Document:

Exhibit 10.1

 

EXECUTION COPY

 

MEMBERSHIP INTEREST PURCHASE AND CONTRIBUTION AGREEMENT

 

 

By and Among

 

MR. STANLEY C. GALE,

 

SCG HOLDING CORP.,

 

MACK-CALI REALTY ACQUISITION CORP.,

 

and

 

MACK-CALI REALTY L.P.

 

 

Dated as of March 7, 2006

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
  Section 1.01.

  	
  Certain
  Defined Terms

  	
   

  	
  1

  
	
  Section 1.02.

  	
  Definitions

  	
   

  	
  5

  
	
  Section 1.03.

  	
  Interpretation
  and Rules of Construction

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II PURCHASE AND SALE

  	
   

  	
  9

  
	
  Section 2.01.

  	
  Contribution,
  Purchase and Sale of the Membership Interests

  	
   

  	
  9

  
	
  Section 2.02.

  	
  Purchase
  Price

  	
   

  	
  9

  
	
  Section 2.03.

  	
  Closing

  	
   

  	
  9

  
	
  Section 2.04.

  	
  Closing
  Deliveries by the Sellers

  	
   

  	
  10

  
	
  Section 2.05.

  	
  Closing
  Deliveries by the Purchaser

  	
   

  	
  11

  
	
  Section 2.06.

  	
  Post-Closing
  Adjustment of Purchase Price

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

  	
   

  	
  14

  
	
  Section 3.01.

  	
  Organization,
  Authority and Qualification of the Sellers; Companies

  	
   

  	
  14

  
	
  Section 3.02.

  	
  Subsidiaries

  	
   

  	
  15

  
	
  Section 3.03.

  	
  Ownership of
  the Membership Interests and Subsidiaries

  	
   

  	
  15

  
	
  Section 3.04.

  	
  No Conflict

  	
   

  	
  16

  
	
  Section 3.05.

  	
  Governmental
  Consents and Approvals

  	
   

  	
  17

  
	
  Section 3.06.

  	
  Financial
  Information

  	
   

  	
  17

  
	
  Section 3.07.

  	
  Absence of
  Undisclosed Liabilities

  	
   

  	
  17

  
	
  Section 3.08.

  	
  Conduct in
  the Ordinary Course

  	
   

  	
  17

  
	
  Section 3.09.

  	
  Litigation

  	
   

  	
  17

  
	
  Section 3.10.

  	
  Compliance
  with Laws

  	
   

  	
  18

  
	
  Section 3.11.

  	
  Environmental
  Matters

  	
   

  	
  18

  
	
  Section 3.12.

  	
  Intellectual
  Property

  	
   

  	
  18

  
	
  Section 3.13.

  	
  Owned and
  Leased Real Property

  	
   

  	
  19

  
	
  Section 3.14.

  	
  Employee
  Benefit Matters

  	
   

  	
  19

  
	
  Section 3.15.

  	
  Taxes

  	
   

  	
  21

  
	
  Section 3.16.

  	
  Contracts

  	
   

  	
  22

  
	
  Section 3.17.

  	
  Securities
  Matters

  	
   

  	
  23

  
	
  Section 3.18.

  	
  Brokers

  	
   

  	
  25

  
	
  Section 3.19.

  	
  Labor
  Matters

  	
   

  	
  25

  
	
  Section 3.20.

  	
  Organization
  Documents

  	
   

  	
  25

  
	
  Section 3.21.

  	
  Insurance

  	
   

  	
  26

  
	
  Section 3.22.

  	
  Accounts
  Receivable

  	
   

  	
  26

  
	
  Section 3.23.

  	
  Disclosure

  	
   

  	
  26

  
	
  Section 3.24.

  	
  Bank
  Accounts

  	
   

  	
  26

  
	
  Section 3.25.

  	
  Assets

  	
   

  	
  27

  
	
  Section 3.26.

  	
  OFAC

  	
   

  	
  27

  

 

i

 

	
  ARTICLE IV
  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MCRLP

  	
   

  	
  28

  
	
  Section 4.01.

  	
  Organization
  and Authority of MCRLP and the Purchaser

  	
   

  	
  28

  
	
  Section 4.02.

  	
  Certificate
  of Incorporation and By-Laws

  	
   

  	
  29

  
	
  Section 4.03.

  	
  Capitalization

  	
   

  	
  29

  
	
  Section 4.04.

  	
  No Conflict

  	
   

  	
  30

  
	
  Section 4.05.

  	
  Governmental
  Consents and Approvals

  	
   

  	
  30

  
	
  Section 4.06.

  	
  SEC Filings

  	
   

  	
  30

  
	
  Section 4.07.

  	
  Form S-3
  Eligibility

  	
   

  	
  31

  
	
  Section 4.08.

  	
  Litigation

  	
   

  	
  31

  
	
  Section 4.09.

  	
  Brokers

  	
   

  	
  31

  
	
  Section 4.10.

  	
  Independent
  Investigation; Representations

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V ADDITIONAL
  AGREEMENTS

  	
   

  	
  32

  
	
  Section 5.01.

  	
  Conduct of
  Business Prior to the Closing

  	
   

  	
  32

  
	
  Section 5.02.

  	
  Access to
  Information

  	
   

  	
  33

  
	
  Section 5.03.

  	
  Confidentiality

  	
   

  	
  34

  
	
  Section 5.04.

  	
  Regulatory
  and Other Authorizations; Notices and Consents

  	
   

  	
  35

  
	
  Section 5.05.

  	
  Non-Competition;
  Non-Solicitation

  	
   

  	
  35

  
	
  Section 5.06.

  	
  Property
  Management Retention

  	
   

  	
  36

  
	
  Section 5.07.

  	
  Office
  Leases

  	
   

  	
  36

  
	
  Section 5.08.

  	
  Right of
  First Offer

  	
   

  	
  37

  
	
  Section 5.09.

  	
  Use of the
  Gale Name

  	
   

  	
  37

  
	
  Section 5.10.

  	
  Stanley C.
  Gale

  	
   

  	
  37

  
	
  Section 5.11.

  	
  Excluded
  Assets

  	
   

  	
  38

  
	
  Section 5.12.

  	
  Registration
  Rights

  	
   

  	
  39

  
	
  Section 5.13.

  	
  Notifications;
  Update of Disclosure Schedule

  	
   

  	
  40

  
	
  Section 5.14.

  	
  Further
  Action

  	
   

  	
  40

  
	
  Section 5.15.

  	
  Conveyance
  Taxes

  	
   

  	
  40

  
	
  Section 5.16.

  	
  Insurance

  	
   

  	
  41

  
	
  Section 5.17.

  	
  Transfer
  Restrictions

  	
   

  	
  41

  
	
  Section 5.18.

  	
  Transition
  Services

  	
   

  	
  41

  
	
  Section 5.19.

  	
  Economic
  Benefits of Assignment

  	
   

  	
  41

  
	
  Section 5.20.

  	
  Delivery of
  2004 Pro Forma Financial Statements.

  	
   

  	
  42

  
	
  Section 5.21.

  	
  Preparation
  of Audited Financials

  	
   

  	
  42

  
	
  Section 5.22.

  	
  Non-Portfolio
  Real Property Interests.

  	
   

  	
  42

  
	
  Section 5.23.

  	
  REIT Issues

  	
   

  	
  42

  
	
  Section 5.24.

  	
  Tax Matters

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI EMPLOYEE MATTERS 

  	
   

  	
  45

  
	
  Section 6.01.

  	
  Employee
  Benefits

  	
   

  	
  45

  
	
  Section 6.02.

  	
  Former
  AT&T Employee Severance Obligations

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII CONDITIONS TO
  CLOSING 

  	
   

  	
  46

  
	
  Section 7.01.

  	
  Conditions
  to Obligations of the Sellers

  	
   

  	
  46

  
	
  Section 7.02.

  	
  Conditions to
  Obligations of the Purchaser

  	
   

  	
  47

  

 

ii

 

	
  ARTICLE VIII INDEMNIFICATION 

  	
   

  	
  48

  	
   

  
	
  Section 8.01.

  	
  Survival of Representations and Warranties

  	
   

  	
  48

  	
   

  
	
  Section 8.02.

  	
  Indemnification
  by the Sellers

  	
   

  	
  48

  	
   

  
	
  Section 8.03.

  	
  Indemnification
  by the Purchaser

  	
   

  	
  48

  	
   

  
	
  Section 8.04.

  	
  Limits on
  Indemnification

  	
   

  	
  49

  	
   

  
	
  Section 8.05.

  	
  Notice of
  Loss; Third Party Claims

  	
   

  	
  49

  	
   

  
	
  Section 8.06.

  	
  Remedies

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX TERMINATION,
  AMENDMENT AND WAIVER 

  	
   

  	
  51

  	
   

  
	
  Section 9.01.

  	
  Termination

  	
   

  	
  51

  	
   

  
	
  Section 9.02.

  	
  Effect of
  Termination

  	
   

  	
  52

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X GENERAL PROVISIONS 

  	
   

  	
  52

  	
   

  
	
  Section 10.01.

  	
  Expenses

  	
   

  	
  52

  	
   

  
	
  Section 10.02.

  	
  Notices

  	
   

  	
  52

  	
   

  
	
  Section 10.03.

  	
  Public
  Announcements; Confidentiality

  	
   

  	
  54

  	
   

  
	
  Section 10.04.

  	
  Severability

  	
   

  	
  54

  	
   

  
	
  Section 10.05.

  	
  Entire Agreement

  	
   

  	
  54

  	
   

  
	
  Section 10.06.

  	
  Assignment

  	
   

  	
  54

  	
   

  
	
  Section 10.07.

  	
  Amendment

  	
   

  	
  55

  	
   

  
	
  Section 10.08.

  	
  Waiver

  	
   

  	
  55

  	
   

  
	
  Section 10.09.

  	
  No Third
  Party Beneficiaries

  	
   

  	
  55

  	
   

  
	
  Section 10.10.

  	
  Currency

  	
   

  	
  55

  	
   

  
	
  Section 10.11.

  	
  Governing
  Law

  	
   

  	
  55

  	
   

  
	
  Section 10.12.

  	
  Waiver of
  Jury Trial

  	
   

  	
  56

  	
   

  
	
  Section 10.13.

  	
  Counterparts

  	
   

  	
  56

  	
   

  
	
  Section 10.14.

  	
  Cooperation

  	
   

  	
  56

  	
   

  

 

EXHIBITS AND SCHEDULES

 

Exhibit A                AT&T Agreement

 

Exhibit B                Payments to the Sellers

 

Exhibit C                Form of O.P. Unit Certificate

 

Exhibit D                Earnout

 

Exhibit E                 Form
of Assignment of Membership Interests

 

Exhibit F                 Stanley
C. Gale Advisor Terms and Conditions

 

Exhibit G                Certificate of Non-Foreign
Status

 

Exhibit H                Non-Porfolio Real Property
Interests

 

Sellers Disclosure Schedules

 

iii

 

MEMBERSHIP INTEREST PURCHASE
AND CONTRIBUTION AGREEMENT (this “Agreement”), dated as of March 7,
2006, by and among Mr. Stanley C. Gale (“SG”), SCG Holding Corp., a
Delaware corporation (“SCG” and together with SG, the “Sellers”),
Mack-Cali Realty Acquisition Corp., a Delaware corporation, or its designee
(the “Purchaser”), and Mack-Cali Realty, L.P., a Delaware limited
partnership (“MCRLP”).

 

WHEREAS, the Sellers own (i)
all of the issued and outstanding membership interests or other ownership or
beneficial interests (the “Gale Services Membership Interests”) of The
Gale Services Company, L.L.C., a Delaware limited liability company (“Gale
Services”) and (ii) all of the issued and outstanding membership interests
or other ownership or beneficial interests (the “Gale Construction
Membership Interests,” and together with the Gale Services Membership
Interests, the “Membership Interests”) of The Gale Construction Services
Company, L.L.C., a Delaware limited liability company (“Gale Construction,”
and together with Gale Services, the “Companies”);

 

WHEREAS, the Companies are
engaged in the Business; and

 

WHEREAS, the Sellers wish to
dispose of the Membership Interests, and the Purchaser wishes to acquire
Membership Interests in part as a contribution to the capital of MCRLP in
consideration of the common units of limited partnership (the “O.P. Units”)
in MCRLP, and in part by purchase in consideration for cash.

 

NOW, THEREFORE, in
consideration of the promises and the mutual agreements and covenants
hereinafter set forth, and intending to be legally bound, the parties hereby
agree as follows:

 

Article
I

 

DEFINITIONS

 

Section 1.01.          Certain Defined Terms.  For
purposes of this Agreement:

 

“Action” means any
claim, action, suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority.

 

“Affiliate” means,
with respect to any specified Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified Person.

 

“Ancillary Agreements”
means the agreements that are set forth on Schedule 1.01(a) attached
hereto.

 

“AT&T Agreement”
means that certain agreement attached hereto as Exhibit A.

 

“Assets” means all
assets and properties of every kind, nature, character and description (whether
real, personal or mixed, whether tangible or intangible and wherever situated),
including the goodwill related thereto, operated, owned or leased by the
Companies and the Subsidiaries, other than the Excluded Assets.

 

 

“Business” means real
property management, construction management, facilities management, leasing
and real estate brokerage services and any other service businesses currently
conducted by the Companies and the Subsidiaries related thereto.

 

“Business Day” means
any day that is not a Saturday, a Sunday or other day on which banks are
required or authorized by Law to be closed in The City of New York.

 

“Code” means the
Internal Revenue Code of 1986, as amended through the date hereof.

 

“Control” (including
the terms “controlled by” and “under common control with”), with
respect to the relationship between or among two or more Persons, means the
possession, directly or indirectly or as trustee, personal representative or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee, personal representative or executor, by contract, credit arrangement
or otherwise.

 

“Conveyance Taxes”
means sales, use, excise, bulk sales, registration, documentary, value added,
transfer, stamp, stock transfer, real property transfer, lease or gains and
similar Taxes.

 

“Disclosure Schedule”
means the Disclosure Schedule attached hereto, dated as of the date hereof,
delivered by the Sellers to the Purchaser in connection with this Agreement.

 

“Due Diligence Expiration
Date” means March 31, 2006.

 

“Encumbrance” means
any security interest, pledge, charge, option, right, hypothecation, mortgage,
lien, claim or other encumbrance, other than any licenses of Intellectual
Property.

 

“Environmental Law”
means any federal, state, local or foreign statute, law, ordinance, regulation,
rule, code, order, consent decree or judgment, in each case in effect as of the
date hereof, relating to pollution or protection of the environment (including
natural resources), or the protection of human health.

 

“Environmental Liability”
means any claim, demand, order, suit, obligation, liability, cost (including
the cost of any investigation, testing, compliance or remedial action),
consequential damages, loss or expense (including reasonable and incurred
attorney’s and consultant’s fees and expenses) arising out of, relating to or
resulting from any Environmental Law or environmental, health or safety matter
or condition, including natural resources, and related in any way to the
Business, the Assets, the Membership Interests, the Companies or to this
Agreement or its subject matter, in each case whether arising or incurred
before, at or after the Closing.

 

“Environmental Permits”
means any permit, approval, identification number, license and other
authorization required under or issued pursuant to any applicable Environmental
Law.

 

2

 

“Excluded Assets”
means (i) Gale International and its subsidiaries (and their assets and
properties), (ii) those assets and properties set forth in Section 1.01(b) of
the Disclosure Schedule and (iii) those assets and properties identified as
Excluded Assets pursuant to Section 5.11.

 

“Financial Statements
Date” means December 31, 2005.

 

“GAAP” means United
States generally accepted accounting principles and practices in effect for the
year ended and as of December 31, 2005.

 

“Gale International”
means Gale International L.L.C., a New York limited liability company.

 

“Governmental Authority”
means any foreign, federal, national, supranational, state, provincial, local
or other government, governmental, regulatory or administrative authority,
agency, board, bureau, agency, instrumentality or commission or any court,
tribunal, or judicial or arbitral body.

 

“Governmental Order”
means any order, writ, judgment, injunction, decree, stipulation, determination
or award entered by or with any Governmental Authority.

 

“Indemnified Party”
means a Purchaser Indemnified Party or a Seller Indemnified Party, as the case
may be.

 

“Indemnifying Party”
means the Sellers pursuant to Section 8.02 and MCRLP and the Purchaser pursuant
to Section 8.03, as the case may be.

 

“Intellectual Property”
means all (a) patents and patent applications, (b) registered and unregistered
trademarks, service marks, trade names, trade dress and registered domain names
and domain name applications, together with the goodwill associated exclusively
therewith, (c) copyrights, including, without limitation, copyrights in
computer software, databases and websites, and (d) confidential and proprietary
information, including trade secrets, formulae, inventions and know-how.

 

“IRS” means the
Internal Revenue Service of the United States.

 

“Law” means any
foreign, federal, national, supranational, state, provincial, local or similar
statute, law, ordinance, regulation, rule, code, order, requirement or rule of
law (including common law) in effect as of the date hereof.

 

“Leased Real Property”
means the Real Property leased or subleased by any of the Companies or the
Subsidiaries, as tenant, together with, to the extent leased or subleased by
the Companies or the Subsidiaries, and all fixtures, systems, equipment and
items of personal property of the Companies or the Subsidiaries attached or
appurtenant thereto used in connection with the operation of the Business.

 

“Liabilities” means
any and all debts, liabilities and obligations, whether accrued or fixed,
absolute or contingent, matured or unmatured or determined or determinable,
including

 

3

 

those arising under any Law, Action or
Governmental Order and those arising under any contract, agreement,
arrangement, commitment or other undertaking.

 

“Material Adverse Effect”
means any circumstance, change in or effect on the Companies or the
Subsidiaries that is materially adverse to the results of operations or the
financial condition of the Companies and the Subsidiaries, taken as a whole; provided,
however, that none of the following, either alone or in combination,
shall be considered in determining whether there has been a “Material
Adverse Effect”: (a) events, circumstances, changes or effects that
generally affect the industries in which the Companies and the Subsidiaries
operate (including legal and regulatory changes), (b) general economic or
political conditions or events, circumstances, changes or effects affecting the
securities markets generally, (c) changes arising from the consummation of the
transactions contemplated by, or the announcement of the execution of, this
Agreement or the transactions contemplated thereby, including (i) any actions
of competitors; or (ii) any delays or cancellations of orders for services, (d)
any reduction in the price of services offered by the Companies or the
Subsidiaries in response to the reduction in price of comparable services
offered by a competitor, (e) any circumstance, change or effect that results
from any action taken pursuant to or in accordance with this Agreement or at
the request of MCRLP or the Purchaser, and (f) changes caused by a material
worsening of current conditions caused by acts of terrorism or war (whether or
not declared) occurring after the date hereof.

 

“MCRC” means Mack-Cali
Realty Corporation, a Maryland corporation and the general partner of MCRLP.

 

 “Permitted Encumbrances” means (a)
 statutory liens for current Taxes not yet due or delinquent (or which may
be paid without interest or penalties) or the validity or amount of which is
being contested in good faith by appropriate proceedings, (b)  mechanics’,
carriers’, workers’, repairers’ and other similar liens arising or incurred in
the ordinary course of business relating to obligations as to which there is no
default on the part of the Companies or any Subsidiary or the validity or
amount of which is being contested in good faith by appropriate proceedings, or
pledges, deposits or other liens securing the performance of bids, trade
contracts, leases or statutory obligations (including workers’ compensation,
unemployment insurance or other social security legislation), and (c) all
Encumbrances that would not, in the aggregate, be material.

 

“Person” means any
individual, partnership, firm, corporation, limited liability company, joint
venture, limited public company, limited liability partnership, association,
trust, unincorporated organization or other entity, as well as any syndicate or
group that would be deemed to be a person under Section 13(d)(3) of the
Securities Exchange Act.

 

“Purchase Price Bank
Account” means a bank account in the United States to be designated by the
Sellers, in a written notice to the Purchaser at least five (5) Business Days
before the Closing.

 

“Real Property” means
all land, buildings, improvements and fixtures erected thereon and all
appurtenances related thereto.

 

4

 

“SEC” means the
United States Securities and Exchange Commission.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

“Securities Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“Sellers’ Knowledge”
or “Knowledge of the Sellers” (or similar terms used in this Agreement)
means the knowledge of SG, Mark Yeager, Ronald Gentile, Steven Cusma, Ian Marlow
and Thomas Walsh as of the date of this Agreement (or, with respect to a
certificate delivered pursuant to this Agreement, as of the date of delivery of
such certificate) without any implication of verification or investigation
concerning such knowledge.

 

“Subsidiaries” means
the subsidiaries of the Companies listed in Section 1.01(c) of the Disclosure
Schedule, which Subsidiaries are not Excluded Assets.

 

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

 

“Tax Returns” means
any and all statements, returns, reports and forms (including elections,
declarations, claims for refund, amendments, schedules, information returns or
attachments thereto) filed or required to be filed with a Governmental
Authority with respect to Taxes.

 

“Working Capital”
means (a) cash, cash equivalents, accounts receivable (other than receivables
due from the Sellers or any of their 90% or more owned Affiliates), vendor
rebate receivables, inventory, prepaid expenses, and other tangible current
assets less (b) all liabilities related to accrued but unused vacation
days and all other liabilities (other than accrued but unused sick days)
which would be reflected on a consolidating balance sheet of the Reference
Companies prepared in accordance with GAAP, in each case computed in accordance
with GAAP applied in a manner consistent with the accounting principles,
practices, policies and methodologies as the line items comprising Working
Capital on the 2005 Balance Sheets; provided that such principles, practices,
policies and methodologies are in accordance with GAAP.

 

“Working Capital Target”
means $0.0.

 

Section 1.02.          Definitions.  The following terms have the
meanings set forth in the Sections set forth below:

 

5

 

	
  Definition

  	
   

  	
  Location

  
	
   

  	
   

  	
   

  
	
  “2004 Financial
  Statements”

  	
   

  	
  3.06

  
	
  “2004 Pro Forma
  Financial Statements”

  	
   

  	
  5.20

  
	
  “2005 Balance Sheets”

  	
   

  	
  2.06(a)

  
	
  “2005 Financial
  Statements”

  	
   

  	
  3.06

  
	
  “2006 Interim Financial
  Statements”

  	
   

  	
  2.04(f)

  
	
  “Agreement”

  	
   

  	
  Preamble

  
	
  “Allocation”

  	
   

  	
  5.24(e)

  
	
  “Alternative Proposal”

  	
   

  	
  5.12

  
	
  “Anti-Terrorism Laws”

  	
   

  	
  3.26(b)

  
	
  “Benefit Plans”

  	
   

  	
  6.01

  
	
  “Business”

  	
   

  	
  Recitals

  
	
  “Closing”

  	
   

  	
  2.03

  
	
  “Closing Date”

  	
   

  	
  2.03

  
	
  “Closing Cash Payment”

  	
   

  	
  2.02(a)

  
	
  “Closing Net Working
  Capital”

  	
   

  	
  2.06(b)

  
	
  “Closing O.P. Units”

  	
   

  	
  2.02(a)

  
	
  “Closing Statement of
  Working Capital”

  	
   

  	
  2.06(b)

  
	
  “COBRA”

  	
   

  	
  3.14(h)

  
	
  “Companies”

  	
   

  	
  Recitals

  
	
  “Company Employees”

  	
   

  	
  6.01

  
	
  “Company Permits”

  	
   

  	
  3.10(b)

  
	
  “Confidential
  Information”

  	
   

  	
  5.03

  
	
  “Confidentiality
  Agreement”

  	
   

  	
  5.03

  
	
  “Cut Off Date”

  	
   

  	
  5.08(a)

  
	
  “Designated Person”

  	
   

  	
  3.26(b)

  
	
  “Development Territory”

  	
   

  	
  5.05(b)

  
	
  “Earnout”

  	
   

  	
  2.02(c)

  
	
  “Effectiveness Time”

  	
   

  	
  5.12(a)

  
	
  “ERISA”

  	
   

  	
  3.14(a)

  
	
  “Executive
  Orders”

  	
   

  	
  3.26(a)

  
	
  “Filing
  Date”

  	
   

  	
  5.12(a)

  
	
  “Former AT&T
  Employees”

  	
   

  	
  6.02

  
	
  “Gale Construction”

  	
   

  	
  Recitals

  
	
  “Gale Construction
  Membership Interests”

  	
   

  	
  Recitals

  
	
  “Gale Intellectual
  Property”

  	
   

  	
  3.12

  
	
  “Gale Services”

  	
   

  	
  Recitals

  
	
  “Gale Services
  Membership Interests”

  	
   

  	
  Recitals

  
	
  “MCRLP Preferred Units”

  	
   

  	
  4.03(b)

  
	
  “Indemnification
  Threshold”

  	
   

  	
  8.04(b)

  
	
  “Independent Accounting
  Firm”

  	
   

  	
  2.06(c)

  
	
  “IP Licensee”

  	
   

  	
  3.12

  
	
  “IP Owner”

  	
   

  	
  3.12

  
	
  “Licensed Intellectual
  Property”

  	
   

  	
  3.12

  

 

6

 

	
  Definition

  	
   

  	
  Location

  
	
   

  	
   

  	
   

  
	
  “Loss” or “Losses”

  	
   

  	
  8.02

  
	
  “LP Agreement”

  	
   

  	
  2.04(l)

  
	
  “Material Contracts”

  	
   

  	
  3.16(a)

  
	
  “MCRC Common Stock”

  	
   

  	
  4.03(a)

  
	
  “MCRC Preferred Stock”

  	
   

  	
  4.03(a)

  
	
  “MCRLP”

  	
   

  	
  Preamble

  
	
  “Membership Interests”

  	
   

  	
  Recitals

  
	
  “Non-Portfolio Interest”

  	
   

  	
  5.22

  
	
  “Non-Portfolio Real Property Interest Purchase Agreements”

  	
   

  	
  5.22

  
	
  “OFAC”

  	
   

  	
  3.26(b)

  
	
  “OFAC Laws and
  Regulations”

  	
   

  	
  3.26(b)

  
	
  “O.P. Units”

  	
   

  	
  Recitals

  
	
  “Other Lists”

  	
   

  	
  3.26(b)

  
	
  “Patriot Act”

  	
   

  	
  3.26(a)

  
	
  “Plans”

  	
   

  	
  3.14(a)

  
	
  “Post-Closing Period”

  	
   

  	
  5.24(c)

  
	
  “Post-Closing Straddle
  Period”

  	
   

  	
  5.24(a)

  
	
  “Pre-Closing Period”

  	
   

  	
  5.24(c)

  
	
  “Pre-Closing Straddle
  Period”

  	
   

  	
  5.24(a)

  
	
  “Pre-Closing Tax Return”

  	
   

  	
  5.24(a)

  
	
  “Preliminary Statement
  of Working Capital”

  	
   

  	
  2.06(a)

  
	
  “Pro Rata Portion”

  	
   

  	
  2.02(b)

  
	
  “Proceeding”

  	
   

  	
  5.24(b)

  
	
  “Prohibited Person”

  	
   

  	
  3.26(b)

  
	
  “Purchase Price”

  	
   

  	
  2.02(a)

  
	
  “Purchaser”

  	
   

  	
  Preamble

  
	
  “Purchaser Indemnified
  Party”

  	
   

  	
  8.02

  
	
  “Purchaser
  Representatives”

  	
   

  	
  5.02(a)

  
	
  “Real Estate Agreement”

  	
   

  	
  2.03

  
	
  “Reference Companies”

  	
   

  	
  2.04(f)

  
	
  “Registrable Securities”

  	
   

  	
  5.12(a)

  
	
  “Registration Losses”

  	
   

  	
  5.12(c)

  
	
  “Registration Rights
  Agreement”

  	
   

  	
  5.12

  
	
  “REIT”

  	
   

  	
  5.23

  
	
  “Representatives”

  	
   

  	
  5.03

  
	
  “Restricted Period”

  	
   

  	
  5.05(a)

  
	
  “ROFO Notice”

  	
   

  	
  5.08(b)

  
	
  “ROFO Properties”

  	
   

  	
  5.08(a)

  
	
  “Sanofi Receivable”

  	
   

  	
  5.11(b)

  
	
  “SCG”

  	
   

  	
  Preamble

  
	
  “SDN List”

  	
   

  	
  3.26(b)

  
	
  “SEC Reports”

  	
   

  	
  4.06(a)

  

 

7

 

	
  Definition

  	
   

  	
  Location

  
	
   

  	
   

  	
   

  
	
  “SG”

  	
   

  	
  Preamble

  
	
  “Seller” or “Sellers”

  	
   

  	
  Preamble

  
	
  “Sellers’
  Representatives”

  	
   

  	
  5.24(b)

  
	
  “Seller Indemnified
  Party”

  	
   

  	
  8.03

  
	
  “Straddle Period”

  	
   

  	
  5.24(a)

  
	
  “Straddle Returns”

  	
   

  	
  5.24(a)

  
	
  “Tax Claim”

  	
   

  	
  5.24(b)

  
	
  “Territory”

  	
   

  	
  5.05(a)

  
	
  “Terrorism Executive
  Order”

  	
   

  	
  3.26(a)

  
	
  “Third Party Claim”

  	
   

  	
  8.05(b)

  
	
  “Transfer”

  	
   

  	
  3.17(b)

  
	
  “Transferred Leases”

  	
   

  	
  5.07

  
	
  “WARN”

  	
   

  	
  3.14(g)

  

 

Section 1.03.          Interpretation and Rules of Construction.  In
this Agreement, except to the extent otherwise provided or that the context
otherwise requires:

 

(a)           when a reference is made in this Agreement to
an Article, Section, Exhibit or Schedule, such reference is to an Article or
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated;

 

(b)           the table of contents and headings for this
Agreement are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement;

 

(c)           whenever the words “include,” “includes” or “including”
are used in this Agreement, they are deemed to be followed by the words “without
limitation” whether or not they are in fact followed by such word or words of
similar import;

 

(d)           the words “hereof,” “herein” and “hereunder”
and words of similar import, when used in this Agreement, refer to this
Agreement as a whole and not to any particular provision of this Agreement;

 

(e)           all terms defined in this Agreement have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto, unless otherwise defined therein;

 

(f)            the definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms;

 

(g)           references to a Person are also to its
successors and permitted assigns;

 

(h)           the use of “or” is not intended to be
exclusive unless expressly indicated otherwise;

 

(i)            references to “day” or “days” are to calendar
days;

 

8

 

(j)            whenever used herein, the singular number
shall include the plural, the plural shall include the singular, and the use of
any gender shall be applicable to all genders; and

 

(k)           any reference in this Agreement to “writing”
or comparable expressions includes a reference to facsimile transmission or
comparable electronic (including e-mail) means of communication.

 

Article
II

 

PURCHASE
AND SALE

 

Section 2.01.          Contribution, Purchase and Sale of the
Membership Interests.   Upon the terms and subject to the
conditions of this Agreement, at the Closing, the Sellers shall contribute,
sell, assign, transfer and deliver to the Purchaser all of the Membership
Interests, and the Purchaser shall, and MCRLP shall cause the Purchaser to,
accept as a capital contribution and purchase from the Sellers all of the
Membership Interests free and clear of all Encumbrances (other than such
Encumbrances as may be created by actions of MCRLP or the Purchaser).

 

Section 2.02.          Purchase Price.

 

(a)           Subject to adjustment as set forth in Section
2.06, the purchase price to be paid in consideration for all of the Membership
Interests shall be (x) an aggregate amount equal to Twenty Two Million Dollars
($22,000,000) (the “Purchase Price”), which shall consist of (i) Ten
Million Dollars ($10,000,000) in the form of 224,719 O.P. Units (the “Closing
O.P. Units”), and (ii) Twelve Million Dollars ($12,000,000) in cash (the “Closing
Cash Payment”) and (y) the additional purchase consideration contemplated
by Section 2.02(c) below.  The Closing
O.P. Units shall be issued in consideration of the contribution of a portion of
the Membership Interests to the capital of MCRLP, and the cash portion of the
Purchase Price shall be paid in consideration of the sale of a portion of the
Membership Interests to Purchaser.

 

(b)           The Purchase Price will be payable ratably to
the Sellers in accordance with their direct or indirect ownership percentage of
Gale Services and Gale Construction immediately prior to the Closing, with each
percentage amount being such Seller’s “Pro Rata Portion”, in each case
as specified in Exhibit B.  The
Closing Cash Payment shall be made by wire transfer to the Purchase Price Bank
Account.  O.P. Unit Certificates in the
form of Exhibit C representing the Closing O.P. Units shall be issued by
MCRLP to Sellers on the Closing Date. 
The Sellers will subsequently allocate to the accounts of each of the
Sellers their respective Pro Rata Portion of the Closing Cash Payment, if any,
and distribute the O.P. Unit Certificates representing the Closing O.P. Units to
the Sellers as specified in Exhibit B.

 

(c)           As additional consideration for the
Membership Interests, the Purchaser agrees to pay, and MCRLP agrees to cause
the Purchaser to pay, an aggregate amount of up to Eighteen Million Dollars in
cash ($18,000,000) (the “Earnout”), if any, determined in the manner set
forth in Exhibit D hereto and payable at the times set forth
therein.  The Purchase Price shall be
deemed to include and be increased by any amounts payable to Sellers pursuant
to Exhibit D.

 

Section 2.03.          Closing.  Upon the terms of this
Agreement and subject to the satisfaction or waiver of the 

conditions of this Agreement, the sale and
purchase of the

 

9

 

Membership Interests contemplated by this
Agreement shall take place at a Closing to be held at the offices of Greenberg
Traurig, LLP, 200 Park Avenue, New York, New York 10166, not earlier than 10:00
a.m. (New York City time) on the fifth (5th) Business Day after the
satisfaction or waiver of the conditions to the obligations of the parties
hereto set forth in Section 7.01(b) and Section 7.02(b) or at such other place
or at such other time or on such other date as the Sellers and the Purchaser
may mutually agree upon in writing (the “Closing”).  The date upon which the Closing occurs is
referred to as the “Closing Date.” 
Notwithstanding the foregoing, the parties shall cause the Closing to
occur prior to or simultaneously with the consummation of the transactions
contemplated by that certain Contribution and Sale Agreement by and among Gale
SLG NJ LLC, a Delaware limited liability company, Gale SLG Ridgefield Mezz LLC,
a Delaware limited liability company, Gale SLG NJ Mezz LLC, a Delaware limited
liability company, and Mack-Cali Ventures L.L.C. (or its Affiliates) (the “Real Estate Agreement”),
unless the Real Estate Agreement shall have been terminated prior to the
Closing.  In addition, notwithstanding
anything to the contrary contained in this Agreement, if the parties to the
Real Estate Agreement shall consummate the transactions contemplated by the
Real Estate Agreement, unless this Agreement shall have been terminated prior
to such consummation pursuant to the provisions of Article IX, MCRLP and the
Purchaser shall automatically be deemed to have waived any and all conditions
specified in Article VII and any and all rights to termination specified in
Article IX and shall be required to consummate the transactions contemplated
hereby as expeditiously as possible on the day of consummation of the transactions
contemplated by the Real Estate Agreement; provided, however, the
Purchaser shall retain any and all rights it shall otherwise have under this
Agreement, including without limitation the Purchaser’s rights and remedies
under Article VIII.

 

Section 2.04.          Closing Deliveries by the Sellers.  At
or prior to the Closing, the Sellers shall deliver or cause to be delivered to
the Purchaser:

 

(a)           a duly executed Assignment of Membership
Interests to Purchaser in the form attached hereto as Exhibit E, and such
other instruments or documents reasonably satisfactory to the Purchaser and
executed by the Sellers evidencing the transfer of the Membership Interests to
the Purchaser and admission of the Purchaser as a member of each of the
Companies;

 

(b)           executed counterparts of any Ancillary
Agreements as executed by the Sellers or any of the appropriate Companies,
Subsidiaries or subsidiaries of the Sellers;

 

(c)           a receipt to the Purchaser for the Purchase
Price;

 

(d)           a written resignation of each of the managers
of the Companies and each of the Subsidiaries;

 

(e)           a written release and waiver from SG;

 

(f)            preliminary unaudited consolidating pro forma
balance sheets and income statements for each of The Gale Company L.L.C., Gale
Global Facility Services, L.L.C., Gale Services, Gale Construction and The Gale
Construction Company, L.L.C. (collectively, the “Reference Companies”)
as of and for the period from January 1, 2006 to February 28, 2006 (the 

 

10

 

“2006 Interim Financial Statements”)
(it being understood that any reference in this Agreement to the Reference
Companies shall mean such entities without the Excluded Assets and after giving
effect to the provisions of Section 5.11);

 

(g)           a true and complete copy, certified by a duly
authorized officer, of SCG, of the resolutions duly and validly adopted by the
members of the board of directors of SCG evidencing its authorization of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;

 

(h)           a certificate of a duly authorized officer of
SCG certifying the names and signatures of the officer of SCG authorized to
sign this Agreement and any Ancillary Agreements;

 

(i)            a certificate of the Sellers certifying as to
the matters set forth in Section 7.02(a) as of the Closing Date;

 

(j)            a certificate signed by each Seller, or, if
applicable, an officer or partner of such Seller in the form prescribed by
Treasury Regulation Section 1445-2(b)(2) and annexed hereto as Exhibit G,
to the effect that such Seller is not a “foreign person” as that term is
defined in Section 1445(f)(3) of Code, in order to avoid the imposition of the
withholding tax payment pursuant to Section 1445 of the Code;

 

(k)           control over all organizational documents of
the Companies and Subsidiaries, including, without limitation, limited
liability company agreements, operating agreements, partnership agreements, and
management agreements;

 

(l)            counterpart signature pages to the Second
Amended and Restated Agreement of Limited Partnership of MCRLP (the “LP
Agreement”), executed by each of the Sellers;

 

(m)          control over all books, records, financial
statements, general ledgers, employee benefits plan documents, leases, real
property management agreements, construction management agreements, leasing and
real estate brokerage services agreements, files, statements, Tax Returns,
market studies, plans, specifications, reports, tests and other materials of
any kind owned by or in the possession of any Seller or any of the Companies
which are used by any of the Companies in the conduct or operation of the
Business;

 

(n)           good standing certificates from each
jurisdiction in which the Companies and each of the Subsidiaries are organized
and such other jurisdictions in which the Companies and each of the
Subsidiaries are qualified to conduct business and for which Sellers have
received good standing certificates; and

 

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

 

Section 2.05.          Closing Deliveries by the Purchaser.  At
the Closing, the Purchaser shall, and MCRLP shall cause the Purchaser to,
deliver or cause to be delivered to the Sellers:

 

11

 

(a)           certificates in the form attached hereto as Exhibit
C representing the Closing O.P. Units allocated among the Sellers as set
forth on Exhibit B hereto;

 

(b)           the Closing Cash Payment by wire transfer in
immediately available funds to the Purchase Price Bank Account by wire transfer
in immediately available funds;

 

(c)           executed counterparts of any Ancillary
Agreements as executed by the Purchaser;

 

(d)           a true and complete copy, certified by a duly
authorized officer of each of MCRLP and the Purchaser, of the resolutions duly
and validly adopted by the board of directors of each of MCRC, as the general
partner of MCRLP, and the Purchaser evidencing its authorization of the
execution and delivery of this Agreement and the Ancillary Agreements to which
it is a party and the consummation of the transactions contemplated hereby and
thereby;

 

(e)           a certificate of a duly authorized officer of
each of MCRC, as the general partner of MCRLP, and the Purchaser certifying the
names and signatures of the officer of each of MCRLP and the Purchaser
authorized to sign this Agreement and the Ancillary Agreements and the other
documents to be delivered hereunder and thereunder; and

 

(f)            a certificate of a duly authorized officer of
each of MCRC, as the general partner of MCRLP, and the Purchaser certifying as
to the matters set forth in Section 7.01(a) as of the Closing Date.

 

Section 2.06.          Post-Closing Adjustment of Purchase Price.  The
Purchase Price shall be subject to adjustment after the Closing as specified in
this Section 2.06:

 

(a)           Preliminary Statement of Working Capital.  The
Sellers shall deliver to the Purchaser, five (5) Business Days prior to
Closing, an estimated consolidating statement of Working Capital of the
Reference Companies as of the Closing Date (the “Preliminary Statement of
Working Capital”), which shall be prepared in accordance with the
accounting principles, practices, policies and methodologies of the balance
sheets of the Reference Companies included in the 2005 Financial Statements,
provided that such principles, practices, policies and methodologies are in
accordance with GAAP (the “2005 Balance Sheets”).  The Preliminary Closing Statement of Working
Capital shall set forth the estimated Working Capital of the Reference
Companies as of the Closing Date, provided, that the Preliminary
Statement of Working Capital and the Closing Statement of Working Capital shall
include a reserve of 1.5% against all receivables included therein.

 

(b)           Closing Statement of Working Capital. 
Within ninety (90) days following the Closing Date, Purchaser shall
deliver to the Sellers an unaudited consolidating statement of Working Capital
of the Reference Companies as of the Closing Date (the “Closing Statement of
Working Capital”) prepared in accordance with the accounting principles,
practices, policies and methodologies of the 2005 Balance Sheets, provided that
such principles, practices, policies and methodologies are in accordance with
GAAP.  The Closing Statement of Working
Capital shall set forth the Net Working Capital of the Reference Companies as
of the Closing Date (the “Closing Net Working Capital”), provided,
that the Preliminary Statement of Working Capital

 

12

 

and the Closing Statement of Working Capital
shall include a reserve of 1.5% against all receivables included therein.

 

(c)           Disputes.  (i) Subject to clause (ii) of
this Section 2.06(c), the Closing Statement of Working Capital delivered by the
Purchaser to the Sellers shall be final, binding and conclusive on the parties
hereto.

 

(ii)           The Sellers shall have the right to dispute
any amounts reflected on the Closing Statement of Working Capital, but only on
the basis that the amounts reflected on the Closing Statement of Working
Capital were not calculated in accordance with the accounting principles,
practices, policies and methodologies of the 2005 Balance Sheets or were
arrived at based on mathematical or clerical error; provided, however,
that the Sellers shall have notified Purchaser in writing of each disputed
item, specifying the estimated amount thereof in dispute and setting forth, in
reasonable detail, the basis for such dispute, within fifteen (15) Business
Days of the delivery of the Closing Statement of Working Capital to the Sellers.  The Purchaser shall provide to the Sellers
and their designated independent public accountants access to such of the
Company’s records that were delivered to Purchaser prior to or at the Closing,
as well as any other records as may 
reasonably be required for the review of the Closing Statement of
Working Capital.  In the event of such a
dispute, the Sellers and the Purchaser and their respective independent public
accountants shall attempt to reconcile their differences, and any resolution by
them as to any disputed amounts shall be final, binding and conclusive on the
parties hereto.  If the Sellers and the
Purchaser are unable to reach a resolution with such effect within thirty (30)
days after the receipt of the Sellers’ written notice of dispute, the Sellers
and the Purchaser shall submit the items remaining in dispute for resolution to
KPMG, LLP or another independent public accounting firm of national reputation
mutually acceptable to Purchaser and Sellers, provided, that neither Purchaser,
MCRLP or Sellers have had a prior relationship with such firm (such accounting
firm being referred to herein as the “Independent Accounting Firm”),
which Independent Accounting Firm shall, within sixty (60) days after such
submission, determine and report (in a written, reasoned manner) to the Sellers
and the Purchaser upon such remaining disputed items, and such report shall be
final, binding and conclusive on the Sellers and the Purchaser.  The fees and disbursements of the Independent
Accounting Firm shall be shared equally between the Sellers, on the one hand,
and the Purchaser, on the other hand.

 

In acting under this Agreement, the
Independent Accounting Firm shall be entitled to the privileges and immunities
of arbitrators.

 

(d)           Purchase Price Adjustment.  The
Closing Statement of Working Capital shall be deemed final and binding for the
purposes of this Section 2.06 upon the earliest of (i) the failure of
the Sellers to notify the Purchaser of a dispute within fifteen (15) Business
Days of the Purchaser’s delivery of the Closing Statement of Working Capital to
the Sellers, (ii) the resolution of all disputes, pursuant to
Section 2.06(c)(ii), by the Sellers and the Purchaser, and (iii) the
resolution of all disputes, pursuant to Section 2.06(c)(ii), by the Independent
Accounting Firm.  Within five (5)
Business Days of the Closing Statement of Working Capital being deemed final
and binding, a Purchase Price adjustment shall be made as follows:

 

(A)          In the event that the Working Capital Target
exceeds the Closing Net Working Capital reflected on the final Closing
Statement of Working Capital,

 

13

 

then the Purchase Price
shall be adjusted downward in an amount equal to such excess and the Sellers,
jointly and severally, shall pay the amount of such excess to the Purchaser by
wire transfer in immediately available funds; or

 

(B)           In the event that the Closing Net Working
Capital reflected on the final Closing Statement of Working Capital exceeds the
Working Capital Target, then the Purchase Price shall be adjusted upward in an
amount equal to such excess and the Purchaser shall pay the amount of such
excess to the Sellers by wire transfer in immediately available funds.

