MACK CALI REALTY CORP, S-3, 1998-06-18

MACK CALI REALTY CORP
S-3, 1998-06-18
REAL ESTATE INVESTMENT TRUSTS

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1998
REGISTRATION NO. 333-[ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

<TABLE>
<S> <C>
MACK-CALI REALTY CORPORATION MACK-CALI
REALTY, L.P.

(Exact names of registrants as specified in their
respective governing documents)
MARYLAND DELAWARE
</TABLE>

<TABLE>
<S> <C>
(State or other jurisdictions of incorporation or
organization of each registrant)
22-3305147 22-3315804
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification
No.)
</TABLE>

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

<TABLE>
<S> <C>
11 COMMERCE DRIVE MR. THOMAS A. RIZK
CRANFORD, NEW JERSEY 07016 CHIEF EXECUTIVE OFFICER
(908) 272-8000 MACK-CALI REALTY CORPORATION
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE 11 COMMERCE DRIVE
NUMBER, INCLUDING AREA CODE, CRANFORD, NEW JERSEY 07016
OF PRINCIPAL EXECUTIVE OFFICES) (908) 272-8000
(908) 272-6755 (FACSIMILE)
(NAME AND ADDRESS OF AGENT FOR SERVICE)
</TABLE>

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

COPIES TO:

JONATHAN A. BERNSTEIN, ESQ.

BLAKE HORNICK, ESQ.

PRYOR CASHMAN SHERMAN & FLYNN LLP

410 PARK AVENUE

NEW YORK, NEW YORK 10022

(212) 421-4100

(212) 326-0806 (FACSIMILE)
------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after the Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
/ /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. / /

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF SHARES TO BE REGISTERED PROPOSED MAXIMUM AGGREGATE OFFERING PRICE(1)
<S> <C>
Preferred Stock(2).............................. (8)
Depositary Shares(3)............................ (8)
Guarantees(4)................................... (8)
Debt Securities(5).............................. (8)
Total........................................... $2,000,000,000(6)

<CAPTION>
TITLE OF SHARES TO BE REGISTERED AMOUNT OF REGISTRATION FEE

<S> <C>
Preferred Stock(2).............................. N/A

Depositary Shares(3)............................ N/A

Guarantees(4)................................... N/A

Debt Securities(5).............................. N/A

Total........................................... $590,000(7)

</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee and
exclusive of accrued interest, if any.

(2) There are being registered an indeterminate number of shares of Preferred
Stock, as may be sold, from time to time, by Mack-Cali Realty Corporation
(the "Company").

(3) To be represented by Depositary Receipts representing an interest in all or
a specified portion of a share of Preferred Stock.

(4) Debt Securities issued by Mack-Cali Realty, L.P. (the "Operating
Partnership") may be accompanied by a Guarantee to be issued by the Company.
No separate consideration will be received for any Guarantee.

(5) There are being registered hereunder an indeterminate amount of
non-convertible debt securities to be issued by the Operating Partnership as
may be sold, from time to time, by the Operating Partnership.

(6) Or an equivalent amount in another currency or currencies or as determined
by reference to an index or, if the securities are to be offered at a
discount, the approximate proceeds to the Registrants.

(7) Calculated in accordance with Rule 457(o) under the Securities Act of 1933.

(8) Not specified as to each class of securities to be registered, pursuant to
General Instruction II.D of Form S-3 under the Securities Act of 1933.

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE

This Registration Statement relates to securities which may be offered from
time to time by Mack-Cali Realty Corporation (the "Company") and Mack-Cali
Realty, L.P., a majority-owned subsidiary of the Company (the "Operating
Partnership"). This Registration Statement contains a form of basic prospectus
(the "Basic Prospectus") relating to both the Company and the Operating
Partnership which will be used in connection with an offering of securities by
the Company or the Operating Partnership. The specific terms of the securities
to be offered will be set forth in a Prospectus Supplement relating to such
securities. To the extent securities of the Operating Partnership, which are
limited to unsecured nonconvertible debt securities, are offered pursuant to the
enclosed Basic Prospectus, the Basic Prospectus will include the financial
statements, together with notes and schedules of the Operating Partnership set
forth on pages F-1 through F-43 of the Basic Prospectus.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE , 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
$2,000,000,000

MACK-CALI REALTY CORPORATION

PREFERRED STOCK AND DEPOSITARY SHARES

MACK-CALI REALTY, L.P.

DEBT SECURITIES

Mack-Cali Realty Corporation (the "Company") may from time to time offer in
one or more series (i) shares or fractional shares of its preferred stock, par
value $.01 per share (the "Preferred Stock") or (ii) shares of Preferred Stock
represented by depositary shares (the "Depositary Shares"). Mack-Cali Realty,
L.P. (the "Operating Partnership") may from time to time offer in one or more
series unsecured non-convertible debt securities (the "Debt Securities"). The
Preferred Stock, Depositary Shares and Debt Securities (collectively, the
"Offered Securities") have an aggregate initial public offering price of up to
$2,000,000,000 (or its equivalent in another currency based on the exchange rate
at the time of sale) in amounts, at prices and on terms to be determined at the
time of the offering and may be offered, separately or together, in separate
series in amounts, at prices and on terms to be set forth in a supplement to
this Prospectus (each a "Prospectus Supplement"). If any Debt Securities issued
by the Operating Partnership are rated below investment grade at the time of
issuance, such Debt Securities will be fully and unconditionally guaranteed by
the Company as to payment of principal, premium, if any, and interest (the
"Guarantees").

The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Preferred
Stock, the specific title and stated value, any dividend, liquidation,
redemption, conversion, voting and other rights and any initial public offering
price; (ii) in the case of Depositary Shares, the fractional share of Preferred
Stock represented by each such Depositary Share; and (iii) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the holder, terms for
sinking fund payments, covenants, applicability of any Guarantees and any
initial public offering price. In addition, such specific terms may include
limitations on direct or beneficial ownership and restrictions on transfer of
the Offered Securities, in each case as may be appropriate to preserve the
status of the Company as a real estate investment trust ("REIT") for United
States federal income tax purposes. See "Restrictions on Ownership of Capital
Stock."

The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.

The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered Securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT
PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.

The date of this Prospectus is , 1998.
<PAGE>
AVAILABLE INFORMATION

The Company is, and upon effectiveness of the registration statement of
which this Prospectus is a part (the "Registration Statement"), the Operating
Partnership will be, subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith the Company files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission") and the Operating
Partnership will file reports with the Commission. The Registration Statement,
the exhibits and schedules forming a part thereof and such reports, proxy
statements and other information can be inspected and copied at the Commission's
public reference section, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained at prescribed rates by writing to
the public reference section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's Web site is: http://www.sec.gov. In addition, the Company's common
stock, par value $.01 per share (the "Common Stock") is listed on the New York
Stock Exchange (the "NYSE"), under the symbol "CLI," and the Pacific Exchange,
and similar information concerning the Company can be inspected and copied at
the offices of the NYSE, 20 Broad Street, New York, New York 10005, and the
Pacific Exchange, 301 Pine Street, San Francisco, California 94104.

The Company and the Operating Partnership have filed with the Commission the
Registration Statement (of which this Prospectus is a part) under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the Offered
Securities. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements contained
in this Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference and the
exhibits and schedules thereto. For further information regarding the Company
and the Offered Securities, reference is hereby made to the Registration
Statement and such exhibits and schedules which may be obtained from the
Commission at its principal office in Washington, D.C. upon payment of the fees
prescribed by the Commission.

EXPLANATORY NOTE

The Company conducts substantially all of its operations through, and
substantially all of its properties are held directly or indirectly by, the
Operating Partnership. Accordingly, information incorporated by reference herein
from certain documents filed with the Commission by the Company is applicable to
the Operating Partnership. To the extent that information incorporated by
reference from such documents is inapplicable to the Operating Partnership,
appropriate disclosure is included herein.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The documents listed below have been filed by the Company (File No. 1-13274)
under the Exchange Act with the Commission and are incorporated herein by
reference:

a. The Company's Annual Report on Form 10-K (File No. 1-13274) for the
fiscal year ended December 31, 1997;

b. The Company's Quarterly Report on Form 10-Q (File No. 1-13274) for the
fiscal quarter ended March 31, 1998;

2
<PAGE>
c. The Company's Current Reports on Form 8-K and Form 8-K/A (File No.
1-13274), dated September 18, 1997, September 19, 1997, December 11,
1997, January 16, 1998 and June 12, 1998;

d. The Company's Proxy Statements relating to the Special Meeting of
Shareholders held on December 11, 1997 and the Annual Meeting of
Shareholders on May 21, 1998; and

e. The description of the Common Stock and the description of certain
provisions of Maryland Law and the Company's Articles of Incorporation
and Bylaws, both contained in the Company's Registration Statement on
Form 8-A, dated August 9, 1994.

All documents filed by the Company or the Operating Partnership pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering of the Offered
Securities shall be deemed to be incorporated by reference in this Prospectus
and to be part hereof from the date of filing such documents (provided, however,
that the information referred to in Item 402(a)(8) of Regulation S-K of the
Commission shall not be deemed specifically incorporated by reference herein).

Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner of the Offered
Securities, to whom this Prospectus is delivered, upon written or oral request.
Requests should be made to Barry Lefkowitz, Executive Vice President and Chief
Financial Officer of the Company, 11 Commerce Drive, Cranford, New Jersey
07016-3510 (telephone number: (908) 272-8000).

3
<PAGE>
THE COMPANY AND THE OPERATING PARTNERSHIP

Mack-Cali Realty Corporation (together with its subsidiaries, the "Company")
is a fully-integrated real estate investment trust ("REIT") that owns and
operates a portfolio comprised primarily of Class A office and office/flex
buildings, as well as commercial real estate leasing, management, acquisition,
development and construction businesses. As of June 1, 1998, the Company owned
and operated 234 properties, aggregating approximately 26.3 million square feet
(collectively, the "Properties"). The Properties are comprised of 222 office and
office/flex buildings totaling approximately 25.9 million square feet (the
"Office Properties" and "Office/Flex Properties," respectively), six
industrial/warehouse properties containing an aggregate of approximately 400,000
square feet (the "Industrial/Warehouse Properties"), two multi-family
residential properties, two stand-alone retail properties and two land leases.
The 222 Office and Office/Flex Properties are comprised of 146 office buildings
containing an aggregate of 22.1 million square feet (the "Office Properties")
and 76 office/flex buildings containing an aggregate of approximately 3.8
million square feet (the "Office/Flex Properties"). The Company believes that
its Properties have excellent locations and access and are well-maintained and
professionally managed. As a result, the Company believes that its Properties
attract high quality tenants and achieve among the highest rental, occupancy and
tenant retention rates within their markets.

The Company's strategy has been to focus its development and ownership of
office properties in sub-markets where it is, or can become, a significant and
preferred owner and operator. The Company will continue this strategy by
expanding, primarily through acquisitions, initially into sub-markets where it
has, or can achieve, similar status. Management believes that the recent trend
towards increasing rental and occupancy rates in office buildings in the
Company's sub-markets continues to present significant opportunities for growth.
The Company may also develop properties in such sub-markets, particularly with a
view towards potential utilization of certain vacant land recently acquired or
on which the Company holds options. Management believes that its extensive
market knowledge provides the Company with a significant competitive advantage
which is further enhanced by its strong reputation for and emphasis on
delivering highly responsive management services, including direct and continued
access to the Company's senior management. The Company performs substantially
all construction, leasing, management and tenant improvements on an "in-house"
basis and is self-administered and self-managed. As of June 1, 1998, the Company
had over 300 employees.

Cali Associates, the entity to whose business the Company succeeded in 1994,
was founded by John J. Cali, Angelo R. Cali and Edward Leshowitz (the
"Founders") who have been involved in the development, leasing, management,
operation and disposition of commercial and residential properties in Northern
and Central New Jersey for over 40 years and have been primarily focusing on
office buildings for the past fifteen years. In addition to the Founders, the
Company's executive officers generally have been employed by the Company and its
predecessor for an average of approximately 10 years. The Company and its
predecessor have built approximately four million square feet of office space,
more than one million square feet of industrial facilities and over 5,500
residential units.

The Company has elected to be taxed as a REIT for federal income tax
purposes and expects to continue to elect such status. Although the Company
believes that it was organized and has been operating in conformity with the
requirements for qualification under the Internal Revenue Code of 1986, as
amended (the "Code"), no assurance can be given that the Company will continue
to qualify as a REIT. Qualification as a REIT involves the application of highly
technical and complex Code provisions of which there are only limited judicial
or administrative interpretations. If in any taxable year the Company were to
fail to qualify as a REIT, the Company would not be allowed a deduction for
distributions to stockholders in computing taxable income and would be subject
to federal taxation at regular corporate rates. As a result, such a failure
would adversely affect the Company's ability to make distributions to its
stockholders and could have an adverse affect on the market value and
marketability of the Common Stock.

4
<PAGE>
To ensure that the Company qualifies as a REIT, the transfer of shares of
capital stock of the Company, including the Preferred Stock, is subject to
certain restrictions, and ownership of capital stock by any single person is
limited to 9.8% of the value of such capital stock, subject to certain
exceptions. The Company's Articles of Incorporation provide that any purported
transfer in violation of the above-described ownership limitations shall be void
AB INITIO.

Substantially all of the Company's interests in the Properties are held by,
and its operations are conducted through, the Operating Partnership, or by
entities controlled by the Operating Partnership. As of June 1, 1998, the
Company was the beneficial owner of approximately 89.3% of the Operating
Partnership and is its sole general partner. As used herein, the term "Units"
refers to limited partnership interests in the Operating Partnership.

The Company, a Maryland corporation, was incorporated in 1994. The Operating
Partnership is a Delaware limited partnership formed in 1994. The executive
offices of both the Operating Partnership and the Company are located at 11
Commerce Drive, Cranford, New Jersey 07016, and their telephone number is (908)
272-8000. The Company has an internet Web address at "http://www.mack-cali.com."

RATIOS OF EARNINGS TO FIXED CHARGES

The following tables set forth the Company's ratios of earnings to fixed
charges for the periods shown (dollars in thousands):

<TABLE>
<CAPTION>
FOR THE THREE FOR THE FOR THE FOR THE FOR THE PERIOD
MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, 1994 TO
MARCH 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
- ----------------- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
2.31x 1.08x 3.26x 2.69x 3.13x
</TABLE>

The following tables set forth the amounts by which the Company's
predecessor's earnings were inadequate to cover fixed charges:

<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 1, 1994 FOR THE YEAR ENDED
TO AUGUST 30, 1994 DECEMBER 31, 1993
- ------------------- --------------------
<S> <C>
$ (110) $ (1,064)
</TABLE>

The following tables set forth the Operating Partnership's ratios of
earnings to fixed charges for the periods shown (dollars in thousands):

The following tables set forth the amounts by which the Operating
Partnership's predecessor's earnings were inadequate to cover fixed charges:

<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 1, 1994 FOR THE YEAR ENDED
TO AUGUST 30, 1994 DECEMBER 31, 1993
- ------------------- --------------------
<S> <C>
$ (110) $ (1,064)
</TABLE>

The ratios of earnings to fixed charges were computed by dividing earnings
before fixed charges by fixed charges. For this purpose, earnings consist of
pre-tax income (loss) from continuing operations,

5
<PAGE>
before gain on sale of property and minority interest plus fixed charges
excluding capitalized interest, preferred unit distributions and beneficial
conversion feature. Fixed charges consist of interest costs, both expensed and
capitalized, debt issuance costs and the interest portion of ground rents on
land leases. Fixed charges for the Company also include preferred unit
distributions and beneficial conversion feature. To date, the Company has not
issued any Preferred Stock, therefore, the ratios of earnings to combined fixed
charges and preferred stock dividend requirements are the same as the ratios of
earnings to fixed charges presented above. For the year ended December 31, 1996,
the calculation of the ratio of earnings to fixed charges excludes a gain on
sale of rental property of $5,658. The ratio of earnings to fixed charges,
including gain on sale of rental property, for the same period was 3.67x.

The following tables set forth the Operating Partnership's ratios of
earnings to combined fixed charges and preferred unit distribution requirement
for the periods shown (dollars in thousands):

The following tables set forth the amounts by which the Operating
Partnership's predecessor's earnings were inadequate to cover fixed charges:

<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 1, 1994 FOR THE YEAR ENDED
TO AUGUST 30, 1994 DECEMBER 31, 1993
- ------------------- --------------------
<S> <C>
$ (110) $ (1,064)
</TABLE>

The Operating Partnership's ratios of earnings to combined fixed charges and
preferred unit distribution requirement were computed by dividing earnings
before fixed charges and preferred unit distributions and beneficial conversion
feature by fixed charges and preferred unit distributions and beneficial
conversion feature. For this purpose, earnings consist of pre-tax income (loss)
from continuing operations before gain on sale of property and preferred unit
distributions and beneficial conversion feature plus fixed charges excluding
capitalized interest. Fixed charges consist of interest costs, both expensed and
capitalized, debt issuance costs and the interest portion of ground rents on
land leases. For the year ended December 31, 1996, the calculation of the ratio
of earnings to combined fixed charges and preferred unit distribution
requirement excludes a gain on sale of rental property of $5,658. The ratio of
earnings to combined fixed charges and preferred unit distribution requirement,
including gain on sale of rental property, for the same period was 3.67x.

USE OF PROCEEDS

The Company is required by the terms of the Amended and Restated Agreement
of Limited Partnership of the Operating Partnership to invest the net proceeds
of any sale of Common Stock or Preferred Stock in the Operating Partnership in
exchange for additional Units. Unless otherwise described in the applicable
Prospectus Supplement, the Company and the Operating Partnership intend to use
the net proceeds from the sale of any Offered Securities for general business
purposes, including the leasing, management, acquisition, development and
construction of office, office/flex, industrial/warehouse, multi-family
residential or other properties as suitable opportunities arise, the expansion
and improvement of certain properties in the Company's portfolio, and the
repayment of indebtedness.

6
<PAGE>
DESCRIPTION OF DEBT SECURITIES

The following sets forth certain general terms and provisions of the
Indenture under which the Debt Securities are to be issued. The particular terms
of the Debt Securities will be set forth in a Prospectus Supplement relating to
such Debt Securities.

The Debt Securities are to be issued under an Indenture, as amended or
supplemented from time to time (the "Indenture"), between the Operating
Partnership and a Trustee chosen by the Operating Partnership and qualified to
act as such under the Trust Indenture Act of 1939 as amended (the "TIA")
(together with any other trustee(s) appointed in a supplemental indenture with
respect to a particular series, the "Trustee"). The Indenture has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part and
will be available for inspection at the corporate trust office of the Trustee,
or as described above under "Available Information." The Indenture is subject
to, and governed by, the TIA. The Operating Partnership will execute the
Indenture if and when the Operating Partnership issues the Debt Securities. The
statements made hereunder relating to the Indenture and the Debt Securities to
be issued hereunder are summaries of certain provisions thereof and do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indenture and such Debt Securities. All
section references appearing herein are to sections of the Indenture, and
capitalized terms used but not defined herein shall have the respective meanings
set forth in the Indenture.

GENERAL

The Debt Securities will be direct, unsecured obligations of the Operating
Partnership. Except for any series of Debt Securities which is specifically
subordinated to other indebtedness of the Operating Partnership, the Debt
Securities will rank equally with all other unsecured and unsubordinated
indebtedness of the Operating Partnership. Under the Indenture, the Debt
Securities may be issued without limit as to aggregate principal amount, in one
or more series, in each case as established from time to time in or pursuant to
authority granted by a resolution of the Board of Directors of the Company as
sole general partner of the Operating Partnership or as established in one or
more indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the Holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series (Section
301).

If any Debt Securities are rated below investment grade at the time of
issuance, such Debt Securities will be fully and unconditionally guaranteed by
the Company as to payment of principal, premium, if any, and interest.

The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect to
such series (Section 608). In the event that two or more persons are acting as
Trustee with respect to different series of Debt Securities, each such Trustee
shall be a trustee of a trust under the Indenture separate and apart from the
trust administered by any other Trustee (Section 609), and, except as otherwise
indicated herein, any action described herein to be taken by the Trustee may be
taken by each such Trustee with respect to, and only with respect to, the one or
more series of Debt Securities for which it is Trustee under the Indenture.

TERMS

Reference is made is to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:

(1) the title of such Debt Securities;

(2) the aggregate principal amount of such Debt Securities and any limit on
such aggregate principal amount;

7
<PAGE>
(3) the percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof the
portion of the principal amount thereof, payable upon declaration of
acceleration of the maturity thereof;

(4) the date or dates, or the method for determining such date or dates, on
which the principal of such Debt Securities will be payable;

(5) the rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;

(6) the date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the Interest Payment Dates on
which any such interest will be payable, the Regular Record Dates for
such Interest Payment Dates, or the method by which such Dates shall be
determined, the Person to whom such interest shall be payable, and the
basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months;

(7) the place or places where (i) the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable and (ii)
notices or demands to or upon the Operating Partnership in respect of
such Debt Securities and the Indenture may be served;

(8) the period or periods within which, or the date or dates on which, the
price or prices at which and the terms and conditions upon which such
Debt Securities may be redeemed, as a whole or in part, at the option of
the Operating Partnership, if the Operating Partnership is to have such
an option;

(9) the obligation, if any, of the Operating Partnership to redeem, repay or
repurchase such Debt Securities pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof, and the
period or periods within which, or the date or dates on which, the price
or prices at which and the terms and conditions upon which such Debt
Securities are required to be redeemed, repaid or purchased, in whole or
in part, pursuant to such obligation;

(10) if other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and/or payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;

(11) whether the amount of payments of principal of (and premium, if any) or
interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency
unit or units or composite currency or currencies) and the manner in
which such amounts shall be determined;

(12) any additions to, modifications of or deletions from the terms of such
Debt Securities with respect to the Events of Default or covenants or
other provisions set forth in the Indenture;

(13) whether such Debt Securities will be issued in certificated and/or
book-entry form;

(14) whether such Debt Securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the
denominations thereof and terms and conditions relating thereto;

(15) with respect to any series of Debt Securities rated below investment
grade at the time of issuance, the Guarantees (the "Guaranteed
Securities");

(16) the applicability, if any, of the defeasance and covenant defeasance
provisions of Article XIV of the Indenture, or any modification thereof;

(17) if such Debt Securities are to be issued upon the exercise of debt
warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;

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(18) the terms and conditions, if any, upon which such Debt Securities may be
subordinated to other indebtedness of the Operating Partnership;

(19) whether and under what circumstances the Operating Partnership will pay
Additional Amounts as contemplated in the Indenture on such Debt
Securities in respect of any tax, assessment or governmental charge and,
if so, whether the Operating Partnership will have the option to redeem
such Debt Securities in lieu of making such payment; and

(20) any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture (Section 301).

The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special U.S. federal income tax,
accounting and other considerations applicable to the Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.

The Indenture does not contain any provisions that would limit the ability
of either the Operating Partnership to incur indebtedness or that would afford
Holders of Debt Securities protection in the event of a highly leveraged or
similar transaction involving the Operating Partnership. However, restrictions
on ownership and transfers of the Company's common stock and preferred stock,
designed to preserve the Company's status as a REIT, may prevent or hinder a
change of control. Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions to
the Events of Default or covenants of the Operating Partnership that are
described below, including any addition of a covenant or other provision
providing event risk or similar protection.

GUARANTEES

The Company will fully, unconditionally and irrevocably guarantee the due
and punctual payment of principal of, premium, if any, and interest on any Debt
Securities rated below investment grade at the time of issuance by the Operating
Partnership, and the due and punctual payment of any sinking fund payments
thereon, when and as the same shall become due and payable, whether at a
maturity date, by declaration of acceleration, call for redemption or otherwise.

DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER

Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series, which are registered securities, other than registered
securities in global form (which may be of any denomination), shall be issuable
in denominations of $1,000 and integral multiples thereof and the Debt
Securities which are bearer securities, other than bearer securities, other than
bearer securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $5,000 and integral multiples of $1,000
thereof (Section 302).

Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the Trustee, provided that, at
the option of the Operating Partnership, payment of interest may be made by
check mailed to the address of the Person entitled thereto as it appears in the
Security Register or by wire transfer of funds to such Person at an account
maintained within the United States (Sections 301, 305, 307 and 1002).

All amounts paid by the Operating Partnership to a paying agent or a Trustee
for the payment of the principal of or any premium or interest on any Debt
Security which remain unclaimed at the end of two years after the principal,
premium or interest has become due and payable will be repaid to the Operating
Partnership, and the holder of the Debt Security thereafter may look only to the
Operating Partnership for payment thereof.

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Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture
(Sections 101 and 307).

Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series, of a like aggregate principal amount
and tenor, of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the Trustee. In addition, subject to
certain limitations imposed upon Debt Securities issued in book-entry form, the
Debt Securities of any series may be surrendered for conversion or registration
of transfer thereof at the corporate trust office of the Trustee referred to
above. Every Debt Security surrendered for conversion, registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Operating Partnership may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith (Section 305). If the applicable Prospectus
Supplement refers to any transfer agent (in addition to the Trustee) initially
designated by the Operating Partnership with respect to any series of Debt
Securities, the Operating Partnership may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Operating Partnership will be required
to maintain a transfer agent in each Place of Payment for such series. The
Operating Partnership may at any time designate additional transfer agents with
respect to any series of Debt Securities (Section 1002).

Neither the Operating Partnership nor the Trustee shall be required to (i)
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before any selection of
Debt Securities of that series to be redeemed and ending at the close of
business of the day of mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Debt Security being
redeemed in part; or (iii) issue, register the transfer of or exchange any Debt
Security which has been surrendered for repayment at the option of the Holder,
except that portion, if any, of such Debt Security which is not to be so repaid
(Section 305).

MERGER, CONSOLIDATION OR SALE

The Operating Partnership may consolidate with, or sell, lease or convey all
or substantially all of its assets to, or merge with or into, any other entity,
provided (a) either the Operating Partnership shall be the continuing entity, or
the successor (if other than the Operating Partnership) formed by or resulting
from any such consolidation or merger or which shall have received the transfer
of such assets shall expressly assume payment of the principal of (and premium,
if any) and interest on all of the Debt Securities and the due and punctual
performance and observance of all of the covenants and conditions contained in
the Indenture; (b) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Operating
Partnership or such Subsidiary at the time of such transaction, no Event of
Default under the Indenture, and no event which, after notice or the lapse of
time, or both, would become such an Event of Default, shall have occurred and be
continuing; and (c) an officer's certificate of the Company as general partner
of the Operating Partnership and legal opinion covering such conditions shall be
delivered to the Trustee (Sections 801 and 803).

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CERTAIN COVENANTS

EXISTENCE. Except as permitted under "Merger, Consolidation or Sale," the
Indenture will require the Operating Partnership to do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (declaration and statutory) and franchises; PROVIDED, HOWEVER, that the
Operating Partnership shall not be required to preserve any right or franchise
if it determines that the preservation thereof is no longer desirable in the
conduct of its business and that the loss thereof is not disadvantageous in any
material respect to the Holders of the Debt Securities (Section 1004).

MAINTENANCE OF PROPERTIES. The Indenture will require the Operating
Partnership to cause all of its material properties used or useful in the
conduct of its business or the business of any subsidiary to be maintained and
kept in good condition, repair and working order, all as in the judgment of the
Operating Partnership may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
PROVIDED, HOWEVER, that the Operating Partnership and its subsidiaries shall not
he prevented from selling or otherwise disposing of their properties for value
in the ordinary course of business. (Section 1006).

INSURANCE. The Indenture will require each of the Operating Partnership to
cause each of its and its subsidiaries' insurable properties to be insured in a
commercially reasonable amount against loss of damage with insurers of
recognized responsibility and, if described in the applicable Prospectus
Supplement, in specified amounts and with insurers having a specified rating
from a recognized insurance rating service. (Section 1007).

PAYMENT OF TAXES AND OTHER CLAIMS. The Indenture will require the Operating
Partnership to pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges levied or imposed upon it or any subsidiary or upon its income, profits
or property or that of any subsidiary and (ii) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Operating Partnership or any subsidiary; PROVIDED, HOWEVER, that
the Operating Partnership shall not be required to pay or discharge or cause to
be paid or discharged any tax, assessment, charge or claim whose amount or
applicability is being contested in good faith. (Section 1008).

ADDITIONAL COVENANTS. Reference is made to the applicable Prospectus
Supplement for information with respect to any additional covenants specific to
a particular series of Debt Securities.

EVENT OF DEFAULT, NOTICE AND WAIVER

Unless otherwise provided in the Prospectus Supplement, the Indenture
provides that the following events are "Events of Default" with respect to any
series of Debt Securities issued thereunder: (a) default for 30 days in the
payment of any interest on any Debt Security of such series; (b) default in the
payment of any principal of (or premium, if any on) any Debt Security of such
series when due; (c) default in making any sinking fund payment as required for
any Debt Security of such series; (d) default in the performance of any other
covenant or warranty of the Operating Partnership contained in the Indenture
with respect to any Debt Security of such series, continued for 60 days after
written notice as provided in the Indenture; (e) default in the payment of an
aggregate principal amount exceeding $10,000,000 of any evidence of indebtedness
of the Operating Partnership or any mortgage, indenture, note, bond, capitalized
lease or other instrument under which such indebtedness is issued or by which
such indebtedness is secured, such default having continued after the expiration
of any applicable grace period and having resulted in the acceleration of the
maturity of such indebtedness, but only if such indebtedness is not discharged
or such acceleration is not rescinded or annulled; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Operating Partnership, or any Significant
Subsidiary or any of their respective property; and (g) any other Event of
Default provided with respect to a particular series of Debt Securities (Section
501). The term "Significant Subsidiary" means each

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significant subsidiary (as defined in Regulation S-X promulgated under the
Securities Act) of the Operating Partnership, as the case may be. (Section 101).

If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities or Indexed Securities, such portion of the principal amount
as may be specified in the terms thereof) of all of the Debt Securities of that
series to be due and payable immediately by written notice thereof to the
Operating Partnership (and to the Trustee if given by the Holders). However, any
time after such a declaration of acceleration with respect to Debt Securities of
such series has been made, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of not less then a
majority in principal amount of Outstanding Debt Securities of such series may
rescind and annul such declaration and its consequences if (a) the Operating
Partnership shall have paid or deposited with the Trustee all required payments
of the principal of (and premium, if any) and interest on the Debt Securities of
such series plus certain fees, expenses, disbursements and advances of the
Trustee and (b) all Events of Default, other than the nonpayment of accelerated
principal or interest with respect to Debt Securities of such series have been
cured or waived as provided in the Indenture (Section 502). The Indenture also
provides that the Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may waive any past default with
respect to such series and its consequences, except a default (x) in the payment
of the principal of (or premium, if any) or interest on any Debt Security of
such series or (y) in respect of a covenant or provision contained in the
Indenture that cannot be modified or amended without the consent of the Holder
of each Outstanding Debt Security affected thereby (Section 513).

The Trustee is required to give notice to the Holders of Debt Securities
within 90 days of a default under the Indenture; PROVIDED, HOWEVER, that the
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if the Responsible Officers of the Trustee consider
such withholding to be in the interest of such Holders (Section 601).

The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than a majority
in principal amount of the Outstanding Debt Securities of that series, as well
as an offer of reasonable indemnity (Section 507). This provision will not
prevent, however, any Holder of Debt Securities from instituting suit for the
enforcement of payment of the principal of (and premium, if any) and interest on
such Debt Securities at the respective due date thereof (Section 508).

Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of Debt
Securities of any series then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or of exercising any trust or power conferred upon the Trustee.
However, the Trustee may refuse to follow any direction which is in conflict
with any law or the Indenture, which may involve the Trustee in personal
liability or which may be unduly prejudicial to the Holders of Debt Securities
of such series not joining therein (Section 512).

Within 120 days after the close of each fiscal year, the Operating
Partnership must deliver to the Trustee a certificate, signed by one of several
specified officers of the Company, stating whether or not

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such officer has knowledge of any default under the Indenture and, if so,
specifying each such default and the nature and status thereof (Section 1005).

MODIFICATION OF THE INDENTURE

Modifications and amendments of provisions of the Indenture applicable to
any series may be made only with consent of the Holders of not less than a
majority in principal amount of all Outstanding Debt Securities which are
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each such
Debt Security affected thereby, (a) change the Stated Maturity of the principal
of, or any installment of interest (or premium, if any) on, any such Debt
Security; (b) reduce the principal amount of, or the rate or amount of interest
on, or any premium payable on redemption of, any such Debt Security, or reduce
the amount of principal of an Original Issue Discount Security that would be due
and payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the Holder
of any such Debt Security; (c) change the Place of Payment, or the coin or
currency, for payment of principal of, premium, if any, or interest on any such
Debt Security; (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security on or after the Stated
Maturity thereof; (e) reduce the above stated percentage of Outstanding Debt
Securities of any series necessary to modify or amend the Indenture, to waive
compliance certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in the
Indenture; (f) modify or affect in any manner adverse to the Holders the terms
and conditions of the obligations of the Company in respect of the payment of
principal (and premium, if any) and interest on any Guaranteed Securities; or
(g) modify any of the foregoing provisions or any of the provisions relating to
the waiver of certain past defaults or certain covenants, except to increase the
required percentage to effect such action or to provide that certain other
provisions may not be modified or waived without the consent of the Holder of
such Debt Security (Section 902).

The Holders of not less than a majority in principal amount of Outstanding
Debt Securities of a particular series have the right to waive compliance by the
Operating Partnership with certain covenants in the Indenture relating to such
series (Section 1010).

Modifications and amendments of the Indenture may be made by the Operating
Partnership and the Trustee without the consent of any Holder of Debt Securities
for any of the following purposes: (i) to evidence the succession of another
Person to the Operating Partnership as obligor under the Indenture; (ii) to add
to the covenants of the Operating Partnership for the benefit of the Holders of
all or any series of Debt Securities or to surrender any right or power
conferred upon the Operating Partnership in the Indenture; (iii) to add Events
of Default for the benefit of the Holders of all or any series of Debt
Securities; (iv) to add or change any provisions of the Indenture to facilitate
the issuance of Debt Securities in bearer form, or to permit or facilitate the
issuance of Debt Securities in uncertificated form, provided that such action
shall not adversely affect the Interests of the Holders of the Debt Securities
of any series in any material respect; (v) to change or eliminate any provisions
of the Indenture, provided that any such change or elimination shall become
effective only when there are not Debt Securities Outstanding of any series
created prior thereto which are entitled to the benefit of such provision; (vi)
to secure the Debt Securities; (vii) to establish the form or terms of Debt
Securities of any series; (viii) to provide for the acceptance of appointment by
a successor Trustee or facilitate the administration of the trust under the
Indenture by more than one Trustee; (ix) to cure any ambiguity, defect or
inconsistency in the Indenture, provided that such action shall not adversely
affect the interests of Holders of Debt Securities of any series in any material
respect; (x) to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of such
Debt Securities, provided that such action shall not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect (Section 901).

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In addition, with respect to Guaranteed Securities, without the consent of
any Holder of Debt Securities the Company, or a subsidiary thereof, may directly
assume the due and punctual payment of the principal of, any premium and
interest on all the Guaranteed Securities and the performance of every covenant
of the Indenture on the part of the Operating Partnership to be performed or
observed. Upon any such assumption, the Company or such subsidiary shall succeed
to, and be substituted for and may exercise every right and power of, the
Operating Partnership under the Indenture with the same effect as if the Company
or such subsidiary had been the issuer of the Guaranteed Securities and the
Operating Partnership shall be released from all obligations and covenants with
respect to the Guaranteed Securities. No such assumption shall be permitted
unless the Company has delivered to the Trustee (i) an officer's certificate and
an opinion of counsel, stating, among other things, that the Guarantee and all
other covenants of the Company in the Indenture remain in full force and effect
and (ii) an opinion of independent counsel that the Holders of Guaranteed
Securities shall have no United States Federal tax consequences as a result of
such assumption, and that, if any Debt Securities are then listed on the New
York Stock Exchange, that such Debt Securities shall not be delisted as a result
of such assumption (Section 805).

The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a Foreign Currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above), (iii) the
principal amount of an Indexed Security that shall be deemed outstanding shall
be the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to
Section 301 of the Indenture, and (iv) Debt Securities owned by the Operating
Partnership or any other obligor upon the Debt Securities or any Affiliate of
the Operating Partnership or of such other obligor shall be disregarded (Section
101).

The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting may be called at any time
by the Trustee, and also, upon request, by the Operating Partnership, the
Company (in respect of a series of Guaranteed Securities) or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of such series,
in any such case upon notice given as provided In the Indenture (Section 1502).
Except for any consent that must be given by the Holder of each Debt Security
affected by certain modifications and amendments of the Indenture any resolution
presented at a meeting or adjourned meeting duly reconvened at which a quorum is
present may be adopted by the affirmative vote of the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series; provided,
however, that, except as referred to above, any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote of
the Holders of such Debt Securities of that series. Any resolution passed or
decision taken at any meeting of Holders of Debt Securities of any series duly
held in accordance with the Indenture will be binding on all Holders of Debt
Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be Persons, holding or
representing a majority in principal amount of the Outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding Debt
Securities of a series, the Persons holding or representing such specified

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percentage in principal amount of the Outstanding Debt Securities of such series
will constitute a quorum (Section 1504).

Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the Outstanding Debt Securities of such series that
vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under the Indenture (Section
1504).

DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE

Unless otherwise provided in the Prospectus Supplement, the Operating
Partnership may discharge certain obligations to Holders of any series of Debt
Securities that have not already been delivered to the Trustee for cancellation
and that either have become due and payable or will become due and payable
within one year (or are scheduled for redemption within one year) by irrevocably
depositing with the Trustee, in trust, funds in such currency or currencies,
currency unit or units or composite currency or currencies in which such Debt
Securities are payable in an amount sufficient to pay the entire indebtedness on
such Debt Securities in respect of principal (and premium, if any) and interest
to the date of such deposit (if such Debt Securities have became due and
payable) or to the Stated Maturity or Redemption Date, as the case may be
(Section 401).

The Indenture provides that, unless otherwise provided in the Prospectus
Supplement, if the provisions of Article Fourteen are made applicable to the
Debt Securities of any series pursuant to Section 301 of the Indenture, the
Operating Partnership may elect either (a) to defease and discharge itself and
the Company (if such Debt Securities are Guaranteed Securities) from any and all
obligations with respect to such Debt Securities (except for the obligation to
pay Additional Amounts, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on such Debt
Securities and the obligations to register the transfer or exchange of such Debt
Securities, to replace temporary or mutilated, destroyed, lost or stolen Debt
Securities, to maintain an office or agency in respect of such Debt Securities
and to hold moneys for payment in trust) ("defeasance") (Section 1402) or (b) to
release itself and the Company (if such Debt Securities are Guaranteed
Securities) from its obligations with respect to such Debt Securities under
Sections 1004 and 1005, inclusive, of the Indenture (being the restrictions
described tinder "Certain Covenants") or, if provided pursuant to Section 301 of
the Indenture, its obligations with respect to any other covenant, and any
omission to comply with such obligations shall not constitute a default or an
Event of Default with respect to such Debt Securities ("covenant defeasance")
(Section 1403), in either case upon the irrevocable deposit by the Operating
Partnership or the Company (if the Debt Securities are Guaranteed Securities)
with the Trustee, in trust, of any amount, in such currency or currencies,
currency unit or units or composite currency or currencies in which such Debt
Securities are payable at Stated Maturity, or Government Obligations (as defined
below), or both applicable to such Debt Securities which through the scheduled
payment of principal and interest in accordance with their terms will provide
money in an amount sufficient to pay the principal of (and premium, if any) and
interest on such Debt Securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.

Such a trust may only be established if, among other things, the Operating
Partnership or the Company (if the Debt Securities are Guaranteed Securities)
has delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for U.S. Federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to U.S. Federal
income tax on the same amounts, in the same

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manner and at the same times as would have been the case if such defeasance or
covenant defeasance had not occurred, and such Opinion of Counsel, in the case
of defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States Federal income tax law occurring
after the date of the Indenture (Section 1404).

"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the Foreign
Currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a Depositary receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a Depositary receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such Depositary receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
Depositary receipt (Section 101).

Unless otherwise provided in the applicable Prospectus Supplement, if after
the Operating Partnership or the Company (if the Debt Securities are Guaranteed
Securities) has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or such
cessation of usage based on the applicable market exchange rate (Section 1405).
"Conversion Event" means the cessation of use of (i) a currency, currency unit
or composite currency both by the government of the country which issued such
currency and for the settlement of transactions by a central bank or other
public institutions or within the international banking community, (ii) the ECU
both within the European Monetary System and for the settlement of transactions
by public institutions of or within the European Communities or (iii) any
currency unit or composite currency other than the ECU for the purposes for
which it was established. (Section 101). Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a Foreign Currency
that ceases to be used by its government of issuance shall be made in U.S.
dollars.

In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (d) under "Events of Default, Notice and Waiver"
with respect to Section 1004 of the Indenture (which Sections would no longer be
applicable to such Debt Securities) or described in clause (h) under "Events of
Default, Notice and Waiver" with respect to any other covenant as to which there
has been covenant defeasance, the amount in such currency, currency unit or
composite currency in which such Debt Securities are payable, and Government
Obligations on deposit with the Trustee, will be sufficient to pay amounts due
on such Debt Securities at the time of their Stated Maturity but may not be
sufficient to pay amounts due on such Debt Securities at

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the time of the acceleration resulting from such Event of Default. However, the
Operating Partnership and the Company (if such Debt Securities are Guaranteed
Securities) would remain liable to make payment of such amounts due at the time
of acceleration.

The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of a particular series.

SUBORDINATION

The terms and conditions, if any, upon which the Debt Securities are
subordinated to other indebtedness of the Operating Partnership will be set
forth in the applicable Prospectus Supplement relating thereto. Such terms will
include a description of the indebtedness ranking senior to the Debt Securities,
the restrictions on payments to the Holders of such Debt Securities while a
default with respect to such senior indebtedness in continuing, the
restrictions, if any, on payments to the Holders of such Debt Securities
following an Event of Default, and provisions requiring Holders of such Debt
Securities to remit certain payments to holders of senior indebtedness.

BOOK-ENTRY SYSTEM AND GLOBAL SECURITIES

The Debt Securities of a series may be issued in whole or in part in the
form of one or more Securities in global form ("Global Securities") that will be
deposited with, or on behalf of, a depository (the "Depository") identified in
the Prospectus Supplement relating to such series. Global Securities, if any,
issued in the United States are expected to be deposited with The Depository
Trust Company ("DTC"), as Depository. Global Securities may be issued in either
fully registered or bearer form and in either temporary or permanent form.
Unless the Prospectus Supplement states otherwise, and until it is exchanged in
whole or in part for the individual Debt Securities represented thereby, a
Global Security may not be transferred except as a whole by the Depository for
such Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by such
Depository or any nominee of such Depositor to a successor Depository or any
nominee of such successor.

The specific terms of the depository arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to such
series and/or the Global Security. The Company expects that unless otherwise
indicated in the applicable Prospectus Supplement and/or the Global Security,
the following provisions will apply to depository arrangements.

The Prospectus Supplement and/or the Global Security will state whether such
Global Securities will be issued in certificated or book-entry form. If such
Global Securities are to be issued in book-entry form, the Company expects that
upon the issuance of a Global Security, the Depository for such Global Security
or its nominee will credit on its book-entry registration and transfer system
the respective principal amounts of the individual Debt Securities represented
by such Global Security to the accounts of persons that have accounts with such
Depository ("Participants"). Such accounts shall be designated by the
underwriters, dealers or agents with respect to such Debt Securities or by the
Company if such Debt Securities are offered directly by the Company. Ownership
of beneficial interests in such Global Security will be limited to Participants
or persons that may hold interests through Participants.

The Company expects that, for the Global Securities deposited with DTC,
pursuant to procedures established by DTC, ownership of beneficial interests in
any Global Security with respect to which DTC is the Depository will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by DTC or its nominee (with respect to beneficial interests of
Participants) and records of Participants (with respect to beneficial interests
of persons who hold through Participants). Neither the Company, any Paying
Agent, the Security Registrar nor the Trustee will have any responsibility or
liability

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for any aspect of the records of DTC or for maintaining, supervising or
reviewing any records of DTC or any of its Participants relating to beneficial
ownership interests in the Debt Securities. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and laws may impair the ability to own, pledge or
transfer beneficial interest in a Global Security.

Unless otherwise specified in the Prospectus Supplement or the actual Global
Security, so long as the Depository for a Global Security or its nominee is the
registered owner of such book-entry Global Security, such Depository or such
nominee, as the case may be, will be considered the sole owner or holder of the
Debt Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as described below or in the applicable Prospectus
Supplement or such Global Security, owners of beneficial interest in a Global
Security will not be entitled to have any of the individual Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of any such Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the applicable Indenture. Beneficial owners of Debt Securities evidenced by a
Global Security will not be considered the owners or holders thereof under the
applicable Indenture for any purpose, including with respect to the giving of
any direction, instructions or approvals to the Trustee thereunder. Accordingly,
each person owning a beneficial interest in a Global Security with respect to
which DTC is the Depository must rely on the procedures of DTC and, if such
person is not a Participant, on the procedures of the Participant through which
such person owns its interests, to exercise any rights of a holder under the
applicable Indenture. The Company understands that, under existing industry
practice, if it requests any action of holders or if an owner of a beneficial
interest in a Global Security desires to give or take any action which a holder
is entitled to give or take under the applicable Indenture, DTC would authorize
the Participants holding the relevant beneficial interest to give or take such
action, and such Participants would authorize beneficial owners through such
Participants to give or take such actions or would otherwise act upon the
instructions of beneficial owners holding through them.

Payments of principal of (and applicable premium, if any) and interest on
individual Debt Securities represented by a Global Security registered in the
name of a Depository or its nominee will be made to or at the direction of the
Depository or its nominee, as the case may be, as the registered owner of the
Global Security under the applicable Indenture. Under the terms of the
applicable Indenture, the Company, any Paying Agent, the Security Registrar and
the Trustee may treat the persons in whose name Debt Securities, including a
Global Security, are registered as the owners thereof for the purpose of
receiving such payments. Consequently, neither the Company, any Paying Agent,
the Security Registrar nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of Debt
Securities (including principal, premium, if any, and interest). The Company
believes, however, that it is currently the policy of DTC to immediately credit
the accounts of relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant Global Security as shown on the records of DTC or its nominee. The
Company also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
street name, and will be the responsibility of such Participants. Redemption
notices with respect to any Debt Securities represented by a Global Security
will be sent to the Depository or its nominee. If less than all of the Debt
Securities of any series are to be redeemed, the Company expects the Depository
to determine the amount of the interest of each Participant in such Debt
Securities to be redeemed to be determined by lot. None of the Company, the
Trustee, any Paying Agent or the Security Registrar for such Debt Securities
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Security for such Debt Securities or for maintaining any records with respect
thereto.

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Neither the Company, any Paying Agent, the Security Registrar nor the
Trustee will be liable for any delay by the holders of a Global Security or the
Depository in identifying the beneficial owners of Debt Securities and the
Company and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the holder of a Global Security or the Depository
for all purposes. The rules applicable to DTC and its Participants are on file
with the Commission.

If a Depository for any Debt Securities is at any time unwilling, unable or
ineligible to continue as depository and a successor depository is not appointed
by the Company within 90 days, the Company will issue individual Debt Securities
in exchange for the Global Security representing such Debt Securities. In
addition, the Company may at any time and in its sole discretion, subject to any
limitations described in the Prospectus Supplement or the Global Security
relating to such Debt Securities, determine not to have any of such Debt
Securities represented by one or more Global Securities and in such event will
issue individual Debt Securities in exchange for the Global Security or
Securities representing such Debt Securities. Individual Debt Securities so
issued will be issued in denominations of $5,000 and integral multiples of
$1,000.

The Debt Securities of a series may also be issued in whole or in part in
the form of one or more bearer global securities (a "Bearer Global Security")
that will be deposited outside of the United States with a depository, or with a
nominee for such depository, identified in the applicable Prospectus Supplement
and/or Global Security. Any such Bearer Global Securities may be issued in
temporary or permanent form. The specific terms and procedures, including the
specific terms of the depository arrangement, with respect to any portion of a
series of Debt Securities to be represented by one or more Bearer Global
Securities will be described in the applicable Prospectus Supplement and/or
Global Security.

DESCRIPTION OF PREFERRED STOCK

The Company is authorized to issue up to 5,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). No shares of Preferred
Stock are outstanding as of the date hereof.

Under the Company's Articles of Incorporation, shares of Preferred Stock may
be issued from time to time, in one or more series, as authorized by the Board
of Directors. Prior to the issuance of shares of each series, the Board of
Directors is required by the Maryland General Corporation Law (the "MGCL") and
the Company's Articles of Incorporation to adopt resolutions and file Articles
Supplementary (the "Articles Supplementary") with the State Department of
Assessments and Taxation of Maryland, setting for each such series the
designations, powers, preferences and rights of the shares of such series and
the qualifications, limitations or restrictions thereon, including, but not
limited to, dividend rights, dividend rate or rates, conversion rights, voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences as are permitted by
Maryland law. Because the Board of Directors has the power to establish the
terms and conditions of each series of Preferred Stock, it may afford the
holders of any series of Preferred Stock power, preferences and rights, voting
or otherwise, senior to the rights of holders of shares of Common Stock. The
issuance of Preferred Stock could have the effect of delaying or preventing a
change in control of the Company.

The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Articles of Incorporation (including the
applicable Articles Supplementary) and bylaws.

GENERAL

Subject to limitations prescribed by Maryland law and the Company's Articles
of Incorporation and bylaws, the Board of Directors is authorized to fix the
number of shares constituting each series of

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Preferred Stock and the designations, powers, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereon, including such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be fixed by
resolution of the Board of Directors or a duly authorized committee thereof. The
Preferred Stock will, when issued, be fully paid and nonassessable.

Reference is made to the Prospectus Supplement relating to the series of
Preferred Stock offered thereby for specific terms, including:

(1) the title and stated value of such Preferred Stock;

(2) the number of shares of such Preferred Stock offered, the liquidation
preference per share and the offering price of such Preferred Stock;

(3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to such Preferred Stock;

(4) whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on such Preferred Stock shall
accumulate;

(5) the procedures for any auction and remarketing, if any, for such
Preferred Stock;

(6) the provisions for a sinking fund, if any, for such Preferred Stock;

(7) any voting rights of such Preferred Stock;

(8) the provisions for redemption, if applicable, of such Preferred Stock;

(9) any listing of such Preferred Stock on any securities exchange;

(10) the terms and conditions, if applicable, upon which such Preferred Stock
will be convertible into Common Stock of the Company, including the
conversion price (or manner of calculation thereof) and conversion
period;

(11) if appropriate, a discussion of United States federal income tax
considerations applicable to such Preferred Stock;

(12) any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT;

(13) the relative ranking and preferences of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company;

(14) any limitations on issuance of any series of Preferred Stock ranking
senior to or on a parity with such series of Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company; and

(15) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.

RANK

Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will, with respect to dividend rights and rights upon liquidation, dissolution
or winding up of the Company, rank (i) senior to all classes or series of Common
Stock of the Company, and to all equity securities ranking junior to such
Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company; (ii) on a parity with all equity
securities issued by the Company the terms of which specifically provide that
such equity securities rank on a parity with the Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the
Company; and (iii) junior to all equity securities issued by the Company the
terms of which specifically provide that such equity securities rank senior to
the

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Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company. As used in the Company's Articles of
Incorporation for these purposes, the term "equity securities" does not include
convertible debt securities.

DIVIDENDS

Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will have the rights with respect to payment of dividends set forth below.

Holders of shares of the Preferred Stock of each series shall be entitled to
receive, when, as and if declared and authorized by the Board of Directors of
the Company, out of assets of the Company legally available for payment, cash
dividends at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the stock transfer books of the Company on such record dates
as shall be fixed by the Board of Directors of the Company.

Dividends on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will accumulate from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are noncumulative, then the holders of such
series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date.

