
shall be in such form as may be prescribed by federal regulations;
(6) The Title Policy, as hereinafter defined in Paragraph
4(c)(v), for the Owned Land or an unconditional commitment of the Title Company
to issue the Title Policy, subject only to the Permitted Exceptions and with the
endorsements described in Paragraph 4(c)(v), the base cost of which shall be
paid by Seller, provided, however, that, if Purchaser desires any endorsements
described in Paragraph 4(c)(v) to such Title Policy, the Purchaser shall pay the
cost thereof; the Seller shall cooperate with the Purchaser to obtain deletion
of the standard printed title exceptions from Schedule B-2 of the Title Policy,
at no cost to either party, provided that Seller shall not be required to incur
any obligation other than as set forth in Paragraph 3(c)(7) and Paragraph
4(a)(2)(i) and (ii);
(7) A Certificate of Authority of Seller evidencing the
status and capacity of Seller and the authority of the person or persons who are
executing the various documents on behalf of Seller in connection with this
Agreement;
(8) The Title Company's Standard Lien Affidavit in the form
attached hereto as EXHIBIT J;
(9) An original (or, if Seller does not have an original, a
copy and with the exception of originals required to be kept by Seller under
Internal Revenue Service regulations, such as purchase invoices, checks, deposit
slips, etc.) of all of the Leases, Service Contracts and Intangible Property
which are in the possession of Seller or Seller's agents, together with such
leasing and property files and records, if any, which are in the possession of
Seller or Seller's agents but excepting those documents which are to be
delivered to Purchaser pursuant to the provisions of Paragraph 3(c)(12) below.
Purchaser shall cooperate with Seller for a period equal to the shorter of (i)
five (5) years after Closing, or (ii) for as long as the Purchaser owns the
Premises, in case of Seller's need in response to any legal requirement, a tax
audit, tax return preparation or litigation threatened or brought against
Seller, by allowing Seller and its agents or representative access, upon
reasonable advance notice (which notice shall identify the nature of the
information sought
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by Seller), at all reasonable times to examine and make copies of any and all
instruments, files and records pertaining to a period prior to the Closing,
which right shall survive the Closing;
(10) Letters of termination, effective no later than Closing,
of those Service Contracts which Purchaser has timely elected not to assume
under the provisions of Paragraph 36, including any management agreements
affecting the Premises;
(11) If applicable under local law, or required by the Title
Company, a waiver of any lien rights by the company managing the Premises and,
if different, the company leasing the Premises for Seller at the time of
Closing;
(12) Any other closing deliveries required of Seller under
this Agreement to be made by or on behalf of Seller;
(13) A letter by which Seller directs its property manager to
deliver to Purchaser all books and records of account, contracts, leases and
leasing correspondence, receipts for deposits, unpaid bills and other papers or
documents which pertain to the Premises together with all advertising materials,
booklets, keys and other items, if any, used in the operation of the Premises.
The foregoing shall not include (i) any copies (not originals) of any documents
of which Purchaser has already received either a copy or the original thereof;
(ii) any originals or copies of documents which have been generated by or for
Seller as part of any record keeping or filing obligations imposed on Seller by
any governmental agencies, except that Seller shall deliver to Purchaser a copy
of all federal tax returns filed by the Seller during its ownership of the
Premises, along with a computer disk of this Agreement in WordPerfect format;
(iii) any of the organizational books and records of the Seller as a legal
entity; and (iv) any documents in Seller's possession which do not relate
directly to the operation of the Premises (including, without limitation,
materials prepared for the advertising and marketing of the Premises for sale,
listing agreements of the Premises for sale and accounting records prepared for
purposes of evaluating the Premises in relation to other assets held by Seller
or its affiliated entities). Seller makes no representations regarding such
documents or items delivered by the property manager at or after Closing;
(14) A counterpart of a closing and proration statement;
(15) A counterpart of any required real estate transfer
declarations, disclosures or forms;
(16) Evidence of compliance with Colorado withholding tax
requirements (including, without limitation, the filing of Forms D1079 and
DR1083);
(17) A letter from Seller advising the tenants and the other
parties to the Leases and Service Contracts (which are being assumed by
Purchaser) of the assignment of their respective Leases and Service Contracts to
Purchaser and, with respect to the Leases, to whom rent is to be paid subsequent
to Closing;
(18) An updated Rent Roll dated as of the Closing Date,
certified by Seller as true, correct and complete; and
(19) A certificate executed by Seller recertifying the
representations and warranties set forth in Paragraph 6 below (subject to any
modifications allowed under said Paragraph 6) as of the Closing Date.
(20) A statement of termination, effective no later than the
Closing Date, of the Exclusive Leasing Agreement with Integrated Property
Management, Inc. dated November 18, 1997, executed by the parties thereto.
(d) PURCHASER'S CLOSING DOCUMENTS. At Closing, Purchaser, at
Purchaser's expense, shall deliver such documentary and other evidence as may be
reasonably required by Seller, the Title Agent, or the Title Company evidencing
the status and capacity of Purchaser, and the authority of the person or persons
who are executing the various documents on behalf of Purchaser in connection
with this Agreement, and shall deliver any other closing deliveries required of
Purchaser under this Agreement to be made by or on behalf of Purchaser.
(e) TENANTS' ESTOPPEL CERTIFICATES. No later than three (3)
business days prior to Closing, Seller shall deliver to Purchaser Clean Tenant
Estoppel Certificates (as defined below) from tenants occupying at least eighty
percent (80%) of the rentable area of the improvements located on the Owned Land
and the RCI Parcel, and such eighty percent (80%) must include a Clean Tenant
Estoppel Certificate from every tenant that occupies 5,000 or more square feet
of the rentable floor area in the Building on the Owned Land as of the date of
the Rent Roll delivered on the Closing Date. A "CLEAN TENANT ESTOPPEL
CERTIFICATE" shall mean either (i) a statement in the form of EXHIBIT I attached
hereto (but from which the applicable tenant may strike Paragraph L thereof, as
more fully set forth below), which does not contain any assertion or disclosure
by a tenant that there are any defaults by the Seller or that there are any
monetary or material nonmonetary defaults by the tenant under any provisions of
the applicable lease, or that there are any events which have occurred which,
with the passage of time or giving of notice or both, would result in Seller or
tenant being in default under such lease; or (ii), if after diligent efforts by
the Seller, any tenant refuses to execute an estoppel statement in the form of
EXHIBIT I, an estoppel statement in the form to which the landlord is entitled
under the applicable tenant's lease certifying that (a) the lease is in full
force and effect, subject only to such modifications (if any) as may be set out
therein; (b) the tenant is in possession of the leased premises and paying rent
as provided in its lease; (c) the dates (if any) to which rent is paid in
advance; and (d) that there are not, to such tenant's knowledge, any uncured
defaults on the part of the landlord under such lease.
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Seller shall use diligent efforts to obtain, in each Tenant
Estoppel Certificate, Paragraph L of EXHIBIT I; provided that, the fact that a
tenant has refused to agree to said provision (and said provision has been
stricken by the tenant from the tenant's Estoppel Certificate by striking out or
similar deletion) shall not, in itself, mean that the Estoppel Certificate is
not a Clean Tenant Estoppel Certificate. The parties understand that, during
the process of obtaining the Tenant Estoppel Certificates, if Seller becomes
aware of any defaults claimed by any tenants or of any other matters which would
prevent any tenant from delivering a Clean Tenant Estoppel Certificate, Seller
may attempt to resolve any such claimed defaults or other items, at Seller's
cost, in order to obtain a Clean Tenant Estoppel Certificate from such tenant.
Upon Seller's receipt of a Tenant Estoppel Certificate that is
not a Clean Tenant Estoppel Certificate, Seller shall have the right, but not
the obligation, to cure any default asserted in the Tenant Estoppel Certificate,
and for this purpose Seller, at its option, shall be entitled to a reasonable
adjournment of the Closing if additional time is required, but in no event shall
said adjournment exceed two (2) weeks after the date for Closing set forth in
Paragraph 3(a) hereof and in no event shall Seller be entitled to such
adjournment unless Seller gives written notice to Purchaser of its election to
so extend the Closing not less than two (2) business days prior to Closing.
If Seller is unable to deliver Clean Tenant Estoppel Certificates
for at least eighty percent (80%) of the rentable area under lease in Building
on the Owned Land as of the date of the Rent Roll delivered on the Closing Date
(including all tenants who have at least 5,000 square feet of rentable floor
area) no later than three (3) business days prior to Closing (whether as
originally scheduled or as postponed by Seller as required above, taking into
account any adjournment allowed by this paragraph), Purchaser may, by written
notice given to Seller no later than one (1) business day prior to Closing,
extend the Closing Date for two (2) additional weeks in order for Purchaser to
determine whether to proceed with this transaction. If on the originally
scheduled Closing Date or any postponed Closing Date permitted under this
Paragraph 3(e), the Seller is unable to deliver the Clean Estoppel Certificates
required under this Paragraph 3(e), Purchaser may then, in its sole discretion,
and as its sole remedy, either (i) terminate this Agreement by written notice to
Seller on or before such applicable Closing Date in which case the Earnest Money
shall be promptly returned to Purchaser and all parties shall be relieved from
any further liability hereunder except as provided in Paragraph 39 below; or
(ii), if Purchaser fails to give such notice of termination, Purchaser shall be
deemed to have waived its objection to the lack of sufficient Clean Tenant
Estoppel Certificates and the parties shall proceed to Closing without reduction
in the Purchase Price by reason thereof.
Seller shall, within five business days after the end of the Due
Diligence Period (the "ESTOPPEL REVIEW PERIOD"), prepare and deliver to
Purchaser for its review and comment the Estoppel Certificates in the form of
EXHIBIT I, and any such Estoppel Certificates shall be deemed approved by
Purchaser (for sending out by Seller to obtain the applicable tenant's signature
thereon) unless Purchaser gives Seller written notice of Purchaser's objections
thereto within three (3) days after receipt thereof. If this Agreement has not
been terminated by Purchaser at the end of the Due Diligence Period, Seller
shall deliver the Estoppel Certificates to the tenants promptly after the end of
the Estoppel Review Period.
A Clean Tenant Estoppel Certificate which is not signed by the
tenant shall be deemed to be an acceptable Clean Tenant Estoppel Certificate
from the tenant if (i) the applicable lease provides that the tenant shall be
deemed to have approved an estoppel certificate if such tenant fails to return
such certificate within a stated period of time, the tenant does so in fact fail
to return or object to such Clean Tenant Estoppel Certificate within the stated
period of time, and the Seller provides to the Purchaser evidence of the proper
delivery of the Clean Tenant Estoppel Certificate to such tenant showing the
start of the applicable time period, or (ii) the applicable lease provides that,
in certain circumstances, the landlord under such lease may execute an estoppel
certificate on behalf of such tenant, Seller does in fact execute such Clean
Tenant Estoppel Certificate and the Seller provides to Purchaser evidence that
such certain circumstances have occurred.
(f) CISSELL ESTOPPEL CERTIFICATE. No later than May 4, 1998
(the "CISSELL ESTOPPEL DEADLINE"), Seller shall deliver to Purchaser a Clean
Cissell Estoppel Certificate (as defined below) from the landlords under the
Cissell Lease. A "CLEAN CISSELL ESTOPPEL CERTIFICATE" shall mean either (i) a
statement in the form of EXHIBIT L attached hereto which does not contain any
assertion or disclosure by such landlords that there are any defaults by the
Seller under any provisions of the Cissell Lease, or that there are any events
which have occurred which, with the passage of time or giving of notice or both,
would result in Seller being in default under such lease; or (ii), if after
diligent efforts by the Seller, such landlords refuse to execute an estoppel
statement in the form of EXHIBIT L, an estoppel statement in the form to which
the Seller (as tenant) is entitled under the Cissell Lease certifying that (a)
the Cissell Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification and certifying that the Cissell Lease,
as so modified, is in full force and effect), (b) the date to which rent,
security deposit, and other charges are paid in advance, if any, and (c)
acknowledging that there are not, to the landlords' knowledge, any uncured
defaults on the part of Tenant under the Cissell Lease.
Seller shall use diligent efforts to obtain a Clean Cissell
Estoppel Certificate. Upon Seller's receipt of a Cissell Estoppel Certificate
that is not a Clean Cissell Estoppel Certificate, Seller shall have the right,
but not the obligation, to cure the default asserted in the Cissell Estoppel
Certificate. If Seller is unable to deliver a Clean Cissell Estoppel
Certificate no later than the Cissell Estoppel Deadline, Purchaser may then, in
its sole discretion, and as its sole remedy, either (i) terminate this Agreement
by written notice to Seller on or before one day after the Cissell Estoppel
Deadline in which case the Earnest Money shall be promptly returned to Purchaser
and all parties shall be
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relieved from any further liability hereunder except as provided in Paragraph 39
below; or (ii), if Purchaser fails to give such notice of termination by such
date, Purchaser shall be deemed to have waived its objection to the lack of the
Clean Cissell Estoppel Certificate and the parties shall proceed to Closing
without reduction in the Purchase Price by reason thereof. If Seller is able to
obtain a Clean Cissell Estoppel Certificate, Seller shall deliver the Cissell
Estoppel Certificate to the Purchaser promptly after the end of the Cissell
Estoppel Deadline.
4. CONDITIONS TO CLOSING.
(a) In addition to all other conditions to the completion of the
transaction described in this Agreement, Seller and Purchaser agree that the
closing of this sale and purchase is subject to satisfaction, approval or waiver
by Purchaser in its sole discretion of the following conditions on or before
April 20, 1998. (the end of the "DUE DILIGENCE PERIOD"):
(1) Inspection and approval of the physical condition and
use of the Premises. For the purpose of conducting non-destructive physical
inspections, Seller agrees to provide Purchaser and its authorized agents a
continuing right of reasonable access to the Premises at all reasonable times
during the Due Diligence Period upon at least twenty-four (24) hours' prior
written notice to Seller, and provided that a representative of Seller may
accompany Purchaser during all such inspections. Purchaser hereby agrees to
indemnify Seller and hold Seller, Seller's agents and employees and the Premises
harmless from and against any and all losses, costs, damages, claims or
liabilities including, but not limited to, mechanic's and materialmen's liens
and reasonable attorney's fees, arising out of or in connection with Purchaser's
access to or entry upon the Premises under this Paragraph 4(a)(1). Purchaser's
indemnity and hold harmless agreements pursuant to this Paragraph 4(a)(1) shall
survive the termination or expiration of this Agreement by Closing or otherwise.
During the pendency of this Agreement, Purchaser and its agents, employees,
and representatives shall have a continuing right of reasonable access to the
Premises and any office where the records of the Premises are kept for the
purpose of examining and making copies of all books and records and other
materials relating to the Premises in Seller's or its property manager's
possession. Purchaser shall have the right to conduct "walk-throughs" of the
Premises before the Closing upon appropriate notice to tenants as permitted
under the Leases. Purchaser may make inquiries to the Asset Managers, parties
to Service Contracts and municipal, local and other government officials and
representatives, and Seller consents to such inquiries.
During any access to the Premises, or by telephone conference call, the
Purchaser shall have the right to interview tenants, but only if Purchaser is
accompanied by or on the telephone call with one of the Asset Managers of Seller
(as defined in Paragraph 6 below) and Purchaser shall not take any actions which
disrupt the peaceable possession by any tenant of its leased space or the
peaceful continuation of such tenant's Lease.
(2) Inspection and approval of the following documents
("DISCLOSURE DOCUMENTATION"):
(i) a title commitment issued by Title Company for the Owned
Land and Cissell Leasehold dated as of or after March 1, 1998 (the "TITLE
COMMITMENT"), with such Title Commitment evidencing all matters affecting record
title to the Owned Land and Improvements and binding the Title Company to issue
promptly after Closing to Purchaser the Title Policy (as more fully defined in
Paragraph 4(c)(v) below), in an amount equal to the Purchase Price for the Owned
Land and its Improvements, together with copies of all instruments referenced in
Schedule B of the Title Commitment;
(ii) any existing survey of the Premises and Improvements in
Seller's possession as of the execution hereof, including that certain survey
issued by R & R Engineer-Surveyors, Inc, dated March 30, 1998, Job No. IP818
(collectively the "SURVEY");
(iii) copies of all evidence of any Intangible Property in
Seller's possession;
(iv) plans and specifications for the Premises in Seller's
possession, if any, including, without limitation, as-built drawings, if any;
(v) the operating statements for the Premises for the last
three (3) calendar years as well as the calendar quarters immediately preceding
the date of this Agreement, which shall not contain any intentional
misrepresentation of facts or omission of facts;
(vi) copies of all service agreements and management
agreements ("SERVICE CONTRACTS") relating to the Premises;
(vii) copies of all certificates of occupancy relating to the
Premises in Seller's possession, if any;
(viii) copies of all of the following documents, if any, to
the extent they exist and are in Seller's possession, but excluding any
documents which are privileged: engineering reports; soils reports and
maintenance reports and environmental reports relating to the Premises (provided
that, if Seller withholds any of such documents on the basis of privilege,
Seller shall, along with delivery of the other Disclosure Documentation, deliver
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notice to Purchaser of the existence of the document and the claim of privilege;
provided that, if no such notice is delivered, Seller shall be deemed to
represent that it has delivered or made available to Purchaser all documents
relating to the ownership, use or operation of the Premises in Seller's
possession or control except for any direct correspondence between Seller and
its legal counsel, and such counsel's work product);
(ix) a list of all vendors for the Premises including their
telephone numbers;
(x) a list of all warranties known to Seller and currently
in effect with respect to the Premises, if any;
(xi) all books and records maintained by Seller with respect
to the Premises ("BOOKS");
(xii) Seller's existing so-called "Phase I Environmental
Review" for the Premises and any other environmental reports of the Premises in
Seller's possession (hereinafter collectively defined as the "REPORT");
(xiii) a copy of all the Leases and whatever is denoted as an
addendum, modification, amendment or rider thereto, and a current statement
showing all of the existing Leases, the applicable suite numbers, their current
rental status, the square footage, the current monthly Base Rent and Operating
Expense Escalations, security deposits held, name of tenant and expiration date
(along with any other informational notes which Seller may elect to add to the
Rent Roll, as defined in Paragraph 6 below); and
(xiv) copies of Seller's certificates of insurance for the
Premises, and any notices requiring correction of defects received from Seller's
insurance carriers relating to the Premises.
On or before March 19th, 1998, the Seller provided a copy for Purchaser's
use of the Disclosure Documentation mentioned above (excluding subparagraphs iv,
v, viii, and ix, copies of which were made available to Purchaser at Seller's
office). On or before March 15th, 1998, the Seller shall caused the Title
Company to deliver the Title Commitment (together with copies of all instruments
referenced in Schedule B of the Title Commitment) to Purchaser. Seller makes no
representations or warranties with respect to such documents or information,
including the accuracy thereof, except as is specifically set forth in this
Agreement and the exhibits forming a part hereof.
In the event the Purchaser determines in its sole and absolute discretion
that it does not wish to purchase the Premises, then Purchaser may terminate
this Agreement by giving written notice (the "TERMINATION NOTICE") to Seller no
later than 5:00 p.m. Mountain Time on the last day of the Due Diligence Period.
If Purchaser fails to give the Termination Notice to Seller prior to 5:00 p.m.
Mountain Time on the last day of the Due Diligence Period, Purchaser shall be
deemed to have waived its right to terminate this Agreement based on this
Paragraph 4(a) contingency and the parties shall proceed to Closing. In the
event Purchaser's Termination Notice is timely received by Seller, the Earnest
Money shall be released to the Purchaser by the Title Agent (except as noted
below), both Seller and Purchaser shall be released and discharged from all
further obligations under this Agreement, and neither Seller nor Purchaser shall
be subject to any claim by the other for damages of any kind except as provided
in Paragraph 39 below.
(b) CONFIDENTIALITY. Without the prior written consent of Seller, unless
and until the Closing has occurred for this transaction, Purchaser shall hold in
strictest confidence all data and information delivered to Purchaser by Seller
pursuant to this Agreement whether obtained before or after the execution and
delivery of this Agreement, and shall not disclose the same to others unless
required by applicable law or the terms of the organizational documents for
Purchaser in which case such information may be made known to investors in
Purchaser; provided, however, that it is understood and agreed that Purchaser
may disclose, for the sole purpose of evaluating and consummating this
transaction, such data and information to its employees, consultants, lenders,
accountants and attorneys, and any other person or entity which Purchaser
anticipates will invest in the Premises and as necessary to conduct its
investigation; provided further that Purchaser shall instruct each person to
whom Purchaser discloses such information that such information is to be held in
strictest confidence and Purchaser shall act as guarantor of the confidentiality
of all information contained in the Rent Roll, the Leases and the Lease files
and shall be responsible for all loss and/or damages incurred by Seller as a
result of any unauthorized disclosure or use of such information by Purchaser's
employees, consultants, vendors, agents, and subcontractors or other entities to
whom Purchaser provided said information. Such information does not include
information which (i) is or becomes generally available to the public other than
as a result of a disclosure by Purchaser or its representatives, (ii) was or
becomes available to Purchaser on a non-confidential basis from a source other
than the Seller, provided that, to Purchaser's knowledge, such source is not
prohibited from disclosing such information to Purchaser by a contractual, legal
or fiduciary obligation to the Seller, or (iii) was within Purchaser's
possession prior to its being furnished to Purchaser by or on behalf of the
Seller or is independently developed by Purchaser.
(c) CONDITIONS TO THE PURCHASER'S OBLIGATION TO CLOSE. In addition to all
other conditions set forth herein, the obligation of Purchaser to consummate the
transaction contemplated hereunder shall be contingent upon the following:
(i) The Seller's representations and warranties contained herein
shall be true and correct as of the date of this Agreement and the Closing
Date;
(ii) As of the Closing Date, the Seller shall have performed its
obligations hereunder and all deliveries to be made by the Seller at
Closing have been tendered;
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(iii) As of the Closing Date, no action or proceeding by or
before any governmental authority shall have been instituted or threatened
(unless dismissed, settled or otherwise terminated prior to Closing) which
is reasonably expected to restrain, prohibit or invalidate the transactions
contemplated by this Agreement;
(iv) As of the Closing Date, Seller shall not be in material
default under any Service Contract to be assigned to, or obligation to be
assumed by, Purchaser under this Agreement;
(v) At Closing, the Title Company shall deliver to Purchaser an
ALTA Owner's Policy of title insurance in the amount of the Purchase Price,
insuring Purchaser as owner of good, marketable and indefeasible fee simple
title to the Owned Land and as owner of the Cissell Leasehold in the real
property which is subject to Cissell Lease, subject only to the Permitted
Exceptions (the "TITLE POLICY") or an unconditional written commitment to
issue same promptly after Closing, on, if the Title Company agrees, ALTA
Form Revised 10-17-70 and 10-17-84 or current form with the creditors'
rights exclusion deleted, and with ALTA General Exceptions 1 through 5 on
Schedule B-2 deleted, and with the following amendments or endorsements, if
available: (1) the exception for parties in possession shall be limited to
tenants in possession as tenants only under the Leases without any option
to purchase or acquire an interest in the Premises; (2) owner's
comprehensive; (3) access; (4) survey (accuracy of survey); (5) location
(survey legal matches title legal); (6) separate tax lot; (7) legal lot;
(8) zoning 3.1, with parking and loading docks; and (9) such other
endorsements as Purchaser may require during the Due Diligence Period based
on its review of the Title Commitment and Survey; provided that Purchaser
shall be obligated to pay for all costs for and associated with all such
modifications, deletions and endorsements to the Title Policy, and provided
further that Seller agrees (as provided above) to execute the Title
Company's Standard Lien/Owner's Affidavit and otherwise to cooperate with
Purchaser to obtain the deletion of the creditors' rights exclusion, the
deletion of Exceptions 1 through 5 on Schedule B-2 and the other
endorsements set forth in this paragraph, but shall have no obligation to
incur any expense in order to obtain same. Prior to the end of the Due
Diligence Period, Purchaser shall determine from the Title Company the form
of the Title Policy, and all modifications, deletions and endorsements
thereof, which the Title Company is willing to issue (based on the Standard
Lien/Owner's Affidavit to be signed by Seller, and based on such other
documents and fees and costs to be provided by Purchaser) and, unless
Purchaser terminates this Agreement under the provisions of Paragraph 4,
Purchaser shall, after the Due Diligence Period, not be entitled to
terminate this Agreement as a result of an inability to obtain any deletion
of any provision of, modification of or endorsement to the base Title
Policy;
(vi) The Clean Tenant and Cissell Estoppels are delivered
pursuant to Paragraphs 3(e) and (f); and
(vii) As of the Closing Date, the aggregate rentable area of
Leases under which a Prohibited Default exists shall not exceed five
percent (5%) of the rentable area covered by Leases in the Rent Roll
delivered on the Closing Date. A "PROHIBITED DEFAULT" (i) shall mean any
monetary breach by any tenant in excess of Five Hundred Dollars ($500.00),
regardless of whether the Seller has given such tenant any notice required
under the applicable lease; (ii) shall mean any nonmonetary breach of any
lease by a tenant which remains uncured for a period of a thirty (30) days
after its due date, regardless of whether notice thereof has been given by
Seller to such tenant; but (iii) shall not include any breach, monetary or
non-monetary, by any tenant whose lease is of less than one thousand
(1,000) rentable square feet. A monetary breach (i) shall not be deemed to
exist under any lease if the amount due is less than Five Hundred Dollars
($500.00), unless there are more than five (5) tenants who are each in
default in an amount less than Five Hundred Dollars ($500.00), in which
case every other tenant who is in default by an amount of under Five
Hundred Dollars ($500.00) shall be counted as a tenant with a monetary
breach, and (ii) shall not include a failure of any tenant to pay any
claims by the Seller for reimbursement of costs incurred by Seller in
excess of a tenant-finish allowance or similar one-time charges claimed by
the Seller under the applicable lease.
If any condition to Purchaser's obligation to proceed with the Closing
hereunder has not been satisfied as of the Closing Date or other applicable
date, Purchaser may, in its sole discretion and as its sole remedy, terminate
this Agreement by delivering written notice to the Seller on or before the
Closing Date or other applicable date, or Purchaser may elect to close,
notwithstanding the non-satisfaction of such condition, in which event the
Purchaser shall be deemed to have waived any such condition. If Purchaser
elects to terminate, without any Purchaser default, under any of the
contingencies provided to Purchaser under this Agreement, Purchaser shall be
entitled to the prompt return of the Earnest Money from the Title Agent, and all
parties hereto shall be relieved of all further obligations hereunder except for
those provided under Paragraph 39 below.
5. PERMITTED TITLE EXCEPTIONS. If Purchaser does not timely deliver a
Termination Notice, the Premises shall be conveyed to Purchaser by Seller
subject to the following title matters (collectively the "PERMITTED
EXCEPTIONS"):
(a) All matters identified on the Title Commitment, except (i) those items
to which Purchaser has objected during the Due Diligence Period and which Seller
has agreed, in a writing signed by Seller and Purchaser before the end of the
Due Diligence Period, to cure, and (ii) mechanic's liens, deeds of trust,
mortgages and recorded U.C.C. security interests;
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(b) Those matters set forth on EXHIBIT B attached hereto;
(c) All matters set forth on the Survey and all matters which are
otherwise apparent upon an inspection of the Owned Land and Improvements, except
those items to which Purchaser has objected during the Due Diligence Period and
which Seller has agreed, in a writing signed by Seller and Purchaser before the
end of the Due Diligence Period, to cure;
(d) Building restrictions, zoning regulations and all other applicable
laws heretofore or hereafter adopted by any municipal or other public authority
relating to the Premises;
(e) Taxes and assessments not yet due and payable;
(f) Any matters arising by, through or under Purchaser; and
(g) The Leases.
Judgment liens, tax liens and other monetary encumbrances which encumber
the Premises to be conveyed by Seller to Purchaser hereunder shall in no
instance constitute Permitted Exceptions and Seller shall cause same to be
released at or prior to Closing.
6. REPRESENTATIONS AND WARRANTIES OF SELLER.
(a) The Seller represents and warrants to Purchaser that as of the date
hereof and as of the Closing Date, with regard to Seller and the Premises:
(i) The Seller is a limited liability company duly organized and
validly existing under the laws of the State of Colorado and authorized to
transact business in the State of Colorado, and the execution and delivery by
Seller of and Seller's performance under this Agreement are within Seller's
powers and have been duly authorized by all requisite action.
(ii) This Agreement constitutes the valid and binding obligation
of Seller, enforceable in accordance with its terms. There is no agreement to
which Seller is a party or, to Seller's knowledge, binding on Seller which is in
conflict with this Agreement, or which challenges or impairs Seller's ability to
execute or perform its obligations under this Agreement. To the best knowledge
of the Seller, there is not now pending (unless such action has been filed in
court but never served on the Seller) or, to the best of Seller's knowledge,
threatened, any action, suit or proceeding before any court or governmental
agency or body against the Seller, or affecting the Premises that would prevent
Seller from performing its obligations hereunder or against or with respect to
the Premises including without limitation, condemnation or similar actions or
relating to Environmental Claims (as defined in Paragraph 37).
(iii) To the best of Seller's knowledge, Seller has not
received notice from any governmental authority regarding property tax increases
or special assessments involving the Premises not reflected in the most recent
tax notice for the Premises.
(iv) Except as set forth on the Rent Roll attached hereto as
EXHIBIT M (the "RENT ROLL") or as allowed under Paragraph 8.2 below; (a) there
are no Leases or other agreements for occupancy in effect with respect to the
Premises, (b) there are no persons in possession or occupancy of the Premises,
or any part thereof, nor are there any persons who have possessory rights with
respect to the Premises or any part thereof; (c) no rent under such Leases has
been overpaid or prepaid in excess of one (1) month; (d) there are no rent
arrearages or delinquencies or uncured material defaults on the part of any
party to any of such Leases except as allowed under Paragraph 4(c)(vii); (e)
there are no security deposits, tax deposits or operating expense deposits under
such Leases; (f) there are no current tenant improvement performance obligations
or tenant credits due with respect to any such Leases except as set forth in the
Leases and other due diligence documentation to be delivered hereunder; (g) to
the best of Seller's knowledge, no uncured default by Seller exists on its
obligations as the landlord under the Leases; and (h) the Rent Roll is true,
correct and complete.
(v) The Leases have not been modified, except as is disclosed in
the Rent Roll or in the Lease files which have been made available to Purchaser
under Paragraph 4(a)(2), or as allowed under Paragraph 8.2.
(vi) Except as otherwise disclosed on the Rent Roll, the Seller
does not have any actual knowledge of a default by any tenant or the existence
of an act or omission by any tenant which, with the passage of time or the
giving of notice or both, would constitute a default by such tenant; provided
that this representation shall be enforceable only by the parties to this
Agreement and shall not be deemed to be enforceable by any tenant of the
Premises.
(vii) Seller has not assigned its interest in any of the Leases to
any third parties, and the copies of the Leases provided to the Purchaser as
part of the Disclosure Documentation are complete and accurate in all material
respects.
(viii) There are no currently effective service contracts,
maintenance agreements, or other agreements
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with respect to the Premises except as set forth in EXHIBIT C or as allowed
under paragraph 8 below.
(ix) All notices and documents in Seller's possession with
respect to the physical and environmental condition of the Premises, and all
documents in Seller's possession with respect to violation by the Premises of
zoning and building laws will be made available to Purchaser as part of Seller's
Disclosure Documentation.
(x) Except as set forth in EXHIBIT L, or as provided in
Paragraph 8.2, or as shown in the Lease files made available to the Purchaser,
there are no leasing commissions due, nor will any become due, as a result of
any agreement entered into by Seller in connection with any Lease or any renewal
or extension or expansion of any Lease, and no written agreement with any party
exists with Seller as to the payment of any leasing commissions or fees
regarding future leases or as to the procuring of tenants.
(xi) Seller has not received any notice of and has no actual
knowledge (with no duty to investigate) of violations or alleged violations of
any laws, rules, regulations or codes, including without limitation zoning and
building codes, with respect to the Premises which have not been corrected to
the satisfaction of the issuer of the notice. Seller has no actual knowledge,
without a duty to investigate, of any violation of Environmental Laws related to
the Premises or the presence or release of Hazardous Materials on or from the
Premises of any federal or state liens as referenced under CERCLA and any other
applicable environmental laws that have attached to the Premises, except as
disclosed in the Seller's Disclosure Documentation. (a) Seller has not
conducted or authorized the generation, transportation, storage, treatment or
disposal at or from the Premises of any Hazardous Materials in violation of any
applicable Environmental Laws (as such terms are defined in Paragraph 37); (b)
to the best of Seller's knowledge, no portion of the Premises lies within an
area which constitutes a "wetland" or protected area subject to the jurisdiction
of the United States Army Corps of Engineers or any federal, state or local
administrative agency; and (c) to the best of Seller's knowledge, no underground
storage tanks are located on the Premises; provided that Seller affirmatively
states that there is an underground wastewater sump.
(xii) The Premises is an independent unit which does not now rely
on any facilities (other than facilities covered by easements appurtenant to the
Premises or facilities of municipalities or public utilities) located on any
property that is not part of the Premises to fulfill any municipal or other
governmental requirement, or for the furnishing to the Premises of any essential
building systems or utilities. No other building or other property that is not
part of the Premises relies upon any part of the Premises to fulfill any
municipal or other governmental requirement, or to provide any essential
building systems or utilities.
(xiii) Other than this Agreement, the documents delivered at
Closing pursuant hereto, the Permitted Exceptions, and the Leases, Service
Contracts, commission agreements and Lease agreements made available to
Purchaser, there are no contracts or agreements to which Seller or its agent is
a party, which would be binding on the Premises or the Purchaser after Closing
regarding the Premises.
(xiv) Seller has fee simple title to the Owned Land, and good and
marketable title to the Cissell Leasehold. Seller has no knowledge of any
person or entity with any right of first refusal, option or similar rights to
acquire any interest in the Owned Land, the Cissell Leasehold or any part
thereof, and Seller has not granted such a right to any party.
(xv) To the best of Seller's knowledge (with no duty to investigate)
(a) the obligations of Seller or the Premises with regard to all applicable
covenants, easements, and restrictions against the Premises have been and are
being performed in a proper and timely manner; (b) Seller is not currently in
default under judicial order, judgment or decree relating to the Premises; and
(c) no conditions or circumstances exist which, with the giving of notice or
passage of time, or both, would constitute a default or breach with respect to
any of the foregoing in (a) or (b) above.
(xvi) The Owned Land is taxed under its own separate tax
identification number(s) and no other land is taxed under such number(s).
(xvii) Seller states that there is a confusion or dispute between
the Seller and the tenant under the RCI Lease involving a strip of land along
the north side of the real property covered by the Cissell Lease and such
confusion or dispute relates to whether the RCI Lease covers the land on which
some of the covered drive-up windows for the bank building are located.
In the event that, prior to the Closing of this transaction, Seller
obtains actual knowledge of any fact or circumstance which would make any of the
foregoing representations or warranties untrue, Seller shall disclose such
information to Purchaser, and Purchaser's sole remedy for such breach shall be,
by notice to Seller before the Closing, to terminate this Agreement, subject to
the provisions of Paragraph 39 below, and obtain a refund of the Earnest Money,
together with all interest thereon. In the event that, prior to Closing,
Purchaser obtains actual knowledge of any fact or circumstance which would make
any of the foregoing representations or warranties untrue, Seller's
representation and warranty regarding such fact shall be deemed to be modified
by such fact or circumstance and Purchaser may terminate this Agreement by
notice to Seller before the Closing and obtain a refund of the Earnest Money or,
if Purchaser elects not to terminate this Agreement pursuant to this paragraph,
Purchaser shall be deemed to have accepted such representation and warranty as
modified by such facts and circumstances.
(b) The representations and warranties of Seller set forth in this
Paragraph 6 hereof shall survive Closing only
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for a period of twelve (12) months. No claim for a breach of any representation
or warranty of Seller shall be actionable or payable (i) if the breach in
question results from or is based on a condition, state of facts or other matter
which was set forth in the Disclosure Documentation or was otherwise known to
Purchaser prior to the end of the Due Diligence Period, and (ii) unless the
valid claim for any single claimed breach equals Ten Thousand and 00/100 Dollars
($10,000.00) or more, or the valid claims of all such breaches collectively and
in the aggregate equal more than Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (in which event the full amount of such claims shall be
actionable). No claim for a breach of any representation or warranty, except
for those set forth in subparagraphs 6(a)(ii) and (iii), shall be actionable or
payable unless written notice thereof containing a description of the specific
nature of such breach shall have been given to Seller within twelve (12) months
after the Closing Date and the lawsuit for such breach shall have been filed
prior to the expiration of sixteen (16) months after Closing. No claim for a
breach of a representation or warranty set forth in subparagraphs 6(a)(ii) and
(iii) shall be actionable or payable unless written notice thereof containing a
description of the specific nature of such breach shall have been given to
Seller and the lawsuit for such breach shall have been filed prior to the
expiration of twelve (12) months after Closing.
(c) For purposes of this Agreement, the term "ASSET MANAGERS" of Seller
shall mean only Loren Snyder, Pauline Wooster and Carrie Parker, and the
knowledge of Seller shall be limited to the actual knowledge (with no duty to
investigate) of such Asset Managers.
