<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
-------------------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- ----------------
Commission file number 0-12946
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First Capital Income Properties, Ltd. - Series IX
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2255857
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 207-0020
-------------------------
Securities registered pursuant to Section 12(b)
of the Act: NONE
-------------------------
Securities registered pursuant to Section 12(g)
of the Act: Limited Partnership Units
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Documents incorporated by reference:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the Partnership's Prospectus dated May 24, 1983, included
in the Partnership's Registration Statement on Form S-11, is incorporated herein
by reference in Part IV of this report.
The Partnership's Report on Form 8-K dated April 6, 1994, reporting the sale of
the El Paso Natural Gas Building, located in El Paso, Texas, is incorporated
herein by reference in Part IV of this report.
The Partnership's Report on Form 8-K dated December 9, 1994, reporting the
disposition of the Fashion Atrium Building, located in New York, New York, is
incorporated herein by reference in Part IV of this report.
The Partnership's Report on Form 8-K dated January 15, 1993, reporting the
refinancing of the El Paso Natural Gas Building, located in El Paso, Texas, is
incorporated herein by reference in Part IV of this report.
The Partnership's Report on Form 8-K dated January 22, 1993, reporting the
purchase of an additional interest in South Orange Avenue Associates, is
incorporated herein by reference in Part IV of this report.
Exhibit Index - Page A-1
------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
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First Capital Income Properties, Ltd. - Series IX (the "Partnership") is a
limited partnership organized in February, 1983 under the Florida Uniform
Limited Partnership Act. The Partnership sold $100,000,000 in Limited
Partnership Units (the "Units") to the public from June, 1983 through October,
1983, pursuant to a Registration Statement on Form S-11 filed with the
Securities and Exchange Commission (Registration Statement No. 2-82357).
Capitalized terms used in this report have the same meaning as those terms have
in this Registration Statement.
The business of the Partnership is to invest primarily in existing, improved,
income-producing commercial real estate such as shopping centers and office
buildings, and, to a lesser extent, in other types of real estate. From July,
1984 through May, 1986, the Partnership made four real property investments and
purchased 50% interests in four joint ventures with Affiliated partnerships
which each made one real property investment. In 1992, the Partnership sold one
of its real property investments. In 1993, the Partnership effectively purchased
the remaining 50% interest in one of the four joint ventures. On June 10, 1994
the Partnership sold one of its real property interests, the Triangle Office
Building. During 1994 the Partnership, in addition, disposed of two of its joint
venture interests: 1) on April 6, 1994 with the sale of The El Paso Natural Gas
Building and 2) on December 9, 1994 with the disposition of The Fashion Atrium
Building (see Note 7 in Notes to Financial Statements for more information).
Property management services for certain of the Partnership's real estate
investments are provided by Affiliates of the Managing General Partner, for fees
calculated as a percentage of gross rents received from the properties.
The real estate business is highly competitive. The results of operations of the
Partnership depend upon the availability of suitable tenants, real estate market
conditions and general economic conditions which may impact the success of these
tenants. Properties owned by the Partnership frequently compete for tenants with
similar properties owned by others.
The Partnership directly or through joint ventures in which it has invested,
employs 48 people for on-site property maintenance and administration.
ITEM 2. PROPERTIES(a)(b)
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As of December 31, 1994, the Partnership owns directly or through a joint
venture, the following properties, all of which are owned in fee simple and,
except for Glendale Center Shopping Mall ("Glendale"), are unencumbered by a
mortgage. For complete details of the material terms of the encumbrance, refer
to Note 4 of Notes to Financial Statements.
<TABLE>
<CAPTION>
Net Leasable Number of
Property Name Location Sq. Footage Tenants (c)
---------------------------------------- ----------------------- ------------ -----------
<S> <C> <C> <C>
Shopping Centers:
-----------------
Richmond Plaza Shopping Center Augusta, Georgia 160,923 22(3)
Glendale Center Shopping Mall (d) Indianapolis, Indiana 649,253 60(2)
Shoppes of West Melbourne West Melbourne, Florida 148,083 15(3)
Office Buildings:
-----------------
Citrus Center (f/k/a Firstate Tower) (e) Orlando, Florida 258,321 47(2)
</TABLE>
2
<PAGE>
ITEM 2. PROPERTIES(a)(b) - Continued
------- ----------------------------
Notes:
------
(a) For a discussion of significant operating results and major capital
expenditures planned for the Partnership's properties refer to Item 7 on
pages 9-15.
(b) For Federal income tax purposes, the Partnership depreciates the portion of
the acquisition costs of its properties allocable to real property, and all
improvements thereafter, over useful lives ranging from 18 years to 40
years, utilizing either the Accelerated Cost Recovery System or straight-
line method. The Partnership's portion of real estate taxes for Glendale,
the Richmond Plaza Shopping Center ("Richmond"), the Shoppes of West
Melbourne ("Shoppes"), and the Citrus Center, were approximately $423,700,
$74,800, $97,300, and $395,000, respectively, for the year ended December
31, 1994.
(c) Represents the total number of tenants as well as the number of tenants, in
parenthesis, that individually occupy more than 10% of the net leasable
square footage of the properties.
(d) The Partnership owns a 50% joint venture interest in the joint venture
which owns this property.
(e) In 1993, the Partnership effectively purchased from an Affiliated
partnership the remaining 50% interest in this property.
The following table sets forth occupancy rates for the Partnership's properties
as of December 31 for each of the last five years:
<TABLE>
<CAPTION>
Property Name 1994 1993 1992 1991 1990
--------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Glendale Center
Shopping Mall 93% 87% 92% 90% 95%
Citrus Center 96% 81% 80% 84% 95%
Richmond Plaza 94% 92% 87% 85% 75%
Shoppes of West
Melbourne 93% 94% 98% 97% 100%
</TABLE>
3
<PAGE>
ITEM 2. PROPERTIES - Continued
------ -----------------------------
The amounts in the following table represent the Partnership's most significant
properties' average annual rentals per square foot for each of the last five
years ended December 31 and are computed by dividing each property's base rental
revenues by its average occupied square footage:
<TABLE>
<CAPTION>
Property Name 1994 1993 1992 1991 1990
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Glendale Center
Shopping Mall $ 5.55 $ 5.41 $ 5.97 $ 6.15 $ 6.10
Richmond Plaza
Shopping Center $ 5.92 $ 6.63 $ 4.90 $ 4.91 $ 6.33
Shoppes of West
Melbourne $ 7.84 $ 7.94 $ 8.12 $ 8.13 $ 7.99
Citrus Center $13.81 $12.98 $11.60 $10.68 $10.95
The following table summarizes the principal provisions of the leases for the
major tenants which occupy more than ten percent of the rentable square footage
at each of the Partnership's properties:
Percentage
of Net Renewal
Partnership's Leasable Options
Share of Expiration Square (Renewal
Rent Date of Footage Options/
for 1995 Lease Occupied Years)
------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
Glendale Center Shopping Mall
---------------------------
L. S. Ayres & Co.
(department store sales) $194,100 1/31/2001 37% 2 / 30
Lazarus
(department store sales) $128,700 1/31/2001 26% 2 / 30
Shoppes of West Melbourne
-------------------------
Marshall's
(discount department store) $140,100 (a) 15% 2 / 5
Phar-Mor (drugstore) $281,700 9/30/2004 23% 6 / 5
Service Merchandise
(department store sales) $312,500 2/28/2005 34% 6 / 5
Richmond Plaza
--------------
Kroger (supermarket) $191,300 12/31/2004 22% None
Ethan Allen (furniture store) $ 29,600 12/31/2004 14% 2 / 5
Service Merchandise
(department store sales) $255,000 12/28/2008 29% 6 / 5
</TABLE>
(a) See note (c) on next page
4
<PAGE>
ITEM 2. PROPERTIES(a)(b) - Continued
------ ----------------------------
<TABLE>
<CAPTION> Percentage
of Net Renewal
Partnership's Leasable Options
Share of Expiration Square (Renewal
Rent Date of Footage Options/
for 1995 Lease Occupied Years)
------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Citrus Center
-------------
Akerman, Senterfitt & Eidson
(legal services) $720,200 12/31/2005 17% None
Citrus Club (Dining/health club) $157,600 1/14/2002 10% None
</TABLE>
The following is a schedule of the Partnership's portion of lease expirations
(assuming no lease renewals) for the Partnership's properties through the year
ended December 31, 2004:
Base Rents
in Year of % of Total
Number of Expiration Base Rents
Year Tenants Square Feet (a) Collected (b)
---- --------- ----------- ----------- -------------
1995 18 46,300 $235,800 3.44%
1996 29 54,100 $409,000 6.54%
1997 15 63,200 $418,800 7.23%
1998 16 37,700 $320,400 5.98%
1999 11 45,600 $490,700 10.00%
2000 (c) 12 76,200 $420,400 9.99%
2001 7 408,500 $103,700 3.01%
2002 8 69,700 $226,900 7.39%
2003 6 15,400 $ 94,000 3.38%
2004 13 133,100 $638,800 42.01%
(a) Represents Partnership's portion of rents to be received, through the
date of expiration, on expiring leases each year.
(b) Represents the rents to be received on expiring leases as a percentage
of the total base rents expected to be collected for each year.
(c) Included in this year are amounts for a tenant whose lease expired on
1/31/95. On February 1, 1995 the tenant exercised one of its options to
renew their lease for a five year term. The Partnership and the tenant
negotiated the terms of a new lease on February 1, 1995. The new lease
expires January 31, 2000. The amounts shown in the above table and the
table on the preceding page are based on the terms of the new lease.
ITEM 3. LEGAL PROCEEDINGS
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(a & b) The Partnership and its properties are not a party to, nor the subject
of, any material pending legal proceedings, nor were any such proceedings
terminated during the quarter ended December 31, 1994. Ordinary routine
litigation incidental to the business which is not deemed material was
maintained during the quarter ended December 31, 1994.
