UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1998
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission File Number 0-9380
CAPITAL PROPERTIES, INC.
(Name of small business issuer in its charter)
Rhode Island 05-0386287
(State or other jurisdiction of IRS Employer Identification
incorporation or organization) No.
100 Dexter Road, East Providence, Rhode Island 02914
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (401) 435-7171
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange
Title of each class on which registered
Common Stock-$1.00 par value American Stock Exchange
Securities registered under Section 12(g) of the Exchange Act:
None
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the issuer was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of issuer's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
<PAGE>
For the year ended December 31, 1998, the Issuer's revenues totaled
$2,793,000.
As of March 1, 1999, the aggregate market value of the voting stock held by
non-affiliates of the Issuer was $7,608,000, which excludes voting stock held
by directors, executive officers and holders of 5% or more of the voting
power of the Issuer's common stock (without conceding that such persons are
"affiliates" of the Issuer for purposes of federal securities law.) The
Issuer has no outstanding non-voting common equity.
As of March 1, 1999, the Issuer had 3,000,000 shares of Common Stock
outstanding.
Documents Incorporated by Reference - Portions of the proxy statement for
the 1999 annual meeting of shareholders are incorporated by reference into
Part III. Portions of the annual report to shareholders of Capital
Properties, Inc. for the year ended December 31, 1998 are incorporated by
reference into Parts I, II, and III.
Transitional Small Business Disclosure Format. Yes No X
<PAGE>
PART I
Item 1. - Description of Business
Business Development
The Issuer was organized as a business corporation under the laws of Rhode
Island in 1983 as Providence and Worcester Company and is the successor by
merger in 1983 to a corporation also named Providence and Worcester Company
which was organized under the laws of Delaware in 1979. The Issuer's
corporate name was changed to Capital Properties, Inc. in 1984.
Business of Issuer
The Issuer owns certain properties in downtown Providence, Rhode Island which
it leases or is holding for lease to third parties (see "Properties Under
Long-Term Leases" and "Properties Under Short-Term Leases," in Item 2 below).
The Issuer is the largest single landowner in the Capital Center Project area
but is nevertheless subject to some measure of competition from other
landowners.
The Issuer owns all of the outstanding capital stock of Tri-State Displays,
Inc., (through which the Issuer leases land for billboards along interstate
and primary highways for outdoor advertising purposes) and all of the
outstanding capital stock of Capital Terminal Company which was incorporated
in 1996 (through which the Issuer operates its petroleum storage facilities).
(See "Petroleum Storage Facilities" in Item 2 below.)
References hereinafter to the "Issuer" are, unless the context indicates
otherwise, collectively to the Issuer and its wholly-owned subsidiaries and
its predecessors.
Miscellaneous
For information relating to the Issuer's dependence on one or a few major
customers, see Note 8 of Notes to Consolidated Financial Statements in the
Issuer's 1998 Annual Report to shareholders attached hereto as Exhibit 13
(hereinafter referred as the "1998 Annual Report"), which Note is
incorporated herein by reference.
During the last two years, no monies were expended by the Issuer and its
subsidiary on material research and development activities.
Compliance with federal, state and local provisions which have been enacted
or adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has not had a
material effect upon the capital expenditures, earnings or competitive
position of the Issuer.
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<PAGE>
On December 31, 1998, the Issuer employed a total of 7 full-time employees
and 1 part-time employee.
Item 2. - Description of Property
Principal Facilities
The Issuer's principal executive offices are located at its petroleum storage
facilities at 100 Dexter Road, East Providence, Rhode Island 02914.
Investment Policies and Investments in Real Estate
The Issuer has no established policy for the purchase of additional developed
or undeveloped property. However, should suitable parcels become available
in the general area of the Issuer"s current land holdings, the Issuer would
consider such an acquisition depending on current levels of cash and the
availability of financing. Any properties acquired would most likely be
leased primarily to developers under long-term leases. The Issuer
periodically invests its excess cash in United States government and
governmental agency obligations maturing in not more than one year.
Description of Real Estate and Operating Data
All of the properties described below (except the petroleum storage
facilities) are shown on a map on page 7 of the Issuer's 1998 Annual Report,
which map is incorporated herein by reference.
All the properties described below (except for the air rights) are owned in
fee by the Issuer. There are no mortgages, liens or other encumbrances on
such properties except for Parcel 22.
In the opinion of management, all of the properties described below are
adequately covered by insurance. Insurance is also required of all tenants,
with the Issuer being named as an additional insured.
Petroleum Storage Facilities - The Issuer holds title to approximately 8
acres of land fronting on the Seekonk River in East Providence, Rhode Island.
The property is used and operated primarily as a petroleum storage facility
(the Facilities) with aggregate storage capacity of 340,000 barrels. Although
the Issuer has received a height variance from the zoning board of appeals on
any new tanks to be erected, it has no present plans to erect any tanks at
this time. The property can be further developed to contain several
additional tanks with an aggregate storage capacity at least equal to the
current capacity. During 1999, the Issuer plans to construct a new expanded
truck rack which will be fully automated and will have both top and bottom
loading capabilities. The estimated cost of construction of the truck rack
is $1.5 million.
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<PAGE>
In January 1998, the Issuer purchased the Wilkesbarre Pier in the Port of
Providence and its deep-water berth for receiving petroleum products by
tanker. In January 1998, the Issuer also purchased the perpetual right to
transport petroleum products from the Pier to its terminal property through
pipelines owned by a third party.
This property is the only independent petroleum storage facility with deep-
water access in the market area. All of the petroleum storage tanks and
buildings are owned by the Issuer.
On October 1, 1996, the Issuer resumed possession of the Facilities and
presently operates the Facilities for Global Companies, L.L.C. under a short-
term agreement. The Issuer and Global are negotiating to extend arrangements
for an additional three years plus options to extend on an annual basis.
The following schedule sets forth certain information on the federal tax
basis of that portion of the petroleum terminal property which is depreciated:
<TABLE>
<S> <C> <C>
Buildings Tanks
Federal Tax Basis (cost) $191,021 $2,246,787
Rate per year 2.5% to 5% 3.33% to 20%
Method S/L S/L
Life (Years) 20 to 40 5 to 33
</TABLE>
The 1998 real estate taxes are $43,098 for the petroleum storage facilities
and $35,826 for the Wilkesbarre Pier at a $23.13 per Thousand Dollars of
assessed valuation tax rate.
Properties Under Long-Term Leases - The Issuer owns approximately 20.5
acres of land within the Capital Center Project area of downtown Providence,
including 1.9 acres of air rights over Amtrak's Northeast Corridor railroad
tracks which run through downtown Providence. (The land underlying the
Parking Garage described below is also included in this acreage.) See the
map on page 7 of the Issuer's 1998 Annual Report, which map is incorporated
herein by reference.
At December 31, 1998, land leases for three separate land parcels within this
area have commenced with remaining terms of up to 145 years. These leases
have scheduled rent increases over their terms. For further information on
the development of these parcels by the tenants, reference is made to the
President's Report at pages 2 and 3 in the Issuer's 1998 Annual Report, which
report is incorporated herein by reference.
As of December 31, 1998, the Issuer had entered into land leases for three
additional land parcels with terms of 95, 145 and 149 years. Under the 95-
year land lease, the developer proposes to construct a hotel containing
approximately 265 suites with parking. Under the 145-year land lease, the
developer proposes to construct an apartment complex containing approximately
250 individual units with underground parking. Under the 149-year land
lease, the developer proposes to construct a building of approximately
350,000 square feet of commercial space and a
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<PAGE>
minimum of 200 public parking spaces. All leases provide a period of time
within which the developer may perform its due diligence, seek the approval
of the plans for its complex from the Capital Center Commission and enter
into a tax stabilization agreement with the City of Providence. There can be
no assurance that the developers, individually or collectively, will be able
to satisfy the conditions precedent to proceeding with the developments.
Each developer's ability to obtain a tax stabilization agreement with the
City of Providence may be adversely affected by the pending litigation
between the City and the Company with respect to prior year taxes as
discussed below. The Issuer is unable to determine at this time when
construction will begin and therefore the time at which the term of each lease
will commence.
Properties Under Short-Term Leases:
Parking Garage - The Issuer owns a 360-car parking garage adjacent to a
rail passenger station in downtown Providence, Rhode Island, together with
the underlying land (the Parking Garage). Through December 31, 1997, the
Parking Garage was operated by the Issuer under a management agreement with a
firm experienced in parking operations. Since January 1, 1998, the Parking
Garage is leased under a short-term cancelable lease to the same firm that
formerly managed the Parking Garage. The annual rent is $117,600 ($.77 per
square foot). The federal tax cost basis of the Parking Garage (exclusive of
the underlying land) is $2,500,000, which is being depreciated on the straight-
line method at the rate of 2.5% per year over a 40-year life. The 1998 real
estate taxes are $99,038 on the Parking Garage and $60,925 on the underlying
land using a $31.99 per Thousand Dollars of assessed valuation tax rate.
Parcels 3E, 3W, 4E, 4W and 6 in the Capital Center Project area and Parcels
21 and 22 immediately adjacent to this area are leased for surface parking
purposes to the same firm that leases the Parking Garage described above.
The short-term lease on Parcel 6 will terminate when construction of the
above-described project commences. The Issuer continues to seek developers
for the remaining parcels, and these leases can be terminated on short notice
should suitable development opportunities arise or when construction on a
parcel commences as described above.
In connection with Parcel 4E, in 1989 the Issuer entered into a non-binding
letter of intent with a developer who proposes to construct an office
building. The developer has delayed the project until such time as it has
located a major tenant to occupy the building.
In connection with Parcel 4W, in March 1999 the Issuer entered into a letter
of intent with a developer who proposes to construct an extended-stay hotel.
It is anticipated that the Issuer and the developer will enter into a lease
for a term of 50 years.
Item 3. Legal Proceedings
Petition for Assessment of Damages - For a discussion of the litigation
currently pending with the State of Rhode Island, reference is made to Note 2
of Notes to Consolidated Financial Statements in the Issuer's 1998 Annual
Report, which note is incorporated herein by reference.
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<PAGE>
Property Tax Dispute - For a discussion of the property tax dispute and
litigation currently pending with the City of Providence, Rhode Island,
reference is made to Note 2 of Notes to Consolidated Financial Statements in
the Issuer's 1998 Annual Report, which note is incorporated herein by
reference.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
I-5
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
See page 32 of the Issuer's 1998 Annual Report, which page is incorporated
herein by reference.
Item 6. Management's Discussion and Analysis or Plan of Operation
See pages 8 through 13 of the Issuer's 1998 Annual Report, which pages are
incorporated herein by reference.
Item 7. Financial Statements
The following consolidated financial statements of the Issuer and its
subsidiaries, set forth at pages 15 through 30 of the Issuer's 1998 Annual
Report, are incorporated herein by reference:
Consolidated balance sheet--December 31, 1998
Consolidated statements of income (loss) and retained
earnings--years ended December 31, 1998 and 1997
Consolidated statements of cash flows--years ended
December 31, 1998 and 1997
Notes to consolidated financial statements--years ended
December 31, 1998 and 1997
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable.
II-1
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons of the
Issuer
For information with respect to the directors and control persons of the
Issuer, see Pages 3, 4 and 5 of the Issuer's definitive proxy statement for
the 1999 annual meeting of its shareholders, which pages are incorporated
herein by reference.
The following are the executive officers of the Issuer:
<TABLE>
<S> <C> <C> <C>
Date of First
Name Age Office Held Election to Office
Robert H. Eder 66 Chairman 1995
Ronald P. Chrzanowski 56 President 1997
Barbara J. Dreyer 60 Treasurer 1997
Stephen J. Carlotti 56 Secretary 1998
</TABLE>
All officers hold their respective offices until their successors are duly
elected and qualified. Mr. Chrzanowski served as Vice President of the
Issuer from November 12, 1997 to December 31, 1997, and as President since
that date. Ms. Dreyer served as Secretary-Treasurer of the Issuer from 1987
to 1995; as President and Treasurer from 1995 to December 31, 1997 and as
Treasurer since that date.
Item 10. Executive Compensation
See page 4 of the Issuer's definitive proxy statement for the 1999 annual
meeting of its shareholders, which page is incorporated herein by reference.
Item 11. Security Ownership of Certain Beneficial Owners and Management
See pages 4 and 5 of the Issuer's definitive proxy statement for the 1999
annual meeting of its shareholders, which pages are incorporated herein by
reference.
Item 12. Certain Relationships and Related Transactions
See pages 5 and 6 of the Issuer's definitive proxy statement for the 1999
annual meeting of its shareholders, which pages are incorporated herein by
reference.
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<PAGE>
Item 13. Exhibits and Reports on Form 8-K
(a) Index of Exhibits:
(3) (a) Restated articles of incorporation (incorporated by reference
to Exhibit 3 to the Issuer's report on Form 8A dated June 6,
1997).
(b) By-laws, as amended (incorporated by reference to Exhibit 3(b)
to the Issuer's quarterly report on Form 10-QSB for the quarter
ended June 30, 1995).
(10) Material contracts:
(a) Note from Providence and Worcester Railroad Company to Issuer
dated January 1, 1988 (incorporated by reference to Exhibit
10(a) to the Issuer's annual report on Form 10-KSB for the year
ended December 31, 1992) as modified by Agreement dated August
16, 1995 (incorporated by reference to Exhibit 10(a) to the
Issuer's annual report on Form 10-KSB for the year ended
December 31, 1995).
(b) Leases between Metropark, Ltd., and Issuer:
(i) Dated December 1, 1997 (incorporated by reference to
Exhibit 10(b) (iii) to the Issuer's annual report on
Form 10-KSB for the year ended December 31, 1997).
(ii) Dated as of November 1, 1998; see page III-3.
(iii) Dated as of December 1, 1998; see page III-4.
(iv) Dated as of January 1, 1999; see page III-5
(v) Dated as of January 1, 1999; see page III-6
(13) Annual report to shareholders for the year ended December 31,
1998; see page III-7.
(21) Subsidiaries of the Issuer; see page III-8.
(22) Plan of the Issuer's parcels in Downtown Providence (incorporated
by reference to page 7 of the Issuer's annual report to
shareholders for the year ended December 31, 1998), filed as
Exhibit 13 hereto.
(27) Financial Data Schedule.
(b) For the quarter ended December 31, 1998, no reports on Form 8-K were
filed.
III-2
<PAGE>
EXHIBIT 10(b)(ii)
LEASE
BETWEEN
METROPARK, LTD.
AND
CAPITAL PROPERTIES, INC.
DATED AS OF NOVEMBER 1, 1998
(COVERING PARCELS 3E AND 4E)
III-3
<PAGE>
LEASE
THIS INDENTURE OF LEASE made as of the 1st day of November, 1998, by and
between CAPITAL PROPERTIES, INC., a Rhode Island corporation (hereinafter
referred to as "Landlord"), and METROPARK, LTD., a Rhode Island corporation
(hereinafter referred to as "Tenant").
W I T N E S S E T H T H A T:
In consideration of the rents, covenants and agreements to be paid, kept
and performed by Tenant, as hereinafter provided, Landlord hereby demises
and leases to Tenant, and Tenant hereby hires and takes from Landlord the
real property known as Parcels 3E and 4E in the Capital Center, in
Providence, Rhode Island, as shown on a plan attached to this Lease as
Exhibit A (hereinafter called the "Premises").
TO HAVE AND TO HOLD the Premises, together with all rights,
privileges, easements and appurtenances thereunto belonging and
attaching, unto Tenant for a term of two (2) years (hereinafter
called the "Term") commencing as of November 1, 1998, and ending
on October 31, 2000.
This Lease is made upon the covenants and agreements herein
set forth on the part of the respective parties, all of which the
parties respectively agree to observe and comply with during the
term hereof.
1. Rental.
During the period from November 1, 1998 to October
31, 1999, Tenant shall pay to Landlord an annual rental of One
Hundred Seventeen Thousand Six Hundred ($117,600) Dollars payable
in monthly installments of Nine Thousand Eight Hundred ($9,800)
Dollars on the first day of each month without offset, deduction
or abatement.
During the period from November 1, 1999 to October 31,
2000, Tenant shall pay to Landlord an annual rental of One
Hundred Twenty-three Thousand Six Hundred ($123,600) Dollars
payable in monthly installments of Ten Thousand ($10,300) Dollars
on the first day of each month.
2. Utilities and Other Charges.
Tenant will pay directly before the same become delinquent
all charges, duties, rates, license and permit fees and other
amounts of every description to which the Premises or any part
thereof or any improvement thereon erected or used by Tenant may,
during the term hereof, be assessed or become liable for
electricity, refuse collection, telephone or any other utillities
or services or any connection or meters therefor, whether
assessed to or payable by Landlord or Tenant. Tenant will,
within ten (10) days after receipt of written demand by Landlord,
furnish Landlord with receipts or other evidence indicating that
all such amounts have been paid. Provided, however, that Tenant
shall only be responsible for those charges and assessments which
are for the period of its occupancy of the Premises.
3. Taxes and Assessments.
Landlord will pay and keep current the real estate taxes
assessed against the premises.
4. Compliance with Laws and Regulations.
Tenant will at all times during the term hereof keep the
Premises in good order and a strictly sanitary condition and
observe and perform all laws, ordinances, orders, rules and
regulations now or hereafter made by any governmental authority
for the time being applicable to the Premises or any improvement
thereon or use thereof, and with the orders, rules and
regulations of the National Board of Fire Underwriters or similar
organization so far as the same may relate to the use of the
Premises, and will indemnify Landlord against all actions, suits,
damages and claims by whomsoever brought or made by reason of the
nonobservance or nonperformance of such laws, ordinances, orders,
rules and regulations, or of this covenant. Nothing herein shall
obligate the Tenant to construct any additional improvements on
the Premises.
5. Inspection.
Tenant will permit Landlord and its agents at all
reasonable times during the term hereof to enter the Premises and
examine the state of repair and condition thereof, and the use
being made of the same. Landlord may also enter upon the
Premises to perform any repairs or maintenance which Tenant has
failed to perform hereunder, and to show the premises to
prospective purchasers, tenants and mortgagees. Further,
Landlord shall have the right to have test borings done on the
premises, and will use reasonable, good faith effort to avoid
unreasonable interference with the Tenant's business thereon.
6. Repair and Maintenance.
Tenant will, at its own expense, from time to time and at
all times during the term hereof, well and substantially repair,
maintain, amend and keep the Premises, together with all fixtures
and items of personal property used or useful in connection
therewith, with all necessary reparations and amendments
whatsoever in as good order and condition as they now are or may
be put in, reasonable wear and tear and damage by the elements
and such unavoidable casualty against which insurance is not
required hereunder excepted. Tenant will maintain the signs on
the Premises and fix all potholes that may develop. Tenant will
have the benefit of all warranties pertaining thereto. Tenant
will remove snow from the Premises and keep the sidewalks clean
and free from ice and snow. Landlord will be responsible for any
capital improvements.
7. Use.
Tenant shall use the Premises only for the operation of a
parking lot and other accessories related to a parking lot which
are approved by Landlord.
8. Notices re Premises.
Landlord will forthwith furnish Tenant copies of any
notices it receives regarding the Premises from any third parties
which notices relate to the Tenant's use and occupancy of the
Premises.
9. Cancellation of Lease.
Either Landlord or Tenant may cancel this Lease upon
thirty (30) days' written notice to the other.
10. Insurance.
Tenant agrees to maintain at all times public liability
insurance on an occurrence basis against all claims and demands
for personal injury liability (including, without limitation,
bodily injury, sickness, disease, and death) and damage to
property which may be claimed to have occurred on the Land or in
the Building in the event of injury to any number of persons or
damage to property, arising out of any one occurrence, which
shall, at the beginning of the Term, be at least equal to
$1,000,000, and to name Landlord and any mortgagees and ground
lessors designated by landlord as additional insured and furnish
landlord with the certificates thereof; such insurance shall
contain a provision that the Landlord, and each such mortgagee
and ground lessor although named as an insured, shall
nevertheless be entitled to recovery under said policy for any
loss occasioned to it, its servants, agents and employees by
reason of the negligence of the Tenant; all insurance required
under the terms of this Lease shall be effected with insurers
having a general policyholders rating of not less than A in
Best's latest rating guide and shall not be canceled or modified
without at least 30 days' prior written notice to each insured
named therein. Tenant shall provide landlord with certificates
of all insurance required to be carried by Tenant under the Lease
at or prior to the Commencement Date and prior to the expiration
of each such policy.