If any shares of the Preferred Stock of any series are outstanding, no full
dividends shall be declared or paid or set apart for payment on the Preferred
Stock of the Company of any other series ranking, as to dividends, on a parity
with or junior to the Preferred Stock of such series for any period unless (i)
if such series of Preferred Stock has a cumulative dividend, full cumulative
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof irrevocably set apart for such payment on
the Preferred Stock of such series for all past dividend periods and the then
current dividend period or (ii) if such series of Preferred Stock does not have
a cumulative dividend, full dividends for the then current dividend period have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof irrevocably set apart for such payment on the Preferred
Stock of such series. When dividends are not paid in full (or a sum sufficient
for such full payment is not so irrevocably set apart) upon the shares of
Preferred Stock of any series and the shares of any other series of preferred
stock ranking on a parity as to dividends with the Preferred Stock of such
series, all dividends declared upon shares of Preferred Stock of such series and
any other series of preferred stock ranking on a parity as to dividends with
such Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share on the Preferred Stock of such series and such other series
of preferred stock shall in all cases bear to each other the same ratio that
accrued and unpaid dividends per share on the shares of Preferred Stock of such
series (which shall not include any accumulation in respect of unpaid dividends
for prior dividend periods if such Preferred Stock does not have a cumulative
dividend) and such other series of preferred stock bear to each other. Except as
may otherwise be set forth in the applicable Prospectus Supplement, no interest,
or sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on Preferred Stock of such series which may be in arrears.

Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
irrevocably set apart for payment for all past dividend periods and the then
current dividend period or (ii) if such series of Preferred Stock does not have
a cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum

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sufficient for the payment thereof irrevocably set apart for payment for the
then current dividend period, no dividends (other than in Common Stock or other
capital stock ranking junior to the Preferred Stock of such series as to
dividends and upon liquidation, dissolution or winding up of the Company) shall
be declared or paid or set aside for payment or other distribution shall be
declared or made upon the Common Stock or any other capital stock of the Company
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends or upon liquidation, dissolution or winding up of the Company, nor
shall any Common Stock or any other capital stock of the Company ranking junior
to or on a parity with the Preferred Stock of such series as to dividends or
upon liquidation, dissolution or winding up of the Company be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Company (except by conversion into or exchange for other
capital stock of the Company ranking junior to the Preferred Stock of such
series as to dividends and upon liquidation, dissolution or, winding up of the
Company).

Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains payable.

REDEMPTION

If so provided in the applicable Prospectus Supplement, the shares of
Preferred Stock will be subject to mandatory redemption or redemption at the
option of the Company, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus Supplement.

The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in such year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock does not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement.

Notwithstanding the foregoing, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of any series
of Preferred Stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof irrevocably set apart for
payment for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
irrevocably set apart for payment for the then current dividend period, no
shares of any series of Preferred Stock shall be redeemed unless all outstanding
shares of Preferred Stock of such series are simultaneously redeemed; provided,
however, that the foregoing shall not prevent the purchase or acquisition of
shares of Preferred Stock of such series pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Preferred
Stock of such series. In addition, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all outstanding shares
of any series of Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof irrevocably set
apart for payment for all past dividend periods and the then current dividend
period and (ii) if such series of Preferred Stock does not have a cumulative
dividend, full dividends on the Preferred Stock of any series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof irrevocably set apart for payment for the then current dividend
period, the Company shall not purchase or otherwise acquire directly or
indirectly any shares of Preferred Stock of such series (except by conversion
into or exchange for capital stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation, dissolution
or winding up of the Company); provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of Preferred Stock of such series
to preserve the REIT status of the

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Company or pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of Preferred Stock of such series.

If fewer than all of the outstanding shares of Preferred Stock of any series
are to be redeemed, the number of shares to be redeemed will be determined by
the Company and such shares may be redeemed pro rata from the holders of record
of such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or any other
equitable method determined by the Company that will not result in violation of
the ownership limitations set forth in the Articles of Incorporation.

Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of a share of Preferred
Stock of any series to be redeemed at the address shown on the stock transfer
books of the Company. Each notice shall state: (i) the redemption date; (ii) the
number of shares and series of the Preferred Stock to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such Preferred
Stock are to be surrendered for payment of the redemption price; (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date; and (vi) the date upon which the holder's conversion rights, if any, as to
such shares shall terminate. If fewer than all the shares of Preferred Stock of
any series are to be redeemed, the notice mailed to each such holder thereof
shall also specify the number of shares of Preferred Stock to be redeemed from
each such holder. If notice of redemption of any shares of Preferred Stock has
been given and if the funds necessary for such redemption have been irrevocably
set apart by the Company in trust for the benefit of the holders of any shares
of Preferred Stock so called for redemption, then from and after the redemption
date dividends will cease to accrue on such shares of Preferred Stock, such
shares of Preferred Stock shall no longer be deemed outstanding and all rights
of the holders of such shares will terminate, except the right to receive the
redemption price.

LIQUIDATION PREFERENCE

Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Stock or any other class or series of capital
stock of the Company ranking junior to the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up of the Company, the
holders of each series of Preferred Stock shall be entitled to receive out of
assets of the Company legally available for distribution to stockholders
liquidating distributions in the amount of the liquidation preference per share
(set forth in the applicable Prospectus Supplement and Articles Supplementary),
plus an amount equal to all dividends accrued and unpaid thereon (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend). Except as
may otherwise be set forth in the applicable Prospectus Supplement, after
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Preferred Stock will have no right or claim to any of
the remaining assets of the Company. In the event that, upon any such voluntary
or involuntary liquidation, dissolution or winding up, the legally available
assets of the Company are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of capital stock of the
Company ranking on a parity with the Preferred Stock in the distribution of
assets upon liquidation, dissolution or winding up of the Company, then the
holders of the Preferred Stock and all other such classes or series of capital
stock shall share ratably in any such distribution of assets in proportion to
the full liquidating distributions to which they would otherwise be respectively
entitled.

If liquidating distributions shall have been made in full to all holders of
shares of Preferred Stock, the remaining assets of the Company shall be
distributed among the holders of any other classes or series of capital stock
ranking junior to the Preferred Stock upon liquidation, dissolution or winding
up of the Company, according to their respective rights and preferences and in
each case according to their respective number of shares. For such purposes, the
consolidation or merger of the Company with or into

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any other corporation, or the sale, lease, transfer or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.

VOTING RIGHTS

Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.

Except as may otherwise be set forth in the applicable Prospectus
Supplement, whenever dividends on any shares of Preferred Stock shall be in
arrears for the equivalent of six or more quarterly periods, the holders of such
shares of Preferred Stock (voting separately as a class with all other series of
preferred stock upon which like voting rights have been conferred and are
exercisable) will be entitled to vote for the election of two additional
directors of the Company at the next annual meeting of stockholders, and at each
subsequent annual meeting, until (i) if such series of Preferred Stock has a
cumulative dividend, all dividends accumulated on such shares of Preferred Stock
for the past dividend periods and the then current dividend period shall have
been fully paid or declared and a sum sufficient for the payment thereof
irrevocably set apart for payment or (ii) if such series of Preferred Stock does
not have a cumulative dividend, four consecutive quarterly dividends shall have
been fully paid or declared and a sum sufficient for the payment thereof
irrevocably set apart for payment. In such case, the entire Board of Directors
of the Company will be increased by two directors.

Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company shall not, without the
affirmative vote or consent of the holders of at least 66% of the shares of each
series of Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting (each such series voting separately as a
class), (i) authorize or create, or increase the authorized or issued amount of,
any class or series of capital stock ranking senior to such series of Preferred
Stock with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the Company or reclassify any
authorized capital stock of the Company into any such shares, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) amend, alter or repeal the provisions
of the Company's Articles of Incorporation (including the Articles Supplementary
for such series of Preferred Stock), whether by merger, consolidation or
otherwise, so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Preferred Stock or the holders
thereof; provided, however, that any increase in the amount of the authorized
preferred stock or the creation or issuance of any other series of preferred
stock, or any increase in the amount of authorized shares of such series or any
other series of Preferred Stock, in each case ranking on a parity with or junior
to the Preferred Stock of such series with respect to payment of dividends and
the distribution of assets upon liquidation, dissolution or winding up of the
Company, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.

The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption upon proper notice and sufficient funds
shall have been irrevocably deposited in trust to effect such redemption.

CONVERSION RIGHTS

The terms and conditions, if any, upon which shares of any series of
Preferred Stock are convertible into Common Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
number of shares of Common Stock into which the Preferred Stock is convertible,
the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring

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an adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Preferred Stock.

RESTRICTIONS ON OWNERSHIP

With certain exceptions, the Company's Articles of Incorporation provide
that no person may own, or be deemed to own by virtue of the attribution rules
of the Code, more than 9.8% of the value of the Company's issued and outstanding
shares of capital stock. See "Restrictions on Ownership of Offered Securities."
These ownership limitations could have the effect of discouraging a takeover or
other transaction in which holders of some of shares of capital stock of the
Company might receive a premium for their shares over the then prevailing market
price or which such holders might believe to be otherwise in their best
interest.

DESCRIPTION OF DEPOSITARY SHARES

GENERAL

The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular class or series of Preferred Stock, as specified in the applicable
Prospectus Supplement. Shares of a class or series of Preferred Stock
represented by Depositary Shares will be deposited under a separate Deposit
Agreement (each, a "Deposit Agreement") among the Company and the depositary
named therein (the "Preferred Stock Depositary"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Receipt will be entitled, in
proportion to the fractional interest of a share of a particular class or series
of Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipt, to all the rights and preferences of the class or series of
the Preferred Stock represented by such Depositary Shares (including dividend,
voting, conversion, redemption and liquidation rights).

The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Stock by the Company to a Preferred Stock
Depositary, the Company will cause such Preferred Stock Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request, and the statements made hereunder relating to the Deposit Agreement and
the Depositary Receipt to be issued thereunder are summaries of certain
anticipated provisions thereof and do not purport to be complete and are subject
to, and qualified in their entirety by reference to, all of the provisions of
the applicable Deposit Agreement and related Depositary Receipts.

DIVIDENDS AND OTHER DISTRIBUTIONS

The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of a class or series of Preferred Stock
to the record holders of Depositary Receipts evidencing the related Depositary
Shares in proportion to the number of the such Depositary Receipts owned by such
holders, subject to certain obligations of holders to file proofs, certificates
and other information and to pay certain charges and expenses to such Preferred
Stock Depositary.

In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Stock Depositary, unless such Preferred Stock
Depositary determines that it is not feasible to make such distribution, in
which case the Preferred Stock Depositary may, with the approval of the Company,
sell such property and distribute the net proceeds from such sale to such
holders.

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No distribution will be made in respect of any Depositary Share to the
extent that it represents any class or series of Preferred Stock that has been
converted or exchanged.

WITHDRAWAL OF STOCK

Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary (unless the related Depositary Shares have
previously been called for redemption or converted), the holders thereof will be
entitled to delivery at such office, to or upon each such holder's order, of the
number of whole or fractional shares of the class or series of Preferred Stock
and any money or other property represented by the Depositary Shares evidenced
by such Depositary Receipts. Holders of Depositary Receipts will be entitled to
receive whole or fractional shares of the related class or series of Preferred
Stock on the basis of the proportion of Preferred Stock represented by each
Depositary Share as specified in the applicable Prospectus Supplement, but
holders of such shares of Preferred Stock will not thereafter be entitled to
receive Depositary shares therefor. If the Depositary Receipts delivered by the
holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of shares of Preferred Stock to be
withdrawn, the Preferred Stock Depositary will deliver to such holder at the
same time a new Depositary Receipt evidencing such excess number of Depositary
Shares.

REDEMPTION OF DEPOSITARY SHARES

Whenever the Company redeems shares of Preferred Stock held by the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem as of the same
redemption date the number of the Depositary Shares representing shares of such
class or series of Preferred Stock so redeemed, provided the Company shall have
paid in full to the Preferred Stock Depositary the redemption price of the
Preferred Stock to be redeemed plus an amount equal to any accrued and unpaid
dividends thereon to the date fixed for redemption. The redemption price per
Depositary Share will be equal to the corresponding proportion of the redemption
price and any other amounts per share payable with respect to such class or
series of Preferred Stock. If fewer than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional Depositary Shares) or
by any other equitable method determined by the Depositary.

From and after the date fixed for redemption, all dividends in respect of
the shares of a class or series of Preferred Stock so called for redemption will
cease to accrue, the Depositary Shares so called for redemption will no longer
be deemed to be outstanding and all rights of the holders of the Depositary
Receipts evidencing the Depositary Shares so called for redemption will cease,
except the right to receive any moneys payable upon such redemption and any
money or other property to which the holders of such Depositary Receipts were
entitled upon such redemption upon surrender thereof to the Preferred Stock
Depositary.

VOTING OF THE PREFERRED STOCK

Upon receipt of notice of any meeting at which the holders of a class or
series of Preferred Stock deposited with the Preferred Stock Depositary are
entitled to vote, the Preferred Stock Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Receipts evidencing the Depositary Shares which represent such class or series
of Preferred Stock. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the record
date for such class or series of Preferred Stock) will be entitled to instruct
the Preferred Stock Depositary as to the exercise of the voting rights
pertaining to the amount of Preferred Stock represented by such holder's
Depositary Shares. The Preferred Stock Depositary will vote the amount of such
class or series of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred

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Stock Depositary will abstain from voting the amount of Preferred Stock
represented by such Depositary Shares to the extent it does not receive specific
instructions from the holder of Depositary Receipts evidencing such Depositary
Shares.

LIQUIDATION PREFERENCE

In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the Depositary Share evidenced by such Depositary
Receipt as set forth in the applicable Prospectus Supplement.

CONVERSION OF PREFERRED STOCK

The Depositary Shares, as such, will not be convertible into Common Stock or
any other securities or property of the Company, except in connection with
certain conversions in connection with the preservation of the Company's status
as a REIT. See "Restrictions on Ownership of Offered Securities." Nevertheless,
if so specified in the applicable Prospectus Supplement relating to an offering
of Depositary Shares, the Depositary Receipts may be surrendered by holders
thereof to the applicable Preferred Stock Depositary with written instructions
to the Preferred Stock Depositary to instruct the Company to cause conversion of
a class or series of Preferred Stock represented by the Depositary Shares
evidenced by such Depositary Receipts into whole shares of Common Stock, other
shares of a class or series of Preferred Stock of the Company or other shares of
stock, and the Company has agreed that upon receipt of such instructions and any
amounts payable in respect thereof, it will cause the conversion thereof
utilizing the same procedures as those provided for delivery of Preferred Stock
to effect such conversion. If the Depositary Shares evidenced by a Depositary
Receipt are to be converted in part only, a Depositary Receipt or Receipts will
be issued for any Depositary Shares not to be converted. No fractional shares of
Common Stock will be issued upon conversion, and if such conversion will result
in a fractional share being issued, an amount will be paid in cash by the
Company equal to the value of the fractional Interest based upon the closing
price of the Common Stock on the last business day prior to the conversion.

AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT

The form of Depositary Receipt evidenced in Depositary Shares which
represent the Preferred Stock and any provision of the Deposit Agreement may at
any tine be amended by agreement between the Company and the Preferred Stock
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
Preferred Stock will not be effective unless such amendment has been approved by
the existing holders of at least two-thirds of the applicable Depositary Shares
evidenced by the applicable Depositary Receipts then outstanding. No amendment
shall impair the right, subject to certain anticipated exceptions in the Deposit
Agreements, of any holder of Depositary Receipts to surrender any Depositary
Receipt with instructions to deliver to the holder the related class or series
of Preferred Stock and all money and other property, if any, represented
thereby, except in order to comply with law. Every holder of an outstanding
Depositary Receipt at the time any such amendment becomes effective shall be
deemed, by continuing to hold such Depositary Receipt, to consent and agree to
such amendment and to be bound by the applicable Deposit Agreement as amended
thereby.

The Deposit Agreement may be terminated by the Company upon not less than 30
days' prior written notice to the Preferred Stock Depositary if such termination
is necessary to preserve the Company's status as a REIT. The Company has agreed
that if the Deposit Agreement is terminated to preserve the Company's status as
a REIT, then the Company will use its best efforts to list each class or series
of Preferred Stock issued upon surrender of the related Depositary Shares. In
addition, the Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares shall have been redeemed, (ii) there shall have
been a final distribution in respect of each class or series of Preferred Stock
in

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connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of the Depositary
Receipts evidencing the Depositary Shares representing such class or series of
Preferred Stock or (iii) each share of the related Preferred Stock shall have
been converted into Common Stock or other Preferred Stock of the Company not so
represented by Depositary Shares or has been exchanged for Debt Securities.

CHARGES OF A PREFERRED STOCK DEPOSITARY

The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. In addition,
the Company will pay the fees and expenses of the Preferred Stock Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Stock Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.

RESIGNATION AND REMOVAL OF DEPOSITARY

The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary. A successor
Preferred Stock Depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least the amount set forth in the Deposit Agreement.

MISCELLANEOUS

The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Stock Depositary with respect to the related Preferred Stock.

Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of a class or
series of Preferred Stock represented by the Depositary Shares), gross
negligence or willful misconduct, and the Company and the Preferred Stock
Depositary will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Receipts, Depositary Shares or shares of a class or
series of Preferred Stock represented thereby unless satisfactory indemnity is
furnished. The Company and the Preferred Stock Depositary may rely on written
advice of counsel or accountants, or information provided by persons presenting
shares of Preferred Stock represented thereby for deposit, holders of Depositary
Receipts or other persons believed in good faith to be competent to give such
information, and on documents believed in good faith to be genuine and signed by
a proper party.

RESTRICTIONS ON OWNERSHIP OF OFFERED SECURITIES

For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year, and its capital stock must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of 12 months or during a proportionate part of a shorter taxable year.

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The Company's Articles of Incorporation provide, subject to certain
exceptions specified therein, that no holder may own, or be deemed to own by
virtue of the attribution rules of the Code, more than 9.8% by value (the
"Ownership Limit") of the outstanding capital stock of the Company. Any transfer
of Offered Securities that would create a direct or indirect ownership of shares
of Common Stock and/or Preferred Stock (collectively the "Stock") in excess of
the Ownership Limit or result in the Company being "closely held" within the
meaning of Code Section 856(h) shall be null and void, and the intended
transferee will acquire no rights to the Offered Securities. Any transfer of
Stock that would result in the capital stock of the Company being beneficially
owned by fewer than 100 persons shall be null and void, and the interested
transferee will acquire no rights to such shares of Stock.

The constructive ownership rules are complex and may cause Common Stock or
Preferred Stock owned directly or constructively by a group of related
individuals and/or entities to be deemed constructively owned by one individual
or entity. As a result, the acquisition of less than 9.8% of the value of the
capital stock of the Company (or the acquisition of an interest in an entity
which owns such capital stock) by an individual or entity could cause that
individual or entity (or another individual or entity) to own constructively in
excess of 9.8% of the value of the capital stock, and thus subject such capital
stock to the Ownership Limit. Moreover, an individual or an entity which owns
warrants to acquire Common Stock or Preferred Stock ("Warrants") will be deemed
to own such Stock for purposes of applying the Ownership Limit.

The Board of Directors may, upon receipt of either a certified copy of a
ruling from the Internal Revenue Service or an opinion of counsel satisfactory
to the Board of Directors, but shall in no case be required to, exempt a person
(the "Exempted Holder") from the Ownership Limit if the ruling or opinion
concludes that no person who is an individual as defined in Section 542(a)(2) of
the Code will, as the result of the ownership of shares by the Exempted Holder,
be considered to have Beneficial Ownership of an amount of capital stock that
will violate the Ownership Limit.

The foregoing restrictions on transferability and ownership will not apply
if the Board of Directors determines that it is no longer in the best interests
of the Company to attempt to qualify, or to continue to qualify, as a REIT.

All certificates representing shares of Common Stock and Preferred Stock
will bear a legend referring to the restrictions described above.

All stockholders of record who own more than a specified percentage of the
outstanding capital stock of the Company must file a written statement with the
Company containing certain information specified in Treasury Regulations,
pertaining to the actual ownership of capital stock of the Company, within 30
days after December 31 of each year. In addition, each holder of capital stock
of the Company and/or Warrants shall, upon demand, be required to disclose to
the Company in writing such information with respect to the direct, indirect and
constructive ownership of capital stock of the Company as the Board of Directors
deems necessary to comply with the provisions of the Code applicable to a REIT
or to comply with the requirements of any taxing authority or governmental
agency.

In addition to preserving the Company's status as a REIT, the Ownership
Limit may have the effect of precluding an acquisition of control of the REIT
without the approval of the Board of Directors. These ownership limitations
could have the effect of discouraging a takeover or other transaction in which
holders of some, or a majority, of shares of capital stock of the Company might
receive a premium for their shares over the then prevailing market price or
which such holders might believe to be otherwise in their best interest.

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CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS TO THE COMPANY OF ITS REIT ELECTION

Pryor Cashman Sherman & Flynn LLP, which has acted as tax counsel to the
Company in connection with the formation of the Company and the Company's
election to be taxed as a REIT, has reviewed the following discussion and is of
the opinion that it fairly summarizes the material federal income tax
considerations relevant to the Company's status as a REIT. The following summary
of certain federal income tax considerations is based on current law, is for
general information only, and is not tax advice. The tax treatment of a holder
of any of the Offered Securities will vary depending upon the terms of the
specific securities acquired by such holder, as well as his particular situation
and this discussion does not purport to deal with all aspects of taxation that
may be relevant to particular holders of Offered Securities in light of their
personal investment or tax circumstances or to certain types of stockholders
(including insurance companies, financial institutions, or broker-dealers,
tax-exempt organizations, foreign corporations, and persons who are not citizens
or residents of the United States) subject to special treatment under the United
States federal income tax laws.

The REIT provisions of the Code are highly technical and complex. The
following sets forth the material aspects of the sections that govern the
federal income tax treatment of a REIT. This summary is qualified in its
entirety by the applicable Code provisions, rules and regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all of
which are subject to change (which change may apply retroactively).

EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS SUPPLEMENT, AS
WELL AS HIS TAX ADVISOR, REGARDING THE TAX CONSEQUENCES OF THE ACQUISITION,
OWNERSHIP AND SALE OF THE OFFERED SECURITIES, INCLUDING THE FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIP AND
SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

TAXATION OF THE COMPANY AS A REIT

GENERAL. The Company has elected to be taxed as a REIT under Sections 856
through 860 of the Code, commencing with its taxable year ended December 31,
1994. The Company believes that it has been organized and operated in such a
manner as to qualify for taxation as a REIT under the Code for such taxable year
and for all subsequent taxable years ending prior to the date of this Prospectus
and the Company intends to continue to operate in such a manner in the future,
but no assurance can be given that it will operate in a manner so as to qualify
or remain qualified.

In the opinion of Pryor Cashman Sherman & Flynn LLP, the Company has been
organized in conformity with the requirements for qualification and taxation as
a REIT, commencing with its initial taxable year ended December 31, 1994, and
for all subsequent taxable years to date, and its method of operation will
enable it to continue to meet the requirements for qualification and taxation as
a REIT under the Code. It must be emphasized that this opinion is based on
various assumptions and is conditioned upon such assumptions and certain
representations made by the Company as to factual matters. Pryor Cashman Sherman
& Flynn LLP is not aware of any facts or circumstances that are inconsistent
with these representations and assumptions. Moreover, such qualification and
taxation as a REIT depends upon the Company's ability to meet, through actual
annual operating results, distribution levels and diversity of stock ownership,
the various qualification tests imposed under the Code and discussed below, the
results of which will not be reviewed by Pryor Cashman Sherman & Flynn LLP.
Accordingly, no assurance can be given that the actual results of the Company's
operation for any particular taxable year will satisfy such requirements. See
"--Failure to Qualify."

If the Company qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on its net income that is currently
distributed to stockholders. This treatment substantially eliminates the "double
taxation" (at both the corporate and stockholder levels) that generally results
from

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investment in a regular corporation. However, the Company will be subject to
federal income tax as follows: First, the Company will be taxed at regular
corporate rates on any undistributed REIT taxable income, including
undistributed net capital gains (although stockholders will receive an
offsetting credit against their own federal income liability for federal income
taxes paid by the Company with respect to any such undistributed net capital
gain). Second, under certain circumstances, the Company may be subject to the
"corporate alternative minimum tax" on its items of tax preference. Third, if
the Company has (i) net income from the sale or other disposition of
"foreclosure property" which is held primarily for sale to customers in the
ordinary course of business or (ii) other non-qualifying net income from
foreclosure property, it will be subject to tax at the highest corporate rate on
such income. Fourth, if the Company has net income from prohibited transactions
(which are, in general, certain sales or other dispositions of property held
primarily for sale to customers in the ordinary course of business, other than
certain involuntary conversions or foreclosure property), such income will be
subject to a 100% tax. Fifth, if the Company should fail to satisfy the 75%
gross income test or the 95% gross income test (as discussed below), but has
nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on an amount equal
to (a) the gross income attributable to the greater of the amount by which the
Company fails the 75% or 95% test, multiplied by (b) a fraction intended to
reflect the Company's profitability. Sixth, if the Company should fail to
distribute during each calendar year at least the sum of (i) 85% of its REIT
ordinary income for such year, (ii) 95% of its REIT capital gain net income for
such year, and (iii) any undistributed taxable income from prior years, the
Company would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. Seventh, with respect to an
asset (a "Built-In Gain Asset") acquired by the Company from a corporation which
is or has been a C corporation (i.e., generally, a corporation subject to full
corporate-level tax) in a transaction in which the basis of the Built-In Gain
Asset in the hands of the Company is determined by reference to the basis of the
asset in the hands of the C corporation, if the Company recognizes gain on the
disposition of such asset during the ten-year period (the "Recognition Period")
beginning on the date on which such asset was acquired by the Company, then, to
the extent of the Built-In Gain (i.e., the excess of (a) the fair market value
of such asset over (b) the Company's adjusted basis in such asset, determined as
of the beginning of the Recognition Period), such gain will be subject to tax at
the highest corporate tax rate pursuant to Internal Revenue Service ("IRS")
regulations that have not yet been promulgated. The results described above with
respect to the recognition of Built-In Gain assume that the Company will make an
election pursuant to IRS Notice 88-19.

REQUIREMENTS FOR QUALIFICATION. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or directors,
(2) the beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest, (3) which would be taxable as
a domestic corporation, but for Code Sections 856 through 859, (4) which is
neither a financial institution nor an insurance company subject to certain
provisions of the Code, (5) the beneficial ownership of which is held by 100 or
more persons (determined without reference to any rules of attribution), (6)
during the last half of each taxable year, not more than 50% in value of the
outstanding stock of which is owned, directly or constructively, by five or
fewer individuals (as defined in the Code to include certain entities) and (7)
which meets certain other tests, described below, regarding the matter of its
income and assets. The Code provides that conditions (1) to (4), inclusive, must
be met during the entire taxable year and that condition (5) must be met during
at least 335 days of a taxable year of 12 months, or during a proportionate part
of a taxable year of less than 12 months.

The Company has previously issued sufficient shares to allow it to satisfy
conditions (5) and (6). In addition, the Company's Articles of Incorporation
provide for restrictions regarding ownership and transfer of the Company's
capital stock, which restrictions are intended to assist the Company in
continuing to satisfy the share ownership requirements described in (5) and (6)
above. The ownership and transfer restrictions are described in "Restrictions on
Ownership of Offered Securities." Prior to 1998, the Company's failure to comply
with the Treasury regulations requiring a REIT to maintain permanent records
showing the actual ownership of its stock (the "Stock Ownership Regulations")
could have resulted

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in the Company's disqualification as a REIT for the taxable year of the failure.
Pursuant to the Taxpayer Relief Act of 1997 (the "Act"), effective for the
Company's taxable years beginning on or after January 1, 1998, so long as the
Company complies with the Stock Ownership Regulations, the Company will not lose
its qualifications as a REIT as a result of a violation of the foregoing
requirement if it neither knows nor upon exercising reasonable diligence would
have known of such violation. Effective for the Company's taxable years
beginning on or after January 1, 1998, instead of being disqualified as a REIT,
the Company would be subject to a financial penalty of $25,000 ($50,000 for
intentional violations) for any year in which the Company fails to comply with
the Stock Ownership Regulations. Furthermore, if the Company can establish that
its failure to comply was due to reasonable cause and not to willful neglect, no
penalty would be imposed.

In addition, a corporation may not elect to become a REIT unless its taxable
year is the calendar year. From its inception, the Company's taxable has been
the calendar year.

The Company currently owns and operates the majority of the Properties
through partnerships in which the Operating Partnership and direct, wholly-owned
subsidiaries (the "Company Subs") are partners. Code Section 856(i), as amended
by the Act, provides that a corporation, 100% of whose stock is held by a REIT,
is a "qualified REIT subsidiary." A "qualified REIT subsidiary" is not treated
as a separate corporation, and all assets, liabilities, and items of income,
deduction, and credit of a "qualified REIT subsidiary" are treated as assets,
liabilities and such items (as the case may be) of the REIT. Thus, in applying
the requirements described herein, the Company's "qualified REIT subsidiaries"
will be ignored, and all assets, liabilities and items of income, deduction, and
credit of such subsidiaries will be treated as assets, liabilities and items of
the Company. The Company has not, however, sought or received a ruling from the
IRS that any of the Company Subs is a "qualified REIT subsidiary."

In the case of a REIT that is a partner in a partnership, either directly,
or indirectly through a "qualified REIT subsidiary," Treasury regulations
provide that the REIT will be deemed to own its proportionate share of the
assets of the partnership and will be deemed to be entitled to the income of the
partnership attributable to such share. In addition, the character of the assets
and gross income of the partnership will retain the same character in the hands
of the REIT for purposes of Code Section 856, including satisfying the gross
income tests and the asset tests. Thus, the Company's proportionate share of the
assets, liabilities and items of income of the partnerships in which the Company
is a partner, directly or indirectly, will be treated as the assets, liabilities
and items of income of the Company for purposes of applying the requirements
described herein.

INCOME TESTS. In order to maintain qualification as a REIT, the Company,
for taxable years beginning on or after January 1, 1998, must satisfy two gross
income requirements annually. First, at least 75% of the Company's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived directly or indirectly from investments relating to real property or
mortgages on real property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments (the
"75% Test"). Second, at least 95% of the Company's gross income (excluding gross
income from "prohibited transactions") for each taxable year must be derived
from such real property investments, dividends, interest and gain from the sale
or disposition of stock or securities, or from any combination of the foregoing
(the "95% Test" and, together with the 75% Test, the "Gross Income Tests"). For
taxable years beginning on or after January 1, 1998, "qualifying income" for
purposes of the 95% test, except to the extent provided by regulations, includes
payments to the Company under any interest rate swap, cap agreement, option,
futures contract, forward rate agreement, or any similar financial instrument
entered into by the Company to hedge its indebtedness as well as any gain from
the disposition of any of the foregoing instruments.

Rents received by the Company will qualify as "rents from real property" in
satisfying the Gross Income Tests only if several conditions are met. First, the
amount of rent must not be based in whole or in part on the income or profits
derived by any person from the property. However, an amount received or

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accrued generally will not be excluded from the term "rents from real property"
solely by reason of being based on a fixed percentage or percentages of receipts
or sales. Second, the Code provides that, for taxable years beginning before
August 5, 1997, rents received from a tenant will not qualify as "rents from
real property" in satisfying the Gross Income Tests if the REIT, or a direct or
constructive owner of 10% or more of the REIT, directly or constructively owns
10% or more of such tenant (a "Related Tenant"). Effective for the Company's
taxable years beginning on or after January 1, 1998, the constructive ownership
rules for determining whether a tenant is a Related Tenant are modified with
respect to partners and partnerships to provide that attribution between
partners and partnerships only occurs when a partner owns, directly and/or
indirectly, a 25%-or-greater interest in the partnership. Thus, a tenant will
not be treated as a Related Tenant with respect to the Company if shares of the
Company are owned by a partnership and a partner that owns, directly and
indirectly, a less-than-25% interest in such partnership also owns an interest
in the tenant. A tenant will also not be a Related Tenant with respect to the
Company if shareholders of the Company and owners of such tenant are partners in
a partnership in which neither own, directly and/or indirectly, a 25%-or-greater
interest in such partnership. Third, if rent attributable to personal property
leased in connection with a lease of real property is greater than 15% of the
total rent received under the lease, then the portion of rent attributable to
such personal property will not qualify as "rents from real property." The
Company has not and will not (i) charge rent for any property that is based in
whole or in part on the income or profits of any person (except by reason of
being based on a fixed percentage of receipts or sales, as described above),
(ii) rent any property to a Related Party Tenant, or (iii) derive rental income
attributable to personal property (other than personal property leased in
connection with the lease of real property, the amount of which is less than 15%
of the total rent received under the lease). Finally, for rents received to
qualify as "rents from real property," the Company generally must not operate or
manage the property or furnish or render services to tenants, other than through
an "independent contractor" from whom the Company derives no revenue. The
"independent contractor" requirement, however, does not apply to the extent the
services provided by the Company are "usually or customarily rendered" in
connection with the rental of space for occupancy only and are not otherwise
considered "rendered to the occupant." The Operating Partnership will provide
certain services with respect to the Properties that are intended to comply with
the "usually or customarily rendered" requirement. In the case of any services
that are not "usual and customary" under the foregoing rules ("Impermissible
Services"), the Company intends to employ independent contractors to perform
such services.

Pursuant to the Act, the Company for its taxable years beginning on or after
January 1, 1998, may render a DE MINIMIS amount of Impermissible Services to
tenants, or in connection with the management of a property, without having
otherwise qualifying rents from the property being disqualified as "rents from
real property." In order to qualify for this DE MINIMIS exception, the value of
such Impermissible Services may not exceed 1% of the Company's gross income from
the property, and such Impermissible Services may not be valued at less than
150% of the Company's direct cost of such services. Notwithstanding the
foregoing, the amount of any income that the Company receives in respect of its
performance of impermissible services ("Impermissible Services Income") will not
be treated as "rents from real property" for purposes of the Gross Income Tests
and, accordingly, must be considered together with other nonqualifying income
for purposes of satisfying the Gross Income Tests.

The Operating Partnership may receive fees in consideration of the
performance of management and administrative services with respect to Properties
that are not owned entirely by the Operating Partnership. Although a portion of
such management and administrative fees generally will not qualify under the
Gross Income Tests, the Company believes that the aggregate amount of such fees
(and any other nonqualifying income) in any taxable year will not cause the
Company to exceed the limits on non-qualifying income under the Gross Income
Tests.

If the Company fails to satisfy one or both of the Gross Income Tests for
any taxable year, it may nevertheless qualify as a REIT for such year if it is
entitled to relief under certain provisions of the Code. These relief provisions
will generally be available if the Company's failure to meet such tests is due
to

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reasonable cause and not due to willful neglect, the Company attaches a schedule
of the sources of its income to its federal income tax return, and any incorrect
information on the schedule is not due to fraud with intent to evade tax. It is
not possible, however, to state whether in all circumstances the Company would
be entitled to the benefit of these relief provisions. As discussed above under
"--General," even if these relief provisions were to apply, a tax would be
imposed with respect to the excess net income.

SALES OR DISPOSITIONS OF CERTAIN ASSETS. The Company, as a REIT, is
generally subject to restrictions that limit its ability to sell real property.
The Company is subject to a tax of 100% on its gain (i.e., the excess, if any,
of the amount realized over the Company's adjusted basis in the property) from
each sale of property (excluding certain property obtained through foreclosure
and property that is involuntarily converted in a transaction that is subject to
Code Section 1033) in which it is a dealer. In calculating its gains subject to
the 100% tax, the Company is not allowed to offset gains on sales of property
against losses on other sales of property in which it is a dealer.

Under the Code, the Company would be deemed to be a dealer in any property
that the Company holds primarily for sale to customers in the ordinary course of
its business. Such determination is a factual inquiry, and absolute legal
certainty of the Company's status generally cannot be provided. However, the
Company will not be treated as a dealer in real property if (i) it has held the
property for at least four years for the production of rental income, (ii)
capitalized expenditures on the property in the four years preceding sale do not
exceed 30% of the net selling price of the property, and (iii) the Company
either (a) has seven or fewer sales of property (excluding involuntarily
converted property subject to Code Section 1033 or certain property obtained
through foreclosure) for the year or (b) the aggregate tax bases (as determined
for purposes of computing earnings and profits) of property sold during the
taxable year is 10% or less of the aggregate tax basis of all assets (as so
determined) of the Company as of the beginning of the taxable year and (iv) if
the requirement in clause (iii)(a) is not satisfied, substantially all of the
marketing and development expenditures with respect to the property sold are
made through an independent contractor from whom the Company derives no income.
The sale of more than one property to one buyer as part of one transaction
constitutes one sale. However, the failure of the Company to meet these "safe
harbor" requirements does not necessarily mean that it is a dealer in real
property for purposes of the 100% tax.

ASSET TESTS. The Company, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets must be represented by real
estate assets (including (i) assets held by the Company or the Company's
qualified REIT subsidiaries, and the Company's allocable share of real estate
assets held by partnerships in which the Company owns an interest directly
and/or indirectly and (ii) stock or debt instruments held for not more than one
year purchased with the proceeds of a stock offering or long-term (at least five
years) debt offering of the Company), cash, cash items and government
securities. Second, not more than 25% of the Company's total assets may be
represented by securities other than those in the 75% asset class. Third, of the
investments included in the 25% asset class, the value of any one issuer's
securities owned by the Company may not exceed (at the end of the quarter in
which such securities are acquired) 5% of the value of the Company's total
assets and the Company may not own more than 10% of any one issuer's outstanding
voting securities.

A REIT which meets the foregoing asset tests at the close of any quarter
will not lose its status as a REIT for failure to satisfy the asset tests at the
end of a later quarter solely by reason of changes in asset values. If the
failure to satisfy the asset tests results from an acquisition of securities or
other property during a quarter (including as a result of the REIT increasing
its interest in any partnership in which the REIT is a partner), the failure can
be cured by disposition of sufficient nonqualifying assets within 30 days after
the close of that quarter. The Company intends to maintain adequate records of
the value of its assets to ensure compliance with the asset tests and to take
such other actions within 30 days after the close of any quarter as may be
required to cure any noncompliance. If the Company failed to cure noncompliance
within such time period, the Company would cease to qualify as a REIT.

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ANNUAL DISTRIBUTION REQUIREMENTS. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its stockholders in an amount at least equal to (A) the sum of (i) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Company's net capital gain) and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of non-cash income. In addition, if the Company disposes of any Built-In
Gain Asset during its Recognition Period, the Company will be required, pursuant
to Treasury regulations which have not yet been promulgated, to distribute at
least 95% of the Built-in Gain (after tax), if any, recognized on the
disposition of such asset. Such distributions must be paid in the taxable year
to which they relate, or in the following taxable year if declared before the
Company timely files its tax return for such prior year and if paid on or before
the first regular dividend payment after such declaration. To the extent that
the Company does not distribute all of its net capital gain or distributes at
least 95%, but less than 100%, of its "REIT taxable income," as adjusted, it
will be subject to tax thereon at regular ordinary and capital gain corporate
tax rates. As discussed below, shareholders of the Company for taxable years of
the Company beginning on or after January 1, 1998, would receive a tax credit
for the corporate level taxes paid by the Company on any undistributed capital
gains. See "Taxation of Domestic Shareholders" below. Furthermore, if the
Company should fail to distribute during each calendar year at least the sum of
(i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT capital
gain income for such year, and (iii) any undistributed taxable income from prior
periods, the Company would be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed.

As discussed more completely below under "Taxation of Domestic
Shareholders," the Company may elect for its taxable years beginning on or after
January 1, 1998, to retain any long-term capital gain recognized during a
taxable year ("Retained Gains") and pay a corporate level tax on such Retained
Gains. The Retained Gains are then considered to have been distributed to
holders of Common Stock.

In the opinion of Pryor Cashman Sherman & Flynn LLP, the Company has
satisfied the annual distribution requirements for taxable years ended prior to
the date of this Prospectus. The Company intends to continue to make timely
distributions sufficient to satisfy this annual distribution requirement in the
future. In this regard, the partnership agreement of the Operating Partnership
authorizes the Company, as general partner, to take such steps as may be
necessary to cause the Operating Partnership to distribute to its partners an
amount sufficient to permit the Company to meet these distribution requirements.
It is possible, however, that the Company, from time to time, may not have
sufficient cash or other liquid assets to meet the 95% distribution requirement
due to timing differences between the actual receipt of income and actual
payment of deductible expenses and the inclusion of such income and deduction of
such expenses in arriving at taxable income of the Company, or if the amount of
nondeductible expenses such as principal amortization or capital expenditures
exceed the amount of non-cash deductions. In the event that such timing
differences occur, in order to meet the 95% distribution requirement, the
Company may, or may cause the Operating Partnership to, arrange for short-term,
or possibly long-term, borrowing to permit the payment of required dividends. If
the amount of nondeductible expenses exceeds non-cash deductions, the Operating
Partnership may refinance its indebtedness to reduce principal payments and
borrow funds for capital expenditures.

Under certain circumstances, the Company may be able to rectify a failure to
meet the distribution requirement for a year by paying to stockholders in a
later year "deficiency dividends," which may be included in the Company's
deduction for dividends paid for the earlier year. Thus, the Company may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the Company will be required to pay interest to the IRS based upon the amount of
any deduction taken for deficiency dividends.

FAILURE TO QUALIFY. If the Company fails to qualify for taxation as a REIT
in any taxable year, and the relief provisions do not apply, the Company will be
subject to tax (including any applicable corporate alternative minimum tax) on
its taxable income at regular corporate rates. Such a failure could have an

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adverse effect on the market value and marketability of the Offered Securities.
Distributions to stockholders in any year in which the Company fails to qualify
will not be deductible by the Company nor will they be required to be made. In
such event, to the extent of current and accumulated earnings and profits, all
distributions to stockholders will be taxable as ordinary income and, subject to
certain limitations of the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific statutory
provisions, the Company will also be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances the Company would be
entitled to such statutory relief.

TAXATION OF STOCKHOLDERS

TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS. As long as the Company qualifies
as a REIT, distributions made to the Company's taxable domestic stockholders out
of current or accumulated earnings and profits (and not designated as capital
gain dividends) will be taken into account by them as ordinary income and will
not be eligible for the dividends received deduction for corporations.
Distributions that are designated as capital gain dividends will be taxed as
long-term capital gains (to the extent they do not exceed the Company's actual
net capital gain for the taxable year) without regard to the period for which
the stockholder has held its stock. Pursuant to the Act, the portion of any such
capital gain dividends attributable to gain recognized after July 28, 1997 with
respect to capital assets held by the Company for more than 18 months on the
date of sale will be treated as long-term capital gain taxable to the
stockholders at a maximum rate of 20% (or 25% to the extent any such gain arises
from the recapture of straight-line depreciation deductions reflected in the
basis of real property that has been held by the Company for more than 18 months
as of the date of sale), and the portion of such capital gain dividends
attributable to gain recognized with respect to property that has been held for
more than one year but not more than 18 months will be treated as long-term
capital gain taxable to the stockholders at a maximum rate of 28%. However,
corporate stockholders may be required to treat up to 20% of certain capital
gain dividends as ordinary income.

As indicated above, pursuant to the Act, effective for its taxable years
beginning on or after January 1, 1998, the Company may elect to retain its net
long term capital gains recognized during a taxable year ("Retained Gains") and
pay a corporate-level tax on such Retained Gains. Corporations are currently
subject to a maximum 35% tax rate on recognized capital gains. A stockholder
owning shares of the Company's stock on December 31st of a taxable year in which
the Company has Retained Gains would be required to include in gross income such
stockholder's proportionate share of the Retained Gains (as designated by the
Company in a notice mailed to stockholders within the first 60 days of the next
year). Each stockholder would be deemed to have paid a proportional share of the
amount of tax paid by the Company with respect to the Retained Gains and would
be allowed a credit or refund for the tax deemed to be paid by him. Stockholders
receiving any such Retained Gains would increase their adjusted basis in their
shares of Company stock by an amount equal to the Retained Gains included in
their income reduced by the amount of Company tax deemed to have been paid by
them.

Distributions (not designated as capital gain dividends) in excess of
current and accumulated earnings and profits will not be taxable to a domestic
stockholder to the extent that they do not exceed the adjusted basis of the
stockholder's shares, but rather will reduce the adjusted basis of such shares.
To the extent that such distributions exceed the adjusted basis of a domestic
stockholder's shares, they will be included in income as capital gains (provided
that the shares have been held as a capital asset). Any such distribution in
excess of a stockholder's adjusted basis in his shares of Company stock will be
included in income as long-term capital gain subject to a maximum tax rate of
20% if the gain is recognized after July 28, 1997, and the shares have been held
for more than 18 months at the time of distribution, long-term capital gain
subject to a maximum tax rate of 28% if the shares have been held for more than
one year but not more than 18 months as of the time of distribution and
short-term capital gain subject to a maximum rate of up to 39.6% if the shares
were held for only one year or less. In addition, any dividend declared by the
Company in October, November or December of any year payable to a stockholder of
record on a specific

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date in any such month shall be treated as both paid by the Company and received
by the stockholder on December 31 of such year, provided that the dividend is
actually paid by the Company during January of the following calendar year.
Stockholders may not include in their individual income tax returns any net
operating losses or capital losses of the Company.

Distributions made by the Company and gain arising from the sale or exchange
by a shareholder of shares of stock will not be treated as passive activity
income, and, as a result, shareholders generally will not be able to apply any
"passive losses" against such income or gain. Distributions made by the Company
(to the extent they do not constitute a return of capital) generally will be
treated as investment income for purposes of computing the investment interest
limitation. Gain arising from the sale or other disposition of stock, however,
will not be treated as investment income unless the stockholder elects to reduce
the amount of his total net capital gain eligible for the 28% maximum rate by
the amount of the gain with respect to the stock.

Upon any sale or other disposition of stock, a stockholder will recognize
gain or loss for federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and the fair market value of any
property received on such sale or other disposition and (ii) the holder's
adjusted basis in such shares of stock for tax purposes. Such gain or loss will
be long-term capital gain or loss if the shares have been held for more than one
year. In general, any loss upon a sale or exchange of shares of stock by a
stockholder who has held such shares for six months or less (after applying
certain holding period rules) will be treated a long-term capital loss to the
extent that distributions from the Company were treated by such stockholder as
long-term capital gain.

BACKUP WITHHOLDING. The Company will report to its domestic stockholders
and the IRS the amount of dividends paid during each calendar year, and the
amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a stockholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless such holder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (b) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding and otherwise
complies with applicable requirements of the backup withholding rules. A
stockholder who does not provide the Company with its correct taxpayer
identification number may also be subject to penalties imposed by the IRS. Any
amount paid as backup withholding generally will be creditable against the
stockholder's income tax liability. In addition, the Company may be required to
withhold a portion of capital gain distributions made to any stockholders who
fail to certify their non-foreign status to the Company. See "--Taxation of
Foreign Stockholders" below.

TAXATION OF TAX-EXEMPT STOCKHOLDERS. Based upon published rulings by the
IRS, distributions by the Company to a stockholder that is a tax exempt entity
will not constitute "unrelated business taxable income" (UBTI"), provided that
the tax-exempt entity has not financed the acquisition of its shares with
"acquisition indebtedness" within the meaning of the Code and the shares are not
otherwise used in an unrelated trade or business of the tax-exempt entity.
Similarly, income from the sale of shares of stock will not constitute UBTI,
provided that the tax-exempt entity has not financed the acquisition of its
shares with "acquisition indebtedness" within the meaning of the Code and the
shares are not otherwise used in an unrelated trade or business of the
tax-exempt entity.

For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans, exempt from federal income taxation under Code
Sections 501(c)(7), (c)(9), (c)(17) and (c)(20), respectively, income from an
investment in the Company will constitute UBTI unless the organization is able
to properly deduct amounts set aside or placed in reserve for certain purposes
so as to offset the income generated by its investment in the Company. Such
prospective investors should consult their own tax advisors concerning these
"set-aside" and reserve requirements.

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Notwithstanding the above, however, a portion of the dividends paid by a
"pension-held REIT" shall be treated as UBTI as to any trust which (i) is
described in Code Section 4011(a), (ii) is tax-exempt under Code Section 501(a)
and (iii) holds more than 10% (by value) of the interests in the REIT.
Tax-exempt pension funds that are described in Code section 401(a) and exempt
from tax under Code section 501(a) are referred to below as "qualified trusts."

A REIT is a "pension-held REIT" if (i) it would not have qualified as a REIT
but for the fact that Code Section 856(h)(3) provides that stock owned by
qualified trusts shall be treated, for purposes of the "not closely held"
requirement, as owned by the beneficiaries of the trust (rather than by the
trust itself), and (ii) either (a) at least one such qualified trust holds more
than 25% (by value) of the interests in the REIT or (b) one or more such
qualified trusts, each of whom owns more than 10% (by value) of the interests in
the REIT, hold in the aggregate more than 50% (by value) of the interests in the
REIT. The percentage of any REIT dividend treated as UBTI is equal to the ration
of (i) the UBTI earned by the REIT (treating the REIT as if it were a qualified
trust and therefore subject to tax on UBTI) to (ii) the total gross income of
the REIT. A DE MINIMIS exception applies where the percentage is less than 5%
for any year. The provisions requiring qualified trusts to treat a portion of
REIT distributions as UBTI will not apply if the REIT is able to satisfy the
"not closely held" requirement without relying upon the "look-through" exception
with respect to qualified trusts. The Company does not expect to be classified
as a "pension-held REIT."

TAXATION OF FOREIGN STOCKHOLDERS. The rules governing U.S. federal income
taxation of nonresident alien individuals, foreign corporations, foreign
partnerships and other foreign stockholders (collectively, "Non-U.S.
Stockholders") are complex, and no attempt will be made herein to provide more
than a limited summary of such rules. Prospective Non-US. Stockholders should
consult with their tax advisors to determine the impact of U.S. federal, state
and local income tax laws with regard to an investment in stock of the Company,
including any reporting requirements.

Distributions by the Company to a Non-U.S. Stockholder that are neither
attributable to gain from sales or exchanges by the Company of U.S. real
property interests and not designated by the Company as capital gain dividends
will be treated as dividends of ordinary income to the extent that they are made
out of current or accumulated earnings and profits of the Company. Such
distributions will ordinarily be subject to a withholding tax equal to 30% of
the gross amount of the distribution unless an applicable tax treaty reduces
that tax. Under certain treaties, lower withholding rates generally applicable
to dividends do not apply to dividends from a REIT. However, if income from the
investment in the stock is treated as effectively connected with the Non-U.S.
Stockholder's conduct of a U.S. trade or business, the Non-U.S. Stockholder
generally will be subject to a tax at graduated rates, in the same manner as
U.S. stockholders are taxed with respect to such and are generally not subject
to withholding. Any such effectively connected distributions received by a
Non-U.S. Stockholder that is a corporation may also be subject to an additional
branch profits tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. The Company expects to withhold U.S. income tax at
the rate of 30% on the gross amount of any dividends paid to a Non-U.S.
Stockholder unless (i) a lower treaty rate applies and the required form
evidencing eligibility for that reduced rate is filed with the Company or (ii)
the Non-U.S. Stockholder files an IRS Form 4224 with the Company claiming that
the distribution is "effectively connected" income.

Distributions in excess of current and accumulated earnings and profits of
the Company will not be taxable to a stockholder to the extent that they do not
exceed the adjusted basis of the stockholder's shares, but rather will reduce
the adjusted basis of such shares. For FIRPTA withholding purposes (discussed
below) such distribution will be treated as consideration for the sale or
exchange shares of stock. To the extent that such distributions exceed the
adjusted basis of a Non-U.S. Stockholder's shares, they will give rise to tax
liability if the Non-U.S. Stockholder would otherwise be subject to tax on any
gain from the sale or disposition of his shares, as described below. If it
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the distribution will be subject to withholding at the rate applicable to
dividends. However, the Non-U.S.

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Stockholder may seek a refund of such amounts from the IRS if it is subsequently
determined that such distribution was, in fact, in excess of current and
accumulated earnings and profits of the Company.