(d) DISCLAIMER. EXCEPT FOR ANY REPRESENTATIONS AND WARRANTIES EXPRESSLY
PROVIDED (i) IN THIS AGREEMENT, (ii) IN THE EXHIBITS ATTACHED HERETO, (iii) IN
ANY DOCUMENT WHICH WAS (a) GENERATED BY SELLER OR BY INTEGRATED PROPERTY
MANAGEMENT, INC., IN ITS ROLE AS PROPERTY MANAGER OF THE PREMISES FOR THE
SELLER, DURING SELLER'S PERIOD OF OWNERSHIP (BUT NOT ANY INCLUDING DRAFT
DOCUMENT AND NOT INCLUDING ANY DOCUMENT GENERATED BY ANY AGENT OF SELLER OR
INTEGRATED PROPERTY MANAGEMENT, INC.), AND (b) PART OF THE DISCLOSURE
DOCUMENTATION MADE AVAILABLE BY SELLER TO PURCHASER, (iv) IN ANY DOCUMENT EITHER
GENERATED AND DELIVERED OR EXECUTED BY SELLER AT CLOSING, PURCHASER DOES HEREBY
WAIVE AND SELLER DOES HEREBY DISCLAIM ALL REPRESENTATIONS AND WARRANTIES OF ANY
KIND OR TYPE WHATSOEVER WITH RESPECT TO THE PREMISES, WHETHER EXPRESSED OR
IMPLIED, INCLUDING BY WAY OF DESCRIPTION BUT NOT LIMITATION, THOSE OF
MARKETABILITY, MERCHANTABILITY OF TITLE, FITNESS FOR A PARTICULAR PURPOSE,
TENANTABILITY, HABITABILITY, AND USE INCLUDING, WITHOUT LIMITATION, ANY AND ALL
REPRESENTATIONS AND WARRANTIES RELATING TO THE PREMISES, THE QUALITY, VALUE,
PHYSICAL ASPECTS OR CONDITION THEREOF, ANY DIMENSIONS OR SPECIFICATIONS OF THE
PREMISES, THE FEASIBILITY, DESIRABILITY, CONVERTIBILITY OF THE PREMISES FOR OR
INTO ANY PARTICULAR USE, THE CURRENT OR PROJECTED INCOME OR EXPENSES OF THE
PREMISES, COMPLIANCE BY THE PREMISES WITH ANY APPLICABLE GOVERNMENTAL LAWS AND
REGULATIONS INCLUDING, WITHOUT LIMITATION, BUILDING AND ZONING CODES, THE SOIL
CONDITIONS OF THE PREMISES, WHETHER THE PREMISES IS SERVED BY SUFFICIENT
UTILITIES INCLUDING, WITHOUT LIMITATION, WATER, SEWER, GAS, ELECTRIC AND
TELEPHONE SERVICE, AND THE COMPLIANCE, IF ANY, BY THE PREMISES WITH ANY
ENVIRONMENTAL REQUIREMENTS, AND ANY OTHER MATTER WITH RESPECT TO THE PREMISES.
For purposes of this paragraph, the term "draft document" shall mean either (i),
if there is a document of which there are several dated versions, only the
document with the latest date shall be considered the final document and all
earlier versions shall be deemed to be "draft documents", and (ii) if a document
is one which provides for initials or signature, all such documents which do not
bear all required initials and signature(s) shall be deemed draft documents.
Seller agrees to cooperate reasonably with Purchaser during the Due Diligence
Period in order to identify final documents.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
(a) Purchaser represents and warrants to Seller that, as of the Effective
Date and as of Closing:
(i) Purchaser is a Delaware Limited Partnership in good standing, and
the execution and delivery by Purchaser of and Purchaser's performance under
this Agreement are within Purchaser's powers and have been duly authorized by
all requisite action. On or before the Closing, Purchaser shall qualify to do
business in Colorado.
(ii) Purchaser has the full right, power and authority to purchase
the Premises as provided in this Agreement and to carry out Purchaser's
obligations hereunder, and all requisite action necessary to authorize Purchaser
to enter into this Agreement and to carry out its obligations hereunder has
been, or by the Closing, will have been, taken. The person(s) signing this
Agreement on behalf of Purchaser is authorized to do so.
(iii) There is no action, suit, arbitration, unsatisfied order or
judgment, government investigation or proceeding pending or threatened against
Purchaser which, if adversely determined, could individually or in the aggregate
materially interfere with the consummation of the transaction contemplated by
this Agreement.
The representations and warranties of Purchaser set forth in Paragraph 7
shall survive Closing for a period of one (1) year.
8. SELLER'S COVENANTS.
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8.1 Between the Effective Date of this Agreement and the earlier of the
Closing or any other termination of this Agreement, the Seller shall:
(a) Maintain the Premises in its present condition, ordinary
wear and tear excepted;
(b) Maintain all casualty, liability and hazard insurance
currently in force with respect to the Premises;
(c) Enter into Service Contracts with respect to the Premises,
in the same manner done by Seller prior to the date hereof, maintaining present
services and sufficient supplies and equipment for the operation and maintenance
of the Premises in the same manner as prior to the date hereof; provided,
however, that, after the Effective Date, Seller shall not enter into any new
Service Contract that cannot be terminated without penalty on the earlier of
thirty (30) days after notice, or the Closing Date;
(d) Use reasonable efforts (but without obligation to incur any
cost or expense paid to tenants) to obtain and deliver to Purchaser the Clean
Tenant Estoppel Certificates required prior to Closing required under Paragraph
3(e).
(e) Not remove any Personal or Intangible Property the title to
which, under the terms of this Agreement, is to be conveyed to Purchaser by
Seller at Closing, unless it is replaced with a comparable item of equal quality
and quantity as existed at the time of such removal;
(f) Not enter into any contracts or letters of intent to sell
the Premises;
(g) Use reasonable efforts to operate the Premises in a manner
consistent with current practices and in compliance with all applicable laws,
and perform its obligations under the Leases; and
(h) Not perform or permit any act which would prevent Seller's
full performance of its obligations hereunder.
8.2 Between the Effective Date and the earlier of (i) the end of the
Due Diligence Period or (ii) any other termination of this Agreement, Seller
shall not enter into any new leases or lease renewals without Purchaser's
written approval unless they are for a term of three (3) to five (5) years, with
a minimum effective rental rate of $19.00 per rentable square foot per year
(after taking into account any rent abatements or concessions granted under such
Lease), a 1998 Base Year for Operating Expenses, a Tenant Improvement Allowance
not to exceed $1.00 per rentable square foot per year, and being on the 400
South Colorado Boulevard Standard Form Agreement (collectively referred to as
the "PRE-APPROVED LEASE STANDARDS"). Seller shall have no obligation to obtain
Purchaser's consent for any new Lease which meets the Pre-Approved Lease
Standards. Any changes to the 400 South Colorado Boulevard Standard Form
Agreement must be approved in writing by Purchaser, which approval shall not be
unreasonably withheld or delayed. Purchaser's consent shall be deemed to have
been given if Purchaser fails to object to any proposed lease, lease amendment
or standard lease form modifications within five (5) days after receiving
written notice thereof from Seller. Once the Earnest Money has become
non-refundable to Purchaser (except in the event of either a default by Seller
or the failure of a condition precedent to Purchaser's obligations to close),
Seller shall not enter into any new leases without Purchaser's written approval,
which shall be in Purchaser's sole discretion. Within three (3) business days
after Seller enters into any Lease which complies with the Pre-Approved Lease
Standards, Seller shall provide a copy of same to Purchaser.
At Closing, Purchaser shall reimburse Seller for all New TI Obligations (as
hereafter defined), other tenant inducement costs, leasing commissions
(including the leasing fees and commissions of the Premises managing agent) and
other expenses incurred by Seller pursuant to a new or renewal Lease properly
entered into by Seller pursuant to this paragraph after March 6, 1998.
9. DELIVERY OF DUE DILIGENCE INVESTIGATION REPORTS. Purchaser hereby
covenants with Seller that, on or before Closing, Purchaser shall furnish to
Seller copies of all third party physical reports which have been prepared for
Purchaser by third parties and which have been received by Purchaser or its
agents in connection with any inspections of the Premises conducted by Purchaser
prior to the Closing Date under this Agreement (including, specifically, without
limitation, any reports analyzing compliance of the Premises with the provisions
of the Americans with Disabilities Act ("ADA"), 42 U.S.C. Section 12101, ET
SEQ., if applicable). Purchaser hereby irrevocably waives any claim against
Seller for any cleanup, recovery or similar costs arising from the presence of
Hazardous Materials (as defined in Paragraph 37) on the Premises (i) which were
discovered by or made known to Purchaser prior to or during the Due Diligence
Period, or (ii) which were not caused by an event which took place during
Seller's period of ownership of the Premises.
10. PRORATIONS. Before Closing, Seller shall provide to Purchaser such
information and verification reasonably necessary to support the prorations and
adjustments shown under Paragraph 10(b) and (c) below. The following
adjustments to the Purchase Price paid hereunder shall be made between Seller
and Purchaser and shall be prorated (as applicable) on a per diem basis as of
the Closing Date, and the Closing Date shall be a date of income and expense to
the Seller:
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(a) TAXES. All real estate taxes for 1998 (due and payable in 1999), and
the current installment of special assessments not yet due and payable shall be
prorated as of the Closing Date on the basis of the most recent ascertainable
taxes and assessments. Prior to or at Closing, Seller shall pay or have paid
all real estate tax bills and special assessments which are due and payable
prior to the Closing Date and shall furnish evidence of such payment to
Purchaser and Title Company. Personal property taxes not yet due and payable
relating to the Personal Property shall be prorated as of the Closing on the
basis of the most recent ascertainable taxes and assessments. The taxes
prorated under this paragraph shall be reprorated within thirty (30) days after
Purchaser's receipt or Seller's submission of the final tax bill(s) for calendar
year 1998.
(b) RENT. Tenant Base Rent and other income under the Leases (including
any additional rent attributable to insurance, taxes, common area maintenance
and other operating and building expenses which are passed through to tenants
under the Leases - i.e. - (collectively, the "PASS-THROUGH EXPENSES") shall be
apportioned as of the Closing Date to the extent such amounts have been
collected by such date, and shall be set forth in the Closing Statements.
Purchaser shall receive a credit for any Base Rent and other income (and any
applicable state or local tax on rent) under Leases collected by Seller before
Closing that applies to any period after Closing. If Seller collected estimated
prepayments of Pass-Through Expenses in excess of any tenant's share of such
expenses, then if the excess can be determined by the Closing, Purchaser shall
receive a credit for the excess or, if the excess cannot be determined at
Closing, Purchaser shall receive a credit based upon the parties' reasonable
estimate, and such Closing adjustment shall be deemed to be final. In either
event, Purchaser shall be responsible for crediting or repaying those amounts to
the appropriate tenants at the time of final reconciliation of such amount. If
Seller collected estimated prepayments of Pass-Through-Expenses that can be
reasonably determined, as of the Closing, to be less than any tenant's share of
such expenses, Seller shall receive a credit for the underbilled amounts or, if
the underbillings cannot be determined at closing, Seller shall receive a credit
based on the parties' reasonable estimate, and such Closing adjustment shall be
deemed to be final. In such event, Purchaser shall be responsible for
collecting any amounts due from the appropriate tenants at the time of final
reconciliation of such amounts.
(c) UNCOLLECTED RENTS. Except as set forth in the preceding paragraph,
Uncollected rent and other uncollected income shall not be prorated at Closing,
but all rent that is due but unpaid for the period prior to and including the
Closing Date shall be accounts receivable retained by Seller. After Closing,
Purchaser shall apply all rent and income collected by Purchaser from a tenant,
unless the tenant properly identifies the payment as being for a specific item
other than rent, first to such tenant's rental obligations for the period after
Closing and then to arrearages for periods prior to the Closing. Purchaser
shall promptly remit such amounts, holding same in trust and promptly remitting
to Seller, after deducting a prorated share of any reasonable collection costs
actually paid by Purchaser to third parties, any rent properly allocable to
Seller's period of ownership. Purchaser shall bill and attempt to collect such
rent arrearages of tenants in possession in the ordinary course of business, but
shall not be obligated to engage a collection agency or take legal action to
collect any rent arrearages. After Closing, Seller shall not have the right to
seek collection directly from any tenant in possession of any rents or other
income allocable to any period before or including the Closing by judicial
action nor shall it have any right to evict any such tenants, terminate their
leases or disturb their possession. Any rent or other income received by Seller
after Closing which is owed to Purchaser shall be held in trust, and remitted to
Purchaser promptly after receipt.
(d) SERVICE CONTRACTS. If, prior to Closing, Seller has prepaid any
amounts under any Service Contracts which are assumed by Purchaser which apply
to the period after Closing, Seller shall receive a credit therefor at Closing
but not for more than thirty (30) days' prepayment. Seller shall be responsible
to pay all amounts due directly to the vendors under all Service Contracts for
the period prior to and including the date of Closing, and shall provide
evidence thereof at Closing, and shall indemnify, save, hold harmless and defend
Purchaser from any liability thereon, and this indemnification obligation shall
survive Closing. Purchaser shall indemnify, save, hold harmless and defend
Seller from any liability on any Service Contracts for any amounts or
liabilities which first arise after Closing, and this indemnification obligation
shall survive Closing.
(e) UTILITIES. The Seller shall cause the meters, if any, for utilities
to be read on the day on which the Closing Date occurs, and to pay the bills
rendered on the basis of such readings; provided that the Seller may make
arrangements for payment thereof through the Title Agent at Closing. Purchaser
shall cause the utilities to be placed in its name for the period starting on
the day after Closing. Seller shall pay directly (or through the Title Agent)
all final bills for utilities through the date of Closing and shall indemnify
Purchaser therefrom. Purchaser shall indemnify Seller for any utility bills
arising out of the period after Closing. If the Seller is unable to terminate
utility service as of the date of Closing, then adjustment at Closing therefor
shall be made on the basis of the most recently issued bills therefor which are
based on meter readings no earlier than thirty (30) days before the Closing
Date; and such adjustments shall be prorated when the next utility bills are
received.
The purpose and intent of the provisions with respect to prorations set
forth herein is that the Seller shall bear all expenses of ownership and
operation of the Premises (including risks and losses due to Tenant payment
delinquencies) and shall receive all income therefrom accruing through midnight
of the day of Closing and Purchaser shall bear all such expenses and receive all
such income accruing thereafter. Except for the provisions regarding taxes (and
utility bills if service cannot be transferred to Purchaser's name on the day
after Closing), all of the prorations described in this Paragraph 10 shall be
deemed to be final and the provision of this paragraph shall survive the Closing
or termination of this Agreement.
(f) LEASING COMMISSIONS. Seller shall pay the leasing commissions for any
Leases that commence prior
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to March 6, 1998 (excluding, however, contingent commissions for such Leases
that will become due and payable after the Closing Date as a result of the
exercise of an extension or expansion right subsequent to the Closing Date, for
which Purchaser shall be responsible). Seller and Purchaser shall prorate any
leasing commissions for Leases entered into (or renewed, expanded, or extended)
after March 6, 1998 and prior to the Closing Date based on the portion of the
term of such Lease prior to the Closing Date.
(g) TENANT IMPROVEMENTS AND ALLOWANCES. Tenant improvement expenses
(including all hard and soft construction costs, whether payable to the
contractor or the tenant), legal fees (not to exceed $2,500 per lease or lease
renewal), tenant allowances, moving expenses and other out-of-pocket costs which
are the obligation of the landlord under Leases shall be allocated between the
parties according to whether such obligations arise in connection with (1)
Leases in place as of (i.e. - entered into before) March 6, 1998 (collectively
referred to as the "EXISTING TI OBLIGATIONS"), or (2) Leases or amendments
entered into after March 6, 1998, pursuant to Paragraph 8, or renewals or
expansion rights properly exercised after March 6, 1998 ("NEW TI OBLIGATIONS").
(i) EXISTING TI OBLIGATIONS. If, by Closing, Seller has not
completed and paid in full Existing TI Obligations, then such unpaid costs
shall be credited to Purchaser at Closing in the maximum amount of such
costs, subject to refund by Purchaser if such amounts are not fully paid to
or utilized by the applicable tenant. After Closing, Purchaser shall be
responsible for completing and paying for such Existing TI Obligations.
(ii) NEW TI OBLIGATIONS. At Closing, Purchaser shall reimburse Seller
for the Pre-Closing Share (as defined below) of all New TI Obligations paid
for by Seller prior to Closing, and Purchaser shall receive a credit from
Seller equal to the Pre-Closing Share of any New TI Obligations which, as
of Closing, have not been paid for by Seller. The "PRE-CLOSING SHARE" of
any New TI Obligations with respect to any Lease shall mean the total
amount of the New TI Obligations for a Lease divided by the total number of
months in the applicable Lease, and then multiplied by the number of months
from the beginning of rent payments under such Lease until the date of
Closing. At Closing, Purchaser shall assume the obligation to perform and
pay for all unpaid and/or unperformed New TI Obligations.
(iii) CHANGE ORDERS. Seller shall not agree to any change orders
or additions to tenant improvements or changes in the scope of work or
specifications which increases the landlord's cost with respect to New TI
Obligations without Purchaser's prior written approval, which approval
shall not be unreasonably withheld or delayed.
(iv) EVIDENCE OF PAYMENT. At Closing, Seller shall provide evidence
of payment of Existing TI Obligations or evidence reasonably satisfactory
to establish the escrow necessary for the payment of Existing TI
Obligations after Closing, and shall provide evidence of any payments made
or debts incurred by Seller prior to Closing for New TI Obligations. To
the extent such coverage is available at no cost to Seller for providing
such affidavit (beyond any actual indemnity claims under such affidavit),
Seller shall provide the Title Company with a standard ALTA affidavit to
enable the Title Company to insure against any claims against the Premises
arising from work which has been performed prior to Closing on any Existing
TI Obligations or New TI Obligations.
(h) TENANT DEPOSITS. All tenant security deposits, as set forth in the
Leases (and interest thereon if required by law or contract to be earned
thereon) shall be transferred or credited to Purchaser at Closing. As of the
Closing, Purchaser shall assume Seller's obligations related to tenant security
deposits, but only to the extent they are properly credited and transferred to
Purchaser.
11. TRANSFER TAXES: TITLE CHARGES. Seller and Purchaser agree to execute
any real estate transfer declarations required by the state, county, or
municipal law in which the Owned Land is located. Purchaser shall pay the
state documentary fee. Any other transfer tax, and any sales or use tax shall
be paid equally by the parties. Purchaser shall pay the cost of recording the
Deed; and Purchaser shall pay for all deletions, endorsements and modifications
to the base Title Policy. If this transaction is terminated by Purchaser under
a contract contingency (but not as a result of a Purchaser default) prior to the
expiration of the Due Diligence Period, Seller shall pay all escrow costs billed
by the Title Company. If the transaction is terminated by either party on
account of default by the other, the defaulting party shall pay all escrow costs
billed by the Title Agent. In the event this transaction shall close as
provided in this Agreement, the Title Agent closing charges shall be divided
equally between Seller and Purchaser, and Seller shall pay the premium for the
owner's Title Policy (except for any endorsements in excess of the base Title
Policy which shall be at Purchaser's expense), and the cost of the updates to
the Existing Survey. Each party shall pay its own attorneys' fees except as
otherwise provided in this Agreement.
12. RISK OF LOSS. Except as provided in any indemnity applicable to
Purchaser's Due Diligence Period activities, Seller shall bear all risk of loss
with respect to the Premises up to and including the Closing Date.
Notwithstanding the foregoing, in the event of damage to the Premises by fire or
other casualty on or prior to the Closing Date, repair of which would cost less
than One Hundred Thousand and 00/100s Dollars ($100,000.00) (as determined by
Seller in good faith based on at least two (2) independent contractor bids) and
which will not result in the termination of any Lease, or the abatement of rent
pursuant to any of the Leases, or the impairment of any building system that
renders a substantial portion of the Premises unfit for occupancy or use for
more than three (3) business days, Purchaser shall not have the right to
terminate its obligations under this Agreement by reason thereof, and Seller
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shall have the right to elect to either repair and restore the Premises before
the Closing or, if its policies cover the loss and will pay for the repairs and
restoration (with the Seller's deductible), to assign and transfer to Purchaser,
with appropriate confirmation by Seller's insurer, on the Closing Date all of
the Seller's right, title and interest in and to all insurance proceeds paid or
payable to Seller on account of such fire or casualty, including, without
limitation, the amount of the deductible with respect thereto. In either case
as provided in the preceding sentence, this transaction shall proceed to Closing
and there shall be no reduction in the Purchase Price by reason of such damage
(except for the credit to the Purchaser for the amount of the Seller's
deductible). Seller shall promptly notify Purchaser in writing of any such fire
or other casualty, and Seller's determination of the cost to repair the damage
caused thereby. In the event of damage to the Premises by fire or other
casualty prior to the Closing Date, repair of which would cost in excess of One
Hundred Thousand and 00/100 Dollars ($100,000.00) (as determined by Seller in
good faith based on at least two (2) independent contractor bids) or will result
in the termination of any Leases, or the abatement of rent pursuant to any of
the Leases which is not fully covered by rent loss insurance then in place, or
the impairment of any building system that renders a substantial portion of the
Premises unfit for occupancy for more than three (3) business days, then this
Agreement may be terminated at the option of Purchaser, which option shall be
exercised, if at all, by Purchaser's written notice thereof to Seller within ten
(10) business days after Purchaser receives written notice of such fire or other
casualty and Seller's determination of the amount of such damages. Upon the
exercise of such option by Purchaser, this Agreement shall become null and void,
the Earnest Money shall be promptly returned to Purchaser and both parties shall
be relieved from all further obligations hereunder, except as provided in
Paragraph 39 below. If Purchaser does not timely elect to terminate this
Agreement, then Seller shall assign and transfer to Purchaser on the Closing
Date all of Seller's right, title and interest in and to all insurance proceeds
paid or payable to Seller on account of such fire or casualty together with the
amount of the deductible relating thereto, in which case this transaction shall
proceed to Closing and there shall be no reduction in the Purchase Price by
reason of such damage (except for the credit to Purchaser for the amount of the
deductible).
13. CONDEMNATION. In the event that, between March 6, 1998 and the
Closing Date, any condemnation or eminent domain proceedings are threatened or
initiated which might result in the taking of any part of the Premises or the
taking, material impairment or closing of any right of access to the Premises,
Seller shall immediately notify Purchaser in writing of any notice of an intent
to take or the commencement or occurrence of any condemnation or eminent domain
proceedings. If such proceedings would result in the taking of any of the
Premises or the taking or closing of any right of access to any part of the
Premises, Purchaser shall then notify Seller, within ten (10) business days of
Purchaser's receipt of Seller's notice, whether Purchaser elects as its sole
remedies:
(a) to terminate this Agreement by written notice to Seller in which case
the Earnest Money shall be promptly returned to Purchaser and both parties shall
be relieved from any further liability hereunder except as provided in Paragraph
39 below; or
(b) to proceed with the Closing, in which event Seller shall assign to
Purchaser all of Seller's right, title and interest in and to any compensation
or award made or to be made in connection with such condemnation or eminent
domain proceedings, and this transaction shall proceed to Closing without any
reduction in the Purchase Price.
Closing shall be delayed, if necessary, for up to ten (10) business days to
allow Purchaser the full time allowed above to make such election. If Purchaser
fails to timely notify Seller of its election of subparagraph (a) above,
Purchaser shall be deemed to have elected to proceed under subparagraph (b)
above.
14. DEFAULT.
14.1 DEFAULT BY PURCHASER. This is a liquidated damages contract.
If this transaction is not consummated by reason of a default by Purchaser
hereunder, then as Seller's sole and exclusive remedy in such event, Seller
shall terminate this Agreement and retain the Earnest Money, all interest
thereon, and all materials prepared by or on behalf of Purchaser with respect to
the Premises, as liquidated damages and shall not be entitled to seek specific
performance or other additional damages, and all further rights and obligations
of the parties hereunder shall cease, except as provided in Paragraph 39 below.
The parties agree that the amount of actual damages which Seller would suffer as
a result of Purchaser's default would be extremely difficult to determine and
have agreed, after specific negotiation, that the amount of the Earnest Money is
a reasonable estimate of Seller's damages and is intended to constitute a fixed
amount of liquidated damages in lieu of other remedies available to Seller and
is not intended to constitute a penalty.
14.2 DEFAULT BY SELLER. If this transaction is not consummated by
reason of a default by Seller hereunder, Purchaser may, in its sole discretion,
elect any one of the following which shall be its sole remedies:
(a) If specific performance is possible, Purchaser may either (i)
proceed with an action for specific performance, in which case the Earnest Money
shall be retained by the Title Agent until the final determination by a court of
competent jurisdiction that Purchaser is entitled to specific performance, in
which case the Earnest Money shall be applied as provided in this Agreement, or,
if the court determines that the Purchaser is not entitled to specific
performance, this Agreement shall then terminate and the Earnest Money shall be
returned to Purchaser less any court costs and attorneys' fees to which the
court has determined the Seller is entitled, in which case all further rights
and obligations of the parties hereunder shall cease, except as provided in
Paragraph 39 below; or (ii) Purchaser shall be entitled to declare this
Agreement terminated, in which event the Purchaser shall be entitled to a refund
of the Earnest Money and all interest thereon, and all further rights and
obligations of the parties hereunder shall cease, except as provided in
Paragraph 39 below; or
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(b) If specific performance is impossible (for any reason other than
Seller having voluntarily transferred title to a third party who does not agree
to be bound as a seller under this Agreement, Purchaser shall be entitled to (i)
an action for damages for all third party costs and expenses incurred by
Purchaser in connection with its investigation and potential purchase of the
Owned Land, but in no event shall such amount exceed the lesser of (a)
Purchaser's actual costs, and (b) a total of Twenty-Five Thousand and no/100
Dollars ($25,000.00), and (ii) a refund of the Earnest Money and all interest
thereon, and all further rights and obligations of the parties hereunder shall
cease, except as provided in Paragraph 39 below; or
(c) If specific performance is impossible because Seller has
voluntarily transferred title to a third party who does not agree to be bound as
the seller under this Agreement, then Purchaser shall be entitled to an action
for damages without limit as to amount except as provided by law.
15. NOTICE. All notices required or permitted hereunder shall be in
writing and shall be served on the parties at the following addresses:
IF TO SELLER:
JAD Properties, LLC
c/o Integrated Property Management, Inc.
455 Sherman Street, Suite 140
Denver, Colorado 80203
Attn: Loren Snyder
Fax #: (303) 733-6272
Phone #: (303) 691-8665
With a copy to:
Huntington C. Brown, Esq.
Huntington C. Brown & Associates
303 East Seventeenth Avenue, Suite 400
Denver, Colorado 80203
Fax #: (303) 830-0804
Phone #: (303) 830-0808
IF TO PURCHASER
Mack-Cali Realty L.P.
5975 South Quebec Street, Suite 100
Englewood, CO 80111
Attn: Chester Latcham
Fax #: (303) 721-1122
Phone #: (303) 721-7600
With a copy to:
Mack-Cali Realty L.P.
11 Commerce Drive
Cranford, NJ 07016
Attn: Daniel Wagner, Esq.
Fax #: (908) 272-6755
Phone #: (908) 272-8000
Any such notices shall be either (a) sent by certified U.S. mail, return
receipt requested, postage prepaid, in which case notice shall be deemed
delivered on the first day that delivery was attempted as shown on the return
receipt; (b) sent (in time for next business day delivery) by a nationally
recognized overnight courier, in which case it shall be deemed delivered one
business day after deposit with such courier; (c) personally delivered in which
case notice shall be deemed delivered on the same day such notice is so
delivered; or (d) sent by telefax in which case such notice shall be deemed
delivered at the time and on the date of the sending party's confirmation of
transmission of such telefax; provided that, under any of the foregoing methods
of delivery, if the time of delivery is after 6:00 p.m. local time at the
location of the addressee of the notice, delivery shall be deemed given on the
next business day. The above addresses and telefax numbers may be changed by
written notice to the other party; provided, however, that no notice of a change
of address or telefax numbers shall be effective until delivery of such notice.
Courtesy copies of notices are for informational purposes only, and a failure to
give such copies of any notice shall not be deemed a failure to give notice.
16. TIME OF ESSENCE. Time is of the essence in this Agreement.
17. GOVERNING LAW. The validity, meaning and effect of this Agreement
shall be determined in accordance
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with the laws of the State of Colorado.
18. 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. A facsimile or
photocopied signature shall have the same legal effect as an original signature.
19. CAPTIONS. The captions in this Agreement are inserted for convenience
of reference and in no way define, describe or limit the scope or intent of this
Agreement or any of the provisions hereof. Any use of the term "including"
shall be construed to mean "including, without limitation".
20. ASSIGNABILITY. Neither party may assign its rights under this
Agreement without the prior written consent of the other, which consent may be
given or withheld in the non-assigning party's discretion, except that either
party shall have the right without the other's consent to assign this Agreement
to a "Permitted Assignee." For purposes of this Paragraph 20, the term
"PERMITTED ASSIGNEE" shall mean any corporation, partnership, limited
partnership, limited liability company, venture or similar entity controlled by,
or under common control with, the assigning party; provided that (i) no
assignment shall be effective unless the assigning party gives the other party
immediate written notice thereof, (ii) no assignment shall relieve the assigning
party from any liabilities arising from the acts or omissions of such party
prior to such assignment during the Due Diligence Period, provided however an
assignment by Purchaser cannot occur until the Earnest Money has become
non-refundable pursuant to the provisions of this Agreement, (iii) all
representations and obligations of the non-assigning party shall thereafter be
owed only to the applicable assignee, and (iv) any assignment by Seller before
the Closing to a Permitted Assignee must be in connection with the conveyance of
the Premises by the Seller to the Permitted Assignee.
21. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and Permitted Assignees.
22. MODIFICATIONS; WAIVER. No waiver, modification, amendment, discharge
or change of this Agreement shall be valid unless the same is in writing and
signed by the party against which the enforcement of such modification, waiver,
amendment, discharge or change is sought.
23. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties relating to the transactions contemplated hereby, and all
prior or contemporaneous agreements, understandings, representations or
statements, oral or written, are superseded hereby.
24. PARTIAL INVALIDITY. Any provision of this Agreement which is
unenforceable or invalid or the inclusion of which would impair the validity,
legality or enforcement of this Agreement shall be of no effect, but all the
remaining provisions of this Agreement shall remain in full force and effect.
25. SURVIVAL. In addition to the obligations of the parties under the
limited survival provisions of Paragraphs 6 and 7 of this Agreement, the
obligations of the parties in Paragraphs 3(c), 4(a)(1), 10, and Paragraphs 15
through 44 shall survive the Closing.
26. NO PERSONAL LIABILITY OF MEMBERS OR MANAGERS OF PARTIES. Each party
acknowledges that this Agreement is entered into by limited liability companies,
and each party agrees that no individual member or manager or representative of
the other party shall have any personal liability under this Agreement or any
document executed in connection with the transactions contemplated by this
Agreement.
27. NO THIRD PARTY RIGHTS. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
28. BROKER. Seller and Purchaser represent each to the other that each
has had no dealings with any broker, finder or other party concerning
Purchaser's purchase of the Premises, except for Cushman Realty Corporation
(Neil Mulholland) ("BROKER"). At Closing, and only in the event of Closing,
the Seller shall pay to Broker a commission pursuant to a separate agreement.
Seller and Purchaser each hereby agree to indemnify and hold the other harmless
from all loss, cost, damage or expense (including reasonable attorneys' fees)
incurred by the other as a result of any claim arising out of the acts of the
indemnifying party (or others on its behalf) for a commission, finder's fee or
similar compensation made by any broker, finder or any party who claims to have
dealt with such party, except as otherwise provided in this Paragraph 28. The
representations and warranties contained in this Paragraph 28 shall survive the
Closing.
29. EFFECTIVE DATE. For purposes of calculation of all time periods
within which Seller or Purchaser must act or respond as herein described, all
phrases such as "the date of this Agreement," "the date of execution of this
Agreement" or any other like phrase referring to the date of the Agreement,
shall mean and refer to the Effective Date of this Agreement, which shall be the
date on which Seller delivers a fully executed copy of this Agreement to the
Title Agent.
30. NON-BUSINESS DAYS. If the Closing Date or any other date set forth in
this Agreement is to occur on a holiday or other non-business day or if any
period of time set forth in this Agreement expires on a holiday or non-
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business day, then such closing or expiration date shall be the next business
day thereafter. As used in this paragraph, the term "HOLIDAY" shall mean any
day which is a recognized holiday by a statute or order of the United States or
the State of Colorado. As used in this paragraph, the term "NON-BUSINESS DAY"
shall mean Saturday and Sunday.
31. JURISDICTION. The parties hereto consent to exclusive venue and
jurisdiction in the district court in and for the City and County of Denver or
the United States District Court for the District of Colorado in any action
commenced relating to this Agreement or the transactions contemplated hereby.
The parties agree that all issues regarding this Agreement, including, without
limitation, issues of formation and performance, shall be governed by Colorado
law.
32. RECORDATION. The parties acknowledge and agree that, except for such
notice as may be permitted by applicable law in connection with an action for
specific performance, neither this Agreement nor any memorandum hereof shall be
recorded in the office of any Clerk and Recorder of any county in Colorado and
in the event of any recordation of this Agreement by Purchaser, this Agreement
shall, at Seller's sole option, be rendered null and void and of no further
force and effect whatsoever, except as provided in Paragraph 39 below.
33. ATTORNEYS' FEES. In the event of any controversy, claim or dispute
between the parties affecting or relating to the subject matter or performance
of this Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party all of its reasonable attorneys' fees and costs incurred in
such action.
34. DISCLOSURE - SPECIAL TAXING DISTRICTS - GENERAL OBLIGATION
INDEBTEDNESS.
SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT
IS PAID BY REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY
WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE PLACED AT RISK
FOR INCREASED MILL LEVIES AND EXCESSIVE TAX BURDENS TO SUPPORT THE SERVICING OF
SUCH DEBT WHERE CIRCUMSTANCES ARISE RESULTING IN THE INABILITY OF SUCH A
DISTRICT TO DISCHARGE SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES.
PURCHASER SHOULD INVESTIGATE THE DEBT FINANCING REQUIREMENTS OF THE AUTHORIZED
GENERAL OBLIGATION INDEBTEDNESS OF SUCH DISTRICTS, EXISTING MILL LEVIES OF SUCH
DISTRICT SERVICING SUCH INDEBTEDNESS AND THE POTENTIAL FOR AN INCREASE IN SUCH
MILL LEVIES.
35. DISCLOSURE OF ENVIRONMENTAL REPORT. Seller received an Environmental
Due-Diligence Assessment of the Premises (as it existed at the time of such
report) at the time of its purchase thereof. A copy of such report will be
provided to Purchaser as part of the Disclosure Documentation. Purchaser
acknowledges that Seller makes no warranties or representations regarding the
adequacy, accuracy or completeness of the Report, and Purchaser shall have no
claim against Seller based upon the Report or any omissions thereon. Purchaser
further acknowledges that, pursuant to Paragraph 4 of this Agreement, it has
full opportunity to perform such environmental investigations as Purchaser deems
appropriate within the period of time set forth in said Paragraph 4 and
Purchaser agrees that if it undertakes any such investigations, it shall provide
Seller with copies of all reports and other information obtained by Purchaser
regarding the results thereof.
36. TERMINATION OF SERVICE CONTRACTS. During the Due Diligence Period,
Purchaser shall advise Seller, in writing, which of the Service Contracts it
intends to assume and which Purchaser requests that Seller terminate on or
before the Closing Date, and Seller shall advise whether any of the Service
Contracts (which Purchaser has requested Seller to terminate) cannot be
terminated or can be terminated only with the payment of a fee or penalty which
Seller is unwilling to pay. If Purchaser elects not to terminate this Agreement
pursuant to Paragraph 4, Purchaser shall be deemed to have agreed to pay any
such fee or penalty if Purchaser thereafter elects to terminate such Service
Contract(s), and, at Closing, Purchaser shall assume all Service Contracts which
are not to be terminated pursuant to this paragraph. Seller shall terminate any
Service Contracts on or before the Closing Date (i) which can be terminated on
or prior to Closing or with the payment of a fee or penalty which Seller is
willing to pay, and (ii) which Purchaser has requested Seller to terminate;
provided that Seller shall terminate at Closing at its expense the existing
property management and leasing agreements for the Premises.
Seller shall defend, indemnify and hold Purchaser harmless from any
claims or damages arising from terminated Service Contracts unless, pursuant to
the terms of the Service Contract in question, such Service Contract may not be
terminated or unless, and to the extent, Purchaser is obligated to pay a
termination fee or penalty in connection with the termination of a Service
Contract as set forth above. Each party shall indemnify, defend and hold the
other harmless from any liabilities arising out of or in connection with any act
or omission by such party or its agents related to the Service Contracts during
its period of ownership of the Premises.
37. ENVIRONMENTAL PROVISION.
A. For purposes of this Agreement, the following terms shall have the
following meanings:
"ENVIRONMENTAL CLAIMS" means any third party (including private parties,
governmental agencies, or employees) action, lawsuit, notice of violation, claim
or proceeding relating to the Premises which seeks to impose liability,
penalties, damages or losses, as well as any direct costs incurred by the
current owner of the Premises not resulting from any third party action,
including but not limited to remedial, removal, response, abatement, clean-up,
and monitoring costs, for (i) any contamination of the air, surface water,
ground water or land; (ii) any solid, gaseous or
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liquid solid or hazardous waste generation, handling, treatment, storage,
transportation or disposal; (iii) any exposure to any air emissions, discharges,
releases or threatened releases of pollutants, contaminants, "Hazardous
Materials" (as hereinafter defined) or toxic substances; or (iv) non-compliance
with any requirements of "Environmental Laws" (as hereinafter defined). For
purposes of this Agreement, the above terms within the meaning of "Environmental
Claims" shall have the meanings ascribed to them in any applicable federal,
state or local Environmental Laws.
"ENVIRONMENTAL LAWS" mean each and every requirement of applicable federal,
state and local environmental laws, including but not limited to, the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq.; the federal Clean Air
Act, 42 U.S.C. 7401 et seq.; the federal Clean Water Act, 33 U.S.C. 1251 et
seq.; the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.; the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
9601 et seq.; and all regulations promulgated thereunder as well as any
applicable federal, state and local laws, ordinances, regulations, and common
laws relating to the industrial hygiene, environmental protection or the use,
analysis, generation, manufacture, storage, presence, disposal or transportation
of any oil, petroleum products, petroleum-based derivatives, flammable
explosives, asbestos, urea formaldehyde, polychlorinated biphenyls, radioactive
materials or waste, or other hazardous, toxic, contaminated or polluting
materials, substances or wastes, including without limitation any "regulated
substances," "hazardous substances," "hazardous waste," "hazardous materials" or
"toxic substances" as defined under any such laws, ordinances or regulations
(collectively, "HAZARDOUS MATERIALS").
