-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KxH56ogwpwSdUO9tyzWvhsWczurA0HqZVo0rx8Ir3FQaB7rkx1JKUJ2HSk1ZHL5H oe49efQHv/NKaUUNq7zKpw== 0000912057-01-007303.txt : 20010308 0000912057-01-007303.hdr.sgml : 20010308 ACCESSION NUMBER: 0000912057-01-007303 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MACK CALI REALTY L P CENTRAL INDEX KEY: 0001067063 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 223315804 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 333-57103-01 FILM NUMBER: 1562409 BUSINESS ADDRESS: STREET 1: 11 COMMERCE DR STREET 2: 1ST FLOOR CITY: CRANFORD STATE: NJ ZIP: 07016 BUSINESS PHONE: 9082728000 MAIL ADDRESS: STREET 1: 11 COMMERCE DRIVE STREET 2: 1ST FLOOR CITY: CRANFORD STATE: NJ ZIP: 07016 10-K405 1 a2040483z10-k405.txt FORM 10-K405 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 333-57103 MACK-CALI REALTY, L.P. - -------------------------------------------------------------------------------- (Exact Name of Registrant as specified in its charter) Delaware 22-3315804 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 11 Commerce Drive, Cranford, New Jersey 07016-3599 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (908) 272-8000 -------------- (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: (Title of Each Class) (Name of Each Exchange on Which Registered) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. |X| LOCATION OF EXHIBIT INDEX: The index of exhibits is contained in Part IV herein on page number 57. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Mack-Cali Realty Corporation's definitive proxy statement to be issued in conjunction with the Mack-Cali Realty Corporation's annual meeting of shareholders to be held on May 15, 2001 are incorporated by reference in Part III of this Form 10-K. TABLE OF CONTENTS FORM 10-K Page No. PART I -------- Item 1 Business ................................................ 3 Item 2 Properties................................................ 15 Item 3 Legal Proceedings......................................... 44 Item 4 Submission of Matters to a Vote of Security Holders....... 44 PART II Item 5 Market for Registrant's Common Equity and Related Stockholder Matters.................................... 45 Item 6 Selected Financial Data................................... 46 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 47 Item 7a Quantitative and Qualitative Disclosures About Market Risk 56 Item 8 Financial Statements and Supplementary Data............... 56 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................... 56 PART III Item 10 Directors and Executive Officers of the Registrant........ 57 Item 11 Executive Compensation.................................... 57 Item 12 Security Ownership of Certain Beneficial Owners and Management............................................. 57 Item 13 Certain Relationships and Related Transactions............ 57 PART IV Item 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K............................................ 57 2 PART I ITEM 1. BUSINESS GENERAL Mack-Cali Realty, L.P., a Delaware limited partnership (together with its subsidiaries, the "Operating Partnership"), is a majority-owned subsidiary of Mack-Cali Realty Corporation, a Maryland corporation (the "Corporation"). The Operating Partnership owns and operates a real estate portfolio comprised predominantly of Class A office and office/flex properties located primarily in the Northeast, as well as commercial real estate leasing, management, acquisition, development and construction businesses. The Operating Partnership was formed on May 31, 1994. The Operating Partnership's executive offices are located at 11 Commerce Drive, Cranford, New Jersey 07016, and its telephone number is (908) 272-8000. The Corporation has an internet website at www.mack-cali.com. As of December 31, 2000, the Operating Partnership owned or had interests in 267 properties, aggregating approximately 28.2 million square feet (collectively, the "Properties"), plus developable land. The Properties are comprised of: (a) 255 wholly-owned or Operating Partnership controlled properties consisting of 155 office buildings and 87 office/flex buildings totaling approximately 26.3 million square feet, six industrial/warehouse buildings totaling approximately 387,400 square feet, two multi-family residential complexes consisting of 451 units, two stand-alone retail properties and three land leases (collectively, the "Consolidated Properties"); and (b) eight office buildings and four office/flex buildings aggregating 1.5 million square feet, owned by unconsolidated joint ventures in which the Operating Partnership has investment interests. Unless otherwise indicated, all references to square feet represent net rentable area. As of December 31, 2000, the office, office/flex and industrial/warehouse properties, included in the Consolidated Properties, were approximately 96.8 percent leased to over 2,400 tenants. The Properties are located in 11 states, primarily in the Northeast, plus the District of Columbia. The general partner of the Operating Partnership is the Corporation, which has elected to be treated and operated so as to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended. The common stock, par value $0.01 (the "Common Stock") of the Corporation is listed on the New York Stock Exchange and the Pacific Exchange under the symbol "CLI." Substantially all of the Corporation's interests in the Properties are held through, and its operations are conducted through, the Operating Partnership, or through entities controlled by the Operating Partnership. As of February 15, 2001, 56,924,613 shares of Common Stock were outstanding. Also, as of February 15, 2001, the Corporation owned a 79.9 percent general partnership interest in the Operating Partnership, assuming conversion of all preferred limited partnership units of the Operating Partnership into common limited partnership units. Without giving effect to the preferred limited partnership units of the Operating Partnership, the Corporation would own an 87.7 percent general partnership interest in the Operating Partnership. As used herein, the term "Units" refers to common limited partnership interests in the Operating Partnership. Units are redeemable for an equal number of shares of Common Stock or cash. The Operating Partnership's strategy has been to focus its acquisition, operation and development of office properties in markets and sub-markets where it believes it is, or can become, a significant and preferred owner and operator. The Operating Partnership will continue this strategy by expanding, through acquisitions and/or development, in Northeast markets and sub-markets where it has, or can achieve, similar status. The Operating Partnership believes that its Properties have excellent locations and access and are well-maintained and professionally managed. As a result, the Operating Partnership believes that its Properties attract high quality tenants and achieve among the highest rental, occupancy and tenant retention rates within their markets. Management believes that the recent trend towards increasing rental rates in the Operating Partnership's sub-markets continues to present opportunities for internal growth. Management also believes that its extensive market knowledge provides the Operating Partnership with a significant competitive advantage which is further enhanced by its strong reputation for, and emphasis on, delivering highly responsive, professional management services. See "Business Strategies". The Operating Partnership's executive officers have been employed by the Corporation and/or its predecessor companies for an average of approximately 13 years. 3 BUSINESS STRATEGIES Operations Reputation: The Operating Partnership has established a reputation as a highly-regarded landlord with an emphasis on delivering quality tenant services in buildings it owns and/or manages. The Operating Partnership believes that its continued success depends in part on enhancing its reputation as an operator of choice, which will facilitate the retention of current tenants and the attraction of new tenants. The Operating Partnership believes it provides a superior level of service to its tenants, which should in turn create higher than average occupancy rates, as well as lower than average turnover. Communication with tenants: The Operating Partnership emphasizes frequent communication with tenants to ensure first-class service to the Properties. Property managers generally are located on site at the Properties to provide convenient access to management and to ensure that the Properties are well-maintained. Property management's primary responsibility is to ensure that buildings are operated at peak efficiency in order to meet both the Operating Partnership's and tenants' needs and expectations. Property managers additionally budget and oversee capital improvements and building system upgrades to enhance the Properties' competitive advantages in their markets. Additionally, the Operating Partnership's in-house leasing representatives develop and maintain long-term relationships with the Operating Partnership's diverse tenant base and coordinate leasing, expansion, relocation and build-to-suit opportunities within the Operating Partnership's portfolio. This approach allows the Operating Partnership to offer office space in the appropriate size and location to current or prospective tenants in any of its sub-markets. Growth The Operating Partnership plans to continue to own and operate a portfolio of properties in high-barrier-to-entry markets, with a primary focus in the Northeast and a presence in California. The Operating Partnership's primary objectives are to maximize funds from operations and to enhance the value of its portfolio through effective management, acquisition, development and property sales strategies, as follows: Internal Growth: The Operating Partnership seeks to maximize the value of its existing portfolio through implementing operating strategies designed to produce increased effective rental and occupancy rates and decreased tenant installation costs. The Operating Partnership believes that it has opportunity for internal growth through re-leasing space at higher effective rents with contractual rent increases and developing or redeveloping space for its diverse base of high credit tenants, including AT&T Corporation, Allstate Insurance Company and IBM Corporation. In addition, the Operating Partnership's management seeks volume discounts to take advantage of the Operating Partnership's size and dominance in particular sub-markets, and operating efficiencies through the use of in-house management, leasing, marketing, financing, accounting, legal, development and construction functions. The Operating Partnership believes that the combination of these factors should allow the Operating Partnership continued internal growth over the next several years. Acquisitions: The Operating Partnership also believes that growth opportunities exist through acquiring operating properties or properties for redevelopment with attractive returns in its core Northeast sub-markets where, based on its expertise in leasing, managing and operating properties, it believes it is, or can become, a significant and preferred owner and operator. The Operating Partnership intends to acquire, invest in or redevelop additional properties that: (i) provide attractive initial yields with potential for growth in cash flow from operations; (ii) are well-located, of high quality and competitive in their respective sub-markets; (iii) are located in its existing sub-markets or in sub-markets in which the Operating Partnership can become a significant and preferred owner or operator; and (iv) have been under-managed or are otherwise capable of improved performance through intensive management, capital improvements and/or leasing that will result in increased occupancy and rental revenues. 4 Development: The Operating Partnership, directly or through joint ventures, is underway on the construction of eight office and office/flex buildings. The most significant development activity is currently at the Operating Partnership's Harborside Financial Center office complex in Jersey City, New Jersey. Three of the eight properties currently under construction are located at the complex and consist of two office towers, aggregating approximately 1.6 million square feet, and a 350-room Hyatt Regency hotel. The Operating Partnership also recently completed and placed in service a 185,000 square-foot office/1,100 space parking garage project at Harborside. See "Liquidity and Capital Resources - Capitalization." Additionally, the Operating Partnership may selectively develop additional properties where it believes such development will result in a favorable risk-adjusted return on investment in coordination with the above operating strategies. Such development primarily will occur: (i) when leases have been executed prior to construction; (ii) in stable core Northeast sub-markets where the demand for such space exceeds available supply; and (iii) where the Operating Partnership is, or can become, a significant and preferred owner and operator. Property Sales: As part of its focused strategy, the Operating Partnership plans to sell substantially all of its properties located in the Southwestern and Western regions, using such proceeds primarily to invest in property acquisitions and development projects in its core Northeast markets. Additionally, while management's principal intention is to own and operate its properties on a long-term basis, it is constantly assessing the attributes of each of its properties, with a particular focus on the supply and demand fundamentals of the sub-markets in which they are located. Based on these ongoing assessments, the Operating Partnership may, from time to time, decide to sell any of its properties. Financial The Operating Partnership currently intends to maintain a ratio of debt-to-undepreciated assets (total debt of the Operating Partnership as a percentage of total undepreciated assets) of approximately 50 percent or less. As of December 31, 2000, the Operating Partnership's total debt constituted approximately 40.9 percent of total undepreciated assets of the Operating Partnership. The Operating Partnership has three investment grade credit ratings. Standard & Poor's Rating Services ("S&P") and Fitch, Inc. ("Fitch") have each assigned their BBB rating to existing and prospective senior unsecured debt of the Operating Partnership. S&P and Fitch have also assigned their BBB- rating to prospective preferred stock offerings of the Corporation. Moody's Investors Service has assigned its Baa3 rating to existing and prospective senior unsecured debt of the Operating Partnership and its Ba1 rating to prospective preferred stock offerings of the Corporation. Although there is no limit in the Operating Partnership's organizational documents on the amount of indebtedness that the Operating Partnership may incur or the requirement for maintenance of investment grade credit ratings, the Operating Partnership has entered into certain financial agreements which contain covenants that limit the Operating Partnership's ability to incur indebtedness under certain circumstances. The Operating Partnership intends to conduct its operations in order to maintain its investment grade rated status. The Operating Partnership intends to utilize the most appropriate sources of capital for future acquisitions, development, capital improvements and other investments, which may include funds from operating activities, proceeds from property sales, short-term and long-term borrowings (including draws on the Operating Partnership's revolving credit facilities), and the issuance of additional debt or equity securities. EMPLOYEES As of December 31, 2000, the Operating Partnership had no employees. The Corporation had over 400 employees. COMPETITION The leasing of real estate is highly competitive. The Properties compete for tenants with lessors and developers of similar properties located in its respective markets primarily on the basis of location, rent charged, services provided, and the design and condition of the Properties. The Operating Partnership also experiences competition when attempting to acquire desirable real estate, including competition from domestic and foreign financial institutions, other REITs, life insurance companies, pension trusts, trust funds, partnerships and individual investors. REGULATIONS Many laws and governmental regulations are applicable to the Properties and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently. 5 Under various laws and regulations relating to the protection of the environment, an owner of real estate may be held liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property. These laws often impose liability without regard to whether the owner was responsible for, or even knew of, the presence of such substances. The presence of such substances may adversely affect the owner's ability to rent or sell the property or to borrow using such property as collateral and may expose it to liability resulting from any release of, or exposure to, such substances. Persons who arrange for the disposal or treatment of hazardous or toxic substances at another location may also be liable for the costs of removal or remediation of such substances at the disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain environmental laws impose liability for release of asbestos-containing materials into the air, and third parties may also seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials and other hazardous or toxic substances. In connection with the ownership (direct or indirect), operation, management and development of real properties, the Operating Partnership may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental penalties and injuries to persons and property. There can be no assurance that (i) future laws, ordinances or regulations will not impose any material environmental liability, (ii) the current environmental condition of the Properties will not be affected by tenants, by the condition of land or operations in the vicinity of the Properties (such as the presence of underground storage tanks), or by third parties unrelated to the Operating Partnership, or (iii) the Operating Partnership's assessments reveal all environmental liabilities and that there are no material environmental liabilities of which the Operating Partnership is aware. If compliance with the various laws and regulations, now existing or hereafter adopted, exceeds the Operating Partnership's budgets for such items, the Operating Partnership's ability to make expected distributions to stockholders could be adversely affected. There are no other laws or regulations which have a material effect on the Operating Partnership's operations, other than typical federal, state and local laws affecting the development and operation of real property, such as zoning laws. INDUSTRY SEGMENTS The Operating Partnership operates in only one industry segment - real estate. The Operating Partnership does not have any foreign operations and its business is not seasonal. RECENT DEVELOPMENTS The Operating Partnership's funds from operations (after adjustment for straight-lining of rents and non-recurring charges) for the year ended December 31, 2000 was $262.1 million as compared to $244.2 million for the year ended December 31, 1999. As a result of the Operating Partnership's improved operating performance, the Corporation announced, in September 2000, a 5.2 percent increase in its quarterly dividend, commencing with the Corporation's dividend with respect to the third quarter of 2000, from $0.58 per share of Common Stock ($2.32 per share of Common Stock on an annualized basis) to $0.61 per share of Common Stock ($2.44 per share of Common Stock on an annualized basis). The Corporation declared a cash dividend of $0.61 per share on December 20, 2000 to shareholders of record as of January 4, 2001, with respect to the fourth quarter of 2000. Also, on that date, the Operating Partnership declared a cash distribution to the limited partners in the Operating Partnership of $0.61 per Unit. The dividend and distributions were paid on January 22, 2001. In 2000, the Operating Partnership: o acquired five operating properties aggregating 702,876 square feet at a total cost of approximately $91.9 million; o placed in service two properties aggregating 339,680 square feet at a total cost of approximately $78.9 million; o acquired two developable land parcels at a total cost of approximately $18.3 million; and o sold five properties, aggregating 1,759,009 square feet, and a vacant land parcel for aggregate net sales proceeds of approximately $293.6 million. Additionally, the Operating Partnership, through unconsolidated joint ventures, placed in service six office and office/flex buildings aggregating 317,041 square feet. 6 Operating Property Acquisitions The Operating Partnership acquired the following operating properties during the year ended December 31, 2000:
- ------------------------------------------------------------------------------------------------------------------------------ Investment by Operating Acquisition # of Rentable Partnership (a) Date Property/Portfolio Name Location Bldgs. Square Feet (in thousands) - ------------------------------------------------------------------------------------------------------------------------------ Office 5/23/00 555 & 565 Taxter Road Elmsford, Westchester County, NY 2 341,108 $42,980 6/14/00 Four Gatehall Drive Parsippany, Morris County, NJ 1 248,480 42,381 - ------------------------------------------------------------------------------------------------------------------------------ Total Office Property Acquisitions: 3 589,588 $85,361 - ------------------------------------------------------------------------------------------------------------------------------ Office/Flex 3/24/00 Two Executive Drive (b) Moorestown, Burlington County, NJ 1 60,800 $ 4,007 7/14/00 915 North Lenola Road (b) Moorestown, Burlington County, NJ 1 52,488 2,542 - ------------------------------------------------------------------------------------------------------------------------------ Total Office/Flex Property Acquisition: 2 113,288 $ 6,549 - ------------------------------------------------------------------------------------------------------------------------------ Total Operating Property Acquisitions: 5 702,876 $91,910 ==============================================================================================================================
Properties Placed in Service The Operating Partnership placed in service the following properties through the completion of development during the year ended December 31, 2000:
- ------------------------------------------------------------------------------------------------------------------------------ Investment by Operating Date Placed # of Rentable Partnership (d) in Service Property Name Location Bldgs. Square Feet (in thousands) - ------------------------------------------------------------------------------------------------------------------------------ Office 9/01/00 Harborside Plaza 4-A (c) Jersey City, Hudson County, NJ 1 207,670 $61,459 9/15/00 Liberty Corner Corp. Center Bernards Township, Somerset County, NJ 1 132,010 17,430 - ------------------------------------------------------------------------------------------------------------------------------ Total Properties Placed in Service: 2 339,680 $78,889 ==============================================================================================================================
(a) Transactions were funded primarily from net proceeds received in the sale or sales of rental property. (b) The properties were acquired through the exercise of a purchase option obtained in the initial acquisition of the McGarvey portfolio in January 1998. (c) Project includes seven-story, 1,100-car parking garage. (d) Unless otherwise noted, transactions were funded primarily through draws on the Operating Partnership's credit facilities, and amounts presented are as of December 31, 2000. Land Acquisitions On January 13, 2000, the Operating Partnership acquired approximately 12.7 acres of developable land located at the Operating Partnership's Airport Business Center, Lester, Delaware County, Pennsylvania. The land was acquired for approximately $2.1 million. On August 24, 2000, the Operating Partnership entered into a joint venture with SJP Properties Operating Partnership ("SJP Properties") to form MC-SJP Morris V Realty, LLC and MC-SJP Morris VI Realty, LLC, which acquired approximately 47.5 acres of developable land located in Parsippany, Morris County, New Jersey. The land was acquired for approximately $16.2 million. The Operating Partnership accounts for the joint venture on a consolidated basis. 7 Property Sales The Operating Partnership sold the following properties during the year ended December 31, 2000:
- ----------------------------------------------------------------------------------------------------------------------------------- Net Sales Net Book Sale # of Rentable Proceeds Value Date Property Name Location Bldgs. Square Feet (in thousands) (in thousands) - ----------------------------------------------------------------------------------------------------------------------------------- Land: 02/25/00 Horizon Center Land Hamilton Township, Mercer County, NJ -- 39.1 acres $ 4,180 $ 1,932 Office: 04/17/00 95 Christopher Columbus Dr. Jersey City, Hudson County, NJ 1 621,900 148,222 80,583 04/20/00 6900 IH-40 West Amarillo, Potter County, TX 1 71,771 1,467 1,727 06/09/00 412 Mt. Kemble Avenue Morris Twp., Morris County, NJ 1 475,100 81,981 75,439 09/21/00 Cielo Center Austin, Travis County, TX 1 270,703 45,785 35,749 11/15/00 210 South 16th Street (1) Omaha, Douglas County, NE 1 319,535 11,976 12,828 - ----------------------------------------------------------------------------------------------------------------------------------- Totals: 5 1,759,009 $293,611 $208,258 =================================================================================================================================== - ----------------------------------------------------------------------------------------- Gain/ Sale (Loss) Date Property Name Location (in thousands) - ----------------------------------------------------------------------------------------- Land: 02/25/00 Horizon Center Land Hamilton Township, Mercer County, NJ $ 2,248 Office: 04/17/00 95 Christopher Columbus Dr. Jersey City, Hudson County, NJ 67,639 04/20/00 6900 IH-40 West Amarillo, Potter County, TX (260) 06/09/00 412 Mt. Kemble Avenue Morris Twp., Morris County, NJ 6,542 09/21/00 Cielo Center Austin, Travis County, TX 10,036 11/15/00 210 South 16th Street (1) Omaha, Douglas County, NE (852) - ----------------------------------------------------------------------------------------- Totals: $85,353 =========================================================================================
(1) In connection with the sale of the Omaha, Nebraska property, the Operating Partnership provided to the purchaser an $8.8 million mortgage loan bearing interest payable monthly at an annual rate of 9.50 percent. The loan is secured by the Omaha, Nebraska property and will mature on November 14, 2003. Other Events On June 27, 2000, William L. Mack was appointed Chairman of the Board of Directors of the Corporation and John J. Cali was named Chairman Emeritus of the Board of Directors of the Corporation. Brant Cali resigned as Executive Vice President, Chief Operating Officer and Assistant Secretary of the Corporation and as a member of the Board of Directors, and John R. Cali resigned as Executive Vice President, Development of the Corporation. John R. Cali was appointed to the Board of Directors of the Corporation to take the seat previously held by Brant Cali. See Note 3 to the Financial Statements. On September 21, 2000, the Corporation and Prentiss Properties Trust, a Maryland REIT ("Prentiss"), mutually agreed to terminate the agreement and plan of merger ("Merger Agreement") dated as of June 27, 2000, among the Corporation, the Operating Partnership, Prentiss and Prentiss Properties Acquisition Partners, L.P., a Delaware limited partnership of which Prentiss (through a wholly-owned direct subsidiary) is the sole general partner ("Prentiss Partnership"). In connection with such termination, the Operating Partnership deposited $25.0 million into escrow for the benefit of Prentiss and Prentiss Partnership. Simultaneous with the termination, the Operating Partnership sold to Prentiss its 270,703 square-foot Cielo Center property located in Austin, Travis County, Texas, and recognized a gain on the sale of approximately $10.0 million. FINANCING ACTIVITY Issuances of Senior Unsecured Notes On December 21, 2000, the Operating Partnership issued $15.0 million of 7.835 percent senior unsecured notes due December 15, 2010 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions) of approximately $14.9 million were used primarily to pay down outstanding borrowings under the Prudential Facility, as defined in Note 9 to the Financial Statements. In January 2001, the Operating Partnership issued $300.0 million face amount of 7.75 percent senior unsecured notes due February 15, 2011 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions and discount) of approximately $296.3 million were used to pay down outstanding borrowings under the 2000 Unsecured Facility, as defined below. The senior unsecured notes were issued at a discount of approximately $1.7 million. 8 Revolving Credit Facility On June 22, 2000, the Operating Partnership obtained an unsecured revolving credit facility ("2000 Unsecured Facility") with a current borrowing capacity of $800.0 million from a group of 24 lenders. The interest rate on outstanding borrowings under the credit line is currently the London Inter-Bank Offered Rate ("LIBOR") plus 80 basis points. The Operating Partnership may instead elect an interest rate representing the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. The 2000 Unsecured Facility also requires a 20 basis point facility fee on the current borrowing capacity payable quarterly in arrears. In the event of a change in the Operating Partnership's unsecured debt rating, the interest rate and facility fee will be changed on a sliding scale. Subject to certain conditions, the Operating Partnership has the ability to increase the borrowing capacity of the credit line up to $1.0 billion. The 2000 Unsecured Facility matures in June 2003, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the credit line upon exercise. Stock Repurchases On August 6, 1998, the Board of Directors of the Corporation authorized a share repurchase program ("Repurchase Program") under which the Corporation was permitted to purchase up to $100.0 million of the Corporation's outstanding common stock. Under the Repurchase Program, the Corporation purchased for constructive retirement 1,869,200 shares of its outstanding common stock for an aggregate cost of approximately $52.6 million through September 12, 2000. On September 13, 2000, the Board of Directors of the Corporation authorized an increase to the Repurchase Program under which the Corporation is permitted to purchase up to an additional $150.0 million of the Corporation's outstanding common stock above the $52.6 million that had previously been purchased. From that date through February 15, 2001 the Corporation purchased for constructive retirement 2,098,300 shares of its outstanding common stock for an aggregate cost of approximately $57.5 million under the Repurchase Program. The Corporation has authorization to repurchase up to an additional $92.5 million of its outstanding common stock which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. RISK FACTORS Our results from operations and ability to make distributions on our equity and debt service on our indebtedness may be affected by the risk factors set forth below. All investors should consider the following risk factors before deciding to purchase securities of the Operating Partnership. The Operating Partnership refers to itself as "we" or "our" in the following risk factors and in Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Disruption in Operations Due to Year 2000 Problems". We are dependent upon the economics of the Northeastern office markets. A majority of our revenues are derived from our properties located in the Northeast, particularly in New Jersey, New York, Pennsylvania and Connecticut. Adverse economic developments in this region could adversely impact the operations of our properties and, therefore, our profitability. Because our portfolio consists primarily of office and office/flex buildings (as compared to a more diversified real estate portfolio), a decline in the economy and/or a decline in the demand for office space may adversely affect our ability to make distributions or payments to our investors. 9 Our performance is subject to risks associated with the real estate industry. General: Our ability to make distributions or payments to our investors depends on the ability of our properties to generate funds in excess of operating expenses (including scheduled principal payments on debt and capital expenditure requirements). Events or conditions that are beyond our control may adversely affect our operations and the value of our properties. Such events or conditions could include: o changes in the general economic climate; o changes in local conditions such as oversupply of office space or a reduction in demand for office space; o decreased attractiveness of our properties to potential tenants; o competition from other office and office/flex buildings; o our inability to provide adequate maintenance; o increased operating costs, including insurance premiums and real estate taxes, due to inflation and other factors which may not necessarily be offset by increased rents; o changes in laws and regulations (including tax, environmental and housing laws and regulations) and agency or court interpretations of such laws and regulations and the related costs of compliance; o changes in interest rate levels and the availability of financing; o the inability of a significant number of tenants to pay rent; o our inability to rent office space on favorable terms; and o civil unrest, earthquakes and other natural disasters or acts of God that may result in uninsured losses. Financially distressed tenants may be unable to pay rent: If a tenant defaults, we may experience delays and incur substantial costs in enforcing our rights as landlord and protecting our investments. If a tenant files for bankruptcy, a potential court judgment rejecting and terminating such tenant's lease could adversely affect our ability to make distributions or payments to our investors. Illiquidity of real estate limits our ability to act quickly: Real estate investments are relatively illiquid. Such illiquidity may limit our ability to react quickly in response to changes in economic and other conditions. If we want to sell an investment, we might not be able to dispose of that investment in the time period we desire, and the sales price of that investment might not recoup or exceed the amount of our investment. The prohibition in the Internal Revenue Code of 1986, as amended, and related regulations on a real estate investment trust holding property for sale also may restrict our ability to sell property. In addition, we acquired a significant number of our properties from individuals to whom we issued limited partnership units as part of the purchase price. In connection with the acquisition of these properties, in order to preserve such individual's tax deferral, we contractually agreed not to sell or otherwise transfer the properties for a specified period of time, subject to certain exceptions. The above limitations on our ability to sell our investments could adversely affect our ability to make distributions or payments to our investors. Americans with Disabilities Act compliance could be costly: Under the Americans with Disabilities Act of 1990, all public accommodations and commercial facilities must meet certain federal requirements related to access and use by disabled persons. Compliance with the ADA requirements could involve removal of structural barriers from certain disabled persons' entrances. Other federal, state and local laws may require modifications to or restrict further renovations of our properties with respect to such accesses. Although we believe that our properties are substantially in compliance with present requirements, noncompliance with the ADA or related laws or regulations could result in the United States government imposing fines or private litigants being awarded damages against us. Such costs may adversely affect our ability to make distributions or payments to our investors. 10 Environmental problems are possible and may be costly: Various federal, state and local laws and regulations subject property owners or operators to liability for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property. These laws often impose liability without regard to whether the owner or operator was responsible for or even knew of the presence of such substances. The presence of or failure to properly remediate hazardous or toxic substances may adversely affect our ability to rent, sell or borrow against contaminated property. Various laws and regulations also impose liability on persons who arrange for the disposal or treatment of hazardous or toxic substances at another location for the costs of removal or remediation of such substances at the disposal or treatment facility. These laws often impose liability whether or not the person arranging for such disposal ever owned or operated the disposal facility. Certain other environmental laws and regulations impose liability on owners or operators of property for injuries relating to the release of asbestos-containing materials into the air. As owners and operators of property and as potential arrangers for hazardous substance disposal, we may be liable under such laws and regulations for removal or remediation costs, governmental penalties, property damage, personal injuries and related expenses. Payment of such costs and expenses could adversely affect our ability to make distributions or payments to our investors. Competition for acquisitions may result in increased prices for properties: We plan to acquire additional properties in New Jersey, New York and Pennsylvania and in the Northeast generally. We may be competing for investment opportunities with entities that have greater financial resources and more experienced managers. Several office building developers and real estate companies may compete with us in seeking properties for acquisition, land for development and prospective tenants. Such competition may adversely affect our ability to make distributions or payments to our investors by: o reducing the number of suitable investment opportunities offered to us; o increasing the bargaining power of property owners; o interfering with our ability to attract and retain tenants; o increasing vacancies which lowers market rental rates and limits our ability to negotiate rental rates; and/or o adversely affecting our ability to minimize expenses of operation. Development of real estate could be costly: As part of our operating strategy, we may acquire land for development under certain conditions. Included among the risks of the real estate development business are the following, which may adversely affect our ability to make distributions or payments to our investors: o financing for development projects may not be available on favorable terms; o long-term financing may not be available upon completion of construction; and o failure to complete construction on schedule or within budget may increase debt service expense and construction costs. Property ownership through joint ventures could subject us to the contrary business objectives of our co-venturers: We, from time to time, invest in joint ventures or partnerships in which we do not hold a controlling interest. These investments involve risks that do not exist with properties in which we own a controlling interest, including the possibility that our co-venturers or partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives. Because we lack a controlling interest, our co-venturers or partners may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. Our organizational documents do not limit the amount of available funds that we may invest in joint ventures or partnerships. If the objectives of our co-venturers or partners are inconsistent with ours, it may adversely affect our ability to make distributions or payments to our investors. 11 Debt financing could adversely affect our economic performance. Scheduled debt payments and refinancing could adversely affect our financial condition: We are subject to the risks normally associated with debt financing. These risks, including the following, may adversely affect our ability to make distributions or payments to our investors: o our cash flow may be insufficient to meet required payments of principal and interest; o payments of principal and interest on borrowings may leave us with insufficient cash resources to pay operating expenses; o we may not be able to refinance indebtedness on our properties at maturity; and o if refinanced, the terms of refinancing may not be as favorable as the original terms of the related indebtedness. As of December 31, 2000, we had total outstanding indebtedness of $1.6 billion comprised of $798.1 million of senior unsecured notes, outstanding borrowings of $348.8 million under our unsecured $800.0 million revolving credit facility and approximately $481.6 million of mortgage indebtedness. We may have to refinance the principal due on our indebtedness at maturity, and we may not be able to refinance any indebtedness we incur in the future. If we are unable to refinance our indebtedness on acceptable terms, or at all, events or conditions that may adversely affect our ability to make distributions or payments to our investors include the following: o we may need to dispose of one or more of our properties upon disadvantageous terms; o prevailing interest rates or other factors at the time of refinancing could increase interest rates and, therefore, our interest expense; o if we mortgage property to secure payment of indebtedness and are unable to meet mortgage payments, the mortgagee could foreclose upon such property or appoint a receiver to receive an assignment of our rents and leases; and o foreclosures upon mortgaged property could create taxable income without accompanying cash proceeds and, therefore, hinder our ability to meet the real estate investment trust distribution requirements of the Internal Revenue Code. Rising interest rates may adversely affect our cash flow: Outstanding borrowings of approximately $348.8 million (as of December 31, 2000) under our revolving credit facilities and approximately $32.2 million (as of December 31, 2000) of our mortgage indebtedness bear interest at variable rates. We may incur additional indebtedness in the future that also bears interest at variable rates. Variable rate debt creates higher debt service requirements if market interest rates increase. Higher debt service requirements could adversely affect our ability to make distributions or payments to our investors or cause us to default under certain debt covenants. Our degree of leverage could adversely affect our cash flow: We fund acquisition opportunities and development partially through short-term borrowings (including our revolving credit facilities), as well as from proceeds from property sales and undistributed cash. We expect to refinance projects purchased with short-term debt either with long-term indebtedness or equity financing depending upon the economic conditions at the time of refinancing. The Board of Directors of Mack-Cali Realty Corporation, our general partner, has a general policy of limiting the ratio of our indebtedness to total undepreciated assets (total debt as a percentage of total undepreciated assets) to 50 percent or less, although there is no limit in Mack-Cali Realty Corporation's or our organizational documents on the amount of indebtedness that we may incur. However, we have entered into certain financial agreements which contain financial and operating covenants that limit our ability under certain circumstances to incur additional secured and unsecured indebtedness. The Board of Directors could alter or eliminate its current policy on borrowing at any time in its discretion. If this policy were changed, we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our cash flow and our ability to make distributions or payments to our investors and could cause an increased risk of default on our obligations. 12 Any unsecured indebtedness that we may issue is effectively subordinated to our secured indebtedness and indebtedness of our subsidiaries: Any unsecured indebtedness that we may issue will be effectively subordinated to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness and indebtedness of our subsidiaries. As of December 31, 2000, our total secured indebtedness (including secured indebtedness issued by our subsidiaries) was approximately $481.6 million. Consequently, in the event we are involved in a bankruptcy, liquidation, dissolution, reorganization or similar proceeding, the holders of any secured indebtedness will be entitled to proceed against the collateral that secures any such secured indebtedness, and such collateral will not be available for satisfaction of any amounts owned under our unsecured indebtedness, including the notes. In addition, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding of our subsidiaries, holders of indebtedness of our subsidiaries (whether secured or unsecured) and trade creditors of our subsidiaries generally will be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us. We are dependent on our key personnel whose continued service is not guaranteed. We are dependent upon our executive officers for strategic business direction and real estate experience. While we believe that we could find replacements for these key personnel, loss of their services could adversely affect our operations. We have entered into an employment agreement (including non-competition provisions) which provides for a continuous four-year employment term with each of Mitchell E. Hersh, Timothy M. Jones, Barry Lefkowitz and Roger W. Thomas. We also have entered into an employment agreement (including non-competition provisions) with Michael A. Grossman which provides for an initial three year employment term and a continuous one-year term from and after the two-year anniversary of the execution of the agreement. We do not have key man life insurance for our executive officers. Consequences of failure to qualify as a real estate investment trust could adversely affect our financial condition. Failure to maintain ownership limits could cause us to lose our qualification as a real estate investment trust: In order for Mack-Cali Realty Corporation to maintain its qualification as a real estate investment trust, not more than 50 percent in value of its outstanding stock may be actually and/or constructively owned by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities). Mack-Cali Realty Corporation limited the ownership of the outstanding shares of its common stock by any single stockholder to 9.8 percent of the outstanding shares of its common stock. The Board of Directors of Mack-Cali Realty Corporation could waive this restriction if it was satisfied, based upon the advice of tax counsel or otherwise, that such action would be in the best interests of Mack-Cali Realty Corporation and would not affect its qualifications as a real estate investment trust. Common stock of Mack-Cali Realty Corporation acquired or transferred in breach of the limitation may be redeemed by Mack-Cali Realty Corporation for the lesser of the price paid and the average closing price for the 10 trading days immediately preceding redemption or sold at the direction of Mack-Cali Realty Corporation. Mack-Cali Realty Corporation may elect to redeem such shares of common stock for limited partnership units, which are nontransferable except in very limited circumstances. Any transfer of shares of common stock which, as a result of such transfer, causes Mack-Cali Realty Corporation to be in violation of any ownership limit will be deemed void. Although Mack-Cali Realty Corporation currently intends to continue to operate in a manner which will enable Mack-Cali Realty Corporation to continue to qualify as a real estate investment trust, it is possible that future economic, market, legal, tax or other considerations may cause Mack-Cali Realty Corporation's Board of Directors to revoke the election for Mack-Cali Realty Corporation to qualify as a real estate investment trust. Under Mack-Cali Realty Corporation's organizational documents, its Board of Directors can make such revocation without the consent of Mack-Cali Realty Corporation's stockholders. In addition, the consent of the holders of at least 85 percent of our partnership units is required: (i) to merge (or permit the merger of) us with another unrelated person, pursuant to a transaction in which we are not the surviving entity; (ii) to dissolve, liquidate or wind us up; or (iii) to convey or otherwise transfer all or substantially all of our assets. As of December 31, 2000, Mack-Cali Realty Corporation, as our general partner, owned approximately 79.9 percent of our outstanding partnership units (assuming conversion of all preferred limited partnership units). 13 Tax liabilities as a consequence of failure to qualify as a real estate investment trust: Mack-Cali Realty Corporation has elected to be treated and has operated so as to qualify as a real estate investment trust for federal income tax purposes since its taxable year ended December 31, 1994. Although Mack-Cali Realty Corporation believes it will continue to operate in such manner, we cannot guarantee that Mack-Cali Realty Corporation will do so. Qualification as a real estate investment trust involves the satisfaction of various requirements (some on an annual and quarterly basis) established under highly technical and complex tax provisions of the Internal Revenue Code. Because few judicial or administrative interpretations of such provisions exist and qualification determinations are fact sensitive, we cannot assure you that Mack-Cali Realty Corporation will qualify as a real estate investment trust for any taxable year. If Mack-Cali Realty Corporation fails to qualify as a real estate investment trust in any taxable year, it will be subject to the following: o it will not be allowed a deduction for dividends to shareholders; o it will be subject to federal income tax at regular corporate rates, including any alternative minimum tax, if applicable; and o unless it is entitled to relief under certain statutory provisions, it will not be permitted to qualify as a real estate investment trust for the four taxable years following the year during which it was disqualified. A loss of Mack-Cali Realty Corporation's status as a real estate investment trust could have an adverse effect on us. Failure to qualify as a real estate investment trust also would eliminate the requirement that Mack-Cali Realty Corporation pay dividends to our stockholders. Other tax liabilities: Even if Mack-Cali Realty Corporation qualifies as a real estate investment trust, it is subject to certain federal, state and local taxes on our income and property and, in some circumstances, certain other state taxes. Our net income from third party management and tenant improvements, if any, also may be subject to federal income tax. Risk of changes in the tax law applicable to real estate investment trusts: Since the Internal Revenue Service, the United States Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any of such legislative action may prospectively or retroactively modify our and Mack-Cali Realty Corporation's tax treatment and, therefore, may adversely affect taxation of us, Mack-Cali Realty Corporation, and/or investors. There is no public market for our unsecured indebtedness. We may issue debt securities for which there is no active trading market. If traded after their initial issuance, such securities may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities, our financial condition and performance and other factors beyond our control, including general economic conditions. We may not list our debt securities on any securities exchange. Disclosure Regarding Forward-Looking Statements The Operating Partnership considers portions of this information to be forward-looking statements. Such forward-looking statements relate to, without limitation, the Operating Partnership's future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "anticipate," "estimate" or "continue" or comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Operating Partnership cannot predict with accuracy and some of which the Operating Partnership might not even anticipate. Although the Operating Partnership believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. See "Risk Factors" for a discussion of important factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from those presented in the forward-looking statements. 14 ITEM 2. PROPERTIES PROPERTY LIST As of December 31, 2000, the Operating Partnership's Consolidated Properties consisted of 248 in-service office, office/flex and industrial/warehouse properties, ranging from one to 20 stories, as well as two multi-family residential properties, two stand-alone retail properties and three land leases. The Consolidated Properties are located primarily in the Northeast. The Consolidated Properties are easily accessible from major thoroughfares and are in close proximity to numerous amenities. The Consolidated Properties contain a total of approximately 26.7 million square feet, with the individual properties ranging from approximately 6,200 to 761,200 square feet. The Consolidated Properties, managed by on-site employees, generally have attractively landscaped sites, atriums and covered parking in addition to quality design and construction. The Operating Partnership's tenants include many service sector employers, including a large number of professional firms and national and international businesses. The Operating Partnership believes that all of its properties are well-maintained and do not require significant capital improvements. 15 Property Listing Office Properties
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- ATLANTIC COUNTY, NEW JERSEY Egg Harbor 100 Decadon Drive...................... 1987 40,422 82.1 770 755 0.16 200 Decadon Drive...................... 1991 39,922 95.3 728 687 0.15 BERGEN COUNTY, NEW JERSEY Fair Lawn 17-17 Route 208 North.................. 1987 143,000 98.3 3,498 3,381 0.72 Fort Lee One Bridge Plaza....................... 1981 200,000 93.5 4,853 4,591 1.00 2115 Linwood Avenue.................... 1981 68,000 99.7 1,255 1,132 0.26 Little Ferry 200 Riser Road......................... 1974 286,628 100.0 1,869 1,869 0.39 Montvale 95 Chestnut Ridge Road................. 1975 47,700 100.0 569 569 0.12 135 Chestnut Ridge Road................ 1981 66,150 99.7 915 843 0.19 Paramus 15 East Midland Avenue................. 1988 259,823 100.0 6,731 6,727 1.39 461 From Road.......................... 1988 253,554 99.8 6,036 6,027 1.25 650 From Road.......................... 1978 348,510 87.5 7,290 7,261 1.50 140 Ridgewood Avenue .................. 1981 239,680 100.0 5,266 5,211 1.09 61 South Paramus Avenue................ 1985 269,191 100.0 6,124 5,683 1.26 Rochelle Park 120 Passaic Street..................... 1972 52,000 99.6 954 933 0.20 365 West Passaic Street................ 1976 212,578 95.7 3,907 3,636 0.81 Saddle River 1 Lake Street.......................... 1973/94 474,801 100.0 7,465 7,465 1.54 Upper Saddle River 10 Mountainview Road................... 1986 192,000 100.0 3,972 3,909 0.82 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ ATLANTIC COUNTY, NEW JERSEY Egg Harbor 100 Decadon Drive...................... 23.20 22.75 Computer Sciences Corp. (81%) 200 Decadon Drive...................... 19.13 18.06 Computer Sciences Corp. (45%), Advanced Casino Systems Corp. (33%), Dimensions International Inc. (15%) BERGEN COUNTY, NEW JERSEY Fair Lawn 17-17 Route 208 North.................. 24.88 24.05 Lonza, Inc. (63%), Boron-Lepore Assoc., Inc. (16%) Fort Lee One Bridge Plaza....................... 25.95 24.55 PricewaterhouseCoopers, LLP (35%), Broadview Associates LLP (16%), Bozell Worldwide, Inc. (16%) 2115 Linwood Avenue.................... 18.51 16.70 US Depot Inc. (23%), Ameribrom Inc. (14%), Mack Management & Construction (11%), Morgan Stanley Dean Witter (10%) Little Ferry 200 Riser Road......................... 6.52 6.52 Ford Motor Company (34%), Dassault Falcon Jet Corp. (33%), Sanyo Fischer Services Corp. (33%) Montvale 95 Chestnut Ridge Road................. 11.93 11.93 Aventis Environmental Science (100%) 135 Chestnut Ridge Road................ 13.87 12.78 Paychex Inc. (45%), Automated Resources Group Inc. (26%), Sys-Con Publications Inc. (11%), Lexmark International (10%) Paramus 15 East Midland Avenue................. 25.91 25.89 Cellular Telephone Company (100%) 461 From Road.......................... 23.85 23.82 Toys 'R' Us, Inc. (96%) 650 From Road.......................... 23.91 23.81 Movado Group Inc. (17%), Long Beach Acceptance Corp. (10%) 140 Ridgewood Avenue .................. 21.97 21.74 Cellular Telephone Company (57%), Smith Barney Shearson Inc. (19%) 61 South Paramus Avenue................ 22.75 21.11 -- Rochelle Park 120 Passaic Street..................... 18.42 18.01 SBC Telecom Inc. (53%), Cantor Fitzgerald LP (46%) 365 West Passaic Street................ 19.20 17.87 United Retail Inc. (31%), Catalina Marketing Corp. (10%), Regulus LLC (10%) Saddle River 1 Lake Street.......................... 15.72 15.72 Prentice-Hall Inc. (100%) Upper Saddle River 10 Mountainview Road................... 20.69 20.36 Thomson Minwax Company (23%), Professional Detailing Inc. (20%), Corning Life Sciences Inc. (15%), ITT Fluid Technology (14%), Pearson Education (14%)
16 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- Woodcliff Lake 400 Chestnut Ridge Road................ 1982 89,200 100.0 2,131 2,131 0.44 470 Chestnut Ridge Road................ 1987 52,500 100.0 1,192 1,192 0.25 530 Chestnut Ridge Road................ 1986 57,204 100.0 1,166 1,166 0.24 50 Tice Boulevard...................... 1984 235,000 95.5 4,881 4,291 1.01 300 Tice Boulevard..................... 1991 230,000 100.0 4,967 4,920 1.02 BURLINGTON COUNTY, NEW JERSEY Moorestown 224 Strawbridge Drive.................. 1984 74,000 98.1 1,368 1,094 0.28 228 Strawbridge Drive.................. 1984 74,000 100.0 1,434 1,081 0.30 ESSEX COUNTY, NEW JERSEY Millburn 150 J.F. Kennedy Parkway............... 1980 247,476 100.0 6,182 6,127 1.28 Roseland 101 Eisenhower Parkway................. 1980 237,000 97.5 4,200 3,899 0.87 103 Eisenhower Parkway................. 1985 151,545 100.0 3,350 3,059 0.69 HUDSON COUNTY, NEW JERSEY Jersey City 95 Christopher Columbus Drive (8)...... 1989 -- -- 3,850 3,844 0.79 Harborside Financial Center Plaza 1.... 1983 400,000 99.0 3,336 3,333 0.69 Harborside Financial Center Plaza 2.... 1990 761,200 100.0 18,523 17,908 3.82 Harborside Financial Center Plaza 3.... 1990 725,600 100.0 17,654 17,067 3.64 Harborside Financial Center Plaza 4-A (7)........................ 2000 207,670 88.7 1,279 1,225 0.26 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ Woodcliff Lake 400 Chestnut Ridge Road................ 23.89 23.89 Timeplex, Inc. (100%) 470 Chestnut Ridge Road................ 22.70 22.70 Andermatt LP (100%) 530 Chestnut Ridge Road................ 20.38 20.38 KPMG Peat Marwick, LLP (100%) 50 Tice Boulevard...................... 21.75 19.12 Syncsort, Inc. (25%) 300 Tice Boulevard..................... 21.60 21.39 Chase Home Mortgage Corp. (25%), Medco Containment Services (20%), Comdisco, Inc. (13%), NYCE Corp. (11%) BURLINGTON COUNTY, NEW JERSEY Moorestown 224 Strawbridge Drive.................. 18.84 15.07 Allstate Insurance Company (49%), Harleysville Mutual Insurance (27%) 228 Strawbridge Drive.................. 19.38 14.61 Cendant Mortgage Corporation (100%) ESSEX COUNTY, NEW JERSEY Millburn 150 J.F. Kennedy Parkway............... 24.98 24.76 KPMG Peat Marwick, LLP (42%), Budd Larner Gross Et Al (23%) Roseland 101 Eisenhower Parkway................. 18.18 16.87 Arthur Andersen, LLP (31%), Brach, Eichler, Rosenberg, Silver, Bernstein & Hammer (13%) 103 Eisenhower Parkway................. 22.11 20.19 Chelsea GCA Realty Corp. (18%), Lum, Danzis, Drasco Positan & Kleinberg (15%), Netplex Group Inc. (12%), Salomon Smith Barney, Inc. (11%) HUDSON COUNTY, NEW JERSEY Jersey City 95 Christopher Columbus Drive (8)...... -- -- -- Harborside Financial Center Plaza 1.... 8.42 8.42 Bankers Trust Harborside, Inc. (96%) Harborside Financial Center Plaza 2.... 24.33 23.53 Morgan Stanley Dean Witter (35%), Dow Jones Telerate Systems, Inc. (24%), DLJ Securities Corp. (15%), Lewco Securities (11%) Harborside Financial Center Plaza 3.... 24.33 23.52 AICPA (34%), BTM Information Services, Inc. (19%) Harborside Financial Center Plaza 4-A (7)........................ 36.44(9) 34.90(9) Waterhouse Securities Inc. (89%)
17 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- MERCER COUNTY, NEW JERSEY Princeton 103 Carnegie Center.................... 1984 96,000 100.0 2,302 2,124 0.47 100 Overlook Center ................... 1988 149,600 88.9 3,338 3,285 0.69 5 Vaughn Drive......................... 1987 98,500 100.0 2,312 2,163 0.48 MIDDLESEX COUNTY, NEW JERSEY East Brunswick 377 Summerhill Road.................... 1977 40,000 100.0 373 370 0.08 Plainsboro 500 College Road East.................. 1984 158,235 100.0 3,404 3,374 0.70 South Brunswick 3 Independence Way..................... 1983 111,300 100.0 2,166 2,116 0.45 Woodbridge 581 Main Street........................ 1991 200,000 100.0 4,699 4,617 0.97 MONMOUTH COUNTY, NEW JERSEY Neptune 3600 Route 66.......................... 1989 180,000 100.0 2,410 2,410 0.50 Wall Township 1305 Campus Parkway.................... 1988 23,350 82.3 472 460 0.10 1350 Campus Parkway.................... 1990 79,747 99.9 1,393 1,295 0.29 MORRIS COUNTY, NEW JERSEY Florham Park 325 Columbia Turnpike.................. 1987 168,144 100.0 4,107 3,684 0.85 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ MERCER COUNTY, NEW JERSEY Princeton 103 Carnegie Center.................... 23.98 22.13 Ronin Development Corp. (15%), R.G. Vanderweil Engineers (14%), Kurt Salmon Assoc. Inc. (11%) 100 Overlook Center ................... 25.10 24.70 Regus Business Centre Corp. (26%), Xerox Corporation (23%), Paine Webber Inc. (14%) 5 Vaughn Drive......................... 23.47 21.96 U.S. Trust Company of NJ (19%), Princeton Venture Research Corp. (14%), Villeroy & Boch Tableware Ltd. (14%), Woodrow Wilson National Fellowship Foundation (14%) MIDDLESEX COUNTY, NEW JERSEY East Brunswick 377 Summerhill Road.................... 9.33 9.25 Greater New York Mutual Insurance Company (100%) Plainsboro 500 College Road East.................. 21.51 21.32 SSB Realty, LLC (72%), Buchanan Ingersoll P.C. (17%), PNC Bank, N.A. (10%) South Brunswick 3 Independence Way..................... 19.46 19.01 Merrill Lynch Pierce Fenner & Smith (84%) Woodbridge 581 Main Street........................ 23.50 23.09 First Investors Management Company, Inc. (38%), Cast North America Ltd. (11%) MONMOUTH COUNTY, NEW JERSEY Neptune 3600 Route 66.......................... 13.39 13.39 United States Life Insurance Company (100%) Wall Township 1305 Campus Parkway.................... 24.56 23.94 Waterford Wedgewood USA Inc. (41%), McLaughlin, Bennett, Gelson (35%) 1350 Campus Parkway.................... 17.49 16.26 Meridan Health Realty Corp. (22%), Milestone Material Inc. (18%), Stephen E. Gertler Law Office (17%), Amper Politzner & Mattia PA (11%), Health Care Software (11%), Sportsgolf L.L.C. (11%) MORRIS COUNTY, NEW JERSEY Florham Park 325 Columbia Turnpike.................. 24.43 21.91 Bressler Amery & Ross (24%), Salomon Smith Barney Inc. (13%), Atlantic Health Systems (12%), Dun & Bradstreet Inc. (12%)
18 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- Morris Plains 250 Johnson Road....................... 1977 75,000 100.0 1,300 1,264 0.27 201 Littleton Road..................... 1979 88,369 100.0 1,880 1,860 0.39 Morris Township 340 Mt. Kemble Avenue.................. 1985 387,000 100.0 5,530 5,530 1.14 412 Mt. Kemble Avenue (8).............. 1986 -- -- 3,030 3,030 0.63 Parsippany 7 Campus Drive......................... 1982 154,395 100.0 2,552 2,551 0.53 8 Campus Drive ........................ 1987 215,265 100.0 5,517 5,324 1.14 2 Dryden Way........................... 1990 6,216 100.0 67 67 0.01 4 Gatehall Drive (7)................... 1988 248,480 90.8 3,170 3,170 0.65 2 Hilton Court......................... 1991 181,592 100.0 4,693 4,656 0.97 600 Parsippany Road.................... 1978 96,000 100.0 1,583 1,499 0.33 1 Sylvan Way........................... 1989 150,557 100.0 3,507 3,103 0.72 5 Sylvan Way........................... 1989 151,383 100.0 3,519 3,459 0.73 7 Sylvan Way........................... 1987 145,983 100.0 2,919 2,919 0.60 PASSAIC COUNTY, NEW JERSEY Clifton 777 Passaic Avenue..................... 1983 75,000 89.1 954 857 0.20 Totowa 999 Riverview Drive.................... 1988 56,066 100.0 1,014 946 0.21 Wayne 201 Willowbrook Boulevard.............. 1970 178,329 99.0 2,407 2,392 0.50 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ Morris Plains 250 Johnson Road....................... 17.33 16.85 Electronic Data Systems Corp. (100%) 201 Littleton Road..................... 21.27 21.05 Xerox Corporation (50%), Willis Corroon Corp. of New Jersey (20%), Bozell Worldwide Inc. (19%), CHEP USA (11%) Morris Township 340 Mt. Kemble Avenue.................. 14.29 14.29 AT&T Corporation (100%) 412 Mt. Kemble Avenue (8).............. -- -- -- Parsippany 7 Campus Drive......................... 16.53 16.52 Nabisco Inc. (100%) 8 Campus Drive ........................ 25.63 24.73 Prudential Insurance Co. (31%), Bay Networks Inc. (27%), MCI Telecommunications Corp. (18%), Ayco Company L.P. (13%) 2 Dryden Way........................... 10.78 10.78 Bright Horizons Childrens Center (100%) 4 Gatehall Drive (7)................... 25.51 25.51 J.B. Hanauer & Company (20%), Royal Indemnity Company (13%), Toyota Motor Credit Corp. (12%) 2 Hilton Court......................... 25.84 25.64 Deloitte & Touche USA LLP (64%), Northern Telecom Inc. (16%), Sankyo Parke Davis (11%) 600 Parsippany Road.................... 16.49 15.61 Exario Networks Inc. (36%), Sharemax.com (32%) 1 Sylvan Way........................... 23.29 20.61 Cendant Operations Inc. (99%) 5 Sylvan Way........................... 23.25 22.85 Integrated Communications (41%), Experian Information Solution (15%), DRS Technologies Inc. (12%) 7 Sylvan Way........................... 20.00 20.00 Nabisco Inc. (100%) PASSAIC COUNTY, NEW JERSEY Clifton 777 Passaic Avenue..................... 14.28 12.82 Grosvenor Marketing Ltd. (10%) Totowa 999 Riverview Drive.................... 18.09 16.87 Medical Logistics Inc. (36%), Telsource Corporation (19%), Humana Press (15%), Bankers Financial Corp. (10%) Wayne 201 Willowbrook Boulevard.............. 13.63 13.55 The Grand Union Company (76%), Woodward-Clyde Consultants (23%)
19 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- SOMERSET COUNTY, NEW JERSEY Basking Ridge 222 Mt. Airy Road...................... 1986 49,000 100.0 745 692 0.15 233 Mt. Airy Road...................... 1987 66,000 100.0 762 712 0.16 Bernards 106 Allen Road (7)..................... 2000 132,010 72.5 279 234 0.06 Bridgewater 721 Route 202/206...................... 1989 192,741 100.0 4,286 4,142 0.88 UNION COUNTY, NEW JERSEY Clark 100 Walnut Avenue...................... 1985 182,555 97.5 4,568 4,001 0.94 Cranford 6 Commerce Drive....................... 1973 56,000 93.0 1,029 964 0.21 11 Commerce Drive (6).................. 1981 90,000 93.2 1,023 908 0.21 12 Commerce Drive...................... 1967 72,260 96.3 604 603 0.12 20 Commerce Drive...................... 1990 176,600 100.0 4,065 3,674 0.84 65 Jackson Drive....................... 1984 82,778 100.0 1,600 1,213 0.33 New Providence 890 Mountain Road...................... 1977 80,000 100.0 2,250 2,238 0.46 - ---------------------------------------------------------------------------------------------------------------------------- Total New Jersey Office 11,430,809 98.0 229,544 220,922 47.39 - ---------------------------------------------------------------------------------------------------------------------------- DUTCHESS COUNTY, NEW YORK Fishkill 300 South Lake Drive................... 1987 118,727 97.3 2,184 2,157 0.45 NASSAU COUNTY, NEW YORK North Hempstead 600 Community Drive.................... 1983 206,274 100.0 4,808 4,808 0.99 111 East Shore Road.................... 1980 55,575 100.0 1,518 1,514 0.31 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ SOMERSET COUNTY, NEW JERSEY Basking Ridge 222 Mt. Airy Road...................... 15.20 14.12 Avaya Inc. (100%) 233 Mt. Airy Road...................... 11.55 10.79 Avaya Inc. (100%) Bernards 106 Allen Road (7)..................... 24.84(9) 20.83(9) KPMG Consulting LLC (59%) Bridgewater 721 Route 202/206...................... 22.24 21.49 Allstate Insurance Company (37%), Norris, McLaughlin & Marcus, PA (30%) UNION COUNTY, NEW JERSEY Clark 100 Walnut Avenue...................... 25.66 22.48 CAP Gemini America Inc. (54%), Equitable Life Assurance (10%), Mastercare Companies Inc. (10%) Cranford 6 Commerce Drive....................... 19.76 18.51 Kendle International Inc. (50%) 11 Commerce Drive (6).................. 12.20 10.82 Northeast Administrators (10%) 12 Commerce Drive...................... 8.68 8.67 Dames & Moore (40%), Registrar & Transfer Company (36%) 20 Commerce Drive...................... 23.02 20.80 Public Service Electric & Gas Company (26%), Quintiles Inc. (21%) 65 Jackson Drive....................... 19.33 14.65 Kraft General Foods, Inc. (35%), Allstate Insurance Company (27%), Procter & Gamble Distribution Co., Inc. (18%), Provident Companies Inc. (14%) New Providence 890 Mountain Road...................... 28.13 27.98 Aspen Technology Inc. (52%), Dun & Bradstreet (27%), K Line America, Inc. (16%) - ------------------------------------------------------------------------------------------------------------------------------------ Total New Jersey Office 21.01 20.22 - ------------------------------------------------------------------------------------------------------------------------------------ DUTCHESS COUNTY, NEW YORK Fishkill 300 South Lake Drive................... 18.91 18.67 Allstate Insurance Company (16%) NASSAU COUNTY, NEW YORK North Hempstead 600 Community Drive.................... 23.31 23.31 CMP Media, Inc. (100%) 111 East Shore Road.................... 27.31 27.24 Administrators For The Professions, Inc. (100%)
20 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- ROCKLAND COUNTY, NEW YORK Suffern 400 Rella Boulevard.................... 1988 180,000 99.8 3,631 3,463 0.75 WESTCHESTER COUNTY, NEW YORK Elmsford 100 Clearbrook Road (6)................ 1975 60,000 91.7 938 869 0.19 101 Executive Boulevard................ 1971 50,000 79.3 801 772 0.17 555 Taxter Road (7).................... 1986 170,554 100.0 2,457 2,457 0.51 565 Taxter Road (7).................... 1988 170,554 86.6 2,052 2,047 0.42 570 Taxter Road........................ 1972 75,000 96.5 1,456 1,398 0.30 Hawthorne 30 Saw Mill River Road................. 1982 248,400 100.0 5,215 4,301 1.07 1 Skyline Drive........................ 1980 20,400 99.0 300 289 0.06 2 Skyline Drive........................ 1987 30,000 98.9 479 435 0.10 7 Skyline Drive........................ 1987 109,000 100.0 2,196 2,193 0.45 17 Skyline Drive....................... 1989 85,000 100.0 1,233 1,233 0.25 Tarrytown 200 White Plains Road.................. 1982 89,000 88.1 1,734 1,581 0.36 220 White Plains Road.................. 1984 89,000 95.4 2,117 2,020 0.44 White Plains 1 Barker Avenue........................ 1975 68,000 99.0 1,605 1,568 0.33 3 Barker Avenue........................ 1983 65,300 93.3 1,251 1,217 0.26 50 Main Street......................... 1985 309,000 99.6 7,641 7,216 1.58 11 Martine Avenue...................... 1987 180,000 100.0 4,529 4,192 0.93 1 Water Street......................... 1979 45,700 99.8 1,048 1,014 0.22 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ ROCKLAND COUNTY, NEW YORK Suffern 400 Rella Boulevard.................... 20.21 19.28 The Prudential Insurance Co. (21%), Provident Savings Bank F.A. (20%), Allstate Insurance Company (19%) WESTCHESTER COUNTY, NEW YORK Elmsford 100 Clearbrook Road (6)................ 17.05 15.79 MIM Corporation (18%), Amerihealth Inc. (13%) 101 Executive Boulevard................ 20.20 19.47 Pennysaver Group Inc. (23%), MCS Business Solutions Inc. (11%) 555 Taxter Road (7).................... 23.58 23.58 Fuji Photo Film USA Inc. (64%), Royal Indemnity Company (12%) 565 Taxter Road (7).................... 22.74 22.68 Nextel of New York Inc. (29%), KLM Royal Dutch Airlines (10%), Nationwide Mutual Insurance (10%) 570 Taxter Road........................ 20.12 19.32 New York State United Teachers Association (11%), Wilder Balter Partners LLC (11%) Hawthorne 30 Saw Mill River Road................. 20.99 17.31 IBM Corporation (100%) 1 Skyline Drive........................ 14.85 14.31 Boxx International Corp. (50%), Childtime Childcare Inc. (49%) 2 Skyline Drive........................ 16.14 14.66 MW Samara (56%), Perini Construction (43%) 7 Skyline Drive........................ 20.15 20.12 E.M. Industries Inc. (42%), Cortlandt Group Inc. (14%) 17 Skyline Drive....................... 14.51 14.51 IBM Corporation (100%) Tarrytown 200 White Plains Road.................. 22.11 20.16 Allmerica Financial (17%), Independent Health Associates Inc., (17%), NYS Dept. of Environmental Services (13%) 220 White Plains Road.................. 24.93 23.79 Eagle Family Foods Inc. (17%), ATM Services Inc. (10%) White Plains 1 Barker Avenue........................ 23.84 23.29 O'Connor McGuinn Conte (19%), United Skys Realty Corp. (18%) 3 Barker Avenue........................ 20.53 19.98 Bernard C. Harris Publishing Co. Inc. (56%), TNS Intersearch Corporation (10%) 50 Main Street......................... 24.83 23.45 TMP Worldwide Inc. (15%), National Economic Research (10%) 11 Martine Avenue...................... 25.16 23.29 Salomon Smith Barney Inc. (12%), McCarthy Fingar Donovan Et Al (11%), David Worby (11%), Dean Witter Reynolds Inc. (11%) 1 Water Street......................... 22.98 22.23 Trigen Energy Company (48%), Stewart Title Insurance Co. (16%)
21 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- Yonkers 1 Executive Boulevard.................. 1982 112,000 100.0 2,380 2,252 0.49 3 Executive Plaza...................... 1987 58,000 100.0 1,418 1,371 0.29 - ---------------------------------------------------------------------------------------------------------------------------- Total New York Office 2,595,484 97.5 52,991 50,367 10.92 - ---------------------------------------------------------------------------------------------------------------------------- CHESTER COUNTY, PENNSYLVANIA Berwyn 1000 Westlakes Drive................... 1989 60,696 93.6 1,485 1,476 0.31 1055 Westlakes Drive................... 1990 118,487 42.9 2,305 2,305 0.48 1205 Westlakes Drive................... 1988 130,265 99.8 2,875 2,836 0.59 1235 Westlakes Drive................... 1986 134,902 100.0 3,229 3,130 0.67 DELAWARE COUNTY, PENNSYLVANIA Lester 100 Stevens Drive...................... 1986 95,000 100.0 1,703 1,593 0.35 200 Stevens Drive...................... 1987 208,000 100.0 4,227 4,011 0.87 300 Stevens Drive...................... 1992 68,000 92.3 1,414 1,359 0.29 Media 1400 Providence Road - Center I........ 1986 100,000 86.4 1,797 1,713 0.37 1400 Providence Road - Center II....... 1990 160,000 80.3 2,923 2,752 0.60 MONTGOMERY COUNTY, PENNSYLVANIA Lower Providence 1000 Madison Avenue.................... 1990 100,700 100.0 1,803 1,769 0.37 Plymouth Meeting 1150 Plymouth Meeting Mall............. 1970 167,748 91.8 2,766 2,718 0.57 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ Yonkers 1 Executive Boulevard.................. 21.25 20.11 Wise Contact US Optical Corp. (12%), AVR Realty Company (11%), Protective Tech International (11%), York, International Agency Inc. (11%) 3 Executive Plaza...................... 24.45 23.64 Montefiore Medical Center (45%), Metropolitan Life Insurance (21%), Allstate Insurance Company (20%), City & Suburban Federal Savings Bank (14%) - ------------------------------------------------------------------------------------------------------------------------------------ Total New York Office 22.08 21.05 - ------------------------------------------------------------------------------------------------------------------------------------ CHESTER COUNTY, PENNSYLVANIA Berwyn 1000 Westlakes Drive................... 26.14 25.98 Drinker Biddle & Reath (42%), PNC Bank, NA (38%) 1055 Westlakes Drive................... 45.35 45.35 Regus Business Centre Corp. (34%) 1205 Westlakes Drive................... 22.11 21.81 Provident Mutual Life Insurance Co. (35%), Oracle Corporation (30%), International Rehab Assoc. (10%) 1235 Westlakes Drive................... 23.94 23.20 Pepper Hamilton & Scheetz L.L.P. (22%), Ratner & Prestia (16%), Turner Investment Partners (10%) DELAWARE COUNTY, PENNSYLVANIA Lester 100 Stevens Drive...................... 17.93 16.77 Keystone Mercy Health Plan (100%) 200 Stevens Drive...................... 20.32 19.28 Keystone Mercy Health Plan (100%) 300 Stevens Drive...................... 22.53 21.65 Bluestone Software Inc. (39%), Keystone Mercy Health Plan (33%) Media 1400 Providence Road - Center I........ 20.80 19.83 General Services Admin. (13%), Erie Insurance Company (11%) 1400 Providence Road - Center II....... 22.75 21.42 Barnett International (36%) MONTGOMERY COUNTY, PENNSYLVANIA Lower Providence 1000 Madison Avenue.................... 17.90 17.57 Reality Online Inc. (42%), Banc One National Processing (21%), Danka Corporation (14%), Seton Company (12%) Plymouth Meeting 1150 Plymouth Meeting Mall............. 17.96 17.65 Computer Learning Centers, Inc. (18%), Ken-Crest Services (18%), Ikea US General Partners Inc. (14%), ECC Management Services (13%)
22 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- Five Sentry Parkway East............... 1984 91,600 100.0 1,499 1,494 0.31 Five Sentry Parkway West............... 1984 38,400 100.0 689 688 0.14 - ---------------------------------------------------------------------------------------------------------------------------- Total Pennsylvania Office 1,473,798 90.8 28,715 27,844 5.92 - ---------------------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CONNECTICUT Greenwich 500 West Putnam Avenue................. 1973 121,250 97.5 2,941 2,845 0.61 Norwalk 40 Richards Avenue..................... 1985 145,487 96.8 3,077 2,927 0.63 Shelton 1000 Bridgeport Avenue................. 1986 133,000 100.0 2,266 2,221 0.47 - ---------------------------------------------------------------------------------------------------------------------------- Total Connecticut Office 399,737 98.1 8,284 7,993 1.71 - ---------------------------------------------------------------------------------------------------------------------------- WASHINGTON, D.C. 1201 Connecticut Avenue, NW............ 1940 169,549 100.0 5,129 5,100 1.06 1400 L Street, NW...................... 1987 159,000 100.0 5,990 5,896 1.24 1709 New York Avenue, NW............... 1972 166,000 100.0 7,227 7,076 1.49 - ---------------------------------------------------------------------------------------------------------------------------- Total District of Columbia Office 494,549 100.0 18,346 18,072 3.79 - ---------------------------------------------------------------------------------------------------------------------------- PRINCE GEORGE'S COUNTY, MARYLAND Lanham 4200 Parliament Place.................. 1989 122,000 92.9 2,543 2,442 0.52 - ---------------------------------------------------------------------------------------------------------------------------- Total Maryland Office 122,000 92.9 2,543 2,442 0.52 - ---------------------------------------------------------------------------------------------------------------------------- 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------- Five Sentry Parkway East............... 16.36 16.31 Merck & Co. Inc. (77%), Selas Fluid Processing Corp. (23%) Five Sentry Parkway West............... 17.94 17.92 Merck & Co. Inc. (70%), David Cutler Group (30%) - ------------------------------------------------------------------------------------------------------------------------------- Total Pennsylvania Office 21.46 20.81 - ------------------------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CONNECTICUT Greenwich 500 West Putnam Avenue................. 24.88 24.07 Hachette Filipacchi Magazines (27%), McMahan Securities Co. LP (15%) Winklevoss Consultants Inc. (12%) Norwalk 40 Richards Avenue..................... 21.85 20.78 South Beach Beverage Co., LLC (14%), Media Horizons Inc. (11%), Programmed Solutions Inc. (10%) Shelton 1000 Bridgeport Avenue................. 17.04 16.70 William Carter Company (23%), Weseley Software Development (22%), Toyota Motor Credit Corporation (11%), LandStar Gemini Inc. (11%) - ------------------------------------------------------------------------------------------------------------------------------- Total Connecticut Office 21.13 20.39 - ------------------------------------------------------------------------------------------------------------------------------- WASHINGTON, D.C. 1201 Connecticut Avenue, NW............ 30.25 30.08 Zuckerman Spaeder Goldstein (29%), Leo A. Daly Company (17%), RFE/RL Inc. (16%) 1400 L Street, NW...................... 37.67 37.08 Winston & Strawn (68%) 1709 New York Avenue, NW............... 43.54 42.63 Board of Gov/Federal Reserve (70%), United States of America -GSA (25%) - ------------------------------------------------------------------------------------------------------------------------------- Total District of Columbia Office 37.10 36.54 - ------------------------------------------------------------------------------------------------------------------------------- PRINCE GEORGE'S COUNTY, MARYLAND Lanham 4200 Parliament Place.................. 22.44 21.55 Group I Software Inc. (45%), Infinity Broadcasting Company (16%), State Farm Mutual Auto Ins. Co. (11%) - ------------------------------------------------------------------------------------------------------------------------------- Total Maryland Office 22.44 21.55 - -------------------------------------------------------------------------------------------------------------------------------
23 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- BEXAR COUNTY, TEXAS San Antonio 200 Concord Plaza Drive................ 1986 248,700 97.4 4,371 4,324 0.90 84 N.E. Loop 410....................... 1971 187,312 89.9 2,545 2,528 0.53 1777 N.E. Loop 410..................... 1986 256,137 83.0 3,718 3,631 0.76 111 Soledad............................ 1918 248,153 93.0 2,621 2,532 0.54 COLLIN COUNTY, TEXAS Plano 555 Republic Place..................... 1986 97,889 85.0 1,421 1,346 0.29 DALLAS COUNTY,TEXAS Dallas 3030 LBJ Freeway (6)................... 1984 367,018 96.8 6,543 6,278 1.35 3100 Monticello........................ 1984 173,837 94.6 2,752 2,682 0.57 8214 Westchester....................... 1983 95,509 81.4 1,242 1,192 0.26 Irving 2300 Valley View....................... 1985 142,634 97.4 1,903 1,786 0.39 Richardson 1122 Alma Road......................... 1977 82,576 100.0 607 607 0.13 HARRIS COUNTY, TEXAS Houston 14511 Falling Creek.................... 1982 70,999 98.8 924 886 0.19 5225 Katy Freeway...................... 1983 112,213 97.1 1,468 1,338 0.30 5300 Memorial.......................... 1982 155,099 98.8 2,298 2,257 0.47 1717 St. James Place................... 1975 109,574 93.2 1,348 1,298 0.28 1770 St. James Place................... 1973 103,689 84.2 1,263 1,205 0.26 10497 Town & Country Way............... 1981 148,434 78.4 1,766 1,666 0.36 POTTER COUNTY, TEXAS Amarillo 6900 IH - 40 West (8).................. 1986 -- -- 190 190 0.04 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ BEXAR COUNTY, TEXAS San Antonio 200 Concord Plaza Drive................ 18.04 17.85 Merrill Lynch Pierce Fenner & Smith (12%) 84 N.E. Loop 410....................... 15.11 15.01 Pacificare of Texas, Inc. (30%), KBL Cable, Inc. (26%), Kraft General Foods Inc. (25%) 1777 N.E. Loop 410..................... 17.49 17.08 -- 111 Soledad............................ 11.36 10.97 SBC Communications, Inc. (38%) COLLIN COUNTY, TEXAS Plano 555 Republic Place..................... 17.08 16.18 William F. Smith Enterprises (22%), Target Corporation (14%) DALLAS COUNTY,TEXAS Dallas 3030 LBJ Freeway (6)................... 18.42 17.67 Club Corporation of America (39%) 3100 Monticello........................ 16.73 16.31 Insignia Commercial, Inc. (23%), Time Marketing Corporation/ Evans Group (12%), Heath Insurance Brokers, Inc. (11%), Tarragon Realty Adv. Inc. (11%), Summit Global Partners Texas (10%) 8214 Westchester....................... 15.98 15.33 Preston Business Center, Inc. (16%), Malone Mortgage Company America, Inc. (14%), State Bank & Trust Co. (11%) Irving 2300 Valley View....................... 13.70 12.86 Alltel Information Services, Inc. (18%), Computer Task Group, Inc. (12%), Tricon Restaurant Services (12%), US Personnel Inc. (12%) Richardson 1122 Alma Road......................... 7.35 7.35 MCI Telecommunications Corp. (100%) HARRIS COUNTY, TEXAS Houston 14511 Falling Creek.................... 13.17 12.63 Nationwide Mutual Insurance Company (17%) 5225 Katy Freeway...................... 13.47 12.28 State of Texas (17%) 5300 Memorial.......................... 15.00 14.73 Drypers Corporation (20%), Datavox, Inc. (20%), HCI Chemicals USA, Inc. (19%) 1717 St. James Place................... 13.20 12.71 MCX Corp (14%) 1770 St. James Place................... 14.47 13.80 Neosoft Inc. (10%), Houston Interweb Design Inc. (10%) 10497 Town & Country Way............... 15.18 14.32 Vastar Resources, Inc. (23%) POTTER COUNTY, TEXAS Amarillo 6900 IH - 40 West (8).................. -- -- --
24 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- TARRANT COUNTY, TEXAS Euless 150 West Parkway....................... 1984 74,429 91.0 1,062 1,030 0.22 TRAVIS COUNTY, TEXAS Austin 1250 Capital of Texas Hwy. South (8)... 1985 -- -- 4,164 4,106 0.86 - ---------------------------------------------------------------------------------------------------------------------------- Total Texas Office 2,674,202 92.1 42,206 40,882 8.70 - ---------------------------------------------------------------------------------------------------------------------------- MARICOPA COUNTY, ARIZONA Glendale 5551 West Talavi Boulevard............. 1991 181,596 100.0 1,730 1,722 0.36 Phoenix 19640 North 31st Street................ 1990 124,171 100.0 1,506 1,453 0.31 Scottsdale 9060 E. Via Linda Boulevard............ 1984 111,200 100.0 2,404 2,404 0.50 - ---------------------------------------------------------------------------------------------------------------------------- Total Arizona Office 416,967 100.0 5,640 5,579 1.17 - ---------------------------------------------------------------------------------------------------------------------------- ARAPAHOE COUNTY, COLORADO Aurora 750 South Richfield Street............. 1997 108,240 100.0 2,911 2,911 0.60 Denver 400 South Colorado Boulevard........... 1983 125,415 97.8 2,182 2,108 0.45 Englewood 9359 East Nichols Avenue............... 1997 72,610 100.0 903 903 0.19 5350 South Roslyn Street............... 1982 63,754 100.0 1,054 1,033 0.22 BOULDER COUNTY, COLORADO Broomfield 105 South Technology Court............. 1997 37,574 100.0 541 541 0.11 303 South Technology Court-A........... 1997 34,454 100.0 396 396 0.08 303 South Technology Court-B........... 1997 40,416 100.0 464 464 0.10 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------- TARRANT COUNTY, TEXAS Euless 150 West Parkway....................... 15.68 15.21 Warrantech Automotive, Inc. (40%), Mike Bowman Realtors/ Century 21 Inc. (17%), Landmark Bank-Mid Cities (16%) TRAVIS COUNTY, TEXAS Austin 1250 Capital of Texas Hwy. South (8)... -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- Total Texas Office 17.14 16.60 - ------------------------------------------------------------------------------------------------------------------------------- MARICOPA COUNTY, ARIZONA Glendale 5551 West Talavi Boulevard............. 9.53 9.48 Honeywell, Inc. (100%) Phoenix 19640 North 31st Street................ 12.13 11.70 American Express Travel Related Services Co., Inc. (100%) Scottsdale 9060 E. Via Linda Boulevard............ 21.62 21.62 Sentry Insurance (63%), PCS Health Systems Inc. (37%) - ------------------------------------------------------------------------------------------------------------------------------- Total Arizona Office 13.53 13.38 - ------------------------------------------------------------------------------------------------------------------------------- ARAPAHOE COUNTY, COLORADO Aurora 750 South Richfield Street............. 26.89 26.89 T.R.W. Inc. (100%) Denver 400 South Colorado Boulevard........... 17.79 17.19 Community Health Plan (32%), State of Colorado (12%), Wells Fargo Bank West NA (11%), Senter Goldfarb & Rice LLC (11%) Englewood 9359 East Nichols Avenue............... 12.44 12.44 First Tennessee Bank NA (100%) 5350 South Roslyn Street............... 16.53 16.20 Alliance Metro Real Estate (19%), Business Word Inc. (17%) BOULDER COUNTY, COLORADO Broomfield 105 South Technology Court............. 14.40 14.40 Sun Microsystems Inc. (100%) 303 South Technology Court-A........... 11.49 11.49 Sun Microsystems Inc. (100%) 303 South Technology Court-B........... 11.48 11.48 Sun Microsystems Inc. (100%)
25 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- Louisville 248 Centennial Parkway................. 1996 39,266 100.0 508 507 0.10 1172 Century Drive..................... 1996 49,566 100.0 641 639 0.13 285 Century Place...................... 1997 69,145 100.0 1,087 1,087 0.22 DENVER COUNTY, COLORADO Denver 3600 South Yosemite.................... 1974 133,743 100.0 1,287 1,287 0.27 DOUGLAS COUNTY, COLORADO Englewood 400 Inverness Drive.................... 1997 111,608 99.9 2,777 2,759 0.57 67 Inverness Drive East................ 1996 54,280 100.0 680 677 0.14 384 Inverness Drive South.............. 1985 51,523 100.0 833 809 0.17 5975 South Quebec Street............... 1996 102,877 99.8 2,373 2,336 0.49 Parker 9777 Pyramid Court..................... 1995 120,281 100.0 1,323 1,323 0.27 EL PASO COUNTY, COLORADO Colorado Springs 8415 Explorer.......................... 1998 47,368 100.0 611 605 0.13 1975 Research Parkway.................. 1997 115,250 100.0 1,683 1,604 0.35 2375 Telstar Drive..................... 1998 47,369 100.0 612 605 0.13 JEFFERSON COUNTY, COLORADO Lakewood 141 Union Boulevard.................... 1985 63,600 98.9 1,111 1,047 0.23 - ---------------------------------------------------------------------------------------------------------------------------- Total Colorado Office 1,488,339 99.7 23,977 23,641 4.95 - ---------------------------------------------------------------------------------------------------------------------------- 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ Louisville 248 Centennial Parkway................. 12.94 12.91 Walnut Brewery Inc. (59%), Aircell Inc. (28%) 1172 Century Drive..................... 12.93 12.89 Skyconnect Inc. (40%), Evolving Systems Inc. (22%), MCI Systemhouse Corp. (22%), RX Kinetix Inc. (16%) 285 Century Place...................... 15.72 15.72 HBO & Company of Georgia (100%) DENVER COUNTY, COLORADO Denver 3600 South Yosemite.................... 9.62 9.62 MDC Holding Inc. (100%) DOUGLAS COUNTY, COLORADO Englewood 400 Inverness Drive.................... 24.91 24.75 Convergent Communications Inc. (26%), Ciber Inc. (22%), Compuware Corp. (19%), Ani Colorado Inc./Alliance Int'l (16%) 67 Inverness Drive East................ 12.53 12.47 T-Netix Inc. (69%), Convergent Communications Inc. (31%) 384 Inverness Drive South.............. 16.17 15.70 Quickpen International Corp. (37%), United States of America - GSA (19%), Worth Group Architects (10%) 5975 South Quebec Street............... 23.11 22.75 Northern Telecom Inc. (43%), Silicon Graphics Inc. (28%), Qwest Communications Corp. (15%) Parker 9777 Pyramid Court..................... 11.00 11.00 Evolving System Inc. (100%) EL PASO COUNTY, COLORADO Colorado Springs 8415 Explorer.......................... 12.90 12.77 Enterprise Systems Group Inc. (52%), URS Greiner Consultants Inc. (39%) 1975 Research Parkway.................. 14.60 13.92 Bombardier Capital Florida Inc. (52%), Concert Management Services (18%), General Dynamics Govt Systems (17%) 2375 Telstar Drive..................... 12.92 12.77 Narwhal Corporation (45%), Memorial Hospital (39%), Aerotek Inc. (14%) JEFFERSON COUNTY, COLORADO Lakewood 141 Union Boulevard.................... 17.66 16.65 Arbitration Forums Inc. (18%), Frontier Real Estate - BH&G (15%) - ------------------------------------------------------------------------------------------------------------------------------------ Total Colorado Office 16.15 15.92 - ------------------------------------------------------------------------------------------------------------------------------------
26 Property Listing Office Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- SAN FRANCISCO COUNTY, CALIFORNIA San Francisco 795 Folsom Street...................... 1977 183,445 100.0 6,170 5,426 1.27 760 Market Street...................... 1908 267,446 98.0 8,140 7,965 1.68 - ---------------------------------------------------------------------------------------------------------------------------- Total California Office 450,891 98.8 14,310 13,391 2.95 - ---------------------------------------------------------------------------------------------------------------------------- HILLSBOROUGH COUNTY, FLORIDA Tampa 501 Kennedy Boulevard.................. 1982 297,429 90.8 3,657 3,419 0.75 - ---------------------------------------------------------------------------------------------------------------------------- Total Florida Office 297,429 90.8 3,657 3,419 0.75 - ---------------------------------------------------------------------------------------------------------------------------- POLK COUNTY, IOWA West Des Moines 2600 Westown Parkway................... 1988 72,265 100.0 1,101 1,014 0.23 - ---------------------------------------------------------------------------------------------------------------------------- Total Iowa Office 72,265 100.0 1,101 1,014 0.23 - ---------------------------------------------------------------------------------------------------------------------------- DOUGLAS COUNTY, NEBRASKA Omaha 210 South 16th Street (8).............. 1894 -- -- 2,876 2,875 0.59 - ---------------------------------------------------------------------------------------------------------------------------- Total Nebraska Office -- -- 2,876 2,875 0.59 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE PROPERTIES 21,916,470 96.8 434,190 418,441 89.59 ============================================================================================================================ 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------- SAN FRANCISCO COUNTY, CALIFORNIA San Francisco 795 Folsom Street...................... 33.63 29.58 Move.com Operations Inc. (51%), AT&T Corp. (34%), Regus Business Centre Corp. (15%) 760 Market Street...................... 31.06 30.39 R.H. Macy & Company, Inc. (19%) - ------------------------------------------------------------------------------------------------------------------------------- Total California Office 32.12 30.06 - ------------------------------------------------------------------------------------------------------------------------------- HILLSBOROUGH COUNTY, FLORIDA Tampa 501 Kennedy Boulevard.................. 13.54 12.66 Fowler, White, Gillen, Boggs, Villareal & Banker, PA (33%), Sykes Enterprises Inc. (22%) - ------------------------------------------------------------------------------------------------------------------------------- Total Florida Office 13.54 12.66 - ------------------------------------------------------------------------------------------------------------------------------- POLK COUNTY, IOWA West Des Moines 2600 Westown Parkway................... 15.24 14.03 Magellan Behavorial Health (28%), New England Mutual Life Insurance Company (15%), American Express Financial Advisors, Inc. (15%), MCI Worldcom Communications (14%) - ------------------------------------------------------------------------------------------------------------------------------- Total Iowa Office 15.24 14.03 - ------------------------------------------------------------------------------------------------------------------------------- DOUGLAS COUNTY, NEBRASKA Omaha 210 South 16th Street (8).............. -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- Total Nebraska Office -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE PROPERTIES 20.87 20.12 ===============================================================================================================================