11. Landlord's Costs and Expenses.
If Tenant shall fail to comply with any of its
obligations hereunder, landlord may, upon ten (10) days' prior
written notice to Tenant (or without notice in case of
emergency), take any such action as may be reasonably required to
cure any such default by Tenant. Tenant will pay to Landlord, on
demand, all costs and expenses, including reasonable attorneys'
fees, incurred by Landlord in collecting any delinquent rents, or
other charges payable by Tenant hereunder, or in connection with
any litigation commenced by or against Tenant (other than
condemnation proceedings) to which Landlord, without any fault on
its part, shall be made a party. All such amounts owing to
Landlord shall constitute additional rent hereunder.
12. Indemnification of Landlord.
12.1. Tenant shall indemnify and save harmless Landlord
(regardless of Tenant's covenant to insure) against and from any
and all claims by or on behalf of any person or persons, firm or
firms, corporation or corporations, arising from the use,
occupancy, conduct or management of the Premises, unless done by
or contributed to Landlord, any of its agents, contractors,
servants, employees or licensees, and shall further indemnify and
save Landlord harmless against and from any and all claims
arising during the term hereof from any condition of the
Premises, or arising from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the
part of Tenant to be performed pursuant to the terms of this
Lease, or arising from any act of Tenant or any of its agents,
contractors, servants or employees to any person, firm or
corporation occurring during the term hereof in or about the
Premises or upon or under said areas, and from and against all
costs, counsel fees, expenses or liabilities incurred in or about
any such claim or action or proceeding brought thereon.
12.2. Tenant shall pay and indemnify Landlord against all
legal costs and charges incurred in obtaining possession of the
Premises after the default of Tenant or upon expiration or
earlier termination of the term hereof, other than by reason of
any default of Landlord, or in enforcing any covenant or
agreement of Tenant herein contained.
13. Liens.
13.1. Tenant will not commit, suffer any act or neglect
whereby the Premises or any improvements thereon or the estate of
Landlord therein shall at any time during the term hereof become
subject to any attachment, judgment, lien, charge or encumbrance
whatsoever, except as herein expressly provided, and will
indemnify and hold Landlord harmless from and against all loss,
costs and expenses, including reasonable attorneys' fees, with
respect thereto.
13.2. If due to any act or neglect of Tenant, any
mechanic's, laborer's or materialmen's lien shall at any time be
filed against the premises or any part hereof, Tenant, within
thirty (30) days after notice of the filing thereof shall cause
the same to be discharged of record by payment, bonding or
otherwise, and if Tenant shall fail to cause the same to be
discharged, then Landlord may, in addition to any other right or
remedy, cause the same to be discharged, either by paying the
amount claimed to be due, or by procuring the discharge of such
lien by deposit or by bonding proceedings, and all amounts so
paid by landlord, together with all reasonable costs and expenses
incurred in connection therewith, and together with interest
thereon at the rate of ten percent (10%) per annum from the
respective dates of payment, shall be paid by Tenant to Landlord,
on demand, as additional rent hereunder.
13.3. Nothing in this lease contained shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied by inference or otherwise, to any
contractor, subcontractor, laborer, materialmen, architect or
engineer for the performance of any labor or the furnishing of
any materials or services for or in connection with the Premises
or any part thereof. Notice is hereby given that Landlord shall
not be liable for any labor or materials or services furnished or
to be furnished to Tenant upon credit, and that no mechanic's or
other lien for any such labor, materials, or services shall
attach to or affect the fee or reversionary or other estate or
interest of Landlord in the Premises of and in this Lease.
14. Default.
14.1. In the event that during the term hereof any of
the following events shall occur (each of which shall be an
"Event of Default");
(a) Tenant shall default in the payment of any
installment of the Rent for ten (10) days after the same shall
become due, during which ten-day period Tenant may cure the
default;
(b) Tenant or any permitted assignee of Tenant
shall (i) apply for or consent to an appointment of a receiver, a
trustee or liquidator of it or of all or a substantial part of
its assets; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated a bankrupt or insolvent; (iv)
file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors to
take advantage of any insolvency law or an answer admitting the
material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or corporate
action shall be taken by it for the purpose of effecting any of
the foregoing;
(c) An order, judgment or decree shall be entered,
without the application, approval or consent of Tenant or any
permitted assignee of Tenant by any court of competent
jurisdiction, approving a petition seeking reorganization of
Tenant or such assignee or appointing a receiver, trust or
liquidator of Tenant or such assignee or of all or a substantial
part of its assets and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60)
consecutive days; or
(d) Any other default by Tenant in performing any of
its other obligations hereunder shall continue uncorrected for
ten (10) days after receipt of written notice thereof from
Landlord, during which period Tenant or such assignee may cure
the default; then landlord may, by giving written notice to
Tenant, either (a) terminate this Lease, (b) re-enter the
Premises by summary proceedings or otherwise, expelling Tenant
and removing all of Tenant's property therefrom, and relet the
Premises and receive the rent therefrom, or (c) exercise any
other remedies permitted by law. Tenant shall also be liable for
the reasonable cost of obtaining possession of and reletting the
Premises and of any repairs and alterations or other payments
necessary to prepare them for reletting. Any and all such
amounts shall be payable to Landlord upon demand. Notwithstanding
anything contained herein to the contrary, no termination of this Lease
prior to the last day of the term hereof, except as provided in Section 15
hereof, shall relieve Tenant of its liability and obligations under this
Lease, and such liability and obligations shall survive any such
termination.
14.2. In the event of any breach by Tenant of any of the
covenants, agreements, terms or conditions contained in this Lease, Landlord
shall be entitled to enjoin such breach or threatened breach and shall have
the right to invoke any right and remedy allowed at law or in equity, or by
statute or otherwise, as though reentry, summary proceedings and other
remedies were not provided for in this Lease.
14.3. Each right and remedy of Landlord provided for in this Lease
shall be cumulative and shall be in addition to every other right or remedy
provided for in this Lease or now or hereafter existing, at law or in equity,
or by statute or otherwise, and the exercise or beginning of the exercise by
Landlord of any one or more of the rights or remedies provided for in this
Lease, or now or hereafter existing at law or in equity, or by statute or
otherwise, shall not preclude the simulatneous or later exercise by Landlord
of any or all other rights or remedies provided for in this Lease, or now or
hereafter existing at law or in equity, or by statute or otherwise.
15. Eminent Domain.
If the whole or any part of the demised premises shall be
condemned or acquired by eminent domain for any public or quasi-
public use or purpose, then the term of this Lease shall cease
and terminate as of the date of vesting of title in such
proceeding and all rentals shall be paid up to the date of the
vacating of the premises by Tenant and Tenant shall have no claim
against Landlord nor the condemning authority for the value of
any unexpired term of this Lease.
In the event of any condemnation or taking as aforesaid,
whether whole or partial, Tenant shall not be entitled to any
part of the award paid for such condemnation and Landlord is to
receive the full amount of such award, Tenant hereby expressly
waiving any right or claim to any part thereof.
16. Condition of Premises.
Tenant represents that the Premises, the sidewalks and
structures adjoining the same, and any subsurface conditions
thereof, and the present uses and non-uses thereof, have been
examined by Tenant, and Tenant agrees that it will accept the
same in the condition or state in which they, or any of them, now
are, without representation or warranty, express or implied in
fact or by law, by Landlord, and without recourse to Landlord as
to the nature, condition or usability thereof, or the use or uses
to which the Premises, or any part thereof, may be put.
17. Independent Covenants--No Waiver.
17.1. Each and every of the covenants and agreements
contained in this Lease shall be for all purposes construed to be
separate and independent covenants and the waiver of the breach
of any covenant contained hereby by Landlord shall in no way or
manner discharge or relieve Tenant from Tenant's obligation to
perform each and every of the covenants contained herein.
17.2. If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Lease,
or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to
the fullest extent permitted by law.
17.3. The failure of Landlord to insist in any one or
more cases upon the strict performance of any of the covenants of
this Lease shall not be construed as a waiver or a relinquishment
for the future of such covenant. A receipt by Landlord of rent
with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by landlord of any
provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord. All remedies to
which landlord may resort under the terms of this Lease or by law
provided shall be cumulative.
18. Subordination.
This Lease and the rights of Tenant hereunder are subject
and subordinate in all respects to all matters of record,
including, without limitation, deeds and all mortgages which may
now or hereafter be placed on or affect the Premises, or any part
thereof, and/or Landlord's interest or estate therein, and to
each advance made and/or hereafter to be made under any such
mortgages, and to all renewals, modifications, consolidations,
replacements and extensions thereof, and all substitutions.
19. Quiet Enjoyment.
Landlord covenants that Tenant, upon paying the rent and
performing the covenants hereof on the part of Tenant to be
performed shall and may peaceably and quietly have, hold and
enjoy the Premises and all related appurtenances, rights,
privileges and easements throughout the term hereof without any
lawful hindrance by landlord and any person claiming by, through
or under it.
20. Return of Premises.
At the expiration or other temination of the term hereof,
Tenant will remove from the Premises its property and that of all
claiming under it and will peaceably yield up to Landlord the
Premises in as good condition in all respects as the same were at
the commencement of this Lease, except for ordinary wear and
tear, damage by the elements, by any exercise of the right of
eminent domain or by public or other authority, or damage which
Landlord is required herein to replace, restore or rebuild or
damage for which no insurance is required hereunder.
21. Holdover.
Tenant agrees to pay to landlord twice the total of all
rent then applicable for each month or portion thereof Tenant
shall retain possession of the Premises or any part thereof after
the termination of this Lease (unless and to the extent such
holding over shall be pursuant to a written agreement between
Landlord and Tenant), whether by lapse of time or otherwise, and
also to pay all damages sustained by landlord on account thereof;
the provisions of this subsection shall not operate as a waiver
by Landlord of any right of re-entry provided in this Lease or
under law. Tenant shall also pay all reasonable legal fees and
damages incurred by Landlord as a result of such holdover.
22. Limitation of Liability.
Tenant shall neither assert nor seek to enforce any claim
for breach of this Lease against any of Landlord's assets other
than Landlord's interest in the Premises, and Tenant agrees to
look solely to such interest for the satisfaction of any
liability of Landlord under this Lease, it being specifically
agreed that in no event shall landlord (which term shall include,
without limitation, any of the officers, employees, agents,
attorneys, trustees, directors, partners, beneficiaries, joint
venturers, members, stockholders or other principals or
representatives, disclosed or undisclosed, thereof) ever be
personally liable for any such liability.
23. No Recording of Lease.
Tenant hereby acknowledges and agrees that it shall not
record this Lease or any notice or memorandum of this Lease in
any land evidence records or any other publics without the
express prior written consent of Landlord. In the event of any
such recording, Tenant shall be in default of this Agreement and
Landlord shall have all rights and remedies available under law
or in equity as a result of such recordation including, without
limitation, the right to terminate this Lease.
24. Assignment and Subletting.
Tenant will not assign this Lease, in whole or in part,
nor sublet all or any part of the Premises, nor license, nor
pledge or encumber by mortgage or other instruments its interest
in this Lease without landlord's prior written consent, which
consent may be withheld by landlord in its sole and absolute
discretion. This prohibition includes any subletting or
assignment which would otherwise occur by operation of law,
merger, consolidation, reorganization, transfer or other change
of Tenant's corporate or trustee in any federal or state
bankruptcy, insolvency, or other proceedings. Consent by
landlord to any assignment or subletting shall not constitute a
waiver of the foregoing prohibition with respect to any
subsequent assignment or subletting.
25. Use of Hazardous Material.
Tenant shall not cause or permit any Hazardous Material to
be brought upon, kept or used in or about the Premises by Tenant,
its agents, employees, contractors or invitees without the prior
written consent of Landlord. If Tenant breaches the obligations
stated in the preceding sentence, or if contamination of the
Premises by Hazardous Material otherwise occurs, Tenant shall
indemnify, protect, defend and hold Landlord harmless from any
and all claims, judgments, damages, penalties, fines, costs,
liabilities or losses (including, without limitation, diminution
in value of the Premises, damages for the loss or restriction on
use of rentable Premises or usable space or of any amenity of the
Premises, damages arising from any adverse impact on marketing of
Premises space, and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or
after the Term as a result of such contamination. This
indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation
of site conditions or any clean-up, remedial, removal or
restoration work required by any federal, state or local
government agency or political subdivision because of Hazardous
Material present in the sole, surface water or groundwater on,
near or under the Premises.
As used herein, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including, but
not limited to, those substances, materials, and wastes listed in
the United States Department of Transportation Hazardous
materials Table (49 CFR 172.101) or by the Environmental
Protection Agency as hazardous substances (40CFR part 302) and
amendments thereto, or such substances, materials and wastes that
are or become regulated under any applicable local, state or
federal law.
Landlord and its agents shall have the right, but not the
duty, to inspect the Premises at any time to determine whether
Tenant is complying with the terms of this Lease.
26. Construction.
The mention of the parties hereto by name or otherwise
shall be construed as including and referring to their respective
successors and assigns as well as to the parties themselves
whenever such construction is required or admitted by the
provisions hereof; and all covenants, agreements, conditions,
rights, powers and privileges hereinbefore contained shall inure
to the benefit of and be binding upon the successors and assigns
of such parties, unless otherwise provided.
27. Permits.
Tenant, at its cost, shall obtain any necessary permits
for the Premises from the City of Providence.
28. Notices.
Whenever notice shall be given under this Lease, the same
shall be in writing and shall be sent by certified or registered
mail, return receipt requested as follows:
<TABLE>
<S> <C>
To the Landlord: 100 Dexter Road
East Providence, Rhode Island 02914
To the Tenant: c/o Charles Meyers
56 Pine Street
Providence, Rhode Island 02903
To the Tenant's Charles Koutsogiane
Attorney: One Grove Avenue
East Providence, RI 02914
</TABLE>
or to such other address or addresses as each party may from time
to time designate by like notice to the other. Said notice shall
be valid and times begin to run hereunder upon receipt of the
party to which said notice is given.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed in duplicate as of the day and year first
above written.
CAPITAL PROPERTIES, INC. METROPARK, LTD.
By/s/Ronald P. Chrzanowski By /s/ Charles Meyers
Ronald P. Chrzanowski Charles Meyers, President
President
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 23rd day of October,
1998, before me personally appeared Ronald P. Chrzanowski,
President of Capital Properties, Inc., to me known and known by
me to be the person executing the foregoing instrument on behalf
of said corporation, and he acknowledged said instrument by him
executed to be his free act and deed and the free act and deed of
said corporation.
/s/ Gloria P. Hopkins
Notary Public
Gloria P. Hopkins
My Commission Expires June 23,
2001
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 22nd day of October,
1998, before me personally appeared Charles Meyers, President of
Metropark, Ltd., to me known and known by me to be the person
executing the foregoing instrument on behalf of said corporation,
and he acknowledged said instrument by him executed to be his
free act and deed and the free act and deed of said corporation.
/s/ Carolyn M. Bouchard
Notary Public
GUARANTEE
In consideration of the execution of the foregoing lease by the
Landlord, the undersigned (jointly and severally, if more than
one) guarantees that the Tenant will pay all rent thereunder and
will perform all other terms, conditions or agreements on its
part to be performed or fulfilled, and agrees that the foregoing
lease may be amended from time to time by the parties thereto
without notice to the undersigned. The undersigned consents that
extensions of time of payment or any other indulgences may be
granted to the Tenant without notice to and without releasing or
affecting in any way the liability of the undersigned and the
undersigned waives demand and notice of default. This guarantee
is in addition to any other security which the Landlord may have
for the performance of the Tenant's obligations and the Landlord
may have the recourse to this guarantee without first pursuing
the Landlord's remedies against such other security, if any. The
Landlord may release, in whole or in part, any other security
without releasing or affecting in any way the liability of the
undersigned. In addition, the undersigned will pay to the
Landlord all costs and expenses (including attorneys' fees)
incurred in connection with the enforcement of this guarantee.
Executed this 22 day of October, 1998.
/s/ Charles Meyers
Charles Meyers
<PAGE>
EXHIBIT 10(b)(iii)
LEASE
BETWEEN
METROPARK, LTD.
AND
CAPITAL PROPERTIES, INC.
DATED AS OF DECEMBER 1, 1998
(COVERING PARCELS 21 AND 22)
III-4
<PAGE>
L E A S E
THIS INDENTURE OF LEASE made as of the 1st day of December,
1998, by and between CAPITAL PROPERTIES, INC., a Rhode Island
corporation (hereinafter referred to as "Landlord"), and
METROPARK, LTD., a Rhode Island corporation (hereinafter referred
to as "Tenant").
W I T N E S S E T H T H A T:
In consideration of the rents, covenants and agreements to
be paid, kept and performed by Tenant, as hereinafter provided,
Landlord hereby demises and leases to Tenant, and Tenant hereby
hires and takes from Landlord the real property known as Parcels
21 and 22 in the Capital Center, in Providence, Rhode Island, as
shown on a plan attached to this Lease as Exhibit A (hereinafter
called the "Premises").
TO HAVE AND TO HOLD the Premises, together with all rights,
privileges, easements and appurtenances thereunto belonging and
attaching, unto Tenant for a term of two (2) years (hereinafter
called the "Term") commencing as of December 1, 1998, and ending
on November 30, 2000.
This Lease is made upon the covenants and agreements herein
set forth on the part of the respective parties, all of which the
parties respectively agree to observe and comply with during the
term hereof.
1. Rental.
During the term hereof, Tenant shall pay to Landlord an
annual rental of Ninety-six Thousand ($96,000) Dollars payable in
monthly installments of Eight Thousand Hundred ($8,000) Dollars
on the first day of each month.
2. Utilities and Other Charges.
Tenant will pay directly before the same become delinquent
all charges, duties, rates, license and permit fees and other
amounts of every description to which the Premises or any part
thereof or any improvement thereon erected or used by Tenant may,
during the term hereof, be assessed or become liable for
electricity, refuse collection, telephone or any other utillities
or services or any connection or meters therefor, whether
assessed to or payable by Landlord or Tenant. Tenant will,
within ten (10) days after receipt of written demand by Landlord,
furnish Landlord with receipts or other evidence indicating that
all such amounts have been paid. Provided, however, that Tenant
shall only be responsible for those charges and assessments which
are for the period of its occupancy of the Premises.
3. Taxes and Assessments.
Landlord will pay and keep current the real estate taxes
assessed against the premises.
4. Compliance with Laws and Regulations.
Tenant will at all times during the term hereof keep the
Premises in good order and a strictly sanitary condition and
observe and perform all laws, ordinances, orders, rules and
regulations now or hereafter made by any governmental authority
for the time being applicable to the Premises or any improvement
thereon or use thereof, and with the orders, rules and
regulations of the National Board of Fire Underwriters or similar
organization so far as the same may relate to the use of the
Premises, and will indemnify Landlord against all actions, suits,
damages and claims by whomsoever brought or made by reason of the
nonobservance or nonperformance of such laws, ordinances, orders,
rules and regulations, or of this covenant. Nothing herein shall
obligate the Tenant to construct any additional improvements on
the Premises.
5. Inspection.
Tenant will permit Landlord and its agents at all
reasonable times during the term hereof to enter the Premises and
examine the state of repair and condition thereof, and the use
being made of the same. Landlord may also enter upon the
Premises to perform any repairs or maintenance which Tenant has
failed to perform hereunder, and to show the premises to
prospective purchasers, tenants and mortgagees. Further,
Landlord shall have the right to have test borings done on the
premises, and will use reasonable, good faith effort to avoid
unreasonable interference with the Tenant's business thereon.