ITEM 4.1 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------- ---------------------------------------------------
(a,b,c & d) None.
5
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER
------- --------------------------------------------------------------
MATTERS
-------
There has not been, nor is there expected to be, a public market for the Units.
As of March 1, 1995, there were 11,301 Holders of the Units.
7
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $14,267,900 $ 18,092,500 $ 15,898,200 $ 16,922,900 $ 16,788,800
Net income (loss) $19,429,400 $ (3,026,100) $ (244,500) $ 2,186,000 $ 1,965,500
Net income (loss)
allocated to Limited
Partners $19,160,300 $ (2,995,800) $ (287,200) $ 1,824,700 $ 1,462,600
Net income (loss)
allocated to Limited
Partners per Unit
(100,000 Units issued
and outstanding) $ 191.60 $ (29.96) $ (2.87) $ 18.25 $ 14.63
Investment in commercial
rental properties (net
of accumulated
depreciation and
amortization) $62,932,400 $102,238,200 $101,280,100 $110,137,900 $112,470,900
Number of real property
interests owned at
December 31 4 7 7 8 8
Total assets $78,938,800 $123,388,300 $114,608,400 $117,712,300 $120,151,900
Mortgage loan(s) payable $ 6,650,000 $ 60,212,600 $ 48,981,600 $ 50,584,600 $ 50,866,800
Cash Flow (as defined in
the Partnership
Agreement) (a) $ 4,869,100 $ 5,278,600 $ 4,803,200 $ 5,298,900 $ 5,028,800
Distributions to Limited
Partners per Unit
(100,000 Units issued
and outstanding) $ 100.50 None $ 5.62 $ 32.52 $ 50.00
Return of Capital to
Limited Partners per
Unit (100,000 Units
issued and outstanding)
(b) None None $ 5.62 $ 14.27 $ 35.37
-------------------------------------------------------------------------------------------
</TABLE>
Reconciliation of Cash Flow (as defined in the Partnership Agreement) to net
cash provided by operating activities:
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------------------------
1994 1993 1992 1991 1990
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Flow (as defined in
the Partnership
Agreement) (a) $4,869,100 $5,278,600 $4,803,200 $5,298,900 $5,028,800
Items of reconciliation:
Principal payments on
mortgage loans payable 359,200 1,176,200 326,900 282,200 254,700
Changes in assets and
liabilities:
Decrease (increase) in
current assets 496,500 750,200 (46,100) (361,500) (97,800)
(Decrease) increase in
current liabilities (399,200) 473,000 238,600 (237,100) 432,000
------------------------------------------------------------------------------------
Net cash provided by
operating activities $5,325,600 $7,678,000 $5,322,600 $4,982,500 $5,617,700
------------------------------------------------------------------------------------
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as all revenues from
operations (excluding tenant deposits, net proceeds from the sale,
disposition or financing of any Partnership properties and proceeds from
the refinancing of any Partnership indebtedness), minus all expenses
(including Operating Expenses, payments of principal and interest on any
Partnership indebtedness, and any reserves of revenues from operations
deemed reasonably necessary by the Managing General Partner), except
depreciation and amortization expenses, capital expenditures and the
General Partners' Partnership Management Fee.
(b) To the extent cash distributions exceed net income, such excess
distributions will be treated as a return of capital.
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 to A-6 and
the supplemental schedule on pages A-7 and A-8 in this report.
7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The ordinary business of the Partnership is expected to pass through three
phases: (i) Offering of Units and investment in properties; (ii) operation of
properties and (iii) sale or other disposition of properties.
The Partnership commenced the Offering of Units in June 1983 and terminated the
Offering in October 1983 upon the sale of 100,000 Units. From July 1984 through
May 1986 the Partnership purchased eight property investments, three of which
are 50% joint venture interests and one of which was a 50% joint venture
interest until 1993 when the Partnership effectively purchased the remaining
50% joint venture interest from an Affiliated partnership. During 1992, the
Partnership, in addition to being in the operation of properties phase, entered
the third phase of its life cycle with the sale of the Old National Bank Valley
Financial Center ("Old National Bank"). On April 6, 1994 the Partnership sold
its joint venture interest in the El Paso Natural Gas Building ("El Paso"). On
June 10, 1994 the Partnership sold one of its real property investments, the
Triangle Office Building ("Triangle"). On December 9, 1994 Fany Seventh Avenue
Associates ("FANY"), one of the Partnership's joint venture interests, disposed
of the Fashion Atrium Building ("Fashion Atrium") through an orderly conveyance
of title to the mortgage holder of Fashion Atrium within the context of a pre-
packaged Chapter 11 bankruptcy plan.
OPERATIONS
The statements of cash flows presented in the financial statements represent a
reconciliation of the changes in cash balances. Cash Flow, as defined in the
Partnership Agreement, is generally not equal to Partnership net income or cash
flows as determined under generally accepted accounting principles, since
certain items are treated differently under the Partnership Agreement than
under generally accepted accounting principles. Management believes that in
order to facilitate a clear understanding of the Partnership's operations, an
analysis of Cash Flow (as defined by the Partnership Agreement) should be
examined in conjunction with an analysis of net income or cash flows as defined
by generally accepted accounting principles. The amount of Cash Flow and the
return on Capital Investment are not indicative of actual distributions and
actual returns on Capital Investment.
<TABLE>
<CAPTION>
Comparative Cash Flow Results
For the Years Ended
-------------------------------------
12/31/94 12/31/93 12/31/92
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Amount of Cash Flow (as defined in the
Partnership Agreement) $ 4,869,100 $ 5,278,600 $ 4,803,200
Average Capital Investment $95,333,300 $100,000,000 $100,000,000
Return on Capital Investment (Cash Flow/
average Capital Investment) 5.11% 5.28% 4.80%
-------------------------------------------------------------------------------
</TABLE>
Comparisons of Cash Flow and operating results between the periods presented in
the table above are complicated by the sale of Old National Bank in 1992 and
the sales of Triangle and El Paso, and the disposition of Fashion Atrium within
the context of a pre-packaged Chapter 11 bankruptcy plan in 1994. Partnership
Cash Flow is generally expected to decline as real property interests are sold
since the Partnership no longer receives Cash Flow from such real property
interests. Also, during this phase, cash and cash equivalents increase as Sale
Proceeds are received and decrease as the Partnership utilizes such proceeds
for the purposes of distributions to Limited Partners or making improvements to
the Partnership's remaining properties. Prior to being utilized for such
purposes, these funds are invested in short-term interest bearing instruments.
Sale Proceeds are excluded from the determination of Cash Flow.
Cash Flow results for the year ended December 31, 1994 when compared to the
year ended December 31, 1993 decreased $409,500. The decrease was caused by
lower Cash Flow results at Glendale, El Paso, Fashion Atrium and Triangle of
$720,200, $714,800, $392,100 and $97,400, respectively. Partially offsetting
the decrease in Cash Flow results from 1993 to 1994 was: 1) higher Cash Flow
results at Citrus Center (formerly known as Firstate Tower), Richmond, and
Shoppes of $847,800, $169,400 and $68,300, respectively; 2) an increase in
interest income earned on short-term investments of $386,500 due to an increase
in funds available for investment, as a result of retaining a portion of the El
Paso sale proceeds, as well as to a trend in higher interest rates earned on
these types of investments and 3) a decrease in general and administrative
expenses of $48,400 due to a decrease in professional fees and printing and
mailing costs.
Comparisons of Cash Flow and operating results for the year ended December 31,
1993 when compared to the year ended December 31, 1992 are further complicated
by the purchase of the additional 50% interest in the joint venture which owns
the Citrus Center. While this transaction, effective January 1, 1993, explains
the significant increases in rental income, interest expense, repairs and
maintenance and property operating expenses of the Partnership, the overall
effect to the Partnership in 1993 compared to 1992 was to increase Cash Flow by
$512,600. Exclusively comparing the 100% operating results of the Citrus Center
in 1993 to 1992, Cash Flow of the property increased approximately $276,500
during 1993 primarily due to increased rental revenues and decreased property
operating and repair and maintenance expenses.
Aside from the effect of the acquisition of the additional interest in the
joint venture which owns the Citrus Center, Cash Flow results of the
Partnership for the year ended December 31, 1993 when compared to the year
ended December 31, 1992 remained stable. Significant factors which impacted
Cash Flow results were: 1) increased debt service payments of approximately
$927,700 under the new mortgage loan collateralized by El Paso; 2) decreased
rental revenues at Fashion Atrium, Old National Bank, due to its sale, Triangle
and Shoppes; 3) increased rental revenues at Glendale, Richmond and El Paso; 4)
lower financing costs on all of the Partnership's variable rate mortgage loans
due to a decline in lending rates and lower financing costs on the mortgage
loan collateralized by Richmond due to its repayment in January, 1993; 5)
decreased real estate taxes at Glendale, Triangle and Fashion Atrium; 6)
increased interest income earned on short-term investments due to an increase
in the funds available for investment and 7) increased general and
administrative expenses due to an increase in the overhead expenses of the
Partnership and increased expenses charged in connection with short-term
investments.
Rental revenues for the Citrus Center for the years ended December 31, 1994,
1993 and 1992 were approximately $4,261,500, $4,085,300 and $4,035,500,
respectively. The Partnership's share of these rental revenues was 100% in 1994
and 1993 and 50% in 1992. Rental revenues increased in 1994 when compared to
1993 primarily due to an increase in base rental rates charged to new and
renewing tenants as well as to an increase in the average annual occupancy rate
from 81% in 1993 to 94% in 1994. Also contributing to the increase in Cash Flow
results for this property from 1993 to 1994 was a decrease in debt service
payments of $692,200 as a result of the repayment of the mortgage loan
collateralizing the property on May 27, 1994, which included a prepayment
penalty of approximately $237,300. The increase in rental revenues for 1993
when compared to 1992 was due to the increase in the average annual occupancy
rate which was 81% in 1993 and 77% in 1992, and to a lesser extent, the partial
recovery of tenant receivables which were previously written off as
uncollectible.