B. Seller agrees and covenants that it shall retain liability for,
and Seller shall indemnify and hold Purchaser, its partners, managers, members,
stockholders, officers, and directors of Purchaser and its direct and indirect
investor partners harmless from any claims, causes of action, suits,
proceedings, fines, penalties, losses, damages, and costs (collectively, a
"LOSS") resulting from any Environmental Claims arising (i) as a result of
violations of any applicable Environmental Laws which result from any acts which
occurred during the period of the Seller's ownership of the Owned Land or
Cissell Leasehold; or (ii) from any Environmental Claims which result from any
acts which occurred during the period of the Seller's ownership of the Owned
Land or Cissell Cissell Leasehold; provided that the term "acts" as used in this
sentence shall not be deemed to include (i) any failure by Seller to clean,
remove, contain or otherwise remediate any condition which existed as a result
of actions which occurred prior to the Seller's period of ownership of the
Premises, and (ii) any occurrences or any environmental conditions of which
Purchaser had notice prior to the end of the Due Diligence Period. Any
provisions of this Agreement to the contrary notwithstanding, Seller shall have
no liability for any loss, damage, or abatement arising out of or in connection
with any asbestos located on the Premises except to the extent that (i) any such
loss or claim arises out of the Seller's acts or omissions during Seller's
period of ownership of the Owned Land or Cissell Leasehold, and (ii) the claim
by a third party therefor has accrued prior to or is pending as of Closing.
C. Except to the extent of Seller's retained liability under
subparagraph B of this Paragraph 37, Purchaser agrees and covenants that
Purchaser shall have liability for any Loss resulting from any Environmental
Claims if the event giving rise to such Environmental Claim occurred after the
Closing Date during Purchaser's period of ownership or is otherwise caused by
Purchaser. Purchaser agrees and covenants to indemnify Seller and its
respective officers, directors, principals, managers, members, agents, employees
and stockholders for any and all Environmental Claims for which Purchaser has
liability under the preceding sentence. Notwithstanding any contrary provision
set forth herein, Purchaser shall have no obligation to indemnify or hold
harmless Seller or its agents or employees with respect to any existing
environmental condition which is discovered by Purchaser during its performance
of its inspection during the Due Diligence Period.
38. 1031 EXCHANGE. Seller hereby notifies Purchaser that Seller may
consummate this transaction under the tax-deferred exchange provisions of the
Internal Revenue Code and applicable regulations. Purchaser hereby consents to
such a Closing and hereby agrees, at no out-of-pocket cost to Purchaser, to
cooperate with Seller and hereby consents that Seller shall have the right,
without any further written consent or signature by Purchaser, to (i) assign all
of Seller's right, title and interest under this Agreement to a qualified
intermediary (as defined in such regulations), and (ii) to enter into any other
Closing Documents in order to effect such a tax-deferred exchange provision;
provided that no such assignment by Seller shall relieve Seller of any of its
liabilities for any of the representations or warranties hereunder and no such
assignment shall impose on any qualified intermediary any liabilities for any of
the Seller's obligations which survive Closing hereunder. The Closing shall not
be delayed by reason of the exchange, nor shall the consummation or
accomplishment of the exchange be a condition precedent or condition subsequent
to Seller's obligations under this Agreement. Seller shall effect the exchange
through an assignment of this Agreement, or its rights under this Agreement, to
a qualified intermediary. Purchaser shall not by this agreement or acquiescence
to the exchange have its rights under this Agreement affected or diminished in
any manner, or be responsible for compliance with or be deemed to have warranted
to Seller that the exchange in fact complies with Section 1031 of the Code.
Purchaser may also effect an exchange subject to the same conditions.
39. PURCHASER'S OBLIGATIONS AFTER TERMINATION. If the Closing of this
transaction does not take place as a result of any termination by Purchaser
pursuant to any of its contingency rights set forth in this Agreement, or as a
result of any default by Purchaser or as a result of any default by Seller for
which Purchaser does not obtain specific performance: (i) such termination
shall not relieve Purchaser from any of the indemnity and non-disclosure
provisions of Paragraphs 4(a)(1),4(b) and 28 of this Agreement; (ii) Purchaser
shall deliver to Seller all originals and all copies of all of the Disclosure
Documentation which are in Purchaser's possession and which were made available
or delivered by Seller; (iii), unless the cause for the termination is a Seller
default, Purchaser shall promptly deliver to Seller a copy of all engineering
and similar reports prepared by third parties for Purchaser in connection with
its physical inspection
18
<PAGE>
of the Parcels; and (iv), if the cause for the termination is a Purchaser
default, Purchaser shall repay Seller for the cost of the R & R
Engineers-Surveyors, Inc. Survey described in Paragraph 4(a)(2)(ii) above. In
the event of any conflict between the provisions of this paragraph and any other
parts of this Agreement, the provisions of this paragraph shall control.
40. CONFIDENTIALITY. Before Closing, Seller shall make no public
announcement or disclosure of any information related to this Agreement to
outside brokers or third parties except to real estate appraisers and as
required to complete any of Seller's obligations hereunder without the prior
written specific consent of Purchaser, which consent Purchaser shall not
unreasonably withhold or delay, except for such disclosures to Seller's lenders,
creditors, officers, employees and agents as necessary to perform Seller's
obligations hereunder. After Closing, neither party hereto shall issue (at such
party's initiation) any written press announcement in any publication disclosing
this sale without the prior written specific consent of the other party, which
consent the other party shall not unreasonably withhold or delay.
41. INFORMATION AND AUDIT COOPERATION. At Purchaser's request, at any
time before or after the Closing, so long as there is no cost or increased
liability to the Seller therefor, Seller shall provide to Purchaser's designated
agents reasonable access to any books and records of the Premises in Seller's
possession of which copies or originals have not previously been delivered or
produced to Purchaser, and shall make reasonably available to such designated
agents any related information, not already in Purchaser's possession, regarding
the period for which Purchaser is required to have the Premises audited under
tax or other applicable laws, and Seller shall provide to such agents a
representation letter regarding such books and records of the Premises in
connection with the normal course of auditing the Premises in accordance with
generally accepted auditing standards.
42. FURTHER ASSURANCES. So long as there is no further cost or increased
liability to the performing party, in addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered by either
party at Closing, each party agrees to perform, execute and deliver, on or after
the Closing any further actions, documents, and will obtain such consents, as
may be reasonably necessary or as may be reasonably requested to fully
effectuate the purposes, terms and conditions of this Agreement or to further
perfect the conveyance, transfer and assignment of the Premises to Purchaser.
43. HEADINGS. The article and paragraph headings of this Agreement are
for convenience only and in no way limit or enlarge the scope or meaning of the
language hereof.
44. INDEMNIFICATIONS. Except as to obligations assumed by Purchaser under
this Agreement or the closing documents executed pursuant hereto, Seller shall
indemnify and hold Purchaser, its successors, assigns and agents, harmless from
and against all losses, claims, damages, liabilities, expenses (including
without limitation attorneys' fees and costs), fees, actions or rights of action
incurred by Purchaser as a result of or arising, directly or indirectly, from
(i) any claim by an employee, if any, employed by Seller in the operation of the
Premises whose employment was not continued after Closing by Purchaser or whose
claim arose prior to the Closing Date; (ii) any claim by any tenant of the
Premises in connection with any Lease attributed to periods prior to Closing;
and (iii) any claim by any person arising from or attributable to any action
which occurred prior to the Closing.
Except as to obligations assumed by Seller under this Agreement or the
Closing Documents executed pursuant hereto, Purchaser shall indemnify and hold
Seller, its successors, assigns and agents, harmless from and against all
losses, claims, damages, liabilities, expenses (including without limitation
attorneys' fees and costs), fees, actions or rights of action incurred by Seller
as a result of or arising, directly or indirectly, from (i) any claim by an
employee, if any, employed by Purchaser in the operation of the Premises or
whose claim arose after the Closing Date; (ii) any claim by any tenant of the
Premises in connection with any Lease attributed to periods after Closing; and
(iii) any claim by any person arising from or attributable to any action which
occurred after the Closing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLER:
JAD PROPERTIES, LLC,
A COLORADO LIMITED LIABILITY COMPANY
Name:
-------------------------------
By:
---------------------------------
Title: Manager
------------------------------
Date:
------------------------------
PURCHASER:
MACK-CALI REALTY L.P.,
19
<PAGE>
A DELAWARE LIMITED PARTNERSHIP
Name:
-------------------------------
By:
---------------------------------
Title:
------------------------------
Date:
------------------------------
20
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION FOR
400 SOUTH COLORADO BOULEVARD
<PAGE>
EXHIBIT B
PERMITTED EXCEPTIONS
1) Taxes and assessments for the year 1998 and subsequent years, not yet due
and payable.
2) All matters of record deemed approved by Purchaser pursuant to the Purchase
Agreement.
3) All Leases and tenancies shown on the Rent Roll and deemed approved by
Purchaser in accordance with the Purchase Agreement.
<PAGE>
EXHIBIT C
BUILDING SERVICE AGREEMENTS
Delivered with Disclosure Documents
<PAGE>
EXHIBIT D
PERSONAL PROPERTY
Inventory was delivered as part of Disclosure Documentation.
<PAGE>
EXHIBIT E
ESCROW INSTRUCTIONS
To be finalized between Seller, Purchaser and the Title Agent during the
Due Diligence Period.
E-1
<PAGE>
EXHIBIT F
SPECIAL WARRANTY DEED
JAD PROPERTIES, LLC, A COLORADO LIMITED LIABILITY COMPANY ("GRANTOR") whose
address is 455 Sherman Street, Suite 140, City and County of Denver, State of
Colorado 80203, for the consideration of Ten and no/100 Dollars ($10.00) in hand
paid hereby sells and conveys to MACK-CALI REALTY L.P., A DELAWARE LIMITED
PARTNERSHIP, whose address is
, County of , State of Colorado , the following
real property in the City of Glendale, County of Arapahoe, to wit:
(a) the real property described on EXHIBIT A attached hereto, with all its
appurtenances;
(b) all existing improvements and fixtures located on the Real Property
described in Exhibit A and on the real property which is the subject of a
certain lease dated September 21, 1977 by and between Vincent J. Cissell and
Shaaron K. Cissell as lessors and George Irvin Chevrolet Co., a Colorado
corporation, as lessee, as amended, but not including the improvements and
fixtures located on the Real Property which is demised by the Ground Lease
Agreement dated January 24, 1992 by and between the Abacus Group Realty Holding
Co. II, a Delaware corporation, and RCI West, Inc., a Colorado corporation, as
amended;
and Grantor warrants the title to same against all persons claiming under
Grantor, subject to those items set forth on EXHIBIT B attached hereto.
IN WITNESS WHEREOF, the Grantor has hereunder set its hand as of the
day of , 1998.
JAD PROPERTIES, LLC,
A COLORADO LIMITED LIABILITY COMPANY
Name:
-------------------------------
By:
---------------------------------
Title: Manager
------------------------------
Date:
------------------------------
STATE OF COLORADO )
) SS.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this . . . . . . . day
of , 1998, by as a Manager of
JAD Properties, LLC, a Colorado limited liability company.
Witness my hand and official seal.
My commission expires: .
-------------------------------
-----------------------------------------------------------------
Notary Public in and for the State of Colorado, County of Denver
(SEAL)
<PAGE>
EXHIBIT G
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS:
That JAD PROPERTIES, LLC, A COLORADO LIMITED LIABILITY COMPANY ("GRANTOR"),
for and in consideration of the sum of Ten Dollars ($10.00) lawful money of the
United States of America, and other good and valuable consideration to it in
hand paid by MACK-CALI REALTY L.P., A DELAWARE LIMITED PARTNERSHIP ("GRANTEE"),
the receipt thereof is hereby acknowledged, does by these presents, remise,
release, sell, assign, transfer, convey and quitclaim unto the Grantee, its
successors and assigns, all right, title and interest which the Grantor has in
and to all electrical fixtures, systems and equipment, plumbing fixtures,
systems and equipment, heating fixtures, systems and equipment, air conditioning
fixtures, systems and equipment, and other improvements, machinery, equipment,
fixtures, appliances, furniture, furnishings, supplies and items of personal
property owned by the Grantor and used in connection with the operation and
maintenance of and located on that certain parcel of real property more
particularly described on EXHIBIT A attached hereto and incorporated herein by
this reference, commonly known as 400 South Colorado Boulevard, Glendale,
Colorado (the "REAL PROPERTY"), including, without limitation, those items
listed on EXHIBIT B attached hereto (the "PERSONAL PROPERTY"), but excepting
therefrom any furniture, furnishings, fixtures, business equipment or articles
of personal property belonging to tenants occupying any portion of the Premises
or belonging to the landlords under the Cissell Lease, and ALL SUBJECT TO the
matters set forth on EXHIBIT C attached hereto (the "PERMITTED EXCEPTIONS").
TO HAVE AND TO HOLD the same to said Grantee, its successors and assigns
forever. The Personal Property is conveyed to Grantee "as is", "where is"
without warranty of quality, condition, merchantability, or fitness, or any
other warranty, or representation of any kind whatsoever, express or implied;
provided that the Grantor, for itself, its successors and assigns, does covenant
and agree that it shall and will WARRANT AND FOREVER DEFEND the Personal
Property in the quiet and peaceable possession of Grantee, its successors and
assigns, against all and every person or persons claiming the whole or any part
thereof, by, through or under the Grantor, except for the Permitted Exceptions.
IN WITNESS WHEREOF, the Grantor has hereunder set its hand as of the
day of , 1998.
JAD PROPERTIES, LLC,
A COLORADO LIMITED LIABILITY COMPANY
Name:
-------------------------------
By:
---------------------------------
Title: Manager
------------------------------
Date:
------------------------------
<PAGE>
EXHIBIT H
ASSIGNMENT AND ASSUMPTION OF CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this "ASSIGNMENT") is made by
and between ________________________________("ASSIGNOR"), and _________________
("ASSIGNEE").
RECITALS
A. Pursuant to a certain Real Estate Purchase and Sale Agreement dated
March , 1998 (the "REAL ESTATE PURCHASE AND SALE AGREEMENT"),
concurrently with the execution and delivery of this Assignment, Assignor is
conveying to Assignee by Special Warranty Deed (the "DEED") that certain tract
of land (the "OWNED LAND") more specifically described in EXHIBIT A attached
hereto and made a part hereof for all purposes, together with the improvements
located thereon (the "IMPROVEMENTS") and certain personal property owned by
Assignor upon the Owned Land within the Improvements (the "PERSONAL PROPERTY").
B. Assignor desires to assign, transfer and convey to Assignee, and
Assignee desires to obtain, all of Assignor's right, title and interest in and
to the Contracts (as hereinafter defined), subject to the terms and conditions
set forth herein.
NOW THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) and other good and valuable consideration to Assignor in hand
paid by Assignee, the receipt and sufficiency of which are hereby acknowledged,
Assignor does hereby SELL, ASSIGN, CONVEY, TRANSFER, SET-OVER and DELIVER unto
Assignee all of Assignor's right, title and interest in and to the following
(collectively the "CONTRACTS"):
(a) all leases, licenses and other written agreements pursuant to which
any portion of the Owned Land or Improvements is used or occupied by anyone
other than Assignor including all security deposits and non-cash security
provided with respect to such Leases (collectively, the "LEASES"), such Leases
being more particularly described in EXHIBIT B attached hereto and made a part
hereof; provided, however, that Assignor reserves and retains for itself all
accounts receivable accruing to Assignor with respect to the Leases prior to the
effective date hereof; and
(b) all contracts and agreements relating to the upkeep, repair,
maintenance or operation of the Owned Land, Improvements or Personal Property
(collectively, the "SERVICE AGREEMENTS"), such Service Agreements being more
particularly described on EXHIBIT C; and
(c) all Intangible Property owned by Assignor and used in connection with
the Owned Land, Improvements and Personal Property, including, without
limitation, the name "400 SOUTH COLORADO BOULEVARD" and any and all other
trademarks and trade names, logos and trade colors used in connection with any
part of the Owned Land and Improvements, and all plans, specifications, and
studies, if any, in the possession of Assignor in connection with the
Improvements, all rights, interests, claims, minerals and mineral rights, water
and water rights, if any, hereditaments, privileges, tenements and appurtenances
belonging to the Owned Land, all right, title and interest of Assignor in and to
all open or proposed highways, streets, roads, avenues, alleys, curb cuts,
sidewalks, sewers, utilities, easements, strips, gores and rights-of-way in, on,
across, in front of, contiguous to, abutting or adjoining the Owned Land, all
licenses, certificates of occupancy, permits and warranties now in effect with
respect to the Owned Land, Improvements and Personal Property, and all rights of
Assignor under all equipment leases relating to equipment or property located
upon the Premises (the "INTANGIBLE PROPERTY"); and
(d) all water and water rights, if any, appurtenant or belonging to the
Owned Land (the "WATER RIGHTS").
This Assignment is made by Assignor and accepted by Assignee subject to the
"PERMITTED EXCEPTIONS" described in the Deed, to the extent, if any, that same
are validly existing and affect the Contracts and Intangible Property.
By execution of this Assignment, Assignee assumes and agrees to perform all
of the covenants, agreements and obligations under the Contracts binding on
Assignor or the Owned Land, Improvements, or Personal Property (such covenants,
agreements and obligations being herein collectively referred to as the
"CONTRACTUAL OBLIGATIONS"), as such Contractual Obligations shall arise from and
after the date of this Assignment. Assignee hereby agrees to indemnify, hold
harmless and defend Assignor from and against any and all third party
obligations, liabilities, costs and claims (including reasonable attorneys'
fees) arising as a result of or with respect to any of the Contractual
Obligations that are attributable to the period of time from and after the date
of this Assignment.
Assignor agrees to indemnify, hold harmless and defend Assignee from and
against any and all third party obligations, liabilities, costs and claims
(including reasonable attorneys' fees), arising as a result of or with respect
to any of the Contractual Obligations that are attributable to the period of
time prior to the date of this Assignment.
ASSIGNEE ACKNOWLEDGES THAT IT HAS INSPECTED THE CONTRACTS AND THAT THIS
ASSIGNMENT IS MADE BY ASSIGNOR AND ACCEPTED BY ASSIGNEE WITHOUT REPRESENTATION
OR
<PAGE>
WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, AND WITHOUT RECOURSE
AGAINST ASSIGNOR, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN THE REAL ESTATE
PURCHASE AND SALE AGREEMENT. THE PARTIES INTEND THAT THIS ASSIGNMENT AND
ASSUMPTION OF CONTRACTS BE CONSTRUED CONSISTENTLY WITH THE REAL ESTATE PURCHASE
AND SALE AGREEMENT, AND NOT SO AS TO MODIFY THE PARTIES' RIGHTS THEREUNDER.
TO HAVE AND TO HOLD all and singular the Contracts unto Assignee, its
successors and assigns, and Assignor does hereby bind itself and its successors
to WARRANT AND FOREVER defend all and singular the Contracts (except the Water
Rights) unto Assignee, its successors and assigns, against every person
whomsoever lawfully claiming or attempting to claim the same, or any part
thereof, by, through, or under Assignor, but not otherwise, subject to the
Permitted Exceptions described in the Deed.
In the event of a default under this Assignment and Assumption of
Contracts, the defaulting party agrees to pay all attorneys' fees and costs
incurred by the non-defaulting party.
This Assignment and Assumption of Contracts shall be governed according to
the laws of the State of Colorado.
EXECUTED to be effective as of the day of , 1998.
ASSIGNOR:
JAD PROPERTIES, LLC,
A COLORADO LIMITED PARTNERSHIP
Name:
-------------------------------
By:
---------------------------------
Title: Manager
------------------------------
Date:
------------------------------
ASSIGNEE:
MACK-CALI REALTY L.P.,
A DELAWARE LIMITED PARTNERSHIP
Name:
-------------------------------
By:
---------------------------------
Title:
------------------------------
Date:
------------------------------
<PAGE>
EXHIBIT I
TENANT ESTOPPEL CERTIFICATE
(PLEASE COMPLETE ALL BLANKS)
_____________, 1998
Mack-Cali Realty L.P.
Denver, Colorado,
RE: Lease dated __________, 199__ (the "LEASE") between
________________________ ("LANDLORD") and ___________________________
("TENANT"), for premises located at 400 South Colorado Boulevard,
Suite _________, Glendale, Colorado 80203.
Gentlemen:
The undersigned Tenant understands that you or your assigns intend to
acquire that office property located at 400 South Colorado Blvd, Glendale,
Colorado (the "PROPERTY") from JAD Properties, LLC. The undersigned Tenant
understands that you or your assigns will rely upon the certifications contained
herein in connection with the purchase of the Property. The undersigned Tenant
does hereby certify to you as follows:
A. Tenant currently leases in the Property certain premises containing
approximately _________ square feet ("PREMISES") commonly known as "Suite
______," pursuant to the terms and conditions of the Lease, dated
____________, between Landlord and Tenant, [as amended by ________________]
(collectively, the "LEASE"). A true, correct and complete copy of the
Lease is attached hereto as EXHIBIT A. Except for the Lease, there are no
agreements (written or oral) or documents which are binding on Landlord in
connection with the lease of the Premises. The Lease is in full force and
effect, has not been modified, supplemented, or amended except as set forth
above, and contains the entire understanding and agreement between Tenant
and Landlord concerning the premises demised under the Lease.
B. Tenant has not given Landlord written notice (i) of any dispute
between Landlord and Tenant or (ii) that Tenant considers Landlord in
default under the Lease. Tenant is not, and to the best of Tenant's
knowledge, Landlord is not, in default under the Lease nor has any
event occurred which with the passage of time or giving of notice
would constitute a default, both parties having performed their
obligations under the Lease.
C. Tenant does not claim any offsets or credits or defenses against the
payment of rents or any other charges payable, or the performance of
any other obligations by Tenant, under the Lease.
D. Tenant has not paid a security or other deposit with respect to the
Lease, except as follows:
E. Tenant has fully paid rent through the month of . The
current monthly Base Rent payment payable under the Lease is
$___________. The monthly payment for estimated escalations on
account of taxes, operating and other pass-through expenses over the
Base Year payable under the Lease is currently $__________. Tenant's
percentage share of taxes, operating expenses and other pass-through
taxes is _______%. Tenant's operating expense base year is
__________. No free rent, partial rent, rent rebate, tenant
improvement allowance or credit for improvements or other tenant
concessions remain outstanding or unrealized except:
F. Tenant has not paid any monthly Base Rent or other amounts payable
under the Lease in advance except for the current month of
, 1998.
G. The Lease shall remain in full force and effect through
, and the Tenant has no options to renew or extend or terminate
the term of the Lease or increase or decrease the size of the Premises
except as expressly provided in the Lease.
H. Tenant has no options, rights of first offer or rights of first
refusal to purchase the Property.
I. Tenant has not assigned its rights under the Lease or sublet any
portion of the leased premises, except as follows:
___________________________________________________________________________
J. Landlord has delivered possession of the Premises to Tenant, and Tenant has
accepted possession of, and currently occupies, the Premises. The Premises
were at the time of delivery of possession and are currently in good order
and repair, and Tenant has no claims against Landlord with respect to the
condition of the Premises
<PAGE>
or the Property. All work to be performed by Landlord for Tenant under the
Lease has been performed and accepted as satisfactory by Tenant, and all
allowances payable to Tenant by Landlord or credits or abatements claimed
by Tenant have been paid, except for:
K. Tenant is not the subject of any bankruptcy, insolvency or similar
proceeding in any federal, state or other court or jurisdiction.
L. Tenant (i) is not presently engaged in nor does it presently permit; (ii)
has not at any time in the past engaged in or permitted, and (iii) has no
knowledge that any third person or entity has engaged in or permitted any
operations or activities upon, or any use or occupancy of the Premises, or
any portion thereof, for the purpose of or in any way involving the
handling, manufacturing, treatment, storage, use, transportation, spillage,
leakage, dumping, discharge or disposal (whether legal or illegal,
accidental or intentional) of any radioactive, toxic or hazardous
substances, materials or wastes, or any wastes regulated under any local,
state or federal law.
M. Tenant will attorn to and recognize __________ or its nominee or assignee
as the Landlord under the Lease and will pay all rents and other amounts
due thereunder to such party upon notice to Tenant that such party has
become the owner of Landlord's interest in the Premises under the Lease.
N. The individual executing this Tenant Estoppel Certificate has the authority
to do so on behalf of Tenant and to bind Tenant to the terms hereof.
TENANT:
------------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Date:
------------------------------
<PAGE>
EXHIBIT J
STANDARD LIEN AFFIDAVIT
To be finalized between Seller, Purchaser and the Title Company during the
Due Diligence Period.
<PAGE>
EXHIBIT K
SPECIAL WARRANTY
ASSIGNMENT AND ASSUMPTION OF GROUND LEASE
THIS ASSIGNMENT dated as of _______________, 1998, is entered into by and
between JAD PROPERTIES, LLC, A COLORADO LIMITED LIABILITY COMPANY ("SELLER") and
MACK-CALI REALTY L.P., A DELAWARE LIMITED PARTNERSHIP ("PURCHASER").
RECITALS
A. Seller is the landlord under a Lease dated September 21, 1977, which
was originally executed by and between Vincent J. Cissell, Shaaron K. Cissell
and George Irvin Chevrolet Co., a Colorado corporation, as amended (the
"LEASE"); and
B. The Lease demises the real property more particularly described on
EXHIBIT A attached hereto and made a part hereof (the "PROPERTY"); and
C. Seller has agreed to assign all of its right, title and interest in
and to the Lease to Purchaser and Purchaser has agreed to assume Seller's
obligations under the Lease, pursuant to that certain Real Estate Purchase and
Sale Agreement dated March 19, 1998 ("the SALES AGREEMENT").
COVENANTS
NOW, THEREFORE, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Seller hereby assigns to Purchaser all of Seller's right, title and
interest as landlord in and to the Lease and warrants title to the same against
all persons claiming under Seller, subject to those exceptions shown on EXHIBIT
B attached hereto and made a part hereof.
2. Purchaser hereby assumes all of the landlord's obligations under the
Lease and shall defend, protect, indemnify and hold harmless Seller from any
claims and/or damages arising from or relating to the Lease on or after the date
hereof.
3. Seller agrees to indemnify and hold harmless Purchaser from any claims
and/or damages arising from or relating under the Lease that accrue prior to the
date hereof.
4. This Assignment is made without any warranties or representations,
express or implied, except otherwise expressly as set forth in this Assignment
and/or the Sales Agreement.
5. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
IN WITNESS WHEREOF, the parties have caused these presents to be executed
on the day and year first above written.
JAD PROPERTIES, LLC
A COLORADO LIMITED LIABILITY COMPANY
Name:
-------------------------------
By:
---------------------------------
Title: Manager
------------------------------
Date:
------------------------------
<PAGE>
MACK-CALI REALTY, L.P.,
A DELAWARE LIMITED PARTNERSHIP
Name:
-------------------------------
By:
---------------------------------
Title: Manager
------------------------------
Date:
------------------------------
STATE OF COLORADO )
) SS.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this ______ day of
________________, 1998, by _____________________ as a Manager of JAD Properties,
LLC, a Colorado limited liability company.
Witness my hand and official seal.
My commission expires: .
------------------
----------------------------------------------------------------
Notary Public in and for the State of Colorado, County of Denver
(SEAL)
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
_________________________, 1998, by ______________________ as _________________
of Mack-Cali Realty L.P., a Delaware limited partnership.
Witness my hand and official seal.
My commission expires:
-----------------------
---------------------------------------------------------------------
Notary Public in and for the State of __________, County of _________
(SEAL)
Page 2 of 2-page Special Warranty Assignment and Assumption of Ground
Lease dated as of _______________,
<PAGE>
1998, entered into by and between JAD Properties, LLC, as Seller, and
Mack-Cali Realty L.P., as Purchaser.
<PAGE>
EXHIBIT L
CISSELL ESTOPPEL CERTIFICATE
Dated:
--------------------
JAD Properties, LLC
c/o Integrated Property Management, Inc.
455 Sherman Street, Suite 140
Denver, Colorado 80203
Re: Ground Lease dated September 21, 1977, originally by and between Vincent J.
Cissell and Shaaron K. Cissell (collectively the "LANDLORDS") and George
Irvin Chevrolet Co., a Colorado corporation as the original tenant, as
modified by the Addendum thereto dated April 25, 1983 (collectively
referred to herein as the "GROUND LEASE"), and under which JAD Properties,
LLC is the current "Tenant".
Gentlemen:
We hereby warrant and represent with respect to the above-captioned Ground
Lease:
1. There is presently in existence a valid Ground Lease pertaining to the
vacant land situate, lying and being in the County of Arapahoe, State
of Colorado, and described more particularly as the "CISSELL LEASE
PARCEL" attached to the Ground Lease, consisting of approximately 1.74
acres of land (the "PROPERTY").
2. The current term of the Ground Lease commenced on April 1, 1983, and
is scheduled to expire on March 31, 2018, subject to renewal for up to
four (4) additional terms of ten (10) years each.
3. The Ground Lease, a true and correct copy of which is attached hereto
as EXHIBIT A, constitutes the entire agreement between Tenant and
Landlords, and no other agreement exists with respect to the Property.
4. The Ground Lease is in full force and effect and there have been no
defaults by either the Landlords or Tenant thereunder. The Landlords
and Tenant have no obligations or duties with respect to the Property
other than as set forth in the Lease.
5. The current minimum monthly rent in the amount of ____________________
($ ) is due on the 1st day of each month from _________________
through _________________ and has been paid to and including
__________________. As of ____________________, the base rent shall
be _________________ ($ ) per annum. Such rental is
subject to increase as set forth more fully in paragraph 3 of the
Addendum to the Ground Lease.
6. Tenant has been granted under the Ground Lease an option to purchase
the Property by giving written notice of intent to purchase within
sixty (60) days after the end of the primary lease term or within
sixty (60) days after the end of any option term, upon the terms and
conditions set forth in paragraph 5 of the Addendum to Ground Lease.
7. We have been informed that JAD Properties, LLC ("JAD"), is intending
to sell the Property to Mack-Cali Realty L.P. ("MACK-CALI"). Such a
sale will not constitute a default under the Ground Lease.
This Certificate is being executed and delivered to you incident to the
Sale Agreement between JAD and Mack-Cali. It is intended that you and Mack-Cali
may rely upon the information contained herein in consummating said transaction.
-------------------------------
Vincent J. Cissell
-------------------------------
Shaaron K. Cissell
<PAGE>
EXHIBIT M
RENT ROLL
RENT ROLL WAS PROVIDED BY SELLER AS PART OF DISCLOSURE DOCUMENTATION
<PAGE>
Exhibit 10.169
OPERATING AGREEMENT
OF
AMERICAN FINANCIAL EXCHANGE L.L.C.
THIS OPERATING AGREEMENT (this "Agreement") of AMERICAN FINANCIAL
EXCHANGE L.L.C. (the "Company") is dated as of May 20, 1998, and is entered into
by and between M-C HARSIMUS PARTNERS L.P. ("MCHP") and COLUMBIA DEVELOPMENT
COMPANY, L.L.C. ("Columbia") as members (each a "Member" and collectively, the
"Members").
PRELIMINARY STATEMENTS
MCHP and Columbia desire to jointly acquire, own, develop, manage,
lease, operate, encumber and/or sell certain real property, as more particularly
described in SCHEDULE "A" attached hereto, located in Jersey City, New Jersey,
and commonly known as Harsimus Cove (the "Real Property");
Columbia has executed that certain Agreement for Sale and Purchase of
Land, dated July 2, 1996; as amended by that certain First Amendment to
Agreement for Sale and Purchase of Land, dated as of July 2, 1996; as amended by
that certain Second Amendment to Agreement for Sale and Purchase of Land, dated
as of March 17, 1997; as amended by that certain Third Amendment to Agreement
for Sale and Purchase of Land, dated as of June, 1997; and as amended by that
certain Fourth Amendment to Agreement for Sale and Purchase of Land, dated as of
September 15, 1997 (collectively, the "Acquisition Contract") by and between
National Bulk Carriers, Inc. (the "Seller") and Columbia (the "Buyer"), with
respect to the Real Property; as well as a License Agreement, dated as of
September 15, 1997 (the "License Agreement"), permitting access to the Real
Property prior to closing of title for the purposes described therein;
MCHP's predecessor-in-interest and Columbia entered into a Development
Agreement, dated January 13, 1997 (the "Development Agreement") in order to
jointly undertake certain development of the Real Property under the terms set
forth therein;
Columbia has entered into a parking agreement with Port Imperial Ferry
Corp. ("PIFC"), dated April 3, 1998 (the "Parking Agreement"), which agreement
provides for the operation of a parking facility on the Real Property;
MCHP's affiliate, Cali Harborside (Fee) Associates L.P. ("CHFA"), is
the current owner of certain real property in Jersey City, New Jersey adjacent
to the Real Property and commonly known as Harborside Center ("Harborside").
CHFA has entered into a ferry agreement, dated as of April 30, 1998 (the "Ferry
Agreement"), with PIFC for the provision of ferry service by PIFC to and from
Harborside, servicing midtown Manhattan and downtown Manhattan for the benefit
of the Real Property; and
<PAGE>
The Members desire to form a limited liability company under the New
Jersey Limited Liability Company Act, N.J.S.A. 42:2B-1,
ET SEQ., as amended from time to time (the "Act") to more specifically provide
for the future development of the Real Property, as more specifically set forth
below.
Accordingly, in consideration of ten dollars ($10.00), the mutual
promises made herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
The following terms shall have the following meanings:
"Accountant" shall mean Schonbraun Safris McCann Bekritsky & Co.,
LLC, Price Waterhouse, or the successors and assigns of either, as selected by
MCHP in its sole discretion, or, if such firms shall cease to exist, such other
accounting firm as shall be acceptable to MCHP in its sole discretion.
"Additional Capital Contribution" means each Member's pro rata share
of any Additional Funds as determined pursuant to
SECTION 4.1 and
SECTION 4.4.
"Additional Funds" means the amount of additional funds required by
the Company in excess of the Members' initial Capital Contributions pursuant to
SECTION 4.1(A).
"Additional Member" means any person or entity who acquires an
Interest in the Company pursuant to the terms of this Agreement, other than the
parties hereto.
"Adjusted Capital Account" means with respect to any Member, such
Member's Capital Account as adjusted by the items described in Sections
1.704-2(g)(1), 1.704-2(i)(5) and 1.704-1(b)(2)(ii)(d)(4),(5) and (6) of the
Treasury Regulations.
"Affiliate" means with respect to any Member (i) any corporation,
partnership or other entity directly or indirectly controlling, controlled by or
under common control with such Member, or (ii) any officer, director or trustee
of any corporation, partnership or other entity directly or indirectly
controlling, controlled by or under common control with such Member. For
purposes hereof, the terms "control", "controlling" or "controlled by" mean the
direct or indirect ownership of more than 20% of the voting or beneficial
interest in such entity.
"Agreement" means this Operating Agreement as originally executed and
as amended, modified, supplemented or restated from time to time, as the context
requires.
"Capital Account" shall means the accounts maintained for each Member
as set forth in SECTION 4.8.
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"Capital Contribution" means any contribution to the capital of the
Company in cash or property by a Member, or Members, as the case may be pursuant
to the provisions of SECTION 4.1.
"Capital Transaction" means (i) any transaction by the Company (other
than receipt of Capital Contributions) not in the ordinary course of the
Company's business, including without limitation, sales of the Property (or any
part thereof), damage recoveries (to the extent not applied to restoration),
insurance proceeds (to the extent not applied to restoration), casualty or
condemnation proceeds (to the extent not applied to restoration) or other
similar transactions and (ii) any financing or re-financing of the Property (or
any part thereof).
"Certificate of Formation" of the Company means the Certificate of
Formation filed with the Secretary of State, State of New Jersey, pursuant to
the Act to form the Company, as originally executed and as amended, modified,
supplemented or restated from time to time, as the context requires.
"Code" means the Internal Revenue Code of 1986, as amended.
"Dissociation" means the events described in Section 7.2.
"Depreciation Deductions" means the depreciation deductions allowed
by the Code with respect to the Property.
"Default Loan" means the loan described in
SECTION 4.5 made on behalf of a Noncontributing Member.
"Gain from a Capital Transaction" means the gain recognized by the
Company attributable to a Capital Transaction, determined in accordance with the
method of accounting used by the Company for federal income tax purposes. In
the event there is a revaluation of the Property and the Capital Accounts are
adjusted pursuant to SECTION 4.8(C), Gain from a Capital Transaction shall be
computed by reference to the "book items" and not the corresponding "tax items".
"Interest" means a Member's interest in the Company as described in
SECTION 4.2.
"Involuntary Withdrawal" means, with respect to any Member, the
occurrence of any of the events of Dissociation, set forth in SECTION 7.2.
"Loss from a Capital Transaction" means the loss recognized by the
Company attributable to a Capital Transaction, determined in accordance with the
method of accounting used by the Company for federal income tax purposes. In
the event there is a revaluation of the Property and the Capital Accounts are
adjusted pursuant to SECTION 4.8(C), Loss from a Capital Transaction shall be
computed by reference to the "book items" and not the corresponding "tax items".
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<PAGE>
"Member" means each of the parties that have executed this Agreement
and each of the parties that may hereafter become Substitute Members pursuant to
this Agreement.
"Member's Representative" means that person or entity which shall
have the authority, on behalf of the applicable Member, to bind such member with
respect to matters arising under this Agreement.
"Net Cash Flow" means the gross receipts and other miscellaneous
revenue derived from Company operations (excluding Net Proceeds) less all cash
operating expenses of the Company including, without limitation, (i) debt
service on any Company loans (excluding the payment of interest and outstanding
principal on Default Loans), (ii) taxes and other fees incurred in connection
with the operation of the Company, and (iii) increases, if any, in reserves
established by the Members from time to time for working capital and other
purposes.
"Net Proceeds" means the net proceeds available to the Company from a
Capital Transaction after deducting all costs and expenses incurred in
connection therewith (including brokerage fees and commissions).
"Net Profit" and "Net Loss" means the net income (including income
exempt from tax) and net loss (including expenditures that can neither be
capitalized nor deducted), respectively, of the Company, determined in
accordance with the method of accounting used by the Company for federal income
tax purposes but excluding any Gain or Loss from a Capital Transaction.