6. Repair and Maintenance.
Tenant will, at its own expense, from time to time and at
all times during the term hereof, well and substantially repair,
maintain, amend and keep the Premises, together with all fixtures
and items of personal property used or useful in connection
therewith, with all necessary reparations and amendments
whatsoever in as good order and condition as they now are or may
be put in, reasonable wear and tear and damage by the elements
and such unavoidable casualty against which insurance is not
required hereunder excepted. Tenant will maintain the signs on
the Premises and fix all potholes that may develop. Tenant will
have the benefit of all warranties pertaining thereto. Tenant
will remove snow from the Premises and keep the sidewalks clean
and free from ice and snow.
7. Use.
Tenant shall use the Premises only for the operation of a
parking lot and other accessory uses related to motor vehicles.
8. Notices re Premises.
Landlord will forthwith furnish Tenant copies of any
notices it receives regarding the Premises from any third parties
which notices relate to the Tenant's use and occupancy of the
Premises.
9. Cancellation of Lease.
Either Landlord or Tenant may cancel this Lease upon
thirty (30) days' written notice to the other.
10. Insurance.
Tenant will, at its own cost and expense, effect and
maintain during the term hereof, a policy or policies of
comprehensive general liability insurance, or its equivalent,
with minimum limits of not less than $500,000 for injury to one
or more persons in any one occurrence, and also insurance in the
sum of not less than $1,000,000 against claims for property
damage in any one accident, such policy or policies to name
Landlord as additional assured, to require the insurer to give
Landlord at least ten days' written notice of its intention to
cancel, terminate or amend the insurance policy or policies in
any material respect, and to cover the entire Premises. Tenant
may insure premises as part of a blanket policy.
11. Landlord's Costs and Expenses.
If Tenant shall fail to comply with any of its obligations
hereunder, landlord may, upon ten (10) days' prior written notice
to Tenant (or without notice in case of emergency), take any such
action as may be reasonably required to cure any such default by
Tenant. Tenant will pay to Landlord, on demand, all costs and
expenses, including reasonable attorneys' fees, incurred by
Landlord in collecting any delinquent rents, or other charges
payable by Tenant hereunder, or in connection with any litigation
commenced by or against Tenant (other than condemnation
proceedings) to which Landlord, without any fault on its part,
shall be made a party. All such amounts owing to Landlord shall
constitute additional rent hereunder.
12. Indemnification of Landlord.
12.1. Tenant shall indemnify and save harmless Landlord
(regardless of Tenant's covenant to insure) against and from any
and all claims by or on behalf of any person or persons, firm or
firms, corporation or corporations, arising from the use,
occupancy, conduct or management of the Premises, unless done by
or contributed to Landlord, any of its agents, contractors,
servants, employees or licensees, and shall further indemnify and
save Landlord harmless against and from any and all claims
arising during the term hereof from any condition of the
Premises, or arising from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the
part of Tenant to be performed pursuant to the terms of this
Lease, or arising from any act of Tenant or any of its agents,
contractors, servants or employees to any person, firm or
corporation occurring during the term hereof in or about the
Premises or upon or under said areas, and from and against all
costs, counsel fees, expenses or liabilities incurred in or about
any such claim or action or proceeding brought thereon.
12.2. Tenant shall pay and indemnify Landlord against
all legal costs and charges incurred in obtaining possession of
the Premises after the default of Tenant or upon expiration or
earlier termination of the term hereof, other than by reason of
any default of Landlord, or in enforcing any covenant or
agreement of Tenant herein contained.
13. Liens.
13.1. Tenant will not commit, suffer any act or neglect
whereby the Premises or any improvements thereon or the estate of
Landlord therein shall at any time during the term hereof become
subject to any attachment, judgment, lien, charge or encumbrance
whatsoever, except as herein expressly provided, and will
indemnify and hold Landlord harmless from and against all loss,
costs and expenses, including reasonable attorneys' fees, with
respect thereto.
13.2. If due to any act or neglect of Tenant, any
mechanic's, laborer's or materialmen's lien shall at any time be
filed against the premises or any part hereof, Tenant, within
thirty (30) days after notice of the filing thereof shall cause
the same to be discharged of record by payment, bonding or
otherwise, and if Tenant shall fail to cause the same to be
discharged, then Landlord may, in addition to any other right or
remedy, cause the same to be discharged, either by paying the
amount claimed to be due, or by procuring the discharge of such
lien by deposit or by bonding proceedings, and all amounts so
paid by landlord, together with all reasonable costs and expenses
incurred in connection therewith, and together with interest
thereon at the rate of ten percent (10%) per annum from the
respective dates of payment, shall be paid by Tenant to Landlord,
on demand, as additional rent hereunder.
13.3. Nothing in this lease contained shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied by inference or otherwise, to any
contractor, subcontractor, laborer, materialmen, architect or
engineer for the performance of any labor or the furnishing of
any materials or services for or in connection with the Premises
or any part thereof. Notice is hereby given that Landlord shall
not be liable for any labor or materials or services furnished or
to be furnished to Tenant upon credit, and that no mechanic's or
other lien for any such labor, materials, or services shall
attach to or affect the fee or reversionary or other estate or
interest of Landlord in the Premises of and in this Lease.
14. Default.
14.1. In the event that during the term hereof any of
the following events shall occur (each of which shall be an
"Event of Default");
(a) Tenant shall default in the payment of any
installment of the Rent for ten (10) days after the same shall
become due, during which ten-day period Tenant may cure the
default;
(b) Tenant or any permitted assignee of Tenant
shall (i) apply for or consent to an appointment of a receiver, a
trustee or liquidator of it or of all or a substantial part of
its assets; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated a bankrupt or insolvent; (iv)
file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors to
take advantage of any insolvency law or an answer admitting the
material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or corporate
action shall be taken by it for the purpose of effecting any of
the foregoing;
(c) An order, judgment or decree shall be entered,
without the application, approval or consent of Tenant or any
permitted assignee of Tenant by any court of competent
jurisdiction, approving a petition seeking reorganization of
Tenant or such assignee or appointing a receiver, trust or
liquidator of Tenant or such assignee or of all or a substantial
part of its assets and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60)
consecutive days; or
(d) Any other default by Tenant in performing any of
its other obligations hereunder shall continue uncorrected for
ten (10) days after receipt of written notice thereof from
Landlord, during which period Tenant or such assignee may cure
the default; then landlord may, by giving written notice to
Tenant, either (a) terminate this Lease, (b) re-enter the
Premises by summary proceedings or otherwise, expelling Tenant
and removing all of Tenant's property therefrom, and relet the
Premises and receive the rent therefrom, or (c) exercise any
other remedies permitted by law. Tenant shall also be liable for
the reasonable cost of obtaining possession of and reletting the
Premises and of any repairs and alterations or other payments
necessary to prepare them for reletting. Any and all such
amounts shall be payable to Landlord upon demand.
Notwithstanding anything contained herein to the contrary, no
termination of this Lease prior to the last day of the term
hereof, except as provided in Section 15 hereof, shall relieve
Tenant of its liability and obligations under this Lease, and
such liability and obligations shall survive any such
termination.
14.2. In the event of any breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this
Lease, Landlord shall be entitled to enjoin such breach or
threatened breach and shall have the right to invoke any right
and remedy allowed at law or in equity, or by statute or
otherwise, as though reentry, summary proceedings and other
remedies were not provided for in this Lease.
14.3. Each right and remedy of Landlord provided for
in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or now or
hereafter existing, at law or in equity, or by statute or
otherwise, and the exercise or beginning of the exercise by
Landlord of any one or more of the rights or remedies provided
for in this Lease, or now or hereafter existing at law or in
equity, or by statute or otherwise, shall not preclude the
simulatneous or later exercise by Landlord of any or all other
rights or remedies provided for in this Lease, or now or
hereafter existing at law or in equity, or by statute or
otherwise.
15. Eminent Domain.
If the whole or any part of the demised premises shall be
condemned or acquired by eminent domain for any public or quasi-
public use or purpose, then the term of this Lease shall cease
and terminate as of the date of vesting of title in such
proceeding and all rentals shall be paid up to the date of the
vacating of the premises by Tenant and Tenant shall have no claim
against Landlord nor the condemning authority for the value of
any unexpired term of this Lease.
In the event of any condemnation or taking as aforesaid,
whether whole or partial, Tenant shall not be entitled to any
part of the award paid for such condemnation and Landlord is to
receive the full amount of such award, Tenant hereby expressly
waiving any right or claim to any part thereof.
16. Condition of Premises.
Tenant represents that the Premises, the sidewalks and
structures adjoining the same, and any subsurface conditions
thereof, and the present uses and non-uses thereof, have been
examined by Tenant, and Tenant agrees that it will accept the
same in the condition or state in which they, or any of them, now
are, without representation or warranty, express or implied in
fact or by law, by Landlord, and without recourse to Landlord as
to the nature, condition or usability thereof, or the use or uses
to which the Premises, or any part thereof, may be put.
17. Independent Covenants--No Waiver.
17.1. Each and every of the covenants and agreements
contained in this Lease shall be for all purposes construed to be
separate and independent covenants and the waiver of the breach
of any covenant contained hereby by Landlord shall in no way or
manner discharge or relieve Tenant from Tenant's obligation to
perform each and every of the covenants contained herein.
17.2. If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Lease,
or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to
the fullest extent permitted by law.
17.3. The failure of Landlord to insist in any one or
more cases upon the strict performance of any of the covenants of
this Lease shall not be construed as a waiver or a relinquishment
for the future of such covenant. A receipt by Landlord of rent
with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by landlord of any
provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord. All remedies to
which landlord may resort under the terms of this Lease or by law
provided shall be cumulative.
18. Subordination.
This Lease and the rights of Tenant hereunder are subject
and subordinate in all respects to all matters of record,
including, without limitation, deeds and all mortgages which may
now or hereafter be placed on or affect the Premises, or any part
thereof, and/or Landlord's interest or estate therein, and to
each advance made and/or hereafter to be made under any such
mortgages, and to all renewals, modifications, consolidations,
replacements and extensions thereof, and all substitutions
therefor; provided, however, that before such subordination shall
be effective, Landlord shall cause the mortgagee, or other party
in interest, as the case may be, to deliver to Tenant an assent
to this Lease, in proper form for recording whereby such
mortgagee or other party agrees that no foreclosure of such
mortgage or any action taken with respect thereto, by such
mortgagee or any other person claiming by or through or under
such mortgage (or other interest) shall disturb the possession of
Tenant under this Lease so long as Tenant is not in default
hereunder, and that the validity and continuance of this Lease
will be so recognized. Simultaneously with the delivery of such
an agreement, Tenant agrees to execute and deliver an instrument
in proper form for recording, wherein Tenant agrees to and does
subordinate this Lease to the liens of the mortgagees and others
as above-mentioned, and to all renewals, modifications,
consolidations and replacements and extensions of such mortgages
thereunder, and to any persons claiming by, through or under such
mortgages or other such interest.
19. Quiet Enjoyment.
Landlord covenants that Tenant, upon paying the rent and
performing the covenants hereof on the part of Tenant to be
performed shall and may peaceably and quietly have, hold and
enjoy the Premises and all related appurtenances, rights,
privileges and easements throughout the term hereof without any
lawful hindrance by landlord and any person claiming by, through
or under it.
20. Return of Premises.
At the expiration or other termination of the term hereof,
Tenant will remove from the Premises its property and that of all
claiming under it and will peaceably yield up to Landlord the
Premises in as good condition in all respects as the same were at
the commencement of this Lease, except for ordinary wear and
tear, damage by the elements, by any exercise of the right of
eminent domain or by public or other authority, or damage which
Landlord is required herein to replace, restore or rebuild or
damage for which no insurance is required hereunder.
21. Construction.
The mention of the parties hereto by name or otherwise
shall be construed as including and referring to their respective
successors and assigns as well as to the parties themselves
whenever such construction is required or admitted by the
provisions hereof; and all covenants, agreements, conditions,
rights, powers and privileges hereinbefore contained shall inure
to the benefit of and be binding upon the successors and assigns
of such parties, unless otherwise provided.
22. Permits.
Tenant, at its cost, shall obtain any necessary permits
for the Premises from the City of Providence.
23. Notices.
Whenever notice shall be given under this Lease, the same
shall be in writing and shall be sent by certified or registered
mail, return receipt requested as follows:
<TABLE>
<S> <C>
To the Landlord: 100 Dexter Road
East Providence, Rhode Island 02914
To the Tenant: c/o Charles Meyers
56 Pine Street
Providence, Rhode Island 02903
To the Tenant's Charles Koutsogiane
Attorney: One Grove Avenue
East Providence, Rhode Island 02914
</TABLE>
or to such other address or addresses as each party may from time
to time designate by like notice to the other. Said notice shall
be valid and times begin to run hereunder upon receipt of the
party to which said notice is given.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed in duplicate as of the day and year first
above written.
CAPITAL PROPERTIES, INC. METROPARK, LTD.
By /s/Ronald P. Chrzanowski By /s/Charles Meyers,
President
Ronald P. Chrzanowski Charles Meyers, President
President
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 23rd day of October,
1998, before me personally appeared Ronald P. Chrzanowski,
President of Capital Properties, Inc., to me known and known by
me to be the person executing the foregoing instrument on behalf
of said corporation, and he acknowledged said instrument by him
executed to be his free act and deed and the free act and deed of
said corporation.
/s/Gloria P. Hopkins
Notary Public
Gloria P. Hopkins
My Commission Expires June 23, 2001
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 22nd day of October,
1998, before me personally appeared Charles Meyers, President of
Metropark, Ltd., to me known and known by me to be the person
executing the foregoing instrument on behalf of said corporation,
and he acknowledged said instrument by him executed to be his
free act and deed and the free act and deed of said corporation.
/s/Carolyn M. Bouchard
Notary Public
GUARANTEE
In consideration of the execution of the foregoing lease by the
Landlord, the undersigned (jointly and severally, if more than
one) guarantees that the Tenant will pay all rent thereunder and
will perform all other terms, conditions or agreements on its
part to be performed or fulfilled, and agrees that the foregoing
lease may be amended from time to time by the parties thereto
without notice to the undersigned. The undersigned consents that
extensions of time of payment or any other indulgences may be
granted to the Tenant without notice to and without releasing or
affecting in any way the liability of the undersigned and the
undersigned waives demand and notice of default. This guarantee
is in addition to any other security which the Landlord may have
for the performance of the Tenant's obligations and the Landlord
may have the recourse to this guarantee without first pursuing
the Landlord's remedies against such other security, if any. The
Landlord may release, in whole or in part, any other security
without releasing or affecting in any way the liability of the
undersigned. In addition, the undersigned will pay to the
Landlord all costs and expenses (including attorneys' fees)
incurred in connection with the enforcement of this guarantee.
Executed this 22nd day of October, 1998.
/s/Charles Meyers
Charles Meyers
<PAGE>
EXHIBIT 10(b)(iv)
LEASE
BETWEEN
METROPARK, LTD.
AND
CAPITAL PROPERTIES, INC.
DATED AS OF JANUARY 1, 1999
(COVERING PARCEL 6)
III-5
<PAGE>
L E A S E
THIS INDENTURE OF LEASE made as of the 1st day of January,
1999 by and between CAPITAL PROPERTIES, INC., a Rhode Island
corporation (hereinafter referred to as "Landlord"), and
METROPARK, LTD., a Rhode Island corporation (hereinafter referred
to as "Tenant").
W I T N E S S E T H T H A T:
In consideration of the rents, covenants and agreements to
be paid, kept and performed by Tenant, as hereinafter provided,
Landlord hereby demises and leases to Tenant, and Tenant hereby
hires and takes from Landlord the real property known as Parcel 6
in the Capital Center, in Providence, Rhode Island, as shown on a
plan attached to this Lease as Exhibit A (hereinafter called the
"Premises").
TO HAVE AND TO HOLD the Premises, together with all rights,
privileges, easements and appurtenances thereunto belonging and
attaching, unto Tenant for a term (hereinafter called the "Term")
commencing as of January 1, 1999 and ending on December 31, 1999.
This Lease is made upon the covenants and agreements herein
set forth on the part of the respective parties, all of which the
parties respectively agree to observe and comply with during the
term hereof.
1. Rental.
During the term hereof, Tenant shall pay to Landlord an
annual rental of One Hundred Fifty Thousand ($150,000) Dollars
payable in monthly installments of Twelve Thousand Five Hundred
($12,500) Dollars on the first day of each month without offset,
deduction or abatement.
2. Utilities and Other Charges.
Tenant will pay directly before the same become delinquent
all charges, duties, rates, license and permit fees and other
amounts of every description to which the Premises or any part
thereof or any improvement thereon erected or used by Tenant may,
during the term hereof, be assessed or become liable for
electricity, refuse collection, telephone or any other utillities
or services or any connection or meters therefor, whether
assessed to or payable by Landlord or Tenant. Tenant will,
within ten (10) days after receipt of written demand by Landlord,
furnish Landlord with receipts or other evidence indicating that
all such amounts have been paid. Provided, however, that Tenant
shall only be responsible for those charges and assessments which
are for the period of its occupancy of the Premises.
3. Taxes and Assessments.
Landlord will pay and keep current the real estate taxes
assessed against the premises.
4. Compliance with Laws and Regulations.
Tenant will at all times during the term hereof keep the
Premises in good order and a strictly sanitary condition and
observe and perform all laws, ordinances, orders, rules and
regulations now or hereafter made by any governmental authority
for the time being applicable to the Premises or any improvement
thereon or use thereof, and with the orders, rules and
regulations of the National Board of Fire Underwriters or similar
organization so far as the same may relate to the use of the
Premises, and will indemnify Landlord against all actions, suits,
damages and claims by whomsoever brought or made by reason of the
nonobservance or nonperformance of such laws, ordinances, orders,
rules and regulations, or of this covenant. Nothing herein shall
obligate the Tenant to construct any additional improvements on
the Premises.
5. Inspection.
Tenant will permit Landlord and its agents at all
reasonable times during the term hereof to enter the Premises and
examine the state of repair and condition thereof, and the use
being made of the same. Landlord may also enter upon the
Premises to perform any repairs or maintenance which Tenant has
failed to perform hereunder, and to show the premises to
prospective purchasers, tenants and mortgagees. Further,
Landlord shall have the right to have test borings done on the
premises, and will use reasonable, good faith effort to avoid
unreasonable interference with the Tenant's business thereon.
6. Repair and Maintenance.
Tenant will, at its own expense, from time to time and at
all times during the term hereof, well and substantially repair,
maintain, amend and keep the Premises, together with all fixtures
and items of personal property used or useful in connection
therewith, with all necessary reparations and amendments
whatsoever in as good order and condition as they now are or may
be put in, reasonable wear and tear and damage by the elements
and such unavoidable casualty against which insurance is not
required hereunder excepted. Tenant will maintain the signs on
the Premises and fix all potholes that may develop. Tenant will
have the benefit of all warranties pertaining thereto. Tenant
will remove snow from the Premises and keep the sidewalks clean
and free from ice and snow. Landlord will be responsible for any
capital improvements.
7. Use.
Tenant shall use the Premises only for the operation of a
parking lot and other accessories related to a parking lot which
are approved by Landlord.
8. Notices re Premises.
Landlord will forthwith furnish Tenant copies of any
notices it receives regarding the Premises from any third parties
which notices relate to the Tenant's use and occupancy of the
Premises.
9. Cancellation of Lease.
Either Landlord or Tenant may cancel this Lease upon
thirty (30) days' written notice to the other.
10. Insurance.
Tenant agrees to maintain at all times public liability
insurance on an occurrence basis against all claims and demands
for personal injury liability (including, without limitation,
bodily injury, sickness, disease, and death) and damage to
property which may be claimed to have occurred on the Land or in
the Building in the event of injury to any number of persons or
damage to property, arising out of any one occurrence, which
shall, at the beginning of the Term, be at least equal to
$1,000,000, and to name Landlord and any mortgagees and ground
lessors designated by landlord as additional insured and furnish
landlord with the certificates thereof; such insurance shall
contain a provision that the Landlord, and each such mortgagee
and ground lessor although named as an insured, shall
nevertheless be entitled to recovery under said policy for any
loss occasioned to it, its servants, agents and employees by
reason of the negligence of the Tenant; all insurance required
under the terms of this Lease shall be effected with insurers
having a general policyholders rating of not less than A in
Best's latest rating guide and shall not be canceled or modified
without at least 30 days' prior written notice to each insured
named therein. Tenant shall provide landlord with certificates
of all insurance required to be carried by Tenant under the Lease
at or prior to the Commencement Date and prior to the expiration
of each such policy.