Rental revenues for Fashion Atrium for the years ended December 31, 1994, 1993,
and 1992 were approximately $1,676,800, $2,476,300, and $3,061,500,
respectively. Average annual occupancy rates for 1994, 1993 and 1992 were 72%,
77% and 83%, respectively. Fashion Atrium's tenant base has experienced
significant changes over the last several years as a result of the economic
downturn in New York City, particularly within the fashion garment industry.
Rental revenues decreased over the period from 1992 to 1994 due to a decline in
the average effective annual rental rates charged on new tenant leases and on
tenant renewals resulting from increased competition from other properties.
Partially offsetting the decrease in rental revenues for this property from
1993 to 1994 was: 1) a decrease in property operating expenses of $135,000 due
primarily to the decrease in occupancy and 2) a decrease of $274,100 in debt
service charged to Cash Flow for the year ended December 31, 1994 due to the
General Partners' decision to discontinue regularly scheduled interest payments
after May 31, 1994. The average interest rate was 5.3% on the variable rate
loan through the five months ended May 31, 1994. Due to a decline in mortgage
lending rates, the Partnership incurred a decrease in financing costs in 1993
when compared to 1992 on the variable rate loan collateralized by Fashion
Atrium. The average rates on this loan were 5.1% and 4.51%, in 1992 and 1993,
respectively.
Rental revenues for Triangle for the years ended December 31, 1994, 1993 and
1992 were approximately $367,600, $879,700 and $958,900, respectively. The
decrease in rental revenues, operating expenses and debt service in 1994 when
compared to 1993 was due to the sale of the property on June 10, 1994. Rental
revenues decreased from 1992 to 1993 primarily due to a highly competitive
Atlanta, Georgia commercial real estate market. Due to the oversupply of
Atlanta office buildings comparable to this property, and the area's market
vacancy rate at the time of approximately 17%, rental rates for new and
renewing tenants were adjusted downward and rental concessions were granted in
response to these market pressures. The average annual occupancy rate at
Triangle was 84% in 1992 and 85% in 1993. Partially offsetting the decrease in
rental revenues for this property for 1993 when compared to 1992 was: 1) a
decrease in real estate taxes due to the receipt of real estate tax refunds in
1993 for 1990 through 1992 of approximately $90,300 and 2) a decrease in
repairs and maintenance.
Rental revenues for Shoppes for the years ended December 31, 1994, 1993 and
1992 were approximately $1,287,900, $1,311,600 and $1,353,600, respectively.
The decrease in rental revenues from 1994 to 1992 was primarily due to the
decrease in the average annual occupancy rate. The average annual occupancy
rate at Shoppes was 93% in 1994, 98% in 1993 and 97% in 1992. Also affecting
Cash Flow from 1993 to 1994 was an increase in property operating expenses of
$23,900 primarily due to an increase in professional fees and an increase in
repairs and maintenance of $10,800. Completely offsetting the decrease in
rental revenues and the increases in 1994 expenses mentioned above was: 1) a
decrease of $104,800 in debt service payments due to the repayment of the loan
collateralized by Shoppes in the amount of $4,000,000 on June 6, 1994 and 2) a
decrease in real estate tax expense resulting from a decrease in the property's
assessed value. Due to a decline in mortgage lending rates, the Partnership
incurred a decrease in financing costs from 1992 to 1993 on the variable rate
mortgage loan collateralized by Shoppes. The average rate decreased from 5.1%
in 1992 to 4.5% in 1993.
Rental revenues for Glendale for the years ended December 31, 1994, 1993 and
1992 were approximately $3,532,000, $4,038,800, and $3,738,200, respectively.
The factors which contributed to the decrease in rental revenues from 1993 to
1994 were: 1) a decrease in real estate tax and operating expense escalation
income of $409,700 as a result of a 1994 adjustment of previously billed 1993
amounts which had been overestimated; 2) the receipt by the Partnership in 1993
of $81,000 from a tenant relating to a lease settlement and 3) a slight
decrease in the average annual occupancy rate from 88% in 1993 to 87% in 1994.
Additional factors contributing to the decrease in Cash Flow results for this
property for the year ended December 31, 1994 were: 1) an increase in operating
expenses of $62,600 primarily due to an increase in promotional expenditures in
order to attract new tenants and 2) an increase
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
in debt service of $159,000 due to a slightly higher variable interest rate and
loan extension costs incurred during the year. Despite a decrease in the
average annual occupancy rate from 92% in 1992 to 88% in 1993, rental revenues
increased from 1992 to 1993 due to the receipt in 1993 of prior years' tenant
expense reimbursements and the receipt of the $81,000 lease settlement payment
mentioned above. The decrease in real estate tax expense from 1992 to 1993 was
due to the fact that the 1992 real tax expense reflected an increase in the tax
rate imposed by the local taxing authority and the recognition of additional
real estate tax expense in connection with the outcome of the Partnership's
protest of the 1989 and 1990 tax assessments. A portion of these increased
expenses had been offset by tenant reimbursements, whereby certain tenants were
charged a pro rata amount of the costs based upon their individual lease
agreements. The decrease in debt service from 1992 to 1993 was due to a
decrease in the variable interest rate. The average annual interest rate
decreased from 5.2% in 1992 to 4.73% in 1993.
Rental revenues for Richmond for the years ended December 31, 1994, 1993 and
1992 were approximately $1,222,500, $1,082,900, and $801,600, respectively. The
increase in rental revenues from 1993 to 1994 was due to an increase in the
average annual occupancy rate. The average annual occupancy rate for 1994, 1993
and 1992 was 92%, 89% and 85%, respectively. Also contributing to the increase
in Cash Flow results for this property from 1993 to 1994 was decreased debt
service payments of $15,700 resulting from the repayment of the mortgage loan
collateraling Richmond in the amount of $2,959,800 in January, 1993. The
increase in rental revenues from 1992 to 1993 was due to the increase in the
average annual occupancy rate as well as the commencement of a major tenant's
lease payments in September of 1992.
Rental revenues at El Paso for the years ended December 31, 1994, 1993 and 1992
were approximately $1,003,400, $3,688,100 and $3,512,500, respectively. The
decrease in rental revenues in 1994 when compared to 1993 was due to the sale
of the property on April 6, 1994. The increase in rental revenues from 1992 to
1993 was due to the annual 5% rent increase allowed under the net lease
agreement to be charged to the sole tenant. Partially offsetting the increase
in Cash Flow for 1993 when compared to 1992 was an increase in debt service
payments of approximately $927,700 resulting from the terms of a new loan
secured in 1993.
Rental revenues at Old National Bank for the year ended December 31, 1992 were
approximately $98,600.
To increase occupancy levels at the Partnership's properties, the General
Partner, through its Affiliated asset and property management groups, continues
to take the necessary actions deemed appropriate for the properties discussed
above. Some of these actions include: 1) implementation of marketing programs,
including hiring of third-party leasing agents or providing on-site leasing
personnel, advertising, direct mail campaigns and development of building
brochures; 2) early renewal of existing tenants and addressing any expansion
needs these tenants may have; 3) promotion of local broker events and
networking with local brokers; 4) networking with national level retailers; 5)
cold-calling other businesses and tenants in the market area; and 6) providing
rental concessions or competitively pricing rental rates depending on market
conditions.
The rate of inflation has remained relatively stable during the years under
comparison and has had a minimal impact on the operating results of the
Partnership. The nature of various tenant lease clauses protects the
Partnership to some extent from increases in the rate of inflation. Certain of
the lease clauses provide for: (1) rent increases based on the Consumer Price
Index or graduated rental increases; (2) percentage rentals for which the
Partnership receives as additional rent a percentage of a tenant's sales over
predetermined breakeven amounts; and (3) total or partial tenant reimbursement
of property operating expenses (e.g., common area maintenance, real estate
taxes, etc.).
LIQUIDITY AND CAPITAL RESOURCES
The decrease in the Partnership's cash position as of December 31, 1994 when
compared to December 31, 1993 was primarily due to the repayment of mortgage
loans collateralized by Citrus Center and Shoppes and the partial principal
paydown on the mortgage loan collateralized by Glendale, payments made for
capital and tenant improvements and the reinstatement of Cash Flow
distributions paid to Partners. The liquid assets of the Partnership as of
December 31, 1994, were comprised of working capital reserves and undistributed
Cash Flow.
Net cash provided by operating activities decreased from $7,678,000 for the
year ended December 31, 1993 to $5,325,600 for the year ended December 31,
1994. This decrease was primarily due to the decrease in operating income for
1994 when compared to 1993 as well as to a decrease in Cash Flow as discussed
above and the timing of the collection of rental revenues and the payment of
certain Partnership expenses.
Net cash (used for) provided by investing activities changed from ($5,028,200)
for the year ended December 31, 1993 to $40,655,900 for the year ended December
31, 1994. This change was primarily due to proceeds received of $43,267,700 and
$1,111,400, respectively from the sales of El Paso and Triangle, and the
maturity of the restricted certificate of deposit established in connection
with the El Paso refinancing completed in 1993, partially offset by an increase
in payments for capital and tenant improvements.
On April 6, 1994 First Capital Kayser Center, a joint venture in which the
Partnership and an Affiliated partnership each had a 50% interest, sold its
interest in El Paso, located in El Paso, Texas, for a sale price of
$88,450,000. The Partnership's share of sale proceeds was approximately
$20,974,800, net of selling expenses, including a mortgage prepayment penalty,
and the payoff of the mortgage loan collateralized by the property. The
Partnership distributed $8,000,000 of these proceeds to the Limited Partners in
May 1994 and the remainder was added to working capital. The Partnership used
approximately $9,731,000 of the amount added to working capital to repay the
mortgage loan collateralized by the Citrus Center, including a prepayment
penalty of approximately $237,300, and $4,000,000 to repay the mortgage loan
collateralized by Shoppes, which matured in June 1994.