"Property" means all real, personal and mixed properties, cash,
assets, interests and rights of any type owned by the Company (directly or
indirectly), including, without limitation, the Real Property. All assets
acquired with Company funds or in exchange for the Property shall constitute the
Property.
"Substitute Member" means each of those people or entities admitted
to the Company as Members, as permitted by Article VIII of this Agreement.
"Transfer" means, when used as a noun, any voluntary sale,
hypothecation, pledge, assignment, attachment, exchange or other relinquishment,
and, when used as a verb, means voluntarily to sell, hypothecate, pledge,
assign, attach, exchange or otherwise relinquish.
"Treasury Regulations" means the regulations promulgated under the
Code.
"Unanimous Consent of the Members" shall mean the consent of the
Members holding 95% of the Interest in the Company.
"Unpaid Preferred Return" means for any period an amount equal to the
amount of interest that would accrue, cumulative and compounded, on MCHP's
Unrecovered Capital Contributions, computed at an interest rate of nine (9%)
percent per annum, reduced (but not below zero) by the amount of any
distributions made to MCHP pursuant to SECTIONS 6.2(A)(I) AND 6.3(B).
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"Unrecovered Capital Contribution" means for MCHP an amount equal to
the aggregate amount of its capital contribution(s) made pursuant to this
Agreement reduced by the aggregate amount of distributions theretofore made to
MCHP pursuant to
SECTION 6.3(C).
"Voluntary Withdrawal" means a Member's Dissociation from the Company
by means other than a Transfer or Involuntary Withdrawal.
ARTICLE II
ORGANIZATION AND TERM
2.1 FORMATION. The Members do hereby agree to form the Company under
the name of American Financial Exchange L.L.C. for the purpose and scope set
forth herein. Pursuant to the provisions of the Act, the formation of the
Company shall be effective upon the execution hereof and the filing of the
Certificate of Formation.
In order to maintain the Company as a limited liability company under
the laws of the State of New Jersey, the Company shall from time to time take
appropriate action, including the preparation and filing of such amendments to
the Certificate of Formation and such other assumed name certificates,
documents, instruments and publications as may be required by law, including,
without limitation, action to reflect:
(i) a change in the Company name;
(ii) a correction of a defectively or erroneously executed
Certificate of Formation;
(iii) a correction of false or erroneous statements in the
Certificate of Formation or the desire of the Members to make a change in any
statement therein in order that it shall accurately represent the agreement
among the Members; or
(iv) a change in the time for dissolution of the Company as stated
in the Certificate of Formation and in this Agreement.
2.2 TERM. The term of the Company shall commence upon filing the
Articles of Organization and shall continue in perpetuity, unless dissolved
following an event set forth in
SECTION 9.1 hereof.
2.3 REGISTERED AGENT AND OFFICE. The registered office of the
Company in the State of New Jersey is c/o Mack-Cali Realty, L.P., 11 Commerce
Drive, Cranford, New Jersey 07016, Attn: Roger W. Thomas, Esq. The name and
address of the registered agent of the Company for service of process on the
Company in the State of New Jersey is Mack-Cali Realty, L.P., 11 Commerce Drive,
Cranford, New Jersey 07016. At any time, the Company may
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<PAGE>
designate another registered agent and/or office by amending the Certificate of
Formation pursuant to the Act.
2.4 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Company shall be c/o Mack-Cali Realty, L.P., 11 Commerce Drive, Cranford,
New Jersey 07016. At any time, the Company may change the location of its
principal place of business and may establish additional offices.
2.5 OTHER INSTRUMENTS. Each Member hereby agrees to execute and
deliver to the Company within ten (10) days after receipt of a written request
therefor, such other and further documents and instruments, statements of
interest and holdings, designations, powers of attorney and other instruments
and to take such other action as the Company reasonably deems necessary, useful
or appropriate to comply with any laws, rules or regulations as may be necessary
to enable the Company to fulfill its responsibilities under this Agreement.
ARTICLE III
PURPOSES AND POWERS OF THE COMPANY
3.1 PURPOSES OF THE COMPANY.
(a) The purposes of the Company's business are to acquire, own,
develop, manage, operate, maintain, encumber and sell the Real Property and to
conduct such other activities as may be necessary, appropriate and incidental to
the foregoing purposes in connection therewith, and to engage in any other
business permitted under the Act as unanimously approved by the Members.
(b)
DEVELOPMENT OF THE REAL PROPERTY. Columbia and MCHP have completed the
construction of certain bulkhead improvements for the Real Property, pursuant to
(i) the Army Corp. of Engineer Permit No. 14767, dated March 22, 1988, as
amended by letter dated July 26, 1989, as further amended by letter dated March
23, 1991, as further amended by letter dated February 25, 1994, and as further
amended by letter dated April 23, 1996 (the "Army Corps Permit"); and (ii) the
New Jersey Department of Environmental Protection Waterfront Development Permit
No. 0906-92-0005.2, issued December 23, 1997 (the "Waterfront Development
Permit", and together with the Army Corps Permit, the "Waterfront Permits").
The Company shall, promptly following the execution of this Agreement, complete
parking lot improvements and a waterfront walkway at the Real Property, as more
fully set forth in the Waterfront Permits (collectively, the "Improvements") in
accordance with (i) those certain plans and specifications approved by the
Members, attached hereto as EXHIBIT "D" (the "Plans and Specifications"); (ii)
that certain budget approved by MCHP attached hereto as EXHIBIT "E" (the
"Budget"); (iii) the Parking Agreement; and (iv) all applicable legal
requirements. Columbia acknowledges that the Ferry Agreement will be contingent
upon the availability of and access to sufficient parking on the Real Property
for PIFC's ferry passengers. At closing of title for the Real Property, MCHP
shall make a Capital Contribution to the Company sufficient to allow the
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<PAGE>
Company to reimburse Columbia for those costs actually incurred by Columbia
through the date hereof with respect to the construction of the Improvements
(the "Development Costs"), which Development Costs are more particularly set
forth in EXHIBIT "F" attached hereto; PROVIDED, HOWEVER, that MCHP's Capital
Contribution pursuant to this paragraph shall constitute an Unrecovered Capital
Contribution, and shall be entitled to an Unpaid Preferred Return, recoverable
by MCHP as provided in this Agreement.
3.2 POWERS OF THE COMPANY. In furtherance of the purpose of the
Company as set forth in SECTION 3.1, the Company shall have the power and
authority to take in its name all actions necessary, useful or appropriate in
the Members' discretion to accomplish its purpose and take all actions
necessary, useful or appropriate in connection therewith. In addition, the
Company shall take all actions that are or may become necessary to insure that
Mack-Cali Realty Corporation maintains its status as a real estate investment
trust under Section 856 of the Code and applicable Treasury Regulations,
provided that such actions shall not materially and adversely affect Columbia.
ARTICLE IV
MEMBER'S CAPITAL CONTRIBUTIONS AND INTERESTS
4.1 CAPITAL CONTRIBUTIONS.
(a) Upon execution hereof, each Member shall be obligated to
contribute to the capital of the Company, in cash or property, as its initial
Capital Contribution the amount set forth opposite its name on
EXHIBIT "A" attached hereto.
(b) Upon the execution of this Agreement, Columbia shall assign to
the Company all of Columbia's right, title and interest under:
(i) The Acquisition Contract, including, without limitation, the right to
receive a warranty deed to Seller's fee estate in the Real Property;
(ii) The License Agreement;
(iii) That certain parking agreement with PIFC;
(iv) A certain Leasing Representation Agreement, dated June 10, 1997, with
Insignia/Edward S. Gordon Co., Inc.;
(v) Any and all other agreements, entered into by Columbia to effectuate
the development of the Real Property, including, without limitation,
agreements with engineers, architects, environmental experts and
attorneys; and
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(vi) All municipal, state and federal approvals and permits relating to the
ownership, development and operation of the Property.
Columbia represents to MCHP (i) that Columbia has full right and authority to
assign the foregoing to the Company and that Columbia is not in default under
any of the foregoing agreements, rights or permits; (ii) that, to the best of
Columbia's knowledge, no event, fact or circumstance then exists that, with the
giving of notice or the expiration of any applicable cure period, would
constitute a default hereunder or under any of the agreements, rights or permits
referenced herein; (iii) that Columbia has not entered into any other agreements
with respect to or affecting the Property; (iv) that Columbia has not created or
suffered to exist any encumbrance or other obligation affecting the Property
except those set forth on
EXHIBIT "B" attached hereto and as indicated in Title Commitment No's.
97-TA-0524 (Block 15, Lot 36) and 97-TA-0504 (Block 15, Lot 35) issued by
Chicago Title Insurance Company, each dated August 31, 1996.
(c) MCHP shall, on behalf of the Company, remit the sum of
$7,990,700.00 (the "Purchase Price"), in cash, to Seller for the purchase of the
Property, as required by the Acquisition Contract. The Purchase Price funds
advanced by MCHP shall be considered a Capital Contribution, and shall
constitute an Unrecovered Capital Contribution entitled to an Unpaid Preferred
Return, recoverable by MCHP as set forth in this Agreement.
(d) MCHP shall make Capital Contributions to the Company to the
extent required by the terms of SECTION 3.1(B) and SECTION 4.1(C). In the event
that any Member determines that the Company requires additional funds (i) to
make any payments due under any third party loan to the Company (other than a
balloon payment of principal at maturity) the failure of which would give the
lender thereunder the right to accelerate the loan; (ii) to make payments on
account of real estate taxes and other municipal charges and levies so that same
may be paid prior to the delinquency thereof; (iii) to make payments on account
of any insurance policies insuring the Company assets; or (iv) to make payments
on account of legal services rendered to the Company, such Member shall notify
the other Members in writing of the total cost of such charges (the "Required
Amount") and each Member's share of the amount required to pay such costs.
Within fifteen (15) days of such notice, any Member may, but is not obligated
to, make a Capital Contribution in the amount of its share of the Required
Amount. Pending the receipt by the Company of the Required Amount, any Member
shall be entitled to advance to the Company the entire Required Amount (and to
receive a Nine Percent (9.0%) return thereon until repaid) if such Member shall
determine in good faith that the Company may incur any liability or additional
expense if the matter giving rise to the need for the Capital Contribution is
not timely satisfied. No Member shall have an obligation to make any Capital
Contribution except as expressly set forth herein.
4.2 INTERESTS. A Member's Interest in the Company shall be
represented by the percentage interest held by such Member, as set forth on
EXHIBIT "C" attached hereto.
4.3 NO REQUIREMENT OF ADDITIONAL FUNDS. Except as expressly
provided in this Agreement or as required by law, no Member shall be required to
make any Capital
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Contributions to the capital of the Company. Without limiting the foregoing, no
Member shall be required to contribute to the capital of the Company to restore
a deficit in the Member's Capital Account existing at any time. No Member will
be bound by, or be personally liable for, the expenses, liabilities or
obligations of the Company. No Member shall be responsible for any liabilities
or obligations of any other Member.
4.4 ADDITIONAL FUNDS.
If the Members in their sole discretion determine that the
Company requires additional funds in excess of the Capital Contributions made by
the Members pursuant to this Agreement (the "Additional Funds") and the Company
is unable to borrow the required funds on commercially reasonable terms and
conditions, then the Members shall advise each Member of the amount of its pro
rata share of the Additional Funds in accordance with each Member's Interest in
the Company pursuant to SECTION 4.2. Within fifteen (15) days of such notice,
each Member may, but is not obligated to, make a Capital Contribution to the
Company in the amount of its pro rata share of the Additional Funds in
accordance with its Interest in the Company pursuant to SECTION 4.2.
4.5 DEFAULT LOANS.
(a) If any Member fails to make (in whole or in part) its Capital
Contribution pursuant to SECTION 4.1(D) and/or SECTION 4.4 (any such Member is
herein referred to as a "Noncontributing Member"), then any Member that has made
its Capital Contribution (any such Member is herein referred to as a
"Contributing Member") shall have the option to make a Default Loan to the
Company on behalf of the Noncontributing Member equal to the Capital
Contribution not made by the Noncontributing Member (a "Default Loan"), on the
terms and conditions set forth in SECTION 4.5(B) below. In the event that more
than one Contributing Member desires to make a Default Loan on account of the
Noncontributing Member, such Contributing Members shall be permitted to
participate in proportion to their respective Interests exclusive of the
Interest of the Non-Contributing Member.
(b) A Default Loan (which for all purposes of this Agreement shall
include all accrued and unpaid interest thereon) made on behalf of a Member due
to its failure to make its Capital Contribution shall bear interest from the
date such Capital Contribution is due at an annual rate equal to the rate
announced from time to time in The Wall Street Journal as the "prime rate" plus
four (4) percentage points, and shall mature upon the liquidation of the Company
if not otherwise paid in full pursuant to the terms of this Agreement. In the
event that The Wall Street Journal shall no longer be published, then the Member
entitled to payments of interest shall be entitled to select, in its reasonable
discretion, an alternative publication or institutional "prime" or "base" rate
(and, if there is more than one such Member, then the Member with the greatest
Interest shall be entitled to make such selection). Any Default Loan and
interest thereon shall be required to be repaid by the Noncontributing Member
only to the extent distributions are made to such Member as set forth in
SECTION 6.2 and SECTION 6.3, and no Noncontributing Member shall have any
personal liability for the repayment of same or any interest thereon. In the
event that there shall be more than one Default Loan during the term of
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this Agreement, then the application of the various rights set forth in this
SECTION 4.5 shall be applied separately to each such Default Loan.
4.6 WITHDRAWALS AND INTEREST. No Member shall have the right to
withdraw from the Company or receive any return or interest on any portion of
its Capital Contribution except as otherwise provided herein.
4.7 RETURN OF CAPITAL. No Member shall be entitled to the return of
all or any part of its Capital Contribution except in accordance with the
provisions of this Agreement.
4.8 CAPITAL ACCOUNTS. The Company shall determine and maintain
"Capital Accounts" for each member throughout the full term of the Company in
accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv),
as such regulation may be amended from time to time. To the extent not
inconsistent with such rules, the following shall apply:
(a) The Capital Account of each Member shall be credited with (1)
an amount equal to such Member's cash contributions including, without
limitation, Purchase Price and Development Costs to the extent set forth in this
Agreement, and the agreed fair market value of property contributed to the
Company by such Member (net of liabilities securing such contributed property
that the Company is considered to assume or take subject to under Section 752 of
the Code) and (2) such Member's share of the Company's Net Profits (or items
thereof) and Gain from a Capital Transaction. The Capital Account of each
Member shall be debited by (1) the amount of cash distributions to such Member
and the agreed fair market value of property distributed to such Member (net of
liabilities assumed by such Member and liabilities to which such distributed
property is subject) and (2) such Member's share of the Company's Net Losses (or
items thereof) and Loss from a Capital Transaction.
(b) Upon the transfer of an Interest in the Company after the date
of this Agreement, (x) if such transfer does not cause a termination of the
Company within the meaning of Section 708(b)(1)(B) of the Code, the Capital
Account of the transferor Member that is attributable to the transferred
Interest will be carried over to the transferee Member but, if the Company has a
Section 754 election in effect, the Capital Account will not be adjusted to
reflect any adjustment under Section 743 of the Code, or (y) if such transfer
causes a termination of the Company within the meaning of Section 708(b)(1)(B)
of the Code, the income tax consequences of the deemed distribution of the
Property and of the deemed immediate contribution of the Property to a new
company (which for all other purposes continues to be the Company) shall be
governed by the relevant provisions of Subchapter K of Chapter 1 of the Code and
the regulations promulgated thereunder, and the initial Capital Accounts of the
Members in the new company shall be determined in accordance with Treasury
Regulation Sections 1.704-1(b)(2)(iv)(d), (e), (f), (g) and (1), and thereafter
in accordance with
SECTION 4.8(A).
(c) Upon (i) the "liquidation of the Company" (as hereinafter
defined), (ii) the "liquidation of a Member's interest in the Company" (as
hereinafter defined), (iii) the distribution of money or property to a Member as
consideration for an Interest in the Company, or (iv) the contribution of money
or (if permitted pursuant to (a) above) property to the Company by a new
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or existing Member as consideration for an Interest in the Company, or upon any
transfer causing a termination of the Company for tax purposes within the
meaning of Section 708(b)(1)(B) of the Code, then adjustments shall be made to
the Members' Capital Accounts in the following manner: all Property of the
Company which is not sold in connection with such event shall be valued at its
then "agreed value". Such agreed value shall be used to determine both the
amount of gain or loss which would have been recognized by the Company if the
Property had been sold for its agreed value (subject to any debt secured by the
Property) at such time, and the amount of Net Cash Flow or Net Proceeds, as the
case may be, which would have been distributable by the Company pursuant to
SECTION 6.2 if the Property had been sold at such time for said value, less the
amount of any debt secured by the Property. The Capital Accounts of the Members
shall be adjusted to reflect the deemed allocation of such hypothetical gain or
loss in accordance with SECTION 6.1. The Capital Accounts of the Members (or of
a transferee of a Member) shall thereafter be adjusted to reflect "book items"
and not tax items in accordance with Treasury Regulation Sections
1.704-1(b)(2)(iv)(G) and 1.704-1(b)(4)(i).
(d) For purposes of this SECTION 4.8, (i) the term "liquidation of
the Company" shall mean (A) a termination of the Company effected in accordance
with this Agreement, which shall be deemed to occur, for purposes of this
ARTICLE IV, on the date upon which the Company ceases to be a going concern and
is continued in existence solely to wind-up its affairs, or (B) a termination of
the Company pursuant to Section 708(b)(1) of the Code; (ii) the term
"liquidation of a Member's interest in the Company" shall mean the termination
of the Member's entire interest in the Company effected by a distribution, or a
series of distributions, by the Company to the Member; and (iii) the term
"agreed value" shall mean, with respect to the Property, such value as is
determined by the Members.
4.9 LIABILITY. No Member shall be liable under a judgment, decree or
order of a court, or in any other manner for a debt, obligation or liability of
the Company. Additionally, no Member shall be required to lend any funds to the
Company or to pay any contributions, assessments or payments to the Company
except the initial Capital Contributions set forth in EXHIBIT "A" and the
Capital Contributions provided for in SECTION 4.1.
ARTICLE V
RIGHTS AND DUTIES OF THE MEMBERS
5.1 MANAGEMENT.
(a) MANAGEMENT OF THE COMPANY. The day-to-day business and
affairs of the Company shall be managed by the Members, who, acting unanimously,
shall have the exclusive power and authority, on behalf of the Company, to take
any action of any kind not inconsistent with the provision of this Agreement and
to do anything and everything they deem necessary or appropriate to carry on the
business and purposes of the Company. There shall not be a "manager" (within
the meaning of the Act) of the Company. The Members are, to the extent of their
rights and powers set forth in this Agreement, agents of the Company for the
purpose of the Company's business, and the actions of the Members taken in
accordance with such rights and
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powers shall bind the Company. Day-to-day decisions with respect to the
construction of the Improvements, as defined in SECTION 3.1(B), the Real
Property parking agreement and/or the acquisition of the Real Property shall be
made only with the Unanimous Consent of the Members. Additionally, any choice
with respect to the following major decisions shall be made only with the
Unanimous Consent of the Members: (i) sale or other transfer of all or
substantially all of the Company's assets; (ii) any indebtedness secured or to
be secured by the Property or with recourse to the Members; (iii) sale of the
Property; (iv) merger, liquidation, dissolution, reorganization or voluntary
filing for bankruptcy by the Company; (v) leasing of the Property; or (vi)
development of the Property (collectively, "Major Decisions").
(b) The Members shall carry on, manage and conduct the Company
business and shall devote so much of their time thereto as shall be reasonably
necessary. The Members shall not be obligated to devote all of their time and
effort to the Company and its affairs.
(c) All deeds, bills of sale, mortgages, leases, contracts of
sale, bonds, notes, or other contracts, documents, agreements, instruments or
writings binding the Company shall bind the Company and be effective for all
uses and purposes if signed on behalf of the Company by all of the Members.
5.2 NO MANAGEMENT POWERS OF THE MEMBERS. The Members in such
capacity shall have no voice or participation in the management of the Company
business, and no power to bind the Company or to act on behalf of the Company in
any manner whatsoever, except as specifically provided in this Agreement.
5.3 MANAGER'S FEES AND REIMBURSEMENT OF EXPENSES. The Members
shall receive no compensation for acting as managers of the Company. All bona
fide costs and expenses actually incurred in connection with the organization of
the Company and the ongoing operation or management of the business of the
Company shall be borne by the Company, provided that they have been approved in
advance, in writing, by the Members. The Company, promptly upon receipt of a
written request for reimbursement, accompanied by reasonably acceptable evidence
that the bona fide costs and expenses have been incurred by the requesting
Member, shall reimburse such Member for all bona fide out-of-pocket costs and
expenses incurred by it in connection with the organization and business of the
Company.
5.4 MEETINGS. Meetings of the Members shall not be held unless
the Members, in their sole discretion, decide to call a meeting of the Members
for any purpose.
5.5 BANK ACCOUNTS. The Company shall establish and maintain
accounts in financial institutions (including, without limitation, national or
state banks, trust companies or savings and loan institutions) in such amounts
as the Members may deem necessary from time to time. The funds and income of
the Company, including, without limitation, rental income from the operation of
the Property, shall be collected by the TMM (as hereinafter defined) and
deposited in such accounts, and shall not be commingled with the funds of the
Members or any Affiliates thereof. All Company disbursements must be approved
by the Members, however, Company checks, after approval by the Members, may be
signed by any Member of the
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Company or by any individual authorized by the Members to sign checks on behalf
of the Company.
5.6 INDEMNITY. The Company (but not the Members) shall indemnify
and hold harmless the Members and their respective directors, officers, agents
and employees from any claims, cost, loss damage or expense (including
reasonable attorney's fees and costs), liability, judgments or causes of action
(collectively, "Losses") incurred by them by reason of any acts or omissions
performed or omitted by them for or on behalf of the Company, unless such Losses
were caused by (i) the applicable Member's fraud, gross negligence or willful
misconduct; or (ii) the Member's violation of law. Notwithstanding any language
to the contrary contained in this Agreement, a Member shall have personal
liability for the Company's indemnity in the event that the Losses are directly
caused by the gross negligence or willful misconduct of such Member.
5.7 RELIANCE ON AUTHORITY OF MEMBERS. Any Person dealing with the
Company, other than another Member, may rely on the authority of the Members
without inquiry into the provisions of this Agreement or compliance herewith,
regardless of whether that action actually is taken in accordance with the
provisions of this Agreement.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 ALLOCATIONS OF PROFITS AND LOSSES AND GAIN OR LOSS ON SALE.
(a) NET PROFITS. The Net Profits of the Company, for each fiscal
year of the Company, shall be allocated among the Members as follows:
(i) First, to the Members in an amount equal to, and in
proportion to, the aggregate amount of Net Losses
theretofore allocated to each Member;
(ii) Second, pro rata among the Members until the aggregate
amount of Net Profits allocated pursuant to this subsection
(a)(ii) for the current and all prior years equals the
aggregate amount of distributions theretofore made to such
Members pursuant to SECTION 6.2(A)(I); and
(iii) Thereafter in proportion to their respective Interests
in the Company.
Any credit available for income tax purposes shall be
allocated among the Members in proportion to their respective Interests in the
Company.
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(b) GAIN ON SALE. Gain from a Capital Transaction shall be
allocated in the following order:
(i) There shall first be allocated to those Members, if
any, who have deficit balances in their Capital Accounts immediately prior to
such transaction, an amount of such gain equal to the aggregate amount of such
deficit balances, which amount shall be allocated in the same proportion as such
deficit balances.
(ii) There shall next be allocated to each of the Members
gain equal to the amount by which (x) the aggregate cash proceeds derived from
such transaction distributable to each Member in accordance with the provisions
of SECTION 6.2(B), assuming such amounts are distributable, exceeds (y) the
positive balance, if any, in such Member's Capital Account after such Member's
Capital Account has been adjusted to reflect the gain allocated to such Member
pursuant to paragraph (i) above; provided, however, that if there shall be an
insufficient amount of gain determined by this paragraph, then the gain shall be
allocated to the Members in proportion to the respective amounts determined
pursuant to this paragraph.
(iii) Any remaining gain shall be allocated among the Members
in proportion to their respective Interests in the Company.
(iv) If the Company shall realize, upon such transaction,
gain which is treated as ordinary income under Section 1245 or 1250 of the Code,
such ordinary income shall be allocated to the Members who receive the
allocation of the depreciation or cost recovery deduction that generated the
ordinary income, which amount shall be allocated in the same proportions as such
deductions.
(v) Notwithstanding the foregoing, any cash payments made
to a Member pursuant to SECTIONS 6.2(A) AND 6.3(A) for interest and in repayment
of the principal on any Default Loan shall not be treated as an amount that
reduces the Capital Account of the Member receiving such amount.
(c) NET LOSSES. Net Losses of the Company shall be allocated
among the Members as follows:
(i) First, Depreciation Deductions shall be allocated among
the Members in proportion to their initial Capital
Contributions made pursuant to SECTION 4.1(A);
(ii) Second, to those Members, if any, that have positive
balances in their Capital Accounts, an amount of such loss
equal to the aggregate amount of such positive Capital
Account balances which amount shall be allocated in the same
proportion as such positive balances; and
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(iii) Thereafter to the Members in proportion to their
respective Interests in the Company.
(d) LOSS ON SALE. Loss from a Capital Transaction from the sale
or other disposition of all or substantially all of the Property shall be
allocated in the following order:
(i) There shall first be allocated to those Members, if
any, who have positive balances in their Capital Accounts,
an amount of such loss equal to the aggregate amount of such
positive balances, which amount shall be allocated in the
same proportion as such positive balances; and
(ii) The balance of such loss shall be allocated to the
Members in proportion to their respective Interests in the
Company.
(e) SPECIAL RULES REGARDING ALLOCATIONS.
Notwithstanding the foregoing provisions of SECTION 6.1:
(i) In accordance with sections 704(b) and (c) of the Code
and the Treasury Regulations thereunder, income, gain, loss and deduction with
respect to any Property contributed to the capital of the Company (including all
or part of any deemed capital contribution under section 708 of the Code) shall,
solely for tax purposes, be allocated among the Members so as to take account of
any variation between the adjusted basis of such Property to the Company and its
agreed value. In the event that Capital Accounts are ever adjusted pursuant to
Treasury Regulation section 1.704-1(b)(2) to reflect the fair market value of
any of the Property, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall, solely for tax purposes, take account of any
variation between the adjusted basis of such asset and its value as adjusted in
the same manner as required under section 704(c) of the Code and the Treasury
Regulations thereunder.
(ii) At no time shall any allocation of losses be made to a
Member if such allocation would cause the deficit in the Member's Capital
Account, if any, to exceed his "Company minimum gain" or "Member non-recourse
debt minimum gain" (as defined in Treasury Regulation Sections 1.704-2(b)(2) and
(g)(1) and (i)(2) and (5), respectively), and any losses not allocated to a
Member by reason of this clause (ii) shall be allocated to each Member whose
deficit, if any, in the Member's Capital Account of such Member shall not exceed
his allocable share of such minimum gain by reason of such allocation, or to the
Members who bear the economic risk of loss attributable to such losses, and
subsequent profits shall be allocated to Members to the extent losses have
previously been allocated to them pursuant to this SECTION 6.1(C)(II).
(iii) Non-recourse deductions, as defined in Treasury
Regulations Section 1.704-2(b), shall be allocated among the Members in
proportion to their Interests. Member non-recourse deductions shall be
allocated among the Members in the proportion to which they share
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the economic risk of loss with respect to the Member non-recourse debt to which
such deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i).
(iv) If there is a net decrease in the Company minimum gain
(within the meaning of Treasury Regulation Section 1.704-2(g)(2)) for a Company
taxable year, then, before any allocations are made for such year other than
those pursuant to clause (ii) above, each Member with a share of the Company
minimum gain at the beginning of the year shall be allocated items of Company
income and gain for such year (and, if necessary for subsequent years) in an
amount equal to each Member's share of the net decrease in Company minimum gain
as determined in accordance with Treasury Regulation Section 1.704-2(f) in a
manner so as to satisfy the requirements of said Treasury Regulation.
(v) If, during any taxable year, there is a net decrease in
Member non-recourse debt minimum gain, then, before any other allocations are
made for such year other than those pursuant to clause (ii) above, each Member
with a share of the Member non-recourse debt minimum gain at the beginning of
the year shall be allocated items of Company income and gain for such year (and,
if necessary, for subsequent years) in an amount equal to each Member's share of
the net decrease in Member non-recourse debt minimum gain as determined in
accordance with Treasury Regulation Section 1.704-2(i)(4) in a manner so as to
satisfy the requirements of said Treasury Regulation.
(vi) If, during any taxable year, a Member unexpectedly
receives, or, as of the end of such year, is reasonably expected to receive, an
adjustment, allocation or distribution described in paragraph (4), (5) or (6) of
Treasury Regulation Section 1.704-1(b)(2)(ii)(d), and if such adjustment,
allocation or distribution would cause at the end of the taxable year a deficit
balance in such Member's Capital Account in excess of his allocable share of
minimum gain as described above, then such Member shall be allocated items of
income and gain for such taxable year (and, if necessary, subsequent taxable
years) in an amount and in a manner sufficient to eliminate such excess balance
as quickly as possible before any other allocation is made for such year, other
than pursuant to clause (ii) and (iii) above, so as to satisfy the requirements
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) (qualified income offset).
(vii) In the event any Member has a deficit balance in his
Capital Account at the end of the fiscal year which is in excess of the sum of
(A) the amount such Member is obligated to restore pursuant to any provision of
this Agreement, if any, and (B) the amount of such Member is deemed to be
obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each Member shall be
specially allocated items of Company income and gain in the amount of such
excess as quickly as possible.
6.2 DISTRIBUTIONS OF NET CASH FLOW.
(a) The Company shall distribute Net Cash Flow to the
Members at such times as the Members shall determine (but not less often than
quarterly), in the following order of priority:
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(i) First, to MCHP in an amount equal to its Unpaid Preferred
Return;
(ii) Second, to the Members in proportion to their Unrecovered
Capital Contributions (excluding MCHP's Capital Contribution
in the amount of the Purchase Price) until their Unrecovered
Capital Contributions (excluding MCHP's Capital Contribution
in the amount of the Purchase Price) have been reduced to
zero; and
(iii) Third, the balance shall be distributed to the Members in
proportion to their respective Interests.
(b) Notwithstanding any provision in this Agreement to the
contrary, all payments of principal and interest on any Default Loan made on
behalf of a Noncontributing Member shall, except as permitted below, be made by
the Company to the Contributing Member out of the first distributions of Net
Cash Flow otherwise due to the Noncontributing Member pursuant to
SECTION 6.2(A) and shall be treated for all purposes of this Agreement as
amounts distributed to the Noncontributing Member and paid by such Member to the
Contributing Member on account of the Default Loan.
6.3 DISTRIBUTIONS OF NET PROCEEDS.
(a) The Company shall distribute Net Proceeds to the
Members as soon as practicable after the occurrence of the event giving rise to
the Net Proceeds, in the following order of priority:
(i) First, to MCHP in an amount equal to its Unpaid
Preferred Return;
(ii) Second, to the Members in proportion to their
Unrecovered Capital Contributions (including MCHP's
Capital Contribution in the amount of the Purchase
Price) until their Unrecovered Capital Contributions
(including MCHP's Capital Contribution in the amount of
the Purchase Price) have been reduced to zero; and
(iii) Third, the balance shall be distributed to the Members
in proportion to their respective Interests.
(b) Notwithstanding any provision in this Agreement to the
contrary, all payments of principal and interest on any Default Loan made on
behalf of a Noncontributing Member shall, except as permitted below, be made by
the Company to the Contributing Member out of the first distributions of Net
Proceeds otherwise due to the Noncontributing Member
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pursuant to SECTION 6.3(A) and shall be treated for all purposes of this
Agreement as amounts distributed to the Noncontributing Member and paid by such
Member to the Contributing Member in full or partial satisfaction of the Default
Loan.
6.4 SPECIAL RULES REGARDING DISTRIBUTIONS.
(a) No distribution shall be declared and paid if, after
the distribution is made: (i) the Company would be unable to pay its debts as
they become due in the usual course of business, or (ii) the fair market value
of the Company's assets would be less than the sum of its liabilities.
(b) All amounts withheld pursuant to the Code or any
provisions of state and local tax law with respect to any payment or
distribution to the Members from the Company shall be treated as amounts
distributed to the relevant Member or Members pursuant to
SECTION 6.2 or SECTION 6.3.
ARTICLE VII
TRANSFERABILITY
7.1 RESTRICTIONS ON TRANSFERABILITY.
(a) No Member may Transfer all, or any portion, of its
Interest except as specifically provided herein and except by operation of law
as a result of the Involuntary Withdrawal of such Member.
(b) Intentionally Deleted.
(c) Notwithstanding anything to the contrary set forth
herein, and without inferring or implying any restriction on the Transfer of the
membership rights of the members of Columbia's members, upon prior written
notice to the other Members, the members of Columbia may freely Transfer or
provide an option to Transfer their interests in Columbia to a corporation,
partnership, limited liability company or other person or entity; PROVIDED,
HOWEVER, that following any of such Transfers (including, without limitation,
Transfers of the membership rights of the members of Columbia's members), the
controlling interest in Columbia is held by Joseph A. Panepinto and Peter A.
Mangin, who shall continue to act jointly as the Member's Representative for
Columbia. The term "controlling interest" shall be defined to be such interest
that would allow Joseph A. Panepinto and Peter A. Mangin jointly to absolutely
govern, oversee, supervise, operate, direct and manage Columbia, whether
directly or indirectly, without the consent, authorization or approval of any
other person or entity.
(d) Notwithstanding anything to the contrary set forth
herein, upon prior written notice to the other Members, MCHP shall have the
right at any time and from time to time to transfer its Interest to (i) an
Affiliate of MCHP, or (ii) any person or entity which acquires all or any
substantial portion of the assets of MCHP or Mack-Cali Realty, L.P., whether
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by an asset or stock sale and purchase, merger or other transaction, without the
consent of the other Members.
(e) Each Member hereby acknowledges the reasonableness of the prohibitions
contained in this SECTION 7 in view of the purposes of the Company and the
relationship of the Members. The Transfer of any Interest in violation of the
prohibitions contained in this SECTION 7 shall be deemed invalid, null and void,
and of no force or effect ab initio, and shall not bind or be recognized by the
Company. Any Person to whom an Interest is attempted to be transferred in
violation of this SECTION 7 shall not be entitled to vote on matters coming
before the Members, participate in the management of the Company, act as an
agent of the Company, receive distributions from the Company, or have any other
rights in or with respect to the Company.
(f) No Member shall have the right or power to Voluntarily Withdraw from
the Company.
(g) Upon the occurrence of an Involuntary Withdrawal, the successor of the
withdrawn Member shall only be entitled to receive any distributions that
otherwise would have been distributable to the withdrawn Member. No such
successor shall have no right to exercise any other rights of a Member under
this Agreement, including, without limitation, (i) voting or management rights
in the Company; (ii) the right to demand that distributions be made by the
Company; or (iii) the right to demand a dissolution or liquidation of the
Company.
(h) In the event any Member (the "Departing Member") ceases to be a member
at any time prior to the expiration of the term of this Company, and the Company
or its business is continued without the Departing Member, all documents and
records of the Company including, without limitation, all financial records,
vouchers, canceled checks and bank statements, up to the date of the termination
of the Departing Member's interest, shall belong to the Members which continue
as Members (the "Surviving Members"), and shall be delivered to the Surviving
Members.
(i) Intentionally Deleted.
(j) Any transferee of all or any portion of a Member's Interest shall be
entitled to receive allocations and distributions attributable to the Interest
acquired by reason of such Transfer from and after the effective date of the
Transfer; HOWEVER, anything to the contrary herein notwithstanding, the Company
shall be entitled to treat the transferor of such Interest as the absolute owner
of the transferred Interest in all respects, and shall incur no liability for
allocations of net income, net losses, or gain or loss of the Property, or
transmittal of reports and notices required to be given to the Members hereunder
which are made in good faith to such transferor until such time as the written
Transfer has been received by the Company, approved and recorded on its books
and the effective date of the Transfer has passed. Provided that the Company
has actual notice of any Transfer of the Interest of the Member, the effective
date of such Transfer on which the transferee shall be deemed a transferee of
record shall be the date set forth on the written instrument of the Transfer.
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7.2 DISSOCIATION. "Dissociation" means, with respect to any
Member, the Involuntary Withdrawal of such Member from the Company due to
occurrence of any of the following events:
(A) the Member is deemed to have automatically withdrawn
from the Company due to the fact that the Member:
(1) becomes a debtor in bankruptcy;
(2) executes an assignment for the benefit of creditors;
(3) seeks, consents to or acquiesces in the appointment of
a trustee, receiver or liquidator of the Member or of all or substantially all
of the Member's properties;
(4) fails, within 90 days after the appointment, without
the Member's consent or acquiescence, of a trustee, receiver or liquidator of
the Member or of all or substantially all of the Member's properties, to have
the appointment vacated or stayed, or fails within 90 days after the expiration
of a stay to have the appointment vacated; or
(5) is dissolved or is having its business affairs wound
up.
(B) In the event that there are more than two Members, the
Members (other than the applicable Member) unanimously vote to expel the
applicable Member on the basis that:
(1) it is unlawful to carry on the business of the Company
with the Member;
(2) there has been an attempted Transfer of that Member's
Interest not expressly permitted under this Agreement, or a court order charging
the Member's Interest; or
(3) the Member is a corporation and 90 days have transpired
since the filing of a certificate of dissolution, the revocation of its charter
or the suspension of its right to conduct business by the jurisdiction of its
formation, and there has been no revocation of the certificate of dissolution or
no reinstatement of its charter or its right to conduct business.
(C) An order of a court of competent jurisdiction, upon the
application of the Company or any Member, requiring the Member's withdrawal.