 

(e)           Interest on Payments.  Any
payments required to be made pursuant to Section 2.06(c) shall bear
interest from the date of the Closing through the date of payment at the prime
rate of interest published by Citibank, N.A. (or any successor thereto) from
time to time as its reference prime rate from the date of the Closing to the
date of each payment.

 

Article
III

REPRESENTATIONS AND WARRANTIES

OF THE SELLERS

 

Each of the Sellers hereby,
jointly and severally, represents and warrants to the Purchaser, as of the date
hereof or, if a representation or warranty is made as of a specified date, as
of such date, as follows (it being expressly understood and agreed that the
Sellers’ representations and warranties, individually and in their entirety,
exclude any representations and warranties whatsoever relating to the Excluded
Assets):

 

Section 3.01.          Organization, Authority and Qualification of
the Sellers; Companies.

 

(a)           SCG (i) is duly organized and validly
existing as a corporation in good standing under the laws of the jurisdiction
of its incorporation and (ii) has all necessary power and authority to enter
into this Agreement and the Ancillary Agreements to which it is a party, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Ancillary Agreements to which it is a party by SCG, the
performance of its obligations hereunder and thereunder and the consummation by
SCG of the transactions contemplated hereby and thereby, have been duly authorized
by all requisite action on the part of SCG and no other action by SCG is
necessary to authorize the transactions contemplated hereby or thereby or to
consummate such transactions.

 

(b)           Each of the Companies (i) is duly organized
and validly existing as a limited liability company and is in good standing
under the laws of its jurisdiction of organization, (ii) has all necessary
power and authority to own, operate or lease the properties and assets owned,
operated or leased by such company and to carry on its business as it has been
and is currently conducted by such company and (iii) is duly licensed or
qualified to do business and is in good standing in each jurisdiction set forth
in Section 3.01(b) of the Disclosure Schedule. 
In addition, none of the Companies owes any franchise, property or other
similar entity level taxes in any jurisdiction in which such Company conducts
any business.

 

14

 

(c)           This Agreement has been, and upon its
execution and the execution of the applicable Ancillary Agreements shall be,
duly executed and delivered by each Seller, and (assuming due authorization,
execution and delivery by the other parties thereto) this Agreement
constitutes, and upon its execution each of the applicable Ancillary Agreements
shall constitute, a legal, valid and binding obligation of each Seller,
enforceable against such Seller in accordance with its respective terms.

 

Section 3.02.          Subsidiaries.

 

(a)           Section 1.01(c) of the Disclosure Schedule
sets forth a true and complete list of all Subsidiaries of the Companies (other
than the Excluded Assets), the authorized capital stock or other ownership
interests of each Subsidiary and the holders thereof. Other than the
Subsidiaries and the Excluded Assets, there are no other corporations,
partnerships, limited liability companies, joint ventures, associations or
other entities in which the Companies or any of their Subsidiaries own, of
record or beneficially, any direct or indirect equity or other interest or any
right (contingent or otherwise) to acquire the same.  Other than the Subsidiaries, neither Gale
Services, Gale Construction nor any of their Subsidiaries is a member of (nor
is any part of the Business conducted through) any partnership, joint venture
or similar arrangement nor is Gale Services, Gale Construction nor any of their
Subsidiaries a participant in any partnership, joint venture or similar
arrangement.

 

(b)           Each Subsidiary that is a corporation (i) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (ii) has all necessary power and authority to
own, operate or lease the properties and assets owned, operated or leased by
such Subsidiary and to carry on its business as it has been and is currently
conducted by such Subsidiary and (iii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction set forth in Section
3.02(b) of the Disclosure Schedule, except as otherwise indicated thereon.  In addition, no Subsidiary that is a
corporation owes any franchise, property or other similar corporate level taxes
in any jurisdiction in which such Subsidiary conducts any business.

 

(c)           Each Subsidiary that is a partnership or
limited liability company (i) is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, (ii) has all
necessary power and authority to own, operate or lease the properties and
assets owned, operated or leased by such Subsidiary and to carry on its business
as it has been and is currently conducted by such Subsidiary and (iii) is duly
licensed or qualified to do business and is in good standing in each
jurisdiction set forth in Section 3.02(c) of the Disclosure Schedule, except as
otherwise indicated thereon.  In
addition, no Subsidiary that is a partnership or limited liability company owes
any franchise, property or other similar entity level taxes in any jurisdiction
in which such Subsidiary conducts any business.

 

Section 3.03.          Ownership of the Membership Interests and
Subsidiaries.

 

(a)           As of the date hereof, the Sellers have good
and marketable title to, and are the lawful record and beneficial owners of,
100% of the Membership Interests, free and clear of all Encumbrances, and the
Membership Interests represent all of the beneficial, voting, management,
contingent, economic interest and other right, title and interest in and to the
Companies.

 

15

 

(b)           With respect to the Membership Interests,
there are no (i) outstanding ownership interests in Gale Services and Gale
Construction other than the Membership Interests owned and held by the Sellers,
(ii) securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Sellers or their
respective affiliates is a party or by which any of the foregoing is bound,
which obligate the Sellers or their respective affiliates to issue, create,
deliver and/or provide additional ownership interests in Gale Services and Gale
Construction or (iii) arrangements or undertakings which obligate the Sellers
or their respective affiliates to issue, grant, extend or enter into any
security, option, warrant, call, right, commitment, agreement, arrangement or
other undertaking with respect to the Companies or the Membership
Interests.  No person or entity has any
voting or management rights with respect to the Companies other than the
Sellers as set forth in and subject to the Companies’ organizational documents.

 

(c)           Other than as set forth on Section 3.03(c) of
the Disclosure Schedule, the Companies own 100%, free and clear of all
Encumbrances, directly or indirectly, of, and have sole voting and dispositive
power with respect to, all of the ownership interests of each of the Subsidiaries,
and there are no (i) outstanding ownership interests in any Subsidiary other
than the ownership interests owned and held by the Companies, (ii) securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Companies are a party or by which any of
the foregoing is bound, which obligate the Companies to issue, create, deliver
and/or provide additional ownership interests in any Subsidiary or (iii)
arrangements or undertakings which obligate the Companies to issue, grant,
extend or enter into any security, option, warrant, call, right, commitment,
agreement, arrangement or other undertaking with respect to any
Subsidiary.  No person or entity has any
voting or management rights with respect to the Subsidiaries other than the
Companies as set forth in and subject to the Subsidiaries’ organizational
documents.

 

Section 3.04.          No Conflict.  Assuming that all consents,
approvals, authorizations and other actions described in Section 3.05 have been
obtained, all filings and notifications listed in Section 3.05 of the
Disclosure Schedule have been made and except as may result from any facts or
circumstances relating solely to MCRLP or the Purchaser, the execution,
delivery and performance of this Agreement and the Ancillary Agreements by the
Sellers do not and will not (a) violate, conflict with or result in the breach
of the certificate of incorporation, bylaws, trust or certificate of
organization, operating agreement, shareholder agreement, partnership
agreement, or management agreement (or similar organizational documents) of the
Sellers, Gale Services, Gale Construction or the Subsidiaries, (b) conflict
with or violate, in any material respect, any Law or Governmental Order
applicable to the Sellers, Gale Services, Gale Construction or the
Subsidiaries, and (c) except as set forth in Section 3.04 of the Disclosure
Schedule, violate, conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, require any consent under, or give others rights of
termination, modification, acceleration or cancellation of, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which any of the Sellers, the
Companies or any Subsidiary is a party, except, in the case of clause (c),
other than with respect to the Material Contracts, for violations, failures to
file, obtain or notify or breaches, conflicts, defaults, or liens which would
not have a Material Adverse Effect.

 

16

 

Section 3.05.          Governmental Consents and Approvals. 
Except as set forth in Section 3.05 of the Disclosure Schedule, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements by the Sellers and the consummation of the transactions contemplated
hereby and thereby do not and will not require any material consent, approval,
permit, authorization or other order of, action by, filing with or notification
to, any Governmental Authority, except as may be necessary as a result of any
facts or circumstances relating solely to MCRLP, the Purchaser or any of their
Affiliates.

 

Section 3.06.          Financial Information.  The
Sellers have heretofore furnished the Purchaser with true and complete copies
of the audited consolidating financial statements as of and for the fiscal year
ended December 31, 2004 for The Gale Company L.L.C. (the “2004 Financial
Statements”).  Section 3.06 of the
Disclosure Schedules sets forth preliminary unaudited consolidating pro forma
balance sheets and income statements for each of the Reference Companies as of
and for the fiscal year ended as of December 31, 2005 (the “2005 Financial
Statements”).  The 2004 Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and present fairly, in all
material respects, the financial condition of The Gale Company L.L.C. as of
such dates and the results of operations for The Gale Company L.L.C. as of the
dates thereof or the periods covered thereby. 
The 2006 Interim Financial Statements when delivered shall be prepared
in accordance with the books and records of the Reference Companies, but lack
footnotes and other presentation items required under GAAP and are subject to
further review and adjustment.  The 2005
Financial Statements have been prepared in accordance with GAAP (except that
they lack footnotes and other presentation items required under GAAP) applied
on a consistent basis throughout the periods covered thereby and present
fairly, in all material respects, the financial condition of the Reference
Companies as of such dates and the results of operations for the Reference
Companies as of the dates thereof or the periods covered thereby.

 

Section 3.07.          Absence of Undisclosed Liabilities. 
There are no Liabilities of the Companies and the Subsidiaries of any
nature required to be reflected on a balance sheet prepared in accordance with
GAAP or disclosed in a footnote thereto, other than Liabilities (a) reflected
on or reserved against on the 2005 Financial Statements, (b) set forth in the
Disclosure Schedules, (c) incurred since the Financial Statements Date in the
ordinary course of business consistent with past practices and which would not
have a Material Adverse Effect.

 

Section 3.08.          Conduct in the Ordinary Course. 
Since the Financial Statements Date, except as set forth in Section 3.08
of the Disclosure Schedule, the Business has been conducted in the ordinary
course and there has not occurred any Material Adverse Effect and none of the
Companies or the Subsidiaries has taken any action (or failed to take any
action) that, if taken after the date hereof, would constitute a violation of
Section 5.01.

 

Section 3.09.          Litigation.  Except as set forth in Section
3.09 of the Disclosure Schedule, as of February 15, 2006 (such Section 3.09 of
the Disclosure Schedule to be updated five (5) Business Days prior to the Closing
Date), there is no Action by or against Gale Services, Gale Construction or the
Subsidiaries or the Business pending before any Governmental Authority, or, to
the Sellers’ Knowledge, threatened.

 

17

 

Section 3.10.          Compliance with Laws. 
Except as set forth in Section 3.10 of the Disclosure Schedule and as
would not (i) adversely affect the ability of the Sellers to carry out their
obligations under, and to consummate the transactions contemplated by, this
Agreement or (ii) otherwise have a Material Adverse Effect, each of Gale
Services, Gale Construction and the Subsidiaries has conducted the Business in
accordance with all applicable Laws and Governmental Orders and none of Gale
Services, Gale Construction or the Subsidiaries are in violation of any such
Law or Governmental Order.

 

Section 3.11.          Environmental Matters.

 

(a)           Except as disclosed in Section 3.11(a) of the
Disclosure Schedule or as would not have a Material Adverse Effect, (i) each of
Gale Services, Gale Construction and the Subsidiaries are in material
compliance with all applicable Environmental Laws and has obtained and is in
material compliance with all Environmental Permits, (ii) there are no written
claims pursuant to any Environmental Law pending or, to the Sellers’ Knowledge,
threatened, against Gale Services, Gale Construction or the Subsidiaries, and
(iii) the Sellers have provided the Purchaser with copies of any and all (A)
environmental reports submitted to any Governmental Authority, (B) any orders,
directives or no further action letters received from any Governmental
Authority relating to any Environmental Laws, and (C) any environmental
assessment or audit reports or other similar studies or analyses generated
within the last three (3) years and in the possession or control of the
Sellers, Gale Services or Gale Construction, that relate to the Business.

 

(b)           Each of MCRLP and the Purchaser acknowledges
that other than the representations and warranties contained in Section 3.09, (i)
the representations and warranties contained in this Section 3.11 are the only
representations and warranties being made with respect to compliance with or
liability under Environmental Laws or with respect to any environmental, health
or safety matter, including natural resources, related in any way to the
Business, or to this Agreement or its subject matter and (ii) no other
representation contained in this Agreement shall apply to any such matters and
no other representation or warranty, express or implied, is being made with
respect thereto.

 

Section 3.12.          Intellectual Property. Except as would not have a Material Adverse
Effect or as set forth on Section 3.12 of the Disclosure Schedule (a) the
conduct of the Business as currently conducted does not infringe upon or
misappropriate the Intellectual Property rights of any third party, and no
claim has been asserted to the Sellers, the Companies or the Subsidiaries that
the conduct of the Business as currently conducted infringes upon or may
infringe upon or misappropriates the Intellectual Property rights of any third
party; (b) with respect to each item of Intellectual Property owned by the
Companies or the Subsidiaries (each, an “IP Owner”) which is material to
the Business as currently conducted and is identified in Section 3.12 of the
Disclosure Schedule (“Gale Intellectual Property”), the IP Owner is the
owner of the entire right, title and interest in and to such Gale Intellectual
Property and is entitled to use such Gale Intellectual Property in the
continued operation of the Business; (c) with respect to each item of
Intellectual Property licensed to Gale Services, Gale Construction or the
Subsidiaries (each, an “IP Licensee”) that is material to the Business
as currently conducted (“Licensed Intellectual Property”), and is
identified in Section 3.12 of the Disclosure Schedule, the IP Licensee has the
right to use such Licensed Intellectual Property in the continued

 

18

 

operation of the Business in accordance with
the terms of the license agreement governing such Licensed Intellectual
Property; (d) the Gale Intellectual Property is valid and enforceable, and has
not been adjudged invalid or unenforceable in whole or in part; (e) to the
Sellers’ Knowledge, no person is engaging in any activity that infringes upon
the Gale Intellectual Property; (f) to the Sellers’ Knowledge, each license of
the Licensed Intellectual Property is valid and enforceable, is binding on all
parties to such license, and is in full force and effect; (g) Sellers are not
in breach of, or default under, any license of the Licensed Intellectual
Property and have not received written notice of any breach or default thereof;
(h) to the Sellers’ Knowledge, no licensor of any license of the Licensed
Intellectual Property is in breach thereof or default thereunder; and (i)
neither the execution of this Agreement nor the consummation of any transaction
shall adversely affect any of Gale Services, Gale Construction or any
Subsidiary’s material rights with respect to the Gale Intellectual Property or
the Licensed Intellectual Property.

 

Section 3.13.          Owned and Leased Real Property.

 

(a)           None of the Companies nor any of the
Subsidiaries owns any Real Property.

 

(b)           Section 3.13(b) of the Disclosure Schedule
lists the street address of each parcel of Leased Real Property and the
identity of the lessor, lessee and current occupant (if different from lessee)
of each such parcel of Leased Real Property. 
Except as described in Section 3.13(b) of the Disclosure Schedule, (i)
the Sellers have delivered to the Purchaser true and complete copies of the
leases in effect at the date hereof relating to the Leased Real Property, (ii)
Sellers have received no written notice of a breach or default of any such lease
(which have not been cured), and (iii) there has not been any sublease or
assignment entered into by the Companies or any Subsidiary in respect of the
leases relating to the Leased Real Property. 
Other than as set forth on Section 3.13(b) of the Disclosure Schedule,
there has been no breach or default of any lease identified in Section 3.13(b)
of the Disclosure Schedule, except for such breaches or defaults that would not
have a Material Adverse Effect.

 

Section 3.14.          Employee Benefit Matters.

 

(a)           Section 3.14(a) of the Disclosure Schedule
lists (i) all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”))
and all bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, and all
employment, termination, severance or other contracts or agreements, to which
the Companies or the Subsidiaries are a party, have any liability, contingent
or otherwise, have any obligation or which are maintained, contributed to or
sponsored by the Companies or any of the Subsidiaries for the benefit of any
current or former employee, officer or director of Gale Services, Gale
Construction or any of the Subsidiaries, (ii) each employee benefit plan for
which the Companies or any of the Subsidiaries could incur liability under
Section 4069 of ERISA in the event such plan has been or were to be terminated,
(iii) any plan in respect of which the Companies or any of the Subsidiaries
could incur liability under Section 4212(c) of ERISA and (iv) any contracts,
arrangements or understandings between the Companies, any of the Subsidiaries
and any of their employees (collectively, the “Plans”).

 

19

 

The Sellers have made available to the
Purchaser a true and complete copy of each Plan and all amendments, summary
plan descriptions, and each summary of material modifications and the most
recent IRS determination letter relating thereto.  Neither the Companies nor the Subsidiaries
have taken action, or have any express or implied commitment to take action (i)
to create, or incur any material liability with respect to or cause to exist
any other material employee benefit plan, program or arrangements (ii) to enter
into any material contract or agreement to provide compensation or benefits to
any officer or director, or (iii) to modify, change or terminate any Plan in
any material respect, other than with respect to a modification, change or
termination required by ERISA or the Code.

 

(b)           Each Plan has been operated in all material
respects in accordance with its terms and the requirements of all applicable
Laws.  Each of the Companies and the
Subsidiaries has performed all material obligations required to be performed by
it under, is not in any material respect in default under or in material
violation of, and the Sellers have no Knowledge of any material default or
violation by any party to, any Plan.  No
Action is pending or, to the Sellers’ Knowledge, threatened with respect to any
Plan (other than claims for benefits in the ordinary course) and, to the
Sellers’ Knowledge, no fact or event exists that could give rise to any such
Action.

 

(c)           Except as set forth on Section 3.14 of the
Disclosure Schedule, neither Gale Services, Gale Construction nor the
Subsidiaries have ever maintained or contributed to a defined benefit pension
plan subject to the provisions of Title IV of ERISA.  Neither Gale Services, Gale Construction or
any of the Subsidiaries has incurred any liability under, arising out of or by
operation of Title IV of ERISA (other than liability for premiums of the
Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any multiemployer plan within the meaning
of Section 3 (37) or 4001 (a)(3) of ERISA, or from any single employer plan
(within the meaning of Section 4001 (a)(15) of ERISA) for which any of such
entities could incur liability under section 4063 or 4064 of ERISA.  None of the transactions contemplated by this
Agreement shall give rise to a complete or partial withdrawal within the
meaning of Section 4203 and 4205 of ERISA, respectively.

 

(d)           Each Plan that is intended to be qualified
under Section 401(a) of the Code or Section 401(k) of the Code has timely received
a favorable determination letter from the IRS covering all of the provisions
applicable to the Plan for which determination letters are currently available
that the Plan is so qualified and each trust established in connection with any
Plan which is intended to be exempt from federal income taxation under Section
501(a) of the Code has received a determination letter from the IRS that it is
so exempt, and no fact or event has occurred since the date of such
determination letter or letters from the IRS to adversely affect the qualified
status of any such Plan or the exempt status of any such trust.

 

(e)           Neither Gale Services, Gale Construction nor
the Subsidiaries has ever maintained a retiree medical program for their
employees or former employees.

 

(f)            No Plan provides that any director or officer
or other employee of Gale Services, Gale Construction or the Subsidiaries will
become entitled to any retirement, severance

 

20

 

or similar benefit or enhanced or accelerated
benefit solely as a result of the transactions contemplated hereby or as the
result of any termination of employment in connection with such transactions;
and such transactions will not result in the payment of any “excess parachute
payment” within the meaning of Section 280G of the Code.

 

(g)           Gale Services, Gale Construction and the
Subsidiaries are each in compliance with the requirements of the Workers
Adjustment and Retraining Notification Act (“WARN”) and have no
liabilities pursuant to WARN.

 

(h)           Each Plan that is an employee welfare benefit
plan complies and has complied with the continuation coverage (“COBRA”)
requirements of Section 4980B of the Code to the extent such Section is
applicable to such Plan.

 

(i)            Section 6.02 of the Disclosure Schedule is a
true, correct and complete list of all of the employees which are subject to
the AT&T Agreement.

 

Section 3.15.          Taxes.  Except as set forth on Section
3.15 of the Disclosure Schedule:

 

(a)           Each of the Companies and each of the
Subsidiaries has timely filed, or has caused to be timely filed on its behalf,
all Tax Returns required to be filed by it, and all such Tax Returns are true,
complete and accurate in all material respects. 
All Taxes shown to be due on such Tax Returns, or otherwise owed, have
been timely paid.  Each of the Companies
and each of the Subsidiaries has withheld or collected and has paid over to the
appropriate taxing authority (or is properly holding for payment to such taxing
authority) all Taxes required by law to be withheld or collected.

 

(b)           No Tax Return of the Companies or any
Subsidiary has been examined or audited by any taxing authority or is currently
being examined or audited by any taxing authority or is the subject of a
pending examination.  All assessments for
Taxes due with respect to any completed or settled examinations or any
concluded litigation relating to such Tax Returns have been fully paid.  None of the Companies or the Subsidiaries
have entered into or has been the subject of a closing agreement with any
taxing authority with respect to Taxes.

 

(c)           There are no liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Companies or the
Subsidiaries.  None of the Companies or
any Subsidiaries are bound by or subject to any tax sharing, allocation or
similar agreement or any indemnification or reimbursement agreement with
respect to Taxes.

 

(d)           Each of the Companies and the Subsidiaries
have at all times been classified and treated as a partnership or disregarded
entity and not as an association taxable as a corporation for federal income
tax purposes in each state and local jurisdiction in which it files Tax
Returns.

 

(e)           None of the Companies nor the Subsidiaries
are subject to any private letter ruling of the IRS or comparable rulings of
another taxing authority.

 

21

 

(f)            None of the Sellers is a foreign person within the
meaning of Section 1445 of the Code or any other laws requiring withholding of
amounts paid to foreign persons.

 

(g)           No agreement or waiver extending any statute of
limitations on or extending the period for the assessment or collection of any
Tax has been executed or filed on behalf of or with respect to the Companies or
any Subsidiaries.  No power of attorney
on behalf of the Companies or the Subsidiaries with respect to any Tax matter
is currently in place.

 

(h)           None of the Companies or the Subsidiaries (i) has
“participated” in a “reportable transaction” or “listed transaction” within the
meaning of Treasury Regulations Section 1.6011-4 or (ii) has taken any
reporting position on a Tax Return, which reporting position (1) if not
sustained, would be reasonably likely, absent disclosure, to give rise to a
penalty for substantial understatement of U.S. federal income Tax under Section
6662 of the Code (or any predecessor statute or any corresponding provision of
any such statute or state, local or foreign Tax law), and (2) has not
adequately been disclosed on such Tax Return in accordance with Section
6662(d)(2)(B) of the Code (or corresponding provision of any such predecessor
statute or state, local or foreign Tax law).

 

(i)            None of the Companies or the Subsidiaries or any other
Person on behalf of and with respect to any Company or any Subsidiary has (i)
agreed to or is required to make any adjustments pursuant to Section 481(a) of
the Code or any similar provision of state, local or foreign law by reason of a
change in accounting method initiated by the Companies or the Subsidiaries,
and, to the Sellers’ Knowledge, the IRS has not proposed any such adjustment or
change in accounting method, or (ii) any application pending with any taxing
authority requesting permission for any change in accounting method that
relates to the business or operations of the Companies or the Subsidiaries or
(iii) executed or entered into a closing agreement pursuant to Section 7121 of
the Code or any predecessor provision thereof or any similar provision of
state, local or foreign law with respect to the Companies or the Subsidiaries;
and

 

(j)            None of the Companies or the Subsidiaries is or has been
a member of a consolidated, combined or unitary group for which any Company or
any Subsidiary for which such Company or Subsidiary is or may be liable
pursuant to Treasury Regulations Section 1.1502-6(a) or any analogous or
similar state, local or foreign law or regulation.

 

Section 3.16.          Contracts.

 

(a)           Section 3.16(a) of the Disclosure Schedule contains a true
and complete list of each of the following contracts and agreements of the
Companies and the Subsidiaries (such contracts and agreements being “Material
Contracts”):

 

(i)            all property management contracts, facility management
contracts and construction management contracts with owners of properties where
the Companies and the Subsidiaries conduct the Business;

 

(ii)           all contracts and agreements relating to indebtedness for
borrowed money, including all capital leases;

 

22

 

(iii)          all contracts and agreements that limit or purport to limit
the ability of Gale Services, Gale Construction or any of the Subsidiaries to
compete in any line of business or with any Person or in any geographic area or
during any period of time;

 

(iv)          all other contracts and agreements which are material to
the Business; and

 

(v)           all contracts, agreements and obligations between or among
any of SG, Mark Yeager, Ronald Gentile, Steven Cusma, Ian Marlow, Thomas Walsh,
the Sellers, the Companies, the Subsidiaries and any of their respective
Affiliates.

 

(b)           Except as disclosed in Section 3.16(b) of the Disclosure
Schedule, each Material Contract (i) was entered into in the ordinary course of
business and (ii) is valid and binding on the Companies or the Subsidiaries, as
the case may be, and, to the Sellers’ 
Knowledge, the counterparties thereto, is in full force and effect and
(iii) upon consummation of the transactions contemplated by this Agreement,
except to the extent that any consents set forth in Section 3.04 of the
Disclosure Schedule are not obtained, shall continue in full force and effect
without penalty or other adverse consequence. 
Except as disclosed in Section 3.16(b) of the Disclosure Schedule, none
of the Companies or the Subsidiaries or, to Seller’s Knowledge, by any other
party thereto, are in breach of, or default under, any Material Contract,
except for such breaches or defaults that would not have a Material Adverse
Effect.  The Companies and Subsidiaries
are not restricted by any agreement from carrying on the Business in any
geographic location.  There are no negotiations
pending or in progress to revise any Material Contract in any material respect,
other than change orders, changes in scope, or other changes in the ordinary
course of business with respect to construction management agreements.

 

(c)           The Sellers have provided the Purchaser with true,
accurate and complete copies of all Material Contracts.

 

Section 3.17.          Securities Matters.  Each Seller:

 

(a)           acknowledges that its representations and warranties
contained herein are being relied upon by the Purchaser and MCRLP as a basis
for the exemption of the issuance of the O.P. Units hereunder from the
registration requirements of the Securities Act and any applicable state
securities laws;

 

(b)           is acquiring the O.P. Units solely for its/his own account
for the purpose of investment and not as a nominee or agent for any other
person and not with a view to, or for offer or sale in connection with, any
distribution of any thereof that would require registration under the
Securities Act or applicable state securities laws or would otherwise violate
the Securities Act or state securities laws. 
Each such Seller further agrees and acknowledges that it is not
permitted to offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (“Transfer”) any of the O.P. Units except as provided in this
Agreement, the LP Agreement and Section 5.12;

 

(c)           is knowledgeable, sophisticated and experienced in
business and financial matters, fully understands the limitations on transfer
described in this Agreement and the LP

 

23

 

Agreement, and is able to bear the economic
risk of holding the O.P. Units for an indefinite period and is able to afford
the complete loss of its investment in the O.P. Units;

 

(d)           has received and reviewed the LP Agreement and had the
opportunity to review the documents filed by MCRLP under the Securities
Exchange Act, and all registration statements and related prospectuses and
supplements filed by MCRLP and declared effective under the Securities Act and
has been given the opportunity to obtain any additional information or documents
and to ask questions and receive answers about such documents, as well as MCRLP
and the business and prospects of MCRLP which such Seller deems necessary to
evaluate the merits and risks related to its investment in the O.P. Units;

 

(e)           acknowledges that it has been advised that (i) the Closing
O.P. Units must be held indefinitely, and such Seller will continue to bear the
economic risk of the investment in the O.P. Units, unless the Contributor Units
are redeemed pursuant to the LP Agreement, this Agreement or are subsequently
Transferred or registered under the Securities Act or an exemption from such
registration is available, (ii) it is not anticipated that there will be any
public market for the O.P. Units at anytime, (iii) Rule 144 promulgated under
the Securities Act may not be available with respect to the sale of any
securities of MCRLP (and that upon redemption of the O.P. Units in MCRLP for
shares of MCRC Common Stock a new holding period under Rule 144 may commence),
and MCRLP has made no covenant, and makes no covenant, to make Rule 144
available with respect to the sale of any securities of MCRLP, (iv) a
restrictive legend as set forth in paragraph (h) below shall be placed on the
certificates representing the O.P. Units, and (v) a notation shall be made in
the appropriate records of MCRLP indicating that the O.P. Units are subject to
restrictions on Transfer;

 

(f)            acknowledges that: 
(i) the redemption of O.P. Units for, at the option of MCRLP acting
through MCRC, shares of MCRC Common Stock is subject to certain restrictions
contained in the LP Agreement; and (ii) the shares of said common stock which
may be received upon such a redemption may, under certain circumstances, be
restricted securities and be subject to limitations as to Transfer, and
therefore subject to the risks referred to in subsection (b) above.  Notwithstanding anything herein or in the LP
Agreement to the contrary, each Seller hereby acknowledges and agrees that it
may not exercise the Redemption Rights (as defined in the LP Agreement) until
after the date which is three (3) years from the Closing Date;

 

(g)           is an “accredited investor” pursuant to Rule 501(a) of
Regulation D under the Securities Act by reason of the fact that it is an
entity in which all of the equity owners are “accredited investors”; and

 

(h)           understands that the O.P. Units will bear the following
legend (or a substantially similar legend):

 

“THE UNITS REPRESENTED BY
THIS CERTIFICATE OR INSTRUMENT MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP DATED AS OF
DECEMBER 11, 1997 (A COPY OF WHICH IS 

 

24

 

ON FILE WITH MCRLP), AS AMENDED, AND THAT
CERTAIN MEMBERSHIP INTEREST PURCHASE AND CONTRIBUTION AGREEMENT BY AND AMONG
MR. STANLEY C. GALE, SCG HOLDING CORP., MACK-CALI ACQUISITION CORP. AND MCRLP
DATED AS OF MARCH 7, 2006 (A COPY OF WHICH IS ON FILE WITH MCRLP; THE “PURCHASE
AGREEMENT”).  EXCEPT AS OTHERWISE
PROVIDED IN SUCH AGREEMENTS, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE UNITS REPRESENTED BY THIS CERTIFICATE
MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR (B) IF MCRLP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS
EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER.  IN
ADDITION, THE UNITS ARE SUBJECT TO THE PROVISIONS OF SECTION 5.17 OF THE
PURCHASE AGREEMENT.”

 

Section 3.18.          Brokers.  Except as set forth on Section 3.18 of the
Disclosure Schedule, no agent, broker, Person, firm, finder or investment
banker acting on behalf of the Sellers, the Companies or the Subsidiaries is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Sellers.

 

Section 3.19.          Labor Matters.  Except as set forth on Section 3.19 of the
Disclosure Schedule, neither Gale Services, Gale Construction nor any of the
Subsidiaries are subject to any collective bargaining or other labor agreement,
and to Sellers’ Knowledge, there are no union organization efforts underway
among the employees of such entities. 
There are no strikes, slowdowns or work stoppages pending, or, to the
Sellers’ Knowledge, threatened between any of them and any of their respective
employees, and none of such entities has experienced any such strike, slowdown
or work stoppage within the past three years. None of Gale Services, Gale
Construction or any of the Subsidiaries has breached in any material respect or
otherwise failed to comply with the provisions of any collective bargaining or
union contract and there are no written grievances outstanding against any of
such entities under any such agreement or contract.  The Companies and each of the Subsidiaries
are in material compliance with all applicable federal, state and local laws
(including common law) respecting employment practices, labor, terms and
conditions of employment and wages and hours and the payment and withholding of
taxes, and to the knowledge of each of the same, there are no suits, actions,
disputes, claims (other than routine claims for benefits), investigations,
charges or audits pending or threatened relating to discrimination in
employment or employment practices.

 

Section 3.20.          Organization Documents.  Sellers have heretofore provided Purchaser
with full access to true, complete and correct copies of the organizational
documents of each SCG, the Companies and the Subsidiaries, including, without
limitation, certificates of incorporation, by-laws, operating agreements,
limited liability company agreements and management agreements, and all such
documents are in full force and effect, except where such failure to be in full
force and effect would not have a Material Adverse Effect (except with respect
to PW/MS OP Sub III, LLC where all such documents are in full force and
effect).  None 

 

25

 

of SCG, the Companies or the Subsidiaries are
in violation, in any material respect, of any provision of its respective
organizational documents.

 

Section 3.21.          Insurance.

 

(a)           Section 3.21(a) of the Disclosure Schedule sets forth all
insurance policies maintained by the Companies and the Subsidiaries with
respect to the Business.  To Sellers’
Knowledge, all material assets, properties and risks of the Business are
covered by valid and, except for policies that have expired under their terms
in the ordinary course, currently effective insurance policies or binders of
insurance (including, without limitation, general liability insurance, property
insurance and workers compensation 
insurance)  issued in favor of the
Companies or the Subsidiaries.

 

(b)           Except as would not have a Material Adverse Effect or set
forth on Section 3.21(b) of the Disclosure Schedules, with respect to each
insurance policy of the Companies and Subsidiaries:  (i) the policy is legal, valid, binding and
enforceable in  accordance  with its terms and, except for policies that
have expired under their terms in the ordinary 
course,  is in full force and
effect; (ii) none of the Companies or Subsidiaries is in breach or default  (including 
any breach or default  with
respect to the payment of  premiums  or the giving of notice), and no event has
occurred which, with notice or the lapse of time, would constitute such a
breach or default or permit  termination
or  modification, under the policy;  (iii) no party to the policy has repudiated,
or given notice of an intent to repudiate, any provision thereof; and (iv)
there is no claim pending under any policy as to which coverage has been denied
or disputed by the insurer.

 

(c)           All insurance policies listed in Section 3.21(a) of the
Disclosure Schedule are outstanding and duly in force as of the date hereof.

 

Section 3.22.          Accounts Receivable.  Section 3.22 of the Disclosure Schedule
contains a true, correct and complete list of all accounts receivables of the
Companies and the Subsidiaries as of January 31, 2006.  All accounts receivable of the Companies and
the Subsidiaries are bona fide and have arisen in the ordinary course of
business in arms length transactions for goods actually sold and services
actually performed or to be performed. 
The Sellers have available in records copies of invoices (or other
appropriate evidence of such accounts receivable) with respect to all such
accounts receivable.

 

Section 3.23.          Disclosure.  The representations and warranties and the
statements and information contained in this Agreement, the Ancillary
Documents, each other document (including the financial statements, exhibits
and schedules), certificates or other writings furnished or to be furnished by
the Sellers to the Purchaser and/or MCRLP pursuant to the provisions hereof and
in connection with the transactions contemplated hereby do not contain any
untrue statement of a material fact and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such statements not misleading in light of the circumstances under which
they were made.

 

Section 3.24.          Bank Accounts.  Section 3.24 of the Disclosure Schedule
attached hereto contains a true, correct and complete list of all bank accounts
maintained in the name of,

 

26

 

or for the benefit for any of the Sellers,
the Companies or the Subsidiaries relating to the Business.

 

Section 3.25.          Assets.   The Assets constitute all of the assets and
properties that are necessary for the conduct of the Business as currently
conducted by the Companies and the Subsidiaries and immediately after the
Closing, the Purchaser shall continue to be able to conduct the Business in the
same manner as conducted by the Companies and the Subsidiaries prior to the
Closing Date.  The Assets, other than the
Excluded Assets of the Companies and the Subsidiaries, are all the Assets
utilized in obtaining the financial results set forth in the 2005 Financial
Statements.

 

Section 3.26.          OFAC.

 

(a)           No Seller, or any Affiliate of any of the Sellers, the
Companies or the Subsidiaries, is subject to sanctions of the United States
government or in violation of any Laws relating to terrorism or money
laundering, including, without limitation, Executive Order No. 13224,
66 Fed. Reg. 49079 (published September 25, 2001) (the “Terrorism
Executive Order”) or a Person similarly designated under any related
enabling legislation or any other similar Executive Orders (collectively with
the Terrorism Executive Order, the “Executive Orders”), the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”),
any sanctions and regulations promulgated under authority granted by the
Trading with the Enemy Act, 50 U.S.C. App. 1-44, as amended from time to time,
the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, as
amended from time to time, the Iraqi Sanctions Act, Publ. L. No. 101-513; United
Nations Participation Act, 22 U.S.C. § 287c, as amended from time to time, the
International Security and Development Cooperation Act, 22 U.S.C. § 2349 aa-9,
as amended from time to time, The Cuban Democracy Act, 22 U.S.C. §§ 6001-10, as
amended from time to time, The Cuban Liberty and Democratic Solidarity Act, 18
U.S.C. §§ 2332d and 2339b, as amended from time to time, and The Foreign
Narcotics Kingpin Designation Act, Publ. L. No. 106-120, as amended from time
to time.

 

(b)           No Seller, or any Affiliate of any of the Sellers, the
Companies or the Subsidiaries, is (i) listed on the Specially Designated
Nationals and Blocked Persons List (the “SDN List”) maintained by the
Office of Foreign Assets Control (“OFAC”), Department of the Treasury,
and/or on any other similar list (“Other Lists” and, collectively with
the SDN List, the “Lists”) maintained by the OFAC pursuant to any
authorizing statute, Executive Order or regulation (collectively, “OFAC Laws
and Regulations”); or (ii) a Person (a “Designated Person”)
either (A) included within the term “designated national” as
defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515,
or (B) designated under Sections 1(a), 1(b), 1(c) or 1(d) of the
Terrorism Executive Order or a Person similarly designated under any related
enabling legislation or any other similar Executive Orders (collectively, the “Executive
Orders”), including a “Prohibited Person”.  The OFAC Laws and Regulations and the
Executive Orders are collectively referred to as the “Anti-Terrorism
Laws”.  “Prohibited Person” is
defined as follows:

 

(i)            a person or entity that is listed in the Annex to the
Terrorism Executive Order, or is otherwise subject to the provisions of the
Terrorism Executive Order or any other Executive Order;

 

27

 

(ii)           a person or entity owned or controlled by, or acting for
or on behalf of, any person or entity that is listed in the Annex to the
Terrorism Executive Order, or is otherwise subject to the provisions of the
Terrorism Executive Order or any other Executive Order;

 

(iii)          a person or entity with whom any Property Owner is
prohibited from dealing or otherwise engaging in any transaction by any
terrorism or anti-money laundering Law, including the Terrorism Executive Order,
any other Executive Order and the Patriot Act;

 

(iv)          a person or entity who commits, threatens or conspires to
commit or supports “terrorism” as defined in the Terrorism Executive Order or
any other Executive Order; or

 

(v)           (a person or entity that is named as a “specially
designated national and blocked person” on the most current list published by
the U.S. Treasury Department Office of Foreign Asset Control at its official
website, http://www.treas.gov/ofac/tllsdn.pdf or any replacement website or other
replacement official publication of such list.

 

(c)           Sellers have required,
and have taken all reasonable
measures to ensure compliance with the requirement that no Affiliate of any of
the Companies or Subsidiaries is on any Lists, be a Designated Person, or be in
violation of any Laws, including any OFAC Laws and Regulations.

 

(d)           No Seller, or any Affiliate of any of the Sellers, the
Companies or the Subsidiaries, has (i) conducted any business or engaged in
making or receiving any contribution of funds, goods or services to or for the
benefit of any Designated Person, (ii) dealt in, or otherwise engaged in, any
transaction relating to any property or interest in property blocked pursuant
to any Executive Order or the Patriot Act, or (iii) engaged in or conspired to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in any
Executive Order or the Patriot Act.

 

Article
IV

 

REPRESENTATIONS
AND WARRANTIES

OF THE PURCHASER AND MCRLP

 

The Purchaser and MCRLP
hereby represent and warrant to the Sellers as follows:

 

Section 4.01.          Organization and Authority of MCRLP
and the Purchaser.

 

(a)           The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation.  MCRLP is a limited
partnership, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. 
Each of the Purchaser and MCRLP has all necessary power and authority to
enter into this Agreement and the Ancillary Agreements to which it is a party,
to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. 
The Purchaser and MCRLP are each duly licensed or 

 

28

 

qualified to do business and in good standing
in each jurisdiction which the properties owned or leased by it or the
operation of its business make such licensing or qualification necessary,
except to the extent that the failure to be so licensed, qualified or in good
standing would not adversely affect the ability of the Purchaser or MCRLP to
carry out their obligations under, and to consummate the transactions
contemplated by, this Agreement and the Ancillary Agreements. MCRC is the sole
general partner of MCRLP.

 

(b)           The execution and delivery by each of the Purchaser and
MCRLP of this Agreement and the Ancillary Agreements to which it is a party,
the performance of their obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby by the
Purchaser and MCRLP have been duly authorized by all requisite corporate or
partnership action on the part of the Purchaser and MCRLP, as applicable.

 

(c)           This Agreement has been, and upon its execution by each of
Purchaser and MCRLP of the applicable Ancillary Agreements shall be, duly
executed and delivered by the Purchaser and MCRLP, and (assuming due
authorization, execution and delivery by the other parties thereto) this
Agreement constitutes, and upon its execution and the execution of the
applicable Ancillary Agreements shall constitute, the legal, valid and binding
obligations of the Purchaser and MCRLP, enforceable against each of them in
accordance with its terms.

 

Section 4.02.          Certificate of Incorporation and
By-Laws. (a)  Purchaser has
heretofore furnished to the Sellers a complete and correct copy of the
certificate of incorporation and the by-laws of Purchaser, as amended to
date.  Such certificate of incorporation
and by-laws are in full force and effect and Purchaser is not in violation of
any material provision of its certificate of incorporation or by-laws.

 

(a)           MCRLP has heretofore furnished to the Sellers a complete
and correct copy of its Certificate of Limited Partnership and the LP Agreement
as amended to date.  Such Certificate of
Limited Partnership and LP Agreement are in full force and effect and MCRLP is
not in violation of any material provision of its Certificate of Limited
Partnership or the LP Agreement.

 

Section 4.03.          Capitalization.

 

(a)           The authorized capital stock of MCRC consists of (i)
190,000,000 shares of common stock, par value $.01 per share (“MCRC Common
Stock”) and (ii) 5,000,000 shares of preferred stock, par value $.01 per
share (“MCRC Preferred Stock”). 
As of February 28, 2006, (i) 62,151,122 shares of MCRC Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
non-assessable, (ii) no shares of MCRC Common Stock were held in the treasury
of MCRC, (iii) no shares of MCRC Common Stock were held by subsidiaries of MCRC
and (iv) 27,315,628 shares of MCRC Common Stock were reserved for future
issuance pursuant to equity compensation awards or pursuant to the redemption
provisions of the LP Agreement.  As of
February 28, 2006, 10,000 shares of MCRC Preferred Stock were issued and
outstanding.

 

(b)           As of February 28, 2006, (i) 10,000 series C preferred
units of limited partnership interest of MCRLP were issued and outstanding, all
of which were validly issued,

 

29

 

fully paid and non-assessable, and (ii)
15,592,773 O.P. Units were issued and outstanding, all of which were validly
issued, fully paid and non-assessable. 
As of February 28, 2006, MCRC owned 79.9% of the outstanding units of
limited partnership of MCRLP.

 

(c)           The O.P. Units to be issued pursuant to and in accordance
with Section 2.02 hereof shall be duly authorized, validly issued, fully paid
and non-assessable, and shall be issued free and clear of all Encumbrances
(other than restrictions of any kind set forth in the LP Agreement and in this
Agreement).  Upon execution and delivery
of counterpart signature pages to the LP Agreement, each of the Sellers shall
be entitled to all of the rights, privileges and preferences of a limited
partner in MCRLP with respect to the O.P. Units issued to such Seller.

 

Section 4.04.          No Conflict.  The execution, delivery and performance by
each of the Purchaser and MCRLP of this Agreement and the execution, delivery
and performance by each of the Purchaser and MCRLP of the Ancillary Agreements
to which it is a party do not and will not (i) violate, conflict with or result
in the breach of any provision of the certificate of incorporation or bylaws, partnership
agreement, certificate of limited partnership (or similar organizational
documents) of the Purchaser and MCRLP, (ii) conflict with or violate any Law or
Governmental Order applicable to the Purchaser or MCRLP or any of their
respective assets, properties or businesses, or (iii) conflict with, result in
any breach of, constitute a default (or event which with the giving of notice
or lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which the Purchaser or MCRLP is a party or
by which any property or asset of the Purchaser or MCRLP is bound or affected,
except, in the case of clauses (b) and (c), as would not materially and
adversely affect the ability of the Purchaser or MCRLP to carry out their
obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements.

 

Section 4.05.          Governmental Consents and Approvals.  The execution, delivery and performance by
the Purchaser, MCRLP of this Agreement and the Ancillary Agreements do not and
will not require any consent, approval, authorization or other order of, action
by, filing with, or notification to, any Governmental Authority, except where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not prevent or materially delay the
consummation by the Purchaser or MCRLP of the transactions contemplated by this
Agreement.

 

Section 4.06.          SEC Filings.  MCRLP has filed all forms, reports and
documents required to be filed with the SEC since December 31, 2003
(collectively, the “SEC Reports”). 
The SEC Reports (i) were prepared in accordance with either the
requirements of the Securities Act or the Securities Exchange Act, as the case
may be, and the rules and regulations promulgated thereunder, and (ii) did not,
at the time they were filed, or, if amended, as of the date of such amendment,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.