On June 10, 1994 the Partnership sold Triangle, located in Atlanta, Georgia,
for a sale price of $3,420,000. The Partnership incurred selling expenses of
approximately $89,400. Proceeds received from the sale were approximately
$1,111,800, net of selling expenses and the assumption by the buyer of the
mortgage loan collateralizing the property. The proceeds from this sale were
added to the Partnership's working capital.
During the year ended December 31, 1994, the Partnership spent approximately
$3,892,500 for capital and tenant improvements and has budgeted to spend
approximately $3,084,000 during 1995. Of the 1995 budgeted amount,
approximately $1,392,000, $393,000, $489,000 and $810,000 relate to anticipated
capital and tenant improvements at Citrus Center, Richmond, Shoppes, and
Glendale, respectively, which the Managing General Partner believes are
necessary to preserve the physical integrity and heighten the image of these
properties in their respective marketplaces, as well as to improve occupancy
levels and maintain rental rates in very competitive markets. Generally,
working capital reserves are maintained to fund these types of expenditures.
Net cash provided by (used for) financing activities changed from $5,701,400
for the year ended December 31, 1993 to ($50,057,000) for the year ended
December 31, 1994. This change was due to: 1) the payoff of mortgage loans
collateralized by El Paso, Citrus Center and Shoppes, including prepayment
penalties; 2) the partial principal paydowns on the mortgage loan
collateralized by Glendale and 3) the distribution of Sale Proceeds to Partners
in 1994 from El Paso.
The maturity date of the mortgage loan collateralized by Glendale had
previously been extended with the existing lender until October 3, 1994. On
October 27, 1994, the joint venture which owns Glendale made a $4,300,000
principal payment to this lender, of which the Partnership's share was
$2,150,000. This principal payment extended the loan's maturity to November 30,
1994. On November 21, 1994, the joint venture made an additional principal
payment of $3,700,000, of which the Partnership's share was $1,850,000, which
further extended the maturity date of the loan to January 31, 1995. A fee of
$50,000 was paid by the joint venture for each loan extension. On January 6,
1995, the Partnership obtained a new mortgage loan in the amount of $17,000,000
collateralizing Glendale. The existing loan was paid off in full with the
proceeds of the new loan. The Partnership's 50% share of the $8,000,000
principal payments were funded by working capital.
The General Partner was unable to reach a mutual resolution with the mortgage
holder regarding the restructuring of the loan for Fashion Atrium and as a
result, in April 1994, the Partnership received a notice of default from the
mortgage holder. On August 25, 1994, FANY Seventh Avenue Associates ("FANY"),
the joint venture which owns Fashion Atrium and in which the Partnership has a
50% interest, executed a Cash Collateral Use Agreement (the "Agreement") with
the mortgage holder. Upon execution of the Agreement, FANY transferred
accumulated cash flow through July 31, 1994 to a safekeeping account under sole
control of the mortgage holder. In addition, the mortgage holder made a
protective advance to FANY for the payment of accrued real estate taxes plus
penalties and interest. FANY assisted in the orderly conveyance of title of the
property to the mortgage holder within the context of a pre-packaged Chapter 11
bankruptcy plan (the "Bankruptcy") filed on October 14, 1994 in the United
States Bankruptcy Court for the Southern District of New York. A confirmation
hearing on the pre-packaged plan occurred on November 22, 1994. The conveyance
of title of the property occurred pursuant to the terms and conditions of a
confirmed plan on December 9, 1994. Upon the transfer of title, the assets and
liabilities of FANY were conveyed to the mortgage holder.
On May 27, 1994 the Partnership repaid the balance of the mortgage loan
collaterized by the Citrus Center in the amount of approximately $9,731,000,
including a prepayment penalty of approximately $237,300.
The Partnership repaid the mortgage loan collateralized by Shoppes in the
amount of $4,000,000 on June 6, 1994, its scheduled maturity date.
The Managing General Partner continues to take a very conservative approach to
projections of future rental income and will continue to maintain higher levels
of cash reserves for the Partnership. The higher level of cash reserves is
needed because of the Partnership's cash requirements during the next several
years, which may be quite substantial due to the anticipated capital and tenant
improvements necessary to be made to the Partnership's properties. As a result
of this, the Partnership continues to reserve amounts from Cash Flow to
supplement working capital reserves and has retained a portion of the Sales
Proceeds as previously discussed. For the year ended December 31, 1994, Cash
Flow withheld to supplement working capital reserves was approximately
$2,591,300. The Managing General Partner believes that the Partnership's
current cash position and any Cash Flow withheld in future periods, will be
sufficient to cover budgeted expenditures for 1995 and any other liquidity
requirements which may be foreseen.
Distributions to Limited Partners for 1994 (exclusive of the $8,000,000
distribution related to the sale of El Paso) were made at an annualized rate of
2.15% on average Capital Investment. Cash distributions are made 60 days after
the quarter-end. The amount of future distributions to the Limited Partners
will ultimately be dependent upon the performance of the Partnership's
investments as well as the amount of Cash Flow retained for future cash
requirements. Therefore, there can be no assurance of the availability or the
amount of Cash Flow for distribution to investors.
9
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------- --------------------------------------------
The response to this item is submitted as a separate section of this report. See
page A-1 "Index of Financial Statements, Schedule and Exhibits."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
------- -----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
10
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------- --------------------------------------------------
(a) DIRECTORS
---------
The Partnership has no directors. First Capital Financial Corporation
("FCFC") is the Managing General Partner. The directors of FCFC, as of
March 30, 1995, are shown in the table below. Directors serve for one year
or until their successors are elected. The next annual meeting of FCFC will
be held in May, 1995.
Name Office
----- ------
Samuel Zell..........................................Chairman of the Board
Douglas Crocker II...................................Director
Sheli Z. Rosenberg...................................Director
Sanford Shkolnik.....................................Director
Samuel Zell, 53, has been a Director of the Managing General Partner since
1983 (Chairman of the Board since December 1985); and is Chairman of the
Board of Great American Management and Investment, Inc. ("Great American").
Mr. Zell is also Chairman of the Board of Equity Financial and Management
Company ("EFMC") and Equity Group Investments, Inc., and is a trustee and
beneficiary of a general partner of Equity Holding Limited, an Illinois
Limited Partnership, a privately owned investment partnership. He is also
Chairman of the Board of Directors of Itel Corporation, Broadway Stores,
Inc., Falcon Building Products, Inc. and American Classic Voyages Co. He is
Chairman of the Board of Trustees of Equity Residential Properties Trust.
He is a director of Jacor Communications, Inc., Sealy Corporation and The
Vigoro Corporation, Chairman of the Board of Directors and Chief Executive
Officer of Capsure Holdings Corp. and Manufactured Home Communities, Inc.
and Co-Chairman of the Board of Revco D.S., Inc. Mr. Zell was President of
Madison Management Group, Inc. ("Madison") prior to October 4, 1991.
Madison filed for a petition under the Federal bankruptcy laws on November
8, 1991.
Douglas Crocker II, 54, has been President and Chief Executive Officer
since December, 1992 and a Director since January, 1993 of the Managing
General Partner. Mr. Crocker has been an Executive Vice President of EFMC
since November, 1992. Mr. Crocker has been President and Chief Executive
Officer of Equity Residential Properties Trust since March 31, 1993. He was
President of Republic Savings Bank, F.S.B. ("Republic") from 1989 to June,
1992 at which time the Resolution Trust Company took control of Republic.
Sheli Z. Rosenberg, 53, was President and Chief Executive Officer of the
Managing General Partner from December, 1990 to December, 1992 and has been
a Director of the Managing General Partner since September, 1983; was
Executive Vice President and General Counsel for EFMC from October, 1980 to
November, 1994; has been President and Chief Executive Officer of EFMC and
Equity Group Investments, Inc. since November, 1994; has been a Director of
Great American since June, 1984 and is a director of various subsidiaries
of Great American. She is also a director of Itel Corporation, Capsure
Holdings Corp., American Classic Voyages Co., Falcon Building Products,
Inc., Jacor Communications, Inc., Revco D.S., Inc. and The Vigoro
Corporation. She was Chairman of the Board from January, 1994 to September,
1994; and has been Co-Chairman of the Board since September, 1994 of CFI
Industries, Inc., She is also a trustee of Equity Residential Properties
Trust. Ms. Rosenberg is Chairman of the Board of Rosenberg & Liebentritt,
P.C., counsel to the Partnership, the Managing General Partner and certain
of their Affiliates. Ms. Rosenberg was Vice President of Madison prior to
October 4, 1991. Madison filed
11
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - Continued
-------- --------------------------------------------------
(a) DIRECTORS (continued)
---------
for a petition under the Federal bankruptcy laws on November 8, 1991. She
has been Vice President of First Capital Benefit Administrators, Inc.
("Benefit Administrators") since July 22, 1987. Benefit Administrators
filed for a petition under the Federal Bankruptcy laws on January 3, 1995.
Sanford Shkolnik, 56, has been a Director of the Managing General Partner
since December, 1985. Mr. Shkolnik has been Executive Vice President of
EFMC since 1976. He is Chairman of the Board and Chief Executive Officer of
SC Management, Inc., which is General Partner of Equity Properties and
Development Limited Partnership, a nationally ranked shopping center
company. He is also a director of Broadway Stores, Inc.
(b,c & e) EXECUTIVE OFFICERS
------------------
The Partnership does not have any executive officers. The executive
officers of the Managing General Partner as of March 30, 1995 are shown in
the table. All officers are elected to serve for one year or until their
successors are elected and qualified.
Name Office
---- ------
Douglas Crocker II.................President and Chief Executive Officer
Arthur A. Greenberg................Senior Vice President
Norman M. Field....................Vice President - Finance and Treasurer
PRESIDENT AND CEO - See Table of Directors above.