11. Landlord's Costs and Expenses.
If Tenant shall fail to comply with any of its obligations
hereunder, landlord may, upon ten (10) days' prior written notice
to Tenant (or without notice in case of emergency), take any such
action as may be reasonably required to cure any such default by
Tenant. Tenant will pay to Landlord, on demand, all costs and
expenses, including reasonable attorneys' fees, incurred by
Landlord in collecting any delinquent rents, or other charges
payable by Tenant hereunder, or in connection with any litigation
commenced by or against Tenant (other than condemnation
proceedings) to which Landlord, without any fault on its part,
shall be made a party. All such amounts owing to Landlord shall
constitute additional rent hereunder.
12. Indemnification of Landlord.
12.1. Tenant shall indemnify and save harmless Landlord
(regardless of Tenant's covenant to insure) against and from any
and all claims by or on behalf of any person or persons, firm or
firms, corporation or corporations, arising from the use,
occupancy, conduct or management of the Premises, unless done by
or contributed to Landlord, any of its agents, contractors,
servants, employees or licensees, and shall further indemnify and
save Landlord harmless against and from any and all claims
arising during the term hereof from any condition of the
Premises, or arising from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the
part of Tenant to be performed pursuant to the terms of this
Lease, or arising from any act of Tenant or any of its agents,
contractors, servants or employees to any person, firm or
corporation occurring during the term hereof in or about the
Premises or upon or under said areas, and from and against all
costs, counsel fees, expenses or liabilities incurred in or about
any such claim or action or proceeding brought thereon.
12.2. Tenant shall pay and indemnify Landlord against
all legal costs and charges incurred in obtaining possession of
the Premises after the default of Tenant or upon expiration or
earlier termination of the term hereof, other than by reason of
any default of Landlord, or in enforcing any covenant or
agreement of Tenant herein contained.
13. Liens.
13.1. Tenant will not commit, suffer any act or neglect
whereby the Premises or any improvements thereon or the estate of
Landlord therein shall at any time during the term hereof become
subject to any attachment, judgment, lien, charge or encumbrance
whatsoever, except as herein expressly provided, and will
indemnify and hold Landlord harmless from and against all loss,
costs and expenses, including reasonable attorneys' fees, with
respect thereto.
13.2. If due to any act or neglect of Tenant, any
mechanic's, laborer's or materialmen's lien shall at any time be
filed against the premises or any part hereof, Tenant, within
thirty (30) days after notice of the filing thereof shall cause
the same to be discharged of record by payment, bonding or
otherwise, and if Tenant shall fail to cause the same to be
discharged, then Landlord may, in addition to any other right or
remedy, cause the same to be discharged, either by paying the
amount claimed to be due, or by procuring the discharge of such
lien by deposit or by bonding proceedings, and all amounts so
paid by landlord, together with all reasonable costs and expenses
incurred in connection therewith, and together with interest
thereon at the rate of ten percent (10%) per annum from the
respective dates of payment, shall be paid by Tenant to Landlord,
on demand, as additional rent hereunder.
13.3. Nothing in this lease contained shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied by inference or otherwise, to any
contractor, subcontractor, laborer, materialmen, architect or
engineer for the performance of any labor or the furnishing of
any materials or services for or in connection with the Premises
or any part thereof. Notice is hereby given that Landlord shall
not be liable for any labor or materials or services furnished or
to be furnished to Tenant upon credit, and that no mechanic's or
other lien for any such labor, materials, or services shall
attach to or affect the fee or reversionary or other estate or
interest of Landlord in the Premises of and in this Lease.
14. Default.
14.1. In the event that during the term hereof any of
the following events shall occur (each of which shall be an
"Event of Default");
(a) Tenant shall default in the payment of any
installment of the Rent for ten (10) days after the same shall
become due, during which ten-day period Tenant may cure the
default;
(b) Tenant or any permitted assignee of Tenant
shall (i) apply for or consent to an appointment of a receiver, a
trustee or liquidator of it or of all or a substantial part of
its assets; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated a bankrupt or insolvent; (iv)
file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors to
take advantage of any insolvency law or an answer admitting the
material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or corporate
action shall be taken by it for the purpose of effecting any of
the foregoing;
(c) An order, judgment or decree shall be entered,
without the application, approval or consent of Tenant or any
permitted assignee of Tenant by any court of competent
jurisdiction, approving a petition seeking reorganization of
Tenant or such assignee or appointing a receiver, trust or
liquidator of Tenant or such assignee or of all or a substantial
part of its assets and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60)
consecutive days; or
(d) Any other default by Tenant in performing any of
its other obligations hereunder shall continue uncorrected for
ten (10) days after receipt of written notice thereof from
Landlord, during which period Tenant or such assignee may cure
the default; then landlord may, by giving written notice to
Tenant, either (a) terminate this Lease, (b) re-enter the
Premises by summary proceedings or otherwise, expelling Tenant
and removing all of Tenant's property therefrom, and relet the
Premises and receive the rent therefrom, or (c) exercise any
other remedies permitted by law. Tenant shall also be liable for
the reasonable cost of obtaining possession of and reletting the
Premises and of any repairs and alterations or other payments
necessary to prepare them for reletting. Any and all such
amounts shall be payable to Landlord upon demand.
Notwithstanding anything contained herein to the contrary, no
termination of this Lease prior to the last day of the term
hereof, except as provided in Section 15 hereof, shall relieve
Tenant of its liability and obligations under this Lease, and
such liability and obligations shall survive any such
termination.
14.2. In the event of any breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this
Lease, Landlord shall be entitled to enjoin such breach or
threatened breach and shall have the right to invoke any right
and remedy allowed at law or in equity, or by statute or
otherwise, as though reentry, summary proceedings and other
remedies were not provided for in this Lease.
14.3. Each right and remedy of Landlord provided for
in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or now or
hereafter existing, at law or in equity, or by statute or
otherwise, and the exercise or beginning of the exercise by
Landlord of any one or more of the rights or remedies provided
for in this Lease, or now or hereafter existing at law or in
equity, or by statute or otherwise, shall not preclude the
simulatneous or later exercise by Landlord of any or all other
rights or remedies provided for in this Lease, or now or
hereafter existing at law or in equity, or by statute or
otherwise.
15. Eminent Domain.
If the whole or any part of the demised premises shall be
condemned or acquired by eminent domain for any public or quasi-
public use or purpose, then the term of this Lease shall cease
and terminate as of the date of vesting of title in such
proceeding and all rentals shall be paid up to the date of the
vacating of the premises by Tenant and Tenant shall have no claim
against Landlord nor the condemning authority for the value of
any unexpired term of this Lease.
In the event of any condemnation or taking as aforesaid,
whether whole or partial, Tenant shall not be entitled to any
part of the award paid for such condemnation and Landlord is to
receive the full amount of such award, Tenant hereby expressly
waiving any right or claim to any part thereof.
16. Condition of Premises.
Tenant represents that the Premises, the sidewalks and
structures adjoining the same, and any subsurface conditions
thereof, and the present uses and non-uses thereof, have been
examined by Tenant, and Tenant agrees that it will accept the
same in the condition or state in which they, or any of them, now
are, without representation or warranty, express or implied in
fact or by law, by Landlord, and without recourse to Landlord as
to the nature, condition or usability thereof, or the use or uses
to which the Premises, or any part thereof, may be put.
17. Independent Covenants--No Waiver.
17.1. Each and every of the covenants and agreements
contained in this Lease shall be for all purposes construed to be
separate and independent covenants and the waiver of the breach
of any covenant contained hereby by Landlord shall in no way or
manner discharge or relieve Tenant from Tenant's obligation to
perform each and every of the covenants contained herein.
17.2. If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Lease,
or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to
the fullest extent permitted by law.
17.3. The failure of Landlord to insist in any one or
more cases upon the strict performance of any of the covenants of
this Lease shall not be construed as a waiver or a relinquishment
for the future of such covenant. A receipt by Landlord of rent
with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by landlord of any
provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord. All remedies to
which landlord may resort under the terms of this Lease or by law
provided shall be cumulative.
18. Subordination.
This Lease and the rights of Tenant hereunder are subject
and subordinate in all respects to all matters of record,
including, without limitation, deeds and all mortgages which may
now or hereafter be placed on or affect the Premises, or any part
thereof, and/or Landlord's interest or estate therein, and to
each advance made and/or hereafter to be made under any such
mortgages, and to all renewals, modifications, consolidations,
replacements and extensions thereof, and all substitutions.
19. Quiet Enjoyment.
Landlord covenants that Tenant, upon paying the rent and
performing the covenants hereof on the part of Tenant to be
performed shall and may peaceably and quietly have, hold and
enjoy the Premises and all related appurtenances, rights,
privileges and easements throughout the term hereof without any
lawful hindrance by landlord and any person claiming by, through
or under it.
20. Return of Premises.
At the expiration or other temination of the term hereof,
Tenant will remove from the Premises its property and that of all
claiming under it and will peaceably yield up to Landlord the
Premises in as good condition in all respects as the same were at
the commencement of this Lease, except for ordinary wear and
tear, damage by the elements, by any exercise of the right of
eminent domain or by public or other authority, or damage which
Landlord is required herein to replace, restore or rebuild or
damage for which no insurance is required hereunder.
21. Holdover.
Tenant agrees to pay to landlord twice the total of all
rent then applicable for each month or portion thereof Tenant
shall retain possession of the Premises or any part thereof after
the termination of this Lease (unless and to the extent such
holding over shall be pursuant to a written agreement between
Landlord and Tenant), whether by lapse of time or otherwise, and
also to pay all damages sustained by landlord on account thereof;
the provisions of this subsection shall not operate as a waiver
by Landlord of any right of re-entry provided in this Lease or
under law. Tenant shall also pay all reasonable legal fees and
damages incurred by Landlord as a result of such holdover.
22. Limitation of Liability.
Tenant shall neither assert nor seek to enforce any claim
for breach of this Lease against any of Landlord's assets other
than Landlord's interest in the Premises, and Tenant agrees to
look solely to such interest for the satisfaction of any
liability of Landlord under this Lease, it being specifically
agreed that in no event shall landlord (which term shall include,
without limitation, any of the officers, employees, agents,
attorneys, trustees, directors, partners, beneficiaries, joint
venturers, members, stockholders or other principals or
representatives, disclosed or undisclosed, thereof) ever be
personally liable for any such liability.
23. No Recording of Lease.
Tenant hereby acknowledges and agrees that it shall not
record this Lease or any notice or memorandum of this Lease in
any land evidence records or any other publics without the
express prior written consent of Landlord. In the event of any
such recording, Tenant shall be in default of this Agreement and
Landlord shall have all rights and remedies available under law
or in equity as a result of such recordation including, without
limitation, the right to terminate this Lease.
24. Assignment and Subletting.
Tenant will not assign this Lease, in whole or in part,
nor sublet all or any part of the Premises, nor license, nor
pledge or encumber by mortgage or other instruments its interest
in this Lease without landlord's prior written consent, which
consent may be withheld by landlord in its sole and absolute
discretion. This prohibition includes any subletting or
assignment which would otherwise occur by operation of law,
merger, consolidation, reorganization, transfer or other change
of Tenant's corporate or trustee in any federal or state
bankruptcy, insolvency, or other proceedings. Consent by
landlord to any assignment or subletting shall not constitute a
waiver of the foregoing prohibition with respect to any
subsequent assignment or subletting.
25. Use of Hazardous Material.
Tenant shall not cause or permit any Hazardous Material to
be brought upon, kept or used in or about the Premises by Tenant,
its agents, employees, contractors or invitees without the prior
written consent of Landlord. If Tenant breaches the obligations
stated in the preceding sentence, or if contamination of the
Premises by Hazardous Material otherwise occurs, Tenant shall
indemnify, protect, defend and hold Landlord harmless from any
and all claims, judgments, damages, penalties, fines, costs,
liabilities or losses (including, without limitation, diminution
in value of the Premises, damages for the loss or restriction on
use of rentable Premises or usable space or of any amenity of the
Premises, damages arising from any adverse impact on marketing of
Premises space, and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or
after the Term as a result of such contamination. This
indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation
of site conditions or any clean-up, remedial, removal or
restoration work required by any federal, state or local
government agency or political subdivision because of Hazardous
Material present in the sole, surface water or groundwater on,
near or under the Premises.
As used herein, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including, but
not limited to, those substances, materials, and wastes listed in
the United States Department of Transportation Hazardous
materials Table (49 CFR 172.101) or by the Environmental
Protection Agency as hazardous substances (40CFR part 302) and
amendments thereto, or such substances, materials and wastes that
are or become regulated under any applicable local, state or
federal law.
Landlord and its agents shall have the right, but not the
duty, to inspect the Premises at any time to determine whether
Tenant is complying with the terms of this Lease.
26. Construction.
The mention of the parties hereto by name or otherwise
shall be construed as including and referring to their respective
successors and assigns as well as to the parties themselves
whenever such construction is required or admitted by the
provisions hereof; and all covenants, agreements, conditions,
rights, powers and privileges hereinbefore contained shall inure
to the benefit of and be binding upon the successors and assigns
of such parties, unless otherwise provided.
27. Permits.
Tenant, at its cost, shall obtain any necessary permits
for the Premises from the City of Providence.
28. Notices.
Whenever notice shall be given under this Lease, the same
shall be in writing and shall be sent by certified or registered
mail, return receipt requested as follows:
<TABLE>
<S> <C>
To the Landlord: 100 Dexter Road
East Providence, Rhode Island 02914
To the Tenant: c/o Charles Meyers
56 Pine Street
Providence, Rhode Island 02903
To the Tenant's Charles Koutsogiane
Attorney: One Grove Avenue
East Providence, Rhode Island 02914
</TABLE>
or to such other address or addresses as each party may from time
to time designate by like notice to the other. Said notice shall
be valid and times begin to run hereunder upon receipt of the
party to which said notice is given.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed in duplicate as of the day and year first
above written.
CAPITAL PROPERTIES, INC. METROPARK, LTD.
By/s/Ronald P. Chrzanowski By/s/Charles Meyers,
Ronald P. Chrzanowski Charles Meyers, President
President
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 10th day of December,
1998, before me personally appeared Ronald P. Chrzanowski,
President of Capital Properties, Inc., to me known and known by
me to be the person executing the foregoing instrument on behalf
of said corporation, and he acknowledged said instrument by him
executed to be his free act and deed and the free act and deed of
said corporation.
/s/Gloria P. Hopkins
Notary Public
Gloria P. Hopkins
My Commission Expires June 23, 2001
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 9th day of December,
1998, before me personally appeared Charles Meyers, President of
Metropark, Ltd., to me known and known by me to be the person
executing the foregoing instrument on behalf of said corporation,
and he acknowledged said instrument by him executed to be his
free act and deed and the free act and deed of said corporation.
/s/ Carolyn M. Bouchard
Notary Public
GUARANTEE
In consideration of the execution of the foregoing lease by the
Landlord, the undersigned (jointly and severally, if more than
one) guarantees that the Tenant will pay all rent thereunder and
will perform all other terms, conditions or agreements on its
part to be performed or fulfilled, and agrees that the foregoing
lease may be amended from time to time by the parties thereto
without notice to the undersigned. The undersigned consents that
extensions of time of payment or any other indulgences may be
granted to the Tenant without notice to and without releasing or
affecting in any way the liability of the undersigned and the
undersigned waives demand and notice of default. This guarantee
is in addition to any other security which the Landlord may have
for the performance of the Tenant's obligations and the Landlord
may have the recourse to this guarantee without first pursuing
the Landlord's remedies against such other security, if any. The
Landlord may release, in whole or in part, any other security
without releasing or affecting in any way the liability of the
undersigned. In addition, the undersigned will pay to the
Landlord all costs and expenses (including attorneys' fees)
incurred in connection with the enforcement of this guarantee.
Executed this 9th day of December, 1998.
/s/Charles Meyers
Charles Meyers
<PAGE>
EXHIBIT 10(b)(v)
LEASE
BETWEEN
METROPARK, LTD.
AND
CAPITAL PROPERTIES, INC.
DATED AS OF JANUARY 1, 1999
(COVERING PARCEL 7A)
III-6
<PAGE>
L E A S E
THIS INDENTURE OF LEASE made as of the 1st day of January,
1999, by and between CAPITAL PROPERTIES, INC., a Rhode Island
corporation (hereinafter referred to as "Landlord"), and
METROPARK, LTD., a Rhode Island corporation (hereinafter referred
to as "Tenant").
W I T N E S S E T H T H A T:
In consideration of the rents, covenants and agreements to
be paid, kept and performed by Tenant, as hereinafter provided,
Landlord hereby demises and leases to Tenant, and Tenant hereby
hires and takes from Landlord the real property known as the
parking garage adjacent to the Providence train station located
on Parcel 7A in the Capital Center, in Providence, Rhode Island,
as shown on a plan attached to this Lease as Exhibit A
(hereinafter called the "Premises").
TO HAVE AND TO HOLD the Premises, together with all rights,
privileges, easements and appurtenances thereunto belonging and
attaching, unto Tenant for a term (hereinafter called the "Term")
commencing as of January 1, 1999, and ending on December 31,
1999.
This Lease is made upon the covenants and agreements herein
set forth on the part of the respective parties, all of which the
parties respectively agree to observe and comply with during the
term hereof.
1. Rental.
During the term hereof, Tenant shall pay to Landlord an
annual rental of One Hundred Twenty-three Thousand Six Hundred
($123,600) Dollars payable in monthly installments of Ten
Thousand Three Hundred ($10,300) Dollars on the first day of each
month without offset, deduction or abatement.
2. Utilities and Other Charges.
Tenant will pay directly before the same become delinquent
all charges, duties, rates, license and permit fees and other
amounts of every description to which the Premises or any part
thereof or any improvement thereon erected or used by Tenant may,
during the term hereof, be assessed or become liable for
electricity, refuse collection, telephone or any other utillities
or services or any connection or meters therefor, whether
assessed to or payable by Landlord or Tenant. Tenant will,
within ten (10) days after receipt of written demand by Landlord,
furnish Landlord with receipts or other evidence indicating that
all such amounts have been paid. Provided, however, that Tenant
shall only be responsible for those charges and assessments which
are for the period of its occupancy of the Premises.
3. Taxes and Assessments.
Landlord will pay and keep current the real estate taxes
assessed against the premises.
4. Compliance with Laws and Regulations.
Tenant will at all times during the term hereof keep the
Premises in good order and a strictly sanitary condition and
observe and perform all laws, ordinances, orders, rules and
regulations now or hereafter made by any governmental authority
for the time being applicable to the Premises or any improvement
thereon or use thereof, and with the orders, rules and
regulations of the National Board of Fire Underwriters or similar
organization so far as the same may relate to the use of the
Premises, and will indemnify Landlord against all actions, suits,
damages and claims by whomsoever brought or made by reason of the
nonobservance or nonperformance of such laws, ordinances, orders,
rules and regulations, or of this covenant. Nothing herein shall
obligate the Tenant to construct any additional improvements on
the Premises.
5. Inspection.
Tenant will permit Landlord and its agents at all
reasonable times during the term hereof to enter the Premises and
examine the state of repair and condition thereof, and the use
being made of the same. Landlord may also enter upon the
Premises to perform any repairs or maintenance which Tenant has
failed to perform hereunder, and to show the premises to
prospective purchasers, tenants and mortgagees in such a fashion
not to unreasonably interfere with Tenant's business operations.