 

30

 

Section 4.07.          Form S-3 Eligibility.  MCRLP, through MCRC, is currently eligible to
register the Registrable Securities on a registration statement on Form S-3
under the Securities Act.  There exist no
facts or circumstances that would prohibit or delay the preparation and filing
of a registration statement on Form S-3 with respect to the Registrable Securities
within the time periods referred to herein.

 

Section 4.08.          Litigation.  No action by or against MCRLP or the
Purchaser is pending or, to the knowledge of MCRLP or the Purchaser,
threatened, which could affect the legality, validity or enforceability of this
Agreement, any Ancillary Agreement or the consummation of the transactions
contemplated hereby or thereby.

 

Section 4.09.          Brokers.  No agent, broker, Person, firm, finder or
investment banker acting on behalf of the Purchaser or MCRLP is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser.

 

Section 4.10.          Independent Investigation;
Representations.  Each of MCRLP and
the Purchaser has conducted or shall conduct its own independent investigation,
review and analysis of the operations, the Assets, Liabilities, results of
operations, financial condition, software, technology and prospects of the
Business, which investigation, review and analysis was done by each of MCRLP
and the Purchaser and its Affiliates and representatives.  In entering into this Agreement, each of
MCRLP and the Purchaser acknowledges that it has relied solely upon the
aforementioned investigation, review and analysis and not on any factual
representations or opinions of the Sellers or its representatives, except the
specific representations and warranties of the Sellers set forth in Article III
and the Disclosure Schedule hereto.  Each
of the Purchaser and MCRLP hereby acknowledge and agree that (a) other than the
representations and warranties made in Article III, none of the Sellers, the
Companies, the Subsidiaries, their Affiliates, or any of their respective
officers, directors, employees or representatives make or have made any
representation or warranty, express or implied, at law or in equity, with
respect to the Companies, the Subsidiaries, the Membership Interests or the
Business, including as to (i) merchantability or fitness for any particular use
or purpose, (ii) the operation of the Business by the Purchaser after the
Closing, or (iii) the probable success or profitability of the Business after
the Closing and (b) other than the indemnification obligations of the Sellers
set forth in Article VIII, none of the Sellers, the Companies, the
Subsidiaries, their Affiliates, or any of their respective officers, directors,
employees or representatives will have or be subject to any Liability or
indemnification obligation to the Purchaser, MCRLP or to any other Person
resulting from the distribution to MCRLP or the Purchaser, its Affiliates or
representatives of, or the their use of, any information relating to the
Business, including any information, documents or material made available to MCRLP
or the Purchaser, whether orally or in writing, in data rooms, management
presentations, break-out discussions, responses to questions submitted on
behalf of MCRLP or the Purchaser or in any other form in expectation of the
transactions contemplated by this Agreement.

 

31

 

Article
V

 

ADDITIONAL
AGREEMENTS

 

Section 5.01.          Conduct of Business Prior to the
Closing.  The Sellers covenant and
agree that, except as described in Section 5.01 of the Disclosure Schedule
or as provided by Sections 5.07 and 5.11 below, between the date hereof and the
Closing, the Sellers shall cause each of Gale Services, Gale Construction and
the Subsidiaries to (A) conduct its operations and the Business in the ordinary
course in all material respects (B) use its reasonable efforts to preserve
intact in all material respects their respective business organizations and the
business organization of Gale Services, Gale Construction and the Subsidiaries
and (C) use its reasonable efforts to preserve for the Purchaser the
relationships of Gale Services, Gale Construction and the Subsidiaries with
their respective customers, suppliers, managers, employees, tenants and others
having on-going relationships with any of Gale Services, Gale Construction and
the Subsidiaries.  Except as described in
Section 5.01 of the Disclosure Schedule or as provided by Sections 5.07 and
5.11 below, the Sellers covenant and agree that, between the date hereof and
the Closing, without the prior written consent of the Purchaser, Gale Services,
Gale Construction and the Subsidiaries will not:

 

(a)           (i) issue or sell any equity interests (partnership,
membership or otherwise), notes, bonds or other securities (or any option,
warrant or other right to acquire the same), (ii) redeem any of its equity
interests, or (iii) declare, make or pay any dividends or distributions to the
holders of equity interests, other than cash dividends, distributions and
redemptions declared, made or paid by the Companies or the Subsidiaries to the
Sellers;

 

(b)           incur or assume any liabilities, obligations or
indebtedness for borrowed money or guarantee any such liabilities, obligations
or indebtedness, other than in the ordinary course of business and consistent
with past practice; provided that in no event shall any such indebtedness
obligate the Purchaser at any time;

 

(c)           amend or restate the certificate of formation or operating
agreement (or similar organizational documents) of the Companies or any of the
Subsidiaries;

 

(d)           enter into any contract, or take any action to extend the
term of any contract, that is not terminable on 30 days’ or less notice, in
each case if such contract survives Closing, other than in the ordinary course
of business and consistent with past practice; provided that in no event shall
any contract or agreement which would, if entered into prior to the date
hereof, be a “Material Contract” be entered into or extended following the Due
Diligence Expiration Date;

 

(e)           permit, allow or suffer any Assets to become subjected to
any Encumbrance, other than Permitted Encumbrances;

 

(f)            cancel any indebtedness or waive any claims or rights of
value;

 

(g)           except for intercompany transactions in the ordinary
course of business, pay, loan or advance any amount to, or sell, transfer or
lease any of its assets to, or enter into any 

 

32

 

agreement or arrangement with, any Seller or
any of affiliates of Sellers, the Companies or the Subsidiaries, in each
instance which survive Closing;

 

(h)           grant or announce any increase in the salaries, bonuses or
other benefits payable by the Companies or the Subsidiaries to any of the
employees of the Companies or the Subsidiaries, other than as required by Law,
pursuant to any Plans, programs or agreements existing on the date hereof or
other ordinary increases consistent with the past practices of the Companies or
the Subsidiaries;

 

(i)            change any method of accounting or accounting practice or
policy used by the Companies or the Subsidiaries, other than such changes
required by GAAP;

 

(j)            fail to exercise any rights of renewal with respect to
any material Leased Real Property that by its terms would otherwise expire;

 

(k)           settle or compromise any material claims of the Companies
or the Subsidiaries, other than in the ordinary course of business;

 

(l)            change any policies, practices or procedures with respect
to credit, billing and/or collection with respect to customers or payments with
respect to vendors/subcontractors; or

 

(m)          agree to take any of the actions specified in Sections
5.01(a)-(l), except as contemplated by this Agreement.

 

Section 5.02.          Access to Information.

 

(a)           From the date hereof until the Closing, upon reasonable
notice, the Sellers shall cause Gale Services, Gale Construction, the
Subsidiaries and each of its officers, directors, employees, agents,
representatives, accountants and counsel to (i) afford the Purchaser and
its officers, directors, employees, agents, representatives, accountants and
counsel (collectively, the “Purchaser Representatives”) with reasonable
access to all of the offices, properties and books and records of Gale
Services, Gale Construction and the Subsidiaries and (ii) furnish to the
Purchaser Representatives such additional financial and operating data and other
information regarding Gale Services, Gale Construction, the Subsidiaries or the
Business (or copies thereof) as the Purchaser may from time to time reasonably
request; provided, however, that any such access or furnishing of
information shall be conducted at the Purchaser’s sole expense, during normal
business hours, under the supervision of the Company’s personnel and in such a
manner as not to interfere with the normal operations of the Companies, the
Subsidiaries or the Business.

 

(b)           In order to facilitate the resolution of any claims made
against or incurred by the Sellers relating to the Business, for a period of
seven (7) years after the Closing or, if shorter, the applicable period
specified in the Purchaser’s document retention policy, the Purchaser shall
(i) retain the books and records relating to the Business, Gale Services,
Gale Construction and the Subsidiaries relating to periods prior to the Closing
and (ii) upon reasonable notice, afford the officers, employees, agents
and representatives of the Sellers reasonable access (including the right to
make, at the Sellers expense, photocopies), during normal business hours, to
such books and records; provided, however, that the Purchaser
shall notify the Sellers at least thirty (30) days in advance of destroying any
such books and records prior to the seventh

 

33

 

anniversary of the Closing in order to
provide the Sellers the opportunity to access such books and records in
accordance with this Section 5.02(b).

 

Section 5.03.          Confidentiality.

 

(a)           The parties hereto acknowledge and agree that all
customer, prospect, and marketing lists, sales data, Intellectual Property,
proprietary information, trade secrets, and other confidential information of
Gale Services, Gale Construction or any Subsidiary (collectively, “Confidential
Information”) (i) are valuable, special and unique assets of the Companies
and the Subsidiaries and (ii) are, and following the Closing, will continue to
be owned exclusively by the Companies or the Subsidiaries, as the case may
be.  Each party hereto agrees to, and
agrees to use reasonable best efforts to cause its directors, officers,
employees, partners, Affiliates, advisors and other representatives (“Representatives”)
to, treat the Confidential Information, together with any other confidential
information furnished to the Sellers, Gale Services, Gale Construction or the
Subsidiaries by the Purchaser, on the one hand, or to Purchaser by the Sellers,
Gale Services, Gale Construction or any of the Subsidiaries, on the other hand,
as confidential and not to make use of such information for its own purposes
other than in connection with the transactions contemplated hereby or for the
benefit of any other Person (other than the Companies and the Subsidiaries and
after the Closing, the Purchaser). Without limiting the generality of the
foregoing and except as provided in Section 10.03 hereof, the parties expressly
acknowledge and agree that the material terms of this Agreement (including,
without limitation, the Purchase Price) constitute Confidential Information,
and, in any event, unless otherwise publicly disclosed by the Purchaser, each
party hereby agrees not to, and agrees to use reasonable best efforts to cause
its Representatives not to, disclose such terms to any Person, except to the
extent required by Law, in which case the non-disclosing parties will be given
as much advance notice as reasonably possible with respect to the nature of
such required disclosure.  To the extent
the terms in this Section 5.03 conflict with the confidentiality provisions of
that certain confidentiality agreement dated as of February 17, 2006, by and
between the Sellers and the Purchaser (the “­Confidentiality Agreement”),
the terms of this Section 5.03 shall supersede the conflicting terms in the
Confidentiality Agreement. 
Notwithstanding anything to the contrary contained herein, the
obligations of the Purchaser pursuant to this Section 5.03 shall terminate upon
the Closing and the term Confidential Information does not include information
which (A) is or becomes generally available to the public other than as a
result of a disclosure by any of the parties hereto or their respective
Representatives, (B) was available on a non-confidential basis prior to its
disclosure, or (C) becomes available on a non-confidential basis from a source,
other than any of the parties hereto or their respective Representatives, not
known to be bound by confidentiality obligations with respect to such
information.

 

(b)           Prior to the Closing, the Sellers shall not disclose to
any third party any information that is not public information concerning the
Purchaser and MCRLP or any transaction or potential transaction the Seller may
become aware of involving the Purchaser and MCRLP without prior written consent
of the Purchaser and MCRLP.

 

34

 

Section 5.04.          Regulatory and Other
Authorizations; Notices and Consents.

 

(a)           Each of the parties to this Agreement shall use all
reasonable efforts to promptly obtain all authorizations, consents, orders and
approvals of all Governmental Authorities and other third parties that may be
or become necessary for its execution and delivery of, and the performance of
its obligations pursuant to, this Agreement and will cooperate fully with one
another in promptly seeking to obtain all such authorizations, consents, orders
and approvals.  None of the Sellers or
the Companies shall be required to pay any fees or other payments in excess of
$100,000 in the aggregate to any Governmental Authorities or other third
parties in order to obtain any such authorization, consent, order or approval.

 

(b)           Except as provided in Section 10.03, each party to this
Agreement shall promptly notify the other party of any communication it or any
of its Affiliates receives from, or sends to, any Governmental Authority
relating to the matters that are the subject of this Agreement and permit, to
the extent practicable, the other party to review in advance any proposed communication
by such party to any Governmental Authority.

 

Section 5.05.          Non-Competition; Non-Solicitation.    

 

(a)           For a period of four (4) years after the Closing (the “Restricted
Period”), the Sellers shall not (and shall cause their respective
Affiliates not to), in the Territory, engage, directly or indirectly, in the
Business or, without prior written consent of the Purchaser, directly or
indirectly, own an interest in, manage, operate, join, control, lend money or
render financial or other assistance to or participate in or be connected with,
as an officer, employee, partner, stockholder, consultant or otherwise, any
Person engaged in the Business in the Territory; provided, however,
that for the purposes of this Section 5.05, ownership of securities having no
more than 4.99% of the outstanding voting power of any competitor which are
listed on any national securities exchange shall not be deemed to be in
violation of this Section 5.05 as long as the Person owning such securities has
no other connection or relationship with such competitor.  For purposes of this Section 5.05, “Territory”
means worldwide, other than Boston, Massachusetts, New York County, New York
and the continent of Asia.

 

(b)           During the Restricted Period, the Sellers shall not (and
shall cause their respective Affiliates not to), in the Development Territory,
engage, directly or indirectly, in the business of developing real property or,
without prior written consent of the Purchaser, directly or indirectly, own an
interest in, manage, operate, join, control, lend money or render financial or
other assistance to or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any Person engaged in
the business of developing real property in the Development Territory; provided,
however, that for the purposes of this Section 5.05(b), ownership of
securities having no more than 4.99% of the outstanding voting power of any
competitor which are listed on any national securities exchange shall not be
deemed to be in violation of this Section 5.05(b) as long as the Person owning
such securities has no other connection or relationship with such
competitor.  For purposes of this Section
5.05, “Development Territory” means the State of New Jersey and the counties
listed on Section 5.05(b) of the Disclosure Schedule.

 

(c)           During the Restricted Period, Sellers shall not hire or
attempt to hire any Person who is, or was at any time six (6) months prior to
the Closing Date, employed by or associated with the Companies or the
Subsidiaries as an executive, officer, employee, manager,

 

35

 

salesman, consultant, independent contractor,
representative or other agent to engage in the Business in the Territory.  Notwithstanding the foregoing, if, after the
date hereof, a Person is terminated by the Companies or the Subsidiaries, then,
the Sellers may freely employ such Person.

 

(d)           If, at the time of the enforcement of this Section 5.05, a
court shall hold that the duration, scope, area or other restrictions stated
herein are unreasonable under the circumstances then existing, each of the
Sellers and the Purchaser agree that it is the intention of the parties hereto
that such provision should be enforceable to the maximum extent permissible
under applicable Law.

 

(e)           Each of the Sellers acknowledge that the covenant of the
Sellers set forth in this Section 5.05 are an essential element of this
Agreement and that, but for the agreement of the Sellers to comply with the
covenant, the Purchaser would not have entered into this Agreement.  Each of the Sellers acknowledge that this
Section 5.05 constitutes an independent covenant that shall not be affected by
the performance or nonperformance of any other provision of this Agreement by
the Purchaser.  Each of the Sellers has
independently consulted with its counsel and after such consultation agrees
that the covenants set forth in this Section 5.05 are reasonable and proper.

 

Section 5.06.          Property Management Retention.  For a period of four (4) years after the
Closing, each of the Sellers shall, and shall cause its Affiliates and all
joint ventures in which it or its Affiliates have a controlling interest, to
retain, on customary and reasonable terms as agreed to by the Sellers and the
Purchaser, the Purchaser and its successors to manage the commercial office
properties in the State of New Jersey identified in Section 5.06 of the
Disclosure Schedule attached hereto which are owned or controlled by the
Sellers, their Affiliates or such joint ventures, unless existing written
agreements with such a joint venture partner expressly provide for the
retention of an alternate manager or otherwise prohibit such retention.  In those instances in which either of the
Sellers or its Affiliates do not have such controlling interest, each of the
Sellers shall use its commercially reasonable efforts to have Purchaser
retained, on customary and reasonable terms as agreed to by the Sellers and the
Purchaser, as manager in the State of New Jersey.

 

Section 5.07.          Office Leases.   Prior to the Closing, the parties
shall identify those office leases to which any of the Companies or any
Subsidiary is a party, but the office space which is the subject of such lease
is being used by an Affiliate of the Sellers which is not one of the Companies
or the Subsidiaries (collectively, the “Transferred Leases”).  The parties acknowledge and agree that the
leases listed in Section 5.07 of the Disclosure Schedule shall be included in
the Transferred Leases.  Prior to the
Closing, the parties shall use all reasonable efforts to make appropriate
arrangements for the Affiliates of the Sellers currently using the office space
which is the subject of the Transferred Leases to continue be able to use such
office space in accordance with the terms of the Transferred Leases following
the Closing.  Such arrangement may
consist of, among other things, an assignment of a Transferred Lease or, if the
landlord under such a Transferred Lease refuses to consent to such an
assignment, then a sublease of the office space on the same terms as the
Transferred Lease.

 

36

 

Section 5.08.          Right of First Offer.

 

(a)           If, at any time prior to the fourth anniversary of the
Closing (the “Cut Off Date”), an investment opportunity comes to the
attention of the Sellers to acquire the real properties located at 500 and 600
Hills Drive, Bedminster, New Jersey (the “ROFO Properties”), the Sellers
shall grant to the Purchaser or its designated Affiliate an irrevocable right
of first offer to participate in such acquisition on an equal basis with the
Sellers.

 

(b)           In such instance, the Sellers shall give written notice
(the “ROFO Notice”) to the Purchaser regarding the acquisition
opportunity for the ROFO Properties and shall describe all the material
business terms of the opportunity. Within thirty (30) calendar days of its
receipt of the ROFO Notice, the Purchaser may elect to exercise its right of
first offer to participate in the acquisition of the ROFO Properties by
delivering to the Sellers its written acceptance of the right of first offer,
which acceptance shall set forth its intent to pursue a participation in the
acquisition of the ROFO Properties. In the event such written acceptance shall
not be received by the Sellers within such ten (10) Business Day acceptance
period, to the extent the ROFO Properties remain available for purchase, the
Sellers may solicit or offer the participation in the acquisition of the ROFO
Properties to a third party, or may otherwise elect to pursue such acquisition
without the participation of Purchaser.

 

(c)           The Sellers hereby further agree to use their commercially
reasonable efforts to grant to the Purchaser or its designated Affiliate at any
time prior to the Cut Off Date, a right of first offer to participate on a pro
rata basis with the Sellers or their Affiliates in an investment in such future
office development or other purchase opportunities as the Sellers or their
Affiliates shall identify from time to time, except in those instances when the
Sellers reasonably believe that such an offer would interfere with the Sellers’
institutional relationships.

 

The parties acknowledge that, notwithstanding
the foregoing, the provisions of this Section 5.08 are not intended to, and
shall not alter Sellers’ obligations under Section 5.05.

 

Section 5.09.          Use of the Gale Name.  After the Closing, neither Sellers nor any of
Sellers’ subsidiaries or Affiliates shall use the names or marks “Gale,” “Gale
Service Companies,” “Gale Real Estate Services” or any derivative thereof
reasonably likely to be confused with the names of Gale Services, Gale
Construction or any of the Subsidiaries for commercial purposes.  Notwithstanding the foregoing, Sellers shall
be permitted to use the names “Gale Investments”, “Gale International”, “The
Gale Company” (but only to the extent and in the locations currently used by SG
in Asia and without further promoting the use of such name), “Gale Holdings”
(outside the Territory only), “Daniel Gale” and names derived from or including
such names.

 

Section 5.10.          Stanley C. Gale.  For a period of three (3) years after the
Closing, SG shall serve as an advisor for the Purchaser’s real property service
company on the terms set forth on Exhibit F hereto.  Prior to the Closing, SG and the Purchaser
hereby agree that they shall negotiate in good faith to enter into a consulting
agreement containing the terms set forth on Exhibit F hereto.

 

37

 

Section 5.11.          Excluded Assets.

 

(a)           Prior to the Closing, the Sellers shall cause Gale
Services to distribute to the Sellers (or an Affiliate of the Sellers other
than the Companies and the Subsidiaries) all of the issued and outstanding
membership interests of Gale International.

 

(b)           The parties hereby agree that the receivable from
Sanofi-Aventis in the amount of approximately $5,400,000 (“Sanofi Receivable”)
shall be an Excluded Asset.  The
Purchaser and MCRLP shall use their commercially reasonable efforts to collect
the Sanofi Receivable on behalf of the Sellers and to promptly pay any amounts
collected with respect to the Sanofi Receivable to the Sellers promptly
following such collection.  The Purchaser
and MCRLP shall be entitled to deduct from any payment made to the Sellers any
commissions payable to employees of the Companies or the Subsidiaries in
connection with the Sanofi Receivable.

 

(c)           The parties recognize that certain assets and properties
of the Companies and the Subsidiaries, including those listed in Section 1.01(b)
of the Disclosure Schedule, are not currently intended to be used in the
Business, but, instead, are intended to be retained by the Sellers and their
Affiliates following the Closing.  The
parties further agree that all of such assets and properties are included in
the Excluded Assets.  In that regard,
prior to the Closing and for a period of one (1) year following the Closing,
the parties agree to use all reasonable efforts (i) to identify all Excluded
Assets held by the Companies and the Subsidiaries and (ii) to cause the
Companies and the Subsidiaries to assign, transfer and convey to the Sellers
(or Affiliates of the Sellers other than the Companies and the Subsidiaries),
without consideration or other payment therefor, all Excluded Assets as they are
so identified.  To the extent any
Excluded Assets were included in the determination of Working Capital on the
Closing Statement of Working Capital, the Sellers shall pay to the Purchaser,
or the Purchaser shall pay to the Sellers, as the case may be, in consideration
therefor, the amount by which the Working Capital was increased or decreased,
as the case may be, due to such inclusion of such Excluded Assets in the
determination of Working Capital on the Closing Statement of Working Capital.

 

(d)           Furthermore, the parties recognize that certain assets and
properties of the Sellers which are intended to be used in the Business may be
held by the Sellers or one of their Affiliates. 
The parties further agree that all of such assets and properties are
included in the Assets.  In that regard,
prior to the Closing and for a period of one (1) year following the Closing,
the parties agree (i) to use all reasonable efforts to identify all Assets held
by the Sellers or any of their Affiliates and (ii) to cause the Sellers or any
of their Affiliates to assign, transfer and convey to the Companies or the
Subsidiaries (or Affiliates of the Companies and the Subsidiaries other than
the Sellers), without consideration or other payment therefor, all Assets as
they are so identified.  To the extent
any such Assets were excluded in the determination of Working Capital on the
Closing Statement of Working Capital, the Sellers shall pay to the Purchaser,
or the Purchaser shall pay to the Sellers, as the case may be, in consideration
therefor, the amount by which the Working Capital was increased or decreased,
as the case may be, due to such exclusion of such Assets in the determination
of Working Capital on the Closing Statement of Working Capital.

 

38

 

Section 5.12.          Registration Rights.

 

(a)           On or about one (1) year from the Closing Date (the “Filing
Date”), MCRLP shall, acting through MCRC, at its expense, register with the
SEC on a Registration Statement on Form S-3 (except if MCRC is not then
eligible to register for resale the MCRC Common Stock on Form S-3, in which
case such registration shall be on another appropriate form in accordance
herewith), at its election and in its sole discretion either (i) the initial
issuance of shares of MCRC Common Stock into which the O.P. Units may be
converted on or after the third anniversary of the Closing  Date, as a primary offering on a shelf
registration statement pursuant to Rule 415 under the Securities Act, or (ii)
the public resale of MCRC Common Stock into which the O.P. Units may be
converted on or after the third anniversary of the Closing Date, as a secondary
offering on a resale shelf registration statement pursuant to Rule 415 under
the Securities Act (the “Registrable Securities”).  MCRLP shall, acting through MCRC, cause such
Registration Statement to be effective as soon as practicable.  If MCRLP elects option (ii), it shall, at its
expense, use its best efforts to maintain the effectiveness (the “Effectiveness
Time”) of such shelf registration statement until the earlier of (i) such
time as when all of the Registrable Securities may be converted have been
disposed of or (ii) two (2) years after the redemption of all of the O.P. Units
for cash or into MCRC Common Stock. 
Notwithstanding anything in this Section 5.12 to the contrary, if at the
time MCRLP is obligated to file a Registration Statement pursuant to this
Section 5.12, MCRLP determines, in the good faith judgment of the Board of
Directors of its general partner (MCRC), with the advice of counsel, that the
filing of either such shelf registration statement would require the disclosure
of non-public material information the disclosure of which would have a
material adverse effect on MCRLP, or would otherwise adversely affect a
material financing, acquisition, disposition, merger or other significant
transaction, MCRLP shall deliver a certificate to such effect signed by the
Chief Executive Officer and President of its general partner (MCRC), to the
holders of the O.P. Units, and MCRLP may postpone or suspend filing or
effectiveness of a registration statement for a period not to exceed forty-five
(45) consecutive days, provided that MCRLP may not postpone or suspend its
obligation under this Section 5.12 for more than sixty (60) days in the
aggregate during any twelve (12) month period; provided, however, that no such
postponement or suspension shall be permitted for consecutive sixty (60) day
periods, arising out of the same set of facts, circumstances or transactions.

 

(b)           All fees and expenses incident to the performance of or
compliance with this Section 5.12 by MCRLP shall be borne by MCRLP whether or
not the Registration Statement is filed or becomes effective.

 

(c)           MCRLP shall indemnify and hold harmless each Seller, the officers,
directors, agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of MCRC Common Stock), investment advisors and employees of each
of them, each Person who controls any such Seller (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and attorneys’ fees) and expenses (collectively, “Registration
Losses”), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in the Registration Statement,
any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a

 

39

 

material fact required to be stated therein
or necessary to make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in the light of the circumstances
under which they were made) not misleading; provided that the foregoing
indemnity shall not apply to the extent, but only to the extent, that such
untrue statements or omissions are based solely upon information regarding such
Seller or such other indemnified party furnished in writing to MCRLP by such
Seller expressly for use therein, which information was reasonably relied on by
MCRLP for use therein or to the extent that such information relates to such
Seller or such Seller’s proposed method of distribution of Registrable
Securities.  MCRLP shall notify the
Sellers promptly of the institution, threat or assertion of any proceeding of
which MCRLP is aware in connection with the transactions contemplated by this
Agreement.

 

Section 5.13.          Notifications; Update of Disclosure
Schedule.  Until the Closing, each
party hereto shall promptly notify the other party in writing of any fact,
change, condition, circumstance or occurrence or nonoccurrence of any event
relating to its own representations, warranties or covenants of which it is
aware that will or is reasonably likely to result in any of the conditions set
forth in Article VII of this Agreement becoming incapable of being satisfied;
provided, however, that the delivery of any notice pursuant to this
Section 5.13 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice. 
The Sellers may, from time to time, prior to or at the Closing, by
notice given in accordance with this Agreement, supplement or amend the
Disclosure Schedule to correct any matter that would otherwise constitute a
breach of any representation, warranty, covenant or agreement contained
herein.  If, pursuant to and in
accordance with Section 9.01(d), such a supplement or amendment of any section
of the Disclosure Schedule materially and adversely affects the benefits to be
obtained by the Purchaser under this Agreement, then the Purchaser shall have
the right to terminate this Agreement in accordance with Section 9.01(d), but such
termination shall be Purchaser’s sole remedy relating to matters set forth in
amendments or supplements to any section of the Disclosure Schedule to the
extent such amendment or supplement shall have been delivered on or prior to
the Due Diligence Expiration Date.  To
the extent any such amendment or supplement to any section of the Disclosure
Schedule shall be delivered following the Due Diligence Expiration Date,
Purchaser shall have the right to terminate this Agreement in accordance with
Section 9.01(d), provided, however, Purchaser and MCRLP shall
retain any and all rights it would otherwise have under this Agreement,
including without limitation Purchaser’s and MCRLP’s rights and remedies under
Article VIII.

 

Section 5.14.          Further Action.  The parties hereto shall use all reasonable
efforts to take, or cause to be taken, all appropriate action, to do or cause
to be done all things necessary, proper or advisable under applicable Law, and
to execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and consummate and make effective
the transactions contemplated by this Agreement in the most expeditious manner
practicable.

 

Section 5.15.          Conveyance Taxes.  The Purchaser shall be liable for, shall hold
the Sellers harmless against, and agrees to pay any and all Conveyance Taxes
that may be imposed upon, or payable or collectible or incurred in connection
with this Agreement and the transactions contemplated hereby.  The Purchaser and the Sellers agree to
cooperate in the execution and delivery of all instruments and certificates
necessary to enable the Purchaser to comply with any pre-Closing filing
requirements.

 

40

 

Section 5.16.          Insurance.  Sellers hereby covenant and agree to make any
claim, on behalf of the Companies and the Subsidiaries, at the request of the
Purchaser, for any Loss which is covered by an insurance policy owned by either
Seller and not included in the Assets and to use commercially reasonable
efforts in the recovery of said insurance proceeds.  Furthermore, the Sellers hereby covenant and
agree to pay to the Purchaser any insurance proceeds actually recovered from
said claims.  All rights to uncollected
proceeds which vested in the Sellers prior to the Closing Date shall be
conveyed, transferred and assigned to the Purchaser in connection with this
Agreement, and the Sellers shall waive any and rights or claims with respect to
such proceeds.

 

Section 5.17.          Transfer Restrictions.  Except as explicitly set forth herein, each
Seller agrees that the OP Units issued pursuant to this Agreement may not be
Transferred or redeemed for shares of MCRC’s common stock until after the third
anniversary of the Closing Date.

 

Section 5.18.          Transition Services.  The parties recognize that each of the
Purchaser and its Affiliates, on the one hand, and the Sellers and their
Affiliates, on the other, will need to provide and receive certain services
from the other following the Closing. 
Prior to the Closing, the parties shall identify all such services to be
provided by the Purchaser, the Companies and the Subsidiaries to the Sellers
and their Affiliate following the Closing and all such services to be provided
by the Sellers and their Affiliates to the Purchaser, the Companies and the
Subsidiaries following the Closing.  It
is agreed by the parties that among the issues addressed will be the extent to
which employees and former employees of Gale International and of Gale,
Wentworth & Dillon Management Co. will continue to participate and hold
account balances in the Gale Company Employee Savings Plan after the Closing,
and the extent to which they will cease to so participate and hold such account
balances after the Closing.  In that
regard, at the Closing, the Sellers and the Purchaser shall enter into a
transition services agreement, in form and on terms as shall be mutually agreed
upon by the parties, with respect to the services contemplated by this Section
5.18.

 

Section 5.19.          Economic Benefits of Assignment.  If any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise, or other
instrument or arrangement to which any of the Companies or any Subsidiary is a
party set forth on Section 3.04 of the Disclosure Schedule may not be
transferred or assigned without the consent, approval or waiver of a third
party and the transfer or assignment or attempted transfer or assignment would
constitute a breach thereof or a violation of any Law, nothing in this Agreement
or in any Ancillary Agreement will be deemed a transfer or assignment or an
attempted transfer or assignment thereof. 
The Sellers will use their commercially reasonable efforts, both before
and after the Closing to secure any such consents, approvals or waivers.  Without limiting any other provision of this
Agreement, if any such consents, approvals and waivers are not (for any reason)
obtained before the Closing, then the Sellers will cooperate (at their expense)
in any reasonable arrangement requested by the Purchaser and MCRLP to transfer
to the Purchaser the economic benefit for all periods after the Closing of any
such agreement as to which consent is not obtained, including by enforcement
for the benefit of the Purchaser of any and all rights of the Sellers against
any other party thereto, and all payments received by the Sellers under any
affected agreement for all periods after the Closing will be immediately paid
over to the Purchaser.  MCRLP and the
Purchaser’s consummation of the transactions contemplated in this

 

41

 

Agreement shall not abridge MCRLP’s, the
Purchaser’s or the Sellers’ obligations under this Section 5.19, which
obligations shall survive the execution and delivery hereof and the Closing,
and remain in full force and effect thereafter.

 

Section 5.20.          Delivery of 2004 Pro Forma
Financial Statements.  The Sellers
shall fully cooperate with each other to cause the Companies to deliver to
Purchaser not later than five (5) Business Days prior to the Due Diligence
Expiration Date, unaudited consolidating pro forma balance sheets and income
statements for the Reference Companies as of and for the fiscal year ended as
of December 31, 2004 (the “2004 Pro Forma Financial Statements”).

 

Section 5.21.          Preparation of Audited Financials.  The Sellers shall cause the Companies to
engage an independent accounting firm to commence an audit of the 2005
Financial Statements as soon as reasonably practicable following the date
hereof.  The parties acknowledge that
such audit will, in all likelihood, be completed following the Closing and
expressly agree that completion of such audit shall not be a condition to any
of the parties’ obligations hereunder. 
Nevertheless, from the date hereof until the completion of such audit,
the Sellers shall provide the auditors with such assistance as may reasonably
be requested by them in connection with the preparation of such audit.

 

Section 5.22.          Non-Portfolio Real Property
Interests.  Prior to the Closing, the
parties shall negotiate in good faith, and prepare and enter into an
appropriate acquisition agreement or agreements (each, a “Non-Portfolio Real
Property Interest Purchase Agreements”) as may be desirable to effect the
sale or transfer of the beneficial economic interests of those certain real
property interests identified on Exhibit H (each a “Non-Portfolio Interest”)
to the Purchaser from the parties identified thereon.  Exhibit H also sets forth the amount of
consideration to be paid for each Non-Portfolio Interest and (ii) the ownership
percentage each Non-Portfolio Interest represents in the real property related
thereto.  The Non-Portfolio Real Property
Interest Purchase Agreements shall (i) contain provisions analogous to Section
5.19 hereof with respect to the Non-Portfolio Interests and (ii) provide that
Sellers will be entitled to participate equally with Purchaser in the economic
benefit generated by the properties after Purchaser recovers the amount of
consideration it paid for such interest plus an agreed upon preferred
return.  The parties hereto hereby
further agree to consummate the transactions contemplated by the Non-Portfolio
Real Property Interest Purchase Agreements, on the terms and conditions
substantially set forth therein, simultaneously with or prior to the Closing.

 

Section 5.23.          REIT Issues.  The Sellers hereby acknowledge the status of
MCRC, MCRLP’s general partner, as a real estate investment trust (a “REIT”).  The Purchaser and MCRLP intend to operate and
manage the Companies and the Subsidiaries in a manner so that:  (a) MCRC’s gross income meets the tests
provided in Section 856(c)(2) and (3) of the Code; (b) MCRC’s assets meet the
tests provided in Section 856(c)(4) of the Code; and (c) MCRC minimizes
federal, state, local and excise taxes that may be incurred by MCRC, or any of
its Affiliates, including taxes under Sections 857(b), 860(c) or 4981 of the
Code.  The Sellers shall cooperate with
the Purchaser and MCRLP prior to Closing to structure the transactions
contemplated by this Agreement in a manner that will enable MCRC to continue to
qualify as a REIT on and after the Closing Date.  Notwithstanding anything in this Section 5.23
to the contrary, the Sellers shall have no obligation to take any action that
would increase a Seller’s liability for Taxes for a Pre-Closing Period or a
Pre-Closing Straddle Period.

 

42

 

Section 5.24.          Tax Matters.

 

(a)           The Sellers shall be liable for and timely pay any and all
Taxes with respect to the ownership or operations of the Companies or the
Subsidiaries for all taxable periods ending on or prior to the Closing.  Except as otherwise provided herein with
respect to Straddle Periods, Purchaser or MCRLP shall be liable for and timely
pay any and all Taxes with respect to the ownership or operations of the
Companies or the Subsidiaries for all taxable periods ending after the Closing.
In any case where applicable law does not permit any Company or any Subsidiary
to close its Tax year as of the Closing Date or in any case in which a Tax is
assessed with respect to a taxable period which includes the Closing Date (but
does not begin or end on that day), then Taxes, if any, attributable to the Tax
period of any Company or any Subsidiary beginning before and ending after the
Closing Date shall be allocated to and be payable by (i) the Sellers for the
period up to and including the Closing Date (the “Pre-Closing Straddle
Period”) and (ii) the Purchasers or MCRLP for the period after the Closing
Date (the “Post-Closing Straddle Period” and together with a Pre-Closing
Straddle Period, a “Straddle Period”). The Sellers shall prepare and
timely file all Tax Returns (including applicable filing extensions) for
taxable periods ended on or prior to the Closing (a “Pre-Closing Tax Return”);
provided, however, that the Sellers shall provide the Purchaser and MCRLP with
a copy of any such Pre-Closing Tax Return no later than fifteen (15) calendar
days prior to filing such Pre-Closing Tax Return and shall within five (5)
calendar days of filing provide the Purchaser and MCRLP with a copy of any such
Pre-Closing Tax Return filed with any taxing authority. All Pre-Closing Tax
Returns shall be prepared in a manner consistent with the reporting of all
items of income or loss on prior Tax Returns of any Company or any Subsidiary,
unless otherwise required by applicable laws. 
The Purchaser or MCRLP shall prepare and shall timely file (including
applicable filing extensions) or cause to be prepared and timely filed
(including applicable filing extensions) all Tax Returns which begin before the
Closing and end after end after the Closing (“Straddle Returns”).  Straddle Returns shall be prepared in a
manner consistent with the reporting of all items of income and loss on prior
Tax Returns of any Company or any Subsidiary, unless otherwise required by
applicable laws, and to the extent they involve an allocation of Taxes as to a
Pre-Closing Straddle Period shall be subject to Sellers’ approval, which shall
not be unreasonably withheld. Taxes payable with Straddle Returns shall be
apportioned to the Pre-Closing Straddle Period and Post-Closing Straddle
Period, as described above, based on an assumed taxable period ending on the
date of Closing; provided, however, that Taxes not based on income or receipts
shall be apportioned to the Pre-Closing Straddle Period and Post-Closing
Straddle Period based on the number of days in each such taxable period.

 

(b)           If any claim, demand, assessment (including a notice of
proposed assessment) or other assertion is made with respect to Taxes against
the Sellers or the Purchaser or MCRLP the calculation of which involves a
specific matter covered in this Agreement (“Tax Claim”) or if the
Purchaser or MCRLP receives any notice from any Governmental Authority with respect
to any current or future audit, examination, investigation or other proceeding
(“Proceeding”) involving the Sellers, the Purchaser or MCRLP or that
otherwise involves a specific matter covered in this Agreement that could
directly or indirectly materially affect the Sellers (adversely or otherwise),
then the Purchaser or MCRLP, as applicable, shall promptly notify SG (“Sellers’
Representatives”) of such Tax Claim or Proceeding.  Any Proceeding that would increase any
Seller’s liability for Taxes for a Pre-Closing Period or a Pre-Closing Straddle

 

43

 

Period or could give rise to a claim for
indemnification under this Agreement shall be considered material to Sellers.

 

(c)           Sellers shall have the right to control the defense,
settlement or compromise of any Proceeding or Tax Claim with respect to the
ownership or operations of the Companies or the Subsidiaries for any taxable
period ended on or prior to the Closing (“Pre-Closing Period”), unless
any such action would reasonably be expected to result in a  material adverse Tax effect or a liability or
material increase in liability to the Purchaser or MCRLP for any Tax period, in
which case, such action may not be taken without Purchaser’s or MCRLP’s consent.  The Purchaser or MCRLP shall have the right
to control the defense, settlement or compromise of any Proceeding or Tax Claim
with respect to the ownership or operations of the Companies or the
Subsidiaries for any taxable period ending after the Closing (“Post-Closing
Period”), unless any such action would reasonably be expected to result in
a material adverse Tax effect or a liability or material increase in liability
to Sellers for any Tax period, in which case, such action may not be taken
without Seller’s consent.  Subject to the
provision of this Section 5.24(c), neither Sellers nor the Purchaser or MCRLP
shall consent to the entry of any judgment or enter into any settlement with
respect to a Tax Claim or Proceeding without the prior written consent of the
other party; provided, that each such party shall keep the other party duly and
contemporaneously informed of the progress thereof to the extent that such
Proceeding or Tax Claim could directly or indirectly materially affect
(adversely or otherwise) the other party and shall afford the other party the
right to review and comment on any and all submissions made to the IRS or any
Governmental Authority with respect to such Tax Claim or Proceeding and shall
consider any such comments in good faith. 
As a condition to withholding its consent to a settlement proposal (i) a
party must have a reasonable basis to believe that such settlement would have a
material adverse Tax effect or material increase in liability to such party;
provided, that if for any period ending after the Closing a proposed settlement
does not increase Sellers’ liability for Taxes for a Pre-Closing Period or a
Pre-Closing Straddle Period and could not give rise to a claim for
indemnification pursuant to this Agreement, then such impact shall not be
deemed material to Sellers unless it is different than the impact to other
holders of O.P. Units who are not Sellers, and (ii) a party must believe, based
on the advice of a nationally recognized accounting or law firm, that it is
more likely than not that the position asserted by the party seeking consent
would prevail if it were to be asserted in a judicial proceeding.  A party withholding its consent shall offer
to assume the subsequent costs of defending and asserting the positions asserted
by such party, and shall indemnify the other party for any taxes and related
interest and penalties resulting from a subsequent judgment in excess of the
amounts that would have been imposed pursuant to the rejected settlement (but
not any other costs associated with such proceeding or any other issues
involved therein).

 

(d)           From and after the Closing, the parties shall provide each
other with such assistance as may reasonably be requested by any of them in
connection with (i) the preparation of any Tax Return, election, consent or
certificate required to be prepared by any party hereto or (ii) any Tax Claim
or Proceeding.  Such assistance shall
include making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder and
shall include providing copies of any relevant Tax Returns and supporting work
schedules.

 

44

 

(e)           The Sellers and the Purchaser shall discuss and consult,
in an attempt to reach agreement, an allocation of the purchase price (as
determined for federal income tax purposes) among the assets of the Companies
(the “Allocation”).  If the
parties cannot agree, then notwithstanding anything in 5.24(c) to the contrary,
any Tax Claim or Proceeding involving the Allocation shall be under the
exclusive control of the party against whom the Tax Claim is made and such
party shall be free to pursue and/or settle such Tax Claim without the approval
of the other party.

 

Article
VI

 

EMPLOYEE
MATTERS

 

Section 6.01.          Employee Benefits.  As of the Closing Date, the Purchaser shall
(and MCRLP shall cause the Purchaser to) cause the Companies and the
Subsidiaries to continue to employ all employees of Gale Services, Gale
Construction and the Subsidiaries (the “Company Employees”), with the
understanding that such employment shall be on the same terms as the Company
Employees are currently employed.  With
respect to such Company Employees, the Purchaser (or Gale Services, Gale
Construction or the Subsidiaries) shall (a) for a period of one (1) year
following the Closing, cause any Company Employee that was covered under a
medical or dental plan, disability benefit plan, 401(k) plan or life insurance
plan (collectively, the “Benefit Plans”) of Gale Services, Gale
Construction or any Subsidiary immediately prior to the Closing Date to receive
coverage on the Closing Date that is comparable in the aggregate to such
coverage provided to the Company Employees by the Company immediately prior to
the Closing Date subject to any applicable limitations arising from the
nondiscrimination requirements of the Code, (b) recognize the service completed
by the Company Employees for purposes of determining eligibility service and
vesting service under any employee benefit plan, program or arrangement
maintained by the Purchaser (or the Companies or any Subsidiary) for their
employees on or after the Closing Date to the same extent such service was
credited under any employee benefit plan, program or arrangement provided by
the Companies or any Subsidiary immediately prior to the Closing Date;
provided, that the foregoing shall not be construed to require crediting of
service that would result in violation of the nondiscrimination requirements of
the Code, duplication of benefits, service credit for benefit accruals, service
credit under a newly established plan for which prior service is not taken into
account, or employer contribution for any 401(k) plan, (c) cause to be waived
any pre-existing condition limitations under welfare benefit plans of the
Purchaser or its Affiliates in which the Company Employees participate (to the
extent those conditions were waived under the corresponding Plans of the
Companies or any Subsidiary), (d) cause to be credited any co-payments,
deductibles and out-of-pocket requirements incurred by the Company Employees
and their beneficiaries and dependents during the portion of the calendar year
prior to participation in the benefit plans provided by the Purchaser, and (e)
assume responsibility for the earned wages, compensation levels, vacation time,
bonuses (including stay or success bonuses) that are accrued on the Closing
Statement of Working Capital, commissions, and sick leave benefits due to the
Company Employees as of the Closing Date.

 

Section 6.02.          Former AT&T Employee Severance
Obligations.  After the Closing, if
the Purchaser, Gale Services, Gale Construction or any of the Subsidiaries
terminates the employment of any of the employees listed in Section 6.02 of the
Disclosure Schedule (the

 

45

 

“Former AT&T Employees”), the
Sellers shall reimburse the Purchaser for any amounts that shall be due and
payable by the Purchaser, the Companies or any Subsidiary to such Former
AT&T Employees pursuant to the AT&T Agreement, less any amounts
required to be reimbursed by AT&T pursuant to the terms of the AT&T
Agreement. Notwithstanding the foregoing, in no event shall Sellers reimburse
the Purchaser for any such amounts which may be due and payable to such Former
AT&T Employees if the AT&T Agreement shall, after the Closing, have (i)
expired in accordance with its terms or (ii) been amended, modified or extended
in a manner that adversely affects the payments required to be made by the
Company or any Subsidiary thereunder.