Arthur A. Greenberg, 53, has been Senior Vice President of the Managing
General Partner since August, 1986. Mr. Greenberg was Executive Vice
President and Chief Financial Officer of Great American from December, 1986
to March, 1995. Mr. Greenberg also is a Director and Executive Vice
President/Treasurer of EFMC since 1971, and President of Greenberg &
Pociask, Ltd. He is Senior Vice President since 1989 and Treasurer since
1990 of Capsure Holdings Corp. Mr. Greenberg is a director of American
Classic Voyages Co., The Vigoro Corporation, and Chairman of the Board of
Firstate Financial A Savings Bank. Mr. Greenberg was Vice President of
Madison prior to October 4, 1991. Madison filed for a petition under the
Federal bankruptcy laws on November 8, 1991.
Norman M. Field, 46, has been Vice President and Treasurer of the Managing
General Partner since February, 1984, and also served as Vice President and
Treasurer of Great American from July, 1983 until March, 1995. Mr. Field
has been treasurer of Benefit Administrators since July 22, 1987. Benefit
Administrators filed for a petition under the Federal Bankruptcy laws on
January 3, 1995. He has also been Chief Financial Officer of Equality
Specialties, Inc., a subsidiary of Great American, since August, 1994.
(d) FAMILY RELATIONSHIPS
--------------------
There are no family relationships among any of the foregoing officers.
(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
----------------------------------------
There are no involvements in certain legal proceedings among any of
the foregoing officers.
12
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
-------- ----------------------
(a, b, c & d) As stated in Item 10, the Partnership has no officers or
directors. Neither the Managing General Partner, nor any director or officer of
the Managing General Partner, received any direct remuneration from the
Partnership during the year ended December 31, 1993. However, Affiliates of the
Managing General Partner do compensate its directors and officers.
(e) None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------- --------------------------------------------------------------
(a) As of March 1, 1995, no person owned of record or was known by the
Partnership to own beneficially more than 5% of the Partnership's 100,000 Units
then outstanding.
(b) The Partnership has no directors or executive officers. As of March 1, 1995
the executive officers and directors of First Capital Financial Corporation, the
Managing General Partner, did not own any Units.
(c) None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------- ----------------------------------------------
(a) Affiliates of the Managing General Partner, provided leasing, property
management and supervisory services to the Partnership. Compensation for these
property management services may not exceed the lesser of the compensation
customarily charged in arm's-length transactions by persons rendering similar
services or 6% of the gross receipts from the property being managed plus normal
out-of-pocket expenses where the Managing General Partner or Affiliate provides
leasing, re-leasing and leasing-related services, or 3% of gross receipts where
the Managing General Partner or Affiliate does not perform leasing, re-leasing
and leasing-related services for a particular property. In the event the
Partnership leases properties on a long-term net basis (10 years or more), the
maximum property management fee from such leases shall be 1% of the gross
revenues from such properties, except that the Partnership may also pay the
General Partners or their Affiliates a one time initial leasing fee of 3% of the
gross revenues on each lease payable over the first five full years of the
original term of the lease. For the year ended December 31, 1994, these
Affiliates were entitled to leasing, supervisory and property management fees of
approximately $654,900. In addition, other Affiliates of the Managing General
Partner were entitled to receive $221,100 as reimbursements for insurance,
personnel and other miscellaneous services. Compensation for these services are
on terms which are fair, reasonable and no less favorable to the Partnership
than reasonably could be obtained from unaffiliated persons. Of these amounts, a
total of approximately $76,700 was due to Affiliates as of December 31, 1994.
As of December 31, 1994, the Partnership owed $48,500 to the Managing General
Partner for a real estate commission earned in connection with the sale of one
Partnership property. This commission has been accrued but not paid. The total
of all real estate commissions incurred in connection with the sale of the
Partnership's properties shall not exceed the lesser of the compensation
customarily charged in arm's-length transactions or 6% of the sales price of the
property. Under the terms of the Partnership Agreement, this fee will not be
paid until such time as Limited Partners have received cumulative distributions
of Sale or Refinancing Proceeds equal to 100% of their Original Capital
Contribution, plus a cumulative return (including all Cash Flow which has been
distributed to the Limited Partners) of 6% simple interest per annum on their
Capital Investment from the initial date of investment.
Firstate Financial A Savings Bank ("Firstate"), an Affiliate of the Managing
General Partner, is obligated to the Partnership under a lease of office space
at Citrus Center. During the year ended December 31, 1994, Firstate paid
approximately $232,600 in rent to the Partnership.
13
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Continued
-------- ----------------------------------------------------------
Subsequent to October 31, 1983, the Termination of the Offering, the General
Partners are entitled to 10% of Cash Flow as a Partnership Management Fee. In
accordance with the Partnership Agreement, Net Profits (exclusive of Net Profits
from the sale or disposition of a Partnership property) shall be allocated to
the General Partners in an amount equal to the greater of the General Partners'
Partnership Management Fee or 1% of such Net Profits and the balance, if any, to
the Unit Holders. For the year ended December 31, 1994, the General Partners
were paid a Partnership Management Fee and were allocated Net Profits from
operations of approximately $227,800.
Net Losses from the sale or disposition of a Partnership property, including
provisions for value impairment, shall be allocated: first, to the General
Partners to the extent of the aggregate balance in their capital accounts;
second, to the Unit Holders and among them (in the ratio which their respective
capital account balances bear to the aggregate of all capital account balances
of the Unit Holders) until the balance in their capital accounts shall be
reduced to zero; and third, the balance, if any, 99% to the Unit Holders and 1%
to the General Partners. Notwithstanding in all events there shall be allocated
to the General Partners not less than 1% of the Net Losses from the sale or
disposition of a Partnership property. For the year ended December 31, 1994, the
General Partners were allocated Net Losses from extraordinary loss on early
extinguishment of debt of approximately $17,000 and Net Profits from the sale or
disposition of Partnership properties of approximately $58,300.
(b) Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to the
Partnership, the Managing General Partner and certain of their Affiliates. Sheli
Z. Rosenberg, President and Chief Executive Officer of the Managing General
Partner from December 1990 to December 1992 and a director of the Managing
General Partner since September 1983, is a principal of this firm. Compensation
for these services are on terms which are fair, reasonable and no less favorable
to the Partnership than reasonably could have been obtained from unaffiliated
persons.
(c) No management person is indebted to the Partnership.
(d) None.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------- ---------------------------------------------------------------
(a, c & d) (1, 2 & 3) See Index of Financial Statements, Schedule and Exhibits
on page A-1 of Form 10-K.
(b) Reports on Form 8-K:
A report on Form 8-K dated December 9, 1994, was filed reporting the
disposition of the Fashion Atrium Building, located in New York, New York.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES IX
BY: FIRST CAPITAL FINANCIAL CORPORATION
MANAGING GENERAL PARTNER
Dated: March 30, 1995 By: /s/ DOUGLAS CROCKER II
------------------ ---------------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ SAMUEL ZELL March 30, 1995 Chairman of the Board and
-------------------------- -------------- Director of the Managing
SAMUEL ZELL General Partner
/s/ DOUGLAS CROCKER II March 30, 1995 President, Chief Executive
-------------------------- -------------- Officer and Director of the
DOUGLAS CROCKER II Managing General Partner
/s/ SHELI Z. ROSENBERG March 30, 1995 Director of the Managing
-------------------------- -------------- General Partner
SHELI Z. ROSENBERG
/s/ SANFORD SHKOLNIK March 30, 1995 Director of the Managing
-------------------------- -------------- General Partner
SANFORD SHKOLNIK
/s/ NORMAN M. FIELD March 30, 1995 Vice President - Finance and
-------------------------- -------------- Treasurer
NORMAN M. FIELD
16
<PAGE>
INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
<TABLE>
<CAPTION>
Pages
---------------
<S> <C>
Independent Auditors' Report A - 2
Balance Sheets at December 31, 1994 and 1993 A - 3
Statements of Partners' Capital for the Years Ended December 31, 1994, 1993, 1992 A - 3
Statements of Income and Expenses for the Years Ended December 31, 1994, 1993, 1992 A - 4
Statements of Cash Flows for the Years Ended December 31, 1994, 1993, 1992 A - 4
Notes to Financial Statements A - 5 to A - 7
</TABLE>
SCHEDULE FILED AS PART OF THIS REPORT
<TABLE>
<S> <C>
III - Real Estate and Accumulated Depreciation as of December 31, 1994 A - 8 and A - 9
</TABLE>
All other schedules have been omitted as inapplicable, or for the reason that
the required information is shown in the financial statements or notes thereto,
or in other schedules.
EXHIBITS FILED AS PART OF THIS REPORT
EXHIBITS (3 & 4) First Amended and Restated Certificate and Agreement of Limited
Partnership as set forth on pages A-1 through A-30 of the Partnership's
definitive Prospectus dated May 24, 1983; Registration Statement No. 2-82357,
filed pursuant to Rule 424(b), incorporated herein by reference.
EXHIBIT (10) Material Contracts
(a) Lease agreement for a tenant at Citrus Center, one of the Partnership's most
significant properties, whose revenues exceed 10% of the Partnership's 1995
budgeted rental income.
(b) Real Estate Sale Agreement for the sale of the Partnership's investment in
the El Paso Natural Gas Building filed as an exhibit to the Partnership's
Report on Form 8-K dated April 6, 1994 is incorporated herein by reference.
(c) Order Confirming Plan of Reorganization under Chapter 11 of the United
States Bankruptcy Code for FANY Seventh Avenue Associates, filed as an exhibit
to the Partnership's Report on Form 10-K dated December 9, 1994, is incorporated
herein by reference.
(d) Lease agreements for tenants that individually occupy more than 10% of the
net leaseable square footage of the Partnership's significant properties, filed
as exhibits to the Partnership's Reports on Form 10-K dated December 31, 1993
and 1992, are incorporated herein by reference.
(e) Assignment Agreement for the purchase of an additional interest in South
Orange Avenue Associates filed as an exhibit to the Partnership's Report on Form
8-K dated January 22, 1993 is incorporated herein by reference.