27 Property Listing Office/Flex Properties
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- BURLINGTON COUNTY, NEW JERSEY Burlington 3 Terri Lane........................... 1991 64,500 68.8 355 343 0.07 5 Terri Lane........................... 1992 74,555 88.6 394 385 0.08 Moorestown 2 Commerce Drive....................... 1986 49,000 100.0 363 363 0.07 101 Commerce Drive..................... 1988 64,700 100.0 336 296 0.07 102 Commerce Drive..................... 1987 38,400 87.5 185 184 0.04 201 Commerce Drive..................... 1986 38,400 100.0 196 191 0.04 202 Commerce Drive..................... 1988 51,200 100.0 268 268 0.06 1 Executive Drive...................... 1989 20,570 100.0 172 143 0.04 2 Executive Drive (7).................. 1988 60,800 100.0 352 343 0.07 101 Executive Drive.................... 1990 29,355 80.0 140 119 0.03 102 Executive Drive.................... 1990 64,000 90.0 351 308 0.07 225 Executive Drive.................... 1990 50,600 86.2 333 312 0.07 97 Foster Road......................... 1982 43,200 100.0 186 186 0.04 1507 Lancer Drive...................... 1995 32,700 100.0 139 130 0.03 1510 Lancer Drive...................... 1998 88,000 100.0 370 370 0.08 1256 North Church Street............... 1984 63,495 49.9 194 165 0.04 840 North Lenola Road.................. 1995 38,300 100.0 266 265 0.05 844 North Lenola Road.................. 1995 28,670 100.0 213 213 0.04 915 North Lenola Road (7).............. 1998 52,488 100.0 131 131 0.03 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ BURLINGTON COUNTY, NEW JERSEY Burlington 3 Terri Lane........................... 8.00 7.73 Tempel Steel Company (18%), ATC Group Services Inc. (10%), General Service Administrators (10%) 5 Terri Lane........................... 5.96 5.83 United Rentals Inc. (22%), Lykes Dispensing Systems Inc. (20%), West Electronics Inc. (12%) Moorestown 2 Commerce Drive....................... 7.41 7.41 Computer Sciences Corporation (100%) 101 Commerce Drive..................... 5.19 4.57 Beckett Corporation (100%) 102 Commerce Drive..................... 5.51 5.48 Nelson Associates (25%), American Banknote Card Svcs. (13%), D&A Eastern Fasteners Inc. (13%), Moorestown Weightlifting Club (13%), Opex Corporation (13%), RGP Impressions Inc. (13%) 201 Commerce Drive..................... 5.10 4.97 Flow Thru Metals Inc. (25%), Franchise Stores Realty Corp. (25%), RE/Com Group (25%), Tropicana Products Inc. (25%) 202 Commerce Drive..................... 5.23 5.23 Standard Register Co. (100%) 1 Executive Drive...................... 8.36 6.95 Bechtel Infrastructure Corp. (48%), T.T.I. (18%) 2 Executive Drive (7).................. 7.47 7.28 CSI Computer Specialists Inc. (32%), Total Product Supply Inc. (18%), On-Campus Marketing Concepts (16%), Nia Zia D/B/A Alpha Academy (10%) 101 Executive Drive.................... 5.96 5.07 Bayada Nurses Inc. (36%), Foundations Inc. (15%), ABC Financial (10%), Bechtel Infrastructure Corp. (10%) 102 Executive Drive.................... 6.09 5.35 Comtrex Systems Corp. (29%), Kencom Communications & Svcs. (21%), PDLJB Corporation (20%), Schermerhorn Bros. Co. (20%) 225 Executive Drive.................... 7.63 7.15 Eastern Research Inc. (77%) 97 Foster Road......................... 4.31 4.31 Consumer Response Company Inc. (50%), Pioneer and Company Inc. (33%), Colornet Inc. (17%) 1507 Lancer Drive...................... 4.25 3.98 Tad's Delivery Service Inc. (100%) 1510 Lancer Drive...................... 4.20 4.20 Tad's Delivery Service Inc. (100%) 1256 North Church Street............... 6.12 5.21 James C. Anderson Associates (30%), Ketec Inc. (20%) 840 North Lenola Road.................. 6.95 6.92 Millar Elevator Service Co. (31%), Omega Storage Inc. (31%), Technology Service Solutions (25%), Computer Integration Services (13%) 844 North Lenola Road.................. 7.43 7.43 Lockheed Martin Corp. (41%), Curbell Inc. (33%), James J. Martin Inc. (25%) 915 North Lenola Road (7).............. 5.33 5.33 Premier Percussion USA Inc. (37%), Don-Mar of Connecticut, LLC (23%), Riley Sales Inc. (18%), United States Postal Service (13%)
28 Property Listing Office/Flex Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- 30 Twosome Drive....................... 1997 39,675 100.0 224 224 0.05 40 Twosome Drive....................... 1996 40,265 93.4 165 165 0.03 50 Twosome Drive....................... 1997 34,075 100.0 262 262 0.05 West Deptford 1451 Metropolitan Drive................ 1996 21,600 100.0 148 148 0.03 MERCER COUNTY, NEW JERSEY Hamilton Township 100 Horizon Drive...................... 1989 13,275 100.0 46 43 0.01 200 Horizon Drive...................... 1991 45,770 100.0 454 439 0.09 300 Horizon Drive...................... 1989 69,780 100.0 703 690 0.15 500 Horizon Drive...................... 1990 41,205 57.8 259 231 0.05 MONMOUTH COUNTY, NEW JERSEY Wall Township 1325 Campus Parkway.................... 1988 35,000 100.0 370 354 0.08 1340 Campus Parkway.................... 1992 72,502 100.0 813 709 0.17 1345 Campus Parkway.................... 1995 76,300 100.0 710 706 0.15 1433 Highway 34........................ 1985 69,020 100.0 557 479 0.11 1320 Wyckoff Avenue.................... 1986 20,336 100.0 132 125 0.03 1324 Wyckoff Avenue.................... 1987 21,168 100.0 183 147 0.04 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ 30 Twosome Drive....................... 5.65 5.65 Hartman Cards Inc. (28%), Sagot Office Interiors Inc. (24%), Aramark Sports Entertainment (14%), The Closet Factory (12%), C&L Packaging Inc. (12%), Mosler Inc. (10%) 40 Twosome Drive....................... 4.39 4.39 Neighborcare - TCI Inc. (49%), Marconi Communications Inc. (30%), Bellstar Inc. (14%) 50 Twosome Drive....................... 7.69 7.69 Wells Fargo Alarm Services (44%), Sussex Wine Merchants (42%), McCarthy Associates Inc. (14%) West Deptford 1451 Metropolitan Drive................ 6.85 6.85 Garlock Bearings Inc. (100%) MERCER COUNTY, NEW JERSEY Hamilton Township 100 Horizon Drive...................... 3.47 3.24 PSEG Energy Technologies Inc. (100%) 200 Horizon Drive...................... 9.92 9.59 O.H.M. Remediation Services Corp. (100%) 300 Horizon Drive...................... 10.07 9.89 State of New Jersey/DEP (50%), Lucent Technologies Inc. (26%), Ward North America (14%), Stephen Gould of Pennsylvania (10%) 500 Horizon Drive...................... 10.87 9.70 Lakeview Child Center Inc. (19%), New Jersey Builders Assoc. (14%), Diedre Moire Corp. (11%) MONMOUTH COUNTY, NEW JERSEY Wall Township 1325 Campus Parkway.................... 10.57 10.11 Cisco Systems Inc. (100%) 1340 Campus Parkway.................... 11.21 9.78 Groundwater & Environmental Services Inc. (33%), GEAC Computers Inc. (22%), State Farm Mutual Insurance (17%), Association For Retarded Citizens (11%), Digital Lightwave, Inc. (11%) 1345 Campus Parkway.................... 9.31 9.25 Depot America, Inc. (37%), Quadramed Corp. (23%), De Vine Corp. (10%) 1433 Highway 34........................ 8.07 6.94 State Farm Mutual Insurance Co. (48%), CACI Technologies Inc. (18%), Depot America (12%), New Jersey Natural Gas Co (11%) 1320 Wyckoff Avenue.................... 6.49 6.15 The County of Monmouth (100%) 1324 Wyckoff Avenue.................... 8.65 6.94 Blackhawk Management Corp. (53%), Systems Fulfillment (25%), Supply Saver, Inc. (22%)
29 Property Listing Office/Flex Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- PASSAIC COUNTY, NEW JERSEY Totowa 1 Center Court......................... 1999 38,961 84.0 136 111 0.03 2 Center Court......................... 1998 30,600 99.3 348 237 0.07 11 Commerce Way........................ 1989 47,025 100.0 513 447 0.11 20 Commerce Way........................ 1992 42,540 100.0 446 442 0.09 29 Commerce Way........................ 1990 48,930 100.0 504 450 0.10 40 Commerce Way........................ 1987 50,576 85.7 534 439 0.11 45 Commerce Way........................ 1992 51,207 100.0 496 452 0.10 60 Commerce Way........................ 1988 50,333 100.0 457 387 0.09 80 Commerce Way........................ 1996 22,500 100.0 282 176 0.06 100 Commerce Way....................... 1996 24,600 100.0 308 192 0.06 120 Commerce Way....................... 1994 9,024 100.0 86 81 0.02 140 Commerce Way....................... 1994 26,881 99.5 256 245 0.05 - ---------------------------------------------------------------------------------------------------------------------------- Total New Jersey Office/Flex 1,996,081 94.1 14,336 13,096 2.95 - ---------------------------------------------------------------------------------------------------------------------------- WESTCHESTER COUNTY, NEW YORK Elmsford 11 Clearbrook Road..................... 1974 31,800 100.0 316 310 0.07 75 Clearbrook Road..................... 1990 32,720 100.0 816 816 0.17 150 Clearbrook Road.................... 1975 74,900 93.8 1,029 998 0.21 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ PASSAIC COUNTY, NEW JERSEY Totowa 1 Center Court......................... 4.16 3.39 Rock-Tenn Converting Company (46%), Eizo Nanao Technologies Inc. (38%) 2 Center Court......................... 11.45 7.80 Nomadic Display (36%), Electro Rent Corp. (33%), Alpine Electronics of America (30%) 11 Commerce Way........................ 10.91 9.51 Coram Alternative Site Services (56%), D.A. Kopp & Associates Inc. (22%), Olsten Health Services (11%), Ericsson Inc. (11%) 20 Commerce Way........................ 10.48 10.39 Emersub LXXXVII Inc. (41%), Lodan Totowa Inc. F/K/A Emersub (21%), Dish Network Service Corp. (14%) 29 Commerce Way........................ 10.30 9.20 Sandvik Sorting Systems, Inc. (44%), Patterson Dental Supply Inc. (23%), Fujitec America Inc. (22%), Williams Communications LLC (11%) 40 Commerce Way........................ 12.32 10.13 Thomson Electron Tubes (43%), Intertek Testing Services Inc. (29%), System 3R USA Inc. (14%) 45 Commerce Way........................ 9.69 8.83 Ericsson Inc. (52%), Woodward Clyde Consultants (27%), Oakwood Corporate Housing (21%) 60 Commerce Way........................ 9.08 7.69 Ericsson Inc. (29%), Jen Mar Graphics Inc. (27%), Dolan & Traynor Building Prod (16%), Prestige Telecom Ltd. (14%), HW Exhibits (14%) 80 Commerce Way........................ 12.53 7.82 Learning Stop LLC (40%), Idexx Veterinary Services (37%), Inter-American Safety Council (12%) 100 Commerce Way....................... 12.52 7.80 Pharmerica Inc. (34%), Minolta Business Systems Inc. (34%), CCH Incorporated (32%) 120 Commerce Way....................... 9.53 8.98 Senior Care Centers of America (100%) 140 Commerce Way....................... 9.57 9.16 Universal Hospital Services (29%), Advanced Image Systems Inc. (20%), MSR Publications Inc. (19%), Holder Group Inc. (11%), Alpha Testing (10%), Showa Tool USA, Inc. (10%) - ------------------------------------------------------------------------------------------------------------------------------------ Total New Jersey Office/Flex 7.77 7.11 - ------------------------------------------------------------------------------------------------------------------------------------ WESTCHESTER COUNTY, NEW YORK Elmsford 11 Clearbrook Road..................... 9.94 9.75 Creative Medical Supplies (28%), Eastern Jungle Gym Inc. (27%), MCS Marketing Group Inc. (24%), Treetops Inc. (21%) 75 Clearbrook Road..................... 24.94 24.94 Evening Out Inc. (100%) 150 Clearbrook Road.................... 14.65 14.21 Sportive Ventures I LLC (24%), Philips Medical Systems N.A. (18%), Transwestern Publications (12%), ADT Security Services Inc. (11%)
30 Property Listing Office/Flex Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- 175 Clearbrook Road.................... 1973 98,900 98.5 1,450 1,405 0.30 200 Clearbrook Road.................... 1974 94,000 99.8 1,208 1,139 0.25 250 Clearbrook Road.................... 1973 155,000 94.5 1,331 1,256 0.27 50 Executive Boulevard................. 1969 45,200 97.2 382 373 0.08 77 Executive Boulevard................. 1977 13,000 55.4 130 128 0.03 85 Executive Boulevard................. 1968 31,000 99.4 396 388 0.08 300 Executive Boulevard................ 1970 60,000 99.7 597 577 0.12 350 Executive Boulevard................ 1970 15,400 98.8 252 252 0.05 399 Executive Boulevard................ 1962 80,000 100.0 968 931 0.20 400 Executive Boulevard................ 1970 42,200 100.0 645 583 0.13 500 Executive Boulevard................ 1970 41,600 100.0 614 587 0.13 525 Executive Boulevard................ 1972 61,700 100.0 888 864 0.18 1 Westchester Plaza.................... 1967 25,000 100.0 301 286 0.06 2 Westchester Plaza.................... 1968 25,000 100.0 447 436 0.09 3 Westchester Plaza.................... 1969 93,500 100.0 1,142 1,126 0.24 4 Westchester Plaza.................... 1969 44,700 99.8 629 604 0.13 5 Westchester Plaza.................... 1969 20,000 100.0 304 295 0.06 6 Westchester Plaza.................... 1968 20,000 100.0 296 278 0.06 7 Westchester Plaza.................... 1972 46,200 100.0 649 641 0.13 8 Westchester Plaza.................... 1971 67,200 97.2 881 776 0.18 Hawthorne 200 Saw Mill River Road................ 1965 51,100 100.0 626 599 0.13 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ 175 Clearbrook Road.................... 14.88 14.42 Nextel of New York Inc. (35%), Hypres Inc. (15%), Perk-Up Inc. (10%) 200 Clearbrook Road.................... 12.88 12.14 Brunschwig & Fils Inc. (39%), Proftech Corp (20%) 250 Clearbrook Road.................... 9.09 8.57 AFP Imaging Corp (31%), The Artina Group Inc. (14%), Prints Plus Inc. (13%), Conri Services Inc. (10%), Merrill-Sharpe Ltd (10%) 50 Executive Boulevard................. 8.69 8.49 MMO Music Group (74%), Medcon Financial Services Inc. (22%) 77 Executive Boulevard................. 18.05 17.77 Bright Horizons Children Center (55%) 85 Executive Boulevard................. 12.85 12.59 VREX Inc (49%), Westhab Inc. (21%), Wald Optics Laboratory Inc. (13%), Saturn II Systems Inc. (11%) 300 Executive Boulevard................ 9.98 9.65 Princeton Ski Outlet Corp. (57%), Varta Batteries Inc. (31%), LMG International Inc. (12%) 350 Executive Boulevard................ 16.56 16.56 Copytex Corp. (99%) 399 Executive Boulevard................ 12.10 11.64 American Banknote Holographic (73%), Wine Enthusiast Inc. (15%), Brandon of Westchester (12%) 400 Executive Boulevard................ 15.28 13.82 Baker Engineering NY, Inc. (39%), Ultra Fabrics Inc. (25%) 500 Executive Boulevard................ 14.76 14.11 Original Consume (36%), Dover Elevator Co. (16%), Angelica Corp. (16%), Olympia Sports Inc. (13%), Philips Medical Systems N.A. (13%) 525 Executive Boulevard................ 14.39 14.00 Vie De France Yamazaki Inc. (59%), New York Blood Center Inc. (21%) 1 Westchester Plaza.................... 12.04 11.44 British Apparel (40%), Thin Film Concepts Inc. (20%), RS Knapp (20%), JT Lynne Representatives (20%) 2 Westchester Plaza.................... 17.88 17.44 Board of Cooperative Education (80%), Kin-Tronics (11%) 3 Westchester Plaza.................... 12.21 12.04 Reveo Inc. (51%), Kangol Headwear (28%), Esperya USA Inc. (12%) 4 Westchester Plaza.................... 14.10 13.54 Metropolitan Life Insurance (38%), EEV Inc. (34%), Arsys Innotech Corp. (13%) 5 Westchester Plaza.................... 15.20 14.75 Fujitsu Network Communications (38%), Rokonet Industries USA Inc. (25%), UA Plumbers Education Fund (25%), Furniture Etc. Inc. (12%) 6 Westchester Plaza.................... 14.80 13.90 Pinkerton Systems Integration (28%), Xerox Corporation (28%), Game Parts Inc. (24%), Girard Rubber Co. (12%) 7 Westchester Plaza.................... 14.05 13.87 Emigrant Savings Bank (69%), Fire End Croker Corp. (22%) 8 Westchester Plaza.................... 13.49 11.88 Mamiya America Corp. (24%), Ciba Specialty Chemicals Corp. (17%), Kubra Data Transfer Ltd. (15%) Hawthorne 200 Saw Mill River Road................ 12.25 11.72 Walter DeGruyter Inc. (21%), Abscoa Industries Inc. (18%), TJ Quatroni Plumbing and Heat (17%), Cablevision Lightpath Inc. (12%), SI International Instruments Inc. (10%)
31 Property Listing Office/Flex Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- 4 Skyline Drive........................ 1987 80,600 99.6 1,267 1,155 0.26 8 Skyline Drive........................ 1985 50,000 98.9 854 717 0.18 10 Skyline Drive....................... 1985 20,000 100.0 283 262 0.06 11 Skyline Drive....................... 1989 45,000 100.0 689 641 0.14 12 Skyline Drive....................... 1999 46,850 100.0 806 646 0.17 15 Skyline Drive....................... 1989 55,000 100.0 1,005 912 0.21 Yonkers 100 Corporate Boulevard................ 1987 78,000 98.2 1,399 1,338 0.29 200 Corporate Boulevard South.......... 1990 84,000 99.8 1,380 1,350 0.28 4 Executive Plaza...................... 1986 80,000 98.7 1,025 973 0.21 6 Executive Plaza...................... 1987 80,000 100.0 1,110 1,093 0.23 1 Odell Plaza.......................... 1980 106,000 93.7 1,256 1,221 0.26 5 Odell Plaza.......................... 1983 38,400 99.6 536 528 0.11 7 Odell Plaza.......................... 1984 42,600 99.6 648 634 0.13 - ---------------------------------------------------------------------------------------------------------------------------- Total New York Office/Flex 2,076,570 98.3 28,555 27,118 5.88 - ---------------------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CONNECTICUT Stamford 419 West Avenue........................ 1986 88,000 94.0 1,486 1,460 0.31 500 West Avenue........................ 1988 25,000 100.0 422 384 0.09 550 West Avenue........................ 1990 54,000 100.0 785 663 0.16 600 West Avenue........................ 1999 66,000 100.0 722 685 0.15 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------------ 4 Skyline Drive........................ 15.78 14.39 Alstom USA Inc. (27%), Evonyx Inc. (23%) 8 Skyline Drive........................ 17.27 14.50 Clientsoft Inc. (70%), Evonyx Inc. (29%) 10 Skyline Drive....................... 14.15 13.10 Bi-Tronic Inc/LCA Sales Corp. (51%), Phoenix Systems Int'l (32%), ENSR Corp. (17%) 11 Skyline Drive....................... 15.31 14.24 Cube Computer Corp. (76%), Agathon Machine Tools Inc. (12%) 12 Skyline Drive....................... 17.20 13.79 Creative Visual Enterprises (38%), Medelec Inc. (32%), Savin Corporation (30%) 15 Skyline Drive....................... 18.27 16.58 Tellabs Operations Inc. (47%), Emisphere Technology Assoc. (23%), Minolta Business Solutions (16%), Acorda Therapeutics Inc. (14%) Yonkers 100 Corporate Boulevard................ 18.26 17.47 Montefiore Medical Center (28%), Sempra Energy Trading Corp. (13%), Minami International Corp. (12%), Otis Elevator Company (11%), Genzyme Genetics Corp. (11%) 200 Corporate Boulevard South.......... 16.46 16.10 Belmay Inc. (32%), Montefiore Medical Center (23%), Advanced Viral Research Corp. (20%), Micromold Products Inc. (10%) 4 Executive Plaza...................... 12.98 12.32 Wise Contact US Optical Corp. (32%), E&B Giftware Inc. (22%), TT Systems LLC (10%) 6 Executive Plaza...................... 13.88 13.66 Cablevision Systems Corp. (40%), CSC Holdings Inc. (12%), Yonkers Savings & Loan Assoc. (11%) , Empire Managed Care Inc. (10%) 1 Odell Plaza.......................... 12.65 12.29 Sportive Ventures 2 LLC (19%), Market Dynamics Group LLC (11%) 5 Odell Plaza.......................... 14.01 13.81 Voyetra Technologies Inc. (44%), Photo File Inc. (34%), Pharmerica Inc. (22%) 7 Odell Plaza.......................... 15.27 14.94 US Postal Service (41%), TT Systems Company (24%), Bright Horizons Childrens Center (16%) - ------------------------------------------------------------------------------------------------------------------------------------ Total New York Office/Flex 13.99 13.28 - ------------------------------------------------------------------------------------------------------------------------------------ FAIRFIELD COUNTY, CONNECTICUT Stamford 419 West Avenue........................ 17.96 17.65 Fuji Medical Systems USA Inc. (80%) 500 West Avenue........................ 16.88 15.36 Peppers and Rogers Group/Mark (35%), Lead Trackers Inc. (28%), Convergent Communications Inc. (26%), M Cohen and Sons Inc. (11%) 550 West Avenue........................ 14.54 12.28 Lifecodes Corp. (68%), Davidoff of Geneva (CT) Inc. (32%) 600 West Avenue........................ 10.94 10.38 Clarence House Imports, Ltd (100%)
32 Property Listing Office/Flex Properties (Continued)
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- 650 West Avenue 1998 40,000 100.0 555 441 0.11 - ---------------------------------------------------------------------------------------------------------------------------- Total Connecticut Office/Flex 273,000 98.1 3,970 3,633 0.82 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE/FLEX PROPERTIES 4,345,651 96.4 46,861 43,847 9.65 ============================================================================================================================ 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - -------------------------------------------------------------------------------------------------------------------------------- 650 West Avenue 13.88 11.03 Davidoff of Geneva (CT) Inc. (100%) - -------------------------------------------------------------------------------------------------------------------------------- Total Connecticut Office/Flex 14.83 13.57 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE/FLEX PROPERTIES 11.25 10.53 ================================================================================================================================
33 Property Listing Industrial/Warehouse Properties
Percentage of Total 2000 Percentage Office, Net Leased 2000 2000 Office/Flex, Rentable as of Base Effective and Industrial/ Property Year Area 12/31/00 Rent Rent Warehouse Location Built (Sq. Ft.) (%)(1) ($000's)(2)(6) ($000's)(3)(6) Base Rent (%) - ---------------------------------------------------------------------------------------------------------------------------- WESTCHESTER COUNTY, NEW YORK Elmsford 1 Warehouse Lane....................... 1957 6,600 100.0 57 56 0.01 2 Warehouse Lane....................... 1957 10,900 100.0 119 113 0.02 3 Warehouse Lane....................... 1957 77,200 100.0 290 279 0.06 4 Warehouse Lane....................... 1957 195,500 97.4 1,936 1,890 0.40 5 Warehouse Lane....................... 1957 75,100 97.1 774 706 0.16 6 Warehouse Lane....................... 1982 22,100 100.0 513 511 0.11 - ---------------------------------------------------------------------------------------------------------------------------- Total Industrial/Warehouse Properties 387,400 98.1 3,689 3,555 0.76 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE, OFFICE/FLEX, AND INDUSTRIAL/WAREHOUSE PROPERTIES 26,649,521 96.8 484,740 465,843 100.0 ============================================================================================================================ 2000 2000 Average Tenants Leasing 10% Average Effective or More of Net Base Rent Rent Rentable Area Per Property Per Sq. Ft. Per Sq. Ft. Property as of Location ($)(4)(6) ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------------------------- WESTCHESTER COUNTY, NEW YORK Elmsford 1 Warehouse Lane....................... 8.64 8.48 JP Trucking Service Center Inc. (100%) 2 Warehouse Lane....................... 10.92 10.37 RJ Bruno Roofing Inc. (55%), Teleport Communications Group (41%) 3 Warehouse Lane....................... 3.76 3.61 United Parcel Service (100%) 4 Warehouse Lane....................... 10.17 9.93 San Mar Laboratories Inc. (63%), Westinghouse Air Brake Co. Inc. (14%) 5 Warehouse Lane....................... 10.61 9.68 Great Spring Waters of America (48%), Chamart Exclusives Inc. (16%), E & H Tire Buying Service Inc. (11%) 6 Warehouse Lane....................... 23.21 23.12 Conway Central Express (100%) - ------------------------------------------------------------------------------------------------------------------------------- Total Industrial/Warehouse Properties 9.70 9.35 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE, OFFICE/FLEX, AND INDUSTRIAL/WAREHOUSE PROPERTIES 19.14 18.40 ===============================================================================================================================
(1) Based on all leases in effect as of December 31, 2000. (2) Total base rent for 2000, determined in accordance with generally accepted accounting principles ("GAAP"). Substantially all of the leases provide for annual base rents plus recoveries and escalation charges based upon the tenant's proportionate share of and/or increases in real estate taxes and certain operating costs, as defined, and the pass through of charges for electrical usage. (3) Total base rent for 2000 minus total 2000 amortization of tenant improvements, leasing commissions and other concessions and costs, determined in accordance with GAAP. (4) Base rent for 2000 divided by net rentable square feet leased at December 31, 2000. For those properties acquired or placed in service during 2000, amounts are annualized, as per Note 7. (5) Effective rent for 2000 divided by net rentable square feet leased at December 31, 2000. For those properties acquired or placed in service during 2000, amounts are annualized, as per Note 7. (6) Excludes space leased by the Operating Partnership. (7) As this property was acquired or placed in service by the Operating Partnership during 2000, the amounts represented in 2000 base rent and 2000 effective rent reflect only that portion of the year during which the Operating Partnership owned or placed the property in service. Accordingly, these amounts may not be indicative of the property's full year results. For comparison purposes, the amounts represented in 2000 average base rent per sq. ft. and 2000 average effective rent per sq. ft. for this property have been calculated by taking 2000 base rent and 2000 effective rent for such property and annualizing these partial-year results, dividing such annualized amounts by the net rentable square feet leased at December 31, 2000. These annualized per square foot amounts may not be indicative of the property's results had the Operating Partnership owned or placed such property in service for the entirety of 2000. (8) The property was sold by the Operating Partnership in 2000. (9) Calculation based on square feet in service as of December 31, 2000. 34 Retail Properties The Operating Partnership owned two stand-alone retail properties as of December 31, 2000, as described below: The Operating Partnership owns an 8,000 square foot restaurant, constructed in 1986, located at 2 Executive Plaza in the South Westchester Executive Park in Yonkers, Westchester County, New York. The restaurant is 100 percent leased to Magic at Yonkers, Inc. for use as a Red Robin restaurant under a 25-year lease. The lease currently provides for fixed annual base rent of $265,000, with fully-reimbursed real estate taxes, and operating expenses escalated based on the consumer price index ("CPI") over a base year CPI. The lease, which expires in June 2012, includes scheduled rent increases in July 2002 to approximately $300,000 annually, and in July 2007 to approximately $345,000 annually. The lease also provides for additional rent calculated as a percentage of sales over a specified sales amount, as well as for two five-year renewal options. 2000 total base rent for the property, calculated in accordance with GAAP, was approximately $345,558. The Operating Partnership also owns a 9,300 square foot restaurant, constructed in 1984, located at 230 White Plains Road, Tarrytown, Westchester County, New York. The restaurant is 100 percent leased to TGI Friday's under a 10-year lease which provides for fixed annual base rent of approximately $195,000, with fully-reimbursed real estate taxes, and operating expenses escalated based on CPI over a base year CPI. The lease, which expires in August 2004, also provides for additional rent calculated as a percentage of sales over a specified sales amount, as well as for four five-year renewal options. 2000 total base rent for the property, calculated in accordance with GAAP, was approximately $186,241. Land Leases The Operating Partnership owned three land parcels, which were leased as of December 31, 2000, as described below: The Operating Partnership leases land to Star Enterprises, on which a 2,264 square-foot Texaco gas station was constructed, located at 1 Enterprise Boulevard in Yonkers, Westchester County, New York. The 15-year, triple-net land lease provides for annual rent of approximately $145,000 and expires in April 2005. The lease also provides for two five-year renewal options. 2000 total base rent under this lease, calculated in accordance with GAAP, was approximately $143,972. The Operating Partnership also leases five acres of land to Rake Realty, on which a 103,500 square-foot office building exists, located at 700 Executive Boulevard, Elmsford, Westchester County, New York. The 22-year, triple-net land lease provides for fixed annual rent plus a CPI adjustment every five years, and expires in November 2018. 2000 total base rent under this lease, calculated in accordance with GAAP, was approximately $97,744. The lease also provides for several renewal options which could extend the lease term for an additional 30 years. The Operating Partnership also leases 27.7 acres of land to Home Depot, on which a 134,000 square-foot retail store was constructed, located at the Operating Partnership's Horizon Center Business Park, Hamilton Township, Mercer County, New Jersey. The net lease, which began on February 1, 1999, provides for annual rent of approximately $298,000 through the fifth year of the lease and fixed annual rent plus a CPI adjustment every five years for the years thereafter and expires in January 2094. The lease also provides an option for Home Depot to purchase the land in 2002. 2000 total base rent under this lease, calculated in accordance with GAAP, was approximately $260,750. Multi-family Residential Properties The Operating Partnership owned two multi-family residential properties, as of December 31, 2000, as described below: Tenby Chase Apartments, Delran, Burlington County, New Jersey: The Operating Partnership's multi-family residential property, known as the Tenby Chase Apartments, was built in 1970. The property contains 327 units, comprised of 196 one-bedroom units and 131 two-bedroom units, with an average size of approximately 1,235 square feet per unit. The property had an average monthly rental rate of approximately $753 per unit during 2000 and was approximately 97.5 percent leased as of December 31, 2000. The property had 2000 total base rent of approximately $2.9 million, which represented approximately 0.6 percent of the Operating Partnership's 2000 total base rent. The average occupancy rate for the property in each of 2000, 1999 and 1998 was 96.8 percent, 97.1 percent and 96.0 percent, respectively. 35 25 Martine Avenue, White Plains, Westchester County, New York: The Operating Partnership's multi-family residential property, known as 25 Martine Avenue, was built in 1987. The property contains 124 residential units, comprised of 18 studio units, 71 one-bedroom units and 35 two-bedroom units, with an average size of approximately 722 square feet per unit. The property had an average monthly rental rate of approximately $1,658 per unit during 2000 and was 97.0 percent leased as of December 31, 2000. The property also has retail space. The property had 2000 total base rent of approximately $2.5 million, which represented approximately 0.5 percent of the Operating Partnership's 2000 total base rent. The average occupancy rate for the property in each of 2000, 1999 and 1998 was 96.5 percent, 96.8 percent and 96.4 percent, respectively. OCCUPANCY The table below sets forth the year-end percentages of rentable square feet leased in the Operating Partnership's in-service Consolidated Properties for the last five years: Percentage of Year ended December 31, Square Feet Leased (%) - -------------------------------------------------------------------------------- 2000 96.8 1999 96.5 1998 96.6 1997 95.8 1996 96.4 36 SIGNIFICANT TENANTS The following table sets forth a schedule of the Operating Partnership's 20 largest tenants for the Consolidated Properties as of December 31, 2000, based upon annualized base rents:
Percentage of Percentage of Annualized Operating Partnership Square Total Operating Year of Number of Base Rental Annualized Base Feet Partnership Lease Properties Revenue($)(1) Rental Revenue(%) Leased Leased Sq. Ft.(%) Expiration - ------------------------------------------------------------------------------------------------------------------------------------ AT&T Wireless Services 2 8,527,197 1.8 395,955 1.6 2007 (2) Donaldson, Lufkin & Jenrette Securities Corp. 1 8,316,096 1.7 271,953 1.1 2011 Keystone Mercy Health Plan 3 7,429,219 1.6 325,843 1.3 2015 (3) AT&T Corporation 2 7,268,746 1.5 450,278 1.8 2009 (4) Prentice-Hall Inc. 1 6,744,495 1.4 474,801 1.9 2014 IBM Corporation 3 6,390,275 1.3 361,688 1.4 2007 (5) Toys 'R' Us - NJ, Inc. 1 5,342,672 1.1 242,518 1.0 2012 Waterhouse Securities, Inc. 1 5,253,555 1.1 184,222 0.7 2015 Nabisco Inc. 3 5,183,132 1.1 310,243 1.2 2005 (6) American Institute of Certified Public Accountants 1 4,981,357 1.0 249,768 1.0 2012 Allstate Insurance Company 9 4,727,383 1.0 224,321 0.9 2009 (7) Board of Gov./Federal Reserve 1 4,705,391 1.0 117,008 0.5 2009 (8) Winston & Strawn 1 4,381,770 0.9 108,100 0.4 2003 Dean Witter Trust Company 1 4,319,507 0.9 221,019 0.9 2008 CMP Media Inc. 1 4,206,598 0.9 206,274 0.8 2014 KPMG Peat Marwick, LLP 2 3,824,080 0.8 161,760 0.6 2007 (9) Move.com Operations, Inc. 1 3,796,680 0.8 94,917 0.4 2006 Regus Business Centre Corp. 3 3,680,880 0.8 107,805 0.4 2011 (10) Bank of Tokyo - Mitsubishi Ltd. 1 3,378,924 0.7 137,076 0.5 2009 Bankers Trust Harborside Inc. 1 3,272,500 0.7 385,000 1.5 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Totals 105,730,457 22.1 5,030,549 19.9 ====================================================================================================================================
(1) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, annualized base rental revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above. (2) 12,150 square feet expire September 2004; 345,799 square feet expire March 2007; 38,006 square feet expire June 2007. (3) 22,694 square feet expire January 2003; 303,149 square feet expire April 2015. (4) 63,278 square feet expire May 2004; 387,000 square feet expire January 2009. (5) 28,289 square feet expire January 2002; 85,000 square feet expire December 2005; 248,399 square feet expire December 2007. (6) 9,865 square feet expire September 2001; 300,378 square feet expire December 2005. (7) 18,882 square feet expire April 2003; 4,398 square feet expire January 2004; 36,305 square feet expire January 2005; 23,024 square feet expire October 2005; 22,444 square feet expire July 2006; 6,108 square feet expire August 2006; 70,517 square feet expire June 2007; 31,143 square feet expire April 2008; 11,500 square feet expire April 2009. (8) 94,719 square feet expire May 2005; 22,289 square feet expire July 2009. (9) 104,556 square feet expire September 2002; 57,204 square feet expire July 2007. (10) 28,000 square feet expire August 2010; 38,930 square feet expire April 2011; 40,875 square feet expire August 2011. 37 SCHEDULE OF LEASE EXPIRATIONS The following table sets forth a schedule of the lease expirations for the total of the Operating Partnership's office, office/flex, industrial/warehouse and stand-alone retail properties, included in the Consolidated Properties, beginning January 1, 2001, assuming that none of the tenants exercise renewal options:
Average Annual Percentage Of Rent Per Net Net Rentable Total Leased Annualized Rentable Percentage Of Area Subject Square Feet Base Rental Square Foot Annual Base Number Of To Expiring Represented By Revenue Under Represented Rent Under Year Of Leases Leases Expiring Expiring By Expiring Expiring Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%) - -------------------------------------------------------------------------------------------------------------------------- 2001............ 531 2,639,934 10.4 43,613,737 16.52 9.2 2002............ 515 3,150,437 12.4 56,082,268 17.80 11.8 2003............ 506 3,831,520 15.1 67,498,472 17.62 14.2 2004............ 350 2,378,899 9.4 45,239,146 19.02 9.5 2005............ 346 3,167,520 12.5 62,884,809 19.85 13.2 2006............ 163 1,899,748 7.5 38,795,616 20.42 8.1 2007............ 72 1,565,437 6.2 32,235,634 20.59 6.8 2008............ 51 1,149,547 4.5 19,628,343 17.07 4.1 2009............ 39 1,113,494 4.4 21,644,393 19.44 4.5 2010............ 77 1,167,775 4.6 23,066,952 19.75 4.8 2011............ 27 1,010,078 4.0 22,213,067 21.99 4.7 2012 and thereafter 40 2,301,556 9.0 43,724,798 19.00 9.1 - -------------------------------------------------------------------------------------------------------------------------- Totals/Weighted Average 2,717 25,375,945(4) 100.0 476,627,235 18.78 100.0 ==========================================================================================================================
(1) Includes office, office/flex, industrial/warehouse and stand-alone retail property tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases. (2) Excludes all unleased space as of December 31, 2000. (3) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, annualized base rental revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above. (4) Reconciliation to Operating Partnership's total net rentable square footage is as follows:
Square Feet Percentage of Total ----------- ------------------- Square footage leased to commercial tenants 25,375,945 95.2% Square footage used for corporate offices, management offices, building use, retail tenants, food services, other ancillary service tenants and occupancy adjustments 426,862 1.6 Square footage unleased 864,014 3.2 ---------- ------ Total net rentable square footage (does not include residential, land lease, retail or not-in-service properties) 26,666,821 100.0% ========== ======
38 SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES The following table sets forth a schedule of the lease expirations for the office properties beginning January 1, 2001, assuming that none of the tenants exercise renewal options:
Average Annual Percentage Of Rent Per Net Net Rentable Total Leased Annualized Rentable Percentage Of Area Subject Square Feet Base Rental Square Foot Annual Base Number Of To Expiring Represented By Revenue Under Represented Rent Under Year Of Leases Leases Expiring Expiring By Expiring Expiring Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%) - ------------------------------------------------------------------------------------------------------------------------------------ 2001............ 436 1,996,939 9.6 36,827,326 18.44 8.7 2002............ 410 2,318,146 11.1 47,490,669 20.49 11.2 2003............ 422 3,152,850 15.2 60,794,043 19.28 14.3 2004............ 293 1,814,213 8.7 38,785,904 21.38 9.2 2005............ 290 2,676,685 12.9 56,812,992 21.23 13.4 2006............ 137 1,554,837 7.5 33,508,335 21.55 7.9 2007............ 64 1,430,006 6.9 30,260,900 21.16 7.1 2008............ 45 964,500 4.6 18,204,342 18.87 4.3 2009............ 26 971,232 4.7 19,654,067 20.24 4.6 2010............ 53 855,944 4.1 18,361,508 21.45 4.3 2011............ 24 949,167 4.6 21,495,631 22.65 5.1 2012 and thereafter 35 2,115,868 10.1 41,494,249 19.61 9.9 - ------------------------------------------------------------------------------------------------------------------------------------ Totals/Weighted Average 2,235 20,800,387 100.0 423,689,966 20.37 100.0 ====================================================================================================================================
(1) Includes office tenants only. Excludes leases for amenity, retail, parking and month-to-month office tenants. Some tenants have multiple leases. (2) Excludes all unleased space as of December 31, 2000. (3) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, annualized base rental revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above. 39 SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES The following table sets forth a schedule of the lease expirations for the office/flex properties beginning January 1, 2001, assuming that none of the tenants exercise renewal options:
Average Annual Percentage Of Rent Per Net Net Rentable Total Leased Annualized Rentable Percentage Of Area Subject Square Feet Base Rental Square Foot Annual Base Number Of To Expiring Represented By Revenue Under Represented Rent Under Year Of Leases Leases Expiring Expiring By Expiring Expiring Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%) - ------------------------------------------------------------------------------------------------------------------------------------ 2001............ 89 632,213 15.1 6,677,238 10.56 13.7 2002............ 103 785,851 18.8 8,090,847 10.30 16.6 2003............ 80 580,696 13.9 6,203,311 10.68 12.7 2004............ 46 355,266 8.5 3,957,742 11.14 8.1 2005............ 53 477,681 11.4 5,889,941 12.33 12.1 2006............ 26 344,911 8.3 5,287,281 15.33 10.8 2007............ 8 135,431 3.2 1,974,734 14.58 4.0 2008............ 6 185,047 4.4 1,424,001 7.70 2.9 2009............ 12 130,462 3.1 1,884,126 14.44 3.9 2010............ 24 311,831 7.5 4,705,444 15.09 9.6 2011............ 3 60,911 1.5 717,436 11.78 1.5 2012 and thereafter 4 177,688 4.3 1,965,549 11.06 4.1 - ------------------------------------------------------------------------------------------------------------------------------------ Totals/Weighted Average 454 4,177,988 100.0 48,777,650 11.67 100.0 ====================================================================================================================================
(1) Includes office/flex tenants only. Excludes leases for amenity, retail, parking and month-to-month office/flex tenants. Some tenants have multiple leases. (2) Excludes all unleased space as of December 31, 2000. (3) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, annualized base rental revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above. 40 SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES The following table sets forth a schedule of the lease expirations for the industrial/warehouse properties beginning January 1, 2001, assuming that none of the tenants exercise renewal options:
Average Annual Percentage Of Rent Per Net Net Rentable Total Leased Annualized Rentable Percentage Of Area Subject Square Feet Base Rental Square Foot Annual Base Number Of To Expiring Represented By Revenue Under Represented Rent Under Year Of Leases Leases Expiring Expiring By Expiring Expiring Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%) - ------------------------------------------------------------------------------------------------------------------------------------ 2001............ 6 10,782 2.8 109,173 10.13 3.0 2002............ 2 46,440 12.2 500,752 10.78 13.5 2003............ 4 97,974 25.8 501,118 5.11 13.5 2004............ 10 200,120 52.6 2,300,500 11.50 62.2 2005............ 3 13,154 3.5 181,876 13.83 4.9 2009............ 1 11,800 3.1 106,200 9.00 2.9 - ------------------------------------------------------------------------------------------------------------------------------------ Totals/Weighted Average 26 380,270 100.0 3,699,619 9.73 100.0 ====================================================================================================================================
(1) Includes industrial/warehouse tenants only. Excludes leases for amenity, retail, parking and month-to-month industrial/warehouse tenants. Some tenants have multiple leases. (2) Excludes all unleased space as of December 31, 2000. (3) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, annualized base rent revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, the historical results may differ from those set forth above. SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES The following table sets forth a schedule of the lease expirations for the stand-alone retail properties beginning January 1, 2001, assuming that none of the tenants exercise renewal options:
Average Annual Percentage Of Rent Per Net Net Rentable Total Leased Annualized Rentable Percentage Of Area Subject Square Feet Base Rental Square Foot Annual Base Number Of To Expiring Represented By Revenue Under Represented Rent Under Year Of Leases Leases Expiring Expiring By Expiring Expiring Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) Leases ($) Leases (%) - ------------------------------------------------------------------------------------------------------------------------------------ 2004............ 1 9,300 53.8 195,000 20.97 42.4 2012 ........... 1 8,000 46.2 265,000 33.12 57.6 - ------------------------------------------------------------------------------------------------------------------------------------ Totals/Weighted Average 2 17,300 100.0 460,000 26.59 100.0 ====================================================================================================================================
(1) Includes stand-alone retail property tenants only. (2) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, annualized base rental revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above. 41 INDUSTRY DIVERSIFICATION The following table lists the Operating Partnership's 30 largest industry classifications based on annualized contractual base rent of the Consolidated Properties:
Percentage of Annualized Percentage of Total Operating Base Rental Operating Partnership Square Partnership Revenue Annualized Base Feet Leased Industry Classification (3) ($) (1) (2) Rental Revenue (%) Leased Sq. Ft. (%) - ------------------------------------------------------------------------------------------------------------------------------------ Securities, Commodity Contracts & Other Financial 54,293,717 11.4 2,333,149 9.2 Manufacturing 45,232,970 9.5 2,733,304 10.8 Computer System Design Svcs. 33,965,877 7.1 1,799,904 7.1 Telecommunications 32,056,149 6.7 1,863,008 7.3 Insurance Carriers & Related Activities 31,246,470 6.6 1,607,184 6.3 Legal Services 28,655,988 6.0 1,280,166 5.0 Health Care & Social Assistance 21,199,594 4.5 1,079,556 4.3 Credit Intermediation & Related Activities 19,966,062 4.2 1,173,198 4.6 Wholesale Trade 17,090,086 3.6 1,254,193 4.9 Accounting/Tax Prep. 16,191,496 3.4 762,021 3.0 Other Professional 15,709,854 3.3 897,542 3.5 Retail Trade 15,304,387 3.2 877,279 3.5 Information Services 13,485,944 2.8 637,787 2.5 Publishing Industries 12,780,221 2.7 560,880 2.2 Arts, Entertainment & Recreation 10,873,673 2.3 742,323 2.9 Real Estate & Rental & Leasing 10,441,206 2.2 481,484 1.9 Public Administration 10,196,985 2.1 353,072 1.4 Other Services (except Public Administration) 9,973,705 2.1 720,267 2.8 Advertising/Related Services 9,059,880 1.9 422,451 1.7 Scientific Research/Development 9,004,156 1.9 516,192 2.0 Management/Scientific 7,713,798 1.6 394,625 1.6 Management of Companies & Finance 6,846,791 1.4 351,868 1.4 Transportation 6,534,616 1.4 449,769 1.8 Data Processing Services 5,774,618 1.2 268,770 1.1 Architectural/Engineering 5,268,844 1.1 302,525 1.2 Construction 4,481,491 0.9 252,042 1.0 Educational Services 3,885,332 0.8 214,446 0.9 Utilities 3,621,901 0.8 177,871 0.7 Admin. & Support, Waste Mgt. & Remediation Svc. 3,556,598 0.8 239,164 0.9 Specialized Design Services 3,488,148 0.7 164,620 0.7 Other 8,726,678 1.8 465,285 1.8 - ------------------------------------------------------------------------------------------------------------------------------------ Totals 476,627,235 100.0 25,375,945 100.0 ====================================================================================================================================
(1) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, annualized base rental revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above. (2) Includes office, office/flex, industrial/warehouse and stand-alone retail tenants only. Excludes leases for amenity, retail, parking and month-to-month office tenants. Some tenants have multiple leases. (3) The Operating Partnership's tenants are classified according to the U.S. Government's new North American Industrial Classification System (NAICS) which has replaced the Standard Industrial Code (SIC) system. 42 MARKET DIVERSIFICATION The following table lists the Operating Partnership's 25 markets (MSAs), based on annualized contractual base rent of the Consolidated Properties:
Annualized Percentage of Base Rental Operating Partnership Total Revenue Annualized Base Property Size Percentage of Market (MSA) ($) (1) (2) Rental Revenue (%) Rentable Area Rentable Area (%) - ------------------------------------------------------------------------------------------------------------------------------------ Bergen-Passaic, NJ 82,717,384 17.4 4,530,091 17.0 New York, NY (Westchester-Rockland Counties) 80,086,544 16.8 4,696,178 17.6 Newark, NJ (Essex-Morris-Union Counties) 71,596,650 15.0 3,444,598 12.9 Jersey City, NJ 42,609,281 8.9 2,094,470 7.8 Philadelphia, PA-NJ 37,954,991 8.0 2,710,346 10.2 Washington, DC-MD-VA 19,253,047 4.0 616,549 2.3 Denver, CO 17,302,628 3.6 1,007,931 3.8 Dallas, TX 15,516,855 3.3 959,463 3.6 Middlesex-Somerset-Hunterdon, NJ 15,343,278 3.2 791,051 3.0 Trenton, NJ (Mercer County) 13,423,461 2.8 672,365 2.5 San Francisco, CA 12,594,371 2.6 450,891 1.7 San Antonio, TX 12,018,130 2.5 940,302 3.5 Stamford-Norwalk, CT 9,369,016 2.0 527,250 2.0 Houston, TX 8,888,789 1.9 700,008 2.6 Monmouth-Ocean, NJ 7,375,329 1.5 577,423 2.2 Nassau-Suffolk, NY 5,762,698 1.2 261,849 1.0 Phoenix-Mesa, AZ 5,535,201 1.2 416,967 1.6 Tampa-St. Petersburg-Clearwater, FL 3,869,760 0.8 297,429 1.1 Boulder-Longmont, CO 3,600,741 0.8 270,421 1.0 Bridgeport, CT 3,230,808 0.7 145,487 0.5 Colorado Springs, CO 2,832,002 0.6 209,987 0.8 Dutchess County, NY 2,201,156 0.5 118,727 0.4 Atlantic-Cape May, NJ 1,339,776 0.3 80,344 0.3 Des Moines, IA 1,163,019 0.2 72,265 0.3 Fort Worth-Arlington, TX 1,042,320 0.2 74,429 0.3 - ------------------------------------------------------------------------------------------------------------------------------------ Totals 476,627,235 100.0 26,666,821 100.0 ====================================================================================================================================
(1) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, annualized base rental revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above. (2) Includes office, office/flex, industrial/warehouse and stand-alone retail tenants only. Excludes leases for amenity, retail, parking and month-to-month office tenants. Some tenants have multiple leases. 43 ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings, other than ordinary routine litigation incidental to its business, to which the Operating Partnership is a party or to which any of the Properties is subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 44 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Operating Partnership currently has no securities listed on any securities exchange. MARKET INFORMATION Not applicable. HOLDERS On February 15, 2001, the Operating Partnership had 106 owners of limited partnership units. RECENT SALES OF UNREGISTERED SECURITIES The Operating Partnership did not issue any unregistered securities in the year ended December 31, 2000. DIVIDENDS AND DISTRIBUTIONS During the year ended December 31, 2000, the Corporation and Operating Partnership declared four quarterly common stock dividends and common unit distributions in the amounts of $0.58, $0.58, $0.61 and $0.61 per share and common unit from the first to the fourth quarter, respectively. During the year ended December 31, 1999, the Corporation and Operating Partnership declared four quarterly common stock dividends and common unit distributions in the amounts of $0.55, $0.55, $0.58 and $0.58 per share and common unit from the first to the fourth quarter, respectively. The declaration and payment of dividends and distributions will continue to be determined by the Board of Directors of the Corporation in light of conditions then existing, including the Operating Partnership's earnings, financial condition, capital requirements, applicable legal restrictions and other factors. 45 ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected financial data on a consolidated basis for the Operating Partnership. The consolidated selected operating, balance sheet and cash flow data of the Operating Partnership as of December 31, 2000, 1999, 1998, 1997 and 1996, and for the periods then ended have been derived from financial statements audited by PricewaterhouseCoopers LLP, independent accountants.
Operating Data Year Ended December 31, In thousands, except per share data 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Total revenues $ 576,153 $ 551,484 $ 493,699 $ 23,135 $ 13,180 Operating and other expenses $ 172,146 $ 168,651 $ 150,448 $ 1,870 $ 251 General and administrative $ 23,276 $ 25,480 $ 24,828 $ 15,061 $ 5,637 Depreciation and amortization $ 92,088 $ 87,209 $ 78,916 $ 279 $ 52 Interest expense $ 105,394 $ 102,960 $ 88,043 $ 9,670 $ 4,672 Non-recurring charges $ 37,139 $ 16,458 $ -- $ 46,519 $ -- Equity in net income of Majority-Owned Unconsolidated Property Partnerships $ -- $ -- $ -- $ 89,846 $ 34,611 Income before minority interest and extraordinary item $ 231,463 $ 152,683 $ 151,464 $ 39,582 $ 37,179 Income before extraordinary item $ 226,391 $ 152,604 $ 151,464 $ 39,582 $ 37,179 Basic earnings per unit - before extraordinary item $ 3.18 $ 2.05 $ 2.13 $ 0.22 $ 1.76 Diluted earnings per unit - before extraordinary item $ 3.10 $ 2.04 $ 2.11 $ 0.21 $ 1.72 Distributions declared per common unit $ 2.38 $ 2.26 $ 2.10 $ 1.90 $ 1.75 Basic weighted average units outstanding 66,392 66,885 63,438 43,356 21,171 Diluted weighted average units outstanding 73,070 67,133 63,893 44,409 21,651 Balance Sheet Data December 31, In thousands 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Rental property, before accumulated depreciation and amortization $3,704,354 $3,654,845 $3,467,799 $ 65,592 $ 712 Investments in Unconsolidated Majority-Owned Property Partnerships $ -- $ -- $ -- $1,821,614 $ 488,585 Total assets $3,676,977 $3,629,601 $3,452,194 $1,901,174 $ 776,220 Total debt $1,628,512 $1,490,175 $1,420,931 $ 322,100 $ 29,805 Total liabilities $1,774,239 $1,648,844 $1,526,974 $ 364,489 $ 47,877 Minority interest $ 1,925 $ 83,600 $ -- $ -- $ -- Redeemable Partnership Units $ -- $ -- $ -- $ 522,812 $ 83,052 Partners' capital $1,900,813 $1,897,157 $1,925,220 $1,013,873 $ 645,291 Other Data Year Ended December 31, In thousands 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows provided by operating activities $ 180,529 $ 243,638 $ 208,761 $ 66,661 $ 39,382 Cash flows provided by (used in) investing activities $ 6,189 $ (195,178) $ (749,067) $ (975,574) $(305,891) Cash flows (used in) provided by financing activities $ (182,210) $ (45,598) $ 543,411 $ 706,368 $ 470,893 Funds from operations (1), before distributions to preferred unitholders $ 262,071 $ 244,240 $ 216,949 $ 111,752 $ 45,220 Funds from operations (1), after distributions to preferred unitholders $ 246,630 $ 228,764 $ 200,636 $ 110,864 $ 45,220
- ---------- (1) The Operating Partnership considers funds from operations (after adjustment for straight-lining of rents and non-recurring charges) one measure of REIT performance. Funds from operations ("FFO") is defined as net income (loss) before distributions to preferred unitholders computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains (or losses) from debt restructuring, other extraordinary items, and sales of depreciable rental 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's performance or to cash flows as a measure of liquidity. Funds from operations presented herein is not necessarily comparable to funds from operations presented by other real estate companies due to 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 and non-recurring charges. Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations," contained elsewhere in this Report, for the calculation of FFO for the periods presented. 46 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Consolidated Financial Statements of Mack-Cali Realty, L.P. and subsidiaries and the notes thereto. Certain defined terms used herein have the meaning ascribed to them in the Consolidated Financial Statements. The following comparisons for the year ended December 31, 2000 ("2000"), as compared to the year ended December 31, 1999 ("1999"), and for 1999, as compared to the year ended December 31, 1998 ("1998"), make reference to the following: (i) the effect of the "Same-Store Properties," which represents all in-service properties owned by the Operating Partnership at December 31, 1998, excluding Dispositions as defined below (for the 2000 versus 1999 comparison) and which represents all in-service properties owned by the Operating Partnership at December 31, 1997, excluding Dispositions as defined below (for the 1999 versus 1998 comparison), (ii) the effect of the "Acquired Properties," which represents all properties acquired or placed in service by the Operating Partnership from January 1, 1999 through December 31, 2000 (for the 2000 versus 1999 comparison) and which represents all properties acquired or placed in service by the Operating Partnership from January 1, 1998 through December 31, 1999 (for the 1999 versus 1998 comparison) and (iii) the effect of the "Dispositions", which represents results for each period for those rental properties sold by the Operating Partnership during the respective periods. Year Ended December 31, 2000 Compared to Year Ended December 31, 1999
Year Ended December 31, Dollar Percent (dollars in thousands) 2000 1999 Change Change - ------------------------------------------------------------------------------------------------------------------------------------ Revenue from rental operations: Base rents $491,193 $469,853 $21,340 4.5% Escalations and recoveries from tenants 58,488 62,182 (3,694) (5.9) Parking and other 15,325 15,915 (590) (3.7) - ------------------------------------------------------------------------------------------------------------------------------------ Sub-total 565,006 547,950 17,056 3.1 Equity in earnings of unconsolidated joint ventures 8,055 2,593 5,462 210.6 Interest income 3,092 941 2,151 228.6 - ------------------------------------------------------------------------------------------------------------------------------------ Total revenues 576,153 551,484 24,669 4.5 - ------------------------------------------------------------------------------------------------------------------------------------ Property expenses: Real estate taxes 59,400 57,382 2,018 3.5 Utilities 42,035 41,580 455 1.1 Operating services 70,711 69,689 1,022 1.5 - ------------------------------------------------------------------------------------------------------------------------------------ Sub-total 172,146 168,651 3,495 2.1 General and administrative 23,276 25,480 (2,204) (8.6) Depreciation and amortization 92,088 87,209 4,879 5.6 Interest expense 105,394 102,960 2,434 2.4 Non-recurring charges 37,139 16,458 20,681 125.7 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses 430,043 400,758 29,285 7.3 - ------------------------------------------------------------------------------------------------------------------------------------ Income before gain on sales of rental property and minority interest 146,110 150,726 (4,616) (3.1) Gain on sales of rental property 85,353 1,957 83,396 4,261.4 - ------------------------------------------------------------------------------------------------------------------------------------ Income before minority interest 231,463 152,683 78,780 51.6 Minority interest in consolidated partially-owned properties 5,072 79 4,993 6,320.3 - ------------------------------------------------------------------------------------------------------------------------------------ Net income 226,391 152,604 73,787 48.4 Preferred unit distributions (15,441) (15,476) 35 0.2 - ------------------------------------------------------------------------------------------------------------------------------------ Net income available to common unitholders $210,950 $137,128 $73,822 53.8% ====================================================================================================================================
47 The following is a summary of the changes in revenue from rental operations and property expenses divided into Same-Store Properties, Acquired Properties and Dispositions (dollars in thousands):
Total Operating Partnership Same-Store Properties Acquired Properties Dispositions --------------------- --------------------- ------------------- ------------ Dollar Percent Dollar Percent Dollar Percent Dollar Percent Change Change Change Change Change Change Change Change - ------------------------------------------------------------------------------------------------------------------------------------ Revenue from rental operations: Base rents $21,340 4.5% $16,615 3.5% $21,429 4.6% $(16,704) (3.6)% Escalations and recoveries from from tenants (3,694) (5.9) (577) (0.9) 1,602 2.6 (4,719) (7.6) Parking and other (590) (3.7) (111) (0.7) 150 0.9 (629) (3.9) - ------------------------------------------------------------------------------------------------------------------------------------ Total $17,056 3.1% $15,927 2.9% $23,181 4.2% $(22,052) (4.0)% ==================================================================================================================================== Property expenses: Real estate taxes $ 2,018 3.5% $ 1,267 2.2% $ 2,287 4.0% $ (1,536) (2.7)% Utilities 455 1.1 752 1.8 1,501 3.6 (1,798) (4.3) Operating services 1,022 1.5 664 1.0 3,359 4.8 (3,001) (4.3) - ------------------------------------------------------------------------------------------------------------------------------------ Total $ 3,495 2.1% $ 2,683 1.6% $ 7,147 4.2% $ (6,335) (3.7)% ==================================================================================================================================== OTHER DATA: Number of Consolidated Properties 255 237 18 7 Square feet (in thousands) 26,667 24,886 1,781 1,949
Base rents for the Same-Store Properties increased $16.6 million, or 3.5 percent, for 2000 as compared to 1999, due primarily to rental rate increases in 2000. Escalations and recoveries from tenants for the Same-Store Properties decreased $0.6 million, or 0.9 percent, for 2000 over 1999, due to the recovery of a decreased amount of total property expenses. Parking and other income for the Same-Store Properties decreased $0.1 million, or 0.7 percent, due primarily to fewer lease termination fees in 2000. Real estate taxes on the Same-Store Properties increased $1.3 million, or 2.2 percent, for 2000 as compared to 1999, due primarily to property tax rate increases in certain municipalities in 2000. Utilities for the Same-Store Properties increased $0.8 million, or 1.8 percent, for 2000 as compared to 1999, due primarily to increased rates. Operating services for the Same-Store Properties increased $0.7 million, or 1.0 percent, due primarily to an increase in maintenance costs in 2000. Equity in earnings of unconsolidated joint ventures increased $5.5 million, or 210.6 percent, for 2000 as compared to 1999. This is due primarily to properties developed by joint ventures being placed in service in 2000 and higher occupancies (see Note 4 to the Financial Statements). Interest income increased $2.2 million, or 228.6 percent, for 2000 as compared to 1999. This increase was due primarily to the effect of net proceeds from certain property sales being invested in cash and cash equivalents for the period of time prior to which such proceeds were reinvested, as well as income from mortgages receivable in 2000. General and administrative decreased by $2.2 million, or 8.6 percent, for 2000 as compared to 1999. This decrease is due primarily to decreased payroll and related costs in 2000. Depreciation and amortization increased by $4.9 million, or 5.6 percent, for 2000 over 1999. Of this increase, $5.4 million, or 6.2 percent, is attributable to the Same-Store Properties, and $3.8 million, or 4.4 percent, is due to the Acquired Properties, partially offset by a decrease of $4.3 million, or 5.0 percent, due to the Dispositions. Interest expense increased $2.4 million, or 2.4 percent, for 2000 as compared to 1999. This increase is due primarily to the replacement in March 1999 of short-term credit facility borrowings with long-term fixed rate unsecured notes and increase in LIBOR in 2000 over 1999. 48 Non-recurring charges of $37.1 million were incurred in 2000 as a result of costs associated with the termination of the Prentiss merger agreement (see Note 3 to the Financial Statements) in September 2000 and costs associated with the resignations of Brant Cali and John R. Cali (see Note 16 to the Financial Statements) in June 2000. Non-recurring charges of $16.5 million were incurred in 1999 as a result of the resignation of Thomas A. Rizk (see Note 16 to the Financial Statements). Income before gain on sales of rental property and minority interest decreased to $146.1 million in 2000 from $150.7 million in 1999. The decrease of approximately $4.6 million is due to the factors discussed above. Net income available to common unitholders increased by $73.8 million, from $137.1 million in 1999 to $210.9 million in 2000. This increase was a result of a gain on sales of rental property of $85.4 million in 2000. This was partially offset by a decrease in income before gain on sales of rental property and minority interest of $4.6 million in 2000 as compared to 1999, a gain on sales of rental property of $2.0 million in 1999, and an increase in minority interest in consolidated partially-owned properties of $5.0 million in 2000. Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Year Ended December 31, Dollar Percent (dollars in thousands) 1999 1998 Change Change - ------------------------------------------------------------------------------------------------------------------------------------ Revenue from rental operations: Base rents $469,853 $427,528 $42,325 9.9% Escalations and recoveries from tenants 62,182 51,981 10,201 19.6 Parking and other 15,915 10,712 5,203 48.6 - ------------------------------------------------------------------------------------------------------------------------------------ Sub-total 547,950 490,221 57,729 11.8 Equity in earnings of unconsolidated joint ventures 2,593 1,055 1,538 145.8 Interest income 941 2,423 (1,482) (61.2) - ------------------------------------------------------------------------------------------------------------------------------------ Total revenues 551,484 493,699 57,785 11.7 - ------------------------------------------------------------------------------------------------------------------------------------ Property expenses: Real estate taxes 57,382 48,297 9,085 18.8 Utilities 41,580 38,440 3,140 8.2 Operating services 69,689 63,711 5,978 9.4 - ------------------------------------------------------------------------------------------------------------------------------------ Sub-total 168,651 150,448 18,203 12.1 General and administrative 25,480 24,828 652 2.6 Depreciation and amortization 87,209 78,916 8,293 10.5 Interest expense 102,960 88,043 14,917 16.9 Non-recurring charges 16,458 -- 16,458 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses 400,758 342,235 58,523 17.1 - ------------------------------------------------------------------------------------------------------------------------------------ Income before gain on sales of rental property, minority interest and extraordinary item 150,726 151,464 (738) (0.5) Gain on sales of rental property 1,957 -- 1,957 -- - ------------------------------------------------------------------------------------------------------------------------------------ Income before minority interest and extraordinary item 152,683 151,464 1,219 0.8 Minority interest in consolidated partially-owned properties 79 -- 79 -- - ------------------------------------------------------------------------------------------------------------------------------------ Income before extraordinary item 152,604 151,464 1,140 0.8 Extraordinary item - loss on early retirement of debt -- (2,670) 2,670 (100.0) - ------------------------------------------------------------------------------------------------------------------------------------ Net income 152,604 148,794 3,810 2.6 Preferred unit distributions (15,476) (16,313) 837 (5.1) - ------------------------------------------------------------------------------------------------------------------------------------ Net income available to common unitholders $137,128 $132,481 $4,647 3.5% ====================================================================================================================================
49 The following is a summary of changes in revenue from rental operations and property expenses divided into Same-Store Properties, Acquired Properties and Dispositions (dollars in thousands):
Total Operating Partnership Same-Store Properties Acquired Properties Dispositions --------------------- --------------------- ------------------- ------------ Dollar Percent Dollar Percent Dollar Percent Dollar Percent Change Change Change Change Change Change Change Change - ------------------------------------------------------------------------------------------------------------------------------------ Revenue from rental operations: Base rents $42,325 9.9% $10,007 2.4% $32,519 7.6% $(201) (0.1)% Escalations and recoveries from from tenants 10,201 19.6 4,800 9.2 5,404 10.4 (3) 0.0 Parking and other 5,203 48.6 2,585 24.1 2,601 24.3 17 0.2 - ------------------------------------------------------------------------------------------------------------------------------------ Total $57,729 11.8% $17,392 3.6% $40,524 8.3% $(187) (0.1)% ==================================================================================================================================== Property expenses: Real estate taxes $ 9,085 18.8% $ 3,300 6.8% $ 5,817 12.1% $ (32) (0.1)% Utilities 3,140 8.2 400 1.0 2,738 7.2 2 0.0 Operating services 5,978 9.4 (165) (0.3) 6,210 9.8 (67) (0.1) - ------------------------------------------------------------------------------------------------------------------------------------ Total $18,203 12.1% $ 3,535 2.4% $14,765 9.8% $ (97) (0.1)% ==================================================================================================================================== OTHER DATA: Number of Consolidated Properties 253 187 66 2 Square feet (in thousands) 27,383 21,775 5,608 190
Base rents for the Same-Store Properties increased $10.0 million, or 2.4 percent, for 1999 as compared to 1998, due primarily to rental rate increases in 1999. Escalations and recoveries from tenants for the Same-Store Properties increased $4.8 million, or 9.2 percent, for 1999 over 1998, due to the recovery of an increased amount of total property expenses, as well as additional settle-up billings in 1999. Parking and other income for the Same-Store Properties increased $2.6 million, or 24.1 percent, due primarily to increased lease termination fees in 1999. Real estate taxes on the Same-Store Properties increased $3.3 million, or 6.8 percent, for 1999 as compared to 1998, due primarily to property tax rate increases in certain municipalities in 1999. Utilities for the Operating Partnership increased $3.1 million, or 8.2 percent, for 1999 as compared to 1998, due substantially to the Acquired Properties. Operating services for the Same-Store Properties decreased $0.2 million, or 0.3 percent, due primarily to a reduction in maintenance costs incurred. Equity in earnings of unconsolidated joint ventures increased $1.5 million in 1999 as compared to 1998. This is due primarily to additional joint venture investments made by the Operating Partnership (see Note 4 to the Financial Statements). Interest income decreased $1.5 million, or 61.2 percent, for 1999 as compared to 1998. This decrease was due primarily to repayment by a borrower of a mortgage note receivable in 1998. General and administrative increased by $0.7 million, or 2.6 percent, for 1999 as compared to 1998. This increase is due primarily to increased payroll and related costs in 1999. Depreciation and amortization increased by $8.3 million, or 10.5 percent, for 1999 over 1998. Of this increase, $4.8 million, or 6.1 percent, is attributable to the Acquired Properties and $3.5 million, or 4.4 percent, is due to the Same-Store Properties. Interest expense increased $14.9 million, or 16.9 percent, for 1999 as compared to 1998. This increase is due primarily to the replacement in 1999 of short-term credit facility borrowings with long-term fixed rate unsecured debt and net additional drawings from the Operating Partnership's revolving credit facilities generally as a result of Operating Partnership acquisitions in 1998. These increases were partially offset by the reduction in spread over LIBOR due to the Unsecured Facility signed in April 1998 and the achievement by the Operating Partnership of investment grade credit ratings in November 1998. 50 Non-recurring charges of $16.5 million were incurred in 1999, as a result of the resignation of Thomas A. Rizk (see Note 16 to the Financial Statements). Income before gain on sales of rental property, minority interests and extraordinary item decreased to $150.7 million in 1999 from $151.5 million in 1998. The decrease of approximately $0.8 million is due to the factors discussed above. Net income available to common unitholders increased by $4.6 million, from $132.5 million in 1998 to $137.1 million in 1999. This increase was a result of an extraordinary item of $2.7 million due to early retirement of debt in 1998, a gain on sales of rental property of $2.0 million in 1999 and a decrease in preferred dividends of $0.8 million. These were partially offset by a decrease in income before gain on sales of rental property, minority interest and extraordinary item of $0.8 million in 2000 as compared to 1999 and an increase in minority interest in consolidated partially-owned properties of $0.1 million. Liquidity and Capital Resources Statement of Cash Flows During the year ended December 31, 2000, the Operating Partnership generated $180.5 million in cash flows from operating activities, and together with $723.0 million in borrowings from the Operating Partnership's revolving credit facilities and the issuance of senior unsecured notes, $292.9 million in proceeds from sales of rental property, $13.3 million in distributions received from unconsolidated joint ventures, $2.5 million in proceeds from stock options exercised and $0.5 million from restricted cash, used an aggregate of approximately $1.2 billion to acquire properties and land parcels and pay for other tenant and building improvements totaling $268.2 million, repay outstanding borrowings on its revolving credit facilities and other mortgage debt of $585.0 million, pay quarterly distributions of $172.1 million, invest $17.6 million in unconsolidated joint ventures, distribute $88.7 million to minority interest in partially-owned properties, issue mortgage note receivables of $14.7 million, pay financing costs of $6.4 million, repurchase 2,026,300 shares of the Corporation's outstanding common stock for $55.5 million and increase the Operating Partnership's cash and cash equivalents by $4.5 million. Capitalization The Operating Partnership has a focused strategy geared to attractive opportunities in high-barrier-to-entry markets, primarily predicated on the Operating Partnership's strong presence in the Northeast region and, to a lesser extent, certain markets in California. The Operating Partnership plans to sell substantially all of its properties located in the Southwestern and Western regions, using such proceeds to invest in property acquisitions and development projects in its core Northeast markets, as well as to repay debt and fund stock repurchases. During 2000, the Operating Partnership sold three of its office properties located in the Southwest and Western regions for aggregate net proceeds of approximately $57.8 million (see Note 3 - "2000 Transactions - Property Sales" to the financial statements.) Currently, the Operating Partnership is actively seeking to sell 10 office properties located in San Antonio and Houston, Texas. Consistent with its strategy, in the fourth quarter 2000, the Operating Partnership started construction of a 980,000 square-foot office property, to be known as Plaza 5, at its Harborside Financial Center office complex in Jersey City, Hudson County, New Jersey. The total cost of the project is currently projected to be approximately $260 million and is anticipated to be completed in third quarter 2002. Additionally, in the fourth quarter 2000, the Operating Partnership, through a joint venture, started construction of a 575,000 square-foot office property, to be known as Plaza 10, on land owned by the joint venture located adjacent to the Operating Partnership's Harborside complex. The total cost of this project is currently projected to be approximately $140 million and is anticipated to be completed in third quarter 2002. Plaza 10 is 100 percent pre-leased to Charles Schwab for a 15-year term. The lease agreement obligates the Operating Partnership, among other things, to deliver space to the tenant by required timelines and offers expansion options, at the tenant's election, to additional space in any adjacent Harborside projects. Such options may obligate the Operating Partnership to construct an additional building at Harborside if vacant space is not available in any of its existing Harborside properties. Should the Operating Partnership be unable to or choose not to provide such expansion space, the Operating Partnership could be liable to Schwab for its actual damages, in no event to exceed $15.0 million. The Operating Partnership expects to finance its funding requirements under both Plazas 5 and 10 projects through drawing on its revolving credit facilities, construction financing, or through joint venture arrangements. 51 On August 6, 1998, the Board of Directors of the Corporation authorized a Repurchase Program under which the Corporation was permitted to purchase up to $100.0 million of the Corporation's outstanding common stock. Under the Repurchase Program, the Corporation purchased for constructive retirement 1,869,200 shares of its outstanding common stock for an aggregate cost of approximately $52.6 million through September 12, 2000. On September 13, 2000, the Board of Directors of the Corporation authorized an increase to the Repurchase Program under which the Corporation is permitted to purchase up to an additional $150.0 million of the Corporation's outstanding common stock above the $52.6 million that had previously been purchased. From that date through February 15, 2001, the Corporation purchased for constructive retirement 2,098,300 shares of its outstanding common stock for an aggregate cost of approximately $57.5 million under the Repurchase Program. The Corporation has authorization to repurchase up to an additional $92.5 million of its outstanding common stock which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. As of December 31, 2000, the Operating Partnership's total indebtedness of $1.6 billion (weighted average interest rate of 7.29 percent) was comprised of $381.0 million of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 7.53 percent) and fixed rate debt of $1.2 billion (weighted average rate of 7.25 percent). As of December 31, 2000, the Operating Partnership had outstanding borrowings of $348.8 million under its revolving credit facilities (with aggregate borrowing capacity of $900.0 million). The total outstanding borrowings were from the 2000 Unsecured Facility, with no outstanding borrowings under the Prudential Facility. The interest rate on outstanding borrowings under the 2000 Unsecured Facility is currently LIBOR plus 80 basis points. The Operating Partnership may instead elect an interest rate representing the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. The 2000 Unsecured Facility also requires a 20 basis point facility fee on the current borrowing capacity payable quarterly in arrears. In the event of a change in the Operating Partnership's unsecured debt rating, the interest and facility fee rate will be changed on a sliding scale. Subject to certain conditions, the Operating Partnership has the ability to increase the borrowing capacity of the 2000 Unsecured Facility up to $1.0 billion. The 2000 Unsecured Facility matures in June 2003, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the credit line upon exercise. The Operating Partnership has been notified that the Prudential Facility, which carries an interest rate of 110 basis points over LIBOR and matures in June 2001, will not be renewed. The Operating Partnership believes that the 2000 Unsecured Facility is sufficient to meet its revolving credit facility needs. The terms of the 2000 Unsecured Facility include certain restrictions and covenants which limit, among other things, the payment of dividends (as discussed below), the incurrence of additional indebtedness, the incurrence of liens and the disposition of assets, and which require compliance with financial ratios relating to the maximum leverage ratio, the maximum amount of secured indebtedness, the minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property debt service coverage and certain investment limitations. The dividend restriction referred to above provides that, except to enable the Corporation to continue to qualify as a REIT under the Code, the Corporation will not during any four consecutive fiscal quarters make distributions with respect to common stock or other equity interests in an aggregate amount in excess of 90 percent of funds from operations (as defined) for such period, subject to certain other adjustments. On December 21, 2000, the Operating Partnership issued $15.0 million of 7.835 percent senior unsecured notes due December 15, 2010 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions) of approximately $14.9 million were used primarily to pay down outstanding borrowings under the Prudential Facility, as defined in Note 9 to the Financial Statements. In January 2001, the Operating Partnership issued $300.0 million face amount of 7.75 percent senior unsecured notes due February 15, 2011 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions and discount) of approximately $296.3 million were used to pay down outstanding borrowings under the 2000 Unsecured Facility, as defined in Note 9 to the Financial Statements. The senior unsecured notes were issued at a discount of approximately $1.7 million. The terms of the Operating Partnership's unsecured corporate debt include certain restrictions and covenants which require compliance with financial ratios relating to the maximum amount of debt leverage, the maximum amount of secured indebtedness, the minimum amount of debt service coverage and the maximum amount of unsecured debt as a percent of unsecured assets. 52 The Operating Partnership has three investment grade credit ratings. Standard & Poor's Rating Services ("S&P") and Fitch, Inc. ("Fitch") have each assigned their BBB rating to existing and prospective senior unsecured debt of the Operating Partnership. S&P and Fitch have also assigned their BBB- rating to prospective preferred stock offerings of the Corporation. Moody's Investors Service has assigned its Baa3 rating to the existing and prospective senior unsecured debt of the Operating Partnership and its Ba1 rating to prospective preferred stock offerings of the Corporation. As of December 31, 2000, the Operating Partnership had 229 unencumbered properties, totaling 20.4 million square feet, representing 76.5 percent of the Operating Partnership's total portfolio on a square footage basis. The Operating Partnership and Corporation have an effective shelf registration statement with the SEC for an aggregate of $2.0 billion in debt securities, preferred stock and preferred stock represented by depositary shares, under which the Operating Partnership has issued an aggregate of $1.1 billion of unsecured corporate debt. Historically, rental revenue has been the principal source of funds to pay operating expenses, debt service and capital expenditures, excluding non-recurring capital expenditures. Management believes that the Operating Partnership will have access to the capital resources necessary to expand and develop its business. To the extent that the Operating Partnership's cash flow from operating activities is insufficient to finance its non-recurring capital expenditures such as property acquisition and construction project costs and other capital expenditures, the Operating Partnership expects to finance such activities through borrowings under its revolving credit facilities and other debt and equity financing. The Operating Partnership expects to meet its short-term liquidity requirements generally through its working capital, net cash provided by operating activities and from the 2000 Unsecured Facility. The Operating Partnership is frequently examining potential property acquisitions and construction projects and, at any given time, one or more of such acquisitions or construction projects may be under consideration. Accordingly, the ability to fund property acquisitions and construction projects is a major part of the Operating Partnership's financing requirements. The Operating Partnership expects to meet its financing requirements through funds generated from operating activities, proceeds from property sales, long-term or short-term borrowings (including draws on the Operating Partnership's revolving credit facilities) and the issuance of additional debt or equity securities. Following the Operating Partnership's issuance of $300.0 million in senior unsecured notes in January 2001, the Operating Partnership's total debt had a weighted average term to maturity of approximately 5.9 years. The Operating Partnership does not intend to reserve funds to retire the Operating Partnership's unsecured corporate debt or its mortgages and loans payable upon maturity. Instead, the Operating Partnership will seek to refinance such debt at maturity or retire such debt through the issuance of additional equity or debt securities. The Operating Partnership is reviewing various refinancing options, including the issuance of additional unsecured debt, preferred stock, and/or obtaining additional mortgage debt, some or all of which may be completed during 2001. The Operating Partnership anticipates that its available cash and cash equivalents and cash flows from operating activities, together with cash available from borrowings and other sources, will be adequate to meet the Operating Partnership's capital and liquidity needs both in the short and long-term. However, if these sources of funds are insufficient or unavailable, the Operating Partnership's ability to make the expected distributions discussed below may be adversely affected. To maintain its qualification as a REIT, the Corporation must make annual distributions to its stockholders of at least 90 percent (for taxable years beginning after December 31, 2000) of its REIT taxable income, determined without regard to the dividends paid deduction and by excluding net capital gains. The Corporation currently relies on the distributions it receives from the Operating Partnership to make distributions to its stockholders. Moreover, the Operating Partnership intends to continue to make regular quarterly distributions to its unitholders which, based upon current policy, in the aggregate would equal approximately $158.3 million on an annualized basis. However, any such distribution, would only be paid out of available cash after meeting operating requirements, scheduled debt service on mortgages and loans payable and preferred unit distributions. 53 Funds from Operations The Operating Partnership considers funds from operations ("FFO"), after adjustment for straight-lining of rents and non-recurring charges, 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 items, and sales of depreciable rental property, plus real estate-related depreciation and amortization. Funds from operations should not be considered as an alternative to net income as an indication of the Operating Partnership's performance or to cash flows as a measure of liquidity. Funds from operations presented herein is not necessarily comparable to funds from operations presented by other real estate companies due to 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 and non-recurring charges. Funds from operations for the years ended December 31, 2000, 1999 and 1998, as calculated in accordance with NAREIT's definition as published in October 1999, after adjustment for straight-lining of rents and non-recurring charges, are summarized in the following table (in thousands):
Year Ended December 31, 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------- Income before gain on sales of rental property, minority interests and extraordinary item $ 146,110 $ 150,726 $ 151,464 Add: Real estate-related depreciation and amortization (1) 94,250 89,731 79,169 Gain on sale of land 2,248 -- -- Non-recurring charges 37,139 16,458 -- Deduct: Rental income adjustment for straight-lining of rents (2) (12,604) (12,596) (13,684) Minority interests: partially-owned properties (5,072) (79) -- - ---------------------------------------------------------------------------------------------------------------------- Funds from operations, after adjustment for straight-lining of rents and non-recurring charges $ 262,071 $ 244,240 $ 216,949 Deduct: Distributions to preferred unitholders (15,441) (15,476) (16,313) - ---------------------------------------------------------------------------------------------------------------------- Funds from operations, after adjustment for straight-lining of rents and non-recurring charges, after distributions to preferred unitholders $ 246,630 $ 228,764 $ 200,636 ====================================================================================================================== Cash flows provided by operating activities $ 180,529 $ 243,638 $ 208,761 Cash flows provided by (used in) investing activities $ 6,189 $(195,178) $(749,067) Cash flows (used in) provided by financing activities $(182,210) $ (45,598) $ 543,411 - ---------------------------------------------------------------------------------------------------------------------- Basic weighted average units outstanding (3) 66,392 66,885 63,438 - ---------------------------------------------------------------------------------------------------------------------- Diluted weighted average units outstanding (3) 73,070 73,769 70,867 - ----------------------------------------------------------------------------------------------------------------------
(1) Includes the Operating Partnership's share from unconsolidated joint ventures of $2,928, $3,166 and $817 for the years ended December 31, 2000, 1999 and 1998. (2) Includes the Operating Partnership's share from unconsolidated joint ventures of $24, $158 and $109 for the years ended December 31, 2000, 1999 and 1998. (3) See calculations for the amounts presented in the following reconciliation. 54 The following schedule reconciles the Operating Partnership's basic weighted average units to the basic and diluted weighted average units presented above: Year Ended December 31, 2000 1999 1998 - -------------------------------------------------------------------------------- Basic weighted average units: 66,392 66,885 63,438 Add: Weighted average preferred units (after conversion to common units) 6,485 6,636 6,974 Stock options 188 241 411 Restricted Stock Awards 5 7 -- Stock Warrants -- -- 44 - -------------------------------------------------------------------------------- Diluted weighted average units: 73,070 73,769 70,867 ================================================================================ Inflation The Operating Partnership's leases with the majority of its tenants provide for recoveries and escalation charges based upon the tenant's proportionate share of, and/or increases in, real estate taxes and certain operating costs, which reduce the Operating Partnership's exposure to increases in operating costs resulting from inflation. Disruption in Operations Due To Year 2000 Problems The Year 2000 issue was the result of computer programs and embedded chips using a two-digit format, as opposed to four digits, to indicate the year. Such computer systems may have been unable to interpret dates beyond the year 1999, which could have caused a system failure or other computer errors, leading to disruptions in operations. We developed a three-phase Year 2000 project (the "Project") to identify, remedy and test our Year 2000 systems compliance, including, but not limited to, central accounting and operating systems, tenant compliance and property compliance. In addition, we prepared contingency plans in the event of Year 2000 failures associated with critical building support systems and our accounting system. Our Project was completed on schedule during the fourth quarter of 1999. Approximately $1.0 million was incurred to modify, upgrade and/or replace non-compliant systems. We experienced no system failures or computer errors associated with Year 2000 compliance. We have concluded the Project and anticipate no further Year 2000 compliance issues or expenditures. 55 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices. In pursuing its business plan, the primary market risk to which the Operating Partnership is exposed is interest rate risk. Changes in the general level of interest rates prevailing in the financial markets may affect the spread between the Operating Partnership's yield on invested assets and cost of funds and, in turn, our ability to make distributions or payments to our investors. Approximately $1.2 billion of the Operating Partnership's long-term debt bears interest at fixed rates and therefore the fair value of these instruments is affected by changes in market interest rates. The following table presents principal cash flows (in thousands) based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the fixed rate debt. The interest rate on the variable rate debt as of December 31, 2000 ranged from LIBOR plus 65 basis points to LIBOR plus 80 basis points.