Distributions to a Non-U.S. stockholder that are designed by the Company at
the time of distribution as capital gain dividends (other than those arising
from the dispositions a U.S. real property interest) generally will not be
subject to U.S. federal income taxation unless (i) investment in the stock is
effectively connected with the Non-U.S. stockholder's U.S. trade or business, in
which case the Non-U.S. stockholder will be subject to the same treatment as
U.S. stockholder with respect to such gain (except that a stockholder that is a
foreign corporation may also be subject to the 30% branch profits tax, as
discussed above), or (ii) the Non-U.S. stockholder is a nonresident alien
individual who is present in the United States for 183 days or more during the
taxable year and has a "tax home" in the United States, in which case the
non-resident alien individual will be subject to a 30% tax on the individual's
capital gains.

For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real
property interests will be taxed to a Non-U.S. Stockholder under the provisions
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). Under
FIRPTA, these distributions are taxed to a Non-U.S. Stockholder as if such gain
were effectively connected with a U.S. business. Thus, Non-U.S. Stockholders
would be taxed at the normal capital gain rates applicable to U.S. stockholders
(subject to applicable alternative minimum tax and a special alternative minimum
tax in the case of nonresident alien individuals). Also, distributions subject
to FIRPTA may be subject to a 30% branch profits tax in the hands of a corporate
Non-U.S. Stockholder not entitled to treaty relief or exemption. The Company is
required by applicable Treasury regulations to withhold 35% of any distribution
to a Non-U.S. Stockholder that could be designated by the Company as a capital
gain dividend. This amount is creditable against the Non-U.S. Stockholder's
United States federal income tax liability. The Company or any nominee (e.g.,
broker holding shares in street name) may rely on a certificate of Non-U.S.
Stockholder status on Form W-8 to determine whether withholding is required on
gains realized from the disposition of U.S. real property interests. A U.S.
stockholder who holds shares of stock on behalf of a Non-U.S. Stockholder will
bear the burden of withholding, provided that the Company has properly
designated the appropriate portion of a distribution as a capital gain dividend.

Gain recognized by a Non-U.S. Stockholder upon a sale of stock of a REIT
generally will not be taxed under FIRPTA if the REIT is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by foreign persons. It is currently anticipated that the Company
will be a "domestically controlled REIT," and therefore the sale of stock of the
Company will not be subject to taxation under FIRPTA. However, because the
Common Stock is publicly traded, no assurance can be given that the Company will
continue to be a domestically-controlled REIT. Notwithstanding the foregoing,
gain not subject to FIRPTA will be taxable to a Non-U.S. Stockholder if (i)
investment in the Stock is "effectively connected" with the Non-U.S.
Stockholder's U.S. trade or business, in which case the Non-U.S. Stockholder
will be subject to the same treatment as U.S. stockholders with respect to such
gain (a Non-U.S. Stockholder that is a foreign corporation may also be subject
to a 30% branch profits tax, as discussed above), or (ii) the Non-U.S.
Stockholder is a nonresident alien individual who was present in the United
States for 183 days or more during the taxable year and has a "tax home" in the
United States, in which case the nonresident alien individual will be subject to
a 30% tax on the individual's capital gains. If the gain on the sale of stock
were to be subject to taxation under FIRPTA, the Non-U.S. Stockholder would be
subject to the same treatment as U.S. stockholders with respect to such gain
(subject to applicable alternative minimum tax, possible withholding tax and a
special alternative minimum tax in the case of nonresident alien individuals).

If the Company is not or ceases to be, a "domestically-controlled REIT,"
whether gain arising from the sale or exchange of shares of stock by a Non-U.S.
Stockholder would be subject to United States taxation under FIRPTA as a sale of
a "United States real property interest" will depend on whether any class of
stock of the Company is "regularly traded" (as defined by applicable Treasury
regulations) on an established securities market (e.g., the New York Stock
Exchange), as is the case with the Common Stock,

39
<PAGE>
and on the size of the selling Non-U.S. Stockholder's interest in the Company.
In the case where the Company is not or ceases to be a "domestically-controlled
REIT" and any class of stock of the stockholder the Company is "regularly
traded" on an established securities market at any time during the calendar
year, a sale of shares of that class of stock of the Company by a Non-U.S.
Stockholder will only be treated as a sale of a "United States real property
interest" (and thus subject to taxation under FIRPTA) if such selling
stockholder beneficially owns (including by attribution) more than 5% of the
total fair market value of all of the shares of such "regularly traded" class of
stock at any time during the five-year period ending either on the date of such
sale or other applicable determination date. To the extent the Company had one
or more classes of stock outstanding that were "regularly traded," but the
Non-U.S. Stockholder sold shares of a class of stock of the Company that was not
"regularly traded," the sale of shares of such letter class would be treated as
a sale of a "United States real property interest under the foregoing rule only
if the shares of such latter class acquired by the Non-U.S. Stockholder had a
total net market value on the date they were acquired that was greater than 5%
of the total fair market value of the "regularly traded" class of Company stock
having the lowest fair market value (or with respect to a nontraded class of
Company stock convertible into a "regularly traded" market value on the date of
acquisition of the total fair market value of the "regularly traded' class into
which it is convertible. If gain on the sale or exchange of shares of stock were
subject to taxation under FIRPTA, the Non U.S. Stockholder would be subject to
regular United States income tax with respect to such gain in the same manner as
a U.S. Stockholder (subject to any applicable alternative minimum tax and a
special alternative minimum tax in the case of nonresident alien individuals);
provided, however, that deductions otherwise allowable will be allowed as
deductions only if the tax returns were filed within the time prescribed by law.
In general, the purchaser of the stock would be required to withhold and remit
to the IRS, 10% of the amount realized by the seller on the sale of such stock.

NEW WITHHOLDING REGULATIONS. Final regulations pertaining to withholding
tax on income paid to foreign persons and related matters (the "New Withholding
Regulations") were issued by the Treasury Department on October 6, 1997 and
published in the Federal Register on October 14, 1997. In general, the New
Withholding Regulations do not significantly alter the substantive withholding
and information reporting requirements, but unify current certification
procedures and forms and clarify reliance standards. For example, the New
Withholding Regulations adopt a certification rule which was in the proposed
regulations, under which a foreign shareholder who wishes to claim the benefit
of an applicable treaty rate with respect to dividends received from a United
States corporation will be required to satisfy certain certification and other
requirements. In addition, the New Withholding Regulations require a corporation
that is a REIT to treat as a dividend the portion of a distribution that is not
designated as a capital gain dividend or return of basis and apply the 30%
withholding tax (subject to any applicable deduction or exemption) to such
portion, and to apply the FIRPTA withholding rules (discussed above) with
respect to the portion of the distribution deemed to have been designated by the
REIT as capital gain dividend. The New Withholding Regulations will generally be
effective for payments made after December 31, 1999, subject to certain
transition rules. EXCEPT AS NOTED, THE DISCUSSION SET FORTH ABOVE IN "TAXATION
OF FOREIGN SHAREHOLDERS" DOES NOT TAKE THE NEW WITHHOLDING REGULATIONS INTO
ACCOUNT. PROSPECTIVE FOREIGN SHAREHOLDERS ARE STRONGLY URGED TO CONSULT THEIR
TAX ADVISORS WITH RESPECT TO THE NEW WITHHOLDING REGULATIONS.

OTHER TAX MATTERS

EFFECT ON REIT QUALIFICATION OF TAX STATUS OF OPERATING PARTNERSHIP AND
OTHER PARTNERSHIPS. Substantially, all of the Company's investments will be
made through the Operating Partnership, which in turn will hold interests in
other property partnerships. In general, partnerships are "pass-through"
entities which are not subject to federal income tax. Rather, partners are
allocated their proportionate shares of the items of income, gain, loss,
deduction and credit of a partnership, and are potentially subject to tax
thereon, without regard to whether the partners receive a distribution from the
partnership. The Company will

40
<PAGE>
include in its income its proportionate share of the foregoing partnership items
for purposes of the Gross income Tests in the computation of its REIT taxable
income. Moreover, for purposes of the REIT asset tests, the Company will include
its proportionate share of assets held by the Operating Partnership. See
"--Taxation of the Company as a REIT."

The ownership of an interest in a partnership may involve special tax risks.
Such risks include possible challenge by the IRS of (a) allocations of income
and expense items, which could affect the computation of income of the Company
and (b) the status of the partnerships as partnerships (as opposed to
associations taxable as corporations) for income tax purposes. This partnership
status risk should be substantially diminished by Treasury regulations issued on
December 17, 1996, permitting election of partnership status effective January
1, 1997 by the filing of Form 8823 or in certain other ways specified in the new
regulations. With respect to the Company's existing partnership investments, the
new regulations provide that (1) previously claimed partnership status, if
supported by a reasonable basis for classification, will generally be respected
for all periods prior to January 1, 1997; and (2) previously claimed partnership
status will generally be retained after January 1, 1997, unless an entity elects
to change its status by filing formal election. The Company believes that it has
a reasonable basis for the classification of the Operating Partnership and the
property partnerships as partnerships for federal income tax purposes and has
neither filed does the Company intend to file an election to be treated
otherwise. If any of the partnerships, elected to be treated as an association,
they would be taxable as a corporations. In such a situation, if the Company's
ownership in any of the partnerships exceeded 10% of the partnership's voting
interests or the value of such interest exceeded 5% of the value of the
Company's assets, the Company would cease to qualify as a REIT. Furthermore, in
such a situation, distributions from any of the partnerships to the Company
would be treated as dividends, which are not taken into account in satisfying
the 75% Gross Income Test described above and which could make it more difficult
for the Company to meet the 75% asset test described above. Finally, in such a
situation, the Company would not be able to deduct its share of losses generated
by the partnerships in computing its taxable income. See "Taxation of the
Company as a REIT--"Failure to Qualify" above for a discussion of the effect of
the Company's failure to meet such tests for a taxable year. The Company
believes that each of the partnerships have been and will continue to be treated
for tax purposes as a partnership (and not as an association taxable as a
corporation). No assurance can be given that the IRS may not successfully
challenge the tax status of any of the partnerships.

PARTNERSHIP ALLOCATIONS. Although a partnership agreement will generally
determine the allocation of income and loss among partners, such allocations
will be disregarded for tax purposes if they do not comply with the provisions
of Code Section 704(b) and the Treasury regulations promulgated thereunder.
Generally, Code Section 704(b) and the Treasury regulations promulgated
thereunder require that partnership allocations respect the economic arrangement
of the partners.

If an allocation is not recognized for federal income tax purposes, the item
subject to the allocation will be reallocated in accordance with the partners'
interests in the partnership, which will be determined by taking into account
all of the facts and circumstances relating to the economic arrangement of the
partners with respect to such item. The Operating Partnership's allocations of
taxable income and loss are intended to comply with the requirements of Code
Section 704b) and the Treasury regulations promulgated thereunder.

The Partnership Agreement provides that net income or net loss of the
Operating Partnership will generally be allocated to the Company and the limited
partners in accordance with their respective percentage interests in the
Operating Partnership. In addition, allocations of net income or net loss will
be subject to compliance with provisions of Code Sections 704(b) and 704(c) and
the Treasury regulations promulgated thereunder.

TAX ALLOCATIONS WITH RESPECT TO CONTRIBUTED PROPERTIES. Pursuant to Section
704(c) of the Code, income, gain, loss, and deduction attributable to
appreciated property that is contributed to a partnership in exchange for an
interest in the partnership must be allocated for federal income tax purposes in
a

41
<PAGE>
manner ensuring that the contributor is charged with the unrealized gain
associated with the property at the time of the contribution. The amount of such
unrealized gain is generally equal to the difference between the fair market
values of the contributed property at the time of contribution and the adjusted
tax basis of such property at the time of contribution (the "Book-Tax
Difference"). In general, the fair market value of certain Properties (or
interests in partnerships holding certain Properties) contributed to the
Operating Partnership are substantially in excess of their adjusted tax bases.
The partnership agreements of the Operating Partnership and other partnerships
controlled by the Operating Partnership and/or the Company require that
allocations attributable to each item of contributed property be made so as to
allocate the tax depreciation available with respect to such property first to
the partners other than the partner that contributed the property, to the extent
of, and in proportion to, their book depreciation, and then, if any tax
depreciation remains, to the partner that contributed the property. Upon the
disposition of any item of contributed property, any gain attributable to an
excess, at such time, of basis for book purposes over basis for tax purposes
would be allocated for tax purposes to the contributing partner. These
allocations are intended to be consistent with the Treasury regulations under
Section 704(c) of the Code.

In general, certain persons who acquired interests in the Operating
Partnership in connection with the contribution of property (including interests
in other partnerships) to the Operating Partnership are allocated
disproportionately lower amounts of depreciation deductions for tax purposes
relative to their percentage interests in the Operating Partnership, and
disproportionately greater shares relative to their percentage interests in the
Operating Partnership of the taxable income and gain on the sale by the
Partnerships of one or more of the contributed properties. These tax allocations
will tend to reduce or eliminate the Book-Tax Difference over the life of the
partnerships. The partnership agreements of the Operating Partnership and other
partnerships that it controls adopt the "traditional method" of making
allocations under Section 704(c) of the Code, unless otherwise agreed to between
the Company and the contributing partner. Under the traditional method the
amounts of the special allocations of depreciation and gain under the special
rules of Section 704(c) of the Code have been and will continue to be limited by
the so-called "ceiling rule" which will not always eliminate the Book-Tax
Difference on an annual basis or with respect to a specific transaction such as
a sale. Thus, the carryover basis of the contributed assets in the hands of the
partnerships will cause the Company to be allocated less depreciation than would
be available for newly purchased properties. As a result, the Company will be
required to distribute more dividends in order to satisfy a 95% distribution
requirement than it would have had the Company purchased the assets for cash in
a taxable transaction. See "Annual Distribution Requirements" above for a
discussion of distributions requirements. In addition, the amount of tax-free
return of capital to each domestic stockholder will be less than the amount such
Stockholder would have realized had the Company purchased assets for cash in a
taxable transaction.

BASIS IN OPERATING PARTNERSHIP INTEREST. The Company's adjusted tax basis
in its interest in the operating Partnership generally (i) will be equal to the
amount of cash and the basis of any other property contributed to the Operating
Partnership by the Company, (ii) will be increased by (a) its allocable share of
the Operating Partnership's income and (b) its allocable share of indebtedness
of the Operating Partnership and (iii) will be reduced, but not below zero, by
the Company's allocable share of (a) losses suffered by the Operating
Partnership, (b) the amount of cash distributed to the Company and (c) by
constructive distributions resulting from a reduction in the Company's share of
indebtedness of the Operating Partnership.

If the allocation of the Company's distributive share of the Operating
Partnership's loss exceeds the adjusted tax basis of the company's partnership
interest in the Operating Partnership, the recognition of such excess loss will
be deferred until such time and to the extent that the Company has adjusted tax
basis in its interest in the Operating Partnership. To the extent that the
Operating Partnership's distributions, or any decrease in the Company's share of
the indebtedness of the Operating partnership (such decreases being considered a
constructive cash distribution to the partners), exceeds the Company's adjusted
tax basis, such excess distributions (including such constructive distributions)
will constitute taxable income to

42
<PAGE>
the Company. Such taxable income will normally be characterized as a capital
gain, and if the Company's interest in the Operating Partnership has been held
for longer than the long-term capital gain holding period (currently one year),
such distributions and constructive distributions) will constitute taxable
income to the Company.

STATE AND LOCAL TAXES. The Company and its stockholders may be subject to
state or local taxation in various state or local jurisdictions, including those
in which it or they transact business or reside. The state and local tax
treatment of the Company and its stockholders may not conform to the federal
income tax consequences discussed above. Consequently, prospective investors
should consult their own tax advisors regarding the effect of state and local
tax laws on an investment in the Offered Securities.

PLAN OF DISTRIBUTION

The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Offered Securities will be named in the applicable Prospectus
Supplement.

Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market prices
at the time of sale or at negotiated prices. The Company also may, from time to
time, authorize underwriters acting as the Company's agents to offer and sell
the Offered Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of Offered
Securities, underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from any entity for whom they may act as agent. Underwriters
may sell Offered Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.

Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts, concessions and commissions
received by them and any profit realized by them on resale of the Offered
Securities may be deemed to be underwriting discounts and commissions, under the
Securities Act. Underwriters, dealers and agents may be entitled, under
agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act.

If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount of Offered Securities
sold pursuant to Contracts shall be not less nor more than, the respective
amounts stated in the applicable Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Offered Securities covered by
its Contracts shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject, and
(ii) if the Offered Securities are being sold to underwriters, the Company shall
have sold to

43
<PAGE>
such underwriters the total principal amount of the Offered Securities less the
principal amount thereof covered by Contracts.

Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Company and its subsidiaries
in the ordinary course of business.

EXPERTS

The financial statements of the Operating Partnership as of December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997 included in this Prospectus have been so included in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting. The financial statements
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
of the Company for the year ended December 31, 1997, have been so incorporated
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting. The
financial statements incorporated in this Prospectus by reference to the Current
Reports on Form 8-K of the Company, dated September 18, 1997 and January 16,
1998, respectively, have been so incorporated in reliance on the reports of
Schonbraun Safris McCann Bekritsky & Co., L.L.C., independent accountants, given
on the authority of said firm as experts in auditing and accounting. The
financial statements of The Mack Group incorporated in this Prospectus by
reference to the Company's Proxy Statement, dated November 10, 1997, except as
they relate to the unaudited nine-month periods ended September 30, 1997 and
1996 and except as they relate to Patriot American Office Group, have been
audited by Price Waterhouse LLP, independent accountants, and, insofar as they
relate to Patriot American Office Group, by Ernst & Young LLP, independent
auditors. Such financial statements have been so incorporated in reliance on the
reports of such independent accountants given on the authority of such firms as
experts in auditing and accounting. The financial statements for Prudential
Business Campus and for Morris County Financial Center incorporated in this
Prospectus by reference to the Current Report on Form 8-K of the Company, dated
June 12, 1998 have been so incorporated in reliance on the reports of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting. The financial statements, except for
Prudential Business Campus and Morris County Financial Center, incorporated in
this Prospectus by reference to the Current Reports on Form 8-K of the Company,
dated June 12, 1998 have been so incorporated in reliance on the reports of
Schonbraun Safris McCann Bekritsky & Co., L.L.C., independent accountants, given
on the authority of said firm as experts in auditing and accounting.

LEGAL MATTERS

Certain legal matters in connection with the Offered Securities as well as
certain legal matters described under "Certain United States Federal Income Tax
Considerations to the Company of its REIT Election" will be passed upon for the
Company by Pryor Cashman Sherman & Flynn LLP, New York, New York. Certain legal
matters relating to Maryland law, including the validity of the issuance of
certain of the securities registered hereby, will be passed upon for the Company
by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.

44
<PAGE>
MACK-CALI REALTY, L.P.
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND OTHER INFORMATION

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS:

Report of Independent Accountants.......................................................................... F-2

Consolidated Balance Sheets as of March 31, 1998 (unaudited), December 31, 1997 and 1996................... F-3

Consolidated Statements of Operations for the three months ended March 31, 1998 and 1997 (unaudited) and
the three years in the period ended December 31, 1997.................................................... F-4

Consolidated Statement of Changes in Partners' Capital for the three months ended March 31, 1998
(unaudited) and the three years in the period ended December 31, 1997.................................... F-5

Consolidated Statements of Cash Flows for the three months ended March 31, 1998 and 1997 (unaudited) and
the three years in the period ended December 31, 1997.................................................... F-6

Notes to Consolidated Financial Statements................................................................. F-7

FINANCIAL STATEMENT SCHEDULE:

Schedule III--Real Estate Investments and Accumulated Depreciation as of December 31, 1997................. F-37

OTHER INFORMATION:

Management's Discussion and Analysis of Financial Condition and Results of Operation

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") of the
Operating Partnership is not presented herein, as it is substantially the same as the Company's MD&A
included in the Company's Annual Report on Form 10-K (File No. 1-13274) for the fiscal year ended
December 31, 1997 and the Company's Quarterly Report on Form 10-Q (File No. 1-13274) for the fiscal
quarter ended March 31, 1998 (see "Incorporation of certain Documents by Reference" herein).

Selected Financial Data.................................................................................... F-43
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of
Mack-Cali Realty, L.P.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of changes in partners' capital and of cash
flows, including financial statement Schedule III, present fairly, in all
material respects, the financial position of Mack-Cali Realty, L.P. and its
subsidiaries at December 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles. These
financial statements and schedules are the responsibility of the Operating
Partnership's management; our responsibility is to express an opinion on these
financial statements and schedule based on our audits. We conducted our audits
of these statements and schedule in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and schedule are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

New York, New York
February 26, 1998

F-2
<PAGE>
MACK-CALI REALTY, L.P.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER
MARCH 31, 31, DECEMBER 31,
1998 1997 1996
----------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Rental property
Land.................................. $ 461,368 $ 374,242 $ 98,127
Buildings and improvements............ 2,567,225 2,206,462 718,466
Tenant improvements................... 50,708 44,596 35,626
Furniture, fixtures and equipment..... 4,650 4,316 1,133
----------- ---------- ------------
3,083,951 2,629,616 853,352
Less--accumulated depreciation and
amortization.......................... (118,567) (103,133 ) (68,610)
----------- ---------- ------------
Total rental property................. 2,965,384 2,526,483 784,742
Cash and cash equivalents (includes
$201,269 in overnight investments at
December 31, 1996).................... 11,717 2,704 204,807
Investment in partially-owned entity.... 18,034 -- --
Unbilled rents receivable............... 30,641 27,438 19,705
Deferred charges and other assets,
net................................... 21,672 18,989 11,840
Restricted cash......................... 6,791 6,844 3,160
Accounts receivable, net of allowance
for doubtful accounts of $493, $327
and $189.............................. 3,826 3,736 2,074
Mortgage notes receivable............... 27,250 7,250 --
----------- ---------- ------------
Total assets............................ $ 3,085,315 $2,593,444 $1,026,328
----------- ---------- ------------
----------- ---------- ------------

LIABILITIES AND PARTNERS' CAPITAL
Mortgages and loans payable............. $ 1,207,592 $ 972,650 $ 268,010
Distributions payable................... 35,139 28,089 17,554
Accounts payable and accrued expenses... 31,510 31,136 5,068
Rents received in advance and security
deposits.............................. 29,651 21,395 6,025
Accrued interest payable................ 1,935 3,489 1,328
----------- ---------- ------------
Total liabilities..................... 1,305,827 1,056,759 297,985
----------- ---------- ------------
Commitments and contingencies
Partners' Capital:
Preferred units, 232,401, 230,562 and
0 units outstanding................. 238,377 236,491 --
Common Units:
General partner, 55,835,686,
49,856,289 and 36,318,937 units
outstanding....................... 1,374,658 1,157,440 701,379
Limited partners, 6,789,352,
6,097,477 and 2,689,945 units
outstanding....................... 157,929 134,230 26,964
Unit warrants, 2,000,000, 2,000,000
and 0 outstanding................. 8,524 8,524 --
----------- ---------- ------------
Total partners' capital................. 1,779,488 1,536,685 728,343
----------- ---------- ------------
Total liabilities and partners'
capital............................... $ 3,085,315 $2,593,444 $1,026,328
----------- ---------- ------------
----------- ---------- ------------
</TABLE>

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

F-3
<PAGE>
MACK-CALI REALTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Base rents................................... $ 92,916 $ 42,791 $ 206,215 $ 76,922 $ 50,808
Escalations and recoveries from tenants...... 10,357 6,612 31,130 14,429 9,504
Parking and other............................ 2,006 1,544 6,910 2,204 1,702
Interest income.............................. 544 1,208 5,546 1,917 321
--------- --------- --------- --------- ---------
Total revenues............................. 105,823 52,155 249,801 95,472 62,335
--------- --------- --------- --------- ---------
EXPENSES
Real estate taxes............................ 10,073 5,433 25,992 9,395 5,856
Utilities.................................... 8,301 3,725 18,246 8,138 6,330
Operating services........................... 12,693 6,416 30,912 12,129 8,519
General and administrative................... 6,196 3,173 15,862 5,800 3,712
Depreciation and amortization................ 16,231 7,493 36,825 14,731 10,655
Interest expense............................. 18,480 7,820 39,078 13,758 10,117
Non-recurring merger--related charges........ -- -- 46,519 -- --
--------- --------- --------- --------- ---------
Total expenses............................. 71,974 34,060 213,434 63,951 45,189
--------- --------- --------- --------- ---------
Income before gain on sale of rental property
and extraordinary item..................... 33,849 18,095 36,367 31,521 17,146
Gain on sale of rental property.............. -- -- -- 5,658 --
--------- --------- --------- --------- ---------
Income before extraordinary item............. 33,849 18,095 36,367 37,179 17,146
Extraordinary item--loss on early retirement
of debt.................................... -- -- (3,985) (561) --
--------- --------- --------- --------- ---------
Net income................................... 33,849 18,095 32,382 36,618 17,146
Preferred unit distributions................. (3,911) -- (888) -- --
Beneficial conversion feature................ -- -- (29,361) -- --
--------- --------- --------- --------- ---------
Net income available to common unitholders... $ 29,938 $ 18,095 $ 2,133 $ 36,618 $ 17,146
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
BASIC EARNINGS PER UNIT:
Income before extraordinary item........... $ 0.52 $ 0.45 $ 0.14 $ 1.76 $ 1.23
Extraordinary item......................... -- -- (0.09) (0.03) --
--------- --------- --------- --------- ---------
Net income................................... $ 0.52 $ 0.45 $ 0.05 $ 1.73 $ 1.23
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
DILUTED EARNINGS PER UNIT:
Income before extraordinary item........... $ 0.51 $ 0.44 $ 0.14 $ 1.74 $ 1.22
Extraordinary item......................... -- -- (0.09) (0.03) --
--------- --------- --------- --------- ---------
Net income................................... $ 0.51 $ 0.44 $ 0.05 $ 1.71 $ 1.22
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Distributions declared per common unit....... $ 0.50 $ 0.45 $ 1.90 $ 1.75 $ 1.66
Basic weighted average units outstanding..... 57,933 40,085 43,356 21,172 13,986
Diluted weighted average units outstanding... 58,682 40,817 44,156 21,436 14,041
</TABLE>

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

F-4
<PAGE>
MACK-CALI REALTY, L.P.

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(IN THOUSANDS)

<TABLE>
<CAPTION>
GENERAL LIMITED
PREFERRED PARTNER PARTNER PREFERRED GENERAL LIMITED UNIT
UNITS UNITS UNITS UNITHOLDER PARTNER PARTNER WARRANTS TOTAL
--------- ------- ------- ---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995.... -- 10,500 2,802 $ -- $ 108,311 $ 28,903 $ -- $ 137,214
Net income.................. -- -- -- -- 13,638 3,508 -- 17,146
Distributions............... -- -- -- -- (19,238) (4,730) -- (23,968)
Contributions--Net proceeds
from common stock
offering.................. -- 4,600 -- -- 83,594 -- -- 83,594
Issuance of units in
connection with
acquisitions.............. -- -- 94 -- -- 1,500 -- 1,500
Purchase of treasury
units..................... -- (100) -- -- (1,595) -- -- (1,595)
Conversion of units to
shares of common stock.... -- 105 (105 ) -- 1,098 (1,098) -- --
--- ------- ------- ---------- ---------- -------- -------- ----------
Balance at December 31,
1995........................ -- 15,105 2,791 -- 185,808 28,083 -- 213,891
Net income.................. -- -- -- -- 31,944 4,674 -- 36,618
Distributions............... -- -- -- -- (37,666) (4,720) -- (42,386)
Contributions -Net proceeds
from common stock
offerings................. -- 20,987 -- -- 518,219 -- -- 518,219
Conversion of units to
shares of common stock.... -- 101 (101 ) -- 1,073 (1,073) -- --
Contributions--Proceeds from
stock options exercised... -- 126 -- -- 2,001 -- -- 2,001
--- ------- ------- ---------- ---------- -------- -------- ----------
Balance at December 31,
1996........................ -- 36,319 2,690 -- 701,379 26,964 -- 728,343
Net income.................. -- -- -- 30,249 1,405 728 -- 32,382
Distributions............... -- -- -- (888) (76,311) (7,790) -- (84,989)
Contributions -Net proceeds
from common stock
offering.................. -- 13,000 -- -- 489,116 -- -- 489,116
Issuance of Stock Award
Rights and Stock Purchase
Rights.................... -- 351 -- -- 12,526 -- -- 12,526
Issuance of Preferred
Units..................... 231 -- 236,491 -- -- -- 236,491
Beneficial conversion
feature................... -- -- -- (29,361) 26,801 2,560 -- --
Issuance of units in
connection with
acquisitions.............. -- -- 3,408 -- -- 111,785 -- 111,785
Issuance of 2,000,000 unit
warrants.................. -- -- -- -- -- -- 8,524 8,524
Purchase of treasury
units..................... -- (152) -- -- (4,680) -- -- (4,680)
Conversion of units to
shares of common stock.... -- 1 (1 ) -- 17 (17) --
Contributions--Proceeds from
stock options exercised... -- 337 -- -- 7,187 -- -- 7,187
--- ------- ------- ---------- ---------- -------- -------- ----------
Balance at December 31,
1997........................ 231 49,856 6,097 236,491 1,157,440 134,230 8,524 1,536,685
Net Income.................. -- -- -- 3,911 26,543 3,395 -- 33,849
Distributions............... -- -- -- (3,911) (27,961) (3,267) -- (35,139)
Contributions--Net proceeds
from common stock
offerings................. -- 5,856 -- -- 215,784 -- -- 215,784
Issuance of units in
connection with
acquisitions.............. -- -- 734 -- -- 25,185 -- 25,185
Conversion of units to
shares of common stock.... -- 22 (22 ) -- 848 (848) -- --
Purchase of treasury
units..................... -- -- (20 ) -- -- (766) -- (766)
Contributions--Proceeds from
stock options
excercised................ -- 102 -- -- 2,004 -- -- 2,004
Issuance of Preferred
Units..................... 2 -- -- 1,886 -- -- -- 1,886
--- ------- ------- ---------- ---------- -------- -------- ----------
Balance at March 31, 1998
(Unaudited)................. 233 55,836 6,789 $238,377 $1,374,658 $157,929 $ 8,524 $1,779,488
--- ------- ------- ---------- ---------- -------- -------- ----------
--- ------- ------- ---------- ---------- -------- -------- ----------
</TABLE>

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

F-5
<PAGE>
MACK-CALI REALTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------ -------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................. $ 33,849 $ 18,095 $ 32,382 $ 36,618 $ 17,146
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................ 16,231 7,493 36,825 14,731 10,655
Amortization of deferred financing costs............. 254 271 983 1,081 1,456
Amortization of stock compensation................... -- -- 12,526 -- --
Gain on sale of rental property...................... -- -- -- (5,658) --
Extraordinary item-loss on early retirement of
debt............................................... -- -- 3,985 561 --
Changes in operating assets and liabilities:
Increase in unbilled rents receivable................ (3,203) (1,606) (7,733) (979) (312)
Increase in deferred charges and other assets, net... (3,790) (1,665) (9,507) (4,335) (1,678)
Increase in accounts receivable, net................. (34) (1,508) (1,663) (629) (99)
Increase in accounts payable and accrued expenses.... 374 6,585 17,569 1,823 35
Increase in rents received in advance and security
deposits........................................... 8,256 4,827 10,614 2,911 878
(Decrease) increase in accrued interest payable...... (1,554) (954) 2,161 699 365
----------- ----------- ----------- ----------- -----------
Net cash provided by operating activities.......... $ 50,383 $ 31,538 $ 98,142 $ 46,823 $ 28,446
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to rental property........................... $ (406,659) $ (230,429) $ (928,974) $ (318,145) $ (133,489)
Issuance of mortgage note receivable................... (20,000) (11,600) (11,600) -- --
Proceeds from sale of rental property.................. -- -- -- 10,324 --
Investment in partially-owned entity................... (18,034) -- -- -- --
Decrease (increase) in restricted cash................. 53 (170) 1,073 69 (247)
----------- ----------- ----------- ----------- -----------
Net cash used in investing activities.............. $ (444,640) $ (242,199) $ (939,501) $ (307,752) $ (133,736)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages and loans payable.............. $ 419,851 $ 47,195 $ 669,180 $ 272,113 $ 60,402
Repayments of mortgages and loans payable.............. (205,514) (19,299) (442,185) (294,819) (20,702)
Payment of financing costs............................. -- -- (3,095) -- (102)
Debt prepayment premiums and other costs............... -- -- (1,812) (312) --
Purchase of treasury units............................. (766) -- (4,680) -- (1,595)
Contributions--net proceeds from common stock
offerings............................................ 215,784 -- 489,116 518,219 83,594
Contributions--proceeds from stock options exercised... 2,004 2,297 7,187 2,001 --
Payment of distributions............................... (28,089) (17,554) (74,455) (32,433) (21,734)
----------- ----------- ----------- ----------- -----------
Net cash provided by financing activities.......... $ 403,270 $ 12,639 $ 639,256 $ 464,769 $ 99,863
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents... $ 9,013 $ (198,022) $ (202,103) $ 203,840 $ (5,427)
Cash and cash equivalents, beginning of period......... 2,704 204,807 204,807 967 6,394
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents, end of period............... $ 11,717 $ 6,785 $ 2,704 $ 204,807 $ 967
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

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

F-6
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)

1. ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION

Mack-Cali Realty, L.P. (formerly Cali Realty, L.P.), a Delaware limited
partnership, and subsidiaries (the "Operating Partnership"), was formed on
August 31, 1994 to conduct the business of leasing, management, acquisition,
development, construction, and tenant-related services for its sole general
partner, Mack-Cali Realty Corporation (the "Company" or "General Partner") and
subsidiaries. The Operating Partnership, through its operating divisions and
subsidiaries, is the entity through which all of the Company's operations are
conducted.

The Company is a fully-integrated, self-administered, self-managed real
estate investment trust ("REIT"). The Company controls the Operating Partnership
as the sole general partner, and at December 31, 1997 owned an 89.1% common unit
interest in the Operating Partnership.

The Company's business is the ownership of interests in and operation of the
Operating Partnership and all of the Company's expenses are incurred for the
benefit of the Operating Partnership. The Company is reimbursed by the Operating
Partnership for all expenses it incurs relating to the ownership and operation
of the Operating Partnership.

The Operating Partnership owns a 99 percent to 100 percent interest (either
directly or as a limited partner with control pursuant to an agreement with the
general partners of the property partnerships) in the Properties. At March 31,
1998, the Operating Partnership owned 227 properties and had a significant
equity interest in another property (collectively, the "Properties"). The
Properties aggregate approximately 25.2 million square feet, and are comprised
of 216 office and office/flex buildings totaling approximately 24.8 million
square feet, six industrial/warehouse buildings totaling approximately 387,000
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.

BASIS OF PRESENTATION

The accompanying consolidated financial statements include all accounts of
the Operating Partnership and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated. See investment in Partially-
owned Entity in Note 2 for the Operating Partnership's treatment of
unconsolidated partnership interests.

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

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

F-7
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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:

<TABLE>
<S> <C>
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
</TABLE>

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

INVESTMENT IN PARTIALLY-OWNED ENTITY

The Operating Partnership acquired a 50 percent interest in an office
property in March 1998. The Operating Partnership accounts for its investment in
a partially-owned entity under the equity method of accounting as the Operating
Partnership exercises significant influence. This investment is recorded
initially at cost, as Investment in Partially-owned Entity, and subsequently
adjusted for net equity in income (loss) and cash contributions and
distributions.

CASH AND CASH EQUIVALENTS

All highly liquid investments with a maturity of three months or less when
purchased are considered to be cash equivalents. At December 31, 1996, cash and
cash equivalents included investments in overnight reverse repurchase agreements
("Overnight Investments") totaling $201,269. Investments in Overnight
Investments are subject to the risks that the counter-party will default and the
collateral will decline in market value. The Overnight Investments held by the
Operating Partnership at December 31, 1996 matured on January 2, 1997. The
entire balance, including interest income earned, was realized by the Operating
Partnership and ultimately used in the funding of the RM Transaction on January
31, 1997 (see Note 3).

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 are included in
interest expense and was $254, $271, $983, $1,081 and $1,456 for the three
months ended March 31, 1998 and 1997, and for the years ended December 31, 1997,
1996 and 1995, respectively.

F-8
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. For the three months ended March 31, 1998 and 1997, and for the years
ended December 31, 1997, 1996 and 1995, such fees, which are capitalized and
amortized, approximated $577, $206, $761, $490 and $575, respectively.

REVENUE RECOGNITION

The Operating Partnership 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
multi-family residential property under operating leases having terms generally
of one year or less is recognized when earned.

The Operating Partnership 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 Operating Partnership is a partnership and, as a result, all income and
losses of the Operating Partnership are allocated to the partners for inclusion
in their respective income tax returns. Accordingly, no provision or benefit for
income taxes has been made in the accompanying financial statements.

As of December 31, 1997, the net basis of the rental property for Federal
income tax purposes, was lower than the net assets as reported in the Operating
Partnership's consolidated financial statements by approximately $851,000. The
Operating Partnership's taxable income for the years ended December 31, 1997,
1996 and 1995 was approximately $68,800, $34,558, and $20,639, respectively. The
differences between book income and taxable income primarily result from
differences in depreciation expense, the recording of rental income, the
nondeductibility of certain expenses for tax purposes, differences in revenue
recognition and the rules for tax purposes of a property exchange and issuance
of preferred convertible partnership units.

INTEREST RATE CONTRACTS

Interest rate contracts are utilized by the Operating Partnership to reduce
interest rate risks. The Operating Partnership does not hold or issue derivative
financial instruments for trading purposes.

The differentials to be received or paid under contracts designated as
hedges are recognized 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.

F-9
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER UNIT

In accordance with Statement of Financial Accounting Standards No. 128
("FASB No. 128") the Operating Partnership presents both basic and diluted
earnings per unit ("EPU"). Basic EPU excludes dilution and is computed by
dividing net income available to common unitholders by the weighted average
number of units outstanding for the period. Diluted EPU reflects the potential
dilution that could occur if securities or other contracts to issue common units
were exercised or converted into common units, where such exercise or conversion
would result in a lower EPU amount.

DISTRIBUTIONS PAYABLE

The distributions payable at March 31, 1998 represents distributions payable
to common unitholders of record on April 3, 1998 (62,711,377 common units) and
preferred distributions payable to preferred unitholders (232,401 preferred
units) for the first quarter 1998. The first quarter 1998 common unit
distributions of $0.50 per common unit, as well as the first quarter preferred
unit distribution of $16.875 per preferred unit, were approved by the General
Partner on March 18, 1998 and were paid on April 21, 1998.

The distributions payable at December 31, 1997 represent distributions
payable to common unitholders of record on January 5, 1998 (55,953,766 common
units) and preferred distributions to preferred unitholders (230,562 preferred
units) for the fourth quarter 1997. The fourth quarter 1997 common unit
distribution of $0.50 per common unit (pro-rated for units issued during the
quarter), as well as the pro-rated fourth quarter preferred unit distribution
aggregating $888, were approved by the General Partner on December 17, 1997 and
were paid on January 16, 1998.

EXTRAORDINARY ITEM

Extraordinary item represents the effect of the early settlement of certain
debt obligations, net of write-offs of related deferred financing costs,
prepayment penalties, yield maintenance payments and other related items.

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

Stock-based compensation is accounted for 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. The Operating
Partnership provides additional pro

F-10
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
forma disclosures as required under Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("FASB No. 123"). See Note 8
for discussion of Stock Compensation.

NON-RECURRING CHARGES

The Operating Partnership considers non-recurring charges as costs incurred
specific to significant non-recurring events that would materially distort the
comparative measurement of the Operating Partnership's performance.

UNAUDITED FINANCIAL STATEMENTS

The consolidated financial statements including the note disclosures
included herein as of March 31, 1998 and for the three months ended March 31,
1998 and 1997 are unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary for a
fair presentation of the consolidated financial statements for these interim
periods have been included. The results for the interim periods are not
necessarily indicative of the results to be obtained for the full fiscal year.

3. ACQUISITIONS/TRANSACTIONS

In 1995, the Operating Partnership acquired 27 office and office/flex
properties totaling approximately 1.6 million square feet for a total cost of
approximately $150,630. The acquired properties are all located in New Jersey
and New York.

In 1996, the Operating Partnership acquired 15 office properties and
completed construction on two office/flex properties totaling approximately 3.4
million square feet for a total cost of approximately $451,623. The acquired and
constructed properties are all located in New Jersey and Pennsylvania.
Concurrently with the acquisition of 103 Carnegie Center in Princeton, Mercer
County, New Jersey, the Operating Partnership sold its office building at 15
Essex Road in Paramus, Bergen County, New Jersey ("Essex Road"). The concurrent
transactions with unrelated parties qualified as a tax-free exchange, as the
Operating Partnership used subsequently all of the proceeds from the sale of
Essex Road to acquire 103 Carnegie Center.

On January 28, 1997, the Operating Partnership acquired 1345 Campus Parkway
("1345 Campus"), a 76,300 square foot office/flex property, located in Wall
Township, Monmouth County, New Jersey, for approximately $6,729 in cash, made
available from the Operating Partnership's cash reserves. The property is
located in the same office park in which the Operating Partnership previously
acquired two office properties and four office/flex properties in November 1995.

On January 31, 1997, the Operating Partnership 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 ("TIAA Mortgage"), the payment of approximately $220,000 in cash,
substantially all of which was obtained from the Operating Partnership's cash
reserves, and the issuance of 1,401,225 common units, valued at $43,788.

F-11
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

3. ACQUISITIONS/TRANSACTIONS (CONTINUED)
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. The RM Properties are
located primarily in established business parks in Westchester County, New York
and Fairfield County, Connecticut. The Operating Partnership has agreed not to
sell certain of the RM Properties for a period of seven years without the
consent of the RM principals, except for sales made under certain circumstances
and/or conditions.

In connection with the RM Transaction, the Operating Partnership was granted
a three-year option to acquire two properties (the "Option Properties"), under
certain conditions, one of which was acquired in 1997 (see below). 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.

In connection with the RM Transaction, the Operating Partnership holds a
$7,250 mortgage loan ("Mortgage Note Receivable") secured by the remaining
Option Property (see Note 6).

On May 8, 1997, the Operating Partnership acquired four buildings in the
Westlakes Office Park ("Westlakes"), a suburban office complex located in
Berwyn, Chester County, Pennsylvania, totaling approximately 444,350 square
feet. The properties were acquired for a total cost of approximately $74,700,
which was made available primarily from drawing on one of the Operating
Partnership's credit facilities.

On July 21, 1997, the Operating Partnership acquired two vacant office
buildings in the Moorestown Corporate Center, a suburban office complex located
in Moorestown, Burlington County, New Jersey. The properties, each consisting of
74,000 square feet, were acquired for a total cost of approximately $10,200,
which was made available from drawing on one of the Operating Partnership's
credit facilities.

On August 1, 1997, the Operating Partnership acquired 1000 Bridgeport Avenue
("Shelton Place"), a 133,000 square-foot office building located in Shelton,
Fairfield County, Connecticut. The property was acquired for approximately
$15,787, which was made available from drawing on one of the Operating
Partnership's credit facilities.

On August 15, 1997, the Operating Partnership acquired one of the Option
Properties, 200 Corporate Boulevard South ("200 Corporate"), an 84,000
square-foot office/flex building located in Yonkers, Westchester County, New
York. The property was acquired for approximately $8,078 through the exercise of
a purchase option obtained in connection with the RM Transaction. The
acquisition cost, net of the mortgage prepayment described below, was financed
from the Operating Partnership's cash reserves.

In conjunction with the acquisition of 200 Corporate, the sellers of the
property, certain RM principals, prepaid $4,350 of the $11,600 Mortgage Note
Receivable between the Operating Partnership and such RM principals (See Note
6).

On September 3, 1997, the Operating Partnership acquired Three Independence
Way ("Three Independence"), a 111,300 square-foot office property located in
South Brunswick, Middlesex County, New Jersey. The property was acquired for
approximately $13,388, which was made available from drawing on one of the
Operating Partnership's credit facilities.

On November 19, 1997, the Operating Partnership acquired 1000 Madison Avenue
("The Trooper Building"), a 100,655 square-foot office building located in Lower
Providence Township, Montgomery

F-12
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

3. ACQUISITIONS/TRANSACTIONS (CONTINUED)
County, Pennsylvania. The property was acquired for approximately $14,271, which
was made available from the Operating Partnership's cash reserves.

On December 11, 1997, the Operating Partnership acquired 54 office
properties (the "Mack Properties") from the Mack Company and Patriot American
Office Group (the "Mack Transaction"), pursuant to a Contribution and Exchange
Agreement (the "Agreement"), for a total cost of approximately $1,102,024.

The Mack Properties consist of 54 office properties comprising a total of
approximately 9.2 million net rentable square feet, ranging from approximately
40,000 to 475,100 square feet. The Mack Properties are located primarily in the
Northeast and Southwest, with a concentration of properties located in Northern
New Jersey (25 properties compromising approximately 4.8 million square feet),
Texas (17 properties comprising approximately 2.5 million square feet) and
Arizona (four properties comprising 485,000 square feet).

The total cost of the Mack Transaction was financed as follows: (i) $498,757
in cash made available from the Operating Partnership's cash reserves and from
the $200,000 Prudential Term Loan (See Note 7), (ii) $291,879 in debt assumed by
the Operating Partnership (the "Mack Mortgages"), (iii) the issuance of
1,965,886 common units valued at $66,373, (iv) the issuance of 15,237 Series A
preferred units and 215,325 Series B preferred units, valued at
$236,491(collectively, the "Preferred Units"), (v) warrants to purchase
2,000,000 common units (the "Unit Warrants"), valued at $8,524 and (vi) issuance
of contingent units, as described below.

In addition, 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.

With the Mack Transaction, the Operating Partnership assumed an aggregate of
approximately $291,879 of mortgage indebtedness with eight separate lenders,
encumbering 17 of the Mack Properties. Such debt matures at various dates from
March 1998 through January 2009. The Mack Mortgages are comprised of an
aggregate of approximately $199,931 of fixed rate debt bearing interest at a
weighted average rate of approximately 7.66 percent per annum, certain of which
require monthly principal amortization payments, and an aggregate of
approximately $91,948 in variable rate debt bearing interest at a weighted
average floating rate of approximately 76 basis points over the London
Inter-Bank Offered Rate (LIBOR), (see Note 7).

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 connection with the Mack Transaction, Brant Cali, Brad W. Berger, Angelo
R. Cali, Kenneth A. DeGhetto, James W. Hughes and Alan Turtletaub resigned from
the Board of Directors of the Company. Mitchell E. Hersh, William L. Mack and
Earle I. Mack were added to the Board as "inside" members, and Martin D. Gruss,
Jeffrey B. Lane, Vincent Tese and Paul A. Nussbaum were added as independent
members.

F-13
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

3. ACQUISITIONS/TRANSACTIONS (CONTINUED)
In accordance with the Agreement, Thomas A. Rizk remained Chief Executive
Officer and resigned as President of the Company, with Mitchell E. Hersh
appointed as President and Chief Operating Officer. The Company's other officers
retained their existing positions and responsibilities, except that Brant Cali
resigned as Chief Operating Officer and John R. Cali resigned as Chief
Administrative Officer. Brant Cali and John R. Cali remained as officers of the
Company as Executive Vice Presidents.

Entering into new employment agreements with the Company after the Mack
Transaction were Thomas A. Rizk, Mitchell E. Hersh, Brant Cali, and John R.
Cali. Entering into amended and restated employment agreements were Roger W.
Thomas, as Executive Vice President, General Counsel and Assistant Secretary,
Barry Lefkowitz, as Executive Vice President and Chief Financial Officer and
Timothy M. Jones, as Executive Vice President.

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

In connection with the Mack Transaction, under each of the Company's
executive officer's then existing employment agreements, due to a change of
control of the Company (as defined in each employment agreement), each of the
aforementioned officers received the benefit of the acceleration of (i) the
immediate vesting and issuance of his restricted stock, including tax gross-up
payments associated therewith, (ii) the forgiveness of his Stock Purchase Rights
loan, including tax gross-up payments associated therewith, and (iii) the
vesting of his unvested employee stock options and warrants. Additionally, under
each of Thomas Rizk's, Brant Cali's and John R. Cali's employment agreements
with the Company, each of these officers became entitled to receive certain
severance-type payments, as a result of certain provisions in each of their
agreements, triggered as result of the Mack Transaction. Finally, certain
officers and employees of the Company were given transaction-based payments as a
reward for their efforts and performance in connection with the Mack
Transaction. The total expense associated with the acceleration of vesting of
restricted stock, the forgiveness of Stock Purchase Rights loans, and the
payment of certain severance-type payments, as well as performance payments and
related tax-obligation payments, which were approved by the Company's Board of
Directors and which took place simultaneous with completion of the Mack
Transaction, totaled $45,769. Such expenses are included in non-recurring
merger-related charges for the year ended December 31, 1997 ( see Note 8).

On December 19, 1997 the Operating Partnership acquired 100 Overlook Center
("Princeton Overlook") a 149,600 square-foot office building located in
Princeton, Mercer County, New Jersey. The property was acquired for
approximately $27,218, which was funded through the issuance of 41,421 common
units valued at $1,624, with the remaining cash portion made available from
drawing on one of the Operating Partnership's credit facilities.

Additionally, on December 19, 1997, the Operating Partnership acquired 200
Concord Plaza Drive ("Concord Plaza"), a 248,700 square-foot office building
located in San Antonio, Bexar County, Texas. The

F-14
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

3. ACQUISITIONS/TRANSACTIONS (CONTINUED)
property was acquired for approximately $34,075, which was made available from
drawing on one of the Operating Partnership's credit facilities.

On January 23, 1998, the Operating Partnership acquired 10 acres of vacant
land in the Stamford Executive Park, located in Stamford, Fairfield County,
Connecticut for approximately $1,300, which was funded from the Operating
Partnership's cash reserves. The vacant land, on which the Operating Partnership
plans to develop 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 Operating Partnership 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 Operating Partnership acquired a 17-building
office/flex portfolio, aggregating approximately 748,660 square feet located in
the Moorestown West Corporate Center in Moorestown, Burlington County, New
Jersey and in Bromley Commons in Burlington, Burlington County, New Jersey. The
17 properties were acquired for a total cost of approximately $46,993. The
Operating Partnership is under contract to acquire an additional four
office/flex properties in the same locations. The Operating Partnership also has
an option to purchase a property following completion of construction and
required lease-up for approximately $3,700. The purchase contract also provides
the Operating Partnership 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 Operating Partnership's credit facilities as well as the
assumption of mortgage debt with an estimated value of $8,419 (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 Operating Partnership acquired 2115 Linwood Avenue,
a 68,000 square-foot vacant office building located in Fort Lee, Bergen County,
New Jersey. The building was acquired for approximately $5,100, which was made
available from drawing on one of the Operating Partnership's credit facilities.

On February 5, 1998, the Operating Partnership 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 Operating
Partnership's credit facilities as well as the assumption of mortgage debt with
an estimated value of $12,104 which bears interest at an annual effective
interest rate of 6.52 percent.

On February 25, 1998, the Operating Partnership 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 $24,500, which was made available from proceeds received from the
Company's February 1998 offering of common stock (see Note 8).

On March 12, 1998, the Operating Partnership acquired 1250 Capital of Texas
Highway South, a 270,703 square foot Class A office property located in Austin,
Travis County, Texas. The property was acquired for a total cost of
approximately $37,062, which was made available from drawing on one of the
Operating Partnership's credit facilities.

On March 27, 1998, the Operating Partnership acquired four office buildings,
a daycare center, plus land parcels, and a 50 percent interest in another office
building, all of such properties aggregating 875,000

F-15
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

3. ACQUISITIONS/TRANSACTIONS (CONTINUED)
square feet and located in the Prudential Business Campus office complex in
Parsippany and East Hanover, Morris County, New Jersey. The properties were
acquired for a total cost of approximately $175,856, which funds were made
available from the Operating Partnership's cash reserves (provided in part from
the proceeds received in 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 Operating Partnership's
credit facilities.