6. Repair and Maintenance.
Tenant will, at its own expense, from time to time and at
all times during the term hereof, well and substantially repair,
maintain, amend and keep the Premises, together with all fixtures
and items of personal property used or useful in connection
therewith, including the sprinkler system, with all necessary
reparations and amendments whatsoever in as good order and
condition as they now are or may be put in, reasonable wear and
tear and damage by the elements and such unavoidable casualty
against which insurance is not required hereunder excepted.
Tenant will maintain the signs on the Premises. Tenant will have
the benefit of all warranties pertaining thereto. Landlord will
be responsible for any capital replacement or improvement.
7. Use.
Tenant shall use the Premises only for the operation of a
parking garage and other accessories related to a parking garage
which are approved by Landlord.
8. Notices re Premises.
Landlord will forthwith furnish Tenant copies of any
notices it receives regarding the Premises from any third parties
which notices relate to the Tenant's use and occupancy of the
Premises.
9. Cancellation of Lease.
Either Landlord or Tenant may cancel this Lease upon
thirty (30) days' written notice to the other.
10. Insurance.
Tenant agrees to maintain at all times public liability
insurance on an occurrence basis against all claims and demands
for personal injury liability (including, without limitation,
bodily injury, sickness, disease, and death) and damage to
property which may be claimed to have occurred on the Land or in
the Building in the event of injury to any number of persons or
damage to property, arising out of any one occurrence, which
shall, at the beginning of the Term, be at least equal to
$1,000,000, and to name Landlord and any mortgagees and ground
lessors designated by landlord as additional insured and furnish
landlord with the certificates thereof; such insurance shall
contain a provision that the Landlord, and each such mortgagee
and ground lessor although named as an insured, shall
nevertheless be entitled to recovery under said policy for any
loss occasioned to it, its servants, agents and employees by
reason of the negligence of the Tenant; all insurance required
under the terms of this Lease shall be effected with insurers
having a general policyholders rating of not less than A in
Best's latest rating guide and shall not be canceled or modified
without at least 30 days' prior written notice to each insured
named therein. Tenant shall provide landlord with certificates
of all insurance required to be carried by Tenant under the Lease
at or prior to the Commencement Date and prior to the expiration
of each such policy.
11. Landlord's Costs and Expenses.
If Tenant shall fail to comply with any of its obligations
hereunder, landlord may, upon ten (10) days' prior written notice
to Tenant (or without notice in case of emergency), take any such
action as may be reasonably required to cure any such default by
Tenant. Tenant will pay to Landlord, on demand, all costs and
expenses, including reasonable attorneys' fees, incurred by
Landlord in collecting any delinquent rents, or other charges
payable by Tenant hereunder, or in connection with any litigation
commenced by or against Tenant (other than condemnation
proceedings) to which Landlord, without any fault on its part,
shall be made a party. All such amounts owing to Landlord shall
constitute additional rent hereunder.
12. Indemnification of Landlord.
12.1. Tenant shall indemnify and save harmless Landlord
(regardless of Tenant's covenant to insure) against and from any
and all claims by or on behalf of any person or persons, firm or
firms, corporation or corporations, arising from the use,
occupancy, conduct or management of the Premises, unless done by
or contributed to Landlord, any of its agents, contractors,
servants, employees or licensees, and shall further indemnify and
save Landlord harmless against and from any and all claims
arising during the term hereof from any condition of the
Premises, or arising from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the
part of Tenant to be performed pursuant to the terms of this
Lease, or arising from any act of Tenant or any of its agents,
contractors, servants or employees to any person, firm or
corporation occurring during the term hereof in or about the
Premises or upon or under said areas, and from and against all
costs, counsel fees, expenses or liabilities incurred in or about
any such claim or action or proceeding brought thereon.
12.2. Tenant shall pay and indemnify Landlord against
all legal costs and charges incurred in obtaining possession of
the Premises after the default of Tenant or upon expiration or
earlier termination of the term hereof, other than by reason of
any default of Landlord, or in enforcing any covenant or
agreement of Tenant herein contained.
13. Liens.
13.1. Tenant will not commit, suffer any act or neglect
whereby the Premises or any improvements thereon or the estate of
Landlord therein shall at any time during the term hereof become
subject to any attachment, judgment, lien, charge or encumbrance
whatsoever, except as herein expressly provided, and will
indemnify and hold Landlord harmless from and against all loss,
costs and expenses, including reasonable attorneys' fees, with
respect thereto.
13.2. If due to any act or neglect of Tenant, any
mechanic's, laborer's or materialmen's lien shall at any time be
filed against the premises or any part hereof, Tenant, within
thirty (30) days after notice of the filing thereof shall cause
the same to be discharged of record by payment, bonding or
otherwise, and if Tenant shall fail to cause the same to be
discharged, then Landlord may, in addition to any other right or
remedy, cause the same to be discharged, either by paying the
amount claimed to be due, or by procuring the discharge of such
lien by deposit or by bonding proceedings, and all amounts so
paid by landlord, together with all reasonable costs and expenses
incurred in connection therewith, and together with interest
thereon at the rate of ten percent (10%) per annum from the
respective dates of payment, shall be paid by Tenant to Landlord,
on demand, as additional rent hereunder.
13.3. Nothing in this lease contained shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied by inference or otherwise, to any
contractor, subcontractor, laborer, materialmen, architect or
engineer for the performance of any labor or the furnishing of
any materials or services for or in connection with the Premises
or any part thereof. Notice is hereby given that Landlord shall
not be liable for any labor or materials or services furnished or
to be furnished to Tenant upon credit, and that no mechanic's or
other lien for any such labor, materials, or services shall
attach to or affect the fee or reversionary or other estate or
interest of Landlord in the Premises of and in this Lease.
14. Default.
14.1. In the event that during the term hereof any of
the following events shall occur (each of which shall be an
"Event of Default");
(a) Tenant shall default in the payment of any
installment of the Rent for ten (10) days after the same shall
become due, during which ten-day period Tenant may cure the
default;
(b) Tenant or any permitted assignee of Tenant
shall (i) apply for or consent to an appointment of a receiver, a
trustee or liquidator of it or of all or a substantial part of
its assets; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated a bankrupt or insolvent; (iv)
file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors to
take advantage of any insolvency law or an answer admitting the
material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or corporate
action shall be taken by it for the purpose of effecting any of
the foregoing;
(c) An order, judgment or decree shall be entered,
without the application, approval or consent of Tenant or any
permitted assignee of Tenant by any court of competent
jurisdiction, approving a petition seeking reorganization of
Tenant or such assignee or appointing a receiver, trust or
liquidator of Tenant or such assignee or of all or a substantial
part of its assets and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60)
consecutive days; or
(d) Any other default by Tenant in performing any of
its other obligations hereunder shall continue uncorrected for
ten (10) days after receipt of written notice thereof from
Landlord, during which period Tenant or such assignee may cure
the default; then landlord may, by giving written notice to
Tenant, either (a) terminate this Lease, (b) re-enter the
Premises by summary proceedings or otherwise, expelling Tenant
and removing all of Tenant's property therefrom, and relet the
Premises and receive the rent therefrom, or (c) exercise any
other remedies permitted by law. Tenant shall also be liable for
the reasonable cost of obtaining possession of and reletting the
Premises and of any repairs and alterations or other payments
necessary to prepare them for reletting. Any and all such
amounts shall be payable to Landlord upon demand.
Notwithstanding anything contained herein to the contrary, no
termination of this Lease prior to the last day of the term
hereof, except as provided in Section 15 hereof, shall relieve
Tenant of its liability and obligations under this Lease, and
such liability and obligations shall survive any such
termination.
14.2. In the event of any breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this
Lease, Landlord shall be entitled to enjoin such breach or
threatened breach and shall have the right to invoke any right
and remedy allowed at law or in equity, or by statute or
otherwise, as though reentry, summary proceedings and other
remedies were not provided for in this Lease.
14.3. Each right and remedy of Landlord provided for
in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or now or
hereafter existing, at law or in equity, or by statute or
otherwise, and the exercise or beginning of the exercise by
Landlord of any one or more of the rights or remedies provided
for in this Lease, or now or hereafter existing at law or in
equity, or by statute or otherwise, shall not preclude the
simultaneous or later exercise by Landlord of any or all other
rights or remedies provided for in this Lease, or now or
hereafter existing at law or in equity, or by statute or
otherwise.
15. Eminent Domain.
If the whole or any part of the demised premises shall be
condemned or acquired by eminent domain for any public or quasi-
public use or purpose, then the term of this Lease shall cease
and terminate as of the date of vesting of title in such
proceeding and all rentals shall be paid up to the date of the
vacating of the premises by Tenant and Tenant shall have no claim
against Landlord nor the condemning authority for the value of
any unexpired term of this Lease.
In the event of any condemnation or taking as aforesaid,
whether whole or partial, Tenant shall not be entitled to any
part of the award paid for such condemnation and Landlord is to
receive the full amount of such award, Tenant hereby expressly
waiving any right or claim to any part thereof.
16. Condition of Premises.
Tenant represents that the Premises, has been examined by
Tenant, and Tenant agrees that it will accept the same in the
condition or state in which they, or any of them, now are,
without representation or warranty, express or implied in fact or
by law, by Landlord, and without recourse to Landlord as to the
nature, condition or usability thereof, or the use or uses to
which the Premises, or any part thereof, may be put.
17. Independent Covenants--No Waiver.
17.1. Each and every of the covenants and agreements
contained in this Lease shall be for all purposes construed to be
separate and independent covenants and the waiver of the breach
of any covenant contained hereby by Landlord shall in no way or
manner discharge or relieve Tenant from Tenant's obligation to
perform each and every of the covenants contained herein.
17.2. If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Lease,
or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to
the fullest extent permitted by law.
17.3. The failure of Landlord to insist in any one or
more cases upon the strict performance of any of the covenants of
this Lease shall not be construed as a waiver or a relinquishment
for the future of such covenant. A receipt by Landlord of rent
with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by landlord of any
provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord. All remedies to
which landlord may resort under the terms of this Lease or by law
provided shall be cumulative.
18. Subordination.
This Lease and the rights of Tenant hereunder are subject
and subordinate in all respects to all matters of record,
including, without limitation, deeds and all mortgages which may
now or hereafter be placed on or affect the Premises, or any part
thereof, and/or Landlord's interest or estate therein, and to
each advance made and/or hereafter to be made under any such
mortgages, and to all renewals, modifications, consolidations,
replacements and extensions thereof, and all substitutions.
19. Quiet Enjoyment.
Landlord covenants that Tenant, upon paying the rent and
performing the covenants hereof on the part of Tenant to be
performed shall and may peaceably and quietly have, hold and
enjoy the Premises and all related appurtenances, rights,
privileges and easements throughout the term hereof without any
lawful hindrance by landlord and any person claiming by, through
or under it.
20. Return of Premises.
At the expiration or other temination of the term hereof,
Tenant will remove from the Premises its property and that of all
claiming under it and will peaceably yield up to Landlord the
Premises in as good condition in all respects as the same were at
the commencement of this Lease, except for ordinary wear and
tear, damage by the elements, by any exercise of the right of
eminent domain or by public or other authority, or damage which
Landlord is required herein to replace, restore or rebuild or
damage for which no insurance is required hereunder.
21. Holdover.
Tenant agrees to pay to landlord twice the total of all
rent then applicable for each month or portion thereof Tenant
shall retain possession of the Premises or any part thereof after
the termination of this Lease (unless and to the extent such
holding over shall be pursuant to a written agreement between
Landlord and Tenant), whether by lapse of time or otherwise, and
also to pay all damages sustained by landlord on account thereof;
the provisions of this subsection shall not operate as a waiver
by Landlord of any right of re-entry provided in this Lease or
under law. Tenant shall also pay all reasonable legal fees and
damages incurred by Landlord as a result of such holdover.
22. Limitation of Liability.
Tenant shall neither assert nor seek to enforce any claim
for breach of this Lease against any of Landlord's assets other
than Landlord's interest in the Premises, and Tenant agrees to
look solely to such interest for the satisfaction of any
liability of Landlord under this Lease, it being specifically
agreed that in no event shall landlord (which term shall include,
without limitation, any of the officers, employees, agents,
attorneys, trustees, directors, partners, beneficiaries, joint
venturers, members, stockholders or other principals or
representatives, disclosed or undisclosed, thereof) ever be
personally liable for any such liability.
23. No Recording of Lease.
Tenant hereby acknowledges and agrees that it shall not
record this Lease or any notice or memorandum of this Lease in
any land evidence records or any other public record without the
express prior written consent of Landlord. In the event of any
such recording, Tenant shall be in default of this Agreement and
Landlord shall have all rights and remedies available under law
or in equity as a result of such recordation including, without
limitation, the right to terminate this Lease.
24. Assignment and Subletting.
Tenant will not assign this Lease, in whole or in part,
nor sublet all or any part of the Premises, nor license, nor
pledge or encumber by mortgage or other instruments its interest
in this Lease without landlord's prior written consent, which
consent may be withheld by landlord in its sole and absolute
discretion. This prohibition includes any subletting or
assignment which would otherwise occur by operation of law,
merger, consolidation, reorganization, transfer or other change
of Tenant's corporate or trustee in any federal or state
bankruptcy, insolvency, or other proceedings. Consent by
landlord to any assignment or subletting shall not constitute a
waiver of the foregoing prohibition with respect to any
subsequent assignment or subletting.
25. Use of Hazardous Material.
Tenant shall not cause or permit any Hazardous Material to
be brought upon, kept or used in or about the Premises by Tenant,
its agents, employees, contractors or invitees without the prior
written consent of Landlord. If Tenant breaches the obligations
stated in the preceding sentence, or if contamination of the
Premises by Hazardous Material otherwise occurs, Tenant shall
indemnify, protect, defend and hold Landlord harmless from any
and all claims, judgments, damages, penalties, fines, costs,
liabilities or losses (including, without limitation, diminution
in value of the Premises, damages for the loss or restriction on
use of rentable Premises or usable space or of any amenity of the
Premises, damages arising from any adverse impact on marketing of
Premises space, and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or
after the Term as a result of such contamination. This
indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation
of site conditions or any clean-up, remedial, removal or
restoration work required by any federal, state or local
government agency or political subdivision because of Hazardous
Material present in the sole, surface water or groundwater on,
near or under the Premises.
As used herein, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including, but
not limited to, those substances, materials, and wastes listed in
the United States Department of Transportation Hazardous
materials Table (49 CFR 172.101) or by the Environmental
Protection Agency as hazardous substances (40CFR part 302) and
amendments thereto, or such substances, materials and wastes that
are or become regulated under any applicable local, state or
federal law.
Landlord and its agents shall have the right, but not the
duty, to inspect the Premises at any time to determine whether
Tenant is complying with the terms of this Lease.
26. Construction.
The mention of the parties hereto by name or otherwise
shall be construed as including and referring to their respective
successors and assigns as well as to the parties themselves
whenever such construction is required or admitted by the
provisions hereof; and all covenants, agreements, conditions,
rights, powers and privileges hereinbefore contained shall inure
to the benefit of and be binding upon the successors and assigns
of such parties, unless otherwise provided.
27. Permits.
Tenant, at its cost, shall obtain any necessary permits
for the Premises from the City of Providence.
28. Parking Facility Operation and Maintenance Agreement.
This lease is made subject to the terms and conditions set
forth in the Parking Facility Operation and Maintenance
Agreement, which agreement is attached hereto as Exhibit B.
29. Notices.
Whenever notice shall be given under this Lease, the same
shall be in writing and shall be sent by certified or registered
mail, return receipt requested as follows:
<TABLE>
<C> <S>
To the Landlord: 100 Dexter Road
East Providence, Rhode Island 02914
To the Tenant: c/o Charles Meyers
56 Pine Street
Providence, Rhode Island 02903
To the Tenant's Charles Koutsogiane
Attorney: One Grove Avenue
East Providence, Rhode Island 02914
</TABLE>
or to such other address or addresses as each party may from time
to time designate by like notice to the other. Said notice shall
be valid and times begin to run hereunder upon receipt of the
party to which said notice is given.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed in duplicate as of the day and year first
above written.
CAPITAL PROPERTIES, INC. METROPARK, LTD.
By/s/Ronald P. Chrzanowski By/s/Charles Meyers,
Ronald P. Chrzanowski Charles Meyers, President
President
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 10th day of December,
1998, before me personally appeared Ronald P. Chrzanowski,
President of Capital Properties, Inc., to me known and known by
me to be the person executing the foregoing instrument on behalf
of said corporation, and he acknowledged said instrument by him
executed to be his free act and deed and the free act and deed of
said corporation.
/s/Gloria P. Hopkins
Notary Public
Gloria P. Hopkins
My Commission Expires June 23, 2001
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 9th day of December,
1998, before me personally appeared Charles Meyers, President of
Metropark, Ltd., to me known and known by me to be the person
executing the foregoing instrument on behalf of said corporation,
and he acknowledged said instrument by him executed to be his
free act and deed and the free act and deed of said corporation.
/s/Carolyn M. Bouchard
Notary Public
GUARANTEE
In consideration of the execution of the foregoing lease by the
Landlord, the undersigned (jointly and severally, if more than
one) guarantees that the Tenant will pay all rent thereunder and
will perform all other terms, conditions or agreements on its
part to be performed or fulfilled, and agrees that the foregoing
lease may be amended from time to time by the parties thereto
without notice to the undersigned. The undersigned consents that
extensions of time of payment or any other indulgences may be
granted to the Tenant without notice to and without releasing or
affecting in any way the liability of the undersigned and the
undersigned waives demand and notice of default. This guarantee
is in addition to any other security which the Landlord may have
for the performance of the Tenant's obligations and the Landlord
may have the recourse to this guarantee without first pursuing
the Landlord's remedies against such other security, if any. The
Landlord may release, in whole or in part, any other security
without releasing or affecting in any way the liability of the
undersigned. In addition, the undersigned will pay to the
Landlord all costs and expenses (including attorneys' fees)
incurred in connection with the enforcement of this guarantee.
Executed this 9th day of December, 1998.
/s/Charles Meyers
Charles Meyers
<PAGE>
CAPITAL PROPERTIES, INC.
ANNUAL REPORT TO SHAREHOLDERS
1998
III-7
<PAGE>
BRIEF DESCRIPTION OF
THE COMPANY'S BUSINESS
The Company's business consists of the leasing of certain of its real estate
interests in downtown Providence, Rhode Island. Through its wholly-owned
subsidiary, Tri-State Displays, Inc., the Company leases locations along
interstate and primary highways in Rhode Island and Massachusetts for outdoor
advertising purposes. Through its wholly-owned subsidiary, Capital Terminal
Company, the Company operates its petroleum storage facilities in East
Providence, Rhode Island.
<PAGE>
PRESIDENT'S REPORT
In the accompanying financial statements, the Company is reporting a net loss
of $201,000 for the calendar year 1998.
The Company's common stock is listed on the American Stock Exchange under the
symbol "CPI". During 1998, the Company paid a dividend of $.10 per share on
the Company's outstanding stock.
In 1988, the Company transferred the ownership of Providence and Worcester
Railroad Company (Railroad) to the Company's shareholders. The Company
received a promissory note in the amount of $9,377,000 payable over a period
of twenty years with interest at 12% per year (reduced to 10% in 1995),
prepayable at any time without penalty. On March 30, 1998, Railroad prepaid
the note.
In March 1998, the Company relocated its offices to a building on the site of
its petroleum storage facilities in East Providence, Rhode Island.
DOWNTOWN PROVIDENCE REAL ESTATE
The Company owns approximately 20.5 acres of land within the Capital Center
Project area (Capital Center) in downtown Providence, Rhode Island, including
1.9 acres of air rights over Amtrak's Northeast Corridor (Boston to New York
City) railroad right of way. These properties, shown on the plan which appears
on page 7 of this Report, are Parcels 2, 3S, 3W, 3E, 4W, 4E, 5, 6, 7A, 8 and
9. The Company also owns a 15,000 square foot parcel (Parcel 22) and a 3,000
square foot parcel (Parcel 21) which are located outside of, but immediately
adjacent to, Capital Center.
The Company has entered into long-term land leases on several of its parcels
with private developers and has entered into letters of intent on other
parcels.