December 31, 2000 Debt , including current portion 2001 2002 2003 2004 2005 Thereafter Total Fair Value - ------------------------- ---- ---- ---- ---- ---- ---------- ----- ---------- Fixed Rate $7,451 $3,433 $195,674 $312,283 $254,762 $473,891 $1,247,494 $1,240,139 Average Interest Rate 7.43% 8.20% 7.30% 7.34% 7.13% 7.47% 7.34% Variable Rate $348,840 $ 32,178 $ 381,018 $ 381,018
While the Operating Partnership has not experienced any significant credit losses, in the event of a significant rising interest rate environment and/or economic downturn, defaults could increase and result in losses to the Operating Partnership which adversely affect its operating results and liquidity. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to this item is submitted as a separate section of this Form 10-K. See Item 14. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 56 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by Item 10 is incorporated by reference from the Corporation's definitive proxy statement for its annual meeting of shareholders to be held on May 15, 2001. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 is incorporated by reference from the Corporation's definitive proxy statement for its annual meeting of shareholders to be held on May 15, 2001. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 is incorporated by reference from the Corporation's definitive proxy statement for its annual meeting of shareholders to be held on May 15, 2001. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 is incorporated by reference from the Corporation's definitive proxy statement for its annual meeting of shareholders to be held on May 15, 2001. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements and Report of PricewaterhouseCoopers LLP, Independent Accountants Consolidated Balance Sheets as of December 31, 2000 and 1999 Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Changes in Partners' Capital for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements (a) 2. Financial Statement Schedules Schedule III - Real Estate Investments and Accumulated Depreciation as of December 31, 2000 All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto. 57 (a) 3. Exhibits The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed: Exhibit Number Exhibit Title ------- ------------- 3.1 Restated Charter of Mack-Cali Realty Corporation dated June 2, 1999, together with Articles Supplementary thereto (filed as Exhibit 3.1 to the Corporation's Form 8-K dated June 10, 1999 and as Exhibit 4.2 to the Operating Partnership's Form 8-K dated July 6, 1999 and each incorporated herein by reference). 3.2 Amended and Restated Bylaws of Mack-Cali Realty Corporation dated June 10, 1999 (filed as Exhibit 3.2 to the Corporation's Form 8-K dated June 10, 1999 and incorporated herein by reference). 3.3 Second Amended and Restated Agreement of Limited Partnership dated December 11, 1997, for Mack-Cali Realty, L.P. (filed as Exhibit 10.110 to the Corporation's Form 8-K dated December 11, 1997 and incorporated herein by reference). 3.4 Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. (filed as Exhibit 3.1 to the Corporation's and Operating Partnership's Registration Statement on Form S-3, Registration No. 333-57103, and incorporated herein by reference). 3.5 Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. (filed as Exhibit 10.2 to the Operating Partnership's Form 8-K dated July 6, 1999 and incorporated herein by reference). 4.1 Amended and Restated Shareholder Rights Agreement, dated as of March 7, 2000, between Mack-Cali Realty Corporation and EquiServe Trust Company, N.A., as Rights Agent (filed as Exhibit 4.1 to the Operating Partnership's Form 8-K dated March 7, 2000 and incorporated herein by reference). 4.2 Amendment No. 1 to the Amended and Restated Shareholder Rights Agreement, dated as of June 27, 2000, by and among Mack-Cali Realty Corporation and Equiserve Trust Company, N.A. (filed as Exhibit 4.1 to the Operating Partnership's Form 8-K dated June 27, 2000). 4.3 Indenture dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer, Mack-Cali Realty Corporation, as guarantor, and Wilmington Trust Company, as trustee (filed as Exhibit 4.1 to the Operating Partnership's Form 8-K dated March 16, 1999 and incorporated herein by reference). 4.4 Supplemental Indenture No. 1 dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership's Form 8-K dated March 16, 1999 and incorporated herein by reference). 58 Exhibit Number Exhibit Title ------- ------------- 4.5 Supplemental Indenture No. 2 dated as of August 2, 1999, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.4 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 4.6 Supplemental Indenture No. 3 dated as of December 21, 2000, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership's Form 8-K dated December 21, 2000 and incorporated herein by reference). 4.7 Supplemental Indenture No. 4 dated as of January 29, 2001, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership's Form 8-K dated January 29, 2001 and incorporated herein by reference). 10.1 Amended and Restated Employment Agreement dated as of July 1, 1999 between Mitchell E. Hersh and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.2 Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Timothy M. Jones and Mack-Cali Realty Corporation (filed as Exhibit 10.3 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.3 Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Barry Lefkowitz and Mack-Cali Realty Corporation (filed as Exhibit 10.6 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.4 Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.7 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). *10.5 Employment Agreement dated as of December 5, 2000 between Michael Grossman and Mack-Cali Realty Corporation. 10.6 Restricted Share Award Agreement dated as of July 1, 1999 between Mitchell E. Hersh and Mack-Cali Realty Corporation (filed as Exhibit 10.8 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.7 Restricted Share Award Agreement dated as of July 1, 1999 between Timothy M. Jones and Mack-Cali Realty Corporation (filed as Exhibit 10.9 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.8 Restricted Share Award Agreement dated as of July 1, 1999 between Barry Lefkowitz and Mack-Cali Realty Corporation (filed as Exhibit 10.12 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.9 Restricted Share Award Agreement dated as of July 1, 1999 between Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.13 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 59 Exhibit Number Exhibit Title ------- ------------- *10.10 Amendment No. 3 to and Restatement of Revolving Credit Agreement dated as of June 22, 2000, by and among Mack-Cali Realty, L.P. and The Chase Manhattan Bank, Fleet National Bank and Other Lenders Which May Become Parties Thereto with The Chase Manhattan Bank, as administrative agent, Fleet National Bank, as syndication agent, Bank of America, N.A., as documentation agent, Chase Securities Inc. and FleetBoston Robertson Stephens Inc., as arrangers, Bank One, N.A., First Union National Bank and Commerzbank Aktiengesellschaft, as senior managing agents, PNC Bank National Association, as managing agent, and Societe Generale, Dresdner Bank AG, Wells Fargo Bank, National Association, Bank Austria Creditanstalt Corporate Finance, Inc., Bayerische Hypo-und Vereinsbank and Summit Bank, as co-agents. 10.11 Contribution and Exchange Agreement among The MK Contributors, The MK Entities, The Patriot Contributors, The Patriot Entities, Patriot American Management and Leasing Corp., Cali Realty, L.P. and Cali Realty Corporation, dated September 18, 1997 (filed as Exhibit 10.98 to the Corporation's Form 8-K dated September 19, 1997 and incorporated herein by reference). 10.12 First Amendment to Contribution and Exchange Agreement, dated as of December 11, 1997, by and among Cali Realty Corporation and the Mack Group (filed as Exhibit 10.99 to the Corporation's Form 8-K dated December 11, 1997 and incorporated herein by reference). 10.13 Termination and Release Agreement, dated September 21, 2000, by and among Mack-Cali Realty Corporation, Mack-Cali Realty, L.P., Prentiss Properties Trust and Prentiss Properties Acquisition Partners, L.P. (filed as Exhibit 10.1 to the Operating Partnership's Form 8-K dated September 21, 2000 and incorporated herein by reference). 10.14 2000 Employee Stock Option Plan (filed as Exhibit B to the Corporation's Proxy Statement for its Annual Meeting of Stockholders held on September 11, 2000 and incorporated herein by reference). 10.15 2000 Director Stock Option Plan (filed as Exhibit C to the Corporation's Proxy Statement for its Annual Meeting of Stockholders held on September 11, 2000 and incorporated herein by reference). *12 Computation of Ratio Earnings to Fixed Charges. *21 Subsidiaries of the Operating Partnership. *23 Consent of PricewaterhouseCoopers LLP, independent accountants. - ---------- *filed herewith (b) Reports on Form 8-K During the fourth quarter of 2000, the Operating Partnership filed with the SEC a current report on Form 8-K dated December 21, 2000, announcing under Item 5 that it closed the sale of $15 million of senior unsecured notes. 60 REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of Mack-Cali Realty, L.P.: In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1) on page 57 present fairly, in all material respects, the financial position of Mack-Cali Realty, L.P. and its subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 14(a)(2) on page 57 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Operating Partnership's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 our opinion. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP New York, New York February 20, 2001 61 MACK-CALI REALTY, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except unit amounts) ================================================================================
December 31, 2000 1999 - ------------------------------------------------------------------------------------------------ ASSETS Rental property Land and leasehold interests $ 561,210 $ 549,096 Buildings and improvements 3,026,561 3,014,532 Tenant improvements 110,123 85,057 Furniture, fixtures and equipment 6,460 6,160 - ------------------------------------------------------------------------------------------------ 3,704,354 3,654,845 Less - accumulated depreciation and amortization (309,951) (256,629) - ------------------------------------------------------------------------------------------------ Total rental property 3,394,403 3,398,216 Cash and cash equivalents 13,179 8,671 Investments in unconsolidated joint ventures 101,438 89,134 Unbilled rents receivable 50,499 53,253 Deferred charges and other assets, net 102,655 66,436 Restricted cash 6,557 7,081 Accounts receivable, net of allowance for doubtful accounts of $552 and $672 8,246 6,810 - ------------------------------------------------------------------------------------------------ Total assets $ 3,676,977 $ 3,629,601 ================================================================================================ LIABILITIES AND PARTNERS' CAPITAL Senior unsecured notes $ 798,099 $ 782,785 Revolving credit facilities 348,840 177,000 Mortgages and loans payable 481,573 530,390 Dividends and distributions payable 43,496 42,499 Accounts payable and accrued expenses 53,608 63,394 Rents received in advance and security deposits 31,146 36,150 Accrued interest payable 17,477 16,626 - ------------------------------------------------------------------------------------------------ Total liabilities 1,774,239 1,648,844 - ------------------------------------------------------------------------------------------------ Minority interest in consolidated partially-owned properties 1,925 83,600 Commitments and contingencies Partners' Captial: Preferred unit, 220,340 and 229,304 units outstanding 226,005 235,200 General partner, 56,980,893 and 58,446,552 common units outstanding 1,453,290 1,441,882 Limited partners, 7,963,725 and 8,153,710 common units outstanding 212,994 211,551 Unit warrants, 2,000,000 and 2,000,000 outstanding 8,524 8,524 - ------------------------------------------------------------------------------------------------ Total partners' capital 1,900,813 1,897,157 - ------------------------------------------------------------------------------------------------ Total liabilities and partners' capital $ 3,676,977 $ 3,629,601 ================================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 62 MACK-CALI REALTY, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per units amounts) ================================================================================
Years Ended December 31, 2000 1999 1998 - -------------------------------------------------------------------------------------------------- REVENUES Base rents $ 491,193 $ 469,853 $ 427,528 Escalations and recoveries from tenants 58,488 62,182 51,981 Parking and other 15,325 15,915 10,712 Equity in earnings of unconsolidated joint ventures 8,055 2,593 1,055 Interest income 3,092 941 2,423 - -------------------------------------------------------------------------------------------------- Total revenues 576,153 551,484 493,699 - -------------------------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------------------------- Real estate taxes 59,400 57,382 48,297 Utilities 42,035 41,580 38,440 Operating services 70,711 69,689 63,711 General and administrative 23,276 25,480 24,828 Depreciation and amortization 92,088 87,209 78,916 Interest expense 105,394 102,960 88,043 Non-recurring charges 37,139 16,458 -- - -------------------------------------------------------------------------------------------------- Total expenses 430,043 400,758 342,235 - -------------------------------------------------------------------------------------------------- Income before gain on sales of rental property, minority interest and extraordinary item 146,110 150,726 151,464 Gain on sales of rental property 85,353 1,957 -- - -------------------------------------------------------------------------------------------------- Income before minority interest and extraordinary item 231,463 152,683 151,464 Minority interest in consolidated partially-owned properties 5,072 79 -- - -------------------------------------------------------------------------------------------------- Income before extraordinary item 226,391 152,604 151,464 Extraordinary item - loss on early retirement of debt -- -- (2,670) - -------------------------------------------------------------------------------------------------- Net income 226,391 152,604 148,794 Preferred unit distributions (15,441) (15,476) (16,313) - -------------------------------------------------------------------------------------------------- Net income available to common unitholders $ 210,950 $ 137,128 $ 132,481 ================================================================================================== Basic earnings per unit: Income before extraordinary item $ 3.18 $ 2.05 $ 2.13 Extraordinary item - loss on early retirement of debt -- -- (0.04) - -------------------------------------------------------------------------------------------------- Net income $ 3.18 $ 2.05 $ 2.09 ================================================================================================== Diluted earnings per unit: Income before extraordinary item $ 3.10 $ 2.04 $ 2.11 Extraordinary item - loss on early retirement of debt -- -- (0.04) - -------------------------------------------------------------------------------------------------- Net income $ 3.10 $ 2.04 $ 2.07 ================================================================================================== Distributions declared per common unit $ 2.38 $ 2.26 $ 2.10 - -------------------------------------------------------------------------------------------------- Basic weighted average units outstanding 66,392 66,885 63,438 - -------------------------------------------------------------------------------------------------- Diluted weighted average units outstanding 73,070 67,133 63,893 - --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements. 63 MACK-CALI REALTY, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (in thousands) ================================================================================
General Limited Preferred Partner Partner Preferred General Limited Unit Units Units Units Unitholders Partner Partners Warrants Total - ------------------------------------------------------------------------------------------------------------------------------------ Balance at January 1, 1998 -- 49,856 -- $ -- $1,005,349 $ -- $8,524 $1,013,873 Net income -- -- -- 6,046 116,578 6,643 -- 129,267 Distributions -- -- -- (8,417) (119,950) (9,204) -- (137,571) Contributions - net proceeds from common stock offerings -- 7,968 -- -- 288,393 -- -- 288,393 Redemption of limited partner units for shares of common stock -- 29 (7) -- 1,029 (181) -- 848 Contributions - proceeds from stock options exercised -- 268 -- -- 5,475 -- -- 5,475 Issuance of units in connection with acquisitions -- -- 1,367 -- -- 41,559 -- 41,559 Issuance of Preferred Units 2 -- -- 2,258 -- -- -- 2,258 Repurchase of common stock -- (855) -- -- (25,058) -- -- (25,058) Adjustment to reflect preferred unitholders'and limited partners' capital at redemption value -- -- -- -- 115,858 -- -- 115,858 Reclassification of previously redeemable partnership units 248 -- 7,727 223,443 -- 266,875 -- 490,318 - ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 1998 250 57,266 9,087 223,330 1,387,674 305,692 8,524 1,925,220 Net income -- -- -- 15,476 119,739 17,389 -- 152,604 Distributions -- -- -- (15,476) (132,327) (18,865) -- (166,668) Conversion of preferred units to limited partner units (21) -- 605 (21,491) -- 21,491 -- -- Redemption of limited partner units for shares of common stock -- 1,935 (1,935) -- 56,065 (56,065) -- -- Issuance of limited partner units -- -- 397 -- -- 11,503 -- 11,503 Contributions - proceeds from stock options exercised -- 48 -- -- 1,049 -- -- 1,049 Repurchase of general partner units -- (1,015) -- -- (27,500) -- -- (27,500) Deferred compensation plan for directors -- -- -- -- 90 -- -- 90 Contributions - proceeds from dividend reinvestment and stock purchase plan -- 1 -- -- 32 -- -- 32 Issuance of Restricted Stock Awards -- 212 -- -- -- -- -- -- Amortization of stock compensation -- -- -- -- 827 -- -- 827 Allocation of net equity -- -- -- 33,361 36,233 (69,594) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 1999 229 58,447 8,154 235,200 1,441,882 211,551 8,524 1,897,157 Net income -- -- -- 15,441 185,338 25,612 -- 226,391 Distributions -- -- -- (15,441) (138,585) (19,125) -- (173,151) Conversion of preferred units to limited partner units (9) -- 258 (9,195) -- 9,195 -- -- Redemption of limited partner units for shares of common stock -- 448 (448) -- 14,239 (14,239) -- -- Contributions - proceeds from stock options exercised -- 117 -- -- 2,500 -- -- 2,500 Repurchase of general partner units -- (2,026) -- -- (55,514) -- -- (55,514) Deferred compensation plan for directors -- -- -- -- 111 -- -- 111 Amortization of stock compensation -- -- -- -- 1,672 -- -- 1,672 Adjustment to fair value of restricted stock -- -- -- -- 97 -- -- 97 Cancellation of Restricted Stock Awards -- (5) -- -- -- -- -- -- Stock option charge -- -- -- -- 1,550 -- -- 1,550 - ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 31, 2000 220 56,981 7,964 $226,005 $1,453,290 $212,994 $8,524 $1,900,813 ====================================================================================================================================
The accompanying notes are an integral part of these consolidated financial statements 64 MACK-CALI REALTY, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) ================================================================================
Years Ended December 31, 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 226,391 $ 152,604 $ 148,794 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 92,088 87,209 78,916 Amortization of stock compensation 1,769 827 -- Amortization of deferred financing costs and debt discount 4,257 3,570 1,580 Stock options charge 1,550 -- -- Equity in earnings of unconsolidated joint ventures (8,055) (2,593) (1,055) Gain on sales of rental property (85,353) (1,957) -- Minority interest in consolidated partially-owned properties 5,072 79 -- Extraordinary item - loss on early retirement of debt -- -- 2,670 Changes in operating assets and liabilities: Increase in unbilled rents receivable (12,591) (12,412) (13,600) Increase in deferred charges and other assets, net (31,332) (28,893) (17,811) Increase in accounts receivable, net (1,436) (2,882) (192) (Decrease) increase in accounts payable and accrued expenses (9,786) 27,536 2,117 (Decrease) increase in rents received in advance and security deposits (2,896) 6,170 8,585 Increase (decrease) in accrued interest payable 851 14,380 (1,243) - ------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities $ 180,529 $ 243,638 $ 208,761 ======================================================================================================================== CASH FLOWS FROM INVESTING ACTIVITIES Additions to rental property $ (268,243) $ (191,507) $ (692,766) Issuance of mortgage note receivable (14,733) -- (20,000) Repayment of mortgage note receivable -- -- 20,000 Investments in unconsolidated joint ventures (17,587) (40,567) (58,844) Distributions from unconsolidated joint ventures 13,338 20,551 1,725 Proceeds from sales of rental property 292,890 17,400 -- Decrease (increase) in restricted cash 524 (1,055) 818 - ------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used in) investing activities $ 6,189 $ (195,178) $ (749,067) ======================================================================================================================== CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from senior unsecured notes $ 15,000 $ 782,535 $ -- Proceeds from revolving credit facilities 708,004 372,248 1,375,758 Proceeds from mortgages and loans payable -- 45,500 150,000 Repayments of revolving credit facilities (536,164) (866,848) (826,258) Repayments of mortgages and loans payable (48,817) (264,431) (271,807) Proceeds from minority interest of consolidated partially-owned properties -- 83,600 -- Distributions to minority interest in partially-owned properties (88,672) -- -- Repurchase of general partner units (55,514) (27,500) (25,058) Redemption of common units -- -- (3,163) Payment of financing costs (6,394) (7,048) (10,110) Net proceeds from common stock offerings -- -- 288,393 Proceeds from stock options exercised 2,500 1,049 5,475 Proceeds from dividend reinvestment and stock purchase plan -- 32 -- Payment of distributions (172,153) (164,735) (139,819) - ------------------------------------------------------------------------------------------------------------------------ Net cash (used in) provided by financing activities $ (182,210) $ (45,598) $ 543,411 ======================================================================================================================== Net increase in cash and cash equivalents $ 4,508 $ 2,862 $ 3,105 Cash and cash equivalents, beginning of period $ 8,671 $ 5,809 $ 2,704 - ------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents, end of period $ 13,179 $ 8,671 $ 5,809 ========================================================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 65 MACK-CALI REALTY, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per unit amounts) ================================================================================ 1. ORGANIZATION AND BASIS OF PRESENTATION Organization Organization Mack-Cali Realty, L.P., a Delaware limited partnership, and its subsidiaries (the "Operating Partnership") was formed on May 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 and its subsidiaries (the "Corporation" or "General Partner"). The Operating Partnership, through its operating divisions and subsidiaries, including the Mack-Cali property-owning partnerships and limited liability companies (collectively, the "Property Partnerships"), as described below, is the entity through which all of the General Partner's operations are conducted. The Property Partnerships, not a legal entity, consist of partnerships and limited liability companies which are engaged in the ownership and operation of the Properties (as hereinafter defined) of the Operating Partnership, excluding certain Properties which are wholly-owned by the Operating Partnership. Prior to January 1, 1998 the Property Partnerships were owned 99 percent by the Operating Partnership as a non-controlling limited partner, and one percent by the General Partner, as a controlling general partner. During 1998, the Operating Partnership obtained control of the Property Partnerships pursuant to agreements with the General Partner. The General Partner is a fully integrated, self-administered, self-managed real estate investment trust ("REIT"). The General Partner controls the Operating Partnership as its sole general partner, and owned an 87.7 percent and 87.8 percent common unit interest in the Operating Partnership as of December 31, 2000 and 1999, respectively. The General Partner's business is the ownership of interests in and operation of the Operating Partnership, and all of the General Partner's expenses are incurred for the benefit of the Operating Partnership. The General Partner is reimbursed by the Operating Partnership for all expenses it incurs relating to the ownership and operation of the Operating Partnership. The Operating Partnership earns a management fee of between three percent and five percent of revenues, as defined, for its management of the Property Partnerships. As of December 31, 2000, the Operating Partnership owned or had interests in 267 properties plus developable land (collectively, the "Properties"). The Properties aggregate approximately 28.2 million square feet, and are comprised of 163 office buildings and 91 office/flex buildings totaling approximately 27.8 million square feet (which includes eight office buildings and four office/flex buildings aggregating 1.5 million square feet, owned by unconsolidated joint ventures in which the Operating Partnership has investment interests), six industrial/warehouse buildings totaling approximately 387,400 square feet, two multi-family residential complexes consisting of 451 units, two stand-alone retail properties and three land leases. The Properties are located in 11 states, primarily in the Northeast, plus the District of Columbia. BASIS OF PRESENTATION The accompanying consolidated financial statements include all accounts of the Operating Partnership and its controlled subsidiaries, including the Property Partnerships. During 1998, the Operating Partnership obtained control of the Property Partnerships pursuant to agreements with the General Partner, as discussed above. Accordingly, the accounts of the Property Partnerships are consolidated with the financial statements of the Operating Partnership effective January 1, 1998. Prior to January 1, 1998, the Operating Partnership accounted for the Property Partnerships under the equity method of accounting. See Investments in Unconsolidated Joint Ventures in Note 2 for the Operating Partnership's accounting treatment of unconsolidated joint venture interests. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 66 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 development. Included in total rental property is construction-in-progress of $162,497 and $99,987 as of December 31, 2000 and 1999, respectively. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts. Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: Leasehold interests Remaining lease term -------------------------------------------------------------- Buildings and improvements 5 to 40 years -------------------------------------------------------------- Tenant improvements The shorter of the term of the related lease or useful life -------------------------------------------------------------- Furniture, fixtures and equipment 5 to 10 years -------------------------------------------------------------- On a periodic basis, management assesses whether there are any indicators that the value of the real estate properties may be impaired. A property's value is impaired only if management's estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. Management does not believe that the value of any of its rental properties is impaired. When assets are identified by management as held for sale, the Operating Partnership discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. If, in management's opinion, the net sales price of the assets which have been identified for sale is less than the net book value of the assets, a valuation allowance is established. See Note 7. Investments in Unconsolidated Joint Ventures The Operating Partnership accounts for its investments in unconsolidated joint ventures under the equity method of accounting as the Operating Partnership exercises significant influence, but does not control these entities. These investments are recorded initially at cost, as Investments in Unconsolidated Joint Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions. Any difference between the carrying amount of these investments on the balance sheet of the Operating Partnership and the underlying equity in net assets is amortized as an adjustment to equity in earnings of unconsolidated joint ventures over 40 years. See Note 4. Cash and Cash Equivalents All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. Deferred Financing Costs Costs incurred in obtaining financing are capitalized and amortized on a straight-line basis, which approximates the effective interest method, over the term of the related indebtedness. Amortization of such costs is included in interest expense and was $3,943, $3,320 and $1,580 for the years ended December 31, 2000, 1999 and 1998, respectively. 67 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 provide leasing services to the Properties and receive compensation based on space leased. The portion of such compensation, which is capitalized and amortized, approximated $3,704, $3,704 and $3,509 for the years ended December 31, 2000, 1999 and 1998, respectively. Revenue Recognition Base rental revenue is recognized 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 and other revenue includes income from parking spaces leased to tenants, income from tenants for additional services provided by the Operating Partnership, income from tenants for early lease terminations and income from managing properties for third parties. Rental income on residential property under operating leases having terms generally of one year or less is recognized when earned. Reimbursements are received 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 17. Income and Other Taxes The Operating Partnership is a partnership and, as a result, all income and losses of the 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, 2000, 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 financial statements by approximately $1,000,139. The Operating Partnership's taxable income for the years ended December 31, 2000, 1999, and 1998 was approximately $163,084, $174,214 and $154,245, 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 over the life of the contracts as adjustments to interest expense. In certain situations, the Operating Partnership uses forward treasury lock agreements to mitigate the potential effects of changes in interest rates for prospective transactions. Gains and losses are deferred and amortized as adjustments to interest expense over the remaining life of the associated debt to the extent that such debt remains outstanding. Earnings Per Share In accordance with the 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. 68 Distributions Payable The distributions payable at December 31, 2000 represents distributions payable to common unitholders of record as of January 4, 2001 (64,946,618 common units), and preferred distributions payable to preferred unitholders (220,340 preferred units) for the fourth quarter 2000. The fourth quarter 2000 common unit distribution of $0.61 per common unit, as well as the fourth quarter preferred unit distribution of $17.6046 per preferred unit, were approved by the Board of Directors of the General Partner on December 20, 2000 and paid on January 22, 2001. The distributions payable at December 31, 1999 represents distributions payable to common unitholders of record as of January 4, 2000 (66,604,262 common units), and preferred distributions payable to preferred unitholders (229,304 preferred units) for the fourth quarter 1999. The fourth quarter 1999 common unit distribution of $0.58 per common unit (pro-rated for units issued during the quarter), as well as the fourth quarter preferred unit distribution of $16.8750 per preferred unit, were approved by the Board of Directors of the General Partner on December 17, 1999 and paid on January 21, 2000. Underwriting Commissions and Costs Underwriting commissions and costs incurred in connection with the Corporation's stock offerings and subsequent reinvestment in general partner units are reflected as a reduction of these unit values. Stock Options The Operating Partnership accounts for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations ("APB No. 25"). Under APB No. 25, compensation cost is measured as the excess, if any, of the quoted market price of the Corporation'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 Corporation's policy is to grant options with an exercise price equal to the quoted closing market price of the Corporation's stock on the business day preceding the grant date. Accordingly, no compensation cost has been recognized under the Corporation's stock option plans for the granting of stock options. The Operating Partnership provides additional pro forma disclosures as required under Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" ("FASB No. 123"). See Note 11. Extraordinary Item Extraordinary item represents the effect resulting from the early settlement of certain debt obligations, including related deferred financing costs, prepayment penalties, yield maintenance payments and other related items. Non-Recurring Charges The Operating Partnership considers non-recurring charges as costs incurred specific to significant non-recurring events that impact the comparative measurement of the Operating Partnership's performance. Reclassifications Certain reclassifications have been made to prior period amounts in order to conform with current period presentation. 69 3. ACQUISITIONS, PROPERTY SALES AND OTHER TRANSACTIONS 2000 TRANSACTIONS Operating Property Acquisitions The Operating Partnership acquired the following operating properties during the year ended December 31, 2000:
- ---------------------------------------------------------------------------------------------------------------------------------- Investment by Acquisition # of Rentable Operating Date Property/Portfolio Name Location Bldgs. Square Feet Partnership (a) - ---------------------------------------------------------------------------------------------------------------------------------- Office - ------ 5/23/00 555 & 565 Taxter Road Elmsford, Westchester County, NY 2 341,108 $42,980 6/14/00 Four Gatehall Drive Parsippany, Morris County, NJ 1 248,480 42,381 - ---------------------------------------------------------------------------------------------------------------------------------- Total Office Property Acquisitions: 3 589,588 $85,361 - ---------------------------------------------------------------------------------------------------------------------------------- Office/Flex - ----------- 3/24/00 Two Executive Drive (b) Moorestown, Burlington County, NJ 1 60,800 $ 4,007 7/14/00 915 North Lenola Road (b) Moorestown, Burlington County, NJ 1 52,488 2,542 - ---------------------------------------------------------------------------------------------------------------------------------- Total Office/Flex Property Acquisition: 2 113,288 $ 6,549 - ---------------------------------------------------------------------------------------------------------------------------------- Total Operating Property Acquisitions: 5 702,876 $91,910 ==================================================================================================================================
- -------------------------------------------------------------------------------- Properties Placed in Service The Operating Partnership placed in service the following properties through the completion of development during the year ended December 31, 2000:
- --------------------------------------------------------------------------------------------------------------------------------- Investment by Date Placed # of Rentable Operating in Service Property Name Location Bldgs. Square Feet Partnership (c) - --------------------------------------------------------------------------------------------------------------------------------- Office - ------ 9/01/00 Harborside Plaza 4-A (d) Jersey City, Hudson County, NJ 1 207,670 $61,459 9/15/00 Liberty Corner Corp. Center Bernards Township, Somerset County, NJ 1 132,010 17,430 - --------------------------------------------------------------------------------------------------------------------------------- Total Properties Placed in Service: 2 339,680 $78,889 ==================================================================================================================================
(a) Transactions were funded primarily from net proceeds received in the sale or sales of rental property. (b) The properties were acquired through the exercise of a purchase option obtained in the initial acquisition of the McGarvey portfolio in January 1998. (c) Transactions were funded primarily through draws on the Operating Partnership's revolving credit facilities and amounts presented are as of December 31, 2000. (d) Project includes seven-story, 1,100-car parking garage. Land Acquisitions On January 13, 2000, the Operating Partnership acquired approximately 12.7 acres of developable land located at the Operating Partnership's Airport Business Center, Lester, Delaware County, Pennsylvania. The land was acquired for approximately $2,069. On August 24, 2000, the Operating Partnership entered into a joint venture with SJP Properties Operating Partnership ("SJP Properties") to form MC-SJP Morris V Realty, LLC and MC-SJP Morris VI Realty, LLC, which acquired approximately 47.5 acres of developable land located in Parsippany, Morris County, New Jersey. The land was acquired for approximately $16,193. The Operating Partnership accounts for the joint venture on a consolidated basis. 70 Property Sales The Operating Partnership sold the following properties during the year ended December 31, 2000:
- ------------------------------------------------------------------------------------------------------------------------------------ Sale # of Rentable Net Sales Net Book Gain/ Date Property Name Location Bldgs. Square Feet Proceeds Value (Loss) - ------------------------------------------------------------------------------------------------------------------------------------ Land: - ---- 02/25/00 Horizon Center Land Hamilton Township, Mercer County, NJ -- 39.1 acres $ 4,180 $ 1,932 $ 2,248 Office: - ------ 04/17/00 95 Christopher Columbus Dr. Jersey City, Hudson County, NJ 1 621,900 148,222 80,583 67,639 04/20/00 6900 IH-40 West Amarillo, Potter County, TX 1 71,771 1,467 1,727 (260) 06/09/00 412 Mt. Kemble Avenue Morris Twp., Morris County, NJ 1 475,100 81,981 75,439 6,542 09/21/00 Cielo Center Austin, Travis County, TX 1 270,703 45,785 35,749 10,036 11/15/00 210 South 16th Street (a) Omaha, Douglas County, NE 1 319,535 11,976 12,828 (852) - ------------------------------------------------------------------------------------------------------------------------------------ Totals: 5 1,759,009 $293,611 $208,258 $85,353 ====================================================================================================================================
(a) In connection with the sale of the Omaha, Nebraska property, the Operating Partnership provided to the purchaser an $8,750 mortgage loan bearing interest payable monthly at an annual rate of 9.50 percent. The loan is secured by the Omaha, Nebraska property and will mature on November 14, 2003. Other Events On June 27, 2000, William L. Mack was appointed Chairman of the Board of Directors of the Corporation and John J. Cali was named Chairman Emeritus of the Board of Directors of the Corporation. Brant Cali resigned as Executive Vice President, Chief Operating Officer and Assistant Secretary of the Corporation and as a member of the Board of Directors, and John R. Cali resigned as Executive Vice President, Development of the Corporation. John R. Cali was appointed to the Board of Directors of the Corporation to take the seat previously held by Brant Cali. See Note 16. On September 21, 2000, the Corporation and Prentiss Properties Trust, a Maryland REIT ("Prentiss"), mutually agreed to terminate the agreement and plan of merger ("Merger Agreement") dated as of June 27, 2000, among the Corporation, the Operating Partnership, Prentiss and Prentiss Properties Acquisition Partners, L.P., a Delaware limited partnership of which Prentiss (through a wholly-owned direct subsidiary) is the sole general partner ("Prentiss Partnership"). In connection with such termination, the Operating Partnership deposited $25,000 into escrow for the benefit of Prentiss and Prentiss Partnership. This cost and approximately $2,911 of other costs associated with the termination of the Merger Agreement are included in non-recurring charges for the year ended December 31, 2000. Simultaneous with the termination, the Operating Partnership sold to Prentiss its 270,703 square-foot Cielo Center property located in Austin, Travis County, Texas. See "2000 Transactions - Property Sales." 1999 TRANSACTIONS Operating Property Acquisitions The Operating Partnership acquired the following operating properties during the year ended December 31, 1999:
- ------------------------------------------------------------------------------------------------------------------------------------ Investment by Acquisition # of Rentable Operating Date Property/Portfolio Name Location Bldgs. Square Feet Partnership (a) - ------------------------------------------------------------------------------------------------------------------------------------ Office - ------ 3/05/99 Pacifica Portfolio - Phase III (b) Colorado Springs, El Paso County, CO 2 94,737 $ 5,709 7/21/99 1201 Connecticut Avenue, NW Washington, D.C. 1 169,549 32,799 - ------------------------------------------------------------------------------------------------------------------------------------ Total Office Property Acquisitions: 3 264,286 $ 38,508 - ------------------------------------------------------------------------------------------------------------------------------------ Office/Flex - ----------- 12/21/99 McGarvey Portfolio - Phase III (c) Moorestown, Burlington County, NJ 3 138,600 $ 8,012 - ------------------------------------------------------------------------------------------------------------------------------------ Total Office/Flex Property Acquisition: 3 138,600 $ 8,012 - ------------------------------------------------------------------------------------------------------------------------------------ Total Operating Property Acquisitions: 6 402,886 46,520 ====================================================================================================================================
(a) Transactions were funded primarily through draws on the Operating Partnership's revolving credit facilities. (b) William L. Mack, Chairman of the Board of Directors of the Corporation and an equity holder in the Operating Partnership, was an indirect owner of an interest in certain of the buildings contained in the Pacifica portfolio. (c) The properties were acquired through the exercise of a purchase option obtained in the initial acquisition of the McGarvey portfolio in January 1998. 71 Properties Placed In Service The Operating Partnership placed in service the following properties through the completion of development or redevelopment during the year ended December 31, 1999:
- ------------------------------------------------------------------------------------------------------------------------------------ Investment by Date Placed # of Rentable Operating in Service Property Name Location Bldgs. Square Feet Partnership (a) - ------------------------------------------------------------------------------------------------------------------------------------ Office - ------ 8/09/99 2115 Linwood Avenue Fort Lee, Bergen County, NJ 1 68,000 $ 8,147 11/01/99 795 Folsom Street (b) San Francisco, San Francisco County, CA 1 183,445 37,337 - ------------------------------------------------------------------------------------------------------------------------------------ Total Office Properties Placed in Service: 2 251,445 $45,484 - ------------------------------------------------------------------------------------------------------------------------------------ Office/Flex - ----------- 3/01/99 One Center Court Totowa, Passaic County, NJ 1 38,961 $ 2,140 9/17/99 12 Skyline Drive (c) Hawthorne, Westchester County, NY 1 46,850 5,023 12/10/99 600 West Avenue (c) Stamford, Fairfield County, CT 1 66,000 5,429 - ------------------------------------------------------------------------------------------------------------------------------------ Total Office/Flex Properties Placed in Service: 3 151,811 $12,592 - ------------------------------------------------------------------------------------------------------------------------------------ Land Lease - ---------- 2/01/99 Horizon Center Business Park (d) Hamilton Township, Mercer County, NJ N/A 27.7 acres $ 1,007 - ------------------------------------------------------------------------------------------------------------------------------------ Total Land Lease Transactions: 27.7 acres $ 1,007 - ------------------------------------------------------------------------------------------------------------------------------------ Total Properties Placed in Service: 5 403,256 $59,083 ==================================================================================================================================
(a) Transactions were funded primarily through draws on the Operating Partnership's revolving credit facilities. (b) On June 1, 1999, the building was acquired for redevelopment for approximately $34,282. (c) The Operating Partnership purchased the land on which this property was constructed, from an entity whose principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg, each of whom are affiliated with the Operating Partnership as the President of the Corporation, a current member of the Board of Directors and a former member of the Board of Directors of the Corporation, respectively. (d) On February 1, 1999, the Operating Partnership entered into a ground lease agreement to lease 27.7 acres of developable land located at the Operating Partnership's Horizon Center Business Park, located in Hamilton Township, Mercer County, New Jersey on which Home Depot constructed a 134,000 square-foot retail store. Land Acquisitions On February 26, 1999, the Operating Partnership acquired approximately 2.3 acres of vacant land adjacent to one of the Operating Partnership's operating properties located in San Antonio, Bexar County, Texas for approximately $1,524, which was made available from the Operating Partnership's cash reserves. On March 2, 1999, the Operating Partnership entered into a joint venture agreement with SJP Vaughn Drive, L.L.C. Under the agreement, the Operating Partnership has agreed to contribute its vacant land at Three Vaughn Drive, Princeton, Mercer County, New Jersey, subject to satisfaction of certain conditions, for an equity interest in the venture. On March 15, 1999, the Operating Partnership entered into a joint venture with SJP 106 Allen Road, L.L.C. to form MC-SJP Pinson Development, LLC, which acquired vacant land located in Bernards Township, Somerset County, New Jersey. The joint venture subsequently completed construction and placed in service a 132,010 square-foot office building on this site (see "2000 Transactions - Properties Placed in Service"). The Operating Partnership accounts for the joint venture on a consolidated basis. 72 On August 31, 1999, the Operating Partnership acquired, from an entity whose principals include Brant Cali, a former executive officer of the Corporation and a former member of the Board of Directors of the Corporation, and certain immediate family members of John J. Cali, Chairman Emeritus of the Board of Directors of the Corporation, approximately 28.1 acres of developable land adjacent to two of the Operating Partnership's operating properties located in Roseland, Essex County, New Jersey for approximately $6,097. The acquisition was funded with cash and the issuance of 121,624 common units to the seller. The Operating Partnership has commenced construction of a 220,000 square-foot office building on the acquired land. In August 1999, the Operating Partnership entered into an agreement with SJP Properties which provides a cooperative effort in seeking approvals to develop up to approximately 1.8 million square feet of office development on certain vacant land owned or controlled, respectively, by the Operating Partnership and SJP Properties, in Hanover and Parsippany, Morris County, New Jersey. The agreement provides that the parties shall share equally in the costs associated with seeking such requisite approvals. Subsequent to obtaining the requisite approvals, upon mutual consent, the Operating Partnership and SJP Properties may enter into one or more joint ventures to construct on the vacant land, or seek to dispose of their respective vacant land parcels subject to the agreement. Property Sales The Operating Partnership sold the following properties during the year ended December 31, 1999:
- ------------------------------------------------------------------------------------------------------------------------------------ Sale # of Rentable Net Sales Net Book Gain/ Date Property Name Location Bldgs. Square Feet Proceeds Value (Loss) - ------------------------------------------------------------------------------------------------------------------------------------ Office: - ------- 11/15/99 400 Alexander Road Princeton, Mercer County, NJ 1 70,550 $ 8,628 $6,573 $2,055 12/15/99 Beardsley Corporate Center Phoenix, Maricopa County, AZ 1 119,301 8,772 8,870 (98) - ------------------------------------------------------------------------------------------------------------------------------------ Totals: 2 189,851 $17,400 $15,443 $1,957 ====================================================================================================================================
4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES PRU-BETA 3 (Nine Campus Drive) On March 27, 1998, the Operating Partnership acquired a 50 percent interest in an existing joint venture with The Prudential Insurance Company of America ("Prudential"), known as Pru-Beta 3, which owns and operates Nine Campus Drive, a 156,495 square-foot office building, located in the Mack-Cali Business Campus (formerly Prudential Business Campus) office complex in Parsippany, Morris County, New Jersey. The Operating Partnership performs management and leasing services for the property owned by the joint venture and recognized $140, $149 and $114 in fees for such services in the years ended December 31, 2000, 1999 and 1998, respectively. HPMC On April 23, 1998, the Operating Partnership entered into a joint venture agreement with HCG Development, L.L.C. and Summit Partners I, L.L.C. to form HPMC Development Partners, L.P. and, on July 21, 1998, entered into a second joint venture, HPMC Development Partners II, L.P. (formerly known as HPMC Lava Ridge Partners, L.P.), with these same parties. HPMC Development Partners, L.P.'s efforts have focused on two development projects, commonly referred to as Continental Grand II and Summit Ridge. HPMC Development Partners II, L.P.'s efforts have focused on three development projects, commonly referred to as Lava Ridge, Peninsula Gateway and Stadium Gateway. Among other things, the partnership agreements provide for a preferred return on the Operating Partnership's invested capital in each venture, in addition to 50 percent of such venture's profit above the preferred returns, as defined in each agreement. Continental Grand II Continental Grand II is a 239,085 square-foot office building located in El Segundo, Los Angeles County, California, which was constructed and placed in service by the venture. Summit Ridge Summit Ridge is an office complex of three one-story buildings aggregating 133,841 square feet located in San Diego, San Diego County, California, which was constructed and placed in service by the venture. In January 2001, the venture sold the office complex for approximately $17,450. 73 Lava Ridge Lava Ridge is an office complex of three two-story buildings aggregating 183,200 square feet located in Roseville, Placer County, California, which was constructed and placed in service by the venture. Peninsula Gateway Peninsula Gateway is a parcel of land purchased from the city of Daly City, located in San Mateo County, California, upon which the venture has commenced construction of an office building and theater and retail complex aggregating 471,379 square feet. Stadium Gateway Stadium Gateway is a 1.5 acre site located in Anaheim, Orange County, California, acquired by the venture upon which it has commenced construction of a six-story 261,554 square-foot office building. G&G MARTCO (Convention Plaza) On April 30, 1998, the Operating Partnership acquired a 49.9 percent interest in an existing joint venture, known as G&G Martco, which owns Convention Plaza, a 305,618 square-foot office building, located in San Francisco, San Francisco County, California. A portion of its initial investment was financed through the issuance of common units, as well as funds drawn from the Operating Partnership's credit facilities. Subsequently, on June 4, 1999, the Operating Partnership acquired an additional 0.1 percent interest in G&G Martco through the issuance of common units (see Note 11). The Operating Partnership performs management and leasing services for the property owned by the joint venture and recognized $231, $225 and $20 in fees for such services in the years ended December 31, 2000, 1999 and 1998, respectively. AMERICAN FINANCIAL EXCHANGE L.L.C. On May 20, 1998, the Operating Partnership entered into a joint venture agreement with Columbia Development Company, L.L.C. to form American Financial Exchange L.L.C. The venture was initially formed to acquire land for future development, located on the Hudson River waterfront in Jersey City, Hudson County, New Jersey, adjacent to the Operating Partnership's Harborside Financial Center office complex. The Operating Partnership holds a 50 percent interest in the joint venture. Among other things, the partnership agreement provides for a preferred return on the Operating Partnership's invested capital in the venture, in addition to the Operating Partnership's proportionate share of the venture's profit, as defined in the agreement. The joint venture acquired land on which it constructed a parking facility, which is currently leased to a parking operator under a 10-year agreement. Such parking facility serves a ferry service between the Operating Partnership's Harborside property and Manhattan. In the fourth quarter 2000, the Operating Partnership started construction of a 575,000 square-foot office building and terminated the parking agreement on certain of the land owned by the venture. The total costs of the project are currently projected to be approximately $140,000. The project, which is currently 100 percent pre-leased, is anticipated to be completed in third quarter 2002. RAMLAND REALTY ASSOCIATES L.L.C. (One Ramland Road) On August 20, 1998, the Operating Partnership entered into a joint venture agreement with S.B. New York Realty Corp. to form Ramland Realty Associates L.L.C. The venture was formed to own, manage and operate One Ramland Road, a 232,000 square-foot office/flex building plus adjacent developable land, located in Orangeburg, Rockland County, New York. In August 1999, the joint venture completed redevelopment of the property and placed the office/flex building in service. The Operating Partnership holds a 50 percent interest in the joint venture. The Operating Partnership performs management, leasing and other services for the property owned by the joint venture and recognized $198, $628 and $0 in fees for such services in the years ended December 31, 2000, 1999 and 1998, respectively. ASHFORD LOOP ASSOCIATES L.P. (1001 South Dairy Ashford/2100 West Loop South) On September 18, 1998, the Operating Partnership entered into a joint venture agreement with Prudential to form Ashford Loop Associates L.P. The venture was formed to own, manage and operate 1001 South Dairy Ashford, a 130,000 square-foot office building acquired on September 18, 1998 and 2100 West Loop South, a 168,000 square-foot office building acquired on November 25, 1998, both located in Houston, Harris County, Texas. The Operating Partnership holds a 20 percent interest in the joint venture. The joint venture may be required to pay additional consideration due to earn-out provisions in the acquisition contracts. Subsequently, through December 31, 2000, the venture paid $19,714 ($3,943 representing the Operating Partnership's share) in accordance with earn-out provisions in the acquisition contracts. The Operating Partnership performs management and leasing services for the properties owned by the joint venture and recognized $172, $117 and $30 in fees for such services in the years ended December 31, 2000, 1999 and 1998, respectively. 74 ARCAP INVESTORS, L.L.C. On March 18, 1999, the Operating Partnership invested in ARCap Investors, L.L.C., a joint venture with several participants, which was formed to invest in sub-investment grade tranches of commercial mortgage-backed securities ("CMBS"). The Operating Partnership has invested $20,000 in the venture. William L. Mack, Chairman of the Board of Directors of the Corporation and an equity holder in the Operating Partnership, is a principal of the managing member of the venture. At December 31, 2000, the venture held approximately $575,621 face value of CMBS bonds at an aggregate cost of $280,982. SOUTH PIER AT HARBORSIDE HOTEL DEVELOPMENT On November 17, 1999, the Operating Partnership entered into an agreement with Hyatt Corporation to develop a 350-room hotel on the Operating Partnership's South Pier at Harborside Financial Center, Jersey City, Hudson County, New Jersey. In July 2000, the joint venture began development of the hotel project. NORTH PIER AT HARBORSIDE RESIDENTIAL DEVELOPMENT On August 5, 1999, the Operating Partnership entered into an agreement which, upon satisfaction of certain conditions, provides for the contribution of its North Pier at Harborside Financial Center, Jersey City, Hudson County, New Jersey to a joint venture with Lincoln Property Company Southwest, Inc., in exchange for cash and an equity interest in the venture. The venture intends to develop residential housing on the property. SUMMARIES OF UNCONSOLIDATED JOINT VENTURES The following is a summary of the financial position of the unconsolidated joint ventures in which the Operating Partnership had investment interests as of December 31, 2000 and 1999:
December 31, 2000 --------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ---------------------------------------------------------------------------------------------------------------------------------- Assets: Rental property, net $20,810 $ 78,119 $ 10,589 $13,309 $38,497 $37,777 $ -- $199,101 Other assets 2,690 27,082 2,418 11,851 9,729 900 310,342 365,012 - ---------------------------------------------------------------------------------------------------------------------------------- Total assets $23,500 $105,201 $ 13,007 $25,160 $48,226 $38,677 $310,342 $564,113 ================================================================================================================================== Liabilities and partners'/ members' capital: Mortgages and loans payable $ -- $ 63,486 $ 50,000 -- $33,966 $ -- $129,562 $277,014 Other liabilities 160 5,035 1,392 9,400 1,785 1,027 3,750 22,549 Partners'/members' capital 23,340 36,680 (38,385) 15,760 12,475 37,650 177,030 264,550 - ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities and partners'/members' capital $23,500 $105,201 $ 13,007 $25,160 $48,226 $38,677 $310,342 $564,113 ================================================================================================================================== Operating Partnership's net investment in unconsolidated joint ventures $16,110 $ 35,079 $ 3,973 $15,809 $ 2,782 $ 7,874 $ 19,811 $101,438 - ----------------------------------------------------------------------------------------------------------------------------------
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December 31, 1999 --------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ---------------------------------------------------------------------------------------------------------------------------------- Assets: Rental property, net $21,817 $72,148 $11,552 $10,695 $19,549 $31,476 $ -- $167,237 Other assets 3,319 6,427 2,571 773 5,069 768 239,441 258,368 - ---------------------------------------------------------------------------------------------------------------------------------- Total assets $25,136 $78,575 $14,123 $11,468 $24,618 $32,244 $239,441 $425,605 ================================================================================================================================== Liabilities and partners'/ members' capital: Mortgages and loans payable $ -- $41,274 $43,081 $ -- $17,300 $ -- $108,407 $210,062 Other liabilities 186 7,254 1,383 2 1,263 3,536 36,109 49,733 Partners'/members' capital 24,950 30,047 (30,341) 11,466 6,055 28,708 94,925 165,810 - ---------------------------------------------------------------------------------------------------------------------------------- Total liabilities and partners'/members' capital $25,136 $78,575 $14,123 $11,468 $24,618 $32,244 $239,441 $425,605 ================================================================================================================================== Operating Partnership's net investment in unconsolidated joint ventures $17,072 $23,337 $ 8,352 $11,571 $ 2,697 $ 6,073 $ 20,032 $ 89,134 - ----------------------------------------------------------------------------------------------------------------------------------
The following is a summary of the results of operations of the unconsolidated joint ventures for the period in which the Operating Partnership had investment interests during the years ended December 31, 2000, 1999 and 1998:
Year Ended December 31, 2000 --------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ---------------------------------------------------------------------------------------------------------------------------------- Total revenues $5,028 $ 9,254 $10,695 $1,009 $ 3,917 $5,917 $19,931 $ 55,751 Operating and other expenses (1,619) (2,628) (3,312) (155) (1,030) (2,773) (3,060) (14,577) Depreciation and amortization (1,226) (5,908) (1,531) (62) (975) (839) -- (10,541) Interest expense -- (4,535) (4,084) -- (1,547) -- (5,045) (15,211) - ---------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $2,183 $(3,817) $ 1,768 $ 792 $ 365 $2,305 $11,826 $ 15,422 ================================================================================================================================== Operating Partnership's equity in earnings of unconsolidated joint ventures $ 935 $ 3,248 $ 483 $ 735 $ 180 $ 474 $ 2,000 $ 8,055 - ---------------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 1999 --------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ---------------------------------------------------------------------------------------------------------------------------------- Total revenues $ 4,938 $ 459 $ 9,011 $ 917 $1,426 $ 4,162 $10,093 $ 31,006 Operating and other expenses (1,505) (104) (3,238) (287) (352) (2,327) (3,774) (11,587) Depreciation and amortization (1,234) (100) (1,422) (96) (439) (551) -- (3,842) Interest expense -- (119) (3,116) -- (45) -- (2,185) (5,465) - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 2,199 $ 136 $ 1,235 $ 534 $ 590 $ 1,284 $ 4,134 $ 10,112 ================================================================================================================================== Operating Partnership's equity in earnings (loss) of unconsolidated joint ventures $ 827 -- $ (366) $ 541 $ 298 $ 233 $ 1,060 $ 2,593 - ----------------------------------------------------------------------------------------------------------------------------------
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Year Ended December 31, 1998 --------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ---------------------------------------------------------------------------------------------------------------------------------- Total revenues $ 3,544 -- $ 7,320 $ 490 -- $ 603 -- $11,957 Operating and other expenses (1,124) -- (2,955) (35) -- (287) -- (4,401) Depreciation and amortization (1,000) -- (759) (50) -- (76) -- (1,885) Interest expense -- -- (3,495) -- -- -- -- (3,495) - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 1,420 -- $ 111 $ 405 -- $ 240 -- $ 2,176 ================================================================================================================================== Operating Partnership's equity in earnings (loss) of unconsolidated joint ventures $ 723 -- $ (182) $ 455 -- $ 59 -- $ 1,055 - ----------------------------------------------------------------------------------------------------------------------------------
5. DEFERRED CHARGES AND OTHER ASSETS December 31, 2000 1999 - -------------------------------------------------------------------------------- Deferred leasing costs $ 80,667 $ 62,076 Deferred financing costs 23,085 16,690 - -------------------------------------------------------------------------------- 103,752 78,766 Accumulated amortization (26,303) (20,197) - -------------------------------------------------------------------------------- Deferred charges, net 77,449 58,569 Prepaid expenses and other assets 25,206 7,867 - -------------------------------------------------------------------------------- Total deferred charges and other assets, net $ 102,655 $ 66,436 ================================================================================ 6. 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: December 31, 2000 1999 - -------------------------------------------------------------------------------- Security deposits $6,477 $6,021 Escrow and other reserve funds 80 1,060 - -------------------------------------------------------------------------------- Total restricted cash $6,557 $7,081 ================================================================================ 7. RENTAL PROPERTY HELD FOR SALE As of December 31, 2000, included in total rental property are 10 office properties that the Operating Partnership has identified as held for sale. These properties have an aggregate carrying value of $107,458 and $107,264 as of December 31, 2000 and 1999, respectively, and are located in San Antonio, Bexar County, Texas or Houston, Harris County, Texas. As of December 31, 1999, included in total rental property were three office properties that the Operating Partnership had identified as held for sale. The three office properties have an aggregate carrying value of $77,783 as of December 31, 1999 and are located in Omaha, Douglas County, Nebraska; Jersey City, Hudson County, New Jersey or Amarillo, Potter County, Texas. The office properties located in Jersey City, Hudson County, New Jersey and Amarillo, Potter County, Texas were sold in April 2000 in two separate transactions and the property located in Omaha, Douglas County, Nebraska was sold in November 2000. See Note 3. 77 The following is a summary of the condensed results of operations of the rental properties held for sale at December 31, 2000 for the years ended December 31, 2000, 1999 and 1998: Years Ended December 31, 2000 1999 1998 - -------------------------------------------------------------------------------- Total revenues $ 26,069 $ 24,181 $ 23,856 Operating and other expenses (13,227) (12,589) (11,391) Depreciation and amortization (2,380) (2,732) (2,397) - -------------------------------------------------------------------------------- Net income $ 10,462 $ 8,860 $ 10,068 ================================================================================ There can be no assurance if and when sales of the Operating Partnership's rental properties held for sale will occur. 8. SENIOR UNSECURED NOTES On March 16, 1999, the Operating Partnership issued $600,000 face amount of senior unsecured notes with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions and discount) of approximately $593,500 were used to pay down outstanding borrowings under the Unsecured Facility, as defined in Note 9, and to pay off certain mortgage loans. The senior unsecured notes were issued at a discount of approximately $2,748, which is being amortized over the terms of the respective tranches as an adjustment to interest expense. On August 2, 1999, the Operating Partnership issued $185,283 of senior unsecured notes with interest payable monthly in arrears. The proceeds from the issuance were used to retire an equivalent amount of a non-recourse mortgage loan. On December 21, 2000, the Operating Partnership issued $15,000 of senior unsecured notes with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions) of approximately $14,907 were used primarily to pay down outstanding borrowings under the Prudential Facility, as defined in Note 9. The Operating Partnership's total senior unsecured notes (collectively, "Senior Unsecured Notes") are redeemable at any time at the option of the Operating Partnership, subject to certain conditions including yield maintenance. A summary of the terms of the Senior Unsecured Notes outstanding as of December 31, 2000 and 1999 is as follows:
December 31, Effective 2000 1999 Rate (1) - --------------------------------------------------------------------------------------- 7.180% Senior Unsecured Notes, due December 31, 2003 $185,283 $185,283 7.23% 7.000% Senior Unsecured Notes, due March 15, 2004 299,744 299,665 7.27% 7.250% Senior Unsecured Notes, due March 15, 2009 298,072 297,837 7.49% 7.835% Senior Unsecured Notes, due December 15, 2010 15,000 -- 7.92% - --------------------------------------------------------------------------------------- Total Senior Unsecured Notes $798,099 $782,785 7.35% =======================================================================================
(1) Includes the cost of terminated treasury lock agreements (if any), offering and other transaction costs and the discount on the notes, as applicable. In January 2001, the Operating Partnership issued $300,000 face amount of 7.75 percent senior unsecured notes due February 15, 2011 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions and discount) of approximately $296,300 were used to pay down outstanding borrowings under the 2000 Unsecured Facility, as defined in Note 9. The senior unsecured notes were issued at a discount of approximately $1,731, which will be amortized over the term as an adjustment to interest expense. The terms of the Senior Unsecured Notes include certain restrictions and covenants which require compliance with financial ratios relating to the maximum amount of debt leverage, the maximum amount of secured indebtedness, the minimum amount of debt service coverage and the maximum amount of unsecured debt as a percent of unsecured assets. 78 9. REVOLVING CREDIT FACILITIES 2000 UNSECURED FACILITY On June 22, 2000, the Operating Partnership obtained an unsecured revolving credit facility ("2000 Unsecured Facility") with a current borrowing capacity of $800,000 from a group of 24 lenders. The interest rate on outstanding borrowings under the credit line is currently the London Inter-Bank Offered Rate ("LIBOR") (6.56 percent at December 31, 2000) plus 80 basis points. The Operating Partnership may instead elect an interest rate representing the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. The 2000 Unsecured Facility also requires a 20 basis point facility fee on the current borrowing capacity payable quarterly in arrears. In the event of a change in the Operating Partnership's unsecured debt rating, the interest rate and facility fee will be changed on a sliding scale. Subject to certain conditions, the Operating Partnership has the ability to increase the borrowing capacity of the credit line up to $1,000,000. The 2000 Unsecured Facility matures in June 2003, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the credit line upon exercise. The terms of the 2000 Unsecured Facility include certain restrictions and covenants which limit, among other things the payment of dividends (as discussed below), the incurrence of additional indebtedness, the incurrence of liens and the disposition of assets, and which require compliance with financial ratios relating to the maximum leverage ratio, the maximum amount of secured indebtedness, the minimum amount of tangible net worth, the minimum amount of debt service coverage, the minimum amount of fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property debt service coverage and certain investment limitations. The dividend restriction referred to above provides that, except to enable the Corporation to continue to qualify as a REIT under the Code, the Corporation will not during any four consecutive fiscal quarters make distributions with respect to common stock or other equity interests in an aggregate amount in excess of 90 percent of funds from operations (as defined) for such period, subject to certain other adjustments. The lending group for the 2000 Unsecured Facility consists of: Chase Manhattan Bank, as administrative agent; Fleet National Bank, as syndication agent; Bank of America, N.A., as documentation agent; Bank One, NA, Commerzbank Aktiengesellschaft and First Union National Bank, as senior managing agents; PNC Bank, N.A., as managing agent; Bank Austria Creditanstalt Corporate Finance, Inc., Bayerische Hypo-und Vereinsbank AG, Dresdner Bank AG, Societe Generale, Summit Bank and Wells Fargo Bank, N.A., as co-agents; and Bayerische Landesbank Girozentrale; Citizens Bank of Massachusetts; European American Bank; Chevy Chase Bank; Citicorp Real Estate, Inc.; DG Bank Deutsche Genossenschaftsbank, AG; Erste Bank; KBC Bank N.V.; SunTrust Bank; Bank Leumi USA and Israel Discount Bank of New York. In conjunction with obtaining the 2000 Unsecured Facility, the Operating Partnership drew funds on the new facility to repay in full and terminate the Unsecured Facility, as defined below. UNSECURED FACILITY The Operating Partnership had an unsecured revolving credit facility ("Unsecured Facility") with a borrowing capacity of $1,000,000 from a group of 28 lenders. The interest rate was based on the Operating Partnership's achievement of investment grade unsecured debt ratings and, at the Operating Partnership's election, bore interest at either 90 basis points over LIBOR or the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. In conjunction with obtaining the 2000 Unsecured Facility, the Operating Partnership repaid in full and terminated the Unsecured Facility on June 22, 2000. ORIGINAL UNSECURED FACILITY The Original Unsecured Facility ("Original Unsecured Facility") was repaid in full and retired in connection with the Operating Partnership obtaining the Unsecured Facility in April 1998. On account of prepayment fees, loan origination fees, legal fees, and other costs incurred in the retirement of the Original Unsecured Facility, an extraordinary loss of $2,478 was recorded for the year ended December 31, 1998. 79 PRUDENTIAL FACILITY The Operating Partnership has a revolving credit facility ("Prudential Facility") with Prudential Securities Corp. ("PSC") in the amount of $100,000, which currently bears interest at 110 basis points over one-month LIBOR, with a maturity date of June 29, 2001. The Prudential Facility is a recourse liability of the Operating Partnership and is secured by the Operating Partnership's equity interest in Harborside Plazas 2 and 3. The Prudential Facility limits the ability of the Operating Partnership to make any distributions during any fiscal quarter in an amount in excess of 100 percent of the Operating Partnership's available funds from operations (as defined) for the immediately preceding fiscal quarter (except to the extent such excess distributions or dividends are attributable to gains from the sale of the Operating Partnership's assets or are required for the Corporation to maintain its status as a REIT under the Code); provided, however, that the Operating Partnership may make distributions and pay dividends in excess of 100 percent of available funds from operations (as defined) for the preceding fiscal quarter for not more than three consecutive quarters. In addition to the foregoing, the Prudential Facility limits the liens placed upon the subject property and certain collateral, the use of proceeds from the Prudential Facility, and the maintenance of ownership of the subject property and assets derived from said ownership. The Operating Partnership has been notified that the Prudential Facility will not be renewed. SUMMARY As of December 31, 2000 and 1999, the Operating Partnership had outstanding borrowings of $348,840 and $177,000, respectively, under its revolving credit facilities (with aggregate borrowing capacity of $900,000 and $1,100,000, respectively). The total outstanding borrowings were from the 2000 Unsecured Facility at December 31, 2000 and from the Unsecured Facility at December 31, 1999, with no outstanding borrowings under the Prudential Facility. 10. MORTGAGES AND LOANS PAYABLE The Operating Partnership has mortgages and loans payable which are comprised of various loans collateralized by certain of the Operating Partnership's rental properties. Payments on mortgages and loans payable are generally due in monthly installments of principal and interest, or interest only. A summary of the Operating Partnership's mortgages and loans payable as of December 31, 2000 and 1999 is as follows:
Effective Principal Balance at Interest December 31, Property Name Lender Rate 2000 1999 Maturity - ------------------------------------------------------------------------------------------------------------------------------------ 201 Commerce Drive Sun Life Assurance Co. 6.240% $ -- $ 1,059 09/01/00 3 & 5 Terri Lane First Union National Bank 6.220% -- 4,434 10/31/00 101 & 225 Executive Drive Sun Life Assurance Co. 6.270% 2,198 2,375 06/01/01 Mack-Cali Morris Plains Corestates Bank 7.510% 2,169 2,235 12/31/01 Mack-Cali Willowbrook CIGNA 8.670% 9,460 10,250 10/01/03 400 Chestnut Ridge Prudential Insurance Co. 9.440% 13,588 14,446 07/01/04 Mack-Cali Centre VI Principal Life Insurance Co. 6.865% 35,000 35,000 04/01/05 Various (a) Prudential Insurance Co. 7.100% 150,000 150,000 05/15/05 Mack-Cali Bridgewater I New York Life Ins. Co. 7.000% 23,000 23,000 09/10/05 Mack-Cali Woodbridge II New York Life Ins. Co. 7.500% 17,500 17,500 09/10/05 Mack-Cali Short Hills Prudential Insurance Co. 7.740% 25,911 26,604 10/01/05 500 West Putnam Avenue New York Life Ins. Co. 6.520% 10,069 10,784 10/10/05 Harborside - Plaza 1 U.S. West Pension Trust 5.610% 54,370 51,015 01/01/06 Harborside - Plazas 2 and 3 Northwestern/Principal 7.320% 95,630 98,985 01/01/06 Mack-Cali Airport Allstate Life Insurance Co. 7.050% 10,500 10,500 04/01/07 Kemble Plaza II Mitsubishi Tr & Bk Co. LIBOR+0.65% -- 40,025 01/31/08 Kemble Plaza I Mitsubishi Tr & Bk Co. LIBOR+0.65% 32,178 32,178 01/31/09 - ------------------------------------------------------------------------------------------------------------------------------------ Total Property Mortgages $481,573 $530,390 ====================================================================================================================================
(a) The Operating Partnership has the option to convert the mortgage loan, which is secured by 11 properties, to unsecured debt. 80 INTEREST RATE CONTRACTS On November 20, 1997, the Operating Partnership entered into a forward treasury rate lock agreement with a commercial bank. The agreement locked an interest rate of 5.88 percent per annum for the interpolated seven-year U.S. Treasury Note effective March 1, 1998, on a notional amount of $150,000. The agreement was used to fix the interest rate on the $150,000 Prudential mortgage loan. On March 2, 1998, the Operating Partnership paid $2,035 in settlement of the agreement, which is being amortized to interest expense over the term of the $150,000 Prudential mortgage loan. On October 1, 1998, the Operating Partnership entered into a forward treasury rate lock agreement with a commercial bank. The agreement locked an interest rate of 4.089 percent per annum for the three-year U.S. Treasury Note effective November 4, 1999, on a notional amount of $50,000. The agreement was used to fix the Index Rate on $50,000 of the Harborside-Plaza 1 mortgage, for which the interest rate was re-set to the three-year U.S. Treasury Note (5.82 percent) plus 110 basis points for the three years beginning November 4, 1999 (see "Property Mortgages: Harborside-Plaza 1"). The Operating Partnership received $2,208 in settlement of the agreement, which is being amortized to interest expense over the three year-period. SCHEDULED PRINCIPAL PAYMENTS Scheduled principal payments and related weighted average annual interest rates for the Operating Partnership's Senior Unsecured Notes, revolving credit facilities and mortgages and loans payable as of December 31, 2000 are as follows:
Weighted Avg. Scheduled Principal Interest Rate of Year Amortization Maturities Total Future Repayments (a) - ---------------------------------------------------------------------------------------- 2001 $ 3,239 $ 4,211 $ 7,450 7.43% 2002 3,433 -- 3,433 8.20% 2003 3,581 540,934 544,515 7.44% 2004 2,420 309,863 312,283 7.34% 2005 1,584 253,178 254,762 7.13% Thereafter (473) 506,542 506,069 7.38% - ---------------------------------------------------------------------------------------- Totals/Weighted Average $ 13,784 $1,614,728 $1,628,512 7.29% ========================================================================================
(a) Assumes weighted average LIBOR at December 31, 2000 of 6.73 percent in calculating revolving credit facility and other variable rate debt interest rates. CASH PAID FOR INTEREST AND INTEREST CAPITALIZED Cash paid for interest for the years ended December 31, 2000, 1999 and 1998 was $112,157, $91,883 and $92,441, respectively. Interest capitalized by the Operating Partnership for the years ended December 31, 2000, 1999 and 1998 was $11,524, $6,840 and $3,547, respectively. SUMMARY OF INDEBTEDNESS As of December 31, 2000, the Operating Partnership's total indebtedness of $1,628,512 (weighted average interest rate of 7.29 percent) was comprised of $381,018 of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 7.53 percent) and fixed rate debt of $1,247,494 (weighted average rate of 7.25 percent). As of December 31, 1999, the Operating Partnership's total indebtedness of $1,490,175 (weighted average interest rate of 7.27 percent) was comprised of $249,204 of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 7.42 percent) and fixed rate debt of $1,240,971 (weighted average rate of 7.24 percent). 11. PARTNERS' CAPITAL Partners' capital in the accompanying consolidated financial statements relates to common units held by the Corporation in the Operating Partnership, common units held by the limited partners, preferred units ("Preferred Units") held by the preferred unitholders of the Operating Partnership and warrants to purchase common units ("Unit Warrants") in the Operating Partnership. Net income allocated to the preferred unitholders and limited partners reflects their pro-rata share of net income and distributions. 81 COMMON STOCK REPURCHASES On August 6, 1998, the Board of Directors of the Corporation authorized a share repurchase program ("Repurchase Program") under which the Corporation was permitted to purchase up to $100,000 of the Corporation's outstanding common stock. Purchases could be made from time to time in open market transactions at prevailing prices or through privately negotiated transactions. Under the Repurchase Program, the Corporation purchased for constructive retirement 1,869,200 shares of its outstanding common stock for an aggregate cost of approximately $52,562 from August 1998 through December 1999. Concurrent with these purchases, the Corporation sold to the Operating Partnership 1,869,200 common units for approximately $52,562. On September 13, 2000, the Board of Directors of the Corporation authorized an increase to the Repurchase Program under which the Corporation is permitted to purchase up to an additional $150,000 of the Corporation's outstanding common stock above the $52,562 that had previously been purchased. The Corporation purchased for constructive retirement 2,026,300 shares of its outstanding common stock for an aggregate cost of approximately $55,514 from September 13, 2000 through December 31, 2000. Concurrent with these purchases, the Corporation sold to the Operating Partnership 2,026,300 common units for approximately $55,514. Subsequent to year end through February 15, 2001, the Corporation purchased for constructive retirement 72,000 shares of its outstanding common stock for an aggregate cost of approximately $1,982 under the Repurchase Program. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN The Corporation filed a registration statement with the SEC for the Corporation's dividend reinvestment and stock purchase plan ("Plan") which was declared effective in February 1999. The Plan commenced on March 1, 1999. During the year ended December 31, 1999, 1,082 shares were issued and proceeds of approximately $32 were received from stock purchases and/or dividend reinvestments under the Plan. The proceeds of the shares issued were contributed by the Corporation to the Operating Partnership in exchange for common units. The Corporation did not issue any shares under the Plan during the year ended December 31, 2000. SHAREHOLDER RIGHTS PLAN On June 10, 1999, the Board of Directors of the Corporation authorized a dividend distribution of one preferred share purchase right ("Right") for each outstanding share of common stock which were distributed to all holders of record of the common stock on July 6, 1999. Each Right entitles the registered holder to purchase from the Corporation one one-thousandth of a share of Series A junior participating preferred stock, par value $0.01 per share ("Preferred Shares"), at a price of $100.00 per one one-thousandth of a Preferred Share ("Purchase Price"), subject to adjustment as provided in the rights agreement. The Rights expire on July 6, 2009, unless the expiration date is extended or the Right is redeemed or exchanged earlier by the Corporation. The Rights are attached to each share of common stock. The Rights are generally exercisable only if a person or group becomes the beneficial owner of 15 percent or more of the outstanding common stock or announces a tender offer for 15 percent or more of the outstanding common stock ("Acquiring Person"). In the event that a person or group becomes an Acquiring Person, each holder of a Right will have the right to receive, upon exercise, common stock having a market value equal to two times the Purchase Price of the Right. On June 27, 2000, the Corporation amended its shareholder rights plan to prevent the triggering of such plan as a result of the Merger Agreement. 82 STOCK OPTION PLANS In September 2000, the Corporation established the 2000 Employee Stock Option Plan ("2000 Employee Plan") and the 2000 Director Stock Option Plan ("2000 Director Plan") under which a total of 2,700,000 shares (subject to adjustment) of the Corporation's common stock have been reserved for issuance (2,500,000 shares under the 2000 Employee Plan and 200,000 shares under the 2000 Director Plan). In 1994, and as subsequently amended, the Corporation established the Mack-Cali Employee Stock Option Plan ("Employee Plan") and the Mack-Cali Director Stock Option Plan ("Director Plan") under which a total of 5,380,188 shares (subject to adjustment) of the Corporation '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 have become exercisable over a three-year period and those options granted under both the 2000 Employee Plan and Employee Plan in 1996, 1997, 1998, 1999 and 2000 become exercisable over a five-year period. All stock options granted under both the 2000 Director Plan and Director Plan become exercisable in one year. All options were granted at the fair market value at the dates of grant and have terms of ten years. As of December 31, 2000 and 1999, the stock options outstanding had a weighted average remaining contractual life of approximately 7.5 and 7.4 years, respectively. Information regarding the Corporation's stock option plans is summarized below: Weighted Shares Average Under Exercise Options Price - -------------------------------------------------------------------------------- Outstanding at January 1, 1998 3,287,290 $ 31.47 Granted 1,048,620 $ 35.90 Exercised (267,660) $ 20.47 Lapsed or canceled (128,268) $ 36.61 - -------------------------------------------------------------------------------- Outstanding at December 31, 1998 3,939,982 $ 33.22 Granted 426,400 $ 25.23 Exercised (47,583) $ 22.31 Lapsed or canceled (591,648) $ 36.92 - -------------------------------------------------------------------------------- Outstanding at December 31, 1999 3,727,151 $ 31.86 Granted 1,523,900 $ 26.75 Exercised (117,053) $ 21.45 Lapsed or canceled (500,679) $ 34.64 - -------------------------------------------------------------------------------- Outstanding at December 31, 2000 4,633,319 $ 30.14 ================================================================================ Options exercisable at December 31, 1999 1,724,920 $ 29.78 Options exercisable at December 31, 2000 2,049,041 $ 31.02 - -------------------------------------------------------------------------------- Available for grant at December 31, 1999 662,878 Available for grant at December 31, 2000 2,344,757 - -------------------------------------------------------------------------------- The weighted average fair value of options granted during 2000, 1999 and 1998 were $3.40, $2.74 and $5.59 per option, respectively. The fair value of each significant option grant is estimated on the date of grant using the Black-Scholes model. The following weighted average assumptions are included in the Corporation's fair value calculations of stock options: 2000 1999 1998 - -------------------------------------------------------------------------------- Expected life (in years) 6 6 6 Risk-free interest rate 5.67% 6.12% 5.41% Volatility 22.66% 24.72% 23.37% Dividend yield 8.82% 9.15% 5.78% - -------------------------------------------------------------------------------- 83 FASB No. 123 Under the above models, the value of stock options granted during 2000, 1999 and 1998 totaled approximately $5,181, $1,167 and $5,281, 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 income, basic earnings per unit and diluted earnings per unit would have been $204,743, $3.08 and $3.01 in 2000, $131,243, $1.96 and $1.95 in 1999 and $125,964, $1.99 and $1.97 in 1998, respectively. STOCK WARRANTS The Corporation has 360,000 warrants outstanding which enable the holders to purchase an equal number of shares of its common stock ("Stock Warrants") at $33 per share (the market price at date of grant). Such warrants are all currently exercisable and expire on January 31, 2007. The Corporation also has 389,976 Stock Warrants outstanding which enable the holders to purchase an equal number of its shares of common stock at $38.75 per share (the market price at date of grant). Such warrants vest equally over a five-year period through December 31, 2001 and expire on December 12, 2007. As of December 31, 2000 and 1999, there were a total of 749,976 and 914,976 Stock Warrants outstanding, respectively. As of December 31, 2000 and 1999, there were 613,985 and 585,989 Stock Warrants exercisable, respectively. For the years ended December 31, 2000 and 1999, 165,000 and no Stock Warrants were canceled, respectively. No Stock Warrants have been exercised through December 31, 2000. STOCK COMPENSATION In July 1999, the Corporation entered into amended and restated employment contracts with six of its then key executive officers which provided for, among other things, compensation in the form of stock awards and associated tax obligation payments. In addition, in December 1999, the Corporation granted stock awards to certain other officers of the Corporation. In connection with the stock awards (collectively, "Restricted Stock Awards"), the executive officers and certain other officers are to receive up to a total of 211,593 shares of the Corporation's common stock vesting over a five-year period contingent upon the Corporation meeting certain performance and/or stock price appreciation objectives. The Restricted Stock Awards provided to the executive officers and certain other officers were granted under the Employee Plan. Effective January 1, 2000, 31,737 shares of the Corporation's common stock were issued to the executive officers and certain other officers upon meeting the required objectives. In connection with the resignation of each of Brant Cali and John R. Cali from the Corporation, all of their respective remaining restricted stock, an aggregate of 38,649 shares, were issued to Brant Cali and John R. Cali upon the accelerated vesting of their remaining Restricted Stock Awards. For the years ended December 31, 2000 and 1999, 5,100 and no unvested Restricted Stock Awards were canceled, respectively. DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS The Deferred Compensation Plan for Directors ("Deferred Compensation Plan"), which commenced January 1, 1999, allows non-employee directors of the Corporation to elect to defer up to 100 percent of their annual retainer fee into deferred stock units. The deferred stock units are convertible into an equal number of shares of common stock upon the directors' termination of service from the Board of Directors or a change in control of the Corporation, as defined in the plan. Deferred stock units are credited to each director quarterly using the closing price of the Corporation's common stock on the applicable dividend record date for the respective quarter. Each participating director's account is also credited for an equivalent amount of deferred stock units based on the dividend rate for each quarter. During the years ended December 31, 2000 and 1999, 4,227 and 3,319 deferred stock units were earned, respectively. 84 EARNINGS PER UNIT FASB No. 128 requires a dual presentation of basic and diluted 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. The following information presents the Operating Partnership's results for the years ended December 31, 2000, 1999 and 1998 in accordance with FASB No. 128:
For the Year Ended December 31, 2000 1999 1998 -------------------------------------------------------------------------------------------- Basic EPU Diluted EPU Basic EPU Diluted EPU Basic EPU Diluted EPU - ------------------------------------------------------------------------------------------------------------------------------------ Net income available to common unitholders $210,950 $210,950 $137,128 $137,128 $132,481 $132,481 Add: Net income attributable to Operating Partnership - preferred units -- 15,441 -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Adjusted net income $210,950 $226,391 $137,128 $137,128 $132,481 $132,481 ==================================================================================================================================== Weighted average unit 66,392 73,070 66,885 67,133 63,438 63,893 - ------------------------------------------------------------------------------------------------------------------------------------ Per Unit $ 3.18 $ 3.10 $ 2.05 $ 2.04 $ 2.09 $ 2.07 ====================================================================================================================================
The following schedule reconciles the units used in the basic EPU calculation to the units used in the diluted EPU calculation:
Year Ended December 31, 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------- Basic EPU Units: 66,392 66,885 63,438 Add: Operating Partnership - preferred units after conversion to common units) 6,485 -- -- Stock options 188 241 411 Restricted Stock Awards 5 7 -- Stock Warrants -- -- 44 - --------------------------------------------------------------------------------------------------------------------- Diluted EPU Units: 73,070 67,133 63,893 =====================================================================================================================
Contingent Units outstanding in 1998 were not included in the 1998 computation of diluted EPU as such units were anti-dilutive during the period. Preferred Units outstanding in 1999 and 1998 were not included in the 1999 and 1998 computations of diluted EPU as such units were anti-dilutive during the periods. Through December 31, 2000, under the Repurchase Program, the Corporation purchased for constructive retirement, a total of 3,895,500 shares of its outstanding common stock for an aggregate cost of approximately $108,076. Concurrent with these purchases, the Corporation sold an equal number of common units to the Operating Partnership. 85 12. REDEEMABLE PARTNERSHIP UNITS Preferred Units At January 1, 1999, the Operating Partnership had 27,132 Series A Preferred Units and 223,124 Series B Preferred Units outstanding. 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 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 Preferred Units may be converted at any time into common units at a conversion price of $34.65 per unit. Common units received pursuant to such conversion may be redeemed for an equal number of shares of common stock. During the year ended December 31, 1999, 20,952 Series A Preferred Units were converted into 604,675 common units. During the year ended December 31, 2000, 6,180 Series A Preferred Units and 2,784 Series B Preferred Units were converted into 258,702 common units. As of December 31, 2000, there were 220,340 Series B Preferred Units outstanding (convertible into 6,359,019 common units). There were no Series A Preferred Units outstanding as of December 31, 2000. Common Units At January 1, 1999, the Operating Partnership had 9,086,585 common units outstanding. Certain individuals and entities own common units in the Operating Partnership. A common unit and a share of common stock of the General Partner have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Operating Partnership. Common units are redeemable by the common unitholders at their option, subject to certain restrictions, on the basis of one common unit for either one share of common stock or cash equal to the fair market value of a share at the time of the redemption. The General Partner has the option to deliver shares of common stock in exchange for all or any portion of the cash requested. When a unitholder redeems a common unit for common stock of the Corporation, limited partners' capital is reduced and the General Partners' capital is increased. Effective August 21, 1998, the partnership agreement was amended to vest this right in the Operating Partnership, rather than in the General Partnership (see Note 2). Common units held by the General Partner are not redeemable. During the year ended December 31, 1999, the Operating Partnership issued an aggregate of 122,062 common units in connection with two separate transactions, valued at approximately $3,362. During the year ended December 31, 1999, the Operating Partnership issued 604,675 common units in connection with the conversion of 20,952 Preferred Units. During the year ended December 31, 1999, an aggregate of 1,934,657 common units were redeemed for an equivalent number of shares of common stock in the Corporation. During the year ended December 31, 1999, the Operating Partnership also issued 275,046 common units, valued at approximately $8,141, in connection with the achievement of certain performance goals at the Mack Properties, as defined below, in redemption of an equivalent number of contingent common units. During the year ended December 31, 2000, the Operating Partnership issued 258,702 common units in connection with the conversion of 8,964 Preferred Units, and an aggregate of 448,688 common units were redeemed for an equivalent number of shares of common stock in the Corporation. As of December 31, 2000, there were 7,963,725 common units outstanding. 86 Contingent Common And Preferred Units In connection with the Mack transaction in December 1997, 2,006,432 contingent common units, 11,895 Series A contingent Preferred Units and 7,799 Series B contingent Preferred Units were issued as contingent non-participating units ("Contingent Units"). Redemption of such Contingent Units occurred upon the achievement of certain performance goals relating to certain of the Mack properties ("Mack Properties"), specifically the achievement of certain leasing activity. When Contingent Units were redeemed for common and Preferred Units, an adjustment to the purchase price of certain of the Mack Properties was recorded, based on the value of the units issued. On account of certain of the performance goals at the Mack Properties having been achieved during the year ended December 31, 1999, the Operating Partnership redeemed 275,046 contingent common units and issued an equivalent number of common units, as indicated above. There were no Contingent Units outstanding as of December 31, 1999. Unit Warrants The Operating Partnership has 2,000,000 Unit Warrants outstanding which enable the holders to purchase an equal number of common units at $37.80 per unit. The Unit Warrants are all currently exercisable and expire on December 11, 2002. 13. MINORITY INTEREST IN CONSOLIDATED PARTIALLY-OWNED PROPERTIES On December 28, 1999, the Operating Partnership sold an interest in six office properties located in Parsippany, Morris County, New Jersey for $83,600. Amongst other things, the operating agreements provided for a preferred return to the joint venture members. On June 29, 2000 the Operating Partnership acquired a 100 percent interest in these properties and the Operating Partnership paid an additional $836 to the minority interest member in excess of its investment. On August 24, 2000, MC-SJP Morris V Realty, LLC and MC-SJP Morris VI Realty, LLC acquired land in which SJP Properties has a minority interest amounting to $1,925. The Operating Partnership controlled these operations and has consolidated the financial position and results of operations of partially-owned properties in the financial statements of the Operating Partnership. The equity interests of the other members are reflected as minority interests: partially-owned properties in the consolidated financial statements of the Operating Partnership. 14. EMPLOYEE BENEFIT PLAN All employees of the Corporation who meet certain minimum age and period of service requirements are eligible to participate in a 401(k) defined contribution plan (the "401(k) Plan"). The 401(k) Plan allows eligible employees to defer up to 15 percent of their annual compensation, subject to certain limitations imposed by federal law. The amounts contributed by employees are immediately vested and non-forfeitable. The Corporation, at management's discretion, may match employee contributions and/or make discretionary contributions. Management has approved, for the year ended December 31, 2001, a matching contribution to be paid under the 401(k) Plan equal to 50 percent of the first 3.5 percent of annual salary, as defined in the 401(k) Plan, contributed to the plan in 2001. Total expense recognized by the Operating Partnership for the years ended December 31, 2000, 1999 and 1998 was $0, $400 and $0, respectively. 15. 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 and Property Partnerships could realize on disposition of the financial instruments at December 31, 2000 and 1999. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. 87 Cash equivalents, receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2000 and 1999. The estimated fair value (excluding prepayment penalties) of the Senior Unsecured Notes and mortgages and loans payable as of December 31, 2000 approximated the carrying values of $798,099 and $481,573, respectively, and as of December 31, 1999 was approximately $741,824 and $511,281, respectively, based upon then current interest rates for debt with similar terms and remaining maturities. Revolving credit facility borrowings as of December 31, 2000 and 1999 approximated the carrying values of $348,840 and $177,000, respectively. Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2000 and 1999. 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, 2000 and current estimates of fair value may differ significantly from the amounts presented herein. 16. COMMITMENTS AND CONTINGENCIES TAX ABATEMENT AGREEMENTS Harborside Financial Center Pursuant to an agreement with the City of Jersey City, New Jersey, the Operating Partnership is required to make payments in lieu of property taxes ("PILOT") on its Harborside Plaza 2 and 3 properties. 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 15. Total Project Costs, as defined, are $145,644. The PILOT totaled $2,677, $2,620 and $2,570 for the years ended December 31, 2000, 1999 and 1998, respectively. The Operating Partnership has entered into a similar agreement with the City of Jersey City, New Jersey on its Harborside Plaza 4-A property. Pursuant to the agreement, such PILOT is equal to two percent of Total Project Costs, as defined, which was estimated to be $45,497. The PILOT, based upon the estimated Total Project Costs, was $25 for the in-service period of the property during the year ended December 31, 2000. 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, 2000, are as follows: Year Amount - -------------------------------------------------------------------------------- 2001 $ 531 2002 531 2003 531 2004 534 2005 534 Thereafter 21,997 - -------------------------------------------------------------------------------- Total $24,658 ================================================================================ Ground lease expense incurred during the years ended December 31, 2000, 1999 and 1998 amounted to $570, $561 and $419, respectively. 88 OTHER On April 19, 1999, the Corporation announced the following changes in the membership of its Board of Directors and the identities, titles and responsibilities of its executive officers: (i) Thomas A. Rizk resigned from the Board of Directors, the Executive Committee of the Board of Directors, his position as Chief Executive Officer and as an employee of the Corporation; (ii) Mitchell E. Hersh was appointed Chief Executive Officer of the Corporation simultaneous with his resignation from his positions as President and Chief Operating Officer of the Corporation; (iii) Timothy M. Jones was appointed President of the Corporation simultaneous with his resignation from his positions as Executive Vice President and Chief Investment Officer of the Corporation; and (iv) Brant Cali was appointed to the Board of Directors of the Corporation to fill the remainder of Thomas A. Rizk's term as a Class III Director and was appointed Chief Operating Officer of the Corporation, also remaining as an Executive Vice President and Assistant Secretary of the Corporation. Pursuant to the terms of Mr. Rizk's employment agreement entered into with the Corporation in December 1997 and an agreement entered into simultaneous with his resigning from the Corporation, Mr. Rizk received payments of approximately $14,490 in April 1999 and $500 in April 2000 and will receive $500 annually over the next two years. All costs associated with Mr. Rizk's resignation are included in non-recurring charges for the year ended December 31, 1999. On June 27, 2000, both Brant Cali and John R. Cali resigned their positions as officers of the Corporation and Brant Cali resigned as a director of the Corporation. John R. Cali was appointed to the Board of Directors of the Corporation to take the seat previously held by Brant Cali. As required by Brant Cali and John R. Cali's employment agreements with the Corporation: (i) the Corporation paid $2,820 and $2,806 (less applicable withholding) to Brant Cali and John R. Cali, respectively; (ii) all options to acquire shares of the Corporation's common stock and Restricted Stock Awards (as hereinafter defined) held by Brant Cali and John R. Cali became fully vested on the effective date of their resignations from the Corporation. All costs associated with Brant Cali and John R. Cali's resignations, which totaled approximately $9,228, are included in non-recurring charges for the year ended December 31, 2000. The Operating Partnership is a defendant in 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 and the Property Partnerships. 17. TENANT LEASES The Properties are leased to tenants under operating leases with various expiration dates through 2016. Substantially all of the leases provide for annual base rents plus recoveries and escalation charges based upon the tenant's proportionate share of and/or increases in real estate taxes and certain operating costs, as defined, and the pass through of charges for electrical usage. Future minimum rentals to be received under non-cancelable operating leases at December 31, 2000, are as follows: Year Amount - -------------------------------------------------------------------------------- 2001 $ 475,043 2002 440,153 2003 379,721 2004 326,091 2005 276,779 Thereafter 997,529 - -------------------------------------------------------------------------------- Total $2,895,316 ================================================================================ 89 18. SEGMENT REPORTING The Operating Partnership operates in one business segment - real estate. The Operating Partnership provides leasing, management, acquisition, development, construction and tenant-related services for its portfolio. The Operating Partnership does not have any foreign operations. The accounting policies of the segments are the same as those described in Note 2, excluding straight-line rent adjustments, depreciation and amortization and non-recurring charges. The Operating Partnership evaluates performance based upon net operating income from the combined properties in the segment. Selected results of operations for the years ended December 31, 2000, 1999 and 1998 and selected asset information as of December 31, 2000 and 1999 regarding the Operating Partnership's operating segment are as follows:
Total Corporate & Total Segment Other (e) Operating Partnership - ------------------------------------------------------------------------------------------- Total contract revenues (a): 2000 $ 557,926 $ 5,623 $ 563,549(f) 1999 534,985 3,903 538,888(g) 1998 475,096 4,919 480,015(h) Total operating and interest expenses (b): 2000 $ 174,116 $ 126,700 $ 300,816(i) 1999 168,166 128,925 297,091(j) 1998 149,791 113,528 263,319(k) Net operating income (c): 2000 $ 383,810 $(121,077) $ 262,733(f)(i) 1999 366,819 (125,022) 241,797(g)(j) 1998 325,305 (108,609) 216,696(h)(k) Total assets: 2000 $3,623,107 $ 53,870 $3,676,977 1999 3,580,782 48,819 3,629,601 Total long-lived assets (d): 2000 $3,522,766 $ 23,574 $3,546,340 1999 3,515,669 24,934 3,540,603
- -------------------------------------------------------------------------------- (a) Total contract revenues represent all revenues during the period (including the Operating Partnership's share of net income from unconsolidated joint ventures), excluding adjustments for straight-lining of rents and the Operating Partnership's share of straight-line rent adjustments from unconsolidated joint ventures. All interest income is excluded from segment amounts and is classified in Corporate and Other for all periods. (b) Total operating and interest expenses represent the sum of real estate taxes, utilities, operating services, general and administrative and interest expense. All interest expense (including for property-level mortgages) is excluded from segment amounts and classified in Corporate and Other for all periods. (c) Net operating income represents total contract revenues [as defined in Note (a)] less total operating and interest expenses [as defined in Note (b)] for the period. (d) Long-lived assets are comprised of total rental property, unbilled rents receivable and investments in unconsolidated joint ventures. (e) Corporate & Other represents all corporate-level items (including interest and other investment income, interest expense and non-property general and administrative expense) as well as intercompany eliminations necessary to reconcile to consolidated Operating Partnership totals. (g) Excludes $12,580 of adjustments for straight-lining of rents and $24 for the Operating Partnership's share of straight-line rent adjustments from unconsolidated joint ventures. (g) Excludes $12,438 of adjustments for straight-lining of rents and $158 for the Operating Partnership's share of straight-line rent adjustments from unconsolidated joint ventures. (h) Excludes $13,575 of adjustments for straight-lining of rents and $109 for the Operating Partnership's share of straight-line rent adjustments from unconsolidated joint ventures. (i) Excludes $92,088 of depreciation and amortization and non-recurring charges of $37,139. (j) Excludes $87,209 of depreciation and amortization and non-recurring charges of $16,458. (k) Excludes $78,916 of depreciation and amortization. 90 19. RELATED PARTY TRANSACTIONS The son of a current director of the Corporation, who was also a former officer of the Corporation, serves as an officer of a company which provides cleaning and other related services to certain of the Operating Partnership's properties. The Operating Partnership has incurred costs from this company of approximately $3,164, $2,524 and $2,296 for the years ended December 31, 2000, 1999 and 1998, respectively. As of December 31, 2000 and 1999, respectively, the Operating Partnership had accounts payable of approximately $108 and $307 to this company. The Operating Partnership provides management, leasing and construction services to properties owned by third parties in which certain officers and directors of the Corporation hold an ownership interest. The Operating Partnership recognized approximately $1,921, $1,960 and $2,476 in revenues from these properties for the years ended December 31, 2000, 1999 and 1998, respectively. As of December 31, 2000 and 1999, respectively, the Operating Partnership had total receivables from these properties of approximately $1,000 and $96. The Operating Partnership purchased land parcels in three separate transactions from affiliates of the Operating Partnership. The Operating Partnership also acquired a portfolio of properties from an affiliate of the Operating Partnership. See Note 3. 20. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("FASB No. 133"). FASB No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. In June 1999, the FASB delayed the implementation date of FASB No. 133 by one year (January 1, 2001 for the Operating Partnership). FASB No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Management of the Operating Partnership has determined that, due to its limited use of derivative instruments, the adoption of FASB No. 133 will not have a significant effect on the Operating Partnership's financial position at January 1, 2001, nor is it expected to materially impact future results of operations. 91 21. CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited) The following summarizes the condensed quarterly financial information for the Operating Partnership:
Quarter Ended 2000: December 31 September 30 June 30 March 31 - ---------------------------------------------------------------------------------------------- Total revenues $ 143,903 $ 143,382 $ 145,889 $ 142,979 Operating and other expenses 43,561 44,191 41,569 42,825 General and administrative 6,543 5,461 5,159 6,113 Depreciation and amortization 23,641 23,320 22,945 22,182 Interest expense 26,271 25,862 26,835 26,426 Non-recurring charges -- 27,911 9,228 -- - ---------------------------------------------------------------------------------------------- Income before gain on sales of rental property, minority interest and extraordinary item 43,887 16,637 40,153 45,433 (Loss) gain on sales of rental property (852) 10,036 73,921 2,248 - ---------------------------------------------------------------------------------------------- Income before minority interest and extraordinary item 43,035 26,673 114,074 47,681 Minority interest in consolidated partially-owned properties -- -- 2,982 2,090 - ---------------------------------------------------------------------------------------------- Income before extraordinary item 43,035 26,673 111,092 45,591 Extraordinary item-loss on early retirement of debt -- -- -- -- - ---------------------------------------------------------------------------------------------- Net income $ 43,035 $ 26,673 $ 111,092 $ 45,591 ============================================================================================== Basic earnings per unit: Income before extraordinary item $ 0.60 $ 0.34 $ 1.61 $ 0.63 Extraordinary item - loss on early retirement of debt -- -- -- -- - ---------------------------------------------------------------------------------------------- Net income $ 0.60 $ 0.34 $ 1.61 $ 0.63 ============================================================================================== Diluted earnings per unit: Income before extraordinary item $ 0.59 $ 0.34 $ 1.52 $ 0.62 Extraordinary item - loss on early retirement of debt -- -- -- -- - ---------------------------------------------------------------------------------------------- Net income $ 0.59 $ 0.34 $ 1.52 $ 0.62 ============================================================================================== Distributions declared per common unit $ 0.61 $ 0.61 $ 0.58 $ 0.58 - ----------------------------------------------------------------------------------------------
92
Quarter Ended 1999: December 31 September 30 June 30 March 31 - ----------------------------------------------------------------------------------------- Total revenues $140,600 $139,020 $136,975 $134,889 Operating and other expenses 43,716 42,947 41,466 40,522 General and administrative 6,258 5,691 5,568 7,963 Depreciation and amortization 19,808 22,967 22,465 21,969 Interest expense 27,167 26,474 25,697 23,622 Non-recurring charges -- -- 16,458 -- - ----------------------------------------------------------------------------------------- Income before gain on sale of rental property, minority interest and extraordinary item 43,651 40,941 25,321 40,813 Gain on sale of rental property 1,957 -- -- -- - ----------------------------------------------------------------------------------------- Income before minority interest and extraordinary item 45,608 40,941 25,321 40,813 Minority interest in consolidated partially-owned properties 79 -- -- -- - ----------------------------------------------------------------------------------------- Income before extraordinary item 45,529 40,941 25,321 40,813 Extraordinary item - loss on early retirement of debt -- -- -- -- - ----------------------------------------------------------------------------------------- Net income $ 45,529 $ 40,941 $ 25,321 $ 40,813 ========================================================================================= Basic earnings per unit: Income before extraordinary item $ 0.63 $ 0.55 $ 0.32 $ 0.55 Extraordinary item - loss on early retirement of debt -- -- -- -- - ----------------------------------------------------------------------------------------- Net income $ 0.63 $ 0.55 $ 0.32 $ 0.55 ========================================================================================= Diluted earnings per unit: Income before extraordinary item $ 0.62 $ 0.55 $ 0.32 $ 0.55 Extraordinary item - loss on early retirement of debt -- -- -- -- - ----------------------------------------------------------------------------------------- Net income $ 0.62 $ 0.55 $ 0.32 $ 0.55 ========================================================================================= Distributions declared per common unit $ 0.58 $ 0.58 $ 0.55 $ 0.55 - -----------------------------------------------------------------------------------------
93 MACK-CALI REALTY, L.P. REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 2000 (dollars in thousands) SCHEDULE III
Initial Costs Costs -------------------- Capitalized Year Related Building and Subsequent Property Location (2) Built Acquired Encumbrances Land Improvements to Acquisition - --------------------- ----- -------- ------------ ---- ------------ -------------- ATLANTIC COUNTY, NEW JERSEY........ Egg Harbor 100 Decadon Drive (O).............. 1987 1995 $ -- $300 $3,282 $160 200 Decadon Drive (O).............. 1991 1995 -- 369 3,241 169 BERGEN COUNTY, NEW JERSEY Fair Lawn 17-17 Rte 208 North (O)............ 1987 1995 -- 3,067 19,415 941 Fort Lee One Bridge Plaza (O)............... 1981 1996 -- 2,439 24,462 1,560 2115 Linwood Avenue (O)............ 1981 1998 -- 474 4,419 4,454 Little Ferry 200 Riser Road (O)................. 1974 1997 10,500 3,888 15,551 246 Montvale 95 Chestnut Ridge Road (O)......... 1975 1997 2,135 1,227 4,907 523 135 Chestnut Ridge Road (O)........ 1981 1997 -- 2,587 10,350 1,740 Paramus 15 East Midland Avenue (O)......... 1988 1997 24,790 10,375 41,497 70 461 From Road (O).................. 1988 1997 35,000 13,194 52,778 121 650 From Road (O).................. 1978 1997 23,316 10,487 41,949 593 140 Ridgewood Avenue (O)........... 1981 1997 15,392 7,932 31,463 578 61 South Paramus Avenue (O)........ 1985 1997 15,776 9,005 36,018 4,234 Rochelle Park 120 Passaic Street (O)............. 1972 1997 -- 1,354 5,415 99 365 West Passaic Street (O)........ 1976 1997 7,468 4,148 16,592 1,615 Saddle River 1 Lake Street (O).................. 1994 1997 35,789 13,952 55,812 7 Upper Saddle River 10 Mountainview Road (O)........... 1986 1998 -- 4,240 20,485 375 Woodcliff Lake 400 Chestnut Ridge Road (O)........ 1982 1997 13,588 4,201 16,802 9 470 Chestnut Ridge Road (O)........ 1987 1997 4,087 2,346 9,385 2 530 Chestnut Ridge Road (O)........ 1986 1997 4,032 1,860 7,441 3 300 Tice Boulevard (O)............. 1991 1996 -- 5,424 29,688 575 50 Tice Boulevard (O).............. 1984 1994 -- 4,500 -- 26,644 BURLINGTON COUNTY, NEW JERSEY Burlington 3 Terri Lane (F)................... 1991 1998 -- 652 3,433 906 5 Terri Lane (F)................... 1992 1998 -- 564 3,792 1,662 Delran Tenby Chase Apartments (M)......... 1970 1994 -- 396 -- 5,584 Moorestown 2 Commerce Drive (F)............... 1986 1999 -- 723 2,893 59 101 Commerce Drive (F)............. 1988 1998 -- 422 3,528 253 102 Commerce Drive (F)............. 1987 1999 -- 389 1,554 34 201 Commerce Drive (F)............. 1986 1998 -- 254 1,694 90 202 Commerce Drive (F)............. 1988 1999 -- 490 1,963 21 1 Executive Drive (F).............. 1989 1998 -- 226 1,453 205 2 Executive Drive (F).............. 1988 2000 -- 801 3,206 73 101 Executive Drive (F)............ 1990 1998 807 241 2,262 208 102 Executive Drive (F)............ 1990 1998 -- 353 3,607 252 225 Executive Drive (F)............ 1990 1998 1,391 323 2,477 100 97 Foster Road (F)................. 1982 1998 -- 208 1,382 54 1507 Lancer Drive (F).............. 1995 1998 -- 119 1,106 44 1510 Lancer Drive (F).............. 1998 1998 -- 732 2,928 41 Gross Amount at Which Carried at Close of Period (1) ------------------------------- Building and Accumulated Property Location (2) Land Improvements Total Depreciation - --------------------- ---- ------------ ----- ------------ ATLANTIC COUNTY, NEW JERSEY........ Egg Harbor 100 Decadon Drive (O).............. $300 $3,442 $3,742 $437 200 Decadon Drive (O).............. 369 3,410 3,779 480 BERGEN COUNTY, NEW JERSEY Fair Lawn 17-17 Rte 208 North (O)............ 3,067 20,356 23,423 2,980 Fort Lee One Bridge Plaza (O)............... 2,439 26,022 28,461 2,862 2115 Linwood Avenue (O)............ 474 8,873 9,347 326 Little Ferry 200 Riser Road (O)................. 3,888 15,797 19,685 1,197 Montvale 95 Chestnut Ridge Road (O)......... 1,227 5,430 6,657 376 135 Chestnut Ridge Road (O)........ 2,588 12,089 14,677 829 Paramus 15 East Midland Avenue (O)......... 10,374 41,568 51,942 3,161 461 From Road (O).................. 13,194 52,899 66,093 4,021 650 From Road (O).................. 10,487 42,542 53,029 3,216 140 Ridgewood Avenue (O)........... 7,932 32,041 39,973 2,122 61 South Paramus Avenue (O)........ 9,005 40,252 49,257 3,153 Rochelle Park 120 Passaic Street (O)............. 1,357 5,511 6,868 413 365 West Passaic Street (O)........ 4,148 18,207 22,355 1,430 Saddle River 1 Lake Street (O).................. 13,953 55,818 69,771 4,248 Upper Saddle River 10 Mountainview Road (O)........... 4,240 20,860 25,100 1,823 Woodcliff Lake 400 Chestnut Ridge Road (O)........ 4,200 16,812 21,012 1,276 470 Chestnut Ridge Road (O)........ 2,346 9,387 11,733 714 530 Chestnut Ridge Road (O)........ 1,860 7,444 9,304 566 300 Tice Boulevard (O)............. 5,424 30,263 35,687 3,130 50 Tice Boulevard (O).............. 4,500 26,644 31,144 12,226 BURLINGTON COUNTY, NEW JERSEY Burlington 3 Terri Lane (F)................... 658 4,333 4,991 374 5 Terri Lane (F)................... 569 5,449 6,018 451 Delran Tenby Chase Apartments (M)......... 396 5,584 5,980 3,600 Moorestown 2 Commerce Drive (F)............... 723 2,952 3,675 73 101 Commerce Drive (F)............. 426 3,777 4,203 385 102 Commerce Drive (F)............. 389 1,588 1,977 39 201 Commerce Drive (F)............. 257 1,781 2,038 159 202 Commerce Drive (F)............. 490 1,984 2,474 49 1 Executive Drive (F).............. 228 1,656 1,884 162 2 Executive Drive (F).............. 801 3,279 4,080 61 101 Executive Drive (F)............ 244 2,467 2,711 214 102 Executive Drive (F)............ 357 3,855 4,212 351 225 Executive Drive (F)............ 326 2,574 2,900 248 97 Foster Road (F)................. 211 1,433 1,644 118 1507 Lancer Drive (F).............. 120 1,149 1,269 94 1510 Lancer Drive (F).............. 735 2,966 3,701 185
94 MACK-CALI REALTY, L.P. REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 2000 (dollars in thousands) SCHEDULE III
Initial Costs Costs -------------------- Capitalized Year Related Building and Subsequent Property Location (2) Built Acquired Encumbrances Land Improvements to Acquisition - --------------------- ----- -------- ------------ ---- ------------ -------------- 840 North Lenola Road (F).......... 1995 1998 -- 329 2,366 50 844 North Lenola Road (F).......... 1995 1998 -- 239 1,714 38 915 North Lenola Road (F).......... 1998 2000 -- 508 2,034 2 1256 North Church (F).............. 1984 1998 -- 354 3,098 250 224 Strawbridge Drive (O).......... 1984 1997 -- 766 4,335 3,134 228 Strawbridge Drive (O).......... 1984 1997 -- 766 4,334 2,907 30 Twosome Drive (F)............... 1997 1998 -- 234 1,954 48 40 Twosome Drive (F)............... 1996 1998 -- 297 2,393 102 50 Twosome Drive (F)............... 1997 1998 -- 301 2,330 44 West Deptford 1451 Metropolitan Drive (F)........ 1996 1998 -- 203 1,189 23 ESSEX COUNTY, NEW JERSEY Millburn 150 J.F. Kennedy Parkway (O)....... 1980 1997 25,911 12,606 50,425 1,478 Roseland 101 Eisenhower Parkway (O)......... 1980 1994 -- 228 -- 14,695 103 Eisenhower Parkway (O)......... 1985 1994 -- -- -- 13,254 HUDSON COUNTY, NEW JERSEY.......... Jersey City Harborside Financial Center Plaza 1 (O) 1983 1996 54,370 3,923 51,013 -- Harborside Financial Center Plaza 2 (O) 1990 1996 47,815 17,655 101,546 2,769 Harborside Financial Center Plaza 3 (O) 1990 1996 47,815 17,655 101,878 2,046 Harborside Financial Center Plaza 4A (O) 2000 2000 -- 1,244 56,144 -- MERCER COUNTY, NEW JERSEY Hamilton Township 100 Horizon Drive (F).............. 1989 1995 -- 205 1,676 54 200 Horizon Drive (F).............. 1991 1995 -- 205 3,027 145 300 Horizon Drive (F).............. 1989 1995 -- 379 4,355 272 500 Horizon Drive (F).............. 1990 1995 -- 379 3,395 135 Zero Horizon Drive (L)............. n/a 1999 -- 498 -- 1,787 Princeton 103 Carnegie Center (O)............ 1984 1996 -- 2,566 7,868 687 100 Overlook Center (O)............ 1988 1997 -- 2,378 21,754 388 5 Vaughn Drive (O)................. 1987 1995 -- 657 9,800 449 MIDDLESEX COUNTY, NEW JERSEY East Brunswick 377 Summerhill Road (O)............ 1977 1997 -- 649 2,594 252 Plainsboro 500 College Road East (O).......... 1984 1998 -- 614 20,626 293 South Brunswick 3 Independence Way (O)............. 1983 1997 -- 1,997 11,391 222 Woodbridge 581 Main Street (O)................ 1991 1997 17,500 3,237 12,949 19,613 MONMOUTH COUNTY, NEW JERSEY Neptune 3600 Route 66 (O).................. 1989 1995 -- 1,098 18,146 41 Wall Township 1305 Campus Parkway (O)............ 1988 1995 -- 335 2,560 80 1325 Campus Parkway (F)............ 1988 1995 -- 270 2,928 381 1340 Campus Parkway (F)............ 1992 1995 -- 489 4,621 379 1345 Campus Parkway (F)............ 1995 1997 -- 1,023 5,703 56 1350 Campus Parkway (O)............ 1990 1995 -- 454 7,134 641 1433 Highway 34 (F)................ 1985 1995 -- 889 4,321 697 Gross Amount at Which Carried at Close of Period (1) ------------------------------- Building and Accumulated Property Location (2) Land Improvements Total Depreciation - --------------------- ---- ------------ ----- ------------ 840 North Lenola Road (F).......... 333 2,412 2,745 215 844 North Lenola Road (F).......... 241 1,750 1,991 156 915 North Lenola Road (F).......... 508 2,036 2,544 25 1256 North Church (F).............. 357 3,345 3,702 324 224 Strawbridge Drive (O).......... 767 7,468 8,235 819 228 Strawbridge Drive (O).......... 767 7,240 8,007 986 30 Twosome Drive (F)............... 236 2,000 2,236 189 40 Twosome Drive (F)............... 301 2,491 2,792 211 50 Twosome Drive (F)............... 304 2,371 2,675 218 West Deptford 1451 Metropolitan Drive (F)........ 206 1,209 1,415 112 ESSEX COUNTY, NEW JERSEY Millburn 150 J.F. Kennedy Parkway (O)....... 12,606 51,903 64,509 3,851 Roseland 101 Eisenhower Parkway (O)......... 228 14,695 14,923 8,430 103 Eisenhower Parkway (O)......... 2,300 10,954 13,254 4,408 HUDSON COUNTY, NEW JERSEY.......... Jersey City Harborside Financial Center Plaza 1 (O) 3,923 51,013 54,936 5,314 Harborside Financial Center Plaza 2 (O) 15,238 106,732 121,970 10,911 Harborside Financial Center Plaza 3 (O) 15,189 106,390 121,579 10,867 Harborside Financial Center Plaza 4A (O) 1,244 56,144 57,388 354 MERCER COUNTY, NEW JERSEY Hamilton Township 100 Horizon Drive (F).............. 205 1,730 1,935 217 200 Horizon Drive (F).............. 205 3,172 3,377 391 300 Horizon Drive (F).............. 379 4,627 5,006 576 500 Horizon Drive (F).............. 379 3,530 3,909 516 Zero Horizon Drive (L)............. 498 1,787 2,285 -- Princeton 103 Carnegie Center (O)............ 2,566 8,555 11,121 1,212 100 Overlook Center (O)............ 2,378 22,142 24,520 1,740 5 Vaughn Drive (O)................. 657 10,249 10,906 1,511 MIDDLESEX COUNTY, NEW JERSEY East Brunswick 377 Summerhill Road (O)............ 649 2,846 3,495 213 Plainsboro 500 College Road East (O).......... 614 20,919 21,533 1,456 South Brunswick 3 Independence Way (O)............. 1,997 11,613 13,610 995 Woodbridge 581 Main Street (O)................ 8,115 27,684 35,799 1,757 MONMOUTH COUNTY, NEW JERSEY Neptune 3600 Route 66 (O).................. 1,098 18,187 19,285 2,356 Wall Township 1305 Campus Parkway (O)............ 335 2,640 2,975 386 1325 Campus Parkway (F)............ 270 3,309 3,579 404 1340 Campus Parkway (F)............ 489 5,000 5,489 751 1345 Campus Parkway (F)............ 1,024 5,758 6,782 565 1350 Campus Parkway (O)............ 454 7,775 8,229 1,124 1433 Highway 34 (F)................ 889 5,018 5,907 783
95 MACK-CALI REALTY, L.P. REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 2000 (dollars in thousands) SCHEDULE III
Initial Costs Costs -------------------- Capitalized Year Related Building and Subsequent Property Location (2) Built Acquired Encumbrances Land Improvements to Acquisition - --------------------- ----- -------- ------------ ---- ------------ -------------- 1320 Wyckoff Avenue (F)............ 1986 1995 -- 255 1,285 1 1324 Wyckoff Avenue (F)............ 1987 1995 -- 230 1,439 196 MORRIS COUNTY, NEW JERSEY Florham Park 325 Columbia Parkway (O)........... 1987 1994 -- 1,564 -- 15,995 Morris Plains 250 Johnson Road (O)............... 1977 1997 2,169 2,004 8,016 313 201 Littleton Road (O)............. 1979 1997 -- 2,407 9,627 170 Morris Township 340 Mt. Kemble Avenue (O).......... 1985 1997 32,178 13,624 54,496 40 Parsippany 7 Campus Drive (O)................. 1982 1998 -- 1,932 27,788 107 8 Campus Drive (O)................. 1987 1998 -- 1,865 35,456 845 2 Dryden Way (O)................... 1990 1998 -- 778 420 13 4 Gatehall Drive (O)............... 1988 2000 -- 8,452 33,929 63 2 Hilton Court (O)................. 1991 1998 -- 1,971 32,007 138 600 Parsippany Road (O)............ 1978 1994 -- 1,257 5,594 1,053 1 Sylvan Way (O)................... 1989 1998 -- 1,689 24,699 2,224 5 Sylvan Way (O)................... 1989 1998 -- 1,160 25,214 647 7 Sylvan Way (O)................... 1987 1998 -- 2,084 26,083 35 PASSAIC COUNTY, NEW JERSEY Clifton 777 Passaic Avenue (O)............. 1983 1994 -- -- -- 7,291 Totowa 1 Center Court (F)................. 1999 1999 -- 270 1,824 90 2 Center Court (F)................. 1998 1998 -- 191 -- 2,563 11 Commerce Way (F)................ 1989 1995 -- 586 2,986 230 20 Commerce Way (F)................ 1992 1995 -- 516 3,108 52 29 Commerce Way (F)................ 1990 1995 -- 586 3,092 230 40 Commerce Way (F)................ 1987 1995 -- 516 3,260 375 45 Commerce Way (F)................ 1992 1995 -- 536 3,379 142 60 Commerce Way (F)................ 1988 1995 -- 526 3,257 281 80 Commerce Way (F)................ 1996 1996 -- 227 -- 1,638 100 Commerce Way (F)............... 1996 1996 -- 226 -- 1,638 120 Commerce Way (F)............... 1994 1995 -- 228 -- 1,201 140 Commerce Way (F)............... 1994 1995 -- 229 -- 1,199 999 Riverview Drive (O)............ 1988 1995 -- 476 6,024 590 Wayne 201 Willowbrook Boulevard (O)...... 1970 1997 9,460 3,103 12,410 2,954 SOMERSET COUNTY, NEW JERSEY Basking Ridge 106 Allen Road (O)................. 2000 2000 -- 3,853 14,465 -- 222 Mt. Airy Road (O).............. 1986 1996 -- 775 3,636 31 233 Mt. Airy Road (O).............. 1987 1996 -- 1,034 5,033 16 Bridgewater 721 Route 202/206 (O).............. 1989 1997 23,000 6,730 26,919 488 Gross Amount at Which Carried at Close of Period (1) ------------------------------- Building and Accumulated Property Location (2) Land Improvements Total Depreciation - --------------------- ---- ------------ ----- ------------ 1320 Wyckoff Avenue (F)............ 255 1,286 1,541 166 1324 Wyckoff Avenue (F)............ 230 1,635 1,865 267 MORRIS COUNTY, NEW JERSEY Florham Park 325 Columbia Parkway (O)........... 1,564 15,995 17,559 6,692 Morris Plains 250 Johnson Road (O)............... 2,004 8,329 10,333 621 201 Littleton Road (O)............. 2,407 9,797 12,204 739 Morris Township 340 Mt. Kemble Avenue (O).......... 13,624 54,536 68,160 4,150 Parsippany 7 Campus Drive (O)................. 1,932 27,895 29,827 2,011 8 Campus Drive (O)................. 1,865 36,301 38,166 2,724 2 Dryden Way (O)................... 778 433 1,211 40 4 Gatehall Drive (O)............... 8,452 33,992 42,444 495 2 Hilton Court (O)................. 1,971 32,145 34,116 2,356 600 Parsippany Road (O)............ 1,257 6,647 7,904 1,095 1 Sylvan Way (O)................... 1,689 26,923 28,612 2,299 5 Sylvan Way (O)................... 1,160 25,861 27,021 1,836 7 Sylvan Way (O)................... 2,084 26,118 28,202 1,922 PASSAIC COUNTY, NEW JERSEY Clifton 777 Passaic Avenue (O)............. 1,100 6,191 7,291 2,836 Totowa 1 Center Court (F)................. 270 1,914 2,184 104 2 Center Court (F)................. 191 2,563 2,754 304 11 Commerce Way (F)................ 586 3,216 3,802 434 20 Commerce Way (F)................ 516 3,160 3,676 404 29 Commerce Way (F)................ 586 3,322 3,908 544 40 Commerce Way (F)................ 516 3,635 4,151 669 45 Commerce Way (F)................ 536 3,521 4,057 542 60 Commerce Way (F)................ 526 3,538 4,064 597 80 Commerce Way (F)................ 227 1,638 1,865 437 100 Commerce Way (F)............... 226 1,638 1,864 437 120 Commerce Way (F)............... 228 1,200 1,428 161 140 Commerce Way (F)............... 229 1,200 1,429 160 999 Riverview Drive (O)............ 476 6,614 7,090 894 Wayne 201 Willowbrook Boulevard (O)...... 3,103 15,364 18,467 969 SOMERSET COUNTY, NEW JERSEY Basking Ridge 106 Allen Road (O)................. 3,853 14,465 18,318 136 222 Mt. Airy Road (O).............. 775 3,667 4,442 403 233 Mt. Airy Road (O).............. 1,034 5,049 6,083 557 Bridgewater 721 Route 202/206 (O).............. 6,730 27,407 34,137 2,056
96 MACK-CALI REALTY, L.P. REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 2000 (dollars in thousands) SCHEDULE III
Initial Costs Costs -------------------- Capitalized Year Related Building and Subsequent Property Location (2) Built Acquired Encumbrances Land Improvements to Acquisition - --------------------- ----- -------- ------------ ---- ------------ -------------- UNION COUNTY, NEW JERSEY Clark 100 Walnut Avenue (O).............. 1985 1994 -- -- -- 17,795 Cranford 6 Commerce Drive (O)............... 1973 1994 -- 250 -- 2,884 11 Commerce Drive (O).............. 1981 1994 -- 470 -- 6,618 12 Commerce Drive (O).............. 1967 1997 -- 887 3,549 422 20 Commerce Drive (O).............. 1990 1994 -- 2,346 -- 22,648 65 Jackson Drive (O)............... 1984 1994 -- 541 -- 7,124 New Providence 890 Mountain Road (O).............. 1977 1997 -- 2,796 11,185 4,257 DUTCHESS COUNTY, NEW YORK Fishkill 300 South Lake Drive (O)........... 1987 1997 -- 2,258 9,031 143 NASSAU COUNTY, NEW YORK North Hempstead 600 Community Drive (O)............ 1983 1997 -- 11,018 44,070 246 111 East Shore Road (O)............ 1980 1997 -- 2,093 8,370 363 ROCKLAND COUNTY, NEW YORK Suffern 400 Rella Boulevard (O)............ 1988 1995 -- 1,090 13,412 1,391 WESTCHESTER COUNTY, NEW YORK Elmsford 11 Clearbrook Road (F)............. 1974 1997 -- 149 2,159 23 75 Clearbrook Road (F)............. 1990 1997 -- 2,314 4,716 -- 100 Clearbrook Road (O)............ 1975 1997 -- 220 5,366 145 150 Clearbrook Road (F)............ 1975 1997 -- 497 7,030 88 175 Clearbrook Road (F)............ 1973 1997 -- 655 7,473 297 200 Clearbrook Road (F)............ 1974 1997 -- 579 6,620 520 250 Clearbrook Road (F)............ 1973 1997 -- 867 8,647 525 50 Executive Boulevard (F)......... 1969 1997 -- 237 2,617 56 77 Executive Boulevard (F)......... 1977 1997 -- 34 1,104 33 85 Executive Boulevard (F)......... 1968 1997 -- 155 2,507 36 101 Executive Boulevard (O)........ 1971 1997 -- 267 5,838 278 300 Executive Boulevard (F)........ 1970 1997 -- 460 3,609 -- 350 Executive Boulevard (F)........ 1970 1997 -- 100 1,793 1 399 Executive Boulevard (F)........ 1962 1997 -- 531 7,191 111 400 Executive Boulevard (F)........ 1970 1997 -- 2,202 1,846 289 500 Executive Boulevard (F)........ 1970 1997 -- 258 4,183 550 525 Executive Boulevard (F)........ 1972 1997 -- 345 5,499 126 700 Executive Boulevard (L)........ n/a 1997 -- 970 -- -- 555 Taxter Road (O)................ 1986 2000 -- 4,285 17,205 280 565 Taxter Road (O)................ 1988 2000 -- 4,285 17,205 319 570 Taxter Road (O)................ 1972 1997 -- 438 6,078 468 1 Warehouse Lane (I)............... 1957 1997 -- 3 268 202 2 Warehouse Lane (I)............... 1957 1997 -- 4 672 47 3 Warehouse Lane (I)............... 1957 1997 -- 21 1,948 388 4 Warehouse Lane (I).............. 1957 1997 -- 84 13,393 216 5 Warehouse Lane (I)............... 1957 1997 -- 19 4,804 213 6 Warehouse Lane (I)............... 1982 1997 -- 10 4,419 38 1 Westchester Plaza (F)............ 1967 1997 -- 199 2,023 52 2 Westchester Plaza (F)............ 1968 1997 -- 234 2,726 77 3 Westchester Plaza (F)............ 1969 1997 -- 655 7,936 71 4 Westchester Plaza (F)............ 1969 1997 -- 320 3,729 83 Gross Amount at Which Carried at Close of Period (1) ------------------------------- Building and Accumulated Property Location (2) Land Improvements Total Depreciation - --------------------- ---- ------------ ----- ------------ UNION COUNTY, NEW JERSEY Clark 100 Walnut Avenue (O).............. 1,822 15,973 17,795 7,681 Cranford 6 Commerce Drive (O)............... 250 2,884 3,134 1,709 11 Commerce Drive (O).............. 470 6,618 7,088 3,417 12 Commerce Drive (O).............. 887 3,971 4,858 275 20 Commerce Drive (O).............. 2,346 22,648 24,994 7,237 65 Jackson Drive (O)............... 541 7,124 7,665 3,780 New Providence 890 Mountain Road (O).............. 3,765 14,473 18,238 1,084 DUTCHESS COUNTY, NEW YORK Fishkill 300 South Lake Drive (O)........... 2,258 9,174 11,432 717 NASSAU COUNTY, NEW YORK North Hempstead 600 Community Drive (O)............ 11,018 44,316 55,334 3,398 111 East Shore Road (O)............ 2,093 8,733 10,826 654 ROCKLAND COUNTY, NEW YORK Suffern 400 Rella Boulevard (O)............ 1,090 14,803 15,893 2,267 WESTCHESTER COUNTY, NEW YORK Elmsford 11 Clearbrook Road (F)............. 149 2,182 2,331 215 75 Clearbrook Road (F)............. 2,314 4,716 7,030 462 100 Clearbrook Road (O)............ 220 5,511 5,731 647 150 Clearbrook Road (F)............ 497 7,118 7,615 720 175 Clearbrook Road (F)............ 655 7,770 8,425 805 200 Clearbrook Road (F)............ 579 7,140 7,719 724 250 Clearbrook Road (F)............ 867 9,172 10,039 896 50 Executive Boulevard (F)......... 237 2,673 2,910 256 77 Executive Boulevard (F)......... 34 1,137 1,171 111 85 Executive Boulevard (F)......... 155 2,543 2,698 252 101 Executive Boulevard (O)........ 267 6,116 6,383 609 300 Executive Boulevard (F)........ 460 3,609 4,069 353 350 Executive Boulevard (F)........ 100 1,794 1,894 176 399 Executive Boulevard (F)........ 531 7,302 7,833 746 400 Executive Boulevard (F)........ 2,202 2,135 4,337 266 500 Executive Boulevard (F)........ 258 4,733 4,991 444 525 Executive Boulevard (F)........ 345 5,625 5,970 556 700 Executive Boulevard (L)........ 970 -- 970 -- 555 Taxter Road (O)................ 4,285 17,485 21,770 250 565 Taxter Road (O)................ 4,285 17,524 21,809 252 570 Taxter Road (O)................ 438 6,546 6,984 654 1 Warehouse Lane (I)............... 2 471 473 36 2 Warehouse Lane (I)............... 4 719 723 74 3 Warehouse Lane (I)............... 21 2,336 2,357 219 4 Warehouse Lane (I).............. 85 13,608 13,693 1,356 5 Warehouse Lane (I)............... 19 5,017 5,036 514 6 Warehouse Lane (I)............... 10 4,457 4,467 434 1 Westchester Plaza (F)............ 199 2,075 2,274 211 2 Westchester Plaza (F)............ 234 2,803 3,037 269 3 Westchester Plaza (F)............ 655 8,007 8,662 785 4 Westchester Plaza (F)............ 320 3,812 4,132 401
97 MACK-CALI REALTY, L.P. REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 2000 (dollars in thousands) SCHEDULE III
Initial Costs Costs -------------------- Capitalized Year Related Building and Subsequent Property Location (2) Built Acquired Encumbrances Land Improvements to Acquisition - --------------------- ----- -------- ------------ ---- ------------ -------------- 5 Westchester Plaza (F)............ 1969 1997 -- 118 1,949 -- 6 Westchester Plaza (F)............ 1968 1997 -- 164 1,998 133 7 Westchester Plaza (F)............ 1972 1997 -- 286 4,321 24 8 Westchester Plaza (F)............ 1971 1997 -- 447 5,262 610 Hawthorne 30 Saw Mill River Road (O)......... 1982 1997 -- 2,355 34,254 4,326 200 Saw Mill River Road (F)........ 1965 1997 -- 353 3,353 156 1 Skyline Drive (O)................ 1980 1997 -- 66 1,711 100 2 Skyline Drive (O)................ 1987 1997 -- 109 3,128 283 4 Skyline Drive (F)................ 1987 1997 -- 363 7,513 450 7 Skyline Drive (O)................ 1987 1998 -- 330 13,013 101 8 Skyline Drive (F)................ 1985 1997 -- 212 4,410 814 10 Skyline Drive (F)............... 1985 1997 -- 134 2,799 96 11 Skyline Drive (F)............... 1989 1997 -- -- 4,788 340 12 Skyline Drive (F)............... 1999 1999 -- 1,562 3,254 1,741 15 Skyline Drive (F)............... 1989 1997 -- -- 7,449 637 17 Skyline Drive (O)............... 1989 1997 -- -- 7,269 128 Tarrytown 200 White Plains Road (O).......... 1982 1997 -- 378 8,367 690 220 White Plains Road (O).......... 1984 1997 -- 367 8,112 498 230 White Plains Road (R).......... 1984 1997 -- 124 1,845 -- White Plains 1 Barker Avenue (O)................ 1975 1997 -- 208 9,629 500 3 Barker Avenue (O)................ 1983 1997 -- 122 7,864 566 50 Main Street (O)................. 1985 1997 -- 564 48,105 3,154 11 Martine Avenue (O).............. 1987 1997 -- 127 26,833 3,368 25 Martine Avenue (M).............. 1987 1997 -- 120 11,366 317 1 Water Street (O)................. 1979 1997 -- 211 5,382 270 Yonkers 100 Corporate Boulevard (F)........ 1987 1997 -- 602 9,910 443 200 Corporate Boulevard South (F).. 1990 1997 -- 502 7,575 191 1 Enterprise Boulevard (L)......... n/a 1997 -- 1,379 -- -- 1 Executive Boulevard (O).......... 1982 1997 -- 1,104 11,904 679 2 Executive Plaza (R).............. 1986 1997 -- 89 2,439 -- 3 Executive Plaza (O).............. 1987 1997 -- 385 6,256 320 4 Executive Plaza (F).............. 1986 1997 -- 584 6,134 334 6 Executive Plaza (F).............. 1987 1997 -- 546 7,246 45 1 Odell Plaza (F).................. 1980 1997 -- 1,206 6,815 370 5 Odell Plaza (F).................. 1983 1997 -- 331 2,988 34 7 Odell Plaza (F).................. 1984 1997 -- 419 4,418 106 CHESTER COUNTY, PENNSYLVANIA Berwyn 1000 Westlakes Drive (O)........... 1989 1997 -- 619 9,016 113 1055 Westlakes Drive (O)........... 1990 1997 -- 1,951 19,046 211 1205 Westlakes Drive (O)........... 1988 1997 -- 1,323 20,098 465 1235 Westlakes Drive (O)........... 1986 1997 -- 1,417 21,215 589 DELAWARE COUNTY, PENNSYLVANIA Lester 100 Stevens Drive (O).............. 1986 1996 -- 1,349 10,018 2,544 200 Stevens Drive (O).............. 1987 1996 -- 1,644 20,186 4,260 300 Stevens Drive (O).............. 1992 1996 -- 491 9,490 748 Media 1400 Providence Rd - Center I (O).. 1986 1996 -- 1,042 9,054 832 1400 Providence Rd. - Center II(O) 1990 1996 -- 1,543 16,464 1,029 Gross Amount at Which Carried at Close of Period (1) ------------------------------- Building and Accumulated Property Location (2) Land Improvements Total Depreciation - --------------------- ---- ------------ ----- ------------ 5 Westchester Plaza (F)............ 118 1,949 2,067 191 6 Westchester Plaza (F)............ 164 2,131 2,295 225 7 Westchester Plaza (F)............ 286 4,345 4,631 434 8 Westchester Plaza (F)............ 447 5,872 6,319 729 Hawthorne 30 Saw Mill River Road (O)......... 2,355 38,580 40,935 5,214 200 Saw Mill River Road (F)........ 353 3,509 3,862 362 1 Skyline Drive (O)................ 66 1,811 1,877 172 2 Skyline Drive (O)................ 109 3,411 3,520 367 4 Skyline Drive (F)................ 363 7,963 8,326 1,015 7 Skyline Drive (O)................ 330 13,114 13,444 761 8 Skyline Drive (F)................ 212 5,224 5,436 600 10 Skyline Drive (F)............... 134 2,895 3,029 308 11 Skyline Drive (F)............... -- 5,128 5,128 526 12 Skyline Drive (F)............... 1,562 4,995 6,557 238 15 Skyline Drive (F)............... -- 8,086 8,086 951 17 Skyline Drive (O)............... -- 7,397 7,397 720 Tarrytown 200 White Plains Road (O).......... 378 9,057 9,435 1,108 220 White Plains Road (O).......... 367 8,610 8,977 878 230 White Plains Road (R).......... 124 1,845 1,969 181 White Plains 1 Barker Avenue (O)................ 207 10,130 10,337 1,012 3 Barker Avenue (O)................ 122 8,430 8,552 871 50 Main Street (O)................. 564 51,259 51,823 5,437 11 Martine Avenue (O).............. 127 30,201 30,328 3,045 25 Martine Avenue (M).............. 120 11,683 11,803 1,136 1 Water Street (O)................. 211 5,652 5,863 565 Yonkers 100 Corporate Boulevard (F)........ 602 10,353 10,955 1,027 200 Corporate Boulevard South (F).. 502 7,766 8,268 701 1 Enterprise Boulevard (L)......... 1,379 -- 1,379 -- 1 Executive Boulevard (O).......... 1,105 12,582 13,687 1,382 2 Executive Plaza (R).............. 89 2,439 2,528 239 3 Executive Plaza (O).............. 385 6,576 6,961 649 4 Executive Plaza (F).............. 584 6,468 7,052 706 6 Executive Plaza (F).............. 546 7,291 7,837 719 1 Odell Plaza (F).................. 1,206 7,185 8,391 713 5 Odell Plaza (F).................. 331 3,022 3,353 294 7 Odell Plaza (F).................. 419 4,524 4,943 488 CHESTER COUNTY, PENNSYLVANIA Berwyn 1000 Westlakes Drive (O)........... 619 9,129 9,748 887 1055 Westlakes Drive (O)........... 1,951 19,257 21,208 1,867 1205 Westlakes Drive (O)........... 1,323 20,563 21,886 2,068 1235 Westlakes Drive (O)........... 1,418 21,803 23,221 2,138 DELAWARE COUNTY, PENNSYLVANIA Lester 100 Stevens Drive (O).............. 1,349 12,562 13,911 1,116 200 Stevens Drive (O).............. 1,644 24,446 26,090 2,168 300 Stevens Drive (O).............. 491 10,238 10,729 970 Media 1400 Providence Rd - Center I (O).. 1,042 9,886 10,928 1,202 1400 Providence Rd. - Center II(O) 1,544 17,492 19,036 2,272
98 MACK-CALI REALTY, L.P. REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 2000 (dollars in thousands) SCHEDULE III
Initial Costs Costs -------------------- Capitalized Year Related Building and Subsequent Property Location (2) Built Acquired Encumbrances Land Improvements to Acquisition - --------------------- ----- -------- ------------ ---- ------------ -------------- MONTGOMERY COUNTY, PENNSYLVANIA Lower Providence 1000 Madison Avenue (O)............ 1990 1997 -- 1,713 12,559 172 Plymouth Meeting 1150 Plymouth Meeting Mall (O)..... 1970 1997 -- 125 499 20,757 Five Sentry Parkway East (O)....... 1984 1996 -- 642 7,992 475 Five Sentry Parkway West (O)....... 1984 1996 -- 268 3,334 53 FAIRFIELD COUNTY, CONNECTICUT Greenwich 500 West Putnam Avenue (O)......... 1973 1998 10,069 3,300 16,734 936 Norwalk 40 Richards Avenue (O)............. 1985 1998 -- 1,087 18,399 1,538 Shelton 1000 Bridgeport Avenue (O)......... 1986 1997 -- 773 14,934 337 Stamford 419 West Avenue (F)................ 1986 1997 -- 4,538 9,246 49 500 West Avenue (F)................ 1988 1997 -- 415 1,679 180 550 West Avenue (F)................ 1990 1997 -- 1,975 3,856 322 600 West Avenue (F)................ 1999 1999 -- 2,305 2,863 795 650 West Avenue (F)................ 1998 1998 -- 1,328 -- 3,891 WASHINGTON, D.C. 1201 Connecticut Avenue, NW (O).... 1940 1999 -- 14,228 18,571 773 1400 L Street, NW (O).............. 1987 1998 -- 13,054 27,423 724 1709 New York Avenue, NW (O)....... 1972 1998 -- 19,898 29,686 2,829 PRINCE GEORGE'S COUNTY, MARYLAND Lanham 4200 Parliament Place (O).......... 1989 1998 -- 2,114 13,546 467 BEXAR COUNTY, TEXAS San Antonio 200 Concord Plaza Drive (O)........ 1986 1997 -- 2,387 31,825 844 84 N.E. Loop 410 (O)............... 1971 1997 -- 2,295 10,382 505 1777 N.E. Loop 410 (O)............. 1986 1997 -- 3,119 12,477 1,101 111 Soledad (O).................... 1918 1997 -- 2,004 8,017 593 COLLIN COUNTY, TEXAS Plano 555 Republic Place (O)............. 1986 1997 -- 942 3,767 197 DALLAS COUNTY, TEXAS Dallas 3030 LBJ Freeway (O)............... 1984 1997 -- 6,098 24,366 1,353 3100 Monticello (O)................ 1984 1997 -- 1,940 7,762 4,816 8214 Westchester (O)............... 1983 1997 -- 1,705 6,819 350 Irving 2300 Valley View (O)............... 1985 1997 -- 1,913 7,651 745 Richardson 1122 Alma Road (O)................. 1977 1997 -- 754 3,015 169 HARRIS COUNTY, TEXAS Houston 10497 Town & Country Way (O)....... 1981 1997 -- 1,619 6,476 918 Gross Amount at Which Carried at Close of Period (1) ------------------------------- Building and Accumulated Property Location (2) Land Improvements Total Depreciation - --------------------- ---- ------------ ----- ------------ MONTGOMERY COUNTY, PENNSYLVANIA Lower Providence 1000 Madison Avenue (O)............ 1,714 12,730 14,444 1,065 Plymouth Meeting 1150 Plymouth Meeting Mall (O)..... 125 21,256 21,381 1,471 Five Sentry Parkway East (O)....... 642 8,467 9,109 873 Five Sentry Parkway West (O)....... 268 3,387 3,655 354 FAIRFIELD COUNTY, CONNECTICUT Greenwich 500 West Putnam Avenue (O)......... 3,300 17,670 20,970 1,403 Norwalk 40 Richards Avenue (O)............. 1,087 19,937 21,024 1,204 Shelton 1000 Bridgeport Avenue (O)......... 744 15,300 16,044 1,379 Stamford 419 West Avenue (F)................ 4,538 9,295 13,833 921 500 West Avenue (F)................ 415 1,859 2,274 196 550 West Avenue (F)................ 1,975 4,178 6,153 542 600 West Avenue (F)................ 2,305 3,658 5,963 92 650 West Avenue (F)................ 1,328 3,891 5,219 393 WASHINGTON, D.C. 1201 Connecticut Avenue, NW (O).... 14,228 19,344 33,572 658 1400 L Street, NW (O).............. 13,054 28,147 41,201 1,878 1709 New York Avenue, NW (O)....... 19,898 32,515 52,413 2,067 PRINCE GEORGE'S COUNTY, MARYLAND Lanham 4200 Parliament Place (O).......... 1,393 14,734 16,127 913 BEXAR COUNTY, TEXAS San Antonio 200 Concord Plaza Drive (O)........ 2,393 32,663 35,056 2,284 84 N.E. Loop 410 (O)............... 2,295 10,887 13,182 750 1777 N.E. Loop 410 (O)............. 3,119 13,578 16,697 1,030 111 Soledad (O).................... 2,004 8,610 10,614 633 COLLIN COUNTY, TEXAS Plano 555 Republic Place (O)............. 942 3,964 4,906 339 DALLAS COUNTY, TEXAS Dallas 3030 LBJ Freeway (O)............... 6,098 25,719 31,817 2,228 3100 Monticello (O)................ 2,511 12,007 14,518 899 8214 Westchester (O)............... 1,705 7,169 8,874 558 Irving 2300 Valley View (O)............... 1,913 8,396 10,309 694 Richardson 1122 Alma Road (O)................. 754 3,184 3,938 242 HARRIS COUNTY, TEXAS Houston 10497 Town & Country Way (O)....... 1,619 7,394 9,013 549
99 MACK-CALI REALTY, L.P. REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 2000 (dollars in thousands) SCHEDULE III
Initial Costs Costs -------------------- Capitalized Year Related Building and Subsequent Property Location (2) Built Acquired Encumbrances Land Improvements to Acquisition - --------------------- ----- -------- ------------ ---- ------------ -------------- 14511 Falling Creek (O)............ 1982 1997 -- 434 1,738 341 5225 Katy Freeway (O).............. 1983 1997 -- 1,403 5,610 831 5300 Memorial (O).................. 1982 1997 -- 1,283 7,269 279 1717 St. James Place (O)........... 1975 1997 -- 909 3,636 346 1770 St. James Place (O)........... 1973 1997 -- 730 2,920 412 TARRANT COUNTY, TEXAS Euless 150 West Park Way (O).............. 1984 1997 -- 852 3,410 139 MARICOPA COUNTY, ARIZONA Glendale 5551 West Talavi Boulevard (O)..... 1991 1997 6,717 2,732 10,927 5,744 Phoenix 19640 North 31st Street (O)........ 1990 1997 7,112 3,437 13,747 4 Scottsdale 9060 E. Via Linda Boulevard (O).... 1984 1997 -- 3,720 14,879 -- ARAPAHOE COUNTY, COLORADO Aurora 750 South Richfield Street (O)..... 1997 1998 -- 2,680 23,125 27 Denver 400 South Colorado Boulevard (O)... 1983 1998 -- 1,461 10,620 480 Englewood 9359 East Nichols Avenue (O)....... 1997 1998 -- 1,155 8,171 (444) 5350 South Roslyn Street (O)....... 1982 1998 -- 862 6,831 193 BOULDER COUNTY, COLORADO Broomfield 105 South Technology Court (O)..... 1997 1998 -- 653 4,936 14 303 South Technology Court-A (O)... 1997 1998 -- 623 3,892 5 303 South Technology Court-B (O)... 1997 1998 -- 623 3,892 4 Louisville 1172 Century Drive (O)............. 1996 1998 -- 707 4,647 101 248 Centennial Parkway (O)......... 1996 1998 -- 708 4,647 102 285 Century Place (O).............. 1997 1998 -- 889 10,133 23 DENVER COUNTY, COLORADO Denver 3600 South Yosemite (O)............ 1974 1998 -- 556 12,980 28 DOUGLAS COUNTY, COLORADO Englewood 67 Inverness Drive East (O)........ 1996 1998 -- 1,034 5,516 18 384 Inverness Drive South (O)...... 1985 1998 -- 703 5,653 162 400 Inverness Drive (O)............ 1997 1998 -- 1,584 19,878 (896) 5975 South Quebec Street (O)....... 1996 1998 -- 855 11,551 146 Parker 9777 Pyramid Court (O)............. 1995 1998 -- 1,304 13,189 26 Gross Amount at Which Carried at Close of Period (1) ------------------------------- Building and Accumulated Property Location (2) Land Improvements Total Depreciation - --------------------- ---- ------------ ----- ------------ 14511 Falling Creek (O)............ 434 2,079 2,513 153 5225 Katy Freeway (O).............. 1,403 6,441 7,844 524 5300 Memorial (O).................. 1,710 7,121 8,831 494 1717 St. James Place (O)........... 909 3,982 4,891 319 1770 St. James Place (O)........... 730 3,332 4,062 276 TARRANT COUNTY, TEXAS Euless 150 West Park Way (O).............. 852 3,549 4,401 299 MARICOPA COUNTY, ARIZONA Glendale 5551 West Talavi Boulevard (O)..... 3,593 15,810 19,403 1,127 Phoenix 19640 North 31st Street (O)........ 3,437 13,751 17,188 1,047 Scottsdale 9060 E. Via Linda Boulevard (O).... 3,720 14,879 18,599 1,132 ARAPAHOE COUNTY, COLORADO Aurora 750 South Richfield Street (O)..... 2,682 23,150 25,832 1,601 Denver 400 South Colorado Boulevard (O)... 1,461 11,100 12,561 764 Englewood 9359 East Nichols Avenue (O)....... 1,155 7,727 8,882 551 5350 South Roslyn Street (O)....... 862 7,024 7,886 532 BOULDER COUNTY, COLORADO Broomfield 105 South Technology Court (O)..... 653 4,950 5,603 349 303 South Technology Court-A (O)... 623 3,896 4,520 293 303 South Technology Court-B (O)... 623 3,897 4,519 293 Louisville 1172 Century Drive (O)............. 707 4,748 5,455 356 248 Centennial Parkway (O)......... 708 4,749 5,457 355 285 Century Place (O).............. 891 10,154 11,045 684 DENVER COUNTY, COLORADO Denver 3600 South Yosemite (O)............ 556 13,008 13,564 876 DOUGLAS COUNTY, COLORADO Englewood 67 Inverness Drive East (O)........ 1,035 5,533 6,568 415 384 Inverness Drive South (O)...... 703 5,815 6,518 428 400 Inverness Drive (O)............ 1,584 18,982 20,566 1,323 5975 South Quebec Street (O)....... 857 11,695 12,552 856 Parker 9777 Pyramid Court (O)............. 1,306 13,213 14,519 980
100 MACK-CALI REALTY, L.P. REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION December 31, 2000 (dollars in thousands) SCHEDULE III
Initial Costs Costs -------------------- Capitalized Year Related Building and Subsequent Property Location (2) Built Acquired Encumbrances Land Improvements to Acquisition - --------------------- ----- -------- ------------ ---- ------------ -------------- EL PASO COUNTY, COLORADO Colorado Springs 8415 Explorer (O).................. 1998 1999 -- 347 2,507 3,015 1975 Research Parkway (O).......... 1997 1998 -- 1,397 13,221 2,887 2375 Telstar Drive (O)............. 1998 1999 -- 348 2,507 3,014 JEFFERSON COUNTY, COLORADO Lakewood 141 Union Boulevard (O)............ 1985 1998 -- 774 6,891 558 SAN FRANCISCO COUNTY, CALIFORNIA San Francisco 795 Folsom Street (O).............. 1977 1999 -- 9,348 24,934 5,692 760 Market Street (O).............. 1908 1997 -- 5,588 22,352 38,717 HILLSBOROUGH COUNTY, FLORIDA Tampa 501 Kennedy Boulevard (O).......... 1982 1997 -- 3,959 15,837 1,516 POLK COUNTY, IOWA West Des Moines 2600 Westown Parkway (O)........... 1988 1997 -- 1,708 6,833 236 Projects Under Development......... -- 73,637 -- 83,475 Furniture, Fixtures & Equipment.... -- -- -- 6,460 - ------------------------------------------------------------------------------------------------------------------- TOTALS $478,187 $545,706 $2,692,501 $466,147 =================================================================================================================== Gross Amount at Which Carried at Close of Period (1) ------------------------------- Building and Accumulated Property Location (2) Land Improvements Total Depreciation - --------------------- ---- ------------ ----- ------------ EL PASO COUNTY, COLORADO Colorado Springs 8415 Explorer (O).................. 348 5,521 5,869 194 1975 Research Parkway (O).......... 1,611 15,894 17,505 1,047 2375 Telstar Drive (O)............. 348 5,521 5,869 194 JEFFERSON COUNTY, COLORADO Lakewood 141 Union Boulevard (O)............ 775 7,448 8,223 590 SAN FRANCISCO COUNTY, CALIFORNIA San Francisco 795 Folsom Street (O).............. 9,348 30,626 39,974 1,528 760 Market Street (O).............. 13,499 53,158 66,657 3,654 HILLSBOROUGH COUNTY, FLORIDA Tampa 501 Kennedy Boulevard (O).......... 3,959 17,353 21,312 1,312 POLK COUNTY, IOWA West Des Moines 2600 Westown Parkway (O)........... 1,708 7,069 8,777 604 Projects Under Development......... 73,637 83,475 157,112 -- Furniture, Fixtures & Equipment.... -- 6,460 6,460 2,673 - ------------------------------------------------------------------------------------------ TOTALS $561,210 $3,143,144 $3,704,354 $309,951 ==========================================================================================
(1) The aggregate cost for federal income tax purposes at December 31, 2000 was approximately $2.78 billion. (2) Legend of Property Codes: (O)=Office Property (M)=Multi-family Residential Property (F)=Office/Flex Property (R)=Stand-alone Retail Property (I)=Industrial/Warehouse Property (L)=Land Lease 101 MACK-CALI REALTY, L.P. NOTE TO SCHEDULE III Changes in rental properties and accumulated depreciation for the periods ended December 31, 2000, 1999 and 1998 are as follows: 2000 1999 1998 ---- ---- ---- Rental Properties Balance at beginning of year $ 3,654,845 $ 3,467,799 $ 2,629,616 Additions 268,900 204,565 838,183 Retirements/Disposals (219,391) (17,519) -- ----------- ----------- ----------- Balance at end of year $ 3,704,354 $ 3,654,845 $ 3,467,799 =========== =========== =========== Accumulated Depreciation Balance at beginning of year $ 256,629 $ 177,934 $ 103,133 Depreciation expense 82,574 81,730 74,801 Retirements/Disposals (29,252) (3,035) -- ----------- ----------- ----------- Balance at end of year $ 309,951 $ 256,629 $ 177,934 =========== =========== =========== 102 MACK-CALI REALTY, L.P. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Mack-Cali Realty, L.P. ------------------------------------ (Registrant) By: Mack-Cali Realty Corporation, its General Partner Date: March 6, 2001 By: /s/ BARRY LEFKOWITZ ------------------------------------ Barry Lefkowitz Executive Vice President & Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Name Title Date ---- ----- ---- /S/ WILLIAM L. MACK Chairman of the Board March 6, 2001 - ---------------------------- William L. Mack /S/ MITCHELL E. HERSH Chief Executive Officer March 6, 2001 - ---------------------------- Mitchell E. Hersh and Director /S/ BARRY LEFKOWITZ Executive Vice President and March 6, 2001 - ---------------------------- Barry Lefkowitz Chief Financial Officer /S/ JOHN J. CALI Director March 6, 2001 - ---------------------------- John J. Cali /S/ MARTIN S. BERGER Director March 6, 2001 - ---------------------------- Martin S. Berger /S/ BRENDAN T. BYRNE Director March 6, 2001 - ---------------------------- Brendan T. Byrne /S/ JOHN R. CALI Director March 6, 2001 - ---------------------------- John R. Cali /S/ NATHAN GANTCHER Director March 6, 2001 - ---------------------------- Nathan Gantcher 103 Name Title Date ---- ----- ---- /S/ MARTIN D. GRUSS Director March 6, 2001 - ---------------------------- Martin D. Gruss /S/ EARLE I. MACK Director March 6, 2001 - ---------------------------- Earle I. Mack /S/ ALAN G. PHILIBOSIAN Director March 6, 2001 - ---------------------------- Alan G. Philibosian /S/ IRVIN D. REID Director March 6, 2001 - ---------------------------- Irvin D. Reid /S/ VINCENT TESE Director March 6, 2001 - ---------------------------- Vincent Tese /S/ ROY J. ZUCKERBERG Director March 6, 2001 - ---------------------------- Roy J. Zuckerberg 104 MACK-CALI REALTY, L.P. EXHIBIT INDEX Exhibit Number Exhibit Title - ------ ------------- 3.1 Restated Charter of Mack-Cali Realty Corporation dated June 2, 1999, together with Articles Supplementary thereto (filed as Exhibit 3.1 to the Corporation's Form 8-K dated June 10, 1999 and as Exhibit 4.2 to the Operating Partnership's Form 8-K dated July 6, 1999 and each incorporated herein by reference). 3.2 Amended and Restated Bylaws of Mack-Cali Realty Corporation dated June 10, 1999 (filed as Exhibit 3.2 to the Corporation's Form 8-K dated June 10, 1999 and incorporated herein by reference). 3.3 Second Amended and Restated Agreement of Limited Partnership dated December 11, 1997, for Mack-Cali Realty, L.P. (filed as Exhibit 10.110 to the Corporation's Form 8-K dated December 11, 1997 and incorporated herein by reference). 3.4 Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. (filed as Exhibit 3.1 to the Corporation's and Operating Partnership's Registration Statement on Form S-3, Registration No. 333-57103, and incorporated herein by reference). 3.5 Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. (filed as Exhibit 10.2 to the Operating Partnership's Form 8-K dated July 6, 1999 and incorporated herein by reference). 4.1 Amended and Restated Shareholder Rights Agreement, dated as of March 7, 2000, between Mack-Cali Realty Corporation and EquiServe Trust Company, N.A., as Rights Agent (filed as Exhibit 4.1 to the Operating Partnership's Form 8-K dated March 7, 2000 and incorporated herein by reference). 4.2 Amendment No. 1 to the Amended and Restated Shareholder Rights Agreement, dated as of June 27, 2000, by and among Mack-Cali Realty Corporation and Equiserve Trust Company, N.A. (filed as Exhibit 4.1 to the Operating Partnership's Form 8-K dated June 27, 2000). 4.3 Indenture dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer, Mack-Cali Realty Corporation, as guarantor, and Wilmington Trust Company, as trustee (filed as Exhibit 4.1 to the Operating Partnership's Form 8-K dated March 16, 1999 and incorporated herein by reference). 4.4 Supplemental Indenture No. 1 dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership's Form 8-K dated March 16, 1999 and incorporated herein by reference). 105 Exhibit Number Exhibit Title - ------ ------------- 4.5 Supplemental Indenture No. 2 dated as of August 2, 1999, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.4 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 4.6 Supplemental Indenture No. 3 dated as of December 21, 2000, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership's Form 8-K dated December 21, 2000 and incorporated herein by reference). 4.7 Supplemental Indenture No. 4 dated as of January 29, 2001, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership's Form 8-K dated January 29, 2001 and incorporated herein by reference). 10.1 Amended and Restated Employment Agreement dated as of July 1, 1999 between Mitchell E. Hersh and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.2 Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Timothy M. Jones and Mack-Cali Realty Corporation (filed as Exhibit 10.3 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.3 Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Barry Lefkowitz and Mack-Cali Realty Corporation (filed as Exhibit 10.6 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.4 Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.7 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). *10.5 Employment Agreement dated as of December 5, 2000 between Michael Grossman and Mack-Cali Realty Corporation. 10.6 Restricted Share Award Agreement dated as of July 1, 1999 between Mitchell E. Hersh and Mack-Cali Realty Corporation (filed as Exhibit 10.8 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.7 Restricted Share Award Agreement dated as of July 1, 1999 between Timothy M. Jones and Mack-Cali Realty Corporation (filed as Exhibit 10.9 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.8 Restricted Share Award Agreement dated as of July 1, 1999 between Barry Lefkowitz and Mack-Cali Realty Corporation (filed as Exhibit 10.12 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 10.9 Restricted Share Award Agreement dated as of July 1, 1999 between Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.13 to the Operating Partnership's Form 10-Q dated June 30, 1999 and incorporated herein by reference). 106 Exhibit Number Exhibit Title - ------ ------------- *10.10 Amendment No. 3 to and Restatement of Revolving Credit Agreement dated as of June 22, 2000, by and among Mack-Cali Realty, L.P. and The Chase Manhattan Bank, Fleet National Bank and Other Lenders Which May Become Parties Thereto with The Chase Manhattan Bank, as administrative agent, Fleet National Bank, as syndication agent, Bank of America, N.A., as documentation agent, Chase Securities Inc. and FleetBoston Robertson Stephens Inc., as arrangers, Bank One, N.A., First Union National Bank and Commerzbank Aktiengesellschaft, as senior managing agents, PNC Bank National Association, as managing agent, and Societe Generale, Dresdner Bank AG, Wells Fargo Bank, National Association, Bank Austria Creditanstalt Corporate Finance, Inc., Bayerische Hypo-und Vereinsbank and Summit Bank, as co-agents. 10.11 Contribution and Exchange Agreement among The MK Contributors, The MK Entities, The Patriot Contributors, The Patriot Entities, Patriot American Management and Leasing Corp., Cali Realty, L.P. and Cali Realty Corporation, dated September 18, 1997 (filed as Exhibit 10.98 to the Corporation's Form 8-K dated September 19, 1997 and incorporated herein by reference). 10.12 First Amendment to Contribution and Exchange Agreement, dated as of December 11, 1997, by and among Cali Realty Corporation and the Mack Group (filed as Exhibit 10.99 to the Corporation's Form 8-K dated December 11, 1997 and incorporated herein by reference). 10.13 Termination and Release Agreement, dated September 21, 2000, by and among Mack-Cali Realty Corporation, Mack-Cali Realty, L.P., Prentiss Properties Trust and Prentiss Properties Acquisition Partners, L.P. (filed as Exhibit 10.1 to the Operating Partnership's Form 8-K dated September 21, 2000 and incorporated herein by reference). 10.14 2000 Employee Stock Option Plan (filed as Exhibit B to the Corporation's Proxy Statement for its Annual Meeting of Stockholders held on September 11, 2000 and incorporated herein by reference). 10.15 2000 Director Stock Option Plan (filed as Exhibit C to the Corporation's Proxy Statement for its Annual Meeting of Stockholders held on September 11, 2000 and incorporated herein by reference). *12 Computation of Ratio Earnings to Fixed Charges. *21 Subsidiaries of the Operating Partnership. *23 Consent of PricewaterhouseCoopers LLP, independent accountants. - ---------- *filed herewith EX-10.5 2 a2040483zex-10_5.txt EXHIBIT 10.5 EMPLOYMENT AGREEMENT FOR MICHAEL GROSSMAN TABLE OF CONTENTS
PAGE ---- 1. EMPLOYMENT........................................................................... 1 2. EMPLOYMENT PERIOD.................................................................... 1 3. SERVICES / PLACE OF EMPLOYMENT....................................................... 2 4. COMPENSATION AND BENEFITS............................................................ 3 5. TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL...................................... 6 6. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON............................................ 8 7. COMPENSATION UPON TERMINATION OF EMPLOYMENT UPON DEATH OR DISABILITY........................................................................... 9 8. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON........................................ 11 9. CHANGE IN CONTROL.................................................................... 12 10. MITIGATION / EFFECT ON EMPLOYEE BENEFIT PLANS AND PROGRAMS........................... 14 11. CONFIDENTIAL INFORMATION............................................................. 15 12. RETURN OF DOCUMENTS.................................................................. 16 13. NONCOMPETE........................................................................... 16 14. REMEDIES............................................................................. 17 15. INDEMNIFICATION/LEGAL FEES........................................................... 18 16. SUCCESSORS AND ASSIGNS............................................................... 19 17. TIMING OF AND NO DUPLICATION OF PAYMENTS............................................. 21 18. MODIFICATION OR WAIVER............................................................... 21 19. NOTICES.............................................................................. 22 20. GOVERNING LAW........................................................................ 22 21. SEVERABILITY......................................................................... 22 22. LEGAL REPRESENTATION................................................................. 23 23. COUNTERPARTS......................................................................... 23 24. HEADINGS............................................................................. 23 25. ENTIRE AGREEMENT..................................................................... 23 26. SURVIVAL OF AGREEMENTS............................................................... 24