(f) Loan Agreement for the refinancing of the Partnership's investment in the El
Paso Natural Gas Building filed as an exhibit to the Partnership's Report on
Form 8-K dated January 15, 1993 is incorporated herein by reference.
EXHIBIT (13) Annual Report to Security Holders
The 1993 Annual Report to Holders of Units is being sent under separate cover,
not via EDGAR, for the information of the Commission.
EXHIBIT (27) Financial Data Schedule.
A - 1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Partners
First Capital Income Properties, Ltd. - Series IX
Chicago, Illinois
We have audited the accompanying balance sheets of First Capital Income
Properties, Ltd. - Series IX as of December 31, 1994 and 1993, and the related
statements of income and expenses, Partners' Capital and cash flows for the
years ended December 31, 1994, 1993 and 1992 and the schedule listed in the
accompanying index. These financial statements and schedule are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and schedule 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 First Capital Income
Properties, Ltd. - Series IX as of December 31, 1994 and 1993, and the results
of its operations and its cash flows for the years ended December 31, 1994, 1993
and 1992 in conformity with generally accepted accounting principles. Further,
it is our opinion that the schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
Kenneth Leventhal & Company
Chicago, Illinois
February 17, 1995
A - 2
<PAGE>
BALANCE SHEETS
December 31, 1994 and 1993
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $15,722,900 $ 22,203,200
Buildings and improvements 61,904,700 107,274,500
-------------------------------------------------------------------------------
77,627,600 129,477,700
Accumulated depreciation and amortization (14,695,200) (27,239,500)
-------------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 62,932,400 102,238,200
Cash and cash equivalents 15,085,400 19,160,900
Restricted cash 261,100
Restricted certificate of deposit 75,000
Rents receivable 671,600 876,600
Escrow deposits 94,300
Other assets (primarily loan acquisition costs, net
of accumulated amortization of $78,400 and
$241,900, respectively) 249,400 632,200
-------------------------------------------------------------------------------
$78,938,800 $123,338,300
-------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loan(s) payable $ 6,650,000 $ 60,212,600
Accounts payable and accrued expenses 1,213,300 1,431,800
Due to Affiliates 125,200 205,500
Security deposits 128,800 440,300
Distributions Payable 722,200
Other liabilities 147,000 247,400
-------------------------------------------------------------------------------
8,986,500 62,537,600
-------------------------------------------------------------------------------
Partners' capital:
General Partners (deficit) (41,300)
Limited Partners (100,000 Units authorized, issued
and outstanding) 69,952,300 60,842,000
-------------------------------------------------------------------------------
69,952,300 60,800,700
-------------------------------------------------------------------------------
$78,938,800 $123,338,300
-------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1994, 1993 and 1992
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' capital, January 1, 1992 $ 8,700 $64,687,000 $64,695,700
Net income (loss) for the year ended
December 31, 1992 42,700 (287,200) (244,500)
Distributions for the year ended December
31, 1992 (62,400) (562,000) (624,400)
-------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1992 (11,000) 63,837,800 63,826,800
Net (loss) for the year ended
December 31, 1993 (30,300) (2,995,800) (3,026,100)
-------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1993 (41,300) 60,842,000 60,800,700
Net income for the year ended December
31, 1994 269,100 19,160,300 19,429,400
Distributions for the year ended December
31, 1994 (227,800) (10,050,000) (10,277,800)
-------------------------------------------------------------------------------
Partners' capital, December 31, 1994 $ 0 $69,952,300 $69,952,300
-------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-3
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 1994, 1993 and 1992
(All dollars rounded to nearest 00s except per Unit amounts)
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rental $13,351,700 $17,562,800 $15,542,600
Interest 916,200 529,700 355,600
------------------------------------------------------------------------------
14,267,900 18,092,500 15,898,200
------------------------------------------------------------------------------
Expenses:
Interest 2,471,500 4,167,800 3,936,800
Depreciation and amortization 2,904,500 3,440,800 3,403,900
Real estate taxes and insurance 1,966,100 1,999,600 2,199,200
Repairs and maintenance 1,483,500 1,532,700 1,252,400
Property operating 3,348,500 3,591,500 3,073,800
General and administrative 288,600 346,100 305,900
------------------------------------------------------------------------------
12,462,700 15,078,500 14,172,000
------------------------------------------------------------------------------
Operating income before other gains
(losses) 1,805,200 3,014,000 1,726,200
Gain on sale of land parcel 7,800
Gain on sale or disposition of
properties 9,967,200 2,021,500
Provision for value impairment (5,500,000) (4,000,000)
------------------------------------------------------------------------------
Net income (loss) before extraordinary
gain (loss) on early extinguishment of
debt 11,772,400 (2,486,000) (244,500)
Extraordinary gain (loss) on early
extinguishment of debt 7,657,000 (540,100)
------------------------------------------------------------------------------
Net income (loss) $19,429,400 $(3,026,100) $ (244,500)
------------------------------------------------------------------------------
Net income (loss) allocated to General
Partners $ 269,100 $ (30,300) $ 42,700
------------------------------------------------------------------------------
Net income (loss) allocated to Limited
Partners $19,160,300 $(2,995,800) $ (287,200)
------------------------------------------------------------------------------
Net income (loss) before extraordinary
gain (loss) on early extinguishment of
debt allocated to Limited Partners per
Unit (100,000 Units authorized, issued
and outstanding) $ 117.72 $ (24.86) $ (2.87)
------------------------------------------------------------------------------
Net income (loss) allocated to Limited
Partners per Unit (100,000 Units
authorized, issued and outstanding) $ 191.60 $ (29.96) $ (2.87)
------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1994, 1993 and 1992
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $19,429,400 $(3,026,100) $ (244,500)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 2,904,500 3,440,800 3,403,900
(Gain) on sale of land parcel (7,800)
(Gain) on sale or disposition of
properties (9,967,200) (2,021,500)
Provisions for value impairment 5,500,000 4,000,000
Extraordinary (gain) loss on early
extinguishment of debt (7,657,000) 540,100
Changes in assets and liabilities:
Decrease in restricted cash 261,100 12,000 10,400
Decrease (increase) in rents
receivable 205,000 333,700 (64,000)
Decrease in other assets 30,400 404,500 7,500
Increase in accounts payable and
accrued expenses 300,100 214,600 276,400
(Decrease) increase in due to
Affiliates (80,300) 104,500 (66,000)
(Decrease) increase in other
liabilities (100,400) 153,900 28,200
-----------------------------------------------------------------------------
Net cash provided by operating
activities 5,325,600 7,678,000 5,322,600
-----------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from the sale of properties 44,379,100 4,710,100
Purchase of commercial rental
property (3,081,400)
Payments for capital and tenant
improvements (3,892,500) (1,866,600) (1,074,800)
Maturity of (investment in)
restricted certificate of deposit 75,000 (75,000)
Decrease (increase) in escrow
deposits 94,300 (5,200) (47,500)
-----------------------------------------------------------------------------
Net cash provided by (used for)
investing activities 40,655,900 (5,028,200) 3,587,800
-----------------------------------------------------------------------------
Cash flows from financing activities:
Cash paid on disposition of property (49,500)
Proceeds from mortgage loan payable 22,500,000
Principal payments on mortgage loans
payable (38,903,800) (16,137,600) (1,603,000)
Prepayment costs on mortgage loans
payable (1,151,600) (540,100)
Payment of loan acquisition costs (85,000) (397,900)
Refund of (deposit on) loan
refinancing 225,000 (225,000)
(Decrease) increase in security
deposits (311,500) 52,000 (21,100)
Distributions paid to Partners (9,555,600) (1,527,700)
Payment of loan commitment fee (81,300)
-----------------------------------------------------------------------------
Net cash (used for) provided by
financing activities (50,057,000) 5,701,400 (3,458,100)
-----------------------------------------------------------------------------
Net (decrease) increase in cash and
cash equivalents (4,075,500) 8,351,200 5,452,300
Cash and cash equivalents at the
beginning of the year 19,160,900 10,809,700 5,357,400
-----------------------------------------------------------------------------
Cash and cash equivalents at the end
of the year $15,085,400 $19,160,900 $10,809,700
-----------------------------------------------------------------------------
Supplemental information:
Interest paid during the year $ 2,103,800 $ 4,323,800 $ 3,985,100
-----------------------------------------------------------------------------
Non-cash financing activities:
Assumption of mortgage loan $ 4,868,600
-----------------------------------------------------------------------------
Mortgage loan assumed by the
purchaser $ 2,218,800
-----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement on Form S-11, filed with the
Securities and Exchange Commission. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is incorporated herein by reference.
ORGANIZATION:
The Partnership was formed on February 2, 1983, by the filing of a Certificate
and Agreement of Limited Partnership with the Department of State of the State
of Florida, and commenced the Offering of Units on June 13, 1983. The
Certificate and Agreement, as amended and restated, authorized the sale to the
public of 75,000 Units (with the Managing General Partner's option to increase
the Offering to 100,000 Units) and not less than 1,400 Units pursuant to the
Prospectus. On June 28, 1983, the required minimum subscription level was
reached and the Partnership's operations commenced. The Managing General
Partner exercised its option to increase the Offering to 100,000 Units, which
amount was sold prior to the Termination of the Offering in October, 1983. The
Partnership was formed to invest primarily in existing, improved, income-
producing commercial real estate.
The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2014. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
ACCOUNTING POLICIES:
The financial statements include the Partnership's 50% interest in three joint
ventures, one of which was sold in April of 1994 and one of which was disposed
of in December of 1994, and a 100% effective interest (50% in 1992) in one
joint venture. The joint ventures are operated under the control of the
Managing General Partner. Accordingly, the Partnership's pro rata share of the
ventures' revenues, expenses, assets, liabilities and capital is included in
the financial statements.
The Partnership is not liable for Federal income taxes as the Partners
recognize their proportionate share of the Partnership income or loss in their
individual tax returns; therefore, no provision for income taxes is made in the
financial statements of the Partnership. In addition, it is not practicable for
the Partnership to determine the aggregate tax bases of the Limited Partners;
therefore, the disclosure of the differences between the tax bases and the
reported assets and liabilities of the Partnership would not be meaningful.