Parcel 2--Gateway Two Limited Partnership, an affiliate of Congress Group
Ventures, Inc. (Congress Group) of Cambridge, Massachusetts, has entered into
a long-term lease (95 years) with the Company for the northerly portion of
the parcel for the construction of a Hilton hotel containing approximately 265
suites in conjunction with Corporex Companies, Inc., of Cincinnati, Ohio.
Plans for the hotel have been approved by the Capital Center Commission. The
term of the lease will not begin until the commencement of construction.
Parcel 3S--CFG Associates, L. P. (CFG) completed the construction of a
13-story office building containing approximately 235,000 square feet in
1990. The general partner in CFG is a subsidiary of Citizens Financial
Group, Inc. whose commercial banking affiliate is the building's principal
tenant and the building serves as its corporate headquarters. Citizens
Financial Group, Inc. is, in turn, an affiliate of Royal Bank of Scotland.
The lease terminates in 2087.
Parcel 4E--One Park Row East Corporation (One Park Row), an affiliate of
First Quebec Corporation of Montreal, Canada, entered into a non-binding
letter of intent with the Company in 1989 for the proposed construction of a
6-story office building containing approximately 95,000 square feet. The
plans for this development have been approved by the Capital Center
Commission, and all permits necessary to commence construction have been
obtained. Construction will not commence until such time as One Park Row has
identified tenants to occupy a significant portion of the building. One Park
Row has been working with a local developer to identify such tenants, at
which time the letter of intent will be supplanted by a formal land lease.
<PAGE>
Parcel 4W--Homestead Village Incorporated (Homestead), a publicly-held
corporation listed on the American Stock Exchange, entered into a letter of
intent with the Company in March 1999 for the proposed construction of an
extended-stay hotel containing approximately 140 units. It is anticipated
that Homestead and the Company will enter into a lease for a term of 50 years.
Parcel 5--Parcel Five Limited Partnership completed the construction of an
8-story apartment building in 1991 containing approximately 454,000 square
feet with 225 units. In May 1997, the apartment building was purchased and
the lease assigned to AvalonBay Communities Inc. (AvalonBay), a real estate
investment trust listed on the New York Stock Exchange. The lease terminates
in 2142.
Parcel 6--AvalonBay has entered into a long-term lease (145 years) with the
Company for the proposed construction of an apartment complex containing
approximately 250 individual units with underground parking. AvalonBay will
submit plans of this project for approval to the Capital Center Commission
and seeks to enter into a tax stabilization agreement with the City of
Providence. The term of the lease will not begin until the commencement of
construction. The lease permits the Company to remove the western portion of
Parcel 6 from under the lease without any reduction in rentals. The Company
has been working with The Koffler Group (Koffler), a local developer, on the
proposed construction of a 1,200 car public parking garage on the western
portion.
Parcel 7A--The Company owns a below-grade parking garage containing 360
public parking spaces which is leased under a short-term arrangement. The
garage is adjacent to the Amtrak rail passenger station.
Parcel 8--Gateway Eight Limited Partnership (Gateway Eight) completed the
construction of a 4-story office building containing approximately 114,000
square feet in 1990. Gateway Eight is an affiliate of Congress Group. The
lease terminates in 2090. The building is currently subleased by Dreyfus
Corporation, which sublease expires December 31, 1999. It has been publicly
announced that Gateway Eight is entering into a ten-year lease with Boston
Financial Data Services, Inc., which will commence January 1, 2000.
Parcel 9--FC Acquisitions Associates, L.L.C. (FC), an affiliate of Forest
City Ratner Companies of Brooklyn, New York, has entered into a long-term
lease (149 years) with the Company for the construction of a building
containing approximately 350,000 square feet of commercial space and a
minimum of 200 public parking spaces. The lease provides a period of time
within which FC may perform its due diligence, seek the approval of the plans
for the project from the Capital Center Commission and enter into a tax
stabilization agreement with the City of Providence. The term of this lease
will not commence until construction begins.
Providence Place Mall, a regional shopping mall containing 1.2 million square
feet of retail space and a 4,000 car garage, is under construction on a 13.2
acre site to the west of the Company's Parcel 9 in Capital Center (marked
"PPM" on the plan). It is anticipated that the Mall will open in August
1999. The Mall's anchor stores include Nordstrom, Filene's and Lord &
Taylor.
The parking garage on Parcel 7A and Parcels 3E, 3W, 4E, 4W, 6, 21 and 22 have
been leased to a firm experienced in parking operations. These leases can be
terminated on short notice as suitable development opportunities arise.
<PAGE>
LITIGATION WITH THE CITY, STATE AND AMTRAK
Development of Parcels 2, 4E, 4W, 6 (for both the apartment complex and the
public parking garage) and 9, as well as the proposed sublease on Parcel 8,
are dependent upon resolution of the property tax dispute between the Company
and the City of Providence.
In 1997 the City revalued the Company's properties within Capital Center
(with the exception of Parcels 7A and 8 which were then under agreements with
the City) and reached back six years to assess over $13,000,000 in back
taxes, interest and penalties on the properties; through January 1999, this
amount has increased to $16,918,000. The Company contends that this action
by the City is both unprecedented and illegal. The Company contends that
under Rhode Island law, tax assessments can only be changed as part of an
overall City-wide reevaluation, the last of which occurred in 1987.
Additionally, the Company contends that back taxes can only be assessed
pursuant to a statute which does not apply in this situation.
The Company is also in dispute with the City over ownership of Parcel 9.
Pursuant to the terms of an agreement dated January 16, 1987 between the City
and the State of Rhode Island (City/State Agreement), the City was obligated
to convey Parcel 9 to the State and to pay 50% of the costs for land
acquisition for the then proposed River Relocation. Under a separate January
16, 1987 agreement between the Company and the State (CPI/State Agreement),
the State was obligated to convey Parcel 9 to the Company. In 1989 the City
conveyed Parcel 9 to the State and the State reconveyed Parcel 9 to the
Company; contemporaneously, the Company purchased a title insurance policy
covering Parcel 9. The City now claims that its execution of the City/State
Agreement was invalid, the conveyance of Parcel 9 to the State was void, and
hence the City is the true owner of Parcel 9. Moreover, in December 1998,
the City adopted an ordinance authorizing the Providence Redevelopment Agency
to condemn Parcel 9 as an "arrested," "blighted," and "substandard" parcel of
land. The Company is contesting both the City's claim of ownership and
the City's attempt to condemn Parcel 9.
The Company's dispute with the State concerns the 1987 condemnation of a
portion of the Company's property by the State for River Relocation pursuant
to the terms of the CPI/State Agreement. The State originally paid the
Company $2,600,000 in condemnation proceeds and in 1997 the Rhode Island
Superior Court awarded to the Company an additional $6,101,000 in condemnation
proceeds as well as interest on the judgment through May 6, 1997 in the
amount of $4,552,000. This judgment was affirmed by the Rhode Island Supreme
Court in April 1998. The Company has yet to receive any money under this
judgment. As discussed previously, pursuant to the terms of the City/State
Agreement, the City and the State were to share equally in the cost of
condemnation. Pursuant to the terms of the CPI/State Agreement, the Company
was obligated to reimburse the State for the State's share of the cost of
condemnation in return for the conveyance to the Company of Parcel 9.
Notwithstanding that the State had sole authority to condemn for River
Relocation, that under the CPI/State Agreement the State was the condemning
authority, and that the Company was not a party to the City/State Agreement
or any other pertinent agreement with the City, the State now contends that
the Company must proceed solely against the City to recover the judgment.
The State also contends that the payment the Company made at the time of
conveyance of Parcel 9 relieved the State of any further obligation under the
CPI/State Agreement to the Company for the condemnation. Finally, the State
contends that the Company waived its contract claims against the State. The
Company contends that the State breached the CPI/State Agreement by refusing
to pay the judgment, by unilaterally reducing the interest rate payable under
the condemnation between the time the CPI/State Agreement was executed and
the final judgment, by not conveying Parcel 9 to the Company in a timely
fashion, and finally, if the City is correct as to the ownership of Parcel 9,
the State has not fulfilled its portion of the CPI/State Agreement. The
Company also contends that the CPI/State
<PAGE>
Agreement, at most, requires the Company to repay to the State one-half of
the condemnation award, but not the interest.
In December 1998, the Rhode Island Supreme Court directed that the various
disputes between the Company, City and State be consolidated before a single
justice of the Superior Court, and final briefs under various Cross Motions
for Summary Judgment are scheduled to be filed by March 23, 1999. The
Company expects a decision in these matters to be issued shortly thereafter.
Any decision is subject to appeal to the Rhode Island Supreme Court.
The Company is also in dispute with Amtrak. As part of the Capital Center
Project, the parties (the Company, State, City and Amtrak) each conveyed
parcels of land in Capital Center so that each party had the land it needed
for its designated functions within Capital Center. As part of this
arrangement, the Company was conveyed approximately 1.9 acres of air rights
over Amtrak's Northeast Corridor 19.3 feet above the top of rail within what
is now designated as Parcel 6. The Company was also conveyed Parcel 7A for
the construction of an underground parking garage. The parking garage and the
railroad station were both constructed by the Federal Railroad
Administration. Many of the facilities needed to service the railroad
station were built within the confines of Parcel 7A. Over the years, the
Company did not charge Amtrak for this intrusion on its properties, and over
the years Amtrak assumed the cost of electricity provided to the underground
parking garage. In 1997, Amtrak unilaterally refused to pay for the
electricity and the Company brought suit in the Federal District Court
seeking an Order requiring Amtrak to remove its facilities from Parcel 7A.
As previously mentioned, the Company has the right to remove the western
portion of Parcel 6 from under the lease without any reduction in rent. The
western portion consists of land located east of the air rights, the air
rights, and land located west of the air rights which the Company purchased
from the State in 1990. The Company is cooperating with Koffler to construct
an approximate 1,200 car parking garage to be located on the western portion
of Parcel 6, including the air rights. Recently, Amtrak erected towers
within these air rights, the tops of which vary in height between 27 and 31
feet above top of rail. Additionally, Amtrak has notified the Company that
it will be erecting a signal bridge within the air rights, all as part of the
electrification of the Northeast Corridor. The Company is reviewing its
options as to Amtrak's present and proposed intrusions upon the Company's
properties.
CAPITAL TERMINAL COMPANY
Capital Terminal Company, a wholly-owned subsidiary, operates the Company's
petroleum storage facilities. In June 1998, the Company entered into a
short-term agreement for the warehousing of product in three of its tanks
with Global Companies L.L.C. (Global) of Waltham, Massachusetts, 51% of which
is owned by Yacimientos Petroliferos Fiscales SA (YPF), Argentina's largest
company. Fifteen percent of YPF was recently acquired by Repsol SA, a
Spanish oil company. In mid-September the Company and Global entered into a
new agreement under which the Company operates the entire terminal facility
for Global. The Company and Global are negotiating to extend the current
arrangement for an additional three years plus options to extend on an annual
basis.
In 1998, the tanks and associated piping were painted. During 1999, the
Company will erect a new expanded truck rack which will be fully automated
and will have both top and bottom loading capabilities; the Company has
received approval from the East Providence Zoning Board of Appeals for this
expansion.
<PAGE>
TRI-STATE DISPLAYS, INC.
Tri-State Displays, Inc., another wholly-owned subsidiary, owns or controls
various locations along interstate and primary highways in Rhode Island and
Massachusetts which are leased for commercial advertising purposes to
Chancellor Media Whiteco Outdoor Corporation (CMWO), a division of Chancellor
Media of Dallas, Texas. These locations contain a total of 45 billboard
faces, all of which are the large painted bulletins normally seen along
interstate and primary highways. During 1998, CMWO erected two new billboard
structures with two faces each; these were the first billboards constructed
in conjunction with the Company since 1989. In addition, one billboard face
was converted to a Tri-Vision board.
The Company and CMWO also identified five new billboard locations (ten faces)
in Worcester, Massachusetts adjacent to the proposed relocated Route 146.
The Company has received approvals from the City's Zoning Board, Planning
Board and Conservation Board. Permit applications for these five locations
have been submitted to the Commonwealth of Massachusetts Outdoor Advertising
Board for approval.
Sincerely,
/s/ Ronald P. Chrzanowski
Ronald P. Chrzanowski
President
March 18, 1999
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial condition:
In 1988, in accordance with a plan of distribution, the Company transferred
the ownership of Providence and Worcester Railroad Company (Railroad) to
the Company's shareholders. The Company and Railroad have a common
controlling shareholder. As part of the plan, the Company received a
promissory note in the amount of $9,377,000 payable over a period of twenty
years with interest at 12% per year, (reduced to 10% in 1995) prepayable at
any time without penalty. In March 1998, Railroad prepaid the note in full.
The Company's principal assets consist of land, a public parking garage,
petroleum storage facilities (the Facilities) and outdoor advertising sites.
A significant portion of the land consists of approximately 20.5 acres,
including 1.9 acres of air rights, in downtown Providence, Rhode Island, held
for development. At December 31, 1998, the Company is earning revenue from
long-term land leases for three separate land parcels. One lease was amended
in May 1997, extending the term thereof from 2092 to 2142, with no change in
the rents due under the original term of the lease, and rents for the
extended period to be calculated in accordance with the formulas set forth
for the original term. The tenants of each parcel have constructed buildings
which are substantially occupied.
As of December 31, 1998, the Company had entered into land leases for three
additional land parcels with terms of 95, 145 and 149 years. Under the 95-
year land lease, the developer proposes to construct a hotel containing
approximately 265 suites with parking. Under the 145-year land lease, the
developer proposes to construct an apartment complex containing approximately
250 individual units with underground parking. Under the 149-year land
lease, the developer proposes to construct a building of approximately
350,000 square feet of commercial space and a minimum of 200 public parking
spaces. All leases provide a period of time within which the developer may
perform its due diligence, seek the approval of the plans for its complex
from the Capital Center Commission and enter into a tax stabilization
agreement with the City of Providence. There can be no assurance that the
developers, individually or collectively, will be able to satisfy the
conditions precedent to proceeding with the developments. Each developer's
ability to obtain a tax stabilization agreement with the City of Providence
may be adversely affected by the pending litigation between the City and
the Company with respect to prior year taxes as discussed below. The Company
is unable to determine at this time when construction will begin and
therefore the time at which the term of each lease will commence.
The Company is engaged in discussions concerning the possible development of
the remaining parcels but is unable to predict when leases on these parcels
will commence. However, the Company will continue to lease all available
parcels which are suitable for public surface parking under short-term
cancelable leases. The Company anticipates that future development of the
remaining properties will consist primarily of long-term ground leases under
which the significant portion of future rental income will not be earned
until the buildings are completed by the developers and occupied.
The Company leases to one tenant locations along interstate and primary
highways in Massachusetts and Rhode Island for outdoor advertising purposes.
At December 31, 1998, these
<PAGE>
locations contained a total of 45 billboard faces. The lease currently
expires in 2025; however, the term of the lease is extended two years for
each additional location added.
Certain of the Company's long-term land leases provide for scheduled rent
increases over their terms which extend to the year 2142. In accordance with
the provisions of Statement of Financial Accounting Standards (FAS) No. 13
(Accounting for Leases) and certain of its interpretations, the Company
recognizes the rental income on the straight-line basis over the term of each
lease; however, the Company does not report as income that portion of such
straight-line rentals which management is unable to conclude is realizable
(collectible) due to the length of the lease terms and other related
uncertainties. At December 31, 1998, the cumulative amount not reported as
income is $11,152,000.
Effective September 1, 1998, the Company entered into a short-term
arrangement with a petroleum company (Petroleum Company) under which the
Company operates the entire Facilities for the Petroleum Company. The
Company currently receives a monthly fee of approximately $78,000 and is
responsible for labor, insurance, property taxes and other operating
expenses. The Company and Petroleum Company are negotiating to extend the
current arrangement for an additional three-year term plus options to extend
on an annual basis with a minimum monthly fee of $67,000, increasing 4.5%
annually during the extended term.
The Company manages its exposure to contamination, cleanup or similar costs
associated with the Facilities through its adherence to established
procedures for operations and equipment maintenance. In addition,
the Company maintains what it believes to be adequate levels of insurance.
During 1999, the Company plans to construct a new expanded truck rack at the
Facilities which will be fully automated and will have both top and bottom
loading capabilities at an estimated cost of $1.5 million. The Company
anticipates paying for the construction from available cash.
In management's opinion, the Company will continue to be able to generate
adequate amounts of cash to meet substantially all of its expenditures.
On January 16, 1987, the Company entered into an Agreement with the State of
Rhode Island (CPI/State Agreement) relating to the State of Rhode Island's
obligation with respect to the condemnation of a portion of the Company's
property in connection with the proposed River Relocation in Providence,
Rhode Island. In November 1987, the State of Rhode Island (the State)
condemned the property and paid the Company a condemnation award of
$2,600,000. Under the CPI/State Agreement, the Company purchased another
parcel of land (Disputed Parcel) from the State and was required to return to
the State a portion of the condemnation award.
In April 1988, the Company filed a petition in the Rhode Island Superior
Court (Superior Court) for an increased condemnation award alleging that the
award paid in 1987 was inadequate. In January 1992, the Superior Court
awarded the Company an additional condemnation award of $401,000 plus
interest from the date of the condemnation. The Company had asserted in the
Superior Court that it was entitled to an additional condemnation award in
excess of $6,000,000 plus interest, and accordingly, in February 1992, the
Company appealed the decision of the Superior Court to the Rhode Island
Supreme Court (Supreme Court). In January 1994, the Supreme Court overturned
the Superior Court decision and returned the matter to the Superior Court for a
retrial of the case. The case was retried in 1995.
<PAGE>
In May 1997, the Superior Court entered final judgment awarding condemnation
proceeds of $6,101,000 in favor of the Company and interest on the judgment
through that date of $4,552,000. The State filed an appeal with the Supreme
Court. On April 17, 1998, the Supreme Court entered an order affirming the
judgment of the Superior Court. Interest continues to accrue on the judgment.
The Supreme Court expressly stated that its decision was "without prejudice
to any party seeking to enforce any contractual obligations that may be
implicated by the enforcement of the Judgment."
The State filed several motions to prevent the Company from collecting the
judgment, which now exceeds $11,500,000 including interest. The Superior
Court denied the State's motions and ordered the State to pay the judgment by
August 14, 1998. The State filed an appeal with the Rhode Island Supreme
Court. In December 1998, the Supreme Court directed that this case,
together with other disputes between the Company, the State and the City of
Providence, be consolidated before a single justice of the Superior Court.
This is more fully discussed below.
Under the CPI/State Agreement, the Company may be required to return to the
State a portion of the award.
During 1995, the Company received notice from the City of Providence (the
City) of an increase in the assessed values of several of its parcels within
Capital Center. The increase in the assessed values was not the result of a
city-wide revaluation, pertained to 1995 and subsequent years, and resulted
in an annual increase in property taxes of $265,000. The Company filed
appeals for 1995 and 1996 but elected to make property tax payments as due
pending the outcome of the appeals. During the fourth quarter of 1996, the
City reduced the assessed value of one of the parcels, resulting in an
abatement of property taxes of $107,000 for 1995 and a reduction in the tax
of $115,000 for 1996 and subsequent years. The Company is unable to
determine if the remaining appeals will result in an abatement of the property
taxes for 1995 and subsequent years.
On August 18, 1997, the Company received from the City real property tax
bills for taxes assessed as of December 31, 1996 reflecting an unexpected
200% increase in the assessed values of a majority of the Company's parcels
within Capital Center, resulting in an annual increase in property tax
expense of approximately $1,370,000. This increase was not part of a city-
wide revaluation.
On August 21, 1997, the Company received from the City real property tax
bills purporting to assess taxes for assessment years ending December 31,
1990 through December 31, 1995, based upon a $42,000,000 retroactive increase
in the assessed values of these same properties. These increases were not
part of a city-wide revaluation. The aggregate amount of such taxes as billed
was approximately $7,100,000, which amount did not include any interest. The
Company believes that the change in the assessed values is related to the
March 1997 Superior Court decision that determined a 1987 value for certain
properties condemned by the State in 1987.