 

Article
VII

 

CONDITIONS
TO CLOSING

 

Section 7.01.          Conditions to Obligations of the
Sellers.  The obligations of the
Sellers to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions:

 

(a)           Representations, Warranties and Covenants.  (i) The representations and warranties of the
Purchaser and MCRLP contained in this Agreement which are qualified by
materiality shall be true and correct in all respects as of the Closing Date
and the representations and warranties of the Purchaser and MCRLP contained in
this Agreement which are not so qualified shall be true and correct in all
material respects as of the Closing Date, except to the extent such
representations and warranties are made as of another date, in which case such
representations and warranties shall be so true and correct as of such other
date and (ii) the covenants and agreements contained in this Agreement to be
complied with by MCRLP and the Purchaser on or before the Closing shall have
been complied with in all material respects.

 

(b)           Governmental Approvals.  All governmental approvals, consents and
waivers applicable to the sale and purchase of the Membership Interests
contemplated by this Agreement shall have expired or shall have been terminated
or shall have been received.

 

(c)           No Order.  No
Governmental Authority shall have enacted, issued, promulgated, enforced or
entered any Law or Governmental Order (whether temporary, preliminary or
permanent) that has the effect of making the transactions contemplated by this
Agreement or the Ancillary Agreements illegal or otherwise restraining or
prohibiting the consummation of such transactions unless same shall have
expired or shall have been terminated.

 

(d)           Closing of Non-Portfolio Real Property Interest
Purchase Agreements.  The Purchaser
and the Sellers shall have consummated the transactions contemplated by the
Non-Portfolio Real Property Interest Purchase Agreements.

 

(e)           No Litigation Threatened.  No Action having a reasonable likelihood of
prevailing shall have been instituted or threatened before a court or other
Governmental Authority to restrain, prohibit or materially delay any of the
transactions contemplated hereby; provided, that the Sellers shall not
be able to asset this condition if any Seller shall have instigated such
Action.

 

46

 

Section 7.02.          Conditions to Obligations of the
Purchaser.  The obligations of MCRLP
and the Purchaser to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or written waiver, at or prior to the
Closing, of each of the following conditions:

 

(a)           Representations, Warranties and Covenants.  (i) The representations and warranties of the
Sellers contained in this Agreement which are qualified by Material Adverse
Effect or materiality shall be true and correct in all respects as of the
Closing and the representations and warranties of the Sellers contained in this
Agreement which are not qualified by Material Adverse Effect or materiality
shall be true and correct in all material respects as of the Closing Date,
other than such representations and warranties that are made as of another
date, in which case such representations and warranties shall be so true and
correct as of such other date, and (ii) the covenants and agreements contained
in this Agreement to be complied with by the Sellers at or before the Closing
shall have been complied with in all material respects.

 

(b)           Governmental Approvals.  All governmental approvals, consents, and
waivers applicable to the sale and purchase of the Membership Interests
contemplated by this Agreement shall have expired or shall have been terminated
or shall have been received.

 

(c)           No Order.  No
Governmental Authority shall have enacted, issued, promulgated, enforced or
entered any Law or Governmental Order (whether temporary, preliminary or
permanent) that has the effect of making the transactions contemplated by this
Agreement or the Ancillary Agreements illegal or otherwise restraining or
prohibiting the consummation of such transactions unless same shall have
expired or shall have been terminated.

 

(d)           No Litigation Threatened.  No Action having a reasonable likelihood or
prevailing shall have been instituted or threatened before a court or other
Governmental Authority to restrain, prohibit or materially delay any of the
transactions contemplated hereby; provided, that the Purchaser shall not
be entitled to assert this condition if MCRLP or the Purchaser (or any of their
Affiliates) shall have instigated such Action.

 

(e)           2006 Interim Financial Statements.  The 2006 Interim Financial Statements shall
have been delivered to the Purchaser.

 

(f)            Repayment of Indebtedness.  The Sellers shall have caused the repayment
of all indebtedness identified on Section 3.16(a)(ii) of the Disclosure
Schedule as indebtedness that will be repaid prior to or at Closing and all
liens or guaranties with respect to such indebtedness shall be discharged.

 

(g)           Closing of Non-Portfolio Real Property Interest
Purchase Agreements.  The Purchaser
and the Sellers shall have consummated the transactions contemplated by the
Non-Portfolio Real Property Interest Purchase Agreements.

 

(h)           Due Diligence Expiration Date.  The Due Diligence Expiration Date shall have
passed without the Purchaser having terminated this Agreement pursuant to
Section 9.01(c).

 

Notwithstanding anything contained herein to
the contrary, if the parties to the Real Estate Agreement shall consummate the
transactions contemplated by the Real Estate Agreement,

 

47

 

unless this Agreement shall have been
terminated prior to such consummation pursuant to Article IX, MCRLP and the
Purchaser shall be deemed to have automatically waived all such conditions to
Closing contained in this Article VII, provided, however, the
Purchaser shall retain any and all rights it shall otherwise have under this
Agreement, including without limitation the Purchaser’s rights and remedies
under Article VIII.

 

Article
VIII

 

INDEMNIFICATION

 

Section 8.01.          Survival of Representations and
Warranties.  The representations and
warranties of the parties hereto contained in this Agreement shall survive the
Closing for a period of eighteen (18) months after the Closing, except that (i)
the representations and warranties of Sellers in Section 3.07 shall survive for
a period of two (2) years after the Closing, (ii) the representations and
warranties of Sellers in Sections 3.01, 3.02, 3.03 and 3.14 shall survive for a
period of three (3) years after the Closing, and (iii) the representations and
warranties of Sellers in Section 3.15 shall survive indefinitely; provided,
that any claim made with reasonable specificity by the party seeking to be
indemnified within the time periods set forth in this Section 8.01 shall
survive until such claim is finally and fully resolved.  All covenants and agreements contained herein
shall remain in full force and effect for a period of eighteen (18) months
following the Closing, except for those covenants and agreements that by their
terms are to be performed in whole or in part after the Closing, which shall
remain in full force and effect for a period equal to the later of eighteen
(18) months after the Closing or eighteen (18) months following the date by
which such covenant or agreement is required to be performed; provided,
however, that any claim made with reasonable specificity by the party seeking
to be indemnified within the time periods set forth in this Section 8.01 shall
survive until such claim is finally and fully resolved.

 

Section 8.02.          Indemnification by the Sellers.  Subject to Section 8.07, MCRLP the Purchaser
and their Affiliates, officers, directors, employees, agents, successors and
assigns (each, a “Purchaser Indemnified Party”) shall be indemnified and
held harmless by the Sellers, jointly and severally, for and against all
losses, damages, claims, costs and expenses, interest, awards, judgments and penalties
(including reasonable attorneys’ and consultants’ fees and expenses) actually
suffered or incurred by them (hereinafter, a “Loss” or, collectively “Losses”),
arising out of or resulting from:  (a)
the breach of any representation or warranty made by the Sellers contained in
this Agreement, (b) the breach of any covenant or agreement by the Sellers
contained in this Agreement, (c) any of the Sellers (or any predecessor of any
of the Sellers) having been a member of an “affiliated group” (as defined in
Section 1504(a) of the Code) for any consolidated, combined or unitary foreign,
state or local tax purposes, (d) any Tax sharing, allocation or similar
agreement to which the Companies and the Subsidiaries are a party prior to or
as of the Closing, (e) all Taxes attributable to the activities of Gale
Services, Gale Construction or any Subsidiary attributable to the period on or
prior to the Closing except as set forth as a reserve or liability on the Final
Financial Statements or (f) the Excluded Assets (including the employment
agreements identified on Section 1.01(b) of the Disclosure Schedule).

 

Section 8.03.          Indemnification by the Purchaser.  The Sellers and their Affiliates, officers,
directors, employees, agents, successors and assigns (each, a “Seller
Indemnified

 

48

 

Party”) shall be indemnified and held harmless by
MCRLP and the Purchaser, jointly and severally, for and against any and all
Losses, arising out of or resulting from: 
(a) the breach of any representation or warranty made by the Purchaser
or MCRLP contained in this Agreement, (b) the breach of any covenant or
agreement by the Purchaser or MCRLP contained in this Agreement, or (c) any
Liability of Gale Services, Gale Construction or any Subsidiary arising before
or after the Closing, except to the extent the Sellers are obligated to
indemnify the Purchaser Indemnified Parties pursuant to Section 8.02.

 

Section 8.04.          Limits on Indemnification.

 

(a)           No claim may be asserted nor may any Action be commenced
against either party for breach of any representation, warranty, covenant or
agreement contained herein, unless written notice of such claim or action is
received by such party describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or Action on or
prior to the date on which the representation, warranty, covenant or agreement
on which such claim or Action is based ceases to survive as set forth in
Section 8.01, irrespective of whether the subject matter of such claim or
action shall have occurred before or after such date.

 

(b)           Notwithstanding anything to the contrary contained in this
Agreement:  (i) an Indemnifying
Party shall not be liable for any claim for indemnification pursuant to Sections 8.02(a)
(other than with respect to the representation and warranty set forth in
Section 3.14(i)) or 8.03(a), unless and until the aggregate amount of
indemnifiable Losses which may be recovered from the Indemnifying Party equals
or exceeds $250,000 (the “Indemnification Threshold”) after which the
Indemnifying Party shall fully indemnify the other party for the total of such
Losses; (ii) the maximum amount of indemnifiable Losses which may be
recovered from an Indemnifying Party arising out of or resulting from the
causes set forth in Section 8.02(a) (other than with respect to the
representation and warranty set forth in Section 3.14(i)) or 8.03(a) shall be
an amount equal to $4,000,000,  (iii)
neither party hereto shall have any liability under any provision of this
Agreement or the Ancillary Agreements for any punitive damages, and (iv) the
Sellers shall have no obligation to indemnify any Purchaser Indemnified Party
for any breach of the Sellers representations, warranties, covenants or
agreements contained herein which is corrected pursuant to an amendment or
supplement to the Disclosure Schedule made prior to the Due Diligence
Expiration Date pursuant to Section 5.13.

 

(c)           For all purposes of this Article VIII, “Losses”
shall be net of any insurance or other recoveries actually received by the
Indemnified Party or its Affiliates in connection with the facts giving rise to
the right of indemnification.

 

Section 8.05.          Notice of Loss; Third Party Claims.

 

(a)           An Indemnified Party shall give the Indemnifying Party
notice of any matter which an Indemnified Party has determined has given or
could give rise to a right of indemnification under this Agreement, within
sixty (60) days of such determination, stating the amount of the Loss, if
known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises.

 

49

 

(b)           If an Indemnified Party shall receive
notice of any Action, audit, claim, demand or assessment (each, a “Third
Party Claim”) against it which may give rise to a claim for Loss under this
Article VIII, within thirty (30) days of the receipt of such notice, the
Indemnified Party shall give the Indemnifying Party notice of such Third Party
Claim; provided, however, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations under this
Article VIII except to the extent that such failure results in a detriment
to the Indemnifying Party and shall not relieve the Indemnifying Party from any
other Liability that it may have to any Indemnified Party other than under this
Article VIII. The Indemnifying Party shall be entitled to assume and
control the defense of such Third Party Claim at its expense and through
counsel of its choice if it gives notice of its intention to do so to the
Indemnified Party within fifteen (15) days of the receipt of such notice from
the Indemnified Party. If the Indemnifying Party elects to undertake any such
defense against a Third Party Claim, the Indemnified Party may participate in
such defense at its own expense. The Indemnified Party shall fully cooperate
with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party’s expense, all witnesses,
pertinent records, materials and information in the Indemnified Party’s
possession or under the Indemnified Party’s control relating thereto as is
reasonably required by the Indemnifying Party. If the Indemnifying Party elects
to direct the defense of any such claim or proceeding, the Indemnified Party
shall not pay, or permit to be paid, any part of such Third Party Claim unless
the Indemnifying Party consents in writing to such payment or unless the
Indemnifying Party withdraws from the defense of such Third Party Claim
liability or unless a final judgment from which no appeal may be taken by or on
behalf of the Indemnifying Party is entered against the Indemnified Party for
such Third Party Claim. If the Indemnifying Party assumes the defense of any
such claims or proceeding pursuant to this Section 8.05 and proposes to settle
such claims or proceeding prior to a final judgment thereon or to forgo any
appeal with respect thereto, then the Indemnifying Party shall give the
Indemnified Party prompt written notice thereof and the Indemnified Party shall
have the right to participate in the settlement or assume or reassume the
defense of such claims or proceeding. The Indemnifying Party shall not enter
into any settlement or compromise of any action, suit or proceeding or consent
to the entry of any judgment (i) which does not include as an unconditional
term thereof the delivery by the claimant or plaintiff to the Indemnified Party
of a written release from all liability in respect of such action, suit or
proceeding or (ii) for other than monetary damages to be borne in full by the
Indemnifying Party without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld, conditioned or delayed.

 

Section 8.06.          Remedies.   MCRLP,
the Purchaser and each of the Sellers acknowledge and agree that (i) following
the Closing, the indemnification provisions of Section 8.02 and Section 8.03
shall be the sole and exclusive remedies of the parties for any breach by the
other party of the representations and warranties in this Agreement and for any
failure by the other party to perform and comply with any covenants and agreements
contained in this Agreement, except that if any of the provisions of this
Agreement are not performed in accordance with their terms or are otherwise
breached, the parties shall be entitled to specific performance of the terms
thereof in addition to any other remedy at Law or equity and (ii) anything
herein to the contrary notwithstanding, no breach of any representation,
warranty, covenant or agreement contained herein shall give rise to any right
on the part of MCRLP, the Purchaser or the Sellers, after the consummation of
the purchase and sale of the Membership Interests contemplated by this
Agreement, to rescind this Agreement or any of the transactions

 

50

 

contemplated hereby. Each party
hereto shall take all reasonable steps to mitigate its Losses upon and after
becoming aware of any event which could reasonably be expected to give rise to
any Losses. The Purchaser shall only have the right to set off any Losses for
which the Purchaser Indemnified Parties are entitled to indemnification
pursuant to Section 8.02(a) from any payment required to be made to the Sellers
pursuant to the Earnout. Notwithstanding the foregoing and after no additional Earnout
payments are capable of being earned, if any Losses, or any portion thereof, for
which the Purchaser Indemnified Parties are entitled to indemnification
pursuant to Section 8.02(a) were not satisfied by set off from the Earnout, the
Sellers may elect, at their sole option, to satisfy their obligations for such
Losses by either (i) paying any such obligations in cash, or (ii) instructing Purchaser
or MCRLP to cancel such number of O.P. Units held in the name of the
Indemnifying Party as shall be equal to (x) the aggregate dollar value of the
Loss not otherwise set off from the Earnout divided by (y) $44.50 (or any
combination of clauses (i) and (ii)).

 

Article
IX

TERMINATION, AMENDMENT AND WAIVER

 

Section 9.01.          Termination.  This Agreement may be terminated at any time
prior to the Closing:

 

(a)           by either the Sellers, or the
Purchaser, if the Closing shall not have occurred by the termination date
specified in the Real Estate Agreement (including any extension thereof); provided,
however, that the right to terminate this Agreement under this
Section 9.01(a) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have been the cause of, or
shall have resulted in, the failure of the Closing to occur on or prior to such
date;

 

(b)           by
either the Purchaser or the Sellers in the event that any Governmental Order
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement shall have become final and nonappealable;

 

(c)           by
the Purchaser, if it provides written notice to the Sellers of its intention to
terminate this Agreement by not later than 5:00 pm, Eastern Standard Time, on
the Due Diligence Expiration Date;

 

(d)           by the Purchaser, if (i) a supplement
or amendment of any section of the Disclosure Schedule made by the Sellers
pursuant to Section 5.13 materially and adversely affects the benefits to be
obtained by the Purchaser under this Agreement and (ii) any breach of a
representation, warranty, covenant or agreement referred to in such supplement
or amendment cannot be or has not been cured within thirty (30) days after such
supplement or amendment is made by the Sellers;

 

(e)           by the Sellers, if MCRLP or
the Purchaser shall have breached any of its representations, warranties,
covenants or agreements contained in this Agreement which would give rise to
the failure of a condition set forth in Article VII, which breach cannot be or
has not

 

51

 

been cured within thirty (30) days after the giving of written notice
by the Sellers to the Purchaser specifying such breach;

 

(f)            by
the Purchaser, if the Sellers shall have breached any of their representations,
warranties, covenants or agreements contained in this Agreement which would
give rise to the failure of a condition set forth in Article VII, which breach
cannot be or has not been cured within thirty (30) days after the giving of
written notice by the Purchaser to the Sellers specifying such breach; or

 

(g)           by
the mutual written consent of the Sellers and the Purchaser.

 

Notwithstanding
anything contained herein to the contrary, if the parties to the Real Estate
Agreement shall consummate the transactions contemplated by the Real Estate
Agreement, unless this Agreement shall have been terminated prior to such
consummation pursuant to this Article IX, neither MCRLP nor the Purchaser shall
have any right to terminate this Agreement.

 

Section 9.02.          Effect of Termination.

 

In the event
of termination of this Agreement as provided in Section 9.01, this
Agreement shall forthwith become void and there shall be no liability on the
part of either party hereto except (a) as set forth in Section 5.03
and Article X and (b) that nothing herein shall relieve either party from
liability for any breach of this Agreement occurring prior to such termination.

 

Article
X

GENERAL PROVISIONS

 

Section 10.01.        Expenses.  Except as
otherwise specified in this Agreement, all costs and expenses, including, fees
and disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be borne by the party incurring such costs and expenses,
whether or not the Closing shall have occurred.

 

Section 10.02.        Notices.  All notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given
or made upon receipt) by delivery in person, by an internationally recognized
overnight courier service, by e-mail (read receipt requested), by facsimile or registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties hereto at the following addresses (or at such other address for a party
as shall be specified in a notice given in accordance with this
Section 10.02):

 

If to the Sellers:

 

c/o The Gale Company, Suite 200

Florham Park, New Jersey 07932

Telecopy:  (973) 245-3600

Telephone:  (973) 301-9500

E-Mail: SG@TheGaleCompany.com

Attention: Mr. Stanley C. Gale

 

52

 

with a copy (which shall not constitute
notice) to:

 

Greenberg Traurig, LLP

200 Park Avenue

New York, NY  10166

Telecopy:  (212) 801-6400

Telephone: (212) 801-9200

E-Mail: Ivanhoer@gtlaw.com and Gerasimovichk@gtlaw.com    

Attention:  Robert Ivanhoe, Esq. and
Kenneth A. Gerasimovich, Esq.

 

If to MCRLP or the Purchaser:

 

c/o Mack-Cali Realty Corporation

11 Commerce Drive

Cranford, New Jersey  07016

with two (2)

separate copies

of the notice sent

to the attention of:

 

Telecopy:  (908) 272-0214

Telephone:  (908) 272-2009

Email:  mhersh@mack-cali.com

Attention:  Mitchell E. Hersh

President and Chief Executive Officer

 

And

 

Telecopy:  (908) 272-0485

Telephone:  (908) 272-2612

Email:  rthomas@mack-cali.com

Attention:  Roger W. Thomas

Executive Vice President and General Counsel

 

with a copy (which shall not constitute
notice) to:

 

Pryor Cashman Sherman & Flynn LLP

410 Park Avenue

New York, New York 10022

Telecopy:  (212) 798-6329

Telephone:  (212) 326-0133

Email:  bhornick@pryorcashman.com

Attention:  Blake Hornick

 

And

 

53

 

Seyfarth Shaw LLP

1270 Avenue of the Americas

25th Floor

New York, New York 10020

Telecopy:  (212) 218-5527

Telephone:  (212) 218-5620

Email:  jnapoli@seyfarth.com

Attention:  John P. Napoli

 

Section 10.03.        Public Announcements; Confidentiality.  Upon
the execution of this Agreement, the Purchaser and MCRLP shall have the right
to make such public announcements or filings as may be required by (i) the
Securities Act, (ii) the Securities Exchange Act, (iii) the rules and listing
standards of the New York Stock Exchange, Inc., (iv) any other law of a
jurisdiction to which MCRLP is subject, or (v) any oral questions,
interrogatories, requests for information, subpoena, civil investigative
demand, or similar process required by applicable rules, laws or regulations by
any court, law or administrative authority to which Purchaser and MCRLP are
subject. Purchaser and MCRLP also shall have the right to make such public
announcements or filings as they may deem reasonably prudent, and shall be
entitled to make such filings or announcements upon advice of counsel as may be
otherwise be deemed necessary. In this 
connection, it should be noted that MCRLP has determined that the entry
into this Agreement will need to be disclosed within four (4) business days of
its execution on a Current Report on Form 8-K under Item 1.01 thereof and that
the Agreement will be filed as an exhibit thereto or be filed as an exhibit to
MCRLP’s next following periodic report filed pursuant to the Securities
Exchange Act. Sellers may make such public disclosures as are required by Law. Each
of Sellers, Purchaser and MCRLP hereby agree to provide the non-disclosing
parties as much advance notice as reasonably possible with respect to the
nature of such disclosure, cooperate fully as to the timing and contents of
such disclosure and review in good faith the suggestions of the other party
with respect to the contents of such disclosure.

 

Section 10.04.        Severability.  If any
term or other provision of this Agreement is invalid, illegal or incapable of
being enforced by any Law or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect for so long
as the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to either party
hereto. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated by this Agreement are consummated as originally
contemplated to the greatest extent possible.

 

Section 10.05.        Entire Agreement.  This
Agreement (including the Exhibits and the Disclosure Schedule) and the
Ancillary Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, between the Sellers and the
Purchaser with respect to the subject matter hereof and thereof.

 

Section 10.06.        Assignment.   This
Agreement may not be assigned by operation of Law or otherwise without the
prior express written consent of the Sellers, and the Purchaser or

 

54

 

MCRLP which consent may be
granted, conditioned, delayed or withheld in the sole discretion of the Sellers
or the Purchaser or MCRLP, as the case may be. Notwithstanding the foregoing,
the Purchaser may assign any or all of its interests in this transaction to one
or more Affiliates, provided, that any such assignment shall not relieve
the Purchaser from its obligations hereunder.

 

Section 10.07.        Amendment.  This
Agreement may not be amended or modified except (a) by an instrument in
writing signed by, or on behalf of, the Sellers and the Purchaser or MCRLP or
(b) by a waiver in accordance with Section 10.08.

 

Section 10.08.        Waiver.  Any party to this Agreement may
(a) extend the time for the performance of any of the obligations or other
acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document delivered
by the other party pursuant hereto, or (c) waive compliance with any of
the agreements of the other party or conditions to such party’s obligations
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition of this Agreement. The failure of either party hereto
to assert any of its rights hereunder shall not constitute a waiver of any of
such rights.

 

Section 10.09.        No Third Party Beneficiaries.  This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors and permitted assigns and nothing
herein, express or implied (including the provisions of Article VI relating to
employee matters and Article VIII relating to indemnified parties), is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever, including any rights of employment
for any specified period, under or by reason of this Agreement.

 

Section 10.10.        Currency.  Unless
otherwise specified in this Agreement, all references to currency, monetary
values and dollars set forth herein shall mean United States (U.S.) dollars and
all payments hereunder shall be made in United States dollars.

 

Section 10.11.        Governing Law.  This
Agreement and all others arising out of or relating to this Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware. All Actions arising out of or relating to this Agreement shall be
heard and determined exclusively in any New York federal court sitting in the
Borough of Manhattan of The City of New York; provided, however, that if such
federal court does not have jurisdiction over such Action, such Action shall be
heard and determined exclusively in any New York state court sitting in the
Borough of Manhattan of The City of New York. Consistent with the preceding
sentence, the parties hereto hereby (a) submit to the exclusive jurisdiction of
any federal or state court sitting in the Borough of Manhattan of The City of
New York for the purpose of any Action arising out of or relating to this
Agreement brought by any party hereto and (b) irrevocably waive, and agree not
to assert by way of motion, defense, or otherwise, in any such Action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution,
that the Action is brought in an inconvenient forum, that the venue of the
Action is improper, or that this

 

55

 

Agreement or the transactions
contemplated by this Agreement may not be enforced in or by any of the
above-named courts.

 

Section 10.12.        Waiver of Jury Trial.  The
parties hereto hereby waive to  the
fullest extent permitted by applicable law any right it may have to a trial by
jury with respect to any litigation directly or indirectly arising out of,
under or in connection with this Agreement or the transactions contemplated by
this Agreement. Each of the parties hereto hereby (a) certifies that no
representative, agent or attorney of the other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it has been induced to
enter into this Agreement and the transactions contemplated by this Agreement,
as applicable, by, among other things, the mutual waivers and certifications in
this Section 10.12.

 

Section 10.13.        Counterparts.  This
Agreement shall not be effective or binding until such time as it has been
executed and delivered by all parties hereto. This Agreement may be executed
and delivered (including by facsimile transmission or portable document format
(PDF)) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.

 

Section 10.14.        Cooperation.  Prior to
and after the Closing, each party hereto shall, from time to time, execute,
acknowledge and deliver such further instruments, in recordable form, if
necessary, and perform such additional acts, as the other party may reasonably
request in writing in order to effectuate the intent of this Agreement, within
thirty (30) days of the request. Except with respect to the Sellers’ admission
to MCRLP as limited partners as contemplated herein, nothing contained in this
Agreement shall be deemed to create any rights or obligations of partnership,
joint venture or similar association between the Sellers and Purchaser or MCRLP.
This Agreement shall be given a fair and reasonable construction in accordance
with the intentions of the parties hereto, and without regard to or aid of
canons requiring construction against the Sellers, Purchaser and MCRLP or the
party whose counsel drafted this Agreement. The provisions of this Section
10.14 shall survive the Closing.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

56

 

IN WITNESS
WHEREOF, the Purchaser, MCRLP and each of the Sellers have executed or have
caused this Membership Interest Purchase and Contribution Agreement to be
executed by their respective officers or Persons thereunto duly authorized as
of the date first written above.

 

	
   

  	
  MACK-CALI REALTY ACQUISITION CORP.,

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MITCHELL E. HERSH

  	
   

  
	
   

  	
  Name: Mitchell E. Hersh

  	
   

  
	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  MACK-CALI REALTY L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Mack-Cali Realty Corporation,

  
	
   

  	
   

  	
  a Maryland corporation, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MITCHELL E. HERSH

  	
   

  
	
   

  	
  Name: Mitchell E. Hersh

  
	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  SCG HOLDING CORP.

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ STANLEY C. GALE

  	
   

  
	
   

  	
  Name: Stanley C. Gale

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  STANLEY C. GALE

  
	
   

  	
   

  
	
   

  	
  /s/ STANLEY C. GALE

  	
   

  
								

 

 

EXHIBIT B

 

PAYMENTS TO THE SELLERS

 

	
  Name

  	
   

  	
  Ownership Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stanley C. Gale

  	
   

  	
  99

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  SCG Holding Corp.

  	
   

  	
  1

  	
  %

  

 

 

EXHIBIT C

 

MACK-CALI REALTY, L.P. UNIT CERTIFICATE

 

* SEE RESTRICTIVE LEGENDS ON SECOND PAGE *

 

MACK-CALI REALTY, L.P.

A DELAWARE LIMITED PARTNERSHIP

 

	
  Number:

  	
          

  	
   

  	
  Units:

  	
           

  

 

 

This is to certify that                                  
is the owner of                                                        
(          ) paid Common
Units of Mack-Cali Realty, L.P., a Delaware limited partnership (the “Partnership”),
transferable only on the books of the Partnership by the holder hereof in
person or by the duly authorized Attorney upon surrender of this Certificate
properly endorsed.

 

WITNESS, the seal of the
Partnership and the signature of its duly authorized General Partner.

 

Dated:             

 

	
   

  	
  MACK-CALI
  REALTY, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Mack-Cali Realty
  Corporation, its

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Roger W. Thomas

  
	
   

  	
   

  	
  Executive Vice President

  

 

-SEAL-

 

 

REFERENCE IS MADE TO THE SECOND AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT DATED AS OF DECEMBER 11, 1997 OF MACK-CALI
REALTY, L.P., AS AMENDED (THE “SECOND AMENDED AND RESTATED PARTNERSHIP
AGREEMENT”) FOR THE RIGHTS OF THE COMMON UNITS REPRESENTED BY THIS CERTIFICATE.

 

THE COMMON UNITS REPRESENTED BY THIS CERTIFICATE OR
INSTRUMENT MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE SECOND
AMENDED AND RESTATED PARTNERSHIP AGREEMENT, AND THAT CERTAIN MEMBERSHIP
INTEREST PURCHASE AND CONTRIBUTION AGREEMENT BY AND AMONG MR. STANLEY C. GALE,
SCG HOLDING CORP., MACK-CALI REALTY ACQUISITION CORP. AND MCRLP DATED AS OF
MARCH        , 2006 (A COPY OF WHICH IS ON
FILE WITH MCRLP; THE “PURCHASE AGREEMENT”). EXCEPT AS OTHERWISE PROVIDED IN
SUCH AGREEMENTS, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE COMMON UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR (B) IF MCRLP HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER. IN ADDITION, THE COMMON UNITS ARE SUBJECT TO THE PROVISIONS OF
SECTION 5.17 OF THE PURCHASE AGREEMENT.

 

THE PARTNERSHIP WILL FURNISH TO EACH HOLDER WHO SO
REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF UNITS OR
SERIES THEREOF WHICH THE PARTNERSHIP IS AUTHORIZED TO ISSUE AND OF THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. ANY
SUCH REQUEST IS TO BE ADDRESSED TO THE PARTNERSHIP AT ITS PRINCIPAL PLACE OF
BUSINESS.

 

FOR VALUE RECEIVED,                                               
hereby sells, assigns and transfers unto                                                                                                    Common
Units represented by the within Certificate, and do hereby irrevocably
constitute and appoint                                                 
Attorney to transfer the said Common Units on the books of the within named
Partnership with full power of substitution in the premises.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT D

 

EARNOUT

 

Section 1                Definitions.

 

Section 1.01           Defined Terms. When used in
this Exhibit D, the following terms shall have the meanings specified therefor
below:

 

“Anniversary
Year” means, as applicable, the First Anniversary Year, the Second
Anniversary Year or the Third Anniversary Year.

 

“AT&T”
means AT&T Corporation.

 

“AT&T
Earnout Payment” means any payment made pursuant to Section 2.01 of this
Exhibit D.

 

“AT&T
Gross Income” means Gross Income (excluding directly reimbursed expenses)
from AT&T or a replacement source of new business (which may be from an
existing client to the extent such existing client generates additional new or
incremental business) procured primarily by the Sellers and/or employees or officers
of the Purchaser, the Companies or the Subsidiaries, and as reasonably agreed
in good faith between the Purchaser and the Sellers.

 

“AT&T
Threshold” has the meaning specified in Section 2.01 of this Exhibit D.

 

“Budget and
Operating Plan” means collectively, the annual budget and the operating plan for
the Companies and the Subsidiaries as approved by the Purchaser and the
Sellers.

 

“Certified
Balance Sheets and Income Statements” means unaudited
consolidating/combining balance sheets and income statements of the Business as
of and for the period ended as of the last day of each Anniversary Year,
accompanied by a statement signed by the chief financial officer of MCRLP on
behalf of the Purchaser certifying that such balance sheets and income
statements are prepared in accordance with GAAP (but which lack footnotes and
other presentation items required under GAAP), in a form similar to the 2005
Financial Statements and are true, correct and complete in all material
respects as at the respective dates thereof and for the respective periods
indicated therein.

 

“Earnout
Payment” has the meaning specified in Section 3.02(a) of this Exhibit D.

 

“First
Anniversary Year” means the one year period between the first day of the
first full calendar month following the Closing Date and ending on the last day
of the twelfth full calendar month thereafter, provided, however,
to the extent the Closing Date occurs on one of the first ten days of a
calendar month, the First Anniversary Year means the one year period beginning
the first day of the calendar month in which the Closing occurs and ending on
the last day of the twelfth calendar month thereafter.

 

D-1

 

“Gross
Income” means total revenues generated by the Company and the Subsidiaries,
regardless of where recorded, operating in accordance with the provisions of
Section 5 of this Exhibit D for the Anniversary Year in question, determined in
accordance with GAAP consistently applied by the Companies and the
Subsidiaries, excluding the effects of any amortization of or other purchase
accounting adjustments required by GAAP, and reduced by: (a) reimbursement
revenue, (including, but not limited to, salary reimbursement fee, insurance
reimbursement fee and the like) except to the extent of the gross profit
associated with all reimbursed salaries for any new or materially amended
contract(s); (b) interest income; (c) direct construction costs; (d) other
income not derived from the Business and (e) reversal of expenses recognized in
prior periods. Gross Income shall be determined without duplication. Gross
Income will also include an additional three (3) months of revenue determined
as of the last full calendar month prior to the sale of any property which is
to be acquired as part of the Real Estate Agreement and the transactions
contemplated thereby, which is currently managed by the Company and the
Subsidiaries and for which MCRLP or its affiliates have sole and absolute
authority to cause such sale to occur, but only if such sale results in a
termination of the relevant agreement with respect to such property.
Notwithstanding anything else to the contrary contained in this Agreement,
Gross Income is intended to be calculated in accordance with the manner in
which the original pro-forma income statement (which was prepared by the
Sellers and provided to MCRLP and the Purchaser as part of their initial
evaluation of the Companies, and that formed the basis for the Modeled Gross
Income that is the basis of the earnout calculations contained in this Exhibit
D) was prepared.

 

“Gross
Income Earnout” means, in any Anniversary Year, an amount equal to
$2,500,000 multiplied by a fraction, the numerator of which shall be the Gross
Income earned during such Anniversary Year and the denominator of which shall
be the Modeled Gross Income, but in no event shall the fraction be greater than
1.00.

 

“Gross
Income Earnout Shortfall” means, in any Anniversary Year, an amount by
which $2,500,000 exceeds the actual Gross Income Earnout paid for such Anniversary
Year.

 

“Gross
Income Rollover” means, in any Anniversary Year, an amount, if any, equal
to the amount by which Gross Income for such Anniversary Year exceeds the Modeled Gross Income.

 

“Gross
Income Threshold” means an amount equal to $15,000,000.

 

“Land
Management Agreement” means that certain agreement by and between Bellemead
Development Corporation as Owner and PW/MS OP Sub III, LLC as Manager, dated
November 7, 1997.

 

“Modeled
Gross Income” means, in the First Anniversary Year, an amount equal to
$21,700,000, and in the Second Anniversary Year and the Third Anniversary Year,
an amount equal to $20,000,000, plus the amount, if any, of gross revenues
payable during the relevant Anniversary Year pursuant to the Land Management
Agreement, as such agreement may have been renewed, determined by reference to
the period of time during such Anniversary Year in which the Land Management
Agreement continues and the gross revenues payable thereunder during such
period.

 

D-2

 

“Modeled
NOI” means an amount equal to $8,000,000.

 

“Net Income
Earnout” means, in any Anniversary Year, an amount equal to $2,500,000
multiplied by a fraction, the numerator of which shall be the NOI earned during
such Anniversary Year and the denominator of which shall be the Modeled NOI,
but in no event shall the fraction be greater than 1.00.

 

“Net Income
Earnout Shortfall” means, in any Anniversary Year, an amount by which
$2,500,000 exceeds the actual Net Income Earnout paid for such Anniversary
Year.

 

“Net Income
Rollover” means, in any Anniversary Year, an amount, if any, equal to the
amount by which NOI for such Anniversary Year exceeds Modeled
NOI.

 

“Net Income
Threshold” means an amount equal to $5,000,000.

 

“NOI”
means Gross Income plus reimbursement revenue (including, but not limited to,
salary reimbursement fee, insurance reimbursement fee and the like) to the
extent deducted in arriving at Gross Income of the Companies and the
Subsidiaries operating in accordance with the provisions of Section 5 of this
Exhibit D after deducting, regardless of where recorded, for all expenses of
the Companies and the Subsidiaries (including (A) any severance payments made
within one (1) year of the Closing Date to employees of the Companies or the
Subsidiaries as of the Closing Date, and (B) thereafter, any other severance
payments made only in the ordinary course of the Business), as determined in
accordance with GAAP consistently applied by the Companies and the
Subsidiaries; provided that, in all such calculations of NOI there shall be
excluded and no effect shall be given to (i) any creation, restoration,
elimination or reversal of additional reserves or allowances on receivables
included in the final Closing Statement of Working Capital, (ii) any amounts
deducted for the Anniversary Year in question for income taxes, depreciation
and interest, and (iii) any amortization of or other purchase accounting
adjustments required by GAAP. No indirect cost shall be allocated to the
Companies, the Subsidiaries or the Business which are not otherwise designated
in the Budget and Operating Plan unless such indirect costs are reasonably so
allocated. NOI shall be determined without duplication. To the extent that
Gross Income includes an additional three months of revenue on account of the
sale of any property, the related expenses which would have been attributable
to such income would also be deducted in arriving at NOI. Notwithstanding
anything else to the contrary contained in this Agreement, NOI is intended to
be calculated in accordance with the manner in which the original pro-forma
income statement (which was prepared by the Sellers and provided to MCRLP and
the Purchaser as part of their initial evaluation of the Companies and that
formed the basis for the Modeled NOI that was the basis of the earnout
calculations contained in this Exhibit D) was prepared.

 

“Purchaser’s
Accountants” has the meaning specified in Section 3.02(a) of this Exhibit
D.

 

“Second
Anniversary Year” means the one year period between the first day after the
end of the First Anniversary Year and the end of the twelfth calendar month
thereafter.

 

“Sellers’
Accountants” has the meaning specified in Section 3.02(a) of this Exhibit
D.

 

D-3

 

“Third
Anniversary Year” means the one year period between the first day after the
end of the Second Anniversary Year and the end of the twelfth calendar month
thereafter.

 

Section 1.02           Other Defined Terms. Capitalized
terms used herein but not otherwise defined herein shall have the meaning
ascribed thereto in the Agreement of which this Exhibit D forms a part.

 

Section 2                Earnout Payments.

 

Section 2.01           AT&T Earnout. (a)  On the first anniversary of the Closing Date,
the Purchaser shall (and MCRLP shall cause the Purchaser to) pay to the Sellers
an amount equal to $3,000,000 if the Purchaser, the Companies, the Subsidiaries
and their respective Affiliates shall have received contractual commitments for
at least $3,000,000 of AT&T Gross Income for the following year (the “AT&T
Threshold”).

 

(b)           If the AT&T Threshold shall not
be satisfied, then the Purchaser shall (and MCRLP shall cause the Purchaser to)
pay to the Sellers an amount equal to the actual amount of AT&T Gross
Income, if any, as shall have been contracted to be in place for the following
year.

 

(c)           Any payments to the Sellers from the
Purchaser in respect of this Section 2.01 shall be paid in immediately
available funds within thirty (30) days after the first anniversary of the
Closing Date to an account designated by the Sellers to the Purchaser.

 

Section 2.02           First Anniversary Year Earnout.
(a)  After the First Anniversary Year,
the Purchaser shall (and MCRLP shall cause the Purchaser to) pay to the Sellers
an amount equal to:

 

(i)            the
Gross Income Earnout, if the Gross Income equals or exceeds the Gross Income
Threshold during the First Anniversary Year; plus

 

(ii)           the
Net Income Earnout, if the NOI equals or exceeds the Net Income Threshold
during the First Anniversary Year.

 

(b)           If Gross Income shall fail to equal
or exceed the Gross Income Threshold during the First Anniversary Year, then
the Gross Income Earnout for the First Anniversary Year shall not be payable in
accordance with Section 2.05. If the NOI shall fail to equal or exceed the Net
Income Threshold during the First Anniversary Year, then the Net Income Earnout
for the First Anniversary Year shall not be payable in accordance with Section
2.05.

 

Section 2.03           Second Anniversary Year Earnout.
(a)  After the Second Anniversary Year, the
Purchaser shall (and MCRLP shall cause the Purchaser to) pay to the Sellers an
amount equal to:

 

(i)            the
Gross Income Earnout, if the Gross Income during the Second Anniversary Year plus any Gross Income Rollover from the First Anniversary
Year equals or exceeds the Gross Income Threshold; plus

 

D-4

 

(ii)           the
Net Income Earnout, if the NOI during the Second Anniversary Year plus any Net Income Rollover from the First Anniversary Year
equals or exceeds the Net Income Threshold.

 

(b)           If there was either a Gross Income
Earnout Shortfall or a Net Income Earnout Shortfall for the First Anniversary
Year, then, in addition to any Earnout payable in accordance with Section
2.03(a) above, after the Second Anniversary Year the Purchaser shall (and MCRLP
shall cause the Purchaser to) pay to the Sellers an amount, if any, equal to:

 

(i)            if
the Gross Income during the First Anniversary Year plus any Gross Income
Rollover from the Second Anniversary Year equals or exceeds the Gross Income
Threshold, $2,500,000 multiplied by a fraction, the numerator of which shall
equal the aggregate of such Gross Income and the denominator of which shall
equal the Modeled Gross Income for the First Anniversary Year (but such
fraction shall not be greater than 1.00) less the amount of any Gross Income
Earnout actually paid for the First Anniversary Year; plus

 

(ii)           if
the NOI during the First Anniversary Year plus any Net Income Rollover from the
Second Anniversary Year equals or exceeds the Net Income Threshold, $2,500,000
multiplied by a fraction, the numerator of which shall equal the aggregate of
such NOI and the denominator of which shall equal the Modeled NOI (but such
fraction shall not be greater than 1.00) less the amount of any Net Income
Earnout actually paid for the First Anniversary Year.

 

(c)           If Gross Income
during the Second Anniversary Year plus any Gross Income Rollover from the
First Anniversary Year shall fail to equal or exceed the Gross Income
Threshold, then the Gross Income Earnout for the Second Anniversary Year shall
not be payable in accordance with Section 2.05. If the NOI during the Second
Anniversary Year plus any Net Income Rollover from the First Anniversary Year
shall fail to equal or exceed the Net Income Threshold, then the Net Income
Earnout for the Second Anniversary Year shall not be payable in accordance with
Section 2.05.

 

Section 2.04           Third Anniversary Year Earnout.
(a)  After the Third Anniversary Year,
the Purchaser shall (and MCRLP shall cause the Purchaser to) pay to the Sellers
an amount equal to:

 

(i)            the
Gross Income Earnout, if the Gross Income during the Third Anniversary Year plus any Gross Income Rollover from the First Anniversary
Year and from the Second Anniversary Year which, in either case, shall not have
previously been applied towards achieving any amounts payable under Section
2.03(a) or 2.03(b) equals or exceeds the Gross Income Threshold; plus

 

(ii)           the Net Income Earnout, if the NOI
during the Third Anniversary Year plus any Net
Income Rollover from the First Anniversary Year and from the Second Anniversary
Year which, in either case, shall not have previously been applied towards
achieving any amounts payable under Section 2.03(a) or 2.03(b) equals or
exceeds the Net Income Threshold.

 

D-5

 

(b)           If there was a Gross
Income Earnout Shortfall for the First Anniversary Year which shall not have
been fully paid pursuant to Section 2.03(b), then, in addition to any Earnout
payable in accordance with Section 2.04(a)(i) above, if the sum of (i) the
Gross Income from the First Anniversary Year plus (ii) the Gross Income
Rollover from the Second Anniversary Year, if any, plus (iii) the Gross Income
Rollover from the Third Anniversary Year equals or exceeds the Gross Income
Threshold, then Purchaser shall (and MCRLP shall cause the Purchaser to) pay to
the Sellers an amount, if any, equal to $2,500,000 multiplied by a fraction,
the numerator of which shall equal the aggregate of such Gross Income and the
denominator of which shall equal the Modeled Gross Income for the First
Anniversary Year (but such fraction shall not be greater than 1.00) less the
amount of any Gross Income Earnout actually paid for the First Anniversary Year
(including pursuant to Section 2.03(b)).

 

(c)           If there was a Net
Income Earnout Shortfall for the First Anniversary Year which shall not have
been fully paid pursuant to Section 2.03(b), then, in addition to any Earnout
payable in accordance with Section 2.04(a)(ii) above, if the sum of (i) the NOI
from the First Anniversary Year plus (ii) the Net Income Rollover from the
Second Anniversary Year, if any, plus (iii) the Net Income Rollover from the
Third Anniversary Year equals or exceeds the Net Income Threshold, then
Purchaser shall (and MCRLP shall cause the Purchaser to) pay to the Sellers an
amount, if any, equal to $2,500,000 multiplied by a fraction, the numerator of
which shall equal the aggregate of such NOI and the denominator of which shall
equal the Modeled Net Income (but such fraction shall not be greater than 1.00)
less the amount of any Net Income Earnout actually paid for the First
Anniversary Year (including pursuant to Section 2.03(b)).