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ARTICLE VIII
ADMISSION OF SUBSTITUTE MEMBERS
8.1 ADMISSION OF SUBSTITUTE MEMBERS.
(a) No Transfer of all or any part of a Member's Interest
permitted to be made under this Agreement shall be binding upon the Company
unless and until a duplicate original of such assignment or instrument of
transfer, duly executed and acknowledged by the assignor and the
assignee/transferee, has been delivered to the Company.
(b) As a condition to the admission of any Substitute Member, as
provided in this Article, the entity or person so to be admitted shall execute
and acknowledge such instruments, in form and substance reasonably acceptable to
the Members, as the Members may deem necessary or desirable, to effectuate such
admission and to confirm the agreement of the person to be admitted as such
Member and to be bound by all of the covenants, terms and conditions of this
Agreement, as the same may be amended.
(c) Any person to be admitted as a Substitute Member pursuant to
the terms of this Agreement shall, as a condition of admission as a Member, pay
all reasonable expenses in connection with such admission as a Member,
including, but not limited to, the cost of the preparation, filing and
publication of any amendment to this Agreement and/or the Articles of
Organization of the Company which the Members deem necessary or desirable in
connection with such admission.
8.2 BANKRUPTCY OF A MEMBER. Notwithstanding the provisions of
SECTION 7.2 to the contrary, in the event of the bankruptcy of a Member, the
successor in interest of such Member may be admitted to the Company as a
Substitute Member in the place and stead of the bankrupt Member in accordance
with this Article upon the written consent of the Members, which consent may be
withheld or delayed in the Members' sole discretion. No such successor in
interest shall be deemed to be a Substitute Member unless so admitted.
8.3 ALLOCATIONS TO SUBSTITUTED MEMBERS. The other Members may, at
their option, at the time a Substitute Member is admitted, close the Company
books (as though the Company's tax year had ended) or make pro-rata allocations
of loss, income and expense deductions to a Substitute Member for that portion
of the Company's tax year in which a Substitute Member was admitted, in
accordance with the provisions of Section 706(d) of the Code and the Treasury
Regulations promulgated thereunder.
8.4 FURTHER CONDITIONS. Notwithstanding anything to the contrary
contained in this Agreement, no sale or exchange of an interest in the Company
may be made if the interest sought to be sold or exchanged, when added to the
total of all other interests sold or exchanged within the period of twelve (12)
consecutive months prior thereto, results in the termination of the Company
under the provisions of Section 708 of the Code without the prior written
Unanimous Consent of the Members, which consent may be withheld or delayed in
their sole discretion.
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ARTICLE IX
DISSOLUTION AND TERMINATION
9.1 DISSOLUTION. The Company shall be dissolved upon the
occurrence of any of the following events:
(a) the written Unanimous Consent of Members;
(b) the entry of a decree of judicial dissolution under Section
702 of the Act; or
(c) upon the sale of all of the Property.
9.2 DISTRIBUTION OF ASSETS UPON DISSOLUTION. In settling accounts
after dissolution, the liabilities of the Company shall be entitled to payment
in the following order:
(a) liabilities to creditors including Members who are creditors
to the extent otherwise permitted by law, other than liabilities for
distributions to Members;
(b) reasonable reserves as determined by the Members; and
(c) liabilities to Members of the Company in accordance with
Section 6.2 provided, however, that no Member shall receive distributions in
excess of such Member's positive Capital Account balance after its Capital
Account has been adjusted to reflect all allocations of income, gain, loss and
deductions attributable to the Dissolution Event pursuant to Section 9.1.
9.3 WINDING UP. Except as provided by law, upon dissolution, each
Member shall look solely to the assets of the Company for the return of its
Capital Contribution. If the Property remaining after the payment or discharge
of the debts and liabilities of the Company is insufficient to return the
Capital Contribution of each Member, such Member shall have no recourse against
any other Member. The winding up of the affairs of the Company and the
distribution of its assets shall be conducted exclusively by the Members, who
are hereby authorized to take all actions necessary to accomplish such
distribution including, without limitation, selling any Company assets the
Members deem necessary or appropriate to sell.
9.4 CERTIFICATE OF CANCELLATION. Within ninety (90) days
following the dissolution and commencement of winding up of the Company, or at
any time there are no Members, Certificate of Cancellation shall be executed and
filed pursuant to Section 42:2B-15 of the Act, and shall contain the information
required by Section 42:2B-14 of the Act.
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ARTICLE X
FINANCIAL STATEMENTS, BOOKS, RECORDS, TAX RETURNS, ETC.
10.1 BOOKS OF ACCOUNT. The Members, at the expense of the Company,
shall maintain, at the principal office of the Company, complete books of
account, in which there shall be entered, fully and accurately, every
transaction of the Company and shall include the following:
(a) A current list of the full name and last known business
address of each Member;
(b) A copy of the Certificate of Formation of the Company and all
amendments thereto;
(c) Copies of the Company's federal, state, and local income tax
returns and reports, if any, for the three most recent years; and
(d) Copies of the Company's currently effective written Agreement
and copies of any financial statements of the Company for the three most recent
years. The fiscal year of the Company shall be the calendar year. The books of
account of the Company shall be kept on a tax accounting basis applied in a
consistent manner. All determinations by the TMM (defined in Section 10.5
below) with respect to the treatment of any item or its allocation for Federal,
state, or local tax purposes shall be binding upon all of the Members. Any
Member shall have the right, from time to time, at its own expense, to cause its
accountants and representatives to examine and audit the books and records of
the Company, and the Members upon not less than five days' written notice shall
make such books and records available for such examinations and audits at
reasonable hours during business days.
10.2 FINANCIAL STATEMENTS AND REPORTS. The Company shall cause the
Accountants to furnish each Member with a balance sheet and an annual statement
of the Company's income and expenses for such year, and the Capital Account of
each Member as of the end of such year, no later than one-hundred twenty (120)
days after the close of the fiscal year of the Company. The report shall
contain a balance sheet as of the end of the fiscal year, an income statement
and a statement of Members' equity and changes in financial position for the
fiscal year. The Company shall send to each Member such information and reports
as are reasonably requested by such Member in order to enable them to more
effectively manage their respective Interests and be fully informed about the
affairs of the Company.
10.3 RETURNS AND OTHER ELECTIONS. The Members shall at the expense
of the Company cause the Accountant to prepare and timely file all tax returns
required to be filed by the Company pursuant to the Code and all other tax
returns deemed necessary and required in each jurisdiction in which the Company
does business. Copies of such returns, or pertinent information therefrom,
shall be furnished to the Members within a reasonable time after the end of the
Company's fiscal year.
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10.4 ELECTION UNDER SECTION 754 OF THE CODE. In the event of any
transaction described in Section 743(b) of the Code and permitted by the
provisions of this Agreement, the Company shall, upon the timely written request
of the person succeeding to an Interest in the Company in such transaction, make
the election provided for in Section 754 of the Code or a similar provision
enacted in lieu thereof, to adjust the basis of the Property of the Company.
The Member requesting said election shall pay all costs and expenses incurred by
the Company in connection therewith.
10.5 TAX MATTERS MEMBER. MCHP is hereby designated the Tax Matters
Member (the "TMM") of the Company for purposes of Chapter 63 of the Code and the
Treasury Regulations thereunder.
(a) Each Member shall furnish the TMM with such information as the
TMM may reasonably request to permit it to provide the Internal Revenue Service
with sufficient information to allow proper notice to the parties in accordance
with Section 6223 of the Code.
(b) No Member shall file, pursuant to Section 6227 of the Code, a
request for an administrative adjustment of company items for any Company
taxable year without first notifying the other Members. If the other Members
agree with the requested adjustment, the TMM shall file the request for
administrative adjustment on behalf of the Company. If the Members do not reach
agreement within 30 days or within the period required to timely file the
request for administrative adjustment, if such period is shorter, any Member may
file a request for administrative adjustment on its own behalf. If, under
Section 6227 of the Code, a request for administrative adjustment which is to be
made by the TMM must be filed on behalf of the Company, the TMM shall also file
such a request on behalf of the Company under the circumstances set forth in the
preceding sentence.
(c) If any Member intends to file a petition under Section 6226 or
6228 of the Code with respect to any company item or other tax matter involving
the Company, the Member so intending shall notify the other Members of such
intention and the nature of the contemplated proceeding. Such notice shall be
given in a reasonable time to allow the other Members to participate in the
choosing of the forum in which such petition will be filed. If the Members do
not agree on the appropriate forum, the petition shall be filed with the United
States Tax Court. If any Member intends to seek review of any court decision
rendered as a result of the proceeding instituted under the preceding part of
this subsection, such party shall notify the others of such intended action.
(d) The TMM shall not bind the other Members to a settlement
agreement without the approval of a majority in interest of the Members. If any
Member enters into a settlement agreement with the Secretary of the Treasury
with respect to any Company items, as defined by Section 6231(a)(3) of the Code,
it shall notify the other Members of such settlement agreement and its terms
within thirty days from the date of settlement.
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ARTICLE XI
INSURANCE
11.1 MINIMUM INSURANCE REQUIREMENTS.
(a) The Company shall carry and maintain in force the following
insurance, the premium for which shall be a cost and expense of the Company:
(i) Worker's Compensation Insurance (including Employee's
Liability Insurance for an amount not less than $500,000) covering all employees
of the Company, if any, employed in, on or about the Property of the Company to
provide statutory benefits as required by the laws of the State of New York;
(ii) Comprehensive General Liability Insurance (including
protective liability coverage on operations of independent contractors engaged
in construction and also blanket contractual liability insurance) for the
benefit of the Company and the Members as named insureds against claims for
"personal injury" liability including, without limitation, bodily injury, death
or property damage liability with a limit of not less than $10,000,000 in the
event of "personal injury" to any number of person or of damages to property
arising out of any one occurrence; such insurance may be furnished under a
"primary" policy and an "umbrella" policy.
(iii) Except to the extent provided by a contractor and provided
that the Company is listed as an additional insured, all Risks Builder's Risk
Insurance on any new construction, including coverage against collapse, written
on a completed value basis in an amount not less than the total value of the
improvements under construction (less the value of such of the Improvements as
are uninsurable under the policy, i.e., site preparation, grading, paving,
parking lots, excepting, however, foundations and other under-surface
installations subject to collapse or damage by other insured perils) including,
if applicable, the coverage available under the so-called Installation Floater,
all in form and amount as may from time to time be required by any mortgagee of
any improvements under construction;
(iv) To the extent not provided by tenants that occupy the
Property and provided that the Company is named as an additional insured, Fire,
Extended Coverage and Vandalism and Malicious Mischief Insurance on the
completed improvements in an amount not less than the balance of any
institutional mortgages on the Property or such other amount (at no time,
however, less than the principal balance secured by said mortgages) as may be
required to prevent the Company and the Members from becoming co-insurer under
the terms of the applicable policy, but in any event, in an amount not less than
90% of the then actual replacement cost of the improvements (exclusive of
excavation and foundation costs and costs of underground tanks, conduits,
pilings and other similar underground items) without deduction for physical
depreciation thereof; such insurance on the completed improvements shall contain
the "Replacement Cost Endorsement";
(v) To the extent not provided by the tenants who occupy
the and provided that the Company is named an additional insured, in the event
that such equipment is
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installed in the improvements, boiler and machinery equipment insurance in the
amount of $200,000 or such greater amount as approved by the Members covering
boilers, pressure vessels, pressure piping, all major components and of any
central air-conditioning or heating system and such additional equipment as
Approved by the Members at any time;
(vi) If the improvements are situated in an area now or
subsequently designated as having special flood hazards as defined by the Flood
Disaster Production Act of 1973, as amended from time to time, flood insurance
in an amount equal to the replacement cost of the improvements or the maximum
amount of flood insurance available, whichever is the lesser; and
(vii) Such other insurance or such additional coverage,
including, but not limited to, insurance on rental income, as may be Approved by
the Members or required by the holder of any mortgage covering the improvements
or any governmental authorities.
(b) All such policies of insurance shall be delivered to the
Company and shall name the Company as named insureds as their respective
interests may appear. Any such insurance may be effected under blanket
policies, and as to any such insurance so effected certificates of such
insurance may be delivered to the Company in place of policies thereof. All
such insurance shall be effected under policies issued by insurers Approved by
the Members, shall be in forms and for amounts approved by the Members, and
shall be in compliance with applicable laws and loan documents.
ARTICLE XII
BUY-SELL
12.1 BUY-SELL.
(a) In the event that the Members, despite good faith efforts, cannot
agree with respect to any Major Decision, either Member may deliver a written
notice to the other (the "Impasse Notice"), which Impasse Notice shall specify
the matter upon which the Members cannot agree and shall summarize the position
of the Member delivering the Impasse Notice with respect thereto. No less than
thirty (30) days following delivery of the Impasse Notice, in the event that the
Members continue to be unable to agree as to the matter set forth in the Impasse
Notice, either Member, so long as it is not then in default hereunder (the
"Initiating Member"), may give the other Member (the "Responding Member") a
written notice (the "Buy-Sell Notice") setting forth the all-cash price (the
"Price") which the Initiating Member would be willing to pay for the Property
and all other Company assets, which Price shall be based upon bona fide written
evidence (the "Buy-Sell Backup"), such as a fully executed letter of intent, of
the verifiable terms and conditions of an arms-length transaction with a bona
fide third party. No Member may deliver a Buy-Sell Notice unless such Buy-Sell
Notice shall also (i) contain a statement of the amount of cash (the "Interest
Price") which would be received by each Member if the Property and all other
Company assets were sold at the Price and on such other terms and conditions as
are set forth in the Buy-Sell Notice and the Net Proceeds (calculated assuming
that it is necessary to
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repay all Company indebtedness) of such sale were distributed to the Members
pursuant to this Agreement; and (ii) be accompanied by the Buy-Sell Backup upon
which the Price and the Interest Price set forth in the Buy-Sell Notice are
based. The Responding Member will be required no later than 120 days after the
receipt of the Buy-Sell Notice (the "120-day Period") either to elect to
purchase the Initiating Member's Interest at the Interest Price of the
Initiating Member, or to sell its own Interest to the Initiating Member at the
Interest Price of the Initiating Member. Failure by the Responding Member to
deliver written notice of such election within the 120-day Period shall
constitute an election by the Responding Member to sell its Interest in the
Company to the Initiating Member; PROVIDED, HOWEVER, that the 120-day Period
shall be tolled for a period not to exceed the earlier to occur of (a) the
issuance of the Independent Appraiser's (as defined below) report or (b) sixty
(60) days, in the event that the Responding Member properly exercises its right
to seek an appraisal pursuant to SECTION 12.1(E). Notwithstanding the
foregoing, in the event that the impasse over a Major Decision is caused by
Columbia's disapproval of the equity contribution required from the Company
pursuant to the transaction proposed by MCHP, then Columbia, within thirty (30)
days from its receipt of an Impasse Notice from MCHP, shall have the right to
deliver to MCHP a written notice of Columbia's disapproval of such equity
contribution requirements (the "Disapproval Notice"). MCHP, upon receipt of
such Disapproval Notice within the requisite thirty (30) day period, shall, for
a period of sixty (60) days from MCHP's receipt of the Disapproval Notice, and
prior to delivering a Buy-Sell Notice to Columbia, use good faith efforts to
assist Columbia in obtaining market rate financing for Columbia's portion of the
equity contribution required from the Company pursuant to the transaction
proposed by MCHP; PROVIDED, HOWEVER, that MCHP's failure to obtain such
financing on behalf of Columbia shall not limit MCHP in the timely exercise of
its rights as set forth herein.
(b) Upon the making (or deemed making) of the election to buy or
sell by the Responding Member, the Members shall be deemed to have entered into
a binding agreement for the sale and purchase of the Property and the selling
Member's Interest in the Company. Within ten (10) days of the Initiating
Member's receipt of the Responding Member's election notice (or after the
expiration of the 120-day Period if no election notice was given), the Members
shall select a mutually acceptable closing date, which shall be a date not more
than thirty (30) days thereafter.
(c) At the closing, the selling Member shall execute such
instruments and documents in form and substance as are reasonably acceptable to
counsel to the purchasing Member and as are necessary or appropriate to transfer
the interest of the selling Member in the Company to the purchasing Member (or
its designee) free and clear of all liens, claims and encumbrances (other than
those created thereon in order to secure any indebtedness of the Company), and
to withdraw from the Company, against receipt by the selling Member, in good
funds, of the Interest Price of the selling Member and releases and/or
indemnifications provided below, and the selling Member shall thereafter have no
further right, title or interest in the Company, the Real Property, or any other
assets of the Company.
(d) Intentionally Deleted.
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(e) In the event that the Responding Member disagrees with the
Initiating Member's calculation of the Price and/or the Interest Price, the
Responding Member shall have the right within thirty (30) days after its receipt
of the Initiating Member's Buy-Sell Notice, to demand in writing that the Price
and/or the Interest Price be determined by three (3) disinterested independent
appraisers. One such appraiser shall be chosen by the Initiating Member who
shall bear the cost of such appraiser. The second appraiser shall selected by
the Responding Member who shall bear the cost of such appraiser. The third
appraiser (the "Independent Appraiser") shall be chosen by the two appraisers
previously chosen by the parties and the cost of such Independent Appraiser
shall be shared equally by the parties. The calculation of the Independent
Appraiser shall be based solely upon the information set forth in the Buy-Sell
Backup; and shall be binding upon the Members unless (i) the Independent
Appraiser's calculation of the Price and/or the Interest Price differs from the
Initiating Member's calculation by less than two percent (2.0%), or (ii) the
Independent Appraiser's written report is not delivered to the Members within
sixty (60) days from the date the Responding Member demands that the Price
and/or the Interest Price be determined by the appraisal method set forth above,
in either of which events the Initiating Member shall have the right to select
the Price and/or Interest Price to be used herein.
(f) In the event that the Responding Member disputes only the
Initiating Member's calculation of the Interest Prices, then such dispute shall
be resolved by a single arbitrator, which shall be one of the "big 6" accounting
firms, pursuant to binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association.
(g) A Member's failure to close as set forth above shall
constitute a default under this Agreement, which default shall entitle the
non-defaulting Member to any and all remedies available at law or in equity,
including, without limitation, specific performance.
(h) Notwithstanding anything herein to the contrary, in the event
that MCHP is the Initiating Member at any time during the first three (3) years
from the date hereof, Columbia shall have the right, within seventy-five (75)
days from receipt of MCHP's Buy-Sell Notice, to remit to MCHP all Capital
Contributions made by MCHP, in which event MCHP shall immediately withdraw from
the Company and shall be released from any and all Losses arising under or
relating to this Agreement from and after the date of such withdrawal.
ARTICLE XIII
MISCELLANEOUS
13.1 NOTICES. Any notice, demand, election or other communication
(hereinafter called a "notice") that, under the terms of this Assignment or
under any statute, must be or may be given by the parties hereto shall be in
writing and shall be given by mailing the same by
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certified or registered mail, return receipt requested, postage-prepaid, by hand
delivery or by reputable overnight courier, addressed as follows:
To MCHP:
c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
with separate notices to:
Attention: Thomas Rizk, Chief Executive Officer,
and Roger W. Thomas, Esq., General Counsel
and Executive Vice President
Fax No.: (908) 272-6755
Tel. No.: (908) 272-8000
with a copy to:
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attention: Andrew S. Levine, Esq.
Fax No.: (212) 326-0806
Tel. No.: (212) 326-0425
To Columbia:
Columbia Development Company, LLC
30 Montgomery Street
Jersey City, New Jersey 07302
Fax No.: (201) 938-1503
Tel. No.: (201) 798-2500
Attn.: Joseph A. Panepinto and
Peter G. Mangin
with a copy to:
Schumann, Hanlon, Doherty, McCrossin & Paolino
30 Montgomery Street
Jersey City, New Jersey 07302
Attention: Eugene T. Paolino, Esq.
Fax No.: (201) 434-3956
Tel. No.: (201) 434-2000
All copies of notices to be sent to any party hereunder shall be sent
in the same manner as required for notices. Either party may designate, by
notice in writing to the other, a
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new or other address to which notices shall thereafter be given. Any notice
given hereunder (other than a notice of a new address or additional address for
notice purposes) shall be deemed given (i) when hand delivered, upon receipt;
(ii) when mailed, four (4) business days after being deposited with the United
States Postal Service; (iii) when overnighted, one (1) business day after being
deposited with an overnight courier service as hereinabove provided. Any notice
of a new or additional address for notice purposes shall be deemed given on the
date upon which the same is received by the addressee thereof. Counsel for any
Member shall be authorized to send notices on behalf of such Member.
13.2 COMPLETE AGREEMENT; INTEGRATION. This Agreement fully sets
forth all of the agreements and understandings of the parties with respect to
the Company and supersedes any prior agreements of the parties. There are no
representations, agreements, arrangements or understandings, oral or written,
among the parties relating to the subject matter of this Agreement which are not
expressly set forth herein.
13.3 OTHER INTERESTS OF THE MEMBERS. Any Member, as well as any of
its Affiliates, may engage in and possess an interest in other business ventures
of every nature and description, independently or with others, including the
real estate business in all its aspects, and neither the Company nor any other
Member shall have any rights in and to such independent ventures or the profits,
losses, income or distributions derived therefrom, including, without
limitation, the development of a multi-tower office, retail hotel and/or
residential complex on the Harborside site by CHFA or its designee.
13.4 LIMITATION ON MEMBER LIABILITY. The Members shall not have
any liability for the obligations or liabilities of the Company except to the
extent expressly provided in the Act.
13.5 AMENDMENTS. This Agreement may be amended only upon the
Unanimous Consent of the Members.
13.6 SEVERABILITY. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, the applicable laws,
ordinances, rules and regulations of the jurisdictions in which the Company
engages in business. If any provision of this Agreement, or the application
thereof to any person or circumstance, shall, for any reason and to any extent,
be held to be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, but rather shall be enforced to the full extent permitted by law.
13.7 RATIFICATION. Each person who becomes a Member in the Company
after the execution and delivery of this Agreement shall, by becoming a Member,
be deemed thereby to ratify and agree to all prior actions taken by the Company
and the Members.
13.8 BINDING UPON SUCCESSORS. This Agreement shall be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns, and shall inure to the benefit of the parties hereto and
their respective heirs, executors, administrators,
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successors and permitted assigns. This Agreement shall become effective upon
its execution and delivery by the Members.
13.9 RIGHTS OF THIRD PARTIES. None of the provisions of this
Agreement shall be construed as having been made for the benefit of any creditor
of either the Company or any of the Members, nor shall any of such provisions be
enforceable (except as otherwise required by law) by any person not a party
hereto.
13.10 GOVERNING LAW. Irrespective of the place of execution or
performance, the validity and construction of this Agreement shall be governed
by the laws of New Jersey.
13.11 CAPTIONS. The captions, headings and titles contained in this
Agreement are solely for convenience of reference and shall not affect the
interpretation of this Agreement or of any provision hereof.
13.12 AFFILIATE TRANSACTIONS. The Members shall not cause or permit
the Company to enter into any agreement or arrangement with a Member or any
Affiliate thereof, other than on commercially reasonable arms-length terms
acceptable to the Members, which shall be entitled to prior notice of such
agreements or arrangements and a copy of the applicable contract for review.
13.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one instrument.
13,14 SENSE AND GENDER OF WORDS. All terms and words used in this
Agreement, regardless of the sense or gender in which they are used, shall be
deemed to include each other sense and gender unless the context requires
otherwise.
13.15 VENUE AND JURISDICTION. The Members agree to be subject to
the juris-diction of the courts of New Jersey and the Federal District Court for
the State of New Jersey.
13.16 MEMBER'S REPRESENTATIVES. For the purposes of this Agreement,
both Peter Mangin and Joseph A. Panepinto jointly shall be the Member's
Representatives authorized to make decisions on behalf of Columbia and its
transferees, successors and assigns, such that MCHP and its agents and employees
shall be entitled to rely on decisions jointly made by Peter Mangin and Joseph
A. Panepinto as binding upon Columbia, its transferees, successors and assigns.
For the purposes of this Agreement, any duly elected officer or director of MCHP
shall be the Member's Representative authorized to make decisions on behalf of
MCHP, such that Columbia and its agents and employees shall be entitled to rely
on decisions made by such officer or director as binding upon MCHP, it
successors and assigns.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed and acknowledged
this Agreement as of the date first above written.
M-C HARSIMUS PARTNERS L.P.
BY: MACK-CALI REALTY, L.P., ITS GENERAL PARTNER
By: Mack-Cali Realty Corporation, its General
Partner
By:
----------------------------
Name:
Title:
COLUMBIA DEVELOPMENT COMPANY, L.L.C.
BY: COLUMBIA CHARTER GROUP, L.L.C.
By:
----------------------------
Name:
Title: Member
BY: ATLANTIS CHARTER COMPANY, L.L.C.
By:
----------------------------
Name:
Title: Member
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<PAGE>
EXHIBIT A
MEMBERS' INITIAL CAPITAL CONTRIBUTIONS
Each of MCHP and Columbia, shall make the following contributions as their
initial Capital Contributions to the Company:
MCHP $ 1,000.00
Columbia 1,000.00
----------
Total $ 2,000.00
==========
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EXHIBIT B
SCHEDULE OF ENCUMBRANCES
34
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EXHIBIT C
MEMBERS' INTERESTS IN THE COMPANY PURSUANT TO SECTION 4.2
MCHP 50%
Columbia 50%
-----
Total 100%
=====
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Exhibit 10.170
FIRST AMENDMENT TO CONTRIBUTION
AND EXCHANGE AGREEMENT
This FIRST AMENDMENT TO CONTRIBUTION AND EXCHANGE AGREEMENT (the "FIRST
AMENDMENT") is made this 8th day of June, 1998, by and between Pacifica Holding
Company, a Colorado corporation ("PACIFICA") and Apollo Real Estate Investment
Fund II, L.P., a Delaware limited partnership ("APOLLO RE II"; together with
Pacifica, the "CONTRIBUTORS," and each individually the "CONTRIBUTOR"),
Pacifica Holding Company, LLC, a Colorado limited liability corporation,
Mack-Cali Realty, L.P., a Delaware limited partnership ("MCRLP") and Mack-Cali
Realty Corporation, a Maryland corporation ("MACK-CALI").
RECITALS
A. The parties desire to amend the Contribution and Exchange Agreement dated
March 25, 1998 (as amended hereby, the "AGREEMENT") to provide for, among other
things, the fact that the Property known as "Pacifica Tech at Briargate"
("BRIARGATE") does not have an occupancy level sufficient for its value to
exceed the construction loan thereon.
B. The parties further desire to equitably adjust the consideration paid,
following completion of all transactions to effect proper apportionment of value
to all of the Earnout Properties.
C. The parties have determined that the transactions contemplated hereby are
in their respective best interests.
NOW THEREFORE, in consideration of $10.00, the mutual promises hereinafter
set forth and other good and valuable consideration, the mutual receipt and
legal sufficiency which are hereby acknowledged, the parties hereto, intending
to be legally bound, do hereby agree as follows. Capitalized terms not defined
herein shall have the meaning set forth in the Agreement.
1. BRIARGATE. Prior to Closing, Briargate shall be conveyed to
Apollo/Pacifica Tech at Briargate, LLC, a Delaware limited liability company
("TECH LLC"), which is solely owned by the Contributors. Following such
conveyance and closing of all Properties other than Briargate, as used in the
Agreement, the term "CLOSING" and "CLOSING DATE," solely with respect to
Briargate, shall be deemed to apply to the date and time when the Contributors
assign to MCRLP all of their interests in Tech LLC. The Closing Date for all of
the Earnout Properties except Briargate shall occur simultaneous with the date
of this First Amendment. The NOI for Briargate shall not be included in the
calculation of the Earnout Consideration paid on the Closing Date for all of the
Earnout Properties except Briargate. The Closing of Briargate shall occur on a
date five business days following delivery of written notice from Contributors
to MCRLP of the date on which the occupancy level of Briargate is 55% and all
other conditions of the Agreement relating to leasing requirements necessary to
attain a valid occupancy level, including, without limitation, the obligation to
deliver tenant estoppel certificates, have been satisfied by Contributors.
<PAGE>
1. PAYMENT OF EARNOUT CONSIDERATION AND EARNOUT ADDITIONAL
CONSIDERATION - BOMBARDIER REPAYMENT OBLIGATION. Due to the fact that Earnout
Consideration and Earnout Additional Consideration is calculated on the basis of
the average total occupancy of the Earnout Properties, and thus more
consideration will be paid for certain Properties than others, because the
occupancy level may be higher at the time Earnout Additional Consideration is
paid or because certain Properties' rental rates are higher or lower than
others, the parties agree to the following: upon the earlier of (i) expiration
of the Earnout Period, (ii) the date when the average occupancy level of the
Earnout Properties equals 95%, (iii) the payment by MCRLP of total Earnout
Consideration and Earnout Additional Consideration equal to $57,000,000.00, or
(iv) the funding by MCRLP of 95% of the projected aggregate value for the
Earnout Properties following initial lease-up, the parties shall adjust the
Earnout Consideration and the Earnout Additional Consideration in order to
reconcile all Earnout Consideration and Earnout Additional Consideration paid so
that the total consideration for each of the Earnout Properties is based on the
NOI for each Earnout Property at a 95% occupancy level (the "ADJUSTMENT"),
subject to other prorations, credits and charges set forth in the Agreement. In
addition to the other requirements set forth in the Agreement, no Earnout
Additional Consideration shall be paid to Contributors until (A) as to the
tenants listed on Exhibit A, estoppels are delivered to MCRLP showing that, (i)
all tenant improvements that Apollo is obligated to complete (including any
punch list items in excess of $1,000 in the aggregate) have been completed and
all contributions by Apollo with respect to tenant improvements have been paid
as required under the applicable lease, (ii) all rent is being paid on a current
basis, and (iii) no rent has been paid more than one month in advance
(hereinafter an "EARNOUT ESTOPPEL"), and (B) as to any future tenant for whom
Earnout Additional Consideration is requested, estoppels are delivered to MCRLP
substantially in the form attached to the Agreement as Exhibit 9.1.
If Bombardier, Inc. defaults under its lease beyond any applicable grace or
cure period or terminates its lease due to a default by Contributors of their
obligation to complete tenant improvements in accordance with the Bombardier,
Inc. lease, then the Contributors shall repay to MCRLP any Earnout Consideration
paid for the Bombardier, Inc. lease (the "REPAYMENT OBLIGATION"); provided,
however, that the Repayment Obligation shall automatically terminate and expire
if, prior to the date on which the Repayment Obligation would have otherwise
arisen, either: (i) Bombardier, Inc. has delivered to MCRLP an Earnout Estoppel
with respect to Phase II stating also that the current rent is not being
subsidized and that it has accepted possession of the premises (but it need not
have taken physical occupancy thereof) and that tenant finish improvements for
the premises have been completed as required under its lease, or (ii) if the
tenant finish improvements have not been completed, and Bombardier Inc. has paid
full rent for the entire calendar year 1999 that is not subsidized by
Contributors directly or indirectly (as evidenced by an estoppel certificate
from Bombardier, Inc. reaffirming the lease and confirming the absence of any
rent subsidy by Contributors) and Contributors have paid to MCRLP the amount
necessary to complete the tenant finish improvements as required under the
Bombardier, Inc. lease. If the Repayment Obligation is paid, Contributors shall
have two years following the date thereof in which to re-lease the premises in
accordance with the Agreement. Upon such reletting, MCRLP shall pay
Contributors the Earnout Additional Consideration applicable thereto. If
Bombardier, Inc. sets off any rent due for any period prior to termination of
the
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Repayment Obligation, Contributors shall repay the amount of such rent to MCRLP
within 30 days thereafter.
Steve Leonard will, pursuant to a separate guaranty agreement of even date
herewith, (a) guarantee payment of the Adjustment and payment of the items set
forth in Section 14(a) of the Agreement and (b) guarantee the Repayment
Obligation.
3. RESERVED AMOUNT ESCROW. The amount of $3.8 Million (the "RESERVED
AMOUNT") shall be held in escrow by the Title Company to pay the Reserved Items
set forth on Exhibit B. Amounts shall be released from the escrow by the Title
Company and paid to Contributors or their designees upon the following
conditions:
a. As to payments for completion of construction, Contributors shall
present to the Title Company and MCRLP invoices and lien releases for the
amount requested to be released from escrow;
b. As to lease commissions, Contributors shall present to the Title
Company and MCRLP, invoices from the applicable broker or agent;
c. As to other operating expenses, capital expenses or other
non-lienable expenses, Contributors shall present
invoices to the Title Company and MCRLP.
d. In the event the tenant for whom construction and capital
expenses are incurred objects to such work in writing or notifies MCRLP or
the Contributors that such work is not proceeding under its lease, and the
Contributors, after notice and a reasonable opportunity to cure tenant's
objection, have failed to so cure, MCRLP shall be entitled to be paid funds
from the Reserved Amount to complete such work to the tenant's reasonable
satisfaction.
e. Any portion of the Reserved Amount remaining in escrow following
payment and completion of all items on the schedule set forth on Exhibit B
and following delivery to MCRLP of the Earnout Estoppels required
hereinabove, shall be paid to Contributors.
4. PRORATED RENTS ESCROW. Due to the fact that the Closing is taking
place on or about June 8, 1998, the parties have calculated a proration of base
rents and operating expense pass-through payments based on the scheduled rents
and payments due on the current rent roll. Contributors will not deposit any
checks received by Apollo for the month of June, but, instead, shall promptly
upon receipt send the original checks to MCRLP. At Closing, the parties shall
calculate an amount which would have been credited to Contributors as of Closing
if all of the rents for June, 1998 had been received by Apollo prior to Closing.
However, Contributors shall not receive a credit on the settlement sheet, but
MCRLP shall pay the amount of such proration to the Title Company as escrow
agent (the "PRORATED RENTS ESCROW"). If by June 30, 1998, any of the scheduled
rents for the month of June, 1998 have not been actually received by MCRLP,
MCRLP may give written notice thereof to Contributors and the Title Company of
the fact that
3
<PAGE>
such rent has not been received, along with the amount of the proration for the
then delinquent tenants for which MCRLP made a deposit into the Prorated Rents
Escrow. Unless the Title Company receives written objection thereto from
Contributors within three days after receipt of such claim from MCRLP, the Title
Company shall pay to MCRLP from the Prorated Rents Escrow an amount equal to the
prorated rent credit which would have been received by Contributors at Closing
applicable to the then delinquent tenants and, thereafter, if such rent for the
month of June is received by MCRLP for such tenant for whom MCRLP has been
reimbursed from the Prorated Rents Escrow, MCRLP shall hold the prorated amount
for such tenant in trust and shall promptly pay the same to Contributors. Any
portion of the Prorated Rents Escrow which is not claimed by MCRLP by July 15,
1998 as a result of any rents not received by MCRLP during the month of June,
1998 shall immediately be paid to Contributors by the Title Company.
5. ESCROW MATTERS. All notices to the Title Company shall be made in
writing and delivered by facsimile transmission to Ellie Matthew at 303-322-7603
with copies to the parties in the manner required in the Agreement. The Title
Company shall only take action required hereunder if proof of copies of notice
to the other party is provided by the party requesting payment and if no
objection to payment is made by any other party within three business days
following receipt of notice. If objection is made, the applicable funds shall
be retained by the Title Company until it receives an instruction executed by
the parties or a valid court order. The Title Company shall have the right to
interplead any funds that are the subject of dispute into a court of lawful
jurisdiction. The parties shall share equally all of the Title Company's costs
and expenses (including reasonable attorneys fees) involving any matters related
thereto.
6. JOINT AND SEVERAL. The obligations of Pacifica Holding Company and
Apollo Real Estate Investment Fund II, L.P. hereunder shall be joint and several
as principals and not at guarantors or sureties.
7. SERVICE CONTRACTS. The parties shall adjust and prorate for service
contracts affecting the Properties following Closing.
8. MISCELLANEOUS. Except as set forth herein, all other provisions of
the Agreement shall remain in full force and effect.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
4
<PAGE>
IN WITNESS WHEREOF, the parties set their hands this 8th day of June, 1998.
PACIFICA HOLDING COMPANY LLC, a Colorado limited
liability company
By:
---------------------------------
Name: Steve Leonard
Title: President
APOLLO REAL ESTATE INVESTMENT FUND II, L.P., a
Delaware limited partnership
By: APOLLO REAL ESTATE ADVISORS II, L.P.,
its General Partner
By: APOLLO REAL ESTATE CAPITAL ADVISORS
II, INC., its general partner
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PACIFICA HOLDING COMPANY, a Colorado corporation
By:
---------------------------------
Name: Steve Leonard
Title: President
<PAGE>
MACK-CALI REALTY, L.P., a Delaware limited
partnership
By: MACK-CALI REALTY CORPORATION, a Maryland
corporation, its general partner
By:
---------------------------------
Name: Roger W. Thomas
Title: Executive Vice President
MACK-CALI REALTY CORPORATION, a Maryland
corporation
By:
---------------------------------
Name: Roger W. Thomas
Title: Executive Vice President
APOLLO/PACIFICA, LLC, a Delaware limited liability
company
By:
---------------------------------
Name: Steve Leonard
Title: Manager
AS TO PARAGRAPH 2:
------------------------------------
Steve Leonard
<PAGE>
AS TO PARAGRAPHS 3, 4 AND 5:
TITLE COMPANY - ESCROW AGENT
LAND TITLE GUARANTY CO.