The Company believes that the increase in the assessed values for 1997 and
prior periods are illegal and on August 27, 1997 filed a lawsuit against the
City in the Superior Court.
On October 14, 1997, the Company received from the City real property tax
bills for the second quarter of 1997 indicating interest due on the 1996
assessment of $76,000 and interest due on the purported assessed taxes for
the years 1990 through 1995 of $3,300,000. The City asserts that the
parcels subject to the retroactive assessment were under-assessed in the
prior assessment periods.
<PAGE>
On November 14, 1997, the Company filed appeals of the 1997 real property tax
bills.
On August 5, 1998, the Company received from the City real property tax bills
for taxes assessed as of December 31, 1997, which taxes are based upon the
assessed valuations as of December 31, 1996. The Company has appealed these
assessments and on October 16, 1998, filed a lawsuit against the City in the
Superior Court claiming that the increased assessments for 1998 are illegal.
In December 1998, the Supreme Court directed that the property tax disputes
with the City, title to the Disputed Parcel, and the condemnation case
previously discussed be heard by a single justice of the Superior Court.
The real property tax bills received by the Company in January 1999 from the
City indicate that there remains unpaid taxes of $11,645,000 and interest
thereon of $5,273,000 for assessment dates of December 31, 1990 through 1997.
Interest continues to accrue at the rate of 1 percent per month.
The Company, upon consultation with counsel, believes that its position with
respect to these assessments will be sustained; however, such proceedings can
be protracted and costly, and there can be no assurance that the Company will
be successful in having the 1997 and 1998 increases or the retroactive
assessments overturned. The failure of the Company to prevail in the
proceedings contesting the retroactive increase in assessed values would have
a material adverse effect on the Company's results of operations and
financial condition and, while the Company believes, upon consultation with
counsel, that the likelihood of such failure is remote, if a court were to
require the Company to pay the retroactive assessments and related interest,
the Company could be forced to seek the protection of the bankruptcy courts.
Pursuant to the terms of an agreement dated January 1987 between the City and
the State (City/State Agreement), the City was obligated to convey the
Disputed Parcel to the State. As discussed above, pursuant to the CPI/State
Agreement, the State was obligated to reconvey the Disputed Parcel to the
Company. In 1989, the City conveyed the Disputed Parcel to the State, and the
State reconveyed the Disputed Parcel to the Company. Contemporaneously, the
Company purchased a title insurance policy in the amount of $1,600,000
covering the Disputed Parcel.
The City now claims that its execution of the City/State Agreement was
invalid, that its conveyance of the Disputed Parcel to the State was void,
and hence the City is the true owner of the Disputed Parcel. Moreover, in
December 1998, the City adopted an ordinance authorizing the Providence
Redevelopment Agency to condemn the Disputed Parcel. The Company is
contesting both the City's claim of ownership and the City's attempt to
condemn the Disputed Parcel.
The Company, upon consultation with counsel, believes that its ownership of
the Disputed Parcel will be affirmed and that the City will fail in any
attempt to condemn this parcel.
This dispute with the City is included in the matters being heard by the
single justice in the Superior Court as directed by the Supreme Court.
The Company's carrying value of the Disputed Parcel is $57,000. The Disputed
Parcel's assessed value was increased to $7,909,000 by the City as more fully
discussed above. The real property tax bill relating to the Disputed Parcel
received in January 1999 from the City indicates that the unpaid taxes and
interest total approximately $2,315,000 through that date.
<PAGE>
In the consolidated case of all of the various disputes between the Company,
City and State before a single justice of the Superior Court, final briefs
under various Cross Motions for Summary Judgment are scheduled to be filed by
March 23, 1999. The Company expects a decision in these matters to be issued
shortly thereafter. Any decision is subject to appeal to the Supreme Court.
In both 1997 and 1998, the Company paid dividends of $.10 per share on the
Company's outstanding common stock. The Company expects to be in a position
to continue dividend payments on a semi-annual basis; however, the
declaration of any dividend and the amount thereof will depend on the
Company's future earnings, financial condition and other relevant factors.
In prior years, the Company had been classified as a personal holding company
(PHC) for federal income tax purposes. A PHC is subject to an additional tax
of 39.6% on amounts classified as undistributed PHC income. This
classification did not affect the Company's federal income tax liability
because the Company made sufficient dividend distributions to shareholders.
The Company is no longer classified as a PHC due principally to the present
sources of the Company's revenue and does not expect to be classified as a
PHC in future years.
Future cash outlays for income taxes will be a more significant portion of
total tax expense and presently exceeds total tax expense for financial
reporting purposes. This results principally from the recognition of rental
income on a contractual basis for tax reporting purposes and additional
depreciation claimed for financial reporting purposes.
The Company has determined that the "Year 2000" issue will not materially
affect its business, financial condition or results of operations. The
Company employs nine people. Substantially all of the leasing revenue is in
the form of fixed monthly payments, and the operation of the Facilities is
not dependent upon date-sensitive equipment. Should the Company experience a
problem, it is entirely feasible to maintain its systems in a non-computer
environment and continue to operate the Facilities.
Certain portions of this Annual Report to Shareholders, and particularly the
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Notes to Consolidated Financial Statements, contain
forward-looking statements which represent the Company's expectations or
beliefs concerning future events. The Company cautions that these statements
are further qualified by important factors that could cause actual results to
differ materially from those in the forward-looking statements, including,
without limitation, the following: the ability of the Company to generate
adequate amounts of cash; the collectibility of the accrued rental income
when due over the terms of the long-term land leases; changes in economic
conditions that may affect either the current or future development on the
Company's parcels; the final outcome of the condemnation and property tax
litigation and the dispute over the ownership of a parcel in the Capital
Center Project area; the extension of the current arrangement for the
Facilities; and exposure to contamination, cleanup or similar costs associated
with the operation of the Facilities.
Results of operations:
The Company's total income for 1998 increased 2% from the 1997 level.
The Company has adopted the provisions of FAS No. 131 (Disclosures about
Segments of an Enterprise and Related Information) and has reported its
revenues and expenses applicable to two operating segments--Leasing and
Petroleum Storage Facilities.
<PAGE>
Leasing revenue and expenses applicable to leasing decreased principally due
to the fact that in 1998 revenues from the operation of the public parking
garage were in the form of rental payments as opposed to customer receipts,
and the Company no longer incurred the direct payroll and other expenses of
operating the garage. The decrease in expenses was offset in part by
increased legal fees in connection with the condemnation case and the
property tax dispute with the City of Providence.
The increase in revenue from petroleum storage facilities resulted
principally from fees received under the Company's agreement with an oil
company in connection with the Wilkesbarre Pier and income from a short-term
arrangement to operate the Facilities which commenced September 1, 1998. The
increase in expenses applicable to petroleum storage facilities resulted
principally from increased insurance costs and repairs and maintenance
relating to the exterior painting of the entire terminal facilities.
The decrease in total interest income in 1998 from 1997 results from
Railroad's prepaying its note in full in March 1998, which note provided for
a 10% rate. The Company was not able to invest the proceeds at comparable
rates.
The General and Administrative expenses for 1998 increased approximately 19%
from the 1997 level due principally to payroll and related costs as a result
of an increased number of employees and legal fees in connection with
corporate planning matters.
<PAGE>
Lefkowitz, Garfinkel, Champi & Derienzo P.C.
Certified Public Accountants/Business Consultants
INDEPENDENT AUDITORS' REPORT
Board of Directors
Capital Properties, Inc.
Providence, Rhode Island
We have audited the accompanying consolidated balance sheet of Capital
Properties, Inc. and subsidiaries as of December 31, 1998, and the
related consolidated statements of income (loss) and retained earnings
and cash flows for the years ended December 31, 1998 and 1997. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Capital Properties, Inc.
and subsidiaries as of December 31, 1998, and the results of their operations
and their cash flows for the years ended December 31, 1998 and 1997, in
conformity with generally accepted accounting principles.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
March 18, 1999
10 Weybosset Street * Providence, Rhode Island 02903 * Tel (401) 421-4800
1-800-927-LGCD * Fax (401) 421-0643
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
<TABLE>
<S> <C>
Properties and equipment (net of accumulated depreciation) $ 8,461,000
Cash and cash equivalents 4,743,000
Receivables:
Tenant property tax reimbursements 214,000
Income taxes 175,000
Accrued rental income 499,000
Prepaid and other 189,000
$14,281,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses:
Property taxes $ 600,000
Other 125,000
Deferred income taxes 1,173,000
1,898,000
Contingencies (Note 2)
Shareholders' equity:
Common stock, $1 par; authorized, issued and
and outstanding 3,000,000 shares 3,000,000
Capital in excess of par 8,828,000
Retained earnings 555,000
12,383,000
$14,281,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C>
1998 1997
Income:
Revenues:
Leasing $1,908,000 $2,081,000
Petroleum storage facilities, net of cost
of product sold of $240,000 and $586,000
in 1998 and 1997, respectively 620,000 86,000
2,528,000 2,167,000
Interest:
Providence and Worcester Railroad Company 98,000 409,000
Other 167,000 35,000
Arbitration award 120,000
2,793,000 2,731,000
Expenses:
Expenses applicable to:
Leasing 1,148,000 1,213,000
Petroleum storage facilities 948,000 533,000
General and administrative 1,033,000 864,000
3,129,000 2,610,000
Income (loss) before income taxes (336,000) 121,000
Income tax expense (benefit):
Current (22,000) 138,000
Deferred (113,000) (74,000)
(135,000) 64,000
Net income (loss) (201,000) 57,000
Retained earnings, beginning 1,056,000 1,299,000
Dividends on common stock (300,000) (300,000)
Retained earnings, ending $ 555,000 $1,056,000
Basic earnings (loss) per share $(.07) $.02
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C>
1998 1997
Cash flows from operating activities:
Net income (loss) $ (201,000) $ 57,000
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation 347,000 363,000
Accrued rental income (47,000) (82,000)
Deferred income taxes (113,000) (74,000)
Changes in assets and liabilities:
Increase in:
Receivables (205,000)
Prepaid and other (301,000)
Accounts payable and accrued expenses 39,000 93,000
Decrease in:
Receivables 133,000
Prepaid and other 243,000
Income taxes payable (128,000)
Net cash provided by (used in) operating
activities 401,000 (277,000)
Cash flows from investing activities:
Purchase of properties and equipment (144,000)
Proceeds from:
Collection of note receivable, Providence
and Worcester Railroad Company 3,993,000 219,000
Maturities of temporary cash investments 203,000
Net cash provided by investing activities 3,849,000 422,000
Cash used in financing activities, payment of
dividends (300,000) (300,000)
Increase (decrease) in cash and cash equivalents 3,950,000 (155,000)
Cash and cash equivalents, beginning 793,000 948,000
Cash and cash equivalents, ending $4,743,000 $ 793,000
Supplemental disclosures, cash paid for
income taxes $ 107,000 $ 285,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1. Basis of presentation and summary of significant accounting policies:
Basis of presentation and principles of consolidation:
The accompanying consolidated financial statements include the accounts
of Capital Properties, Inc. (the Company) and its wholly-owned subsidiaries,
Tri-State Displays, Inc. and Capital Terminal Company. All significant
intercompany accounts and transactions between the Company and its
subsidiaries have been eliminated in consolidation.
Description of business:
The Company has adopted the provisions of Statement of Financial Accounting
Standards (FAS) No. 131 (Disclosures about Segments of an Enterprise and
Related Information) which changes the manner in which the Company determines
its operating business segments. FAS No. 131 defines operating segments as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker
in deciding how to allocate resources and in assessing performance.
The provisions of FAS No. 131 result in the Company's reporting two operating
segments:
* the leasing of certain of its real estate interests in
downtown Providence, Rhode Island, and locations along
interstate and primary highways in Rhode Island and
Massachusetts for outdoor advertising purposes; and
* the operation of its petroleum storage facilities (the
Facilities) in East Providence, Rhode Island.
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and cash equivalents:
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. Cash equivalents,
which consist of a certificate of deposit and a short-term uninsured
repurchase agreement which the Company routinely purchases, totaled
$4,632,000 at December 31, 1998.
Properties and equipment:
Properties and equipment are stated at cost. Depreciation is being provided
by the straight-line method over the estimated useful lives of the
respective assets.
<PAGE>
The Company follows the provisions of FAS No. 121 (Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of)
which requires that property and equipment held and used by the Company be
reviewed for impairment whenever events or changes in circumstances indicate
that the net book value of the asset may not be recoverable. An impairment
loss will be recognized if the sum of the expected future cash flows
(undiscounted and before interest) from the use of the asset is less than the
net book value of the asset. Generally, the amount of the impairment loss is
measured as the difference between the net book value and the estimated fair
value of the asset.
Income taxes:
The Company and its subsidiaries file a consolidated Federal income tax
return.
Income taxes are provided based on income reported for financial statement
purposes. The provision for income taxes differs from the amounts currently
payable because of temporary differences in the recognition of certain income
and expense items for financial reporting and tax reporting purposes.
Leasing revenue:
The Company's properties leased to others are under operating leases. The
Company reports leasing revenue when earned under the operating method.
Certain of the Company's long-term land leases provide for scheduled rent
increases over their remaining terms (30 to 145 years). In accordance with
the provisions of FAS No. 13 (Accounting for Leases) and certain of its
interpretations, the Company is recognizing leasing revenue on the straight-
line basis over the terms of the leases; however, the Company does not
report as income that portion of such straight-line rentals which management
is unable to conclude is realizable (collectible) due to the length of the
lease terms and other related uncertainties.
2. Litigation with the State of Rhode Island and the City of Providence:
Condemnation case:
On January 16, 1987, the Company entered into an Agreement with the State of
Rhode Island (CPI/State Agreement) relating to the State of Rhode Island's
obligation with respect to the condemnation of a portion of the Company's
property in connection with the proposed River Relocation in Providence,
Rhode Island. In November 1987, the State of Rhode Island (the State)
condemned the property and paid the Company a condemnation award of
$2,600,000. Under the CPI/State Agreement, the Company purchased another
parcel of land (Disputed Parcel) from the State and was required to return
to the State a portion of the condemnation award.
In April 1988, the Company filed a petition in the Rhode Island Superior
Court (Superior Court) for an increased condemnation award alleging that the
award paid in 1987 was inadequate. In
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
2. Litigation with the State of Rhode Island and the City of Providence
(continued):
Condemnation case (continued):
January 1992, the Superior Court awarded the Company an additional
condemnation award of $401,000 plus interest from the date of the
condemnation. The Company had asserted in the Superior Court that it was
entitled to an additional condemnation award in excess of $6,000,000 plus
interest, and accordingly, in February 1992, the Company appealed the
decision of the Superior Court to the Rhode Island Supreme Court (Supreme
Court). In January 1994, the Supreme Court overturned the Superior Court
decision and returned the matter to the Superior Court for a retrial of the
case. The case was retried in 1995.
In May 1997, the Superior Court entered final judgment awarding condemnation
proceeds of $6,101,000 in favor of the Company and interest on the judgment
through that date of $4,552,000. The State filed an appeal with the Supreme
Court. On April 17, 1998, the Supreme Court entered an order affirming the
judgment of the Superior Court. Interest continues to accrue on the
judgment. The Supreme Court expressly stated that its decision was "without
prejudice to any party seeking to enforce any contractual obligations that
may be implicated by the enforcement of the Judgment."
The State filed several motions to prevent the Company from collecting the
judgment, which now exceeds $11,500,000 including interest. The Superior
Court denied the State's motions and ordered the State to pay the judgment
by August 14, 1998. The State filed an appeal with the Supreme Court.
In December 1998, the Supreme Court directed that this case, together with
other disputes between the Company, the State and the City of Providence, be
consolidated before a single justice of the Superior Court. This is more
fully discussed below.
Under the CPI/State Agreement, the Company may be required to return to the
State a portion of the award.
Property tax dispute with the City of Providence:
During 1995, the Company received notice from the City of Providence (the
City) of an increase in the assessed values of several of its parcels within
Capital Center. The increase in the assessed values was not the result of a
city-wide revaluation, pertained to 1995 and subsequent years, and resulted
in an annual increase in property taxes of $265,000. The Company filed
appeals for 1995 and 1996 but elected to make property tax payments as due
pending the outcome of the appeals. During the fourth quarter of 1996, the
City reduced the assessed value of one of the parcels, resulting in an
abatement of property taxes of $107,000 for 1995 and a reduction in the tax
of $115,000 for 1996 and subsequent years. The Company is unable to
determine if the remaining appeals will result in an abatement of the
property taxes for 1995 and subsequent years.
On August 18, 1997, the Company received from the City real property tax
bills for taxes assessed as of December 31, 1996 reflecting an unexpected
200% increase in the assessed values of a majority of the Company's parcels
within Capital Center, resulting in an annual
<PAGE>
increase in property tax expense of approximately $1,370,000. This increase
was not part of a city-wide revaluation.
On August 21, 1997, the Company received from the City real property tax
bills purporting to assess taxes for assessment years ending December 31,
1990 through December 31, 1995, based upon a $42,000,000 retroactive increase
in the assessed values of these same properties. These increases were not
part of a city-wide revaluation. The aggregate amount of such taxes as
billed was approximately $7,100,000, which amount did not include any
interest. The Company believes that the change in the assessed values is
related to the March 1997 Superior Court decision that determined a 1987
value for certain properties condemned by the State in 1987.
The Company believes that the increase in the assessed values for 1997 and
prior periods are illegal and on August 27, 1997 filed a lawsuit against the
City in the Superior Court.
On October 14, 1997, the Company received from the City real property tax
bills for the second quarter of 1997 indicating interest due on the 1996
assessment of $76,000 and interest due on the purported assessed taxes for
the years 1990 through 1995 of $3,300,000. The City asserts that the
parcels subject to the retroactive assessment were under-assessed in the
prior assessment periods.
On November 14, 1997, the Company filed appeals of the 1997 real property
tax bills.
On August 5, 1998, the Company received from the City real property tax bills
for taxes assessed as of December 31, 1997, which taxes are based upon the
assessed valuations as of December 31, 1996. The Company has appealed these
assessments and on October 16, 1998, filed a lawsuit against the City in the
Superior Court claiming that the increased assessments for 1998 are illegal.
In December 1998, the Supreme Court directed that the property tax disputes
with the City, title to the Disputed Parcel, and the condemnation case
previously discussed be heard by a single justice of the Superior Court.
The real property tax bills received by the Company in January 1999 from the
City indicate that there remains unpaid taxes of $11,645,000 and interest
thereon of $5,273,000 for assessment dates of December 31, 1990 through 1997.
Interest continues to accrue at the rate of 1 percent per month.
The Company is reporting for financial statement purposes (and paying)
property taxes based on the 1994 and 1995 assessed valuations while it
pursues its lawsuits and its administrative appeals. City of Providence
property tax expense reported on the accompanying consolidated statements
of income (loss) and retained earnings totaled $782,000 for both 1998 and
1997.
The Company, upon consultation with counsel, believes that its position with
respect to these assessments will be sustained; however, such proceedings can
be protracted and costly, and there can be no assurance that the Company will
be successful in having the 1997 and 1998 increases or the retroactive
assessments overturned. The failure of the Company to prevail in the
proceedings contesting the retroactive increase in assessed values would have
a material adverse effect on the Company's results of operations and
financial condition and, while the Company believes, upon consultation with
counsel, that the likelihood of such failure is remote,
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
2. Litigation with the State of Rhode Island and City of Providence
(continued):
Property tax dispute with the City of Providence (continued):
if a court were to require the Company to pay the retroactive assessments and
related interest, the Company could be forced to seek the protection of the
bankruptcy courts.
Dispute over ownership of Disputed Parcel:
Pursuant to the terms of an agreement dated January 1987 between the City and
the State (City/State Agreement), the City was obligated to convey the
Disputed Parcel to the State. As discussed above under the heading
"Condemnation Case," pursuant to the CPI/State Agreement, the State was
obligated to reconvey the Disputed Parcel to the Company. In 1989, the City
conveyed the Disputed Parcel to the State, and the State reconveyed the
Disputed Parcel to the Company. Contemporaneously, the Company purchased a
title insurance policy in the amount of $1,600,000 covering the Disputed
Parcel.