 

(d)           If there was a Gross
Income Earnout Shortfall for the Second Anniversary Year, then, in addition to
any Earnout payable in accordance with Section 2.04(a)(i) above, if the sum of
(i) the Gross Income Rollover from the First Anniversary Year, if any, plus
(ii) the Gross Income from the Second Anniversary Year plus (iii) the Gross Income
Rollover from the Third Anniversary Year which, in either case, shall not
previously been applied towards achieving any amounts payable under Section
2.03 or this Section 2.04, equals or exceeds the Gross Income Threshold, then
Purchaser shall (and MCRLP shall cause the Purchaser to) pay to the Sellers an
amount, if any, equal to $2,500,000 multiplied by a fraction, the numerator of
which shall equal the aggregate of such Gross Income and the denominator of
which shall equal the Modeled Gross Income for the Second Anniversary Year (but
such fraction shall not be greater than 1.00) less the amount of any Gross
Income Earnout actually paid for the Second Anniversary Year.

 

(e)           If there was a Net
Income Earnout Shortfall for the Second Anniversary Year, then, in addition to
any Earnout payable in accordance with Section 2.04(a)(ii) above, if the sum of
(i) the Net Income Rollover from the First Anniversary Year, if any, plus (ii)
the NOI from the Second Anniversary Year plus (iii) the Net Income Rollover from
the Third Anniversary Year which, in either case, shall not previously been
applied towards achieving any amounts payable under Section 2.03 or this
Section 2.04, equals or exceeds the Net Income Threshold, then Purchaser shall
(and MCRLP shall cause the Purchaser to) pay to the Sellers an amount, if any,
equal to $2,500,000 multiplied by a fraction, the numerator of which shall
equal the aggregate of such NOI and the denominator of which shall equal the
Modeled Net Income (but such fraction shall not be greater than 1.00) less the
amount of any Net Income Earnout actually paid for the First Anniversary Year
(including pursuant to Section 2.03(b)).

 

D-6

 

(f)            If Gross Income during the Third
Anniversary Year plus any applicable Gross Income Rollover shall fail to equal
or exceed the Gross Income Threshold, then the Gross Income Earnout for the
Third Anniversary Year shall not be payable and shall be forfeited. If the NOI
during the Third Anniversary Year plus any applicable Net Income Rollover shall
fail to equal or exceed the Net Income Threshold, then the Net Income Earnout
for the Third Anniversary Year shall not be payable and shall be forfeited.

 

Section 2.05           Payment of Gross Income Earnout
and Net Income Earnout. Any payments to the Sellers from the Purchaser in
respect of the Gross Income Earnout or the Net Income Earnout will be paid in
immediately available funds not later than the third Business Day after
determination by the parties as to whether such Gross Income Earnout or Net
Income Earnout shall have become payable.

 

Section 2.06           Offset for Losses. The
Purchaser shall be entitled to deduct from any Earnout amount payable to the
Sellers under this Exhibit D an amount equal to any indemnifiable Losses which
may be recovered by a Purchaser Indemnified Party (pursuant to Article VIII of
the Agreement) subject to the limitation specified in Section 8.04(b) of the
Agreement. Notwithstanding anything herein to the contrary, any amounts
deducted from any Earnout amount under this Section 2.06 shall be deemed to
have been paid to the Sellers for all purposes under this Agreement and this
Exhibit D.

 

Section 3                Determination

 

Section 3.01           Preparation of Financial
Statements. (a)  Within sixty (60)
calendar days after the expiration of each Anniversary Year (except if an
Anniversary Year shall end on a calendar quarter, then within ninety (90)
calendar days after the expiration of the Anniversary Year), the Purchaser
shall (and MCRLP shall cause the Purchaser to) prepare and deliver to the
Sellers the Certified Balance Sheets and Income Statements for the prior
Anniversary Year.

 

(b)           The Purchaser shall
provide the Sellers with copies of any information concerning the consolidated
operations of the Purchaser as the Sellers may reasonably request, including
any financial information as may be reasonably requested by the Sellers in
order to allow the Sellers and the Sellers’ Accountants to review and audit the
Certified Balance Sheets and Income Statements at Sellers’ sole cost and
expense, with reasonable notice at normal business hours.

 

Section 3.02           Determination of Earnout Payments.    (a)
In addition to, and along with, delivering the Certified Balance Sheets and
Income Statements for the prior Anniversary Year, the Purchaser shall prepare
and deliver to the Sellers a statement which sets forth, in reasonable detail,
the Purchaser’s determination of the payment due to the Sellers under Sections
2.02, 2.03 or 2.04, as the case may be (an “Earnout Payment”), if any,
payable in respect of the prior Anniversary Year. In accordance with Section
3.01(b) above, at all reasonable times during the thirty (30) days immediately
following the Seller’ receipt of such statement, the Sellers and the Sellers’
accountants (“Sellers’ Accountants”) shall be permitted to review the
Purchaser’s and Purchaser’s accountants (“Purchaser’s Accountants”)
financial information and working papers relating to the Certified Balance
Sheets and Income Statements and the Purchaser shall make

 

D-7

 

available to
the Sellers and the Sellers’ Accountants at reasonable times and on reasonable
advance notice the individuals responsible for the preparation of the Certified
Balance Sheets and Income Statements in order to respond to the reasonable
inquiries of the Sellers and the Sellers Accountants.

 

(b)           The Sellers shall notify the
Purchaser in writing within thirty (30) days after receiving each of the
statements of determination for each Anniversary Year if the Sellers and the
Sellers’ Accountants disagree with any amounts reflected on such statement of
determination. The notice of disagreement shall set forth in reasonable detail
the reason for such dispute, the dollar amounts involved and the Sellers and
Sellers’ Accountants good faith estimate of the applicable Earnout Payment. If
the Sellers and the Sellers’ Accountants do not deliver a notice of
disagreement to the Purchaser within such thirty (30)-day period, then the
Purchaser’s statement of determination shall be deemed to have been accepted by
the Sellers and the Sellers’ Accountants and upon the expiration of such thirty
(30)-day period shall become final and binding. If the Sellers do deliver a
notice of disagreement, only those matters specified in reasonable detail in
such notice of disagreement shall be deemed to be in dispute, and all other
matters shall be final and binding.

 

(c)           During the thirty (30) days
immediately following the delivery of a notice of disagreement, the Sellers and
the Sellers’ Accountants and the Purchaser and the Purchaser’s Accountants, in
good faith, shall seek to resolve any differences that they may have with
respect to any matter specified in such notice of disagreement, and any
resolution by them as to any such matter shall be final and binding. If at the
end of such thirty (30)-day period, the Sellers and the Sellers’ Accountants
and the Purchaser and the Purchaser’s Accountants have been unable to agree
upon all matters specified in such notice of disagreement, then the Sellers and
the Sellers’ Accountants and the Purchaser and the Purchaser’s Accountants
shall submit to an Independent Accounting Firm for review and resolution any
and all matters specified in the notice of disagreement that remain in dispute.
The Purchaser and the Sellers shall cause the Independent Accounting Firm to
make a final determination (which determination shall be binding on the parties
hereto) of the Earnout Payment for the applicable Anniversary Year within
thirty (30) days from such submission. The cost of the Independent Accounting
Firm’s review and determination shall be shared equally by the Sellers and the
Purchaser. During such thirty (30)-day review, the Purchaser and the Sellers
shall each make available to the Independent Accounting Firm such individuals
and such information, books and records as may be reasonably required by the
Independent Accounting Firm to make its final determination.

 

Section 4                Characterization of Earnout
Payments. All amounts paid by the Purchaser with respect to Earnout
pursuant to the Agreement shall, to the extent permitted by applicable Law, be
treated as adjustments to the Purchase Price for all Tax purposes. Each of the
Purchaser and the Sellers agree to report, on their respective Tax Returns, the
allocation of any Earnout consistently (including any adjustment to an Earnout
pursuant to this Exhibit D).

 

Section 5                Covenants of MCRLP and the
Purchaser Relating to the Conduct of Business. Each of MCRLP and the
Purchaser acknowledges that a significant portion of the consideration for the
Companies and the Subsidiaries hereunder is to be satisfied by the AT&T
Earnout Payment and the Earnout Payments described in this Exhibit D. Accordingly,
each of MCRLP and the Purchaser, on the one hand, and the Sellers, on the other
hand, covenant and

 

D-8

 

agree to act in good faith to work with the others to
prepare and implement a Budget and Operating Plan for the Companies and the
Subsidiaries for each Anniversary Year (or, if agreed to by the Purchaser and
the Sellers, fiscal year) which shall set forth the manner in which the
Business of the Companies and the Subsidiaries is to be conducted. Each of
MCRLP and the Purchaser further covenants and agrees to manage the Companies
and the Subsidiaries from the Closing Date through the end of the Third
Anniversary Year as a prudent owner would manage the Companies and the
Subsidiaries and to use its commercially reasonable efforts to manage the
Companies and the Subsidiaries in a manner substantially as previously managed
and in accordance with the Budget and Operating Plan, subject to its overriding
fiduciary duties to all of its and MCRC’s equity owners.

 

MCRLP and the
Purchaser hereby agree that they shall procure that MCRC (or any of its
Affiliates) shall not, and not cause the Purchaser, the Company or any of the
Subsidiaries to,  terminate or adversely
amend, any property management, facilities management, leasing, construction
management or real estate brokerage agreement or arrangement with respect to
any property currently managed by the Company and the Subsidiaries, absent a
material breach of such agreement or arrangement, other than an action taken in
good faith in response to an action initiated by the other party to such
agreement or arrangement. If MCRC or any of its Affiliates shall, or shall
cause the Purchaser, the Company or any of the Subsidiaries to, terminate or
adversely amend any such agreement or arrangement, MCRLP and the Purchaser
agree that any income and corresponding expense that would have been derived
under any such agreement or arrangement prior to such amendment or termination
shall be included in the Purchaser’s calculation of Gross Income and NOI as if
such contract or arrangement were not so terminated or adversely amended. The
Sellers, MCRLP and the Purchaser also agree that the schedule of management
fees with respect to the Class B Properties (as defined in the Real Estate
Agreement) which are to be acquired as part of the Real Estate Agreement
specified in the related Amended and Restated Limited Liability Company
Agreement of Mack-Green-Gale LLC to be entered into upon the consummation of
the transactions contemplated by the Real Estate Agreement shall not constitute
such an adverse amendment or arrangement.

 

Furthermore,
but subject to the fiduciary duty the Purchaser owes to its and MCRC’s equity
owners, each of MCRLP and the Purchaser hereby covenants and agrees that from
the Closing Date through the end of the Third Anniversary Year it shall cause
the Companies and their Subsidiaries:

 

(i)            to continue to solicit new clients
and to service its existing and new clients substantially in accordance with
its long-standing service expertise and practices, provided that the foregoing
shall not prevent the Purchaser from consolidating operations, taking actions
intended to permit the Purchaser to operate the Companies and the Subsidiaries
in a more efficient manner or taking actions intended to facilitate its tax
requirements, including MCRC’s status as a REIT;

 

(ii)           to continue to operate the Companies
and the Subsidiaries as a separate and distinct division, with a separate set
of financial records, and not to permit the Business to be discontinued,
dissolved, transferred to a non-affiliated third party or otherwise sold
(through a sale of stock, sale of assets, operation of merger or otherwise),
unless the acquiring party expressly agrees to be bound by the provisions of
this Exhibit D;

 

D-9

 

(iii)          to maintain records to allow for the
calculations of AT&T Gross Income, Gross Income and NOI that shall be
complete and accurate in all material respects, including, without limitation,
not changing the accounting principles, practices, policies and methodologies
of the Companies or the Subsidiaries for the Business for the purpose of the
calculation of AT&T Gross Income, Gross Income and NOI; and

 

(iv)          not to take any action or omit to take
any action in connection with the operation of the Business which would, or
would reasonably be likely to, reduce the amount of AT&T Gross Income,
Gross Income and/or NOI or the ability of the Seller to achieve the AT&T
Earnout Payment or any Earnout Payment.

 

Notwithstanding anything contained herein to the contrary, the Purchaser
shall be entitled to take any action or omit to take any action in connection
with the operation of the Business which would, or would reasonably be likely
to, reduce the amount of AT&T Gross Income, Gross Income and/or NOI or the
ability of the Seller to achieve the AT&T Earnout Payment or any Earnout
Payment so long as (i) such action or omission is in the ordinary course of the
Business and consistent with the Budget and Operating Plan and the primary
purpose of such action or omission is not to reduce AT&T Gross Income,
Gross Income or NOI or the ability of the Seller to achieve the AT&T
Earnout Payment or any Earnout Payment or (ii) if after such action or omission
is taken, the Purchaser shall promptly deliver to the Sellers a written
proposal to adjust the calculation of Gross Income and NOI, so that achieving
the AT&T Earnout Payment or each Earnout Payment will not be less likely
due to such action or omission (an “Adjustment Proposal”).

 

If the Purchaser shall deliver to the Sellers an Adjustment Proposal,
the Sellers shall, within thirty (30) days after receiving an Adjustment
Proposal, either (i) deliver a written notice to the Purchaser agreeing to such
Adjustment Proposal (an “Acceptance Notice”) or (ii) deliver a written
notice to the Purchaser that the Sellers object to the Adjustment Proposal (an “Objection
Notice”). If the Sellers deliver an Acceptance Notice or fail to deliver a
timely Objection Notice, then the Adjustment Proposal shall be deemed to be
accepted by the Sellers and final, binding and conclusive upon the Purchaser
and the Sellers. If the Sellers shall timely deliver an Objection Notice, then
the Purchaser and the Sellers shall negotiate, in good faith, for a period of
thirty (30) days (the “Negotiation Period”), an adjustment to the
calculation of Gross Income and/or NOI, as necessary, so that achieving the
AT&T Earnout Payment or each Earnout Payment will not be less likely due to
such action or omission. Any resolution reached by the Sellers and the
Purchaser shall be final, binding and conclusive upon the Sellers and the
Purchaser.

 

If the Negotiation Period shall have expired without the full
resolution of all matters regarding the Adjustment Proposal, then the parties
shall submit all unresolved issues for resolution to an Independent Accounting
Firm, which shall, within thirty (30) days after such submission, determine and
report to the Sellers and the Purchaser upon such remaining disputed items, and
such report shall be final, binding and conclusive on the Sellers and the
Purchaser. The fees and disbursements of the Independent Accounting Firm’s
review and determination shall be shared equally by the Sellers and the
Purchaser.

 

D-10

 

Section 6                Confidentiality. Each of the
parties hereto hereby expressly acknowledge and agree that the material terms
of this Exhibit D (including, without limitation, any amounts payable
hereunder) constitute Confidential Information, and are subject, in all respect
to the confidentiality provisions contained in Section 5.03 of the Agreement.

 

D-11

 

EXHIBIT E

 

FORM OF ASSIGNMENT OF MEMBERSHIP INTERESTS

 

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged,                                     (“Assignor”),
owner of an interest in                                           ,
a Delaware limited liability company (the “Company”), hereby assigns,
transfers, sells and conveys to Mack-Cali Realty Acquisition Corp., (“Assignee”),
a Delaware corporation, all of such legal and beneficial right, title and
interest in and to the Company, including, without limitation, all right, title
and interest of Assignor in and to the assets of the Company and the right to
receive distributions of money, profits and other assets from the Company,
presently existing or hereafter at any time arising or accruing (such right,
title and interest are hereinafter collectively referred to as the “Membership
Interest”).

 

TO HAVE AND HOLD the same unto Assignee, its successors and assigns,
forever.

 

This
Assignment is made without representation or warranty by Assignor to Assignee
and without recourse to Assignor. Upon the execution and delivery hereof,
Assignee assumes all obligations in respect of the Membership Interest.

 

Executed: as of                         
           , 2006

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ENTITY]

  
	
   

  	
   

  
	
   

  	
  BY:
  

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  MACK-CALI REALTY ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

EXHIBIT F

 

STANLEY C. GALE ADVISOR TERMS AND CONDITIONS

 

For a period of three (3) years from the date of the Agreement, Mr.
Stanley C. Gale shall serve as an advisor, holding the title of non-Executive
Vice Chairman, to Mack-Cali Realty Acquisition Corp.’s real property service
company (the “Service Business”) and shall, at reasonable times and on
reasonable notice, perform the functions requested by the Chief Executive
Officer of Mack-Cali Realty Corporation, which shall include: (i) attending
meetings related to the Service Business (including meetings with customers,
potential customers, institutions and other third parties) and (ii) meeting
regularly with Mark Yeager, department leaders and other staff.

 

Mr. Gale shall undertake to
perform such functions to advance and preserve the Business and the goodwill of
the Business.

 

 

EXHIBIT G

 

CERTIFICATE OF NON-FOREIGN STATUS

 

Section 1445
of the Internal Revenue Code of 1986, as amended (the “Code”), provides
that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person or entity. In connection with the contribution
by [SELLER] (“Seller”) to Mack-Cali Realty, L.P. (“MCRLP”) of the
Seller’s indirect interest in certain U.S. real property, and to inform MCRLP
that withholding of tax is not required upon the disposition of such interest
by Seller, Seller hereby certifies the following:

 

1.             Seller is not a foreign person or
entity (as those terms are defined in the Code and Treasury Regulations).

 

2.             The address of
Seller is:

 

                                                      

                                                      

3.             Seller understands that this
certification may be disclosed to the Internal Revenue Service by MCRLP.

 

I declare that
I have examined this certification and to the best of my knowledge and belief
it is true, correct and complete.

 

Dated: As of                          
           , 2006

 

 

EXHIBIT H

 

NON-PORTFOLIO REAL PROPERTY INTERESTS

 

	
   

  	
   

  	
  Size

  (SF)

  	
   

  	
  Value per

  SF

  	
   

  	
  Value

  	
   

  	
  TGC

  Interest

  	
   

  	
  Current TGC

  Cost/Value (a)

  	
   

  	
  Partner

  	
   

  
	
  3 Campus Dr.

  	
   

  	
  122,000

  	
   

  	
  $

  	
  35.00

  	
   

  	
  $

  	
  4,270,000

  	
   

  	
  50.0(b

  	
  )%

  	
  $

  	
  2,135,000

  	
  (b)

  	
  Landis 50%

  Morgan Stanley 25%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Center of Morris County:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  100 Kimball

  	
   

  	
  175,000

  	
   

  	
  $

  	
  68.57

  	
   

  	
   

  	
   

  	
  8.3

  	
  %

  	
  $

  	
  991,654

  	
   

  	
  JPM 75%

  Hampshire 16.7%

  	
   

  
	
  One Jefferson

  	
   

  	
  100,000

  	
   

  	
  $

  	
  40.00

  	
   

  	
   

  	
   

  	
  8.3

  	
  %

  	
  $

  	
  402,501

  	
   

  	
  JPM 75%

  Hampshire 16.7%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12 Vreeland

  	
   

  	
  139,750

  	
   

  	
  $

  	
  180.00

  	
   

  	
  $

  	
  25,155,000

  	
   

  	
  50.0

  	
  %(c)

  	
  $

  	
  6,920,991

  	
   

  	
  S&K 50%

  	
   

  
	
  ($11,313,017 million of debt in place)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Princeton Forrestal Village

  	
   

  	
  550,000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  10.0

  	
  %

  	
  $

  	
  1,774,500

  	
   

  	
  GE 80%

  Witmondt 5%

  Mandelbaum 5%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Offices at Bedminster

  	
   

  	
  190,000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  10.6

  	
  %

  	
  TBD

  	
   

  	
  TBD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  One Newark Center

  	
   

  	
  419,000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TBD

  	
   

  	
  TBD

  	
   

  	
  Praedium

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Belmar—Redevelopment Rights

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Generally
  100% Hunt-50% DiFeo-85%

  	
   

  	
  $

  	
  1,373,840

  	
   

  	
  TBD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Newark Transit Village

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  50

  	
  %

  	
  $

  	
  551,864

  	
   

  	
  Ivor Braka

  	
   

  

 

(a)          Subject
to change if additional TGC capital contributions are made. Such TGC capital
contributions shall not exceed $500,000 in the aggregate without the prior
consent of Purchaser, such consent not to be unreasonably withheld or delayed.

(b)         After
payment of $915,000 to Morgan Stanley  for
its 25% interest to be deducted from current TGC Cost/Value.

(c)          Subject
to receiving the consents of the other members in GW Vreeland.Exhibit 10.2

 

 

 

CONTRIBUTION AND SALE AGREEMENT

 

by and among

 

GALE SLG NJ LLC, 

a Delaware limited liability company,

 

GALE SLG RIDGEFIELD MEZZ LLC,

a Delaware limited liability company,

 

GALE SLG NJ MEZZ LLC,

a Delaware limited liability company,

 

and

 

MACK-CALI VENTURES L.L.C.,

a Delaware limited liability company

 

 

Dated as of March 7, 2006

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  CERTAIN
  DEFINITIONS

  	
  4

  
	
   

  	
   

  	
   

  
	
  2.

  	
  AGREEMENT
  FOR CONTRIBUTION AND SALE

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.

  	
  DEPOSIT

  	
  14

  
	
   

  	
   

  	
   

  
	
  4.

  	
  DUE
  DILIGENCE WAIVED; SPECIAL GALE TERMINATION RIGHT

  	
  14

  
	
   

  	
   

  	
   

  
	
  5.

  	
  CLOSING

  	
  15

  
	
   

  	
   

  	
   

  
	
  6.

  	
  ESCROW

  	
  16

  
	
   

  	
   

  	
   

  
	
  7.

  	
  TITLE
  COMMITMENT

  	
  16

  
	
   

  	
   

  	
   

  
	
  8.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  20

  
	
   

  	
   

  	
   

  
	
  9.

  	
  GALE
  SLG COVENANTS

  	
  30

  
	
   

  	
   

  	
   

  
	
  10.

  	
  INSPECTION

  	
  34

  
	
   

  	
   

  	
   

  
	
  11.

  	
  CONDITIONS
  PRECEDENT TO CLOSING

  	
  35

  
	
   

  	
   

  	
   

  
	
  12.

  	
  CLOSING
  DOCUMENTS; FINANCING; EXISTING LENDER CONSENTS

  	
  37

  
	
   

  	
   

  	
   

  
	
  13.

  	
  FIRE
  OR CASUALTY

  	
  40

  
	
   

  	
   

  	
   

  
	
  14.

  	
  CONDEMNATION

  	
  41

  
	
   

  	
   

  	
   

  
	
  15.

  	
  ADJUSTMENTS
  AND PRORATIONS

  	
  41

  
	
   

  	
   

  	
   

  
	
  16.

  	
  SURVIVAL;
  LIMITATION OF LIABILITY

  	
  48

  
	
   

  	
   

  	
   

  
	
  17.

  	
  NOTICES

  	
  49

  
	
   

  	
   

  	
   

  
	
  18.

  	
  BROKERS

  	
  50

  
	
   

  	
   

  	
   

  
	
  19.

  	
  TAX
  MATTERS

  	
  51

  
	
   

  	
   

  	
   

  
	
  20.

  	
  MISCELLANEOUS

  	
  53

  
	
   

  	
   

  	
   

  
	
  21.

  	
  TROY
  TRANSACTION

  	
  57

  

 

i

 

Exhibits

 

	
  A

  	
   

  	
  -

  	
   

  	
  Properties and Owners

  
	
  B-1

  	
   

  	
  -

  	
   

  	
  Gale SLG Pre-Closing Organizational Chart

  
	
  B-2

  	
   

  	
  -

  	
   

  	
  Mack-Cali Pre-Closing Organizational Chart

  
	
  B-3

  	
   

  	
  -

  	
   

  	
  Post-Closing Organizational Chart

  
	
  C

  	
   

  	
  -

  	
   

  	
  Form of Initial JVLLC Operating Agreement

  
	
  D

  	
   

  	
  -

  	
   

  	
  Form of Amended and Restated JVLLC Limited
  Liability Company Operating Agreement

  
	
  E

  	
   

  	
  -

  	
   

  	
  Form of Title Affidavit

  
	
  F

  	
   

  	
  -

  	
   

  	
  Form of Escrow Agreement

  
	
  G

  	
   

  	
  -

  	
   

  	
  Form of Certification of Representations
  and Warranties

  
	
  H

  	
   

  	
  -

  	
   

  	
  Form of Assignment and Assumption of
  Limited Liability Company Interest

  
	
  I

  	
   

  	
  -

  	
   

  	
  Form of Rent Shortfall Guaranty

  
	
  J

  	
   

  	
  -

  	
   

  	
  Form of Landlord Estoppel

  
	
  K

  	
   

  	
  -

  	
   

  	
  Form of Tenant Estoppel

  
	
  L

  	
   

  	
  -

  	
   

  	
  Gramercy Term Sheet

  
	
  M

  	
   

  	
  -

  	
   

  	
  Troy Entities and Troy Properties

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7(g)(viii)

  	
   

  	
  -

  	
   

  	
  Title Policies

  
	
  8(a)(iii)

  	
   

  	
  -

  	
   

  	
  Contribution and Subscription Agreements

  
	
  8(a)(x)

  	
   

  	
  -

  	
   

  	
  Leases

  
	
  8(a)(xi)

  	
   

  	
  -

  	
   

  	
  Service Contracts

  
	
  8(a)(xiii)

  	
   

  	
  -

  	
   

  	
  Brokerage Agreements

  
	
  8(a)(xiv)

  	
   

  	
  -

  	
   

  	
  Litigation

  
	
  8(a)(xviii)

  	
   

  	
  -

  	
   

  	
  Other Subsidiaries

  
	
  8(a)(xxii)

  	
   

  	
  -

  	
   

  	
  Leasing Commissions as allocated to the
  Parties

  
	
  8(a)(xxiv)

  	
   

  	
  -

  	
   

  	
  Existing Fixed Rate Debt Balance

  
	
  8(a)(xxvi)

  	
   

  	
  -

  	
   

  	
  Rent Roll

  
	
  8(a)(xxvii)

  	
   

  	
  -

  	
   

  	
  Certain Licenses

  
	
  8(a)(xxx)

  	
   

  	
  -

  	
   

  	
  Tax Cert Proceedings

  
	
  8(a)(xxxi)

  	
   

  	
  -

  	
   

  	
  Surveys

  
	
  8(a)(xxxii)

  	
   

  	
  -

  	
   

  	
  Subsidiaries Treated as a Corporation

  
	
  9(g)

  	
   

  	
  -

  	
   

  	
  Master Lease Spaces

  
	
  9(j)

  	
   

  	
  -

  	
   

  	
  Mandatory Tenants

  
	
  9(s)

  	
   

  	
  -

  	
   

  	
  Reciprocal Agreements

  
	
  12(c)

  	
   

  	
  -

  	
   

  	
  Existing Fixed Rate Debt

  
	
  13

  	
   

  	
  -

  	
   

  	
  Agreed Values

  
	
  15(i)

  	
   

  	
  -

  	
   

  	
  Certain “Free Rent” Amounts

  

 

ii

 

CONTRIBUTION AND SALE AGREEMENT

 

THIS
CONTRIBUTION AND SALE AGREEMENT (together with all
Schedules and Exhibits hereto, this “Agreement”)
is made and entered into as of the 7th of March, 2006 (the “Date of Agreement”) by and among GALE SLG
NJ LLC, a Delaware limited liability company (“Gale SLG”), GALE SLG NJ MEZZ LLC, a Delaware limited liability
company (“Portfolio Mezz”) and
GALE SLG RIDGEFIELD MEZZ LLC, a Delaware limited liability company (“Challenger Mezz”, and together with Gale
SLG and Portfolio Mezz, collectively, the “Gale
SLG Transferors”, and each a “Gale
SLG Transferor”), and Mack-Cali Ventures L.L.C., a Delaware limited
liability company (“Mack-Cali”).

 

RECITALS

 

A.            Gale SLG is
the owner of 100% of the membership interests (the “Gale GP Interest”) in Gale SLG NJ GP LLC, a Delaware limited
liability company (the “GP”),
existing pursuant to the Limited Liability Company Agreement of the GP dated
July 30, 2004 (the “GP Operating Agreement”)
and 32,754,800 OP Units (as defined in the OP Partnership Agreement) (the “Gale OP Units”; and together with the Gale
GP Interest, collectively, the “Contributed
Interest”) of Gale SLG NJ Operating Partnership, L.P. (the “OP”), a Delaware limited partnership existing
pursuant to the Third Amended and Restated Limited Partnership Agreement of the
OP, dated August 24, 1999, as amended by a First Amendment and Second
Amendment, each dated July 30, 2004 (as so amended, the “OP Partnership Agreement”).

 

B.            The GP is
the sole general partner of the OP and owns 327,508 GP Units (as defined in the
OP Partnership Agreement) and all of the outstanding Preferred GP Units (as
defined in the OP Partnership Agreement).

 

C.            The OP is
the owner of 100% of the membership interests in Portfolio Mezz, and Portfolio
Mezz is the indirect owner of certain real property listed in Exhibit A attached hereto (the “Portfolio Properties”; each individually, a
“Portfolio Property”). Fee title
to each Portfolio Property is held by the entity set forth next to such
Property on Exhibit A
(collectively, the “Portfolio  Owners”). In addition, (a) Mezz is the
owner of 100% of the membership interests in the entities listed on Exhibit M (the “Troy Entities”), which entities are the fee owners of the properties
set forth next to their names on Exhibit M (the
“Troy Properties”) and (b) the OP
is the owner of 100% of the membership interests in Gale SLG Naperville Member
LLC (“Gale SLG Naperville”, and
together with the Troy Entities, the “Class C
Entities”; and the OP’s direct or indirect membership interests in
the Class C Entities, collectively, the “Class
C Assets”).

 

D.            The OP is
the owner of 100% of the issued and outstanding capital stock of Gale SLG NJ
TRS Corp., a Delaware corporation (“Portfolio
TRS”). Portfolio TRS is the owner of 100% of the membership
interests (the “OP Sub II Interest”)
in PW/MS OP Sub II, LLC, a Delaware limited liability company (“Op Sub II”).

 

E.             Portfolio
Mezz is the owner of (a) 100% of the membership interests (the “Waterview Interest”) in 35 Waterview SPE
LLC, a Delaware limited liability company (“Waterview
Owner”), which is fee owner of certain real property commonly known
as 35

 

 

Waterview Boulevard, Parsippany-Troy Hills,
New Jersey (the “Waterview Property”)
and (b) 100% of the membership interests (the “Thornall Interest”) in 343 Thornall SPE LLC, a Delaware
limited liability company (“Thornall Owner”),
which is a fee owner of certain real property commonly known as 343 Thornall
Street, Edison, New Jersey (the “Thornall
Property”).

 

F.             Challenger
Mezz is the owner of 100% of the membership interests (the “Challenger Interest”) in 105 Challenger
Owner LLC, a Delaware limited liability company (“Challenger Owner”; Challenger Owner, together with and the
Portfolio Owners, collectively, the “Owners”,
each, an “Owner”). Challenger
Owner is owner of a ground leasehold interest in certain real property known as
105 Challenger Road, Ridgefield Park, New Jersey (the “Challenger Property”; together with the
Portfolio Properties, the Waterview Property and the Thornall Property,
collectively, the “Properties”,
each, a “Property”).

 

G.            Gale SLG
Challenger LLC (“Challenger Parent”)
is the owner of 100% of the membership interests in Challenger Mezz and 100% of
the issued and outstanding stock of 105 Challenger TRS Corp. (“Challenger TRS”), a Delaware corporation.

 

H.            The Owners,
together with the OP, the GP, Portfolio Mezz and the Class C Entities are
referred to herein collectively the “Gale SLG
Entities”. An organizational chart depicting the pre-Closing
structure of the Gale SLG Entities and ownership of the Properties is attached
hereto as Exhibit B-1. An
organizational chart depicting the post-Closing structure, after giving effect
to the Transaction, as hereinafter defined, is attached as Exhibit B-3.

 

I.              The
Properties are currently encumbered by mortgage and mezzanine debt as more
particularly described herein.

 

J.             Prior to
the Closing:

 

(a)           (i) 
TRS shall form a Delaware limited liability company (“TRS LLC”), to which it shall contribute all
of the Op Sub II Interest in exchange for 100% of the membership interests in
TRS LLC (the “TRS LLC Interest”);
(ii) TRS LLC shall form a Delaware corporation (“TRS Sub”), to which it shall contribute all of the Op Sub II
Interest in exchange for 100% of the issued and outstanding capital stock in
TRS Sub; (iii) TRS shall distribute the TRS LLC Interest to its sole
shareholder, the OP as a dividend; (iv) the OP shall distribute the TRS LLC
Interest to its partners as a capital distribution; and (v) the GP shall, in
turn, distribute the TRS LLC Interest distributed to it to its sole member,
Gale SLG as a distribution (clauses (i)-(iv) are, collectively, the “Portfolio TRS Reorganization”);

 

(b)           Gale SLG shall form Mack-Green-Gale
LLC, a new wholly-owned Delaware limited liability company (“JVLLC”); shall enter into an initial
limited liability company operating agreement in the form attached hereto as Exhibit C; shall contribute the Contributed
Interest to JVLLC; and

 

(c)           Challenger Parent shall contribute
100% of the capital stock of Challenger TRS to Challenger Owner.

 

2

 

K.            At Closing:

 

(a)           Portfolio Mezz shall sell to
Mack-Cali the Waterview Interest (the transaction described in this clause (a),
the “Waterview Transaction”);

 

(b)           Portfolio Mezz shall sell to
Mack-Cali the Thornall Interest (the transaction described in this clause (b),
the “Thornall Transaction”);

 

(c)           Challenger Mezz shall sell to
Mack-Cali the Challenger Interest (the transaction described in this clause
(c), the “Challenger Transaction”);
and

 

(d)           Gale SLG shall sell to Mack-Cali the
Mack-Cali Interest (as hereinafter defined), and Gale SLG and Mack-Cali shall
enter into the Amended and Restated operating agreement of JVLLC in the form
attached hereto as Exhibit D (such
agreement, the “JVLLC Operating Agreement”;
the transaction described in this (d), the “Portfolio
Transaction”, and  together
with the Challenger Transaction, the Thornall Transaction and the Waterview Transaction,
collectively, the “Transaction”).

 

L.            In
consideration of the Waterview Transaction, Mack-Cali shall pay to Portfolio
Mezz an amount (the “Waterview Purchase Price”),
equal to the Agreed Value of the Waterview Property minus the then-outstanding
principal amount of the Existing Fixed Rate Debt encumbering the Waterview
Property, in exchange for the Waterview Interest.

 

M.           In
consideration of the Thornall Transaction, Mack-Cali shall pay to Portfolio
Mezz an amount (the “Thornall Purchase Price”),
equal to the Agreed Value of the Thornall Property, in exchange for the
Thornall Interest.

 

N.            In
consideration of the Challenger Transaction, Mack-Cali shall pay to Challenger
Mezz an amount (the “Challenger Purchase
Price”), equal to the Agreed Value of the Challenger Property minus
the then-outstanding principal amount of the Existing Fixed Rate Debt
encumbering the Challenger Property, in exchange for the Challenger Interest.

 

O.            In
consideration of the Portfolio Transaction, Mack-Cali shall pay to Gale SLG the
sum of the following in exchange for Mack-Cali’s interest in JVLLC:

 

(a)           an amount (the “Clause A Amount”), equal to Mack-Cali’s
Applicable Percentage Share of an amount equal to the difference between (x)
the aggregate Agreed Value of the Class A Properties and (y) the aggregate
outstanding principal amount of Existing Fixed Rate Debt encumbering the Class
A Properties as of the Closing Date;

 

(b)           an amount (the “Clause B Amount”), equal to Mack-Cali’s
Applicable Percentage Share of an amount equal to the difference between (x)
the aggregate Agreed Value of the Class B Properties and (y) the aggregate
outstanding principal amount of Existing Fixed Rate Debt encumbering the Class
B Properties as of the Closing Date; and

 

(c)           an amount equal to Mack-Cali’s
Applicable Percentage Share of an amount equal to the difference between (x)
the Agreed Value of the Troy Properties and (y) the aggregate principal amount
of Existing Floating Rate Debt encumbering the Troy Properties as

 

3

 

of the Closing Date (and after application of
the release prices in respect of the Class A Properties and Class B Properties
encumbered thereby to reduce the principal amount thereof), (such amount the “Clause C Amount”, and together with the
Clause A Amount and the Clause B Amount, collectively, the “Portfolio Purchase Price”; the Portfolio
Purchase Price, together with the Challenger Purchase Price, the Thornall
Purchase Price and the Waterview Purchase Price, collectively, the “Total Purchase Price”), in all cases
subject to proration and adjustment at Closing and to the other terms and
conditions contained herein, including, without limitation, the provisions of Section 21 (the interest in JVLLC acquired
by Mack-Cali upon payment of the Portfolio Purchase Price is referred to herein
as the “Mack-Cali Interest”).

 

P.            After the
transfer of the Mack-Cali Interest to Mack-Cali, Gale SLG will hold the
remaining interest in JVLLC (the “Gale SLG
Interest”).

 

Q.            The parties
desire to enter into this Agreement for the purpose of implementing the
transfers and contributions of partnership interests and membership interests
described herein and making the covenants, representations and warranties
described herein.

 

AGREEMENTS

 

NOW,
THEREFORE, in consideration of the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

 

1.             CERTAIN DEFINITIONS. The following terms as used in this Agreement will have
the meanings attributed to them as set forth below unless the context clearly
requires some other meaning.

 

“2004 Financials” has the meaning set forth
in Section 8(a)(xv).

 

“2005 Financials” has the meaning set forth
in Section 8(a)(xv).

 

“75 Livingston” has the meaning set forth in
Section 12(c).

 

“Action” means any claim, action, suit,
arbitration, inquiry, proceeding or investigation by or before any Governmental
Authority.

 

“Agreed Value” means, with respect to any
Property and the Troy Properties, the value set forth on Schedule 13.

 

“Agreement” has the meaning set forth in the
introductory paragraph.

 

“Applicable Gale SLG Transferor” means, with
respect to the Contributed Interest, Gale SLG; with respect to the Waterview
Property and the Thornall Property, Portfolio Mezz; and with respect to the
Challenger Property, Challenger Mezz.

 

“Applicable Percentage Share” means:

 

4

 

(1) with
respect to Mack-Cali, (a) with respect to the Class A Properties, the product
of (x) Mack-Cali’s Class A Property Percentage Share and (y) the OP Percentage
Interest, (b) with respect to the Class B Properties, the product of (x)
Mack-Cali’s Class B Property Percentage Share and (y) the OP Percentage
Interest and (c) with respect to the Class C Assets, the product of (x)
Mack-Cali’s Class C Property Percentage Share and (y) the OP Percentage
Interest; and

 

(2) with
respect to Gale SLG, (a) with respect to the Class A Properties, the product of
(x) Gale SLG’s Class A Property Percentage Share and (y) the OP Percentage
Interest, (b) with respect to the Class B Properties, the product of (x) Gale
SLG’s Class B Property Percentage Share and (y) the OP Percentage Interest and
(c) with respect to the Class C Assets, the product of (x) Gale SLG’s Class C
Property Percentage Share and (y) the OP Percentage Interest.

 

“Appurtenant Rights” means all rights of
way, tenements, hereditaments, easements, interests, minerals and mineral
rights, water and water rights, utility capacity and appurtenances, strips and
gores and all adjoining streets, alleys, roads, parking areas, curbs, curb
cuts, sidewalks, landscaping, signage, sewers and public ways, if any, in any
way belonging or appertaining to, and material to the ownership or operation
of, the Land and the Improvements.

 

“Assignment” has the meaning set forth in
Section 12(a)(vii).

 

“Assumption Approval Date” has the meaning
set forth in Section 5(a).

 

“Broker” has the meaning set forth in Section
18.

 

“Brokerage Agreements” means all agreements
with brokers or agents for the leasing of space at the Properties.

 

“Business Day” means any day other than a
Saturday, Sunday or other day on which banks located in New York, New York are
required or permitted to close.

 

“Certification of Representations and Warranties”
has the meaning set forth in Section 12(a)(vi).

 

“Challenger Mezz” has the meaning set forth
in the introductory paragraph.

 

“Challenger Ground Lease” means that certain
Lease of the Sixth Redevelopment Parcel, dated November 21, 1990 between the
Village of Ridgefield Park, as lessor and Hartz Mountain Industries, Inc., as
lesseee, as assigned by Hartz Mountain Industries, Inc. to Samsung America,
Inc. by Assignment and Assumption of Ground Lease, dated November 21, 1990, as
amended by First Amendment to Sixth Redevelopment Parcel Lease between the
Village of Ridgefield Park and Samsung America, Inc., dated June 14, 1993, and
assigned (to the extent of a 50% undivided interest) by Samsung America, Inc.
to Samsung Semiconductor, Inc. pursuant to an Assignment and Assumption of
Lease, dated September 1, 1995, as amended by Second Amendment to Redevelopment
Parcel Lease between the Village of Ridgefield Park and Samsung America, Inc.
and Samsung Semiconductor, Inc., dated February 11, 1997, as assigned by
Samsung America, Inc. and Samsung Semiconductor, Inc. to SAI/SSI Realty L.L.C.
by Assignment and Assumption of Lease, dated as of June 4, 1998, as assigned by
SAI/SSI Realty L.L.C. to Samsung America, Inc. and Samsung Semiconductor, Inc
by Assignment and

 

5

 

Assumption of Lease, dated as of December 22,
1998, as assigned by Samsung America, Inc. and Samsung Semiconductor, Inc. to
Wellsford/Whitehall Holdings, L.L.C. by Assignment and Assumption of Ground
Lease dated as of December 22, 1998, as amended by Third Amendment to Sixth
Redevelopment Parcel Lease, dated as of December 22, 1998, between the Village
of Ridgefield Park and Wellsford/Whitehall Holdings, L.L.C., as assigned by
Wellsford/Whitehall Holdings, L.L.C. to 105 Challenger Owner LLC by Assignment
and Assumption of Ground Lease, dated as of May 16, 2005.

 

“Challenger Interest” has the meaning set
forth in paragraph (F) of the Recitals.

 

“Challenger Owner” has the meaning set forth
in paragraph (F) of the Recitals.

 

“Challenger Parent” has the meaning set
forth in paragraph (G) of the Recitals.

 

“Challenger Property” has the meaning set
forth in paragraph (F) of the Recitals.

 

“Challenger Purchase Price” has the meaning
set forth in paragraph (N) of the Recitals.

 

“Challenger Transaction” has the meaning set
forth in paragraph (K) of the Recitals.

 

“Challenger TRS” has the meaning set forth
in paragraph (G) of the Recitals.

 

“Class A Properties” means the Properties
identified on Exhibit A as Class A Properties.

 

“Class A Property Percentage Share” has the
meaning given such term in the JVLLC Operating Agreement.

 

“Class B Properties” means the Properties
identified on Exhibit A as Class B Properties.

 

“Class B Property Percentage Share” has the
meaning given such term in the JVLLC Operating Agreement.

 

“Class C Assets” has the meaning set forth
in paragraph (C) of the Recitals.

 

“Class C Entities” has the meaning set forth
in paragraph (C) of the Recitals.

 

“Class C Policies” has the meaning set forth
in Section 7(k).

 

“Class C Properties” has the meaning set
forth in Section 7(k).

 

“Class C Property Percentage Share” has the
meaning given such term in the JVLLC Operating Agreement.

 

“Class Tax Liability” has the meaning set
forth in Section 17.

 

“Clause A Amount” has the meaning set forth
in paragraph O of the Recitals.

 

“Clause B Amount” has the meaning set forth
in paragraph O of the Recitals.

 

6

 

“Clause C Amount” has the meaning set forth
in paragraph O of the Recitals.

 

“Closing” has the meaning set forth in
Section 5(a).

 

“Closing Date” has the meaning set forth in
Section 5(a).

 

“Closing Documents” has the meaning set
forth in Section 12(a).

 

“Closing Statement” has the meaning set
forth in Section 15(k).

 

“Code” shall mean the Internal Revenue Code
of 1986, as amended, as it may be further amended from time to time, and any
successor statutes thereto, and applicable U.S. Department of Treasury
regulations issued pursuant thereto in temporary or final form.

 

“Condition of the Interest” has the meaning
set forth in Section 8(f)(ii).

 

“Contributed Interest” has the meaning set
forth in paragraph (A) of the Recitals.

 

“Contribution and Subscription Agreements”
has the meaning set forth in Section 8(a)(iii).

 

“Date of Agreement” has the meaning set
forth in the introductory paragraph.

 

“Debt Assumption” has the meaning set forth
in Section 12(c).

 

“Deposit” has the meaning set forth in
Section 3.

 

“Encumbrance” has the meaning set forth in Section 8(a)(iii).

 

“Entity-Related Representations” has the
meaning set forth in Section 16(b).

 

“Environmental Law” shall mean any
applicable federal, state, county or municipal statute, ordinance, rule,
regulation, order, code, directive or requirement, together with all successor
statutes, ordinances, rules, regulations, orders, codes, directives or
requirements, of any Governmental Authority in any way related to Hazardous
Materials.

 

“Escrowee” has the meaning set forth in
Section 6.

 

“Escrow Agreement” has the meaning set forth
in Section 6.

 

“Existing Fixed Rate Debt” means, for each
Property, the mortgage loan so identified for such Property on Schedule 12(c).

 

“Existing Floating Rate Debt” shall mean the
mortgage loan, dated July 30, 2004, made by Wachovia Bank, National Association
to certain of the Owners in the original principal amount of $344,395,000.