Also, on March 27, 1998, the Operating Partnership acquired ten office
properties ( the "Pacifica I Acquisition"), located in suburban Denver and
Colorado Springs, Colorado, from Pacifica Holding Company ("Pacifica"), a
private real estate owner and operator in Denver, Colorado, for a total cost of
approximately $74,712. The acquisition cost was funded by drawing approximately
$68,200 from the Operating Partnership's credit facilities, from the issuance of
approximately $3,779 in common operating partnership units and $2,700 from the
Operating Partnership's cash reserve. (see Note 8). The Pacifica I Acquisition
was comprised 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 Operating Partnership acquired six of
the remaining eight office building, encompassing 514,427 square feet, and 2.5
acres of vacant land, located in the Denver Tech Center, from Pacifica for an
aggregate purchase price of approximately $80,700, funded by drawing
approximately $59,900 from one of the Operating Partnership's credit facilities,
cash reserves and the issuance of approximately $20,800 in common operating
partnership units. The Operating Partnership currently is a party to a contract
to acquire the remaining two office buildings, encompassing 95,360 square feet,
from Pacifica for an aggregate purchase price of approximately $11,900. William
L. Mack, a director and equity holder of the Operating Partnership, was an
indirect owner of an interest in certain of the buildings contained in the
Pacifica Portfolio.

On March 30, 1998, the Operating Partnership acquired two office buildings,
aggregating 308,215 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 $52,753, which was made available from drawing on
one of the Operating Partnership's credit facilities.

On May 13, 1998, the Operating Partnership acquired 3600 South Yosemite
("3600 S. Yosemite"), a 133,743 square-foot office building located in Denver,
Denver County, Colorado for approximately $13,500, which was made available from
drawing on one of the Operating Partnership's credit facilities.

On May 14, 1998, the Operating Partnership acquired One Ramland Road
("Ramland Road"), a 232,000 square-foot vacant office/flex building located in
Orangeburg, Rockland County, New York, for approximately $6,700, which was made
available from the Operating Partnership's cash reserves. The Operating
Partnership intends to redevelop the property.

On May 22, 1998, the Operating Partnership acquired 500 College Road East
("500 College Road"), a 158,235 square-foot office building located in
Plainsboro, Middlesex County, New Jersey, for approximately $21,200, which was
made available from drawing on one of the Operating Partnership's credit
facilities.

On June 1, 1998, the Operating Partnership acquired 1709 New York Avenue
Northwest and 1400 L Street Northwest, two individual office buildings
aggregating approximately 335,600 square feet located in Washington, D.C. The
properties were acquired for approximately $90,000, which was made available
from

F-16
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

3. ACQUISITIONS/TRANSACTIONS (CONTINUED)
drawing on one of the Operating Partnership's credit facilities. Additionally,
the Operating Partnership also entered into contract with the same seller to
acquire a third office building located at 4200 Parliament Drive and vacant land
in Lanham, Prince Georges County, Maryland. The 120,600 square-foot office
building, in addition to adjacent developable land, is expected to be acquired
for approximately $15,500. The completed building acquisitions, and pending
building and land acquisitions are to be collectively referred to as the "D.C.
Portfolio".

On June 3, 1998, the Operating Partnership acquired 400 South Colorado
Boulevard ("400 South Colorado"), a 125,415 square-foot office building located
in Denver, Denver County, Colorado, for approximately $12,000, which was made
available from drawing on one of the Operating Partnership's credit facilities.

4. DEFERRED CHARGES AND OTHER ASSETS

<TABLE>
<CAPTION>
DECEMBER DECEMBER
MARCH 31, 31, 31,
1998 1997 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred leasing costs................... $ 22,662 $ 20,297 $ 14,031
Deferred financing costs................. 3,669 3,640 5,390
----------- ----------- -----------
26,331 23,937 19,421
Accumulated amortization................. (10,428) (9,535) (8,994)
----------- ----------- -----------
Deferred charges, net.................... 15,903 14,402 10,427
Prepaid expenses and other assets........ 5,769 4,587 1,413
----------- ----------- -----------
Total deferred charges and other assets,
net.................................... $ 21,672 $ 18,989 $ 11,840
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

5. RESTRICTED CASH

Restricted cash includes security deposits for the Operating Partnership's
residential properties and certain commercial properties, and escrow and reserve
funds for debt service, real estate taxes, property insurance, capital
improvements, tenant improvements, and leasing costs established pursuant to
certain mortgage financing arrangements, and is comprised of the following:

<TABLE>
<CAPTION>
DECEMBER DECEMBER
MARCH 31, 31, 31,
1998 1997 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Escrow and other reserve funds........... $ 1,552 $ 1,278 $ 2,814
Security deposits........................ 5,239 5,566 346
----------- ----------- -----------
Total restricted cash.................... $ 6,791 $ 6,844 $ 3,160
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

6. MORTGAGE NOTES RECEIVABLE

In connection with the RM Transaction on January 31, 1997, the Operating
Partnership provided an $11,600 non-recourse, non-amortizing mortgage loan to
entities controlled by the RM principals, bearing interest at an annual rate of
450 basis points over one-month LIBOR. The Mortgage Notes Receivable,

F-17
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

6. MORTGAGE NOTES RECEIVABLE (CONTINUED)
which is secured by the Option Properties and guaranteed by certain of the RM
principals, matures on February 1, 2000. In addition, the Operating Partnership
received a three percent origination fee in connection with providing the
Mortgage Notes Receivable.

In conjunction with the acquisition of 200 Corporate, one of the Option
Properties, on August 15, 1997, the sellers of the property, certain RM
principals, prepaid $4,350 of the Mortgage Notes Receivable, leaving a remaining
principal balance of $7,250 secured by the remaining Option Property. The
Operating Partnership also received a prepayment fee of $163.

On March 6, 1998, prior to the completion of the Pacifica I Acquisition, the
Operating Partnership provided a $20,000 mortgage loan to an entity controlled
by certain principals of Pacifica. Such mortgage loan is secured by an office
property in California. The mortgage note receivable which bore interest at an
annual rate of 9.25 percent and had a two-year term was repaid in full on June
9, 1998.

7. MORTGAGES AND LOANS PAYABLE

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
TIAA Mortgage........................... $ 185,283 $185,283 --
Harborside Mortgages.................... 150,000 150,000 $150,000
Mortgage Financing...................... -- -- 64,508
CIGNA Mortgages......................... 75,910 86,650 --
Mitsubishi Mortgages.................... 72,204 72,204 --
Prudential Mortgages.................... 61,669 62,205 18,445
Other Mortgages......................... 99,937 88,474 --
Prudential Term Loan.................... 200,000 200,000 --
Revolving Credit Facilities............. 356,751 122,100 29,805
Contingent Obligation................... 5,838 5,734 5,252
----------- ------------ ------------
Total mortgages and loans payable....... $ 1,207,592 $972,650 $268,010
----------- ------------ ------------
----------- ------------ ------------
</TABLE>

TIAA MORTGAGE

In connection with the RM Transaction, on January 31, 1997, the Operating
Partnership 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 is
secured and cross-collateralized by 43 of the RM Properties and matures on
December 31, 2003. The Operating Partnership, at its option, may convert the
TIAA Mortgage to unsecured debt upon achievement by the Operating Partnership of
an investment grade credit rating of Baa3/BBB- or better. The TIAA Mortgage is
prepayable in whole or in part subject to certain provisions, including yield
maintenance.

F-18
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

7. MORTGAGES AND LOANS PAYABLE (CONTINUED)

HARBORSIDE MORTGAGES

In connection with the acquisition of Harborside Financial Center
("Harborside"), on November 4, 1996, the Operating Partnership assumed existing
mortgage debt and was provided seller-financed mortgage debt aggregating
$150,000. The existing financing, with a principal balance of $104,059 and
$104,768 as of March 31, 1998, and December 31, 1997, respectively, bears
interest at a fixed rate of 7.32 percent per annum for a term of approximately
nine years. The seller-provided financing, with a principal balance of $45,941
and $45,232 as of March 31, 1998 and December 31, 1997, respectively, also has a
term of approximately nine years and initially bears interest at a rate of 6.99
percent per annum. 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.

MORTGAGE FINANCING

The $64,508 in mortgage financing (the "Mortgage Financing") consisted of
$43,313, which bore interest at a net cost to the Operating Partnership equal to
a fixed rate of 8.02 percent per annum and $20,195 which bore interest at a net
cost to the Operating Partnership equal to a floating rate of 100 basis points
over one-month LIBOR with a lifetime interest rate cap of 11.6 percent. On
August 12, 1997, the Operating Partnership retired the Mortgage Financing with
funds made available primarily from drawing on the Original Unsecured Facility
(see below). On account of prepayment fees, loan origination fees, legal fees
and other costs incurred in the retirement of the Mortgage Financing, an
extraordinary loss of $3,985, was recorded for the year ended December 31, 1997.

CIGNA MORTGAGES

In connection with the Mack Transaction, the Operating Partnership assumed
non-recourse mortgage debt (the "CIGNA Mortgages") aggregating $75,910 and
$86,650 in principal as of March 31, 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 7.68 percent and require monthly payments of interest and
principal on various term amortization schedules. The CIGNA mortgages mature
between October 1998 and October 2003.

In April 1998, simultaneous with the Operating Partnership obtaining the
$150,000 Prudential Mortgage Loan, as described below, the Operating Partnership
retired one of the CIGNA Mortgages with a principal balance of $27,835.

MITSUBISHI MORTGAGES

In connection with the Mack Transaction, the Operating Partnership assumed
non-recourse variable-rate mortgage debt (the "Mitsubishi Mortgages")
aggregating $72,204 in principal as of March 31, 1998 and December 31, 1997 with
Mitsubishi Trust and Banking Corporation. Such mortgages, which are secured by
two of the Mack Properties, bear interest payable monthly at a variable rate of
65 basis points over LIBOR (5.6875 percent at March 31, 1998 and 5.72 percent at
December 31, 1997) and mature between January 2008 and January 2009.

F-19
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

7. MORTGAGES AND LOANS PAYABLE (CONTINUED)
PRUDENTIAL MORTGAGES

The Operating Partnership has mortgage debt (the "Prudential Mortgages")
aggregating $61,669 and $62,205 in principal as of March 31, 1998 and December
31, 1997, respectively, with The Prudential Insurance Company of America,
substantially all of which was assumed in the Mack Transaction. Such mortgages,
which are secured by three properties, bear interest at a weighted average
annual fixed rate of 8.43 percent, all of which require monthly payments of
interest. In addition, certain of the Prudential Mortgages require monthly
payments of principal, in addition to interest, on various term amortization
schedules. The Prudential Mortgages mature between October 2003 and July 2004.

OTHER MORTGAGES

The Operating Partnership has mortgage debt ("Other Mortgages") aggregating
$99,937 and $88,474 in principal as of March 31, 1998 and December 31, 1997,
respectively, with six different lenders, all of which was assumed in the Mack
Transaction, and are secured by eight of the Mack Properties. The Other
Mortgages are comprised of: (i) fixed rate debt aggregating $80,723 at March 31,
1998 ($69,110 at December 31, 1997), which bears interest at a weighted average
fixed rate of 6.89 percent, and require monthly payments of principal and
interest on various term amortization schedules, and (ii) variable rate debt
aggregating $19,214 at March 31, 1998 ($19,364, at December 31, 1997) which
bears interest at 115 basis points over LIBOR. The Other Mortgages mature
between February 1999 and September 2005.

In April 1998, simultaneous with the Operating Partnership obtaining the
$150,000 Prudential Mortgage Loan, as described below, the Operating Partnership
retired $20,338 of the Other Mortgages.

PRUDENTIAL TERM LOAN

On December 10, 1997, the Operating Partnership 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 has a one-year term and interest
payments are required monthly at an interest rate of 110 basis points over
one-month LIBOR. The loan is a recourse loan secured by 11 properties owned by
the Operating Partnership and located in New Jersey. The Prudential Term Loan
was subsequently retired in April 1998, simultaneous with the Operating
Partnership obtaining the $150,000 Prudential Mortgage Loan, as described below.

REVOLVING CREDIT FACILITIES

PRUDENTIAL FACILITY

The Operating Partnership 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, and matures on March 31, 1999. The
Prudential Facility is a recourse liability of the Operating Partnership and is
secured by the Operating Partnership's equity interest in Harborside. The terms
of the Prudential Facility include certain restrictions and covenants that
limit, among other things, dividend payments and additional indebtedness and
that require compliance with specified financial ratios and other financial
measurements. The Operating Partnership had no outstanding borrowings at either
March 31, 1998 or December 31, 1997 under the Prudential Facility.

F-20
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

7. MORTGAGES AND LOANS PAYABLE (CONTINUED)
FIRST PRUDENTIAL FACILITY

The Operating Partnership had a $70,000 revolving credit facility (the
"First Prudential Facility") with PSC. The First Prudential Facility bore
interest at a floating rate equal to 150 basis points over one-month LIBOR for
January 1, 1996 through August 31, 1996. Effective September 1, 1996, the
interest rate was reduced to a floating rate equal to 125 basis points over
one-month LIBOR. In conjunction with obtaining the Original Unsecured Facility
(see below), the Operating Partnership repaid in full and terminated the First
Prudential Facility on August 7, 1997. The Operating Partnership had outstanding
borrowings of $6,000 at December 31, 1996 under the First Prudential Facility.

BANK FACILITY

The Operating Partnership had a revolving credit facility (the "Bank
Facility"), secured by certain of its properties, in the amount of $75,000 from
two participating banks. The Bank Facility had a three-year term and bore
interest at 150 basis points over one-month LIBOR. In conjunction with obtaining
the Original Unsecured Facility (see below), the Operating Partnership repaid in
full and terminated the Bank Facility on August 7, 1997. The Operating
Partnership had outstanding borrowings of $23,805 at December 31, 1996 under the
Bank Facility.

SECOND PRUDENTIAL FACILITY

The Operating Partnership has a revolving credit facility ("Second
Prudential Facility") from PSC in the amount of $100,000 which currently bears
interest at 110 basis points over one-month LIBOR, and matures on March 31,
1999. The Second Prudential Facility is a recourse liability of the Operating
Partnership and is secured by the Operating Partnership's equity interest in
Harborside. The terms of the Second Prudential Facility include certain
restrictions and covenants that limit, among other things, dividend payments and
additional indebtedness and that require compliance with specified financial
ratios and other financial measurements. The Operating Partnership had no
outstanding borrowings at December 31, 1997 and 1996 under the Second Prudential
Facility.

ORIGINAL UNSECURED FACILITY

On August 6, 1997, the Operating Partnership obtained an unsecured revolving
credit facility (the "Original Unsecured Facility") in the amount of $400,000
from a group of 13 lender banks. The Original Unsecured Facility has a
three-year term and currently bears interest at 125 basis points over one-month
LIBOR.

The terms of the Original Unsecured Facility include certain restrictions
and covenants which limit, among other things, dividend payments and additional
indebtedness and which require compliance with specified financial ratios and
other financial measurements. The Original Unsecured Facility also requires 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 Operating Partnership had outstanding borrowings of $356,751 and
$122,100 at March 31, 1998 and December 31, 1997, respectively, under the
Original Unsecured Facility. The Original Unsecured

F-21
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

7. MORTGAGES AND LOANS PAYABLE (CONTINUED)
Facility was subsequently repaid and retired in connection with the Operating
Partnership obtaining the 1998 Unsecured Facility in April 1998, as described
below.

1998 UNSECURED FACILITY

On April 17, 1998, the Operating Partnership 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. 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 Operating Partnership's achievement
of an investment grade long-term 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, dividend payments and additional
indebtedness and which require compliance with specified financial ratios and
other financial measurements. 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 (EAB), 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 and Erste Bank.

$150,000 PRUDENTIAL MORTGAGE LOAN

On April 30, 1998, the Operating Partnership obtained a $150,000,
interest-only mortgage loan from The Prudential Insurance Company of America
with a seven-year term. The mortgage loan, which is secured by 12 of the
Operating Partnership's properties, has an effective annual interest rate of 7.1
percent, and includes a conversion feature whereby the Operating Partnership,
upon receiving an investment-grade credit rating, will have the option to
convert the loan into senior unsecured debt.

The proceeds of the new loan were used, along with funds drawn from one of
the Operating Partnership's credit facilities, to retire the Prudential Term
Loan, as well as approximately $48,200 of the Mack Mortgages.

CONTINGENT OBLIGATION

As part of the Harborside acquisition, the Operating Partnership agreed to
make payments (with an estimated net present value of approximately $5,252 at
acquisition date) to the seller for development rights ("Contingent Obligation")
if and when the Operating Partnership commences construction on the acquired
site during the next several years. However, the agreement provides, among other
things, that even if the Operating Partnership does not commence construction,
the seller may nevertheless require the Operating Partnership to acquire these
rights during the six-month period after the end of the sixth year. After such
period, the seller's option lapses, but any development in years 7 through 30
will require a

F-22
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

7. MORTGAGES AND LOANS PAYABLE (CONTINUED)
payment, on an increasing scale, for the development rights. For the three
months ended March 31, 1998 and the year ended December 31, 1997, interest was
imputed on the Contingent Obligation, thereby increasing the balance of the
Contingent Obligation to $5,838 as of March 31, 1998 ($5,734 as of December 31,
1997).

INTEREST RATE CONTRACTS

The Operating Partnership has an interest rate swap agreement with a
commercial bank. The swap agreement fixes the Operating Partnership's one-month
LIBOR base to a fixed 6.285 percent per annum on a notional amount of $24,000
through August 1999.

The Operating Partnership also has 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 Operating Partnership's one-month LIBOR base
to 5.265 percent per annum through January 1999.

On November 20, 1997, the Operating Partnership entered into a seven-year,
interpolated U.S. Treasury interest rate lock agreement with a commercial bank.
The agreement fixes the Operating Partnership's base Treasury rate of 5.88
percent per annum on a notional amount of $150,000.

The Operating Partnership is exposed to credit loss in the event of
non-performance by the other parties to the interest rate contracts. However,
the Operating Partnership does not anticipate non-performance by any of its
counterparties.

SCHEDULED PRINCIPAL PAYMENTS, INTEREST PAID AND CAPITALIZED INTEREST

Scheduled principal payments on the mortgages and loans payable, as of
December 31, 1997, are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
- ---------------------------------------------------------------------------------- ----------
<S> <C>
1998.............................................................................. $ 278,788
1999.............................................................................. 61,848
2000.............................................................................. 125,265
2001.............................................................................. 5,538
2002.............................................................................. 10,406
Thereafter........................................................................ 490,805
----------
Total............................................................................. $ 972,650
----------
----------
</TABLE>

Cash paid for interest for the three months ended March 31, 1998 and 1997
and the years ended December 31, 1997, 1996, and 1995 was $20,302 and $8,503,
$36,917, $12,096, and $8,322, respectively. Interest capitalized by the
Operating Partnership for the three months ended March 31, 1998 and 1997, and
the years ended December 31, 1997, 1996 and 1995 was $201, none, $820, $118 and
$27, respectively.

F-23
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

8. PARTNERS' CAPITAL

Partners' capital in the accompanying consolidated financial statements
relates to common units in the Operating Partnership, in addition to certain
preferred units and unit warrants in the Operating Partnership issued in
conjunction with the Mack Transaction. Preferred and common units and unit
warrants issued during 1997 and the first three months of 1998 are described in
Note 3.

On August 13, 1996, the Company sold 3,450,000 shares of its common stock
through a public stock offering (the "August 1996 Offering"), which included an
exercise of the underwriters over-allotment option of 450,000 shares. Net
proceeds from the August 1996 Offering (after offering costs) were approximately
$76,830.

On November 22, 1996, the Company completed an underwritten public offer and
sale of 17,537,500 shares of its common stock. The Company received
approximately $441,215 in net proceeds (after offering costs) from the offering,
and used such funds to complete certain of the Company's property acquisitions
in November and December 1996, pay down outstanding borrowings on its revolving
credit facilities, and invest in Overnight Investments.

On May 15, 1997, the stockholders approved an increase in the authorized
shares of common stock in the Company to 190,000,000.

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 Unsecured Facility and the remainder of the proceeds to fund a
portion of the purchase price of the Mack Transaction, for other 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 (the "1998 Offering") and used the
net proceeds of approximately $92,000 (after offering costs) to pay down a
portion of its outstanding borrowings under the Unsecured Facility and to fund
the acquisition of Moutainview (see Note 3).

On March 18, 1998, in connection with the acquisition of several properties
and land within the 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 Operating Partnership'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 proceeds, which totaled
approximately $34,650 (after offering costs) primarily to pay down a portion of
its outstanding borrowings under the Operating Partnership's credit facilities.

On May 29, 1998, the Company completed an underwritten public offer and sale
of 984,615 shares of its common stock and used the net proceeds, which totaled
approximately $34.2 million (after offering costs) primarily to pay down a
portion of its outstanding borrowings under the Operating Partnership's credit
facilities.

F-24
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

8. PARTNERS' CAPITAL (CONTINUED)
The proceeds of the above offerings were contributed to the Operating
Partnership in exchange for units.

PREFERRED UNITS

As described in Note 3, in connection with the funding of the Mack
Transaction, the Operating Partnership issued 15,237 Series A Preferred Units
and 215,325 Series B Preferred Units, with an aggregate value of $236,490. The
Preferred Units have a stated value of $1,000 per unit and are preferred as to
assets over any class of common units or other class of preferred units of the
Operating Partnership, based on circumstances per the applicable unit
certificates.

The quarterly distribution on each Preferred Unit is an amount equal to the
greater of (i) $16.875 (representing 6.75 percent of the Preferred Unit stated
value of $1,000 on an annualized basis) 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 common 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 Unit to common unit conversion rate of $34.65 per common unit,
was an amount less than the $39.0625 closing stock price on the date of closing
of the Mack Transaction. Accordingly, the Operating Partnership recorded, on
December 11, 1997, the financial value ascribed to this beneficial conversion
feature inherent in the Preferred Units upon issuance, totaling $29,361 and was
recorded as beneficial conversion feature in Partners' Capital. The beneficial
conversion feature was amortized in full as the Preferred Units were immediately
convertible upon issuance; such amortization was included in the Statement of
Operations for the year ended December 31, 1997.

During the three months ended March 31, 1998, the Operating Partnership
issued 1,839 additional Preferred Units (1,111 of Series A and 728 of Series B),
valued at approximately $1,886, 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 (other than the
General Partner) at their option, subject to certain restrictions, on the basis
of one common unit for either one share of common stock or cash equal to the
fair market value of a share at the time of the redemption. The Company has the
option to deliver shares of common stock in exchange for all or any portion of
the cash requested. When a

F-25
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

8. PARTNERS' CAPITAL (CONTINUED)
Unitholder redeems a common unit, limited partner's capital is reduced and the
general partner's capital is increased. Common units held by the Company are not
redeemable.

As described in Note 3, the Operating Partnership issued an aggregate of
3,408,532 common units in 1997 in connection with the completion of the RM
Transaction, the Mack Transaction and Princeton Overlook.

During the three months ended March 31, 1998, a common unitholder redeemed
20,000 common units and received $766 in cash from the Operating Partnership.
Additionally, certain other common unitholders redeemed an aggregate of 22,300
common units for an equivalent number of shares of common stock in the Company.

On March 26, 1998, in connection with the Pacifica I Acquisition, the
Operating Partnership issued 100,175 common units, valued at approximately
$3,779.

During the three months ended March 31, 1998, the Company also issued
634,000 common units, valued at approximately $21,405, in connection with the
achievement of certain performance goals at the Mack Properties in redemption o
an equivalent number of contingent common units.

CONTINGENT COMMON & PREFERRED UNITS

In conjunction with the completion of the Mack Transaction, 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 certain of the performance goals having been achieved during the three months
ended March 31, 1998, the Operating Partnership redeemed 634,000 contingent
common units and 1,839 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 Operating Partnership 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 thereof at an
exercise price of $37.80 per common unit.

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

F-26
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

8. PARTNERS' CAPITAL (CONTINUED)
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 a result of certain provisions contained in certain of the Company's
executive officers' employment agreements, on December 11, 1997, the Mack
Transaction triggered the accelerated vesting of unvested stock options held by
such officers on that date.

Information regarding the Company's stock option plans is summarized below:

<TABLE>
<CAPTION>
EMPLOYEE DIRECTOR
SHARES UNDER OPTION: PLAN PLAN
- ---------------------------------------------------------------------- ---------- ---------
<S> <C> <C>
Outstanding at January 1, 1995 $15.25-$17.25 per share................ 600,000 25,000
Granted at $17.25-$19.875 per share................................... 220,200 10,000
Less-Lapsed or canceled............................................... (3,588) --
---------- ---------
Outstanding at December 31, 1995 $15.25-$19.875 per share............. 816,612 35,000
Granted at $21.50-$26.25 per share.................................... 795,700 14,000
Less-Lapsed or canceled............................................... (7,164) --
Exercised at $17.25 per share......................................... (116,041) (10,000)
---------- ---------
Outstanding at December 31, 1996 $15.25-$26.25 per share.............. 1,489,107 39,000
Granted at $33.00-$38.75 per share.................................... 1,956,538 170,000
Less-Lapsed or canceled............................................... (30,073) --
Exercised at $17.25-$26.25 per share.................................. (335,282) (2,000)
---------- ---------
Outstanding at December 31, 1997 $15.25-$38.75 per share.............. 3,080,290 207,000
Granted at $37.3125 per share......................................... 901,150 --
Less--Lapsed or canceled.............................................. (344) --
Exercised at $17.25-$30.75............................................ (99,062) (2,000)
---------- ---------
Outstanding at March 31, 1998 $15.25-$38.75 per share................. 3,882,034 205,000
---------- ---------
---------- ---------
Exercisable at December 31, 1997...................................... 967,618 37,000
Exercisable at March 31, 1998......................................... 1,295,965 45,000
---------- ---------
Available for grant at December 31, 1996.............................. 175,040 51,000
Available for grant at December 31, 1997.............................. 1,448,575 181,000
Available for grant at March 31, 1998................................. 547,769 181,000
---------- ---------
</TABLE>

The weighted-average fair value of options granted during 1997, 1996, and
1995 were $6.66, $2.41, and $1.28 per option, respectively. The fair value of
each significant option grant is estimated on the date of

F-27
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

8. PARTNERS' CAPITAL (CONTINUED)
grant using the Black-Scholes model. The following weighted average assumptions
are included in the Company's fair value calculations of stock options:

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Expected life (years)............................................. 6 6 6
Risk-free interest rate........................................... 5.84% 6.11% 6.58%
Volatility........................................................ 23.76% 19.14% 1.41%
Dividend yield.................................................... 5.29% 7.58% 10.20%
</TABLE>

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 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. The unvested warrants held by Timothy Jones and Brad Berger
became immediately exercisable on December 11, 1997 as a result of provisions
contained in their employment agreements, which were triggered by the Mack
Transaction.

On December 12, 1997, in conjunction with the completion of the Mack
Transaction, the Company granted a total of 491,756 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 other Company executives formerly
with Patriot American Office Group. Such warrants vest equally over a five-year
period and have a term of ten years.

The weighted-average fair value of warrants granted during 1997 were $6.27
per warrant. No warrants were outstanding in 1995 or 1996. The fair value of
each warrant grant is estimated on the date of grant using the Black-Scholes
model. The following weighted average assumptions are included in the Company's
fair value calculations of warrants granted during 1997:

<TABLE>
<S> <C>
Expected life (years)................................................ 6
Risk-free interest rate.............................................. 5.96%
Volatility........................................................... 22.77%
Dividend yield....................................................... 5.29%
</TABLE>

FASB NO. 123

Under the above models, the value of stock options and warrants granted
during 1997, 1996 and 1995 totaled approximately $22,998, $1,955, and $294,
respectively, which would be amortized ratably on a pro forma basis over the
appropriate vesting period. Had the Operating Partnership determined
compensation cost for these granted securities in accordance with FASB No. 123,
the Operating Partnership's pro forma net (loss) income and basic (loss)
earnings per share and diluted (loss) earnings per share would have been
($2,425), ($0.06) and ($0.05) in 1997, $36,115, $1.71 and $1.68 in 1996 and
$17,043, $1.22 and $1.21 in 1995. The FASB No. 123 method of accounting does not
apply to options granted prior to January 1, 1995 and accordingly, the resulting
pro forma compensation cost may not be representative of that to be expected in
the future.

F-28
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

8. PARTNERS' CAPITAL (CONTINUED)
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 (the "Restricted Stock Awards") and Company-financed stock
purchase rights (the "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 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 certain
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 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. As a result, the accelerated cost of $16,788 affecting the
stock compensation described above was included in non-recurring merger-related
charges for the year ended December 31, 1997. With such accelerated vestings
there was no remaining balance in unamortized stock compensation as of December
31, 1997.

Included in general and administrative expense for the year ended December
31, 1997 is $2,257 relating to the normal cost of Restricted Stock Awards and
Stock Purchase Rights.

EARNINGS PER UNIT

FASB No. 128 requires a dual presentation of basic and diluted earnings per
unit ("EPU") on the face of the income statement for all companies with complex
capital structures even where the effect of such dilution is not material. Basic
EPU excludes dilution and is computed by dividing net income available to common
unitholders by the weighted average number of units outstanding for the period.
Diluted EPU reflects the potential dilution that could occur if securities or
other contracts to issue common units were exercised or converted into common
units.

F-29
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

8. PARTNERS' CAPITAL (CONTINUED)
The following information presents the Operating Partnership's results for
the three months ended March 31, 1998 and 1997, and the years ended December 31,
1997, 1996 and 1995 in accordance with FASB No. 128.

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
1998 1997
------------------------ ------------------------
BASIC EPU DILUTED EPU BASIC EPU DILUTED EPU
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income....................................... $ 29,938 $ 29,938 $ 18,095 $ 18,095
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average units........................... 57,933 58,682 40,085 40,817
----------- ----------- ----------- -----------
Per Unit......................................... $ 0.52 $ 0.51 $ 0.45 $ 0.44
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1995
-------------------------- ------------------------- -------------------------
BASIC EPU DILUTED EPU BASIC EPU DILUTED EPU BASIC EPU DILUTED EPU
----------- ------------- ----------- ------------ ----------- ------------

<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net income.................................. $ 2,133 $ 2,133 $ 36,618 $ 36,618 $ 17,146 $ 17,146
----------- ------ ----------- ------------ ----------- ------------
----------- ------ ----------- ------------ ----------- ------------
Weighted average units...................... 43,356 44,156 21,172 21,436 13,986 14,041
----------- ------ ----------- ------------ ----------- ------------
Per Unit.................................... $ 0.05 $ 0.05 $ 1.73 $ 1.71 $ 1.23 $ 1.22
----------- ------ ----------- ------------ ----------- ------------
----------- ------ ----------- ------------ ----------- ------------
</TABLE>

The following schedule reconciles the units used in the basic EPU
calculation to the units used in the diluted EPU calculation (units in
thousands).

<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
(UNAUDITED)
-------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
Basic EPU Units:................................................. 57,933 40,085 43,356 21,172 13,986
Add: Stock Options............................................... 612 533 579 264 55
Restricted Stock Awards...................................... -- 199 188 -- --
Stock Warrants............................................... 137 -- 33 -- --
--------- --------- --------- --------- ---------
Diluted EPU Units:............................................... 58,682 40,817 44,156 21,436 14,041
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

9. 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. No employer contributions have
been made to date.

F-30
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

10. DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of estimated fair value was determined by
management using available market information and appropriate valuation
methodologies. However, considerable judgement is necessary to interpret market
data and develop estimated fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the Operating Partnership
could realize on disposition of the financial instruments at December 31, 1997
and 1996. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.

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

Mortgages and loans payable had an aggregate carrying value of $972,650 and
$268,010 as of December 31, 1997 and 1996, respectively, which approximates
their estimated aggregate fair value (excluding prepayment penalties) based upon
then current interest rates for debt with similar terms and remaining
maturities.

The estimated cost to settle the Operating Partnership's interest rate
contracts, at December 31, 1997 and 1996, based on quoted market prices of
comparable contracts was $1,404 and $140, respectively.

Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 1997 and 1996. Although
management is not aware of any factors that would significantly affect the fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since December 31, 1997 and current estimates of
fair value may differ significantly from the amounts presented herein.

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 Operating Partnership is required to make
payments in lieu of property taxes ("PILOT") on its property at 95 Christopher
Columbus Drive, Jersey City, Hudson County, New Jersey. Such PILOT, as defined,
is $1,267 per annum through May 31, 1999 and $1,584 per annum through May 31,
2004.

HARBORSIDE FINANCIAL CENTER PROPERTY

Pursuant to an agreement with the City of Jersey City, New Jersey obtained
by the former owner of the Harborside property in 1988 and assumed by the
Operating Partnership as part of the acquisition of the property in November
1996, the Operating Partnership 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.

F-31
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
GROUND LEASE AGREEMENTS

Future minimum rental payments under the terms of all non-cancelable ground
leases, under which the Operating Partnership is the lessee,as of December 31,
1997 are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
- ----------------------------------------------------------------------------------- ---------
<S> <C>
1998............................................................................... $ 320
1999............................................................................... 320
2000............................................................................... 320
2001............................................................................... 320
2002............................................................................... 320
Thereafter......................................................................... 17,851
---------
Total.............................................................................. $ 19,451
---------
---------
</TABLE>

OTHER CONTINGENCIES

On December 10, 1997, a Shareholder's Derivative Action was filed in
Maryland Court on behalf of one individual 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 pursuant to
which it incurred a cost of approximately $554, and agreed to certain changes to
employment agreements of certain of its executive officers. The Company expects
to incur an additional $196 in costs associated with defending this action. The
Company provided for $750 at December 31, 1997 for this matter which is included
in non-recurring merger-related charges.

The Operating Partnership 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
Operating Partnership.

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.

F-32
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

12. TENANT LEASES (CONTINUED)

Future minimum rentals to be received under non-cancelable operating leases
at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
- -------------------------------------------------------------------------------- ------------
<S> <C>
1998............................................................................ $ 335,286
1999............................................................................ 304,157
2000............................................................................ 259,715
2001............................................................................ 207,136
2002............................................................................ 168,239
Thereafter...................................................................... 690,884
------------
Total........................................................................... $ 1,965,417
------------
------------
</TABLE>

13. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board ("FASB") issued
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. This statement requires a
separate statement to report the components of comprehensive income for each
period reported. The provisions of this statement are effective for fiscal years
beginning after December 15, 1997. Management believes that they currently do
not have items that would require presentation in a separate statement of
comprehensive income.

In June 1997, the FASB also 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 periods
beginning after December 15, 1997, and requires that comparative information
from earlier years be restated to conform to the requirements of this standard.

14. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

The following pro forma financial information for the years ended December
31, 1997 and 1996 are presented as if the acquisitions, disposition and common
stock offerings in 1996, the RM Transaction, the Mack Transaction and 1997 stock
offering and the 1997 acquisitions of 1345 Campus, Westlakes, Shelton Place, 200
Corporate, Three Independence, The Trooper Building, Concord Plaza and Princeton
Overlook had all occurred on January 1, 1996. The pro forma information for the
three month periods ended March 31, 1998 and 1997 are presented as if the RM
Transaction, the Mack Transaction and all other acquisitions and common stock
offering completed in 1997, and during the three months ended March 31, 1998 had
all occurred on January 1, 1997. The pro forma financial information excludes
any deduction for the non-recurring merger-related charges and beneficial
conversion feature charge included in the Operating Partnership's historical
information for the year ended December 31, 1997. In management's opinion, all
adjustments necessary to reflect the effects of these transactions have been
made.

F-33
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

14. PRO FORMA FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)
This pro forma financial information is not necessarily indicative of what
the actual results of operations of the Operating Partnership would have been
assuming such transactions had been completed as of January 1, 1996 or 1997, nor
do they represent the results of operations of future periods.

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------------- ----------------------
<S> <C> <C> <C> <C>
1998 1997 1997 1996
---------- ---------- ---------- ----------
Total revenues................................................... $ 116,530 $ 116,554 $ 429,796 $ 407,181
Operating and other expenses..................................... (34,470) (35,779) (129,293) (125,618)
General and administrative....................................... (6,600) (6,070) (24,112) (21,462)
Depreciation and amortization.................................... (17,982) (16,910) (61,197) (59,440)
Interest expense................................................. (22,753) (24,469) (66,496) (67,217)
---------- ---------- ---------- ----------
Income before extraordinary item and Preferred Unit distribution
requirement.................................................... 34,725 33,326 148,698 133,444
Preferred Unit distribution requirement.......................... (3,911) (3,891) (15,563) (15,563)
---------- ---------- ---------- ----------
Income before extraordinary item available for common
unitholders.................................................... $ 30,814 $ 29,435 $ 133,135 $ 117,881
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic earnings per common unit................................... $ 0.49 $ 0.48 $ 2.39 $ 2.12
Basic weighted average units outstanding......................... 62,453 61,233 55,773 55,521
Diluted earnings per common unit................................. $ 0.48 $ 0.48 $ 2.35 $ 2.11
Diluted weighted average units outstanding....................... 63,676 61,965 56,573 55,786
</TABLE>

F-34
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

15. CONDENSED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following summarizes the condensed quarterly financial information for
the Operating Partnership:

<TABLE>
<CAPTION>
QUARTER ENDED 1997
------------------------------------------------
SEPTEMBER
DECEMBER 31 30 JUNE 30 MARCH 31
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Total revenues.................................... $ 74,495 $ 62,609 $ 60,542 $ 52,155
Operating and other expenses...................... 22,580 18,928 18,068 15,574
General and administrative........................ 5,260 3,675 3,754 3,173
Depreciation and amortization..................... 11,194 9,339 8,799 7,493
Interest expense.................................. 10,680 10,694 9,884 7,820
Non-recurring merger-related charges.............. 46,519 -- -- --
----------- ----------- --------- -----------
Loss/Income before extraordinary item............. (21,738) 19,973 20,037 18,095
Extraordinary item--loss on early retirement
debt............................................ -- 3,985 -- --
----------- ----------- --------- -----------
Net (loss) income................................. $ (21,738) $ 15,988 $ 20,037 $ 18,095
----------- ----------- --------- -----------
----------- ----------- --------- -----------
BASIC EARNINGS PER UNIT:
(Loss) income before extraordinary item......... $ (1.00) $ 0.49 $ 0.49 $ 0.45
Extraordinary item.............................. -- (0.10) -- --
----------- ----------- --------- -----------
Net (loss) income................................. $ (1.00) $ 0.39 $ 0.49 $ 0.45
----------- ----------- --------- -----------
----------- ----------- --------- -----------
DILUTED EARNINGS PER UNIT:
(Loss) income before extraordinary item......... $ (1.00) $ 0.49 $ 0.49 $ 0.44
Extraordinary item.............................. -- (0.10) -- --
----------- ----------- --------- -----------
Net (loss) income................................. $ (1.00) $ 0.39 $ 0.49 $ 0.44
----------- ----------- --------- -----------
----------- ----------- --------- -----------
Distributions declared per common unit............ $ 0.50 $ 0.50 $ 0.45 $ 0.45
</TABLE>

F-35
<PAGE>
MACK-CALI REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (CONTINUED)

15. CONDENSED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
QUARTER ENDED 1996
------------------------------------------------
SEPTEMBER
DECEMBER 31 30 JUNE 30 MARCH 31
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Total revenues.................................... $ 32,370 $ 22,518 $ 21,013 $ 19,571
Operating and other expenses...................... 9,404 7,035 6,579 6,644
General and administrative........................ 2,365 1,371 1,128 936
Depreciation and amortization..................... 4,880 3,469 3,348 3,034
Interest expense.................................. 4,665 2,999 3,265 2,829
----------- ----------- --------- -----------
Income before gain on sale of rental property
extraordinary item................................ 11,056 7,644 6,693 6,128
Gain on sale of rental property................... -- -- -- 5,658
----------- ----------- --------- -----------
Income before extraordinary item.................. 11,056 7,644 6,693 11,786
Extraordinary item--loss on early retirement
debt............................................ -- -- -- 561
----------- ----------- --------- -----------
Net income........................................ $ 11,056 $ 7,644 $ 6,693 $ 11,225
----------- ----------- --------- -----------
----------- ----------- --------- -----------
BASIC EARNINGS PER UNIT:
Income before extraordinary item................ $ 0.39 $ 0.39 $ 0.37 $ 0.66
Extraordinary item.............................. -- -- -- (0.03)
----------- ----------- --------- -----------
Net income........................................ $ 0.39 $ 0.39 $ 0.37 $ 0.63
----------- ----------- --------- -----------
----------- ----------- --------- -----------
DILUTED EARNINGS PER UNIT:
Income before extraordinary item................ $ 0.38 $ 0.38 $ 0.37 $ 0.65
Extraordinary item.............................. -- -- -- (0.03)
----------- ----------- --------- -----------
Net income........................................ $ 0.38 $ 0.38 $ 0.37 $ 0.62
----------- ----------- --------- -----------
----------- ----------- --------- -----------
Distributions declared per common unit............ $ 0.45 $ 0.45 $ 0.43 $ 0.43
</TABLE>

F-36
<PAGE>
SCHEDULE III

MACK-CALI REALTY, L.P.

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Rte 208 N.(O)................ 1987 1995 $ 18,033 3,067 19,415 282
FORT LEE
One Bridge Plaza(O)................ 1981 1996 13,800 2,439 24,462 1,137
LITTLE FERRY
200 Riser Road(O).................. 1974 1997 7,006 3,888 15,551 --
MONTVALE
135 Chestnut Ridge Road(O)......... 1981 1997 -- 2,587 10,350 --
95 Chestnut Ridge Road(O).......... 1975 1997 1,183 1,227 4,907 --
PARAMUS
140 Ridgewood Avenue(O)............ 1981 1997 -- 7,932 31,729 --
15 East Midland Avenue(O).......... 1988 1997 28,022 10,375 41,497 --
461 From Road(O)................... 1988 1997 29,890 13,194 52,778 --
61 South Paramus Avenue(O)......... 1985 1997 -- 9,005 36,018 --
650 From Road(O)................... 1978 1997 -- 10,487 41,949 --
ROCHELLE PARK
120 Passaic Street(O).............. 1972 1997 -- 1,354 5,415 --
365 West Passaic Street(O)......... 1976 1997 -- 4,148 16,592 --
SADDLE RIVER
1 Lake Street(O)................... 1973/94 1997 -- 13,952 55,812 --
WOODCLIFF LAKE
400 Chestnut Ridge Road(O)......... 1982 1997 15,281 4,201 16,802 --
470 Chestnut Ridge Road(O)......... 1987 1997 -- 2,346 9,385 --
530 Chestnut Ridge Road(O)......... 1986 1997 -- 1,860 7,441 --
50 Tice Boulevard(O)............... 1984 1994 19,300 4,500 -- 25,325
300 Tice Boulevard(O).............. 1991 1996 17,400 5,424 29,688 162

BURLINGTON COUNTY, NEW JERSEY
DELRAN
Tenby Chase Apartments(M).......... 1970 1994 -- 396 -- 5,107
MOORESTOWN
224 Strawbridge Drive(O)........... 1984 1997 -- 766 4,334 1,381
228 Strawbridge Drive(O)........... 1984 1997 -- 767 4,333 383

ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway(O)........ 1980 1997 28,890 12,606 50,425 --
ROSELAND
101 Eisenhower Parkway(O).......... 1980 1994 10,900 228 -- 13,930
103 Eisenhower Parkway(O).......... 1985 1994 11,200 -- -- 14,040

HUDSON COUNTY, NEW JERSEY
JERSEY CITY
95 Christopher Columbus Drive(O)... 1989 1994 74,600 6,205 -- 79,479
Harborside Financial Center Plaza
I(O)............................. 1983 1996 -- 3,923 51,013 5
Harborside Financial Center Plaza
II(O)............................ 1990 1996 48,099 17,655 101,546 1,343
Harborside Financial Center Plaza
III(O)........................... 1990 1996 107,635 17,655 101,878 367

MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive(F)............... 1989 1995 -- 205 1,676 --
200 Horizon Drive(F)............... 1991 1995 -- 205 3,027 1
300 Horizon Drive(F)............... 1989 1995 -- 379 4,355 8
500 Horizon Drive(F)............... 1990 1995 -- 379 3,395 86
PRINCETON
5 Vaughn Drive(O).................. 1987 1995 -- 657 9,800 148
400 Alexander Road(O).............. 1987 1995 -- 344 3,917 2,397
103 Carnegie Center(O)............. 1984 1996 -- 2,566 7,868 362
100 Overlook Center(O)............. 1988 1997 -- 4,068 23,150 --

<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD(1)
----------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION(2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- ----------------------------------- -------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive(O)............... $ 300 $ 3,353 $ 3,653 $ 180
200 Decadon Drive(O)............... 369 3,338 3,707 193
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Rte 208 N.(O)................ 3,067 19,697 22,764 1,420
FORT LEE
One Bridge Plaza(O)................ 2,439 25,599 28,038 644
LITTLE FERRY
200 Riser Road(O).................. 3,888 15,551 19,439 17
MONTVALE
135 Chestnut Ridge Road(O)......... 2,587 10,350 12,937 11
95 Chestnut Ridge Road(O).......... 1,227 4,907 6,134 5
PARAMUS
140 Ridgewood Avenue(O)............ 7,932 31,729 39,661 35
15 East Midland Avenue(O).......... 10,375 41,497 51,872 46
461 From Road(O)................... 13,194 52,778 65,972 58
61 South Paramus Avenue(O)......... 9,005 36,018 45,023 40
650 From Road(O)................... 10,487 41,949 52,436 46
ROCHELLE PARK
120 Passaic Street(O).............. 1,354 5,415 6,769 6
365 West Passaic Street(O)......... 4,148 16,592 20,740 18
SADDLE RIVER
1 Lake Street(O)................... 13,952 55,812 69,764 62
WOODCLIFF LAKE
400 Chestnut Ridge Road(O)......... 4,201 16,802 21,003 16
470 Chestnut Ridge Road(O)......... 2,346 9,385 11,731 10
530 Chestnut Ridge Road(O)......... 1,860 7,441 9,301 8
50 Tice Boulevard(O)............... 4,500 25,325 29,825 9,453
300 Tice Boulevard(O).............. 5,424 29,850 35,274 813
BURLINGTON COUNTY, NEW JERSEY
DELRAN
Tenby Chase Apartments(M).......... 396 5,107 5,503 3,138
MOORESTOWN
224 Strawbridge Drive(O)........... 766 5,715 6,481 --
228 Strawbridge Drive(O)........... 767 4,716 5,483 --
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway(O)........ 12,606 50,425 63,031 56
ROSELAND
101 Eisenhower Parkway(O).......... 228 13,930 14,158 6,849
103 Eisenhower Parkway(O).......... 2,300 11,740 14,040 4,643
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
95 Christopher Columbus Drive(O)... 6,205 79,479 85,684 19,212
Harborside Financial Center Plaza
I(O)............................. 3,923 51,018 54,941 1,488
Harborside Financial Center Plaza
II(O)............................ 17,843 101,721 119,544 2,994
Harborside Financial Center Plaza
III(O)........................... 17,823 102,077 119,900 2,993
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive(F)............... 205 1,676 1,881 99
200 Horizon Drive(F)............... 205 3,028 3,233 164
300 Horizon Drive(F)............... 379 4,363 4,742 237
500 Horizon Drive(F)............... 379 3,481 3,860 204
PRINCETON
5 Vaughn Drive(O).................. 657 9,948 10,605 620
400 Alexander Road(O).............. 344 6,314 6,658 415
103 Carnegie Center(O)............. 2,566 8,230 10,796 397
100 Overlook Center(O)............. 4,068 23,150 27,218 --
</TABLE>

F-37
<PAGE>
SCHEDULE III

MACK-CALI REALTY, L.P.

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66(O)................... 1989 1995 12,200 1,098 18,146 40
WALL TOWNSHIP
1305 Campus Parkway(O)............. 1988 1995 -- 335 2,560 39
1320 Wykoff Avenue(F).............. 1986 1995 -- 255 1,285 --
1324 Wykoff Avenue(F).............. 1987 1995 -- 230 1,439 88
1325 Campus Parkway(F)............. 1988 1995 -- 270 2,928 24
1340 Campus Parkway(F)............. 1992 1995 -- 489 4,621 100
1350 Campus Parkway(O)............. 1990 1995 -- 454 7,134 487
1433 Highway 34(F)................. 1985 1995 -- 889 4,321 241
1345 Campus Parkway(F)............. 1995 1997 -- 1,023 5,703 --

MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway(O)............ 1987 1994 12,800 1,564 -- 15,116
PARSIPPANY
600 Parsippany Road(O)............. 1978 1994 -- 1,257 5,594 444
MORRIS PLAINS
201 Littleton Road(O).............. 1979 1997 -- 2,407 9,627 --
250 Johnston Road(O)............... 1977 1997 2,354 2,004 8,016 --
MORRIS TOWNSHIP
340 Mt. Kemble Avenue(O)........... 1985 1997 32,178 13,624 54,496 --
412 Mt. Kemble Avenue(O)........... 1986 1997 40,025 15,737 62,954 --

PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue(O).............. 1983 1994 -- -- -- 6,932
TOTOWA
11 Commerce Way(F)................. 1989 1995 -- 586 2,986 65
120 Commerce Way(F)................ 1994 1995 -- 228 -- 1,187
140 Commerce Way(F)................ 1994 1995 -- 229 -- 1,187
20 Commerce Way(F)................. 1992 1995 -- 516 3,108 26
29 Commerce Way(F)................. 1990 1995 -- 586 3,092 225
40 Commerce Way(F)................. 1987 1995 -- 516 3,260 399
45 Commerce Way(F)................. 1992 1995 -- 536 3,379 103
60 Commerce Way(F)................. 1988 1995 -- 526 3,257 226
999 Riverview Drive(O)............. 1988 1995 -- 476 6,024 115
100 Commerce Way(F)................ 1996 1996 -- 226 -- 1,615
80 Commerce Way(F)................. 1996 1996 -- 227 -- 1,616
WAYNE
201 Willowbrook Boulevard(O)....... 1970 1997 11,637 3,103 12,410 --

SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road(O)............... 1986 1996 -- 775 3,636 16
233 Mt. Airy Road(O)............... 1987 1996 -- 1,034 5,033 16
BRIDGEWATER
721 Route 202/206(O)............... 1989 1997 24,315 6,730 26,919 --

UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue(O)............... 1985 1994 13,900 -- -- 17,299
CRANFORD
11 Commerce Drive(O)............... 1981 1994 -- 470 -- 5,807
20 Commerce Drive(O)............... 1990 1994 11,000 2,346 -- 21,192
6 Commerce Drive(O)................ 1973 1994 2,900 250 -- 2,655
65 Jackson Drive(O)................ 1984 1994 -- 541 -- 6,944
12 Commerce Drive(O)............... 1967 1997 -- 887 3,549 --
NEW PROVIDENCE
890 Mountain Road(O)............... 1977 1997 8,551 2,796 11,185 --

DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive(O)............ 1987 1997 -- 2,258 9,031 --

<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD(1)
----------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION(2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- ----------------------------------- -------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road(O)............. 649 2,594 3,243 3
SOUTH BRUNSWICK
3 Independence Way(O).............. 1,997 11,391 13,388 95
WOODBRIDGE
581 Main Street(O)................. 3,237 12,949 16,186 14
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66(O)................... 1,098 18,186 19,284 987
WALL TOWNSHIP
1305 Campus Parkway(O)............. 335 2,599 2,934 166
1320 Wykoff Avenue(F).............. 255 1,285 1,540 70
1324 Wykoff Avenue(F).............. 230 1,527 1,757 78
1325 Campus Parkway(F)............. 270 2,952 3,222 166
1340 Campus Parkway(F)............. 489 4,721 5,210 250
1350 Campus Parkway(O)............. 454 7,621 8,075 427
1433 Highway 34(F)................. 889 4,562 5,451 282
1345 Campus Parkway(F)............. 1,023 5,703 6,726 133
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway(O)............ 1,564 15,116 16,680 5,024
PARSIPPANY
600 Parsippany Road(O)............. 1,257 6,038 7,295 493
MORRIS PLAINS
201 Littleton Road(O).............. 2,407 9,627 12,034 11
250 Johnston Road(O)............... 2,004 8,016 10,020 9
MORRIS TOWNSHIP
340 Mt. Kemble Avenue(O)........... 13,624 54,496 68,120 60
412 Mt. Kemble Avenue(O)........... 15,737 62,954 78,691 70
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue(O).............. 1,100 5,832 6,932 2,230
TOTOWA
11 Commerce Way(F)................. 586 3,051 3,637 167
120 Commerce Way(F)................ 228 1,187 1,415 --
140 Commerce Way(F)................ 229 1,187 1,416 128
20 Commerce Way(F)................. 516 3,134 3,650 169
29 Commerce Way(F)................. 586 3,317 3,903 214
40 Commerce Way(F)................. 516 3,659 4,175 209
45 Commerce Way(F)................. 536 3,482 4,018 221
60 Commerce Way(F)................. 526 3,483 4,009 222
999 Riverview Drive(O)............. 476 6,139 6,615 345
100 Commerce Way(F)................ 226 1,615 1,841 79
80 Commerce Way(F)................. 227 1,616 1,843 79
WAYNE
201 Willowbrook Boulevard(O)....... 3,103 12,410 15,513 14
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road(O)............... 775 3,652 4,427 129
233 Mt. Airy Road(O)............... 1,034 5,049 6,083 179
BRIDGEWATER
721 Route 202/206(O)............... 6,730 26,919 33,649 30
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue(O)............... 1,822 15,477 17,299 5,750
CRANFORD
11 Commerce Drive(O)............... 470 5,807 6,277 2,824
20 Commerce Drive(O)............... 2,346 21,192 23,538 4,980
6 Commerce Drive(O)................ 250 2,655 2,905 1,458
65 Jackson Drive(O)................ 541 6,944 7,485 2,475
12 Commerce Drive(O)............... 887 3,549 4,436 4
NEW PROVIDENCE
890 Mountain Road(O)............... 2,796 11,185 13,981 12
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive(O)............ 2,258 9,031 11,289 10
</TABLE>

F-38
<PAGE>
SCHEDULE III

MACK-CALI REALTY, L.P.