By:
---------------------------------
APOLLO/PACIFICA TECH AT BRIARGATE, LLC, a Delaware
limited liability company
By:
---------------------------------
Steve Leonard, Manager
<PAGE>
EXHIBIT A
TENANTS
1. Sun Microsystems
2. First Tennessee Bank National Association
3. MultiFamily and Commercial Lending Corporation
4. Convergent Communications, Inc.
5. Ascend Communications, Inc.
6. Knowledge Development Centers
7. Bombardier (solely with respect to "Phase I" improvements)
<PAGE>
Exhibit 10.171
AGREEMENT OF SALE
AGREEMENT made this day of January, 1998, by and between LANCER
ASSOCIATES, L.L.C., a New Jersey limited liability company, having an office at
840 N. Lenola Road, Moorestown, New Jersey 08057 (hereinafter called "Seller"),
and MACK-CALI REALTY, L.P., a Delaware limited partnership, having an office at
11 Commerce Drive, Cranford, New Jersey 07016 (hereinafter called "Purchaser").
W I T N E S S E T H:
FOR AND IN CONSIDERATION of the mutual covenants hereinafter contained:
1. AGREEMENT TO SELL AND PURCHASE.
(a) Seller hereby agrees to sell and convey, and Purchaser hereby
agrees to purchase, subject to the conditions set forth herein, those certain
plots, pieces or parcels of land ("Land"), together with all buildings and
improvements located thereon or to be constructed thereon, and any appurtenances
or hereditaments appertaining thereto ("Improvements"), located in the Township
of Moorestown, County of Burlington, State of New Jersey (hereinafter referred
to as the "Premises"). The Land and Improvements constitute a portion of Lots
1, 2, 3 and 4, Block 300 on the current Township's Tax Map, and are more
particularly described on Schedule "A" attached hereto and made a part hereof
and cross-hatched on Schedule "A-1" attached hereto and made a part hereof.
(b) This sale includes, for no additional consideration, all of the
right, title and interest, if any, of Seller in and to the following:
(i) All fixtures, equipment and articles of personal property
necessary or appropriate for the operation or use of the Premises, and any
replacements or substitutions therefor and additions thereto ("Personal
Property"), all trade names and fictitious names used by Seller in connection
with the
<PAGE>
Premises ("Names"), and all documents, records and books of account relating to
the construction, ownership, leasing, operation, management, maintenance and/or
financing of the Premises, which are in the possession or control of Seller
("Records"). All of said Personal Property, Names and Records shall be included
in the deed of conveyance, Bill of Sale and/or assignments to be delivered at
Closing (as hereinafter defined), as Purchaser may request;
(ii) Any land lying in the bed of any street, or road open or
proposed in front of, adjacent to, or adjoining the Premises, to the center
lines thereof, and any future award, if any, for damages to said Premises by
reason of change of grade of any street and all rights of way appurtenant
thereto ("Appurtenant Property"); and Seller shall execute and deliver to
Purchaser, at Closing or thereafter, on demand, all proper instruments for the
conveyance of such title and for the assignment and collection of any such
award.
The Premises, together with the Personal Property, Names, Records and
Appurtenant Property are referred to herein collectively as the "Property".
2. PURCHASE PRICE.
The purchase price to be paid by Purchaser to Seller is Three Million
Six Hundred Fifty Thousand ($3,650,000.00) Dollars (herein called the "Purchase
Price"), subject to adjustments and prorations described herein. The Purchase
Price shall be payable by immediately available funds in accordance with wiring
instructions of Seller. The Purchase Price shall be payable in full at Closing.
3. DEPOSIT.
(a) Upon the execution and delivery of this Agreement, Purchaser
shall deliver to Escrow Agent (as hereinafter defined in Paragraph 3.(b) hereof)
an irrevocable letter of credit in substantially the form of the letter of
credit annexed hereto as Schedule "C" in the sum of One Hundred Thousand
($100,000.00) Dollars (the "Letter of Credit").
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<PAGE>
(b) The Letter of Credit shall be deposited with Archer & Greiner,
Esqs., attorneys for Seller ("Escrow Agent"), and shall be held by Escrow Agent
in accordance with the provisions of Paragraph 23 hereof, subject to the
following terms:
(i) At Closing, the Letter of Credit shall be delivered to
Purchaser;
(ii) If this Agreement is terminated pursuant to its terms, or if
this transaction otherwise does not close for any reason except for Purchaser's
or Seller's default, the Letter of Credit shall be delivered immediately to
Purchaser without application of Paragraph 23(f), (h) and (I) hereof;
(iii) If this Agreement is terminated due to Purchaser's default,
the Letter of Credit shall be delivered immediately to Seller as liquidated
damages pursuant to Paragraph 18 hereof subject to the terms of Paragraph 23
hereof; and
(iv) If this Agreement is terminated due to Seller's default, the
Letter of Credit shall be delivered to Purchaser, subject to the terms of
Paragraph 23 hereof.
4. CONSTRUCTION OF IMPROVEMENTS.
(a) Attached hereto and made a part hereof as Schedule "B" is a list
of complete architectural drawings and specifications (the "Plans and
Specifications") for the construction of Improvements on the Property. The
Plans and Specifications shall be final and shall not be changed by Seller
without the prior consent of Purchaser.
(b) Seller has advised Purchaser that it has commenced construction
of the Improvements and covenants and agrees that it shall, promptly and with
due diligence continue to construct the Improvements on the Property in
accordance with the Plans and Specifications, including, without limitation,
utility lines, drainage, lighting facilities, grading and paving, landscaping,
approaches, entrances, exits, ramps, sidewalks, roadways, curb cuts, loading
areas, platforms, service roads and all buildings required to be constructed
pursuant to the Plans and
3
<PAGE>
Specifications. The construction work shall be done in a first class, good and
workmanlike manner and in compliance with all applicable laws, orders and
regulations of federal, state, county and municipal authorities having
jurisdiction. Seller, at its sole cost and expense, shall obtain or cause to be
obtained all building permits, licenses, temporary and permanent certificates of
occupancy and other governmental approvals which may be required to permit the
construction of the Improvements in accordance with the Plans and Specifications
and the use or occupancy thereof.
(c) Purchaser may, on reasonable prior notice to Seller, visit the
job site to inspect the progress and performance of the work and the materials
being incorporated into the Improvements.
(d) At least ten (10) days prior to Closing (as hereinafter defined)
but not later than thirty (30) days after Substantial Completion (as hereinafter
defined) of construction of the Improvements on the Property, Seller shall, at
its sole cost, deliver to Purchaser an accurate "as built" survey of the
Improvements certified to Purchaser and its designees by a duly licensed
surveyor including the information set forth on Schedule "E", together with
three (3) sets of "as built" plans of the Improvements, including, without
limitation, architectural and mechanical plans.
(e) Seller shall, at its own expense, maintain or cause to be
maintained in force a policy or policies of insurance written by one or more
responsible insurance carriers acceptably rated by national rating organizations
insuring against liability for bodily injury, death and property damage of any
person or persons in connection with construction work to be performed pursuant
to this Agreement, with minimum limits as set forth below:
(A) Worker's Compensation: Statutory Limits.
(B) Employer's Liability: $100,000.00.
(C) Comprehensive General Liability covering the following:
4
<PAGE>
(1) Bodily injury, death and property damage having a
combined single limit of liability of not less
than Two Million ($2,000,000.00) Dollars;
(2) Owner's Protective Liability: $1,000,000.00 per
occurrence;
(3) Products Completed Operations Coverage: (to be
kept in effect for two (2) years after
completion);
(4) "XCU" Hazard Endorsement, if applicable;
(5) "Broad Form" Property Damage Endorsement;
(6) "Personal Injury" Endorsement;
(7) Contractual Liability Endorsement.
Such policy or policies shall provide, among other things, that the insurer(s)
specifically recognize and insure the obligations undertaken by Seller pursuant
to this Agreement and shall name Purchaser as an additional insured. Seller
shall deliver a certificate of insurance evidencing the existence in force of
such policy or policies of insurance. Such certificate shall provide that such
insurance will not be canceled or materially amended unless twenty (20) days
prior written notice is given to Purchaser.
(f) Seller covenants and agrees, at its sole cost and expense, to
promptly make, or cause to be made, all repairs and replacements to the
applicable work arising from defective labor and/or materials during the period
commencing on final completion of such Improvements and terminating on the date
which is one (1) year therefrom.
(g) Seller shall give Purchaser at least sixty (60) days prior notice
of the date of Substantial Completion (the "Substantial Completion Notice").
5
<PAGE>
5. TITLE.
(a) Seller shall convey title to the Property and Purchaser shall
accept Marketable Title (as hereinafter defined), subject only to the
encumbrances set forth on Schedule "D" ("Permitted Encumbrances"). Marketable
Title shall mean that fee title to the Property is vested in Seller and shall be
insured as such by a title company selected by Purchaser (herein referred to as
the "Title Company") at standard rates; and that Purchaser shall not incur any
damage, cost or expense resulting from any encroachment or overlap affecting the
Property. Title Company shall certify that Seller has the right, authority and
power to enter into and to perform its obligations hereunder. The legal
description in the Binder (as hereinafter defined) and in the Deed (as
hereinafter defined) shall be in accordance with a current survey showing the
completed Improvements satisfactory to Title Company and Purchaser.
(b) Purchaser has received a title insurance binder (herein referred
to as the "Binder"), a copy of which has been delivered to Seller. Prior to the
expiration of the Due Diligence Period (as hereinafter defined), Purchaser shall
deliver to Seller's attorney notice of any objections to title which are not
Permitted Encumbrances. After the execution hereof, no further liens,
encumbrances, easements or restrictions shall be created or filed ("Subsequent
Encumbrances") on or with respect to the Property. The Binder, at the request
of Purchaser, shall contain the following endorsements so that at Closing, Title
Company will issue an Owner's Policy of Title Insurance (American Land Title
Association Owner's Policy - 1992, or equivalent, in Purchaser's sole judgment),
in the full amount of the Purchase Price (the "Title Policy"):
(i) a zoning endorsement certifying that the Property is not
subject to any ordinance, regulation or restriction which in any way would
prohibit or restrict the construction, maintenance and/or use of the insured
Property for its present use;
6
<PAGE>
(ii) an endorsement insuring contiguity between or among all of
the tracts or parcels of land comprising the Property;
(iii)an endorsement deleting any coverage exclusions with respect
to creditor's rights; and
(iv) an endorsement affirmatively insuring access to public
streets, highway and roadways.
If the Binder discloses any exceptions, liens, encumbrances, defects or
objections other than the Permitted Encumbrances or if, after execution hereof,
a Subsequent Encumbrance shall be placed against the Property or if the Title
Company is unable to issue the endorsements (herein collectively called the
"Title Defect(s)"), then Purchaser shall have the right to: (i) require Seller
to use best efforts to cure any such Title Defects (except that Seller shall be
obligated to cure any Title Defects which can be removed solely by the payment
of a sum of money); (ii) attempt to cure any such Title Defect; (iii) accept
such title as Seller shall be able to convey and proceed to Closing without
reduction in the Purchase Price; (iv) cause a title report and title insurance
policy to be issued by another title company without such Title Defect; (v)
elect not to purchase the Property and declare this Agreement null and void,
whereupon Purchaser shall be entitled to the return of the Letter of Credit;
provided, however, if Seller gives notice to Purchaser within five (5) days
after Purchaser's election under this subparagraph (v), that Seller intends to
cure such Title Defects and thereafter cures such Title Defects in accordance
with the terms of this Agreement within thirty (30) days after receipt of notice
from Purchaser of its election under this subparagraph (v), then Purchaser's
notice of termination shall be deemed negated and the transaction contemplated
by this Agreement shall proceed pursuant to the terms of this Agreement. The
right of Purchaser to terminate this Agreement may be exercised following the
exercise of its other rights hereunder.
(c) If at Closing there are liens or encumbrances against the
Property other than Permitted Encumbrances, Seller
7
<PAGE>
may use any portion of the Purchase Price to satisfy same, provided Seller, at
Closing, either shall: (1) deliver to Purchaser instruments in recordable form
sufficient to satisfy such liens or encumbrances of record, together with the
cost of recording or filing said instruments; or (2) deposit with Title Company
sufficient monies acceptable to Title Company to insure obtaining and recording
of such satisfactions and the issuance of a Title Policy for the Property to
Purchaser free and clear of any such liens or encumbrances, but only to the
extent that such liens or encumbrances are in favor of and held by institutional
lenders. The existence of any such liens or encumbrances shall not be deemed
objections or exceptions to title if Seller shall comply with the foregoing
requirements.
(d) If a search of title discloses judgments, bankruptcies or other
returns against other persons or entities having names the same as or similar to
that of Seller or any predecessor in title, Seller, on request, shall deliver to
Title Company, an affidavit showing that such judgments, bankruptcies or other
returns are not against Seller or such predecessors in interest of Seller.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Seller acknowledges that all representations and warranties set
forth in this Agreement presently are true and accurate and shall remain true
and accurate as of the Closing Date, it being acknowledged that Purchaser is
relying on all of said representations and warranties, and that each of the
representations and warranties set forth in this Agreement is of the essence
hereof, notwithstanding any investigation, review, examination or other acts or
conduct of Purchaser, its agents or representatives relating to or in connection
with, any representation or warranty contained in this Agreement. In addition
to any other representations, warranties and/or covenants contained in this
Agreement, Seller makes the following additional representations, warranties
and/or covenants:
8
<PAGE>
(A) Seller has delivered to Purchaser true, correct and complete
copies of any applicable certificate of incorporation, certificate of formation,
certificate of limited partnership, trade name certificate, Shareholders'
Agreement, Operating Agreement, Limited Partnership Agreement, Partnership
Agreement, Trust Agreement, By-Laws and all other governing documents of Seller
and each participant of Seller (referred to herein singularly and collectively
as "Organizational Document(s)");
(B) Seller is duly organized, validly existing and in good
standing in its state of formation and is in good standing in New Jersey, has
the right and authority to execute this Agreement and to consummate this
transaction in accordance with the provisions hereof and all persons executing
this Agreement and all other applicable documents on behalf of Seller have the
right, power and authority to do so. Seller shall provide Purchaser true copies
of its authority and appropriate resolutions ("Seller Resolutions") ratifying
Seller's entering into this Agreement, and authorizing Seller's sale of the
Property to Purchaser in accordance with the terms of this Agreement;
(C) Seller owns and shall convey to Purchaser the Premises and
the fixtures, Personal Property, Names and Records, free and clear of all liens
and encumbrances, except for the Permitted Encumbrances;
(D) Seller has no knowledge of and has not received any
notice(s) of, any violations of law, code, ordinances, rule, regulation or
requirements noted in or issued by any governmental department having authority
with respect to the Property, except as otherwise provided herein. Seller shall
deliver to Purchaser true copies of any such notice(s) received after the date
hereof, forthwith on receipt thereof, and each such notice shall be complied
with by Seller, at its sole cost and expense, prior to Closing, or as otherwise
agreed upon between the parties;
9
<PAGE>
(E) Schedule "F" annexed hereto and made a part hereof contains
a complete and accurate statement of all tenants who have entered Leases,
whether or not they are occupying space at the Property as of the date of this
Agreement ("Tenant(s)"), each of whom has entered into and/or will be in
occupancy pursuant to a written lease agreement (referred to herein collectively
as "Leases" and individually as a "Lease"). Schedule "F" contains: (i) the
complete and accurate name of each Tenant; (ii) the commencement date of each
Lease or the basis for determining same; (iii) the termination date of each
Lease or the basis for determining same; (iv) the renewal, extension or other
rights or options, if any, for existing, additional and/or other space granted
by each Lease, and whether said rights or options have been exercised; (v) the
initial base rent being paid or to be paid by each Tenant; (vi) the initial
additional rent being paid or to be paid by each Tenant (itemized); (vii) the
date the last base and additional rent were paid by each Tenant, if any, and the
period covered by said payment; (viii) the amount of the security deposit being
held or to be held by Seller, if any, for each Tenant and the amount of interest
accrued thereon, if interest is required to be paid to any Tenant; (ix) any
future concession, rebate, allowance, free rent period or other considerations;
(x) any right of each Tenant to purchase or acquire an ownership interest in all
or any portion of the Property; and (xi) any breach or default by landlord or
Tenant in accordance with the provisions of subparagraph (G) below. There are
no tenants, licensees, concessionaires or other occupants or persons with the
right of occupancy of any portion of the Property except for Tenants set forth
on Schedule "F". At the Closing, Seller will assign to Purchaser, and Purchaser
will assume from Seller, all of Seller's interest in the Leases and the security
deposits, by execution and delivery of the assignment and assumption of leases
("Assignment and Assumption of Leases") in the form annexed hereto and made a
part hereof as Schedule "G". At the Closing, the parties agree to execute
letters notifying all Tenants of the
10
<PAGE>
sale of the Property to Purchaser ("Tenant Notice") in the form annexed hereto
and made a part hereof as Schedule "H";
(F) True and complete copies of the Leases and all amendments or
modifications thereto have been given to Purchaser for each Tenant listed on
Schedule "F". There are no amendments or modifications to the Leases which have
not been provided to Purchaser;
(G) The Leases are in full force and effect. Neither Seller
nor, except as set forth on Schedule "F", any Tenant is in breach or default of
its Lease obligations, and to the best of Seller's knowledge, nothing has
occurred which, with the passage of time and/or with the giving of notice, might
result in Seller or any Tenant being in breach or default of its Lease
obligations;
(H) At the time of Closing, all obligations of Seller pursuant
to the Leases with respect to performance of work or installation of equipment
in all respects shall have been completed, subject to the terms of this
Agreement;
(I) No Tenant is entitled to receive or has been offered or
given any free rent, rent concessions, rebates, allowances or other
considerations which would be effective for any period after the date of this
Agreement, except as set forth in the Leases listed on Schedule "F," and no
Tenant has made a claim for any of the foregoing, except as otherwise herein
provided;
(J) To the best of Seller's knowledge, there are no claims,
offsets or charges asserted by any Tenant against rent, security deposit or any
other payment to be made by such Tenant;
(K) No person or entity, other than the aforesaid Tenants, has
or shall have any right to use, utilize or occupy the Property or any part
thereof, either as a tenant or otherwise;
(L) Seller shall obtain and deliver to Purchaser, on or before
the Closing, a duly executed estoppel certificate ("Estoppel Certificate") in
the form annexed hereto as Schedule
11
<PAGE>
"I" dated not more than fifteen (15) days prior to Closing, from each Tenant;
(M) From and after the date of this Agreement, without
Purchaser's prior consent, Seller shall not: (i) accept prepayment of rent more
than one month in advance from any Tenant; (ii) grant any free rent, rent
concession, rebate, allowance or other consideration; (iii) modify or amend any
Leases; (iv) accept the surrender of any Leases; or (v) enter into any new
leases or other occupancy, license or concession arrangements with Tenants or
any other person or entity for the use of any portion of the Property;
(N) Except as otherwise provided herein in Schedule "J" annexed
hereto, there are no brokerage commissions or other fees due in connection with
the rental of any space at the Property, there will be no obligation for such
commissions or fees due at the Closing, and there will be no obligations for
such commissions or fees due after the Closing, including, without limitation,
any obligation to pay commissions or fees in connection with the renewal or
extension of the term of any Leases. All brokerage commissions in connection
with the leasing of any space in the Property, whether due prior to Closing or
thereafter, on account of the continued occupancy by any Tenant for the lease
term in effect at Closing, shall be paid by Seller at Closing or allowed as a
credit against the Purchase Price by Seller at Closing (in which event Purchaser
shall pay such commissions in accordance with the provisions of the applicable
brokerage agreements). All brokerage commissions in connection with the leasing
of any space in the Property on account of any unexercised renewal, extension or
taking of other space at the time of Closing shall be paid by Purchaser. Each
party shall indemnify, defend and hold the other harmless from and against any
and all costs and liabilities incurred by such party as a result of the falsity
of the aforesaid representation or the breach of the aforesaid obligation;
(O) At Closing, Seller shall deliver to Purchaser an assignment
(to the extent lawfully assignable) of all of its
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<PAGE>
right, title and interest in: (i) any existing Certificate of the Board of Fire
Underwriters covering the Property; (ii) any permits or licenses it may have
pertaining to the Property; (iii) all available site and building plans and
specifications relating to the Property; and (iv) all available Certificates of
Occupancy;
(P) All existing guarantees and warranties which Seller has
received or will receive from contractors, subcontractors, manufacturers,
materialmen, distributors, sellers or others, regarding all or any portion of
the Property are set forth on Schedule "L" attached hereto and made a part
hereof (together with any additional guarantees and warranties relating to the
Property received after the date hereof, being collectively referred to herein
as "Guarantees"). At Closing, Seller shall assign to Purchaser (to the extent
the Guarantees are assignable) all of its right, title and interest in and to
all Guarantees;
(Q) All service, maintenance, vending, concession, license,
agency or other agreements affecting the Property or the operation thereof
("Contract(s)") will be in force at the Closing and a true and complete list of
all Contracts are set forth on Schedule "M" annexed hereto and made a part
hereof. True copies of all Contracts have been delivered to Purchaser or shall
be delivered to Purchaser within ten (10) days of the date hereof. Any or all
such Contracts, upon Purchaser's request, shall be assigned by Seller to
Purchaser at Closing and all Contracts are cancelable on not more than thirty
(30) days' notice. On request of Purchaser, Seller shall cancel any or all of
such Contracts as of the Closing Date. Between the date hereof and the Closing,
Seller shall not renew, extend, modify or terminate any of said Contracts or
enter into any other contract and/or agreement affecting the Property or the
operation thereof without the consent of Purchaser in each instance first being
obtained. No party to any Contract is in breach or default thereunder, and to
Seller's knowledge, nothing has occurred which
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<PAGE>
with the passage of time and/or with the giving of notice could constitute a
breach or default thereunder;
(R) At the time of Closing there shall not be any, employment,
collective bargaining or union agreements affecting the Property or the
operation thereof or any deferred income or retirement plans in effect;
(S) There are no actions, suits, labor disputes, litigation or
proceedings ("Action(s)") pending or, to the knowledge of Seller, threatened
against or affecting Seller or the Property, the environmental condition thereof
or the operation thereof at law or in equity or before any federal, state,
municipal or governmental department, commission, board, bureau, agency or
instrumentality, nor does Seller have knowledge of any basis for any such
Action, which, if determined adversely to Seller, in any way would affect the
Property or the operation thereof other than as set forth on Schedule "N"
annexed hereto and made a part hereof. None of the Actions listed on Schedule
"N" nor any subsequent Actions will be settled, either prior to or after
Closing, without Purchaser's consent, nor will Seller take any material actions
in connection therewith without first notifying Purchaser;
(T) Seller has not, nor prior to Closing shall: make a general
assignment for the benefit of creditors; file a voluntary petition in
bankruptcy; be by any court adjudicated a bankrupt; take the benefit of any
insolvency act; be dissolved or liquidated, voluntarily or involuntarily; or
have a receiver or trustee appointed in any proceedings;
(U) Seller has no knowledge and has received no notice of any
application for any zoning change or pending zoning ordinance or amendment,
which would affect the Property;
(V) The execution, delivery and performance of this Agreement in
accordance with its terms does not violate any contract, agreement, commitment,
order, judgment, decree, law, regulation or ordinance to which Seller is a party
or by which Seller is bound or as to which any of its assets is subject;
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(W) Seller has not entered into any commitment or any agreement
or understanding with any municipality, county, state or federal government
agency or authority which would require the installation of any improvements or
the incurring of any cost or expense affecting the Property or otherwise;
(X) Seller presently maintains and shall continue to maintain
until Closing policies of insurance in accordance with Schedule "O" attached
hereto and made a part hereof;
(Y) Seller has no knowledge of any Federal, State or local plans
to change the highway or road system in the vicinity of the Property or to
restrict or change access from any such highway or road to the Property or of
any pending or threatened condemnation of the Property or any part thereof or of
any plans for improvements which might result in a special assessment against
the Property;
(Z) At Closing, no services, material or work have been supplied
by Seller's contractors, subcontractors or materialmen with respect to the
Property for which payment has not been made in full. If, subsequent to the
Closing Date, any mechanic's or other lien, charge or order for the payment of
money shall be filed against the Property or against Purchaser or Purchaser's
assigns, based upon any act or omission, or alleged act or omission before or
after the Closing Date, of Seller, its agents, servants or employees, or any
contractor, subcontractor or materialmen connected with the construction and
completion by Seller of improvements at the Property, or repairs made to the
Property by or on behalf of Seller (whether or not such lien, charge or order
shall be valid or enforceable as such), within ten (10) days after notice to
Seller of the filing thereof, Seller shall take such action, by bonding,
deposit, payment or otherwise, as will remove or satisfy such lien of record
against the Property;
(AA) Seller has provided Purchaser with all reports and documents
set forth on Schedule "P", which are all of the Environmental Documents (as
defined in Paragraph 14.(e)(iv) hereof) in its possession or under its control
related to the
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physical condition of the Property. In addition, Seller has provided Purchaser
with all books and records necessary for Purchaser to conduct its due diligence
of the Property;
(BB) Seller has no knowledge of any notices, suits,
investigations or judgments relating to any violations of any laws, ordinances
or regulations affecting the Property, (including, without limitation,
Environmental Laws [as defined in Paragraph 14.(e)(v) hereof]), or any
violations or conditions that may give rise thereto, and has no reason to
believe that any "Governmental Authority" (as defined in Paragraph 14.(e)(vi)
hereof) contemplates the issuance thereof, and there are no outstanding orders,
judgments, injunctions, decrees, directives or writ of any Governmental
Authority against or involving Seller or the Property; and
(CC) Except as disclosed on Schedule "Q" attached hereto and made
a part hereof:
(1) to the best of Seller's knowledge, there are no
Contaminants (as defined in Paragraph 14.(e)(i) hereof) on, under, at, emanating
from or affecting the Property, except those in compliance with all applicable
Environmental Laws;
(2) Seller has not, nor to Seller's knowledge, has any
current occupant and any prior owner or occupant, of the Property received any
Notice (as defined in Paragraph 14.(e)(ix) hereof) or advice from any
Governmental Authority or any other third party with respect to Contaminants on,
under, at, emanating from or affecting the Property and, to Seller's knowledge,
no Contaminants have been Discharged (as defined in Paragraph 14.(e)(ii) hereof)
which would allow a Governmental Authority to demand that a cleanup be
undertaken;
(3) no portion of the Property has ever been used by Seller
or, to Seller's knowledge, 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
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third party with respect thereto in violation of Environmental Laws;
(4) no portion of the Property now is or, to Seller's
knowledge, ever has been used as a Major Facility (as defined in Paragraph
14.(e)(vii) hereof) and Seller shall not use, nor permit use of any portion of
the Property for that purpose;
(5) Seller has not transported any Contaminants, nor to
Seller's knowledge has any current or former occupant or former owner
transported Contaminants from the Property to another location which was not
done in compliance with all applicable Environmental Laws;
(6) no Section 104(e) informational request has been
received by Seller issued pursuant to CERCLA (as defined in Paragraph 14.(e)(i)
hereof);
(7) to the best of Seller's knowledge, there is no asbestos
or asbestos containing material in any friable state or otherwise in violation
of Environmental Laws on the Property;
(8) to the best of Seller's knowledge, all transformers and
capacitators containing polychlorinated biphenyls ("PCBs"), and all "PCB Items",
as defined in 40 C.F.R. Section 761.3, located on or affecting the Property are
identified in Schedule "S" and are in compliance with all Environmental Laws;
(9) to the best of Seller's knowledge, there are no above
ground storage tanks or Underground Storage Tanks (as defined in Paragraph
14.(e)(xi) hereof) at the Property, regardless of whether such tanks are
regulated tanks or not;
(10) to the best of Seller's knowledge, 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;
(11) to the best of Seller's knowledge, the Property has not
been used as a sanitary landfill facility as
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defined in the Solid Waste Management Act, N.J.S.A. 13:1E-1 ET SEQ.;
(12) Seller and, to the best of Seller's knowledge, each
occupant of the Property have all environmental certificates, licenses and
permits ("Permit") required to operate the Property and there is no 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;
(13) to the best of Seller's knowledge, 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 NJDEP
(as defined in Paragraph 14.(e)(viii) hereof);
(14) there are no federal or state liens as referred to
under CERCLA or the Spill Act (as defined in Paragraph 14.(e)(i) hereof) that
have attached to the Property;
(15) Seller in the past has not and does not now own,
operate or control any Major Facility;
(16) Seller has not nor to the best of Seller's knowledge
has Seller permitted any occupant to engage in any activity on the Property in
violation of Environmental Laws;
(17) the Property is in material compliance with
Environmental Laws; and
(18) to the best of 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. Section 13:1E-56 or N.J.S.A. 58:10B-13.
(b) Purchaser hereby represents, warrants and covenants the
following:
(A) Purchaser is a limited partnership of the State of Delaware,
in good standing, has the right and authority to execute this Agreement and to
consummate this transaction in accordance with the provisions hereof and all
persons executing
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this Agreement and all other applicable documents on behalf of Purchaser, have
the right, power and authority to do so;
(B) The execution, delivery and performance of this Agreement in
accordance with its terms does not violate any contract, agreement, commitment,
order, judgment, decree, law, regulation or ordinance to which Purchaser is a
party or by which it is bound or as to which any of its assets is subject; and
(C) Purchaser shall provide Seller true copies of authorization
("Purchaser's Authorization") authorizing or ratifying Purchaser's entering into
this Agreement and authorizing Purchaser's purchase of the Property from Seller
in accordance with the terms of this Agreement.
(c) In the event that either party knows or learns that any of the
representations contained in this Agreement are false or no longer are true and
accurate, such party forthwith shall deliver notice of such fact to the other
party, and the other party shall proceed diligently to cure or remedy such
misrepresentations. In the event that such misrepresentations cannot or shall
not be cured within thirty (30) days following delivery of notice thereof, then
the notifying party shall have the right either (i) to elect, nevertheless, to
close title to the Property in accordance with the provisions of this Agreement,
or (ii) to declare this Agreement null and void, by notice delivered to the
non-curing party. The termination of this Agreement pursuant to this Paragraph
6 shall not release the misrepresenting party from any liability it may
otherwise have to the other party by reason thereof.
(d) Whenever in this Paragraph 6, a representation and/or warranty is
made to the knowledge of Seller, knowledge of Seller shall mean the actual
knowledge of William G. Price, Jr. and/or John S. McGarvey, without any
independent investigation other than reviewing the applicable representation
and/or warranty.
(e) The representations and warranties made by Seller in Paragraphs
6(C), (E), (F), (H), (K), (N), (V), (W), (AA), (AB) and (AC) shall survive the
Closing for the applicable statute of
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limitations. The representations and warranties made by Seller in Paragraphs
6(A), (B), (D), (G), (I), (J), (L), (M), (O), (P), (Q), (R), (S), (T), (U), (X),
(Y) and (Z) shall survive the Closing for a period of one (1) year; provided,
however, that no claims for indemnification under Paragraphs 6(A), (B), (D),
(G), (I), (J), (L), (M), (O), (P), (Q), (R), (S), (X), (Y), and (Z), with
respect to a breach of any representation or warranty referred to above in this
sentence may be maintained by Purchaser unless Purchaser shall have delivered
notice to Seller specifying the nature of such claim, which notice shall be
delivered on or before the date which is one (1) year after the Closing Date
(the "Survival Date"). Upon the giving of such notice as aforesaid, Purchaser
shall have the right to commence legal proceedings prior or subsequent to the
Survival Date for the enforcement of its rights under this Agreement. The
representations and warranties made by Purchaser in Paragraph 6 shall not
survive the Closing.
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7. LEASES AND TENANCIES.
(a) If any claim is made against Purchaser by any Tenant asserting an
offset against rent or otherwise, including any rent over-charges or failure in
construction or to provide services, with respect to any matter which arose
prior to Closing, Seller shall indemnify and hold Purchaser harmless for all
losses, damages and expenses (including, without limitation, reasonable
attorneys' fees and costs) incurred by Purchaser in connection thereof. After
Purchaser shall receive notice of a claim that may give rise to an indemnity
hereunder, Purchaser shall notify Seller; provided, however, the failure to give
any notice shall not relieve Seller from any liability hereunder unless such
failure impairs the right to defend such action. In the event any claim is
brought against Purchaser with respect to which Seller may have liability under
the indemnity agreement contained in this Paragraph 7.(a), the claim may, upon
written agreement of Seller that it is obligated to indemnify against the
particular claim under the indemnity agreement contained herein, be settled by
Seller with the prior written consent of Purchaser, which shall not be
unreasonably withheld.
(b) Purchaser shall assume the Leases following the Closing and shall
indemnify and hold Seller harmless for all losses, damages and expenses
(including, without limitation, reasonable attorneys' fees and costs) incurred
by Seller arising from any claim by a Tenant in respect to any obligation to
Tenant assumed by Purchaser or any advance rental credited to Purchaser. After
Seller shall receive notice of a claim that may give rise to an indemnity
hereunder, Seller shall notify Purchaser; provided, however, the failure to give
any notice shall not relieve Purchaser from any liability hereunder unless such
failure impairs the right to defend such action. In the event any claim is
brought against Seller with respect to which Purchaser may have liability under
the indemnity agreement contained in this Paragraph 7.(b), the claim may, upon
written agreement of Purchaser that it is obligated to indemnify against
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the particular claim under the indemnity contained herein, be settled by
Purchaser with the prior written consent of Seller, which shall not be
unreasonably withheld.
(c) Seller agrees not to apply or return any security deposit in
whole or in part. At the Closing, Seller shall turn over to Purchaser all
Tenant security deposits plus any interest earned thereon for the benefit of
Tenant together with an updated Schedule "F". Seller shall indemnify Purchaser
for any claims made, suits commenced or judgments entered in connection with the
security deposits for the period through the Closing Date and Purchaser shall
indemnify Seller for any claims made, suits commenced or judgments entered into
in connection with all security deposits for the period subsequent to the
Closing Date.
8. CLOSING.
(a) Closing shall occur at 10:00 a.m. at the offices of Cole, Schotz,
Meisel, Forman & Leonard, P.A., Court Plaza North, 25 Main Street, Hackensack,
New Jersey, on the date which is fifteen (15) days after satisfaction or waiver
of all conditions and contingencies set forth herein, or at such other date,
time and/or place as the parties may agree upon; provided, however, that if such
date shall be a Saturday, Sunday or legal holiday, then Closing shall take place
on the first business date thereafter (herein referred to as the "Closing" and
the "Closing Date" respectively).
(b) At Closing, the following shall be executed and/or delivered:
(i) By Seller:
(A) The Deed [as hereinafter described in subparagraph
(c)];
(B) Seller's certification that the representations and
warranties set forth in this Agreement are true and accurate as of the Closing;
(C) Seller's affidavit of title, the form and substance of
which shall be subject to the reasonable approval of Title Company and
Purchaser's attorneys;
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(D) Seller's Resolutions;
(E) Bill of Sale and/or assignments if so requested by
Purchaser;
(F) The Assignment and Assumption of Leases together with
schedules of security deposits paid by Tenants and any applications thereof made
by Seller. At Closing, Seller shall pay to Purchaser by separate certified
check or allow as a credit against the Purchase Price, the aggregate amount of
all security deposits held under Leases;
(G) The original Leases and all amendments, modifications
and guarantees thereto, and all brokerage commission agreements;
(H) The Tenant Notice(s) to Tenants;
(I) The Estoppel Certificates;
(J) Certification of non-foreign status in accordance with
Internal Revenue Code Section 1445, as amended;
(K) Keys to all doors to, and equipment and utility rooms
located in the Property, which keys shall be properly tagged for identification;
(L) An endorsement to all transferable insurance
policies,if any, approved by Purchaser, naming Purchaser as the party insured,
together with the original of each such policy;
(M) As-built plans and specifications in accordance with
the provisions of Paragraph 4 and permanent certificates of occupancy for each
building and improvement comprising a part of the Property;
(N) All original licenses and permits pertaining to the
Property and required for the use or occupancy thereof together with a duly
executed assignment thereof to Purchaser;
(O) True and complete Records;
(P) All Guarantees and Contracts, together with a duly
executed assignment thereof to Purchaser;
(Q) ISRA Approval (as hereinafter defined in Paragraph
14.(a) hereof);
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(R) Mutually satisfactory closing statement;
(S) The Guaranty in the form of Schedule "R" annexed hereto
and made a part hereof;
(T) Such other items to be provided to Purchaser pursuant
to this Agreement; and
(U) Such other instruments as reasonably may be required by
Purchaser's counsel or the Title Company to effectuate this transaction.
(ii) By Purchaser:
(A) The Purchase Price;
(B) The Assignment and Assumption of Leases;
(C) Tenant Notices to Tenants;
(D) Mutually satisfactory closing statement;
(E) Such other items to be provided to Seller pursuant to
this Agreement; and
(F) Such other instruments as reasonably may be required by
Seller's counsel to effectuate this transaction.
(c) The deed ("Deed") to be delivered at Closing shall be a Bargain
and Sale Deed with covenants against grantors' acts, in proper form for
recording so as to convey to Purchaser good, marketable and insurable fee simple
title to the Property in accordance herewith.
(d) The words "Closing", "title closing", "Closing of title",
"delivery of deed" and words of similar import are used interchangeably in this
Agreement, as the sense of text indicates, to mean the event of consummation of
this sale in accordance with the terms of this Agreement.
9. CLOSING ADJUSTMENTS.
(a) The following are to be apportioned as of the Closing Date:
(i) real property taxes;
(ii) water rates and charges;
(iii) sewer taxes and rents;
(iv) all base rent payments;
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(v) common area and other additional rent charges, if any;
(vi) fuel oil on hand, determined at Seller's cost;
(vii) insurance premiums on transferable policies, if any,
approved by Purchaser; and
(viii) annual license, permit and inspection fees, if any,
provided that Seller's rights thereunder (or with respect thereto) are
transferable to Purchaser.
(b) (i) Apportionment of real property taxes, water rates and
charges and sewer taxes and rents shall be made on the basis of the fiscal year
for which assessed solely to the extent actually received by Seller from Tenants
or actually paid or payable by Seller. If the Closing Date shall occur before
any or all of the foregoing are fixed, the apportionment of real property taxes
shall be made on the basis of the tax rate for the preceding year applied to the
latest assessed valuation. After the final real property taxes, water rates and
charges and sewer taxes and rents are fixed, Seller and Purchaser shall make a
recalculation of the apportionment of same, and Seller or Purchaser, as the case
may be, shall make an appropriate payment to the other based on such
recalculation.