 

“Existing Mezz Debt” shall mean,
collectively, (a) the revolving mezzanine loan, dated July 30, 2004,
made by SLG Gale Funding LLC to Portfolio Mezz in the maximum principal

 

7

 

amount of $25,000,000 and (b) the
mezzanine loan, dated May 16, 2005 made by Gramercy Warehouse Funding II
LLC to Challenger Mezz in the amount of $6,500,000.

 

“Expense Reimbursements” has the meaning set
forth in Section 15(d)(ii).

 

“Financials” has the meaning set forth in
Section 8(a)(xiii).

 

“Gale GP Interest” has the meaning set forth
in paragraph (A) of the Recitals.

 

“Gale OP Units” has the meaning set forth in
paragraph (A) of the Recitals.

 

“Gale SLG” has the meaning set forth in the
introductory paragraph.

 

“Gale SLG Entity” and “Gale SLG Entities” have the meanings set
forth in paragraph (H) of the Recitals.

 

“Gale SLG Interest” has the meaning set
forth in paragraph (P) of the Recitals.

 

“Gale SLG Lease Cost Space” has the meaning
set forth in Section 9(g).

 

“Gale SLG Transferor” and “Gale SLG Transferors” have the meanings set
forth in the introductory paragraph.

 

“Gale SLG Transferors’ Representatives” has
the meaning set forth in Section 19.

 

“Gale SLG Naperville” has the meaning set
forth in paragraph (C) of the Recitals.

 

“GAAP” means United States generally
accepted accounting principles and practices in effect on the date of this
Agreement.

 

“Governmental Authority” shall mean any
court, board, agency, commission, office, authority, department, bureau or
instrumentality of any nature whatsoever or any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence.

 

“Governmental Order” means any order, writ,
judgment, injunction, decree, stipulation, determination or award entered by or
with any Governmental Authority.

 

“GI Test” has the meaning set forth in
Section 4(b).

 

“GP” has the meaning set forth in paragraph
(A) of the Recitals.

 

“GP Operating Agreement” has the meaning set
forth in paragraph (A) of the Recitals.

 

“Guarantor Release” has the meaning set
forth in Section 12(c).

 

“Hazardous Materials” has the meaning set
forth in Section 8(f)(ii)(A).

 

8

 

“Improvements” means all buildings, fixtures
and other improvements existing on the Land.

 

“Initial Deposit” has the meaning set forth
in Section 3.

 

“Intangibles” means all right, title and
interest in and to all trade names, trademarks, copyrights, service marks,
logos, designs, goodwill, telephone numbers, proprietary software (and
documentation thereof), books and records, and other intellectual and
intangible property used by Owner, if any, in connection with, and material to,
the ownership, operation and maintenance of the Property.

 

“JVLLC” has the meaning set forth in
paragraph (J) of the Recitals.

 

“JVLLC Operating Agreement” has the meaning
set forth in paragraph (K) of the Recitals.

 

“Knowledge” has the meaning set forth in
Section (8)(c).

 

“Knowledge Parties” has the meaning set
forth in Section (8)(c).

 

“Land” means the real property constituting
any Property.

 

“Law” means any foreign, federal, national, supranational,
state, provincial, local or similar statute, law, ordinance, regulation, rule,
code, order, requirement or rule of law (including common law) in effect as of
the date hereof.

 

“Leases” means all rights as lessor,
landlord or licensor under all leases, tenancies and rental or occupancy
agreements granting possessory rights, options, rights of first refusal or
similar rights with respect to any interest in the Properties or any part
thereof, in, on or covering the Land or Improvements, together with all
modifications, extensions, amendments and guarantees thereof, together with
such other leases of the Improvements (together with modifications, extensions,
amendments and guarantees thereof) as may be made prior to Closing in
accordance with the terms of this Agreement.

 

“Letter of Credit” has the meaning set forth
in Section 3.

 

“Liabilities” means any and all debts,
liabilities and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or determinable, including those arising
under any Law, Action or Governmental Order and those arising under any
contract, agreement, arrangement, commitment or other undertaking.

 

“Licenses” means all plans, drawings,
specifications, blueprints and surveys in Owner’s possession and relating in
any material way to, the Land, Improvements, and Appurtenant Rights, and all
licenses, franchises, occupancy and use certificates, permits, authorizations,
consents, variances, waivers, approvals and the like from any governmental or
quasi-governmental entity or instrumentality materially affecting the
ownership, operation or maintenance of the Land or the Improvements, including,
without limitation, the Licenses set forth on Schedule
8(a)(xxvii).

 

9

 

“Mack-Cali” has the meaning set forth in the
introductory paragraph.

 

“Mack-Cali  Interest”
has the meaning set forth in paragraph (O) of the Recitals.

 

“Mack-Cali Representatives” has the meaning
set forth in Section 19.

 

“Mandatory Tenants” has the meaning set
forth in Section 9(j).

 

“Master Lease Space” has the meaning set
forth in Section 9(g).

 

“Minimum Estoppel Requirement” shall have
the meaning set forth in Section 9(j).

 

“New Exceptions” has the meaning set forth
in Section 7(b).

 

“New Financing” has the meaning set forth in
Section 12(d).

 

“Non-Portfolio Property Payment” has the
meaning set forth in Section 16(d).

 

“Notice” shall mean, in addition to its
ordinary meaning, any written communication of any nature, whether in the form
of correspondence, memoranda, order, directive or otherwise.

 

“OP” has the meaning set forth in paragraph
(A) of the Recitals.

 

“OP Partnership Agreement” has the meaning
set forth in paragraph (A) of the Recitals.

 

“OP Percentage Interest” or “OP Percentage Share” means, as of any date
in respect of which the same is determined, the aggregate Percentage Interest
(as defined in the OP Partnership Agreement) in the OP owned, directly or
indirectly, by JVLLC as of such date.

 

“Op Sub II” has the meaning set forth in
paragraph (D) of the Recitals.

 

“Op Sub II Interest” has the meaning set
forth in paragraph (D) of the Recitals.

 

“Organizational Documents” has the meaning
set forth in Section 8(a)(ix).

 

“Owner” and “Owners” have the meanings set forth in paragraph (F) of the
Recitals.

 

“Permitted Exceptions” has the meaning set
forth in Section 7(g).

 

“Parking Field Lot” has the meaning set
forth in Section 7(b).

 

“Personal Property” means all equipment and
fixtures (other than those owned by tenants) attached to the Improvements and
located at and used in connection with the ownership, operation and maintenance
of the Land or the Improvements, including without limitation all heating,
lighting, air conditioning, ventilating, plumbing, electrical or other mechanical
equipment, other than such equipment and fixtures which are de minimis in the
operation of the applicable Property. The Personal Property is set forth on
Schedule 8(a)(xxiii).

 

10

 

“Portfolio Mezz” has the meaning set forth
in the introductory paragraph.

 

“Portfolio Owners” has the meaning set forth
in paragraph (C) of the Recitals.

 

“Portfolio Property” and “Portfolio Properties” have the meanings set
forth in paragraph (C) of the Recitals.

 

“Portfolio Purchase Price” has the meaning
set forth in paragraph (O) of the Recitals.

 

“Portfolio Transaction” has the meaning set
forth in paragraph (K) of the Recitals.

 

“Portfolio TRS” has the meaning set forth in
paragraph (D) of the Recitals.

 

“Portfolio TRS Reorganization” has the
meaning set forth in paragraph (J) of the Recitals.

 

“Post-Closing Owner” has the meaning set
forth in Section 15(a).

 

“Post-Closing Period” has the meaning set
forth in Section 19.

 

“Post-Closing Straddle Period” has the
meaning set forth in Section 19.

 

“Pre-Closing Owner” has the meaning set
forth in Section 15(a).

 

“Pre-Closing Period” has the meaning set
forth in Section 19.

 

“Pre-Closing Straddle Period” has the
meaning set forth in Section 19.

 

“Pre-Closing Tax Return” has the meaning set
forth in Section 19.

 

“Proceeding” has the meaning set forth in
Section 19.

 

“Property” and “Properties” have the meanings set forth in paragraph (F) of
the Recitals and shall include the applicable Owner’s interest in the related
Land, Improvements, Appurtenant Rights, Personal Property, Leases, Contracts,
Licenses and Intangibles.

 

“Rent Roll” has the meaning set forth in
Section 8(a)(xxiii).

 

“Rent Shortfall Guaranty” has the meaning
set forth in Section 9(g).

 

“Restricted Property” and “Restricted Properties” have the meanings
set forth in Section 19(a).

 

“Scheduled Payment Date” means a scheduled
payment date under the Existing Floating Rate Debt.

 

“Section 9 Leasing Costs” has the meaning
set forth in Section 9(g).

 

11

 

“Service  Contracts”
means all contracts, agreements, employment agreements, guarantees, warranties
and indemnities, if any, affecting the ownership, operation, management and
maintenance of the Land, Improvements, Appurtenant Rights, Personal Property
and Leases, other than contracts which are de minimis in the operation of the
applicable Property. The Service Contracts are set forth on Schedule 8(a)(xi) attached hereto.

 

“Straddle Returns” has the meaning set forth
in Section 19.

 

“Surveys” means the surveys of the
Properties listed on Schedule 8(a)(xxxi).

 

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

 

“Tax Cert Proceedings” has the meaning set
forth in Section 8(a)(xxx).

 

“Tax Claim” has the meaning set forth in
Section 19.

 

“Tax Returns” means any and all statements,
returns, reports and forms (including elections, declarations, claims for
refund, amendments, schedules, information returns or attachments thereto)
filed or required to be filed with a Governmental Authority with respect to
Taxes.

 

“Tenant Estoppel” has the meaning set forth
in Section 9(j).

 

“Thornall Interest” has the meaning set
forth in paragraph (E) of the Recitals.

 

“Thornall LLC Agreement” has the meaning set
forth in Section 8(a)(v).

 

“Thornall Owner” has the meaning set forth
in paragraph (E) of the Recitals.

 

“Thornall Property” has the meaning set
forth in paragraph (E) of the Recitals.

 

“Thornall Transaction” has the meaning set
forth in paragraph (K) of the Recitals.

 

“Thornall Purchase Price” has the meaning
set forth in paragraph (M) of the Recitals.

 

“Title Clearance Date” has the meaning set
forth in Section 7(b).

 

“Title Commitment” has the meaning set forth
in Section 7(a).

 

“Title Company” has the meaning set forth in
Section 7(a).

 

12

 

“Title Election” has the meaning set forth
in Section 7(f).

 

“TOE Date” has the meaning set forth in
Section 5(a).

 

“TOE Declaration” has the meaning set forth
in Section 5(a).

 

“TOE Declarer” has the meaning set forth in
Section 5(a).

 

“Total Purchase Price” has the meaning set
forth in paragraph (O) of the Recitals.

 

“Transaction” has the meaning set forth in
paragraph (K) of the Recitals.

 

“Troy Entities” has the meaning set forth in
paragraph (C) of the Recitals.

 

“Troy Properties” has the meaning set forth
in paragraph (C) of the Recitals.

 

“Troy JV” has the meaning set forth in
Section 20.

 

“Troy Transaction” has the meaning set forth
in Section 20.

 

“TRS Sub” has the meaning set forth in
paragraph (J) of the Recitals.

 

“Unfunded Leasing Expenses” has the meaning
set forth in Section 15(i).

 

“Unpermitted Exceptions” has the meaning set
forth in Section 7(b).

 

“Waterview Interest” has the meaning set
forth in paragraph (E) of the Recitals.

 

“Waterview LLC Agreement” has the meaning
set forth in Section 8(a)(v).

 

“Waterview Owner” has the meaning set forth
in paragraph (E) of the Recitals.

 

“Waterview Property” has the meaning set
forth in paragraph (E) of the Recitals.

 

“Waterview Transaction” has the meaning set
forth in paragraph (K) of the Recitals.

 

“Waterview Purchase Price” has the meaning
set forth in paragraph (L) of the Recitals.

 

2.             AGREEMENT FOR CONTRIBUTION AND
SALE.

 

(a)           Mack-Cali
agrees to buy, and Portfolio Mezz agrees to sell, the Waterview Interest in
exchange for the Waterview Purchase Price and the Thornall Interest in exchange
for the Thornall Purchase Price, subject to the terms and conditions contained
herein, including prorations and adjustments.

 

(b)           Mack-Cali
agrees to buy, and Challenger Mezz agrees to sell, the Challenger Interest in
exchange for the Challenger Purchase Price, subject to the terms and conditions
contained herein, including prorations and adjustments.

 

13

 

(c)           Gale
SLG agrees to contribute the Contributed Interest to JVLLC.

 

(d)           Mack-Cali
agrees to buy, and Gale SLG agrees to sell, the Mack-Cali Interest in exchange
for the Portfolio Purchase Price, subject to the terms and conditions contained
herein, including prorations and adjustments.

 

3.             DEPOSIT.

 

On or about
February 6, 2006, Mack-Cali deposited with Gale SLG the sum of $500,000 as an
initial deposit (the “Initial Deposit”)
in respect of the transaction contemplated by this Agreement and simultaneous
with the execution of this Agreement, Mack-Cali has deposited with Escrowee (as
hereinafter defined) cash or an unconditional irrevocable Letter of Credit (a “Letter of Credit”) in the amount of
$14,500,000.00 as an additional deposit (such additional deposit together with
the Initial Deposit, shall constitute the “Deposit”
in the aggregate amount of $15,000,000.00). Simultaneously with the execution
of this Agreement, Gale SLG shall transfer the Initial Deposit to Escrowee. Upon
the closing of the transaction contemplated by this Agreement, the Deposit and
all interest earned thereon shall be delivered to Gale SLG, Mezz or Challenger
Mezz, as determined by Gale SLG, and, to the extent in cash, shall be applied
against the portion of the Total Purchase Price due to Gale SLG, Mezz or
Challenger Mezz, as applicable. If the transaction does not so close, the Deposit
shall be disbursed in accordance with the terms of this Agreement.

 

4.             DUE DILIGENCE WAIVED; SPECIAL
GALE TERMINATION RIGHT.

 

(a)           Mack-Cali
has completed its due diligence with respect to the Properties, the Gale SLG
Entities and has no right to terminate or rescind this Agreement except as
expressly set forth herein.

 

(b)           The
parties hereto acknowledge that Mack-Cali, or an affiliate thereof, is
currently pursuing a transaction (the “Services
Transaction”) pursuant to which it may acquire the membership
interests in The Gale Services Company, L.L.C. and The Gale Construction
Services Company, L.L.C. and certain of their subsidiaries (together,
collectively, the “Services Companies”),
as partially described in the Letter of Intent, dated February 6, 2006, from
Mitchell E. Hersh to Stanley C. Gale (as the same may be amended from time to
time to, among other things, include additional assets, the “Services LOI”). If Mack-Cali elects to
terminate the Services Transaction at any time during or at the expiration of
the Due Diligence Period (as defined in the Services LOI) for any reason other
than failure of the Services Companies to meet the GI Test, or if the Services
Transaction fails to close by reason of a failure by Mack-Cali or its
affiliates to satisfy any condition precedent to sellers’ obligations
thereunder, Gale SLG shall have the option of terminating this Agreement, by
notice to Mack-Cali within 10 Business Days after Mack-Cali’s termination of
the Services LOI, and in the event of such termination by Gale SLG, the
Deposit, together with any interest earned thereon, shall promptly be returned
to Mack-Cali and this Agreement shall be of no further force or effect, except
for obligations that are expressly intended to survive the termination of this Agreement.
For purposes of this paragraph, the “GI Test”
shall mean that the annual aggregate gross income (as defined in the Membership
Interest Purchase Agreement in

 

14

 

connection with the Services Transaction) of
the Services Companies is equal to or in excess of $17,500,000.00.

 

5.             CLOSING.

 

(a)           Subject
to terms and conditions of this Agreement, the closing of the transaction
contemplated by this Agreement (the “Closing”)
shall take place on the date (the “Closing
Date”) which is the first Scheduled Payment Date the date (the “Assumption Approval Date”) which is five
(5) days after the approval of the Debt Assumption by the lenders under the
Existing Fixed Rate Debt; provided that, either the Gale SLG Transferors
or Mack-Cali may, by written notice to the other on or before such first
Scheduled Payment Date, extend the Closing until the second Scheduled Payment
Date after the Assumption Approval Date, and by further written notice on or
before such second Scheduled Payment Date, until the third Scheduled Payment
Date after the Assumption Approval Date. If all necessary conditions precedent
to Closing have been satisfied or waived, and the Closing has not occurred on
or before the Closing Date, as extended to the second or third Scheduled
Payment Date after the Assumption Approval Date, either the Gale SLG
Transferors or Mack-Cali (the “TOE Declarer”)
may, by written notice, declare that time is of the essence (a “TOE Declaration”), and if the other party
fails to Close on the next subsequent Scheduled Payment Date (such next
subsequent Payment Date, the “TOE Date”),
such party shall be deemed to be in default hereunder, and the TOE Declarer
shall be entitled to terminate this Agreement. If the Gale SLG Transferors are
the TOE Declarer and the Closing fails to occur on the TOE Date because
Mack-Cali is unable or unwilling to Close, the Gale SLG Transferors shall be
entitled to retain the Deposit and any interest earned thereon, as liquidated
damages. The Gale SLG Transferors and Mack-Cali agree it would be impractical
and extremely difficult to fix the damages which the Gale SLG Transferors would
suffer as a result of a default by Mack-Cali hereunder. Mack-Cali and the Gale
SLG Transferors hereby agree that (i) an amount equal to the Deposit (together
with any interest thereon) is a reasonable estimate of the total net detriment
the Gale SLG Transferors would suffer in the event Mack-Cali defaults and fails
to complete the purchase of the Challenger Interest, the Thornall Interest, the
Waterview Interest and the Mack-Cali Interest, and (ii) such amount will be the
full, agreed and liquidated damages for Mack-Cali’s default and failure to
consummate the Transaction, and will be the Gale SLG Transferors’ sole and exclusive
remedy (whether at law or in equity) for any default of Mack-Cali resulting in
the failure of consummation of the Closing, whereupon this Agreement will be of
no further force or effect, except for those provisions which expressly survive
the termination hereof. The payment of such amount as liquidated damages is not
intended as a forfeiture or penalty but is intended to constitute liquidated
damages to the Gale SLG Transferors. Except as set forth above, the Gale SLG
Transferors expressly waive their rights to seek damages if the Closing and the
transactions contemplated hereby do not occur as herein provided by reason of
any default of Mack-Cali. If Mack-Cali is the TOE Declarer and the Closing
fails to occur on the TOE Date because Gale SLG Transferors are unable or
unwilling to Close and have no further right hereunder to adjourn the Closing
Date for the purposes of performing their obligations or satisfying conditions
precedent to Mack-Cali’s obligation to Close hereunder, Mack-Cali at its option
may either (i) terminate this Agreement and direct Escrowee to return to
Mack-Cali the Deposit, together with any interest earned

 

15

 

thereon, and
upon such refund, this Agreement shall be deemed terminated and of no further
force or effect, except for those provisions that expressly survive termination
hereunder, and neither Mack-Cali nor Gale SLG Transferors shall have any
further right or liability against the other hereunder, or (ii) to seek
specific performance of the Gale Transferors’ obligation to execute the
documents required to convey the Challenger Interest, the Waterview Interest,
the Thornall Interest and the Mack-Cali Interest to Mack-Cali under this
Agreement, it being understood that the remedy of specific performance shall
not be available to enforce any other obligation of the Gale SLG Transferors
hereunder. Except as set forth above, Mack-Cali expressly waives its rights to
seek damages if the Closing and the transactions contemplated hereby do not
occur as herein provided by reason of any default or misrepresentation of the
Gale SLG Transferors. Mack-Cali shall be deemed to have elected to terminate
this Agreement and receive back the Deposit as its sole and exclusive remedy if
Mack-Cali fails to file suit for specific performance against the Gale SLG
Transferors in a court of competent jurisdiction on or before 45 days following
the TOE Date.

 

(b)           At
Closing, Gale SLG and Mack-Cali shall make, or cause to be made, the deliveries
required of the Gale SLG Transferors under Section
12 below. At Closing, Mack-Cali shall (i) pay the Waterview Purchase
Price and the Thornall Purchase Price to Portfolio Mezz in exchange for the
Waterview Interest and the Thornall Interest (ii) pay the Challenger Purchase
Price to Challenger Mezz in exchange for the Challenger Interest and (iii) pay
the Portfolio Purchase Price to Gale SLG in exchange for the Mack-Cali
Interest, in each case subject to the prorations and adjustments provided
herein.

 

6.             ESCROW.

 

The Deposit
shall be held in escrow by the Title Company (“Escrowee”) in accordance with an escrow agreement in the form
attached hereto as Exhibit F
(the “Escrow Agreement”). Any fees
relating to the Escrow Agreement shall be borne one half by Gale SLG and one
half by Mack-Cali. The obligations of Mack-Cali and the Gale SLG Transferors
under this Section 6 shall
survive the Closing or termination of this Agreement.

 

7.             TITLE COMMITMENT.

 

(a)           Mack-Cali
has procured or will procure title commitments for each of the Properties
(collectively, the “Title Commitment”)
for owner’s and lender’s title insurance policies issued by Commonwealth Land
Title Insurance Company (the “Title Company”),
and shall deliver copies of same to Gale SLG upon receipt. Gale SLG shall have
the right to designate an additional title insurance company or companies to
act as co-insurer only with respect to 50% of the coverage under all of the
title insurance policies issued at Closing with respect to the Class B
Properties, it being understood that the Title Company shall act as “lead
insurer”.

 

(b)           Mack-Cali
may, at any time prior to Closing, but solely with respect to matters arising
after the date of the Title Commitment and added as exceptions thereto after
the date hereof and prior to Closing and any exceptions shown on an updated
survey obtained after the date hereof and prior to Closing and not shown on the
Surveys

 

16

 

(collectively,
the “New Exceptions”), notify Gale
SLG in writing of any objections to such New Exceptions; provided that
Mack-Cali may not object to those matters described in Sections 7(g)(i)-(ix). With respect to any
objections to title properly set forth in such notice, the Applicable Gale SLG
Transferor shall have the right, but not the obligation, until the date which
is ten (10) Business Days after being notified of such objection (the “Title Clearance Date”) to inform Mack-Cali
in writing of its intent to have any of such exceptions (collectively, the “Unpermitted Exceptions”) removed from the
Title Commitment or to have the Title Company omit, at the Applicable Gale SLG
Transferor’s expense, such Unpermitted Exceptions from the Title Commitment. The
parties agree that the New Exceptions may include objections relating to title
searches and survey of a 0.561 acre lot (the “Parking
Field Lot”) at Block 230, Lot 1 adjacent to the 1280 Wall Street
West, Lyndhurst, New Jersey property. The Parking Field Lot appears to be
included in the common elements for the 1280 Wall condominium but no title
search or survey was provided or obtained for the Parking Field Lot prior to
the Date of Agreement.

 

(c)           If
any Property shall be affected by any lien or other encumbrance which is not a
Permitted Exception and which may be discharged by the payment of an
ascertainable amount of money (which amount, in the aggregate for all such
encumbrances on all of the Properties, shall not exceed $1,000,000.00, subject
to the provisions of Section 7(e))
then it shall be the Applicable Gale SLG Transferor’s obligation to cause the
discharge of such lien or encumbrance at Closing, or, at the option of the
Applicable Gale SLG Transferor, to bond or escrow (or cause such bond or
escrow) for such lien or encumbrance in a manner sufficient to cause the Title
Company to remove same from the Title Commitment.

 

(d)           Subject
to Section 7(g) below, in the
event there shall be any New Exceptions affecting the Properties other than (or
in amounts larger than) those required to be discharged or removed from the
Title Commitment pursuant to Section 7(c)
the Gale SLG Transferors shall have the following options, exercisable in their
sole and absolute discretion: (i) to cause the same to be removed from the
Title Commitment at Gale SLG Transferors’ sole cost and expense at or prior to
the Closing, in which case this Agreement shall remain in full force and effect
or (ii) to notify Mack-Cali that Gale SLG Transferors elect not to remove same,
in which case Mack-Cali shall have the right to either (A) terminate this
Agreement and Escrowee shall return the Deposit to Mack-Cali, together with
interest earned thereon as its sole and exclusive remedy, in which event this
Agreement shall be deemed terminated and of no further force or effect, except
for those provisions that expressly survive termination hereunder and neither
Mack-Cali nor the Gale SLG Transferors shall have any further right or
liability against the other hereunder, or (B) proceed to Close hereunder,
without credit or adjustment to any Purchase Price by reason of any such
exceptions (except that Mack-Cali shall be entitled to a credit to the extent
of any amount required to be applied to cure liens or encumbrances pursuant to Section 7(c)).

 

(e)           Notwithstanding
anything to the contrary contained in this Section
7, if there shall be (x) unbonded mechanics’ or materialman’s liens
affecting any Property, other than those placed or caused by Tenants under the
Leases (or by parties claiming

 

17

 

under such
Tenants) or other liens and encumbrances (other than Permitted Encumbrances),
whether or not in liquidated sums, which a Gale SLG Transferor has allowed to
be placed on such Property after the date hereof, including judgments and
federal state and municipal tax liens, or (y) any mortgages or instruments
securing or evidencing a payment obligation other than the Existing Fixed Rate
Debt and Existing Floating Rate Debt, and in each case which exist as of the
Closing Date then the applicable Gale SLG Transferor shall cause such
exceptions to be removed from the Title Commitment, at its sole cost and
expense, which shall not be subject to the limit provided in Section 7(c).

 

(f)            Except
as otherwise provided herein, if the Applicable Gale SLG Transferor fails on or
before the Title Clearance Date to give written notice to Mack-Cali of its
intent to cause any of the Unpermitted Exceptions to be removed prior to
Closing, or omitted by the Title Company, then, Mack-Cali shall, as its sole
remedy, have the option (the “Title Election”)
to either (i) terminate this Agreement, in which case the parties hereto shall
have no further obligations hereunder (except for obligations that are
expressly intended to survive the termination of this Agreement), and receive a
return of the Deposit, together with any interest earned thereon, or (ii)
proceed with Closing, with no reduction in the amount of the Total Purchase
Price, and Mack-Cali shall be deemed to have waived any objection to the
Unpermitted Exceptions which the Gale SLG Transferors do not intend to cause to
be removed or omitted, and any other exceptions set forth in the Title
Commitment. If Mack-Cali fails to notify Gale SLG of its Title Election by the
earlier of the Closing Date or five (5) days after the Title Clearance Date,
Mack-Cali shall be deemed to have terminated this Agreement as set forth in
subclause (i) above. If the Applicable Gale SLG Transferor notifies Mack-Cali
of its intention to cure any such matters, the date for Closing may, at the
request Gale SLG, be extended by a reasonable additional time to effect such a
cure, but in no event shall the extension exceed sixty (60) days after the
original date for Closing.

 

(g)           It
shall be a condition precedent to the obligation of Mack-Cali to proceed to
Closing hereunder that at Closing the applicable Owner shall hold fee title (or
in the case of Challenger Owner, a ground leasehold interest in the Challenger
Property) to the applicable Property free and clear of any and all mortgages,
liens, claims, leases, tenancies, occupants, encumbrances and easements, except
the following (collectively, “Permitted
Exceptions”):

 

(i)            All taxes, water
meter and water charges and sewer rents, accrued or unaccrued, fixed or not
fixed, becoming due and payable after the Closing Date, but subject to
adjustment as provided herein;

 

(ii)           All zoning laws and
building ordinances, resolutions, regulations and orders of all Governmental
Authorities;

 

(iii)          Liens and security
interests securing the Existing Fixed Rate Debt;

 

(iv)          Any exception shown
on the applicable Survey set forth on Schedule 8(a)(xxxi)
and any additional exceptions any updates thereto would

 

18

 

show, provided
that such additional exceptions do not prevent or interfere with the continued
use of the Properties as they are being used on the date hereof;

 

(v)           Any easement or
right of use created in favor of a public utility company for electricity,
steam, gas, telephone, water or other service, and the right thereunder to
install, use, maintain repair and replace wires, cables, terminal boxes, lines,
service connections, poles, mains, facilities and the like, upon, under and
across the applicable Property;

 

(vi)          Any difference in
lot lines shown on an accurate survey and tax lot lines;

 

(vii)         Non-material
violations of building ordinances, resolutions and regulations;

 

(viii)        Any other matters
set forth as exceptions to title in the existing owners’, or in the case of the
Challenger Property, leasehold owner’s, policies of title insurance held by the
Owners, dated July 30, 2004 (in the case of the Portfolio Properties) and
May 16, 2005 (in the case of the Challenger Property), and provided to
Mack-Cali, which policies are set forth on Schedule
7(g)(viii);

 

(ix)           Any Exception set
forth in the Title Commitment and not objected to as provided in Section 7(b) and matters otherwise approved
or deemed approved in accordance with this Agreement; and

 

(x)            Any Unpermitted
Exception that has been waived as provided in Section
7(d) or (f).

 

(h)           If
at the Closing it should appear that the applicable owner’s or leasehold owner’s
title to any Property is subject to any exception other than the Permitted
Exceptions, and if such exception may, according to reasonable expectations, be
removed as an objection to title within 60 days after the scheduled Closing Date, Gale
SLG may adjourn the Closing Date for a period not exceeding 60 days in the
aggregate for such purpose.

 

(i)            Subject
to the other provisions of this Section 7,
after any applicable adjournment, the relevant Owner does not hold title to
each Property subject to and in accordance with the provisions of this
Agreement, Mack-Cali shall have the right to waive the defect in title and
Close without a reduction in Total Purchase Price, or terminate this Agreement
by written notice to Gale SLG, whereupon the Deposit and all interest earned
thereon shall be refunded to Mack-Cali and the parties shall thereafter have no
further rights or obligations hereunder except with respect to those provisions
of this Agreement that expressly survive termination.

 

(j)            Notwithstanding
the foregoing provisions of this Section 7,
in the event that the Title Company shall raise an exception to title which is
not a Permitted Exception, the Gale SLG Transferors shall have no obligation to
cause such exception to be eliminated and Mack Cali shall have no right to
terminate the Agreement by reason of

 

19

 

such exception
if the Title Company (or any other reputable title insurance company licensed
to issue title insurance in the State of New York) shall be prepared to omit
such exception, at no additional cost or expense (unless the Gale SLG
Transferors shall agree, in the Gale SLG Transferors’ sole discretion, to
assume any such additional cost or expense).

 

(k)           Mack-Cali
acknowledges that it has received copies of the current owner’s title insurance
policies (the “Class C Policies”)
with respect to the properties in which the Class C Entities hold an indirect
ownership interest (the “Class C Properties”).
Mack-Cali shall have no right of objection to any exception contained therein
and the Gale SLG Transferors shall have no obligation to remove any exception
contained therein or any encumbrance placed upon any Class C Property at any time.

 

(l)            Any
owner’s title insurance policies procured at the Closing shall be at Mack-Cali’s
sole cost and expense.

 

(m)          At
Closing, if requested by the Title Company, the Applicable Gale SLG Transferor
or Gale SLG Entity shall execute and deliver a normal, customary title
affidavit to the Title Company in substantially the form attached hereto as Exhibit E.

 

8.             REPRESENTATIONS AND WARRANTIES.

 

(a)           The
Gale SLG Transferors represent and warrant to Mack-Cali, as of the Date of
Agreement, as follows:

 

(i)            (A) Each of the
Gale SLG Entities and each Gale SLG Transferor is duly organized, validly
existing and in good standing under the laws of the State of their formation
and each Owner is qualified to do business in the State in which the Property
owned by it is located and any other jurisdictions where qualification to do
business is necessary. (B) Each of the Gale SLG Transferors has all necessary
right, power and authority to execute, enter into and deliver this Agreement
and to consummate all of the transactions contemplated herein. (C) The
individuals executing this Agreement on behalf of the Gale SLG Transferors (or
on behalf of partners, members or managers of the Gale SLG Transferors) are
duly authorized to enter into, execute, deliver and perform this Agreement on
behalf of the Gale SLG Transferors (or on behalf of partners, members or
managers of the Gale SLG Transferors) and to bind the Gale SLG Transferors. No
consent of any third party (other than lender consents in connection with the
Debt Assumption) that has not been or will not prior to the Closing be obtained
is required in order for the Gale SLG Transferors and the Gale SLG Entities to
consummate the Transaction. (D) The organizational chart set forth as Exhibit B-1 attached hereto accurately sets
forth the ownership structures of the Gale SLG Transferors and the Gale SLG
Entities and certain of their affiliates shown thereon as of the date hereof,
subject to the provisions of Section 21.
(E) This Agreement and all documents to be executed by the Gale SLG Transferors
or any of the Gale SLG Entities and delivered to Mack-Cali hereunder (1) are
or, at the time of such execution and delivery, will be the legal, valid and
binding

 

20

 

obligations of
such Gale SLG Transferors or such Gale SLG Entities, enforceable against such
parties in accordance with their terms, (2) do not or, at the time of such
execution and delivery, will not contravene any provision of such Gale SLG
Transferor’s or such Gale SLG Entity’s organizational documents (including,
without limitation, restrictions on transfer, if any, set forth in operating
agreements, partnership agreements, shareholders’ agreements, by-laws and the
like of any of the Gale SLG Transferors or the Gale SLG Entities) or any
existing laws and regulations applicable to such Gale SLG Transferors or such
Gale SLG Entities or any of the Properties and (3) do not and will not conflict
with or result in a violation of any material agreement, instrument, order,
writ, judgment or decree to which such Gale SLG Transferors or such Gale SLG
Entities is a party or is subject or which is binding upon it or its Property;

 

(ii)           Intentionally
Omitted.

 

(iii)          The total number of
outstanding OP Units (as defined in the OP Partnership Agreement) is
34,100,052; the total number of outstanding GP Units (as defined in the OP
Partnership Agreement) is 327,508 and the total number of outstanding Preferred
GP Units (as defined in the OP Partnership Agreement) is 1,364,723. Gale SLG
holds 32,754,800 OP Units. The GP holds 327,508 GP Units and 1,364,723
Preferred GP Units. Other than by reason of redemption of limited partners of
the OP, as set forth in the OP Partnership Agreement, redemption of the
Preferred GP Units, at Closing, and additional OP Units that may be issued to
the GP or to Gale SLG in the event they contribute additional common equity to
the OP, as permitted by the terms and provisions of the OP Partnership
Agreement, there shall continue to be an aggregate total of 34,100,052 OP Units
outstanding at Closing. At Closing all Preferred GP Units will be redeemed and
converted to OP Units. Gale SLG, together with its wholly-owned subsidiary, the
GP, is the legal and beneficial owner and holder of the Contributed Interest
and as of Closing the Contributed Interest will be held by JVLLC free and clear
of any lien, pledge, security interest, claim or encumbrance of any nature
(collectively, “Encumbrances”)
and, except as set forth in the OP Partnership Agreement, the GP Operating Agreement,
the Contribution and Subscription Agreements made by the limited partners of
the OP other than Gale SLG (collectively, the “Contribution and Subscription Agreements”), which Contribution
and Subscription Agreements are described on Schedule
8(a)(iii), and the liens of the Existing Fixed Rate Debt, the
Existing Floating Rate Debt and the Existing Mezz Debt, there are no
Encumbrances, fixed or contingent, that directly or indirectly, (x) provide for
the sale, pledge or other transfer or disposition of interests in the GP, the
OP, Challenger Mezz, Portfolio Mezz or the Owner or any rights with respect
thereto, or relate to the voting, disposition, exercise, or control of any of
such interests or (y) obligate Gale SLG, JVLLC, the GP, the OP, Challenger Mezz,
Portfolio Mezz or any Owners to grant, offer or enter into any of the
foregoing.

 

(iv)          Neither Gale SLG nor
the GP has granted, or caused the OP or the GP, as the case may be, to grant,
any option, warrant, subscription, or rights of

 

21

 

 

conversion or
exchange, equity or otherwise, that would obligate the OP to issue additional
GP Units or OP Units except as set forth in the OP Partnership Agreement and
the Contribution and Subscription Agreements or that would obligate the GP the
issue additional membership interests in the GP.

 

(v)           Portfolio Mezz is
the owner and holder of the Waterview Interest and the Thornall Interest and at
Closing the Waterview Interest and the Thornall Interest shall be held by Portfolio
Mezz free and clear of any Encumbrance, except as set forth in the Limited
Liability Company Agreement of Portfolio Mezz or the Limited Liability Company
Agreement Waterview Owner (the “Waterview LLC
Agreement”) or Thornall Owner (the “Thornall LLC Agreement”), as the case may be.

 

(vi)          None of Gale SLG,
the OP, the GP or Portfolio Mezz has granted any option, warrant, subscription,
or rights of conversion or exchange, equity or otherwise, that would obligate
the Waterview Owner or the Thornall Owner to issue additional membership
interests.

 

(vii)         Challenger Mezz is
the owner and holder of the Challenger Interest and at Closing the Challenger
Interest shall be held by Challenger Mezz free and clear of any Encumbrance.

 

(viii)        Challenger Mezz has
not granted, or caused Challenger Owner to grant, any option, warrant,
subscription, or rights of conversion or exchange, equity or otherwise, that
would obligate the Challenger Owner to issue additional membership interests.

 

(ix)           The Applicable Gale
SLG Transferor, has delivered or made available to Mack-Cali true and complete
copies (in either paper or electronic form) of the organizational documents of
each of the Gale SLG Entities (other than Challenger Mezz) and the subsidiaries
of the Class C Entities, if any, (the “Organizational
Documents”) subject, in the case of the Organizational Documents of
the Troy Entities, to the provisions of Section
21. The Organizational Documents, are true, complete and correct and
constitute all of the material documents, agreements and instruments with
respect to the formation, governance, management and organization of each of
the Gale SLG Entities. The Organizational Documents have not been amended,
modified, supplemented, terminated or otherwise changed.

 

(x)            The Leases set
forth on Schedule 8(a)(x)
constitute all of the Leases with respect to use and occupancy affecting any
Property on the date hereof (except as a result of any subleases of portions of
any Property). True, accurate and complete copies of the Leases have been
provided or made available to Mack-Cali. Except as disclosed in writing to
Mack-Cali, no Gale SLG Transferor or Gale SLG Entity has received any material
written notices of default by the applicable landlord under any Lease which
remain uncured. The Leases are valid and bona fide obligations of the landlord
thereunder and are in full force

 

22

 

and effect. Except
as disclosed in writing to Mack-Cali, no Gale SLG Transferor or Gale SLG Entity
has given or received any written notices of default by the applicable tenant
under an Lease which remain uncured. Except as expressly set forth in the
Leases, no tenant is entitled to now or in the future any concession, rebate,
offset, allowance or free rent for any period nor has any such claim been
asserted in writing by any tenant.

 

(xi)           The contracts
listed on Schedule 8(a)(xi),
constitute all of the Service Contracts to which any of the Owners, Portfolio
Mezz, the OP or the GP is party. True, accurate and complete copies of such
Service Contracts have been provided or made available to Mack-Cali.

 

(xii)          All Service
Contracts are cancelable on thirty (30) days notice without penalty or premium.
All sums presently due and payable under the Service Contracts will be paid as
of the Closing Date.

 

(xiii)         The brokerage
agreements set forth on Schedule 8(a)(xiii)
are all of the Brokerage Agreements with respect to the Properties. True,
accurate and complete copies of the Brokerage Agreements have been provided or
made available to Mack-Cali.

 

(xiv)        Except as set forth
on Schedule 8(a)(xiv), there are
no lawsuits or proceedings pending or threatened in writing against any Gale
SLG Entity or affecting the Properties or the operations or assets of any Gale
SLG Entity, other than claims fully covered by insurance. There are no lawsuits
pending or threatened in writing against the Gale SLG Transferors which would
prevent the consummation of this transaction.

 

(xv)         Gale SLG Transferors
will cause the accountants to the Gale SLG Entities to furnish Mack-Cali with
(i) true and complete copies of the audited consolidated balance sheet and
income statement as of and for the fiscal year ended December 31, 2004 for the
Gale SLG Entities (the “2004 Financial
Statements”) and (ii) preliminary unaudited balance sheets and
income statements for the Gale SLG Entities (consolidated) and for Challenger
Mezz as of and for the fiscal year ended as of December 31, 2005 (the “2005 Financial Statements”). The 2004
Financial Statements will be prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby and will present
fairly, in all material respects, the financial condition of the Gale SLG
Entities as of such dates and the results of operations for the Gale SLG
Entities as of the dates thereof or the periods covered thereby. The 2005
Financial Statements will be prepared in accordance with the books and records
of the Gale SLG Entities, but lack footnotes and other presentation items
required under GAAP and will be subject to further review and adjustment.

 

(xvi)        There are no
Liabilities of the Gale SLG Entities of any nature other than Liabilities (a)
expressly set forth in this Agreement and the Schedules hereto or (b) otherwise
permitted to be incurred under this Agreement. From and

 

23

 

after Closing,
the Gale SLG Entities shall not be subject to any Liabilities other than (x)
those assumed by Mack-Cali or the Post-Closing Owners pursuant to the
provisions of this Agreement and (y) those to which a purchaser of the
Properties would be subject, had such a purchaser acquired the Properties by
deed (or by assignment of leasehold interest, as applicable), rather than by
acquiring interests in the Gale SLG Entities, pursuant to a contract of sale
containing representations and warranties with respect to the Properties
substantially the same as those set forth herein, as limited by Section 16(a) hereof. The Gale SLG
Transferors shall remain liable for the OP Percentage Share as of the Closing
Date for any and all liabilities of the Gale SLG Entities related to periods
prior to Closing, other than as set forth in the preceding sentence.

 

(xvii)       Except for the
Existing Fixed Rate Debt, the Existing Floating Rate Debt, the Challenger Mezz
Debt, and the Portfolio Mezz Debt, none of the Gale SLG Entities has any
indebtedness for borrowed money and none of the Gale SLG Entities has
guaranteed the debt of any other person or entity.

 

(xviii)      Except as set forth
in the organizational chart attached as Exhibit
B-1 and on Schedule 8(a)(xviii),
the Gale SLG Entities do not own capital stock or equity interests in any other
corporation, partnership, limited liability company or entity.

 

(xix)         All undisputed bills
and claims for labor performed and materials furnished to or for the account of
the applicable Owner of any Property arising prior to the Closing Date will be
paid in full by such Owner in the ordinary course of business.

 

(xx)          None of the Gale SLG
Entities has or has ever had any employees.

 

(xxi)         The Gale SLG
Transferors have provided or made available to Mack-Cali all tenant
correspondence files in their possession or control with respect to the
Properties.

 

(xxii)        Schedule 8(a)(xxii) contains a true,
accurate and complete schedule of all obligations for leasing commissions and
tenant improvements, affecting any Property. Other than as set forth on Schedule 8(a)(xxii), there are as of the
date hereof no obligations for leasing commissions or tenant improvements
affecting any Property.

 

(xxiii)       All items of
Personal Property are now owned by such Owner free and clear of any conditional
bills of sale, chattel mortgages, security agreements or financing statements
or other security interests of any kind, except the liens of the Existing Fixed
Rate Debt, the Existing Floating Rate Debt and the Existing Mezz Debt and at
Closing all items of Personal Property shall be held by such Owner free and
clear of any conditional bills of sale, chattel mortgages, security agreements
or financing statements or other security interests of any kind except for the
liens securing the Existing Fixed Rate Debt.

 

24

 

(xxiv)       The principal balance
outstanding under the Existing Fixed Rate Debt as of the date hereof is as set
forth on Schedule 8(a)(xxiv). No
Gale SLG Transferor or Gale SLG Entity has received written notice of any
default under the Existing Fixed Rate Debt which remains uncured. Schedule 12(c) sets forth all material
documents evidencing and securing the Existing Fixed Rate Debt. True correct
and complete copies of such documents have been provided to Mack-Cali.

 

(xxv)        Mack-Cali has been
provided with a true, correct and complete copy of the Challenger Ground Lease,
which has not been amended. Neither Challenger Mezz nor Challenger Owner has
received written notice of any default under the Challenger Ground Lease which
remains uncured.

 

(xxvi)       The Rent Roll
attached hereto as Schedule 8(a)(xxvi) (the
“Rent Roll”) is true, accurate and
complete in all material respects as of the date thereof and sets forth, to
Gale SLG’s knowledge, all arrearages with respect to the Leases as of the date
hereof.

 

(xxvii)      No Owner has received
written notice from any Governmental Authority that any of the Licenses is
subject to, or in jeopardy of, cancellation or non-renewal. True, correct and
complete copies of Licenses that are within the possession or control of the
Gale SLG Transferors have been provided or made available to Mack Cali.

 

(xxviii)     No Owner has received
written notice from a Governmental Authority of violation of any Environmental
Law that has not been cured.

 

(xxix)       No Gale SLG Entity
has received written notice from any Governmental Authority of (i) any pending,
threatened or contemplated annexation or condemnation proceedings, or private
purchase in lieu thereof, affecting or which may affect any Property, or any
part thereof, (ii) any proposed or pending proceeding to change or redefine the
zoning classification of all or any part of any Property, (iii) any proposed or
pending special assessments affecting any Property or any portion thereof, (iv)
any penalties or interest due with respect to real estate taxes assessed
against any Property and (v) any proposed change(s) in any road or grades with
respect to the roads providing a means of ingress and egress to any Property.