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard(O)............. 1988 1995 -- 1,090 13,412 457

WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane(I)................ 1957 1997 161 3 268 --
1 Westchester Plaza(F)............. 1967 1997 1,320 199 2,023 17
100 Clearbrook Road(O)............. 1975 1997 1,281 220 5,366 98
101 Executive Boulevard(O)......... 1971 1997 3,600 267 5,838 19
11 Clearbrook Road(F).............. 1974 1997 1,367 149 2,159 --
150 Clearbrook Road(F)............. 1975 1997 4,464 497 7,030 --
175 Clearbrook Road(F)............. 1973 1997 4,826 655 7,473 197
2 Warehouse Lane(I)................ 1957 1997 402 4 672 --
2 Westchester Plaza(F)............. 1968 1997 1,760 234 2,726 --
200 Clearbrook Road(F)............. 1974 1997 4,263 579 6,620 8
250 Clearbrook Road(F)............. 1973 1997 5,631 867 8,647 205
3 Warehouse Lane(I)................ 1957 1997 1,166 21 1,948 --
3 Westchester Plaza(F)............. 1969 1997 5,080 655 7,936 --
300 Executive Boulevard(F)......... 1970 1997 2,403 460 3,609 --
350 Executive Boulevard(F)......... 1970 1997 -- 100 1,793 --
399 Executive Boulevard(F)......... 1962 1997 4,560 531 7,191 --
4 Warehouse Lane(I)................ 1957 1997 8,043 84 13,393 8
4 Westchester Plaza(F)............. 1969 1997 2,400 320 3,729 12
400 Executive Boulevard(F)......... 1970 1997 2,403 2,202 1,846 --
5 Warehouse Lane(I)................ 1957 1997 2,855 19 4,804 3
5 Westchester Plaza(F)............. 1969 1997 1,200 118 1,949 --
50 Executive Boulevard(F).......... 1969 1997 1,680 237 2,617 --
500 Executive Boulevard(F)......... 1970 1997 2,643 258 4,183 --
525 Executive Boulevard(F)......... 1972 1997 -- 345 5,499 --
570 Taxter Road(O)................. 1972 1997 3,847 438 6,078 18
6 Warehouse Lane(I)................ 1982 1997 2,654 10 4,419 --
6 Westchester Plaza(F)............. 1968 1997 1,280 164 1,998 --
7 Westchester Plaza(F)............. 1972 1997 2,720 286 4,321 9
700 Executive Boulevard(L)......... N/A 1997 -- 970 -- --
75 Clearbrook Road(F).............. 1990 1997 -- 2,313 4,717 --
77 Executive Boulevard(F).......... 1977 1997 3,982 34 1,104 --
8 Westchester Plaza(F)............. 1971 1997 3,378 447 5,262 111
85 Executive Boulevard(F).......... 1968 1997 1,562 155 2,507 --
HAWTHORNE
1 Skyline Drive(O)................. 1980 1997 -- 66 1,711 --
10 Skyline Drive(F)................ 1985 1997 1,729 134 2,799 109
11 Skyline Drive(F)................ 1989 1997 -- -- 4,788 --
15 Skyline Drive(F)................ 1989 1997 -- -- 7,449 305
17 Skyline Drive(O)................ 1989 1997 -- -- 7,269 --
2 Skyline Drive(O)................. 1987 1997 -- 109 3,128 --
200 Saw Mill River Road(F)......... 1965 1997 2,172 353 3,353 4
30 Saw Mill River Road(O).......... 1982 1997 21,553 2,355 34,254 --
4 Skyline Drive(F)................. 1987 1997 -- 363 7,513 210
8 Skyline Drive(F)................. 1985 1997 2,734 212 4,410 --
TARRYTOWN
200 White Plains Road(O)........... 1982 1997 5,150 378 8,367 335
220 White Plains Road(O)........... 1984 1997 5,030 367 8,112 15
230 White Plains Road(R)........... 1984 1997 1,158 124 1,845 --
WHITE PLAINS
1 Barker Avenue(O)................. 1975 1997 -- 208 9,629 33
1 Water Street(O).................. 1979 1997 3,298 211 5,382 6
11 Martine Avenue(O)............... 1987 1997 15,465 127 26,833 --
25 Martine Avenue(M)............... 1987 1997 -- 120 11,366 --
3 Barker Avenue(O)................. 1983 1997 122 7,864 249 122
50 Main Street(O).................. 1985 1997 27,919 564 48,105 144

<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD(1)
----------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION(2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- ----------------------------------- -------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
111 East Shore Road(O)............. 2,093 8,370 10,463 9
600 Community Drive(O)............. 11,018 44,070 55,088 49
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard(O)............. 1,090 13,869 14,959 982
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane(I)................ 3 268 271 6
1 Westchester Plaza(F)............. 199 2,040 2,239 47
100 Clearbrook Road(O)............. 220 5,464 5,684 125
101 Executive Boulevard(O)......... 267 5,857 6,124 136
11 Clearbrook Road(F).............. 149 2,159 2,308 49
150 Clearbrook Road(F)............. 497 7,030 7,527 161
175 Clearbrook Road(F)............. 655 7,670 8,325 184
2 Warehouse Lane(I)................ 4 672 676 15
2 Westchester Plaza(F)............. 234 2,726 2,960 62
200 Clearbrook Road(F)............. 579 6,628 7,207 152
250 Clearbrook Road(F)............. 867 8,852 9,719 203
3 Warehouse Lane(I)................ 21 1,948 1,969 45
3 Westchester Plaza(F)............. 655 7,936 8,591 182
300 Executive Boulevard(F)......... 460 3,609 4,069 83
350 Executive Boulevard(F)......... 100 1,793 1,893 41
399 Executive Boulevard(F)......... 531 7,191 7,722 165
4 Warehouse Lane(I)................ 84 13,401 13,485 309
4 Westchester Plaza(F)............. 320 3,741 4,061 87
400 Executive Boulevard(F)......... 2,202 1,846 4,048 42
5 Warehouse Lane(I)................ 19 4,807 4,826 111
5 Westchester Plaza(F)............. 118 1,949 2,067 45
50 Executive Boulevard(F).......... 237 2,617 2,854 60
500 Executive Boulevard(F)......... 258 4,183 4,441 96
525 Executive Boulevard(F)......... 345 5,499 5,844 126
570 Taxter Road(O)................. 438 6,096 6,534 143
6 Warehouse Lane(I)................ 10 4,419 4,429 101
6 Westchester Plaza(F)............. 164 1,998 2,162 46
7 Westchester Plaza(F)............. 286 4,330 4,616 100
700 Executive Boulevard(L)......... 970 -- 970 --
75 Clearbrook Road(F).............. 2,313 4,717 7,030 108
77 Executive Boulevard(F).......... 34 1,104 1,138 25
8 Westchester Plaza(F)............. 447 5,373 5,820 128
85 Executive Boulevard(F).......... 155 2,507 2,662 57
HAWTHORNE
1 Skyline Drive(O)................. 66 1,711 1,777 39
10 Skyline Drive(F)................ 134 2,908 3,042 69
11 Skyline Drive(F)................ -- 4,788 4,788 110
15 Skyline Drive(F)................ -- 7,754 7,754 211
17 Skyline Drive(O)................ -- 7,269 7,269 167
2 Skyline Drive(O)................. 109 3,128 3,237 72
200 Saw Mill River Road(F)......... 353 3,357 3,710 77
30 Saw Mill River Road(O).......... 2,355 34,254 36,609 785
4 Skyline Drive(F)................. 363 7,723 8,086 187
8 Skyline Drive(F)................. 212 4,410 4,622 101
TARRYTOWN
200 White Plains Road(O)........... 378 8,702 9,080 250
220 White Plains Road(O)........... 367 8,127 8,494 193
230 White Plains Road(R)........... 124 1,845 1,969 42
WHITE PLAINS
1 Barker Avenue(O)................. 208 9,662 9,870 225
1 Water Street(O).................. 211 5,388 5,599 124
11 Martine Avenue(O)............... 127 26,833 26,960 615
25 Martine Avenue(M)............... 120 11,366 11,486 260
3 Barker Avenue(O)................. 8,113 8,235 191
50 Main Street(O).................. 564 48,249 48,813 1,111
</TABLE>

F-39
<PAGE>
SCHEDULE III

MACK-CALI REALTY, L.P.

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COSTS COSTS
---------------------- CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION(2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- ----------------------------------- ------- -------- ------------ -------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
YONKERS
1 Enterprise Boulevard(L).......... N/A 1997 -- 1,380 -- --
1 Executive Boulevard(O)........... 1982 1997 684 1,104 11,904 24
1 Odell Plaza(F)................... 1980 1997 -- 1,206 6,815 --
100 Corporate Boulevard(F)......... 1987 1997 6,211 602 9,910 --
2 Executive Plaza(R)............... 1986 1997 7,722 89 2,439 --
3 Executive Plaza(O)............... 1987 1997 -- 385 6,259 4
4 Executive Plaza(F)............... 1986 1997 1,528 584 6,134 162
5 Odell Plaza(F)................... 1983 1997 -- 331 2,988 --
6 Executive Plaza(F)............... 1987 1997 -- 546 7,246 --
7 Odell Plaza(F)................... 1984 1997 -- 419 4,418 53
200 Corporate Boulevard South(F)... 1990 1997 -- 502 7,575 --

CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive(O)............ 1989 1997 -- 619 9,016 60
1055 Westlakes Drive(O)............ 1990 1997 -- 1,951 19,046 116
1205 Westlakes Drive(O)............ 1988 1997 -- 1,323 20,098 127
1235 Westlakes Drive(O)............ 1986 1997 -- 1,417 21,215 136

DELAWARE COUNTY, PENNSYLVANIA
MEDIA
1400 Providence Rd--Center I(O).... 1986 1996 -- 1,042 9,054 532
1400 Providence Rd. - Center
II(O)............................ 1990 1996 -- 1,543 16,464 518
LESTER
100 Stevens Drive(O)............... 1986 1996 -- 1,349 10,018 109
200 Stevens Drive(O)............... 1987 1996 -- 1,644 20,186 133
300 Stevens Drive(O)............... 1992 1996 -- 491 9,490 74

MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue(O)............. 1990 1997 -- 1,713 12,559 1
PLYMOUTH MEETING
Five Sentry East(O)................ 1984 1996 -- 642 8,168 255
Five Sentry West(O)................ 1984 1996 -- 268 3,406 34
1150 Plymouth Meeting Mall(O)...... 1970 1997 -- 125 499 --

FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
419 West Avenue & Expans(F)........ 1986 1997 -- 4,538 9,246 --
500 West Avenue(F)................. 1988 1997 -- 415 1,679 --
550 West Avenue(F)................. 1990 1997 -- 1,975 3,856 --
SHELTON
1000 Bridgeport Avenue(O).......... 1986 1997 773 15,036 -- 773

BEXAR COUNTY, TEXAS
SAN ANTONIO
111 Soledad(O)..................... 1918 1997 -- 2,004 8,017 --
1777 N.E. Loop 410(O).............. 1986 1997 -- 3,119 12,477 --
84 N.E. Loop 410(O)................ 1971 1997 -- 2,596 10,382 --
200 Concord Plaza Drive(O)......... 1986 1997 -- 5,109 28,967 --

COLLIN COUNTY, TEXAS
PLANO
555 Republic Place(O).............. 1986 1997 -- 942 3,767 --

DALLAS COUNTY, TEXAS
DALLAS
3030 LBJ Freeway(O)................ 1984 1997 -- 6,098 24,366 --
3100 Monticello(O)................. 1984 1997 -- 1,940 7,762 --
8214 Westchester(O)................ 1983 1997 -- 1,705 6,819 --
IRVING
2300 Valley View(O)................ 1985 1997 -- 1,913 7,651 --
RICHARDSON
1122 Alma Road(O).................. 1977 1997 -- 754 3,015 --

<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD(1)
----------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION(2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- ----------------------------------- -------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
YONKERS
1 Enterprise Boulevard(L).......... 1,380 -- 1,380 --
1 Executive Boulevard(O)........... 1,104 11,928 13,032 284
1 Odell Plaza(F)................... 1,206 6,815 8,021 156
100 Corporate Boulevard(F)......... 602 9,910 10,512 227
2 Executive Plaza(R)............... 89 2,439 2,528 56
3 Executive Plaza(O)............... 385 6,263 6,648 143
4 Executive Plaza(F)............... 584 6,296 6,880 150
5 Odell Plaza(F)................... 331 2,988 3,319 68
6 Executive Plaza(F)............... 546 7,246 7,792 166
7 Odell Plaza(F)................... 419 4,471 4,890 108
200 Corporate Boulevard South(F)... 502 7,575 8,077 174
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive(O)............ 619 9,076 9,695 167
1055 Westlakes Drive(O)............ 1,951 19,162 21,113 343
1205 Westlakes Drive(O)............ 1,323 20,225 21,548 359
1235 Westlakes Drive(O)............ 1,417 21,351 22,768 391
DELAWARE COUNTY, PENNSYLVANIA
MEDIA
1400 Providence Rd--Center I(O).... 1,042 9,586 10,628 395
1400 Providence Rd. - Center
II(O)............................ 1,543 16,982 18,525 711
LESTER
100 Stevens Drive(O)............... 1,349 10,127 11,476 253
200 Stevens Drive(O)............... 1,644 20,319 21,963 508
300 Stevens Drive(O)............... 491 9,564 10,055 239
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue(O)............. 1,713 12,559 14,272 32
PLYMOUTH MEETING
Five Sentry East(O)................ 642 8,423 9,065 239
Five Sentry West(O)................ 268 3,440 3,708 100
1150 Plymouth Meeting Mall(O)...... 125 499 624 1
FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
419 West Avenue & Expans(F)........ 4,538 9,246 13,784 213
500 West Avenue(F)................. 415 1,679 2,094 38
550 West Avenue(F)................. 1,975 3,856 5,831 88
SHELTON
1000 Bridgeport Avenue(O).......... 15,036 15,809 148
BEXAR COUNTY, TEXAS
SAN ANTONIO
111 Soledad(O)..................... 2,004 8,017 10,021 9
1777 N.E. Loop 410(O).............. 3,119 12,477 15,596 14
84 N.E. Loop 410(O)................ 2,596 10,382 12,978 11
200 Concord Plaza Drive(O)......... 5,109 28,967 34,076 30
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place(O).............. 942 3,767 4,709 4
DALLAS COUNTY, TEXAS
DALLAS
3030 LBJ Freeway(O)................ 6,098 24,366 30,464 27
3100 Monticello(O)................. 1,940 7,762 9,702 9
8214 Westchester(O)................ 1,705 6,819 8,524 8
IRVING
2300 Valley View(O)................ 1,913 7,651 9,564 8
RICHARDSON
1122 Alma Road(O).................. 754 3,015 3,769 3
</TABLE>

F-40
<PAGE>
SCHEDULE III

MACK-CALI REALTY, L.P.

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COSTS COSTS
---------------------- CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION(2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- ----------------------------------- ------- -------- ------------ -------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
HARRIS COUNTY, TEXAS
HOUSTON
10497 Town & Country Way(O)........ 1981 1997 -- 1,619 6,476 --
14511 Falling Creek(O)............. 1982 1997 -- 434 1,738 --
1717 St. James Place(O)............ 1975 1997 -- 909 3,636 --
1770 St. James Place(O)............ 1973 1997 -- 730 2,920 --
5225 Katy Freeway(O)............... 1983 1997 -- 1,403 5,610 --
5300 Memorial(O)................... 1982 1997 -- 1,283 7,269 --

POTTER COUNTY, TEXAS
AMARILLO
6900 IH--40 West(O)................ 1986 1997 -- 287 1,147 --

TARRANT COUNTY, TEXAS
EULESS
150 West Park Way(O)............... 1984 1997 -- 852 3,410 --

MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard(O)...... 1991 1997 7,847 2,732 10,927 --
PHOENIX
19640 North 31st Street(O)......... 1990 1997 11,518 3,437 13,747 --
20002 North 19th Avenue(O)......... 1986 1997 -- 1,843 7,371 --
SCOTTSDALE
9060 E. Via Linda Boulevard(O)..... 1984 1997 10,095 3,720 14,879 --

SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
760 Market Street(O)............... 1908 1997 -- 5,588 22,352 --

HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard(O)........... 1982 1997 -- 3,959 15,837 --

POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway(O)............ 1988 1997 -- 1,708 6,833 --

DOUGLAS COUNTY, NEBRASKA
OMAHA
210 South 16th Street(O)........... 1894 1997 -- 2,559 10,236 --
Projects Under Development......... 1,163 -- 1,073
Furniture, Fixtures & Equipment.... -- -- 4,316
------------ -------- ------------ --------------
TOTALS............................. $850,550 $368,684 $2,020,297 $240,635
------------ -------- ------------ --------------
------------ -------- ------------ --------------

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

(1) The aggregate cost for federal income tax purposes at December 31, 1997 was
approximately $1.68 billion.

(2) Legend of Property Codes:

(O)=Office Property

(F)=Office/Flex Property

(I)=Industrial/Warehouse Property

(M)=Multi-family Residential Property

(R)=Stand-alone Retail Property

(L)=Land Lease

F-41
<PAGE>
MACK-CALI REALTY, L.P.
NOTE TO SCHEDULE III

Changes in rental properties and accumulated depreciation for the periods
ended December 31, 1997, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
RENTAL PROPERTIES 1997 1996 1995
- ------------------------------------------------------- ------------ ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year........................... $ 853,352 $ 387,675 $ 234,470
Additions............................................ 1,776,264 473,371 153,753
Retirements/Disposals................................ -- (7,694) (548)
------------ ---------- ----------
Balance at end year.................................... $ 2,629,616 $ 853,352 $ 387,675
------------ ---------- ----------
------------ ---------- ----------
Accumulated Depreciation:
Balance at beginning of year........................... $ 68,610 $ 59,095 $ 50,800
Depreciation expense................................. 34,523 12,810 8,807
Retirements/Disposals................................ -- (3,295) (512)
------------ ---------- ----------
Balance at end of year................................. $ 103,133 $ 68,610 $ 59,095
------------ ---------- ----------
------------ ---------- ----------
</TABLE>

F-42
<PAGE>
SELECTED FINANCIAL DATA
MACK-CALI REALTY, L.P.

The following table sets forth selected financial data on a consolidated
basis for the Operating Partnership and on a combined basis for the Cali Group.

THE OPERATING PARTNERSHIP
--------------------------------------------------------------- THE CALI GROUP
-------------------------
THREE MONTHS ENDED AUGUST 31, JANUARY 1,
OPERATING DATA MARCH 31, YEAR ENDED DECEMBER 31, 1994 TO 1994 TO YEAR ENDED
IN THOUSANDS, EXCEPT PER --------------------- -------------------------- DECEMBER 31, AUGUST 30, DECEMBER 31,
UNIT DATA 1998 1997 1997 1996 1995 1994 1994 1993
- ------------------------- ----------- ------- -------- ------- ------- ------------ ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues........... $105,823 $52,155 $249,801 $95,472 $62,335 $16,841 $33,637 $47,900
Operating and other
expenses............... $ 31,067 $15,574 $ 75,150 $29,842 $20,705 $ 5,240 $11,155 $16,408
General and
administrative......... $ 6,196 $ 3,173 $ 15,862 $ 5,800 $ 3,712 $ 1,079 $ 2,288 $ 2,618
Depreciation and
amortization........... $ 16,231 $ 7,493 $ 36,825 $14,731 $10,655 $ 3,319 $ 5,093 $ 7,934
Interest expense......... $ 18,480 $ 7,820 $ 39,078 $13,758 $10,117 $ 2,213 $13,969 $22,004
Non-recurring
merger-related
charges................ $ -- $ -- $ 46,519 $ -- $ -- $-- $ -- $--
Income(loss) before
extraordinary item..... $ 33,849 $18,095 $ 36,367 $37,179 $17,146 $ 4,990 $ (110) $(1,064)
Basic earnings per common
unit-- before
extraordinary item
(1).................... $ 0.52 $ 0.45 $ 0.05 $ 1.73 $ 1.23 $ 0.38
Diluted earnings per
common unit-- before
extraordinary item
(1).................... $ 0.51 $ 0.44 $ 0.05 $ 1.71 $ 1.22 $ 0.38
Distributions declared
per common unit........ $ 0.50 $ 0.45 $ 1.90 $ 1.75 $ 1.66 $ 0.54
Basic weighted average
units outstanding...... 57,933 40,085 43,356 21,171 13,986 13,302
Diluted weighted average
units outstanding...... 58,682 40,817 44,156 21,436 14,041 13,302
</TABLE>

<TABLE>
<CAPTION>
THE OPERATING PARTNERSHIP
----------------------------------------------------------- THE CALI GROUP
DECEMBER 31, --------------
BALANCE SHEET DATA IN ------------------------------------------ DECEMBER 31,
THOUSANDS MARCH 31, 1998 1997 1996 1995 1994 1993
- ------------------------- -------------- ---------- ---------- -------- -------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Rental property, before
accumulated
depreciation and
amortization........... $3,083,951 $2,629,616 $ 853,352 $387,675 $234,470 $213,675
Total assets............. $3,085,315 $2,593,444 $1,026,328 $363,949 $225,295 $208,828
Mortgages and loans
payable................ $1,207,592 $ 972,650 $ 268,010 $135,464 $ 77,000 $231,981
Total liabilities........ $1,305,827 $1,056,759 $ 297,985 $150,058 $ 88,081 $243,163
Partners' capital
(deficit).............. $1,799,488 $1,536,685 $ 728,343 $213,891 $137,214 $(34,355)
</TABLE>

<TABLE>
<CAPTION>
THE OPERATING PARTNERSHIP
-------------------------------------------------------------------
THE CALI GROUP
THREE MONTHS ENDED -------------------------
MARCH 31, AUGUST 31, JANUARY 1,
(UNAUDITED) YEAR ENDED DECEMBER 31, 1994 TO 1994 TO YEAR ENDED
-------------------- ------------------------------- DECEMBER 31, AUGUST 30, DECEMBER 31,
OTHER DATA IN THOUSANDS 1998 1997 1997 1996 1995 1994 1994 1993
- ------------------------- --------- --------- --------- --------- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash flows provided by
operating activities... $ 50,383 $ 31,538 $ 98,142 $ 46,823 $ 28,446 $ 6,367 $ 6,328 $ 2,735
Cash flows (used in)
provided by investing
activities............. $(444,640) $(242,199) $(939,501) $(307,752) $(133,736) $(8,947) $ 1,975 $(3,227)
Cash flows provided by
(used in) financing
activities............. $ 403,270 $ 12,639 $ 639,256 $ 464,769 $ 99,863 $ 8,974 $(1,038) $ (886)
Funds from operations
(2).................... $ 42,855 $ 23,967 $ 110,864 $ 45,220 $ 27,397 $ 8,404
</TABLE>

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

(1) Earnings per unit (EPU) amounts were not applicable for the Cali Group
periods, as the Cali Group consisted of a series of partnerships.

(2) The Operating Partnership considers funds from operations (after adjustment
for straight-lining of rents) one measure of REIT performance. Funds from
operations is defined as net income (loss) before distribution to preferred
unitholders computed in accordance with generally accepted accounting
principles ("GAAP"), excluding gains (or losses) from debt restructuring,
other extraordinary and significant non-recurring items and sales of
property, plus real estate-related depreciation and amortization. Funds from
operations should not be considered as an alternative for net income as an
indication of the Operating Partnership performance or to cash flows as a
measure of liquidity. Funds from operations presented herein is not
necessarily comparable to Funds from operations presented by other real
estate companies due to the fact that not all real estate companies use the
same definition. However, the Operating Partnership's funds from operations
is comparable to the funds from operations of real estate companies that use
the current definition of the National Association of Real Estate Investment
Trusts ("NAREIT"), after the adjustment for straight-lining of rents.

F-43
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth estimated expenses (except for Commission
fee) to be incurred in connection with the issuance and distribution of the
securities being registered.

<TABLE>
<S> <C>
Commission Registration Fee................................. $ 590,000.00
Printing and Engraving Expenses............................. 200,000.00
Legal Fees and Expenses (other than Blue Sky)............... 700,000.00
Accounting Fees and Expenses................................ 450,000.00
Blue Sky Fees and Expenses (including fees of counsel)...... 20,000.00
Rating Agency Costs......................................... 125,000.00
Indenture Trustee Fees...................................... 50,000.00
Miscellaneous............................................... 40,000.00
---------------
Total..................................................... $ 2,175,000.00
---------------
---------------
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's officers and directors are indemnified under Maryland law, the
Articles of Incorporation and the Amended and Restated Agreement of Limited
Partnership of the Operating Partnership (the "Partnership Agreement of the
Operating Partnership"), against certain liabilities. The Articles of
Incorporation require the Company to indemnify its directors and officers to the
fullest extent permitted from time to time by the laws of the State of Maryland.
The bylaws contain provisions which implement the indemnification provisions of
the Articles of Incorporation.

The Maryland General Corporation Law ("MGCL") permits a corporation to
indemnify its directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason of
their service in those capacities unless it is established that the act or
omission of the director or officer was material to the matter giving rise to
the proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty, or the director or officer actually received an improper
personal benefit in money, property or services, or in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful, or the director or officer was adjudged to be liable
to the corporation for the act or omission. No amendment of the Articles of
Incorporation of the Company shall limit or eliminate the right to
indemnification provided with respect to acts or omissions occurring prior to
such amendment or repeal. Maryland law permits the Company to provide
indemnification to an officer to the same extent as a director, although
additional indemnification may be provided if such officer is not also a
director.

The MGCL permits the articles of incorporation of a Maryland corporation to
include a provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages, with specified exceptions.
The MGCL does not, however, permit the liability of directors and officers to
the corporation or its stockholders to be limited to the extent that (1) it is
proved that the person actually received an improper benefit or profit in money,
property or services (to the extent such benefit or profit was received) or (2)
a judgment or other final adjudication adverse to such person is entered in a
proceeding based on a finding that the person's action, or failure to act, was
the result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding. The Articles of Incorporation of the
Company contain a provision consistent with the MGCL. No amendment of the

II-1
<PAGE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
Articles of Incorporation shall limit or eliminate the limitation of liability
with respect to acts or omissions occurring prior to such amendment or repeal.

The Partnership Agreement of the Operating Partnership also provides for
indemnification of the Company and its officers and directors to the same extent
indemnification is provided to officers and directors of the Company in its
Articles of Incorporation, and limits the liability of the Company and its
officers and directors to the Operating Partnership and its partners to the same
extent liability of officers and directors of the Company to its stockholders is
limited under the Company's Articles of Incorporation.

In addition, the Delaware Revised Uniform Limited Partnership Act provides
that a limited partnership has the power to indemnify and hold harmless any
partner or other person from and against any and all claims and demands
whatsoever, subject to such standards and restrictions, if any, as are set forth
in its partnership agreement.

The Company has entered into indemnification agreements with each of its
directors and officers. The indemnification agreements require, among other
things, that the Company indemnify its directors and officers to the fullest
extent permitted by law, and advance to the directors and officers all related
expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. The Company also must indemnify and advance
all expenses incurred by directors and officers seeking to enforce their rights
under the indemnification agreements, and cover directors and officers under the
Company's directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by provisions of the Articles of Incorporation and the bylaws and the
Partnership Agreement of the Operating Partnership, it provides greater
assurance to directors and officers that indemnification will be available,
because, as a contract, it cannot be modified unilaterally in the future by the
Board of Directors or by the stockholders to eliminate the rights it provides.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement for equity securities (1)
4.1 Form of Indenture
4.2 Form of Articles Supplementary for the Preferred Stock (1)
4.3 Form of Preferred Stock Certificate (1)
4.4 Form of Deposit Agreement (1)
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding the validity of certain of the securities
being registered
5.2 Opinion of Pryor Cashman Sherman & Flynn LLP regarding the validity of certain of the securities
being registered
8.1 Opinion of Pryor Cashman Sherman & Flynn LLP regarding tax matters
12.1 Computation of Ratios of Earnings to Fixed Charges
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included as part of Exhibit 5.1)
23.2 Consent of Pryor Cashman Sherman & Flynn LLP (included as part of Exhibits 5.2 and 8.1)
23.3 Consent of Price Waterhouse LLP
23.4 Consent of Schonbraun Safris McCann Bekritsky & Co., L.L.C.
23.5 Consent of Ernst & Young LLP
25.1 Statement of Eligibility of Trustee on Form T-1 (1)
</TABLE>

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

(1) To be filed by amendment or incorporated by reference in connection with the
offering of the applicable Offered Securities.

II-2
<PAGE>
ITEM 17. UNDERTAKINGS.

Each of the undersigned Registrants hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
this registration statement or any material change to such information in this
registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

The undersigned Registrants hereby further undertake that, for the purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrants' annual reports pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned Registrants hereby further undertake that:

(1) For the purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance under Rule 430A and contained in a form
of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

Mack-Cali Realty, L.P., an undersigned Registrant, hereby further undertakes
to file an application for the purpose of determining the eligibility of the
Trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York on this 17th day of June,
1998.

MACK-CALI REALTY CORPORATION

By: /s/ THOMAS A. RIZK
-----------------------------------------
Thomas A. Rizk
CHIEF EXECUTIVE OFFICER

MACK-CALI REALTY, L.P.

By: Mack-Cali Realty Corporation as General
Partner

By: /s/ THOMAS A. RIZK
-----------------------------------------
Thomas A. Rizk
CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

<C> <S> <C>
/s/ THOMAS A. RIZK Chief Executive Officer and
- ------------------------------ Director June 17, 1998
Thomas A. Rizk

/s/ MITCHELL E. HERSH President, Chief Operating
- ------------------------------ Officer and Director June 17, 1998
Mitchell E. Hersh

/s/ BARRY LEFKOWITZ Executive Vice President
- ------------------------------ and Chief Financial June 17, 1998
Barry Lefkowitz Officer

/s/ JOHN J. CALI Chairman of the Board
- ------------------------------ June 17, 1998
John J. Cali

/s/ WILLIAM L. MACK Director
- ------------------------------ June 17, 1998
William L. Mack
</TABLE>

II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

<C> <S> <C>
/s/ BRENDAN T. BYRNE Director
- ------------------------------ June 17, 1998
Brendan T. Byrne

/s/ MARTIN D. GRUSS Director
- ------------------------------ June 17, 1998
Martin D. Gruss

/s/ JEFFREY B. LANE Director
- ------------------------------ June 17, 1998
Jeffrey B. Lane

/s/ EARLE I. MACK Director
- ------------------------------ June 17, 1998
Earle I. Mack

/s/ PAUL A. NUSSBAUM Director
- ------------------------------ June 17, 1998
Paul A. Nussbaum

/s/ ALAN G. PHILIBOSIAN Director
- ------------------------------ June 17, 1998
Alan G. Philibosian

/s/ IRVIN D. REID Director
- ------------------------------ June 17, 1998
Irvin D. Reid

/s/ VINCENT TESE Director
- ------------------------------ June 17, 1998
Vincent Tese

/s/ ROBERT F. WEINBERG Director
- ------------------------------ June 17, 1998
Robert F. Weinberg
</TABLE>

II-5
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
- ------------- ------------------------------------------------------------------------------------- ---------------
<C> <S> <C>
4.1 Form of Indenture

4.2 Form of Articles Supplementary for the Preferred Stock(1)

4.3 Form of Preferred Stock Certificate(1)

4.4 Form of Deposit Agreement(1)

5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding the validity of certain
of the securities being registered

5.2 Opinion of Pryor Cashman Sherman & Flynn LLP regarding the validity of certain of the
securities being registered

8.1 Opinion of Pryor Cashman Sherman & Flynn LLP regarding tax matters

12.1 Computation of Ratios of Earnings to Fixed Charges

23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included as part of Exhibit 5.1)

23.2 Consent of Pryor Cashman Sherman & Flynn LLP (included as part of Exhibits 5.2 and
8.1)

23.3 Consent of Price Waterhouse LLP

23.4 Consent of Schonbraun Safris McCann Bekritsky & Co., L.L.C.

23.5 Consent of Ernst & Young LLP

25.1 Statement of Eligibility of Trustee on Form T-1(1)
</TABLE>

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

(1) To be filed by amendment or incorporated by reference in connection with the
offering of the applicable Offered Securities.

<PAGE>

MACK-CALI REALTY, L.P.,

ISSUER

MACK-CALI REALTY CORPORATION,

GUARANTOR

--------------------------------------,

TRUSTEE

INDENTURE

DATED AS OF ______, 1998

DEBT SECURITIES

<PAGE>

REFERENCE SHEET (*)
-------------------

Reference is made to the following provisions of the Trust Indenture
Act of 1939, as amended, which establish certain duties and responsibilities of
the Issuer and the Trustee which may not be set forth in this Indenture:

<TABLE>
<CAPTION>
SECTIONS SUBJECT SECTION SUBJECT
-------- ------- ------- -------
<S> <C> <C> <C>
310(b) Disqualification of the 315(b) Notice of default from the
Trustee for conflicting Trustee to Securityholders
interest

311 Preferential collection of 315(c) Duties of the Trustee in
claims of the Trustee as case of default
creditor of the Issuer

312(a) Periodic filing of 315(d) Provisions relating to
information by the Issuer responsibility of the
with Trustee Trustee

312(b) Access of Securityholders 315(e) Assessment of costs
to information against litigating
Securityholders in certain
circumstances

313(a) Annual report of the 316(a) Directions and waivers by
Trustee to Securityholders Securityholders in certain
circumstances

313(b) Additional reports of the 316(b) Prohibition of impairment
Trustee to Securityholders of right of
Securityholders to payment

314(a) Reports by the Issuer, 316(c) Right of the Issuer to set
including annual record date for certain
compliance certificate purposes

314(b) Evidence of compliance 317(a) Special powers of the
with conditions precedent Trustee

315(a) Duties of the Trustee 318(a) Provisions of Trust
prior to default Indenture Act of 1939 to
control in case of
conflict.
</TABLE>

- -----------------------------------
(*) This reference sheet is not a part of the Indenture.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . . . . . . . . . 2
SECTION 101. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. . . . . . . . . . .10
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. . . . . . . . . .11
SECTION 104. ACTS OF HOLDERS . . . . . . . . . . . . . . . . . . . . .11
SECTION 105. NOTICES, ETC., TO TRUSTE, ISSUER AND GUARANTOR. . . . . .13
SECTION 106. NOTICE TO HOLDERS; WAIVER. . . . . . . . . . . . . . . .14
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. . . . . . . . .14
SECTION 108. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . .14
SECTION 109. SEPARABILITY CLAUSE . . . . . . . . . . . . . . . . . . .14
SECTION 110. BENEFIT OF INDENTURE. . . . . . . . . . . . . . . . . . .15
SECTION 111. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . .15
SECTION 112. LEGAL HOLIDAYS. . . . . . . . . . . . . . . . . . . . . .15

ARTICLE TWO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

SECURITIES FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 201. FORMS OF SECURITIES . . . . . . . . . . . . . . . . . . .15
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION . . . . .16
SECTION 203. IF SECURITIES OF A SERIES ARE ISSUABLE IN GLOBAL FORM . .16

ARTICLE THREE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. . . . . . . . . . .17
SECTION 302. DENOMINATIONS . . . . . . . . . . . . . . . . . . . . . .21
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. . . . . .21
SECTION 304. TEMPORARY SECURITIES. . . . . . . . . . . . . . . . . . .23
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE . . .24
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. . . . .27
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHT PRESERVED . . . . . .28
SECTION 308. PERSONS DEEMED OWNERS . . . . . . . . . . . . . . . . . .30
SECTION 309. CANCELLATION. . . . . . . . . . . . . . . . . . . . . . .31
SECTION 310. COMPUTATION OF INTEREST . . . . . . . . . . . . . . . . .31
</TABLE>

3
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
ARTICLE FOUR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . .32
SECTION 402. APPLICATION OF TRUST FUNDS. . . . . . . . . . . . . . . .33

ARTICLE FIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 501. EVENT DEFAULT . . . . . . . . . . . . . . . . . . . . . .34
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. . . .36
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 504. TRUSTEE MAY FILE PROOF OF CLAIM . . . . . . . . . . . . .38
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES OR COUPONS . . . . . . . . . . . . . . . . .39
SECTION 506. APPLICATION OF MONEY COLLECTED. . . . . . . . . . . . . .39
SECTION 507. LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . .39
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM, IF ANY, INTEREST AND ADDITIONAL AMOUNTS. . . .40
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. . . . . . . . . . . .40
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. . . . . . . . . . . . . .40
SECTION 511. DELAY OR OMISSION NOT WAIVER. . . . . . . . . . . . . . .41
SECTION 512. CONTROL BY HOLDERS OF SECURITIES. . . . . . . . . . . . .41
SECTION 513. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . .41
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS . . . . . . . . .42
SECTION 515. UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . .42

ARTICLE SIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
SECTION 601. NOTICE OF DEFAULTS. . . . . . . . . . . . . . . . . . . .42
SECTION 602. CERTAIN RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . .43
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. .44
SECTION 604. MAY HOLD SECURITIES . . . . . . . . . . . . . . . . . . .44
SECTION 605. MONEY HELD IN TRUST . . . . . . . . . . . . . . . . . . .44
SECTION 606. COMPENSATION AND REIMBURSEMENT. . . . . . . . . . . . . .45
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING
INTERESTS . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR . . . .46
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. . . . . . . . . .47
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 611. APPOINTMENT OF AUTHENTICATION AGENT . . . . . . . . . . .49
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
ARTICLE SEVEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER . . . . . . . . . . . . .50
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. . . . . . .50
SECTION 702. REPORTS BY TRUSTEE. . . . . . . . . . . . . . . . . . . .51
SECTION 703. REPORTS BY ISSUER AND GUARANTOR . . . . . . . . . . . . .51
SECTION 704. ISSUER AND THE GUARANTOR TO FURNISH TO TRUSTEE
NAMES AND ADDRESSES OF HOLDERS. . . . . . . . . . . . .51

ARTICLE EIGHT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

CONSOLIDATION, MERGER AND SALES. . . . . . . . . . . . . . . . . . . . . .52
SECTION 801. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS . . .52
SECTION 802. SUCCESSOR PERSON SUBSTITUTED FOR ISSUER . . . . . . . . .53
SECTION 803. GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. .53
SECTION 804. SUCCESSOR PERSON SUBSTITUTED FOR GUARANTOR. . . . . . . .54
SECTION 805. ASSUMPTION BY GUARANTOR . . . . . . . . . . . . . . . . .54

ARTICLE NINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . . . . . . .55
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. . . .55
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS . . . . .56
SECTION 903. EXECUTION OF SUPPLEMENT INDENTURES. . . . . . . . . . . .58
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . .58
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT . . . . . . . . . . .58
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES. . . .58

ARTICLE TEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST AND
ADDITIONAL AMOUNTS . . . . . . . . . . . . . . . . . .58
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . .59
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST. . . .61
SECTION 1004. EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . .62
SECTION 1005. STATEMENT AS TO COMPLIANCE . . . . . . . . . . . . . . .62
SECTION 1006. MAINTENANCE OF PROPERTIES. . . . . . . . . . . . . . . .62
SECTION 1007. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . .63
SECTION 1008. PAYMENT OF TAXES AND OTHER CLAIMS. . . . . . . . . . . .63
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
SECTION 1009. ADDITIONAL AMOUNTS . . . . . . . . . . . . . . . . . . .63
SECTION 1010. WAIVER OF CERTAIN COVENANTS. . . . . . . . . . . . . . .64

ARTICLE ELEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64

REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 1101. APPLICABILITY OF ARTICLE . . . . . . . . . . . . . . . .64
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. . . . . . . . . .64
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. . . .65
SECTION 1104. NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . .65
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . .66
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE. . . . . . . . . .67
SECTION 1107. SECURITIES REDEEMED IN PART. . . . . . . . . . . . . . .68

ARTICLE TWELVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

SINKING FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
SECTION 1201. APPLICABILITY OF ARTICLE . . . . . . . . . . . . . . . .68
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENT WITH SECURITIES . .68
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. . . . . . . .69

ARTICLE THIRTEEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

REPAYMENT AT THE OPTION OF HOLDERS . . . . . . . . . . . . . . . . . . . .69
SECTION 1301. APPLICABILITY OF ARTICLE . . . . . . . . . . . . . . . .69
SECTION 1302. REPAYMENT OF SECURITIES. . . . . . . . . . . . . . . . .69
SECTION 1303. EXERCISE OF OPTION . . . . . . . . . . . . . . . . . . .70
SECTION 1304. WHEN SECURITIES PRESENTED FOR RECIPIENT BECOME DUE
AND PAYABLE. . . . . . . . . . . . . . . . . . . . . .70
SECTION 1305. SECURITIES REPAID IN PART. . . . . . . . . . . . . . . .71

ARTICLE FOURTEEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . .71
SECTION 1401. APPLICABILITY OF ARTICLE; ISSUER'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE. . . . . . . . . . .71
SECTION 1402. DEFEASANCE AND DISCHARGE . . . . . . . . . . . . . . . .72
SECTION 1403. COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . .72
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. . . . .73
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS . . . . . . .75
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
ARTICLE FIFTEEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76

MEETINGS OF HOLDERS OF SECURITIES. . . . . . . . . . . . . . . . . . . . .76
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. . . . . . . .76
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS . . . . . . . . . . .76
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS . . . . . . . . . .76
SECTION 1504. QUORUM; ACTION . . . . . . . . . . . . . . . . . . . . .77
SECTION 1505. DETERMINATION OF VOTING RIGHT; CONDUCT AND
ADJOURNMENT OF MEETINGS. . . . . . . . . . . . . . . .78
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETING . . . . .79

ARTICLE SIXTEEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79

GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
SECTION 1601. GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . .79

EXHIBIT A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO RECEIVE
BEARER SECURITY OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE
EXCHANGE DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
</TABLE>

7
<PAGE>

INDENTURE, dated as of___________ 1998, among Mack-Cali Realty, L.P., a
limited partnership organized under the laws of Delaware (hereinafter called the
"ISSUER"), having its principal office at 11 Commerce Drive, Cranford, New
Jersey 07016, Mack-Cali Realty Corporation, a corporation organized under the
laws of Maryland (hereinafter called the "GUARANTOR"), having its principal
office at 11 Commerce Drive, Cranford, New Jersey 07016, and
________________________, as Trustee hereunder (hereinafter called the
"TRUSTEE"), having a Corporate Trust Office at
____________________________________________________.

RECITALS

The Issuer deems it necessary to issue from time to time for lawful
purposes its unsecured debt securities (hereinafter called the "SECURITIES")
evidencing its unsecured indebtedness, and has duly authorized the execution and
delivery of this Indenture, to provide for the issuance from time to time of the
Securities, unlimited as to principal amount, to bear interest at the rates or
formulas, to mature at such times and to have such other provisions as shall be
fixed as hereinafter provided.

All things necessary to make this Indenture a valid agreement of the
Issuer, in accordance with its terms, have been done.

For value received, the execution and delivery by the Guarantor of this
Indenture to provide for the issuance of the Guarantee provided for herein has
been duly authorized. All things necessary to make this Indenture a valid
agreement of the Guarantor, in accordance with its terms, have been done.

This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, that are deemed to be incorporated into this Indenture by such
Act, and shall, to the extent applicable, be governed by such provisions.

All things necessary to make this Indenture a valid agreement of the
Issuer, in accordance with its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities
by the Holders thereof; it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the securities, as follows:

<PAGE>

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;

(2) all other terms used herein which are defined in the TIA, either
directly or by reference therein, have the meanings assigned to them therein,
and the terms "cash transaction" and "self-liquidating paper", as used in TIA
Section 311, shall have the meanings assigned to them in the rules of the
Commission adopted under the TIA;

(3) all account terms not otherwise defined herein have the meanings
assigned to than in accordance with GAAP; and

(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.

Certain terms used principally in Article Three, Article Five, Article Six
and Article Ten, are defined in those Articles.

"ACT", when used with respect to any Holder, has the meaning specified in
Section 104.

"ADDITIONAL AMOUNTS" means any additional amounts which are required by a
Security or by or pursuant to a Board Resolution, under circumstances specified
therein, to be paid by the Issuer in respect of certain taxes imposed on certain
Holders and which are owing to such Holders.

"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

"AUTHENTICATING AGENT" means any authenticating agent appointed by the
Trustee pursuant to Section 611.

"AUTHORITY NEWSPAPER" means a newspaper, printed in the English language or
in an official language of the country of publication, customarily published on
each Business Day, whether or not published on Saturdays, Sundays or holidays,
and of general circulation in each

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place in connection with which the term is used or in the financial community of
each such place. Whenever successive publications are required to be made in
Authorized Newspapers, the successive publications may be made in the same or in
different Authorized Newspapers in the same city meeting the foregoing
requirements and in each case on any Business Day.

"BEARER SECURITY" means any Security established pursuant to Section 201
which is payable to bearer.

"BOARD" means the board of directors of the General Partner, the executive
committee or any committee of that board duly authorized to act hereunder.

"BOARD RESOLUTION" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the General Partner to have been duly adopted by
the Board and to be in full force and effect on the date of such certification,
and delivered to the Trustee.

"BUSINESS DAY", when used with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to Section
301, any day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which banking institutions in that Place of Payment or particular
location are authorized or required by law, regulation or executive order to
close.

"CAPITALIZED LEASES" means any lease of property by the Issuer or any
Subsidiary as lessee which is reflected on the Issuer's consolidated balance
sheet as a capitalized lease, or which should be so reflected, in accordance
with GAAP.

"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties on such date.

"CONVERSION EVENT" means the cessation of use of (i) a Foreign Currency
either by the government of the country which issued such currency or for the
settlement of transactions by a central bank or other public institution of or
within the international banking community, (ii) the ECU either within the
European Monetary System or for the settlement of transactions by public
institutions of or within the European Community, or (iii) any currency unit (or
composite currency) other than the ECU for the purposes for which it was
established.

"CORPORATE TRUST OFFICE" means the office of the Trustee at which, at any
particular time, its corporate trust business shall be principally administered,
which office at the date hereof is located at _________; provided, that with
respect to presentment, transfer, exchange, registration or payment of
Securities, "CORPORATE TRUST OFFICE" means c/o the corporate trust office of
__________________________________________________.

"COUPON" means any interest coupon appertaining to a Bearer Security.

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<PAGE>

"DEBT" of the Issuer or any Subsidiary means, without duplication, any
indebtedness of the Issuer or any Subsidiary, in respect of (i) borrowed money,
(ii) evidenced by bonds, notes, debentures or similar instruments, (iii)
indebtedness secured by any mortgage, pledge, lien, charge, encumbrance or any
security interest existing on property owned by the Issuer or any Subsidiary,
(iv) letters of credit or amounts representing the balance deferred and unpaid
of the purchase price of any property, except any such balance that constitutes
an accrued expense or trade payable, or (iv) Capitalized Leases, and also
includes, to the extent not otherwise included, any obligation by the Issuer or
any Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of business),
indebtedness of another person (other than the Issuer or any Subsidiary).

"DEFAULTED INTEREST" has the meaning specified in Section 307.

"DOLLAR" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.

"DTC" means The Depository Trust Company, or any successor thereto.

"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Community.

"EUROPEAN COMMUNITY" means the European Economic Community.

"EUROPEAN MONETARY SYSTEM" means the European Monetary System established
by the Resolution of December 5, 1978 of the Council of the European Community.

"EVENT OF DEFAULT" has the meaning specified in Article Five.

"FOREIGN CURRENCY" means any currency, currency unit or composite currency,
including, without limitation, the ECU, issued by the government of one or more
countries, other than the United States of America, or by any recognized
confederation or association of such governments.

"GAAP" means generally accepted accounting principles as used in the United
States applied on a consistent basis.

"GENERAL PARTNER" means MACK-CALI REALTY CORPORATION, a Maryland
corporation, as general partner of the Issuer.

"GOVERNMENT OBLIGATIONS" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Securities of a particular series are payable, for the
payment of which its full faith and credit is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America or such government which issued the Foreign

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<PAGE>

Currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust issuer as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.

"GUARANTEE" means the unconditional guarantee of the payment of the
principal of or any premium or interest on or any Additional Amounts with
respect to the Guaranteed Securities by the Guarantor, as more fully set forth
in Article Sixteen.

"GUARANTEED SECURITIES" means a series of Securities made subject to a
Guarantee (as set forth in Article Sixteen) pursuant to Section 301.

"GUARANTOR" means the Person named as the "Guarantor" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantor" shall mean such successor Person.

"GUARANTOR'S BOARD OF DIRECTORS" means the board of directors of the
Guarantor or any committee of that board duly authorized to act generally or in
any particular respect for the Guarantor hereunder.

"GUARANTOR'S BOARD RESOLUTION" means a copy of one or more resolutions,
certified by the Secretary or an Assistant Secretary of the Guarantor to have
been duly adopted by the Guarantor's Board of Directors and to be in full force
and effect on the date of such certification, delivered to the Trustee.

"GUARANTOR'S OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman, the President or a Vice President and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, that
complies with the requirements of Section 314(e) of the Trust Indenture Act and
is delivered to the Trustee.

"GUARANTOR REQUEST" and "GUARANTOR ORDER" mean, respectively, a written
request or order signed in the name of the Guarantor by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Guarantor, and delivered to the
Trustee.

"HOLDER" means, in the case of a Registered Security, the Person in whose
name a Security is registered in the Security Register and, in the case of a
Bearer Security, the bearer thereof and, when used with respect to any coupon,
shall mean the bearer thereof

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<PAGE>

"INDENTURE" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, and shall
include the terms of particular series of Securities established as contemplated
by Section 301; PROVIDED, HOWEVER, that, if at any time more than one Person is
acting as Trustee under this instrument, "Indenture" shall mean, with respect to
any one or more series of Securities for which any such Person is Trustee, this
instrument as originally executed or as it may from time to time be supplemented
or amended and shall include the terms of the Security or those particular
series of Securities for which such Person is Trustee established as
contemplated by Section 301, exclusive, however, of any provisions or terms
which relate solely to other series of Securities for which such Person is not
Trustee.