(ii) If at the time for the delivery of the Deed, the Premises
shall be or shall have been affected by an assessment or assessments (including
special and/or added) which are or may become payable in annual installments of
which the first installment is then due 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 delivery of the Deed for the
Premises, shall be deemed to be due and payable and to be liens upon such
Premises affected thereby and shall be paid and discharged by Seller upon the
delivery of the Deed for the Premises. If any assessment with respect to the
Premises is unconfirmed at the time of Closing, or if subsequent to Closing any
assessment, including special or added, is determined to be incorrect, then,
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immediately after the amount of the assessment has been established, or the
confirmed assessment corrected as a result of a prior error, Seller shall make
an appropriate payment to Purchaser within ten (10) days of the tax assessor's
calculation of the assessment. Notwithstanding the foregoing, if the tenant(s)
of the Premises are obligated under a written lease for the payment of the
entire assessment (confirmed and/or unconfirmed), then with respect to such
assessment Purchaser shall seek payment from the Tenant(s), and any assessment
not otherwise the obligation of the Tenant(s) shall be the obligation of Seller.
Seller shall indemnify and hold Purchaser harmless from and against all costs
and expenses, including reasonable attorneys fees, incurred by Purchaser in
connection with Seller's failure to perform Seller's obligation under this
Paragraph 9(b)(ii).
(c) If there shall be any water meters on the Property (other than
meters measuring water consumption costs which are the obligation of Tenants to
pay), Seller shall furnish readings to a date not more than ten (10) days prior
to the Closing Date, and the unfixed water rates and charges and sewer taxes and
rents, if any, based thereon for the intervening time, shall be apportioned on
the basis of such last readings.
(d) The amount of unpaid taxes, assessments, water charges and sewer
rents which Seller is obligated to pay and discharge, with interest and
penalties thereon to the fifth (5th) day after the Closing Date, at the option
of Seller, may be allowed to Purchaser out of the Purchase Price, provided that
official bills therefor with interest and penalties thereon are furnished by
Seller at the Closing.
(e) If any refund of real property taxes, water rates and charges or
sewer taxes and rents is made after the Closing Date for a period prior to the
Closing Date, the same shall be applied first to the costs incurred in obtaining
same and second to the refunds due to Tenants by reason of the provisions of
their respective Leases. The balance, if any, of such refund shall be paid to
Seller (for the period prior to the Closing
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Date) and Purchaser (for the period commencing with the Closing Date).
(f) To the extent that Seller receives rent payments after the
Closing Date for any period from and after the Closing Date, the same shall be
held in trust and immediately paid to Purchaser.
(g) All rent payments received by Seller or Purchaser after Closing
shall be applied firstly against out-of-pocket costs of collection, then to
rents due and owing by such Tenant for the periods from and after Closing and
thereafter against rents due and owing prior to Closing in inverse order of due
date.
(h) All realty transfer fees and charges (other than recording fees
for the Deed) shall be paid by Seller at Closing.
10. RISK OF LOSS.
(a) Seller assumes the risk of loss or damage to the Property beyond
ordinary wear and tear until delivery of the Deed to Purchaser and shall notify
Purchaser forthwith upon the occurrence of any such casualty ("Casualty
Notice"). In the event of any casualty in which the Casualty Threshold (as
hereinafter defined) is not established, or in the event of a casualty in which
the Casualty Threshold is established and if Purchaser elects to complete the
purchase of the Property hereunder, Seller shall restore and repair the damaged
Property to its condition immediately preceding such casualty and in accordance
with its obligations pursuant to Leases, and without a change in the Purchase
Price.
(b) If, prior to the Closing Date, the Property shall be damaged by
fire or other casualty and the estimated cost of repair and/or restoration shall
exceed twenty-five (25%) percent of the Purchase Price or reasonably shall be
estimated to require more than one hundred eighty (180) days to repair or
restore (collectively, "Casualty Threshold"), Purchaser may, by notice to
Seller, elect to terminate this Agreement. If this Agreement is so terminated,
the Letter of Credit forthwith shall be returned
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to Purchaser. Purchaser shall notify Seller of its decision within sixty (60)
days of receipt of the Casualty Notice, which shall include the amount of
insurance coverage, the amount of insurance received, if any, the reasonably
estimated cost of repairs and the reasonably estimated time in which to complete
said repairs, and the Closing shall be postponed accordingly.
(c) Notwithstanding the foregoing, any proceeds of loss of rent
insurance for a casualty occurring prior to the Closing Date, whether received
prior to or following the Closing, shall be apportioned as of the Closing Date.
11. CONDEMNATION. In the event that, prior to Closing, all or any portion
of the Property shall be condemned or taken as the result of the exercise of the
power of eminent domain, or by deed in lieu thereof (collectively, a "Taking"),
or if such proceedings shall have commenced or shall be threatened, Seller
promptly shall notify Purchaser ("Taking Notice"). Purchaser, in its sole
judgment, shall notify Seller within sixty (60) days following receipt of the
Taking Notice, that: (1) the remaining portion of the Property is not suitable
or economically viable for its intended use of the Property, in which event
Purchaser may terminate this Agreement; or (2) the remaining portion of the
Property is suitable and economically viable for its intended use, in which
event Closing shall proceed and Purchaser and Seller shall have the right to
participate jointly in the condemnation proceedings and the proceeds thereof
shall belong to Seller, but Purchaser shall be entitled to a credit against the
Purchase Price in an amount equal to said proceeds, unless such condemnation
proceedings shall be pending on the Closing Date, in which event there shall not
be any credit and at Closing, Seller shall assign all its right, title and
interest in and to said proceedings and award to Purchaser.
12. APPROVALS FOR TRANSFER. In the event that any Governmental Authority
shall have an ordinance, law, rule, regulation or other requirement requiring a
new Certificate of Occupancy or other governmental authorization to be issued in
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connection with the transfer of title to the Property, or in the event that on
the Closing Date there is any such requirement, then and in any of such events,
Seller shall use its best efforts, at its sole cost and expense, to obtain and
deliver to Purchaser, the Certificate of Occupancy or other governmental
authorization.
13. DUE DILIGENCE PERIOD.
(a) Through the period ending on the date which is forty-five (45)
days from the date of this Agreement (the "Due Diligence Period"), Purchaser 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 borings,
ground water tests and investigations, percolation tests, surveys,
architectural, engineering, subdivision, environmental, access, development
studies and such other tests, investigations or studies as Purchaser, 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, Contracts,
engineering and environmental reports, development approval agreements, permits
and approvals. Purchaser shall repair and restore any portion of the surface of
the Property disturbed by Purchaser, its agents, representatives or contractors
during the conduct of any tests and studies to substantially 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 Purchaser of the breach of any
representation, warranty, covenant or agreement of Seller which might, or
should, have been disclosed by such inspection.
(b) During the Due Diligence Period, Purchaser, its agents,
representatives and contractors, shall have unlimited access to the Property and
other information pertaining thereto in the possession or within the control of
Seller for the purpose of performing such studies,tests, borings, investigations
and inspections for the purposes described in this Paragraph. Seller
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<PAGE>
shall cooperate with Purchaser in facilitating its due diligence inquiry and
shall obtain, and use its best reasonable efforts to obtain, any consents that
may be necessary in order for Purchaser to perform same. In addition, Seller
will deliver to Purchaser promptly after request, true and complete copies of
all test borings, Environmental Documents, surveys, title materials and
engineering and architectural data and the like relating to the Property that
are in Seller's possession or under its control. In the event any additional
materials or information comes within Seller's possession or control after the
date of this Agreement, Seller promptly shall submit true and complete copies of
the same to Purchaser. Seller shall notify Purchaser 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 Purchaser may pose a dangerous condition to
Purchaser or Purchaser's agents, representatives or contractors.
(c) Purchaser shall obtain, or cause its contractors, agents and
representatives to obtain, liability insurance in an amount equal to One Million
($1,000,000.00) Dollars on a per occurrence and aggregate basis on account of
personal injury to one or more persons and property damage with respect to
Purchaser's activities and entry onto the Property. Upon request of Seller, the
policy shall name Seller as an additional insured. In addition, Purchaser
agrees to indemnify and hold Seller harmless from any damage or injury to
persons or property arising out of or in connection with Purchaser or its
contractors, agents or representatives entering upon the Property.
(d) Purchaser may terminate this Agreement for any reason or for no
reason by notice to Seller given within the Due Diligence Period. In the event
Purchaser terminates this Agreement during the Due Diligence Period, this
Agreement shall be null and void, the Letter of Credit forthwith shall be
returned to Purchaser, copies of any reports or studies prepared by third
parties as part of Purchaser's investigations during the Due Diligence Period
(if expressly permitted by such third
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party), shall be delivered to Seller (except, if this Agreement is terminated as
a result of Seller's breach hereof). In the event Purchaser does not terminate
this Agreement by the end of the Due Diligence Period, Purchaser shall be deemed
to have elected not to terminate this Agreement.
14. ENVIRONMENTAL PROVISIONS.
(a) 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 from
the Element, (as hereinafter defined in Paragraph 14.(e)(iii) hereof) pursuant
to ISRA (as hereinafter defined in Paragraph 14.(e)(i) hereof), and deliver to
Purchaser, at least five (5) days prior to Closing (the "ISRA Compliance Date"),
together with all submissions upon which any one or more of the following is
based, either:
(i) a Letter of Non-Applicability;
(ii) a de minimis quantity exemption;
(iii) an unconditional approval of a Negative Declaration; or
(iv) an unconditional No Further Action Letter;
(collectively the "ISRA Approval") for which Seller shall apply promptly. In no
event shall an ISRA Approval involve any engineering or institutional controls,
including without limitation, capping, deed notice, declaration of environmental
restriction or other institutional control notice pursuant to P.L. 1993 c. 139,
a groundwater classification exception area or a well restriction area. If the
requirements of this Paragraph 14.(a) are not satisfied on or before the ISRA
Compliance Date, Purchaser thereafter shall have the right, by notice to Seller,
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, Seller shall refund to Purchaser all charges made for title
examination, municipal searches and survey fees, the Letter of Credit forthwith
shall be returned to Purchaser and neither party shall
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have further liability or obligation to the other under or by virtue of this
Agreement.
(b) Contemporaneously with the execution of this Agreement, and
subsequently promptly upon receipt by Seller or its representatives, Seller
shall deliver to Purchaser: (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 or control; (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 or control,
whether currently or hereafter existing; and (iv) a description of all known
operations, past and present, undertaken at the Property and 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 Contaminants above or below ground, on, under, at,
emanating from or affecting the Property or its environs.
(c) Seller shall notify Purchaser in advance of all meetings
scheduled between Seller or its representatives and NJDEP, and Purchaser and/or
its representatives shall have the right, without obligation, to attend and
participate in all such meetings.
(d) Seller shall indemnify, defend and hold harmless Purchaser from
and against any and all claims, liabilities, losses, deficiencies, damages,
interest, penalties and costs, foreseen or unforeseen including, without
limitation, reasonable counsel, engineering and other professional or expert
fees, which Purchaser may incur, by reason of or resulting directly or
indirectly, wholly or partly, from any breach, inaccuracy, incompleteness or
nonfulfillment of any representation, warranty, covenant or agreement herein by
Seller, or by reason of Seller's actions or non-action with regard to any of
Seller's obligations pursuant to this Paragraph 14.
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(e) 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 New Jersey
Environmental Rights Act, N.J.S.A. 2A:35A-1 ET SEQ.; the New Jersey Spill
Compensation and Control Act, N.J.S.A. 58:10-23.11 ET SEQ. (the "Spill Act");
the New Jersey Air Pollution Control Act, N.J.S.A. 26:2C-1 ET SEQ.; the
Hazardous Substances Discharge: Reports and Notices Act, N.J.S.A. 13:1K-15 ET
SEQ.; the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 ET SEQ. ("ISRA"); the
"Tanks Laws" as hereinafter defined in Paragraph 14.(e)(x) hereof; the Resource
Conservation and Recovery Act, AS AMENDED, 42 U.S.C. Section 6901 ET SEQ.
("RCRA"); the Comprehensive Environmental Response, Compensation and Liability
Act, AS AMENDED, 42 U.S.C. Section 9601 ET SEQ. ("CERCLA"); the Water Pollution
and Control Act, 33 U.S.C. Section 1251 ET SEQ.; together with any amendments
thereto, regulations promulgated thereunder and all substitutions thereof, as
well as words of similar purport or meaning referred to in any other applicable
federal, state, county or municipal environmental statute, ordinance, 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 or onto the Property,
regardless of whether the result of an intentional or unintentional action or
omission.
(iii) "Element" shall mean the Industrial Site Evaluation Element
or its successor of the NJDEP.
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(iv) "Environmental Documents" shall mean all environmental
documentation in the possession or under the control of Seller concerning the
Property, or its environs, including without limitation, all sampling plans,
cleanup plans, preliminary assessment plans and reports, site investigation
plans and reports, remedial investigation plans and reports, remedial action
plans and reports, or the equivalent, 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.
(v) "Environmental Laws" shall mean 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.
(vi) "Governmental Authority" shall mean the federal, state,
county or municipal government, or any department, agency, bureau, board,
commission, office or other body obtaining authority therefrom, or created
pursuant to any law.
(vii) "Major Facility" is as defined in the Spill Act.
(viii)"NJDEP" shall mean the New Jersey Department of
Environmental Protection or its successor.
(ix) "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.
(x) "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 RCRA, together with any amendments
thereto,
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regulations promulgated thereunder, and all substitutions thereof, and any
successor legislation and regulations.
(xi) "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 in the Tank Laws.
(f) Seller covenants and agrees that between the date hereof and the
Closing Date it shall perform or observe the following:
(i) 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 Contaminants;
(ii) At its own cost and expense, be responsible for the
remediation of all Contaminants existing on, under, at emanating from or
affecting the Property as of the date of Closing, in violation of Environmental
Laws, regardless of the date of discovery, notwithstanding anything to the
contrary set forth herein. In no event shall Seller's remediation involve any
engineering or institutional controls, including, without limitation, capping, a
deed notice, a declaration of environmental restrictions or other institutional
control notice pursuant to P.L. 1993, c. 139, or a groundwater classification
exception area or well restriction area. Any such remediation and associated
activities shall be undertaken pursuant to a right of access agreement
reasonably acceptable to Purchaser;
(iii) Contemporaneously with 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.
15. CONDITIONS TO CLOSING. In addition to other conditions set forth in
this Agreement, Purchaser's obligation to close
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title to the Property is expressly conditioned upon and subject to the
occurrence of all of the following:
(a) Seller shall have completed subdivision of the Land in the
configuration set forth on Schedule "A-1", all requisite governmental approvals
shall have been obtained, and all conditions to subdivision shall have been
satisfied including, without limitation, the filing in the public records of the
subdivision plat;
(b) Substantial Completion (as hereinafter defined) of all work set
forth in the Plans and Specifications, including all tenant improvement work
required under the Lease (including change orders);
(c) Tenant has accepted delivery of possession of the Property
pursuant to the terms and conditions of the Lease;
(d) A final, unconditional Certificate of Occupancy permitting
occupancy of the Property for Tenant's use has been issued by all Governmental
Authorities having jurisdiction;
(e) Tenant has delivered the security deposit and has commenced the
payment of rent required to be paid pursuant to the terms and conditions of the
Lease;
(f) Tenant shall have delivered the Estoppel Certificate;
(g) Written certification of McGarvey Construction Co., Inc. that the
work has been fully completed in accordance with the Plans and Specifications
(or in accordance with the Plans and Specifications as amended after the date
hereof provided any such amendments have been approved in writing by Purchaser),
the provisions hereof and all legal requirements, and that all necessary
certificates and approvals required to be obtained from any Governmental
Authority having jurisdiction over the Property have been obtained;
(h) Receipt of an absolute unconditional waiver of liens from all
contractors and subcontractors for all work performed at the Property; and
(i) All contractors and subcontractors have been paid in full for
performance of work at the Property.
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The term "Substantial Completion" as used herein shall mean that only
so-called "punch list" items of work which shall be limited to such unfinished
minor items which, when considered as a whole, do not materially adversely
affect Tenant's occupancy of the Property, and otherwise are permitted pursuant
to the terms of the Lease. Seller covenants and agrees to fully complete any
punch list items not later than the date which is twenty (20) days after Seller
receives notification thereof or within the time period set forth in the Lease.
16. NOTICES.
(a) Any notice, request, consent, approval or demand ("notice")
which, pursuant to the provisions of this Agreement or otherwise, must or may be
given or made by either party hereto to the other, shall be in writing and shall
be given by such party or its attorney and shall be delivered by personal
delivery, by mailing same via certified mail, return receipt requested, postage
prepaid, in a United States Post Office depository, by delivery to a postal or
private expedited form of delivery service, or telecopied to the intended
recipient at the telecopy number set forth therefor below (with hard copy to
follow), addressed to Purchaser at its address set forth in the heading to this
Agreement, Attention: Roger Thomas, Esq., (fax 908-272-6755), with a copy given
in the aforesaid manner to Cole, Schotz, Meisel, Forman & Leonard, P.A., Court
Plaza North, 25 Main Street, P.O. Box 800, Hackensack, New Jersey 07602-0800,
Attention: Richard W. Abramson, Esq., (fax 201-489-1536), and to Seller to
William Price (fax 609-235-3043) at the address set forth in the heading to this
Agreement with a copy given in the aforesaid manner to Archer & Greiner, One
Centennial Square, Haddonfield, New Jersey 08033, Attention: Gary L. Green,
Esq., (fax 609-795-0574).
(b) Notice shall be deemed delivered on the day of personal delivery,
on the day telecopied, on the first business day following deposit with the
overnight carrier or on the second
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business day following deposit in the Post Office depository, as the case may
be.
(c) Either party may designate a different person or address by
notice to the other party given in accordance herewith.
17. BROKER. Each party represents and warrants to the other party that it
dealt with no broker or other person entitled to claim fees for such services in
connection with the negotiation, execution and delivery of this Agreement, other
than Jackson Cross (hereinafter referred to as the "Broker"). Seller agree to
pay Broker pursuant to a separate agreement with Broker, which agreement shall
provide, INTER ALIA, that Broker shall not have any claim whatsoever for
commissions or other fees against Purchaser whether or not Closing shall occur,
including failure to close due to the default of Purchaser hereunder. Based
upon the aforesaid representations, warranties and covenants, each party agrees
to defend, indemnify and hold the other party harmless from and against any and
all claims for finders' fees or brokerage or other commission which at any time
may be asserted against the indemnified party, including any claim by Broker
against Purchaser, founded upon a claim that the substance of the aforesaid
representations of the indemnifying party is untrue. Such indemnification shall
include, but not be limited to, all commission claims, as well as all costs,
expenditures, legal fees and expert fees reasonably incurred in defending any
claim of any third party. In the event that by settlement or otherwise, any
monies or other consideration is awarded to or turned over to any third party as
a result of a commission claim, it is the intention of the parties hereto that
the indemnifying party shall be solely responsible therefor.
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18. DEFAULT.
(a) If Purchaser shall default in the payment of the Purchase Price
or otherwise shall default in the performance of any of its other obligations
pursuant to this Agreement, Seller, as its sole and exclusive remedy, shall be
entitled to receive, as liquidated damages and not as a penalty, the Letter of
Credit and the right to convert same to cash, it being acknowledged that the
actual damages which may be suffered by Seller in the event of any default by
Purchaser shall be difficult to ascertain, plus the costs and expenses set forth
in subparagraph (c) below. If the Letter of Credit is converted to cash, Seller
shall be entitled to receive any interest earned on such cash.
(b) If Seller shall default in any of its obligations hereunder,
Purchaser shall have the right to (i) terminate this Agreement by notice to
Seller, in which event the Letter of Credit shall be returned to Purchaser, and
obtain from Seller damages suffered by Purchaser plus the costs and expenses set
forth in subparagraph (c) below, or (ii) seek specific performance by Seller of
Seller's obligations hereunder, and if Purchaser is successful, in addition
obtain from Seller the costs and expenses set forth in (c) below together with
damages suffered by Purchaser.
(c) In the event of litigation arising out of this Agreement, the
prevailing party shall be entitled to recover from the losing party, costs and
expenses incurred by the prevailing party, including reasonable legal fees and
disbursements.
19. SURVIVAL. It is agreed that all of the terms, agreements, covenants,
promises, provisions, indemnifications, representations and warranties set forth
herein shall, except as otherwise specifically set forth in this Agreement,
survive Closing and delivery of the Deed.
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20. INDEMNITY.
(a) Seller agrees to indemnify, defend and save harmless Purchaser
and its respective representatives, employees, agents, constituent members,
successors and assigns from and against all claims, actions, demands, suits,
liabilities and damages (i) subject to the limitations set forth in Paragraph
6.(e), resulting from the breach or default of any covenant, provision,
representation or warranty of Seller including all reasonable costs and expenses
incurred by Purchaser in the enforcement of this Paragraph, or (ii) imposed upon
or incurred by Purchaser, or allegedly due by Purchaser, arising out of or
relating to the ownership, operation, leasing, repair or improvement of or
otherwise dealing with, the Property, or by reason of any event or occurrence
on, or relating to, the Property which occurred, accrued or related to an event
occurring at any time prior to the Closing Date.
(b) Purchaser agrees to indemnify, defend and save harmless Seller
and its representatives, employees, agents, constituent members, successors and
assigns from and against all claims, actions, demands, suits, liabilities and
damages (i) subject to the limitations set forth in Paragraphs 6.(e) and 18,
resulting from the breach or default of any covenant, provision, representation
or warranty of Purchaser or (ii) imposed upon or incurred by Seller, or
allegedly due by Seller, arising out of or relating to the ownership, operation,
leasing, repair or improvement of or otherwise dealing with, the Property, or by
reason of any event or occurrence on, or relating to, the Property which
occurred, accrued or related to an event occurring at any time after the Closing
Date.
21. ASSIGNMENT. This Agreement may not be assigned by Purchaser, without
the consent of Seller (which consent shall not be unreasonably withheld, delayed
or conditioned), except that no such consent shall be required with respect to
an assignment to any affiliate of Purchaser. Upon such assignment, Purchaser
named herein shall be relieved of any further liability for any
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of the terms, promises and conditions of this Agreement on its part to be
performed hereunder.
22. CROSS DEFAULT. Simultaneously with the execution and delivery of this
Agreement, Purchaser has entered into a certain Agreement of Sale with Seller
and certain affiliates of Seller (the "Agreement of Sale") relating to certain
property more particularly described on Schedule "T"; and a certain agreement
with an affiliate of Seller (the "Development Agreement") relating to certain
property located in Moorestown, New Jersey as more particularly described in the
Development Agreement. This Agreement and the obligations of the parties
hereunder are subject to performance by the respective parties to the
Development Agreement and/or the Agreement of Sale of their respective
obligations which are required to be performed prior to the Closing Date in
accordance with the terms thereof. If Seller or its related entities default in
their obligations under the Agreement of Sale and/or the Development Agreement,
Purchaser shall have the right to proceed with the purchase of the Property, to
declare a default hereunder, and/or to terminate this Agreement. If Purchaser
shall default in its obligations under the Development Agreement and/or the
Agreement of Sale, Seller shall have the right to declare a default hereunder.
23. ESCROW AGENT.
(a) The Letter of Credit shall be held in escrow by Escrow Agent and
released on the terms hereinafter set forth.
(b) If Escrow Agent receives notice from Purchaser or Purchaser's
attorney that Purchaser has terminated this Agreement pursuant to Paragraph 5 or
13 hereof, Escrow Agent shall immediately return the Letter of Credit to
Purchaser without application of Paragraph 23(f), (h) and (i);
(c) At the Closing, Escrow Agent shall deliver the Letter of Credit
to Purchaser.
(d) Any notice(s) to and from Escrow Agent shall be given in
accordance with Paragraph 16 hereof.
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(e) If Escrow Agent receives a notice signed by Seller or Seller's
attorney stating that Purchaser has defaulted in the performance of its
obligations pursuant to this Agreement, Escrow Agent shall deliver a copy of
such notice to Purchaser. If Escrow Agent shall not have received notice of
objection from Purchaser within ten (10) days after Escrow Agent has delivered
such notice, Escrow Agent shall deliver the Letter of Credit to Seller. If
Escrow Agent shall receive a timely notice of objection from Purchaser as
aforesaid, Escrow Agent promptly shall forward a copy thereof to Seller.
(f) If Escrow Agent receives a notice signed by Purchaser or
Purchaser's attorney stating that this Agreement has been canceled or terminated
and that Purchaser is entitled to the Letter of Credit, or that Seller has
defaulted in the performance of its obligations pursuant to this Agreement,
Escrow Agent shall deliver a copy of such notice to Seller. If Escrow Agent
shall not have received notice of objection from Seller within ten (10) days
after Escrow Agent has delivered such notice, Escrow Agent shall deliver the
Letter of Credit to Purchaser. If Escrow Agent shall receive a timely notice of
objection from Seller as aforesaid, Escrow Agent promptly shall forward a copy
thereof to Purchaser.
(g) If Escrow Agent receives notice from either party authorizing
delivery of the Letter of Credit to the other party, Escrow Agent shall deliver
the Letter of Credit in accordance with such instructions.
(h) If Escrow Agent receives a notice of objection as aforesaid,
Escrow Agent shall convert the Letter of Credit to cash and hold such proceeds
in an interest bearing FDIC insured bank in New Jersey until Escrow Agent
receives either: (i) a notice signed by both Seller and Purchaser stating who is
entitled to the Letter of Credit; or (ii) a final order of a court of competent
jurisdiction directing disbursement in a specific manner, in either of which
events Escrow Agent shall deliver the Letter of Credit in accordance herewith or
in accordance with such notice or order. Escrow Agent shall not be
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or become liable in any way or to any person for its refusal to comply with any
requests or demands until and unless it has received a direction of the nature
described in (i) or (ii) above.
(i) Notwithstanding the foregoing provisions of Subparagraph (g)
above, if Escrow Agent shall have received a notice of objection as aforesaid,
or shall have received at any time before actual delivery of the Letter of
Credit, a notice signed by either Seller or Purchaser advising that litigation
between Seller and Purchaser over entitlement to the Letter of Credit has been
commenced, Escrow Agent shall have the right, upon notice to both Seller and
Purchaser to deposit the Letter of Credit with the Clerk of the Court in which
any litigation is pending, whereupon Escrow Agent shall be released of and from
all liability hereunder except for any previous gross negligence or willful
default.
(j) Escrow Agent shall not be liable for any error or judgment or for
any act done or omitted by it in good faith, or for any mistake of fact or law,
and is released and exculpated from all liability hereunder except for willful
misconduct or gross negligence.
(k) Escrow Agent's obligations hereunder shall be as a depositary
only, and Escrow Agent shall not be responsible or liable in any manner whatever
for the sufficiency, correctness, genuineness or validity of any notice,
instructions or other instrument furnished to it or deposited with it, or for
the form of execution of any thereof, or for the identity or authority of any
person depositing or furnishing same.
(l) Escrow Agent shall not have any duties or responsibilities except
those set forth in this Agreement and shall not incur any liability in acting
upon any signature, notice, request, waiver, consent, receipt or other paper or
document believed by it to be genuine, and Escrow Agent may assume that any
person purporting to give any notice or advice on behalf of any party in
accordance with the provisions hereof has been duly authorized to do so.
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(m) Escrow Agent shall be entitled to consult with counsel in
connection with its duties hereunder, including attorneys at its firm. The
parties shall reimburse Escrow Agent, jointly and severally, for all costs and
expenses incurred by Escrow Agent in performing its duties as Escrow Agent
including, but not limited to, reasonable attorneys' fees (either paid to
retained attorneys or amounts representing the fair value of services rendered
to itself).
(n) The terms and provisions of this Paragraph shall create no right
in any person, firm or corporation other than the parties hereto and their
respective successors or assigns, and no third party shall have the right to
enforce or benefit from the terms hereof.
(o) In the event of any dispute, disagreement or suit between Seller
and Purchaser, whether pertaining to the Letter of Credit, this Agreement or
otherwise, Escrow Agent shall have the right to represent or otherwise serve as
attorneys for Seller.
(p) Escrow Agent is designated the "real estate reporting person" for
purposes of Section 6045 of Title 26 of the United States Code and Treasury
Regulation 1.6045-4 and any instructions or settlement statement prepared by
Escrow Agent shall so provide. Upon the consummation of the transaction
contemplated by this Agreement, Escrow Agent shall file Form 1099 information
return and send the statement to Seller as required under the aforementioned
statute and regulation.
(q) The applicable provisions of this Paragraph shall survive the
Closing or termination of this Agreement.
24. MISCELLANEOUS.
(a) This Agreement shall inure to the benefit of and shall be binding
upon the parties and their respective heirs, successors, legal representatives
and assigns.
(b) This Agreement may be executed in one or more counterparts, each
of which when so executed and delivered by each party to the other shall be
deemed an original, but all of
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which when taken together shall constitute but one and the same instrument.
(c) At any time or from time to time, upon written request of the
other party, each party shall execute and deliver all such further documents and
do all such other acts and things as reasonably may be required to confirm or
consummate the within transaction.
(d) The captions preceding the paragraphs of this Agreement are
intended only as a matter of convenience and for reference and in no way define,
limit or describe the scope of this Agreement or the intent of any provision
hereof.
(e) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof. No variations or
modifications of or amendments to the terms of this Agreement shall be binding
unless in writing and signed by the parties hereto. The respective attorneys
for each party are authorized to modify any dates or time periods set forth
herein.
(f) The terms, conditions, covenants and provisions of this Agreement
shall be deemed to be severable except with respect to any provision relating to
the Purchase Price. If any clause or provision herein contained shall be
adjudged to be invalid or unenforceable by a court of competent jurisdiction or
by operation of any applicable law, the same shall be deemed to be severable and
shall not affect the validity of any other clause or provision herein, but such
other clauses or provisions shall remain in full force and effect.
(g) The obligations of each party to complete the transaction
contemplated hereby is subject to the satisfaction, as of Closing, of all of the
terms, conditions and obligations to be met and/or performed by the other party
or which otherwise are for the benefit of such party, any of which conditions
and/or obligations may be waived in whole or in part by the party which is the
beneficiary of such condition or obligation.
(h) Each party, at its sole cost and expense, shall have the right to
record a short form memorandum of this
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Agreement, which memorandum shall not set forth the Purchase Price or terms of
payment, and each party agrees to execute any such short form memorandum upon
the request of the other party.
(i) As used in this Agreement, the masculine gender shall include the
feminine or neuter genders and the neuter gender shall include the masculine or
feminine genders, the singular shall include the plural and the plural shall
include the singular, wherever appropriate to the context.
(j) This Agreement shall be governed by and enforced in accordance
with the substantive laws of the State of New Jersey.
25. GUARANTY.
(a) William G. Price, Jr. and John S. McGarvey (collectively,
"Guarantors") hereby, jointly and severally, guarantee to Purchaser, its
successors and assigns, the full, due and timely completion of construction of
all Improvements in the manner required by the Plans and Specifications and in
accordance with the provisions of this Agreement, including any modifications or
amendments hereto, without any further writing, and the costs for enforcing this
Guaranty (collectively, the "Obligations").
(b) This is a guaranty of payment and performance and not of
collection. The obligations of Guarantors hereunder are independent of the
obligations of Seller, and a separate action or actions may be brought and
prosecuted against Guarantors, regardless whether action is brought against
Seller or whether Seller is joined in any such action or actions.
(c) Guarantors agree that the obligations of Guarantors under this
Paragraph 25 are primary, absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Agreement or
any instrument referred to herein, or any substitution, release or exchange of
any other guaranty of or security for the Obligations, and, to the fullest
extent permitted by applicable law, irrespective of any other circumstance
whatsoever
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(including, without limitation, personal defenses of Seller) which might
otherwise constitute a legal or equitable discharge or defense of a surety,
guarantor or co-obligor, it being the intent of this Paragraph 25 that the
obligations of Guarantors hereunder shall be primary, absolute and unconditional
under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more the following
shall not alter or impair the liability of Guarantors hereunder:
(i) at any time or from time to time, without notice to or
consent of Guarantors, the time for any performance of or compliance with the
Obligations shall be extended, or such performance or compliance shall be
waived;
(ii) any modification of or amendment to the Agreement;
(iii) the existence of any claim, set-off or other right
which Guarantors may have at any time against Purchaser, Seller or any other
person or entity, whether in connection herewith or with any unrelated
transaction;
(iv) any of the acts required or contemplated in any of the
provisions of the Agreement or other instruments referred herein shall be done
or omitted;
(v) the maturity of any of the Obligations shall be accelerated
or extended, or any of the Obligations shall be modified, supplemented or
amended in any respect or any right under the Agreement or other instruments
referred to herein shall be waived or extended or any other guaranty of the
Obligations or any security therefor shall be released or exchanged in whole or
in part or otherwise dealt with;
(vi) Purchaser releases or substitutes any one or more of any
Seller, endorses or guarantors of the Obligations;
(vii) any of the Obligations shall be determined to be void
or voidable or shall be subordinated to the claims of any person; or
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(viii) there shall be occur any insolvency, bankruptcy,
reorganization or dissolution of Seller or other guarantor.
With respect to their obligations hereunder, Guarantors hereby expressly
waive diligence, presentment, demand of payment, protest and all notices
whatsoever and any requirement that Purchaser exhaust any right, power or remedy
or proceed against any person under the Agreement or other instruments referred
to herein, or against any collateral or other person under any other guaranty
of, or security for, or obligation relating to, any of the Obligations.
(d) The obligations of Guarantors under this Paragraph 25 shall be
automatically reinstated if and to the extent that for any reason any payment or
performance by or on behalf of any persons in respect of the Obligations is
rescinded or must be otherwise restored by Purchaser or any other holder or
recipient of payment or performance of the Obligations, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise, and Guarantors
agree that they will pay to Purchaser on demand all reasonable out-of-pocket
costs and expenses (including, without limitation, fees of counsel) incurred by
Purchaser in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.
(e) Without limiting the generality of the provisions of this
Paragraph 25, Guarantors hereby specifically waive: (a) promptness, diligence,
notice of acceptance and any other notice with respect to the Obligations; (b)
any requirement that Purchaser protect, secure or insure any lien or any
property subject thereto or exhaust any right or take any action against Seller
or any collateral or undertake any marshalling of assets; (c) the right to
direct the order of enforcement or remedies, (d) any defense arising by reason
of any claim or defense based upon an election of remedies by Purchaser which in
any manner impairs,
48
<PAGE>
reduces, releases or otherwise adversely affects its subrogating, contribution
or reimbursement rights or other rights to proceed against Sellers or any
collateral; (e) any duty on the part of Purchaser to disclose to Guarantors any
matter, fact or thing relating to the business, operation or condition of the
Property or Seller and its assets now known or hereafter known by Purchaser; and
(f) all presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, and notices of acceptance of
the guaranty provided for in this Paragraph 25 and the existence, creation or
incurrence of new or additional indebtedness.
26. ROLLBACK TAXES. Any "rollback taxes" assessed or to be assessed
against the Premises pursuant to the Farmland Assessment Act of 1964, N.J.S.A.
54:4-23.1, ET SEQ., shall be paid by Seller. If rollback taxes will be due with
respect to the Premises but are not assessed at the Closing Date, a good-faith
estimate of the amount of same shall be obtained by the parties from the tax
assessor of the Township of Moorestown, at least twenty-four (24) hours prior to
Closing, and Seller shall pay one hundred twenty-five (125%) percent of the
amount of said estimate from the proceeds at Closing into escrow to be held by
the Title Company until such time as the rollback tax assessment against the
Premises is made. Upon Title Company's receipt of notice from Purchaser that
said rollback taxes have been assessed against the Premises, Title Company
shall, within three (3) business days thereof, pay said taxes to the Township of
Moorestown. In the event the amount of the monies being held in escrow by Title
Company are not sufficient to cover payment of said rollback taxes, then Seller
shall promptly pay to Purchaser any additional monies that are due and payable
by Seller in accordance with the terms and provisions of this Paragraph; and in
the event the amount of the escrow monies are in excess of the amount of said
rollback taxes, then Title Company shall disburse the remaining balance of the
escrow funds to Seller after the amount of the escrow monies due to Purchaser
have been disbursed
49
<PAGE>
to the Township of Moorestown, in accordance with the terms and provisions of
the immediately proceeding sentence. Seller shall indemnify and hold Purchaser
harmless from and against all costs and expenses, including reasonable attorneys
fees, incurred by Purchaser in connection with Seller's failure to perform
Seller's obligations under this Paragraph 26.
27. SELLER'S RIGHT TO EXCHANGE PROPERTY.
(a) (i) Seller shall have the right, exercisable at least five (5)
days prior to Closing, to elect to exchange the Property for other property of
like kind ("Exchange Property") pursuant to Section 1031 of the Internal Revenue
Code of 1986, as amended.
(ii) If Seller elects to effect any exchange, it shall notify
Purchaser as to all details thereof, and Purchaser shall execute a contract to
purchase the Exchange Property in a form satisfactory to Seller (hereinafter
called the "Exchange Contract"), and immediately thereafter shall assign all of
its right, title and interest in and to the Exchange Contract to the Exchange
Escrow Agent, as hereinafter defined. The funds required to pay the deposit
under the Exchange Contract shall be provided to Purchaser by Seller or Exchange
Escrow Agent. The Exchange Contract shall provide for the right of assignment
by Purchaser to Exchange Escrow Agent and/or Seller without recourse, and that
the seller of the Exchange Property shall look only to the deposit monies
thereunder as liquidated damages, there being no liability on the part of
Purchaser to said seller. Purchaser shall not be obligated to execute an
Exchange Contract which would require Purchaser to be personally liable on any
indebtedness or to incur any cost or expense which would increase Purchaser's
liability beyond that liability incurred by Purchaser hereunder.
(iii) In no event, however, shall the closing of title to the
Property be delayed due to the inability of Seller to select an Exchange
Property or close title thereto.
50
<PAGE>
(b) (i) If Seller shall elect to exchange the Property pursuant to
this Paragraph, whether or not an Exchange Property has been designated, as
herein set forth, the Purchase Price, exclusive of the satisfaction of liens,
payment of closing costs and other permitted expenses, shall be deposited with
the Exchange Escrow Agent ("Escrow Account"), subject to the Exchange Escrow
Agent executing an agreement reasonably satisfactory to Purchaser whereby
Exchange Escrow Agent agrees to be bound by the terms and conditions of this
Paragraph 27, and shall not be paid to Seller at Closing. The Escrow Account
shall be held by Exchange Escrow Agent in an interest bearing account, pursuant
to the terms hereof. The interest earned upon the Escrow Account while being
held by Exchange Escrow Agent shall be added to the Escrow Account and shall be
paid to Seller at the closing of the Exchange Property.