MICHAEL GROSSMAN EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of December 5, 2000, by and between Michael Grossman, an individual residing at 105 Valley View Road, Chappaqua, New York 10514 ("Executive"), and Mack-Cali Realty Corporation, a Maryland corporation with offices at 11 Commerce Drive, Cranford, New Jersey 07016 (the "Company"). RECITALS WHEREAS, Executive has been promoted to Executive Vice President as of December 5, 2000; and WHEREAS, the Company desires to continue to employ Executive in his new capacity of Executive Vice President, and Executive desires to continue to be employed by the Company in his new capacity, pursuant to the terms set forth herein NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereby agree as follows: 1. EMPLOYMENT. The Company hereby agrees to employ Executive, and Executive hereby agrees to accept such employment during the period and upon the terms and conditions set forth in this Agreement. 2. EMPLOYMENT PERIOD. (a) Except as otherwise provided in this Agreement to the contrary, the terms and conditions of this Agreement shall be and remain in effect during the period of employment (the "Employment Period") established under this Paragraph 2. The initial Employment Period shall be for a term commencing on the date of this Agreement and ending on the third (3rd) anniversary of the date of this Agreement provided, however, that commencing on January 1, 2003 and on each day thereafter, the Employment Period shall be extended automatically for one additional day so that a constant one (1) year Employment Period shall be in effect unless the Company or Executive elects not to extend the term of this Agreement by giving written notice to the other party, in which case, the term of this Agreement shall become fixed. Any extension of this Agreement shall not create an obligation of the Company to issue new awards to Executive hereunder. (b) Notwithstanding anything contained herein to the contrary: (i) Executive's employment with the Company may be terminated by the Company or Executive during the Employment Period, subject to the terms and conditions of this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a continuation of Executive's employment following the expiration of the Employment Period upon such terms and conditions as the Board of Directors of the Company (the "Board") and Executive may mutually agree. (c) If Executive's employment with the Company is terminated, for purposes of this Agreement the term "Unexpired Employment Period" shall mean the period commencing on the date of such termination and ending on the last day of the Employment Period. 3. SERVICES / PLACE OF EMPLOYMENT. 2 SERVICES. During the Employment Period, Executive shall hold the position of Executive Vice President of the Company. Executive shall devote his best efforts and substantially all of his business time, skill and attention to the business of the Company (other than absences due to vacation, illness, disability or approved leave of absence), and shall perform such duties as are customarily performed by similar executive officers and as may be more specifically enumerated from time to time by the Chief Executive Officer; PROVIDED, HOWEVER, that the foregoing is not intended to preclude Executive from (i) owning and managing personal investments, including real estate investments, subject to the restrictions set forth in Paragraph 13 hereof or (ii) engaging in charitable activities and community affairs, provided that the performance of the activities referred to in clauses (i) and (ii) does not prevent Executive from devoting substantially all of his business time to the Company. 4. COMPENSATION AND BENEFITS. (a) SALARY. During the Employment Period, the Company shall pay Executive a minimum annual base salary in the amount of $315,000 (the "Annual Base Salary") payable in accordance with the Company's regular payroll practices. Executive's Annual Base Salary shall be reviewed annually in accordance with the policy of the Company from time to time and may be subject to upward adjustment based upon, among other things, Executive's performance, as determined in the sole discretion of the Chief Executive Officer. In no event shall Executive's Annual Base Salary in effect at a particular time be reduced without his prior written consent. 3 (b) INCENTIVE COMPENSATION/BONUSES. In addition, Executive shall be eligible for incentive compensation payable each year in such amounts as may be determined by the Option and Executive Compensation Committee of the Board (the "Compensation Committee"). Executive shall be entitled to receive such bonuses, restricted share awards and options to purchase shares of common stock, par value $0.01 per share, of the Company (the "Common Stock") as the Board or the Compensation Committee as the case may be shall approve, in its sole discretion, including, without limitation, options, restricted share awards and bonuses contingent upon Executive's performance and the achievement of specified financial and operating objectives. (c) RESTRICTED SHARE AWARD/TAX GROSS-UP PAYMENT. Pursuant to the Employee Stock Option Plan of Mack-Cali Realty Corporation which was originally effective August 31, 1994 and amended and restated as of December 1, 1998 (the "SOP"), Executive has been awarded a restricted share award in 1999 of 4,000 shares of Common Stock and a restricted share award of 18,519 shares of Common Stock ("Restricted Shares") as of December 5, 2000 (the "Restricted Share Awards"). Commencing with vesting that will occur in calendar year 2002, Executive shall be entitled to receive a tax gross-up payment (the "Tax Gross-Up Payment") from the Company with respect to each tax year in which Restricted Shares granted pursuant to the Restricted Share Awards vest and are distributed to him. Each Tax Gross-Up Payment shall be a dollar amount equal to forty-three (43%) percent of the fair market value of the Restricted Shares at time of vesting, exclusive of dividends. In the event vesting occurs with respect to any Restricted Shares as a result of the achievement of 4 the required performance goals, such payment shall be made as soon as practicable after a determination that the performance goals have been achieved but in no event later than the 90th day of the fiscal year of the Company immediately following the fiscal year as to which the performance goals were achieved. In the event vesting occurs for any other reason, including, without limitation, termination of Executive's employment by the Company without Cause or by Executive for Good Reason (but excluding a termination by the Company for Cause or a voluntary quit without Good Reason by Executive), such payment shall be made as soon as practicable after the date of vesting but in no event later than the tenth (10th) business day following such vesting. (d) TAXES AND WITHHOLDING. The Company shall have the right to deduct and withhold from all compensation all social security and other federal, state and local taxes and charges which currently are or which hereafter may be required by law to be so deducted and withheld. (e) ADDITIONAL BENEFITS. In addition to the compensation specified above and other benefits provided pursuant to this Paragraph 4, Executive shall be entitled to the following benefits: (i) participation in the SOP, the Mack-Cali Realty Corporation 401(k) Savings and Retirement Plan (subject to statutory rules and maximum contributions and non-discrimination requirements applicable to 401(k) plans) and such other benefit plans and programs, including but not limited to restricted stock, phantom stock and/or unit awards, loan programs and any other incentive compensation plans or programs (whether or not employee benefit plans or programs), as maintained by the Company from time to time and made generally available to executives of the Company with such participation to be consistent with reasonable Company guidelines; 5 (ii) participation in any health insurance, disability insurance, paid vacation, group life insurance or other welfare benefit program made generally available to executives of the Company; and (iii) reimbursement for reasonable business expenses incurred by Executive in furtherance of the interests of the Company including a monthly allowance of one thousand ($1,000) dollars which is intended to cover the cost of local business-related travel expenses exclusive of amounts paid to third-parties (E.G. taxi service). 5. TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL. (a) Executive's employment hereunder may be terminated during the Employment Period under the following circumstances: (i) CAUSE. The Company shall have the right to terminate Executive's employment for Cause upon Executive's: (A) willful and continued failure to use best efforts to substantially perform his duties hereunder (other than any such failure resulting from Executive's incapacity due to physical or mental illness) for a period of thirty (30) days after written demand for substantial performance is delivered by the Company specifically identifying the manner in which the Company believes Executive has not substantially performed his duties; (B) willful misconduct and/or willful violation of Paragraph 11 hereof, which is materially economically injurious to the Company and the partnership taken as a whole; (C) the willful violation of the provisions of Paragraph 13 hereof; or (D) conviction of, or plea of guilty to a felony. For purposes of this sub-paragraph 5(a), no act, or failure to act, on Executive's part shall be considered "willful" unless done, or omitted to be done, by him (I) not in good faith and (II) without reasonable belief that his action or omission was in furtherance of the interests of the Company. (ii) DEATH. Executive's employment hereunder shall terminate upon his death. (iii) DISABILITY. The Company shall have the right to terminate Executive's employment due to "Disability" in the event that there is a determination by the Company, upon the advice of an independent qualified physician, reasonably acceptable to Executive, that Executive has become physically or mentally incapable of performing his duties under this Agreement and such 6 disability has disabled Executive for a cumulative period of one hundred eighty (180) days within a twelve (12) month period. (iv) GOOD REASON. Executive shall have the right to terminate his employment for "Good Reason": (A) upon the occurrence of any material breach of this Agreement by the Company which shall include but not be limited to; an assignment to Executive of duties materially and adversely inconsistent with Executive's status as Executive Vice President, or a material adverse alteration in the nature of a diminution in Executive's duties and/or responsibilities, reporting obligations, titles or authority; (B) upon a reduction in Executive's Annual Base Salary or a material reduction in other benefits (except for bonuses or similar discretionary payments) as in effect at the time in question, a failure to pay such amounts when due or any other failure by the Company to comply with Paragraph 4 hereof; or (C) upon any purported termination of Executive's employment for Cause which is not effected pursuant to the procedures of sub-paragraph 5(a)(i) (and for purposes of this Agreement, in the event of such failure to comply, no such purported termination shall be effective). (v) WITHOUT CAUSE. The Company shall have the right to terminate the Executive's employment hereunder without Cause subject to the terms and conditions of this Agreement. (vi) WITHOUT GOOD REASON. The Executive shall have the right to terminate his employment hereunder without Good Reason subject to the terms and conditions of this Agreement. (vii) CHANGE IN CONTROL. For purposes of this Agreement "Change in Control" shall mean that any of the following events has occurred: (A) any "person" or "group" of persons, as such terms are used in Sections 13 and 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than any employee benefit plan sponsored by the Company, becomes the "beneficial owner", as such term is used in Section 13 of the Exchange Act, (irrespective of any vesting or waiting periods) of (I) Common Stock or any class of stock convertible into Common Stock and/or (II) Common OP Units or preferred units or any other class of units convertible into Common OP Units, in an amount equal to twenty (20%) percent or more of the sum total of the Common Stock and the Common OP Units (treating all classes of outstanding stock, units or other securities convertible into stock units as if they were converted into Common Stock or Common OP Units as the case may be and then treating Common Stock and Common OP Units 7 as if they were a single class) issued and outstanding immediately prior to such acquisition as if they were a single class and disregarding any equity raise in connection with the financing of such transaction; (B) any Common Stock is purchased pursuant to a tender or exchange offer other than an offer by the Company; (C) the dissolution or liquidation of the Company or the consummation of any merger or consolidation of the Company or any sale or other disposition of all or substantially all of its assets, if the shareholders of the Company and unitholders of the partnership taken as a whole and considered as one class immediately before such transaction own, immediately after consummation of such transaction, equity securities and partnership units possessing less than fifty (50%) percent of the surviving or acquiring company and partnership taken as a whole; or (D) a turnover, during any two (2) year period, of the majority of the members of the Board, without the consent of the remaining members of the Board as to the appointment of the new Board members. (b) NOTICE OF TERMINATION. Any termination of Executive's employment by the Company or any such termination by Executive (other than on account of death) shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated. In the event of the termination of Executive's employment on account of death, written Notice of Termination shall be deemed to have been provided on the date of death. 6. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON. In the event the Company terminates Executive's employment for Cause or Executive terminates his employment without Good Reason, the Company shall pay 8 Executive any unpaid Annual Base Salary at the rate then in effect accrued through and including the date of termination. In addition, in such event, Executive shall be entitled (i) to receive any earned but unpaid incentive compensation or bonuses and (ii) to exercise any options which have vested and are exercisable in accordance with the terms of the applicable option grant agreement or plan, and (iii) to retain and/or receive any Restricted Shares which have vested as of the last day of the Company's fiscal year coincident or immediately preceding Executive's termination of employment and the corresponding Tax Gross-Up Payment (irrespective of whether the determination is made after Executive's termination of employment). Except for any rights which Executive may have to unpaid salary amounts through and including the date of termination, earned but unpaid incentive compensation or bonuses, vested options, vested Restricted Shares and the corresponding Tax Gross-Up Payment, the Company shall have no further obligations hereunder following such termination. The aforesaid amounts shall be payable in full immediately upon such termination. 7. COMPENSATION UPON TERMINATION OF EMPLOYMENT UPON DEATH OR DISABILITY. In the event of termination of Executive's employment as a result of either Executive's death or Disability, the Company shall pay to Executive, his estate or his personal representative the aggregate of (i) a cash payment of one million dollars ($1,000,000) in full immediately upon such termination (the "Fixed Amount") and (ii) reimbursement of expenses incurred prior to date of termination ("Expense Reimbursement"). Executive (and Executive's dependents) shall also receive 9 continuation of health coverage through the end of the Unexpired Employment Period on the same basis as health coverage is provided by the Company for active employees and as may be amended from time to time ("Medical Continuation"). In addition, all (A) incentive compensation payments or programs of any nature whether stock based or otherwise that are subject to a vesting schedule including, without limitation, the Restricted Share Awards or any other restricted stock, phantom stock, units and any loan forgiveness arrangements granted to Executive ("Incentive Compensation") shall immediately vest as of the date of such termination ("Vested Incentive Compensation"), (B) options granted to Executive shall immediately vest as of the date of such termination (the "Vested Options") and Executive shall be entitled at the option of Executive, his estate or his personal representative, within one (1) year of the date of such termination, to exercise the Vested Options and/or other options which have vested (including, without limitation, all other options which have previously vested in accordance with any applicable option grant agreement or plan) (the "Total Vested Options") and are exercisable in accordance with the terms of the applicable option grant agreement or plan and/or any other methods or procedures for exercise applicable to optionees or to require the Company (upon written notice delivered within one hundred eighty (180) days following the date of Executive's termination) to repurchase all or any portion of Executive's vested options to purchase shares of Common Stock at a price equal to the difference between the Repurchase Fair Market Value (as hereinafter defined) of the shares of Common Stock for which the options to be repurchased are exercisable and the exercise price of such options as of the date of Executive's termination of employment (the "Vested Option Exercise Election"), and (C) 10 the Tax Gross-Up Payment(s) applicable to the Restricted Share Awards shall vest and be paid to Executive at such time as provided in sub-paragraph 4(c) above (the "Vested Tax Gross-Up Payments"). In the event of a conflict between any Incentive Compensation grant agreement or program or any option grant agreement or plan and this Agreement, the terms of this Agreement shall control. Except for any rights which Executive or Executive's estate in the event of Executive's death may have to all of the above including the Fixed Amount, Vested Incentive Compensation, Total Vested Options and the Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical Continuation (which, in the event of Executive's death, shall be provided to Executive's dependents), the Company shall have no further obligations hereunder following such termination. For purposes of this Agreement, "Repurchase Fair Market Value" shall mean the average of the closing price on the New York Stock Exchange (or such other exchange on which the Common Stock is primarily traded) of the Common Stock on each of the trading days within the thirty (30) days immediately preceding the date of termination of Executive's employment. 8. COMPENSATION UPON TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON. In the event the Company terminates Executive's employment for any reason other than Cause or Executive terminates his employment for Good Reason, the Company shall pay to Executive and Executive shall be entitled to receive the aggregate of (i) the Fixed Amount and (ii) Vested Incentive Compensation, Total Vested 11 Options and the Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical Continuation. In the event of a conflict between any Incentive Compensation grant agreement or program or any option grant agreement or plan and this Agreement, the terms of this Agreement shall control. Executive understands that any options exercised more than ninety (90) days following the date of his termination of employment which were granted as incentive stock options shall automatically be converted into non-qualified options. Except for any rights which Executive may have to the Fixed Amount, Vested Incentive Compensation, Total Vested Options and the Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense Reimbursement and Medical Continuation, the Company shall have no further obligations hereunder following such termination. The parties both agree that the agreement to make these payments was consideration and an inducement to obtain Executive's consent to enter into this Agreement. The payments are not a penalty and neither party will claim them to be a penalty. Rather, the payments represent a fair approximation of reasonable amounts due to Executive for the Employment Period. 9. CHANGE IN CONTROL. (a) OPTIONS. Any Incentive Compensation and options granted to Executive that have not vested as of the date of a Change in Control shall immediately vest upon the date of the Change in Control. Neither the occurrence of a Change in Control, nor the vesting in any options as a result thereof shall require Executive to exercise any options. In the event of a conflict between any Incentive Compensation 12 grant agreement or program or any option grant agreement or plan and this Agreement, the terms of this Agreement shall control. (b) EXCISE TAX GROSS UP. If it is determined by an independent accountant mutually acceptable to the Company and Executive that as a result of any payment in the nature of compensation made by the Company to (or for the benefit of) Executive pursuant to this Agreement or otherwise, an excise tax may be imposed on Executive pursuant to Section 4999 of the Code (or any successor provisions), the Company shall pay Executive in cash an amount equal to X determined under the following formula: (the "Excise Tax Gross Up"): E x P X = --------------------------------- 1-[(FI x (1-SLI)) + SLI + E + M] where E = the rate at which the excise tax is assessed under Section 4999 of the Code (or any successor provisions); P = the amount with respect to which such excise tax is assessed, determined without regard to the Excise Tax Gross Up; FI = the highest effective marginal rate of income tax applicable to Executive under the Code for the taxable year in question (taking into account any phase-out or loss of deductions, personal exemptions or other similar adjustments); SLI = the sum of the highest effective marginal rates of income tax applicable to Executive under all applicable state and local laws for the taxable year in question (taking into account any phase-out or loss of deductions, personal exemptions and other similar adjustments); and M = the highest marginal rate of Medicare tax applicable to Executive under the Code for the taxable year in question. 13 With respect to any payment in the nature of compensation that is made to (or for the benefit of) Executive under the terms of this Agreement or otherwise and on which an excise tax under Section 4999 of the Code (or any successor provisions) may be assessed, the payment determined under this sub-paragraph 9(c) shall be paid to Executive at the time of the Change in Control but prior to the consummation of the transaction with any successor. It is the intention of the parties that the Company provide Executive with a full tax gross-up under the provisions of this sub-paragraph, so that on a net after-tax basis, the result to Executive shall be the same as if the excise tax under Section 4999 of the Code (or any successor provisions) had not been imposed. The Excise Tax Gross Up may be adjusted if alternative minimum tax rules are applicable to Executive. 10. MITIGATION / EFFECT ON EMPLOYEE BENEFIT PLANS AND PROGRAMS. (a) MITIGATION. Executive shall not be required to mitigate amounts payable under this Agreement by seeking other employment or otherwise, and there shall be no offset against amounts due Executive under this Agreement on account of subsequent employment. Amounts owed to Executive under this Agreement shall not be offset by any claims the Company may have against Executive and such payment shall not be affected by any other circumstances, including, without limitation, any counterclaim, recoupment, defense, or other right which the Company may have against Executive or others. (b) EFFECT ON EMPLOYEE BENEFIT PROGRAMS. The termination of Executive's employment hereunder, whether by the Company or Executive, shall have 14 no effect on the rights and obligations of the parties hereto under the Company's (i) welfare benefit plans including, without limitation, Medical Continuation as provided for herein and, health coverage thereafter but only to the extent required by law, and on the same basis applicable to other employees and (ii) 401(k) Plan but only to the extent required by law and pursuant to the terms of the 401(k) Plan. 11. CONFIDENTIAL INFORMATION. (a) Executive understands and acknowledges that during his employment with the Company, he will be exposed to Confidential Information (as defined below), all of which is proprietary and which will rightfully belong to the Company. Executive shall hold in a fiduciary capacity for the benefit of the Company such Confidential Information obtained by Executive during his employment with the Company and shall not, directly or indirectly, at any time, either during or after his employment with the Company, without the Company's prior written consent, use any of such Confidential Information or disclose any of such Confidential Information to any individual or entity other than the Company or its employees, attorneys, accountants, financial advisors, consultants, or investment bankers except as required in the performance of his duties for the Company or as otherwise required by law. Executive shall take all reasonable steps to safeguard such Confidential Information and to protect such Confidential Information against disclosure, misuse, loss or theft. (b) The term "Confidential Information" shall mean any information not generally known in the relevant trade or industry or otherwise not generally available to the public, which was obtained from the Company or its predecessors or which 15 was learned, discovered, developed, conceived, originated or prepared during or as a result of the performance of any services by Executive on behalf of the Company or its predecessors. For purposes of this Paragraph 11, the Company shall be deemed to include any entity which is controlled, directly or indirectly, by the Company and any entity of which a majority of the economic interest is owned, directly or indirectly, by the Company. 12. RETURN OF DOCUMENTS. Except for such items which are of a personal nature to Executive (E.G., daily business planner), all writings, records, and other documents and things containing any Confidential Information shall be the exclusive property of the Company, shall not be copied, summarized, extracted from, or removed from the premises of the Company, except in pursuit of the business of the Company and at the direction of the Company, and shall be delivered to the Company, without retaining any copies, upon the termination of Executive's employment or at any time as requested by the Company. 13. NONCOMPETE. Executive agrees that: (a) During the Employment Period and, in the event (i) the Company terminates Executive's employment for Cause, or (ii) Executive terminates his employment without Good Reason, for a one (1) year period thereafter, Executive shall not, directly or indirectly, within the continental United States, engage in, or own, invest in, manage or control any venture or enterprise primarily engaged in any office-service, 16 flex, or office property development, acquisition or management activities without regard to whether or not such activities compete with the Company. Nothing herein shall prohibit Executive from being a passive owner of not more than five percent (5%) of the outstanding stock of any class of securities of a corporation or other entity engaged in such business which is publicly traded, so long as he has no active participation in the business of such corporation or other entity. (b) If, at the time of enforcement of this Paragraph 13, a court shall hold that the duration, scope, area or other restrictions stated herein are unreasonable, the parties agree that reasonable maximum duration, scope, area or other restrictions may be substituted by such court for the stated duration, scope, area or other restrictions and upon substitution by such court, this Agreement shall be automatically modified without further action by the parties hereto. (c) For purposes of this Paragraph 13, the Company shall be deemed to include any entity which is controlled, directly or indirectly, by the Company and any entity of which a majority of the economic interest is owned, directly or indirectly, by the Company. 14. REMEDIES. The parties hereto agree that the Company would suffer irreparable harm from a breach by Executive of any of the covenants or agreements contained in Paragraphs 11, 12 or 13 of this Agreement. Therefore, in the event of the actual or threatened breach by Executive of any of the provisions of Paragraphs 11, 12 or 13 of this Agreement, the Company may, in addition and supplementary to other rights and 17 remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violation of the provisions thereof. 15. INDEMNIFICATION/LEGAL FEES. (a) INDEMNIFICATION. In the event the Executive is made party or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of Executive's employment with or serving as an officer or director of the Company, whether or not the basis of such Proceeding is alleged action in an official capacity, the Company shall indemnify, hold harmless and defend Executive to the fullest extent authorized by Maryland law, as the same exists and may hereafter be amended, against any and all claims, demands, suits, judgments, assessments and settlements including all expenses incurred or suffered by Executive in connection therewith (including, without limitation, all legal fees incurred using counsel reasonably acceptable to Executive) and such indemnification shall continue as to Executive even after Executive is no longer employed by the Company and shall inure to the benefit of his heirs, executors, and administrators. Expenses incurred by Executive in connection with any Proceeding shall be paid by the Company in advance upon request of Executive that the Company pay such expenses; but, only in the event that Executive shall have delivered in writing to the Company an undertaking to reimburse the Company for expenses with respect to which Executive is not entitled to indemnification. The provisions of this Paragraph shall remain in effect after this Agreement is terminated irrespective of the reasons for 18 termination. The indemnification provisions of this Paragraph shall not supersede or reduce any indemnification provided to Executive under any separate agreement, or the by-laws of the Company since it is intended that this Agreement shall expand and extend the Executive's rights to receive indemnity. (b) LEGAL FEES. If any contest or dispute shall arise between the Company and Executive regarding or as a result of any provision of this Agreement, the Company shall reimburse Executive for all legal fees and expenses reasonably incurred by Executive in connection with such contest or dispute, but only if Executive is successful in respect of substantially all of Executive's claims pursued or defended in connection with such contest or dispute. Such reimbursement shall be made as soon as practicable following the resolution of such contest or dispute (whether or not appealed). 16. SUCCESSORS AND ASSIGNS. (a) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of an such succession shall be a breach of this Agreement and shall entitle Executive to compensation from the Company in the same amount and on the same terms as he would be entitled to hereunder if Executive 19 terminated his employment hereunder for Good Reason except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date of termination. In the event of such a breach of this Agreement, the Notice of Termination shall specify such date as the date of termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to all or substantially all of its business and/or its assets as aforesaid which executes and delivers the agreement provided for in this Paragraph 16 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. Any cash payments owed to Executive pursuant to this Paragraph 16 shall be paid to Executive in a single sum without discount for early payment immediately prior to the consummation of the transaction with such successor. (b) This Agreement and all rights of Executive hereunder may be transferred only by will or the laws of descent and distribution. Upon Executive's death, this Agreement and all rights of Executive hereunder shall inure to the benefit of and be enforceable by Executive's beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to Executive's interests under this Agreement. Executive shall be entitled to select and change a beneficiary or beneficiaries to receive any benefit or compensation payable hereunder following Executive's death by giving the Company written notice thereof. If Executive should die following the date of termination while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or 20 persons so appointed in writing by Executive, including, without limitation, under any applicable plan, or otherwise to his legal representatives or estate. 17. TIMING OF AND NO DUPLICATION OF PAYMENTS. All payments payable to Executive pursuant to this Agreement shall be paid as soon as practicable after such amounts have become fully vested and determinable. In addition, Executive shall not be entitled to receive duplicate payments under any of the provisions of this Agreement. 18. MODIFICATION OR WAIVER. No amendment, modification, waiver, termination or cancellation of this Agreement shall be binding or effective for any purpose unless it is made in a writing signed by the party against whom enforcement of such amendment, modification, waiver, termination or cancellation is sought. No course of dealing between or among the parties to this Agreement shall be deemed to affect or to modify, amend or discharge any provision or term of this Agreement. No delay on the part of the Company or Executive in the exercise of any of their respective rights or remedies shall operate as a waiver thereof, and no single or partial exercise by the Company or Executive of any such right or remedy shall preclude other or further exercise thereof. A waiver of right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any other occasion. 21 The respective rights and obligations of the parties hereunder shall survive the Executive's termination of employment and termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations. 19. NOTICES. All notices or other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand or delivered by a recognized delivery service or mailed, postage prepaid, by express, certified or registered mail, return receipt requested, and addressed to the Chief Executive Officer of the Company or Executive, as applicable, at the address set forth above (or to such other address as shall have been previously provided in accordance with this Paragraph 19). 20. GOVERNING LAW. This agreement will be governed by and construed in accordance with the laws of the State of New Jersey except as to Paragraph 15(a), without regard to principles of conflicts of laws thereunder. 21. SEVERABILITY. Whenever possible, each provision and term of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or term of this Agreement shall be held to be prohibited by or invalid under 22 such applicable law, then, subject to the provisions of Paragraph 13(b) above, such provision or term shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or affecting in any manner whatsoever the remainder of such provisions or term or the remaining provisions or terms of this Agreement. 22. LEGAL REPRESENTATION. Each of the Company and Executive have been represented by counsel with respect to this Agreement. 23. COUNTERPARTS. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and both of which taken together shall constitute one and the same agreement. 24. HEADINGS. The headings of the Paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute a part hereof and shall not affect the construction or interpretation of this Agreement. 25. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all other prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof. 23 26. SURVIVAL OF AGREEMENTS. The covenants made in Paragraphs 5 through 15 and 21 each shall survive the termination of this Agreement. 24 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. MACK-CALI REALTY CORPORATION By: /s/ Mitchell E. Hersh --------------------------------- Mitchell E. Hersh Chief Executive Officer /s/ Michael Grossman --------------------------------- Michael Grossman 25 EX-10.10 3 a2040483zex-10_10.txt EXHIBIT 10.10 AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT among MACK-CALI REALTY, L.P. and THE CHASE MANHATTAN BANK, FLEET NATIONAL BANK and OTHER LENDERS WHICH MAY BECOME PARTIES TO THIS AGREEMENT with THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE AGENT, FLEET NATIONAL BANK, AS SYNDICATION AGENT, BANK OF AMERICA, N.A., AS DOCUMENTATION AGENT CHASE SECURITIES INC. and FLEETBOSTON ROBERTSON STEPHENS INC. AS ARRANGERS, BANK ONE, NA, FIRST UNION NATIONAL BANK, and COMMERZBANK AKTIENGESELLSCHAFT AS SENIOR MANAGING AGENTS PNC BANK NATIONAL ASSOCIATION, AS MANAGING AGENT and SOCIETE GENERALE, DRESDNER BANK AG, WELLS FARGO BANK, NATIONAL ASSOCIATION, BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC., BAYERISCHE HYPO-UND VEREINSBANK, and SUMMIT BANK AS CO-AGENTS Dated as of June 22, 2000 TABLE OF CONTENTS
Section Page - ------- ---- Section 1. DEFINITIONS AND RULES OF INTERPRETATION..................................................... 2 Section 1.1. Definitions................................................................. 2 Section 1.2. Rules of Interpretation..................................................... 27 Section 2. THE REVOLVING CREDIT FACILITY............................................................... 28 Section 2.1. Commitment to Lend.......................................................... 28 Section 2.2. Increase of Total Commitment................................................ 29 Section 2.3. The Revolving Credit Notes.................................................. 30 Section 2.4. Interest on Revolving Credit Loans; Fees.................................... 31 Section 2.5. Requests for Revolving Credit Loans......................................... 32 Section 2.6. Conversion Options.......................................................... 34 Section 2.7. Funds for Revolving Credit Loans............................................ 35 Section 2.8. Repayment of the Revolving Credit Loans at Maturity......................... 37 Section 2.9. Optional Repayments of Revolving Credit Loans............................... 37 Section 2.10. Reduction of Total Commitment............................................... 37 Section 2A. COMPETITIVE BID LOANS....................................................................... 38 Section 2A.1. The Competitive Bid Option.................................................. 38 Section 2A.2. Competitive Bid Loan Accounts: Competitive Bid Notes........................ 38 Section 2A.3. Competitive Bid Quote Request; Invitation for Competitive Bid Quotes........ 39 Section 2A.4. Alternative Manner of Procedure............................................. 40 Section 2A.5. Submission and Contents of Competitive Bid Quotes........................... 41 Section 2A.6. Notice to Borrower.......................................................... 42 Section 2A.7. Acceptance and Notice by Borrower........................................... 42 Section 2A.8. Allocation by Administrative Agent.......................................... 43 Section 2A.9. Funding of Competitive Bid Loans............................................ 43 Section 2A.10. Funding Losses.............................................................. 44 Section 2A.11. Repayment of Competitive Bid Loans; Interest................................ 44 Section 2A.12. Optional Repayment of Competitive Bid Loans................................. 44 Section 3. LETTERS OF CREDIT........................................................................... 45 Section 3.1. Letter of Credit Commitments................................................ 45 Section 3.2. Reimbursement Obligation of the Borrower.................................... 46 Section 3.3. Letter of Credit Payments; Funding of a Loan................................ 47 Section 3.4. Obligations Absolute........................................................ 47 Section 3.5. Reliance by Issuer.......................................................... 48 Section 3.6. Letter of Credit Fee........................................................ 48 Section 3.7. Existing Letters of Credit.................................................. 49 Section 4. CERTAIN GENERAL PROVISIONS.................................................................. 49 Section 4.1. Funds for Payments.......................................................... 49 Section 4.2. Computations................................................................ 50 Section 4.3. Inability to Determine LIBOR Rate........................................... 50 Section 4.4. Illegality.................................................................. 50 Section 4.5. Additional Costs, Etc....................................................... 51 Section 4.6. Capital Adequacy............................................................ 52 Section 4.7. Certificate................................................................. 53 Section 4.8. Indemnity................................................................... 53 Section 4.9. Interest on Overdue Amounts................................................. 54 Section 4.10. [Intentionally Omitted]..................................................... 54 Section 4.11. Reasonable Efforts to Mitigate.............................................. 54 Section 4.12. Replacement of Lenders...................................................... 54 Section 5. GUARANTIES.................................................................................. 55 Section 5.1. Guaranties.................................................................. 55 Section 5.2. Subsidiary Guaranty Proceeds................................................ 55 Section 6. REPRESENTATIONS AND WARRANTIES.............................................................. 57 Section 6.1. Authority; Etc.............................................................. 57 Section 6.2. Governmental Approvals...................................................... 60 Section 6.3. Title to Properties; Leases................................................. 60 Section 6.4. Financial Statements........................................................ 61 Section 6.5. Fiscal Year................................................................. 62 Section 6.6. Franchises, Patents, Copyrights, Etc........................................ 62 Section 6.7. Litigation.................................................................. 62 Section 6.8. No Materially Adverse Contracts, Etc........................................ 62 Section 6.9. Compliance With Other Instruments, Laws, Etc................................ 62 Section 6.10. Tax Status.................................................................. 63 Section 6.11. No Event of Default; No Materially Adverse Changes.......................... 63 Section 6.12. Investment Company Acts..................................................... 63 (ii) Section 6.13. Absence of UCC Financing Statements, Etc.................................... 64 Section 6.14. Absence of Liens............................................................ 64 Section 6.15. Certain Transactions........................................................ 64 Section 6.16. Employee Benefit Plans...................................................... 64 Section 6.17. Regulations U and X......................................................... 66 Section 6.18. Environmental Compliance.................................................... 66 Section 6.19. Subsidiaries................................................................ 68 Section 6.20. Loan Documents.............................................................. 68 Section 6.21. REIT Status................................................................. 68 Section 6.22. Subsequent Guarantors....................................................... 68 Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS.............................................................................. 68 Section 7.1. Punctual Payment............................................................ 69 Section 7.2. Maintenance of Office....................................................... 69 Section 7.3. Records and Accounts........................................................ 69 Section 7.4. Financial Statements, Certificates and Information.......................... 69 Section 7.5. Notices..................................................................... 72 Section 7.6. Existence of Borrower and Subsidiary Guarantors; Maintenance of Properties................................................... 74 Section 7.7. Existence of MCRC; Maintenance of REIT Status of MCRC; Maintenance of Properties............................................. 75 Section 7.8. Insurance................................................................... 76 Section 7.9. Taxes....................................................................... 76 Section 7.10. Inspection of Properties and Books.......................................... 76 Section 7.11. Compliance with Laws, Contracts, Licenses, and Permit....................... 77 Section 7.12. Use of Proceeds............................................................. 77 Section 7.13. Acquisition of Unencumbered Properties...................................... 77 Section 7.14. Additional Guarantors; Solvency of Guarantors............................... 78 Section 7.15. Further Assurances.......................................................... 78 Section 7.16. [Intentionally Omitted]..................................................... 78 Section 7.17. Environmental Indemnification............................................... 78 Section 7.18. Response Actions............................................................ 79 Section 7.19. Environmental Assessments................................................... 79 Section 7.20. Employee Benefit Plans...................................................... 80 Section 7.21. No Amendments to Certain Documents.......................................... 80 Section 7.22. Primary Credit Facility..................................................... 81 Section 7.23. Management.................................................................. 81 Section 7.24. Distributions in the Ordinary Course........................................ 81 (iii) Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS.......................................................................... 82 Section 8.1. Restrictions on Indebtedness................................................ 82 Section 8.2. Restrictions on Liens, Etc.................................................. 82 Section 8.3. Restrictions on Investments................................................. 85 Section 8.4. Merger, Consolidation and Disposition of Assets............................. 86 Section 8.5. Negative Pledge............................................................. 89 Section 8.6. Compliance with Environmental Laws.......................................... 89 Section 8.7. Distributions............................................................... 90 Section 8.8. Employee Benefit Plans...................................................... 90 Section 8.9. Fiscal Year................................................................. 91 Section 9. FINANCIAL COVENANTS OF THE BORROWER......................................................... 91 Section 9.1. Leverage Ratio.............................................................. 91 Section 9.2. Secured Indebtedness........................................................ 91 Section 9.3. Tangible Net Worth.......................................................... 92 Section 9.4. Debt Service Coverage....................................................... 92 Section 9.5. Fixed Charge Coverage....................................................... 92 Section 9.6. Unsecured Indebtedness...................................................... 92 Section 9.7. Unencumbered Property Debt Service Coverage................................. 92 Section 9.8. Investment Limitation....................................................... 92 Section 9.9. Covenant Calculations....................................................... 94 Section 10 CONDITIONS TO THE CLOSING DATE.............................................................. 95 Section 10.1. Loan Documents.............................................................. 95 Section 10.2. Certified Copies of Organization Documents.................................. 96 Section 10.3. By-laws; Resolutions........................................................ 96 Section 10.4. Incumbency Certificate; Authorized Signers.................................. 96 Section 10.5. Title Policies.............................................................. 97 Section 10.6. Certificates of Insurance................................................... 97 Section 10.7. Hazardous Waste Assessments................................................. 97 Section 10.8. Opinion of Counsel Concerning Organization and Loan Documents.............................................................. 97 Section 10.9. Tax and Securities Law Compliance........................................... 98 Section 10.10. Guaranties.................................................................. 98 Section 10.11. Certifications from Government Officials UCC-11 Reports.............................................................. 98 Section 10.12. Proceedings and Documents................................................... 98 Section 10.13. Fees........................................................................ 99 (iv) Section 10.14. Closing Certificate; Compliance Certificate................................. 99 Section 10.15. Subsequent Guarantors....................................................... 99 Section 10.16. No Default Under Original Agreement......................................... 99 Section 11. CONDITIONS TO ALL BORROWINGS................................................................ 99 Section 11.1. Representations True; No Event of Default; Compliance Certificate...................................................... 99 Section 11.2. No Legal Impediment......................................................... 100 Section 11.3. Governmental Regulation..................................................... 100 Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC........................................................ 100 Section 12.1. Events of Default and Acceleration.......................................... 100 Section 12.2. Termination of Commitments.................................................. 104 Section 12.3. Remedies.................................................................... 105 Section 13. SETOFF...................................................................................... 105 Section 14. THE ADMINISTRATIVE AGENT.................................................................... 106 Section 14.1. Authorization............................................................... 106 Section 14.2. Employees and Agents........................................................ 107 Section 14.3. No Liability................................................................ 107 Section 14.4. No Representations.......................................................... 107 Section 14.5. Payments.................................................................... 108 Section 14.6. Holders of Revolving Credit Notes........................................... 109 Section 14.7. Indemnity................................................................... 109 Section 14.8. Administrative Agent as Lender.............................................. 109 Section 14.9. Notification of Defaults and Events of Default.............................. 109 Section 14.10. Duties in the Case of Enforcement........................................... 110 Section 14.11. Successor Administrative Agent.............................................. 110 Section 14.12. Notices..................................................................... 111 Section 15. EXPENSES.................................................................................... 111 Section 16. INDEMNIFICATION............................................................................. 112 Section 17. SURVIVAL OF COVENANTS, ETC.................................................................. 113 (v) Section 18. ASSIGNMENT; PARTICIPATIONS; ETC............................................................. 114 Section 18.1. Conditions to Assignments by Lenders........................................ 114 Section 18.2. Certain Representations and Warranties; Limitations; Covenants...................................................... 114 Section 18.3. Register.................................................................... 115 Section 18.4. New Revolving Credit Notes.................................................. 116 Section 18.5. Participations.............................................................. 116 Section 18.6. Pledge by Lender............................................................ 117 Section 18.7. No Assignment by Borrower................................................... 117 Section 18.8. Disclosure.................................................................. 117 Section 18.9. Syndication................................................................. 117 Section 19. NOTICES, ETC................................................................................ 117 Section 20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE................................................................................. 118 Section 21. HEADINGS.................................................................................... 119 Section 22. COUNTERPARTS................................................................................ 119 Section 23. ENTIRE AGREEMENT, ETC....................................................................... 119 Section 24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS............................................................................... 119 Section 25. CONSENTS, AMENDMENTS, WAIVERS, ETC.......................................................... 119 Section 26. SEVERABILITY................................................................................ 121 Section 27. TRANSITIONAL ARRANGEMENTS................................................................... 121 Section 27.1. Original Agreement Superseded............................................... 121 Section 27.2. Return and Cancellation of Notes............................................ 121 Section 27.3. Interest and Fees Under Original Agreement.................................. 121
(vi) EXHIBITS A Form of Revolving Credit Note B Form of Subsidiary Guaranty C Form of Revolving Credit Loan Request D Form of Compliance Certificate E Form of Closing Certificate F Form of Assignment and Assumption Agreement G Competitive Bid Note H Competitive Bid Quote Request I Invitation for Competitive Bid Quotes J Competitive Bid Quote K Notice of Acceptance or Non-acceptance L Form of Notice of Continuation/Conversion
(vii) SCHEDULES SCHEDULE EMPL List of Employee Agreements with Key Management Individuals SCHEDULE EG List of Eligible Ground Leases as of Closing Date SCHEDULE SG List of Subsidiary Guarantors SCHEDULE 1.2 Lenders' Commitments SCHEDULE 3.7 Existing Letters of Credit SCHEDULE 6.1(b) Capitalization; Outstanding Securities, Etc. SCHEDULE 6.3 Partially Owned Real Estate Holding Entities SCHEDULE 6.7 Litigation SCHEDULE 6.15 Certain Transactions SCHEDULE 6.19 Subsidiaries SCHEDULE 8.3(d) Existing Investments SCHEDULE 8.3(f) Investments
(viii) AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT This AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT (this "AGREEMENT") is made as of the 22nd day of June, 2000, by and among MACK-CALI REALTY, L.P., a Delaware limited partnership ("MCRLP" or the "BORROWER"), having its principal place of business at 11 Commerce Drive, Cranford, New Jersey 07016, THE CHASE MANHATTAN BANK ("CHASE"), having its principal place of business at 270 Park Avenue, New York, New York 10017, FLEET NATIONAL BANK ("FLEET"), a national banking association having its principal place of business at 100 Federal Street, Boston, Massachusetts 02110, and the other lending institutions party hereto or which may become parties hereto pursuant to Section 18 (individually, a "LENDER" and collectively, the "LENDERS") and THE CHASE MANHATTAN BANK, as the administrative agent for itself and each other Lender, and FLEET NATIONAL BANK, as the syndication agent. RECITALS A. The Borrower and its Subsidiaries are primarily engaged in the business of owning, purchasing, developing, constructing, renovating and operating office, office/flex, industrial/warehouse and multifamily residential properties in the United States. B. Mack-Cali Realty Corporation, a Maryland corporation ("MCRC"), is the sole general partner of MCRLP, holds in excess of 80% of the partnership interests in MCRLP, is qualified to elect REIT status for income tax purposes, and has agreed to guaranty the obligations of the Borrower hereunder. C. Those Subsidiaries of the Borrower which are the owners of Unencumbered Property have also agreed to guaranty the obligations of the Borrower hereunder. D. The Borrower, certain of the Lenders, certain other lending institutions, and the Administrative Agent are parties to a Revolving Credit Agreement dated as of April 16, 1998, as amended by Amendment No. 1 to Revolving Credit Agreement dated as of July 20, 1998, as further amended by Amendment No. 2 to Revolving Credit Agreement dated as of December 30, 1998 (as so amended, the "ORIGINAL AGREEMENT"). E. The Borrower, the Lenders and the Administrative Agent wish to amend and restate the Original Agreement in its entirety as set forth in this Agreement. -2- NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows: Section 1. DEFINITIONS AND RULES OF INTERPRETATION. Section 1.1. DEFINITIONS. The following terms shall have the meanings set forth in this Section 1 or elsewhere in the provisions of this Agreement referred to below: ABSOLUTE COMPETITIVE BID LOAN. See Section 2A.3(a). ACCOUNTANTS. In each case, nationally-recognized, independent certified public accountants reasonably acceptable to the Administrative Agent. The Lenders hereby acknowledge that PricewaterhouseCoopers LLP and the other major national accounting firms are acceptable accountants. ADJUSTED UNENCUMBERED PROPERTY NOI. With respect to any fiscal period for any Unencumbered Property, the net income of such Unencumbered Property during such period, as determined in accordance with GAAP, before adjustment for (a) gains (or losses) from debt restructurings or other extraordinary items relating to such Unencumbered Property, (b) minority interests, not inconsistent with the wholly-owned Subsidiary requirements for Unencumbered Properties and (c) income taxes; PLUS (x) interest expense relating to such Unencumbered Property and (y) depreciation and amortization relating to such Unencumbered Property and (z) the noncash portion of executive stock award rights and stock purchase rights relating to the Unencumbered Property in question included in written executive employment agreements, written employee plans or other written non-monetary employment compensation provisions to the extent excluded from net income, as determined in accordance with GAAP; MINUS a recurring capital expense reserve equal to four percent (4%) of total revenue of such Unencumbered Property for such period, after adjustments to eliminate the effect of the straight-lining of rents affecting such Unencumbered Property. ADMINISTRATIVE AGENT. The Chase Manhattan Bank acting as administrative agent for the Lenders, or any successor administrative agent, as permitted by Section 14. ADMINISTRATIVE AGENT'S HEAD OFFICE. The Administrative Agent's head office located at 270 Park Avenue, New York, New York 10017, or at such other location as the Administrative Agent may designate from time to time pursuant to Section 19 hereof, or the office of any successor Administrative Agent permitted under Section 14 hereof. ADMINISTRATIVE FEE. See Section 2.4(g). -3- ADVISORY AND STRUCTURING FEE. See Section 2.4(d). AFFILIATE. With reference to any Person, (i) any director or executive officer of that Person, (ii) any other Person controlling, controlled by or under direct or indirect common control of that Person, (iii) any other Person directly or indirectly holding 10% or more of any class of the capital stock or other equity interests (including options, warrants, convertible securities and similar rights) of that Person (other than a mutual fund which owns 10% or more of the common stock of MCRC) and (iv) any other Person 10% or more of any class of whose capital stock or other equity interests (including options, warrants, convertible securities and similar rights) is held directly or indirectly by that Person. AGREEMENT. The Original Agreement as amended by this Amendment No. 3 to and Restatement of Revolving Credit Agreement, including the schedules and exhibits hereto, as the same may be from time to time amended and in effect. ALTERNATE BASE RATE. The higher of (a) the annual rate of interest announced from time to time by Chase at its head office in New York, New York as its "prime rate" or (b) one half of one percent (1/2%) above the overnight federal funds effective rate as published by the Board of Governors of the Federal Reserve System, as in effect from time to time. Any change in the Alternate Base Rate during an Interest Period shall result in a corresponding change on the same day in the rate of interest accruing from and after such day on the unpaid balance of principal of the Alternate Base Rate Loans, if any, applicable to such Interest Period, effective on the day of such change in the Alternate Base Rate. ALTERNATE BASE RATE LOANS. Those Revolving Credit Loans bearing interest calculated by reference to the Alternate Base Rate. APPLICABLE L/C PERCENTAGE. As of any date of determination, a per annum percentage equal to the Applicable Margin for Revolving Credit LIBOR Rate Loans then in effect. APPLICABLE MARGIN. The applicable margin (if any) over the then Alternate Base Rate or LIBOR Rate, as applicable to the Revolving Credit Loan(s) in question, as set forth below, which is used in calculating the interest rate applicable to Revolving Credit Loans and which shall vary from time to time in accordance with MCRLP's debt ratings, if any. The Applicable Margin to be used in calculating the interest rate applicable to Alternate Base Rate Loans or Revolving Credit LIBOR Rate Loans shall vary from time to time in -4- accordance with MCRLP's then applicable (if any) (x) Moody's debt rating, (y) S&P's debt rating and (z) any Third Debt Rating, as set forth below in this definition, and the Applicable Margin shall be adjusted effective on the next Business Day following any change in MCRLP's Moody's debt rating or S&P's debt rating or Third Debt Rating, as the case may be. MCRLP shall notify the Administrative Agent in writing promptly after becoming aware of any change in any of its debt ratings. In order to qualify for an Applicable Margin based upon a debt rating, MCRLP shall maintain debt ratings from at least two (2) nationally recognized rating agencies reasonably acceptable to the Administrative Agent, one of which must be Moody's or S&P so long as such Persons are in the business of providing debt ratings for the REIT industry; PROVIDED that if MCRLP fails to maintain at least two debt ratings, the Applicable Margin shall be based upon an S&P rating of less than BBB- in the table below. In addition, MCRLP may, at its option, obtain and maintain three debt ratings (of which one must be from Moody's or S&P except as set forth in the previous sentence). If at any time of determination of the Applicable Margin, (a) MCRLP has then current debt ratings from two (2) rating agencies, then the Applicable Margin shall be based on the lower of such ratings, or (b) MCRLP has then current debt ratings from three (3) rating agencies, then the Applicable Margin shall be based on the lower of the two highest ratings. The applicable debt ratings and the Applicable Margins are set forth in the following table:
- ----------------------------------------------------------------------------------------------------------------- APPLICABLE APPLICABLE MARGIN MARGIN FOR REVOLVING CREDIT FOR ALTERNATE BASE S&P RATING MOODY'S RATING THIRD RATING LIBOR RATE LOANS RATE LOANS - ----------------------------------------------------------------------------------------------------------------- No rating or less than No rating or less No rating or less BBB-/Baa3 equivalent 1.20% 0% than BBB- than Baa3 - ----------------------------------------------------------------------------------------------------------------- BBB- Baa3 BBB-/Baa3 equivalent 0.95% 0% - ----------------------------------------------------------------------------------------------------------------- BBB Baa2 BBB/Baa2 equivalent 0.80% 0% - ----------------------------------------------------------------------------------------------------------------- BBB+ Baa1 BBB+/Baa1 equivalent 0.725% 0% - ----------------------------------------------------------------------------------------------------------------- A- or higher A3 or higher A-/A3 equivalent 0.65% 0% or higher - -----------------------------------------------------------------------------------------------------------------
ARRANGERS. Chase Securities Inc. and FleetBoston Robertson Stephens Inc. ASSIGNMENT AND ASSUMPTION. See Section 18.1. BORROWER. As defined in the preamble hereto. -5- BUILDING. Individually and collectively, the buildings, structures and improvements now or hereafter located on the Real Estate. BUSINESS DAY. Any day on which banking institutions in New York, New York are open for the transaction of banking business and, in the case of LIBOR Rate Loans, also a day which is a LIBOR Business Day. CAPITALIZED LEASES. Leases under which the Borrower or any of its Subsidiaries or any Partially-Owned Entity is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with GAAP. CAPITALIZED UNENCUMBERED PROPERTY NOI. As of any date of determination with respect to an Unencumbered Property, an amount equal to the Revised Adjusted Unencumbered Property NOI for such Unencumbered Property for the most recent two (2) complete fiscal quarters MULTIPLIED BY two (2), with the product being DIVIDED BY 9.25%. CERCLA. See Section 6.18. CLOSING DATE. June 22, 2000, which is the date on which all of the conditions set forth in Section 10 have been satisfied. CODE. The Internal Revenue Code of 1986, as amended and in effect from time to time. COMMITMENT. With respect to each Lender, the amount set forth from time to time on SCHEDULE 1.2 hereto as the amount of such Lender's Commitment to make Revolving Credit Loans to, and to participate in the issuance, extension and renewal of Letters of Credit for the account of, the Borrower. COMMITMENT PERCENTAGE. With respect to each Lender, the percentage set forth on SCHEDULE 1.2 hereto as such Lender's percentage of the Total Commitment and any changes thereto from time to time. COMPETITIVE BID LOAN ACCOUNTS. See Section 2A.2(a). COMPETITIVE BID LOANS. A borrowing hereunder consisting of one or more loans made by any of the participating Lenders whose offer to make a Competitive Bid Loan as part of such borrowing has been accepted by the Borrower under the auction bidding procedure described in Section 2A hereof. -6- COMPETITIVE BID MARGIN. See Section 2A.5(b)(iv). COMPETITIVE BID NOTES. See Section 2A.2(b). COMPETITIVE BID QUOTE. An offer by a Lender to make a Competitive Bid Loan in accordance with Section 2A.5 hereof. COMPETITIVE BID QUOTE REQUEST. See Section 2A.3. COMPETITIVE BID RATE. See Section 2A.5(b)(v). COMPLETED REVOLVING CREDIT LOAN REQUEST. A loan request accompanied by all information required to be supplied under the applicable provisions of Section 2.5. CONSOLIDATED OR CONSOLIDATED. With reference to any term defined herein, shall mean that term as applied to the accounts of MCRC and its subsidiaries (including the Borrower and the Subsidiary Guarantors) or MCRLP and its subsidiaries, as the case may be, consolidated in accordance with GAAP. CONSOLIDATED ADJUSTED NET INCOME. For any period, an amount equal to the consolidated net income of MCRC, the Borrower and their respective Subsidiaries for such period, as determined in accordance with GAAP, before (a) gains (or losses) from the sale of real property or interests therein, debt restructurings and other extraordinary items, (b) minority interest of said Persons in other Persons and (c) income taxes; PLUS (w) interest expense, (x) depreciation and amortization, (y) the noncash portion of executive stock award rights and stock purchase rights included in written executive employment agreements, written employee plans or other written non-monetary employment compensation provisions, and (z) certain non-recurring cash payments made pursuant to certain written employment agreements, written employee plans or other written employment compensation provisions with key management individuals existing as of the date hereof and described on SCHEDULE EMPL hereto and their successors (as such agreements, plans and provisions may be amended from time to time) in an amount not to exceed $20,000,000 in the aggregate during any fiscal year; MINUS a recurring capital expense reserve in an amount equal to four percent (4%) of consolidated total revenue of MCRC, the Borrower and their respective Subsidiaries; all after adjustments to eliminate the effect of the straight-lining of rents; and all after adjustments for unconsolidated partnerships, joint ventures and other entities. CONSOLIDATED CAPITALIZED NOI. As of any date of determination, an amount equal to Revised Consolidated Adjusted Net Income for the most recent -7- two (2) completed fiscal quarters MULTIPLIED BY two (2), with the product being DIVIDED BY 9.25%. CONSOLIDATED FIXED CHARGES. For any fiscal period, the sum of Consolidated Total Debt Service PLUS the aggregate of all Distributions payable on the preferred stock of or other preferred beneficial interests in the Borrower, MCRC or any of their respective Subsidiaries. CONSOLIDATED SECURED INDEBTEDNESS. As of any date of determination, the aggregate principal amount of all Indebtedness of MCRC, the Borrower and their respective Subsidiaries outstanding at such date secured by a Lien on the Real Estate of such Person, without regard to Recourse. CONSOLIDATED TANGIBLE NET WORTH. As of any date of determination, the Consolidated Total Capitalization MINUS Consolidated Total Liabilities. CONSOLIDATED TOTAL CAPITALIZATION. As of any date of determination, with respect to MCRC, the Borrower and their respective Subsidiaries determined on a consolidated basis in accordance with GAAP; the sum (without double-counting) of (a) Consolidated Capitalized NOI PLUS (b) the value of Unrestricted Cash and Cash Equivalents (excluding until forfeited or otherwise entitled to be retained by the Borrower or its Subsidiaries, tenant security and other restricted deposits), PLUS (c) the aggregate costs incurred and paid to date by the Borrower and its Subsidiaries with respect to Construction-In-Process, PLUS (d) the value of Indebtedness of third parties to the Borrower and its Subsidiaries for borrowed money which is secured by mortgage liens in real estate (valued in accordance with GAAP at the book value of such Indebtedness and not then more than 90 days past due or declared by the Borrower or its Subsidiary to be past due), PLUS (e) the actual net cash investment by the Borrower and its Subsidiaries in any Opportunity Funds (wherein such Opportunity Fund (x) does not have any Indebtedness that is then more than 90 days past due or (y) has not been declared to be in default of any monetary or material monetizable obligations), PLUS (f) the book value of Unimproved Non-Income Producing Land PLUS (g) the value of Eligible Cash 1031 Proceeds; PROVIDED that the value of all permitted investments included within Consolidated Total Capitalization (other than Eligible Cash 1031 Proceeds) shall not exceed the limitations set forth in Section 9.8 hereof. CONSOLIDATED TOTAL DEBT SERVICE. For any fiscal period, without double-counting, (a) Consolidated Total Interest Expense for such period PLUS (b) the aggregate amount of scheduled principal payments of Indebtedness (excluding (x) optional prepayments and (y) balloon payments at maturity) required to be made during such period by MCRC, the Borrower and any of their respective Subsidiaries PLUS (c) the aggregate amount of capitalized interest -8- required in accordance with GAAP to be paid or accrued by MCRC, the Borrower and their respective Subsidiaries during such quarter. CONSOLIDATED TOTAL INTEREST EXPENSE. For any fiscal period, the aggregate amount of interest required in accordance with GAAP to be paid or accrued, without double-counting, by MCRC, the Borrower and their respective Subsidiaries during such period on all Indebtedness of MCRC, the Borrower and their respective Subsidiaries outstanding during all or any portion of such period, whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest expenses in respect of any Synthetic Lease. CONSOLIDATED TOTAL LIABILITIES. As of any date of determination, without double-counting, all liabilities of MCRC, the Borrower and their respective Subsidiaries, including guaranties of payment for any Opportunity Fund, determined on a consolidated basis in accordance with GAAP and classified as such on the consolidated balance sheet of MCRC, the Borrower and their respective Subsidiaries, and all Indebtedness of MCRC, the Borrower and their respective Subsidiaries, whether or not so classified (excluding, to the extent otherwise included in Consolidated Total Liabilities, restricted cash held on account of tenant security and other restricted deposits). CONSOLIDATED TOTAL UNSECURED DEBT SERVICE. For any fiscal period, Consolidated Total Debt Service with respect to Consolidated Unsecured Indebtedness only for such period. CONSOLIDATED UNSECURED INDEBTEDNESS. As of any date of determination, the aggregate principal amount of all Unsecured Indebtedness of MCRC, the Borrower and their respective Subsidiaries outstanding at such date, including without limitation the aggregate principal amount of all the Obligations under this Agreement as of such date, determined on a consolidated basis in accordance with GAAP, without regard to Recourse. CONSTRUCTION-IN-PROCESS. Any Real Estate for which the Borrower, any Guarantor, any of the Borrower's Subsidiaries or any Partially-Owned Entity is actively pursuing construction, renovation, or expansion of Buildings and, except for purposes of the covenant set forth in Section 9.8(c) hereof, for which construction is proceeding to completion without undue delay from Permit denial, construction delays or otherwise, all pursuant to such Person's ordinary course of business. Notwithstanding the foregoing, tenant improvements to previously constructed and/or leased Real Estate shall not be considered Construction-In-Process. -9- CONVERSION REQUEST. A notice given by the Borrower to the Administrative Agent of its election to convert or continue a Revolving Credit Loan in accordance with Section 2.6. CREDIT PARTIES. Collectively, the Borrower, the Operating Subsidiaries, MCRC, the Subsidiary Guarantors and any other wholly-owned Subsidiary for which the Borrower or MCRC has legal liability for such wholly-owned Subsidiary's obligations and liabilities, directly or indirectly. DEBT RATINGS. Long-term, unsecured, non-credit enhanced debt ratings. DEFAULT. As of the relevant time of determination, an event or occurrence which solely with the giving of notice or the lapse of time, or both, would constitute an Event of Default. DISQUALIFYING ENVIRONMENTAL EVENT. Any Release or threatened Release of Hazardous Substances, any violation of Environmental Laws or any other similar environmental event with respect to any Real Estate (x) that causes either the occupancy or rent of such Real Estate to be adversely affected by greater than ten percent (10%), as compared to what otherwise would have been the occupancy or rent of such Real Estate in the absence of such environmental event or (y) for which the remaining costs of remediation in order to bring such Real Estate into compliance with Environmental Laws exceeds the greater of $1,000,000 or 1.5% of the Capitalized Unencumbered Property NOI of the Real Estate that is the particular Unencumbered Property in issue ("REMEDIATION"); PROVIDED that (1) any Real Estate that qualifies under (x) and (y) which requires Remediation shall only be eligible to be an Unencumbered Property if such Remediation is ongoing in accordance with prudent environmental practice and (2) the number of Unencumbered Properties subject to Remediation shall not exceed the greater of (i) five (5) Buildings (and related land) or (ii) the number of Buildings (and related land) that are two and one-half percent (2.5%) of the total number of Buildings constituting all of the Buildings in Unencumbered Properties at any time. DISTRIBUTION. (i) with respect to the Borrower or its Subsidiaries, any distribution of cash or other cash equivalent, directly or indirectly, to the partners or other equity interest holders of the Borrower or its Subsidiaries in respect of such partnership or other equity interest or interests so characterizable; or any other distribution on or in respect of any partnership interests of the Borrower or its Subsidiaries; and -10- (ii) with respect to MCRC, the declaration or payment of any cash dividend on or in respect of any shares of any class of capital stock of MCRC. DOLLARS or $. Dollars in lawful currency of the United States of America. DRAWDOWN DATE. The date on which any Revolving Credit Loan is made or is to be made, and the date on which any Revolving Credit Loan is converted or continued in accordance with Section 2.6. DUFF & PHELPS. Duff & Phelps, and its successors. ELIGIBLE ASSIGNEE. Any of (a) a commercial bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having total assets in excess of $1,000,000,000; (b) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having total assets in excess of $1,000,000,000, calculated in accordance with GAAP; (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having total assets in excess of $1,000,000,000, PROVIDED that such bank is acting at all times with respect to this Agreement through a branch or agency located in the United States of America and (d) a financial institution reasonably acceptable to the Administrative Agent which is regularly engaged in making, purchasing or investing in loans and having total assets in excess of $300,000,000. ELIGIBLE CASH 1031 PROCEEDS. The cash proceeds held by a "qualified intermediary" from the sale of Real Estate, which proceeds are intended to be used by the qualified intermediary to acquire one or more "replacement properties" that are of "like-kind" to such Real Estate in an exchange that qualifies as a tax-free exchange under Section 1031 of the Code, and no portion of which proceeds MCRC, the Borrower or any Subsidiary has the right to receive, pledge, borrow or otherwise obtain the benefits of until such time as provided under the applicable "exchange agreement" (as such terms in quotations are defined in Treasury Regulations Section 1.1031(k)-1(g)(4)) (the "Regulations")) or until such exchange is terminated. Upon the cash proceeds no longer being held by the qualified intermediary pursuant to the Regulations or otherwise qualifying under the Regulations for like-kind exchange treatment, such proceeds shall cease being Eligible Cash 1031 Proceeds. ELIGIBLE GROUND LEASE. A ground lease that (a) has a minimum remaining term of thirty (30) years, including tenant controlled options, as of any date of determination, (b) has customary notice rights, default cure rights, bankruptcy new lease rights and other customary provisions for the benefit of a leasehold -11- mortgagee or has equivalent protection for a leasehold permanent mortgagee by a subordination to such leasehold permanent mortgagee of the landlord's fee interest, and (c) is otherwise acceptable for Without Recourse leasehold mortgage financing (with the exception permitted under clause (b) above) under customary prudent lending requirements. The Eligible Ground Leases as of the date of this Agreement are listed on SCHEDULE EG. EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of Section 3(3) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, other than a Multiemployer Plan. ENVIRONMENTAL LAWS. See Section 6.18(a). ERISA. The Employee Retirement Income Security Act of 1974, as amended and in effect from time to time. ERISA AFFILIATE. Any Person which is treated as a single employer with the Borrower under Section 414 of the Code. ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived. EUROCURRENCY RESERVE RATE. For any day with respect to a LIBOR Rate Loan, the weighted average of the rates (expressed as a decimal) at which all of the Lenders subject thereto would be required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulations relating to such reserve requirements) against "Eurocurrency Liabilities" (as that term is used in Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Rate. EVENT OF DEFAULT. See Section 12.1. FACILITY FEE. See Section 2.4(f). FEE LETTER. See Section 2.4(d). FINANCIAL STATEMENT DATE. With respect to the Borrower, MCRC and their respective subsidiaries, December 31, 1999. FITCH. Fitch IBCA, Inc., and its successors. -12- FRONTING BANK. With respect to any letters of credit issued under this Agreement on or after the date hereof, Chase, or with the consent of the Administrative Agent and the Borrower, another Lender. FUNDS FROM OPERATIONS. As defined in accordance with resolutions adopted by the Board of Governors of the National Association of Real Estate Investment Trusts as in effect from time to time, but in any event excluding one-time or non-recurring charges. GAAP. Generally accepted accounting principles in effect from time to time in the United States, consistently applied, PROVIDED that a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in position to deliver an unqualified opinion as to financial statements in which such principles have been properly applied. GUARANTEED PENSION PLAN. Any employee pension benefit plan within the meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or any Guarantor, as the case may be, or any ERISA Affiliate of any of them the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan. GUARANTIES. Collectively, (i) the MCRC Guaranty, (ii) the Subsidiary Guaranties, (iii) any other guaranty of the Obligations made by an Affiliate of the Borrower in favor of the Administrative Agent and the Lenders, and (iv) the ratification for purposes of this Agreement of all "Guaranties" under the Original Agreement. GUARANTORS. Collectively, MCRC, the Subsidiary Guarantors and any other Affiliate of the Borrower executing a Guaranty; PROVIDED, HOWEVER, when the context so requires, Guarantor shall refer to MCRC or such Affiliate, as appropriate. Any Guarantor that is the owner or ground lessee of an Unencumbered Property shall be a wholly-owned Subsidiary. PROVIDED FURTHER, HOWEVER, from and after the release of the Guaranty of any Subsidiary Guarantor pursuant to Section 5 below, such Subsidiary Guarantor shall no longer be considered a "Guarantor" for purposes of this Agreement. HARBORSIDE ASSUMED DEBT. (i) The Indebtedness to be owed by one or more of MCRLP and certain of its Subsidiaries to Northwestern Mutual Insurance Company and Principal Mutual Life Insurance Company in the original principal amount of $110,000,000, and (ii) the Indebtedness to be owed by one or more of MCRC, MCRLP and certain of its Subsidiaries to US West Pension Trust, Investment Management Company in the original principal amount of $42,087,513. -13- HARBORSIDE DEBT. The Indebtedness incurred by MCRLP pursuant to the Revolving Credit Facility Agreement dated as of November 1, 1996, among MCRLP, the several lenders from time to time parties thereto, and PSC, as administrative agent for such lenders, as the same may be amended, supplemented or otherwise modified from time to time. HARBORSIDE PLEDGE AGREEMENTS. Collectively, (i) the pledge agreement between MCRC and PSC, as the administrative agent, and (ii) the pledge agreement between MCRLP and PSC, as the administrative agent, in each case (a) securing the Harborside Debt in connection with the Harborside Transaction, and (b) as the same may be amended, supplemented or otherwise modified from time to time. HARBORSIDE PLEDGED INTERESTS. Collectively, (i) the 99% limited partnership interest owned by MCRLP in each of Cali Harborside (Fee) Associates L.P., a New Jersey limited partnership, Cal-Harbor II & II Urban Renewal Associates L.P., a New Jersey limited partnership, Cal-Harbor IV Urban Renewal Associates L.P., a New Jersey limited partnership, Cal-Harbor V Urban Renewal Associates L.P., a New Jersey limited partnership, Cal-Harbor VI Urban Renewal Associates L.P., a New Jersey limited partnership, Cal-Harbor So. Pier Urban Renewal Associates L.P., a New Jersey limited partnership, Cal-Harbor No. Pier Urban Renewal Associates L.P., a New Jersey limited partnership, and Cal-Harbor VII Urban Renewal Associates L.P., a New Jersey limited partnership; and (ii) 100% of the issued and outstanding capital stock owned by MCRC of each of Cali Sub X, Inc., a Delaware corporation, and Cali Sub XI, Inc., a Delaware corporation, in each case pledged to PSC, as the administrative agent, pursuant to the Harborside Pledge Agreements. HARBORSIDE TRANSACTION. (i) The acquisition by MCRLP and certain of its Subsidiaries of the real property, buildings and other improvements thereon commonly known as the Harborside Financial Center, Jersey City, New Jersey, (ii) the incurrence of the Harborside Debt, and (iii) the incurrence of the Harborside Assumed Debt. HAZARDOUS SUBSTANCES. See Section 6.18(b). INDEBTEDNESS. All obligations, contingent and otherwise, that in accordance with GAAP should be classified upon the obligor's balance sheet as liabilities, including, without limitation, (a) all obligations for borrowed money and similar monetary obligations, whether direct or indirect; (b) all liabilities secured by any mortgage, pledge, negative pledge, security interest, lien, charge, or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (c) all -14- obligations under any Capitalized Lease (determined in accordance with Section 9.9) or any Synthetic Lease; (d) all guarantees for borrowed money, endorsements and other contingent obligations, whether direct or indirect, (without double counting and in accordance with Section 9.0) in respect of indebtedness or obligations of others, including any obligation to supply funds (including partnership obligations and capital requirements) to or in any manner to invest in, directly or indirectly, the debtor, to purchase indebtedness, or to assure the owner of indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit; and (e) to the extent not otherwise included, obligations of the Borrower under so-called forward equity purchase contracts to the extent that such obligations are not payable solely in equity interests in MCRC. INTEREST PAYMENT DATE. (i) As to any Alternate Base Rate Loan, the last day of the calendar month which includes the Drawdown Date thereof; and (ii) as to any Revolving Credit LIBOR Rate Loan in respect of which the Interest Period is (A) three (3) months or less, the last day of such Interest Period and (B) more than three (3) months, the date that is three (3) months from the first day of such Interest Period, each date that is three (3) months thereafter, and, in addition, the last day of such Interest Period. INTEREST PERIOD. With respect to each Loan, (a) initially, the period commencing on the Drawdown Date of such Loan and ending on the last day of one of the following periods (as selected by the Borrower in a Completed Revolving Credit Loan Request or as otherwise in accordance with the terms of this Agreement): (i) for any Alternate Base Rate Loan, the last day of the calendar month, (ii) for any Revolving Credit LIBOR Rate Loan, 1, 2, 3, 6, 9 or 12 months (PROVIDED that (x) the Interest Period for Revolving Credit LIBOR Rate Loans may be shorter than one (1) month in order to consolidate two (2) or more Revolving Credit LIBOR Rate Loans and (y) the Interest Period for all Revolving Credit LIBOR Rate Loans shall be one (1) month until the earlier of ninety (90) days after the Closing Date or the date on which the Arrangers complete the syndication of the Total Commitment, as evidenced by written notice from the Arrangers to the Borrower as to such completion), (iii) for any Absolute Competitive Bid Loan, a market period not to extend beyond the Maturity Date, and (iv) for any LIBOR Competitive Bid Loan, 1, 2, 3, 6, 9 or 12 months; and (b) thereafter, each period commencing at the end of the last day of the immediately preceding Interest Period applicable to such Loan and ending on the last day of the applicable period set forth in (a) above as selected by the Borrower in a Conversion Request or as otherwise in accordance with this Agreement; PROVIDED that all of the foregoing provisions relating to Interest Periods are subject to the following: -15- (A) if any Interest Period with respect to a Alternate Base Rate Loan would end on a day that is not a Business Day, that Interest Period shall end on the next succeeding Business Day; (B) if any Interest Period with respect to a LIBOR Rate Loan would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (C) if the Borrower shall fail to give a Conversion Request as provided in Section 2.6, the Borrower shall be deemed to have requested a continuation of the affected Revolving Credit LIBOR Rate Loan as a Revolving Credit LIBOR Rate Loan with an Interest Period of one (1) month on the last day of the then current Interest Period with respect thereto, other than during the continuance of a Default or an Event of Default; (D) any Interest Period relating to any LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to subparagraph (E) below, end on the last Business Day of a calendar month; and (E) any Interest Period that would otherwise extend beyond the Maturity Date shall end on the Maturity Date. INVESTMENT GRADE CREDIT RATING. A long-term unsecured, non-credit enhanced debt rating (a) from Moody's of Baa3 or higher, (b) from S&P of BBB- or higher, or (c) from a Third Rating Agency of the Baa3/BBB- equivalent or higher. INVESTMENTS. All expenditures made and all liabilities incurred (contingently or otherwise, but without double-counting): (i) for the acquisition of stock, partnership or other equity interests or Indebtedness of, or for loans, advances, capital contributions or transfers of property to, any Person; and (ii) for the acquisition of any other obligations of any Person. In determining the aggregate amount of Investments outstanding at any particular time: (a) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (b) there shall be deducted in respect of each such Investment any amount received as a return of capital (but only by repurchase, redemption, retirement, -16- repayment, liquidating dividend or liquidating distribution); (c) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (a) may be deducted when paid; and (d) there shall not be deducted from the aggregate amount of Investments any decrease in the value thereof. LEASES. Leases, licenses and agreements, whether written or oral, relating to the use or occupation of space in or on the Buildings or on the Real Estate by persons other than the Borrower, its Subsidiaries or any Partially-Owned Entity, PROVIDED that "Leases" shall include any such lease, license or other such agreement with a Partially-Owned Entity if such lease, license or other agreement is at a market level rent and related tenant charges, which are required to be paid monthly or, in the case of non-rent tenant charges, when usually and customarily required to be paid by other tenants of the same Real Estate (and at least annually). LENDERS. Collectively, the Administrative Agent, any other lenders which may provide additional commitments and become parties to this Agreement, and any other Person who becomes an assignee of any rights of a Lender pursuant to Section 18 or a Person who acquires all or substantially all of the stock or assets of a Lender. LETTER OF CREDIT. See Section 3.1.1. LETTER OF CREDIT APPLICATION. See Section 3.1.1. LETTER OF CREDIT FEE. See Section 3.6. LETTER OF CREDIT PARTICIPATION. See Section 3.1.4. LIBOR BREAKAGE COSTS. With respect to any LIBOR Rate Loan to be prepaid or not drawn after elected, or converted prior to the last day of the applicable Interest Period, a prepayment "breakage" fee in an amount determined by the Administrative Agent in the following manner: (i) First, the Administrative Agent shall determine the amount by which (a) the total amount of interest which would have otherwise accrued hereunder on each installment of principal prepaid or not so drawn, during the period beginning on the date of such prepayment or failure to draw and ending on the last day of the applicable LIBOR Rate Loan Interest Period (the "REEMPLOYMENT PERIOD"), exceeds (b) the total amount of interest which would accrue, during the Reemployment Period, on any readily marketable bond or other obligation of the United States of -17- America designated by the Administrative Agent in its sole discretion at or about the time of such payment, such bond or other obligation of the United States of America to be in an amount equal (as nearly as may be) to the amount of principal so paid or not drawn after elected and to have maturity at the end of the Reemployment Period, and the interest to accrue thereon to take account of amortization of any discount from par or accretion of premium above par at which the same is selling at the time of designation. Each such amount is hereinafter referred to as an "INSTALLMENT AMOUNT". (ii) Second, each Installment Amount shall be treated as payable on the last day of the LIBOR Rate Loan Interest Period which would have been applicable had such principal installment not been prepaid or not borrowed. (iii) Third, the amount to be paid on each such breakage date shall be the present value of the Installment Amount determined by discounting the amount thereof from the date on which such Installment Amount is to be treated as payable, at the same yield to maturity as that payable upon the bond or other obligation of the United States of America designated as aforesaid by the Administrative Agent. If by reason of an Event of Default the Administrative Agent elects to declare a LIBOR Rate Loan to be immediately due and payable, then any breakage fee with respect to such LIBOR Rate Loan shall become due and payable in the same manner as though the Borrower had exercised such right of prepayment. LIBOR BUSINESS DAY. Any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London. LIBOR COMPETITIVE BID LOAN(S). See Section 2A.3(a). LIBOR RATE. For any Interest Period with respect to a LIBOR Rate Loan, the rate of interest per annum (rounded upward, if necessary, to the nearest 1/16 of one percent) as determined on the basis of the offered rates for deposits in Dollars for a period of time comparable to such Interest Period which appears on the Telerate page 3750 (or such other page as may replace that page on the Telerate service) as of 11:00 a.m. London time on the date that is two (2) LIBOR Business Days prior to the beginning of such Interest Period; PROVIDED, HOWEVER, if the rate described above does not appear on the Telerate System on any applicable interest determination date, the LIBOR Rate shall be the rate (rounded upwards as described above, if necessary) for deposits in Dollars for a period of time substantially equal to the Interest Period which appears on the -18- Reuters Page "LIBO" (or such other page as may replace the LIBO Page on that service for the purpose of displaying such rates), as of 11:00 a.m. London time on the date that is two (2) LIBOR Business Days prior to the beginning of such Interest Period. If both the Telerate and Reuters systems are unavailable, then the rate for that date will be determined on the basis of the offered rates for deposits in Dollars for a period of time comparable to the Interest Period which are offered by four major banks in the London interbank market at approximately 11:00 a.m. London time on the date that is two (2) LIBOR Business Days prior to the beginning of such Interest Period. The principal London office of each of the four major London banks will be requested to provide a quotation of its Dollar deposit offered rate. If at least two such quotations are provided, the rate for that date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in Dollars to leading European banks for a period of time comparable to the Interest Period by major banks in New York City at approximately 11:00 a.m. New York City time on the date that is two (2) LIBOR Business Days prior to the beginning of such Interest Period. In the event that the Administrative Agent is unable to obtain any quotation as provided above, it will be deemed that the LIBOR Rate cannot be determined. In the event that the Board of Governors of the Federal Reserve System shall impose a reserve requirement with respect to LIBOR deposits of the Lenders, then for any period during which such reserve requirement shall apply, the LIBOR Rate shall be equal to the amount determined above divided by an amount equal to one (1.00) minus the Eurocurrency Reserve Rate. LIBOR RATE LOAN(S). Loans bearing interest calculated by reference to the LIBOR Rate. LIEN. See Section 8.2. LOAN DOCUMENTS. Collectively, this Agreement, the Letter of Credit Applications, the Letters of Credit, the Notes, the Guaranties, and any and all other agreements, instruments or documents now or hereafter identified thereon as a "Loan Document" under this Agreement, and all schedules, exhibits and annexes hereto or thereto, as the same may from time to time be amended and in effect. LOANS. The Revolving Credit Loans and the Competitive Bid Loans. MAJORITY LENDERS. As of any date, the Lenders whose aggregate Commitments constitute at least fifty-one percent (51%) of the Total -19- Commitment, but in no event fewer than two Lenders if there are three or more Lenders; PROVIDED that if the Total Commitment has been terminated by the Lenders and no Revolving Credit Loans or Letters of Credit are outstanding, the Majority Lenders shall be the Lenders holding fifty-one percent (51%) of the outstanding principal amount of Competitive Bid Loans on such date. MATERIAL ADVERSE EFFECT. Any event or occurrence of whatever nature which: (a) has a material adverse effect on the business, properties, operations or financial condition of (i) the Borrower or (ii) MCRC or (iii) the Borrower, the Guarantors and their respective Subsidiaries, taken as a whole, (b) has a material adverse effect on the ability of the Borrower or any Guarantor to perform its payment and other material obligations under any of the Loan Documents, or (c) causes a material impairment of the validity or enforceability of any of the Loan Documents or any material impairment of the rights, remedies and benefits available to the Administrative Agent and the Lenders under any of the Loan Documents. MATURITY DATE. June 22, 2003, or such earlier date on which the Loans shall become due and payable pursuant to the terms thereof. The Borrower may, by notice to the Administrative Agent given at least one hundred twenty (120) days prior to the Maturity Date, extend the Maturity Date for one (1) year, PROVIDED that no Default or Event of Default shall have occurred and be continuing and that the Borrower pay an aggregate extension fee equal to 0.25% of the then existing Total Commitment. MAXIMUM DRAWING AMOUNT. The maximum aggregate amount that the beneficiaries may at any time draw under outstanding Letters of Credit, as such maximum aggregate amount may be reduced from time to time pursuant to the terms of the Letters of Credit. MCRC GUARANTY. The Guaranty reaffirmed as of the date hereof made by MCRC in favor of the Administrative Agent and the Lenders pursuant to which MCRC guarantees to the Administrative Agent and the Lenders the unconditional payment and performance of the Obligations. MOODY'S. Moody's Investors Service, Inc., and its successors. MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of Section 3(37) of ERISA maintained or contributed to by the Borrower or any Guarantor as the case may be or any ERISA Affiliate. NON-MATERIAL BREACH. A (i) breach of a representation or warranty or covenant contained in Section 6 or Section 7 (other than Section 7.1), (ii) a breach of any other representation or warranty or covenant as to which such term "Non-Material -20- Breach" is specifically applied, or (iii) a Permitted Event; but only to the extent any such breach under (i) or (ii) or an event under (iii) (other than Section 7.1), neither (A) singularly or in conjunction with any other existing breaches or (iii) events, materially adversely affect the business, properties or financial condition of (x) MCRC; (y) MCRLP; or (z) the Borrower, the Guarantors and their Subsidiaries, taken as whole nor (B) singularly or in conjunction with any other existing breaches or (iii) events, materially adversely affect the ability of (x) MCRC; (y) MCRLP; or (z) the Borrower, the Guarantors and their Subsidiaries, taken as a whole, to fulfill the obligations to the Lenders under the Loans (including, without limitation, the repayment of all amounts outstanding under the Loans, together with interest and charges thereon, when first due) nor (C) has been identified in this Agreement specifically as a matter that does not constitute a Non-Material Breach. During the continuance of any Permitted Event, the Real Estate (including Unencumbered Property) and other assets of any affected Guarantor shall be excluded from asset (but not liability) and income (but not loss) calculation under Section 9 which exclusions shall be evidenced in all compliance certificates provided as required by this Agreement. A breach or event which may constitute a Non-Material Breach shall be identified when first known to the Borrower, any Guarantor or Subsidiary on the next compliance certificate required to be delivered to the Lenders pursuant to the terms of this Agreement; PROVIDED that the identification of such breach or event as a Non-Material Breach by the Borrower, any Guarantor or any Subsidiary shall not be binding on the Lenders. NOTES. The Revolving Credit Notes and the Competitive Bid Notes. OBLIGATIONS. All indebtedness, obligations and liabilities of the Borrower and its Subsidiaries to any of the Lenders and the Administrative Agent, individually or collectively, under this Agreement or any of the other Loan Documents or in respect of any of the Loans or the Notes or Reimbursement Obligations incurred or the Letter of Credit Applications or the Letters of Credit or other instruments at any time evidencing any thereof, whether existing on the date of this Agreement or arising or incurred hereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise. OPERATING SUBSIDIARIES. Those Subsidiaries of the Borrower that, at any time of reference, provide management, construction, design or other services (excluding any such Subsidiary which may provide any such services which are only incidental to that Subsidiary's ownership of one or more Real Estate), and any successors or assigns of their respective businesses and/or assets which are Subsidiaries of the Borrower or the Guarantors. -21- OPPORTUNITY FUND. An investment made by the Borrower, any Guarantor or any Subsidiary which has been or is designated at the time of investment by the Borrower from time to time as an "Opportunity Fund" (including an investment company); PROVIDED that (a) such investment would not jeopardize MCRC's status as a REIT, (b) subject to the next sentence, such investment is Without Recourse to the Person making such investment and the liability of the Person making such investment is limited solely (including in any insolvency proceeding affecting such Person) to the amount so invested, (c) if the Person making such investment exercises any management or control responsibilities, such management and/or control shall be exercised through a so-called "bankruptcy-remote entity" and (d) such investment complies with the requirements of Section 9.8(b) hereof. Notwithstanding anything contained in the foregoing definition to the contrary, an investment may still be an Opportunity Fund if it provides for (i) guaranties of completion, (ii) guaranties of payment (which shall be included in Consolidated Total Liabilities), (iii) environmental guaranties and indemnities, and/or (iv) other typical recourse carve-outs from otherwise long-term, non-recourse debt, such as for fraud, waste, misappropriation of proceeds and material misrepresentations. ORIGINAL AGREEMENT. As defined in the recitals. PARTIALLY-OWNED ENTITY(IES). Any of the partnerships, joint ventures and other entities owning real estate assets (other than an Opportunity Fund) in which MCRLP and/or MCRC collectively, directly or indirectly through its full or partial ownership of another entity, own less than 100% of the equity interests, whether or not such entity is required in accordance with GAAP to be consolidated with MCRLP for financial reporting purposes. PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of ERISA and any successor entity or entities having similar responsibilities. PERMITS. All governmental permits, licenses, and approvals necessary for the lawful operation and maintenance of the Real Estate. PERMITTED EVENT. The exclusion of a Guarantor (other than MCRC) or any other Subsidiary or Operating Subsidiary as a Credit Party by the Borrower solely for the purposes of the proceedings of a bankruptcy filed by or against such Person and involving for all creditors of such bankruptcy a total Indebtedness which is in an amount permitted within Section 12.1(f)(i) cumulatively with any other then pending Permitted Event or other matter affecting Section 12.1(f)(i). For purposes of a Permitted Event, the term "bankruptcy" shall include all actions or proceedings described in Section 12.1(g) or Section 12.1(h). The Borrower may exercise the provisions of Section 12.1 (last paragraph) for Permitted -22- Event(s) provided such exercise shall not allow for a breach of the limitation on Permitted Events relating to Section 12.1(f)(i) or otherwise cause a Default or Event of Default. PERMITTED LIENS. Liens, security interests and other encumbrances permitted by Section 8.2. PERSON. Any individual, corporation, partnership, trust, unincorporated association, business, or other legal entity, and any government (or any governmental agency or political subdivision thereof). PROJECT COSTS. With respect to Construction-In-Process, the actual project cost of such Construction-In-Process shown on schedules submitted to the Administrative Agent from time to time; PROVIDED that for Construction-In-Process owned by any Partially-Owned Entity, the Project Cost of such Construction-In-Process shall be the Borrower's or its subsidiaries' pro-rata share of the actual project cost of such Construction-In-Process (based on the greater of (x) the Borrower's or its subsidiaries' percentage equity interest in such Partially-Owned Entity or (y) the Borrower's or its subsidiaries' obligation to provide, or liability for providing, funds to such Partially-Owned Entity). PSC. Prudential Securities Credit Corporation, and its successors and assigns. PUBLIC DEBT. Unsecured Indebtedness, not subordinated to the Obligations (or to the holders thereof), issued by the Borrower and which is either (a) in offerings registered under the Securities Act of 1933, as amended, or in transactions exempt from registration pursuant to rule 144A or Regulation B thereunder or listed on non-U.S. securities exchanges or (b) pursuant to the Indenture dated as of March 16, 1999 by and between the Borrower, MCRC and Wilmington Trust Company, a Delaware banking corporation as trustee (the "Trustee"), as supplemented by Supplemental Indenture No. 1 dated as of the same date between the Borrower and the Trustee, and by Supplemental Indenture No. 2 dated as of August 2, 1999 between the Borrower and the Trustee, and as the Indenture may be further supplemented and/or amended from time to time. RCRA. See Section 6.18. REAL ESTATE. The fixed and tangible properties consisting of land, buildings and/or other improvements owned or ground-leased as a lessee by the Borrower, by any Guarantor or by any other entity in which the Borrower is the holder of an equity interest at the relevant time of reference thereto, including, without limitation, (i) the Unencumbered Properties at such time of reference, -23- and (ii) the real estate assets owned or ground-leased as a lessee by each of the Partially-Owned Entities at such time of reference. RECORD. The grid attached to any Note, or the continuation of such grid, or any other similar record, including computer records, maintained by any Lender with respect to any Loan. RECOURSE. With reference to any obligation or liability, any liability or obligation that is not Without Recourse to the obligor thereunder, directly or indirectly. For purposes hereof, a Person shall not be deemed to be "indirectly" liable for the liabilities or obligations of an obligor solely by reason of the fact that such Person has an ownership interest in such obligor, PROVIDED that such Person is not otherwise legally liable, directly or indirectly, for such obligor's liabilities or obligations (e.g., by reason of a guaranty or contribution obligation, by operation of law or by reason of such Person's being a general partner of such obligor). REIMBURSEMENT OBLIGATION. The Borrower's obligation to reimburse the Lenders and the Administrative Agent and the Fronting Bank on account of any drawing under any Letter of Credit as provided in Section 3.2. Notwithstanding the foregoing, unless the Borrower shall notify the Administrative Agent of its intent to repay the Reimbursement Obligation on the date of the related drawing under any Letter of Credit as provided in Section 3.2, such Reimbursement Obligation shall simultaneously with such drawing be converted to and become a Alternate Base Rate Loan as set forth in Section 3.3. REIT. A "real estate investment trust", as such term is defined in Section 856 of the Code. RELEASE. See Section 6.18(c)(iii). REQUIRED LENDERS. As of any date, the Lenders whose aggregate Commitments constitute at least sixty-six and two-thirds percent (66-2/3%) of the Total Commitment; PROVIDED that if the Total Commitment has been terminated by the Lenders and no Revolving Credit Loans or Letters of Credit are outstanding, the Required Lenders shall be the Lenders holding sixty-six and two-thirds percent (66-2/3%) of the outstanding principal amount of the Competitive Bid Loans on such date. REVISED ADJUSTED UNENCUMBERED PROPERTY NOI. With respect to any fiscal period for any Unencumbered Property, Adjusted Unencumbered Property NOI for such Unencumbered Property for such period; MINUS (a) interest income relating to such Unencumbered Property and (b) a management fee reserve in an amount equal to three percent (3%) of total revenue (after deduction of -24- interest income of such Unencumbered Property for such period); PLUS (i) actual general and administrative expenses to the extent included in Adjusted Unencumbered Property NOI relating to such Unencumbered Property for such period and (ii) actual management fees relating to such Unencumbered Property for such period. REVISED CONSOLIDATED ADJUSTED NET INCOME. For any period, Consolidated Adjusted Net Income for such period; MINUS (a) interest income and (b) a management fee reserve in an amount equal to three percent (3%) of consolidated total revenue (after deduction of interest income of MCRC, the Borrower and their respective Subsidiaries for such period), PLUS (i) actual general and administrative expenses for such period to the extent included in Consolidated Adjusted Net Income and (ii) actual management fees relating to Real Estate for such period. REVOLVING CREDIT LIBOR RATE LOAN. A Revolving Credit Loan which is a LIBOR Rate Loan. REVOLVING CREDIT LOAN(S). Each and every revolving credit loan made or to be made by the Lenders to the Borrower pursuant to Section 2. REVOLVING CREDIT NOTES. Collectively, the separate promissory notes of the Borrower in favor of each Lender in substantially the form of EXHIBIT A hereto, in the aggregate principal amount of the Total Commitment, dated as of the date hereof or as of such later date as any Person becomes a Lender under this Agreement, and completed with appropriate insertions, as each of such notes may be amended and/or restated from time to time. REVOLVING CREDIT NOTE RECORD. A Record with respect to the Revolving Credit Notes. S&P. Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., and its successors. SARA. See Section 6.18. SEC FILINGS. Collectively, (a) the MCRC's Annual Report on Forms 10-K and 10-K/A for the year ended December 31, 1999, filed with the Securities and Exchange Commission (the "SEC") pursuant to the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and (b) MCRC's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000 filed with the SEC pursuant to the Exchange Act. -25- SUBSIDIARY. Any entity required to be consolidated with its direct or indirect parent in accordance with GAAP. SUBSIDIARY. Any corporation, association, partnership, trust, or other business entity of which the designated parent shall at any time own directly, or indirectly through a Subsidiary or Subsidiaries, at least a majority (by number of votes or controlling interests) of the outstanding voting interests or at least a majority of the economic interests (including, in any case, the Operating Subsidiaries and any entity required to be consolidated with its designated parent in accordance with GAAP). SUBSIDIARY GUARANTOR. Any Guarantor other than MCRC. The Subsidiary Guarantors on the Closing Date are listed on SCHEDULE SG hereto. SUBSIDIARY GUARANTY. Each Guaranty made from time to time by a Subsidiary Guarantor in favor of the Administrative Agent and the Lenders in substantially the form of EXHIBIT B hereto, pursuant to which such Subsidiary Guarantor guarantees the unconditional payment and performance of the Obligations, as the same shall have been reaffirmed in accordance with Section 10.10 hereof for Subsidiary Guaranties executed prior to the date hereof. SUBSIDIARY GUARANTY PROCEEDS. See Section 5.2. SYNDICATION AGENT. Fleet National Bank. SYNTHETIC LEASE. Any lease which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes. THIRD DEBT RATING. MCRLP's long term unsecured debt rating from a Third Rating Agency. THIRD RATING AGENCY. Duff & Phelps, Fitch's or another nationally-recognized rating agency (other than S&P or Moody's) reasonably satisfactory to the Administrative Agent. TITLE POLICIES. For each Unencumbered Property, an ALTA standard form title policy (or, if such form is not available, an equivalent form of title insurance policy) of a reasonably current date or endorsed down to a reasonably current date issued by a nationally-recognized title insurance company, insuring that the Borrower or a Subsidiary Guarantor holds good and clear marketable fee simple or leasehold title to such Unencumbered Property, subject only to Permitted Liens. -26- TOTAL COMMITMENT. As of any date, the sum of the then-current Commitments of the Lenders, which shall not at any time exceed $800,000,000, except as such amount may be increased pursuant to Section 2.2 hereof or reduced pursuant to Section 2.10 hereof. TYPE. As to any Revolving Credit Loan, its nature as a Alternate Base Rate Loan or a LIBOR Rate Loan. UNANIMOUS LENDER APPROVAL. The written consent of each Lender that is a party to this Agreement at the time of reference. UNENCUMBERED PROPERTY. Any Real Estate located in the United States that on any date of determination: (a) is not subject to any Liens (including any such Lien imposed by the organizational documents of the owner of such asset, but excluding Permitted Liens), (b) is not the subject of a Disqualifying Environmental Event, (c) has been improved with a Building or Buildings which (1) have been issued a certificate of occupancy (where available) or is otherwise lawfully occupied for its intended use, and (2) are fully operational, including in each case, an Unencumbered Property that is being renovated and such renovation is proceeding to completion without undue delay from Permit denial, construction delays or otherwise, (d) is not in violation of the covenant set forth in Section 7.9 hereof, and (e) is wholly owned or ground-leased under an Eligible Ground Lease by the Borrower or a Guarantor that is a wholly-owned Subsidiary and has not been the subject of an event or occurrence that has had a Material Adverse Effect on such Guarantor UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, or any successor version thereof adopted by the Administrative Agent in the ordinary course of its business as a letter of credit issuer and in effect at the time of issuance of such Letter of Credit. UNIMPROVED NON-INCOME PRODUCING LAND. Any Real Estate consisting of raw land which is unimproved by Buildings and does not generate any rental income or other income for MCRC or the Borrower or any of their respective Subsidiaries. UNRESTRICTED CASH AND CASH EQUIVALENTS. As of any date of determination, the sum of (a) the aggregate amount of unrestricted cash then held by the Borrower or any of its Subsidiaries and (b) the aggregate amount of unrestricted cash equivalents (valued at fair market value) then held by the Borrower or any of its Subsidiaries. As used in this definition, (i) "unrestricted" means the specified asset is not subject to any Liens in favor of any Person and -27- (ii) "cash equivalents" includes overnight deposits and also means that such asset has a liquid, par value in cash and is convertible to cash within 3 months. Notwithstanding anything contained herein to the contrary, the term Unrestricted Cash and Cash Equivalents shall not include the Commitments of the Lenders to make Loans under this Agreement or any other commitments from which the access to such cash or cash equivalents would create Indebtedness. UNSECURED INDEBTEDNESS. All Indebtedness of any Person that is not secured by a Lien on any asset of such Person. UPFRONT FEE. See Section 2.4(e). WHOLLY-OWNED SUBSIDIARY. Any Subsidiary (a) of which MCRLP and/or MCRC shall at any time own directly or indirectly through a Subsidiary or Subsidiaries at least a controlling majority (by number of votes or controlling interests) of the outstanding voting interests and one hundred percent (100%) of the economic interests, of which at least ninety-five percent (95%) of the economic interests shall be owned by MCRLP and (b) of which MCRC directly or indirectly (through wholly-owned Subsidiaries) acts as sole general partner or managing member; PROVIDED that the Subsidiary Guarantors shall be wholly-owned Subsidiaries. "WITHOUT RECOURSE" or "WITHOUT RECOURSE". With reference to any obligation or liability, any obligation or liability for which the obligor thereunder is not liable or obligated other than as to its interest in a designated Real Estate or other specifically identified asset only, subject to such limited exceptions to the non-recourse nature of such obligation or liability, such as fraud, misappropriation, misapplication and environmental indemnities, as are usual and customary in like transactions involving institutional lenders at the time of the incurrence of such obligation or liability. Section 1.2 RULES OF INTERPRETATION. (i) A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms (and so amended, modified or supplemented in accordance with this Agreement) or the terms of this Agreement. (ii) The singular includes the plural and the plural includes the singular. -28- (iii) A reference to any law includes any amendment or modification to such law. (iv) A reference to any Person includes its permitted successors and permitted assigns. (v) Accounting terms (a) not otherwise defined herein have the meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer and (b) shall not provide for double counting of items included within such term. (vi) The words "include", "includes" and "including" are not limiting. (vii) All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in New York, have the meanings assigned to them therein. (viii) Reference to a particular "Section" refers to that Section of this Agreement unless otherwise indicated. (ix) The words "herein", "hereof", "hereunder" and words of like import shall refer to this Agreement as a whole and not to any particular Section or subdivision of this Agreement. (x) Any provision granting any right to the Borrower or any Guarantor during the continuance of (a) an Event of Default shall not modify, limit, waive or estopp the rights of the Lenders during the continuance of such Event of Default, including the rights of the Lenders to accelerate the Loans under Section 12.1 and the rights of the Lenders under Sections 12.2 or 12.3, or (b) a Default, shall not extend the time for curing same or modify any otherwise applicable notice regarding same. (xi) As applied to Real Estate, the word "owns" includes the ownership of the fee interest in such Real Estate or the tenant's interest in a ground lease of such Real Estate. Section 2. THE REVOLVING CREDIT FACILITY. Section 2.1. COMMITMENT TO LEND. Subject to the provisions of Section 2.5 and the other terms and conditions set forth in this Agreement, each of the Lenders severally agrees to lend to the Borrower and the Borrower may borrow, repay, and reborrow from each Lender from time to time from the Closing Date up to but not including the Maturity Date upon notice by the Borrower to the -29- Administrative Agent given in accordance with Section 2.5 hereof, such sums as are requested by the Borrower up to a maximum aggregate principal amount outstanding (after giving effect to all amounts requested) at any one time equal to such Lender's Commitment minus such Lender's Commitment Percentage of the Maximum Drawing Amount; PROVIDED that the sum of the outstanding amount of the Revolving Credit Loans (after giving effect to all amounts requested) and the Competitive Bid Loans PLUS the Maximum Drawing Amount shall not at any time exceed the Total Commitment in effect at such time. The Revolving Credit Loans shall be made pro rata in accordance with each Lender's Commitment Percentage. Each request for a Revolving Credit Loan made pursuant to Section 2.5 hereof shall constitute a representation and warranty by the Borrower that the conditions set forth in Section 10 have been satisfied as of the Closing Date and that the conditions set forth in Section 11 have been satisfied on the date of such request and will be satisfied on the proposed Drawdown Date of the requested Revolving Credit Loan, PROVIDED that the making of such representation and warranty by the Borrower shall not limit the right of any Lender not to lend if such conditions have not been met. No Revolving Credit Loan shall be required to be made by any Lender unless all of the conditions contained in Section 10 have been satisfied as of the Closing Date and all of the conditions set forth in Section 11 have been met at the time of any request for a Revolving Credit Loan. Notwithstanding the foregoing, the Borrower shall be able to borrow under this Agreement during the occurrence of a Default or an Event of Default arising solely from the Borrower's failure to comply with the provisions of Section 7.22 if such borrowing is to cure, and will cure, such Default or Event of Default without causing any other Default or Event of Default. Section 2.2. INCREASE OF TOTAL COMMITMENT. Unless a Default or an Event of Default has occurred and is continuing, the Borrower, by written notice to the Administrative Agent, may request on up to four (4) occasions during the term of this Agreement that the Total Commitment be increased by an amount not less than $25,000,000 per request and not more than $200,000,000 in the aggregate (such that the Total Commitment after such increase shall never exceed $1,000,000,000); PROVIDED that for any such request (a) the Borrower shall not have requested the one-year extension of the Maturity Date pursuant to the definition thereof, (b) any Lender which is a party to this Agreement prior to such request for increase, at its sole discretion, may elect to increase its Commitment but shall not have any obligation to so increase its Commitment, and (c) in the event that each Lender does not elect to increase its Commitment, the Arrangers shall use commercially reasonable efforts to locate additional lenders willing to hold commitments for the requested increase, and the Borrower may also identify additional lenders willing to hold commitments for the requested increase, PROVIDED that the Administrative Agent shall have the right to approve any such additional lender, which approval will not be -30- unreasonably withheld or delayed. In the event that lenders commit to any such increase, the Total Commitment and the Commitments of the committed Lenders shall be increased, the Commitment Percentages of the Lenders shall be adjusted, new Notes shall be issued, the Borrower shall make such borrowings and repayments as shall be necessary to effect the reallocation of the Commitments, and other changes shall be made to the Loan Documents as may be necessary to reflect the aggregate amount, if any, by which Lenders have agreed to increase their respective Commitments or make new Commitments in response to the Borrower's request for an increase in the Total Commitment pursuant to this Section 2.2, in each case without the consent of the Lenders other than those Lenders increasing their Commitments. The fees payable by the Borrower upon any such increase in the Total Commitment shall be agreed upon by the Arrangers and the Borrower at the time of such increase. Notwithstanding the foregoing, nothing in this Section 2.2 shall constitute or be deemed to constitute an agreement by any Lender to increase its Commitment hereunder. Section 2.3. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be evidenced by the Revolving Credit Notes. Return and cancellation of the "Notes" under the Original Agreement and issuance of initial Revolving Credit Notes under this Agreement shall be governed by Section 27 hereof. A Revolving Credit Note shall be payable to the order of each Lender in an aggregate principal amount equal to such Lender's Commitment. The Borrower irrevocably authorizes each Lender to make or cause to be made, at or about the time of the Drawdown Date of any Revolving Credit Loan or at the time of receipt of any payment of principal on such Lender's Revolving Credit Notes, an appropriate notation on such Lender's Revolving Credit Note Record reflecting the making of such Revolving Credit Loan or (as the case may be) the receipt of such payment. The outstanding amount of the Revolving Credit Loans set forth on such Lender's Revolving Credit Note Record shall be PRIMA FACIE evidence of the principal amount thereof owing and unpaid to such Lender, but the failure to record, or any error in so recording, any such amount on such Lender's Revolving Credit Note Record shall not limit or otherwise affect the obligations of the Borrower hereunder or under any Revolving Credit Note to make payments of principal of or interest on any Revolving Credit Note when due. The Administrative Agent hereby agrees to provide the Borrower with a statement concerning the outstanding amount of the Revolving Credit Loans, in reasonable detail, on a monthly basis. Although each Revolving Credit Note shall be dated the Closing Date, interest in respect thereof shall be payable only for the periods during which the Revolving Credit Loans evidenced thereby to the Borrower are outstanding, and although the stated amount of such Revolving Credit Notes shall be equal to the Total Commitment as of the date hereof, such Revolving Credit Notes shall be enforceable, with respect to -31- obligations of the Borrower to pay the principal amount thereof, only to the extent of the unpaid principal amount of the Revolving Credit Loans to them as of any date of determination. Section 2.4. INTEREST ON REVOLVING CREDIT LOANS; FEES. (a) INTEREST ON ALTERNATE BASE RATE LOANS. Except as otherwise provided in Section 4.9, each Alternate Base Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of the Interest Period with respect thereto (unless earlier paid in accordance with Section 2.9) at a rate equal to the Alternate Base Rate PLUS the Applicable Margin for Alternate Base Rate Loans, if any. (b) INTEREST ON REVOLVING CREDIT LIBOR RATE LOANS. Except as otherwise provided in Section 4.9, each Revolving Credit LIBOR Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of the Interest Period with respect thereto (unless earlier paid in accordance with Section 2.9) at a rate equal to the LIBOR Rate determined for such Interest Period PLUS the Applicable Margin for Revolving Credit LIBOR Rate Loans. (c) INTEREST PAYMENTS. The Borrower unconditionally promises to pay interest on each Revolving Credit Loan in arrears on each Interest Payment Date with respect thereto. (d) ADVISORY AND STRUCTURING FEE. The Borrower agrees to pay to the Administrative Agent, the Syndication Agent and the Arrangers that certain fee (the "ADVISORY AND STRUCTURING FEE") as set forth in that certain letter agreement dated as of April 25, 2000 between the Borrower, the Administrative Agent, the Syndication Agent and the Arrangers (the "FEE LETTER"). (e) UPFRONT FEE. The Borrower agrees to pay to the Administrative Agent on the Closing Date for the accounts of the Lenders in accordance with their respective Commitment Percentages, a fee (the "UPFRONT FEE") as set forth in the Fee Letter. (f) FACILITY FEE. The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders based on their respective Commitment Percentages, a fee (the "FACILITY FEE") which is a percentage per annum of the Total Commitment and which varies based on the Borrower's debt ratings as set forth in the following table: -32-
S&P RATING MOODY'S RATING THIRD RATING FACILITY FEE PERCENTAGE ---------- -------------- ------------ ----------------------- No rating or less than No rating or less No rating or less than 0.30% BBB- than Baa3 BBB-/Baa3 equivalent BBB- Baa3 BBB-/Baa3 equivalent 0.20% BBB Baa2 BBB/Baa2 equivalent 0.20% BBB+ Baa1 BBB+/Baa1 equivalent 0.175% A- or higher A3 or higher A-/A3 equivalent 0.15% or higher
Such fee shall be payable quarterly, in arrears, on the fifteenth (15th) day of each January, April, July, and October, or, if all of the Commitments are terminated pursuant to the terms hereof, such fee shall be prorated to such termination date from the last date of payment thereof. (g) ADMINISTRATIVE FEE. The Borrower shall pay to the Administrative Agent a fee (the "ADMINISTRATIVE FEE") as set forth in the Fee Letter. Section 2.5. REQUESTS FOR REVOLVING CREDIT LOANS. The following provisions shall apply to each request by the Borrower for a Revolving Credit Loan: (i) The Borrower shall submit a Completed Revolving Credit Loan Request to the Administrative Agent as provided in this Section 2.5. Except as otherwise provided herein, each Completed Revolving Credit Loan Request shall be in a minimum amount of $2,000,000 or an integral multiple of $500,000 in excess thereof. Each Completed Revolving Credit Loan Request shall be irrevocable and binding on the Borrower and shall obligate the Borrower to accept the Revolving Credit Loans requested from the Lenders on the proposed Drawdown Date, unless such Completed Revolving Credit Loan Request is withdrawn (x) in the case of a request for a Revolving Credit LIBOR Rate Loan, at least three (3) Business Days prior to the proposed Drawdown Date for such Revolving Credit Loan, and (y) in the case of a request for a Alternate Base Rate Loan, at least one (1) Business Day prior to the proposed Drawdown Date for such Revolving Credit Loan. (ii) Each Completed Revolving Credit Loan Request may be delivered by the Borrower to the Administrative Agent by 12:00 p.m. noon -33- (New York City time) on any Business Day, and at least one (1) Business Day prior to the proposed Drawdown Date of any Alternate Base Rate Loan, and at least three (3) Business Days prior to the proposed Drawdown Date of any Revolving Credit LIBOR Rate Loan. (iii) Each Completed Revolving Credit Loan Request shall include a completed writing in the form of EXHIBIT C hereto specifying: (1) the principal amount of the Revolving Credit Loan requested, (2) the proposed Drawdown Date of such Revolving Credit Loan, (3) the Interest Period applicable to such Revolving Credit Loan, and (4) the Type of such Revolving Credit Loan being requested. (iv) No Lender shall be obligated to fund any Revolving Credit Loan unless: (a) a Completed Revolving Credit Loan Request has been timely received by the Administrative Agent as provided in subSection (i) above; and (b) both before and after giving effect to the Revolving Credit Loan to be made pursuant to the Completed Revolving Credit Loan Request, all of the conditions contained in Section 10 shall have been satisfied as of the Closing Date and all of the conditions set forth in Section 11 shall have been met, including, without limitation, the condition under Section 11.1 that there be no Default or Event of Default under this Agreement (PROVIDED that notwithstanding the foregoing, the Borrower shall be able to borrow under this Agreement during the occurrence of a Default or an Event of Default arising solely from the Borrower's failure to comply with the provisions of Section 7.22 if such borrowing is to cure, and will cure, such Default or Event of Default without causing any other Default or Event of Default); and (c) the Administrative Agent shall have received a certificate in the form of EXHIBIT D hereto signed by the chief financial officer or treasurer or vice president of finance or other thereon designated officer of the Borrower setting forth computations evidencing compliance with the covenants contained in Sections 9.1 and 9.6 on a PRO FORMA basis after giving effect to such requested Revolving Credit Loan (including, to the extent necessary to evidence compliance thereunder, the estimated results for all Real Estate to be acquired with the proceeds of such requested Revolving Credit Loan), and, certifying that, both before and after giving effect to such requested Revolving Credit Loan, no Default or Event of Default exists or will exist under this Agreement or any -34- other Loan Document (other than a Default or Event of Default arising solely from the Borrower's failure to comply with Section 7.22 as permitted in the proviso at the end of clause (b) above), and that after taking into account such requested Revolving Credit Loan, no Default or Event of Default will exist as of the Drawdown Date or thereafter. (v) The Administrative Agent will cause the Completed Revolving Credit Loan Request (and the Certificate in the form of EXHIBIT D) to be delivered to each Lender in accordance with Section 14.12 and in any event on the same day that a Completed Revolving Credit Loan Request is received by the Administrative Agent (in the case of an Alternate Base Rate Loan) and on the same day or the Business Day following the day a Completed Revolving Credit Loan Request is received by the Administrative Agent (in the case of a Revolving Credit LIBOR Rate Loan). Section 2.6. CONVERSION OPTIONS. (a) The Borrower may elect from time to time by delivering a Conversion Request in the form of EXHIBIT L to convert any outstanding Revolving Credit Loan to a Revolving Credit Loan of another Type, PROVIDED that (i) with respect to any such conversion of a Revolving Credit LIBOR Rate Loan to a Alternate Base Rate Loan, the Borrower shall give the Administrative Agent at least three (3) Business Days prior written notice of such election; (ii) with respect to any such conversion of a Alternate Base Rate Loan to a Revolving Credit LIBOR Rate Loan, the Borrower shall give the Administrative Agent at least three (3) LIBOR Business Days prior written notice of such election; (iii) with respect to any such conversion of a Revolving Credit LIBOR Rate Loan into a Alternate Base Rate Loan, such conversion shall only be made on the last day of the Interest Period with respect thereto unless the Borrower pays the related LIBOR Breakage Costs at the time of such conversion and (iv) no Revolving Credit Loan may be converted into a Revolving Credit LIBOR Rate Loan when any Default or Event of Default has occurred and is continuing. All or any part of outstanding Revolving Credit Loans of any Type may be converted into a Revolving Credit Loan of another Type as provided herein, PROVIDED that any partial conversion shall be in an aggregate principal amount of $2,000,000 or a integral multiple of $500,000 in excess thereof. Each Conversion Request relating to the conversion of a Alternate Base Rate Loan to a Revolving Credit LIBOR Rate Loan shall be irrevocable by the Borrower. (b) Any Revolving Credit Loan of any Type may be continued as such upon the expiration of the Interest Period with respect thereto (i) in the case of Alternate Base Rate Loans, automatically and (ii) in the case of -35- Revolving Credit LIBOR Rate Loans by compliance by the Borrower with the notice provisions contained in Section 2.6(a) or (c); PROVIDED that no Revolving Credit LIBOR Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing but shall be automatically converted to a Alternate Base Rate Loan on the last day of the first Interest Period relating thereto ending during the continuance of any Default or Event of Default. The Administrative Agent shall notify the Lenders promptly when any such automatic conversion contemplated by this Section 2.6(b) is scheduled to occur. (c) In the event that the Borrower does not notify the Administrative Agent of its election hereunder with respect to the continuation of any Revolving Credit LIBOR Rate Loan as such, the affected Revolving Credit LIBOR Rate Loan shall automatically be continued as a Revolving Credit LIBOR Rate Loan with an Interest Period of one (1) month at the end of the applicable Interest Period other than during the continuance of a Default or Event of Default, in which case it will be continued as a Alternate Base Rate Loan at the end of the applicable Interest Period. In such event, the Borrower shall be deemed to have requested a Revolving Credit LIBOR Rate Loan hereunder and shall be subject to all provisions of this Agreement relating to LIBOR Rate Loans, including, without limitation, those set forth in Sections 4.5, 4.6, and 4.8 hereof. (d) The Borrower may not request or elect a Revolving Credit LIBOR Rate Loan pursuant to Section 2.5, elect to convert a Alternate Base Rate Loan to a Revolving Credit LIBOR Rate Loan pursuant to Section 2.6(a), elect to continue a Revolving Credit LIBOR Rate Loan pursuant to Section 2.6(b) or have continued a Revolving Credit LIBOR Rate Loan pursuant to Section 2.6(c) if, after giving effect thereto, there would be greater than twenty (20) Revolving Credit LIBOR Rate Loans then outstanding. Any Loan Request for a Revolving Credit LIBOR Rate Loan that would create greater than twenty (20) Revolving Credit LIBOR Rate Loans outstanding shall be deemed to be a Loan Request for a Alternate Base Rate Loan. Section 2.7. FUNDS FOR REVOLVING CREDIT LOANS. (a) Subject to the other provisions of this Section 2, not later than 12:00 p.m. (New York City time) on the proposed Drawdown Date of any Revolving Credit Loan, each of the Lenders will make available to the Administrative Agent, at the Administrative Agent's Head Office, in immediately available funds, the amount of such Lender's Commitment Percentage of the amount of the requested Revolving Credit Loan; PROVIDED that each Lender shall provide notice to the Administrative Agent of its intent not to make available its Commitment Percentage of any requested Revolving Credit Loan as soon as possible after receipt of any Completed Revolving Credit Loan -36- Request, and in any event not later than 4:00 p.m. (New York City time) on (x) the Business Day prior to the Drawdown Date of any requested Alternate Base Rate Loan and (y) the third Business Day prior to the Drawdown Date of any requested Revolving Credit LIBOR Rate Loan. Upon receipt from each Lender of such amount, the Administrative Agent will make available to the Borrower, in the Borrower's account with the Administrative Agent or as otherwise directed to the Administrative Agent by the Borrower, the aggregate amount of such Revolving Credit Loan made available to the Administrative Agent by the Lenders; all such funds received by the Administrative Agent by 12:00 p.m. (New York City time) on any Business Day will be made available to the Borrower not later than 2:00 p.m. on the same Business Day. Funds received after such time will be made available by not later than 12:00 p.m. on the next Business Day. The Administrative Agent hereby agrees to promptly provide the Borrower with a statement confirming the particulars of each Revolving Credit LIBOR Rate Loan, in reasonable detail, when each such Loan is made. The failure or refusal of any Lender to make available to the Administrative Agent at the aforesaid time and place on any Drawdown Date the amount of its Commitment Percentage of the requested Revolving Credit Loan shall not relieve any other Lender from its several obligation hereunder to make available to the Administrative Agent the amount of its Commitment Percentage of any requested Revolving Credit Loan but in no event shall the Administrative Agent (in its capacity as Administrative Agent) have any obligation to make any funding or shall any Lender be obligated to fund more than its Commitment Percentage of the requested Revolving Credit Loan or to increase its Commitment Percentage on account of such failure or otherwise. (b) The Administrative Agent may, unless notified to the contrary by any Lender prior to a Drawdown Date, assume that such Lender has made available to the Administrative Agent on such Drawdown Date the amount of such Lender's Commitment Percentage of the Revolving Credit Loan to be made on such Drawdown Date, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower a corresponding amount. If any Lender makes available to the Administrative Agent such amount on a date after such Drawdown Date, such Lender shall pay to the Administrative Agent on demand an amount equal to the product of (i) the average, computed for the period referred to in clause (iii) below, of the weighted average interest rate paid by the Administrative Agent for federal funds acquired by the Administrative Agent during each day included in such period, MULTIPLIED BY (ii) the amount of such Lender's Commitment Percentage of such Revolving Credit Loan, MULTIPLIED BY (iii) a fraction, the numerator of which is the number of days that elapsed from and including such Drawdown Date to the date on which the amount of such Lender's Commitment Percentage of such Revolving Credit Loan shall become immediately available to the Administrative Agent, and the denominator of which is 360. A statement of -37- the Administrative Agent submitted to such Lender with respect to any amounts owing under this paragraph shall be PRIMA FACIE evidence of the amount due and owing to the Administrative Agent by such Lender. If the amount of such Lender's Commitment Percentage of such Revolving Credit Loans is not made available to the Administrative Agent by such Lender within three (3) Business Days following such Drawdown Date, the Administrative Agent shall be entitled to recover such amount from the Borrower on demand, with interest thereon at the rate per annum applicable to the Revolving Credit Loans made on such Drawdown Date. Section 2.8. REPAYMENT OF THE REVOLVING CREDIT LOANS AT MATURITY. The Borrower promises to pay on the Maturity Date, and there shall become absolutely due and payable on the Maturity Date, all unpaid principal of the Revolving Credit Loans outstanding on such date, together with any and all accrued and unpaid interest thereon, the unpaid balance of the Commitment Fee or Facility Fee accrued through such date, and any and all other unpaid amounts due under this Agreement, the Revolving Credit Notes or any other of the Loan Documents. Section 2.9. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The Borrower shall have the right, at its election, to prepay the outstanding amount of the Revolving Credit Loans, in whole or in part, at any time without penalty or premium; PROVIDED that the outstanding amount of any Revolving Credit LIBOR Rate Loans may not be prepaid unless the Borrower pays any LIBOR Breakage Costs for each Revolving Credit LIBOR Rate Loan so prepaid at the time of such prepayment. The Borrower shall give the Administrative Agent, no later than 11:00 a.m., New York City time, at least one (1) Business Day's prior written notice of any prepayment pursuant to this Section 2.9 of any Alternate Base Rate Loans, and at least three (3) LIBOR Business Days' notice of any proposed prepayment pursuant to this Section 2.9 of Revolving Credit LIBOR Rate Loans, specifying the proposed date of prepayment of Revolving Credit Loans and the principal amount to be prepaid. Each such partial prepayment shall be in an amount of $2,000,000 or integral multiple of $500,000 in excess thereof or, if less, the outstanding balance of the Revolving Credit Loans then being repaid, shall be accompanied by the payment of all charges outstanding on all Revolving Credit Loans so prepaid and of all accrued interest on the principal prepaid to the date of payment, and shall be applied, in the absence of instruction by the Borrower, first to the principal of Alternate Base Rate Loans and then to the principal of Revolving Credit LIBOR Rate Loans, at the Administrative Agent's option. Section 2.10. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the right at any time and from time to time upon five (5) Business Days prior written notice to the Administrative Agent to reduce by $10,000,000 or an -38- integral multiple thereof or terminate entirely the unborrowed portion of the Total Commitment, whereupon the Commitments of the Lenders shall be reduced pro rata in accordance with their respective Commitment Percentages of the amount specified in such notice or, as the case may be, terminated. Promptly after receiving any notice of the Borrower delivered pursuant to this Section 2.10, the Administrative Agent will notify the Lenders of the substance thereof. Upon the effective date of any such reduction or termination, the Borrower shall pay to the Administrative Agent for the respective accounts of the Lenders the full amount of any Facility Fee then accrued on the amount of the reduction. No reduction of the Commitments may be reinstated. Section 2A. COMPETITIVE BID LOANS. Section 2A.1. THE COMPETITIVE BID OPTIONS. In addition to the Revolving Credit Loans made pursuant to Section 2 hereof, and provided that at the time of such request no Default or Event of Default has occurred and is continuing and MCRLP maintains an Investment Grade Credit Rating from two nationally-recognized rating agencies reasonably acceptable to the Administrative Agent (one of which must be Moody's or S&P so long as such Persons are in the business of providing debt ratings for the REIT industry), the Borrower may from time to time request Competitive Bid Loans pursuant to the terms of this Section 2A. The Lenders may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept such offers in the manner set forth in this Section 2A. Notwithstanding any other provision herein to the contrary, at no time shall the aggregate principal amount of Competitive Bid Loans outstanding at any time exceed the lesser of (a) the Total Commitment minus the sum of (i) the aggregate outstanding principal amount of Revolving Credit Loans, plus (ii) the Maximum Drawing Amount of Letters of Credit outstanding at such time, or (b) $350,000,000. Section 2A.2. COMPETITIVE BID LOAN ACCOUNTS: COMPETITIVE BID NOTES. (a) The obligation of the Borrower to repay the outstanding principal amount of any and all Competitive Bid Loans, plus interest at the applicable Competitive Bid Rate or the sum of the Competitive Bid Margin plus the applicable LIBOR Rate (as the case may be) accrued thereon, shall be evidenced by this Credit Agreement and by individual loan accounts (the "COMPETITIVE BID LOAN ACCOUNTS" and individually, a "COMPETITIVE BID LOAN ACCOUNT") maintained by the Administrative Agent on its books for each of the Lenders, it being the intention of the parties hereto that, except as provided for in paragraph (b) of this Section 2A.2, the Borrower's obligations with respect to Competitive Bid Loans are to be evidenced only as stated herein and not by separate promissory notes and shall hereby constitute an absolute promise to pay when due, without notice, demand, presentment or setoff. -39- (b) Any Lender may at any time, and from time to time, request that any Competitive Bid Loans outstanding to such Lender be evidenced by a promissory note of the Borrower in substantially the form of EXHIBIT G hereto (each, a "COMPETITIVE BID NOTE"), dated as of the Closing Date and completed with appropriate insertions. One Competitive Bid Note shall be payable to the order of each Lender in an amount equal to the principal amount of the Competitive Bid Loan made by such Lender to the Borrower, and representing the obligation of the Borrower to pay such Lender such principal amount or, if less, the outstanding principal amount of any and all Competitive Bid Loans made by such Lender, plus interest at the applicable Competitive Bid Rate or the sum of the Competitive Bid Margin plus the applicable LIBOR Rate accrued thereon, as set forth herein. Upon execution and delivery by the Borrower of a Competitive Bid Note, the Borrower's obligation to repay any and all Competitive Bid Loans made to them by such Lender and all interest thereon shall thereafter be evidenced by such Competitive Bid Note. (c) The Borrower irrevocably authorizes (i) each Lender to make or cause to be made, in connection with a Drawdown Date of any Competitive Bid Loan or at the time of receipt of any payment of principal on such Lender's Competitive Bid Note in the case of a Competitive Bid Note, and (ii) the Administrative Agent to make or cause to be made, in connection with a Drawdown Date of any Competitive Bid Loan or at the time of receipt of any payment of principal on such Lender's Competitive Bid Loan Account in the case of a Competitive Bid Loan Account, an appropriate notation on such Lender's records or on the schedule attached to such Lender's Competitive Bid Note or a continuation of such schedule attached thereto, or the Administrative Agent's records, as applicable, reflecting the making of the Competitive Bid Loan or the receipt of such payment (as the case may be) and may, prior to any transfer of a Competitive Bid Note, endorse on the reverse side thereof the outstanding principal amount of Competitive Bid Loans evidenced thereby. The outstanding amount of the Competitive Bid Loans set forth on such Lender's record or the Administrative Agent's records, as applicable, shall be PRIMA FACIE evidence of the principal amount thereof owing and unpaid to such Lender, but the failure to record, or any error in so recording, any such amount shall not limit or otherwise affect the obligations of the Borrower hereunder to make payments of principal of or interest on any Competitive Bid Loan when due. Section 2A.3. COMPETITIVE BID QUOTE REQUEST; INVITATION FOR COMPETITIVE BID QUOTES. (a) When the Borrower wishes to request offers to make Competitive Bid Loans under this Section 2A, it shall transmit to the Administrative Agent by telex or facsimile a Competitive Bid Quote Request substantially in -40- the form of EXHIBIT H hereto (a "COMPETITIVE BID QUOTE REQUEST") so as to be received no later than 11:00 a.m. (New York City time) (i) four (4) Business Days prior to the requested Drawdown Date in the case of a Competitive Bid Loan bearing interest calculated by reference to the LIBOR Rate (a "LIBOR COMPETITIVE BID LOAN") or (ii) one (1) Business Day prior to the requested Drawdown Date in the case of an Competitive Bid Loan bearing interest calculated by reference to a fixed rate of interest (an "ABSOLUTE COMPETITIVE BID LOAN"), specifying: (A) the requested Drawdown Date (which must be a Business Day); (B) the aggregate amount of such Competitive Bid Loans, which shall be $5,000,000 or larger multiple of $1,000,000; (C) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period; and (D) whether the Competitive Bid Quotes requested are for LIBOR Competitive Bid Loans or Absolute Competitive Bid Loans. The Borrower may request offers to make Competitive Bid Loans for more than one Interest Period in a single Competitive Bid Quote Request. No new Competitive Bid Quote Request shall be given until the Borrower has notified the Administrative Agent of its acceptance or non-acceptance of the Competitive Bid Quotes relating to any outstanding Competitive Bid Quote Request. (b) Promptly upon receipt of a Competitive Bid Quote Request, the Administrative Agent shall send to the Lenders by telecopy or facsimile transmission an Invitation for Competitive Bid Quotes substantially in the form of EXHIBIT I hereto, which shall constitute an invitation by the Borrower to each Lender to submit Competitive Bid Quotes in accordance with this Section 2A. Section 2A.4. ALTERNATIVE MANNER OF PROCEDURE. If, after receipt by the Administrative Agent and each of the Lenders of a Competitive Bid Quote Request from the Borrower in accordance with Section 2A.3, the Administrative Agent or any Lender shall be unable to complete any procedure of the auction process described in Section s2A.5 through 2A.6 (inclusive) due to the inability of such Person to transmit or receive communications through the means specified therein, such Person may rely on telephonic notice for the transmission or receipt of such communications. In any case where such Person shall rely on telephone transmission or receipt, any communication made by telephone shall, as soon as possible thereafter, be followed by written confirmation thereof. -41- Section 2A.5. SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES. (a) Each Lender may, but shall be under no obligation to, submit a Competitive Bid Quote containing an offer or offers to make Competitive Bid Loans in response to any Competitive Bid Quote Request. Each Competitive Bid Quote must comply with the requirements of this Section 2A.5 and must be submitted to the Administrative Agent by telex or facsimile transmission at its offices as specified in or pursuant to Section 19 not later than (i) 10:00 a.m. (New York City time) on the third LIBOR Business Day prior to the proposed Drawdown Date, in the case of a LIBOR Competitive Bid Loan or (ii) 10:00 a.m. (New York City time) on the proposed Drawdown Date, in the case of an Absolute Competitive Bid Loan, provided that Competitive Bid Quotes may be submitted by the Administrative Agent in its capacity as a Lender only if it submits its Competitive Bid Quote to the Borrower not later than (x) one hour prior to the deadline for the other Lenders, in the case of a LIBOR Competitive Bid Loan or (y) 15 minutes prior to the deadline for the other Lenders, in the case of an Absolute Competitive Bid Loan. Subject to the provisions of Sections 10 and 11 hereof, any Competitive Bid Quote so made shall be irrevocable except with the written consent of the Administrative Agent given on the instructions of the Borrower. (b) Each Competitive Bid Quote shall be in substantially the form of EXHIBIT J hereto and shall in any case specify: (i) the proposed Drawdown Date; (ii) the principal amount of the Competitive Bid Loan for which each proposal is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Lender, (x) must be $1,000,000 or a larger multiple of $500,000, (y) may not exceed the aggregate principal amount of Competitive Bid Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Competitive Bid Loans for which offers being made by such quoting Lender may be accepted; (iii) the Interest Periods for which Competitive Bid Quotes are being submitted; (iv) in the case of a LIBOR Competitive Bid Loan, the margin above or below the applicable LIBOR Rate (the "COMPETITIVE BID MARGIN") offered for each such Competitive Bid Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such LIBOR Rate; (v) in the case of an Absolute Competitive Bid Loan, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the -42- "COMPETITIVE BID RATE") offered for each such Absolute Competitive Bid Loan; and (vi) the identity of the quoting Lender. A Competitive Bid Quote may include up to five (5) separate offers by the quoting Lender with respect to each Interest Period specified in the related Invitation for Competitive Bid Quotes. (c) Any Competitive Bid Quote shall be disregarded if it: (i) is not substantially in the form of EXHIBIT J hereto; (ii) contains qualifying, conditional or similar language; (iii) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bid Quotes; or (iv) arrives after the time set forth in Section 2A.5(a) hereof. Section 2A.6. NOTICE TO BORROWER. The Administrative Agent shall promptly notify the Borrower of the terms (a) of any Competitive Bid Quote submitted by a Lender that is in accordance with Section 2A.5 and (b) of any Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a previous Competitive Bid Quote submitted by such Lender with respect to the same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by the Administrative Agent unless such subsequent Competitive Bid Quote is submitted solely to correct a manifest error in such former Competitive Bid Quote and was received by the Administrative Agent within the time period required in Section 2A.5(a) for receipt of Competitive Bid Quotes. The Administrative Agent's notice to the Borrower shall specify (i) the aggregate principal amount of Competitive Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Quote Request, (ii) the respective principal amounts and Competitive Bid Margins or Competitive Bid Rates, as the case may be, so offered, and the identity of the respective Lenders submitting such offers, and (iii) if applicable, limitations on the aggregate principal amount of Competitive Bid Loans for which offers in any single Competitive Bid Quote may be accepted. Section 2A.7. ACCEPTANCE AND NOTICE BY BORROWER AND ADMINISTRATIVE AGENT. Not later than 11:00 a.m. (New York City time) on (a) the third Business Day prior to the proposed Drawdown Date, in the case of a LIBOR Competitive Bid Loan or (b) the proposed Drawdown Date, in the case of an Absolute Competitive Bid Loan, the Borrower shall notify the Administrative Agent of its -43- acceptance or non-acceptance of each Competitive Bid Quote in substantially the form of EXHIBIT K hereto. The Borrower may accept any Competitive Bid Quote in whole or in part; provided that: (i) the aggregate principal amount of each Competitive Bid Loan may not exceed the applicable amount set forth in the related Competitive Bid Quote Request; (ii) acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or Competitive Bid Rates, as the case may be, and (iii) the Borrower may not accept any offer that is described in subSection 2A.5(c) or that otherwise fails to comply with the requirements of this Agreement. The Administrative Agent shall promptly notify each Lender which submitted a Competitive Bid Quote of the Borrower's acceptance or non-acceptance thereof. At the request of any Lender which submitted a Competitive Bid Quote and with the consent of the Borrower, the Administrative Agent will promptly notify all Lenders which submitted Competitive Bid Quotes of (a) the aggregate principal amount of, and (b) the range of Competitive Bid Rates or Competitive Bid Margins of, the accepted Competitive Bid Loans for each requested Interest Period. Section 2A.8. ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by two (2) or more Lenders with the same Competitive Bid Margin or Competitive Bid Rate, as the case may be, for a greater aggregate principal amount than the amount in respect of which offers are accepted for the related Interest Period, the principal amount of Competitive Bid Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Lenders as nearly as possible (in such multiples, not less than $1,000,000, as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determination by the Administrative Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. Section 2A.9. FUNDING OF COMPETITIVE BID LOANS. If, on or prior to the Drawdown Date of any Competitive Bid Loan, the Total Commitment has not terminated in full and if, on such Drawdown Date, the applicable conditions of Section s10 and 11 hereof are satisfied, and the Administrative Agent shall have received a certificate in the form of EXHIBIT D hereto, the Lender or Lenders whose offers the Borrower has accepted will fund each Competitive Bid Loan so accepted. Notwithstanding the foregoing, the Borrower shall be able to borrow -44- under this Agreement during the occurrence of a Default or an Event of Default arising solely from the Borrower's failure to comply with the provisions of Section 7.22 if such borrowing is to cure, and will cure, such Default or Event of Default without causing any other Default or Event of Default. Such Lender or Lenders will make such Competitive Bid Loans by crediting the Administrative Agent for further credit to the Borrower's specified account with the Administrative Agent, in immediately available funds not later than 1:00 p.m. (New York City time) on such Drawdown Date. Section 2A.10. FUNDING LOSSES. If, after acceptance of any Competitive Bid Quote pursuant to Section 2A, the Borrower (a) fails to borrow any Competitive Bid Loan so accepted on the date specified therefor, or (b) repays the outstanding amount of the Competitive Bid Loan on or prior to the last day of the Interest Period relating thereto, the Borrower shall indemnify the Lender making such Competitive Bid Quote or funding such Competitive Bid Loan against any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain such unborrowed Loans, including, without limitation compensation as provided in Section 4.8. Section 2A.11. REPAYMENT OF COMPETITIVE BID LOANS; INTEREST. The principal of each Competitive Bid Loan shall become absolutely due and payable by the Borrower on the last day of the Interest Period relating thereto, and the Borrower hereby absolutely and unconditionally promises to pay to the Administrative Agent for the account of the relevant Lenders at or before 1:00 p.m. (New York City time) on the last day of the Interest Periods relating thereto the principal amount of all such Competitive Bid Loans, plus interest thereon at the applicable Competitive Bid Rates or the sum of the Competitive Bid Margin plus the applicable LIBOR Rate (as the case may be). The Competitive Bid Loans shall bear interest at the rate per annum specified in the applicable Competitive Bid Quotes. Interest on the Competitive Bid Loans shall be payable (a) on the last day of the applicable Interest Periods, and if any such Interest Period is longer than three months, also on the last day of the third month following the commencement of such Interest Period, and (b) on the Maturity Date for all Loans. Subject to the terms of this Credit Agreement, the Borrower may make Competitive Bid Quote Requests with respect to new borrowings of any amounts so repaid prior to the Maturity Date. The provisions of Section 2.6 shall not apply to Competitive Bid Loans. Section 2A.12. OPTIONAL REPAYMENT OF COMPETITIVE BID LOANS. The Borrower shall have the right, at its election, to repay the outstanding amount of any of the Competitive Bid Loans, as a whole or in part, at any time without penalty or premium, PROVIDED that any full or partial prepayment of the outstanding amount of any Competitive Bid Loan pursuant to this Section 2A.12 may be made only on the last day of the Interest Period relating thereto, or, if made prior to such -45- date, shall be made subject to the provisions of Section 2A.10 hereof. The Borrower shall give the Administrative Agent no less than three (3) Business Days notice of any proposed prepayment pursuant to this Section 2A.12, specifying the proposed date of prepayment of the Competitive Bid Loan and the principal amount to be prepaid. Each such partial prepayment of any Competitive Bid Loan shall be in an integral multiple of $500,000, and shall be accompanied by the payment of accrued interest on the principal prepaid to the date of prepayment. Section 3. LETTERS OF CREDIT. Section 3.1. LETTER OF CREDIT COMMITMENTS. Section 3.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms and conditions hereof and the execution and delivery by the Borrower of a letter of credit application on the Fronting Bank's customary form as part of a Completed Revolving Credit Loan Request (a "LETTER OF CREDIT APPLICATION"), the Fronting Bank on behalf of the Lenders and in reliance upon the agreement of the Lenders set forth in Section 3.1.4 and upon the representations and warranties of the Borrower contained herein, agrees, in its individual capacity, to issue, extend and renew for the account of the Borrower one or more standby or documentary letters of credit (individually, a "LETTER OF CREDIT"), in such form as may be requested from time to time by the Borrower and reasonably agreed to by the Fronting Bank; PROVIDED, HOWEVER, that, after giving effect to such Completed Revolving Credit Loan Request, (a) the Maximum Drawing Amount shall not exceed $100,000,000 at any one time, (b) the sum of (i) the Maximum Drawing Amount on all Letters of Credit and (ii) the amount of all Revolving Credit Loans and Competitive Bid Loans outstanding shall not exceed the Total Commitment in effect at such time, and (c) the total number of Letters of Credit outstanding shall not exceed twenty-five (25). Section 3.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit Application shall be completed to the reasonable satisfaction of the Administrative Agent and the Fronting Bank. In the event that any provision of any Letter of Credit Application shall be inconsistent with any provision of this Agreement (including provisions applicable to a Completed Revolving Credit Loan Request), then the provisions of this Agreement shall, to the extent of any such inconsistency, govern. Section 3.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued, extended or renewed hereunder shall, among other things, (i) provide for the payment of sight drafts for honor thereunder when presented in accordance with the terms thereof and when accompanied by the documents described therein, and (ii) have an expiry date no later than the earlier of (x) one year from the date of issuance or (y) the date which is thirty (30) days prior to the Maturity -46- Date. Each Letter of Credit so issued, extended or renewed shall be subject to the Uniform Customs. Section 3.1.4. REIMBURSEMENT OBLIGATIONS OF LENDERS. Each Lender severally agrees that it shall be absolutely liable, without regard to the occurrence of any Default or Event of Default or any other condition precedent whatsoever, to the extent of such Lender's Commitment Percentage, to reimburse the Fronting Bank on demand pursuant to Section 3.3 for the amount of each draft paid by the Fronting Bank under each Letter of Credit to the extent that such amount is not reimbursed by the Borrower pursuant to Section 3.2 (such agreement for a Lender being called herein the "LETTER OF CREDIT PARTICIPATION" of such Lender). Section 3.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce the Fronting Bank to issue, extend and renew each Letter of Credit and the Lenders to participate therein, the Borrower hereby agrees, except as contemplated in Section 3.3 below, to reimburse or pay to the Fronting Bank, for the account of the Fronting Bank or (as the case may be) the Lenders, with respect to each Letter of Credit issued, extended or renewed by the Fronting Bank hereunder, (a) except as otherwise expressly provided in Section 3.2(b) or Section 3.3, on each date that any draft presented under such Letter of Credit is honored in accordance with its terms by the Fronting Bank, or the Fronting Bank otherwise makes a payment with respect thereto in accordance with applicable law, (i) the amount paid by the Fronting Bank under or with respect to such Letter of Credit, and (ii) any amounts payable pursuant to Section 4.5 hereof under, or with respect to, such Letter of Credit, and (b) upon the termination of the Total Commitment, or the acceleration of the Reimbursement Obligations with respect to all Letters of Credit in accordance with Section 12, an amount equal to the then Maximum Drawing Amount on all Letters of Credit, which amount shall be held by the Administrative Agent as cash collateral for the benefit of the Fronting Bank, the Lenders and the Administrative Agent for all Reimbursement Obligations. Each such payment shall be made to the Administrative Agent at the Administrative Agent's Head Office in immediately available funds. Interest on any and all amounts not converted to a Revolving Credit Loan pursuant to Section 3.3 and remaining unpaid by the Borrower under this Section 3.2 at any time from the date such amounts become due and payable (whether as stated in this Section 3.2, by acceleration or otherwise) until payment in full (whether before or after judgment) shall be payable to the Administrative Agent for the benefit of the Lenders on demand at the rate specified in Section 4.9 for overdue principal on the Revolving Credit Loans. -47- Section 3.3. LETTER OF CREDIT PAYMENTS; FUNDING OF A LOAN. If any draft shall be presented or other demand for payment shall be made under any Letter of Credit, the Fronting Bank shall notify the Borrower and the Lenders of the date and amount of the draft presented or demand for payment and of the date and time when it expects to pay such draft or honor such demand for payment, and, except as provided in this Section 3.3, the Borrower shall reimburse Administrative Agent, as set forth in Section 3.2 above. Notwithstanding anything contained in Section 3.2 above or this Section 3.3 to the contrary, however, unless the Borrower shall have notified the Administrative Agent and the Fronting Bank prior to 11:00 a.m. (New York time) on the Business Day immediately prior to the date of such drawing that the Borrower intends to reimburse the Fronting Bank for the amount of such drawing with funds other than the proceeds of the Loans, the Borrower shall be deemed to have timely given a Completed Revolving Credit Loan Request pursuant to Section 2.5 to the Administrative Agent, requesting a Alternate Base Rate Loan on the date on which such drawing is honored and in an amount equal to the amount of such drawing. The Borrower may thereafter convert any such Alternate Base Rate Loan to a Revolving Credit Loan of another Type in accordance with Section 2.6. Each Lender shall, in accordance with Section 2.7, make available such Lender's Commitment Percentage of such Revolving Credit Loan to the Administrative Agent, the proceeds of which shall be applied directly by the Administrative Agent to reimburse the Fronting Bank for the amount of such draw. In the event that any Lender fails to make available to the Administrative Agent the amount of such Lender's Commitment Percentage of such Revolving Credit Loan on the date of the drawing, the Administrative Agent shall be entitled to recover such amount on demand from such Lender plus any additional amounts payable under Section 2.7(b) in the event of a late funding by a Lender. The Fronting Bank is irrevocably authorized by the Borrower and each of the Lenders to honor draws on each Letter of Credit by the beneficiary thereof in accordance with the terms of the Letter of Credit. The responsibility of the Fronting Bank to the Borrower and the Lenders shall be only to determine that the documents (including each draft) delivered under each Letter of Credit in connection with such presentment shall be in conformity in all material respects with such Letter of Credit. Section 3.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of the occurrence of any Default or Event of Default or any condition precedent whatsoever or any setoff, counterclaim or defense to payment which the Borrower may have or have had against the Administrative Agent, the Fronting Bank, any Lender or any beneficiary of a Letter of Credit. The Borrower further agrees with the Administrative Agent, the Fronting Bank and the Lenders that the Administrative Agent, the Fronting Bank and the Lenders shall not be responsible for, and the Borrower's Reimbursement Obligations -48- under Section 3.2 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon (so long as the documents delivered under each Letter of Credit in connection with such presentment shall be in the form required by, and in conformity in all material respects with, such Letter of Credit), even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among any of the Borrower, the beneficiary of any Letter of Credit or any financing institution or other party to whom any Letter of Credit may be transferred, or any claims or defenses whatsoever of the Borrower against the beneficiary of any Letter of Credit or any such transferee. If done in good faith and absent gross negligence, the Administrative Agent, the Fronting Bank and the Lenders shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit. The Borrower agrees that any action taken or omitted by the Administrative Agent, the Fronting Bank or any Lender under or in connection with each Letter of Credit and the related drafts and documents, if done in good faith and absent gross negligence, shall be binding upon the Borrower and shall not result in any liability on the part of the Administrative Agent, the Fronting Bank or any Lender to the Borrower. Section 3.5. RELIANCE BY ISSUER. To the extent not inconsistent with Section 3.4, the Administrative Agent and the Fronting Bank shall be entitled to rely, and shall be fully protected in relying upon, any Letter of Credit, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel, independent accountants and other experts selected by the Administrative Agent or the Fronting Bank. The Administrative Agent and the Fronting Bank shall in all cases be fully protected by the Lenders in acting, or in refraining from acting, under this Section 3 in accordance with a request of the Majority Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and all future holders of the Notes or of a Letter of Credit Participation. Section 3.6. LETTER OF CREDIT FEE. The Borrower shall pay to the Administrative Agent a fee (in each case, a "LETTER OF CREDIT FEE") in an amount equal to the Applicable L/C Percentage of the face amount of each outstanding Letter of Credit, which fee (a) shall be payable quarterly in arrears on the first day of each calendar quarter for the immediately preceding calendar quarter, with a final payment on the Maturity Date or any earlier date on which the Commitments shall terminate (which Letter of Credit Fee shall be pro-rated for any calendar quarter in which such Letter of Credit is issued, drawn upon or otherwise reduced or terminated) and (b) shall be for the accounts of the Lenders -49- as follows: (i) an amount equal to 0.125% per annum of the face amount of the Letter of Credit shall be for the account of the Fronting Bank and (ii) the remainder of the Letter of Credit Fee shall be for the accounts of the Lenders (including the Fronting Bank) pro rata in accordance with their respective Commitment Percentages. In respect of each Letter of Credit, the Borrower shall also pay to the Fronting Bank for the Fronting Bank's own account, at such other time or times as such charges are customarily made by the Fronting Bank, the Fronting Bank's customary issuance, amendment, negotiation or document examination and other administrative fees as in effect from time to time. Section 3.7. EXISTING LETTERS OF CREDIT. Those Letters of Credit issued to the Borrower by Chase under the Original Agreement prior to its being amended and restated by this Agreement, which Letters of Credit are identified on SCHEDULE 3.7 hereto (the "EXISTING LETTERS OF CREDIT") shall for all purposes be deemed to be Letters of Credit issued under this Agreement. Section 4. CERTAIN GENERAL PROVISIONS. Section 4.1. FUNDS FOR PAYMENTS. (a) All payments of principal, interest, fees, and any other amounts due hereunder or under any of the other Loan Documents shall be made to the Administrative Agent, for the respective accounts of the Lenders or (as the case may be) the Administrative Agent, at the Administrative Agent's Head Office, in each case in Dollars and in immediately available funds. (b) All payments by the Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory liens, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon the Borrower with respect to any amount payable by it hereunder or under any of the other Loan Documents, the Borrower shall pay to the Administrative Agent, for the account of the Lenders or (as the case may be) the Administrative Agent, on the date on which such amount is due and payable hereunder or under such other Loan Document, such additional amount in Dollars as shall be necessary to enable the Lenders to receive the same net amount which the Lenders would have received on such due date had no such obligation been imposed upon the Borrower. The Borrower will deliver promptly to the Administrative Agent certificates or other valid -50- vouchers for all taxes or other charges deducted from or paid with respect to payments made by the Borrower hereunder or under such other Loan Document. Section 4.2. COMPUTATIONS. All computations of interest on the Loans and of other fees to the extent applicable shall be based on a 360-day year and paid for the actual number of days elapsed. Except as otherwise provided in the definition of the term "INTEREST PERIOD" with respect to LIBOR Rate Loans, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. The outstanding amount of the Loans as reflected on the Note Records from time to time shall constitute PRIMA FACIE evidence of the principal amount thereof. Section 4.3. INABILITY TO DETERMINE LIBOR RATE. In the event, prior to the commencement of any Interest Period relating to any LIBOR Rate Loan, the Administrative Agent shall reasonably determine that adequate and reasonable methods do not exist for ascertaining the LIBOR Rate that would otherwise determine the rate of interest to be applicable to any LIBOR Rate Loan during any Interest Period, the Administrative Agent shall forthwith give notice of such determination (which shall be conclusive and binding on the Borrower) to the Borrower and the Lenders. In such event (a) any Loan Request or Competitive Bid Request with respect to LIBOR Rate Loans shall be automatically withdrawn and shall be deemed a request for Alternate Base Rate Loans (in the case of Revolving Credit Loans) or Absolute Competitive Bid Loans (in the case of Competitive Bid Loans), (b) each Revolving Credit LIBOR Rate Loan will automatically, on the last day of the then current Interest Period thereof, become a Alternate Base Rate Loan, and (c) the obligations of the Lenders to make LIBOR Rate Loans shall be suspended until the Administrative Agent reasonably determines that the circumstances giving rise to such suspension no longer exist, whereupon the Administrative Agent shall so notify the Borrower and the Lenders. Section 4.4. ILLEGALITY. Subject to Sections 4.11 and 4.12 hereof, but notwithstanding any other provisions herein, if any present or future law, regulation, treaty or directive or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain LIBOR Rate Loans, such Lender shall forthwith give notice of such circumstances to the Borrower and the other Lenders and thereupon (a) the commitment of such Lender to make LIBOR Rate Loans or convert Alternate Base Rate Loans to LIBOR Rate Loans shall forthwith be suspended and (b) such Lender's Commitment Percentage of Revolving Credit LIBOR Rate Loans then outstanding shall be converted automatically to Alternate Base Rate Loans on the last day of each Interest Period applicable to such LIBOR Rate Loans or within such earlier period as -51- may be required by law, all until such time as it is no longer unlawful for such Lender to make or maintain LIBOR Rate Loans. Subject to Sections 4.11 and 4.12 hereof, the Borrower hereby agrees to promptly pay the Administrative Agent for the account of such Lender, upon demand, any additional amounts necessary to compensate such Lender for any costs incurred by such Lender in making any conversion required by this Section 4.4 prior to the last day of an Interest Period with respect to a LIBOR Rate Loan, including any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. Section 4.5. ADDITIONAL COSTS, ETC. Subject to Sections 4.11 and 4.12 hereof, if any present or future applicable law, which expression, as used herein, includes statutes, rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time hereafter made upon or otherwise issued to any Lender or the Administrative Agent by any central bank or other fiscal, monetary or other authority (whether or not having the force of law), shall: (a) subject any Lender or the Administrative Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Agreement, the other Loan Documents, any Letters of Credit, such Lender's Commitment or the Loans (other than taxes based upon or measured by the income or profits of such Lender or the Administrative Agent), or (b) materially change the basis of taxation (except for changes in taxes on income or profits) of payments to any Lender of the principal of or the interest on any Loans or any other amounts payable to the Administrative Agent or any Lender under this Agreement or the other Loan Documents, or (c) impose or increase or render applicable (other than to the extent specifically provided for elsewhere in this Agreement) any special deposit, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or loans by, or letters of credit issued by, or commitments of an office of any Lender, or (d) impose on any Lender or the Administrative Agent any other conditions or requirements with respect to this Agreement, the other Loan Documents, any Letters of Credit, the Loans, such Lender's Commitment, or any class of loans, letters of credit or commitments of which any of the Loans or such Lender's Commitment forms a part; -52- and the result of any of the foregoing is (i) to increase the cost to any Lender of making, funding, issuing, renewing, extending or maintaining any of the Loans or such Lender's Commitment or any Letter of Credit, or (ii) to reduce the amount of principal, interest, Reimbursement Obligation or other amount payable to such Lender or the Administrative Agent hereunder on account of such Lender's Commitment, any Letter of Credit or any of the Loans, or (iii) to require such Lender or the Administrative Agent to make any payment or to forego any interest or Reimbursement Obligation or other sum payable hereunder, the amount of which payment or foregone interest or Reimbursement Obligation or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Lender or the Administrative Agent from the Borrower hereunder, then; and in each such case arising or occurring in the immediately preceding 365 days from such demand, the Borrower will, within thirty (30) days after demand made by such Lender or (as the case may be) the Administrative Agent at any time and from time to time and as often as the occasion therefor may arise, within the shorter of such maximum allowable period as permitted by law or such Lender's internal policies (but no longer than one year or the occurrence of the Maturity Date, if sooner) pay to such Lender such additional amounts as such Lender shall determine in good faith to be sufficient to compensate such Lender for such additional cost, reduction, payment or foregone interest or other sum, PROVIDED that such Lender is generally imposing similar charges on its other similarly situated borrowers. Section 4.6. CAPITAL ADEQUACY. Subject to Sections 4.11 and 4.12 hereof, if after the date hereof any Lender or the Administrative Agent determines in good faith that (i) the adoption of or change in any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) regarding capital requirements for banks or bank holding companies or any change in the interpretation or application thereof by a court or governmental authority with appropriate jurisdiction, or (ii) compliance by such Lender or the Administrative Agent or any Person controlling such Lender or the Administrative Agent with any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) of any such Person regarding capital adequacy, has the effect of reducing the return on such Lender's or the Administrative -53- Agent's Commitment with respect to any Loans to a level below that which such Lender or the Administrative Agent could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or the Administrative Agent's then existing policies with respect to capital adequacy and assuming full utilization of such entity's capital) by any amount deemed by such Lender or (as the case may be) the Administrative Agent to be material, then such Lender or the Administrative Agent may notify the Borrower of such fact. To the extent that the amount of such reduction in the return on capital is not reflected in the Alternate Base Rate, the Borrower agrees to pay such Lender or (as the case may be) the Administrative Agent the amount of such reduction in the return on capital as and when such reduction is determined, within thirty (30) days after presentation by such Lender or (as the case may be) the Administrative Agent of a certificate in accordance with Section 4.7 hereof which certificate shall be presented within the shorter of such maximum allowable period as permitted by law or such Lender's internal policies (but no longer than one year or the occurrence of the Maturity Date, if sooner). Each Lender shall allocate such cost increases among its customers in good faith and on an equitable basis. Section 4.7. CERTIFICATE. A certificate setting forth any additional amounts payable pursuant to Sections 4.5 or 4.6 and a brief explanation of such amounts which are due, submitted by any Lender or the Administrative Agent to the Borrower shall be PRIMA FACIE evidence that such amounts are due and owing. Section 4.8. INDEMNITY. In addition to the other provisions of this Agreement regarding such matters, the Borrower agrees to indemnify the Administrative Agent and each Lender and to hold the Administrative Agent and each Lender harmless from and against any loss, cost or expense (including LIBOR Breakage Costs, but excluding any loss of Applicable Margin on the relevant Loans) that the Administrative Agent or such Lender may sustain or incur as a consequence of (a) the failure by the Borrower to pay any principal amount of or any interest on any LIBOR Rate Loans as and when due and payable, including any such loss or expense arising from interest or fees payable by the Administrative Agent or such Lender to lenders of funds obtained by it in order to maintain its LIBOR Rate Loans, (b) the failure by the Borrower to make a borrowing or conversion after the Borrower has given or is deemed pursuant to Section 2.6(c) to have given a Completed Revolving Credit Loan Request or Competitive Bid Request for a LIBOR Rate Loan or a Conversion Request to convert a Alternate Base Rate Loan into a LIBOR Rate Loan, and (c) the making of any payment of a LIBOR Rate Loan or the making of any conversion of any such Loan to a Alternate Base Rate Loan on a day that is not the last day of the applicable Interest Period with respect thereto, including interest or fees payable by the Administrative Agent or a Lender to lenders of funds obtained by it in order to maintain any such LIBOR Rate Loans. -54- Section 4.9. INTEREST DURING EVENT OF DEFAULT. During the continuance of an Event of Default, outstanding principal and (to the extent permitted by applicable law) interest on the Loans and all other amounts payable hereunder or under any of the other Loan Documents shall bear interest at a rate per annum equal to four percent (4%) above the rate otherwise then in effect until such amount shall be paid in full (after as well as before judgment). In addition, the Borrower shall pay on demand a late charge equal to five percent (5%) of any amount of principal (other than principal due on the Maturity Date) and/or interest charges on the Loans which is not paid within ten (10) days of the date when due. Section 4.10. [Intentionally Omitted] Section 4.11. REASONABLE EFFORTS TO MITIGATE. Each Lender agrees that as promptly as practicable after it becomes aware of the occurrence of an event or the existence of a condition that would cause it to be affected under Sections 4.4, 4.5 or 4.6, such Lender will give notice thereof to the Borrower, with a copy to the Administrative Agent and, to the extent so requested by the Borrower and not inconsistent with regulatory policies applicable to such Lender, such Lender shall use reasonable efforts and take such actions as are reasonably appropriate (including the changing of its lending office or branch) if as a result thereof the additional moneys which would otherwise be required to be paid to such Lender pursuant to such Section s would be reduced other than for de minimus amounts, or the illegality or other adverse circumstances which would otherwise require a conversion of such Loans or result in the inability to make such Loans pursuant to such Section s would cease to exist, and in each case if, as determined by such Lender in its sole discretion, the taking such actions would not adversely affect such Loans. Section 4.12. REPLACEMENT OF LENDERS. If any Lender (an "AFFECTED LENDER") (i) makes demand upon the Borrower for (or if the Borrower is otherwise required to pay) amounts pursuant to Sections 4.4, 4.5 or 4.6, or (ii) is unable to make or maintain LIBOR Rate Loans as a result of a condition described in Section 4.4, the Borrower may, within 90 days of receipt of such demand, notice (or the occurrence of such other event causing the Borrower to be required to pay such compensation or causing Section 4.4 to be applicable) as the case may be, by notice (a "REPLACEMENT NOTICE") in writing to the Administrative Agent and such Affected Lender (A) request the Affected Lender to cooperate with the Borrower in obtaining a replacement lender satisfactory to the Administrative Agent and the Borrower (the "REPLACEMENT LENDER"); (B) request the non-Affected Lenders to acquire and assume all of the Affected Lender's Loans and Commitment, and/or participate in Letters of Credit, as provided herein, but none of such Lenders shall be under an obligation to do so; or (C) designate a -55- Replacement Lender which is an Eligible Assignee and is reasonably satisfactory to the Administrative Agent other than when an Event of Default has occurred and is continuing and absolutely satisfactory to the Administrative Agent when an Event of Default has occurred and is continuing. If any satisfactory Replacement Lender shall be obtained, and/or any of the non-Affected Lenders shall agree to acquire and assume all of the Affected Lender's Loans and Commitment, and/or participate in Letters of Credit, then such Affected Lender shall assign, in accordance with Section 18, all of its Commitment, Loans, Notes and other rights and obligations under this Agreement and all other Loan Documents to such Replacement Lender or non-Affected Lenders, as the case may be, in exchange for payment of the principal amount so assigned and all interest and fees accrued on the amount so assigned, plus all other Obligations then due and payable to the Affected Lender; PROVIDED, HOWEVER, that (x) such assignment shall be in accordance with the provisions of Section 18, shall be without recourse, representation or warranty and shall be on terms and conditions reasonably satisfactory to such Affected Lender and such Replacement Lender and/or non-Affected Lenders, as the case may be, and (y) prior to any such assignment, the Borrower shall have paid to such Affected Lender all amounts properly demanded and unreimbursed under Sections 4.4, 4.5 and 4.8. Section 5. GUARANTIES. Section 5.1. GUARANTIES. Each of the Guarantors will jointly and severally guaranty all of the Obligations pursuant to its Guaranty. The Obligations are full recourse obligations of the Borrower and each Guarantor, and all of the respective assets and properties of the Borrower and each such Guarantor shall be available for the payment in full in cash and performance of the Obligations (subject to Permitted Liens and senior claims enforceable as senior in accordance with applicable law, without the Lenders hereby agreeing to any such senior claim that is otherwise prohibited by this Agreement). Other than during the continuance of a Default or Event of Default, at the request of the Borrower, the Guaranty of any Subsidiary Guarantor shall be released by the Administrative Agent if and when all of the Real Estate owned or ground-leased by such Subsidiary Guarantor shall cease (not thereby creating a Default or Event of Default) to be owned by such Subsidiary Guarantor or by any other Borrower, Guarantor, Subsidiary or other Affiliate of any of same, PROVIDED the foregoing shall never permit the release of MCRC. Section 5.2. SUBSIDIARY GUARANTY PROCEEDS. (a) Notwithstanding any provision of this Agreement or any other Loan Document to the contrary, the Administrative Agent and the Lenders agree with the Borrower that any funds, claims, or distributions actually received by the Administrative Agent or any -56- Lender for the account of any Lender as a result of the enforcement of, or pursuant to a claim relating solely to the Loans under, any Subsidiary Guaranty, net of the Administrative Agent's and the Lenders' expenses of collection thereof (such net amount, "SUBSIDIARY GUARANTY PROCEEDS"), shall be made available for distribution equally and ratably (in proportion of the aggregate amount of principal, interest and other amounts then owed in respect of the Obligations or of the issuance of Public Debt, as the case may be) among the Administrative Agent, the Lenders and the trustee or trustees of any Public Debt so long as the Administrative Agent receives written notice of the amounts then owed under the Public Debt; PROVIDED that such agreement to distribute Subsidiary Guaranty Proceeds shall not be effective if the holders of the Public Debt have the benefit of guaranties at any time from the Subsidiaries of the Borrower and have not made a reciprocal agreement to share the proceeds of such guaranties with the Lenders. The Administrative Agent is hereby authorized, by the Borrower, by each Lender and by the Borrower on behalf of each Subsidiary Guarantor to make such Subsidiary Guaranty Proceeds available pursuant to the immediately preceding sentence. No Lender shall have any interest in any amount paid over by the Administrative Agent or any other Lender to the trustee or trustees in respect of any Public Debt (or to the holders thereof) pursuant to the foregoing authorization. This Section 5.2 shall apply solely to Subsidiary Guaranty Proceeds, and not to any payments, funds, claims or distributions received by the Administrative Agent or any Lender directly or indirectly from Borrower or any other Person (including a Subsidiary Guarantor) other than from a Subsidiary Guarantor pursuant to the enforcement of, or the making of a claim relating solely to the Loans under, a Subsidiary Guaranty. The Borrower is aware of the terms of the Subsidiary Guarantees, and specifically understands and agrees with the Administrative Agent, and the Lenders that, to the extent Subsidiary Guaranty Proceeds are distributed to holders of Public Debt or their respective trustees, such Subsidiary Guarantor has agreed that the Obligations under this Agreement and any other Loan Document will not be deemed reduced by any such distributions, and each Subsidiary Guarantor shall continue to make payments pursuant to its Subsidiary Guaranty until such time as the Obligations have been paid in full (and the Commitments have been terminated and any Letter of Credit Participations reduced to zero). (b) Nothing contained in this Section 5.2 shall be deemed (i) to limit, modify, or alter the rights of the Administrative Agent or any of the Lenders under any Subsidiary Guaranty or other Guaranty, (ii) to subordinate the Obligations to any Public Debt, or (iii) to give any holder of Public Debt (or any trustee for such holder) any rights of subrogation. (c) This Section 5.2, and each Guaranty, are for the sole benefit of the Administrative Agent, the Lenders and their respective successors and -57- assigns. Nothing contained herein or in any Guaranty shall be deemed for the benefit of any holder of Public Debt, or any trustee for such holder, nor shall anything contained herein or therein be construed to impose on the Administrative Agent or any Lender any fiduciary duties, obligations or responsibilities to the holders of any Public Debt or their trustees (including, but not limited to, any duty to pursue any Guarantor for payment under its Subsidiary Guaranty). Section 6. REPRESENTATIONS AND WARRANTIES. The Borrower for itself and for each Guarantor insofar as any such statements relate to such Guarantor represents and warrants to the Administrative Agent and the Lenders all of the statements contained in this Section 6. Section 6.1. AUTHORITY; ETC. (a) ORGANIZATION; GOOD STANDING. (i) MCRLP is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware; each Subsidiary of MCRLP that owns Real Estate is duly organized or formed, validly existing and in good standing as a corporation or a partnership or other entity, as the case may be, under the laws of the state of its organization or formation; the Borrower and each of the Borrower's Subsidiaries that owns Real Estate has all requisite partnership or corporate or other entity, as the case may be, power to own its respective properties and conduct its respective business as now conducted and as presently contemplated; and the Borrower and each of the Borrower's Subsidiaries that owns Real Estate is in good standing as a foreign entity and is duly authorized to do business in the jurisdictions where the Unencumbered Properties or other Real Estate owned or ground-leased by it are located and in each other jurisdiction where such qualification is necessary except where a failure to be so qualified in such other jurisdiction would not have a materially adverse effect on any of their respective businesses, assets or financial conditions. (ii) MCRC is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland; each Subsidiary of MCRC that owns Real Estate is duly organized or formed, validly existing and in good standing as a corporation or partnership or other entity, -58- as the case may be, under the laws of the state of its organization or formation; MCRC and each of its Subsidiaries that owns Real Estate has all requisite corporate or partnership or other entity, as the case may be, power to own its respective properties and conduct its respective business as now conducted and as presently contemplated; and MCRC and each of its Subsidiaries that owns Real Estate is in good standing as a foreign entity and is duly authorized to do business in the jurisdictions where such qualification is necessary (including, as to MCRC, in the State of New Jersey) except where a failure to be so qualified in such other jurisdiction would not have a materially adverse effect on the business, assets or financial condition of MCRC or such Subsidiary. (iii) As to each subsequent Guarantor, a provision similar, as applicable, to (a) (i) or (ii) above shall be included in each such subsequent Guarantor's Subsidiary Guaranty, and the Borrower shall be deemed to make for itself and on behalf of each such subsequent Guarantor a representation and warranty as to such provision regarding such subsequent Guarantor. (b) CAPITALIZATION. (i) The outstanding equity of MCRLP is comprised of a general partner interest and limited partner interests, all of which have been duly issued and are outstanding and fully paid and non-assessable as set forth in SCHEDULE 6.1(b) hereto. All of the issued and outstanding general partner interests of MCRLP are owned and held of record by MCRC. Except as disclosed in SCHEDULE 6.1(b) hereto, as of the Closing Date there are no outstanding securities or agreements exchangeable for or convertible into or carrying any rights to acquire any general partnership interests in MCRLP. Except as disclosed in SCHEDULE 6.1(b), there are no outstanding commitments, options, warrants, calls or other agreements (whether written or oral) binding on MCRLP or MCRC which require or could require MCRLP or MCRC to sell, grant, transfer, assign, mortgage, pledge or otherwise dispose of any general partnership interests of MCRLP. Except as set forth in the Agreement of Limited Partnership of MCRLP, no general partnership interests of MCRLP are subject to any restrictions on transfer or any -59- partner agreements, voting agreements, trust deeds, irrevocable proxies, or any other similar agreements or interests (whether written or oral). (ii) As of the Closing Date, the authorized capital stock of, or any other equity interests in, each of MCRC's Subsidiaries are as set forth in SCHEDULE 6.1(b), and the issued and outstanding voting and non-voting shares of the common stock of each of MCRC's Subsidiaries, and all of the other equity interests in such Subsidiaries, all of which have been duly issued and are outstanding and fully paid and non-assessable, are owned and held of record as set forth in SCHEDULE 6.1(b). Except as disclosed in SCHEDULE 6.1(b), as of the Closing Date there are no outstanding securities or agreements exchangeable for or convertible into or carrying any rights to acquire any equity interests in any of MCRC's Subsidiaries, and there are no outstanding options, warrants, or other similar rights to acquire any shares of any class in the capital of or any other equity interests in any of MCRC's Subsidiaries. Except as disclosed in SCHEDULE 6.1(b), as of the Closing Date there are no outstanding commitments, options, warrants, calls or other agreements or obligations (whether written or oral) binding on any of MCRC's Subsidiaries to issue, sell, grant, transfer, assign, mortgage, pledge or otherwise dispose of any shares of any class in the capital of or other equity interests in any of MCRC's Subsidiaries. Except as disclosed in SCHEDULE 6.1(b), no shares of, or equity interests in, any of MCRC's Subsidiaries held by MCRC are subject to any restrictions on transfer pursuant to any of MCRC's Subsidiaries' applicable partnership, charter, by-laws or any shareholder agreements, voting agreements, voting trusts, trust agreements, trust deeds, irrevocable proxies or any other similar agreements or instruments (whether written or oral). (c) DUE AUTHORIZATION. The execution, delivery and performance of this Agreement and the other Loan Documents to which the Borrower or any of the Guarantors is a party and the transactions contemplated hereby and thereby (i) are within the authority of the Borrower and such Guarantor, (ii) have been duly authorized by all necessary proceedings on the part of the Borrower or such Guarantor and any general partner or other controlling Person thereof, (iii) do not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which the Borrower or such Guarantor is subject or any judgment, order, writ, injunction, license or permit -60- applicable to the Borrower or such Guarantor, (iv) do not conflict with any provision of the agreement of limited partnership, any certificate of limited partnership, the charter documents or by-laws of the Borrower or such Guarantor or any general partner or other controlling Person thereof, and (v) do not contravene any provisions of, or constitute a default, Default or Event of Default hereunder or a failure to comply with any term, condition or provision of, any other agreement, instrument, judgment, order, decree, permit, license or undertaking binding upon or applicable to the Borrower or such Guarantor or any of the Borrower's or such Guarantor's properties (except for any such failure to comply under any such other agreement, instrument, judgment, order, decree, permit, license, or undertaking as would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrower, the Operating Subsidiaries or any Guarantor) or result in the creation of any mortgage, pledge, security interest, lien, encumbrance or charge upon any of the properties or assets of the Borrower, the Operating Subsidiaries or any Guarantor. (d) ENFORCEABILITY. Each of the Loan Documents to which the Borrower or any of the Guarantors is a party has been duly executed and delivered and constitutes the legal, valid and binding obligations of the Borrower and each such Guarantor, as the case may be, subject only to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights and to the fact that the availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought. Section 6.