"INDEXED SECURITY" means a Security the terms of which provide that the
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance, as determined by reference
to a particular index or other measure specified in a supplemental indenture
relating to such Security.

"INTEREST", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, shall mean
interest payable after Maturity, and, when used with respect to a Security which
provides for the payment of Additional Amounts pursuant to Section 1010,
includes such Additional Amounts.

"INTEREST PAYMENT DATE", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.

"ISSUER" means the Person named as the "Issuer" in the first paragraph of
this Indenture until a successor shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Issuer" shall mean such
successor.

"ISSUER REQUEST" and "ISSUER ORDER" mean, respectively, a written request
or order signed in the name of the Issuer by the General Partner by its
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the General Partner, and delivered to the
Trustee.

"MATURITY", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.

"OFFICERS' CERTIFICATE" means a certificate signed by the President or a
Vice President of the General Partner and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the General Partner, and
delivered to the Trustee.

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<PAGE>

"OPINION OF COUNSEL" means a written opinion of counsel, who may, if
permitted by the TIA, be counsel for the Issuer or the Guarantor, as the case
may be, or who may be an employee of or other counsel for the Issuer or the
Guarantor, as the case may be.

"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.

"OUTSTANDING", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except;

(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;

(ii) Securities, or portions thereof, for whose payment or
redemption or repayment at the option of the Holder money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Issuer or the Guarantor) in trust for the Holders of such
Securities and any coupons appertaining thereto, provided, that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;

(iii) Securities, except to the extent provided in Sections 1402
and 1403, with respect to which the Issuer or the Guarantor has effected
defeasance as provided in Article Fourteen; and

(iv) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Issuer;

PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of the Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the Dollar equivalent, determined pursuant to Section 301 as of the date such
Security is originally issued by the Issuer, of the principal amount (or, in the
case of an Original Issue Discount Security, the Dollar equivalent as

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<PAGE>

of such date of original issuance of the amount determined as provided in clause
(i) above) of such Security, (iii) the principal amount of any Indexed Security
that may be counted in making such determination or calculation and that shall
be deemed Outstanding for such purpose shall be equal to the principal face
amount of such Indexed Security at original issuance, unless otherwise provided
with respect to such Security pursuant to Section 301, and (iv) Securities owned
by the Issuer, the Guarantor, or any other obligor upon the Securities or any
Affiliate of the Issuer, the Guarantor, or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in making such calculation or in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which shall have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee (A) the pledgee's right so to act with respect to such Securities
and (B) that the pledgee is not the Issuer, the Guarantor or any other obligor
upon the Securities or any coupons appertaining thereto or an Affiliate of the
Issuer, the Guarantor or such other obligor.

"PAYING AGENT" means any Person authorized by the Issuer to pay the
principal of (and premium, if any) or interest on any securities or coupons on
behalf of the Issuer.

"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock Issuer, trust, unincorporated organization or
government or any agency or political subdivision thereof.

"PLACE OF PAYMENT", when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on such Securities are payable as specified as contemplated by Sections
301 and 1002.

"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, last or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.

"REDEMPTION DATE", when used with respect to any Security to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.

"REDEMPTION PRICE", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.

"REGISTERED SECURITY" shall mean any Security established pursuant to
Section 201 which is registered in the Security Register.

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<PAGE>

"REGULAR RECORD DATE" for the interest payable on any Interest Payment Date
on the Registered Securities of any series means the date specified for that
purpose as contemplated by Section 301, whether or not a Business Day.

"REPAYMENT DATE" means, when used with respect to any Security to be repaid
at the option of the Holder, the date fixed for such repayment by or pursuant to
this Indenture.

"RESPONSIBLE OFFICER", when used with respect to the Trustee, means the
chairman or vice- chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president (whether or not designated by a number or a word
or words added before or after the title "vice president"), the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer, the controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of such officer's knowledge and familiarity with the particular subject.

"SECURITY" has the meaning stated in the first recital of this Indenture
and, more particularly, means any Security or Securities authenticated and
delivered under this Indenture; PROVIDED, HOWEVER, that, if at any time there is
more than one Person acting as Trustee under this Indenture, "Securities" with
respect to the Indenture as to which such Person is Trustee shall have the
meaning stated in the first recital of this Indenture and shall more
particularly mean Securities authenticated and delivered by such Trustee (or its
predecessor as such) under this Indenture, exclusive, however, of Securities of
any series as to which such Person is not Trustee.

"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective meanings
specified in Section 305.

"SIGNIFICANT SUBSIDIARY" means any Subsidiary which is a "significant
subsidiary" (as defined in Article I, Rule 1-02 of Regulation S-X, promulgated
under the Securities Act of 1933, as amended) of the Issuer.

"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the
Registered Securities of any series means a date fixed by the Trustee pursuant
to Section 307.

"STATED MATURITY", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security or a coupon representing such installment of interest as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.

"SUBSIDIARY" means a corporation, partnership or limited liability company,
a majority of the outstanding voting stock, partnership interests or membership
interests, as the case may be, of which is owned or controlled, directly or
indirectly, by the Issuer or by one or more other Subsidiaries of the Issuer.
For the purposes of this definition, "voting stock" means stock having

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<PAGE>

voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.

"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939, as
amended and as in force at the date as of which this Indenture was executed,
except as provided in Section 905.

"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder; PROVIDED, HOWEVER, that if
at any time there is more than one such Person, "Trustee" as used with respect
to the Securities of any series shall mean only the Trustee with respect to
Securities of that series.

"UNITED STATES" means, unless otherwise specified with respect to any
Securities pursuant to Section 301, the United States of America (including the
states and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.

"UNITED STATES PERSON" means, unless otherwise specified with respect to
any Securities pursuant to Section 301, an individual who is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or an estate
the income of which is subject to United States federal income taxation
regardless of its source or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all
substantial decisions of the trust.

"YIELD TO MATURITY" means the yield to maturity, computed at the time of
issuance of a Security or, if applicable, at the most recent redetermination of
interest on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.

SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS". Upon any application
or request by the Issuer or the Guarantor to the Trustee to take any action
under any provision of this Indenture, the Issuer or the Guarantor, as the case
may be, shall furnish to the Trustee an Officers' Certificate or a Guarantor's
Officer's Certificate, as the case may be, stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such Counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be finished.

Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (including certificates delivered
pursuant to Section 1006) shall include:

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(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;

(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;

(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and

(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.

SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by or covered by an opinion of any
specified Person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or give an opinion
as to some matters and one or more other such Persons as to other matters, and
any such Person or give an opinion as to such matters in one or several
documents.

Any certificate or opinion of an officer of the Issuer or the Guarantor may
be based, insofar as it relates to legal matters, upon an Opinion of Counsel, or
a certificate or representations by counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters upon a
certificate or opinion of, or representations by, an officer or officers of the
Issuer or the Guarantor, as the case may be, stating that the information as to
such factual matters is in the possession of the Issuer or the Guarantor, as the
case may be, unless such counsel knows that the certificate or opinion or
representations as to such matters are erroneous.

Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 104. ACTS OF HOLDERS.

(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders of
the Outstanding Securities of all series or one or more series, as the case may
be, may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by agents duly appointed in
writing. If Securities of a series are issuable as Bearer Securities, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders of Securities
of such series may, alternatively, be

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embodied in and evidenced by the record of Holders of Securities of such series
voting in favor thereof either in person or by proxies duly appointed in
writing, at any meeting of Holders of Securities of such series duly called and
held in accordance with the provisions of Article Fifteen, or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
or record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Issuer and the Guarantor. Such instrument or instruments and
any such record (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "ACT" of the Holders signing such instrument
or instruments or so voting at any such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the holding by any
Person of a Security, shall be sufficient for any purpose of this Indenture and
conclusive in favor of the Trustee and the Issuer and the Guarantor and any
agent of the Trustee or the Issuer and the Guarantor, if made in the manner
provided in this Section. The record of any meeting of Holders of Securities
shall be proved in the manner provided in Section 1506;

(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may so be proved in
any other reasonable manner which the Trustee deans sufficient;

(d) The ownership of Bearer Securities may be proved by the production of
such Bearer Securities or by a certificate executed, as depository, by any trust
issuer, bank or other depository reasonably acceptable to the Issuer and the
Guarantor, wherever situated, if such certificate shall be deemed by the Trustee
to be satisfactory, showing that at the date therein mentioned such Person had
on deposit with such depository, or exhibited to it, the Bearer Securities
therein described; or such facts may be proved by the certificate or affidavit
of the Person holding such Bearer Securities, if such certificate or affidavit
is deemed by the Trustee to be satisfactory. The Trustee, the Guarantor and the
Issuer may assume that such ownership of any Bearer Security continues until (1)
another certificate or affidavit bearing a later date issued in respect of the
same Bearer Security is produced, or (2) such Bearer Security is produced to the
Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding. The ownership of Bearer Securities may also be proved in any other
manner which the Trustee deems sufficient;

(e) If the Issuer or the Guarantor shall solicit from the Holders of
Registered Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Issuer or the Guarantor, as the case may be,
may, at its option, in or pursuant to a Board Resolution in Guarantor's Board
Resolution, as the case may be, fix in advance a record date for

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the determination of the Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Issuer
or the Guarantor shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of the Holders generally in connection therewith
and not later than the date such solicitation is completed. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than seven
months after the record date;

(f) Any request, demand, authorization, direction, notice, consent. waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee, any Security
Registrar, any Paying Agent, any Authenticating Agent, the Guarantor or the
Issuer in reliance thereon, whether or not notation of such action is made upon
such Security.

SECTION 105. NOTICES, ETC., TO TRUSTEE, ISSUER AND GUARANTOR. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with:

(1) the Trustee by any Holder, the Guarantor or the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office, or

(2) the Issuer or the Guarantor by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage prepaid,
to the Issuer or the Guarantor, as the case may be, addressed to it at the
address of its principal office specified in the first paragraph of this
Indenture or at any other address previously furnished in writing to the
Trustee by the Issuer or the Guarantor, as the case may be.

SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for
notice of any event to the Holders of Registered Securities by the Issuer or the
Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first class postage prepaid, to
each such Holder affected by such event, at his address as it appears in the
Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to the Holders of Registered Securities is given by mail, neither the
failure to mail such notice, nor any defect in any notice so

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<PAGE>

mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders of Registered Securities or the sufficiency of any
notice to the Holders of Bearer Securities given as provided herein. Any notice
mailed to a Registered Holder in the manner herein prescribed shall be
conclusively deemed to have been received by such Holder, whether or not such
Holder actually receives such notice.

Except as otherwise express provided herein or otherwise specified with
respect to any Securities pursuant to Section 301, where this Indenture provides
for notice to the Holders of Bearer Securities of any event, such notice shall
be sufficiently given if published in an Authorized Newspaper in the City of New
York and in such other city or cities as maybe specified in such Securities on a
Business Day, such publication to be not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. Any
such notice shall be deemed to have been given on the date of such publication
or, if published more than once, on the date of the first such publication.

Any request, demand, authorization, direction, notice, consent or waiver
required or permitted under the Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.

Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by the Holders shall be filed with the Trustee.

SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.

SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture by the Issuer or the Guarantor shall bind its successors and assigns,
whether so expressed or not.

SECTION 109. SEPARABILITY CLAUSE. In case any provision in this Indenture
or in any Security or coupon shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

SECTION 110. BENEFIT OF INDENTURE. Nothing in this Indenture or in
the Securities or coupon, express or implied, shall give to any Person, other
than the parties hereto, any Security Register, any Paying Agent, any
Authenticating Agent and their successors hereunder and the Holders, any benefit
or any legal or equitable right, remedy or claim under this Indenture.

SECTION 111. GOVERNING LAW. This Indenture and the Securities and coupons
shall be governed by and construed in accordance with the laws of the State of
New York. This Indenture is subject to the provisions of the TIA that are
required to be part of this Indenture and shall, to the extent applicable, be
governed by such provisions, which are incorporated herein by reference.

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<PAGE>

SECTION 112. LEGAL HOLIDAYS. In any case where any Interest Payment Date,
Redemption Date, Repayment Date, sinking fund payment date, Stated Maturity or
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or any Security or
coupon other than a provision in the Securities of any series which specifically
states that such provision shall apply in lieu hereof), payment of interest or
any Additional Amounts or principal (and premium, if any) or sinking fund
payment need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date, Redemption Date, Repayment
Date or sinking fund payment date, or at the Stated Maturity or Maturity,
provided that interest shall accrue on the amount so payable for the period from
and after such Interest Payment Date, Redemption Date, Repayment Date, sinking
fund payment date, Stated Maturity or Maturity, as the case may be, to the date
of payment.

ARTICLE TWO

SECURITIES FORMS

SECTION 201. FORMS OF SECURITIES. The Registered Securities, if any, of
each series and the Bearer Securities and related coupons, if any, of each
series shall be in substantially the form as shall be established in an
indenture supplemental hereto or approved from time to time by or pursuant to a
Board Resolution in accordance with Section 301, shall have such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture or any indenture supplemental hereto, and may have
such letters, numbers or other marks of identification or designation and such
legends or endorsements placed thereon as the Issuer may deem appropriate and as
are not inconsistent with the provisions of this Indenture, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Securities may be listed, or to conform to usage.

Unless otherwise specified as contemplated by Section 301, Bearer
Securities shall have interest coupons attached.

The definitive Securities (and coupons, if any) shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers of the Issuer executing such
Securities (or coupons), as evidenced by their execution of such Securities or
coupons.

SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. Subject to
Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:

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This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

-------------------------,
as Trustee

By
----------------------
Authorized Officer

SECTION 203. SECURITIES ISSUABLE IN GLOBAL FORM. If Securities of a
series are issuable in global form, as specified in and as contemplated by
Section 301, then, notwithstanding clause (8) of Section 301 and the provisions
of Section 302, any such Security shall represent such of the Outstanding
Securities of such series as shall be specified therein and may provide that it
shall represent the aggregate amount of Outstanding Securities of such series
from time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be increased
or decreased to reflect exchanges. Any endorsement of a Security in global form
to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Issuer Order to be delivered to the Trustee pursuant to Section 303 or
304. Subject to the provisions of Section 303 and, if applicable, Section 304,
the Trustee shall deliver and redeliver any Security in permanent global form in
the manner and upon instructions given by the Person or Persons specified
therein or in the applicable Issuer Order. If a Issuer Order pursuant to Section
303 or 304 has been, or simultaneously is, delivered, any instructions by the
Issuer with respect to endorsement or delivery or redelivery of a Security in
global form shall be in writing but need not comply with Section 102 and need
not be accompanied by an Opinion of Counsel.

The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Security in global form if such Security was never
issued and sold by the Issuer and the Issuer delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.

Notwithstanding the provisions of Section 307, unless otherwise specified
as contemplated by Section 301, payment of principal of and any premium and
interest on any Security in permanent global form shall be made to the Person or
Persons specified therein.

Notwithstanding the provisions of Section 308 and except as provided in the
preceding paragraph, the Issuer, the Trustee and any agent of the Issuer and the
Trustee shall treat as the Holder of such principal amount of Outstanding
Securities represented by a permanent global Security (i) in the case of a
permanent global Security in registered form, the Holder of such permanent
global Security in registered form or (ii) in the case of a permanent global
Security in bearer form, the Person or Persons specified therein.

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ARTICLE THREE

THE SECURITIES

SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.

The Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority granted by
one or more Board Resolutions and, subject to Section 303, set forth, or
determined in the manner provided, in an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series, any or all of the following, as applicable:

(1) the title of the Securities of the series (which shall
distinguish the Securities of such series from all other series of
Securities);

(2) any limit upon the aggregate principal amount of the Securities
of the series that may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906, 1107 or 1305);

(3) the date or dates, or the method by which such date or dates will
be determined, on which the principal of the Securities of the series shall
be payable;

(4) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be determined, the Interest
Payment Dates on which such interest will be payable and the Regular Record
Date, if any, for the interest payable on any Registered Security on any
Interest Payment Date, or the method by which such date shall be
determined, and the basis upon which interest shall be calculated if other
than that of a 360-day year of twelve 30-day months;

(5) the place or places, if any, other than or in addition to the
City of ______, where (i) the principal of (and premium, if any), interest,
if any, on, and Additional Amounts, if any, payable in respect of;
Securities of the series shall be payable, (ii) any Registered Securities
of the series may be surrendered for registration of transfer, exchange or
conversion, and (iii) notices or demands to or upon the Issuer in respect
of the Securities of the series and this Indenture may be served;

(6) the period or periods within which, or the date or dates on
which, the price or prices at which, the currency or currencies, currency
unit or units or composite currency or currencies in which, and other terms
and conditions upon which Securities of

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<PAGE>

the series may be redeemed, in whole or in part, at the option of the
Issuer, if the Issuer is to have the option;

(7) the obligation, if any, of the Issuer to redeem, repay or
purchase Securities of the series, pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof upon the
occurrence of specified circumstances or otherwise, and the period or
periods within which or the date or dates on which, the price or prices at
which, the currency or currencies, currency unit or units or composite
currency or currencies in which, and other terms and conditions upon which
Securities of the series shall be redeemed, repaid or purchased, in whole
or in part, pursuant to such obligation;

(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Securities of the series
shall be issuable and, if other than the denomination of $5,000, the
denomination or denominations in which any Bearer Securities of the series
shall be issuable;

(9) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent for the series;

(10) the percentage of the principal amount at which Securities of
such series will be issued and, if other than the principal amount thereof,
the portion of the principal amount of Securities of the series that shall
be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 or, if applicable, the portion of the principal
amount of Securities of the series that is convertible in accordance with
the provisions of this Indenture, or the method by which such portion shall
be determined;

(11) if other than Dollars, the Foreign Currency or Currencies in
which payment of the principal of (and premium, if any), interest, if any,
on, and Additional Amounts, if any, on the Securities of the series shall
be payable or in which the Securities of the series shall be denominated;

(12) whether the amount of payments of principal of (and premium, if
any) or Interest, if any, on the Securities of the series may be determined
with reference to an index, formula or other method (which index, formula
or method may be based, without limitation, on one or more currencies,
currency units, composite currencies, commodities, equity indices or other
indices), and the manner in which such amounts shall be determined;

(13) whether the principal of (and premium, if any) or interest, if
any, on or Additional Amounts, if any, on the Securities of the series are
to he payable, at the election of the Issuer or the Guarantor or a Holder
thereof, in a currency or currencies, currency unit or units or composite
currency or currencies other than that in which such Securities are
denominated or stated to be payable, the period or periods within which
(including the Election Date), and the terms and conditions upon which,
such election may be made, and the time and manner of, and identity of the
exchange rate between the

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<PAGE>

currency or currencies, currency unit or units or composite currency or
currencies in which such securities are denominated or stated to be payable
and the currency or currencies, currency unit or units or composite
currency or currencies in which such Securities are to be so payable;

(14) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be
specified;

(15) any deletions from, modifications of or additions to the Events
of Default or covenants of the Issuer or the Guarantor set forth in this
Indenture with respect to Securities of the series, (whether or not such
Events of Default or covenants are consistent with the Events of default or
covenants set forth herein),

(16) whether Securities of such series will be issued in certificated
or book-entry form and, if certificated, whether Securities of the series
are to be issuable as Registered Securities, Bearer Securities (with or
without coupons) or both, any restrictions applicable to the offer, sale or
delivery of Bearer Securities and the terms upon which Bearer Securities of
the series may be exchanged for Registered Securities of the series and
vice versa (if permitted by applicable laws and regulations), whether any
Securities of the series are to be issuable initially in temporary global
form and whether any Securities of the series are to be issuable in
permanent global form with or without coupons and, if so, whether
beneficial owners of interests in any such permanent global Security may
exchange such interests for Securities of such series and of like tenor of
any authorized form and denomination and the circumstances under which any
such exchanges may occur, if other than in the manner provided in Section
305, and, if Registered Securities of the series are to be issuable as a
global Security, the identity of the depository for such series;

(17) the date as of which any Bearer Securities of the series and any
temporary global Security representing outstanding Securities of the series
shall be dated if other than the date of original issuance of the first
Security of the series to be issued;

(18) the Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, the manner
in which, or the Person to whom, any interest on any Bearer Security of the
series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on a
temporary global Security on an Interest Payment Date will be paid if other
than in the manner provided in Section 304;

(19) the applicability, if any, of Sections 1402 and/or 1403 to the
Securities of the series and any provisions in modification of, in addition
to or in lieu of any of the provisions of Article Fourteen;

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<PAGE>

(20) if the Securities of such series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary Security
of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, then the form and/or terms
of such certificates, documents or conditions;

(21) if the Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Securities to be
authenticated and delivered;

(22) whether and under what circumstances the Issuer will pay
Additional Amounts as contemplated by Section 1010 on the Securities of the
series to any Holder who is not a United States person (including any
modification to the definition of such term) in respect of any tax,
assessment or governmental charge and, if so, whether the Issuer will have
the option to redeem such Securities rather than pay such Additional
Amounts (and the terms of any such option);

(23) the terms and conditions, if any, upon which payment of the
Securities of such series shall be subordinated to other Debt of the Issuer
(including, without limitation, the Debt which ranks senior to such
Securities, restrictions on payments to Holders of such Securities while a
default with respect to such senior Debt is continuing; restrictions, if
any, on payments to the Holders of such Securities following an Event of
Default, and any requirements for Holders of such Securities to remit
certain payments to the holders of such senior Debt);

(24) if the Securities of such series are to be Guaranteed Securities;
and

(25) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).

All Securities of any one series and the coupons appertaining to any Bearer
Securities of such series shall be substantially identical except, in the case
of Registered Securities, as to denominations and except as may otherwise be
provided in or pursuant to the Board Resolution establishing the series (subject
to Section 303) and set forth in an Officers' Certificate or in any indenture
supplemental hereto. All Securities of any one series need not be issued at the
same time and, unless otherwise provided, a series may be reopened, without the
consent of the Holders, for issuances of additional Securities of such series.

If any of the terms of the Securities of any series are established by
action taken pursuant to one or more Board Resolutions, a copy of an appropriate
record of such action(s) shall be certified by the Secretary or an Assistant
Secretary of the Issuer and delivered to the Trustee at or prior to the delivery
of the Officers' Certificate setting forth the terms of the Securities of such
series.

SECTION 302. DENOMINATIONS. The Securities of each series shall be
issuable in such denominations as shall be specified as contemplated by Section
301. With respect to Securities

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<PAGE>

of any series denominated in Dollars, in the absence of any such provisions, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in denominations of $5,000
and any integral multiple $1,000. Securities not denominated in Dollars shall
be issuable in such denominations as are established with respect to such
Securities in or purusant to this Indenture.

SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING., The
Securities and any coupons appertaining thereto shall be executed on behalf of
the Issuer by its President or one of its Vice Presidents, under its seal
reproduced thereon, and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities and
coupons may be manual or facsimile signatures of such authorized officer and may
be imprinted or otherwise reproduced on the Securities.

Securities or coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities or coupons.

At any time and from time to time after the execution and delivery of this
Indenture, the Issuer may deliver Securities of an series, together with any
coupon appertaining thereto, executed by the Issuer to the Trustee for
authentication, together with a Issuer Order for the authentication and delivery
of such Securities, and the Trustee in accordance with the Issuer Order shall
authenticate and deliver such Securities; PROVIDED, HOWEVER, that, in connection
with its original issuance, no Bearer Security shall be mailed or otherwise
delivered to any location in the United States; and PROVIDED, FURTHER, that,
unless otherwise specified with respect to any series of Securities pursuant to
Section 301, a Bearer Security may be delivered in connection with its original
issuance only if the Person entitled to receive such Bearer Security shall have
furnished a certificate in the form set forth in EXHIBIT A to this Indenture or
such other certificate as may be specified with respect to any series of
Securities pursuant to Section 301, dated no earlier than 15 days prior to the
earlier of the date on which such Bearer Security is delivered and the date on
which a temporary Security first becomes exchangeable for such Bearer Security
in accordance with the terms of such temporary Security and this Indenture. If
any Security shall be represented by a permanent global Bearer Security, then,
for purposes of this Section and Section 304, the notation of a beneficial
owner's interest therein upon original issuance of such Security or upon
exchange of a portion of a temporary global Security shall be deemed to be
delivery in connection with its original issuance of such beneficial owner's
interest in such permanent global Security. Except as permitted by Section 306,
the Trustee shall not authenticate and deliver any bearer Security unless all
appurtenant coupons for interest then matured have been detached and canceled if
all the Securities of any series are not to be issued at one time and if the
Board Resolution or supplemental indenture establishing such series shall so
permit, such Issue Order may set forth procedures acceptable to the Trustee for
the issuance of such Securities and determining the terms of particular
Securities of such series, such as interest rate or formula, maturity date, date
of issuance and date from which interest shall accrue. In authenticating such

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<PAGE>

Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to TIA Sections 315(a) through 315(d)) shall be fully protected in
relying upon,

(i) an Opinion of Counsel stating that:

(a) the form or forms of such Securities and any coupons have been
established in conformity with the provisions of this Indenture;

(b) the terms of such Securities and any coupons have been
established in conformity with the provisions of this Indenture; and

(c) such Securities, together with any coupons appertaining thereto,
when completed by appropriate insertions and executed and delivered by the
Issuer or the Guarantor to the Trustee for authentication in accordance
with this Indenture, authenticated and delivered by the Trustee in
accordance with this Indenture and issued by the Issuer or the Guarantor in
the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute legal, valid and binding obligations of the
Issuer, enforceable in accordance with their terms, subject to applicable,
bankruptcy, insolvency, reorganization and other similar of general
applicability relating to or affecting the enforcement of creditors' rights
generally and to general equitable principles; and will entitle the Holders
thereof to the benefits of this Indenture, including the Guarantee; such
Opinion of Counsel need express no opinion as to the availability of
equitable remedies; and

(ii) an Officers' Certificate and a Guarantor's Officer's Certificate,
in each case stating that all conditions precedent provided for in this
Indenture relating to the issuance of the Securities have been complied
with and that, to the best of the knowledge of the signers of such
certificate, no Event of Default with respect to any of the Securities
shall have occurred and be continuing.

If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties,
obligations or immunities under the Securities and this Indenture or otherwise
in a manner which is not acceptable to the Trustee.

Each Registered Security shall be dated the date of its authentication and
each Bearer Security shall be dated as of the date specified as contemplated by
Section 301.

No Security or coupon shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
or Security to which such coupon appertains certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized officer, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.

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<PAGE>

Notwithstanding the foregoing, if any Security still have been authenticated and
delivered hereunder but never issued and sold by the Issuer, and the Issuer
shall deliver such Security to the Trustee for cancellation as provided in
Section 309 together with a written statement (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Issuer, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.

SECTION 304. TEMPORARY SECURITIES. Pending the preparation of definitive
Securities of any series, the Issuer may execute, and upon Issuer Order the
Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, of the tenor of the definitive Securities in lieu of which they
are issued, in registered form, or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities. In the case of Securities of any series, such temporary Securities
may be in global form.

Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the terms thereof or as otherwise provided in or
pursuant to a Board Resolution), if temporary Securities of any series are
issued, the Issuer will cause definitive Securities of that series to be
prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Issuer in a
Place of Payment for that series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities of any series
(accompanied by any non-matured coupons appertaining thereto), the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of the same series of authorized
denominations; PROVIDED, HOWEVER, that no definitive Bearer Security shall be
delivered in exchange for a temporary Registered Security; and PROVIDED;
FURTHER; that a definitive Bearer Security shall be delivered in exchange for a
temporary Bearer Security only in compliance with the conditions set forth in
Section 303. Until so exchanged, the temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.

SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept at the Corporate Trust Office of the Trustee or in
any office or agency of the Issuer or the Guarantor in a Place of Payment a
register for each series of Registered Securities (the registers maintained in
such office or in any such office or agency of the Issuer or the Guarantor in a
Place of Payment being herein sometimes referred to collectively as the
"SECURITY REGISTER") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Registered
Securities and of transfers of Registered Securities. The Security Register
shall be in written form or any other form capable of being convened into
written form within a reasonable time. The Trustee, at its Corporate Trust
Office, is hereby initially appointed the "SECURITY REGISTRAR" for the purpose
of registering Registered Securities

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and transfers of Registered Securities on such Security Register as herein
provided. In the event that the Trustee shall cease to be Security Registrar,
it shall have the right to examine the Security Register at all reasonable
times.

Subject to the provisions of this Section 305, upon surrender for
registration of transfer of any Registered Security of any series at any office
or agency of the Issuer in a Place of Payment for that series, the Issuer shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, once or more new Registered Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount, bearing a number not contemporaneously outstanding, and
containing identical terms and provisions.

Subject to the provisions of this Section 305, at the option of the Holder,
Registered Securities of any series may be exchanged for other Registered
Securities of the same series, of any authorized denomination or denominations
and of a like aggregate principal amount, containing identical terms and
provisions, upon surrender of the Registered Securities to be exchanged at any
such office or agency. Whenever any such Registered Securities are so
surrendered for exchange, the Issuer shall execute, and the Trustee shall
authenticate and deliver, the Register Securities which the Holder making the
exchange is entitled to receive. Unless otherwise specified with respect to any
series of Securities as contemplated by Section 301, Bearer Securities may not
be issued in exchange for Registered Securities.

If (but only if) permitted by the applicable Board Resolution or
Guarantor's Board Resolution and (subject to Section 303) set forth in the
applicable Officers' Certificate, or in any indenture supplemental hereto,
delivered as contemplated by Section 301, at the option of the Holder, Bearer
Securities of any Series may be exchanged for Registered Securities of the same
series of any authorized denominations and of a like aggregate principal amount
and tenor, upon surrender of the Bearer Securities to be exchanged at any such
office or agency, with all unmatured coupons and all matured coupons in default
thereto appertaining. If the Holder of a Bearer Security is unable to produce
any such unmatured coupon or coupons or matured coupon or coupons, in default
any such permitted exchange may be effected if the Bearer Securities are
accompanied by payment in funds acceptable to the Issuer or the Guarantor (if
such Bearer Securities are Guaranteed Securities) in an amount equal to the face
amount of such missing coupon or coupons, or the surrender of such missing
coupon or coupons may be waived by the Issuer, the Guarantor (if such Bearer
Securities are Guaranteed Securities) and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall
surrender to any Paying Agent any such missing coupon in respect of which such a
payment shall have been made, such Holder shall be entitled to receive the
amount of such payment; PROVIDED, HOWEVER, that, except as otherwise provided in
Section 1002, interest represented by coupons shall be payable only upon
presentation and surrender of those coupons at an office or agency located
outside the United States. Notwithstanding the foregoing, in case a Bearer
Security of any series is surrendered at any such office or agency in a
permitted exchange for a Registered Security of the same series and like tenor
after the close of business at such office or agency on (i) any Regular Record
Date and before the opening of business at such office or agency on the relevant
Interest Payment Date, or (ii) any Special Record Date and before the opening of
business at such

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<PAGE>

office or agency on the related proposed date for payment of Defaulted Interest,
such Bearer Security shall be surrendered without the coupon relating to such
Interest Payment Date or proposed date for payment, as the case may be, and
interest or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon when due in accordance
with the provisions of this Indenture. Whenever any Securities are so
surrendered for exchange, the Issuer shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.

Notwithstanding the foregoing, except as otherwise specified as
contemplated in Section 301, any permanent global Security shall be exchangeable
only as provided in this paragraph. If the depository for any permanent global
Security is DTC, then, unless the terms of such global Security expressly permit
such global Security to be exchanged in whole or in part for definitive
Securities, a global Security may be transferred, in whole but not in part, only
to a nominee of DTC, or by a nominee of DTC to DTC or to a successor to DTC for
such, global Security selected or approved by the Issuer or to a nominee of such
successor to DTC. If at any time DTC notifies the Issuer that it is unwilling
or unable to continue as depository for the applicable global Security or
Securities or if at any time DTC ceases to be a clearing agency registered under
the Securities Exchange Act of 1934 if so required by applicable law or
regulation, the Issuer shall appoint a successor depository with respect to such
global Security or Securities. If (x) a successor depository for such global
Security or Securities is not appointed by the Issuer within 90 days after the
Issuer receives such notice or becomes aware of such unwillingness, inability or
ineligibility, (y) an Event of Default has occurred and is continuing and the
beneficial owners representing a majority in principal amount of the applicable
series of Securities represented by such global Security or Securities advise
DTC to cease acting as depository for such global Security or Securities, or (z)
the Issuer, in its sole discretion, determines at any time that all (but not
less than all) Outstanding Securities of any series issued or issuable in the
form of one or more global Securities shall no longer be represented by such
global Security or Securities, then the Issuer shall execute, and the Trustee
shall authenticate and deliver, definitive Securities of like series, rank,
tenor and terms in a definitive form in an aggregate principal amount equal to
the principal amount of such global Security or Securities. If any beneficial
owner of an interest in a permanent global Security otherwise entitled to
exchange such interest for Securities of such series and of like tenor and
principal amount of another authorized form and denomination, as specified as
contemplated by Section 301 and provided that any applicable notice provided in
the permanent global Security shall have been given, then without unnecessary
delay but in any event no later than the earliest date on which such interest
may be so exchanged, the Issuer shall execute, and the Trustee shall
authenticate and deliver, definitive Securities in aggregate principal amount
equal to the principal amount of such beneficial owner's interest in such
permanent global Security. On or after the earliest date on which such
interests may be so exchanged, such permanent global Security shall be
surrendered for exchange by DTC or such other depository as shall be specified
in tile Issuer Order with respect thereto to the Trustee; PROVIDED, HOWEVER,
that no such exchanges may occur during a period beginning at the opening of
business 15 days before any selection of Securities to be redeemed and ending on
the relevant Redemption Date if the Security for which exchange is requested may
be among those selected

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<PAGE>

for redemption; and PROVIDED, FURTHER, that no Bearer Security delivered in
exchange for a portion of a permanent global Security shall be mailed or
otherwise delivered to any location in the United States. If a Registered
Security is issued in exchange for an portion of a permanent global Security
after the close of business at the office or agency where such exchange occurs
on (i) a Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date, or (ii) a Special Record Date
and before the opening of business at such office or agency on the related
proposed date for payment of interest or Defaulted Interest, as the case may be,
will not be payable on such Interest Payment Date or proposed date or payment,
as the case may be, in respect of such Registered Security, but will be payable
on such Interest Payment Date or proposed date for payment, as the case may be,
only to the Person to whom interest in respect of such portion of such permanent
global Security is payable in accordance with the provisions of this Indenture.

All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer and the Guarantor,
respectively, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer
or exchange.

Every Registered Security presented or surrendered for registration of
transfer or for exchange, conversion or redemption shall (if so required by the
Issuer or the Security Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Issuer and the
Security Register, duly executed by the Holder thereof or his attorney duly
authorized in writing.

No service charge shall be made for any registration of transfer or
exchange of Securities, but the Issuer may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.

The Issuer or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Security if such Security may be
among those selected for redemption during a period beginning at the opening of
business 15 days before selection of the Securities to be redeemed under Section
1103 and ending at the close of business on (A) if such Securities are issuable
only as Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if such Securities are issuable as Bearer Securities, the day
of the first publication of the relevant notice of redemption or, if such
Securities are also issuable as Registered Securities and there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of a Registered Security to
be redeemed in part, the portion thereof not selected for redemption may be
exchanged for a Registered Security of that series and of like tenor, provided
that such Registered Security shall be simultaneously surrendered for
redemption, or (iii) to issue, register the transfer of or exchange any Security
which has been surrendered for repayment at the option of the Holder, except
that portion, if any, of such Security which is not to be so repaid.

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<PAGE>

SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any
mutilated Security or a Security with a mutilated coupon appertaining to it is
surrendered to the Trustee or the Issuer, together with, in proper cases, such
security or indemnity as may be required by the Issuer or the Trustee to save
each of them or any agent of either of them harmless, the Issuer shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.

If there shall be delivered to the Issuer, the Guarantor (if the Security
is a Guaranteed Security) and to the Trustee (i) evidence to their satisfaction
of the destruction, loss or theft of any Security or coupon, and (ii) such
security or indemnity as may be required by them to save each of them and any
agent of either of them harmless, then, in the absence of written notice to the
Issuer, the Guarantor (if the Security is a Guaranteed Security) or the Trustee
that such Security or coupon has been acquired by a bona fide purchaser, the
Issuer shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security or in exchange
for the Security to which a destroyed, lost or stolen coupon appertains (with
all appurtenant coupons not destroyed, lost or stolen), a new Security of the
same series and principal amount, containing identical terms and provisions and
bearing a number not contemporaneously outstanding with coupons corresponding to
the coupons, if any, appertaining to such destroyed, lost or stolen Security or
to the Security to which such destroyed, lost or stolen coupon appertains.

Notwithstanding the provisions of the previous two paragraphs, in case any
such mutilated, destroyed, lost or stolen Security or coupon has become or is
about to become due and payable, the Issuer in its discretion may, instead of
issuing a new Security, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the security to
which such destroyed, lost or stolen coupon appertains, pay such Security or
coupon; PROVIDED, HOWEVER, that payment of principal of (and premium, if any),
any interest on and any Additional Amounts with respect to, Bearer Securities
shall, except as otherwise provided in Section 1002, be payable only at an
office or agency located outside the United States and, unless otherwise
specified as contemplated by Section 301, any interest on Bearer Securities
shall be payable only upon presentation and surrender of the coupons
appertaining thereto.

Every new Security of any series with its coupons, if any, issued pursuant
to this Section in lieu of any mutilated, destroyed, lost or stolen Security, or
in exchange for a Security to which a mutilated, destroyed, lost or stolen
coupon may pertain, shall constitute an original additional contractual
obligation of the Issuer and the Guarantor (if the Security is a Guaranteed
Security), whether or not the mutilated, destroyed, lost or stolen Security and
its coupons, if and, or the mutilated, destroyed, lost or stolen coupon shall be
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of
that series and their coupons, if any, duly issued hereunder.

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<PAGE>

The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to The replacement or
payment of mutilated, destroyed, lost or stolen Securities or coupons.

SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHT PRESERVED. Except as
otherwise specified with respect to a series of Securities in accordance with
the provisions of Section 301, interest on any Registered Security that is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Issuer maintained
for such purpose pursuant to Section 1002; PROVIDED, HOWEVER, that each
installment of interest on any Registered Security may at the Holders option be
paid by (i) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 303, to the address of
such Person as it appears on the Security Register or (ii) transfer to an
account maintained by the payee located inside the United States.

Unless otherwise provided as contemplated by Section 301 with respect to
the Securities of any series, payment of interest may be made, in the case of a
Bearer Security, by transfer to an account maintained by the payee with a bank
located outside the United States.

Unless otherwise provided as contemplated by Section 301, every permanent
global Security will provide that interest, if any, payable on any Interest
Payment Date will be paid to DTC, with respect to that portion of such permanent
global Security held for its account by Cede & Co, for the purpose of permitting
such party to credit the interest received by it in respect of such permanent
global Security to the accounts of the beneficial owners thereof.

In case a Bearer Security of any series is surrendered in exchange for a
Registered Security of such series after the close of business (at an office or
agency in a Place of Payment for such series) on any Regular Record Date and
before the opening of business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.

Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, any interest on any Registered
Security of any series that is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date (herein called "DEFAULTED INTEREST")
shall forthwith cease to be payable to the registered Holder thereof on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest shall be paid by the Issuer or the Guarantor (if the
Registered Security is a Guaranteed Security), as provided in clause (1) or (2)
below:

(1) The Issuer or the Guarantor (if the Registered Security is a
Guaranteed Security) may elect to make payment of any Defaulted Interest to
the Persons in whose

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<PAGE>

names the Registered Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Issuer or the Guarantor (if the
Registered Security is a Guaranteed Security) shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Registered Security of such series and the date of the proposed payment
(which shall not be less than 20 days after such notice is received by the
Trustee), and at the same time the Issuer or the Guarantor (if the
Registered Security is a Guaranteed Security), as the case may be, shall
deposit with the Trustee an amount of money in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit on
or prior to the date of the proposed payment such money when deposited to
be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
not be more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Issuer or the Guarantor, as the case may be, of such Special Record
Date and, in the name and at the expense of the Issuer or the Guarantor, as
the case may be, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Registered Securities of
such series at his address as it appears in the Security Register not less
than 10 days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Issuer or the Guarantor,
as the case may be, cause a similar notice to be published at least once in
an Authorized Newspaper in each Place of Payment, but such publications
shall not be a condition precedent to the establishment of such Special
Record Date Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Registered Securities of such series (or their respective predecessor
Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following clause (2).
In case a Bearer Security of any series is surrendered for transfer or
exchange at the office or agency in a Place of Payment for such series
after the close of business at such office or agency on any Special Record
Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the coupon relating to such Proposed
date of payment and Defaulted Interest will not be payable on such proposed
date of payment in respect of the Registered Security issued in exchange
for such Bearer Security, but will be payable only to the Holder of such
coupon when due in accordance with the provisions of this Indenture.

(2) The Issuer or the Guarantor (if the Security is a Guaranteed
Security) may make payment of any Defaulted Interest on the Registered
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on

29
<PAGE>

which such Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Issuer or the
Guarantor, as the case may be, to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed practicable
by the Trustee.

Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.

SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a
Registered Security for registration of transfer, the Issuer, the Guarantor (if
the Registered Security is a Guaranteed Security), the Trustee and any agent of
the Issuer, the Guarantor (if the Registered Security is Guaranteed Security) or
the Trustee may treat the Person in whose name such Registered Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of (and premium, if any), and (subject to Sections 305 and 307)
interest on, such Registered Security and for all other purposes whatsoever,
whether or not such Registered Security is overdue, and neither the Issuer nor
the Guarantor, the Trustee nor any agent, the Guarantor (if the Bearer Security
is a Guaranteed Security), of the Issuer, the Guarantor or the Trustee shall be
affected by notice to the contrary.

Title to any Bearer Security and any coupons appertaining thereto shall
pass by delivery. The Issuer the Guarantor (if the Bearer Security is a
Guaranteed Security), the Trustee and any agent of the Issuer, or the Trustee
may treat the Holder of any Bearer Security and the Holder of any coupon as the
absolute owner of such Security or coupon for the purpose of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether or
not such Security or coupon is overdue, and neither the Issuer the Guarantor,
the Trustee nor any agent of the Issuer the Guarantor or, the Trustee shall be
affected by notice to the contrary.

None of the Issuer, the Trustee, any Paying Agent or the Security Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of a Security
in global form or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.

Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Issuer, the Guarantor (if the Bearer Security is a
Guaranteed Security), the Trustee, or any agent of the Issuer, the Guarantor (if
the Bearer Security is a Guaranteed Security), or the Trustee, from giving
effect to any written certification, proxy or other authorization furnished by
any depository, as a Holder, with respect to such global Security or impair, as
between such depository and owners of beneficial interests in such global
Security, the operation of customary practices governing the exercise of the
rights of such depository (or its nominee) as Holder of such global Security.

SECTION 309. CANCELLATION. All Securities and coupons surrendered for
payment, redemption, repayment at the option of the Holder, registration of
transfer or exchange for credit

30
<PAGE>

against any sinking fund payment shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee, and any such Securities and coupons
and Securities and coupons surrendered directly to the Trustee for any such
purpose shall be promptly canceled by it. The Issuer or the Guarantor (if the
Security is a Guaranteed Security) may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Issuer or the Guarantor (if the Security is a Guaranteed Security) may
have acquired in any manner whatsoever, and may deliver to the Trustee (or to
any other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Issuer has not issued and sold,,
and all Securities so delivered shall be promptly canceled by the Trustee. If
the Issuer shall so acquire any of the Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are surrendered to the
Trustee for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. Canceled Securities and coupons held by
the Trustee shall be destroyed by the Trustee and the Trustee shall deliver a
certificate of such destruction to the Issuer and the Guarantor, unless by a
Issuer Order or Guarantor Order the Issuer or the Guarantor, as the case may be,
directs their return to it.

SECTION 310. COMPUTATION OF INTEREST. Except as otherwise specified as
contemplated by Section 301 with respect to Securities of any series, interest
on the Securities of each series shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.

ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall
upon an Issuer Request or a Guarantor Request (if the applicable series of
Securities is a series of Guaranteed Securities) cease to be of further effect
with respect to any series of Securities specified in such Issuer Request or
Guarantors Request (except as to any surviving rights of registration of
transfer or exchange of Securities of such series herein expressly provided for
and any right to receive Additional Amounts, as provided in Section 1010), and
the Trustee, upon receipt of a Issuer Order or Guarantor Order, and at the
expense of the Issuer and the Guarantor, shall execute proper instruments
acknowledging satisfaction and discharge of its Indenture as to such series when

(1) either:

(A) all Securities of such series theretofore authenticated and
delivered and all coupons, if any, appertaining thereto (other than (i)
coupons appertaining to Bearer Securities surrendered for exchange for
Registered Securities and maturing after such exchange, whose surrender is
not required or has been waived as provided in Section 305, (ii) Securities
and coupons of such series which have been destroyed, lost or stolen and

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<PAGE>

which have been replaced or paid as provided in Section 306, (iii) coupons
appertaining to Securities called for redemption and maturing after the
relevant Redemption Date, whose surrender has been waived as provided in
Section 1106, and (iv) Securities and coupons of such series for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or

(B) all Securities of such series and, in the case of (i) or (ii)
below, any coupons pertaining thereto, not theretofore delivered to the
Trustee for cancellation.

(i) have become due and payable, or

(ii) will become due and payable at their Stated Maturity within one
year, or

(iii) if redeemable at the option of the Issuer, are to be called
for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Issuer and the Guarantor (if the Securities of
such series are Guaranteed Securities),

and the Issuer or the Guarantor (if the Securirties of such series are
Guaranteed Securities), in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as funds
in trust for such purpose an amount in the currency or currencies, currency
unit or units or composite currency or currencies in which the Securities
of such series are payable, sufficient to pay and discharge the entire
indebtedness on such Securities and such coupons not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if any) and
interest, and any Additional Amounts with respect thereto, to the date of
such deposit (in the case of Securities which have become due and payable)
or to the Stated Maturity or Redemption Date, as the case may be; and

(2) the Issuer or the Guarantor (if the Securities of such series are
Guaranteed Securities) has paid or caused to be paid all other sums payable
hereunder by the Issuer and the Guarantor; and

(3) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel and the Guarantor has delivered to the Trustee a
Guarantor's Officers' Certificate (if the Securities of such series are
Guaranteed Securities), each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
as to such series have been complied with.

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<PAGE>

The obligations of the Issuer to the Trustee and any predecessor
Trustee under Section 606, the obligations of the Issuer to any
Authenticating Agent under Section 611 and, if money shall have been
deposited with and held by the Trustee pursuant to subclause (B) of clause
(1) of this Section, the obligations of the Trustee under Section 402 and
the last paragraph of Section 1003 shall survive the satisfaction and
discharge of this Indenture.

SECTION 402. APPLICATION OF TRUST FUNDS. Subject to the provisions of the
last paragraph of Section 1003, all monies deposited with the Trustee pursuant
to Section 401 shall be held in trust and applied by it, in accordance with the
provisions of the Securities, the coupons and this Indenture, to the payment,
either directly or through any Paying Agent but not in any event including the
Issuer acting as its own Paying Agent, as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any), and any
interest and Additional Amounts for whose payment such money has been deposited
with or received by the Trustee. Such money shall he segregated from other funds
of the Trustee.

ARTICLE FIVE

REMEDIES

SECTION 501. EVENT DEFAULT. "Event of Default," wherever used herein with
respect to any particular series of Securities, means any one of the following
events (whatever the reason for such Event of Default and whether or not it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):

(1) default in the payment of any interest upon or any Additional
Amounts payable in respect of any Security of that series or of any coupon
appertaining thereto, when such interest, Additional Amounts or coupon
becomes due and payable, and continuance of such default for a period of
30-days; or

(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series when it becomes due and payable at its
Maturity; or

(3) default in the deposit of any sinking fund payment, when and as
due by the terms of any Security of that series; or

(4) default in the performance of, or breach of, any covenant or
warranty of the Issuer or the Guarantor (if the Securities of such series
are Guaranteed Securities) in

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<PAGE>

this Indenture with respect to any Security of that series (other than a
covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section 501 specifically dealt with), and continuance of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Issuer and the Guarantor (if the
Securities of such series are Guaranteed Securities) by the Trustee or to
the Issuer, the Guarantor (if the Securities of such series are Guaranteed
Securities) and the Trustee by the Holders of at least a majority in
principal amount of the Outstanding Securities of that series a written
notice specified such default or breach and requiring it to be remedied and
stating that such notice is a "NOTICE OF DEFAULT" hereunder; or

(5) a default under any bond, debenture, note or other evidence of
indebtedness of the Issuer, or the Guarantor (if the Securities of such
series are Guaranteed Securities) or under any mortgage, indenture or other
instrument of the Issuer or the Guarantor (if the Securities of such series
are Guaranteed Securities) (including a default with respect to Securities
of any series other than that series) under which there may be issued or by
which there may be secured any indebtedness of the Issuer or the Guarantor
(if the Securities of such series are Guaranteed Securities) (or by any
Subsidiary, the repayment of which the Issuer has Guaranteed or for which
the Issuer is directly responsible or liable as obligor or guarantor),
whether such indebtedness now exists or shall hereafter be created, which
default shall constitute a failure to pay an aggregate principal amount
exceeding $10,000,000 of such indebtedness when due and payable which shall
continue after the expiration of any applicable grace period with respect
thereto or shall have resulted in such indebtedness in an aggregate
principal amount exceeding $10,000,000 becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of 10 days
after there shall have been given, by registered or certified mail, to the
Issuer or the Guarantor, as the case may be, by the Trustee or to the
Issuer or the Guarantor, as the case may be, and the Trustee by the Holders
of at least a majority in principal amount of the Outstanding Securities of
that series a written notice specifying such default and requiring the
Issuer or the Guarantor, as the case may be, to cause such indebtedness to
be discharged or cause such acceleration to be rescinded or annulled and
stating that such notice is a "NOTICE OF DEFAULT" hereunder; or

(6) the Issuer, the Guarantor (if the Securities of such series are
Guaranteed Securities) or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:

(A) commences a voluntary case,

(B) consents to the entry of an order for relief against it in
an involuntary case,

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(D) makes a general assignment for the benefit of its creditors; or

(7) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:

(A) is for relief against the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) or any Significant
Subsidiary in an involuntary case, appoints a Custodian of the Issuer, or
the Guarantor (if the Securities of such series are Guaranteed Securities)
or any Significant Subsidiary or for all or substantially all of either of
its property, or

(B) orders the liquidation of the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) or any Significant
Subsidiary and the order or decree remains unstayed and in effect for 90
days; or

(8) any other Event of Default provided with respect to Securities of that
series.

As used in this Section 501, the term "Bankruptcy Law" means Title 11, U.S.
Code or any similar Federal or State law for the relief of debtors and the term
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or other similar
official under any Bankruptcy Law.

SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than a majority in principal amount of the Outstanding
Securities of that series may declare the principal (or, if any Securities are
Original Issue Discount Securities or Indexed Securities, such portion of the
principal as may be specified in the terms thereof) of all the Securities of
that series to be due and payable immediately, by a notice in writing to the
Issuer and the Guarantor (if the Securities are Guaranteed Securities) (and to
the Trustee if given by the Holders), and upon any such declaration such
principal or specified portion thereof shall become immediately due and payable.