(ii) Purchaser appoints its title insurance company or such other
title insurance company or other entity as Purchaser reasonably may designate,
its agent, in order to effectuate the Exchange (the "Exchange Escrow Agent").
Purchaser and Seller shall cooperate with each other and Exchange Escrow Agent
and promptly shall sign and deliver to Exchange Escrow Agent all documents
reasonably deemed necessary by Seller in order to qualify this transaction
pursuant to Internal Revenue Code Section 1031.
(iii) Seller shall pay all fees relating to the Escrow Account,
and all reasonable attorneys' fees and expenses of Purchaser, if any, relating
to the exchange transaction and in no event shall Purchaser be required to
assume any liability thereunder.
(iv) During the period that the Escrow Account is in existence,
Seller shall not have any control, directly or indirectly, over the funds placed
in the Escrow Account, except as may be expressly provided herein.
(v) If, at the time of Closing, Seller shall not have designated
the Exchange Property, then if within forty-five (45) days following Closing,
Seller shall deliver to Purchaser
51
<PAGE>
and to Exchange Escrow Agent a designation of an Exchange Property which Seller
desires to acquire by way of exchange for the Property transferred to Purchaser
at Closing ("Designation"), the parties shall proceed as provided for herein.
If there is no timely Designation, then Exchange Escrow Agent, on the
forty-sixth (46th) day after Closing (or, if such day is a Saturday, Sunday or
legal holiday, on the first business day thereafter) shall disburse to Seller
the Escrow Account and all interest earned thereon shall be paid to Purchaser.
(vi) Any Designation of an Exchange Property shall include an
Exchange Contract, or thereafter Seller shall provide Purchaser with an Exchange
Contract, which Exchange Contract comply with the terms set forth in
Subparagraph 27.(a). The parties acknowledge that there may be multiple
Exchange Properties and that multiple Designations may be delivered, provided
that each meets the conditions set forth herein and the requirements of the
Internal Revenue Code Section 1031 and regulations thereunder.
(vii) Upon receipt by Purchaser of an Exchange Contract, it shall
execute and deliver the Exchange Contract to the seller of the Exchange Property
("Exchange Seller"), Seller and Exchange Escrow Agent. Thereafter, Purchaser
shall assign its interest in the Exchange Contract to Exchange Escrow Agent, it
being agreed that Purchaser shall not take title to any Exchange Property.
(viii) Upon Purchaser executing any Exchange Contract, and in
accordance therewith, Exchange Escrow Agent shall pay from the Escrow Account to
Exchange Seller, or such other party as is provided for in the Exchange
Contract, the amount of the deposit and all other monies required under the
Exchange Contract or otherwise related to the transaction.
(ix) Exchange Escrow Agent shall not be liable to either Seller
or Purchaser in connection with its performance as Exchange Escrow Agent, except
in the event of intentional wrongdoing or negligence. Exchange Escrow Agent is
authorized
52
<PAGE>
only to do those acts necessary and proper to effect the purpose of this
Agreement.
(x) The Exchange Escrow Agent shall use the Escrow Account, for
payment of the deposit and all other payments due under the Exchange Contract to
purchase the Exchange Property, plus closing costs, and for no other purpose.
(xi) If the payment for the Exchange Property shall exceed the
amount of the Escrow Account, Seller either shall: (i) deposit an amount equal
to such excess with Exchange Escrow Agent no later than the day of the Exchange
Property Closing; or (ii) cause or direct that the funds necessary to effectuate
the Exchange Property Closing be paid directly to Exchange Seller at the
Exchange Property Closing.
(xii) At the Exchange Property Closing, the following shall be
deposited or caused to be deposited with Exchange Escrow Agent: (i) a deed for
the Exchange Property from Exchange Seller as grantor to Seller, as grantee; and
(ii) any other documents or agreements necessary or incidental to the
acquisition or conveyance of the Exchange Property.
(xiii) When all documents and funds called for herein have been
deposited with Exchange Escrow Agent and when a title policy can be issued on
the Exchange Property to Seller, subject only to title exceptions approved by
Seller, Exchange Escrow Agent shall record the deed, disburse the funds and
deliver all other documents to Seller. All expenses, reimbursements and
prorations in connection with the Exchange Property shall be governed by the
provisions of the Exchange Contract, except as expressly set forth herein.
(xiv) Purchaser makes no warranty with respect to the Exchange
Property and Seller assumes all responsibility for title to the Exchange
Property being good and marketable. Seller agrees to indemnify Purchaser and
hold Purchaser harmless from any damages, liability, costs, expenses, claims,
losses or demands (including reasonable attorneys' fees and costs of litigation
including those for enforcing this indemnity), arising out of or in any way
related to the acquisition of the Exchange
53
<PAGE>
Property. If the Exchange Property is subject to any mortgage, deed of trust or
lease, Purchaser shall assume no liability or obligation with respect to said
mortgage, deed of trust or lease. Purchaser makes no representations as to the
tax consequences of any aspect of this transaction.
(xv) If the Exchange Property as may be designated by Seller is
not conveyed to Seller within the earlier of: (i) one hundred eighty (180) days
after Closing; or (ii) the due date (determined with regard to extensions) of
Seller's federal income tax return for the taxable year in which the transfer of
the Property occurs or if no Exchange Property is designated within forty-five
(45) days following Closing, then the Escrow Account shall be released to
Seller, free of the escrow, and the obligations of Purchaser and Exchange Escrow
Agent shall end. Notwithstanding failure of the Exchange Property to be
conveyed to Seller as hereinabove set forth, the transfer of the Property to
Purchaser shall not be subject to recession or revocation by Seller or Purchaser
for any reason whatsoever.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
54
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and seals or
caused these presents to be signed and sealed by duly authorized persons the day
and year first above written.
SELLER:
WITNESS: LANCER ASSOCIATES, L.L.C.
______________________________ By:__________________________
Name:________________________
Title:_______________________
PURCHASER:
ATTEST: MACK-CALI REALTY, L.P.
By: MACK-CALI REALTY CORPORATION, its
general partner
______________________________ By:__________________________
Name:________________________
Title:_______________________
AS TO PARAGRAPH 23:
WITNESS or ATTEST: ARCHER & GREINER (Escrow Agent)
______________________________ By:__________________________
AS TO PARAGRAPH 25:
WITNESSES:
______________________________ _____________________________
WILLIAM G. PRICE, JR.
______________________________ _____________________________
JOHN S. MCGARVEY
55
<PAGE>
SCHEDULE "A"
PREMISES
ALL THOSE CERTAIN tracts or parcels of land and premises thereon situate in
the Township of Moorestown, County of Burlington, and State of New Jersey,
bounded and described according to a plan of subdivision titled "FISHER
DEVELOPMENT CO., TECHNI-PARK, MOORESTOWN, N.J.", dated May 14, 1986 and revised
to November 2, 1987, by Paull Engineering of Cherry Hill, New Jersey, as
follows:
BEGINNING at a point in the Southwesterly line of Lancer Road, 66 feet wide,
said point being the Southeasterly end of a curve connecting the Southeasterly
line of Glen Avenue, 66 feet wide, with the Southwesterly line of Lancer Road,
said connecting curve having a radius of 32 feet; thence
(1) South 38 degrees 22 minutes 54 seconds East 294.70 feet continuing along
the Southwesterly line of Lancer Road to a point corner to lots 3 and 4,
Block 200 C, said plan; thence
(2) South 51 degrees 37 minutes 06 seconds West 368.00 feet along the line of
lot 3 to a point in the centerline of a 12 feet wide drainage easement,
corner to lots 3, 4, 5 and 6, said plan; thence
(3) North 38 degrees 22 minutes 54 seconds West 326.70 feet along the line of
Lot 5 and the centerline of the 12 feet wide drainage easement to a point
in the Southeasterly line of Glen Avenue, corner to lots 4 and 5, said
plan; thence
(4) North 51 degrees 37 minutes 06 seconds East 336.00 feet along the
Southeasterly line of Glen Avenue to a point; thence
(5) Southeasterly, curving to the right with a radius of 32 feet, an arc
distance of 50.27 feet along the above mentioned connecting curve to a
point in the Southwesterly line of Lancer Road and the point and place of
beginning.
BEGINNING at a point in the Southwesterly line of Lancer Road, 66 feet wide,
corner to lots 3 and 4 on above mentioned plan, said point being South 38
degrees 22 minutes 54 seconds East 294.70 feet from the Southeasterly end of a
curve connecting the Southeasterly line of Glen Avenue, 66 feet wide, with the
Southwesterly line of Lancer Road, said connecting curve having a radius of 32
feet; thence
(1) South 38 degrees 22 minutes 54 seconds East 326.10 feet continuing along
the Southwesterly line of Lancer Road to a point in a 25 feet wide utility,
sanitary sewer, and drainage easement, corner to lots 2 and 3, Block 200 C,
said plan; thence
(2) South 51 degrees 37 minutes 06 seconds West 368.00 feet along the line of
lot 2, and 15 feet from the Northwesterly line of the above mentioned 25
feet wide easement to a point in the centerline of a 15 feet wide drainage
easement, corner to lots 3 and 6, said plan; thence
(3) North 38 degrees 22 minutes 54 seconds West 326.10 feet along the line of
Lot 6 and the centerline of the 15 feet wide drainage easement to a point,
corner to lots 3, 4, 5 and 6, said plan; thence
(4) North 51 degrees 37 minutes 06 seconds East 368.00 feet along the line of
lot 4, said plan, to a point in the
<PAGE>
Southwesterly line of Lancer Road and the point and place of beginning.
BEING COMMONLY KNOWN AS Lots 2, & 4, Block 300 on the Tax Map of the Township of
Moorestown.
<PAGE>
SCHEDULE "B"
LIST OF PLANS AND SPECIFICATIONS
<PAGE>
SCHEDULE "C"
FORM OF PURCHASER LETTER OF CREDIT
[Letterhead of the Bank]
_______________, 19__
BENEFICIARY:
[Seller Name]
[Seller Address]
Irrevocable Letter of Credit No.
--------------------------------------------
Gentlemen:
We hereby issue our Irrevocable Letter of Credit No. ______________________
("LETTER OF CREDIT") in your favor, for the account of Mack-Cali Realty, L.P.
("Purchaser") in an amount equal to One Hundred Thousand ($100,000.00) Dollars.
Drawings under this Letter of Credit shall be by one or more sight drafts,
in the form of Exhibit 1 hereto, presented at our office, bearing this Letter of
Credit number and accompanied by the original of this Letter of Credit and a
statement by you that "the amount of this drawing represents an application of
the deposit in accordance with the Agreement of Sale, dated ___________________,
between Lancer Associates, L.L.C. as seller, and Purchaser."
Partial drawings under this Letter of Credit are permitted. We will,
immediately after each presentation of this Letter of Credit, return the same to
you, marking this Letter of Credit to show the amount paid by us and the date of
such payment.
WE HEREBY AGREE WITH EACH DRAWER, ENDORSER AND BONA FIDE HOLDER OF ANY
DRAFT DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT THAT
SUCH DRAFT WILL BE DULY HONORED ON DUE PRESENTATION TO US.
THIS LETTER OF CREDIT SHALL EXPIRE AT THE CLOSE OF BUSINESS ON THE DATE
THAT IS ___________________________________ FROM THE DATE OF THIS LETTER OF
CREDIT.
All drafts, documents, instructions and communications pertinent to this
Letter of Credit must be presented to our office located at
______________________________, Attention: Letter of Credit Department, or at
any other office in New Jersey which may be designated by our written notice
delivered to you.
This Letter of Credit is issued subject to the Uniform Customs and Practice
for Documentary Credits (1994 revision), International Chamber of Commerce
Publication No. 500, and any amendments thereof. This Letter of Credit shall be
deemed to be a contract made under the laws of the State of New Jersey and
shall, as to matters not governed by said Uniform Customs and Practice for
Documentary Credits, be governed by and construed in accordance with the laws of
said State.
Yours very truly,
[Name of Issuing Bank]
By:___________________________
Authorized Signature
By:___________________________
Authorized Signature
<PAGE>
SCHEDULE "D"
PERMITTED ENCUMBRANCES
I. 1. Declaration of Restriction for Buffer Area and Storm Water Easement,
recorded with the Burlington County Clerk on October 9, 1996 in book 5244 at
page 281, creating a 40 foot wide planting buffer and 20 foot wide drainage
easement, provided and on the condition that such Declaration and the easements
and restrictions therein do not adversely affect Purchaser's use and enjoyment
of the Property and the improvements erected or to be erected thereon.
2. Easement to Public Service Electric and Gas, recorded with the
Burlington County Clerk on September 19, 1978 in book 2112 at page 327, for gas
line, provided and on the condition that such Easement and the use thereof does
not adversely affect Purchaser's use and enjoyment of the Property and the
improvements erected or to be erected thereon.
3. Easement to the Township of Moorestown, recorded with the Burlington
County Clerk on June 27, 1980 in book 2372 at page 163, for storm sewer lines,
provided and on the condition that such Easement and the use thereof does not
adversely affect Purchaser's use and enjoyment of the Property and the
improvements erected or to be erected thereon.
<PAGE>
SCHEDULE E
SURVEY REQUIREMENTS
(a) Calculated "metes and bounds" boundary data shown on the drawing
with orientation, etc.
(b) Narrative legal description as recorded in local records together
with a "metes and bounds" boundary survey. The survey must show any items to
which reference is made in legal description and/or "metes and bounds"
description.
(c) Location, description (with any recorded data) of all easements,
servitudes, right-of-ways and other encroachments whether recorded or otherwise
evident.
(d) Location and size of all utilities including water, electricity,
gas, telephone, sewer, etc.
(e) Topography and terrain features shown on drawing with B.M. noted
relative to local established datum.
(f) Size, variety and location of plantings.
(g) Adjoining property owners of record.
(h) Set backs, building lines and other local or deed restrictions.
(i) Zoning of parcel.
(j) Location and nature of site improvements including curbs, catch
basins, sidewalks, etc.
(k) Location and orientation of the building on the site.
(l) Note any previously recorded lot lines, servitudes, etc., that
have been replatted or vacated.
Statement of Certification by a registered surveyor as follows:
"To Mack-Cali Realty, L.P., Mack-Cali Realty Corporation, Cole Schotz
Meisel Forman & Leonard, P.A. and First American Title Insurance Company:
The undersigned certifies to the best of his professional knowledge,
information and belief that this map or plat and the survey on which it was
based were made (i) in accordance with "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys", jointly established and adopted by ALTA and ACSM
in 1992; (ii) includes Table A Items No. 2, 3, 6, 7, 8, 9, 10, 11, 13, 14, 15,
16 and 17 as specifically defined therein, and (iii) pursuant to the Accuracy
Standards (as adopted by ALTA and ACSM and in effect on the date of this
Certification) of an Urban Survey."
______________________________
<PAGE>
SCHEDULE "F"
LIST OF TENANTS AND LEASES
<TABLE>
<CAPTION>
- ---------------------- ------------- ------------- ---------------------- -------------- ------------------- -----------------
LEASE LEASE RENEWAL, CURRENT ADDITIONAL DATE LAST
TENANT COMMENCEMENT TERMINATION EXTENSION OR ANNUAL RENT BASE AND
NAME/ADDRESS DATE DATE OTHER RIGHTS BASE RENT ADDITIONAL
OR OPTIONS; RENT WERE
HAVE SAID PAID; PERIOD
RIGHTS OR COVERED
OPTIONS BEEN
EXERCISED
- ---------------------- ------------- ------------- ---------------------- -------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Tad's Delivery Service, 4/1/98 3/31/08 2, 5 year renewals; $365,400.00 None required at None required at
Inc. t/a T&N Van Not to the time of this the time of this
Service, Inc. be exercised until Agreement Agreement
Moorestown, NJ 2008
- ---------------------- ------------- ------------- ---------------------- -------------- ------------------- -----------------
- -------------- -------------------------- ---------------------------- --------------------
SECURITY FUTURE CONCESSION, RIGHT TO PURCHASE IS LANDLORD OR
DEPOSIT; REBATE, ALLOWANCE, OWNERSHIP INTEREST TENANT IN BREACH
INTEREST FREE RENT PERIOD PROPERTY OR DEFAULT?
EARNED OR OTHER CONSIDERATIONS
- -------------- -------------------------- ---------------------------- --------------------
$58,666.66 None Tenant has 3 options No
to purchase the premises:
1st option 4/1/98-3/31/03;
2nd option 7/1/98-10/31/98;
3rd option 11/1/07-2/28-08
- -------------- -------------------------- ---------------------------- --------------------
</TABLE>
<PAGE>
SCHEDULE "G"
ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY DEPOSITS
THIS ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY DEPOSITS made and
executed this ___ day of ___________, 19___ by and between LANCER ASSOCIATES,
L.L.C., a New Jersey limited liability company, having an office at 840 N.
Lenola Road, Moorestown, New Jersey 08057 ("Assignor") and MACK-CALI REALTY,
LP., a New Jersey limited partnership, having an address at 11 Commerce Drive,
Cranford, New Jersey 07016 ("Assignee").
WHEREAS, Assignor is the owner of certain land located in the Township of
Moorestown, County of Burlington, State of New Jersey and more particularly
described on EXHIBIT A annexed hereto and made a part hereof, and the
improvements thereon (the land and improvements hereinafter collectively
referred to as the "Premises");
WHEREAS, Assignor has agreed to sell and convey to Assignee and Assignee
has agreed to purchase the Premises;
WHEREAS, the Premises is subject to certain tenant leases ("Leases") and
Landlord has possession of certain security deposits ("Security Deposits") more
fully described on EXHIBIT B attached hereto and made a part hereof; and
WHEREAS, in connection with the sale and purchase of the Premises, Assignor
has agreed to assign to Assignee the Leases and the Security Deposits and
Assignee has agreed to assume from Assignor the obligations under said Leases.
NOW, THEREFORE, in consideration of One ($1.00) Dollar and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Assignor does by these presence assign to Assignee all of Assignor's right,
title and interest in and to the Leases and Security Deposits.
<PAGE>
Assignee does by these presence assume and agrees to perform and discharge
all of the obligations of Assignor under and pursuant to said Leases from this
date forward.
Assignee hereby indemnifies and agrees to hold Assignor harmless from and
against any and all claims arising out of or related to the Leases or Security
Deposits accruing from and after this date, including reasonable attorneys' fees
and costs in the defense of such claims.
Assignor hereby indemnifies and agrees to hold Assignee harmless from and
against all claims arising out of or related to the Leases and Security Deposits
accruing prior to the date hereof, including reasonable attorneys' fees and
costs in the defense of such claims.
This Assignment and Assumption is binding on the parties
hereto and their respective heirs, administrators, executors and
and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have each caused these presence
to be signed by its proper corporate officer as of the date first above written.
ATTEST: LANCER ASSOCIATES, L.L.C.
Assignor
__________________________ By:______________________________
Name: ___________________________
Title: __________________________
ATTEST: MACK-CALI REALTY, L.P.
By: Mack-Cali Realty Corporation
Assignee
__________________________ By:______________________________
Name: ___________________________
Title:___________________________
STATE OF NEW JERSEY
COUNTY OF
)
)
)
SS.:
I CERTIFY that on _______________________________ , 19__,
__________________________ personally came before me and this person
acknowledged under oath, to my satisfaction, that:
(a) this person signed, sealed, and delivered the attached document as the
_______________________________;
(b) the proper corporate seal was affixed; and
<PAGE>
(c) this document was signed and made by the corporation as its voluntary
act and deed by virtue of authority from its Board of Directors.
______________________________
<PAGE>
STATE OF NEW JERSEY
COUNTY OF
)
)
)
SS.:
I CERTIFY that on _____________________________, 19___,
_____________________________ personally came before me and this person
acknowledged under oath, to my satisfaction, that:
(a) this person signed, sealed, and delivered the attached document as the
_________________________;
(b) the proper corporate seal was affixed; and
(c) this document was signed and made by the corporation as its voluntary
act and deed by virtue of authority from its Board of Directors.
______________________________
STATE OF NEW JERSEY
COUNTY OF
)
)
)
SS.:
I CERTIFY that on ___________________________ , 19___,
____________________________________ personally came before me and acknowledged
under oath, to my satisfaction, that this person (or if more than one, each
person):
(a) is named in and personally signed the attached document; and
(b) signed, sealed and delivered this document as his or her act and deed.
_____________________________
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B
LEASES AND SECURITY DEPOSITS
<PAGE>
SCHEDULE "H"
TENANT NOTICE
Lancer Associates, L.L.C.
c/o McGarvey Development Co., Inc.
840 North Lenola Road
Moorestown, New Jersey 08057
[Date]
[Tenant Name]
[Tenant Address]
Re: [Property Address]
Dear Tenant:
Please be notified that Lancer Associates, L.L.C. has sold its interest in
the Property to Mack-Cali Realty, L.P. You are requested to forward all future
rent payments, additional charges, and all notices required to be given under
the Lease, to the new Landlord at the following address:
______________________________________
______________________________________
______________________________________
______________________________________
Your security deposit of $____________________________ has also been
transferred.
Sincerely,
LANCER ASSOCIATES, L.L.C.
By:___________________________
Name:_________________________
<PAGE>
SCHEDULE "I"
ESTOPPEL CERTIFICATE
Mack-Cali Realty, L.P.
11 Commerce Drive
Cranford, New Jersey 07016
RE: __________________________________
__________________________________ (the "Property")
The undersigned, as Tenant under that certain lease dated ________________
(the "Lease"), made with LANCER ASSOCIATES, L.L.C., as Landlord, does hereby
warrant and represent to Mack-Cali Realty, L.P. and its assigns and successors
(the "Purchaser") and to any lender or mortgagee of Purchaser with respect to
Purchaser's acquisition and financing 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:
Unit(s) __________ consisting of _______________
square feet;
2. That the Lease has not been modified, changed, altered or amended in
any respect, except as set forth below. 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;
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, that Tenant has accepted possession of the Demised Premises
and that Tenant now occupies the same, and is open for business. All
improvements, alterations or additions to be constructed on the Demised Premises
by Landlord pursuant to the Lease have been completed and accepted by Tenant and
any other item of an executory nature has been completed under the terms of the
Lease. All contributions required from Landlord for improvements to the Demised
Premises, if any, have been paid in full to Tenant;
5. That the original Lease term began on ________________, 19__ and will
expire on ________________________, 19__;
6. That Tenant pays rent on a current basis and rent has been paid
through _________________________________; that no rent has been paid by Tenant
for more than one month in advance; that the annual fixed rent payable to
Landlord is $_______________; that as of the date hereof, additional rent of
$_________________ is payable to Landlord on account of utility costs, real
estate taxes and operating expenses; that the base amount for such additional
rent is $_____________________________; that there is no claim or basis for an
adjustment thereto; and that the amounts of fixed and additional rent are being
paid on a current basis;
<PAGE>
7. 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 the Landlord under
the Lease which has not been cured. There are no defaults by Landlord under the
Lease as of the date hereof. As of the date hereof, the undersigned is entitled
to no credit, no free rent, and no offset, counterclaim or deduction in rent;
8. That the Lease is not in default and is now in full force and effect
and has not been assigned nor any portion of the Demised Premises sublet except
as set forth in Paragraph 2 above, and the Lease is the only agreement between
Landlord and the undersigned regarding the Demised Premises;
9. 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;
10. 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 __________________________;
11. That Tenant has no (i) option to expand into additional space in the
Property, (ii) right of first refusal or first offer 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;
12. Except as set forth on Exhibit B, Tenant does not use, store,
manufacture, generate, handle or dispose of at the Property, any chemical,
element or compound which is identified or classified as a regulated substance,
toxic substance, hazardous substance, hazardous waste, pollution, pollutant,
toxic pollutant, contaminant, solid waste or special waste ("Hazardous
Materials") under any law, ordinance, rule, regulation, order, directive or
requirement of any governmental authority ("Laws"), other than small quantities
of household cleaning and office supplies. To the extend Hazardous Materials
are set forth on Exhibit B, each of such Hazardous Materials is used, stored,
manufactured, generated, handled and disposed of in accordance with Law; and
13. Tenant's Standard Industrial Classification ("SIC") Number is
____________________.
14. That no actions, whether voluntary or otherwise, are pending against
the undersigned under the bankruptcy laws of the United States or any State
thereof.
Dated _______________, 199__
TENANT:
_____________________________
By:________________________
Name:______________________
Title:_____________________
<PAGE>
EXHIBIT A
LEASE
<PAGE>
EXHIBIT B
DESCRIPTION OF HAZARDOUS MATERIAL
<PAGE>
SCHEDULE "J"
BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
- ------------- -------------- ------------------- -------------- -------------- ------------------ -----------------
BROKER NAME TENANT NAME DESCRIPTION OF AGREEMENT COMMISSION PAYMENT DATE(S) EXP. OF COMM.
PREMISES OBLIGATIONS
- ------------- -------------- ------------------- -------------- -------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
GMH Realty T & N Unit 1 6% of rental As collected none
Lancer and Glenn
Moorestown, NJ
- ------------- -------------- ------------------- -------------- -------------- ------------------ -----------------
</TABLE>
<PAGE>
SCHEDULE "K"
INTENTIONALLY DELETED
<PAGE>
SCHEDULE "L"
LIST OF GUARANTEES
None
<PAGE>
SCHEDULE "M"
LIST OF CONTRACTS
None
<PAGE>
SCHEDULE "N"
LIST OF ACTIONS
None
<PAGE>
SCHEDULE "O"
LIST OF INSURANCE
The insurance set forth in Section 4(e) of this Agreement.
<PAGE>
SCHEDULE "P"
SELLER'S ENVIRONMENTAL REPORTS
BLOCK 300, LOTS 1-4, FLEX BUILDINGS XXV AND XXVI, MOORESTOWN, NJ:
- ------------- ------------------------------------------------------------------
Date Description
- ------------- ------------------------------------------------------------------
9/08/97 Soil and Foundation Engineering Report prepared by Underwood
Engineering Company for McGarvey Development
- ------------- ------------------------------------------------------------------
<PAGE>
SCHEDULE "Q"
ENVIRONMENTAL MATTERS
None
<PAGE>
SCHEDULE "R"
FORM OF GUARANTY
IN CONSIDERATION of Ten ($10.00) Dollars and other good and valuable
consideration to the undersigned, WILLIAM G. PRICE, JR. AND JOHN S. MCGARVEY,
jointly and severally (collectively, "Guarantor"), in hand paid, receipt whereof
is hereby acknowledged, and in further consideration for and as an inducement to
MACK-CALI REALTY, L.P., a New Jersey limited partnership ("Purchaser"), to enter
into that certain Agreement of Sale ("Agreement") with LANCER ASSOCIATES,
L.L.C., as Seller ("Seller") for certain real property located in Moorestown,
New Jersey (the "Property") as more particularly described in the Agreement,
Guarantor acknowledges that it is a related person to Seller and that the sale
of the Property as contemplated in the Agreement is of material value and
benefit to Guarantor; therefore, Guarantor does hereby unconditionally,
absolutely and irrevocably guarantee to Purchaser, its successors and assigns,
the full, timely, and faithful payment and performance of all Obligations (as
defined in the Agreement) of Seller, and any damages payable to Purchaser
arising from Seller's failure to timely perform Seller's Obligations. This
Guarantee shall not require any diligence, presentment, notice of
non-performance or non-observance, or proof, or notice, or demand, whereby to
charge Guarantor, all of which Guarantor hereby expressly waives. Guarantor
expressly agrees that the validity of this Guarantee and the obligations of
Guarantor hereunder shall not be terminated, affected or impaired by reason of
the assertion by Purchaser against Seller of any of the rights or remedies
reserved to Purchaser pursuant to the provisions of the Agreement.
With respect to the payment by Seller of any sums of money to Purchaser,
including, without limitation, any damages payable to Purchaser arising from
Seller's failure to timely perform Seller's Obligations, this Guarantee is a
guarantee of payment and not of collection. With respect to non-monetary
obligations of Seller, this Guarantee is a guarantee of performance of all of
the Obligations of Seller under the Agreement. Guarantor hereby waives
exhausting of recourse against Seller or any collateral and agrees that any
action brought for the enforcement of rights under the Agreement or under this
Guarantee may, in Purchaser's discretion, be brought against Guarantor and/or
Seller jointly or severally. Guarantor hereby agrees that the failure of
Purchaser to require strict performance of any of the terms of the Agreement, or
any extension of time, concession, indulgence, or waiver of performance granted
by Purchaser shall not release Guarantor from liability under this Guarantee.
Guarantor hereby expressly agrees that no act or omission of any nature
whatsoever by Seller or Purchaser shall release Guarantor from its obligations
under this Guarantee and that the obligations of Guarantor hereunder shall be
primary, direct and unconditional irrespective of any circumstances which might
otherwise constitute a legal or equitable discharge of a guarantor or surety,
including, without limitation, (i) any extensions, removal, settlement,
compromise, waiver, or release in respect of any obligation of Seller under the
Agreement, by operation of law or otherwise, (ii) the existence of any claim,
set-off or other right which Guarantor may have at any time against Purchaser,
Seller or any other person or entity, whether in connection herewith or with any
unrelated transaction, (iii) the genuineness, validity, regularity, or
enforceability of the Agreement or any other instrument between Seller and
Purchaser, (iv) any substitution, release or exchange of any other guarantee of
or security for the Obligations, (v) the release or substitution of any one or
more of any Seller, endorser or Guarantor or any person or entity comprising any
one of them, or (vi) any Obligation shall be determined to be void or voidable.
Without limiting the generality of the provisions of this
<PAGE>
Guarantee, Guarantor hereby specifically waives: (a) any requirement that
Purchaser protect, secure or insure any lien or any property subject thereto or
exhaust any right or take any action against Seller or any collateral or
undertake any marshalling of assets; (b) the right to direct the order of
enforcement or remedies, (c) any defense arising by reason of any claim or
defense based upon an election of remedies by Purchaser which in any manner
impairs, reduces, releases or otherwise adversely affects its subrogating,
contribution or reimbursement rights or other rights to proceed against Seller
or any collateral; (d) any duty on the part of Purchaser to disclose to
Guarantor any matter, fact or thing relating to the business, operation or
condition of the Properties (as defined in the Agreement) or Seller and its
assets now known or hereafter known by Purchaser. The obligations of Guarantor
hereunder shall survive the termination or expiration of the Agreement.
Guarantor hereby agrees that any subsequent change, modification,
amendment, extension or renewal of either of the Agreement or any of its
respective terms, covenants or conditions, may be agreed or consented to by
Purchaser or any successors in interest, without notice to or consent of
Guarantor and without in any manner releasing or relieving Guarantor from its
present or future liability under the Agreement or this Guarantee. Guarantor
agrees that notwithstanding any change, modification, amendment, extension or
renewal of the Agreement, the obligations hereunder of Guarantor shall extend
and apply with respect to the full, timely, and faithful performance and
observance of all the covenants, terms and conditions of the Agreement as
modified.
Neither Guarantor's obligation to make payment in accordance with the terms
of this Guarantee nor any remedy for the enforcement thereof shall be impaired,
modified, released or limited in any way by any impairment, modification,
release, or limitation of the liability of Guarantor or Seller or their
respective estate in bankruptcy, resulting from the obligation of any present or
future provision of the Bankruptcy Code of the United State as amended from time
to time or from the decision of any court interpreting the same, or by any
insolvency, reorganization, or dissolution. The obligations of Guarantor under
this Guarantee shall be automatically reinstated if and to the extent that for
any reason any payment or performance by or on behalf of any persons in respect
of the Obligations is rescinded or must be otherwise restored by Purchaser or
any other holder or recipient of payment or performance of the Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and Guarantor agrees that it will pay to Purchaser on demand all
reasonable out-of-pocket costs and expenses (including, without limitation, fees
of counsel) incurred by Purchaser in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
For so long as the Guarantee is in effect, Guarantor waives any rights that
Guarantor may have against Seller by reason of any one or more payments or acts
in compliance with the obligations of Guarantor under this Guarantee, and
subordinates any liability or indebtedness of Seller held by Guarantor to the
obligations of Seller to Purchaser under the Agreement.
This Guarantee shall be in effect until Seller has fully and faithfully
performed the Obligations of Seller in accordance with the terms of the
Agreement. This Guarantee shall be binding upon the undersigned and its
successors and assigns. Guarantor represents and warrants that this Guarantee
has been duly executed and delivered, and constitutes Guarantor's valid and
legally binding agreement in accordance with its terms.
<PAGE>
This Guarantee shall be governed by, interpreted under the laws of, and
enforced in the courts of the State of New Jersey. Guarantor irrevocably
appoints Seller as its agent for the service of process related to this
Guarantee.
Guarantor hereby waives the right to a jury trial in any action or
proceeding that may hereafter be instituted by Purchaser against Guarantor with
respect to this Guarantee. Guarantor shall pay to Purchaser, all of Purchaser's
expenses, including but not limited to, reasonable attorneys' fees and costs
incurred in successfully enforcing the provisions of this Guarantee.
IN WITNESS WHEREOF, the undersigned has caused these presents to be duly
executed and sealed this ____ day of _______________, 1998.
WITNESS
______________________ __________________________
William G. Price, Jr.
_______________________ _________________________
John S. McGarvey
<PAGE>
SCHEDULE "S"
PCB TRANSFORMERS
None
<PAGE>
SCHEDULE "T"
ADJACENT PROPERTIES
ADDRESS OF PROPERTY TAX BLOCK/LOT
1. 2 Commerce Drive B.502/L.18
Moorestown, NJ
2. 101 Commerce Drive B.501/L.3
Moorestown, NJ
3.(a)102 Commerce Drive B.501/L.16
Moorestown, NJ
(b)202 Commerce Drive B.502/L.17
Moorestown, NJ
4. 201 Commerce Drive B.502/L.10
Moorestown, NJ
5. 1 Executive Drive B.500/L.1
Moorestown, NJ
6. 2 Executive Drive B.501/L.5
Moorestown, NJ
7. 101 Executive Drive B.500/L.2
Moorestown, NJ
8. 102 Executive Drive B.501/L.1
Moorestown, NJ
9. 225 Executive Drive B.502/L.3 & 4
Moorestown, NJ
10. 97 Foster Road B.200/L.4
Moorestown, NJ
11. 1507 Lancer Drive B.301/L.8
Moorestown, NJ
12. 1256 North Church St. B.302/L.2 & 3
Moorestown, NJ
13. 840 North Lenola Road B.400/L.8
Moorestown, NJ
14. 844 North Lenola Road B.400/L.8
Moorestown, NJ
15. 30 Twosome Drive B.3504/L.6
Moorestown, NJ
16. 40 Twosome Drive B.3504/L.5
Moorestown, NJ
17. 50 Twosome Drive B.3504/L.4
Moorestown, NJ
18. 3 Terri Lane B.120.03/L.2
Burlington, NJ
19. 5 Terri Lane B.120.03/L.1
Burlington, NJ
20. 1413 Metropolitan Ave B.346.05/L.5
West Deptford
(Thorofare)
(Gloucester County)
<PAGE>
TABLE OF CONTENTS
PAGE
1. AGREEMENT TO SELL AND PURCHASE. . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. CONSTRUCTION OF IMPROVEMENTS. . . . . . . . . . . . . . . . . . . . . . 3
5. TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . . 8
7. LEASES AND TENANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . 20
8. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9. CLOSING ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10. RISK OF LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11. CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
12. APPROVALS FOR TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . . 27
13. DUE DILIGENCE PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . 28
14. ENVIRONMENTAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 30
15. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 34
16. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
17. BROKER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
18. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
19. SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
20. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
21. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
22. CROSS DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
23. ESCROW AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
24. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
25. GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
26. ROLLBACK TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
27. SELLER'S RIGHT TO EXCHANGE PROPERTY . . . . . . . . . . . . . . . . . . 48
SCHEDULE "A" - PREMISES
SCHEDULE "A-1"- DEPICTION OF PREMISES
SCHEDULE "B" - LIST OF PLANS AND SPECIFICATIONS
SCHEDULE "C" - FORM OF LETTER OF CREDIT
SCHEDULE "D" - PERMITTED ENCUMBRANCES
SCHEDULE "E" - SURVEY REQUIREMENTS
SCHEDULE "F" - LIST OF TENANTS AND LEASES
SCHEDULE "G" - ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY DEPOSITS
SCHEDULE "H" - TENANT NOTICE
SCHEDULE "I" - ESTOPPEL CERTIFICATE
SCHEDULE "J" - BROKERAGE COMMISSIONS
SCHEDULE "K" - INTENTIONALLY DELETED
SCHEDULE "L" - LIST OF GUARANTEES
SCHEDULE "M" - LIST OF CONTRACTS
SCHEDULE "N" - LIST OF ACTIONS
SCHEDULE "O" - LIST OF INSURANCE
SCHEDULE "P" - SELLER'S ENVIRONMENTAL REPORTS
SCHEDULE "Q" - ENVIRONMENTAL MATTERS
SCHEDULE "R" - FORM OF GUARANTY
SCHEDULE "S" - PCB TRANSFORMERS
SCHEDULE "T" - ADJACENT PROPERTIES
<PAGE>
AGREEMENT OF SALE
BETWEEN
LANCER ASSOCIATES, L.L.C.,
AS SELLER
AND
MACK-CALI REALTY, L.P.,
AS PURCHASER
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 22,078
<SECURITIES> 0
<RECEIVABLES> 6,302
<ALLOWANCES> 773
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,343,879
<DEPRECIATION> 136,568
<TOTAL-ASSETS> 3,352,727
<CURRENT-LIABILITIES> 0
<BONDS> 1,350,996
0
0
<COMMON> 580
<OTHER-SE> 1,445,042
<TOTAL-LIABILITY-AND-EQUITY> 3,352,727
<SALES> 0
<TOTAL-REVENUES> 227,864
<CGS> 0
<TOTAL-COSTS> 102,988
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,265
<INCOME-PRETAX> 72,020
<INCOME-TAX> 0
<INCOME-CONTINUING> 56,931
<DISCONTINUED> 0
<EXTRAORDINARY> 2,373
<CHANGES> 0
<NET-INCOME> 54,558
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.00
</TABLE>