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by the Borrower of this Agreement and by the Borrower and each Guarantor of the other Loan Documents to which the Borrower or such Guarantor is a party and the transactions contemplated hereby and thereby do not require (i) the approval or consent of any governmental agency or authority other than those already obtained, or (ii) filing with any governmental agency or authority, other than filings which will be made with the SEC when and as required by law. Section 6.3. TITLE TO PROPERTIES; LEASES. The Borrower, the Guarantors and their respective Subsidiaries that own Real Estate each has good title to all of its respective Real Estate purported to be owned by it, including, without limitation, that: (a) As of the Closing Date (with respect to Unencumbered Properties designated as such on the Closing Date) or the date of designation as an Unencumbered Property (with respect to Unencumbered Properties acquired -61- and/or designated as such after the Closing Date), and in each case to its knowledge thereafter, the Borrower or a Guarantor holds good and clear record and marketable fee simple or leasehold title to the Unencumbered Properties, subject to no rights of others, including any mortgages, conditional sales agreements, title retention agreements, liens or encumbrances, except for Permitted Liens and, in the case of any ground-leased Unencumbered Property, the terms of such ground lease (which shall be an Eligible Ground Lease), as the same may then or thereafter be amended from time to time in a manner consistent with the requirements for an Eligible Ground Lease. (b) The Borrower and each of the then Guarantors will, as of the Closing Date, own all of the assets as reflected in the financial statements of the Borrower and MCRC described in Section 6.4 or acquired in fee title (or, if Real Estate, leasehold title under an Eligible Ground Lease) since the date of such financial statements (except property and assets sold or otherwise disposed of in the ordinary course of business since that date). (c) As of the Closing Date, each of the direct or indirect interests of MCRC, the Borrower or MCRC's other Subsidiaries in any Partially-Owned Entity that owns Real Estate is set forth on SCHEDULE 6.3 hereto, including the type of entity in which the interest is held, the percentage interest owned by MCRC, the Borrower or such Subsidiary in such entity, the capacity in which MCRC, the Borrower or such Subsidiary holds the interest, and MCRC's, the Borrower's or such Subsidiary's ownership interest therein. SCHEDULE 6.3 will be updated quarterly at the time of delivery of the financial statements pursuant to Section 7.4(b). Section 6.4. FINANCIAL STATEMENTS. The following financial statements have been furnished to each of the Lenders: (a) The audited consolidated balance sheet of MCRC and its Subsidiaries (including, without limitation, MCRLP and its Subsidiaries) as of December 31, 1999 and their related consolidated income statements for the fiscal year ended December 31, 1999. Such balance sheet and income statements have been prepared in accordance with GAAP and fairly present the financial condition of MCRC and its Subsidiaries as of the close of business on the date thereof and the results of operations for the fiscal year then ended. There are no contingent liabilities of MCRC as of such dates involving material amounts, known to the officers of the Borrower or of MCRC, not disclosed in said financial statements and the related notes thereto. (b) The SEC Filings. -62- Section 6.5 FISCAL YEAR. MCRC, the Borrower and its Subsidiaries each has a fiscal year which is the twelve months ending on December 31 of each calendar year, unless changed in accordance with Section 8.9 hereof. Section 6.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower, each Guarantor and each of their respective Subsidiaries that owns Real Estate possesses all franchises, patents, copyrights, trademarks, trade names, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of their respective businesses substantially as now conducted without known material conflict with any rights of others, including all Permits. Section 6.7. LITIGATION. Except as stated on SCHEDULE 6.7, as updated at the time of each compliance certificate, there are no actions, suits, proceedings or investigations of any kind pending or, to the knowledge of the Borrower and the Guarantors, threatened against the Borrower, any Guarantor or any of their respective Subsidiaries before any court, tribunal or administrative agency or board that, if adversely determined, could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect or materially impair the rights of the Borrower or such Guarantor to carry on their respective businesses substantially as now conducted by them, or result in any substantial liability not adequately covered by insurance, or for which adequate reserves are not maintained, as reflected in the applicable financial statements of MCRLP and MCRC, or which question the validity of this Agreement or any of the other Loan Documents, or any action taken or to be taken pursuant hereto or thereto. Section 6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrower, any Guarantor or any of their respective Subsidiaries is subject to any charter, corporate, partnership or other legal restriction, or any judgment, decree, order, rule or regulation that has or is reasonably expected to have a Material Adverse Effect. None of the Borrower, any Guarantor or any of their respective Subsidiaries that owns Real Estate is a party to any contract or agreement that has or is reasonably expected, in the judgment of their respective officers, to have a Material Adverse Effect. Section 6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the Borrower, any Guarantor or any of their respective Subsidiaries that owns Real Estate is in violation of any provision of its partnership agreement, charter documents, bylaws or other organizational documents, as the case may be, or any respective agreement or instrument to which it is subject or by which it or any of its properties (including, in the case of MCRC and MCRLP, any of their respective Subsidiaries) are bound or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that could reasonably be expected to result, individually or in the aggregate, in the imposition of substantial penalties or have a Material Adverse Effect. -63- Section 6.10. TAX STATUS. (a) (i) Each of the Borrower, the Guarantors and their respective Subsidiaries (A) has timely made or filed all federal, state and local income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (B) has paid all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings, and except those which would not be in violation of Section 8.1(b) hereof and (C) has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply, and (ii) there are no unpaid taxes in any amount in violation of Section 8.1(b) hereof claimed to be due by the taxing authority of any jurisdiction, and the respective officers of the Borrower and the Guarantors and their respective Subsidiaries know of no basis for any such claim. (b) To the Borrower's knowledge, each Partially-Owned Entity (i) has timely made or filed all federal, state and local income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings and except those which would not be in violation of Section 8.1(b) hereof, and (iii) has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. To the best of the Borrower's knowledge, except as otherwise disclosed in writing to the Administrative Agent, there are no unpaid taxes in any amount in violation of Section 8.1(b) hereof claimed to be due by the taxing authority of any jurisdiction from any Partially-Owned Entity, and the officers of the Borrower know of no basis for any such claim. Section 6.11. NO EVENT OF DEFAULT; NO MATERIALLY ADVERSE CHANGES. No Default or Event of Default has occurred and is continuing. Since December 31, 1999 there has occurred no materially adverse change in the financial condition or business of MCRC and its Subsidiaries or MCRLP and its Subsidiaries as shown on or reflected in the SEC Filings or the consolidated balance sheet of MCRC and its Subsidiaries as at December 31, 1999, or the consolidated statement of income for the fiscal quarter then ended, other than changes in the ordinary course of business that have not had a Material Adverse Effect on the Borrower, Guarantors and their respective Subsidiaries, taken as a whole. Section 6.12. INVESTMENT COMPANY ACTS. None of the Borrower, any Guarantor or any of their respective Subsidiaries is an "investment company", or an "affiliated -64- company" or a "principal underwriter" of an "investment company", as such terms are defined in the Investment Company Act of 1940. Section 6.13. ABSENCE OF UCC FINANCING STATEMENTS, ETC. Except for Permitted Liens, as of the Closing Date there will be no financing statement, security agreement, chattel mortgage, real estate mortgage, equipment lease, financing lease, option, encumbrance or other document filed or recorded with any filing records, registry, or other public office, that purports to cover, affect or give notice of any present or possible future lien or encumbrance on, or security interest in, any Unencumbered Property. Neither the Borrower nor any Guarantor has pledged or granted any lien on or security interest in or otherwise encumbered or transferred any of their respective interests in any Subsidiary (including in the case of MCRC, its interests in MCRLP, and in the case of the Borrower, its interests in the Operating Subsidiaries) or in any Partially-Owned Entity, except for the Harborside Pledged Interests pledged to PSC in connection with the Harborside Transaction. Section 6.14. ABSENCE OF LIENS The Borrower or a Guarantor is the owner of or the holder of a ground leasehold interest under an Eligible Ground Lease in the Unencumbered Properties free from any lien, security interest, encumbrance and any other claim or demand, except for Permitted Liens. Section 6.15. CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 6.15 or for transactions that have been determined by the Board of Directors of the relevant Borrower, Guarantor or Subsidiary (or its respective general partner) to be on terms as favorable to such Person as in an arms-length transaction with a third party, none of the officers, partners, directors, or employees of the Borrower or any Guarantor or any of their respective Subsidiaries is presently a party to any transaction with the Borrower, any Guarantor or any of their respective Subsidiaries (other than for or in connection with services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, partner, director or such employee or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any officer, partner, director, or any such employee or natural Person related to such officer, partner, director or employee or other Person in which such officer, partner, director or employee has a direct or indirect beneficial interest has a substantial interest or is an officer, director, trustee or partner. Section 6.16. EMPLOYEE BENEFIT PLANS. Section 6.16.1 IN GENERAL. Each Employee Benefit Plan and each Guaranteed Pension Plan has been maintained and operated in -65- compliance in all material respects with the provisions of ERISA and, to the extent applicable, the Code, including but not limited to the provisions thereunder respecting prohibited transactions and the bonding of fiduciaries and other persons handling plan funds as required by Section 412 of ERISA. The Borrower has heretofore delivered to the Administrative Agent the most recently completed annual report, Form 5500, with all required attachments, and actuarial statement required to be submitted under Section 103(d) of ERISA, with respect to each Guaranteed Pension Plan. Section 6.16.2 TERMINABILITY OF WELFARE PLANS. No Employee Benefit Plan, which is an employee welfare benefit plan within the meaning of Section 3(1) or Section 3(2)(B) of ERISA, provides benefit coverage subsequent to termination of employment, except as required by Title I, Part 6 of ERISA or the applicable state insurance laws. The Borrower may terminate each such Plan at any time (or at any time subsequent to the expiration of any applicable bargaining agreement) in the discretion of the Borrower without material liability to any Person other than for claims arising prior to termination. Section 6.16.3 GUARANTEED PENSION PLANS. Each contribution required to be made to a Guaranteed Pension Plan, whether required to be made to avoid the incurrence of an accumulated funding deficiency, the notice or lien provisions of Section 302(f) of ERISA, or otherwise, has been timely made. No waiver of an accumulated funding deficiency or extension of amortization periods has been received with respect to any Guaranteed Pension Plan, and neither the Borrower nor any Guarantor nor any ERISA Affiliate is obligated to or has posted security in connection with an amendment to a Guaranteed Pension Plan pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code. No liability to the PBGC (other than required insurance premiums, all of which have been paid) has been incurred by the Borrower nor any Guarantor nor any ERISA Affiliate with respect to any Guaranteed Pension Plan and there has not been any ERISA Reportable Event (other than an ERISA Reportable Event as to which the requirement of 30 days notice has been waived), or any other event or condition which presents a material risk of termination of any Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each Guaranteed Pension Plan (which in each case occurred within twelve months of the date of this representation), and on the actuarial methods and assumptions employed for that valuation, the aggregate benefit liabilities of all such Guaranteed Pension Plans within the meaning of Section 4001 of ERISA did not exceed the aggregate value of the assets of all such Guaranteed Pension Plans, disregarding for this purpose the benefit liabilities and assets of any Guaranteed Pension Plan with assets in excess of benefit liabilities, by more than $500,000. -66- Section 6.16.4 MULTIEMPLOYER PLANS. Neither the Borrower nor any Guarantor nor any ERISA Affiliate has incurred any material liability (including secondary liability) to any Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan under Section 4201 of ERISA or as a result of a sale of assets described in Section 4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has been notified that any Multiemployer Plan is in reorganization or insolvent under and within the meaning of Section 4241 or Section 4245 of ERISA or is at material risk of entering reorganization or becoming insolvent, or that any Multiemployer Plan intends to terminate or has been terminated under Section 4041A of ERISA. Section 6.17. REGULATIONS U AND X. The proceeds of the Loans shall be used for the purposes described in Section 7.12. No portion of any Loan is to be used, and no portion of any Letter of Credit is to be obtained, for the purpose of purchasing or carrying any "margin security" or "margin stock" as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224, PROVIDED the Borrower may purchase MCRC stock as a Distribution under sub part (ii) of the definition thereof as long as it does not at any time cause the Lenders to be in violation of Regulations U and X and such action does not otherwise constitute a Default or an Event of Default. Section 6.18. ENVIRONMENTAL COMPLIANCE. The Borrower has caused environmental assessments to be conducted and/or taken other steps to investigate the past and present environmental condition and usage of the Real Estate and the operations conducted thereon. Except as disclosed in the environmental assessments provided to the Administrative Agent pursuant to Section 10.7 and based upon such assessments and/or investigation, to the Borrower's knowledge, the Borrower has determined that: (a) None of the Borrower, any Guarantor, any of their respective Subsidiaries or any operator of the Real Estate or any portion thereof, or any operations thereon is in violation, or alleged violation (in writing), of any judgment, order, law, license, rule or regulation pertaining to environmental matters, including without limitation, those arising under the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance or order relating to health, safety or the environment (hereinafter "ENVIRONMENTAL LAWS"), which violation or alleged violation (in writing) has, or its remediation would have, by itself or when aggregated with all such other violations or alleged violations, a Material Adverse Effect or constitutes a Disqualifying Environmental Event. -67- (b) None of the Borrower, any Guarantor or any of their respective Subsidiaries has received notice from any third party, including, without limitation, any federal, state or local governmental authority, (i) that it has been identified by the United States Environmental Protection Agency ("EPA") as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986), (ii) that any hazardous waste, as defined by 42 U.S.C. Section 6903(5), any hazardous substances as defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) or any toxic substances, oil or hazardous materials or other chemicals or substances regulated by any Environmental Laws ("HAZARDOUS SUBSTANCES") which it has generated, transported or disposed of has been found at any site at which a federal, state or local agency or other third party has conducted or has ordered that the Borrower, any Guarantor or any of their respective Subsidiaries conduct a remedial investigation, removal or other response action pursuant to any Environmental Law, or (iii) that it is or shall be a named party to any claim, action, cause of action, complaint, or legal or administrative proceeding (in each case, contingent or otherwise) arising out of any third party's incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the release of Hazardous Substances; which event described in any such notice would have a Material Adverse Effect or constitutes a Disqualifying Environmental Event. (c) (i) No portion of the Real Estate has been used for the handling, processing, storage or disposal of Hazardous Substances except in accordance with applicable Environmental Laws; and no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of any Real Estate except in accordance with applicable Environmental Laws, (ii) in the course of any activities conducted by the Borrower, the Guarantors, their respective Subsidiaries or to the knowledge of the Borrower, without any independent inquiry other than as set forth in the environmental assessments, the operators of the Real Estate, or any ground or space tenants on any Real Estate, no Hazardous Substances have been generated or are being used on such Real Estate except in accordance with applicable Environmental Laws, (iii) there has been no present or past releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping (a "RELEASE") or threatened Release of Hazardous Substances on, upon, into or from the Real Estate, (iv) to the knowledge of the Borrower without any independent inquiry other than as set forth in the environmental assessments, there have been no Releases on, upon, from or into any real property in the vicinity of any of the Real Estate which, through soil or groundwater contamination, may have come to be located on such Real Estate, and (v) any Hazardous Substances that have been generated by the Borrower or a Guarantor or any of their respective Subsidiaries at any of -68- the Real Estate have been transported off-site only by carriers having an identification number issued by the EPA, treated or disposed of only by treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws; any of which events described in clauses (i) through (v) above would have a Material Adverse Effect, or constitutes a Disqualifying Environmental Event. (d) By virtue of the use of the Loans proceeds contemplated hereby, or as a condition to the effectiveness of any of the Loan Documents, none of the Borrower, any Guarantor or any of the Real Estate is subject to any applicable Environmental Law requiring the performance of Hazardous Substances site assessments, or the removal or remediation of Hazardous Substances, or the giving of notice to any governmental agency or the recording or delivery to other Persons of an environmental disclosure document or statement. Section 6.19. SUBSIDIARIES. As of the Closing Date, SCHEDULE 6.19 sets forth all of the respective Subsidiaries of MCRC or MCRLP and any other Guarantor, and SCHEDULE 6.19 will be updated annually at the time of delivery of the financial statements pursuant to Section 7.4(a) to reflect any changes, including subsequent Guarantor and its Subsidiaries, if any. Section 6.20. LOAN DOCUMENTS. All of the representations and warranties of the Borrower and the Guarantors made in this Agreement and in the other Loan Documents or any document or instrument delivered to the Administrative Agent or the Lenders pursuant to or in connection with any of such Loan Documents are true and correct in all material respects and do not include any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make such representations and warranties not materially misleading. Section 6.21. REIT STATUS. MCRC has not taken any action that would prevent it from maintaining its qualification as a REIT or from maintaining such qualification at all times during the term of the Loans. Section 6.22. SUBSEQUENT GUARANTORS. The foregoing representations and warranties in Section 6.3 through Section 6.20, as the same are true, correct and applicable to Guarantors existing on the Closing Date, shall be true, correct and applicable to each subsequent Guarantor in all material respects as of the date it becomes a Guarantor. Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS. The Borrower for itself and on behalf of each of the Guarantors (if and to the extent expressly included in Subsections contained in this Section) -69- covenants and agrees that, so long as any Loan, Letter of Credit or Note is outstanding or the Lenders have any obligation to make any Loans or any Lender has any obligation to issue, extend or renew any Letters of Credit: Section 7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause to be paid the principal and interest on the Loans and all interest, fees, charges and other amounts provided for in this Agreement and the other Loan Documents, all in accordance with the terms of this Agreement and the Notes, and the other Loan Documents. Section 7.2. MAINTENANCE OF OFFICE. The Borrower and each of the Guarantors will maintain its chief executive office in Cranford, New Jersey, or at such other place in the United States of America as each of them shall designate upon written notice to the Administrative Agent to be delivered within five (5) days of such change, where notices, presentations and demands to or upon the Borrower and the Guarantors, as the case may be, in respect of the Loan Documents may be given or made. Section 7.3. RECORDS AND ACCOUNTS. The Borrower and each of the Guarantors will (a) keep true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP in all material respects, and will cause each of its Subsidiaries that owns Real Estate to keep true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP in all material respects, (b) maintain adequate accounts and reserves for all taxes (including income taxes), contingencies, depreciation and amortization of its properties and the properties of its Subsidiaries and (c) at all times engage PricewaterhouseCoopers LLP or other Accountants as the independent certified public accountants of MCRC, MCRLP and their respective Subsidiaries and will not permit more than thirty (30) days to elapse between the cessation of such firm's (or any successor firm's) engagement as the independent certified public accountants of MCRC, MCRLP and their respective Subsidiaries and the appointment in such capacity of a successor firm as Accountants. Section 7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower will deliver and will cause MCRC to deliver to the Administrative Agent: (a) as soon as practicable, but in any event not later than ninety (90) days after the end of each of its fiscal years, unless, in the case of MCRC, MCRC has filed for an extension in accordance with Section 7.4(g) hereof, in which case such annual financial statements shall be due in accordance with the proviso to Section 7.4(g): -70- (i) in the case of MCRLP, if prepared, the audited consolidated balance sheet of MCRLP and its subsidiaries at the end of such year, the related audited consolidated statements of operations, owner's equity (deficit) and cash flows for the year then ended, in each case (except for statements of cash flow and owner's equity) with supplemental consolidating schedules provided by MCRLP; and (ii) in the case of MCRC, the audited consolidated balance sheet of MCRC and its subsidiaries (including, without limitation, MCRLP and its subsidiaries) at the end of such year, the related audited consolidated statements of operations, stockholders' equity (deficit) and cash flows for the year then ended, in each case with supplemental consolidating schedules (except for statements of cash flow and stockholders' equity) provided by MCRC; each setting forth in comparative form the figures for the previous fiscal year and all such statements to be in reasonable detail, prepared in accordance with GAAP, and, in each case, accompanied by an auditor's report prepared without qualification by the Accountants; (b) as soon as practicable, but in any event not later than forty-five (45) days after the end of each of its first three (3) fiscal quarters: (i) in the case of MCRLP, if prepared, copies of the unaudited consolidated balance sheet of MCRLP and its subsidiaries as at the end of such quarter, the related unaudited consolidated statements of operations, owner's equity (deficit) and cash flows for the portion of MCRLP's fiscal year then elapsed, with supplemental consolidating schedules (except with respect to statements of cash flow and owner's equity) provided by MCRLP; and (ii) in the case of MCRC, copies of the unaudited consolidated balance sheet of MCRC and its subsidiaries (including, without limitation, MCRLP and its subsidiaries) as at the end of such quarter, the related unaudited consolidated statements of operations, stockholders' equity (deficit) and cash flows for the portion of MCRC's fiscal year then elapsed, with supplemental consolidating schedules (except with respect to statements of cash flow and stockholders' equity) provided by MCRC; all in reasonable detail and prepared in accordance with GAAP on the same basis as used in preparation of MCRC's Form 10-Q statements filed with the SEC, together with a certification by the chief financial officer or vice president of finance of MCRLP or MCRC, as applicable, that the information contained in -71- such financial statements fairly presents the financial position of MCRLP or MCRC (as the case may be) and its subsidiaries on the date thereof (subject to year-end adjustments); (c) simultaneously with the delivery of the financial statements referred to in subsections (a) (for the fourth fiscal quarter of each fiscal year) above and (b) (for the first three fiscal quarters of each fiscal year), a statement in the form of EXHIBIT D hereto signed by the chief financial officer or vice president of finance of the MCRLP or MCRC, as applicable, and (if applicable) reconciliations to reflect changes in GAAP since the applicable Financial Statement Date, but only to the extent that such changes in GAAP affect the financial covenants set forth in Section 9 hereof; and, in the case of MCRLP, setting forth in reasonable detail computations evidencing compliance with the covenants contained in Section 8.7 and Section 9 hereof; (d) promptly if requested by the Administrative Agent, a copy of each report (including any so-called letters of reportable conditions or letters of no material weakness) submitted to the Borrower, MCRC, or any other Guarantor or any of their respective subsidiaries by the Accountants in connection with each annual audit of the books of the Borrower, MCRC, or any other Guarantor or such subsidiary by such Accountants or in connection with any interim audit thereof pertaining to any phase of the business of the Borrower, MCRC or any other Guarantor or any such subsidiary; (e) contemporaneously with the filing or mailing thereof, copies of all material of a financial nature sent to the holders of any Indebtedness of the Borrower or any Guarantor (other than the Loans) for borrowed money, to the extent that the information or disclosure contained in such material refers to or could reasonably be expected to have a Material Adverse Effect; (f) subject to subsection (g) below, contemporaneously with the filing or mailing thereof, copies of all material of a financial nature filed with the SEC or sent to the stockholders of MCRC; (g) as soon as practicable, but in any event not later than ninety (90) days after the end of each fiscal year of MCRC, copies of the Form 10-K statement filed by MCRC with the SEC for such fiscal year, and as soon as practicable, but in any event not later than forty-five (45) days after the end of each fiscal quarter of MCRC, copies of the Form 10-Q statement filed by MCRC with the SEC for such fiscal quarter, PROVIDED that, in either case, if MCRC has filed an extension for the filing of such statements, MCRC shall deliver such statements to the Administrative Agent within ten (10) days after the filing thereof with the SEC which filing shall be within fifteen (15) days of MCRC's -72- filing for such extension or such sooner time as required to avert a Material Adverse Effect on MCRC; (h) from time to time, but not more frequently than once each calendar quarter so long as no Default or Event of Default has occurred and is continuing, such other financial data and information about the Borrower, MCRC, the other Guarantors, their respective Subsidiaries, the Real Estate and the Partially-Owned Entities as the Administrative Agent or any Lender acting through the Administrative Agent may reasonably request, and which is prepared by such Person in the normal course of its business or is required for securities and tax law compliance, including pro forma financial statements described in Section 9.9(b)(ii), complete rent rolls for the Unencumbered Properties and summary rent rolls for the other Real Estate, existing environmental reports, and insurance certificates with respect to the Real Estate (including the Unencumbered Properties) and tax returns (following the occurrence of a Default or Event of Default or, in the case of MCRC, to confirm MCRC's REIT status), but excluding working drafts and papers and privileged documents; and (i) simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, updates to SCHEDULE 6.3 and SCHEDULE 6.19 hereto. Section 7.5. NOTICES. (a) DEFAULTS. The Borrower will, and will cause each Guarantor, as applicable, to, promptly notify the Administrative Agent in writing of the occurrence of any Default or Event of Default. If any Person shall give any notice or take any other action in respect of (x) a claimed default (whether or not constituting a Default or Event of Default under this Agreement) or (y) a claimed default by the Borrower, any Guarantor or any of their respective Subsidiaries, as applicable, under any note, evidence of Indebtedness, indenture or other obligation for borrowed money to which or with respect to which any of them is a party or obligor, whether as principal, guarantor or surety, and such default would permit the holder of such note or obligation or other evidence of Indebtedness to accelerate the maturity thereof or otherwise cause the entire Indebtedness to become due, the Borrower, MCRC or such other Guarantor, as the case may be, shall forthwith give written notice thereof to the Administrative Agent, describing the notice or action and the nature of the claimed failure to comply. (b) ENVIRONMENTAL EVENTS. The Borrower will, and will cause each Guarantor to, promptly give notice in writing to the Administrative Agent (i) upon the Borrower's or such Guarantor's obtaining knowledge of any material violation of any Environmental Law affecting any Real Estate or the Borrower's -73- or such Guarantor's operations or the operations of any of their Subsidiaries, (ii) upon the Borrower's or such Guarantor's obtaining knowledge of any known Release of any Hazardous Substance at, from, or into any Real Estate which it reports in writing or is reportable by it in writing to any governmental authority and which is material in amount or nature or which could materially adversely affect the value of such Real Estate, (iii) upon the Borrower's or such Guarantor's receipt of any notice of material violation of any Environmental Laws or of any material Release of Hazardous Substances in violation of any Environmental Laws or any matter that may be a Disqualifying Environmental Event, including a notice or claim of liability or potential responsibility from any third party (including without limitation any federal, state or local governmental officials) and including notice of any formal inquiry, proceeding, demand, investigation or other action with regard to (A) the Borrower's or such Guarantor's or any other Person's operation of any Real Estate, (B) contamination on, from or into any Real Estate, or (C) investigation or remediation of off-site locations at which the Borrower or such Guarantor or any of its predecessors are alleged to have directly or indirectly disposed of Hazardous Substances, or (iv) upon the Borrower's or such Guarantor's obtaining knowledge that any expense or loss has been incurred by such governmental authority in connection with the assessment, containment, removal or remediation of any Hazardous Substances with respect to which the Borrower or such Guarantor or any Partially-Owned Entity may be liable or for which a lien may be imposed on any Real Estate; provided any of which events described in clauses (i) through (iv) above would have a Material Adverse Effect or constitute a Disqualifying Environmental Event with respect to any Unencumbered Property. (c) NOTIFICATION OF CLAIMS AGAINST UNENCUMBERED PROPERTIES. The Borrower will, and will cause each Guarantor to, promptly upon becoming aware thereof, notify the Administrative Agent in writing of any setoff, claims, withholdings or other defenses to which any of the Unencumbered Properties are subject, which (i) would have a material adverse effect on the value of such Unencumbered Property, (ii) would have a Material Adverse Effect, or (iii) with respect to such Unencumbered Property, would constitute a Disqualifying Environmental Event or a Lien which is not a Permitted Lien. (d) NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will, and will cause each Guarantor and each Guarantor's Subsidiaries to, and the Borrower will cause each of its respective Subsidiaries to, give notice to the Administrative Agent in writing within ten (10) days of becoming aware of any litigation or proceedings threatened in writing or any pending litigation and proceedings an adverse determination in which could reasonably be expected to have a Material Adverse Effect or materially adversely affect any Unencumbered Property, or to which the Borrower, any Guarantor or any of -74- their respective Subsidiaries is or is to become a party involving an uninsured claim against the Borrower, any Guarantor or any of their respective Subsidiaries that could reasonably be expected to have a Materially Adverse Effect or materially adversely affect the value or operation of the Unencumbered Properties and stating the nature and status of such litigation or proceedings. The Borrower will, and will cause each of the Guarantors and the Subsidiaries to, give notice to the Administrative Agent, in writing, in form and detail reasonably satisfactory to the Administrative Agent, within ten (10) days of any judgment not covered by insurance, final or otherwise, against the Borrower, any Guarantor or any of their Subsidiaries in an amount in excess of $1,000,000. (e) ACQUISITION OF REAL ESTATE. The Borrower shall promptly provide the Administrative Agent and the Lenders with any press releases relating to the acquisition of any Real Estate by the Borrower, any Guarantor, any of their respective Subsidiaries or any Partially-Owned Entity. In addition, to the extent not otherwise provided to the Administrative Agent in its press release and Form 10-Q filings with the SEC, the Borrower shall provide to the Administrative Agent on a quarterly basis together with the financial statements referred to in Section 7.4(b) the following information with respect to all Real Estate acquired during the prior quarter: its address, a brief description, a brief summary of the key business terms of such acquisition (including sources and uses of funds for such acquisition), a brief summary of the principal terms of any financing for such Real Estate, and a statement as to whether such Real Estate qualifies as an Unencumbered Property. Section 7.6. EXISTENCE OF BORROWER AND SUBSIDIARY GUARANTORS; MAINTENANCE OF PROPERTIES. The Borrower for itself and for each Subsidiary Guarantor insofar as any such statements relate to such Subsidiary Guarantor will do or cause to be done all things necessary to, and shall, preserve and keep in full force and effect its existence as a limited partnership or its existence as another legally constituted entity, and will do or cause to be done all things necessary to preserve and keep in full force all of its material rights and franchises and those of its Subsidiaries. The Borrower (a) will cause all necessary repairs, renewals, replacements, betterments and improvements to be made to all Real Estate owned or controlled by it or by any of its Subsidiaries or any Subsidiary Guarantor, all as in the judgment of the Borrower or such Subsidiary or such Subsidiary Guarantor may be necessary so that the business carried on in connection therewith may be properly conducted at all times, subject to the terms of the applicable Leases and partnership agreements or other entity charter documents, (b) will cause all of its other properties and those of its Subsidiaries and the Subsidiary Guarantors used or useful in the conduct of its business or the business of its Subsidiaries or such Subsidiary Guarantor to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment, ordinary wear and tear excepted, and (c) will, and -75- will cause each of its Subsidiaries and each Subsidiary Guarantor to, continue to engage primarily in the businesses now conducted by it and in related businesses consistent with the requirements of the fourth sentence of Section 7.7 hereof; PROVIDED that nothing in this Section 7.6 shall prevent the Borrower from discontinuing the operation and maintenance of any of its properties or any of those of its Subsidiaries if such discontinuance is, in the judgment of the Borrower, desirable in the conduct of its or their business and such discontinuance does not cause a Default or an Event of Default hereunder and does not in the aggregate have a Material Adverse Effect on the Borrower, Guarantors and their respective Subsidiaries taken as a whole. Section 7.7. EXISTENCE OF MCRC; MAINTENANCE OF REIT STATUS OF MCRC; MAINTENANCE OF PROPERTIES. The Borrower will cause MCRC to do or cause to be done all things necessary to preserve and keep in full force and effect MCRC's existence as a Maryland corporation. The Borrower will cause MCRC at all times to maintain its status as a REIT and not to take any action which could lead to its disqualification as a REIT. The Borrower shall cause MCRC at all times to maintain its listing on the New York Stock Exchange or any successor thereto. The Borrower will cause MCRC to continue to operate as a fully-integrated, self-administered and self-managed real estate investment trust which, together with its Subsidiaries (including, without limitation MCRLP) owns and operates an improved property portfolio comprised primarily (i.e., 85% or more by value) of office, office/flex, warehouse and industrial/warehouse properties. The Borrower will cause MCRC not to engage in any business other than the business of acting as a REIT and serving as the general partner and limited partner of MCRLP, as a member, partner or stockholder of other Persons and as a Guarantor. The Borrower shall cause MCRC to conduct all or substantially all of its business operations through MCRLP or through subsidiary partnerships or other entities in which (x) MCRLP directly or indirectly owns at least 95% of the economic interests and (y) MCRC directly or indirectly (through wholly-owned Subsidiaries) acts as sole general partner or managing member. The Borrower shall cause MCRC not to own real estate assets outside of its interests in MCRLP. The Borrower will cause MCRC to do or cause to be done all things necessary to preserve and keep in full force all of its rights and franchises and those of its Subsidiaries. The Borrower will cause MCRC (a) to cause all of its properties and those of its Subsidiaries used or useful in the conduct of its business or the business of its Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment, ordinary wear and tear excepted, (b) to cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of MCRC may be necessary so that the business carried on in connection therewith may be properly conducted at all times, and (c) to cause each of its Subsidiaries to continue to engage primarily in the businesses now conducted by it and in related businesses, consistent with -76- the requirements of the fourth sentence of this Section 7.7; PROVIDED that nothing in this Section 7.7 shall prevent MCRC from discontinuing the operation and maintenance of any of its properties or any of those of its Subsidiaries if such discontinuance is, in the judgment of MCRC, desirable in the conduct of its or their business and such discontinuance does not cause a Default or an Event of Default hereunder and does not in the aggregate materially adversely affect the business of MCRC and its Subsidiaries on a consolidated basis. Section 7.8. INSURANCE. The Borrower will, and will cause each Guarantor to, maintain with respect to its properties, and will cause each of its Subsidiaries to maintain with financially sound and reputable insurers, insurance with respect to such properties and its business against such casualties and contingencies as shall be commercially reasonable and in accordance with the customary and general practices of businesses having similar operations and real estate portfolios in similar geographic areas and in amounts, containing such terms, in such forms and for such periods as may be reasonable and prudent for such businesses. Section 7.9. TAXES. The Borrower will, and will cause each Guarantor to, pay or cause to be paid real estate taxes, other taxes, assessments and other governmental charges against the Real Estate before the same become delinquent and will duly pay and discharge, or cause to be paid and discharged, before the same shall become overdue, all taxes, assessments and other governmental charges imposed upon its sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies that if unpaid might by law become a lien or charge upon any of the Real Estate; PROVIDED that any such tax, assessment, charge, levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Borrower or such Guarantor shall have set aside on its books adequate reserves with respect thereto; and PROVIDED FURTHER that the Borrower or such Guarantor will pay all such taxes, assessments, charges, levies or claims forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor. If requested by the Agent, the Borrower will provide evidence of the payment of real estate taxes, other taxes, assessments and other governmental charges against the Real Estate in the form of receipted tax bills or other form reasonably acceptable to the Agent. Notwithstanding the foregoing, a breach of the covenants set forth in this Section 7.9 shall only constitute an Event of Default if such breach results in a violation of the covenant set forth in Section 8.1(b) hereof. Section 7.10. INSPECTION OF PROPERTIES AND BOOKS. The Borrower will, and will cause each Guarantor to, permit the Lenders, coordinated through the Administrative Agent, (a) on an annual basis as a group, or more frequently if -77- required by law or by regulatory requirements of a Lender or if a Default or an Event of Default shall have occurred and be continuing, to visit and inspect any of the properties of the Borrower, any Guarantor or any of their respective Subsidiaries, and to examine the books of account of the Borrower, the Guarantors and their respective Subsidiaries (and to make copies thereof and extracts therefrom) and (b) to discuss the affairs, finances and accounts of the Borrower, the Guarantors and their respective Subsidiaries with, and to be advised as to the same by, its officers, all at such reasonable times and intervals during normal business hours as the Administrative Agent may reasonably request; PROVIDED that the Borrower shall only be responsible for the costs and expenses incurred by the Administrative Agent in connection with such inspections after the occurrence and during the continuance of an Event of Default; and PROVIDED FURTHER that such Person has executed a confidentiality agreement in substantially the form executed by the Administrative Agent as of the date hereof. The Administrative Agent and each Lender agrees to treat any non-public information delivered or made available by the Borrower to it in accordance with the provisions of the confidentiality agreement executed by such Person. Section 7.11. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The Borrower will, and will cause each Guarantor to, comply with, and will cause each of their respective Subsidiaries to comply with (a) all applicable laws and regulations now or hereafter in effect wherever its business is conducted, including, without limitation, all Environmental Laws and all applicable federal and state securities laws, (b) the provisions of its partnership agreement and certificate or corporate charter and other charter documents and by-laws, as applicable, (c) all material agreements and instruments to which it is a party or by which it or any of its properties may be bound (including the Real Estate and the Leases) and (d) all applicable decrees, orders, and judgments; PROVIDED that any such decree, order or judgment need not be complied with if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Borrower or such Guarantor shall have set aside on its books adequate reserves with respect thereto; and PROVIDED FURTHER that the Borrower or such Guarantor will comply with any such decree, order or judgment forthwith upon the commencement of proceedings to foreclose any Lien that may have attached as security therefor. Section 7.12. USE OF PROCEEDS. Subject at all times to the other provisions of this Agreement, the Borrower will use the proceeds of the Loans solely for general working capital needs (including letters of credit) and other general corporate purposes. Section 7.13. ACQUISITION OF UNENCUMBERED PROPERTIES. The Borrower shall promptly, but in any event within thirty (30) days of the acquisition of an -78- Unencumbered Property or the qualification of any Real Estate as an Unencumbered Property, deliver to the Administrative Agent a copy of the Title Policy or commitment for a Title Policy and the final environmental site assessment for such Unencumbered Property. Section 7.14. ADDITIONAL GUARANTORS; SOLVENCY OF GUARANTORS. (a) If, after the Closing Date, a Subsidiary that is not a Guarantor, acquires any Real Estate that then or thereafter qualifies under (a)-(d) of the definition of Unencumbered Property and is wholly-owned or ground leased under an Eligible Ground Lease, the Borrower shall cause such Person (which Person must be or become a wholly-owned Subsidiary) to execute and deliver a Guaranty to the Administrative Agent and the Lenders in substantially the form of EXHIBIT B hereto. Such Guaranty shall evidence consideration and equivalent value. The Borrower will not permit any Guarantor that owns or ground leases any Unencumbered Properties to have any Subsidiaries unless such Subsidiary's business, obligations and undertakings are exclusively related to the business of such Guarantor in the ownership of the Unencumbered Properties. (b) The Borrower, MCRC, and each Subsidiary Guarantor is solvent, other than for Permitted Event(s) permitted by this Agreement which shall be the only Non-Material Breaches under this Section 7.14(b). The Borrower and MCRC each acknowledge that, subject to the indefeasible payment and performance in full of the Obligations, the rights of contribution among each of the them and the Subsidiary Guarantors are in accordance with applicable laws and in accordance with each such Person's benefits under the Loans and this Agreement. The Borrower further acknowledges that, subject to the indefeasible payment and performance in full of the Obligations, the rights of subrogation of the Subsidiary Guarantors as against the Borrower and MCRC are in accordance with applicable laws. Section 7.15. FURTHER ASSURANCES. The Borrower will, and will cause each Guarantor to, cooperate with, and to cause each of its Subsidiaries to cooperate with, the Administrative Agent and the Lenders and execute such further instruments and documents as the Lenders or the Administrative Agent shall reasonably request to carry out to their reasonable satisfaction the transactions contemplated by this Agreement and the other Loan Documents. Section 7.16. [Intentionally Omitted] Section 7.17. ENVIRONMENTAL INDEMNIFICATION. The Borrower covenants and agrees that it and its Subsidiaries will indemnify and hold the Administrative Agent and each Lender, and each of their respective Affiliates, harmless from -79- and against any and all claims, expense, damage, loss or liability incurred by the Administrative Agent or any Lender (including all reasonable costs of legal representation incurred by the Administrative Agent or any Lender in connection with any investigative, administrative or judicial proceeding, whether or not the Administrative Agent or any Lender is party thereto, but excluding, as applicable for the Administrative Agent or a Lender, any claim, expense, damage, loss or liability as a result of the gross negligence or willful misconduct of the Administrative Agent or such Lender or any of their respective Affiliates) relating to (a) any Release or threatened Release of Hazardous Substances on any Real Estate; (b) any violation of any Environmental Laws with respect to conditions at any Real Estate or the operations conducted thereon; (c) the investigation or remediation of off-site locations at which the Borrower, any Guarantor or any of their respective Subsidiaries or their predecessors are alleged to have directly or indirectly disposed of Hazardous Substances; or (d) any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances relating to Real Estate (including, but not limited to, claims with respect to wrongful death, personal injury or damage to property). In litigation, or the preparation therefor, the Lenders and the Administrative Agent shall be entitled to select their own counsel and participate in the defense and investigation of such claim, action or proceeding, and the Borrower shall bear the expense of such separate counsel of the Administrative Agent and the Lenders if (i) in the written opinion of counsel to the Administrative Agent and the Lenders, use of counsel of the Borrower's choice could reasonably be expected to give rise to a conflict of interest, (ii) the Borrower shall not have employed counsel reasonably satisfactory to the Administrative Agent and the Lenders within a reasonable time after notice of the institution of any such litigation or proceeding, or (iii) the Borrower authorizes the Administrative Agent and the Lenders to employ separate counsel at the Borrower's expense. It is expressly acknowledged by the Borrower that this covenant of indemnification shall survive the payment of the Loans and shall inure to the benefit of the Administrative Agent and the Lenders and their respective Affiliates, their respective successors, and their respective assigns under the Loan Documents permitted under this Agreement. Section 7.18. RESPONSE ACTIONS. The Borrower covenants and agrees that if any Release or disposal of Hazardous Substances shall occur or shall have occurred on any Real Estate owned by it or any of its Subsidiaries, the Borrower will cause the prompt containment and removal of such Hazardous Substances and remediation of such Real Estate if necessary to comply with all Environmental Laws. Section 7.19. ENVIRONMENTAL ASSESSMENTS. If the Majority Lenders have reasonable grounds to believe that a Disqualifying Environmental Event has -80- occurred with respect to any Unencumbered Property, after reasonable notice by the Administrative Agent, whether or not a Default or an Event of Default shall have occurred, the Majority Lenders may determine that the affected Real Estate no longer qualifies as an Unencumbered Property; PROVIDED that prior to making such determination, the Administrative Agent shall give the Borrower reasonable notice and the opportunity to obtain one or more environmental assessments or audits of such Unencumbered Property prepared by a hydrogeologist, an independent engineer or other qualified consultant or expert approved by the Administrative Agent, which approval will not be unreasonably withheld, to evaluate or confirm (i) whether any Release of Hazardous Substances has occurred in the soil or water at such Unencumbered Property and (ii) whether the use and operation of such Unencumbered Property materially complies with all Environmental Laws (including not being subject to a matter that is a Disqualifying Environmental Event). Such assessment will then be used by the Administrative Agent to determine whether a Disqualifying Environmental Event has in fact occurred with respect to such Unencumbered Property. All such environmental assessments shall be at the sole cost and expense of the Borrower. Section 7.20. EMPLOYEE BENEFIT PLANS. (a) IN GENERAL. Each Employee Benefit Plan maintained by the Borrower, any Guarantor or any of their respective ERISA Affiliates will be operated in compliance in all material respects with the provisions of ERISA and, to the extent applicable, the Code, including but not limited to the provisions thereunder respecting prohibited transactions. (b) TERMINABILITY OF WELFARE PLANS. With respect to each Employee Benefit Plan maintained by the Borrower, any Guarantor or any of their respective ERISA Affiliates which is an employee welfare benefit plan within the meaning of Section 3(1) or Section 3(2)(B) of ERISA, the Borrower, such Guarantor, or any of their respective ERISA Affiliates, as the case may be, has the right to terminate each such plan at any time (or at any time subsequent to the expiration of any applicable bargaining agreement) without material liability other than liability to pay claims incurred prior to the date of termination. (c) UNFUNDED OR UNDERFUNDED LIABILITIES. The Borrower will not, and will not permit any Guarantor to, at any time, have accruing or accrued unfunded or underfunded liabilities with respect to any Employee Benefit Plan, Guaranteed Pension Plan or Multiemployer Plan, or permit any condition to exist under any Multiemployer Plan that would create a withdrawal liability. Section 7.21. NO AMENDMENTS TO CERTAIN DOCUMENTS. The Borrower will not, and will not permit any Guarantor to, at any time cause or permit its certificate of -81- limited partnership, agreement of limited partnership, articles of incorporation, by-laws, certificate of formation, operating agreement or other charter documents, as the case may be, to be modified, amended or supplemented in any respect whatever, without (in each case) the express prior written consent or approval of the Administrative Agent, if such changes would adversely affect MCRC's REIT status or otherwise materially adversely affect the rights of the Administrative Agent and the Lenders hereunder or under any other Loan Document. Section 7.22. PRIMARY CREDIT FACILITY. The Borrower will at all times use this Agreement as the Borrower's primary revolving credit agreement and will not at any time during the term of this Agreement permit that ratio of (a) the sum of the outstanding principal balance of the Loans PLUS the Maximum Drawing Amount to (b) the Total Commitment (the "OUTSTANDING RATIO") to be less than the corresponding ratio under any other revolving credit agreement maintained by the Borrower or any Guarantor, including MCRC, except that the corresponding ratio under the $100,000,000 credit facility with PSC (as amended, modified, restated or refinanced so long as the amount of such facility does not exceed $100,000,000) may exceed the Outstanding Ratio from time to time. Section 7.23. MANAGEMENT. Except by reason of death or incapacity, at least three (3) of the Key Management Individuals (as hereinafter defined) shall remain active in the executive and/or operational management, in their current (or comparable) positions, of MCRC (which is and shall remain the sole general partner and management of MCRLP); PROVIDED, HOWEVER, if at least three (3) of the Key Management Individuals are not so active in such positions (except by reason of death or incapacity as aforesaid), then within ninety (90) days of the occurrence of such event, MCRC shall propose and appoint such individual(s) of comparable experience, reputation and otherwise reasonably acceptable to the Majority Lenders to such position(s) such that, after such appointment, such acceptable replacement individuals, together with the Key Management Individuals remaining so active in such positions with MCRC, if any, total at least three (3). For purposes hereof, "KEY MANAGEMENT INDIVIDUALS" shall mean and include Mitchell E. Hersh, John R. Cali, Brant B. Cali, Barry Lefkowitz, Roger W. Thomas and Timothy M. Jones. Section 7.24. DISTRIBUTIONS IN THE ORDINARY COURSE. In the ordinary course of business MCRLP causes all of its and MCRC's Subsidiaries to make net transfers of cash and cash equivalents upstream to MCRLP and MCRC, and shall continue to follow such ordinary course of business. MCRLP shall not make net transfers of cash and cash equivalents downstream to its and MCRC's Subsidiaries except in the ordinary course of business consistent with past practice. -82- Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS. The Borrower for itself and on behalf of the Guarantors covenants and agrees that, so long as any Loan, Letter of Credit or Note is outstanding or any of the Lenders has any obligation to make any Loans or any Lender has any obligation to issue, extend or renew any Letters of Credit: Section 8.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower and the Guarantors may, and may permit their respective Subsidiaries to, create, incur, assume, guarantee or be or remain liable for, contingently or otherwise, any Indebtedness other than the specific Indebtedness which is prohibited under this Section 8.1 and with respect to which each of the Borrower and the Guarantors will not, and will not permit any Subsidiary to, create, incur, assume, guarantee or be or remain liable for, contingently or otherwise, singularly or in the aggregate as follows: (a) Indebtedness which would result in a Default or Event of Default under Section 9 hereof or under any other provision of this Agreement; (b) An aggregate amount in excess of $10,000,000 at any one time in respect of (i) taxes, assessments, governmental charges or levies and claims for labor, materials and supplies for which payment therefor is required to be made in accordance with the provisions of Section 7.9 and has not been timely made, (ii) uninsured judgments or awards, with respect to which the applicable periods for taking appeals have expired, or with respect to which final and unappealable judgments or awards have been rendered, and (iii) current unsecured liabilities incurred in the ordinary course of business, which (A) are overdue for more than sixty (60) days, and (B) are not being contested in good faith; and (c) Guarantees of the Indebtedness of any Opportunity Fund which are not permitted under the definition of "Opportunity Fund" herein. The terms and provisions of this Section 8.1 are in addition to, and not in limitation of, the covenants set forth in Section 9 of this Agreement. Section 8.2. RESTRICTIONS ON LIENS, ETC. None of the Borrower, any Guarantor, any Operating Subsidiary and any wholly-owned Subsidiary will: (a) create or incur or suffer to be created or incurred or to exist any lien, encumbrance, mortgage, pledge, negative pledge, charge, restriction or other security interest of any kind upon any of its property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) transfer any of such property or assets or the income or profits therefrom for the -83- purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement; (d) suffer to exist for a period of more than thirty (30) days after the same shall have been incurred any Indebtedness or claim or demand against it that if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever over its general creditors; or (e) sell, assign, pledge or otherwise transfer any accounts, contract rights, general intangibles, chattel paper or instruments, with or without recourse (the foregoing items (a) through (e) being sometimes referred to in this Section 8.2 collectively as "LIENS"), PROVIDED that the Borrower, the Guarantors and any Subsidiary may create or incur or suffer to be created or incurred or to exist: (i) Liens securing taxes, assessments, governmental charges (including, without limitation, water, sewer and similar charges) or levies or claims for labor, material and supplies, the Indebtedness with respect to which is not prohibited by Section 8.1(b); (ii) deposits or pledges made in connection with, or to secure payment of, worker's compensation, unemployment insurance, old age pensions or other social security obligations; and deposits with utility companies and other similar deposits made in the ordinary course of business; (iii) Liens (other than affecting the Unencumbered Properties) in respect of judgments or awards, the Indebtedness with respect to which is not prohibited by Section 8.1(b); (iv) encumbrances on properties consisting of easements, rights of way, covenants, notice of use limitations under Environmental Laws, restrictions on the use of real property and defects and irregularities in the title thereto; landlord's or lessor's Liens under Leases to which the Borrower, any Guarantor, or any Subsidiary is a party or bound; purchase options granted at a price not less than the market value of such property; and other similar Liens or encumbrances on properties, none of which interferes materially and adversely with the use of the property affected in the ordinary conduct of the business of the owner thereof, and which matters neither (x) individually or in the aggregate have a Material Adverse Effect nor (xx) make title to such property unmarketable by the conveyancing standards in effect where such property is located; (v) any Leases (excluding Synthetic Leases) entered into in good faith with Persons that are not Affiliates; PROVIDED that Leases with Affiliates -84- on market terms and with monthly market rent payments required to be paid are Permitted Liens; (vi) Liens and other encumbrances or rights of others which exist on the date of this Agreement and which do not otherwise constitute a breach of this Agreement; (vii) as to Real Estate which are acquired after the date of this Agreement, Liens and other encumbrances or rights of others which exist on the date of acquisition and which do not otherwise constitute a breach of this Agreement; (viii) Liens affecting the Unencumbered Properties in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal, so long as execution is not levied thereunder or in respect of which, at the time, a good faith appeal or proceeding for review is being prosecuted, and in respect of which a stay of execution shall have been obtained pending such appeal or review; PROVIDED that the Borrower shall have obtained a bond or insurance with respect thereto to the Administrative Agent's reasonable satisfaction; (ix) Liens securing Indebtedness for the purchase price of capital assets (other than Real Estate but including Indebtedness in respect of Capitalized Leases for equipment and other equipment leases) to the extent not otherwise prohibited by Section 8.1; (x) other Liens (other than affecting the Unencumbered Properties) in connection with any Indebtedness not prohibited under Section 8.1 which do not otherwise result in a Default or Event of Default under this Agreement; and (xi) Liens granted in accordance with Section 8.4(b) hereof. Notwithstanding the foregoing provisions of this Section 8.2, the failure of any Unencumbered Property to comply with the covenants set forth in this Section 8.2 shall result in such Unencumbered Property's no longer qualifying as Unencumbered Property under this Agreement, but such disqualification shall not by itself constitute a Default or Event of Default, unless the cause of such non-qualification otherwise constitutes a Default or an Event of Default. -85- Section 8.3. RESTRICTIONS ON INVESTMENTS. None of the Borrower, any Guarantor, or any Subsidiary will make or permit to exist or to remain outstanding any Investment except Investments in: (a) marketable direct or guaranteed obligations of the United States of America that mature within one (1) year from the date of purchase; (b) demand deposits, certificates of deposit, bankers acceptances and time deposits of United States banks having total assets in excess of $1,000,000,000, PROVIDED that any such deposits may be moved to a qualifying bank within thirty (30) days after the Borrower, Guarantor or Subsidiary has knowledge that any depository bank no longer has total assets in excess of such amounts; (c) securities commonly known as "commercial paper" issued by a corporation organized and existing under the laws of the United States of America or any state thereof, or in both cases any governmental subdivision, that at the time of purchase have been rated and the ratings for which are not less than "P 1" if rated by Moody's, and not less than "A 1" if rated by S&P; (d) Investments existing on the Closing Date and listed on SCHEDULE 8.3(d) hereto; (e) So long as no Event of Default enumerated in Section 8.7(a)(ii) has occurred and is continuing or would occur after giving effect thereto, acquisitions of Real Estate consistent with the requirements of the fourth sentence of Section 7.7 hereof and the equity of Persons, PROVIDED (i) that within thirty (30) days after any such Investment the total assets of MCRLP, MCRC and their Subsidiaries, taken as a whole, shall be comprised of assets of which eighty-five percent (85%) or more comply with the parameters of the fourth sentence of Section 7.7 hereof and (ii) that the Borrower shall not permit any of its Subsidiaries which is not a Guarantor, or which does not become a Guarantor, to acquire any Unencumbered Property, and in all cases such Guarantor shall be a wholly-owned Subsidiary of MCRLP; (f) any Investments now or hereafter made in the Borrower, any Guarantor or other Subsidiary, as identified or which will be identified from time to time in SCHEDULE 8.3(f) hereto, which SCHEDULE 8.3(f) shall be updated annually at the time of the delivery of the financial statements referred to in Section 7.4(a) hereof; (g) Investments in respect of (1) equipment, inventory and other tangible personal property acquired in the ordinary course of business, (2) current trade and customer accounts receivable for services rendered in -86- the ordinary course of business and payable in accordance with customary trade terms, (3) advances to employees for travel expenses, drawing accounts and similar expenditures, and (4) prepaid expenses made in the ordinary course of business; (h) any other Investments made in the ordinary course of business and consistent with past business practices; (i) interest rate hedges in connection with Indebtedness; (j) shares of so-called "money market funds" registered with the SEC under the Investment Company Act of 1940 which maintain a level per-share value, invest principally in marketable direct or guaranteed obligations of the United States of America and agencies and instrumentalities thereof, and have total assets in excess of $50,000,000 provided that any such shares are moved to a qualifying money market fund within thirty (30) days after the Borrower, any Guarantor or any Subsidiary has knowledge that any money market fund no longer has total assets in excess of that amount; and (k) Investments permitted under Section 9.8 hereof. Section 8.4. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS. None of the Borrower, any Guarantor, any Operating Subsidiary or any wholly-owned Subsidiary will: (a) Become a party to any merger, consolidation or reorganization without the prior Unanimous Lender Approval, except that so long as no Default or Event of Default has occurred and is continuing, or would occur after giving effect thereto, the merger, consolidation or reorganization of one or more Persons with and into the Borrower, any Guarantor, or any wholly-owned Subsidiary, shall be permitted if (i) such action is not hostile, (ii) the Borrower, any Guarantor, or any wholly-owned Subsidiary, as the case may be, is the surviving entity and (iii) such merger, consolidation or reorganization does not cause a breach of Section 7.23 hereof or a Default or Event of Default under Section 12.1(m) hereof; PROVIDED, that for any such merger, consolidation or reorganization (other than (w) the merger or consolidation of one or more Subsidiaries of MCRLP with and into MCRLP, (x) the merger or consolidation of two or more Subsidiaries of MCRLP, (y) the merger or consolidation of one or more Subsidiaries of MCRC with and into MCRC, or (z) the merger or consolidation of two or more Subsidiaries of MCRC), the Borrower shall provide to the Administrative Agent a statement in the form of EXHIBIT D hereto signed by the chief financial officer or treasurer or vice president of finance or other thereon designated officer of the Borrower and setting forth in reasonable detail -87- computations evidencing compliance with the covenants contained in Section 9 hereof and certifying that no Default or Event of Default has occurred and is continuing, or would occur and be continuing after giving effect to such merger, consolidation or reorganization and all liabilities, fixed or contingent, pursuant thereto; (b) Sell, transfer or otherwise dispose of (collectively and individually, "SELL" or a "SALE") or grant a Lien to secure Indebtedness (an "INDEBTEDNESS LIEN") on any of its now owned, ground leased or hereafter acquired assets without obtaining the prior written consent of the Required Lenders, except after written notice to the Administrative Agent for: (i) the Sale of or granting of an Indebtedness Lien on any Unencumbered Property or other Real Estate so long as no Default or Event of Default has then occurred and is continuing, or would occur and be continuing after giving effect to such Sale or Indebtedness Lien; PROVIDED, that prior to any Sale of any Unencumbered Property or other Real Estate or the granting of an Indebtedness Lien under this clause (i), the Borrower shall provide to the Administrative Agent a statement in the form of EXHIBIT D hereto signed by the chief financial officer or treasurer or vice president of finance or other thereon designated officer of the Borrower and setting forth in reasonable detail computations evidencing compliance with the covenants contained in Section 9 hereof and certifying that no Default or Event of Default has occurred and is continuing, or would occur and be continuing after giving effect to such proposed Sale or Indebtedness Lien and all liabilities, fixed or contingent, pursuant thereto; and PROVIDED FURTHER, if such Sale involves a qualified, deferred exchange under Section 1031 of the Code, the Borrower shall also provide the statements and certifications described in the previous proviso on the date of any release from the escrow account of the proceeds of such qualified, deferred exchange under Section 1031 of the Code; (ii) the Sale of or the granting of an Indebtedness Lien on any Unencumbered Property while a Default or Event of Default (other than a Default or an Event of Default under Section 12.1(a) (including, without limitation, any such failure to pay resulting from acceleration of the Loans), Section 12.1(b), Section 12.1(c) (resulting from a failure to comply with Section 7.7 (as to the legal existence and REIT status of MCRC) or Section 9), Section 12.1(g), Section 12.1(h), or Section 12.1(j)) has then occurred and is continuing or would occur and be continuing after giving effect to such Sale or Indebtedness Lien; PROVIDED, that the Borrower shall (A) apply the net proceeds of each such permitted Sale or Indebtedness Lien to the repayment of the Loans or (B) segregate the net proceeds of such permitted Sale or Indebtedness Lien in an escrow account with the Administrative Agent or with a financial institution -88- reasonably acceptable to the Administrative Agent and apply such net proceeds solely to a qualified, deferred exchange under Section 1031 of the Code or to another use with the prior written approval of the Required Lenders or (C) complete an exchange of such Unencumbered Property for other real property of equivalent value under Section 1031 of the Code so long as such other real property becomes an Unencumbered Property upon acquisition, and, in any event, on the date of such Sale or granting of an Indebtedness Lien and on the date of any release from the escrow account of the proceeds of the qualified, deferred exchange under Section 1031 of the Code, the Borrower shall provide to the Administrative Agent a statement in the form of EXHIBIT D hereto signed by the chief financial officer, or treasurer or vice president of finance or other thereon designated officer and setting forth in reasonable detail computations evidencing compliance with the covenant in Section 9 hereof and certifying the use of the proceeds of such Sale or Indebtedness Lien and certifying that no Default or Event of Default above enumerated has occurred and is continuing or would occur and be continuing after giving effect to such Sale or Indebtedness Lien, and all liabilities fixed or contingent pursuant thereto or to such release of proceeds; (iii) the Sale of or the granting of an Indebtedness Lien on any Real Estate (other than an Unencumbered Property) while a Default or Event of Default has then occurred and is continuing or would occur and be continuing after giving effect to such Sale or Indebtedness Lien; PROVIDED, that the Borrower shall (A) apply the net proceeds of each such Sale or Indebtedness Lien to the repayment of the Loans or (B) segregate the net proceeds of such Sale or Indebtedness Lien in an escrow account with the Administrative Agent or with a financial institution reasonably acceptable to the Administrative Agent and apply such net proceeds solely to a qualified, deferred exchange under Section 1031 of the Code or to another use with the prior written approval of the Required Lenders or (C) complete an exchange of such Real Estate for other real property of equivalent value under Section 1031 of the Code; (iv) the Sale or granting of an Indebtedness Lien on any Unencumbered Property while any Default or Event of Default has then occurred and is continuing PROVIDED (A) the Borrower shall provide to the Administrative Agent a statement in the form of EXHIBIT D hereto signed by the chief financial officer or treasurer or vice president of finance or other thereon designated officer of the Borrower and setting forth in reasonable detail computations evidencing the status of compliance with the covenants contained in Section 9 hereof and certifying that the continuing Default or Event of Default will be cured by such proposed Sale or Indebtedness Lien and no other Default or Event of Default would occur -89- and be continuing after giving effect to such proposed Sale or Indebtedness Lien and all liabilities fixed or contingent, pursuant thereto and (B) the Sale or granting of an Indebtedness Lien pursuant to this Section 8.4(b) (iv) shall not (x) occur more than four times during the period that any Commitment is outstanding, (y) involve a Sale or Indebtedness Lien for greater than $200,000,000 in the aggregate in the combined four permitted occasions (which shall be the maximum member of permitted occasions) under (x), or (z) involve a Sale at less than fair market value or an Indebtedness Lien on terms more onerous or expensive than fair market terms from institutional lenders; and (v) the Sale of or the granting of an Indebtedness Lien on any of its now owned or hereafter acquired assets (other than Real Estate) in one or more transactions. Section 8.5. NEGATIVE PLEDGE. From and after the date hereof, neither the Borrower nor any Guarantor will, and will not permit any Subsidiary to, enter into any agreement containing any provision prohibiting the creation or assumption of any Lien upon its properties (other than prohibitions on liens for particular assets (other than an Unencumbered Property) set forth in a security instrument in connection with Secured Indebtedness for such assets and the granting or effect of such liens does not otherwise constitute a Default or Event of Default), revenues or assets, whether now owned or hereafter acquired, or restricting the ability of the Borrower or the Guarantors to amend or modify this Agreement or any other Loan Document. The Borrower shall be permitted a period of (i) thirty (30) days to cure any Non-Material Breach affecting other than MCRC or MCRLP and (ii) ten (10) days to cure any Non-Material Breach affecting MCRC or MCRLP under this Section 8.5 before the same shall be an Event of Default under Section 12.1(c). Section 8.6. COMPLIANCE WITH ENVIRONMENTAL LAWS. None of the Borrower, any Guarantor, or any Subsidiary will do any of the following: (a) use any of the Real Estate or any portion thereof as a facility for the handling, processing, storage or disposal of Hazardous Substances except for quantities of Hazardous Substances used in the ordinary course of business and in compliance with all applicable Environmental Laws, (b) cause or permit to be located on any of the Real Estate any underground tank or other underground storage receptacle for Hazardous Substances except in compliance with Environmental Laws, (c) generate any Hazardous Substances on any of the Real Estate except in compliance with Environmental Laws, or (d) conduct any activity at any Real Estate or use any Real Estate in any manner so as to cause a Release causing a violation of Environmental Laws or a Material Adverse Effect or a violation of any Environmental Law; PROVIDED that a breach of this covenant shall result in the affected Real Estate no longer being an Unencumbered Property, but shall -90- only constitute an Event of Default under Section 12.1(d) if such breach is not a Non-Material Breach. Section 8.7. DISTRIBUTIONS. (a) The Borrower (i) will not in any period of four (4) consecutive completed fiscal quarters make Distributions with respect to common stock or other common equity interests in such period in an aggregate amount in excess of 90% of Funds From Operations for such period (for purposes of this clause, non-cash assets or interests in non-cash assets which are distributed to equity interest holders of the Borrower shall be valued at the value of such assets used in calculating Consolidated Total Capitalization) or (ii) will not make any Distributions during any period when any Event of Default under Section 12.1(a) (including, without limitation, any failure to pay resulting from acceleration of the Loans) Section 12.1(b), Section 12.1(c) resulting from a failure to comply with Section 7.7 (as to the legal existence and REIT status of MCRC), Section 9, Section 12.1(g), Section 12.1(h), or Section 12.1(j) has occurred and is continuing or (iii) will not make any Distributions or transfers of cash or cash equivalents to any Guarantor or its Subsidiaries when such Person is the subject of a Permitted Event except as required by order of the tribunal in which such Permitted Event is occurring; and except that such Person may make Distributions or transfers of cash or cash equivalents permitted under Section 7.24 to a Guarantor or Subsidiary while such distributing Person is the subject of a Permitted Event; PROVIDED, HOWEVER, that the Borrower may at all times make Distributions (after taking into account all available funds of MCRC from all other sources) in the minimum aggregate amount required in order to enable MCRC to continue to qualify as a REIT. In the event that MCRC or MCRLP raises equity during the term of this Agreement, the permitted percentage of Distributions will be adjusted based on the total declared distribution per share and partnership units over the most recent four (4) quarters to Funds From Operations per weighted average share and partnership unit based on the most recent four (4) quarters. (b) MCRC will not, during any period when any Event of Default has occurred and is continuing, make any Distributions in excess of the Distributions required to be made by MCRC in order to maintain its status as a REIT. Section 8.8. EMPLOYEE BENEFIT PLANS. None of the Borrower, any Guarantor or any ERISA Affiliate will (a) engage in any "prohibited transaction" within the meaning of Section 406 of ERISA or Section 4975 of the Code which could result in a material liability for the Borrower, any Guarantor or any of their respective Subsidiaries; or -91- (b) permit any Guaranteed Pension Plan to incur an "accumulated funding deficiency", as such term is defined in Section 302 of ERISA, whether or not such deficiency is or may be waived; or (c) fail to contribute to any Guaranteed Pension Plan to an extent which, or terminate any Guaranteed Pension Plan in a manner which, could result in the imposition of a lien or encumbrance on the assets of the Borrower, any Guarantor or any of their respective Subsidiaries pursuant to Section 302(f) or Section 4068 of ERISA; or (d) amend any Guaranteed Pension Plan in circumstances requiring the posting of security pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code; or (e) permit or take any action which would result in the aggregate benefit liabilities (with the meaning of Section 4001 of ERISA) of all Guaranteed Pension Plans exceeding the value of the aggregate assets of such Plans, disregarding for this purpose the benefit liabilities and assets of any such Plan with assets in excess of benefit liabilities; PROVIDED that none of (a) - (e) shall be an Event of Default under Section 12.1(c) if the prohibited matters occurring are in the aggregate within the Dollar limits permitted within Section 12.1(l) and are otherwise the subject of the matters that are covered by the Events of Default in Section 12.1(l) Section 8.9. FISCAL YEAR. The Borrower will not, and will not permit the Guarantors or any of their respective Subsidiaries to, change the date of the end of its fiscal year from that set forth in Section 6.5; provided that such persons may change their respective fiscal years if they give the Administrative Agent thirty (30) days prior written notice of such change and the parties make appropriate adjustments satisfactory to the Borrower and the Lenders to the provisions of this Agreement (including without limitation those set forth in Section 9) to reflect such change in fiscal year. Section 9. FINANCIAL COVENANTS OF THE BORROWER. The Borrower covenants and agrees that, so long as any Loan, Letter of Credit or Note is outstanding or any Lender has any obligation to make any Loan or any Lender has any obligation to issue, extend or renew any Letters of Credit: Section 9.1. LEVERAGE RATIO. As at the end of any fiscal quarter or other date of measurement, the Borrower shall not permit Consolidated Total Liabilities to exceed 55% of Consolidated Total Capitalization. Section 9.2. SECURED INDEBTEDNESS. As at the end of any fiscal quarter or other date of measurement, the Borrower shall not permit Consolidated Secured Indebtedness to exceed 40% of Consolidated Total Capitalization. -92- Section 9.3. TANGIBLE NET WORTH. As at the end of any fiscal quarter or any other date of measurement, the Borrower shall not permit Consolidated Tangible Net Worth to be less than the sum of (a) $1,500,000,000 PLUS (b) 75% of the sum of (i) the aggregate proceeds received by MCRC (net of fees and expenses customarily incurred in transactions of such type) in connection with any offering of stock in MCRC and (ii) the aggregate value of operating units issued by MCRLP in connection with asset or stock acquisitions (valued at the time of issuance by reference to the terms of the agreement pursuant to which such units are issued), in each case after the Closing Date and on or prior to the date such determination of Consolidated Tangible Net Worth is made. Section 9.4. DEBT SERVICE COVERAGE. As at the end of any fiscal quarter or other date of measurement, the Borrower shall not permit Consolidated Adjusted Net Income to be less than two (2) times Consolidated Total Debt Service, based on the results of the most recent two (2) complete fiscal quarters. For purposes of this Section 9.4, the Consolidated Total Debt Service of the Borrower shall include, on a net basis, positive amortization and negative amortization of each of the Harborside Assumed Debt. Section 9.5. FIXED CHARGE COVERAGE. As at the end of any fiscal quarter or other date of measurement, the Borrower shall not permit Consolidated Adjusted Net Income to be less than one and three-quarters (1.75) times Consolidated Fixed Charges, based on the results of the most recent two (2) complete fiscal quarters. Section 9.6. UNSECURED INDEBTEDNESS. As at the end of any fiscal quarter or other date of measurement, the Borrower shall not permit Consolidated Unsecured Indebtedness to exceed 60% of the sum (the "Section 9.6 Sum") of (a) aggregate Capitalized Unencumbered Property NOI for all Unencumbered Properties plus (b) the value of all Eligible Cash 1031 Proceeds resulting from the sale of Unencumbered Properties. Section 9.7. UNENCUMBERED PROPERTY DEBT SERVICE COVERAGE. As at the end of any fiscal quarter or other date of measurement, the Borrower shall not permit the aggregate Adjusted Unencumbered Property NOI for all Unencumbered Properties to be less than two (2) times Consolidated Total Unsecured Debt Service, based on the results of the most recent two (2) complete fiscal quarters. Section 9.8. INVESTMENT LIMITATION. None of the Borrower, any Guarantor, or any Subsidiary will make or permit to exist or to remain outstanding any Investment in violation of the following restrictions and limitations: (a) As at the end of any fiscal quarter or other date of measurement, the book value of Unimproved Non-Income Producing Land shall not exceed ten (10%) of Consolidated Total Capitalization. -93- (b) Investments in Opportunity Funds shall be Without Recourse to the Borrower, the Guarantors and their Subsidiaries other than as expressly permitted in the definition of Opportunity Fund, shall otherwise comply with the requirements of the definition of Opportunity Fund, and shall not exceed the lesser of 7.5% of Consolidated Total Capitalization or $200,000,000. (c) As at the end of any fiscal quarter or other date of measurement, the aggregate Project Costs of all Construction-in-Process shall not exceed fifteen (15%) percent of Consolidated Total Capitalization. For purposes of this Section 9.8(c), Construction-in-Process shall not include so-called "build to suit" properties which are (i) seventy-five (75%) percent pre-leased (by rentable square foot) to tenants which have a minimum credit rating of BBB-from S&P or Baa3 from Moody's, as the case may be, or which have a financial condition reasonably acceptable to the Majority Lenders (provided that the Borrower shall submit any such request for the Lender's acceptance of a tenant's financial condition to the Administrative Agent in writing, and the Administrative Agent shall, in turn, promptly forward such request to each Lender; each Lender shall then have five (5) Business Days from its deemed receipt of such request to approve or disapprove of such tenant's financial condition, with any Lender's failure to send notice of disapproval to the Administrative Agent within five (5) Business Days being deemed to be its approval) and (ii) in substantial compliance, with respect to both time and cost, with the original construction budget and construction schedule, as amended by change orders or otherwise updated. A property shall continue to be considered Construction-in-Process until the date of substantial completion of such property; from such date, it will continue to be valued (for financial covenant compliance purposes) as if it were Construction-in-Process until the earlier of (i) the end of four (4) consecutive quarters following substantial completion and (ii) the date upon which such property is 90% leased to tenants who are then paying rent. (d) As at the end of any fiscal quarter or other date of measurement, the value of Indebtedness of third parties to the Borrower, the Guarantors, or their Subsidiaries for borrowed money which is unsecured or is secured by mortgage liens (valued at the book value of such Indebtedness) shall not exceed fifteen (15%) percent of Consolidated Total Capitalization. (e) The Investments set forth in clauses (a) through (d) above, taken in the aggregate, shall not exceed thirty (30%) percent of Consolidated Total Capitalization. -94- (f) Investments in Real Estate other than office, office flex, and industrial/warehouse properties, taken in the aggregate, shall not exceed fifteen (15%) of Consolidated Total Capitalization. Section 9.9. COVENANT CALCULATIONS. (a) For purposes of the calculations to be made pursuant to Sections 9.1-9.8 (and the defined terms relevant thereto, including, without limitation, those relating to "debt service"), references to Indebtedness or liabilities of the Borrower shall mean Indebtedness or liabilities (including, without limitation, Consolidated Total Liabilities) of the Borrower, PLUS (but without double-counting): (i) all Indebtedness or liabilities of the Operating Subsidiaries, the Guarantors and any other wholly-owned Subsidiary (excluding any such Indebtedness or liabilities owed to the Borrower or any Guarantor; PROVIDED that, as to MCRC, MCRC has a corresponding Indebtedness or liability to the Borrower), (ii) all Indebtedness or liabilities of each Partially-Owned Entity (including for Capitalized Leases), but only to the extent, if any, that said Indebtedness or liability is Recourse to the Borrower, the Guarantors or their respective Subsidiaries or any of their respective assets (other than their respective interests in such Partially-Owned Entity); PROVIDED that Recourse Indebtedness arising from such Person's acting as general partner or guarantor of collection only (and not of payment or performance) of a Partially-Owned Entity shall be limited to the amount by which the Indebtedness exceeds the liquidation value of the Real Estate and other assets owned by such Partially-Owned Entity if the creditor owed such Indebtedness is required by law or by contract to seek repayment of such Indebtedness from such Real Estate and other assets before seeking repayment from such Person, and (iii) Indebtedness or liabilities of each Partially-Owned Entity to the extent of the pro-rata share of such Indebtedness or liability allocable to the Borrower, the Guarantors or their respective Subsidiaries without double counting. (b) For purposes of Sections 9.1-9.8 hereof, Consolidated Adjusted Net Income, Revised Consolidated Adjusted Net Income, Adjusted Unencumbered Property NOI and Revised Adjusted Unencumbered Property NOI (and all defined terms and calculations using such terms) shall be adjusted (i) to deduct the actual results of any Real Estate disposed of by the Borrower, a Guarantor or any of their respective Subsidiaries during the relevant fiscal period (for -95- Revised Consolidated Adjusted Net Income and Revised Adjusted Unencumbered Property NOI only), (ii) to include the pro forma results of any Real Estate acquired by the Borrower, a Guarantor or any of their respective Subsidiaries during the relevant fiscal period, with such pro forma results being calculated by (x) using the Borrower's pro forma projections for such acquired property, subject to the Administrative Agent's reasonable approval, if such property has been owned by the Borrower, a Guarantor or any of their respective Subsidiaries for less than one complete fiscal quarter or (y) using the actual results for such acquired property and adjusting such results for the appropriate period of time required by the applicable financial covenant, if such property has been owned by the Borrower, a Guarantor or any of their respective Subsidiaries for at least one complete fiscal quarter (for Revised Consolidated Adjusted Net Income and Revised Adjusted Unencumbered Property NOI only) and (iii) to the extent applicable, to include the pro rata share of results attributable to the Borrower from unconsolidated Subsidiaries of MCRC, the Borrower and their respective Subsidiaries and from unconsolidated Partially-Owned Entities; PROVIDED that income shall not be included until received without restriction in cash by the Borrower. (c) For purposes of Sections 9.1 - 9.8 hereof, if any change in GAAP after the Financial Statement Date results in a material change in the calculation to be performed in any such Section , solely as a result of such change in GAAP, the Lenders and the Borrower shall negotiate in good faith a modification of any such covenant(s) so that the economic effect of the calculation of such covenant(s) using GAAP as so changed is as close as feasible to what the economic effect of the calculation of such covenant(s) would have been using GAAP in effect as of the Financial Statement Date. (d) For purposes of Sections 9.1-9.8 hereof, Consolidated Total Capitalization and the Section 9.6 Sum (as such term is defined in Section 9.6 hereof) shall be adjusted (without double-counting) to include the Eligible Cash 1031 Proceeds from any Real Estate disposed of by the Borrower, a Guarantor or any of their respective Subsidiaries and for which the results have been deducted pursuant to Section 9.9(b). Section 10. CONDITIONS TO THE CLOSING DATE. The obligations of the Lenders to make the initial Revolving Credit Loans and of the Fronting Bank to issue any initial Letters of Credit shall be subject to the satisfaction of the following conditions precedent: Section 10.