Commercial rental properties are recorded at cost, net of any provisions for
value impairment, and depreciated (exclusive of amounts allocated to land) on
the straight-line method over their estimated useful lives. Lease acquisition
fees are recorded at cost and amortized over the life of the lease. Maintenance
and repair costs are expensed as incurred; expenditures for improvements are
capitalized and depreciated over the estimated life of the improvements.
Loan acquisition costs are amortized over the period of the note issued under
first mortgage loans made in connection with the acquisitions or refinancings
of Partnership properties. When a property is disposed or refinanced, the
related loan acquisition costs and accumulated amortization are removed from
the respective accounts and any unamortized balance is expensed.
Property sales or dispositions are recorded when title transfers and sufficient
consideration has been received by the Partnership. Upon disposition, the
related costs and accumulated depreciation and amortization are removed from
the respective accounts. Any gain or loss on sale or disposition is also
recognized in accordance with generally accepted accounting principles.
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
Restricted certificate of deposit represented funds reserved from loan proceeds
received in connection with the refinancing of the El Paso Natural Gas Building
("El Paso"), which were placed in an interest-bearing investment. Under the
terms of the loan agreement this amount was available to be used for future
loan servicing costs. As a result of the sale of El Paso, these funds are no
longer restricted.
Certain reclassifications have been made to the previously reported 1992 and
1993 statements in order to provide comparability with the 1994 statements.
These reclassifications have no effect on income or Partners' capital.
2. RELATED PARTY TRANSACTIONS:
Subsequent to October 31, 1983, the Termination of the Offering, the General
Partners are entitled to 10% of Cash Flow as a Partnership Management Fee. In
accordance with the Partnership Agreement, Net Profits (exclusive of Net
Profits from the sale or disposition of a Partnership property) shall be
allocated to the General Partners in an amount equal to the greater of the
General Partners' Partnership Management Fee or 1% of such Net Profits and the
balance, if any, to the Unit Holders. Net Profits from the sale or disposition
of a Partnership property shall be allocated: first, to the General Partners
and Unit Holders with negative balances in their capital accounts, pro rata in
proportion to such respective negative balances, to the extent of the total
such negative balances; second, to the General Partners in an amount necessary
to make the aggregate amount of their capital accounts equal to the greater of
the Sale or Refinancing Proceeds to be distributed to the General Partners with
respect to the sale or disposition of such property or 1% of such Net Profits;
and third, the balance, if any, to the Unit Holders. Net Losses from the sale
or disposition of a Partnership property (including provisions for value
impairment) shall be allocated: first, to the General Partners to the extent of
the aggregate balance in their capital accounts; second, to the Unit Holders
and among them (in the ratio which their respective capital account balances
bear to the aggregate of all capital account balances of the Unit Holders)
until the balance in their capital accounts shall be reduced to zero; and
third, the balance, if any, 99% to the Unit Holders and 1% to the General
Partners. Notwithstanding, in all events there shall be allocated to the
General Partners not less than 1% of Net Profits and Net Losses from the sale
or disposition of a Partnership property. For the year ended December 31, 1994,
the General Partners were allocated Cash Flow, and accordingly, Net Profits
from operations of approximately $227,800, Net Losses from extraordinary loss
on the early extinguishment of debt of approximately $17,000, and Net Profits
from the sale or disposition of Partnership properties of $58,300. For the year
ended December 31, 1993, the General Partners were not paid a Partnership
Management Fee and were allocated Net Profits from operations of approximately
$30,100, a Net Loss from a provision for value impairment of $55,000 and a Net
Loss of approximately $5,400 on early extinguishment of debt. For the year
ended December 31, 1992, the General Partners were allocated Cash Flow and,
accordingly, Net Profits from operations of approximately $62,400, Net Profits
from the sale of a Partnership property of approximately $20,300 and a
provision for value impairment of approximately $40,000.
Fees and reimbursements paid and payable by the Partnership to Affiliates are
as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------------------------
1994 1993 1992 (a)
----------------------------------
Paid Payable Paid Payable Paid Payable
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Real estate commission
(b) None $ 48,500 None $ 48,500 None $ 48,500
Property management and
leasing fees $ 728,200 70,900 $ 637,500 144,200 $ 661,800 41,000
Reimbursements of
property insurance
premiums, at cost 177,600 None 192,600 None 216,800 300
Reimbursements of
expenses, at cost:
(1) Accounting 28,100 4,200 30,500 4,200 27,100 3,900
(2) Investor
communication 15,400 1,600 10,400 1,600 11,200 2,000
(3) Legal 250,400 None 130,300 7,000 133,200 5,300
(4) Other None None 1,600 None None None
------------------------------------------------------------------------------------
$1,199,700 $125,200 $1,002,900 $205,500 $1,050,100 $101,000
------------------------------------------------------------------------------------
</TABLE>
(a) Property management reimbursements and other expense reimbursements
previously reported in 1992 have been excluded from the above table and
amounts previously included in 1992 in due to Affiliates have been
reclassified to accounts payable and accrued expenses in order to provide
comparability to the fees presented for 1994 and 1993.
(b) As of December 31, 1994, the Partnership owed $48,500 to the Managing
General Partner for a real estate commission earned in connection with the
1992 sale of one Partnership property. This commission has been accrued but
not paid. Under the terms of the Partnership Agreement, this fee will not
be paid until such time as Limited Partners have received cumulative
distributions of Sale or Refinancing Proceeds equal to 100% of their
Original Capital Contribution, plus a cumulative return (including all Cash
Flow which has been distributed to the Unit Holders) of 6% simple interest
per annum on their Capital Investment from the initial date of investment.
Firstate Financial A Savings Bank ("Firstate"), an Affiliate of the Managing
General Partner is obligated to the Partnership under a lease of office space
at Citrus Center (f/k/a/ Firstate Tower). A new lease agreement commenced on
March 1, 1992 and terminates on February 28, 2002. For the years ended December
31, 1994, 1993 and 1992, Firstate paid approximately $232,600, $224,200 and
$279,700, respectively, in total rents. The Partnership's share of these rents
is 100% in 1994 and 1993 and 50% in 1992 (see Note 6 for additional
information).
3. FUTURE MINIMUM RENTALS:
The Partnership's share of future minimum rents due on noncancelable operating
leases as of December 31, 1994, was as follows:
<TABLE>
<S> <C>
1995 $ 6,725,900
1996 2,907,000
1997 5,791,400
1998 5,355,900
1999 4,905,100
Thereafter 18,269,200
--------------
$43,954,500
--------------
</TABLE>
The Partnership is subject to the usual business risks associated with the
collection of the above-scheduled rentals. In addition to the amounts scheduled
above, the Partnership expects to receive rental revenue from operating expense
and real estate tax reimbursements and percentage rents. Percentage rents
earned for the years ended December 31, 1994, 1993 and 1992 were approximately
$252,500, $506,600 and $397,000, respectively.
4. MORTGAGE LOANS PAYABLE:
Mortgage loans and notes payable at December 31, 1994 and 1993 consisted of the
following non-recourse loan(s):
<TABLE>
<CAPTION>
Property Loan Loan Estimated
Pledged as Balance at Balance at Interest Maturity Periodic Balloon
Collateral 12/31/94 12/31/93 Rate Date Payment Payment
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
El Paso
Natural
Gas
Building (a) $21,611,600 (a) (a) (a) (a)
Triangle
Office
Building (b) 2,265,100 (b) (b) (b) (b)
Fashion
Atrium
Building (c) 12,112,500 (c) (c) (c) (c)
Glendale
Center
Shopping
Mall (d) $6,650,000 10,650,000 6.27%(e) 1/31/95(f) (g) $6,650,000(f)
Shoppes of
West
Melbourne (h) 4,000,000 (h) (h) (h) (h)
Citrus
Center
(f/k/a
Firstate
Tower)
(i) (j) 9,573,400 (j) (j) (j) (j)
-------------------------------------------------------------------------------
$6,650,000 $60,212,600
-------------------------------------------------------------------------------
</TABLE>
A-5
<PAGE>
(a) On April 6, 1994 First Capital Kayser Center, a joint venture in which the
Partnership and an Affiliated Partnership each had a 50% interest (the
"Joint Venture"), sold its interest in the El Paso Natural Gas Building.
The outstanding indebtedness on this property of approximately $42,757,000,
of which the Partnership's share was $21,378,500, was satisfied at closing.
In addition a prepayment penalty on early extinguishment of debt of
approximately $1,828,600 was incurred as a result of the sale, of which the
Partnership's share was $914,300. This prepayment penalty was recorded as
an extraordinary loss for financial statement purposes.
(b) On June 10, 1994 the Partnership sold the Triangle Building. The
outstanding indebtedness on this property of approximately $2,218,800 was
assumed by the buyer at closing.
(c) The General Partner was unable to reach a mutual resolution with the
mortgage holder regarding the restructuring of the loan for Fashion Atrium
and as a result, in April 1994, the Partnership received a notice of
default from the mortgage holder. On August 25, 1994, FANY Seventh Avenue
Associates ("FANY"), the joint venture which owns Fashion Atrium and in
which the Partnership has a 50% interest, executed a Cash Collateral Use
Agreement (the "Agreement") with the mortgage holder. Upon execution of the
Agreement, FANY transferred approximately $1,311,000, of which the
Partnership's share was approximately $655,500, of accumulated cash flow
through July 31, 1994 to a safekeeping account under sole control of the
mortgage holder. In addition, the mortgage holder made a protective advance
to FANY in the amount of approximately $2,313,200, of which the
Partnership's proportionate share was approximately $1,156,600, for the
payment of accrued real estate taxes plus penalties and interest. FANY
assisted in the orderly conveyance of title of the property to the mortgage
holder within the context of a pre-packaged Chapter 11 bankruptcy plan
filed on October 14, 1994 in the United States Bankruptcy Court for the
Southern District of New York. A confirmation hearing on the pre-packaged
plan occurred on November 22, 1994. The conveyance of title to the property
occurred pursuant to the terms and conditions of a confirmed plan on
December 9, 1994. At the time the conveyance of title occurred, FANY was
relieved of its obligation under the mortgage loan of approximately
$24,151,000 less amounts held in safekeeping, of which the Partnership's
share was $12,075,500 and any interest in the assets and liabilities of
FANY therein, with the exception of the rights to real estate tax refunds
that may be received for the fiscal years 1992 and 1993.