The City now claims that its execution of the City/State Agreement was
invalid, that its conveyance of the Disputed Parcel to the State was void,
and hence the City is the true owner of the Disputed Parcel. Moreover, in
December 1998, the City adopted an ordinance authorizing the Providence
Redevelopment Agency to condemn the Disputed Parcel. The Company is
contesting both the City's claim of ownership and the City's attempt to
condemn the Disputed Parcel.
The Company, upon consultation with counsel, believes that its ownership of
the Disputed Parcel will be affirmed and that the City will fail in any
attempt to condemn this parcel.
This dispute with the City is included in the matters being heard by the
single justice of the Superior Court as directed by the Supreme Court.
The Company's carrying value of the Disputed Parcel is $57,000. The Disputed
Parcel's assessed value was increased to $7,909,000 by the City as more fully
discussed above under the heading "Property Tax Dispute with the City of
Providence." The real property tax bill relating to the Disputed Parcel
received in January 1999 from the City indicates that the unpaid taxes and
interest total approximately $2,315,000 through that date.
Consolidated case:
In the consolidated case of all of the various disputes between the Company,
City and State before a single justice of the Superior Court, final briefs
under various Cross Motions for Summary Judgment are scheduled to be filed by
March 23, 1999. The Company expects a decision in these matters to be issued
shortly thereafter. Any decision is subject to appeal to the Supreme Court.
<PAGE>
3. Properties and equipment:
<TABLE>
<S> <C>
Properties on lease or held for lease:
Land and land improvements $ 4,206,000
Parking garage 2,500,000
6,706,000
Petroleum storage facilities:
Land 2,175,000
Buildings and structures 386,000
Tanks and equipment 4,203,000
6,764,000
Office equipment 89,000
13,559,000
Less accumulated depreciation:
Properties on lease or held for lease 675,000
Petroleum storage facilities 4,342,000
Office equipment 81,000
5,098,000
$ 8,461,000
</TABLE>
4. Note receivable, Providence and Worcester Railroad Company:
In 1988, in accordance with a plan of distribution, the Company transferred
the ownership of Providence and Worcester Railroad Company (Railroad) to
the Company's shareholders. The Company and Railroad have a common
controlling shareholder. As part of the plan, the Company received a
promissory note in the amount of $9,377,000 payable over a period of twenty
years with interest at 12% per year, (reduced to 10% in 1995) prepayable at
any time without penalty. In March 1998, Railroad prepaid the note in full.
5. Description of leasing arrangements:
As lessor:
At December 31, 1998, the Company had entered into long-term land leases for
six separate land parcels, three of which will not commence until
construction begins. One lease was amended in May 1997, extending the term
thereof from 2092 to 2142, with no change in the rents due under the original
term of the lease, and rents for the extended period to be calculated in
accordance with the formulas set forth for the original term. The Company
also leases various parcels of land for outdoor advertising purposes for
remaining terms of up to 30 years and for public parking purposes under
short-term cancelable leases.
For those leases with scheduled rent increases, the cumulative excess of
straight-line over contractual rentals (considering scheduled rent increases
over the 30 to 149 year terms of the leases) amounted to $11,651,000 through
December 31, 1998. Management has concluded that a portion of the excess of
straight-line over contractual rentals ($499,000 at December 31, 1998) is
realizable when payable over the terms of the leases.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
5. Description of leasing arrangements (continued):
As lessor (continued):
Minimum future contractual rental payments to be received from noncancellable
leases as of December 31, 1998 are:
<TABLE>
Year ending December 31,
<S> <C>
1999 $ 1,321,000
2000 1,411,000
2001 1,433,000
2002 1,464,000
2003 1,486,000
2004 to 2142 185,166,000
$192,281,000
</TABLE>
In the event of tenant default, the Company has the right to reclaim its
leased land together with any improvements thereon.
Several leases provide that the tenants reimburse the Company for property
taxes, which amounts are excluded from leasing revenues and expenses
applicable to leasing on the accompanying consolidated statements of income
(loss) and retained earnings. These reimbursements totaled $377,000
and $348,000 in 1998 and 1997, respectively.
As lessee:
The Company leases certain properties for outdoor advertising purposes under
noncancellable leases which expire at various dates to 2005. In most cases,
management expects that in the normal course of business, leases that expire
will be renewed or replaced by other leases. Rent expense (including the
Company's corporate offices through February 1998) amounted to $51,000 and
$96,000 in 1998 and 1997, respectively. Future minimum lease payments under
noncancellable leases at December 31, 1998 are as follows: 1999, $40,000;
2000, $26,000; 2001, $17,000; 2002, $12,000; 2003, $13,000 and thereafter,
$30,000.
6. Income taxes:
A reconciliation of the income tax provision as computed by applying the
United States income tax rate (34%) to income (loss) before income taxes is
as follows:
<TABLE>
<S> <C> <C>
1998 1997
Computed "expected" tax expense (benefit) $(114,000) $ 41,000
Increase (decrease) in taxes resulting from:
State income tax, net of Federal income
tax benefit (2,000) 11,000
Other (19,000) 12,000
$(135,000) $ 64,000
</TABLE>
<PAGE>
Deferred income taxes are recorded based upon differences between financial
statement and tax carrying amounts of assets and liabilities. The tax
effects of temporary differences which give rise to deferred tax assets and
liabilities at December 31, 1998 were as follows:
<TABLE>
<S> <C>
Gross deferred tax liabilities:
Property having a financial statement basis
in excess of its tax basis $1,195,000
Accrued rental income 199,000
1,394,000
Gross deferred tax assets, principally professional
fees in connection with condemnation case
(see Note 2) (221,000)
$1,173,000
</TABLE>
7. Petroleum storage facilities:
Environmental incident:
In 1994, a leak was discovered in a 25,000 barrel storage tank at the
Facilities which allowed the escape of a small amount of fuel oil. All
required notices were made to the appropriate environmental agency (the
Agency). To date, monitoring wells have shown no ground water contamination,
and the leak has been contained in the soil under the tank. The Company's
engineering consultants (the Consultants) are working with the Agency to
determine the extent of remediation. The Consultants proposed several
acceptable options and determined a range of estimated costs (including
professional fees) to be $40,000 (for the capping of the contaminated area)
to $405,000 (for the complete removal of the contaminated soil and its
off-site disposal). The Agency has advised the Company that it will accept
the capping of the contaminated area as an appropriate remediation measure,
subject to the placement of a notice on the Company's deed describing the
location of the contaminated area. The Company has provided for the estimated
costs to remediate the contaminated soil by reporting a liability of $40,000,
which amount is included in accrued expenses, other on the accompanying
consolidated balance sheet.
Arbitration award:
The Company's Facilities were leased to an operator (the Operator) from
October 1, 1991 through September 30, 1996. At the termination of the lease,
there were several disputes between the Operator and the Company as to
amounts owed by the Operator. In accordance with the provisions of the
lease, the matter was submitted to arbitration. In August 1997, the
arbitrator awarded the Company $184,000 with respect to all claims. The
Company recorded the arbitration award in the accompanying consolidated
statement of income and retained earnings for 1997 as follows:
<TABLE>
<S> <C>
Award $184,000
Application against receivable from Operator (42,000)
Amount payable to Operator for refund of 1996
property tax paid in advance (22,000)
$120,000
</TABLE>
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
7. Petroleum storage facilities (continued):
Wilkesbarre Pier:
The Wilkesbarre Pier (the Pier) is a deep-water pier in East Providence,
Rhode Island, which is integral to the operation of the Facilities. The Pier
and the Facilities are connected by two petroleum pipelines. In 1995, the
Company and Railroad (the owner of the Pier) entered into an agreement which,
among other provisions, gave the Company the right to acquire the Pier for $1.
Effective January 1, 1998, Railroad and a company which uses the Pier to off-
load product (Oil Company) entered into an agreement (the Agreement) whereby
Oil Company agreed to pay annual fees for five years, which range from
$185,000 to $235,000. Under the terms of the Agreement, the owner of the
Pier is not required to make any repairs to the Pier. The Agreement may be
terminated by Oil Company upon ninety (90) days' notice only in the event of
a failure of a component of the Pier that the owner does not repair.
In January 1998, the Company exercised its right and acquired the Pier; and
Railroad assigned its rights under the Agreement to the Company.
Included in revenues, petroleum storage facilities on the accompanying
consolidated statement of loss and retained earnings for 1998 is $185,000 of
fees paid by Oil Company.
Pipeline rights:
A trust for the benefit of the Company's controlling shareholder (the Trust)
was party to an agreement (the Pipeline Agreement) with respect to the use of
the two petroleum pipelines which connect the Pier to the Facilities. Since
February 1983, the Company and any operator of its Facilities have had the
right to use the pipelines for the transportation of petroleum products in
consideration for which the Company assumed all of the Trust's obligations for
repair and maintenance under the Pipeline Agreement and agreed to pay to the
Trust a fee based upon the number of barrels of product transported through
the pipelines. In 1997, the Company paid $20,000 to the Trust and was not
required to make any payment with respect to maintenance and other expenses.
In December 1997, the Trust entered into an agreement with the owner of the
two petroleum pipelines (Pipeline Company), under which Pipeline Company
released the Trust from liability in connection with the pipelines for any
costs incurred by Pipeline Company prior to the date of the agreement.
Further, under the agreement the Trust is responsible for its proportionate
share of any future repair or replacement to the pipelines in excess of
$25,000.
The Company had the option to purchase the rights of the Trust under the
Pipeline Agreement and exercised its option in January 1998, acquiring all
rights of the Trust for $50,000, which amount is included in properties and
equipment on the accompanying consolidated balance sheet.
<PAGE>
Current operations:
During 1997 and the first half of 1998, the Company purchased petroleum
products which it stored and resold at the Facilities and leased storage
tanks under short-term arrangements for the warehousing of petroleum products.
Effective September 1, 1998, the Company entered into a short-term
arrangement with a petroleum company (Petroleum Company) under which the
Company operates the entire Facilities for the Petroleum Company. The
Company currently receives a monthly fee of approximately $78,000 and is
responsible for labor, insurance, property taxes and other operating
expenses. The Company and the Petroleum Company are negotiating to extend
the current arrangement for an additional three-year period plus options to
extend on an annual basis.
8. Operating segment disclosures:
The Company operates in two segments: (1) Leasing and (2) Petroleum Storage
Facilities.
The Leasing segment consists of the long-term leasing of certain of its real
estate interests in downtown Providence, Rhode Island (to tenants that have
constructed buildings thereon) and locations along interstate and primary
highways in Rhode Island and Massachusetts (to a company which has
constructed outdoor advertising boards thereon). The Company anticipates
that the future development of its remaining properties will consist
primarily of long-term ground leases. Pending this development, the Company
leases these parcels and an adjacent parking garage for public parking purposes
under short-term cancelable leasing arrangements.
The Petroleum Storage Facilities segment presently consists of operating the
Facilities in East Providence under a short-term arrangement at a fixed
monthly rate for the Petroleum Company which stores and distributes petroleum
products. The Company and the Petroleum Company are negotiating to extend
the current arrangement for an additional three-year period plus options to
extend on an annual basis.
The principal difference between the two segments relates to the nature of
the operations. The tenants in the Leasing segment incur substantially all
of the development and operating costs of the asset constructed on the
Company's land, whereas the Company is responsible for the operating
and maintenance expenditures of the Facilities.
The Company makes decisions relative to the allocation of resources and
evaluates performance based on income before income taxes, excluding
interest and other income, and certain corporate expenses. The accounting
policies of the segments are the same as those described in the Summary of
Significant Accounting Policies (see Note 1).
There are no inter-segment revenues. The Company did not incur interest
expense during the two years ended December 31, 1998.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
8. Operating segment disclosures (continued):
The following financial information is used by the chief operating decision
maker for making operating decisions and assessing performance of the
Company's segments:
<TABLE>
Petroleum
Storage
Leasing Facilities Total
Year ended December 31, 1998:
<S> <C> <C> <C>
Revenues:
Contractual $1,861,000 $ 620,000 $2,481,000
Noncash, excess of straight-line
over contractual rentals 47,000 47,000
$1,908,000 $ 620,000 $2,528,000
Interest income $ --- $ --- $ ---
Depreciation $ 63,000 $ 276,000 $ 339,000
Income (loss) before income taxes $ 760,000 $ (328,000) $ 432,000
Assets $6,866,000 $2,562,000 $9,428,000
Expenditures for properties and
equipment $ --- $ 136,000 $ 136,000
Year ended December 31, 1997:
Revenues:
Contractual $1,999,000 $ 86,000 $2,085,000
Noncash, excess of straight-line
over contractual rentals 82,000 82,000
$2,081,000 $ 86,000 $2,167,000
Interest income $ --- $ --- $ ---
Depreciation $ 63,000 $ 292,000 $ 355,000
Income (loss) before income taxes $ 868,000 $ (447,000) $ 421,000
Assets $6,954,000 $3,014,000 $9,968,000
Expenditures for properties and
equipment $ --- $ --- $ ---
</TABLE>
<PAGE>
The following is a reconciliation of the segment information to the amounts
reported in the accompanying consolidated financial statements:
<TABLE>
<S> <C> <C>
1998 1997
Income:
Revenues for operating segments $ 2,528,000 $ 2,167,000
Interest income 265,000 444,000
Arbitration award 120,000
Total consolidated income $ 2,793,000 $ 2,731,000
Depreciation:
Depreciation for operating segments $ 339,000 $ 355,000
Unallocated corporate depreciation 8,000 8,000
Total consolidated depreciation $ 347,000 $ 363,000
Income (loss) before income taxes:
Income for operating segments $ 432,000 $ 421,000
Interest income 265,000 444,000
Arbitration award 120,000
Unallocated corporate expenses (1,033,000) (864,000)
Total consolidated income (loss)
before income taxes $ (336,000) $ 121,000
Assets:
Assets for operating segments $ 9,428,000 $ 9,968,000
Corporate cash and cash equivalents 4,632,000 568,000
Note and interest receivable, Providence
and Worcester Railroad Company 4,026,000
Income tax receivable 175,000 152,000
Arbitration award receivable 110,000
Other unallocated amounts 46,000 32,000
Total consolidated assets $14,281,000 $14,856,000
Expenditures for properties and equipment:
Expenditures for operating segments $ 136,000 $ ---
Unallocated corporate expenditures 8,000
Total consolidated expenditures $ 144,000 $ ---
</TABLE>
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
8. Operating segment disclosures (continued):
The following table sets forth the percentage of revenue from major customers
to total consolidated revenue:
<TABLE>
<S> <C> <C>
1998 1997
Leasing segment:
A 23.9% 15.3%
B 21.9 22.5
C 11.9 13.9
D 11.4 13.3
69.1 65.0
Petroleum Storage Facilities
segment (one customer) 18.7
Total 87.8% 65.0%
</TABLE>
9. Fair value of financial instruments:
The carrying amounts of the Company's financial instruments approximate their
fair values at December 31, 1998, due to the short maturities of cash and
cash equivalents, receivables and accounts payable and accrued expenses.
<PAGE>
DIRECTORS AND OFFICERS
OF CAPITAL PROPERTIES, INC.
<TABLE>
<S> <C>
Robert H. Eder, Director Chairman of Capital Properties, Inc.
Chairman
Ronald P. Chrzanowski, Director President of Capital Properties, Inc.
President
Barbara J. Dreyer, Treasurer Treasurer of Capital Properties, Inc.
Stephen J. Carlotti, Secretary Attorney, Hinckley, Allen & Snyder
Providence, Rhode Island
James H. Dodge, Director Chairman of Providence Energy
Corporation
Providence, Rhode Island
Harold J. Harris, Director President of Wm. H. Harris, Inc.
(Retailer)
Providence, Rhode Island
Henry S. Woodbridge, Jr., Director Consultant
Pomfret, Connecticut
TRANSFER AGENT INDEPENDENT AUDITORS
American Stock Transfer & Lefkowitz, Garfinkel, Champi &
& Trust Company DeRienzo P.C.
40 Wall Street 10 Weybosset Street
New York, New York 10005 Providence, Rhode Island 02903
</TABLE>
<PAGE>
MARKET FOR THE COMPANY'S COMMON STOCK
AND
RELATED SECURITY HOLDER MATTERS
Since June 1997, the Company's common stock has been traded on the American
Stock Exchange, symbol "CPI." Prior to that date, the Company's common stock
was traded on the Boston Stock Exchange. The following table shows the high
and low trading prices for the Company's common stock during the quarterly
periods indicated, as obtained from the American Stock Exchange and the
Boston Stock Exchange, together with dividends paid per share during such
periods. The prices have been restated to reflect the 3-for-1 stock split
in June 1997.
<TABLE>
Trading Prices Dividends
<S> <C> <C> <C>
High Low Paid
1998
1st Quarter 8 5/8 7 .00
2nd Quarter 8 7/8 8 1/8 .05
3rd Quarter 8 13/16 6 13/16 .00
4th Quarter 7 1/4 5 7/8 .05
1997
1st Quarter 4 1/4 2 7/8 .00
2nd Quarter 6 1/4 3 15/16 .05
3rd Quarter 6 5/8 5 1/2 .00
4th Quarter 6 7/8 6 .05
</TABLE>
At March 1, 1999 there were 457 holders of record of the Company's common
stock.
<PAGE>
EXHIBIT 21
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE ISSUER
(AS OF MARCH 1, 1999)
<TABLE>
<S> <C>
Subsidiary State of
Incorporation
Tri-State Displays, Inc. Rhode Island
Capital Terminal Company Rhode Island
</TABLE>
III-8
<PAGE>
EXHIBIT 22
MAP IN ANNUAL REPORT
The map in the Annual Report to Shareholders is a plan of a portion of
downtown Providence, Rhode Island, which indicates those parcels owned by
the Issuer in that area known as "Capital Center" and immediately adjacent
thereto. A legend contains the Parcel Number, the Parcel Size and the
Development on the Parcels as follows:
<TABLE>
<S> <C> <C>
Parcel No. Square Feet
CAPITAL PARCEL SIZE DEVELOPMENT ON PARCELS
CENTER
2 92,000
3S 48,000 13 Story Office Building -
235,000 gross square feet
3W 35,000
3E 24,000
4W 46,000
4E 22,000
5 54,000 8 Story Luxury Apartment Building -
454,000 gross square feet
6 386,000 (Land, 303,000; Air Rights, 83,000)
7A 76,000 360 Car Public Parking Garage
8 36,000 4 Story Office Building - 114,000
gross square feet
9 72,000
OUTSIDE
CAPITAL
CENTER
21 3,000
22 15,000
</TABLE>
(See President's Report, pages 2 and 3, for discussion of the development
on the parcels.)
<PAGE>
SIGNATURES
In accordance with Section 13 or15(d) of the Exchange Act, the Issuer
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CAPITAL PROPERTIES, INC.
By /s/ Ronald P. Chrzanowski
Ronald P. Chrzanowski
President and Principal
Executive Officer
Dated: March 23, 1999
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Issuer and in the capacities and on
the dates indicated.
<TABLE>
<S> <C>
Signature
/s/ Robert H. Eder March 24, 1999
Robert H. Eder
Chairman and Director
/s/Ronald P. Chrzanowski March 23, 1999
Ronald P. Chrzanowski
President and Director
(Principal Executive Officer)
/s/ Barbara J. Dreyer March 23, 1999
Barbara J. Dreyer
Treasurer, Principal Financial Officer
and Principal Accounting Officer
/s/ James H. Dodge March 23, 1999
James H. Dodge, Director
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,743
<SECURITIES> 0
<RECEIVABLES> 389
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 13,559
<DEPRECIATION> 5,098
<TOTAL-ASSETS> 14,281
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3,000
<OTHER-SE> 9,383
<TOTAL-LIABILITY-AND-EQUITY> 14,281
<SALES> 0
<TOTAL-REVENUES> 2,793
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (336)
<INCOME-TAX> (135)
<INCOME-CONTINUING> (201)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (201)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