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto and shall be in full force and effect. -96- Section 10.2. CERTIFIED COPIES OF ORGANIZATION DOCUMENTS. The Administrative Agent shall have received (i) from the Borrower and each of the Subsidiary Guarantors a copy, certified as of the Closing Date by a duly authorized officer of such Person (or its general partner, if such Person is a partnership, or its managing member, if such Person is a limited liability company), to be true and complete, of each of its certificate of limited partnership, agreement of limited partnership, incorporation documents, by-laws, certificate of formation, operating agreement and/or other organizational documents as in effect on the Closing Date; provided that any Subsidiary Guarantor which has previously delivered such organizational documents may satisfy this condition by providing a certificate of a duly authorized officer of such Person as to the absence of changes or as to the changes, if any, to those organizational documents previously delivered, and (ii) from MCRC a copy, certified as of a date within thirty (30) days prior to the Closing Date by the appropriate officer of the State of Maryland to be true and correct, of the corporate charter of MCRC, in each case along with any other organization documents of the Borrower and each Subsidiary Guarantor (and its general partner, if such Person is a partnership, or its managing member, if such Person is a limited liability company) or MCRC, as the case may be, and each as in effect on the date of such certification. Section 10.3. BY-LAWS; RESOLUTIONS. All action on the part of the Borrower, the Subsidiary Guarantors and MCRC necessary for the valid execution, delivery and performance by the Borrower, the Subsidiary Guarantors and MCRC of this Agreement and the other Loan Documents to which any of them is or is to become a party as of the Closing Date shall have been duly and effectively taken, and evidence thereof satisfactory to the Lenders shall have been provided to the Administrative Agent. Without limiting the foregoing, the Administrative Agent shall have received from MCRC true copies of its by-laws and the resolutions adopted by its board of directors authorizing the transactions described herein and evidencing the due authorization, execution and delivery of the Loan Documents to which MCRC and the Borrower and Subsidiary Guarantors of which MCRC is a controlling Person are a party, each certified by the secretary as of a recent date to be true and complete. Section 10.4. INCUMBENCY CERTIFICATE; AUTHORIZED SIGNERS. The Administrative Agent shall have received from each of the Borrower, MCRC and the Subsidiary Guarantors an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of such Person and giving the name of each individual who shall be authorized: (a) to sign, in the name and on behalf of such Person, each of the Loan Documents to which such Person is or is to become a party as of the Closing Date; (b) in the case of the Borrower, to make Loan Requests, Conversion Requests and Competitive Bid Requests and to apply for Letters of Credit on behalf of the Borrower; and (c) in the case of the Borrower, to give -97- notices and to take other action on behalf of the Borrower and the Guarantors under the Loan Documents. Section 10.5. TITLE POLICIES. The Administrative Agent (on behalf of the Lenders) shall have received copies of the Title Policies for all Real Estate which are Unencumbered Properties as of the Closing Date. For any Person that has converted from one form of entity to another (e.g., from being a limited partnership to a limited liability company) since the time that it provided the Administrative Agent with a Title Policy for an Unencumbered Property, such Person shall deliver to the Administrative Agent recorded evidence that title to such Unencumbered Property is vested in such Person as the new form of entity. Such evidence shall be either a deed or an amendment to the organizational documents of such Person, together with evidence of the continued effectiveness of such Title Policy. Section 10.6. CERTIFICATES OF INSURANCE. The Administrative Agent shall have received (a) current certificates of insurance as to all of the insurance maintained by the Borrower and its Subsidiaries on the Real Estate (including flood insurance if necessary) from the insurer or an independent insurance broker, identifying insurers, types of insurance, insurance limits, and policy terms; and (b) such further information and certificates from the Borrower, its insurers and insurance brokers as the Administrative Agent may reasonably request. Section 10.7. ENVIRONMENTAL SITE ASSESSMENTS. The Administrative Agent shall have received environmental site assessments from a hydrogeologist, environmental engineer, qualified consultant or other expert and in form and substance reasonably satisfactory to the Administrative Agent, covering all Real Estate and all other real property in respect of which the Borrower or any of its Subsidiaries may have material liability, whether contingent or otherwise, for dumping or disposal of Hazardous Substances and which are in the possession of the Borrower. Section 10.8. OPINION OF COUNSEL CONCERNING ORGANIZATION AND LOAN DOCUMENTS. Each of the Lenders and the Administrative Agent shall have received favorable opinions addressed to the Lenders and the Administrative Agent in form and substance reasonably satisfactory to the Lenders and the Administrative Agent from (a) Pryor Cashman Sherman & Flynn LLP, as counsel to the Borrower, the Subsidiary Guarantors, MCRC and their respective Subsidiaries, with respect to New York and New Jersey law and certain matters of Delaware law, (b) Ballard, Spahr, Andrews and Ingersoll, as counsel to MCRC, with respect to Maryland and District of Columbia law, (c) Cohn, Birnbaum & Shea, as counsel to the Borrower and the Subsidiary Guarantors with respect to Connecticut law, (d) McCausland, Keen & Buckman, as counsel to the Borrower and the Subsidiary -98- Guarantors with respect to Pennsylvania law, (e) Jones, Day, Reavis & Pogue, as counsel to the Borrower and the Subsidiary Guarantors with respect to Texas and California law, (f) Holland & Knight, as counsel to the Borrower and the Subsidiary Guarantors with respect to Florida law, (g) Blackwell, Sanders, Pepper & Martin LLP, as counsel to the Borrower and the Subsidiary Guarantors with respect to Nebraska law, (h) Davis, Brown, Koehn, Shors & Robert, as counsel to the Borrower and the Subsidiary Guarantors with respect to Iowa law; and (i) Santin, Poli, Ball, Sims & Cook, P.L.C., as counsel to the Borrower and the Subsidiary Guarantors with respect to Arizona law. Section 10.9. TAX AND SECURITIES LAW COMPLIANCE. Each of the Lenders and the Administrative Agent shall also have received from Pryor Cashman Sherman & Flynn LLP, as counsel to the Borrower and MCRC, a favorable opinion addressed to the Lenders and the Administrative Agent, in form and substance satisfactory to each of the Lenders and the Administrative Agent, with respect to the qualification of MCRC as a REIT and certain other tax and securities laws matters. Section 10.10. GUARANTIES. Each of the Guaranties to be executed and delivered on the Closing Date shall have been duly executed and delivered by the Guarantor thereunder. Each of the Subsidiary Guarantors that executed and delivered a Subsidiary Guaranty under the Original Agreement shall have executed and delivered to the Administrative Agent a reaffirmation of such Subsidiary Guaranty in form and substance reasonably satisfactory to the Administrative Agent confirming that such Subsidiary Guaranty remains in full force and effect and continues to guaranty the Obligations hereunder. Section 10.11. CERTIFICATIONS FROM GOVERNMENT OFFICIALS; UCC-11 REPORTS. The Administrative Agent shall have received (i) long-form certifications from government officials evidencing the legal existence, good standing and foreign qualification of the Borrower and each Guarantor, along with a certified copy of the certificate of limited partnership or certificate of incorporation of the Borrower and each Guarantor, all as of the most recent practicable date; and (ii) UCC-11 search results from the appropriate jurisdictions for the Borrower and each Guarantor with respect to the Unencumbered Properties. Section 10.12. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the transactions contemplated by this Agreement, the other Loan Documents and all other documents incident thereto shall be satisfactory in form and substance to each of the Lenders', the Borrower's, the Guarantors' and the Administrative Agent's counsel, and the Administrative Agent, each of the Lenders and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Administrative Agent may reasonably request. -99- Section 10.13. FEES. The Borrower shall have paid to the Administrative Agent, for the accounts of the Lenders, the Syndication Agent, the Arrangers or for its own account, as applicable, all of the fees and expenses that are due and payable as of the Closing Date in accordance with this Agreement and the Fee Letter. Section 10.14. CLOSING CERTIFICATE; COMPLIANCE CERTIFICATE. The Borrower shall have delivered a Closing Certificate to the Administrative Agent, the form of which is attached hereto as EXHIBIT E. The Borrower shall have delivered a compliance certificate in the form of EXHIBIT D hereto evidencing compliance with the covenants set forth in Section 9 hereof, the absence of any Default or Event of Default, and the accuracy of all representations and warranties in all material respects. Section 10.15. SUBSEQUENT GUARANTORS. As a condition to the effectiveness of any subsequent Guaranty, each subsequent Guarantor shall deliver such documents, agreements, instruments and opinions as the Administrative Agent shall reasonably require as to such Guarantor and the Unencumbered Property owned or ground-leased by such Guarantor that are analogous to the deliveries made by the Guarantors as of the Closing Date pursuant to Section 10.2 through Section 10.8, Section 10.10 and Section 10.11. Section 10.16. NO DEFAULT UNDER ORIGINAL AGREEMENT. There shall exist no Default or Event of Default under the Original Agreement. Section 11. CONDITIONS TO ALL BORROWINGS. The obligations of the Lenders to make any Loan and of any Lender to issue, extend or renew any Letter of Credit, in each case, whether on or after the Closing Date, shall also be subject to the satisfaction of the following conditions precedent: Section 11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT; COMPLIANCE CERTIFICATE. Each of the representations and warranties of the Borrower and the Guarantors contained in this Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Agreement shall be true as of the date as of which they were made and shall also be true at and as of the time of the making of each Loan or the issuance, extension or renewal of each Letter of Credit, with the same effect as if made at and as of that time (except to the extent (i) of changes resulting from transactions contemplated or not prohibited by this Agreement or the other Loan Documents (ii) of changes occurring in the ordinary course of business, (iii) that such representations and warranties relate expressly to an earlier date and (iv) that such untruth is disclosed when first known to the Borrower or a Guarantor in the next delivered compliance certificate, and is a Non-Material Breach); and no Default or Event -100- of Default under this Agreement shall have occurred and be continuing on the date of any Loan Request or Competitive Bid Request or on the Drawdown Date of any Loan (other than a Default or Event of Default arising solely from the Borrower's failure to comply with the provision of Section 7.22 and such borrowing is to cure, and will cure, such Default or Event of Default without causing any other Default or Event of Default). Each of the Lenders shall have received a certificate of the Borrower as provided in Section 2.5(iv)(c) or Section 2A.9. Section 11.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or regulations thereunder or interpretations thereof that in the reasonable opinion of the Administrative Agent or any Lender would make it illegal for any Lender to make such Loan or to participate in the issuance, extension or renewal of such Letter of Credit or, in the reasonable opinion of the Administrative Agent, would make it illegal to issue, extend or renew such Letter of Credit. Section 11.3. GOVERNMENTAL REGULATION. Each Lender shall have received such statements in substance and form reasonably satisfactory to such Lender as such Lender shall require for the purpose of compliance with any applicable regulations of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System. Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC. Section 12.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events ("EVENTS OF DEFAULT") shall occur: (a) the Borrower shall fail to pay any principal of the Loans when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment; none of the foregoing is a Non-Material Breach. (b) the Borrower shall fail to pay any interest on the Loans, the Commitment Fee, the Facility Fee, any Letter of Credit Fee or any other sums due hereunder or under any of the other Loan Documents (including, without limitation, amounts due under Section 7.17) when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment, and such failure continues for five (5) days; none of the foregoing is a Non-Material Breach. (c) the Borrower or any Guarantor or any of their respective Subsidiaries shall fail to comply with any of their respective covenants contained in: Section 7.1 within ten (10) days of any such amount being due (except with respect to interest, fees and other sums covered by clause (b) above or principal covered by clause (a) above); Section 7.6 (as to the legal existence of MCRLP -101- for which no period to cure is granted); Section 7.7 (as to the legal existence and REIT status of MCRC for which no period to cure is granted); Section 7.12; Section 7.21 within ten (10) days of the occurrence of same; Section 7.22 within thirty (30) days of any non-compliance; Section 8 (except with respect to Section 8.1(b), Section 8.5 for Non-Material Breaches only, or Section 8.6); or Section 9; none of the foregoing is a Non-Material Breach. (d) the Borrower or any Guarantor or any of their respective Subsidiaries shall fail to perform any other term, covenant or agreement contained herein or in any other Loan Document (other than those specified elsewhere in this Section 12) and such failure continues for thirty (30) days (other than a Non-Material Breach (excluding Section 8.5 for which the Non-Material Breach must be cured within the thirty or ten days, as applicable, provided therein) and such cure period shall not extend any specific cure period set forth in any term, covenant or agreement covered by this Section 12.1(d)). (e) any representation or warranty of the Borrower or any Guarantor or any of their respective Subsidiaries in this Agreement or any of the other Loan Documents or in any other document or instrument delivered pursuant to or in connection with this Agreement shall prove to have been false in any material respect upon the date when made or deemed to have been made or repeated (other than a Non-Material Breach). (f) the Borrower or any Guarantor or any of their respective Subsidiaries shall (i) fail to pay at maturity, or within any applicable period of grace or cure, any obligation for borrowed money or credit received (other than current obligations in the ordinary course of business) or in respect of any Capitalized Leases (x) in respect of any Recourse obligations or credit in an aggregate amount in excess of $5,000,000 (determined in accordance with Section 9.9 hereof) or (y) in respect of any Without Recourse obligations or credit in an aggregate amount in excess of $50,000,000 (determined in accordance with Section 9.9 hereof), or (ii) fail to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing borrowed money or credit received (other than current obligations in the ordinary course of business) or in respect of any Capitalized Leases (x) in respect of any Recourse obligations or credit in an aggregate amount in excess of $5,000,000 (determined in accordance with Section 9.9 hereof) for such period of time (after the giving of appropriate notice if required) as would permit the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof or (y) in respect of any Without Recourse obligations or credit in an aggregate amount in excess of $50,000,000 (determined in accordance with Section 9.9 hereof), and the holder or holders thereof shall have accelerated the maturity thereof; none of the foregoing is a Non-Material Breach. -102- (g) any Credit Party (other than for a Permitted Event) shall make an assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of any Credit Party or of any substantial part of the properties or assets of any Credit Party (other than for a Permitted Event) or shall commence any case or other proceeding relating to any Credit Party (other than for a Permitted Event) under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against any Credit Party (other than for a Permitted Event) and (i) any Credit Party (other than for a Permitted Event) shall indicate its approval thereof, consent thereto or acquiescence therein or (ii) any such petition, application, case or other proceeding shall continue undismissed, or unstayed and in effect, for a period of seventy-five (75) days. (h) a decree or order is entered appointing any trustee, custodian, liquidator or receiver or adjudicating any Credit Party (other than for a Permitted Event) bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of any Credit Party (other than for a Permitted Event) in an involuntary case under federal bankruptcy laws as now or hereafter constituted, and such proceeding, decree or order shall continue undismissed, or unstayed and in effect, for a period of seventy-five (75) days. (i) there shall remain in force, undischarged, unsatisfied and unstayed, for a period of more than thirty (30) days, any uninsured final judgment against the Borrower, any Guarantor or any of their respective Subsidiaries that, with other outstanding uninsured final judgments, undischarged, unsatisfied and unstayed, against the Borrower, any Guarantor or any of their respective Subsidiaries exceeds in the aggregate $10,000,000 (other than for a Permitted Event). (j) any of the Loan Documents or any material provision of any Loan Documents shall be canceled, terminated, revoked or rescinded otherwise than in accordance with the terms thereof or with the express prior written agreement, consent or approval of the Administrative Agent, or any Guaranty shall be canceled, terminated, revoked or rescinded at any time or for any reason whatsoever, or any action at law, suit or in equity or other legal proceeding to make unenforceable, cancel, revoke or rescind any of the Loan Documents shall be commenced by or on behalf of the Borrower or any of its Subsidiaries or any Guarantor or any of its Subsidiaries, or any court or any other governmental or -103- regulatory authority or agency of competent jurisdiction shall make a determination that, or issue a judgment, order, decree or ruling to the effect that, any one or more of the Loan Documents is illegal, invalid or unenforceable as to any material terms thereof, other than as any of the same may occur from a Permitted Event permitted by this Agreement. (k) any "Event of Default" or default (after notice and expiration of any period of grace, to the extent provided, and if none is specifically provided or denied, then for a period of thirty (30) days after notice), as defined or provided in any of the other Loan Documents, shall occur and be continuing. (l) the Borrower or any ERISA Affiliate incurs any liability to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate amount exceeding $5,000,000, or the Borrower or any ERISA Affiliate is assessed withdrawal liability pursuant to Title IV of ERISA by a Multiemployer Plan requiring aggregate annual payments exceeding $5,000,000, or any of the following occurs with respect to a Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to make a required installment or other payment (within the meaning of Section 302(f)(1) of ERISA), PROVIDED that the Administrative Agent determines in its reasonable discretion that such event (A) could be expected to result in liability of the Borrower or any of its Subsidiaries to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $5,000,000 and (B) could constitute grounds for the termination of such Guaranteed Pension Plan by the PBGC, for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan or for the imposition of a lien in favor of such Guaranteed Pension Plan; or (ii) the appointment by a United States District Court of a trustee to administer such Guaranteed Pension Plan; or (iii) the institution by the PBGC of proceedings to terminate such Guaranteed Pension Plan; to the extent that any breach of Section 6.16 or Section 7.20 is a matter that constitutes a specific breach of a provision of this Section 12.1(l), the breach of Section 6.16 or Section 7.20 shall not be a Non-Material Breach. (m) Notwithstanding the provisions of Section 8.4(a), any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act) of 40% or more of the outstanding shares of common stock of MCRC in a transaction or a series of related transactions and, if at any time within one (1) year following such acquisition (i) fewer than four (4) of the six (6) Key Management Individuals (as defined in Section 7.23) remain active in the executive and/or operational management in their current (or comparable) positions with MCRC or (ii) individuals who were directors of MCRC on the date -104- of such acquisition shall cease to constitute a majority of the voting members of the board of directors of MCRC. then, and in any such event, so long as the same may be continuing, the Administrative Agent may, and upon the request of the Required Lenders shall, by notice in writing to the Borrower, declare all amounts owing with respect to this Agreement, the Notes and the other Loan Documents and all Reimbursement Obligations to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower and each Guarantor; PROVIDED that in the event of any Event of Default specified in Section 12.1(g) or Section 12.1(h), all such amounts shall become immediately due and payable automatically and without any requirement of notice from any of the Lenders or the any of Administrative Agent or action by the Lenders or the Administrative Agent. A Non-Material Breach shall require that the Borrower commence and continue to exercise reasonable diligent efforts to cure such breach (which shall occur within any specific time period for curing a Non-Material Breach elsewhere set forth in this Agreement if any). Such efforts may include (and for a Permitted Event shall include) the release of the affected Person(s) (other than MCRC) as the Guarantor pursuant to Section 5 so long as such release (i) cures such Non-Material Breach (ii) does not otherwise cause a Default or Event of Default, and (iii) does not have a Material Adverse Effect on the Borrower, the remaining Guarantors, and their respective Subsidiaries, taken as a whole. Continuing failure of the Borrower to comply with the requirements to commence and continue to exercise reasonable diligent efforts to cure such Non-Material Breach shall constitute a material breach after notice from the Administrative Agent. Section 12.2. TERMINATION OF COMMITMENTS. If any one or more Events of Default specified in Section 12.1(g) or Section 12.1(h) shall occur, any unused portion of the Commitments hereunder shall forthwith terminate and the Lenders shall be relieved of all obligations to make Loans to the Borrower and the Administrative Agent and any Fronting Bank shall be relieved of all further obligations to issue, extend or renew Letters of Credit. If any other Event of Default shall have occurred and be continuing, whether or not the Lenders shall have accelerated the maturity of the Loans pursuant to Section 12.1, the Administrative Agent may, and upon the request of the Required Lenders shall, by notice to the Borrower, terminate the unused portion of the credit hereunder, and upon such notice being given such unused portion of the credit hereunder shall terminate immediately and each of the Lenders shall be relieved of all further obligations to make Loans, the Administrative Agent and any Fronting Bank shall be relieved of all further obligations to issue, extend or renew Letters of Credit. No -105- such termination of the credit hereunder shall relieve the Borrower or any Guarantor of any of the Obligations or any of its existing obligations to the Lenders arising under other agreements or instruments. Section 12.3. REMEDIES. In the event that one or more Events of Default shall have occurred and be continuing, whether or not the Lenders shall have accelerated the maturity of the Loans pursuant to Section 12.1, the Required Lenders may direct the Administrative Agent to proceed to protect and enforce the rights and remedies of the Administrative Agent and the Lenders under this Agreement, the Notes, any or all of the other Loan Documents or under applicable law by suit in equity, action at law or other appropriate proceeding (including for the specific performance of any covenant or agreement contained in this Agreement or the other Loan Documents or any instrument pursuant to which the Obligations are evidenced and, to the full extent permitted by applicable law, the obtaining of the EX PARTE appointment of a receiver), and, if any amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right or remedy of the Administrative Agent and the Lenders under the Loan Documents or applicable law. No remedy herein conferred upon the Lenders or the Administrative Agent or the holder of any Note or purchaser of any Letter of Credit Participation is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under any of the other Loan Documents or now or hereafter existing at law or in equity or by statute or any other provision of law. Section 13. SETOFF. Without demand or notice, during the continuance of any Event of Default, any deposits (general or specific, time or demand, provisional or final, regardless of currency, maturity, or the branch at which such deposits are held, but specifically excluding tenant security deposits, other fiduciary accounts and other segregated escrow accounts required to be maintained by the Borrower for the benefit of any third party) or other sums credited by or due from any of the Lenders to the Borrower or its Subsidiaries or any other property of the Borrower or its Subsidiaries in the possession of the Administrative Agent or a Lender may be applied to or set off against the payment of the Obligations. Each of the Lenders agrees with each other Lender that (a) if pursuant to any agreement between such Lender and the Borrower (other than this Agreement or any other Loan Document), an amount to be set off is to be applied to Indebtedness of the Borrower to such Lender, other than with respect to the Obligations, such amount shall be applied ratably to such other Indebtedness and to the Obligations, and (b) if such Lender shall receive from the Borrower or its Subsidiaries, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the Obligations by proceedings against the Borrower or its Subsidiaries at law or in equity or by proof thereof in bankruptcy, reorganization, liquidation, receivership or similar -106- proceedings, or otherwise, and shall retain and apply to the payment of the Note or Notes held by, or Reimbursement Obligations owed to, such Lender any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Notes held by, and Reimbursement Obligations owed to, all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, PRO TANTO assignment of claims, subrogation or otherwise, as shall result in each Lender receiving in respect of the Notes held by it or Reimbursement Obligations owed it, its proportionate payment as contemplated by this Agreement; PROVIDED that if all or any part of such excess payment is thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. Notwithstanding the foregoing, no Lender shall exercise a right of setoff if such exercise would limit or prevent the exercise of any other remedy or other recourse against the Borrower or its Subsidiaries; and PROVIDED FURTHER, if a Lender receives any amount in connection with the enforcement by such Lender against any particular assets held as collateral for Secured Indebtedness existing on the date hereof and unrelated to the Obligations which is owing to such Lender by the Borrower, such Lender shall not be required to ratably apply such amount to the Obligations. Section 14. THE ADMINISTRATIVE AGENT. Section 14.1. AUTHORIZATION. (a) The Administrative Agent is authorized to take such action on behalf of each of the Lenders and to exercise all such powers as are hereunder and under any of the other Loan Documents and any related documents delegated to the Administrative Agent, together with such powers as are reasonably incident thereto, PROVIDED that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by the Administrative Agent. The relationship between the Administrative Agent and the Lenders is and shall be that of agent and principal only, and nothing contained in this Agreement or any of the other Loan Documents shall be construed to constitute the Administrative Agent as a trustee or fiduciary for any Lender. Subject to the terms and conditions hereof, the Administrative Agent shall discharge its functions as "Administrative Agent" with the same degree of care as it performs administrative services for loans in which it is the sole lender. The Administrative Agent and the Fronting Bank shall be fully justified in failing or refusing to take any action under Section 3 hereof unless it shall first have received such advice or concurrence of the Majority Lenders as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. -107- (b) The Borrower, without further inquiry or investigation, shall, and is hereby authorized by the Lenders to, assume that all actions taken by the Administrative Agent hereunder and in connection with or under the Loan Documents are duly authorized by the Lenders. The Lenders shall notify the Borrower of any successor to Administrative Agent by a writing signed by Required Lenders, which successor shall be reasonably acceptable to the Borrower so long as no Default or Event of Default has occurred and is continuing. Section 14.2. EMPLOYEES AND AGENTS. The Administrative Agent may exercise its powers and execute its duties by or through employees or agents and shall be entitled to take, and to rely on, advice of counsel concerning all matters pertaining to its rights and duties under this Agreement and the other Loan Documents. The Administrative Agent may utilize the services of such Persons as the Administrative Agent in its sole discretion may reasonably determine, and all reasonable fees and expenses of any such Persons shall be paid by the Borrower. Section 14.3. NO LIABILITY. Neither the Administrative Agent, nor any of its shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent or employee thereof, shall be liable for any waiver, consent or approval given or any action taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Loan Documents, or in connection herewith or therewith, or be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Administrative Agent may be liable for losses due to its willful misconduct or gross negligence. Section 14.4. NO REPRESENTATIONS. Neither the Administrative Agent nor the Syndication Agent shall be responsible for the execution or validity or enforceability of this Agreement, the Notes, the Letters of Credit, or any of the other Loan Documents or for the validity, enforceability or collectibility of any such amounts owing with respect to the Notes, or for any recitals or statements, warranties or representations made herein or in any of the other Loan Documents or in any certificate or instrument hereafter furnished to it by or on behalf of any Guarantor or the Borrower or any of their respective Subsidiaries, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements in this Agreement or the other Loan Documents. Neither the Administrative Agent nor the Syndication Agent shall be bound to ascertain whether any notice, consent, waiver or request delivered to it by the Borrower or any Guarantor or any holder of any of the Notes shall have been duly authorized or is true, accurate and complete. Neither the Administrative Agent nor the Syndication Agent has made nor does it now make any representations or warranties, express or implied, nor does it -108- assume any liability to the Lenders, with respect to the credit worthiness or financial condition of the Borrower or any of its Subsidiaries or any Guarantor or any of the Subsidiaries or any tenant under a Lease or any other entity. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, the Syndication Agent or any other Lender, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Section 14.5. PAYMENTS. (a) A payment by the Borrower to the Administrative Agent hereunder or any of the other Loan Documents for the account of any Lender shall constitute a payment to such Lender. The Administrative Agent agrees to distribute to each Lender such Lender's pro rata share of payments received by the Administrative Agent for the account of the Lenders, as provided herein or in any of the other Loan Documents. All such payments shall be made on the date received, if before 1:00 p.m., and if after 1:00 p.m., on the next Business Day. If payment is not made on the day received, interest thereon at the overnight federal funds effective rate shall be paid pro rata to the Lenders. (b) If in the reasonable opinion of the Administrative Agent the distribution of any amount received by it in such capacity hereunder, under the Notes or under any of the other Loan Documents might involve it in material liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction, PROVIDED that interest thereon at the overnight federal funds effective rate shall be paid pro rata to the Lenders. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Administrative Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to the Administrative Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court. (c) Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, any Lender that fails (i) to make available to the Administrative Agent its pro rata share of any Loan or to purchase any Letter of Credit Participation or (ii) to comply with the provisions of Section 13 with respect to making dispositions and arrangements with the other Lenders, where such Lender's share of any payment received, whether by setoff or otherwise, is in excess of its pro rata share of such payments due and payable to all of the Lenders, in each case as, when and to the full extent required by the provisions of this Agreement, or to adjust promptly such Lender's outstanding principal and its pro rata Commitment Percentage as provided in Section 2.1, shall be deemed delinquent (a "DELINQUENT LENDER") and shall be deemed a Delinquent -109- Lender until such time as such delinquency is satisfied. A Delinquent Lender shall be deemed to have assigned any and all payments due to it from the Borrower, whether on account of outstanding Loans, interest, fees or otherwise, to the remaining nondelinquent Lenders for application to, and reduction of, their respective pro rata shares of all outstanding Loans. The Delinquent Lender hereby authorizes the Administrative Agent to distribute such payments to the nondelinquent Lenders in proportion to their respective pro rata shares of all outstanding Loans. If not previously satisfied directly by the Delinquent Lender, a Delinquent Lender shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to all outstanding Loans of the nondelinquent Lenders, the Lenders' respective pro rata shares of all outstanding Loans have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency. Section 14.6. HOLDERS OF NOTES. The Administrative Agent may deem and treat the payee of any Notes or the purchaser of any Letter of Credit Participation as the absolute owner or purchaser thereof for all purposes hereof until it shall have been furnished in writing with a different name by such payee or by a subsequent holder, assignee or transferee. Section 14.7. INDEMNITY. The Lenders ratably and severally agree hereby to indemnify and hold harmless the Administrative Agent (in its capacity as such and not in its capacity as a Lender) and its Affiliates from and against any and all claims, actions and suits (whether groundless or otherwise), losses, damages, costs, expenses (including any expenses for which the Administrative Agent has not been reimbursed by the Borrower as required by Section 15), and liabilities of every nature and character arising out of or related to this Agreement, the Notes, or any of the other Loan Documents or the transactions contemplated or evidenced hereby or thereby, or the Administrative Agent's actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by the Administrative Agent's willful misconduct or gross negligence. Section 14.8. ADMINISTRATIVE AGENT AS LENDER. In its individual capacity as a Lender, Chase shall have the same obligations and the same rights, powers and privileges in respect to its Commitment and the Loans made by it, and as the holder of any of the Notes and as the purchaser of any Letter of Credit Participations, as it would have were it not also the Administrative Agent. Section 14.9. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Lender hereby agrees that, upon learning of the existence of a default, Default or an Event of Default, it shall (to the extent notice has not previously been provided) promptly notify the Administrative Agent thereof. The Administrative Agent hereby -110- agrees that upon receipt of any notice under this Section 14.9 it shall promptly notify the other Lenders of the existence of such default, Default or Event of Default. Section 14.10. DUTIES IN THE CASE OF ENFORCEMENT. In case one or more Events of Default have occurred and shall be continuing, and whether or not acceleration of the Obligations shall have occurred, the Administrative Agent shall, if (a) so requested by the Required Lenders and (b) the Lenders have provided to the Administrative Agent such additional indemnities and assurances against expenses and liabilities as the Administrative Agent may reasonably request, proceed to enforce the provisions of this Agreement and exercise all or any such other legal and equitable and other rights or remedies as it may have in respect of enforcement of the Lenders' rights against the Borrower and the Guarantors under this Agreement and the other Loan Documents. The Required Lenders may direct the Administrative Agent in writing as to the method and the extent (other than when such direction as to extent requires Unanimous Lender Approval under Section 25) of any such enforcement, the Lenders (including any Lender which is not one of the Required Lenders) hereby agreeing to ratably and severally indemnify and hold the Administrative Agent harmless from all liabilities incurred in respect of all actions taken or omitted in accordance with such directions other than actions taken in gross negligence or willful misconduct, PROVIDED that the Administrative Agent need not comply with any such direction to the extent that the Administrative Agent reasonably believes the Administrative Agent's compliance with such direction to be unlawful or commercially unreasonable in any applicable jurisdiction. Section 14.11. SUCCESSOR ADMINISTRATIVE AGENT. Chase, or any successor Administrative Agent, may resign as Administrative Agent at any time by giving written notice thereof to the Lenders and to the Borrower. In addition, the Required Lenders may remove the Administrative Agent in the event of the Administrative Agent's gross negligence or willful misconduct or in the event that the Administrative Agent ceases to hold a Commitment of at least $20,000,000 or a Commitment Percentage of at least five percent (5%) under this Agreement. Any such resignation or removal shall be effective upon appointment and acceptance of a successor Administrative Agent, as hereinafter provided. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Administrative Agent, which is a Lender under this Agreement, PROVIDED that so long as no Default or Event of Default has occurred and is continuing the Borrower shall have the right to approve any successor Administrative Agent, which approval shall not be unreasonably withheld. Upon the resignation of Chase as the Administrative Agent, the Borrower may elect the Syndication Agent to become the successor Administrative Agent for all purposes under this Agreement and the other Loan Documents. If, in the case of a resignation by the Administrative Agent, no -111- successor Administrative Agent shall have been so appointed by the Required Lenders and approved by the Borrower, and shall have accepted such appointment, within thirty (30) days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint any one of the other Lenders as a successor Administrative Agent; PROVIDED that the Administrative Agent shall have first submitted the names of two (2) Lenders to the Borrower and, within ten (10) Business Days of such submission the Borrower shall not have selected one of such Lenders as the successor Administrative Agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent, and the retiring or removed Administrative Agent shall be discharged from all further duties and obligations as Administrative Agent under this Agreement. After any Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Section 14 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. Section 14.12. NOTICES. Any notices or other information required hereunder to be provided to the Administrative Agent and any formal statement or notice given by the Administrative Agent to the Borrower or any Lender shall be promptly forwarded by the Administrative Agent to each of the other Lenders. Section 15. EXPENSES. The Borrower agrees to pay (a) the reasonable costs of incurred by Chase and Fleet and the Arrangers in producing this Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) the reasonable fees, expenses and disbursements of one outside counsel to both the Administrative Agent and the Syndication Agent, one local counsel to the Administrative Agent and the Syndication Agent incurred in connection with the preparation, administration or interpretation of the Loan Documents and other instruments mentioned herein, each closing hereunder, and amendments, modifications, approvals, consents or waivers hereto or hereunder, (c) the reasonable fees, expenses and disbursements of the Administrative Agent and the Syndication Agent incurred by the Administrative Agent and the Syndication Agent in connection with the preparation, administration or interpretation of the Loan Documents (including those relating to the Competitive Bid Loans) and other instruments mentioned herein, each closing hereunder, any amendments, modifications, approvals, consents or waivers hereto or hereunder, or the cancellation of any Loan Document upon payment in full in cash of all of the Obligations or pursuant to any terms of such Loan Document for providing for such cancellation, including, without limitation, the reasonable fees and disbursements (including, without limitation, reasonable photocopying costs) of one counsel to the Administrative -112- Agent and the Syndication Agent in preparing the documentation, (d) the reasonable fees, costs, expenses and disbursements of the Arrangers and their Affiliates incurred in connection with the syndication and/or participations of the Loans, including, without limitation, costs of preparing syndication materials and photocopying costs, subject to the limitations set forth in the Fee Letter, (e) all reasonable expenses (including reasonable attorneys' fees and costs, which attorneys may be employees of any Lender or the Administrative Agent or the Syndication Agent, and the fees and costs of appraisers, engineers, investment bankers, surveyors or other experts retained by any Lender or the Administrative Agent or the Syndication Agent in connection with any such enforcement, preservation proceedings or dispute) incurred by any Lender or the Administrative Agent or the Syndication Agent in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Borrower or any of its Subsidiaries or any Guarantor or the administration thereof after the occurrence and during the continuance of a Default or Event of Default (including, without limitation, expenses incurred in any restructuring and/or "workout" of the Loans), and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to any Lender's or the Administrative Agent's relationship with the Borrower, any Guarantor or any of their Subsidiaries, (f) all reasonable fees, expenses and disbursements of the Administrative Agent incurred in connection with UCC searches and (g) all costs incurred by the Administrative Agent in the future in connection with its inspection of the Unencumbered Properties after the occurrence and during the continuance of an Event of Default. The covenants of this Section 15 shall survive payment or satisfaction of payment of amounts owing with respect to the Notes. Section 16. INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless the Administrative Agent, the Syndication Agent, the Arrangers and each of the Lenders and the shareholders, directors, agents, officers, subsidiaries and affiliates of the Administrative Agent, the Syndication Agent, the Arrangers and each of the Lenders from and against any and all claims, actions and suits sought or brought by a third party, whether groundless or otherwise, and from and against any and all liabilities, losses, settlement payments, obligations, damages and expenses of every nature and character, including reasonable legal fees and expenses, arising out of or resulting in any way from this Agreement or any of the other Loan Documents or the transactions contemplated hereby or thereby or which otherwise arise in connection with the financing, including, without limitation, (a) any actual or proposed use by the Borrower or any of its Subsidiaries of the proceeds of any of the Loans, (b) the Borrower or any of its Subsidiaries or any Guarantor entering into or performing this Agreement or any of the other Loan Documents, or (c) pursuant to Section 7.17 hereof, in each case including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any investigative, administrative or judicial -113- proceeding (whether or not such indemnified Person is a party thereto), PROVIDED, HOWEVER, that the Borrower shall not be obligated under this Section 16 to indemnify any Person for liabilities arising from such Person's own gross negligence or willful misconduct. In litigation, or the preparation therefor, the Borrower shall be entitled to select counsel reasonably acceptable to the Required Lenders, and the Lenders (as approved by the Required Lenders) shall be entitled to select their own supervisory counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of each such counsel if (i) in the written opinion of counsel to the Administrative Agent, the Syndication Agent, the Arrangers or the Lenders, as the case may be, use of counsel of the Borrower's choice could reasonably be expected to give rise to a conflict of interest, (ii) the Borrower shall not have employed counsel reasonably satisfactory to the Administrative Agent, the Syndication Agent, the Arrangers or the Lenders, as the case may be, within a reasonable time after notice of the institution of any such litigation or proceeding or (iii) the Borrower authorizes the Administrative Agent, the Syndication Agent, the Arrangers or the Lenders, as the case may be, to employ separate counsel at the Borrower's expense. If and to the extent that the obligations of the Borrower under this Section 16 are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The provisions of this Section 16 shall survive the repayment of the Loans and the termination of the obligations of the Lenders hereunder and shall continue in full force and effect as long as the possibility of any such claim, action, cause of action or suit exists. Section 17. SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and warranties made herein, in the Notes, in any of the other Loan Documents shall be deemed to have been relied upon by the Lenders, the Administrative Agent and the Syndication Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Lenders of any of the Loans and the issuance, extension or renewal of any Letters of Credit, as herein contemplated, and shall continue in full force and effect so long as any Letter of Credit or any amount due under this Agreement or the Notes or any of the other Loan Documents remains outstanding or any Lender has any obligation to make any Loans or the Administrative Agent or any Fronting Bank has any obligation to issue, extend or renew any Letter of Credit. The indemnification obligations of the Borrower provided herein and in the other Loan Documents shall survive the full repayment of amounts due and the termination of the obligations of the Lenders hereunder and thereunder to the extent provided herein and therein. All statements contained in any certificate delivered to any Lender or the Administrative Agent or the Syndication Agent at any time by or on behalf of the Borrower or any of its Subsidiaries or any Guarantor pursuant hereto or in -114- connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower or such Subsidiary or such Guarantor hereunder. Section 18. ASSIGNMENT; PARTICIPATIONS; ETC. Section 18.1. CONDITIONS TO ASSIGNMENT BY LENDERS. Except as provided herein, each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment Percentage and Commitment and the same portion of the Loans at the time owing to it, the Notes held by it, the Competitive Bid Loan Accounts maintained by it and its participating interest in the risk relating to any Letters of Credit); PROVIDED that (a) the Administrative Agent and, unless an Event of Default shall have occurred and be continuing, the Borrower each shall have the right to approve any Eligible Assignee, which approval shall not be unreasonably withheld or delayed, (b) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Lender's rights and obligations under this Agreement as to such interests, rights and obligations under this Agreement so assigned, (c) each such assignment shall be in a minimum amount of $15,000,000 or an integral multiple of $1,000,000 in excess thereof, (d) unless the assigning Lender shall have assigned its entire Commitment, each Lender shall have at all times an amount of its Commitment of not less than $15,000,000 and (e) the parties to such assignment shall execute and deliver to the Administrative Agent, for recording in the Register (as hereinafter defined), an assignment and assumption, substantially in the form of EXHIBIT F hereto (an "ASSIGNMENT AND ASSUMPTION"), together with any Notes subject to such assignment. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Assumption, which effective date shall be at least five (5) Business Days after the execution thereof, (i) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Assumption, have the rights and obligations of a Lender hereunder and thereunder, and (ii) the assigning Lender shall, to the extent provided in such assignment and upon payment to the Administrative Agent of the registration fee referred to in Section 18.3, be released from its obligations under this Agreement. Section 18.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By executing and delivering an Assignment and Assumption, the parties to the assignment thereunder confirm to and agree with each other and the other parties hereto as follows: (a) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or -115- the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto; (b) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any of its Subsidiaries or any Guarantor or any other Person primarily or secondarily liable in respect of any of the Obligations, or the performance or observance by the Borrower or any of its Subsidiaries or any Guarantor or any other Person primarily or secondarily liable in respect of any of the Obligations of any of their obligations under this Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (c) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 6.4 and Section 7.4 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (d) such assignee will, independently and without reliance upon the assigning Lender, the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (e) such assignee represents and warrants that it is an Eligible Assignee; (f) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; (g) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender; (h) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Assumption; and (i) such assignee acknowledges that it has made arrangements with the assigning Lender satisfactory to such assignee with respect to its pro rata share of Letter of Credit Fees in respect of outstanding Letters of Credit. Section 18.3. REGISTER. The Administrative Agent shall maintain a copy of each Assignment and Assumption delivered to it and a register or similar list (the "REGISTER") for the recordation of the names and addresses of the Lenders and the Commitment Percentages of, and principal amount of the Loans owing to, the Lenders from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and the Lenders at any reasonable time and from time to time upon reasonable prior notice. Upon each such recordation other than assignments pursuant to Section 4.12, the assigning Lender agrees to pay to the Administrative Agent a registration fee in the sum of $2,500. -116- Section 18.4. NEW REVOLVING CREDIT NOTES. Upon its receipt of an Assignment and Assumption executed by the parties to such assignment, together with each Note subject to such assignment, the Administrative Agent shall (a) record the information contained therein in the Register, and (b) give prompt written notice thereof to the Borrower and the Lenders (other than the assigning Lender). Within five (5) Business Days after receipt of such notice, the Borrower, at its own expense, (i) shall execute and deliver to the Administrative Agent, in exchange for each surrendered Note, a new Note to the order of such Eligible Assignee in an amount equal to the amount assumed by such Eligible Assignee pursuant to such Assignment and Assumption and, if the assigning Lender has retained some portion of its obligations hereunder, a new Note to the order of the assigning Lender in an amount equal to the amount retained by it hereunder and (ii) shall deliver an opinion from counsel to the Borrower in substantially the form delivered on the Closing Date pursuant to Section 10.8 as to such new Notes. Such new Notes shall provide that they are replacements for the surrendered Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Assumption and shall otherwise be in substantially the form of the assigned Notes. The surrendered Notes shall be canceled and returned to the Borrower. Section 18.5. PARTICIPATIONS. Each Lender may sell participations to one or more banks or other entities in all or a portion of such Lender's rights and obligations under this Agreement and the other Loan Documents; PROVIDED that (a) each such participation shall be in an amount of not less than $15,000,000 if such participation is to a Person other than an Affiliate of such Lender, (b) any such sale or participation shall not affect the rights and duties of the selling Lender hereunder to the Borrower and the Administrative Agent and the Lender shall continue to exercise all approvals, disapprovals and other functions of a Lender, (c) the only rights granted to the participant pursuant to such participation arrangements with respect to waivers, amendments or modifications of, or approvals under, the Loan Documents shall be the rights to approve waivers, amendments or modifications that would reduce the principal of or the interest rate on any Loans, extend the term (other than any extension contemplated by the definition of "MATURITY DATE") or increase the amount of the Commitment of such Lender as it relates to such participant, reduce the amount of any fees to which such participant is entitled or extend any regularly scheduled payment date for principal or interest, and (d) no participant shall have the right to grant further participations or assign its rights, obligations or interests under such participation to other Persons without the prior written consent of the Administrative Agent. -117- Section 18.6. PLEDGE BY LENDER. Notwithstanding any other provision of this Agreement, any Lender at no cost to the Borrower may at any time pledge all or any portion of its interest and rights under this Agreement (including all or any portion of its Notes) to any of the twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof shall release the pledgor Lender from its obligations hereunder or under any of the other Loan Documents. Section 18.7. NO ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer any of its rights or obligations under any of the Loan Documents without prior Unanimous Lender Approval. Section 18.8. DISCLOSURE. The Borrower agrees that, in addition to disclosures made in accordance with standard banking practices, any Lender may disclose information obtained by such Lender pursuant to this Agreement to assignees or participants and potential assignees or participants hereunder. Any such disclosed information shall be treated by any assignee or participant with the same standard of confidentiality set forth in Section 7.10 hereof. Section 18.9. SYNDICATION. The Borrower acknowledges that the Administrative Agent and the Syndication Agent intend, and shall have the right, by themselves or through their Affiliates, to syndicate or enter into co-lending arrangements with respect to the Loans and the Total Commitment pursuant to this Section 18, and the Borrower agrees to reasonably cooperate with the Administrative Agent's, the Syndication Agent's and their Affiliates' syndication and/or co-lending efforts, such cooperation to include, without limitation, the provision of information reasonably requested by potential syndicate members. Section 19. NOTICES, ETC. Except as otherwise expressly provided in this Agreement, all notices and other communications made or required to be given pursuant to this Agreement or the Notes or any Letter of Credit Applications shall be in writing and shall be delivered in hand, or mailed by United States registered or certified first class mail, return receipt requested, postage prepaid; or sent by overnight courier; or sent by facsimile and confirmed by delivery via overnight courier or postal service; addressed as follows: (a) if to the Borrower or any Guarantor, to the Borrower at Mack-Cali Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016, Attention: Mr. Roger W. Thomas, Executive Vice President and General Counsel and Mr. Barry Lefkowitz, Executive Vice President and Chief Financial Officer, with a copy to Andrew S. Levine, Esq., Pryor Cashman Sherman & Flynn LLP, 410 Park Avenue, New York, New York 10222, or to such other address for notice as the Borrower or any Guarantor shall have last furnished in writing to the Administrative Agent; -118- (b) if to the Administrative Agent, at The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention: Marc E. Costantino, Vice President, or such other address for notice as the Administrative Agent shall have last furnished in writing to the Borrower, with a copy to Paul M. Vaughn, Esq., Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110, or at such other address for notice as the Administrative Agent shall last have furnished in writing to the Person giving the notice; and (c) if to any Lender, at the address set forth on Schedule 1.2 hereto, or such other address for notice as such Lender shall have last furnished in writing to the Person giving the notice. Any such notice or demand shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or facsimile to the party to which it is directed, at the time of the receipt thereof by such party or the sending of such facsimile and (ii) if sent by registered or certified first-class mail, postage prepaid, return receipt requested on the fifth Business Day following the mailing thereof. Section 20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWER AND THE GUARANTORS AND THE ADMINISTRATIVE AGENT AND THE LENDERS AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK OR ANY FEDERAL COURT SITTING IN NEW YORK, NEW YORK AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER OR THE GUARANTORS OR THE ADMINISTRATIVE AGENT OR THE LENDERS BY MAIL AT THE ADDRESS SPECIFIED IN Section 19. EACH OF THE BORROWER AND THE GUARANTORS AND THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY WAIVES ANY OBJECTION THAT EITHER OF THEM MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. -119- Section 21. HEADINGS. The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. Section 22. COUNTERPARTS. This Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. In proving this Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. Section 23. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in Section 25. Section 24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, EACH OF THE BORROWER AND THE GUARANTORS AND THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING CREDIT NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, THE BORROWER AND EACH OF THE GUARANTORS HEREBY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH OF THE BORROWER AND THE GUARANTORS (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER OR THE ADMINISTRATIVE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER OR THE ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGE THAT THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN. Section 25. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly provided in this Agreement, any acceptance, consent, -120- approval or other authorization required or permitted by this Agreement may be given, and any term of this Agreement or of any of the other Loan Documents may be amended, and the performance or observance by the Borrower or any Guarantor of any terms of this Agreement or the other Loan Documents or the continuance of any default, Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Required Lenders. Notwithstanding the foregoing, Unanimous Lender Approval shall be required for any amendment, modification or waiver of this Agreement that: (i) reduces or forgives any principal of any unpaid Loan or any interest thereon (including any interest "breakage" costs) or any fees due any Lender hereunder, or permits any prepayment not otherwise permitted hereunder; or (ii) changes the unpaid principal amount of, or the rate of interest on, any Loan; or (iii) changes the date fixed for any payment of principal of or interest on any Loan (including, without limitation, any extension of the Maturity Date) or any fees payable hereunder; or (iv) changes the amount of any Lender's Commitment (other than pursuant to an assignment permitted under Section 18.1 hereof) or increases the amount of the Total Commitment, except as provided in Section 2.2; or (v) amends any of the covenants contained in Sections 9.1, 9.3, 9.4, 9.6 or 9.7 hereof; or (vi) releases or reduces the liability of any Guarantor pursuant to its Guaranty other than as provided in Section 5; or (vii) modifies this Section 25 or any other provision herein or in any other Loan Document which by the terms thereof expressly requires Unanimous Lender Approval; or (viii) amends any of the provisions governing funding contained in Section 2 hereof; or (ix) changes the rights, duties or obligations of the Administrative Agent specified in Section 14 hereof (PROVIDED that no amendment or modification to such Section 14 or to the fee payable to the -121- Arrangers or the Administrative Agent under this Agreement may be made without the prior written consent of the Arrangers or the Administrative Agent affected thereby); or (x) changes the definitions of Required Lenders, Majority Lenders or Unanimous Lender Approval. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of the Administrative Agent or the Lenders or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial to such right or any other rights of the Administrative Agent or the Lenders. No notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances. Section 26. SEVERABILITY. The provisions of this Agreement are severable, and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction. Section 27. TRANSITIONAL ARRANGEMENTS. Section 27.1. ORIGINAL AGREEMENT SUPERSEDED. This Agreement shall supersede the Original Agreement in its entirety, except as provided in this Section 27 and Section 3.7. On the Closing Date, the rights and obligations of the parties under the Original Agreement and the "Notes" defined therein shall be subsumed within and be governed by this Agreement and the Notes; PROVIDED HOWEVER, that any of the "Revolving Credit Loans" (as defined in the Original Agreement) outstanding under the Original Agreement shall, for purposes of this Agreement, be Revolving Credit Loans hereunder. The Lenders' interests in such Revolving Credit Loans and participations in such Letters of Credit shall be reallocated on the Closing Date in accordance with each Lender's applicable Commitment Percentage. Section 27.2. RETURN AND CANCELLATION OF NOTES. Upon its receipt of the Revolving Credit Notes to be delivered hereunder on the Closing Date, each Lender will promptly return to the Borrower, marked "Cancelled" or "Replaced", the notes of the Borrower held by such Lender pursuant to the Original Agreement. Section 27.3 INTEREST AND FEES UNDER ORIGINAL AGREEMENT. All interest and all commitment, facility and other fees and expenses owing or accruing under or in -122- respect of the Original Agreement shall be calculated as of the Closing Date (prorated in the case of any fractional periods), and shall be paid on the Closing Date in accordance with the method specified in the Original Agreement, as if the Original Agreement were still in effect. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] [SIGNATURE PAGES TO FOLLOW] -123- IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a sealed instrument as of the date first set forth above. MACK-CALI REALTY, L.P. By: Mack-Cali Realty Corporation, its general partner By: /s/ Barry Lefkowitz ----------------------------------- Name: Barry Lefkowitz Title: Executive Vice President and Chief Financial Officer SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -124- BANK LEUMI USA By: /s/ Federick A. Wolhel ----------------------------------- Name: Federick A. Wolhel Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -125- BANK ONE, NA By: /s/ Dennis J. Redpath ----------------------------------- Name: Dennis J. Redpath Title: First Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -126- BANK OF AMERICA, N.A. By: /s/ Jeffrey B. Hoyle ----------------------------------- Name: Jeffrey B. Hoyle Title: Principal SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -127- BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC. By: /s/ Peter W. Wood ----------------------------------- Name: Peter W. Wood Title: Vice President By: /s/ Anthony Mugno ----------------------------------- Name: Anthony Mugno Title: Assistant Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -128- BAYERISCHE HYPO-UND VEREINSBANK AG NEW YORK BRANCH By: /s/ William J. Rogers ----------------------------------- Name: William J. Rogers Title: Managing Director By: /s/ George S. Gnad ----------------------------------- Name: George S. Gnad Title: Director SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -129- BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH By: /s/ John A. Wain ----------------------------------- Name: John A. Wain Title: First Vice President By: /s/ Alexander Kohnert ----------------------------------- Name: Alexander Kohnert Title: First Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -130- CHEVY CHASE BANK By: /s/ Todd A. Lee ----------------------------------- Name: Todd A. Lee Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -131- CITICORP REAL ESTATE, INC. By: /s/ David Boutin ----------------------------------- Name: David Boutin Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -132- CITIZENS BANK OF MASSACHUSETTS By: /s/ Craig E. Schermerhorn ----------------------------------- Name: Craig E. Schermerhorn Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -133- COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH By: /s/ Christine H. Finkel ----------------------------------- Name: Christine H. Finkel Title: Vice President By: /s/ R. William Knickerbocker ----------------------------------- Name: R. William Knickerbocker Title: Assistant Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -134- DG BANK DEUTSCHE GENOSSENSCHAFTSBANK, AG NEW YORK BRANCH By: /s/ Rob T. Jokhai ----------------------------- Name: Rob T. Jokhai Title: Vice President By: /s/ Sabine Wendt ----------------------------- Name: Sabine Wendt Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -135- DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By: /s/ Johannes Boeckmann ----------------------------- Name: Johannes Boeckmann Title: Senior Vice President By: /s/ Clifford L. Rooke ----------------------------- Name: Clifford L. Rooke Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -136- ERSTE BANK By: /s/ Paul Judicke ----------------------------- Name: Paul Judicke Title: Vice President By: /s/ John Runnion ----------------------------- Name: John Runnion Title: First Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -137- EUROPEAN AMERICAN BANK By: /s/ Joanne Schemerti ------------------------------- Name: Joanne Schemerti Title: Assistant Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -138- FIRST UNION NATIONAL BANK By: /s/ David Hoagland ----------------------------- Name: David Hoagland Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -139- FLEET NATIONAL BANK By: /s/ Scott C. Dow ----------------------------- Name: Scott C. Dow Title: Authorized Officer SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -140- ISRAEL DISCOUNT BANK OF NEW YORK By: /s/ Marc G. Cooper ----------------------------- Name: Marc G. Cooper Title: Vice President By: /s/ Chet Davis ----------------------------- Name: Chet Davis Title: First Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -141- KBC BANK N.V. By: /s/ Michael V. Curran ----------------------------- Name: Michael V. Curran Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -142- PNC BANK, NATIONAL ASSOCIATION By: /s/ Melinda E. DiBenedetto ----------------------------- Name: Melinda E. DiBenedetto Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -143- SOCIETE GENERALE By: /s/ Jeffrey C. Schultz ----------------------------- Name: Jeffrey C. Schultz Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -144- SUMMIT BANK By: /s/ Marianne W. de Jongh --------------------------------- Name: Marianne W. de Jongh Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -145- SUNTRUST BANK (SUCCESSOR IN INTEREST TO CRESTAR BANK) By: /s/ Blake K. Thompson ------------------------------------- Name: Blake K. Thompson Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -146- THE CHASE MANHATTAN BANK By: /s/ Marc E. Constantino ------------------------------------ Name: Marc E. Constantino Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT -147- WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/ Diana M. Elton ----------------------------------- Name: Diana M. Elton Title: Vice President SIGNATURE PAGE TO AMENDMENT NO. 3 TO AND RESTATEMENT OF REVOLVING CREDIT AGREEMENT SCHEDULE 1.2
LENDER COMMITMENT AMOUNT COMMITMENT PERCENTAGE - ------ ----------------- --------------------- The Chase Manhattan Bank $60,000,000 7.500% 270 Park Avenue New York, NY 10017 Fleet National Bank $60,000,000 7.500% 100 Federal Street Boston, MA 02110 Bank of America, N.A. $60,000,000 7.500% 100 N. Tryon Street Charlotte, NC 28255-0001 Bank One, NA $50,000,000 6.250% One First National Plaza Suite 0151, 1-14 Chicago, IL 60670 Commerzbank Aktiengesellschaft, $50,000,000 6.250% New York Branch 2 World Financial Center New York, NY 10281-1050 First Union National Bank $50,000,000 6.250% One First Union Center Charlotte, NC 28288-0166 PNC Bank, National Association $40,000,000 5.000% Two Tower Center Blvd. East Brunswick, NJ 08816 Bank Austria Creditanstalt $35,000,000 4.375% Corporate Finance, Inc. 2 Ravinia Drive Atlanta, GA 30346 Bayerische Hypo-und Vereinsbank $35,000,000 4.375% AG New York Branch 150 East 42nd Street New York, NY 10017 Dresdner Bank AG, New York and $35,000,000 4.375% Grand Cayman Branches 75 Wall Street New York, NY 10005
-2-
LENDER COMMITMENT AMOUNT COMMITMENT PERCENTAGE - ------ ----------------- --------------------- Societe Generale $35,000,000 4.375% 2001 Ross Avenue Dallas, TX 75201 Summit Bank $35,000,000 4.375% 750 Walnut Avenue Cranford, NJ 07016 Wells Fargo Bank, National $35,000,000 4.375% Association 40 West 57th Street, 22nd Floor New York, NY 10019 Bayerische Landesbank Girozentrale $30,000,000 3.750% 560 Lexington Avenue New York, NY 10022 Citizens Bank of Massachusetts $25,000,000 3.125% 1 Citizens Plaza Providence, RI 02903-1339 European American Bank $25,000,000 3.125% 335 Madison Avenue New York, NY 10017 Chevy Chase Bank $20,000,000 2.500% 8401 Connecticut Avenue Chevy Chase, MD 20815 Citicorp Real Estate, Inc. $20,000,000 2.500% 399 Park Avenue New York, NY 10043 DG Bank Deutsche $20,000,000 2.500% Genossenschaftsbank, AG New York Branch 609 Fifth Avenue New York, NY 10017-1021 Erste Bank $20,000,000 2.500% 280 Park Avenue, West Building New York, NY 10017 KBC Bank N.V. $20,000,000 2.500% 125 West 55th Street New York, NY 10019
-3-
LENDER COMMITMENT AMOUNT COMMITMENT PERCENTAGE - ------ ----------------- --------------------- SunTrust Bank (successor in interest $20,000,000 2.500% to Crestar Bank) 8245 Boone Blvd., Suite 820 Vienna, VA 22182 Bank Leumi USA $10,000,000 1.250% 562 Fifth Avenue New York, NY 10036 Israel Discount Bank of New York $10,000,000 1.250% 511 Fifth Avenue New York, NY 10017 ----------------- --------------------- TOTAL $800,000,000 100%
EX-12 4 a2040483zex-12.txt EXHIBIT 12 Exhibit 12 Mack-Cali Realty, L.P. and Subsidiaries Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Unit Distribution Requirement (Dollar Amounts in Thousands)
For the Year Ended December 31, ---------------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Income before gain on sale of property, minority interests and extraordinary item 146,110 150,726 151,464 39,582 37,179 Less: Adjustment for income or loss from equity investees (8,055) (2,593) (1,055) -- -- ------- ------- ------- ------- ------- Income before gain on sale of property, extraordinary item and adjustment for minority interests in consolidated subsidiaries or income or loss from equity investees 138,055 148,133 150,409 39,582 37,179 Add: Distributed income from equity investees 4,627 2,263 725 -- -- Interest expense attributable to the Operating Partnership 105,394 102,960 88,043 9,670 4,672 Interest expense attributable to the unconsolidated Property Partnerships -- -- -- 29,408 9,086 Interest portion (33 percent) of ground rents on land leases attributable to the Property Partnerships 190 187 140 29 -- Less: Gain on sale of rental property attributable to unconsolidated Property Partnerships -- -- -- -- (5,658) Intercompany interest income recorded by unconsolidated Property Partnerships -- -- -- (3,215) -- ------- ------- ------- ------- ------- Income before gain on sale of property and extraordinary item, as adjusted 248,266 253,543 239,317 75,474 45,279 ======= ======= ======= ======= ======= Fixed Charges: Interest expense attributable to the Operating Partnership 105,394 102,960 88,043 9,670 4,672 Interest expense attributable to unconsolidated majority-owned Property Partnerships -- -- -- 29,408 9,086 Interest portion (33 percent) of ground rents on land leases attributable to the Property Partnerships 190 187 140 29 -- ------- ------- ------- ------- ------- Total fixed charges 105,584 103,147 88,183 39,107 13,758 ======= ======= ======= ======= ======= Preferred unit distribution requirement 15,441 15,476 16,313 888 -- Beneficial conversion feature -- -- -- 29,361 -- Ratio of pre-tax income to net income 1 1 1 1 -- ------- ------- ------- ------- ------- Preferred unit distribution factor 15,441 15,476 16,313 30,249 -- Total fixed charges 105,584 103,147 88,183 39,107 13,758 ------- ------- ------- ------- ------- Total fixed charges and preferred unit distribution requirement 121,025 118,623 104,496 69,356 13,758 ======= ======= ======= ======= ======= Ratio of earnings to combined fixed charges and preferred unit distribution 2.05 2.14 2.29 1.09 3.29
EX-21 5 a2040483zex-21.txt EXHIBIT 21 Exhibit 21
STATE OF INCORPORATION SUBSIDIARY OR ORGANIZATION 11 COMMERCE DRIVE ASSOCIATES L.L.C. NJ 12 SKYLINE ASSOCIATES L.L.C. NY 120 PASSAIC STREET LLC NJ 1717 REALTY ASSOCIATES L.L.C. NJ 20 COMMERCE DRIVE ASSOCIATES L.L.C. NJ 300 TICE REALTY ASSOCIATES L.L.C. NJ 300 HORIZON ROAD REALTY L.L.C. NJ 400 PRINCETON ASSOCIATES L.L.C. NJ 250 JOHNSON ROAD REALTY L.L.C. NJ 400 RELLA REALTY ASSOCIATES L.L.C. NY 500 COLUMBIA TURNPIKE ASSOCIATES L.L.C. NJ 600 PARSIPPANY ASSOCIATES L.L.C. NJ 4 GATEHALL REALTY L.L.C. NJ 78 PINSON PARTNERS L.L.C. NJ 795 FOLSOM REALTY ASSOCIATES L.P. CA 9060 EAST VIA LINDA CO., LTD. AZ AIRPORT PROPERTIES ASSOCIATES LLC NJ BMP MOORESTOWN REALTY L.L.C. NJ BMP SOUTH REALTY L.L.C. NJ BRANDEIS BUILDING INVESTORS L.L.C. NE BRANDEIS BUILDING INVESTORS, L.P. DE BRIDGE PLAZA ASSOCIATES L.L.C. NJ
STATE OF INCORPORATION SUBSIDIARY OR ORGANIZATION C.W. ASSOCIATES L.L.C. NJ CAL-HARBOR II & III URBAN RENEWAL ASSOCIATES L.P. NJ CAL-HARBOR IV URBAN RENEWAL ASSOCIATES L.P. NJ CAL-HARBOR NO. PIER URBAN RENEWAL ASSOCIATES L.P. NJ CAL-HARBOR SO. PIER URBAN RENEWAL ASSOCIATES L.P. NJ CAL-HARBOR V LEASING ASSOCIATES L.L.C. NJ CAL-HARBOR V URBAN RENEWAL ASSOCIATES L.P. NJ CAL-HARBOR VI URBAN RENEWAL ASSOCIATES L.P. NJ CAL-HARBOR VII LEASING ASSOCIATES L.L.C. NJ CAL-HARBOR VII URBAN RENEWAL ASSOCIATES L.P. NJ CAL-TREE REALTY ASSOCIATES L.P. PA CALI AIRPORT REALTY ASSOCIATES L.P. PA CALI HARBORSIDE (FEE) ASSOCIATES L.P. NJ CALI HARBORSIDE PLAZA I (FEE) ASSOCIATES L.P. NJ CALI PENNSYLVANIA REALTY ASSOCIATES L.P. PA CALI PROPERTY HOLDINGS I, L.P. DE CALI PROPERTY HOLDINGS II, L.P. DE CALI PROPERTY HOLDINGS III, L.P. DE CALI PROPERTY HOLDINGS IV, L.P. DE CALI PROPERTY HOLDINGS IX, L.P. MD CALI PROPERTY HOLDINGS V, L.P. DE CALI PROPERTY HOLDINGS VI, L.P. DE CALI PROPERTY HOLDINGS VII, L.P. DE CALI PROPERTY HOLDINGS VIII, L.P. DE CALI PROPERTY HOLDINGS X, L.P. DE
STATE OF INCORPORATION SUBSIDIARY OR ORGANIZATION CENTURY PLAZA ASSOCIATES L.L.C. NJ COLLEGE ROAD REALTY L.L.C. NJ COMMERCENTER REALTY ASSOCIATES L.L.C. NJ COMMERCENTER REALTY ASSOCIATES L.P. NJ COMMON MESSAGING EXCHANGE, INC. NJ CROSS WESTCHESTER REALTY ASSOCIATES L.L.C. NY D.B.C. REALTY L.L.C. NJ ELMSFORD REALTY ASSOCIATES L.L.C. NY FIVE SENTRY REALTY ASSOCIATES L.P. PA GROVE STREET ASSOCIATES OF JERSEY CITY LIMITED PARTNERSHIP NJ HORIZON CENTER REALTY ASSOCIATES L.L.C. NJ HORIZON CENTER REALTY ASSOCIATES L.P. NJ HORIZON CENTER REALTY L.L.C. NJ JUMPING BROOK REALTY ASSOCIATES L.L.C. NJ JUMPING BROOK REALTY ASSOCIATES L.P. NJ KEMBLE-MORRIS, LLC NJ LINWOOD REALTY L.L.C. NJ M-C CALIFORNIA SERVICES, INC. DE M-C CAPITOL ASSOCIATES L.L.C. DE M-C HARSIMUS PARTNERS L.L.C. NJ
STATE OF INCORPORATION SUBSIDIARY OR ORGANIZATION M-C PENN MANAGEMENT CORP. DE M-C PROPERTIES CO. REALTY L.L.C. NJ M-C ROCKLAND PARTNERS L.P. NY M-C TEXAS MANAGEMENT L.P. TX MACK-CALI ADVANTAGE SERVICES CORPORATION DE MACK-CALI ARIZONA CORPORATION DE MACK-CALI B PROPERTIES, L.L.C. NJ MACK-CALI BEARDSLEY LIMITED PARTNERSHIP AZ MACK-CALI BRIDGEWATER CO., L.P. NJ MACK-CALI BUILDING V ASSOCIATES L.L.C. NJ MACK-CALI CALIFORNIA DEVELOPMENT ASSOCIATES L.P. CA MACK-CALI CALIFORNIA PARTNERS L.P. CA MACK-CALI CAMPUS REALTY L.L.C. NJ MACK-CALI CENTURY III INVESTORS L.L.C. IA MACK-CALI CENTURY III INVESTORS, L.P. DE MACK-CALI CHESTNUT RIDGE, L.L.C. NJ MACK-CALI CW REALTY ASSOCIATES L.L.C. NY MACK-CALI D.C. MANAGEMENT CORP DE MACK-CALI E-COMMERCE, INC. DE MACK-CALI E-COMMERCE L.L.C. DE MACK-CALI EAST LAKEMONT L.L.C. NJ MACK-CALI F PROPERTIES L.P. NJ MACK-CALI GLENDALE LIMITED PARTNERSHIP AZ MACK-CALI METROPOLITAN, LTD. FL MACK-CALI MID-WEST REALTY ASSOCIATES L.L.C. NY MACK-CALI MORRIS REALTY L.L.C. NJ MACK-CALI NORTH HILLS L.L.C. NY
STATE OF INCORPORATION SUBSIDIARY OR ORGANIZATION MACK-CALI PROPERTIES CO. #3 L.P. NJ MACK-CALI PROPERTIES CO. NO. 11, L.P. NY MACK-CALI PROPERTY TRUST MD MACK-CALI REALTY CONSTRUCTION CORPORATION NJ MACK-CALI SO. WEST REALTY ASSOCIATES L.L.C. NY MACK-CALI STAMFORD REALTY ASSOCIATES, L.P. CT
STATE OF INCORPORATION SUBSIDIARY OR ORGANIZATION MACK-CALI SUB XV, INC. DE MACK-CALI TAXTER ASSOCIATES L.L.C. NY MACK-CALI TEXAS PROPERTY L.P. TX MACK-CALI TRS HOLDING CORPORATION DE MACK-CALI WILLOWBROOK COMPANY L.P. NJ MACK-CALI WOODBRIDGE II L.P. NJ MACK-CALI WP REALTY ASSOCIATES L.L.C. NY MACK-CALI-R COMPANY NO. 1 L.P. NJ MANHASSET ASSOCIATES L.L.C. NY MARTIN AVENUE REALTY ASSOCIATES L.L.C. NY MC-CAP L.L.C. DE MC-SJP MORRIS V REALTY L.L.C. NJ MC-SJP MORRIS VI REALTY L.L.C. NJ MID-WEST MAINTENANCE CORP. NY MID-WESTCHESTER REALTY ASSOCIATES L.L.C. NY MONMOUTH/ATLANTIC REALTY ASSOCIATES L.L.C. NJ MONMOUTH/ATLANTIC REALTY ASSOCIATES L.P. NJ MOORESTOWN REALTY ASSOCIATES L.L.C. NJ
STATE OF INCORPORATION SUBSIDIARY OR ORGANIZATION MORRIS V PARTNERS L.L.C. NJ MORRIS VI PARTNERS L.L.C. NJ MORRISTOWN TEN NJ MOUNT AIRY REALTY ASSOCIATES L.L.C. NJ MOUNT AIRY REALTY ASSOCIATES L.P. NJ MOUNTAINVIEW REALTY L.L.C. NJ OFFICE ASSOCIATES L.L.C. NJ ONE SYLVAN REALTY, L.L.C. NJ PARSIPPANY CAMPUS REALTY ASSOCIATES L.L.C. NJ PHELAN REALTY ASSOCIATES L.P. CA PLAZA X LEASING ASSOCIATES L.L.C. NJ PLAZA X REALTY L.L.C. NJ PLAZA X URBAN RENEWAL ASSOCIATES L.L.C. NJ PRINCETON CORPORATE CENTER REALTY ASSOCIATES L.L.C. NJ PRINCETON OVERLOOK REALTY L.L.C. NJ ROSELAND II L.L.C. NJ ROSELAND OWNERS ASSOCIATES L.L.C. NJ SHELTON REALTY ASSOCIATES L.P. CT SIX COMMERCE DRIVE ASSOCIATES L.L.C. NJ SKYLINE REALTY L.L.C. NY
STATE OF INCORPORATION SUBSIDIARY OR ORGANIZATION SO. WESTCHESTER REALTY ASSOCIATES L.L.C. NY STEVENS AIRPORT REALTY ASSOCIATES L.P. PA SYLVAN/CAMPUS REALTY ASSOCIATES L.L.C. NJ TALLEYRAND REALTY ASSOCIATES L.L.C. NY TENBY CHASE APARTMENTS L.L.C. NJ THE HORIZON CENTER PROPERTY OWNERS ASSOCIATION, INC. NJ TRADEMATRIX COMMUNICATIONS, INC. DE U.S. UTILIPRO SOLUTIONS L.L.C. DE UTILIPRO SOLUTIONS, INC. NJ VAUGHN PARTNERS L.L.C. NJ VAUGHN PRINCETON ASSOCIATES L.L.C. NJ VAUGHN PRINCETON ASSOCIATES L.P. NJ WESTAGE REALTY L.L.C. NY WHITE PLAINS REALTY ASSOCIATES L.L.C. NY
EX-23 6 a2040483zex-23.txt EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-57103) of Mack-Cali Realty, L.P. of our report dated February 20, 2001, relating to the financial statements and financial statement schedule, which appears in the Form 10-K. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP New York, New York March 6, 2001 -----END PRIVACY-ENHANCED MESSAGE-----