At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of not less than a majority in principal amount of
the Outstanding Securities of that series, by written notice to the Issuer and
the Trustee, may rescind and annul such declaration and its consequences if:

(1) the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) has paid or deposited with the Trustee a sum sufficient to pay
in the currency, currency unit or composite currency in which the
Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series):

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(A) all overdue installments of interest and any Additional
Amounts payable in respect of all Outstanding Securities of that
series and any related coupons,

(B) the principal of (and premium, if any, on) any Outstanding
Securities of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
borne by or provided for in such Securities,

(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest and any Additional
Amounts at the rate or rates borne by or provided for in such
Securities, and

(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and

(2) all Events of Default with respect to Securities of that series,
other than the nonpayment of the principal of (or premium, if any) or
interest on Securities of that series which have become due solely by such
declaration of acceleration have been cured or waived as provided in
Section 513.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Issuer and the Guarantor (if the Securities are Guaranteed
Securities) covenants, in each case, that if:

(1) default is made in the payment of any installment of interest or
Additional Amounts, if any, on any Securities of any series and any related
coupon when such interest or Additional Amount becomes due and payable and
such default continues for a period of 30 days, or

(2) default is made in the payment of the principal of (or premium,
if any, on) any Security of any series at its Maturity,

then the Issuer or the Guarantor (if the Securities are Guaranteed Securities)
will, as the case may be, upon demand of the Trustee, pay to the Trustee, for
the benefit of the Holders of such Securities of such series and coupons, the
whole amount then due and payable on such Securities and coupons for principal
(and premium, if any) and interest and Additional Amounts thereon, with interest
upon any overdue principal (and premium, if any) and, to the extent that payment
of such interest shall be legally enforceable, upon any overdue installments of
interest or Additional Amounts thereon, if any, at the rate or rates borne by or
provided for in such Securities, and, in addition thereto, such further amount
shall be sufficient to cover the costs and expenses of

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collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel.

If the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) fails to pay such amounts forthwith upon such demand, the Trustee,
in its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, and may prosecute
such proceeding to judgment or final decree, and may enforce the same against
the Issuer, the Guarantor (if the Securities are Guaranteed Securities) or any
other obligor upon such Securities of such series and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) or any other obligor upon such Securities of such series, wherever
situated.

If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series and any
related coupons by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 504. TRUSTEE MAY FILE PROOF OF CLAIM. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Issuer, the Guarantor (if the Securities are Guaranteed Securities) or any
other obligor upon the Securities or the property of the Issuer, the Guarantor
(if the Securities are Guaranteed Securities) or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
of any series shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) for the payment of overdue principal of, premium, if any, or
interest on the Securities) shall be entitled and empowered, by intervention in
such proceeding or otherwise:

(i) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of such series, of
principal (and premium, if any) and interest and Additional Amounts, if
any, owing and unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and

(ii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidation, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of Securities of such series and coupons to make such payments to
the Trustee, and in the event that such payments are made

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<PAGE>

directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee and
any predecessor Trustee, their agents and counsel, and any other amounts due the
Trustee or any predecessor Trustee under Section 606.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder or Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.

SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES
OR COUPONS. All rights of action and claims under this Indenture or any of the
Securities or coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of Securities and coupons
in respect of which such judgment has been recovered.

SECTION 506. APPLICATION OF MONEY COLLECTED. Any money collected by the
Trustee pursuant to this Article shall be applied in the following order, at the
date and dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) and interest and any
Additional Amounts, upon presentation of the Securities or coupons, or both, as
the case may be, and the notation thereon of the payment if only partially paid
and upon surrender thereof if finally paid:

FIRST: To the payment of all amounts due to the Trustee and any
predecessor Trustee under Section 606;

SECOND: To the payment of the amounts then due and unpaid upon the
Securities and coupons for principal (and premium, if any) and interest and any
Additional Amounts payable, in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind,
according to the aggregate amounts due and payable on such Securities and
coupons for principal (and premium, if any), interest and Additional Amounts,
respectively; and

THIRD: To the payment of the remainder, if any, to the Issuer.

SECTION 507. LIMITATION ON SUITS"SECTION507.LimitationonSuits""3". No
Holder of any Security of any series or any related coupon shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:

<PAGE>

(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;

(2) the Holders of not less than a majority in principal amount of
the Outstanding Securities of that series shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;

(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;

(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and

(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.

SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM,
IF ANY, INTEREST AND ADDITIONAL AMOUNTS. Notwithstanding any other provision in
this Indenture, the Holder of any Security or coupon shall have the right which
is absolute and unconditional to receive payment of the principal of (and
premium, if any) and (subject to Sections 305 and 307) interest on, and any
Additional Amounts in respect of, such Security or payment of such coupon on the
respective due dates expressed in such Security or coupon (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of
such Holder.

SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder of a Security or coupon has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case the Issuer, the Guarantor (if the
Security is a Guaranteed Security), the Trustee and the Holders of Securities
and coupons shall, subject to any determination in such proceeding, be restored
severally and respectively to their former position hereunder and thereafter all
rights and remedies of the Trustee and the Holders shall continue as though no
such proceeding had been instituted.

SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities or coupons in the last paragraph of Section 306, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders of
Securities or coupons is intended to be exclusive of

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<PAGE>

any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion nor employment of any other
appropriate right or remedy.

SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder of any Security or coupon to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders of Securities or coupons, as the
case may be.

SECTION 512. CONTROL BY HOLDERS OF SECURITIES. The Holders of not less
than a majority in principal amount of the Outstanding Securities of any series
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Securities of such series,
provided that:

(1) such direction shall not be in conflict with any rule of law or
with this Indenture,

(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and

(3) the Trustee need not take any action which might expose it to
personal liability, without the receipt of reasonable indemnity from
Holders requesting such action, or be unduly prejudicial to the Holders of
Securities of such series not joining therein.

SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series and any related
coupons waive any past default hereunder with respect to such series and its
consequences, except a default

(1) in the payment of the principal of (or premium, if any) or
interest on or Additional Amounts payable in respect of any Security of
such series or any related coupons, or

(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.

Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been waived, for every purpose
of this Indenture; but no such

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<PAGE>

waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.

SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS. The Issuer and the
Guarantor, in each case, covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at anytime hereafter in force which may affect the
covenants or the performance of this Indenture, and the Issuer and the Guarantor
each (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.

SECTION 515. UNDERTAKING FOR COSTS. All parties to this Indenture
acknowledge, and each Holder of any Security by his acceptance thereof shall be
deemed to have acknowledged, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than a majority in principal amount of
the Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium if any) or interest
on any Security on or after the respective Maturities expressed in such Security
(or, in the case of redemption, on or after the Redemption Date).

ARTICLE SIX

THE TRUSTEE

SECTION 601. NOTICE OF DEFAULTS. Within 90 days after the occurrence of
any default hereunder with respect to the Securities of any series, the Trustee
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice of such default hereunder known to the Trustee, unless such default shall
have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a
default in the payment of the principal of (or premium if any) or interest on or
any Additional Amounts or sinking fund installment with respect to the
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders
of the Securities and coupons of such series; and PROVIDED, FURTHER, that in the
case of any default or breach of the character specified in Section 501(4) with
respect to the Securities and coupons of such series, no such notice to Holders
shall be given until at least 60 days after the occurrence thereon. For the
purpose of this Section, the term "default" means any event

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<PAGE>

which is, or after notice or lapse of time or both would become, an Event of
Default with respect to the Securities of such series.

SECTION 602. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of TIA
Sections 315(a) through 315(d):

(1) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parities;

(2) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by a Issuer Request or Issuer Order or of the
Guarantor mentioned herein shall be sufficiently evidenced by a Guarantor
Request or Guarantor Order (in each case, other than delivery of any
Security, together with any coupons appertaining thereto, to the Trustee
for authentication and delivery pursuant to Section 303 which shall be
sufficiently evidenced as provided therein) and any resolution of the Board
of Directors may be sufficiently evidenced by a Board Resolution or by the
Guarantor's Board of Directors may be sufficiently evidenced by a
Guarantor's Board Resolution or, if such matter pertains to the Guarantor,
a Guarantor's Officer's Certificate;

(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting to take any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may in the
absence of bad faith on its part, rely upon an Officers' Certificate;

(4) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon,

(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Securities of any series or any related coupons
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction,

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<PAGE>

(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Issuer and the Guarantor, personally
or by agent or attorney,

(7) the Trustee may execute any of the trusts of powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and

(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture.

The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers.

SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The
recitals contained herein and in the Securities, except the Trustee's
certificate of authorization, and in any coupons shall be taken as the
statements of the Issuer or the Guarantor (if the Securities are Guaranteed
Securities), as the case may be, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligation hereunder. Neither the Trustee nor the
Authenticating Agent shall be accountable for the use or application by the
Issuer of Securities or the proceeds thereof.

SECTION 604. MAY HOLD SECURITIES. The Trustee, any Paying Agent, Security
Registrar, Authenticating Agent or any other agent of the Issuer or the
Guarantor, in its individual or any other capacity, may become the owner or
pledgee of Securities and coupons and, subject to TIA Sections 310 (b) and 311,
may otherwise deal with the Issuer or the Guarantor with the same rights it
would have if it were not Trustee, Paying Agent, Security Registrar,
Authenticating Agent or such other agent.

SECTION 605. MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder, except as otherwise agreed with the Issuer.

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<PAGE>

SECTION 606. COMPENSATION AND REIMBURSEMENTT. The Issuer and the
Guarantor jointly and severally agree;

(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);

(2) except as otherwise expressly provided herein, to reimburse each
of the Trustee and any predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to Trustee's negligence or bad faith; and

(3) to indemnify each of the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its own part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.

When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 505(5) or Section 501(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.

As security for the performance of the obligations of the Issuer and the
Guarantor under this Section, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (or premium, if any)
or interest on particular Securities or coupons.

The provisions of this Section shall survive the termination of this
Indenture.

SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING
INTERESTS. There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined
capital and surplus of at least $50,000,000. If such corporation publishes
reports of condition at least annually, pursuant to law or the requirements of a
Federal, state, Territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.

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<PAGE>

SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.

(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Issuer and the
Guarantor (if the Securities are Guaranteed Securities). If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.

(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Trustee and to the Issuer
and the Guarantor (if the Securities are Guaranteed Securities).

(d) If at any time:

(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Issuer, the Guarantor
(if the Securities are Guaranteed Securities) or by any Holder of a
Security who has been a bona fide Holder of a Security for at least six
months, or

(2) the Trustee shall cease to be eligible under Section 607(a) and
shall fail to resign after written request therefor by the Issuer, the
Guarantor (if the Securities are Guaranteed Securities) or by any Holder of
a Security who has been a bona fide Holder of a Security for at least six
months, or

(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,

then, in any such case, (i) the Issuer by or pursuant to a Board Resolution or
the Guarantor (if the Securities are Guaranteed Securities), by or pursuant to a
Guarantor's Board Resolution, may remove the Trustee and appoint a successor
Trustee with respect to all Securities, or (ii) subject to TIA Section 315(e),
any Holder of a Security who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor Trustee or
Trustees.

(e) if the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any reason with respect
to the Securities of one or more

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series, the Issuer, by or pursuant to a Board Resolution, and the Guarantor (if
the Securities are Guaranteed Securities), by or pursuant to a Guarantor's Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series). If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Issuer, the Guarantor (if
the Securities are Guaranteed Securities) and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee with respect to the Securities of such
series and to that extent supersede the successor Trustee appointed by the
Issuer and the Guarantor (if the Securities are Guaranteed Securities). If no
successor Trustee with respect to the Securities of any series shall have been
so appointed by the Issuer and the Guarantor (if the Securities are Guaranteed
Securities) or the Holders of Securities and accepted appointment in the manner
hereinafter provided, any Holder of a Security who has been a bona fide Holder
of a Security of such series for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to Securities of such
series.

(f) The Issuer shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series in the manner
provided for notices to the Holders of Securities in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.

SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee shall execute,
acknowledge and deliver to the Issuer, the Guarantor and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, upon
request of the Issuer, the Guarantor or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor trustee all the rights, powers and trusts of the
retiring Trustee, and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder, subject
nevertheless to its claim, if any, provided for in Section 606.

(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Issuer, the
Guarantor (if any of such series of Securities is a series of Guaranteed
Securities) the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto, pursuant to Article Nine hereof, wherein each successor
Trustee shall

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accept such appointment and which (i) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (ii) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (iii) shall add to or change any of
the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust, and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the right, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates; but, on request of the Issuer,
the Guarantor, if applicable, or any successor Trustee, such retiring Trustee
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder with respect to the Securities
of that or those series to which the appointment of such successor Trustee
relates.

(c) Upon request of any such successor Trustee, the Issuer and the
Guarantor shall execute any and all instruments for a more fully and certainly
vesting in, and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) or (b) of this section, as the ease may be.

(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.

SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities or coupons shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities or coupons so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities or coupons. In case any Securities or coupons shall not have been
authenticated by such predecessor Trustee, any such successor Trustee may
authenticate and deliver such Securities or coupons, in either its own

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name or that of its predecessor Trustee, with the full force and effect which
this Indenture provides for the certificate of authentication of the Trustee.

SECTION 611. APPOINTMENT OF AUTHENTICATION AGENT. At any time when any of
the Securities remain Outstanding, the Trustee may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer or partial redemption or
repayment thereof, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee Hereunder. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, a copy of which instruction shall be promptly furnished to the Issuer.
Wherever reference is made in this Indenture to the authentication and delivery
of Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Issuer and the Guarantor and,
except as may otherwise be provided pursuant to Section 301, shall at all times
be a bank or trust issuer or corporation organized and doing business and in
good standing under the laws of the United States of America or of any State or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authorities. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.

Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or further act
on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent for any series of Securities may at any time resign
by giving written notice of resignation to the Trustee for such series, the
Guarantor and the Issuer. The Trustee for any series of Securities may at any
time terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent, the Guarantor and the Issuer. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time such Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, the Trustee for such series may appoint a
successor Authenticating Agent which shall be acceptable to the Issuer and the
Guarantor and shall give notice of such appointment to

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all Holders of Securities of the series with respect to which such
Authenticating Agent will service in the manner set forth in Section 106. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent
herein. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section.

The Issuer agrees and the Guarantor agrees to pay to each Authenticating
Agent from time to time reasonable compensation including reimbursement of its
reasonable expenses for its services under this Section.

If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:

This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.

[ ]
-----------------------------------
as Trustee

By:
---------------------------------
as Authenticating Agent

By:
---------------------------------
Authorized Officer

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE, GUARANTOR AND ISSUER

SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. Every Holder
of Securities or coupons, by receiving and holding the same, agrees with the
Issuer, the Guarantor and the Trustee that neither the Issuer, the Guarantor nor
the Trustee nor any Authenticating Agent nor any Paying Agent nor any Security
Registrar shall be held accountable by reason of the disclosure of any
information as to the names and addresses of the Holders of Securities in
accordance with TIA Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA Section
312(b).

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SECTION 702. REPORTS BY TRUSTEE. Within 60 days after January 1 of each
year commencing with the first January 1 after the issuance of Securities
pursuant to this Indenture, the Trustee shall transmit by mail to all Holders of
Securities as provided in TIA Section 313(c) a brief report dated as of such
January 1, if required by TIA Section 313(a).

SECTION 703. REPORTS BY ISSUER AND GUARANTOR. The Issuer and the
Guarantor will:

(1) file with the Trustee, within 15 days after the Issuer or the
Guarantor, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information documents
and other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations prescribed)
which the Issuer or the Guarantor, as the case may be, may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Issuer or Guarantor, as the
case may be, is not required to file information, documents or reports
pursuant to either of such Sections, then it will file with the Trustee and
the Commission, in accordance with the rules and regulations prescribed
from time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a security
listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;

(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Issuer or Guarantor ,as the case may be, with the conditions and
covenants of this Indenture as may be required from time to time by such
rules and regulations; and

(3) transmit by mail to the Holders of Securities, within 30 days
after the filing hereof with the Trustee, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information,
documents and reports required to be filed by the Issuer or the Guarantor
pursuant to paragraphs (1) and (2) of this section as may be required by
rules and regulations prescribed from time to time by the Commission.

SECTION 704. ISSUER AND THE GUARANTOR TO FURNISH TO TRUSTEE NAMES AND
ADDRESSES OF HOLDERS. The Issuer and the Guarantor (with respect to Securities
of each series that are Guaranteed Securities, will furnish or cause to be
furnished to the Trustee:

(a) semi-annually, not later than 25 days after the Regular Record Date
for interest for each series of Securities, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders of Registered
Securities of such series as of such Regular Record Date, or if there is no
Regular Record Date for interest for such series of Securities, semi-annually,
upon such dates as are set forth in the Board Resolution or indenture
supplemental hereto authorizing such series, and

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<PAGE>

(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Issuer or the Guarantor (with respect to
Securities of each series that are Guaranteed Securities) of any such request, a
list of similar form and content as of a date not more than 15 days prior to the
time such list is furnished; PROVIDED, HOWEVER, that so long as the Trustee is
the Security Registrar, no such list shall be required to be furnished.

ARTICLE EIGHT

CONSOLIDATION, MERGER AND SALES

SECTION 801. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. Nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of the issuer with or into any other Person or Persons
(whether or not affiliated with the issuer), or successive consolidations or
mergers in which either the Issuer will he the continuing entity or the Issuer
or its successor or successors shall be a party or parties, or shall prevent any
conveyance, transfer or lease of all or substantially all of the property of the
Issuer, to any other Person (whether or not affiliated with the Issuer);
provided, however, that:

(1) in case the Issuer shall consolidate with or merge into another
Person or convey, transfer or lease all or substantially all of its
properties and assets to any Person, the entity formed by such
consolidation or into which the Issuer is merged or the Person which
acquires by conveyance or transfer, or which leases, all or substantially
all of the properties of the Issuer shall be a Person organized arid
existing under the laws of the United States of America, any state thereof
or the District of Columbia and shall expressly assume, by an indenture (or
indentures if at such time there is more than one Trustee) supplemental
hereto, executed by the successor Person and the Guarantor and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of, any premium and interest on and any Additional
Amounts with respect to all the Securities and the performance of every
obligation in this Indenture and the Outstanding Securities on the part of
the Issuer to be performed or observed;

(2) immediately after giving effect to such transaction, no Event of
Default or event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing; and

(3) either the Issuer or the successor Person shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance, transfer or lease and,
if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and that
all conditions precedent herein provided for relating to such transaction
have been complied with.

No such consolidation, merger, conveyance, transfer or lease shall be permitted
by this Section

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<PAGE>

unless prior thereto the Guarantor shall have delivered to the Trustee a
Guarantor's Officers' Certificate and an Opinion of Counsel, each stating that
the Guarantor's obligations hereunder shall remain in full force and effect
thereafter.

SECTION 802. SUCCESSOR PERSON SUBSTITUTED FOR ISSUER. Upon any
consolidation by the Issuer with or merger of the Issuer into any other Person
or any conveyance, transfer or lease of all or substantially all of the
properties and assets of the Issuer to any Person in accordance with Section
801, the successor Person formed by such consolidation or into which the Issuer
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such successor Person had
been named as the Issuer herein; and thereafter, except in the case of a lease,
the predecessor Person shall be released from all obligations and covenants
tinder this Indenture, the Securities and the Coupons.

SECTION 803. GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
Nothing contained in this Indenture or in any of the Securities shall prevent
any consolidation or merger of the Guarantor with or into any other Person or
Persons (whether or not affiliated with the Guarantor), or successive
consolidations or mergers in which either the Guarantor will he the continuing
entity or the Guarantor or its successor or successors shall be a party or
parties, or shall prevent any conveyance, transfer or lease of all or
substantially all of the property of the Guarantor, to any other Person (whether
or not affiliated with the Guarantor); provided, however, that:

(1) in case the Guarantor shall consolidate with or merge into
another Person or convey, transfer or lease all or substantially all of its
properties and assets to any Person, the entity formed by such
consolidation or into which the Guarantor is merged or the Person which
acquires by conveyance or transfer, or which leases, all or substantially
all of the properties and assets of the Guarantor shall be a Person
organized and existing under the laws of the United States of America, any
stale thereof or the District of Columbia and shall expressly assume, by an
indenture (or indentures, if at such time there is more than one Trustee)
supplemental hereto, executed and delivered by the Issuer and the successor
Person to the Trustee, in form satisfactory other Trustee, the obligation
of the Guarantor under the Guarantee and the performance of every other
covenant of this Indenture on the part of the Guarantor to be performed or
observed;

(2) immediately after giving effect to such transaction, no Event of
Default and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and

(3) each of the Guarantor arid the successor Person has delivered to
the Trustee a Guarantor's Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
and such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with.

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<PAGE>

SECTION 804. SUCCESSOR PERSON SUBSTITUTED FOR GUARANTOR. Upon any
consolidation or merger or any conveyance, transfer or lease of all or
substantially all of the properties and assets of the Guarantor to any Person in
accordance with Section 803, the successor Person formed by such consolidation
or into which the Guarantor is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Guarantor under this Indenture with the same effect as
if. it such successor Person had been named as the Guarantor herein, and
thereafter, except in the case of a lease to another Person, the predecessor
Person shall be released from all obligations and covenants under this
indenture.

SECTION 805 ASSUMPTION BY GUARANTOR. The Guarantor, or a subsidiary
thereof that is a Corporation, may directly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of, any premium and
interest on and any Additional Amounts with respect to all the Guaranteed
Securities and the performance of every covenant of this Indenture on the part
of the Issuer to be performed or observed. Upon any such assumption, the
Guarantor or such subsidiary shall succeed to, and be substituted for and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if the Guarantor or such subsidiary had been named as the Issuer
herein and the Issuer shall be released from all obligations and covenants with
respect to the Guaranteed Securities. No such assumption shall be permitted
unless the Guarantor has delivered to the Trustee (i) a Guarantor's Officers'
Certificate and an Opinion of Counsel, each stating that such assumption and
supplemental indenture comply with this Article, and that all conditions
precedent herein provided for relating to such transaction have been complied
with and that, in the event of assumption by a subsidiary, the Guarantee and all
other covenants of the Guarantor herein remain in full force and effect and (ii)
an opinion of independent counsel that she Holders of Guaranteed Securities or
related Coupons (assuming such orders are only taxed as residents of the United
States) shall have no United States federal tax consequences as a result of such
assumption, and that, if any Securities are then listed on the New York Stock
Exchange, that such Securities shall not be delisted as a result of such
assumption.

ARTICLE NINE

SUPPLEMENTAL INDENTURES

SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without
the consent of any Holders of Securities or coupons, the Issuer (when authorized
by or pursuant to a Board Resolution), the Guarantor (when authorized by a
Guarantor's Board Resolution) and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, for any of the
following purposes;

(1) to evidence the succession of another Person to the Issuer or the
Guarantor and the assumption by any such successor of the covenants of the
Issuer or the Guarantor, as the case may be, herein and in the Securities
contained; or

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<PAGE>

(2) to add to the covenants of the Issuer or the Guarantor for the
benefit of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein conferred
upon the Issuer or the Guarantor; or

(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such Events of Default
are to be for the benefit of less than all series of Securities, stating
that such Events of Default are expressly being included solely for the
benefit of such series); PROVIDED, HOWEVER, that in respect of any such
additional Events of Default such supplemental indenture may provide for a
particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for
an immediate enforcement upon such default or may limit the immediate
enforcement upon such default or may limit the remedies available to the
Trustee upon such default or may limit the right of the Holders of a
majority in aggregate principal amount of that or those series of
Securities to which such additional Events of Default apply to waive such
default; or

(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registerable as to principal, to
change or eliminate any restrictions on the payment of principal of or any
premium or interest on Bearer Securities, to permit Bearer Securities to be
issued in exchange for Registered Securities, to permit Bearer Securities
to be issued in exchange for Bearer Securities of other authorized
denominations or to permit or facilitate the issuance of Securities in
uncertificated form, provided, that any such action shall not adversely
affect the interests of the Holders of Securities of any series or any
related coupons in any material respect; or

(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or

(6) to secure the Securities; or

(7) to establish the form or terms of Securities of any series and
any related coupons as permitted by Sections 202 and 301, including the
provisions and procedures relating to Securities convertible into Common
Stock or Preferred Stock, as the case may be; or

(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee; or

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<PAGE>

(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with
the provisions of this Indenture, provided such provisions shall not
adversely affect the interests of the Holders of Securities of any series
or any related coupons of any material respect; or

(10) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Sections 401, 1402 and
1403; provided that any such action shall not adversely affect the
interests of the Holders of Securities of such series and any related
coupons or any other series of Securities if any material respect; or

(11) to effect the assumption by the Guarantor or a subsidiary thereof
pursuant to Section 805; or

SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Securities of any series, by Act of said Holders delivered to the
Issuer, the Guarantor (if Securities are Guaranteed Securities) and the Trustee,
the Issuer (when authorized by or pursuant to a Board Resolution) the Guarantor
(when authorized by or pursuant to a Guarantor's Board Resolution) if
applicable, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture, as it relates
to such series or of modify in any manner the rights of the Holders of
Securities of such series and any related coupons under this Indenture;
PROVIDED, HOWEVER, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:

(1) change the Stated Maturity of the principal of (or premium, if
any, on) or any installment of principal of or interest on, any Security;
or reduce the principal amount thereof or the rate or amount of interest
thereon or any Additional Amounts payable in respect thereof; or any
premium payable upon the redemption thereof; or change any obligation of
the Issuer to pay Additional Amounts pursuant to Section 1010 (except as
contemplated by Section 801(i) and permitted by Section 901(1)), or reduce
the amount of the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 502 or the amount thereof pursuant to Section
502 or the amount thereof provable in bankruptcy pursuant to Section 504,
or adversely affect any right of repayment at the option of the Holder of
any Security, or change any Place of Payment where, or the currency or
currencies, currency unit or units or composite currency or currencies in
which, any Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment
on or after the Maturity thereof (or, in the ease of redemption or
repayment at the option of the Holder, on or after the Redemption Date or
the Repayment Date, as the case may be), or

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(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver with respect to such series (or compliance with certain
provisions of this indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or reduce the requirement of
Section 1504 for quorum or voting, or

(3) modify or effect in any manner adverse to the Holders the terms
and conditions of the obligations of the Guarantor in respect of the due
and punctual payments of principal of, or any premium or interest on or any
sinking fund requirements or Additional Amounts with respect to, Guaranteed
Securities, or

(4) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase the required percentage to effect such
action or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding
Security affected thereby.

It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

SECTION 903. EXECUTION OF SUPPLEMENT INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.

SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of an
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder and of any coupon appertaining
thereto shall be bound thereby.

SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.

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SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the execution of an
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.

ARTICLE TEN

COVENANTS

SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST AND
ADDITIONAL AMOUNTS. The Issuer covenants and agrees for the benefit of the
Holders of each series of Securities that it will duly and punctually pay the
principal of (and premium, if any) and interest on and any Additional Amounts
payable in respect of the Securities of that series in accordance with the terms
of such series of Securities; and coupons appertaining thereto and this
Indenture. Unless otherwise specified as contemplated by Section 301 with
respect to any series of a Securities, any interest due on and any Additional
Amounts payable in respect of Bearer Securities on or before Maturity, other
than Additional Amounts, if any, payable as provided in Section 1010 in respect
of principal of (or premium, if any, on) such a Security, shall be payable only
upon presentation and surrender of the several coupons for such interest
installments as are evidenced thereby as they severally mature. Unless otherwise
specified with respect to Securities of any series pursuant to Section 301, at
the option of the Issuer, all payments of principal may be paid by check to the
registered Holder of the Registered Security or other person entitled thereto
against surrender of such Security.

SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. If Securities of a series
are issuable only as Registered Securities, the Issuer or the Guarantor (if any
Guaranteed Securities are Outstanding) shall maintain in each Place of Payment
for any series of Securities (but not Bearer Securities, except as otherwise
provided in clause (B) below, unless such place of payment is located outside
the United States) an office or agency where Securities of that series may be
presented or surrendered for payment or conversion, where Securities of that
series may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer or the Guarantor (if any of the
Guaranteed Securities are Outstanding) in respect of the Securities of that
series and this Indenture may be served. If Securities of a series are issuable
as Bearer Securities, the Issuer or the Guarantor (if any of the Guaranteed
Securities are Outstanding) will maintain (A) in the Borough of Manhattan, the
City of New York, an office or agency where any Registered Securities of that
series may be presented or surrendered for payment or conversion, where any
Registered Securities of that series may be surrendered for registration of
transfer, where Securities of that series may be surrendered for exchange, where

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notices and demands to or upon the Issuer in respect of the Securities of that
series and this Indenture may be served and where Bearer Securities of that
series and related coupons may be presented or surrendered for payment or
conversion in the circumstances described in the following paragraph (and not
otherwise); (B) subject to and laws or regulations applicable thereto, in a
Place of Payment for that series which is located outside the United States, an
office or agency where Securities of that series and related coupons may be
presented and surrendered for payment (including payment of any Additional
Amounts payable on Securities of that series pursuant to Section 1010) or
conversion; PROVIDED, HOWEVER, that if the Securities of that series are listed
on The Stock Exchange of the United Kingdom and the Republic of Ireland or the
Luxembourg Stock Exchange or an other stock exchange located outside the United
States and such stock exchange shall so require, the Issuer or the Guarantor (if
any Guaranteed Securities are Outstanding) will maintain a Paying Agent for the
Securities of that series in London, Luxembourg or any other required city
located outside the United States, as the case may be, so long as the Securities
of that series are listed on such exchange; and (C) subject to any laws or
regulations applicable thereto, in a Place of Payment for that series located
outside the United States an office or agency where any Registered Securities of
that series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange and where notices and demands to or
upon the Issuer in respect of the Securities of that series and this Indenture
may be served. The Issuer and the Guarantor (if any Guaranteed Securities are
Outstanding) will give prompt written notice to the Trustee of the location, and
any change in the location, of each such office or agency. If at any time the
Issuer or the Guarantor (if any Guaranteed Securities are Outstanding) shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereto, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee,
except that Bearer Securities of that series and the related coupons may be
presented and surrendered for payment (including payment of any Additional
Amounts payable on Bearer Securities of that series pursuant to Section 1022) or
conversion at the offices specified in the Security in London, England; and the
Issuer and the Guarantor (if any Guaranteed Securities are Outstanding) hereby
appoints the same as its agent to receive such respective presentations,
surrenders, notices and demands, and the Issuer and the Guarantor (if any
Guaranteed Securities are Outstanding) hereby appoints the Trustee its agent to
receive all such presentations, surrenders, notices and demands.

<PAGE>

Unless otherwise specified with respect to any Securities pursuant to
Section 301, no payment of principal, premium or interest on or Additional
Amounts in respect of Bearer Securities shall be made at any office or agency of
the Issuer or the Guarantor (if any Guaranteed Securities are Outstanding) in
the United States or by check mailed to any address in the United States or by
transfer to an account maintained with a bank located in the United States;
PROVIDED, HOWEVER, that, if the Securities of a series are payable in Dollars,
payment of principal and any premium and interest on any Bearer Security
(including any additional Amounts Payable on Securities of such series pursuant
to Section 1010) shall be made at the office of the Issuer's or the Guarantor
(if any Guaranteed Securities are Outstanding) Paying Agent in the Borough of
Manhattan, the City of New York, if (but only if) payment in Dollars of the full
amount of such principal, premium, interest or Additional Amounts, as the case
may be, at all offices or agencies outside the United States maintained for such
purpose by the Issuer in accordance with this Indenture, is illegal or
effectively precluded by exchange controls or other similar restrictions.

The Issuer or the Guarantor (if any Guaranteed Securities are Outstanding)
may from time to time designate one or more other offices or agencies where the
Securities of one or more series may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designation; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Issuer or the Guarantor (if any Guaranteed Securities are Outstanding) of its
obligation to maintain an office or agency in accordance with the requirements
set forth above for Securities of any series for such Purposes. The Issuer or
the Guarantor (if any Guaranteed Securities are Outstanding) will give prompt
written notice to the Trustee of any, such designation or rescission and of any
change in the location of any such other office or agency. Unless otherwise
specified with respect to any Securities pursuant to Section 301 with respect to
a series of Securities, the Issuer and the Guarantor (if any Guaranteed
Securities are Outstanding) hereby designates as a Place of Payment for each
series of Securities the office or agency of the Issuer or the Guarantor (if any
Guaranteed Securities are Outstanding) in the Borough of Manhattan, the City of
New York, and initially appoints the Trustee at its Corporate Trust Office as
Paying Agent in such city and as its agent to receive all such presentations,
surrenders, notices and demands.

Unless otherwise specified with respect to any Securities pursuant to
Section 302, if and so long as the Securities of any series (i) are denominated
in a Foreign Currency or (II) may be payable in a Foreign Currency or so long as
it is required under any other provision of this Indenture, then the Issuer will
maintain with respect to each such series of Securities, or as so required, at
least one exchange rate agent.

SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST. If the
Issuer shall at any time act as its own Paying Agent with respect to any series
of any Securities and any related coupons, it will, by no later than 11:00 a.m.
Eastern Time on the day prior to each due date of the principal of (and premium,
if any), or interest on or Additional Amounts in respect of, any of the
Securities of that series, segregate and holder in trust for the benefit of the
Persons entitled thereto a sum in the currency or currencies, currency unit or
units or composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) sufficient to pay the principal (and

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premium, if any) or interest or Additional Amounts so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided,
and will promptly notify the Trustee of its action or failure so to act.

Whenever the Issuer shall have one or more Paying Agents for any series of
Securities and any related coupons, it will, on or before each due date of the
principal of (and premium, if any), or interest on or Additional Amounts in
respect of any Securities of that Series, deposit with a Paying Agent a sum (in
the currency or currencies, currency unit or units or composite currency or
currencies described in the preceding paragraph) sufficient to pay the principal
(and premium, if any) or interest or Additional Amount, so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest or Additional Amounts and (unless such Paying
Agent is the Trustee) the Issuer will promptly notify the Trustee of its action
or failure so to act.

The Issuer will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:

(1) hold all sums held by it for the payment of principal or (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;

(2) give the Trustee notice of any default by the Issuer or the
Guarantor (or any other obligor upon the Securities) in the making of any
such payment of principal (and premium, if any) or interest; and

(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.

The Issuer or the Guarantor (with Securities that are Guaranteed
Securities) may at any time, for the purpose of obtaining the satisfaction and
discharge of this indenture or for any other purpose, pay, or by Issuer Order or
Guarantor Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Issuer or such Paying Agent, such sums to be held by the Trustee
upon the same terms as those upon which such sums were held by the Issuer or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.

Except as otherwise provided in the Securities of any series, any money
deposited with the Trustee or any Paying Agent, or then held by the Issuer in
trust for the payment of the principal of (and premium, if any) or interest on,
or any Additional Amounts in respect of, any Security of any series and
remaining unclaimed for two years after such principal (and premium, if any),
interest or Additional Amounts has become due and payable shall be paid to the
Issuer upon Issuer Request (or if deposited by the Guarantor, paid to the
Guarantor or Guarantor Request), or (if then held by the Issuer) shall be
discharged from such trust; and the Holder of

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such Security shall thereafter, as an unsecured general creditor, look only to
the Issuer and the Guarantor (if the Securities are Guaranteed Securities) for
payment of such principal of (and premium, it any) or interest on, or any
Additional Amounts in respect of such Security, without interest thereon, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Issuer as trustee thereof; shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in an Authorized Newspaper, notice that such money remains
unclaimed and that after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer or the Guarantor, as the case may
be.

SECTION 1004. EXISTENCE. Subject to Article Eight, the Issuer and the
Guarantor will do or cause to be done all things necessary to preserve and keep
in full force and effect its existence, rights (declaration and statutory) and
franchises; PROVIDED, HOWEVER, that the Issuer or the Guarantor shall not be
required to preserve any right or franchise if the Board or the Guarantor's
Board of Directors, respectively, shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the issuer and that the
loss thereof is not disadvantageous in any material respect to the Holders.

SECTION 1005. STATEMENT AS TO COMPLIANCE. The Issuer and the Guarantor
will each deliver to the Trustee, within 120 days after the end of each of their
respective fiscal year, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer of the
General Partner or the Guarantor, respectively, as to his or her knowledge of
the Issuer's or the Guarantor's compliance with all conditions and covenants
under this Indenture and in the event of any noncompliance, specifying such
noncompliance and the nature and status thereof. For purposes of this Section
1006, such compliance shall be determined without regard to any period of grace
or requirement of notice under this Indenture.

SECTION 1006. MAINTENANCE OF PROPERTIES. The Issuer shall cause all of
its material properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order, all as in the judgment of the Issuer may be necessary so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times; PROVIDED, HOWEVER, notwithstanding
anything herein to the contrary, the Issuer and its Subsidiaries may sell or
otherwise dispose of any of their properties for value in the ordinary course of
business.

SECTION 1007. INSURANCE. The Issuer shall cause each of its properties
and each of the properties of its Subsidiaries to be insured against loss of
damage with insurers of recognized responsibility, in commercially reasonable
amounts and types and with insurers having a specified rating from a recognized
insurance rating service as may be specified as contemplated by Section 301.

SECTION 1008. PAYMENT OF TAXES AND OTHER CLAIMS. The Issuer and the
Guarantor shall pay or discharge or cause to be paid or discharged, before the
same shall become delinquent (i) all taxes, assessments and governmental charges
levied or imposed upon the Issuer, the Guarantor or any Subsidiary or upon the
income, profits or property of the Issuer, the

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Guarantor or any Subsidiary, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon property of the
Issuer, the Guarantor or any Subsidiary; PROVIDED, HOWEVER, notwithstanding
anything herein to the contrary that neither, the Issuer nor the Guarantor shall
not be required to pay or discharge or cause to be paid or discharged any tax,
assessment, charge or claim whose amount or applicability is being contested in
good faith.

SECTION 1009. ADDITIONAL AMOUNTS. If any Securities of a series provide
for the payment of Additional Amounts, the Issuer and the Guarantor (if the
Securities are Guaranteed Securities) will pay to the Holder of any Security of
such series or any upon appertaining thereto Additional Amounts as may be
specified as contemplated by Section 301. Whenever in this Indenture there is
mentioned, in any context except in the case of Section 502(1), the payment of
the principal of or any premium or interest on, or in respect of; any Security
of any series or payment of any related coupon or the net proceeds received on
the statement or exchange of any Security of any series, such mention shall be
deemed to include mention of the payment of Additional Amounts provided by the
terms of such series established pursuant to Section 301 to the extent that, in
such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to such terms and express mention of the payment of Additional
Amounts (if applicable) in any provisions hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made.

Except as otherwise specified as contemplated by Section 301, if the
Securities of a series provide for the payment of Additional Amounts, at least
20 days prior to the first Interest Payment Date with respect to that series of
Securities (or if the Securities of that series will not bear interest prior to
Maturity, the first day on which a payment of principal and any premium is made)
and at least 10 days prior to each date of payment of principal and any premium
or interest if there has been any change with respect to the matters set forth
in the below-mentioned Officers' Certificate, the Issuer or the Guarantor, as
the case may be, will furnish the Trustee and the Issuer's principal Paying
Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of and any premium or interest on the Securities of that
series shall be made to Holders of Securities of that series or any related
coupons who are not United States persons without withholding for or on account
of any tax, assessment or other governmental charge described in the Securities
of the series. If any such withholding shall be required, then such Officers
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities of that series or related coupons
and the Issuer and the Guarantor (if the Securities are Guaranteed Securities)
will pay to the Trustee or such Paying Agent the Additional Amounts required by
the terms of such Securities. In the event that the Trustee or any Paying
Agent, as the case may be, shall not so receive the above-mentioned certificate
then the Trustee or such Paving Agent shall be entitled (i) to assume that no
such withholding or deduction is required with respect to any payment of
principal or interest with respect to any Securities of a series or related
coupons until it shall have received a certificate advising otherwise and (ii)
to make all payments of principal and interest with respect to the Securities of
a series or related coupons without withholding or deductions until otherwise
advised. The Issuer and the Guarantor each covenant to indemnify the Trustee
and any Paying

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Agent for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them or in reliance on
any officers, Certificate finished pursuant to this Section or in reliance on
the Issuer or the Guarantor not furnishing such an Officers' Certificate.

SECTION 1010. WAIVER OF CERTAIN COVENANTS. The Issuer or the Guarantor,
as the case may be, may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004 or 1005, before or after the
time for such compliance the Holders of at least a majority in principal amount
of all Outstanding Securities of each series, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Issuer and the Guarantor
and the duties of the Trustee in respect of an such term, provision or condition
shall remain in full force and effect.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 1101. APPLICABILITY OF ARTICLE. Securities of any series which
are redeemable before their Stated Maturity shall be redeemable in accordance
with their terms and (except as otherwise specified as contemplated by Section
301 for Securities of any series) in accordance with this Article.

SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the
Issuer to redeem any Securities shall be evidenced by or pursuant to a Board
Resolution. In case of any redemption at the election of the Issuer of less than
all of the Securities of any series, the Issuer shall, at least 45 days prior to
the giving of the notice of redemption in Section 1104 (unless a shorter notice
shall be satisfactory to the Trustee in its sole discretion), notify the Trustee
of such Redemption Date and of the principal amount of Securities of such series
to be redeemed. In the case of any redemption of Securities prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities or elsewhere in this Indenture, the Issuer shall furnish the Trustee
with an Officers' Certificate evidencing compliance with such restriction.

SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less
than all the Securities of any series are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of
portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series or a denomination larger than the minimum authorized denomination
for Securities or that series. The Trustee shall promptly notify the Issuer and
the Security Registrar (if other than itself) in writing of the

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Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Security redeemed or to be reviewed only in part, to the portion of
the principal amount of such Security which has been or is to be redeemed.

SECTION 1104. NOTICE OF REDEMPTION. Notice of redemption shall be given
in the manner provided in Section 106 and may be further specified in an
indenture supplemental hereto, not less than 30 days nor more than 60 days prior
to the Redemption Date, unless a shorter period is specified by the terms of
such series established pursuant to Section 301, to each Holder of Securities to
be redeemed, but failure to give such notice in the manner herein provided to
the Holder any Security designated for redemption as a whole or in part, or any
defect in the notice to any such Holder, shall not affect the validity of the
proceedings for the redemption of any other such Security or portion thereof.

Any notice that is mailed to the Holders of Registered Securities in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not a Holder receives the notice.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price, accrued interest to the Redemption Date
payable as provided in Section 1106, if any, and Additional Amounts, if
any,

(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed,

(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the holder will receive, without
charge, a new Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed,

(5) that on the Redemption Date the Redemption Price and accrued
interest to the Redemption Date payable as provided in Section 1106, if
any, will become due and payable upon each such Security, or the portion
thereof, to be redeemed and, if applicable, that interest thereon shall
cease to accrue on and after said date,

(6) the Place or Places of Payment where such Securities together in
the case of Bearer Securities with all coupons appertaining thereto, if
any, maturing after the

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Redemption Date, are to be surrendered for payment of the Redemption Price
and accrued interest, if any, or for conversion,

(7) that the redemption is for a sinking fund, if such is the case,

(8) that unless otherwise specified in such notice, Bearer Securities
of any series, if any, surrendered for redemption must be accompanied by
all coupons maturing subsequent to the Redemption Date or the amount of any
such missing coupon or coupons will be deducted from the Redemption Price,
unless security or indemnity satisfactory to the Issuer, the Trustee for
such series and any Paying Agent is finished,

(9) if Bearer Securities of any series are to be redeemed and any
Registered Securities of any such series are not to be redeemed, and if
such Bearer Securities may be exchanged for Registered Securities not
subject to redemption on this Redemption Date pursuant to Section 305 or
otherwise, the last date, as determined by the Issuer, on which such
exchanges may be made,

(10) the CUSIP number of such Security, if any, and

(11) if applicable, that a Holder of Securities who desires to convert
Securities for redemption must satisfy the requirements for conversion
contained in such Securities, the then existing conversion price or rate,
and the date and time when the option to convert shall expire.

Notice of redemption of Securities to be redeemed shall be given by the
Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer.

SECTION 1105. DEPOSIT OF REDEMPTION PRICE. On or prior to 11:00 a.m.
Eastern Time on the date prior to any Redemption Date, the Issuer shall deposit
with the Trustee or with a Paying Agent (or, if the Issuer is acting as its own
Paying Agent, which it may not do in the case of a sinking fund payment under
Article Twelve, segregate and hold in trust as provided in Section 1003) an
amount of money in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) sufficient to pa on the Redemption Date the
Redemption Price of; and (except if the Redemption Date shall be an interest
Payment Date) accrued interest on, all the Securities or portions thereof which
are to be redeemed on that date.

SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified in the currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 far the Securities of
such series) (together with accrued interest, if any, to the Redemption Date),
and from and after such date (unless the Issuer shall default in the payment of
the Redemption Price and accrued interest) such

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Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
redeemed, except to the extent provided below, shall be void. Upon surrender of
any such Security for redemption in accordance with said notice, together with
all coupons if any, appertaining thereto maturing after the Redemption Date,
such Security shall be paid by the Issuer at the Redemption Price, together with
accrued interest, if any, to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section 1002)
and, unless otherwise specified as contemplated by Section 301, only upon
representation and surrender of coupons for such interest; and PROVIDED,
FURTHER, that except as otherwise provided with respect to Securities
convertible into Common Stock or Preferred Stock, installments of interest on
Registered Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
predecessor Securities registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section 307
if any Bearer Security surrendered for redemption shall not be accompanied by
all appurtenant coupons maturing after the Redemption Date, such Security may be
paid after deducting from the Redemption Price an amount equal to the face
amount of all such mining coupons, or the surrender of such missing coupon or
coupons may be waived by the Issuer and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless if thereafter the Holder of such Security shall surrender
to the Trustee or any Paying Agent ally such missing coupon in respect of which
a deduction shall have been made from the Redemption Price, such Holder shall be
entitled to receive the amount so deducted; PROVIDED, HOWEVER, that interest
represented by coupons shall be payable only at an office or agency located
outside the United States (except as otherwise provided in Section 1002) and,
unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of those coupons.

If an Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Security.

SECTION 1107. SECURITIES REDEEMED IN PART. Any Registered Security which
is to be redeemed only in part pursuant to the provisions of this Article or of
Article Twelve) shall be surrendered at a Place of Payment therefor (with, if
the Issuer or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Issuer and the Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing) and
the Issuer shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without charge a new Security or Securities of the same
series, of any authorized denomination as requested by such Holder in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.

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ARTICLE TWELVE

SINKING FUNDS

SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 301 for
Securities of such series. The minimum amount of any sinking fund payment
provided for by the terms of Securities of any series is herein referred to as a
"mandatory sinking fund payment", and any payment in excess of such minimum
amount provided for by the terms of such Securities of any series is herein
referred to as an "optional sinking fund payment". If provided for by the terms
of any Securities of any series, the cash amount of any mandatory sinking fund
payment may be subject to reduction as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.

SECTION 1202. SATISFACTION OF SINKING FUND PAYMENT WITH SECURITIES. The
Issuer may, in satisfaction of all or any part of any mandatory sinking fund
payment with respect to the Securities of a series, (1) deliver Outstanding
Securities of such series (other than any previously called for redemption)
together in the case of any Bearer Securities of such series with any unmatured
coupons appertaining thereto and (2) apply as a credit Securities of such series
which have been redeemed either at the election of the Issuer pursuant to the
terms of such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities, as provided for
by the terms of such Securities, or which have otherwise been acquired by the
Issuer; provided that such Securities so delivered or applied as a credit have
not been previously so credited. Such Securities shall be received and credited
for such purpose by the Trustee at the applicable Redemption Price specified in
such Securities for redemption through operation of the sinking fund and the
amount of such mandatory sinking fund payment shall be reduced accordingly.

SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. Not less than 60
days prior to each sinking and payment date for Securities of any series, the
Issuer will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing mandatory sinking fund payment for that series
pursuant to the terms of that series, or portion thereof; if any, which is to be
Satisfied by payment of cash in the currency or currencies, currency unit or
units or composite currency or currencies in which the Securities of such series
are payable except as otherwise specified pursuant to Section 301 for the
Securities of such series) and the portion thereof; if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 1202, and the optional amount, if any, to be added in cash to the next
ensuing mandatory sinking fund payment, and will also deliver to the Trustee any
Securities to be so delivered and credited. If such Officers' Certificate shall
specify an optional amount to be added in cash to the next ensuring mandatory
sinking fund payment, the Issuer shall thereupon be obligated to pay the amount
therein specified. Not less than 30 days before each such Sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereto to be given in the name of and at the expense of the
Issuer in the manner provided in Section

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1104. Such notice having been duly given, the redemption of such Securities
shall be made upon the terms and in the manner stated in Sections 1106 and 1107.

ARTICLE THIRTEEN

REPAYMENT AT THE OPTION OF HOLDERS

SECTION 1301. APPLICABILITY OF ARTICLE. Repayment of Securities of any
series before their Stated Maturity at the option of Holders thereof shall be
made in accordance with the terms of such Securities, if any, and except as
otherwise specified by the terms of such series established pursuant to Section
301 in accordance with this Article.

SECTION 1302. REPAYMENT OF SECURITIES. Securities of any series subject
to repayment in whole or in part at the option of the Holders thereof will
unless otherwise provided in the terms of such Securities, be repaid at a price
equal to the principal amount thereof; together with interest, if any, thereon
accrued to The Repayment Date specified in or pursuant to the terms of such
Securities. The Issuer covenants that on or the day prior to the Repayment Date
it will deposit with the Trustee or with a Paying Agent (or, if the Issuer is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money in the currency or currencies, currency unit or
units or composite currency or currencies in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) sufficient to pay the principal (or, if so provided
by the terms of the Securities of any series, a percentage of the principal) of;
and (except if the Repayment Date shall be an Interest Payment Date) accrued
interest on, all the Securities or portions thereof; as the case may be, to be
repaid on such date.

SECTION 1303. EXERCISE OF OPTION. Securities of any series subject to
repayment at the option of the Holders thereof will contain an "Option to Elect
Repayment" form on the reverse of such Securities. In order for any Security to
be repaid at the option of the Holder, the Trustee must receive at the Place of
Payment therefor specified in the terms of such Security (or at such other place
or places of which the Issuer shall from time to time notify the Holders of such
securities) not earlier than 60 days nor later than 30 days prior to the
Repayment Date (1) the Security so providing for any such repayment together
with the Option to Elect Repayment form on the reverse thereof duly completed by
the Holder or by the Holder's attorney duly authorized in writing or (2) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange, or the National Association of Securities Dealers, Inc.
("NASD"), or a commercial bank or trust Issuer in the United States setting
forth the name of the Holder of the Security, the principal amount of the
Security, the principal amount of the security to be repaid, the CUSIP number,
if any, or a description of the tenor and terms of the Security, a statement
that the option to elect repayment is being exercised thereby and a guarantee
that the Security to be repaid, together with the duly completed form entitled
"Option to Elect Repayment" on the reverse of the Security will be received by
the Trustee not later than the fifth Business Day after the date of such
telegram, telex, facsimile transmission or letter; PROVIDED, HOWEVER, that such
telegram, telex, facsimile transmission or letter shall only be effective if
such Security and form

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duly completed are received by the Trustee by such fifth Business Day. If less
than the entire principal amount of such Security is to be repaid in accordance
with the terms of such Security, the principal amount of such Security to be
repaid, in increments of the minimum denomination for Securities of such series,
shall be stated in a writing issuing such Security. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of
the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Issuer.

SECTION 1304. WHEN SECURITIES PRESENTED FOR RECIPIENT BECOME DUE AND
PAYABLE. If Securities of any series providing for repayment at the option of
the Holders thereof shall have been surrendered as provided in this Article and
as provided by or pursuant to the terms of such Securities, such Securities or
the portions thereof, as the case may be, to be repaid shall become due and
payable and shall be paid by the Issuer on the Repayment Date therein specified,
and on and after such Repayment Date (unless the Issuer shall default in the
payment of such Securities on such Repayment Date) such Securities shall, if the
same were interest-bearing, cease to bear interest and the coupons for such
interest appertaining to any Bearer Securities so to be repaid, except to the
extent provided below, shall be void. Upon surrender of any such Security for
repayment in accordance with such provisions, together with all coupons, if any,
appertaining thereto maturing after the Repayment Date, the principal amount of
such Security so to be repaid shall be paid by the Issuer, together with accrued
interest, if any, to the Repayment Date; PROVIDED, HOWEVER, that coupons whose
Stated Maturity is on or prior to the Repayment Date shall be payable only at an
office or agency located outside the United States (except as otherwise provided
in Section 1002) and unless otherwise specified pursuant to Section 301, only
upon presentation and surrender of such coupons; and PROVIDED, FURTHER, that, in
the case of Registered Securities, installments of interest, if any, whose
Stated Maturity is on or prior to the Repayment Date shall be payable (but
without interest thereon, unless the Issuer shall default in the payment
thereof) to the Holders of such Securities, or one or more predecessor
Securities, registered as such as the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.