 

(xxx)        Schedule 8(a)(xxx) sets forth all pending
proceedings for tax certiori (the “Tax Cert
Proceedings”) with respect to any of the Properties.

 

(xxxi)       Schedule 8(a)(xxxi) sets forth all current
surveys with respect to the Properties that are in the possession or control of
the Gale SLG Transferors. Complete copies of the surveys on Schedule 8(a)(xxxi) have been provided or
made available to Mack-Cali.

 

(xxxii)      Except as otherwise
set forth on Schedule 8(a)(xxxii),
each of the OP, the GP, Portfolio Mezz or any subsidiaries of the foregoing,
have at all times

 

25

 

been
classified and treated as a partnership or disregarded entity and not as an
association taxable as a corporation for federal income tax purposes in each
state and local jurisdiction in which it files Tax Returns.

 

(xxxiii)     None of the OP, the
GP, Portfolio Mezz or any subsidiaries of the foregoing is subject to any private
letter ruling of the IRS or comparable rulings of another taxing authority.

 

(xxxiv)     None of the Gale SLG
Transferors is a foreign person within the meaning of Section 1445 of the Code
or any other laws requiring withholding of amounts paid to foreign persons.

 

(xxxv)      No agreement or waiver
extending any statute of limitations on or extending the period for the
assessment or collection of any Tax has been executed or filed on behalf of or
with respect to the OP, the GP, Portfolio Mezz or any subsidiaries of the
foregoing. No power of attorney on behalf of the Gale SLG Entities with respect
to any Tax matter is currently in place.

 

Notwithstanding
anything to the contrary contained in this Agreement, (a) Gale SLG Transferors
do not represent or warrant that any Lease will be in force or effect at
Closing, that any tenant will have performed its obligations under its Lease or
that any tenant will not be the subject of bankruptcy proceedings and (b) the
existence of any default by a tenant, the failure by a tenant to perform its
obligations under its Lease, the termination of any Lease prior to Closing by
reason of the tenant’s default or the existence of bankruptcy proceedings
pertaining to any tenant shall not affect Mack-Cali’s obligation to close or any
other obligation hereunder or entitle Mack-Cali to an abatement of or credit
against the Total Purchase Price or give rise to any other claim on the part of
Mack-Cali.

 

(b)           Mack-Cali
represents and warrants to the Gale SLG Transferors, now and again on the
Closing Date, that:  (i) Mack-Cali is
duly organized, validly existing and in good standing under the laws of its
State of formation and any other jurisdictions where qualification to do
business is necessary, (ii) Mack-Cali has all necessary right, power and
authority to enter into, execute and deliver this Agreement and to consummate
all the transactions contemplated herein, (iii) the individual(s) executing
this Agreement on behalf of Mack-Cali are duly authorized to enter into,
execute, deliver and perform this Agreement on behalf of Mack-Cali and to bind
Mack-Cali, and no consent of any third party that has not been and will not be
obtained is required in order for Mack-Cali to consummate the Transaction, (iv)
the organizational chart set forth as Exhibit
B-2 attached hereto accurately sets forth the ownership structures
of Mack-Cali and certain of its affiliates shown thereon and (v) this
Agreement and all documents to be executed by Mack-Cali and delivered to the
Gale SLG Transferors hereunder (A) are or, at the time of such execution and
delivery, will be the legal, valid and binding obligations of Mack-Cali,
enforceable against Mack-Cali in accordance with their terms, (B) do not or, at
the time of such execution and delivery, will not contravene any provision of
Mack-Cali’s organizational documents or any existing laws and regulations
applicable to Mack-Cali and (C) do not or will not, at the time of such
execution and delivery, conflict with or

 

26

 

result in a
violation of any agreement, instrument, order, writ, judgment or decree to
which Mack-Cali is a party or is subject.

 

(c)           To
the extent that Mack-Cali has Knowledge prior to the execution of this
Agreement that any of the Gale SLG Transferors’ representations and warranties
are inaccurate, untrue or incorrect in any way, such representations and
warranties shall be deemed modified to reflect such Knowledge, as the case may
be. For purposes of this Agreement, Mack-Cali shall have “Knowledge” of a particular fact, if any of
Mitchell Hersh, Roger Thomas and Barry Lefkowitz has actual knowledge of such
fact without any implication of verification or investigation concerning such
knowledge.

 

(d)           No
Gale SLG Transferor shall have any liability in connection with this Agreement
by reason of an inaccuracy of a representation or warranty, if and to the
extent that Mack-Cali has Knowledge thereof (as provided herein) at the time of
the Closing and Mack-Cali elects, nevertheless, to cause the transactions contemplated
by this Agreement to be consummated.

 

(e)           The
parties hereby expressly acknowledge and agree that, except as set forth in
this Agreement, as reliance thereon and enforcement thereof may be limited in
this Agreement, no party, nor anyone acting for or on behalf of any party, has
made any oral or written representation, warranty, covenant, agreement, promise
or statement, express or implied, to the other party, or to anyone acting for
or on behalf of the other party, and no party has, except as provided in this
Agreement, relied on, and shall not be entitled to rely on same.

 

(f)            No
Further Representations.

 

(i)            In entering into
this Agreement, Mack-Cali has not been induced by and has not relied upon any
written or oral representations, warranties or statements, whether express or
implied, made by any of the Gale SLG Transferors or the Gale SLG Entities or by
any broker or any other person representing or purporting to represent any of
the Gale SLG or the Gale SLG Entities, with respect to the Properties, the
Contributed Interest, the Thornall Interest, the Waterview Interest, the
Challenger Interest, the Mack-Cali Interest, the Condition of the Interest (as
hereinafter defined), the Class C Assets, or any other matter affecting or
relating to the transactions contemplated by this Agreement, other than those
expressly set forth in this Agreement. Mack-Cali acknowledges and agrees that,
except as expressly set forth herein, the Gale SLG Transferors make no
representations or warranties whatsoever, whether express or implied or arising
by operation of law, with respect to the Properties, the Contributed Interest,
the Waterview Interest, the Thornall Interest, the Challenger Interest, the
Mack-Cali Interest, the Condition of the Interest or the Class C Assets. Except
as otherwise set forth herein, Mack-Cali agrees that the Contributed Interest
will be contributed to JVLLC and the Mack-Cali Interest, the Waterview Interest
the Thornall Interest, and the Challenger Interest will be sold to Mack-Cali at
the Closing in the then-existing Condition of the Interest of the Mack-Cali
Interest, the Waterview Interest, the Thornall Interest and the Challenger
Interest,

 

27

 

respectively,
AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT ANY WRITTEN OR ORAL
REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED OR ARISING
BY OPERATION OF LAW, other than representations and warranties of the Gale SLG
Transferors expressly set forth in this Agreement. Without limiting the
generality of the foregoing, except for the representations and warranties of
the Gale SLG Transferors contained in this Agreement, the transactions
contemplated by this Agreement are without statutory, express or implied
warranty, representation, agreement, statement or expression of opinion of or
with respect to (i) the Condition of the Interest or any aspect thereof,
including, without limitation, any and all statutory, express or implied
representations or warranties related to the suitability for habitation,
merchantability, or fitness for a particular purpose, (ii) the nature or
quality of construction, structural design or engineering of the improvements
included in the Properties, (iii) the quality of labor or materials included in
the improvements included in the Properties, (iv) the soil conditions,
drainage, topographical features, flora, fauna, or other conditions of or which
affect the Properties, (v) any conditions at or which affect the Properties
with respect to a particular use, purpose, development, potential or otherwise,
(vi) areas, size, shape, configuration, location, access, capacity, quantity,
quality, cash flow, expenses, value, condition, make, model, composition,
accuracy, completeness, applicability, assignability, enforceability,
exclusivity, usefulness, authenticity or amount, and (vii) any environmental,
botanical, zoological, hydrological, geological, meteorological, structural, or
other condition or hazard or the absence thereof heretofore, now or hereafter
affecting in any manner the Properties. By executing this Agreement, Mack-Cali
shall be deemed to acknowledge that Mack-Cali has had sufficient opportunity to
examine all aspects of the Contributed Interest, the Mack-Cali Interest, the
OP, the Waterview Interest, Waterview Owner, the Thornall Interest, Thornall
Owner, the Challenger Interest, Challenger Owner, the Properties and the Class
C Assets and has knowledge and expertise in financial and business matters that
enable Mack-Cali to evaluate the merits and risks of the transactions
contemplated by this Agreement.

 

(ii)           For purposes of
this Agreement, the term “Condition of the
Interest” means the following matters:

 

(A)          Physical Condition
of the Properties. The quality, nature and adequacy of the physical
condition of the Properties, including, without limitation, the quality of the
design, labor and materials used to construct the Improvements; the condition
of structural elements, foundations, roofs, glass, mechanical, plumbing,
electrical, HVAC, sewage, and utility components and systems; the capacity or
availability of sewer, water, or other utilities; the geology, flora, fauna,
soils, subsurface conditions, groundwater, landscaping, and irrigation of or
with respect to the Properties, the location of the Properties in or near any
special taxing district, flood hazard zone, wetlands area, protected habitat,
geological fault or subsidence zone, hazardous waste disposal or clean-up site,
or

 

28

 

other special
area, the existence, location, or condition of ingress, egress, access, and
parking; the condition of the personal property and any fixtures located on or
at the Properties; and the presence of any asbestos or other Hazardous
Materials, dangerous, or toxic substance, material or waste in, on, under or
about the Properties and the improvements located thereon. “Hazardous Materials” means (A) those
substances included with the definitions of any or more of the terms “hazardous
substances,” “toxic pollutants”, “hazardous materials”, “toxic substances”, and
“hazardous waste” in the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9601 et seq. (as amended), the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Sections 1801 et seq., the
Resource Conservation and Recovery Act of 1976 as amended, 42 U.S.C.
Section 6901 et seq., Section 311 of the Clean Water Act, the New
Jersey Environmental Rights Act, N.J.S.A. 2A:35A-1 et seq., the New Jersey
Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq., the
Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq., the New Jersey
Underground Storage of Hazardous Substances Act, N.J.S.A. 58:10A-21 et seq.,
and any similar state or federal laws or any regulations issued under any such
laws and (B) petroleum, radon gas, lead based paint, asbestos or asbestos
containing material and polychlorinated biphenyls.

 

(B)           Adequacy of the
Properties. The economic feasibility, cash flow and expenses of the OP and
any of its subsidiaries, Waterview Owner, Thornall Owner, Challenger Owner and
the Class C Assets, and habitability, merchantability, fitness, suitability and
adequacy of the Properties for any particular use or purpose.

 

(C)           Insurance. The
availability, cost, terms and coverage of liability, hazard, comprehensive,
terrorism and any other insurance of or with respect to the Properties.

 

(D)          Condition of Title.
The condition of title to the Properties, including, without limitation,
vesting, legal description, matters affecting title, title defects, liens,
encumbrances, boundaries, encroachments, mineral rights, options, easements,
and access; violations of restrictive covenants, zoning ordinances, setback
lines, or development agreements; the availability, cost, and coverage of title
insurance; leases, rental agreements, occupancy agreements, rights of parties
in possession of, using, or occupying the Properties; and standby fees, taxes,
bonds and assessments.

 

(E)           Information. Except
as expressly set forth in this Agreement, all materials and documents, if any,
which have been provided by or on behalf of any of the Gale SLG Transferors or
the Gale SLG Entities or any related parties have been provided without any
warranty or representation, express or implied, as to their content, suitability
for any

 

29

 

purpose,
accuracy, truthfulness or completeness, and Mack-Cali shall not have any
recourse against any Person in the event of any errors therein or omissions
therefrom. None of the Gale SLG Transferors or the Gale SLG Entities shall be
liable or bound in any manner whatsoever by any guarantees, promises,
projections, operating expenses, set-ups or other information pertaining to the
Contributed Interest, the OP, any Gale SLG Entity, the Waterview Interest, the
Thornall Interest, the Challenger Interest, the Properties or the Class C
Assets made, furnished or claimed to have been made or furnished, whether
orally or in writing, by the Gale SLG Transferors or the Gale SLG Entities or
other Person representing or purporting to represent any of the Gale SLG
Transferors or the Gale SLG Entities.

 

(iii)          The provisions of
this Section 8(f) shall survive
the Closing.

 

9.             GALE SLG COVENANTS.

 

From and after
the Date of Agreement through the Closing Date, the Gale SLG Transferors shall
or shall cause the Gale SLG Entities to, at the Gale SLG Transferors’ expense:

 

(a)           Operate
and maintain the Properties in the ordinary course of business, normal wear and
tear and casualty and condemnation excepted, and not commit waste with respect
thereto, it being understood that this covenant shall include, without
limitation, an obligation to pursue the cure of violations and open permits in
the ordinary course of business.

 

(b)           Keep
in full force and effect all hazard, liability and casualty, fire and extended
coverage insurance policies, and all public liability insurance policies, that
are in existence as of the date hereof with respect to the Properties (or
substitute policies that are equivalent thereto).

 

(c)           Except
as permitted herein or as approved in writing by Mack-Cali, not sell, encumber
or grant any interest in the Properties or the Gale SLG Entities, or any part
thereof, in any form or manner whatsoever.

 

(d)           Pay
all taxes and special assessments levied against or incurred in connection with
the ownership or operation of the Properties, as such taxes and special
assessments become due and payable.

 

(e)           From
the Date of Agreement until the earlier of the Closing or termination of this
Agreement, the Gale SLG Transferors shall not, and shall not cause or allow any
of the Gale SLG Entities to, without the prior written consent of Mack-Cali,
which consent will not be unreasonably conditioned, denied or delayed,
(a) enter into, amend, modify, renew, terminate or assign any Lease or
enter into, amend, modify, renew, terminate or assign any Contract, broker
agreement or other similar material agreement with respect to the Properties,
(b) make payments or distributions of any proceeds from condemnation or
insurance claims or of any condemnation or insurance claims on account of the
Contributed Interest, the Waterview Interest, the Thornall Interest, the 

 

30

 

Challenger
Interest or the Properties (except as required pursuant to the terms of the
existing Leases or the documents evidencing and securing any existing
financing), (c) amend or modify the Organizational Documents other than to
redeem any OP Units held by limited partners of the OP or to redeem the
Preferred GP Units of the OP or to issue additional OP Units to the GP or Gale
SLG by reason of a contribution of common equity to the OP, or (d) modify
any of the Existing Fixed Rate Debt. If Mack-Cali fails to object to any
request for its consent within 5 days of the request, Mack-Cali will be deemed
to have approved the request. Except with respect to Leases and Brokerage
Agreements, Mack-Cali’s prior written consent will not be required
(i) with respect to the activities described in subsections (a) or (b), to
the extent such activities are conducted substantially in accordance with the
current budgets and operating plans, including the leasing guidelines included
therein, for the Properties, the OP, its subsidiaries and Challenger Owner made
available to Mack-Cali or (ii) with respect to the activities described in
subsection (a), to the extent such activities are conducted in the ordinary
course of the Gale SLG Entities’, or the OP’s business, consistent in all
material respects with past practice. Except as provided in Section 9(h) and Section 21, Gale SLG will cause the OP to operate its
business consistent in all material respects with past practices, and, except
as provided in Section 9(i),
Challenger Mezz will cause Challenger Owner to operate its business consistent
in all material respects with past practices, in each case subject to the terms
and provisions of any contract to which any Gale SLG Transferor or Gale SLG
Entity is party or by which it or its properties are bound.

 

(f)            Prior
to the Closing and subject to the reasonable approval of Mack-Cali, the
applicable Gale SLG Entities shall have the right to enforce the rights and
remedies of the landlord under any Lease, by summary proceedings or otherwise
(including, without limitation, the right to remove any tenant under any
Lease), and, subject to Section 9(m)(ii),
to apply all or any portion of any security deposits then held by the Gale SLG
Transferors or the Gale SLG Entities upon eviction toward any loss or damage
incurred by any of them by reason of any defaults by tenants, and the exercise
of any such rights or remedies shall not affect the obligations of Mack-Cali
under this Agreement in any manner or entitle Mack-Cali to a reduction in, or
credit or allowance against, the Total Purchase Price or give rise to any other
claim on the part of Mack-Cali.

 

(g)           In
the event that as of the Closing Date there is not a Lease in effect for any of
the spaces listed on Schedule 9(g) (each
a “Master Lease Space”), Gale SLG
shall enter into an agreement (the “Rent Shortfall
Guaranty”) in the form of Exhibit
I, which shall provide that Gale SLG shall pay to Mack-Cali
Mack-Cali’s Applicable Percentage Share of annual rent set forth for such space
on Schedule 9(g) on a monthly
basis until such space is leased or until the end of the period specified for
such space on Schedule 9(g),
whichever first occurs. Mack-Cali, on behalf of JVLLC, agrees to use
commercially reasonable best efforts to lease each Master Lease Space
expeditiously and at market rates with respect to all economic terms,
including, but not limited to, rental rate, tenant improvement allowances, free
rent and other lease concessions. With respect to each of the spaces noted on Schedule 9(g) as a “Gale SLG Lease Cost Space”, if at Closing a
third party Lease is not in effect, Gale SLG shall escrow with an escrow agent
mutually acceptable to Gale SLG and JVLLC an amount equal to the OP Percentage
Share (as of the Closing Date) of $35 times the number of square feet contained
in the

 

31

 

relevant Gale
SLG Lease Cost Space, as set forth on Schedule
9(g). Upon execution of a Lease with respect to such space, an
amount equal to the OP Percentage Share (as of the Closing Date) of the cost of
leasing commissions and tenant improvements only (“Section 9 Leasing Costs”) associated with entering into such
Lease (in any event not to exceed the OP Percentage Share (as of the Closing
Date) of $35 in the aggregate per square foot) shall be released from escrow to
the applicable Owner. Provided that Gale/SLG is not in default under the Rent
Shortfall Guaranty, any excess amount remaining with respect to any Gale SLG
Lease Cost Space after payment of the OP Percentage Share (as of the Closing
Date) of Section 9 Leasing Costs related to such Gale SLG Lease Cost Space
shall be released to Gale SLG.

 

(h)           Prior
to Closing, Gale SLG shall cause the Portfolio TRS Reorganization to be
effected.

 

(i)            Prior
to Closing, Challenger Parent shall contribute 100% of the stock of Challenger
TRS to Challenger Owner.

 

(j)            The
Applicable Gale SLG Transferor shall request tenant estoppel certificates
(each, a “Tenant Estoppel”) prior
to Closing from all tenants of the Properties, in the form attached hereto as Exhibit K or as set forth in the applicable
Lease and shall deliver or cause to be delivered to Mack-Cali, upon receipt,
copies of each Tenant Estoppel in the form received. It shall be a condition
precedent (the “Minimum Estoppel Requirement”)
to Mack-Cali’s obligation to Close that Tenant Estoppels dated no more than 45
days prior to Closing be obtained from tenants under Leases representing not
less than seventy percent (70%) of the aggregate currently occupied square
footage of the Properties, which seventy percent shall include the tenants listed
on Schedule 9(j) (the “Mandatory Tenants”). All Tenant Estoppels
delivered by tenants shall be accepted by Mack-Cali without regard to the
contents of such Tenant Estoppels or to any changes to the form of Tenant
Estoppel, unless such Tenant Estoppel (individually or collectively with other
Tenant Estoppels) contains statements whose substance indicates that the
Applicable Gale SLG Transferor has made a material misrepresentation under this
Agreement. The Gale SLG Transferors shall be entitled to an adjournment of the
Closing of not more than thirty (30) days to obtain Tenant Estoppels. If the
Gale SLG Transferors do not obtain Tenant Estoppels meeting the Minimum
Estoppel Requirement, the Applicable Gale SLG Transferor shall have the right
to deliver to Purchaser at the Closing a certificate (the “Landlord Estoppel”) substantially in the
form of Exhibit J, in lieu of
Tenant Estoppels with respect to Leases representing not more than five percent
(5%) of the Minimum Estoppel Requirement; provided that the Gale SLG
Transferors shall not be permitted to deliver a Landlord Estoppel with respect
to any Mandatory Tenant. Notwithstanding anything in this Section 9(j) or any Landlord Estoppel to
the contrary, the Landlord Estoppel shall terminate on the earlier of (i) as to
the Landlord Estoppel in its entirety, the date which is twelve (12) months
after the Closing Date, and (ii) with respect to any particular Lease covered
by the Landlord Estoppel (a “Landlord
Estoppel Lease”), the date of delivery to Mack-Cali of one or more
Tenant Estoppels from tenants under Leases for an aggregate square footage
equal to or in excess of the square footage leased covered by the Landlord
Estoppel Lease.

 

32

 

(k)           Upon written request by Mack Cali, and at
Mack-Cali’s expense, the Gale SLG Entities agree to engage an accounting firm
(the “Accounting Firm”) that is
registered with the Public Company Accounting Oversight Board and which
Accounting Firm is reasonably acceptable to Mack-Cali to prepare and deliver
audited financial statements for any of the Gale SLG Entities that comply with
Regulation 210.3-14 (Instruction for Real Estate Operations to be Acquired) of
Regulation S-X (the “3-14 Financial
Statements”).

 

(l)            Prior to Closing, Gale SLG shall cause the
dissolution of the entities set forth on Schedule 8(a)(xviii).

 

(m)          The Gale SLG Transferors shall not, and shall
not cause or permit the Gale SLG Entities to:

 

(i)            Enter into any agreement requiring work to be
done for any Tenant after the Closing Date without first obtaining the prior
written consent of Mack-Cali, which shall not be unreasonably withheld,
conditioned or delayed (and if Mack-Cali fails to object to any request for its
consent within 5 Business Days of the request, Mack-Cali shall be deemed to
have approved the request);

 

(ii)           Apply any Security Deposits with respect to
any tenant in occupancy;

 

(iii)          Remove any Personal Property located in or on
any Property, except as Gale SLG may deem necessary for repair and
replacement.  All replacements shall be
free and clear of all liens and encumbrances except those of the Existing Fixed
Rate Debt, the Existing Floating Rate Debt and the Existing Mezz Debt, shall be
of quality at least equal to the replaced items and shall be deemed included in
this sale, without cost or expense to Mack-Cali; or

 

(iv)          Cause or permit any Property, or any interest
therein, to be alienated, mortgaged, licensed, encumbered or otherwise be
transferred except for new Leases entered into in accordance with this
Agreement and transfers by tenants as permitted by the applicable Lease.

 

(n)           Challenger Mezz shall use commercially
reasonable efforts to procure an estoppel from the Village of Ridgefield Park,
the ground lessor of the Challenger Property, setting forth the information
required by Section 36 of the Challenger Ground Lease;

 

(o)           The Gale SLG Transferors will neither take
any action with respect to commencing, prosecuting or settling any tax
certiorari proceeding with respect to any Class A Property or Class B Property
with respect to years prior to 2006 which would have an adverse effect on the
Post-Closing Owners nor take any action that affects the 2006 assessment for
any Property without the prior written consent of Mack-Cali and will keep
Mack-Cali informed as to the status of such proceedings, from time to time at
Mack-Cali’s request.  From and after the
Agreement Date Mack-Cali shall have the sole and exclusive right, on behalf of
Post-Closing Owners, to commence, prosecute and settle

 

33

 

tax certiorari proceedings
with respect to any Class A Property or Class B Property for the current and
Post-Closing period, employing legal counsel designated by Mack-Cali except to
the extent other counsel are currently handling the Tax Cert Proceedings.

 

(p)           At Closing there shall be no default or Event
of Default under the Existing Fixed Rate Debt.

 

(q)           All undisputed bills and claims for labor
performed and materials furnished to or for the account of the applicable Owner
of any Property arising prior to the Closing Date will be paid in full by such
owner within customary time periods but not later than the Closing Date.

 

(r)           The Gale SLG Transferors shall promptly
notify Mack-Cali of, and promptly deliver to Mack-Cali a true and complete copy
of any Notice that may be received concerning any of the Properties, on or
prior to the Closing Date, from any Governmental Authority concerning a
violation of any Environmental Laws.

 

(s)           Prior to Closing the Applicable Gale
Transferor shall use commercially reasonable efforts to procure an estoppel
from parties to the reciprocal agreements set forth in Schedule 9(s) stating any defaults or
payments due under such reciprocal agreements.

 

10.          INSPECTION.

 

Prior to Closing, (A) the
Gale SLG Transferors shall permit Mack-Cali to examine, at reasonable times,
the books and records (including without limitation historical financial and
operating statements) in the Gale SLG Transferors’ possession or control
relating to the Properties and (B) Mack-Cali shall have the right, at all
reasonable times, to (I) inspect the Land and the Improvements,
(II) review the Leases, and (III) conduct non-invasive environmental
audit or audits of the Properties and to the extent recommended by a reputable
third party environmental consultant based on its “Phase I” report, invasive
environmental audit or audits of the Properties, subject to Gale SLG
Transferors’ consent which will not be unreasonably delayed, withheld or
conditioned  (with copies of the reports
relating to such audits delivered to the Gale SLG Transferors when
completed).  All of the foregoing to be
conducted under this Section 10 by
Mack-Cali shall be subject to the following:

 

(a)           Such inspections, reviews, audits and
investigations shall take place during normal business hours upon not less than
two (2) Business Days prior written notice to the Applicable Gale SLG
Transferor or its designated agents, the Applicable Gale SLG Transferor’s
consent shall be required prior to the performance of any drilling, boring or
other invasive testing or procedures and the Applicable Gale SLG Transferor
shall be entitled to have a representative present during any such inspection,
review, audit or investigation;

 

(b)           In the event the Closing does not occur,
Mack-Cali shall promptly return to the Gale SLG Transferors any documents
obtained from the Gale SLG Transferors or their agents;

 

34

 

(c)           Mack-Cali shall not suffer or permit any
lien, claim or charge of any kind whatsoever to attach to the Properties or any
part thereof; and

 

(d)           Such inspection, review, audit or
investigation shall be at Mack-Cali’s sole cost and expense, shall be subject
to the rights of tenants and shall not unreasonably interfere with the
operation of the Properties.  In the
event of any damage to any Property caused by Mack-Cali, its agents, engineers,
employees, contractors or surveyors (including without limitation pavement,
landscaping and surface damage), Mack-Cali shall pay the cost incurred by the
Gale SLG Transferors or the Gale SLG Entities to restore the Property to the
condition existing prior to the performance of such investigations or audits;
such obligation shall survive the termination of this Agreement.

 

Mack-Cali shall defend,
indemnify and hold the Gale SLG Entities and the Gale SLG Transferors harmless
from any and all liability, loss, claims, cost and expense (including without
limitation reasonable attorneys’ fees, court costs and costs of appeal)
suffered or incurred by any of the Gale SLG Entities or the Gale SLG
Transferors but only to the extent caused by or arising out of Mack-Cali’s
reviews, interviews, investigations, tests, studies and inspections of the
Property (other than that caused by the negligence or willful misconduct of any
of the Gale SLG Entities, any of the SLG Transferors or any of their respective
designated agents).  Prior to commencing
any such tests, studies and investigations, Mack-Cali shall furnish to the
Applicable Gale SLG Transferor a certificate of insurance evidencing
comprehensive general public liability insurance insuring the person, firm or
entity performing such tests, studies and the applicable investigations from
insurers and in amounts reasonably acceptable to the Applicable Gale SLG
Transferor and listing the applicable Owner as an additional insured
thereunder.  The provisions of this
paragraph shall survive the Closing and the termination of this Agreement.

 

11.          CONDITIONS PRECEDENT TO CLOSING.

 

(a)           Mack-Cali’s obligation to Close hereunder is
subject to satisfaction of the following conditions precedent, any of which may
be waived in whole or in part by Mack-Cali, in its sole and absolute
discretion:

 

(i)            The Gale SLG Transferors shall have delivered
to or for the benefit of Mack-Cali, on or before the Closing Date, all of the
documents and items required of the Gale SLG Transferors pursuant to Section 12(a), and the Gale SLG Transferors
shall have performed all of their obligations hereunder to be performed as of
the Closing Date in all material respects;

 

(ii)           The Title Company shall have irrevocably
committed to issue an owner’s title insurance policy with respect to each
Property, subject only to the Permitted Exceptions;

 

(iii)          All of the Gale SLG Transferors’
representations and warranties made in this Agreement shall be true and correct
in all material respects (except to the extent otherwise qualified by a
materiality standard) as of the date hereof and

 

35

 

as of the Closing Date as if
then made, subject to any changes or updates as are contemplated or permitted
hereunder and set forth in the Certification of Representations and Warranties,
provided, that the Entity Related Representations shall be deemed true and
correct for purposes of this Section 11(a)
unless the aggregate liability arising from incorrect Entity-Related
Representations is in excess of $20,000,000;

 

(iv)          The Portfolio TRS Reorganization shall have
taken place;

 

(v)           Challenger Parent shall have contributed 100%
of the stock of Challenger TRS to Challenger Owner;

 

(vi)          Mack-Cali shall have received Tenant
Estoppels meeting the Minimum Estoppel Condition, subject to Section 9(j);

 

(vii)         The Existing Mezzanine Debt shall be
satisfied in full at Closing in accordance with Section 12(e), and the Mack-Cali Interest shall be free and
clear of any Encumbrances;

 

(viii)        The Debt Assumption shall occur (provided
that Mack-Cali is not in default of its obligations hereunder with respect
thereto); and

 

(ix)           The Existing Floating Rate Debt shall be
satisfied in full with respect to the Class A Properties and Class B
Properties.  The New Financing shall
close simultaneously herewith.

 

(b)           The Gale SLG Transferors’ obligation to Close
hereunder is subject to satisfaction of the following conditions precedent, any
of which may be waived in whole or in part by the Gale SLG Transferors, in
their sole and absolute discretion:

 

(i)            Mack-Cali shall have paid the Total Purchase
Price pursuant to the terms hereof;

 

(ii)           Mack-Cali shall have delivered to or for the
benefit of Gale SLG, on or before the Closing Date, all of the documents and
items required to be delivered by Mack-Cali pursuant to Section 12(b), and Mack-Cali shall have
performed all of its obligations hereunder to be performed on or before the
Closing Date;

 

(iii)          All of Mack-Cali’s representations and
warranties made in this Agreement shall be true and correct in all material
respects (except to the extent otherwise qualified by a materiality standard)
as of the date hereof and as of the Closing Date as if then made;

 

(iv)          The Debt Assumption and Guarantor Release
shall occur; and

 

(v)           The New Financing shall close simultaneously
herewith.

 

36

 

12.          CLOSING DOCUMENTS; FINANCING; EXISTING LENDER CONSENTS.

 

(a)           On the Closing Date, the Gale SLG Transferors
shall deliver or cause to be delivered the following documents (with the
documents described in Section 12(b), the “Closing
Documents”) to Mack-Cali, all duly executed by the Applicable Gale
SLG Transferor, each of which shall be a condition precedent to Mack-Cali’s
obligation to close the transaction contemplated by this Agreement (and one or
more of which conditions may be waived in writing by Mack-Cali, in its sole
discretion, on or prior to the Closing Date):

 

(i)            the JVLLC Operating Agreement;

 

(ii)           the Gale SLG Transferors’ counterpart of a
closing and proration statement;

 

(iii)          a certification of nonforeign status
satisfying Section 1445 of the Code;

 

(iv)          evidence of each Gale SLG Transferor’s and
each Gale SLG Entity’s existence, good standing in its State of organization,
qualification to do business and authority to perform its obligations under
this Agreement, in form and substance reasonably satisfactory to the Title
Company, and all organization documents of each such entity including the
partnership agreement or limited liability company agreement, as applicable
redacted, in the case of Gale SLG, to eliminate confidential business terms;

 

(v)           a current Rent Roll including arrears
schedule with respect to each Property certified by the Applicable Gale SLG
Transferor as true, correct and complete to its knowledge;

 

(vi)          a certificate (the “Certification of Representation and Warranties”)
in the form of Exhibit G, executed
by the Gale SLG Transferors and dated as of the Closing Date, certifying that
all of the representations and warranties of the Gale SLG Transferors set forth
in Section 8(a) and all Exhibits
and Schedules referenced in therein are true and correct in all material
respects (except as qualified by materiality) as of the Closing Date or setting
forth any updates or material changes thereto, which updates and changes, if
any, shall be consistent with this Agreement;

 

(vii)         an assignment and assumption of limited
liability company interests in the form attached hereto as Exhibit H (an “Assignment”) executed by Portfolio Mezz with respect to the
Waterview Interest and the Thornall Interest, an Assignment executed by Challenger
Mezz with respect to the Challenger Interest and an Assignment executed by Gale
SLG with respect to the Mack-Cali Interest;

 

(viii)        the Cross Collateral Indemnity executed by
Gale SLG;

 

37

 

(ix)           payment of any closing costs to be paid by
Gale SLG Transferors under the terms of this Agreement;

 

(x)            to the extent they are then in or under Gale
SLG Transferors’ possession or control and not posted at Properties, all
certificates of occupancy and other permits and approvals (or equivalent
documents) for the Properties;

 

(xi)           to the extent within the Gale SLG
Transferors’ possession or control, all original documents or instructions
referred to herein, including without limitation the books, records, tenant
data, leasing material and forms, original brokerage agreements, past and
current rent rolls, files, statements, tax returns, market studies, keys,
access cards, codes, combinations, plan, specifications, reports, tests and
other materials of any kind owned by or in possession or control or any Gale
SLG Transferor or any Owner which are or may be used in the use and operation
of any Property or Personal Property, contracts and agreements for the
servicing, maintenance and operation of any Property, Licenses, and certified
copies of same where Gale SLG Transferors, using commercially reasonable
efforts, are unable to deliver originals;

 

(xii)          an opinion of Gale SLG Transferor’s counsel
reasonably satisfactory to Mack-Cali with respect to the existence, organization
and authority of each Applicable Gale Transferor and of the authority of
persons executing documents on behalf of each Applicable Gale Transferor; and

 

(xiii)         such documents as may be necessary to effect
the Debt Assumption and the New Financing as set forth below and payment of all
assumption fees and lender expenses relating to the Debt Assumption.

 

(xiv)        required tax returns, if any, for all
applicable real property transfer taxes, and/or similar levies and charges,
completed and executed by the Applicable Gale SLG Transferor, together with
certified checks to the order of the appropriate officers for the amount of the
transfer taxes, if any, shown on said tax returns, it being understood that, as
of the date hereof, the parties hereto agree that the Closing of the
Transaction would not give rise to any such taxes;

 

(xv)         letters to tenants of the Challenger
Property, the Waterview Property and the Thornall Property, advising them of
the transactions hereunder and directing that rent and other payments
thereafter be sent to Mack-Cali or its designee, as manager or agent for the
applicable Owner, as Mack-Cali shall so direct;

 

Any document or item
required under this Section 12(a)
to be delivered by any Gale SLG Transferor shall be deemed delivered for
purposes of this Agreement if such document or item is delivered to or retained
by the property manager or leasing agent acquired by Mack-Cali or an affiliate
at Closing in connection with the Services Transaction or otherwise retained by
Post-Closing Owners.

 

38

 

(b)           On the Closing Date, Mack-Cali shall deliver
the following to the Gale SLG Transferors, in form and substance reasonably
acceptable to the Gale SLG Transferors, all duly executed by Mack-Cali, where
appropriate, each of which shall be a condition precedent to the Gale SLG
Transferors’ obligation to close the transaction contemplated by this
Agreement:

 

(i)            counterparts of the JVLLC Operating
Agreement;

 

(ii)           counterparts of the closing and proration
statement;

 

(iii)          a certified copy of the resolutions or
consent of Mack-Cali authorizing the transaction contemplated by this Agreement
or other satisfactory evidence of authorization;

 

(iv)          authorization for disbursement by the
Escrowee of that portion of the Deposit held thereby;

 

(v)           the balance of the Total Purchase Price;

 

(vi)          such documents as may be necessary to effect
the Debt Assumption and the New Financing as set forth below;

 

(vii)         counterparts of the Assignments with respect
to the Waterview Interest, the Thornall Interest, the Challenger Interest and
the Mack-Cali Interest;

 

(viii)        a counterpart of the Cross Collateral
Indemnity; and

 

(ix)           such other documents, instruments or
agreements as may be reasonably requested by Gale SLG or the Escrowee to
otherwise consummate the Closing.

 

(c)           Upon purchasing the Mack-Cali Interest,
Mack-Cali shall, at closing, cause the applicable Post-Closing Owners to assume
the debt (the “Debt Assumption”)
evidenced by the documents set forth on Schedule
12(c) (the “Existing Fixed Rate
Debt”), which debt encumbers the Class A Properties, the Waterview
Property, 75 Livingston Avenue, Roseland, New Jersey (“75 Livingston”) (which Property is a Class
B Property) and the Challenger Property. 
Mack-Cali shall execute and deliver, or cause to be executed and
delivered, such documents as the lenders holding the Existing Fixed Rate Debt
may reasonably require to consent to the Transaction and effect the Debt
Assumption, including, without limitation, such guaranties and indemnities, in
substantially the form of those currently in effect with respect to the
Existing Fixed Rate Debt, made by a credit-worthy affiliate of Mack-Cali as may
be reasonably required by the lender thereunder.  Additionally, the current guarantors and
indemnitors in respect of the Fixed Rate Debt shall be released (the “Guarantor Release”) from any and all
obligations thereunder arising from and after Closing.  Mack-Cali and the Gale SLG Transferors agree
to cooperate in good faith in effecting the Debt Assumption.  Accrued, unpaid interest as of the Closing
Date shall be for the account of Pre-Closing Owners, who shall be entitled to a
credit at Closing for any unapplied cash reserves held by

 

39

 

lenders with respect to the
Existing Fixed Rate Debt, as more particularly set forth in Section 15.

 

(d)           It shall be a condition precedent to the
obligations of Gale SLG and Mack-Cali to Close the Transaction that the
applicable Post-Closing Owners obtain first mortgage and/or mezzanine financing
(the “New Financing”) with respect
to the Class B Properties reasonably acceptable to Gale SLG and Mack-Cali with
such financing being in principal amount of not less than $90,000,000.  The proceeds of the New Financing shall be
distributed at Closing to the partners of the OP, including JVLLC, and further
distributed by JVLLC to its members. 
Gale SLG and Mack-Cali each acknowledge that it has reviewed and
approves of the Term Sheet for financing from Gramercy Capital Corp. attached
hereto as Exhibit L.  Gale SLG and Mack-Cali agree to cooperate in
good faith to procure the New Financing. 
The costs of the New Financing shall be borne by the applicable
Post-Closing Property Owners.

 

(e)           The parties acknowledge that the membership
interests in each Owner are encumbered as of the date hereof by the Existing
Mezz Debt.  The Gale SLG Transferors
covenant and agree that the Existing Mezz Debt shall be satisfied in full at or
prior to Closing and that such documents as are necessary to effect the release
of all liens and encumbrances on the membership interests in any Owner (other
than any such lien and encumbrances granted in connection with the New
Financing) shall be presented at Closing.

 

13.          FIRE OR CASUALTY.

 

In the event of damage to
any Property, reasonably estimated by the Applicable Gale SLG Transferor to be
in excess of $250,000, by fire or other casualty prior to the Closing Date, the
Applicable Gale SLG Transferor shall promptly notify Mack-Cali of such fire or
other casualty.  If the fire or other
casualty causes damage which would cost in excess of 5% of the aggregate Agreed
Values of all of the Properties (as set forth on Schedule 13) to repair (as determined by Mack-Cali’s third
party insurance consultant in good faith), then Mack-Cali shall elect, by
written notice to be delivered to each of the Gale SLG Transferors, on or
before the sooner of (i) the twentieth (20th) day after Mack-Cali’s receipt of
such notice or (ii) the Closing Date, to either:  (a) close the transaction contemplated
by this Agreement or (b) terminate this Agreement, and receive a return of
the Deposit together with any interest earned thereon in which case the parties
hereto shall have no further obligations hereunder (except for obligations that
are expressly intended to survive the termination of this Agreement).  If Mack-Cali fails to timely deliver written
notice of its election under the prior sentence, it shall be deemed to have
elected to terminate this Agreement.  If
the damage to all of the Properties, by fire or other casualty prior to the
Closing Date, would cost less than or equal to 5% of the aggregate Agreed
Values of all of the Properties to repair (as determined by Mack-Cali’s third
party insurance consultant in good faith), Mack-Cali shall not have the right
to terminate its obligations under this Agreement by reason thereof.  If, following a fire or other casualty, this
Agreement is not terminated pursuant to the foregoing rights in this Section,
the Applicable Gale SLG Transferor shall cause the applicable Owner to retain
all of such Owner’s right, title and interest in and to all insurance proceeds
paid or payable to such Owner on account of such fire or casualty (subject to
the terms of the Existing Fixed Rate Debt and Leases) and, in addition, the
Applicable Gale SLG

 

40

 

Transferor shall (x)  in the case
of a Portfolio Property, cause the OP to contribute to the applicable Owner and
(y) in the case of the Challenger Property, contribute to Challenger Owner,
additional capital equal to the deductible under the applicable Owner’s policy
of casualty insurance.

 

14.          CONDEMNATION.

 

If, prior to the Closing
Date, all or any part of any of the Properties is taken by condemnation or a
conveyance in lieu thereof, or if the Applicable Gale SLG Transferor or the
applicable Owner receives notice of a condemnation proceeding with respect to
any such Property, then the Applicable Gale SLG Transferor shall promptly
notify Mack-Cali of such condemnation or conveyance in lieu thereof.  If the taking or threatened taking involves a
material portion of such Property (hereinafter defined), Mack-Cali may elect,
by written notice to be delivered to each of the Gale SLG Transferors, on or
before the sooner of (i) the twentieth (20th) day after Mack-Cali’s
receipt of such notice, or (ii) the Closing Date, to terminate this
Agreement, in which event the Deposit together with any interest earned thereon
shall be returned to Mack-Cali, and the parties hereto shall have no further
obligations hereunder (except for obligations that are expressly intended to
survive the termination of this Agreement). 
If Mack-Cali elects to close this transaction notwithstanding such taking
or condemnation, the Owner or, in the case of the Waterview Property, the
Thornall Property and the Challenger Property, Mack-Cali, shall be entitled to
any award given to the applicable Owner as a result of such condemnation
proceedings (subject to the terms of the Existing Fixed Rate Debt and Leases),
with the same being retained by such Owner (or by the OP for the benefit of
such Owner) (in the case of a Class A Property or a Class B Property) or
Mack-Cali (in the case of the Waterview Property, the Thornall Property and the
Challenger Property) at Closing.  As used
herein, a “material portion of the Property” means any part of the Property
reasonably required for the operation of the Property substantially in the
manner operated on the date hereof.  If
any taking or threatened taking does not involve a material portion of the
Property, Mack-Cali shall be required to proceed with the Closing, in which
event the Applicable Gale SLG Transferor, shall cause the applicable Owner to
retain at Closing any award given to such Owner (or the right to receive any
such award) as a result of such condemnation proceedings (subject to the terms
of the Existing Fixed Rate Debt and Leases).

 

15.          ADJUSTMENTS AND PRORATIONS.

 

(a)           For purposes of this Section 15 only, the term “Pre-Closing Owner” shall mean any Owner for
the period prior to the Closing Date and the term “Post-Closing Owner” shall mean any Owner for the period from
and after 12:01 A.M. on the Closing Date. 
The terms Pre-Closing Owner and Post-Closing Owner are intended to
reflect the different beneficial ownership of the Owners pre-Closing and
post-Closing.  Pre-Closing Owners shall
be entitled to all income produced from the operation of the Properties which
is allocable to the period prior to the Closing and shall be responsible for
all expenses allocable to that period; and the corresponding Post-Closing Owner
shall be entitled to all income and responsible for all expenses allocable to
the period beginning at 12:01 A.M. on the day the Closing occurs.  Except as expressly set forth below, at the
Closing, (i) all items of income and expense with respect to each Property
shall be prorated in accordance with the foregoing principles and the rules for
the specific items

 

41

 

set forth hereinafter, and
(ii) the Agreed Value of each Property shall be adjusted up or down at Closing
by the net amount of all such prorations and adjustments in respect of such
Property under this Section 15.  Mack-Cali shall make any post-Closing payment
with respect to a proration or adjustment in favor of a Pre-Closing Owner of a
Portfolio Property other than the Waterview Property and the Thornall Property
by paying Mack-Cali’s Applicable Percentage Share thereof to Gale SLG.  Mack-Cali shall make any such post-Closing
payment with respect to the Waterview Property or the Thornall Property by (i)
paying the OP Percentage Share (as of the Closing Date) thereof to Gale SLG and
(ii) paying the balance thereof to the holders of OP Units other than the GP
and JVLLC.  Mack-Cali shall make any
post-Closing payment with respect to Challenger by paying same to Challenger
Mezz.  At Closing Mack-Cali shall pay to
Gale SLG Mack-Cali’s Applicable Percentage Share of any cash held by the OP or
any of its subsidiaries and 100% of any cash held by Challenger Owner.

 

(b)           Real Estate Taxes and Assessments.

 

(i)            Real estate taxes and assessments on each
Property shall be prorated and adjusted based upon the period (i.e., calendar
or other tax fiscal year) to which the same are attributable, regardless of
whether or not any such real estate taxes are then due and payable or are a
lien.  Each Pre-Closing Owner shall pay
at or prior to Closing (or the applicable Post-Closing Owner shall receive
credit for) any unpaid real estate taxes attributable to periods prior to the
Closing Date (whether or not then due and payable or a lien as aforesaid);
provided, that with respect to any assessments which can be paid in
installments, each Pre-Closing Owner shall only be responsible for installments
which are payable on or before the Closing Date.  Each Pre-Closing Owner shall receive credit
for any previously paid or prepaid real estate taxes attributable to periods
from and after the Closing Date.  In the
event that as of the Closing Date the actual real estate  tax bills for the tax year or years in
question are not available and the amount of real estate tax to be prorated as
aforesaid cannot be ascertained, then rates and assessed valuations of the
previous year, with known changes, shall be used; and after the Closing occurs
and when the actual amount of real estate taxes of the year or years in
question shall be determinable, such real estate taxes will be re-prorated
between the parties to reflect the actual amount of such real estate taxes.

 

(ii)           Gale SLG shall have the right at Gale SLG’s
expense, to continue the prosecution, on behalf of any Owner, of any real
estate tax certiorari or other proceedings or protests brought by such Owner
prior to Closing, to reduce the taxes or any portion thereof for the fiscal
year prior to the fiscal year in which Closing occurs which are pending as of
the Closing Date using counsel selected by Gale SLG, until a final
determination has been rendered or a settlement reached.  If Gale SLG elects not to pursue such matters,
JVLLC, on behalf of the applicable Owner, may continue to prosecute same.  The applicable Post-Closing Owner shall pay
from the proceeds of any refund, all actual and reasonable legal, accounting
and other expenses which may be incurred in connection with such real estate
tax certiorari or other proceedings or protests, and Gale SLG (or JVLLC, if
applicable, with Gale SLG’s consent) may settle or compromise any

 

42

 

such proceedings on behalf
of the applicable Post-Closing Owner.  If
such determination shall result in a refund or credit of taxes, or if the taxes
are otherwise reduced, because of a reduction of the assessed valuation or tax
rate or for any other reason, then the net amount of such refund or credit of
taxes (after deducting Gale SLG’s (and if applicable the applicable
Post-Closing Owner’s) out-of-pocket third party costs and any refunds or
credits of taxes owed to Tenants under Leases or expired or terminated Leases)
shall be apportioned between the applicable Pre-Closing Owner and the
applicable Post-Closing Owner as of the Closing.

 

(iii)          All increases in taxes imposed due to a
change of use of any portion of any Property after the Closing Date shall be
paid by the applicable Post-Closing Owner.

 

(iv)          Any increases in taxes attributable to
reassessment of any of the Properties for ad valorem (including real estate and
franchise) tax purposes as a result of the transactions contemplated by this
Agreement shall be paid by the applicable Post-Closing Owner.

 

(c)           Utilities.

 

(i)            Gas, water, electricity, heat, fuel, sewer
and other utilities charges, the governmental licenses, permits and inspection
fees relating to each Property shall be prorated as of the Closing Date on a
per diem basis.  Pre-Closing Owners shall
receive a credit at Closing for any security deposits held by any utility
companies.  Post-Closing Owners shall be
responsible for all utility charges beginning as of the Closing Date forward.

 

(d)           Rent and Other Tenant Charges.

 

(i)            Rent under each Lease shall be apportioned as
of the Closing Date to the extent such rent has actually been collected as of
such date.  Except as provided below in
this Section 15(d), with
respect to any rent arrearages arising under each Lease for the period prior to
the month in which the Closing occurs, after Closing, the applicable
Post-Closing Owner shall pay to the applicable Pre-Closing Owner any rent
actually collected which is applicable to the period preceding the Closing
Date; provided, however, that all rent collected by the applicable Post-Closing
Owner shall be applied first to all unpaid rent for the month in which the
Closing occurs, next, to unpaid rent accruing after the Closing Date, and then
to all unpaid rent accruing prior to the Closing Date.

 

(ii)           Tenant obligations under Leases for taxes,
common area expenses, operating expenses, so-called “escalation rent” or
additional charges of any other nature (“Expense
Reimbursements”), shall be adjusted and prorated on an as, if and
when collected basis.

 

(iii)          If any Expense Reimbursements for a period
that shall have expired prior to the Closing are paid after the Closing,
Post-Closing Owner shall

 

43

 

pay the entire amount over
to Pre-Closing Owner upon receipt thereof. 
Post-Closing Owner shall (a) promptly render bills to the applicable
tenants for any Expense Reimbursements in respect of a period that shall have
expired prior to the Closing but which is payable after the Closing, (b) bill
tenants for any such Expense Reimbursements on a monthly basis for a period of
twelve (12) consecutive months thereafter and (c) use the same efforts to
collect such Expense Reimbursements as Post-Closing Owner uses after the
Closing to collect Expense Reimbursements from tenants at the Premises
generally, but shall not be required to commence legal actions with respect
thereto.  Notwithstanding the foregoing,
Gale SLG, on behalf of the applicable Pre-Closing Owner, shall have the right,
upon prior written notice to JVLLC, to pursue tenants to collect such
delinquencies (including, without limitation, the prosecution of one or more
lawsuits).  From and after the Closing,
Gale SLG shall furnish to JVLLC calculations of the amounts due from tenants on
account of Expense Reimbursements for periods prior to the Closing, and such
other information relating to the period prior to the Closing as is reasonably
necessary for the billing of any such Expense Reimbursements, including the
form of bill to be delivered to such tenants. 
Post-Closing Owner shall (x) bill tenants for Expense Reimbursements for
periods prior to the Closing in accordance with and on the basis of such
information furnished by Gale SLG absent manifest error and (y) deliver to Gale
SLG, concurrently with the delivery to tenants or shortly thereafter, copies of
all statements relating to Expense Reimbursements for periods prior to the
Closing.

 

(iv)          Expense Reimbursements for the period in
which the Closing occurs shall be apportioned between Pre-Closing Owner and
Post-Closing Owner as of the close of business of the day preceding the
Closing, with Pre-Closing Owner receiving the proportion of such Expense
Reimbursements that the portion of such period occurring prior to the Closing
bears to the entire such period, and Post-Closing Owner receiving the
proportion of such Expense Reimbursements that the portion of such period from
and after the Closing bears to the entire such period.  If, prior to the Closing, Pre-Closing Owner
shall receive any installment of Expense Reimbursements attributable to Expense
Reimbursements for periods from and after the Closing, such sum shall be paid
to Post-Closing Owner at the Closing. 
If, after the Closing, Post-Closing Owner shall receive any installment
of Expense Reimbursements attributable to Expense Reimbursements for periods
prior to the Closing, the applicable portion of such sum (as determined
pursuant to Section 15(a)) shall
be paid by Mack-Cali to Gale SLG promptly after the applicable Post-Closing
Owner receives payment thereof.

 

(v)           Any payment by a tenant on account of Expense
Reimbursements (to the extent not applied against rents due and payable by such
tenant in accordance with the terms hereof) shall be applied to Expense
Reimbursements then due and payable in the following order of priority:  (a) first, in payment of Expense
Reimbursements for the accounting period in which the Closing occurs, (b)
second, in payment of Expense Reimbursements owed by such tenant for the accounting
periods succeeding the accounting period in which the Closing occurs

 

44

 

and (c) third, in payment of
Expense Reimbursements owed by such tenant for accounting periods preceding the
accounting period in which the Closing occurs.

 

(vi)          To the extent that any payment on account of
Expense Reimbursements is required to be paid periodically by tenants for any
calendar year (or, if applicable, any lease year or any other applicable
accounting period), and at the end of such calendar year (or lease year or
other applicable accounting period, as the case may be), such estimated amounts
are to be recalculated based upon the actual expenses, taxes or other relevant
factors for that calendar year, lease year or other applicable accounting
period, with the appropriate adjustments being made with such tenants, then
such portion of the Expense Reimbursements that has been paid shall be prorated
between Pre-Closing Owner and Post-Closing Owner at the Closing based on such
estimated payments (i.e., with Pre-Closing Owner entitled to retain all monthly
or other periodic installments of such amounts paid with respect to periods
prior to the calendar month or other applicable installment period in which the
Closing occurs, Pre-Closing Owner to pay to Post-Closing Owner at the Closing
all monthly or other periodic installments of such amounts theretofore received
by Pre-Closing Owner with respect to periods following the calendar month or
other applicable installment period in which the Closing occurs and Pre-Closing
Owner and Post-Closing Owner to apportion as of the Closing Date all monthly or
other periodic installments of such amounts with respect to the calendar month
or other applicable installment period in which the Closing occurs).  At the time(s) of final calculation and
collection from (or refund to) each tenant of the amounts in reconciliation of
actual Expense Reimbursements for a period for which estimated amounts paid by
such tenant have been prorated, there shall be a re-proration between Pre-Closing
Owner and Post-Closing Owner.  If, with
respect to any tenant, the recalculated Expense Reimbursements exceeds the
estimated amount paid by such tenant, (a) such excess, upon receipt from the
applicable tenant, shall be paid by Post-Closing Owner to Pre-Closing Owner, if
the period for which such recalculation was made expired prior to the Closing,
and (b) such excess shall be apportioned between Pre-Closing Owner and
Post-Closing Owner as of the Closing, if the Closing occurred during the period
for which such recalculation was made. 
If, with respect to any tenant, the recalculated Expense Reimbursements
is less than the estimated amount paid by such tenant, (a) the shortfall shall
be paid by Pre-Closing Owner to Post-Closing Owner, if the period for which
such recalculation was made expired prior to the Closing and (b) such shortfall
shall be apportioned between Pre-Closing Owner and Post-Closing Owner as of the
Closing, if the Closing occurred during the period for which such recalculation
was made.

 

(vii)         Until such time as all amounts required to be
paid to Pre-Closing Owner by Post-Closing Owner pursuant to this Section 15(d)
shall have been paid in full, the applicable Post-Closing Owner shall furnish
to Gale SLG a reasonably detailed monthly accounting of cash receipts from
tenants (to be accompanied by monthly cash receipt journals, bank statements
and aged account receivable reports) with a detailed accounting of amounts
allocable to Pre-Closing Owner

 

45

 

pursuant to this Agreement,
which accounting shall be delivered to Gale SLG on or prior to the thirtieth
(30th) day following the last day of each calendar month from and after the
calendar month in which the Closing occurs. 
Gale SLG or its representatives shall have the right from time to time
for a period of two (2) years following the Closing, on prior notice to JVLLC,
during ordinary business hours on business days, to review the applicable
Post-Closing Owner’s rental records with respect to the Property at the office
where such records are then maintained by or on behalf of Post-Closing Owner to
ascertain the accuracy of any such accountings.

 

(viii)        Any amount collected by any Post-Closing
Owner or JVLLC to which Gale SLG is entitled to pursuant to this Section 15(d)
shall be promptly paid over to Gale SLG, less the applicable Post-Closing
Owner’s and JVLLC’s out-of-pocket costs of collection, including reasonable
attorney’s fees and expenses reasonably allocable thereto.

 

(ix)           Gale SLG, on behalf of any Owner, shall be
entitled to sue any Tenant or take any other actions to collect any delinquent
rent, Expense Reimbursements or other payments due to such Owner and accrued
prior to Closing (and not previously paid to such Owner) so long as such suit
does not seek a termination of such Tenant’s Lease or eviction of such Tenant,
and JVLLC, on behalf of such Owner, shall use good faith efforts at Gale SLG’s
expense to support Gale SLG’s collection efforts on behalf of such Owner.

 

(e)           The amount of any security deposits received
by a Pre-Closing Owner and not applied against Tenants’ obligations under
Leases shall be credited against the applicable Agreed Value, and Pre-Closing
Owners shall be entitled to retain any deposits so credited.  The applicable Agreed Value shall be
increased by the amount of any utility deposits paid by Pre-Closing Owner with
respect to the Properties.  JVLLC shall
indemnify, defend and hold Gale SLG harmless with respect to any prepaid
amounts or security deposits retained by, or delivered or credited to, the
Post-Closing Owners at Closing.

 

(f)            Any assessments and other charges paid or
payable by Pre-Closing Owners under any declarations, reciprocal easement
agreements, covenants, restrictions or other agreements affecting the
Properties shall be prorated between the Pre-Closing Owners and the
Post-Closing Owners as of the Closing.

 

(g)           Fees and other charges under any Contracts
shall be prorated between the Pre-Closing Owners and the Post-Closing Owners as
of the Closing.

 

(h)           Mack-Cali shall pay to Gale SLG at Closing
Mack-Cali’s Applicable Percentage Share of the amounts listed on Schedule
15(h).

 

(i)            Pre-Closing Owners shall be responsible for
all unpaid leasing and brokerage commissions and tenant improvement costs
identified on Schedule 8(a)(xxii)
as being the responsibility of Pre-Closing Owners (collectively, together with
certain free

 

46

 

rent amounts set forth on Schedule 15(i), “Unfunded Lease Expenses”). 
The leasing and brokerage commissions and tenant improvement costs
identified on Schedule 8(a)(xxii)
as being the responsibility of Post-Closing Owners shall be paid by the
applicable Post-Closing Owner (or to the extent paid prior to Closing,
reimbursed by Post-Closing Owners to Pre-Closing Owners at Closing).  Gale SLG shall escrow at Closing an amount
equal to Mack-Cali’s Applicable Percentage Share of Unfunded Lease Expenses (to
the extent then-remaining unpaid), and, upon receipt of proof of payment
thereof by the Post-Closing Owner, Gale SLG shall direct that escrowee release
to Mack-Cali or its designee for the benefit of the applicable Post-Closing
Owner an amount equal to Mack-Cali’s Applicable Percentage Share of such
Unfunded Leasing Expenses (or, with respect to the Challenger Property
Challenger Mezz shall direct escrowee to release to Mack-Cali or its designee,
for the benefit of the applicable Post-Closing Owner one hundred percent of
such Unfunded Tenant Liabilities, or, with respect to the Waterview Property or
the Thornall Property, Gale SLG shall direct escrowee to release to Mack-Cali
or its designee, for the benefit of the applicable Post-Closing Owner an amount
equal to the OP Percentage Interest, as of the Closing Date, multiplied by the
amount of such Unfunded Leasing Expenses). 
With respect to any other Lease or Lease modification entered into by
Pre-Closing Owners after the date hereof, and with respect to any renewal,
expansion or extension of any Lease through the exercise of an existing option,
occurring after the date hereof, all tenant improvement work, leasing
commissions, legal fees or other expenses or grants of any free rent period or
other concessions shall be paid by the Post-Closing Owner (or to the extent
paid prior to Closing, reimbursed by Post-Closing Owner to Pre-Closing Owner at
Closing).  The prorations and payments
made pursuant to this Section 15(i) shall
not affect the Agreed Values of the Properties.

 

(j)            Fees and Expenses Related to New Financing.

 

(i)            JVLLC shall be responsible for the OP
Percentage Share of all costs associated with the New Financing, including,
without limitation, any costs imposed by or reimbursable to the lender for
physical, environmental and legal due diligence, legal fees and disbursements,
title charges and appraisal fees.

 

(ii)           Pre-Closing Owners shall be responsible for
any accrued, unpaid interest, costs and expenses, prepayment premiums, breakage
fees or other charges payable to lenders in connection with the payment and
satisfaction at Closing of the principal balance of all mortgage and mezzanine
indebtedness encumbering the Properties, other than (x) the Existing Floating
Rate Debt encumbering the Troy Properties and (y) the Existing Fixed Rate Debt.

 

(k)           Pre-Closing Owners shall deliver proposed
prorations to Mack-Cali on or before the date that is three (3) business days
before the Closing Date.  Upon approval
by Mack-Cali, the parties shall deliver the approved prorations statement (the
“Closing Statement”) to the Title
Company; provided that if any of such prorations were not accurately
determined, then the same shall be recalculated as soon as reasonably
practicable after the Closing Date and either party owing the other party a sum
of money based on such subsequent proration(s) shall promptly pay said sum to
the other party.

 

47

 

(l)            If any refund of any prorated item is made
after the Closing Date whether for a period prior to or on and after the
Closing Date, the same shall be applied first to the reasonable out-of-pocket
third party costs incurred in obtaining same and the appropriate pro rata
portion of the balance, if any, of such refund shall, to the extent received by
a Post-Closing Owner, be paid to Gale SLG (to the extent relating to the period
prior to Closing).

 

(m)          Accrued, unpaid interest on the Existing
Fixed Rate Debt as of the Closing Date shall be for the account of the
Pre-Closing Owners.  Pre-Closing Owners
shall be entitled to a credit in the amount of any unapplied cash reserves held
by lenders with respect to the Existing Fixed Rate Debt (with any common
reserves being allocated to the applicable Owners on the basis of contributions
thereto and withdrawals therefrom).

 

(n)           The Agreed Value of the Class C Assets shall
be adjusted upward at Closing to take account of any accrued and unpaid
distributions on account of the OP’s interest in Gale SLG Naperville as of the
Closing Date.

 

(o)           Any errors or omissions in calculations or
adjustments shall be corrected or adjusted as soon as practicable after the
Closing.

 

(p)           The provisions of this Section 15 shall survive the Closing.

 

16.          SURVIVAL; LIMITATION OF LIABILITY.

 

(a)           Subject to Section
16(b), all representations and warranties of the Gale SLG
Transferors contained in this Agreement shall survive the Closing for a period
of nine (9) months from the date of the Closing, provided that Mack-Cali must
give the Gale SLG Transferors written notice of any claim it may have against
any Gale SLG Transferor for a breach of such representation, or for the breach
of any covenant of a Gale SLG Transferor contained in this Agreement, within
nine (9) months after the Closing.  Any
claim which Mack-Cali may have at any time, whether known or unknown, which is
not asserted within such nine (9) month period shall not be effective or valid,
and the Gale SLG Transferors shall have no liability therefor.  In addition, Mack-Cali may not bring any
action against any Gale SLG Transferor unless and until the aggregate amount of
all liability and losses arising out of any breaches of this Agreement by the
Gale SLG Transferors exceeds $250,000, and except as set forth in Section 16(b), in no event shall the
aggregate liability and losses of the Gale SLG Transferors with respect to
representations and warranties hereunder exceed $5,000,000.

 

(b)           Notwithstanding the provisions of Section 16(a), (i) the representations and
warranties of the Gale SLG Transferors contained in Sections 8(a)(i) through
8(a)(ix) and in Section 8(a)(xv)
and 8(a)(xvi) and in Section 16(f) (collectively, the “Entity-Related Representations”) shall
survive the Closing indefinitely, subject only to any applicable statute of
limitations, and (ii) in no event shall the aggregate liability of the Gale SLG
Transferors with respect to the Entity-Related Representations and under
Section 11.05(b) of the JVLLC Operating Agreement exceed $100,000,000.00.

 

48

 

(c)           Any payments for liabilities to Mack-Cali by
reason of Entity-Related Representations with respect to the Thornall Interest,
Thornall Owner or the Thornall Property or the Waterview Interest, Waterview
Owner or the Waterview Property (in any such case, a “Non-Portfolio Property Payment”) shall be
made by Portfolio Mezz.  To the extent
that any Non-Portfolio Property Payment made by Portfolio Mezz results in
diminished distributions by Portfolio Mezz to its sole member, the OP, causing
diminished distributions by the OP to its partners, and diminished
distributions by JVLLC to Gale SLG and Mack-Cali, Gale SLG shall pay to
Mack-Cali an amount equal to the difference between (x) the aggregate amount of
distributions received by Mack-Cali from JVLLC for the applicable period and
(y) the aggregate amount of distributions that would have been received by
Mack-Cali from JVLLC for the applicable period, had Portfolio Mezz not made a
Non-Portfolio Property Payment.

 

(d)           Any payments for liabilities to Mack-Cali by
reason of Entity-Related Representations with respect to the Challenger
Interest, Challenger Owner or its Challenger Property shall be made by
Challenger Mezz.

 

(e)           Gale SLG shall cause its members to
recontribute any distributions made by it to such members in connection with
the Transaction as and to the extent necessary to satisfy any liability it may
have under this Section 16.

 

(f)            Mack-Cali shall not be subject directly or
indirectly to any liability related to the Class C Assets, the Class C
Properties or the Class C Entities, beyond its indirect interest therein
through JVLLC.

 

(g)           The provisions of this Section 16 shall survive the Closing.

 

17.          NOTICES.

 

All notices, requests,
claims, demands and other communications hereunder shall be in writing and
shall be given or made (and shall be deemed to have been duly given or made
upon receipt) by delivery in person, by an internationally recognized overnight
courier service, by facsimile or registered or certified mail (postage prepaid,
return receipt requested) to the respective parties hereto at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section
17):

 

	
  If to the Gale SLG Transferors:

  	
   

  	
  c/o The Gale Company, L.L.C.

  
	
   

  	
   

  	
  100 Campus Drive, Suite 200

  
	
   

  	
   

  	
  Florham Park, NJ 07932

  
	
   

  	
   

  	
  Attention: Stanley Gale

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  SL Green Realty Corp.

  
	
   

  	
   

  	
  The Graybar Building

  
	
   

  	
   

  	
  420 Lexington Avenue

  
	
   

  	
   

  	
  New York, New York 10170

  
	
   

  	
   

  	
  Attention: Andrew S. Levine, Esq.

  

 

49

 

	
   

  	
   

  	
   

  
	
  and to:

  	
   

  	
  Greenberg Traurig, LLP

  
	
   

  	
   

  	
  200 Park Avenue

  
	
   

  	
   

  	
  New York, New York 10166

  
	
   

  	
   

  	
  Attn: Robert J. Ivanhoe, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (212) 801-6400

  
	
   

  	
   

  	
   

  
	
  If to Mack-Cali:

  	
   

  	
  c/o Mack-Cali Realty Corporation

  
	
   

  	
   

  	
  11 Commerce Drive

  
	
   

  	
   

  	
  Cranford, New Jersey 07016

  
	
   

  	
   

  	
  with two (2)

  
	
   

  	
   

  	
  separate copies

  
	
   

  	
   

  	
  of the notice sent

  
	
   

  	
   

  	
  to the attention of:

  
	
   

  	
   

  	
  Mitchell E. Hersh

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
  Facsimile No: (908) 272-0214

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  
	
   

  	
   

  	
  Roger W. Thomas

  
	
   

  	
   

  	
  Executive Vice President

  
	
   

  	
   

  	
  and General Counsel

  
	
   

  	
   

  	
  Facsimile No: (908) 272-0485

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Seyfarth Shaw LLP

  
	
   

  	
   

  	
  1270 Avenue of the Americas

  
	
   

  	
   

  	
  Suite 2500

  
	
   

  	
   

  	
  New York, New York 10020

  
	
   

  	
   

  	
  Attn: John P. Napoli

  
	
   

  	
   

  	
  Facsimile No: (212) 218-5527

  
	
   

  	
   

  	
   

  
	
  If to Escrowee:

  	
   

  	
  Commonwealth Land Title Insurance

  Company

  
	
   

  	
   

  	
  Two Grand Central Tower

  
	
   

  	
   

  	
  140 East 45th Street

  
	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
  Attn: Asher Fried, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (212) 973-6723

  

 

18.          BROKERS.

 

Each of Mack-Cali, on the
one hand, and the Gale SLG Transferors, on the other hand, represents and
warrants to the other that, other than Eastdil (“Broker”), it has not dealt with any brokers, finders or agents
with respect to the transaction contemplated hereby.  Each party agrees to indemnify, defend and
hold harmless the other party, its successors, assigns and agents, from and
against the payment of any commission, compensation, loss, damages, costs, and
expenses (including without limitation attorneys’ fees and costs) incurred in
connection with, or arising out of, claims for any broker’s, agent’s or
finder’s fees of any person claiming by

 

50

 

or through such party with respect to this transaction other than
Broker.  The obligations of Mack-Cali and
the Gale SLG Transferors under this Section 18
shall survive the Closing and the termination of this Agreement.  The
fees, commissions, costs and/or expenses due to Broker shall be borne by Gale
SLG and paid at Closing.

 

19.          TAX MATTERS.

 

(a)           The Gale SLG Transferors shall be liable for
and timely pay their proportionate share of any and all liabilities of the GP,
the OP, the Properties or any Property Subsidiary for all Taxes attributable to
taxable periods ending on or prior to the Closing (“Pre-Closing Period”). 
Except as otherwise provided herein with respect to Straddle Periods (as
defined below), each of the Gale SLG Transferors and Mack-Cali shall be liable
for and timely pay its proportionate share of any and all liabilities of the
JVLLC, the GP, the OP, the Properties or any Property Subsidiary for all Taxes
attributable to taxable periods ending after the Closing (a “Post-Closing Period”); provided, however,
that any party’s liability for Taxes shall be calculated by first determining
the Properties to which any such Tax liability relates (a “Class Tax Liability”) and then allocating
such Class Tax Liability to the Gale SLG Transferors and Mack-Cali in
accordance with their respective Class A Percentage Interest, Class B
Percentage Interest or Class C Percentage Interest, as the case may be.  In any case where applicable law does not
permit the GP, the OP or any Property Subsidiary to close its Tax year as of
the Closing Date or in any case in which a Tax is assessed with respect to a
taxable period which includes the Closing Date (but does not begin or end on
that day) (a “Straddle Period”),
Taxes, if any, attributable to the Straddle Period shall be allocated to and be
payable by the Gale SLG Transferors for the period up to and including the
Closing Date (the “Pre-Closing Straddle
Period”) or the Gale SLG Transferors and Mack-Cali for the period
after the Closing Date (the “Post-Closing
Straddle Period”), which liability for Taxes relating to a
Post-Closing Straddle Period shall be allocated among the Gale SLG Transferors
and Mack-Cali in the same manner as liabilities for Taxes are allocated for a
Post-Closing Period.  The Gale SLG
Transferors shall prepare and timely file all Tax Returns (including applicable
filing extensions) for the GP, the OP and all Property Subsidiaries for taxable
periods ended on or prior to the Closing (each a “Pre-Closing Tax Return”); provided, however, that the Gale SLG
Transferors shall provide the JVLLC and Mack-Cali with a copy of any such
Pre-Closing Tax Return no later than fifteen (15) calendar days prior to filing
such Pre-Closing Tax Return and shall within five (5) calendar days of filing
provide the JVLLC, the Gale SLG Transferors and Mack-Cali with a copy of any
such Pre-Closing Tax Return filed with any taxing authority. All Pre-Closing
Tax Returns shall be prepared in a manner consistent with the reporting of all
items of income or loss on prior Tax Returns of the GP, the OP or any Property
Subsidiary, unless otherwise required by applicable laws.  The JVLLC shall prepare, or cause to be
prepared, and shall timely file (including applicable filing extensions) or cause
to be prepared and timely filed (including applicable filing extensions) all
Tax Returns for the GP, the OP and all Property Subsidiaries, other than the
Waterview Owner, the Challenger Owner and the Thornall Owner, for all Straddle
Periods (“Straddle Returns”).  Straddle Returns shall be prepared in a
manner consistent with the reporting of all items of income and loss of prior
Tax Returns of the GP, the OP or any Property Subsidiary, unless otherwise
required by applicable laws.  Any

 

51

 

allocations of (i) Taxes to
a Pre-Closing Straddle Period shall be subject to Gale SLG Transferors’
approval, which shall not be unreasonably withheld, (ii) Class Tax Liability to
Class A Properties or Class B Properties shall be subject to Mack-Cali’s
approval, which shall not be unreasonably withheld, or (iii) Class Tax
Liability to Class B Properties or Class C Properties shall be subject to Gale
SLG Transferors’ approval, which shall not be unreasonably withheld. Taxes
payable with Straddle Returns shall be allocated between the Pre-Closing
Straddle Period and Post-Closing Straddle Period, as described above, based on
an assumed period ending on the Closing Date; provided, however, that Taxes not
based on income or receipts shall be allocated between the Pre-Closing Straddle
Period and Post-Closing Straddle Period based on the number of days in each
such taxable period.

 

(b)           If any claim, demand, assessment (including a
notice of proposed assessment) or other assertion is made by a taxing authority
with respect to Taxes against the JVLLC, the GP, the OP, any Property
Subsidiary or the Properties, the calculation of which involves a specific
matter covered in this Agreement (“Tax Claim”),
or if the JVLLC, the GP, the OP or any Property Subsidiary receives any notice
from any taxing authority with respect to any current or future audit,
examination, investigation or other proceeding (“Proceeding”) involving the JVLLC, the GP, the OP, any Property
Subsidiary, or the Properties or that otherwise involves a specific matter
covered in this Agreement that could directly or indirectly materially affect
either the Gale SLG Transferors or Mack-Cali (adversely or otherwise), then the
JVLLC shall promptly notify the Gale SLG Transferors’ notice parties set forth
in Section 17 (“Gale SLG Transferors’ Representatives”) and
the Mack-Cali  notice parties set forth
in Section 17 (“Mack-Cali’s Representatives”) of such Tax
Claim or Proceeding.  Any Tax Claim or
Proceeding that would increase any party’s liability for Taxes for any taxable
period or could give rise to a claim for indemnification under this Agreement
shall be considered material.

 

(c)           The Gale SLG Transferors shall have the right
to control the defense, settlement or compromise of any Proceeding or Tax Claim
with respect to the ownership or operations of the GP, the OP, any Property
Subsidiary or the Properties for any Pre-Closing Period, unless any such action
would reasonably be expected to result, directly or indirectly, in a material
adverse Tax effect or a liability or material increase in liability to
Mack-Cali for any Tax period, in which case, such action may not be taken
without Mack-Cali’s consent.

 

The JVLLC shall have the
right to control the defense, settlement or compromise of any Proceeding or Tax
Claim with respect to the ownership or operations of the JVLLC, the GP, the OP,
any Property Subsidiary or the Properties for any Post-Closing Period, unless
any such action would reasonably be expected to result in a material adverse
Tax effect or a liability or material increase in liability to the Gale SLG
Transferors or Mack-Cali for any Tax period, in which case, such action may not
be taken without the Gale SLG Transferors’ consent and Mack-Cali’s consent.  Notwithstanding the foregoing, (i) each such
party shall keep the other parties, including, without limitation, Mack-Cali,
duly and contemporaneously informed of the progress of any Tax Claim or
Proceeding under its control to the extent that such Proceeding or Tax

 

52

 

Claim could directly or
indirectly materially affect (adversely or otherwise) the Gale SLG Transferors
or Mack-Cali and shall afford the Gale SLG Transferors or Mack-Cali the right
to review and comment on any and all submissions made to any taxing authority
with respect to such Tax Claim or Proceeding and shall consider any such
comments in good faith, and (ii) subject to the balance of this Section 19(c), neither the Gale SLG
Transferors nor the JVLLC shall consent to the entry of any judgment or enter
into any settlement with respect to a Tax Claim or Proceeding without the prior
written consent of the Gale SLG Transferors or Mack-Cali, as applicable.  As a condition to withholding its consent to
a settlement proposal (i) a party must have a reasonable basis to believe that
such settlement would have a material adverse Tax effect or material increase
in liability to such party, and (ii) a party must believe, based on the advice
of a nationally recognized accounting or law firm, that it is more likely than
not that the position asserted by the party seeking consent would prevail if it
were to be asserted in a judicial proceeding. 
A party withholding its consent to a settlement proposal shall assume
the subsequent costs of defending and asserting the positions asserted by such
party in a judicial proceeding, shall have the right to control such proceeding
and shall indemnify the other party for any Taxes and related interest and
penalties resulting from a subsequent judgment in excess of the amounts that
would have been imposed pursuant to the rejected settlement (but not any other
costs associated with such proceeding or any other issues involved therein).

 

(d)           From and after the Closing, the parties shall
provide each other with such assistance as may reasonably be requested by any
of them in connection with (i) the preparation of a Tax Return, election,
consent or certificate required to be prepared by any party hereto or (ii) any
Tax Claim or Proceeding.  Such assistance
shall include making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder and shall include providing copies of any relevant Tax Returns and
supporting work schedules.

 

20.          MISCELLANEOUS.

 

(a)           Mack-Cali shall have no right to assign its
rights or obligations under this Agreement except for an assignment at Closing
to one or more controlled affiliates of Mack-Cali, provided that such assignees
shall expressly assume all obligations and liabilities of Mack-Cali
hereunder.  Each of the Gale SLG
Transferors may assign its rights to an affiliate, to which such Gale SLG
Transferor transfers all right, title and interest in the GP and the OP, or
Challenger Owner, as applicable, immediately prior to Closing; provided that
such Gale SLG Transferor shall not thereby be relieved from any of its
obligations or liabilities under this Agreement (whether arising before or
after Closing ) and such assignee shall expressly assume all obligations and
liabilities of the Applicable Gale SLG Transferors hereunder.

 

(b)           No party to this Agreement shall make, or
cause to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated by this Agreement or otherwise
communicate with any news media without the prior written consent of the other
parties unless otherwise required by law or applicable stock exchange
regulation, and the parties to this Agreement shall cooperate as to the timing
and contents of any such press release, public announcement or

 

53

 

communication.  The provisions of this Section 20(b) shall survive the Closing and
termination of this Agreement.

 

(c)           If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to either party hereto.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated by this Agreement are
consummated as originally contemplated to the greatest extent possible.

 

(d)           This Agreement (including the Exhibits and
the Schedules) constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, between the Gale SLG
Transferors and Mack-Cali with respect to the subject matter hereof and
thereof, including the Letter of Intent dated February 3, 2006 between
Mack-Cali Realty Acquisition Corp., The Gale Company, L.L.C. and SL Green
Realty Corp.

 

(e)           This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the Gale SLG
Transferors and Mack-Cali or (b) by a waiver in accordance with Section 20(f).

 

(f)            Any party to this Agreement may (a) extend
the time for the performance of any of the obligations or other acts of the
other party, (b) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document delivered by the other
party pursuant hereto, or (c) waive compliance with any of the agreements of
the other party or conditions to such party’s obligations contained
herein.  Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
to be bound thereby.  Any waiver of any
term or condition shall not be construed as a waiver of any subsequent breach
or a subsequent waiver of the same term or condition, or a waiver of any other
term or condition of this Agreement.  The
failure of either party hereto to assert any of its rights hereunder shall not
constitute a waiver of any of such rights.

 

(g)           This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns and nothing herein, express or implied is
intended to or shall confer upon any other person any legal or equitable right,
benefit or remedy of any nature whatsoever, including any rights of employment
for any specified period, under or by reason of this Agreement.

 

(h)           Unless otherwise specified in this Agreement,
all references to currency, monetary values and dollars set forth herein shall
mean United States (U.S.) dollars and all payments hereunder shall be made in
United States dollars.

 

54

 

(i)            This Agreement and all others arising out of
or relating to this Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, except to the extent that the laws of
the State in which any Property is located dictate that its laws shall govern
the issue in dispute.  All actions
arising out of or relating to this Agreement shall be heard and determined
exclusively in any New York federal court sitting in the Borough of Manhattan of
the City of New York; provided, however, that if such federal court does not
have jurisdiction over such action, such action shall be heard and determined
exclusively in any New York state court sitting in the Borough of Manhattan of
the City of New York.  Consistent with
the preceding sentence, the parties hereto hereby (a) submit to the exclusive
jurisdiction of any federal or state court sitting in the Borough of Manhattan
of the City of New York for the purpose of any action arising out of or relating
to this Agreement brought by any party hereto and (b) irrevocably waive, and
agree not to assert by way of motion, defense, or otherwise, in any such
action, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that the action is brought in an inconvenient forum, that the venue
of the action is improper, or that this Agreement or the transactions
contemplated by this Agreement may not be enforced in or by any of the
above-named courts.  The provisions of
this Section 20(i) shall survive
the Closing and the termination of this Agreement.

 

(j)            The parties hereto hereby waive to the
fullest extent permitted by applicable law any right they may have to a trial
by jury with respect to any litigation directly or indirectly arising out of,
under or in connection with this Agreement or the transactions contemplated by
this Agreement.  Each of the parties
hereto hereby (a) certifies that no representative, agent or attorney of the
other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it has been induced to enter into this Agreement and the transactions
contemplated by this Agreement, as applicable, by, among other things, the
mutual waivers and certifications in this Section
20(j).  The provisions of this
Section 20(j) shall survive the
Closing and the termination of this Agreement.

 

(k)           This Agreement may be executed and delivered
(including by facsimile transmission or portable document format (PDF)) in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original,
but all of which taken together shall constitute one and the same agreement.

 

(l)            This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the fact
that the Agreement may have been prepared primarily by counsel for one of the
parties, it being recognized that both the Gale SLG Transferors and Mack-Cali
have contributed substantially and materially to the preparation of this
Agreement.  The provisions of this Section 20(l) shall survive the Closing.

 

(m)          If, under the terms of this Agreement and the
calculation of the time periods provided for herein, the Closing Date or any
other date to be determined under

 

55

 

this Agreement should fall
on a day that is not a Business Day then such date shall be extended to the
next succeeding Business Day.

 

(n)           All parties shall hold both the terms and
conditions of this Agreement and its existence as confidential information and
will not disclose such terms, conditions or existence, or the fact that
negotiations are taking place, to any third party without the other parties’
prior written consent, except to the extent necessary to comply with law or to
conform to any party’s general custom and practice.  The provisions of this Section 20(n) shall survive the
Closing and the termination of this Agreement.

 

(o)           In connection with the Transaction, the Gale
SLG Transferors shall be responsible for their attorneys’ fees, all real estate
transfer taxes, all costs incurred to repay or satisfy any liens affecting any
Property or membership interests in any Owner, assumption fees and expenses
payable to lender in respect of the Debt Assumption pursuant to the documents
evidencing the Existing Fixed Rate Debt, prorations and apportionments as set
forth in Section 15 and one half
of all reasonable escrow fees.  In
connection with the Transaction, Mack-Cali shall be responsible for its
attorneys’ fees, all title insurance and survey costs, the costs of its due
diligence investigations, prorations and apportionments as set forth in Section 15 and one-half of all reasonable
escrow fees.  Except as otherwise
specified in this Agreement, all costs and expenses, including fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be borne by the party incurring such costs and expenses,
whether or not the Closing shall have occurred. 
The provisions of this Section 20(o)
shall survive the Closing and the termination of this Agreement.

 

(p)           From and after the Closing Date, the parties
hereto shall take such further actions and execute and deliver such further
documents and instruments as may be reasonably requested by the other parties
and are reasonably necessary to provide the respective parties hereto the
benefits intended to be afforded hereby. 
The provisions of this Section 20(p)
shall survive Closing.

 

(q)           Neither Mack-Cali nor any of its affiliates
has engaged in any dealings or transactions, directly or indirectly, (a) in
contravention of any U.S., international or other money laundering regulations
or conventions, including the United States Bank Secrecy Act, the United States
Money Laundering Control Act of 1986, the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the
Enemy Act (50 U.S.C. §1 et seq., as amended), or any foreign asset control
regulations of the United States Treasure Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto, or (b) in contravention of Executive Order No. 13224 dated September
24, 2001 issued by President of the United States (Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten To
Commit, or Support Terrorism), as may be amended or supplemented from time to
time or on behalf of terrorists or terrorist organizations.

 

56

 

(r)           Notwithstanding anything to the contrary
contained in this Agreement, it is understood and agreed that none of the
employees, directors, officers, members, partners, managers, principals,
consultants, shareholders, advisors, attorneys, or agents of any of the Gale
SLG Transferors or their affiliates, shall have any personal liability or
obligation whatsoever for obligations under this Agreement or under any
documents delivered at Closing, and the individual assets of such parties shall
not be subject to any claims of any person relating to such obligations.  Notwithstanding anything to the contrary
contained in this Agreement, it is understood and agreed that none of the
employees, directors, officers, members, partners, managers, principals,
consultants, shareholders, advisors, attorneys or agents of Mack-Cali shall
have any personal liability or obligation whatsoever for any obligations under
this Agreement of under any documents delivered at Closing, and the individual
assets of such parties shall not be subject to any claims of any person
relating to such obligations.  However,
the foregoing shall not in any way limit the parties’ obligations and
liabilities under this Agreement.  The
provisions of this Section 20(r)
shall survive the Closing and the termination of this Agreement.

 

(s)           Gale SLG understands that Mack-Cali may seek
to structure its acquisition of one or more of the Challenger Property, the
Waterview Property or the Thornall Property in such a way that will afford
Mack-Cali an opportunity to take advantage of the provisions of Code Section
1031 governing tax free exchanges and reorganizations.  Gale SLG shall cooperate with Mack-Cali in
such efforts, which cooperation shall be at Mack-Cali’s expense, except as
otherwise set forth below.  Without
limiting the generality of the foregoing, (i) the parties hereto shall, at
Mack-Cali’s request, sever this Agreement into separate agreements (each, a “Severed Contract”) for the Waterview
Interest, Challenger Interest, Thornall Interest and Mack-Cali Interest,
respectively and (ii) the applicable Gale SLG Transferor, as directed by
Mack-Cali, shall transfer the Challenger Interest, the Waterview Interest or
the Thornall Interest, as applicable, at Closing to one or more Qualified
Intermediaries (as defined in the Code) and not to Mack-Cali.  The Severed Contracts shall reflect all of
the terms and provisions of this Agreement with respect to the Properties
covered thereby and drafts thereof shall be prepared by Mack-Cali’s attorneys,
subject to review and approval by Gale SLG and its counsel (it being understood
that Gale SLG shall bear its own legal fees with respect to such review and
approval).  Mack-Cali reserves the right,
in effectuating such like-kind exchanges, to assign its rights, but not its obligations,
under this Agreement with respect to the Challenger Interest, the Waterview
Interest or the Thornall Interest, as applicable, at Closing to such Qualified
Intermediaries, and Gale SLG hereby consents to such assignment.  Mack-Cali shall indemnify, defend and hold
the Gale SLG Transferors harmless from and against any and all costs, loss,
liability and expenses, including attorneys’ fees and costs, arising out of or
in connection with any such like-kind exchange and any related matter arising
by reason of Gale SLG’s obligations under this paragraph.

 

21.          TROY TRANSACTION.

 

(a)           Mack-Cali acknowledges that Gale SLG is
currently pursuing a transaction with respect to recapitalizing the OP’s
interest in the Troy Properties.  It is

 

57

 

currently contemplated that
the OP will contribute its membership interest in the Troy Entities of to a
to-be-formed joint venture (the “Troy JV”)
between a newly-formed wholly-owned subsidiary of the OP, and an affiliate of Transwestern
Investment Company, L.L.C. in exchange for certain common equity and preferred
equity interests in the Troy JV having an Agreed Value of $9,500,000.00.

 

(b)           Mack-Cali hereby acknowledges, agrees and
consents to the transaction described in Section
21(a), and/or any other transaction with respect to the disposition,
refinancing or recapitalization, in whole or in part, of the Troy Entities or
the Troy Properties (in any case, a “Troy
Transaction”) as may be entered into by Gale SLG, the OP, Portfolio
Mezz or the Troy Entities in the sole and absolute discretion of Gale SLG.

 

(c)           Notwithstanding anything to the contrary
contained herein, Gale SLG shall be permitted to pursue any Troy Transaction or
series of Troy Transactions, to execute, deliver and perform under such
contracts and agreements with respect thereto on behalf of itself, the OP,
Portfolio Mezz or the Troy Entities as Gale SLG may deem advisable in its sole
and absolute discretion, to transfer, finance, encumber or otherwise pledge the
Troy Properties or the membership interests in the Troy Entities or take any
other action with respect to the Troy Entities in each in whole or in part or
the Troy Properties as Gale SLG shall determine in its sole and absolute
discretion.

 

(d)           If a Troy Transaction closes on or before
Closing hereunder, the Clause C Amount shall be adjusted to equal the
Applicable Percentage Share of the net equity value of the OP’s then-remaining
interest, direct or indirect, in the Troy Properties.

 

[Signature
Page Follows]

 

58

 

IN WITNESS
WHEREOF, this
Agreement has been executed as of the date first above written.

 

 

	
   

  	
  GALE SLG PARTIES:

  
	
   

  	
   

  
	
   

  	
  Gale SLG NJ LLC, a Delaware limited

  
	
   

  	
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ STANLEY C. GALE

  	
   

  
	
   

  	
  Name: Stanley C. Gale

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
  Gale SLG NJ Mezz LLC, a Delaware limited

  
	
   

  	
  liability company:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ STANLEY C. GALE

  	
   

  
	
   

  	
  Name: Stanley C. Gale

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
  Gale SLG Ridgefield Mezz LLC, a Delaware

  
	
   

  	
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ STANLEY C. GALE

  	
   

  
	
   

  	
  Name: Stanley C. Gale

  
	
   

  	
  Title: President

  

 

 

[ADDITIONAL
SIGNATURE PAGE FOLLOWS]

 

59

 

	
   

  	
  MACK-CALI:

  
	
   

  	
   

  
	
   

  	
  Mack-Cali Ventures L.L.C., a Delaware limited liability

  company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Mack-Cali Realty, L.P., Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Mack-Cali Realty Corporation, General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MITCHELL E. HERSH

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mitchell E. Hersh

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
							

 

60

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