If any Bearer Security surrendered for repayment shall not be accompanied
by all appurtenant coupons maturing after the Repayment Date, such Security may
be paid after deducting from the amount payable therefor as provided in Section
1302 an amount equal to the face amount of all such missing coupons, or the
surrender of such missing coupon or coupons may be waived by the issuer and the
Trustee if there be furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security shall surrender to the Trustee or any Paying Agent any
such missing coupon in respect of which a deduction shall have been made as
provided in the preceding sentence, such Holder shall be entitled to receive the
amount so deducted; PROVIDED, HOWEVER, that interest represented by coupons
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
as contemplated by Section 301, only upon presentation and surrender of those
coupons.

If the principal amount of any Security surrendered for repayment shall not
be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to

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such Repayment Date) shall, until paid, bear interest from the Repayment Date at
the rate of interest or Yield to Maturity (in the case of Original Issue
Discount Securities) set forth in such Security.

SECTION 1305. SECURITIES REPAID IN PARTT. Upon surrender of any
Registered Security which is to be repaid in part only, the Issuer shall execute
and the Trustee shall authenticate and deliver to the Holder of such Security,
without charge and at the expense of the Issuer9 a new Registered Security or
Securities of the same series, of any authorized denomination specified by the
Holder, in an aggregate principal amount equal to and in exchange for the
portion of the principal of such Security so surrendered which is not to be
repaid.

ARTICLE FOURTEEN

DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1401. APPLICABILITY OF ARTICLE; ISSUER'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE. If; pursuant to Section 301, provision is
made for either or both of (a) defeasance of the Securities of a series under
Section 1402 or (b) covenant defeasance of the Securities of a series under
Section 1403, then the provisions of such Section or Sections, as the case may
be, together with the other provisions of this Article (with such modifications
thereto as may be specified pursuant to Section 301 with respect to any
Securities), shall be applicable to such Securities and any coupons appertaining
thereto, and the Issuer may at its option by Board Resolution, at any time, with
respect to such Securities and any coupons appertaining thereto, elect to have
Section 1402 (if applicable) or Section 1403 (if applicable) be applied to such
Outstanding Securities and any coupons appertaining thereto upon compliance with
the conditions set forth below in this Article.

SECTION 1402. DEFEASANCE AND DISCHARGE. Upon the Issuer's exercise of the
above option applicable to this Section with respect to any Securities of a
series, the Issuer shall be deemed to have been discharged from its obligations
with respect to such Outstanding Securities and any coupons appertaining thereto
on the date the conditions set forth in Section 1404 are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Issuer shall be
deemed to have paid and discharged the entire indebtedness represented by such
Outstanding Securities and any coupons appertaining thereto, which shall
thereafter be deemed to be "Outstanding" only for the purposes of Section 1405
and the other Sections of this Indenture referred to in clauses (A) and (B)
below, and to have satisfied all of its other obligations under such Securities
and coupons appertaining thereto and this Indenture insofar as such Securities
and any coupons appertaining thereto are concerned (and the Trustee, at the
expense of the Issuer, shall execute proper instruments acknowledging the same),
except for the following which shall survive until otherwise terminated or
discharged hereunder: (A) the rights of Holders of such Outstanding Securities
and any coupons appertaining thereto to receive, solely from the trust fund
described in Section 1404 and as more fully set forth in such Section, payments
in respect of the principal of (and premium, if any) and interest, if any, on
such Securities and any coupons appertaining thereto when such payments are due,
(B) the Issuer' s

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obligations with respect to such Securities under Sections 305, 306, 1002 and
1003 and with respect to the payment of Additional Amounts. if any, on such
Securities as contemplated by Section 1010, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (D) this Article Fourteen.
Subject to compliance with this Article Fourteen, the Issuer may exercise its
option under this Section notwithstanding the prior exercise of its option under
Section 1403 with respect to such Securities and any coupons appertaining
thereto.

SECTION 1403. COVENANT DEFEASANCE. Upon the Issuer's exercise of the
above option applicable to this Section with respect to any Securities of a
series, each of the Issuer and the Guarantor (if the Securities are Guaranteed
Securities) shall be released from its obligations under Sections 1004 and 1005
and, if specified pursuant to Section 301, its obligations under any other
covenant, with respect to such Outstanding Securities and any coupons
appertaining thereto and the Guarantee in respect thereof (if the Securities are
Guaranteed Securities), on and after the date the conditions set forth in
Section 1404 are satisfied (hereinafter, "covenant defeasance"), and such
Securities and any coupons appertaining thereto shall thereafter be deemed to be
not "Outstanding" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with Sections 1004 and 1605 or such other covenant but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to such Outstanding
Securities and any coupons appertaining thereto, the Issuer and the Guarantor,
if applicable, may omit to comply with and shall have no liability in respect of
any term, condition or imitation set forth in any such Section or such other
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to an such Section or such other covenant or by reason of reference in
any such Section or such other covenant to any other provision herein or in any
other document and such omission to comply shall not constitute a default or an
Event of Default under Section 501(4) or 501(9) or otherwise, as the case may
be, but except as specified above, the remainder of this Indenture and such
Securities and any coupons appertaining thereto and the Guarantee in respect
thereof (if the Securities are Guaranteed Securities), shall be unaffected
thereby.

SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to application of Section 1402 or Section 1403
to any Outstanding Securities of a series and any coupons appertaining thereto
and the Guarantor in respect thereof (if the Securities are Guaranteed
Securities),

(a) The Issuer or the Guarantor (if the Securities are Guaranteed
Securities) shall irrevocably have deposited or caused to be deposited with
the Trustee (or another trustee satisfying the requirements of Section 607
who shall agree to comply with the provisions of this Article Fourteen
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities and any coupons
appertaining thereto, (1) an amount in such currency, currencies or
currency unit in which such Securities and any coupons appertaining hereto
are then specified as payable at Stated Maturity) which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment of principal of (and premium, if any) and interest,
it any, on such

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Securities and any coupons appertaining thereto, or (2) a combination of
currency, currencies or currency units in an amount, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, (i) the principal (and premium,
if any) and interest, if any, on such Outstanding Securities and any
coupons appertaining thereto on the Stated Maturity of such principal or
installment of principal or interest and (ii) any mandatory sinking fund
Payments or analogous payments applicable to such Outstanding Securities
any coupons appertaining thereto on the day on which such payments are due
and payable in accordance with the terms of this Indenture and of such
Securities and any coupons appertaining thereto.

(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Issuer or the
Guarantor (if the Securities are Guaranteed Securities) is a party or by
which it is bound.

(c) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to such Securities
and any coupons appertaining thereto shall have occurred and be continuing
on the date of such deposit or, insofar as Sections 501(6) and 501(7) are
concerned, at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfies until the expiration of such period).

(d) In the case of an election under Section 1402, the Issuer or the
Guarantor (if the Securities are Guaranteed Securities) shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Issuer
or the Guarantor (if the Securities are Guaranteed Securities) has received
from, or there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of execution of this Indenture, there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the
Holders or such Outstanding Securities and any coupons appertaining thereto
will not recognize income, gain or loss or Federal income tax purposes as a
result of such defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred.

(e) In the case of an election under Section 1403, the Issuer or the
Guarantor (if the Securities are Guaranteed Securities) shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Securities and any coupons appertaining thereto
will not recognize income, gain or loss for Federal income tax purposes as
a result of such covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred.

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(f) The Issuer or the Guarantor (if the Securities are Guaranteed
Securities) shall have delivered to the Trustee an Officers' Certificate or
a Guarantor's Officer's Certificate and an Opinion of Counsel, each
stating that all conditions precedent to the defeasance under Section 1402
or the covenant defeasance under Section 1403 (as the cue may be) have been
complied with and an Opinion of Counsel to the effect that either (i) as a
result of a deposit pursuant to subsection (a) above and the related
exercise of the Issuer's option under Section 1402 or Section 1403 (as the
case may be), registration is not required under the Investment Issuer Act
of 1940, as amended, by the Issuer, with respect to the trust hinds
representing such deposit or by the Trustee for such trust funds or (ii)
all necessary registrations under said Act have been effected.

(g) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be
imposed on the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) in connection therewith pursuant to Section 301.

SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the last
paragraph of Section 1003, all money and Government Obligations (or other
property as may be provided pursuant to Section 301) (including the Proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 1405, the "Trustee") pursuant to Section 1404 in
respect of any Outstanding Securities of any series and any coupons appertaining
thereto shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and any coupons appertaining thereto and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities and any coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
if any premium) and interest an Additional Amounts, if any, but such money be
not be segregated from other funds except to the extent required by law.

Unless otherwise specified with respect to an Security pursuant to Section
301, if after a deposit referred to in Section 1404(a) has been made, (a) the
Holder of a Security in respect of which such deposit was made is entitled to,
and does, elect pursuant to Section 301 or the terms of such Security to receive
payment in a currency or currency unit other than that in which the deposit
pursuant to Section 1404(a) has been made in respect of such Security, or (b) a
Conversion Event occurs in respect of the currency or currency unit in which the
deposit pursuant to Section 1404(a) has been made, the indebtedness represented
by such Security and any coupons appertaining thereto shall be deemed to have
been, and will be fully discharged and satisfied through the payment of the
principal of (and premium, if any), and interest, if any, on such Security as
the same becomes due out of the proceeds yielded by converting (from time to
time as specified below in the case of any such election) the amount or other
property deposited in respect of such Security into the currency or currency
unit in which such Security becomes payable as a result of such election based
on the applicable market exchange rate for such currency or currency unit in
effect on the second Business Day prior to each payment date, or,

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with respect to a Conversion Event, in effect for such currency or currency unit
(as nearly as feasible) at the time of the Conversion Event.

The Issuer shall pay and indemnify the Trustee against any taxi fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1404 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which bylaw is for the
account of the Holders of such Outstanding Securities and any coupons
appertaining thereto.

Anything in this Article to the contrary notwithstanding, the Trustee shall
deliver or pay to the Issuer from time to time upon Issuer Request, or the
Guarantor, as the case may be, upon the Guarantor Request, any money or
Government Obligations (or other property and any proceeds therefrom) held by it
as provided in Section 1404 which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect a defeasance or covenant
defeasance, as applicable, in accordance with this Article.

ARTICLE FIFTEEN

MEETINGS OF HOLDERS OF SECURITIES

SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of
Holders of Securities of any series may be called at any time and from time to
time pursuant to this Article to make give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.

SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS.

(a) The Trustee may at any time call a meeting of Holders of Securities
of any series for any purpose specified in Section 1501, to be held at such time
and at such place in the Borough of Manhattan, The City of New York or, if
Securities of such series have been issued in whole or in part as Bearer
Securities, in London as the Trustee shall determine. Notice of every meeting
of Holders of Securities of any series, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be given, in the manner provided in Section 106, not less than 21
nor more than 180 days prior to the date fixed for the meeting.

(b) In case at any time the Issuer (pursuant to a Board Resolution) the
Guarantor (if the Securities are Guaranteed Securities) pursuant to a
Guarantors' Board Resolution or the Holders of at least twenty-five percent
(25%) in principal amount of the Outstanding Securities of any series shall have
requested the Trustee to call a meeting of the Holders of Securities of such
series for any purpose specified in Section 1501, by written request setting
forth in

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reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have made the first mailing of the notice of such meeting
within 21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Issuer, the Guarantor,
if applicable, or the Holders of Securities of such series in the amount above
specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York or, if Securities of such series have
been issued in whole or in part as Bearer Securities, in London for such meeting
and may call such meeting for such purposes of waiving notice thereof as
provided in subsection (a) of this Section.

SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled to vote
at any meeting of Holders of Securities of any series, a perSON shall be (1) a
Holder of one or more Outstanding Securities of such series, or (2) a Person
appointed by an instrument in writing as Proxy for a Holder or Holders of one or
more Outstanding Securities of such series by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders of Securities of any series shall be the Persons entitled to vote at
such meeting and their counsel, any representatives of the Trustee and its
counsel, any representatives of the Guarantor and its counsel and any
representatives of the Issuer and its counsel.

SECTION 1504. QUORUM; ACTION. The Persons entitled to vote a majority in
principal amount of the Outstanding Securities of a series shall constitute a
quorum for a meeting of Holders of Securities of such series; PROVIDED, HOWEVER,
that if any action is to be taken at such meeting with respect to a consent or
waiver which this indenture expressly provides may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding
Securities of a series, the Persons entitled to vote such specified percentage
in principal amount of the Outstanding Securities of such series shall
constitute a quorum. In the absence of a quorum within 30 minutes after the
time appointed for any such meeting, the meeting shall, if convenes at the
request of Holders of Securities of such series, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10 days
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 1502(a), except that such notice need be given only
once not less than five days prior to the date on which the meeting is scheduled
to be reconvened. Notice of the reconvening of any adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series which shall constitute a quorum.

Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted by the affirmative vote of the Holders of a majority
in principal amount of the outstanding Securities of that series; PROVIDED,
HOWEVER, that, except as limited by the provisions of Section 902, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which this Indenture expressly provides
may be made, given or taken by the Holders of a specified percentage, which is
less than a majority, in principal amount of the

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Outstanding Securities of such a series may be adopted at a meeting or an
adjourned meeting duly reconvened and at which a quorum is present as aforesaid
by the affirmative vote of the Holders of such specified percentage in principal
amount of the Outstanding Securities of that series.

Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related coupons,
whether or not present or represented at the meeting. Notwithstanding the
foregoing provisions of this Section 1504, if any action is to be taken at a
meeting of Holders of Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
this Indenture expressly provides may be made, given or taken by the Holders of
a specified percentage in principal amount of all Outstanding Securities
affected thereby, or of the Holders of such series and one or more additional
series:

(i) there shall be no minimum quorum requirement for such meeting;
and

(ii) the principal amount of the Outstanding Securities of such series
that vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made1 given or taken under this
Indenture.

SECTION 1505. DETERMINATION OF VOTING RIGHT; CONDUCT AND ADJOURNMENT OF
MEETINGS.

(a) Notwithstanding any provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting
of Holders of Securities of a series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard
to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the Conduct of the meeting as it
shall deem appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in the manner
specified in Section 104 and the appointment of any proxy shall be proved
in the manner specified in Section 104 or having the nature of the Person
executing the proxy witnessed or guaranteed by any trust Issuer, bank or
banker authorized by Section 104 to certify to the holding of Bearer
Securities. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid or genuine
without the proof specified in Section 104 or other proof

(b) The Trustee shall, by an instrument m writing appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Issuer or by Holders of Securities as provided in Section l502(b), in which
case the Issuer or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary

76
<PAGE>

of the meeting shall be elected by vote of the Persons entitled to vote a
majority in principal amount of the Outstanding Securities of such series
represented at the meeting.

(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Securities of such series held or represented by him; PROVIDED,
HOWEVER, that no vote shall be cast or counted at any meeting in respect of
any Security challenged as not Outstanding and ailed by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Security of such series or proxy.

(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting, and
the meeting may he so adjourned without further notice.

SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETING The vote
upon any resolution submitted to any meeting of Holders of Securities of any
series shall be by written ballots on which shall be subscribed the signatures
of the Holders of Securities of such series or of their representatives by proxy
and the principal amounts and serial numbers of the Outstanding Securities of
such series held or re resented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities of any Series shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the fact, setting forth a
copy of the notice of the meeting and showing that said notice was given as
provided in Section 1502 and, if applicable, Section 1504. Each copy shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one such copy shall be delivered to the Issuer and the Guarantor
and another to the Trustee to be reserved by the Trustee the latter to have
attached thereto the Ballots voted at the meeting. Any record so signed and
verified shall be conclusive evidence of the matters therein stated.

This Indenture may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Indenture.

ARTICLE SIXTEEN

GUARANTEE

77
<PAGE>

SECTION 1601. GUARANTEE. The Guarantee set forth in this Article Sixteen
shall only be in effect with respect to Securities of a series to the extent
such Guarantee is made applicable to such series in accordance with Section 301.
The Guarantor hereby unconditionally guarantees to each Holder of a Guaranteed
Security authenticated and delivered by the Trustee the due and punctual payment
of the principal of, any premium and interest on, and any Additional Amounts
with respect to such Guaranteed Security and the due and punctual payment of the
sinking fund payments (if any) provided for pursuant to the terms of such
Guaranteed Security, when and as the same shall become due and payable, whether
at maturity, by acceleration, redemption, repayment or otherwise, in accordance
with the terms of such Security and of this Indenture. In case of the failure
of the Issuer punctually to pay any such principal, premium, interest,
Additional Amounts or sinking fund payment, the Guarantor hereby agrees to cause
any such payment to be made punctually when and as the same shall become due and
payable, whether at maturity, upon acceleration, redemption, repayment or
otherwise, and as if such payment were made by the Issuer.

The Guarantor hereby agrees that is obligations hereunder shall be as
principal and not merely as surely, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any Guaranteed Security or this Indenture,
any failure to enforce the provisions of any Guaranteed Security or this
Indenture, or any waiver, modification, consent or indulgence granted with
respect thereto by the Holder of such Guaranteed Security or the Trustee, the
recovery of any judgment against the Issuer or any action to enforce the same,
or any other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or guarantor. The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
merger, insolvency or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer, protest or notice with respect to any such
Guaranteed Security or the Indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be discharged except by
payment in full of the principal of, any premium and interest on, and any
Additional Amounts and sinking fund payments required with respect to, the
Guaranteed Securities and the complete performance of all other obligations
contained in the Guaranteed Securities.

This Guarantee shall continue to be effective or be reinstated, as the case
may be, if at any time payment on any Guaranteed Security, in whole or in part,
is restricted or must otherwise be restored to the Issuer or the Guarantor upon
the bankruptcy, liquidation or reorganization of the Issuer or otherwise.

The Guarantor shall be subrogated to all rights of the Holder of any
Guaranteed Security against the Issuer in respect of any amounts paid to such
Holder by the Guarantor pursuant to the provisions of this Guarantee; PROVIDED,
HOWEVER, that the Guarantor shall not be entitled to enforce, or to receive any
payments arising out of or based upon, such right of subrogation until the
principal of, any premium an interest on, and any Additional Amounts and sinking
fund payments required with respect to, all Guaranteed Securities shall have
been paid in full.

78
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and [the corporate seal] of the Issuer to be hereunto affixed and
attested, as of the day and year first above written:

MACK-CALI REALTY, L.P.
By: Mack-Cali Realty Corporation
Partner

By:
-------------------------------
Name:
Title:

(Seal)
Attest:

- ---------------------------------
Title:

[ ]
-----------------------------------

By:
-------------------------------
Name:
Title:

Attest:

- ---------------------------------
Title:

79
<PAGE>

EXHIBIT A

FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO
RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST PAYABLE
PRIOR TO THE EXCHANGE DATE

(Insert title or sufficient description of Securities to be delivered).

This is to certify that, as of the date, hereof, and except as set forth
below the above captioned Securities held by you for our account (i) are
owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the
income of which is subject to United States federal income taxation
regardless of its source ("United States person(s)"), (ii) are owned by
United States person(s) that are (a) foreign branches of United States
financial institutions (financial institutions, as defined in United States
Treasury Regulations Section 2.165-12(c)(1)(v) are herein referred to as
"financial institutions") purchasing for their own account or for resale or
(b) United States person(s) who acquired the Securities through foreign
branches of United States financial Institutions and who hold the Securities
through such United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial institutions hereby
agrees, on its own behalf or through its agent, that you may advise the Price
REIT or its agent that such financial institutions will comply with the
requirements of Section l65(j)(3)(A),(B) or (C) of the United States Internal
Revenue Code of 1986, as amended, and the regulations thereunder), or (iii)
are owned by United States or foreign financial institutions) for purposes of
resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(l)(i)(D)(7), and, in addition, if the owner is
a United States or foreign financial institution described in clause (iii)
above (whether or not also described in clause (i) or (ii)), this is to
further certify that such financial institution has not acquired the
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.

As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.

We undertake to advise you promptly by tested telex on or prior to the date
on which you intend to submit your certification relating to the above-captioned
Securities held by you for our account in accordance with your Operating
Procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.

This certificate excepts and does not relate to (U.S. $)_____ of such
interest in the above-captioned Securities in respect of which we are not able
to certify and as to which we understand an exchange for an interest in a
permanent global Security or an exchange for and delivery of

80
<PAGE>

definitive Securities (or, if relevant, collection of any interest) cannot be
made until we do so certify.

We understand that this certificate may be required in connection with
certain tax legislation in the United States if administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.

Dated 19__

(To be dated no earlier than the 15th day prior to (i) the Exchange Date or
(ii) the relevant Interest Payment Date occurring prior to the Exchange Date, as
applicable)

(Name of Person Making Certification)

(Authorized Signatory)
- -----------------------------------------
Name:
Title:

<PAGE>

[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP]

June 17, 1998

Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016

Re: Mack-Cali Realty Corporation, a Maryland corporation (the "Company").
Registration Statement on Form S-3 pertaining to $2,000,000,000
maximum aggregate initial offering price of (i) shares of preferred
stock of the Company, par value $.01 per share ("Preferred Stock");
(ii) shares of Preferred Stock represented by Depositary Shares
("Depositary Shares"); (iii) Debt Securities of Mack-Cali Realty,
L.P., a Delaware limited partnership, ("Debt Securities") and (iv)
Guarantees that may be issued by the Company to accompany the Debt
Securities ("GUARANTEES")

Ladies and Gentlemen:

In connection with the registration of shares of Preferred Stock,
Depositary Shares, Debt Securities and Guarantees (collectively, the
"Securities") under the Securities Act of 1933, as amended (the "Act"), by the
Company on Form S-3, filed with the Securities and Exchange Commission (the
"Commission") on or about June 17, 1998 (the "Registration Statement"), you have
requested our opinion with respect to the matters set forth below. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Registration Statement.

We have acted as special Maryland corporate counsel to the Company in
connection with the matters described herein. In our capacity as special
Maryland corporate counsel to the Company, we have reviewed and are familiar
with the charter of the Company (the "Charter"), consisting of the Articles of
Incorporation filed with the State Department of Assessments and Taxation of
Maryland (the "Department") on May 24, 1994, Articles of Amendment and
Restatement filed with the Department on July 28, 1994, Articles of Amendment
and Restatement filed with the Department on August 9, 1994, Articles of
Amendment filed with the Department on May 31, 1996, Articles of Amendment filed
with the Department on June 13, 1997, Articles of Amendment filed with the
Department on December 11, 1997 and Articles of Amendment filed with the
Department on May 22, 1998; the Bylaws of the Company duly adopted by the Board
of Directors of the Company on August 9, 1994 (the "Bylaws") and certain
resolutions adopted and actions taken by the Board of Directors of the Company
(the "Board of Directors") on or before the date hereof and in full force and
effect on the date hereof including, but not limited to, those certain
resolutions adopted by the Board of Directors on March 25, 1998. We have also
examined other documents, corporate and other records of the Company and
certificates of public officials and officers of the Company including, without
limitation, a status certificate of recent date issued by the Department to the
effect that the Company is duly incorporated and existing under the laws of the
State of Maryland, and a Certificate of Officer of the Company of recent date to
the effect that, among other things, the Charter and Bylaws of the Company and
the resolutions and actions by the Board of Directors which we have examined are
true, correct and complete, have not been rescinded or modified and are in full
force and effect on the date of such certificate. We have also made such
further legal and factual examinations as we have deemed necessary or
appropriate to provide a basis for the opinion set forth below.

In reaching the opinions set forth below, we have assumed the following:
(a) each person executing any instrument, document or agreement on behalf of any
party (other than the Company) is duly authorized to do so; (b)

<PAGE>

each natural person executing any instrument, document or agreement is legally
competent to do so; (c) all documents submitted to us as originals are
authentic; all documents submitted to us as certified, facsimile or photostatic
copies conform to the original document; all signatures on all documents
submitted to us for examination are genuine and all public records reviewed are
accurate and complete; (d) the resolutions adopted and to be adopted, and the
actions taken and to be taken by the Board of Directors including, but not
limited to, the adoption of all resolutions and the taking of all action
necessary to authorize the issuance and sale of the Securities in accordance
with the procedures set forth in paragraphs 1, 2 and 3 below, have occurred or
will occur at duly called meetings at which a quorum of the incumbent directors
of the Company were or are present and acting throughout, or by unanimous
written consent of all incumbent directors, all in accordance with the Charter
and Bylaws of the Company and applicable law; (e) the number of shares of
Preferred Stock to be offered and sold under the Registration Statement will not
in the aggregate exceed the number of shares of Preferred Stock authorized in
the Charter of the Company, less the number of shares of Preferred Stock
authorized and reserved for issuance and issued and outstanding on the date on
which the Securities are authorized and the date on which the Securities are
issued and delivered; (f) none of the terms of any Security to be established
subsequent to the date hereof, nor the issuance and delivery of such Security
nor the compliance by the Company with the terms of such Security will violate
any applicable law or will conflict with, or result in a breach or violation of,
the Charter or Bylaws of the Company, or any instrument or agreement to which
the Company is a party or by which the Company is bound or any order or decree
of any court, administrative or governmental body having jurisdiction over the
Company; and (g) none of the Securities will be issued in violation of the
provisions of Article VI, Section 2 of the Charter.

Based on the foregoing, and subject to the assumptions and qualifications
set forth herein, it is our opinion that:

1. Upon (a) designation by the Board of Directors of one or more classes
of Preferred Stock to distinguish each such class from other then outstanding
classes of Preferred Stock, (b) setting by the Board of Directors of the number
of shares of Preferred Stock to be included in each such class, (c)
establishment by the Board of Directors of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of each such class of Preferred Stock,
(d) filing by the Company with the Department of Articles Supplementary setting
forth a description of each such class of Preferred Stock, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption as set by the Board of Directors and a statement that the Preferred
Stock has been classified by the Board of Directors under the authority
contained in the Charter, and the acceptance for record by the Department of
such Articles Supplementary and (e) due authorization by the Board of Directors
of a designated number of shares of Preferred Stock for issuance at a minimum
price or value of consideration to be set by the Board of Directors, all
necessary corporate action on the part of the Company will have been taken to
authorize the issuance and sale of such shares of Preferred Stock and when such
shares of Preferred Stock are issued and delivered against payment of the
consideration therefor as set by the Board of Directors, such shares of
Preferred Stock will be validly issued, fully paid and non-assessable.

2. The Company has the corporate power to enter into deposit agreements
and, upon completion of the procedures set forth in paragraph 1 for the issuance
of shares of Preferred Stock, and approval of a deposit agreement and due
authorization by the Board of Directors of the delivery of Depositary Shares
pursuant to such deposit agreement, and compliance with the
conditions established by the Board of Directors for the delivery of the
Depositary Shares, such Depositary Shares may be delivered by or on behalf
of the Company, and the Preferred Stock represented by the Depositary
Shares will be validly issued, fully paid and non-assessable.

3. The Company has the corporate power to authorize the issuance of
Guarantees and, upon due authorization of the issuance of Guarantees by the
Board of Directors, and compliance with the conditions established by the Board
of Directors for the issuance thereof, such Guarantees may be issued and
delivered by the Company.

We consent to the filing of this opinion as an exhibit to the Registration
Statement and further consent to the filing of this opinion as an exhibit to
applications to the securities commissioners of the various states of the

<PAGE>

United States for registration of the Securities. We also consent to the
identification of our firm as Maryland counsel to the Company in the section of
the Prospectus (which is a part of the Registration Statement) entitled "Legal
Matters."

This opinion is limited to the present corporate laws of the State of
Maryland and we express no opinion with respect to the laws of any other
jurisdiction. Furthermore, the opinions presented in this letter are limited to
the matters specifically set forth herein and no other opinion shall be inferred
beyond the matters expressly set forth herein. Without limiting the generality
of the foregoing, we express no opinion with respect to any securities laws.

The opinions set forth in this letter are rendered as of the date hereof
and are necessarily limited to laws now in effect and facts and circumstances
presently existing and brought to our attention. We assume no obligation to
supplement this opinion if any applicable law is changed after the date hereof
or if we become aware of any facts or circumstances which now exist or which
occur or arise in the future and may change the opinions expressed herein after
the date hereof.

The opinions expressed in this letter are for your use and the use of your
securities counsel, Pryor Cashman Sherman & Flynn LLP in connection with the
filing of the Registration Statement and the rendering of opinions by Pryor
Cashman Sherman & Flynn LLP in connection therewith, and may not be relied upon
by you or Pryor Cashman Sherman & Flynn LLP for any other purpose, without our
prior written consent.

Very truly yours,

/s/ Ballard Spahr Andrews & Ingersoll, LLP

<PAGE>

Exhibit 5.2

[LETTERHEAD OF
PRYOR CASHMAN SHERMAN & FLYNN LLP]

June 17, 1998

Mack-Cali Realty Corporation
Mack-Cali Realty, L.P.
11 Commerce Drive
Cranford, New Jersey 07016

Ladies and Gentlemen:

We are acting as counsel to Mack-Cali Realty Corporation, a Maryland
corporation (the "Company") and Mack-Cali Realty, L.P., a Delaware limited
partnership (the "Operating Partnership") in connection with the Registration
Statement on Form S-3 of up to $2,000,000,000 in maximum aggregate offering
price of (i) shares or fractional shares of the Company's preferred stock,
par value $.01 per share ("Preferred Stock"), (ii) shares of the Company's
Preferred Stock represented by depositary shares ("Depositary Shares") and
(iii) unsecured non-convertible debt securities of the Operating Partnership
("Debt Securities"). The Preferred Stock, Depositary Shares and Debt
Securities are the subject of a Registration Statement (the "Registration
Statement") filed by the Company and the Operating Partnership on Form S-3
under the Securities Act of 1933, as amended (the "Act").

In our capacity as your counsel in connection with this Registration
Statement, we are familiar with the proceedings taken and proposed to be taken
by the Operating Partnership in connection with the authorization and issuance
of the Debt Securities and, for the purposes of this opinion, have assumed such
proceedings will be timely completed in the manner presently proposed. In
addition, we have made such legal and factual examinations and inquiries,
including examination of originals or copies of originals, certified or
otherwise identified to our satisfaction, of such documents, corporate records
and instruments, as we have deemed necessary or appropriate for purposes of this
opinion.

Based upon and subject to the foregoing, it is our opinion that:

1. The Operating Partnership is a limited partnership duly organized and
validly existing under the laws of the state of Delaware.

2. Upon the adoption by the Board of Directors of the Company, as sole general
partner of the Operating Partnership, of a resolution in form and content
required under applicable law, the Operating Partnership shall have the
authority to issue the Debt Securities to be registered under the Registration
Statement and when (a) the applicable provisions of the Act and such state "blue
sky" or securities laws as may be applicable have been complied with and (b) the
Debt Securities have been issued and delivered for value as contemplated in the
Registration Statement, such Debt Securities shall be legally issued and shall
be binding obligations of the Operating Partnership.

To the extent that the obligations of the Operating Partnership as obligor
under an indenture may be dependent upon such matters, we have assumed for
purposes of this opinion that upon the Operating Partnership's selection of a
trustee, from time to time as may be necessary, (i) such trustee shall be duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and shall be duly qualified to engage in the
activities contemplated by the indenture, (ii) that upon the issuance of Debt
Securities, if at all, such indenture shall be duly authorized, executed and
delivered by and constitute the legal, valid and binding obligation of such
trustee enforceable in accordance with its terms, (iii) that such trustee shall
be in compliance, generally and with respect to acting as trustee under such
indenture, with all applicable laws and regulations and (iv) that such trustee
shall have the requisite organizational and legal power and authority to perform
its obligations under such indenture.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to us under the heading "Legal
Matters" in the Registration Statement, the Prospectus constituting a part
thereof and any amendments thereto.

<PAGE>

This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to, or relied upon by
any other person, firm or corporation for any purpose, without our prior written
consent.

Very truly yours,

/s/ Pryor Cashman Sherman & Flynn LLP

<PAGE>

EXHIBIT 8.1

[LETTERHEAD OF
PRYOR CASHMAN SHERMAN & FLYNN LLP]

June 12, 1998

Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, NJ 07016

Re: CERTAIN FEDERAL INCOME TAX MATTERS

Ladies and Gentlemen:

We have acted as tax counsel to Mack-Cali Realty Corporation (the
"Company") in connection with the Prospectus included as part of that certain
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission and as amended through the date hereof (the "Registration
Statement"). In connection therewith, you have requested our opinion with
respect to the qualification of the Company as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code") and
the accuracy of the discussion included in the Registration Statement under the
heading "Certain United States Federal Income Tax Considerations to the Company
of its REIT Election."

We hereby consent to the use of our opinions as an Exhibit to the
Registration Statement and to any and all references to our firm in the
Prospectus that is a part of the Registration Statement, which Prospectus will
be delivered to prospective purchasers of securities of the Company, and we
hereby consent to such use of our opinion. All defined terms used herein shall
have the same meaning as used in the Registration Statement.

FACTS AND ASSUMPTIONS RELIED UPON

In rendering the opinions expressed herein, we have examined the Articles
of Incorporation and Bylaws of the Company, and such other records, certificates
and documents as we have deemed necessary or appropriate for purposes of
rendering the opinions set forth herein.

In our examination of documents, we have assumed, with your consent, that
all documents submitted to us are authentic originals, or if submitted as
photocopies, that they faithfully reproduce the originals thereof, that all such
documents have been or will be duly executed to the extent required, that all
representations and statements set forth in such documents are true and correct,
and that all obligations imposed by any such on the parties thereto have been or
will be performed or satisfied in accordance with their terms. We have also
assumed, without investigation, that all documents, certificates, warranties and
covenants on which we have relied in rendering the opinions set forth below and
that were given or dated earlier than the date of this letter continue to remain
accurate, insofar as relevant to the opinions set forth herein, from such
earlier date through and including the date of this letter.

We have reviewed the Registration Statement and the descriptions set forth
therein of the Company and its investments and activities. We have relied upon
the representations of the Company and its affiliates regarding the manner in
which the Company has been and will continue to be owned and operated. We have
also relied upon the representations of the accountants for the Company
regarding the type and amount of income received by the Company during its
taxable year ended December 31, 1997 and the character and amount of
distributions made with

<PAGE>

Mack-Cali Realty Corporation
June 12, 1998
Page 2

respect to its taxable year ended December 31, 1997, and the representations
similarly made with respect to prior years of the Company. We note that for its
taxable years ending December 31, 1995 and December 31, 1996, the Company
elected to treat dividends declared in January 1996 and January 1997,
respectively, as having been paid during its 1995 and 1996 taxable years
pursuant to Section 858 of the Code. We have neither independently investigated
nor verified such representations, and we assume that such representations are
true, correct and complete and that all representations made "to the best of the
knowledge and belief" of any person(s) or party(ies) are and will be true,
correct and complete as if made without such qualification. We assume that the
Company has been and will be operated in accordance with applicable laws and the
terms and conditions of applicable documents, and the descriptions of the
Company and its investments, and the proposed investments, activities,
operations and governance of the Company set forth in the Registration Statement
continue to be true. In addition, we have relied on certain additional facts
and assumptions described below.

The foregoing representations are all contained in letters to us dated as
of the date hereof (the "Certificates"). No facts have come to our attention
that are inconsistent with the facts and representations set forth in the
Certificates.

OPINIONS

Based upon and subject to the foregoing, we are of the following opinions:

1. The Company has been organized in conformity with the requirements for
qualification as a REIT under the Code commencing with its initial taxable year
ended December 31, 1994, and for all subsequent taxable years to date, and its
method of operation as described in the representations referred to above, will
enable it to continue to meet the requirements for qualification and taxation as
a REIT under the Code.

2. The discussion contained in that portion of the Registration Statement
under the caption "Certain United States Federal Income Tax Considerations to
the Company of its REIT Election" fairly summarizes the material federal income
tax considerations relevant to the Company's status as a REIT.

The opinions expressed herein are based upon the Code, the Treasury
Regulations promulgated thereunder, current administrative positions of the
Internal Revenue Service, and existing judicial decisions, any of which could be
changed at any time, possibly on a retroactive basis. Any such changes could
adversely affect the opinions rendered herein and the tax consequences to the
Company and investors in the Preferred Stock or Debt Securities. In addition,
as noted above, our opinions are based solely on the documents that we have
examined, the additional information that we have obtained, and the
representations that are being made to us, and cannot be relied upon if any of
the facts contained in such documents or in such additional information are, or
later become, inaccurate or if any of the representations made to use are, or
later become, inaccurate.

We express no opinion with respect to the Registration Statement other than
those expressly set forth herein. Furthermore, the Company's qualification as a
REIT will depend on the Company meeting, in its actual operations, the
applicable asset composition, source of income, shareholder diversification,
distribution, recordkeeping and other requirements of the Code necessary for a
corporation to qualify as a REIT. We will not review these operations, and no
assurance can be given that the actual operations of the Company and its
affiliates will meet these requirements or the representations made to us with
respect thereto.

Finally, our opinion is limited to the tax matters specifically covered
hereby, and we have not been asked to address, nor have we addressed, any other
tax consequences of an investment in the Preferred Stock or Debt Securities.

Very truly yours,

/s/ Pryor Cashman Sherman & Flynn LLP

<PAGE>

EXHIBIT 12.1

MACK-CALI REALTY CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
Mack-Cali Realty Corporation
-----------------------------------------------

For the Three For the For the For the
Mos. Ended Yr. Ended Yr. Ended Yr. Ended
3/31/98 12/31/97 12/31/96 12/31/95
------- -------- -------- --------
<S> <C> <C> <C> <C>
Income (Loss) before gain on sale of
property, minority interest and
extraordinary item (A) $33,849 $36,367 $31,521 $17,146

Add:
Interest expense 18,480 39,078 13,758 10,117

Interest portion (33 percent) of
ground rents on land leases 44 29 - -
------ ------ ------ ------
Income before gain on sale of
property, minority interest and
extraordinary item,
as adjusted (B) $52,373 $75,474 $45,279 $27,263
------ ------ ------ ------
------ ------ ------ ------
Fixed Charges:
Interest Expense $18,480 $39,078 $13,758 $10,117

Interest portion (33 percent) of
ground rents on land leases 44 29 - -
Capitalized interest costs 201 820 118 27
Preferred Dividends 3,911 888 - -
Beneficial conversion feature(C) - 29,361 - -
------ ------ ------ ------
Total fixed charges $22,636 $70,176 $13,876 $10,144
------ ------ ------ ------
------ ------ ------ ------
Ratio of earnings to fixed charges 2.31 1.08 3.26(D) 2.69
------ ------ ------ ------
------ ------ ------ ------
Deficiency of earnings to fixed
charges(F)

<CAPTION>
Cali Group Combined
---------------------------------------------------------
For the Period For the Period For the
August 31, 1994 to January 1, 1994 to Year Ended
December 31, 1994 August 30, 1994 12/31/93
----------------- --------------- --------
<S> <C> <C> <C>
Income (Loss) before gain on sale of
property, minority interest and
extraordinary item (A) $4,990 $ (110) $(1,064)

Add:
Interest expense 2,342 13,829 21,950

Interest portion (33 percent) of
ground rents on land leases - 194 326
------ ------ ------
Income before gain on sale of
property, minority interest and
extraordinary item,
as adjusted (B) $7,332 $13,913 $21,212
------ ------ ------
------ ------ ------
Fixed Charges:
Interest Expense $2,342 $13,829 $21,950

Interest portion (33 percent) of
ground rents on land leases - 194 326
Capitalized interest costs - - -
Preferred Dividends - - -
Beneficial conversion feature(C) - - -
------ ------ ------
Total fixed charges $2,342 $14,023 $22,276
------ ------ ------
------ ------ ------

Ratio of earnings to fixed charges 3.13 (E) (E)
------
------
Deficiency of earnings to fixed charges(F) $ (110) $(1,064)
------ ------
------ ------
</TABLE>

- --------------
(A) Represents pre-tax income (loss) before gain on sale of property, minority
interest and extraordinary item.
(B) Represents earnings before fixed charges.
(C) In connection with the funding of the Mack Transaction, the Operating
Partnership issued certain Preferred Units with a conversion rate of $34.65
per common unit, an amount less than the $39.0626 closing stock price on
the date of closing. Accordingly, the Operating Partnership recorded, on
December 11, 1997, the financial value ascribed to this beneficial
conversion feature.
(D) Represents the ratio of earnings to fixed charges, excluding gain on sale
of rental property of $5,658. The ratio of earnings to fixed charges,
including gain on sale of rental property, was 3.67.
(E) The ratio of earnings to fixed charges was less than 1.00 reflecting the
fact that earnings for the period were not adequate to cover fixed charges.
(F) Represents the amounts by which earnings for the period were not adequate
to cover fixed charges.

<PAGE>

MACK-CALI REALTY, L.P.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Mack-Cali Realty Corporation
--------------------------------------------------------
For the Three For the For the For the
Mos. Ended Yr. Ended Yr. Ended Yr. Ended
3/31/98 12/31/97 12/31/96 12/31/95
------- -------- -------- --------
<S> <C> <C> <C> <C>

Income (Loss) before gain on
sale of property and
extraordinary item (A) $33,849 $36,367 $31,521 $17,146

Add:
Interest expense 18,480 39,078 13,758 10,117

Interest portion (33 percent)
of ground rents on land leases 44 29 - -
------ ------ ------ -------
Income before gain on sale of
property and extraordinary
item, as adjusted (B) $52,373 $75,474 $45,279 $27,263
------ ------ ------ -------
------ ------ ------ -------
Fixed Charges:
Interest Expense $18,480 $39,078 $13,758 $10,117
Interest portion (33 percent)
of ground rents
on land leases 44 29 - -
Capitalized interest costs 201 820 118 27
------ ------ ------ -------
Total fixed charges $18,725 $39,927 $13,876 $10,144
------ ------ ------ -------
------ ------ ------ -------
Ratio of earnings to fixed
charges 2.80 1.89 3.26(C) 2.69
------ ------ ------ -------
------ ------ ------ -------

Deficiency of earnings
to fixed charges(E)

<CAPTION>
Cali Group Combined
----------------------------------------------------------
For the Period For the Period For the
August 31, 1994 to January 1, 1994 to Year Ended
December 31, 1994 August 30, 1994 12/31/93
----------------- --------------- --------
<S> <C> <C> <C>
Income (Loss) before gain on
sale of property and
extraordinary item (A) $4,990 $ (110) $(1,064)

Add:
Interest expense 2,342 13,829 21,950

Interest portion (33 percent)
of ground rents
on land leases - 194 326
------ ------- -------
Income before gain on sale of
property and extraordinary item,
as adjusted (B) $7,332 $13,913 $21,212
------ ------- -------
------ ------- -------
Fixed Charges:
Interest Expense $2,342 $13,829 $21,950

Interest portion (33 percent)
of ground rents
on land leases - 194 326
Capitalized interest costs - - -
------ ------- -------
Total fixed charges $2,342 $14,023 $22,276
------ ------- -------
------ ------- -------
Ratio of earnings to fixed
charges 3.13 (D) (D)
------
------
Deficiency of earnings
to fixed charges(E) (110) $(1,064)
------- -------
------- -------

</TABLE>

- --------------
(A) Represents pre-tax income (loss) before gain on sale of property and
extraordinary item.
(B) Represents earnings before fixed charges.
(C) Represents the ratio of earnings to fixed charges, excluding gain on sale
of rental property of $5,658. The ratio of earnings to fixed charges,
including gain on sale of rental property, was 3.67.
(D) The ratio of earnings to fixed charges was less than 1.00 reflecting the
fact that earnings for the period were not adequate to cover fixed charges.
(E) Represents the amounts by which earnings for the period were not adequate
to cover fixed charges.

<PAGE>

MACK-CALI REALTY, L.P.
COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED UNIT DISTRIBUTION REQUIREMENT
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>

Mack-Cali Realty, L.P.
----------------------------------------------------------
For the Three For the For the For the
Mos. Ended Yr. Ended Yr. Ended Yr. Ended
3/31/98 12/31/97 12/31/96 12/31/95
------- -------- -------- --------
<S> <C> <C> <C> <C>
Income (Loss) before gain on
sale of property and
extraordinary item (A) $33,849 $36,367 $31,521 $17,146

Add:
Interest expense 18,480 39,078 13,758 10,117

Interest portion (33 percent)
of ground rents
on land leases 44 29 - -
------ ------ ------ ------
Income before gain on sale of
property and extraordinary item,
as adjusted (B) $52,373 $75,474 $45,279 $27,263
------ ------ ------ ------
------ ------ ------ ------

Fixed Charges:
Interest Expense $18,480 $39,078 $13,758 $10,117

Interest portion (33 percent) of
ground rents
on land leases 44 29 - -
Capitalized interest costs 201 820 118 27
------ ------ ------ ------
Total fixed charges $18,725 $39,927 $13,876 $10,144
------ ------ ------ ------
------ ------ ------ ------

Preferred unit distribution
requirement $3,911 $888 - -
Beneficial conversion feature(C) - 29,361 - -
Ratio of pre-tax income to
net income 1.00 1.00 - -
------ ------ ------ ------
Preferred unit distribution factor 3,911 30,249 - -
Total fixed charges 18,725 39,927 $13,876 $10,144
------ ------ ------ ------
Total fixed charges and
preferred unit distribution requirement $22,636 $70,176 $13,876 $10,144
------ ------ ------ ------
------ ------ ------ ------
Ratio of earnings to combined
fixed charges and preferred
unit distribution requirement 2.31 1.08 3.26(D) 2.69
------ ------ ------ ------
------ ------ ------ ------
Deficiency of earnings
to fixed charges(F)

<CAPTION>
Cali Group Combined
--------------------------------------------------------
For the Period For the Period For the
August 31, 1994 to January 1, 1994 to Year Ended
December 31, 1994 August 30, 1994 12/31/93
----------------- --------------- --------
<S> <C> <C> <C>
Income (Loss) before gain on
sale of property and
extraordinary item (A) $4,990 $ (110) $(1,064)

Add:
Interest expense 2,342 13,829 21,950

Interest portion (33 percent)
of ground rents
on land leases - 194 326
------ ------ ------
Income before gain on sale of
property and extraordinary item,
as adjusted (B) $7,332 $13,913 $21,212
------ ------ ------
------ ------ ------
Fixed Charges:
Interest Expense $2,342 $13,829 $21,950

Interest portion (33 percent) of
ground rents
on land leases - 194 326
Capitalized interest costs - - -
------ ------ ------
Total fixed charges $2,342 $14,023 $22,276
------ ------ ------
------ ------ ------

Preferred unit distribution
requirement - - -
Beneficial conversion feature(C) - - -
Ratio of pre-tax income to net
income - - -
Preferred unit distribution factor - - -
Total fixed charges $2,342 $14,023 $22,276
------ ------ ------
------ ------ ------
Total fixed charges and
preferred unit distribution
requirement $2,342 $14,023 $22,276
------ ------ ------
------ ------ ------
Ratio of earnings to combined
fixed charges and preferred
unit distribution requirement 3.13 (E) (E)
------
------
Deficiency of earnings
to fixed charges(F) $ (110) $(1,064)
------ ------
------ ------
</TABLE>
- --------------
(A) Represents pre-tax income (loss) before gain on sale of property and
extraordinary item.
(B) Represents earnings before fixed charges.

<PAGE>

(C) In connection with the funding of the Mack Transaction, the Operating
Partnership issued certain Preferred Units with a conversion rate of $34.65
per common unit, an amount less than the $39.0626 closing stock price on
the date of closing. Accordingly, the Operating Partnership recorded, on
December 11, 1997, the financial value ascribed to this beneficial
conversion feature.
(D) Represents the ratio of earnings to fixed charges, excluding gain on sale
of rental property of $5,658. The ratio of earnings to fixed charges,
including gain on sale of rental property, was 3.67.
(E) The ratio of earnings to fixed charges was less than 1.00 reflecting the
fact that earnings for the period were not adequate to cover fixed charges.
(F) Represents the amounts by which earnings for the period were not adequate
to cover fixed charges.

<PAGE>

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 26, 1998, appearing in Mack-Cali Realty Corporation's Annual
Report on Form 10-K for the year ended December 31, 1997. We also consent to
the incorporation by reference in this Registration Statement of our report
dated September 15, 1997, except as to Note 12, which is as of October 30,
1997, relating to the combined financial statements of The Mack Group, for
each of the three years in the period ended December 31, 1996, included in
Cali Realty Corporation's Proxy Statement filed on November 10, 1997. We
also consent to the incorporation by reference of our reports dated April 2,
1998 and April 16, 1998, which appear on pages 45 and 39, respectively, of
the Current Report on Form 8-K dated June 12, 1998. We also consent to the
use in the Prospectus constituting part of this Registration Statement on
Form S-3 of our report dated February 26, 1998, relating to the financial
statements of Mack-Cali Realty, L.P., which appears in such Prospectus. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.

/s/ PRICE WATERHOUSE LLP
- ------------------------
Price Waterhouse LLP

New York, New York
June 16, 1998

<PAGE>

EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated May 20, 1997 on our audited Statement
of Revenue and Certain Expenses for Westlakes Offices Park of our report dated
August 8, 1997 on our audited Statement of Revenue and Certain Expenses for
First Shelton Place, and of our report dated September 3, 1997 on our audited
Statement of Revenue and Certain Expenses for Three Independence Way, appearing
in Mack-Cali Realty Corporation's current report on Form 8-K dated September 18,
1997.

We also consent to incorporation by reference in this Registration
Statement of our report dated October 19, 1997 on our audit of the Statement of
Revenue and Certain Expenses for the McGarvey Portfolio, of our report dated
October 15, 1997 on our audit of the Statement of Revenue and Certain Expenses
for Princeton Overlook, of our report dated November 18, 1997 on our audit of
the Statement of Revenue and Certain Expenses for The Trooper Building, and of
our report dated December 22, 1997 on our audit of the Statement of Revenue and
Certain Expenses for 500 West Putnam, appearing in Mack-Cali Realty
Corporation's current report on Form 8-K dated January 16, 1998.

We also consent to incorporation by reference in this Registration
Statement of our report dated April 6, 1998 on our audit of the Statement of
Revenue and Certain Expenses for the McGarvey Portfolio, of our report dated
March 29, 1998 on our audit of the Statement of Revenue and Certain Expenses for
500 West Putnam, of our report dated March 27, 1998 on our audit of the
Statement of Revenue and Certain Expenses for Mountainview, of our report dated
March 30, 1998 on our audit of the Statement of Revenue and Certain Expenses for
Cielo Center, of our report dated April 8, 1998 on our audit of the Statement of
Revenue and Certain Expenses for the Pacifica Portfolio, of our report dated May
29, 1998 on our audit of the Statement of Revenue and Certain Expenses for 500
College Road, of our report dated May 29, 1998 on our audit of the Statement of
Revenue and Certain Expenses for the D.C. Portfolio, of our report dated May 30,
1998 on our audit of the Statement of Revenue and Certain Expenses for 400 South
Colorado, and of our report dated June 4, 1998 on our audit of the Statement of
Revenue and Certain Expenses for 3600 S. Yosemite, appearing in Mack-Cali Realty
Corporation's current report on Form 8-K dated June 12, 1998.

We also consent to the reference to us under the heading "Experts" in such
Registration Statement.

/s/ Schonbraun Safris McCann Bekritsky & Co., L.L.C.
- ----------------------------------------------------
Schonbraun Safris McCann Bekritsky & Co., L.L.C.
Roseland, New Jersey
June 17, 1998

<PAGE>

EXHIBIT 23.5

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 of Mack-Cali Realty Corporation and Mack-Cali
Realty, L.P. for the registration of $2,000,000,000 of Preferred Stock,
Depositary Shares and Debt Securities and to the incorporation by reference
therein of our report dated March 19, 1997, except for Note 9, for which the
date is October 2, 1997, with respect to the Combined Financial Statements of
the Patriot American Office Group included in the Proxy Statement of Cali Realty
Corporation dated November 10, 1997, filed with the Securities and Exchange
Commission.

/s/ Ernst & Young LLP
- ---------------------
ERNST & YOUNG LLP

Dallas, Texas
June 15, 1998