(d) This property is owned through a joint venture. Amounts represent the
Partnership's share of the liability and are not the total amount by which
the property is encumbered.
(e) This interest rate represents the weighted average for the year ended
December 31, 1994. The interest rate is subject to change in accordance
with the provisions within the loan agreement. As of December 31, 1994, the
interest rate on the Glendale loan was 9.5%.
(f) The maturity date of the mortgage loan collateralized by Glendale had
previously been extended with the existing lender until October 3, 1994. On
October 27, 1994, the joint venture which owns Glendale made a $4,300,000
principal payment to this lender, of which the Partnership's share was
$2,150,000. This principal payment extended the loan's maturity to November
30, 1994. On November 21, 1994, the joint venture made an additional
principal payment of $3,700,000, of which the Partnership's share was
$1,850,000, which further extended the maturity date to January 31, 1995. A
fee of $50,000 was paid by the joint venture for each loan extension. On
January 6, 1995, the Partnership obtained a new mortgage loan in the amount
of $17,000,000 collateralizing Glendale, of which the Partnership's share
is $8,500,000. The existing loan was paid off in full with the proceeds of
the new loan (see Note 9 for additional information).
(g) Interest only.
(h) The Partnership repaid the mortgage loan collateralized by Shoppes of West
Melbourne in the amount of $4,000,000 on June 6, 1994, its scheduled
maturity date.
(i) The Partnership and a wholly owned subsidiary purchased First Capital
Income Properties, Ltd.--Series XI's 50% interest in the joint venture
which owns Citrus Center, effective January 1, 1993. The amount paid by the
Partnership and its subsidiary was equal to approximately 50% of the
appraised value of the Citrus Center, as determined by an independent
appraiser, minus 50% of the outstanding principal balance under the loan
collateralized by the Citrus Center (see Note 6 for additional
information).
(j) On May 27, 1994 the Partnership repaid the mortgage loan collateralized by
Citrus Center for a total amount of approximately $9,731,000, which
included a prepayment penalty of approximately $237,300. The prepayment
penalty was recorded as an extraordinary loss on early extinguishment of
debt for financial statement purposes.
Amortization of mortgage loans for 1995:
<TABLE>
<S> <C>
1995 $6,650,000
-------
$6,650,000
-------
</TABLE>
5. INCOME TAX:
The Partnership utilizes an accrual basis method of accounting for both tax
reporting and financial statement purposes. Financial statement results will
differ from tax results due to the use of differing depreciation lives and
methods, the recognition of rents received in advance as taxable income, the
Partnership's provisions for value impairment and other factors for financial
statement purposes. The net effect of these accounting differences for the year
ended December 31, 1994, was that the net income for financial statement
purposes was approximately $6,798,600 less than the net income for tax
reporting purposes.
6. PROPERTY ACQUISITION:
On January 22, 1993, the Partnership purchased First Capital Income Properties,
Ltd.--Series XI's ("Series XI") 50% interest in the joint venture which owns
the Citrus Center. The purchase, effective January 1, 1993, is pursuant to the
terms of an assignment agreement by and among the Partnership, Series XI and a
corporation wholly owned by the Partnership. The amount paid to Series XI by
the Partnership was approximately $3,081,400, which was equal to approximately
50% of the appraised value of the Citrus Center, as determined by an
independent appraiser, less 50% of the outstanding principal balance under the
loan collateralized by the Citrus Center (approximately $4,868,600). The
independent appraiser took into consideration the fact that this property
contains a significant amount of asbestos, removal of which will require a
substantial amount of Partnership working capital.
7. PROPERTY SALES/DISPOSITIONS:
On April 6, 1994 First Capital Kayser Center, the joint venture ("Joint
Venture") which owns El Paso sold the property for a sale price of $88,450,000.
The outstanding indebtedness on this property of approximately $42,757,000 was
satisfied at closing. The Joint Venture incurred selling expenses of
approximately $3,743,300, of which approximately $1,828,600 related to a
prepayment penalty on the early extinguishment of debt of which the
Partnership's share was $1,871,600 and $914,300, respectively. The Joint
Venture received net sale proceeds of approximately $84,706,700, of which the
Partnership's share was approximately $42,353,400. The net gain, after
recognition of the prepayment penalty, reported by the Partnership for
financial statement purposes was approximately $18,015,300. For tax reporting
purposes the Partnership will report a net gain in 1994 of approximately
$28,646,700.
On June 10, 1994 the Partnership sold the Triangle Office Building, located in
Atlanta, Georgia, for a sale price of $3,420,000. The Partnership incurred
selling expenses of approximately $89,800. The outstanding indebtedness on this
property of approximately $2,218,800 was assumed by the buyer at closing. The
Partnership received sale proceeds of approximately $1,111,400. The total loss
to the Partnership in connection with this sale was approximately $5,017,600 of
which $4,000,000 was recorded in 1992 as a provision for value impairment. For
tax reporting purposes the Partnership will report a loss of approximately
$2,700,000.
On December 9, 1994, the joint venture which owned Fashion Atrium, in which the
Partnership had a 50% interest, transferred title to Fashion Atrium to the
mortgage holder through an orderly conveyance of title within the context of a
pre-packaged Chapter 11 bankruptcy plan filed on October 14, 1994 in the United
States Bankruptcy Court for the Southern District of New York. The disposition
of the Fashion Atrium relieved the Partnership of its share of the obligation
under the nonrecourse mortgage loan collateralized by the property as well as
any interest in the assets therein, with the exception of the rights to real
estate tax refunds that may be received for the fiscal years 1992 and 1993.
This extinguishment of debt was considered a noncash event for the purposes of
the Statement of Cash Flows, and was not included in the Partnership's
calculation of Cash Flow (as defined by the Partnership Agreement) for the year
ended December 31, 1994. The total loss to the Partnership in connection with
the disposition of the Fashion Atrium was approximately $13,444,800 of which
$5,500,000 was recorded in 1993 as a provision for value impairment for
financial statement purposes. This loss represented the net book value of the
property (prior to any provision for value impairment) in excess of its
estimated fair market value. In addition, in 1994, the Partnership also
recorded an extraordinary gain on extinguishment of debt in connection with the
disposition of the Fashion Atrium of approximately $8,808,600 for financial
statement purposes. This extraordinary gain on extinguishment of debt
represented the excess property indebtedness over the estimated fair market
value of the property. For tax purposes, the Partnership recorded a loss in
1994 of approximately $588,700 on this disposition.
On March 31, 1992 the Partnership sold the Old National Bank Valley Financial
Center. The sale price was $4,850,000. The Partnership incurred selling
expenses of approximately $260,900, including a $48,500 brokerage fee owed to
The Managing General Partner. The commission has been accrued but not paid (see
Note 2 for additional information). The Partnership received net proceeds from
the sale of approximately $4,637,600. The gain for financial statement purposes
was approximately $2,021,500. For tax reporting purposes the Partnership
recorded a gain of approximately $2,750,000.
On October 9, 1992, a joint venture in which the Partnership holds a 50%
interest, sold a parcel of land at Glendale, located in Indianapolis, Indiana.
The Partnership's share of the sales price was $72,500 and its share of selling
expenses was $5,300, which represented legal fees accrued in 1992 and paid in
1993 to an Affiliate of the General Partner. The Partnership received net
proceeds from this sale of approximately $72,500. The gain for both financial
statement purposes and tax reporting purposes was approximately $7,800.
All of the above transactions (with the exception of Fashion Atrium) were all-
cash sales, with no further involvement on the part of the Partnership.
8. PROVISIONS FOR VALUE IMPAIRMENT:
In 1995, the Financial Accounting Standards Board agreed to issue a new
standard entitled "Accounting for the Impairment of Long-Lived Assets" (the
"Standard"). This Standard establishes guidance for determining if defined
assets are impaired, and if so, how impairment losses should be measured and
reported in the financial statements of companies. The carrying amount of
impaired assets will be required to be reduced to fair value. The Standard is
effective for fiscal years beginning after December 15, 1995. The Managing
General Partner believes that implementation will not materially affect the
Partnership's financial position or results of operations once the Standard
becomes effective.
The Partnership recorded provisions for value impairment of $4,000,000 in 1992
for Triangle and $5,500,000 in 1993 for Fashion Atrium. Due to the uncertainty
of the Partnership's ability to recover the net carrying value of its
investment in these properties (prior to any provision for value impairment)
during the remaining estimated holding periods, it was deemed appropriate to
reduce the basis of these properties for financial statement purposes. The
provision amounts were in part based on the Managing General Partner's estimate
of the current market value, adjusted by estimates of future cash flow, capital
improvements and depreciation during the remaining estimated holding period as
well as the outstanding mortgage balance. These provisions for value impairment
are considered non-cash events for the purposes of the Statement of Cash Flows,
and were not included in the Partnership's calculation of Cash Flow (as defined
by the Partnership Agreement) for the years ended December 31, 1992 or 1993.
9. SUBSEQUENT EVENT:
On January 6, 1995, Indianapolis Mall Associates, the joint venture which owns
Glendale, obtained a new mortgage loan in the amount of $17,000,000 secured by
Glendale. The Partnership's share of the new loan amount is $8,500,000. The
existing loan was paid off in full with the proceeds from the new loan. The
interest rate on the new loan is variable at Libor plus 4.5% and is payable
monthly. The maturity date of the new loan is January 1, 1999. Monthly payments
of principal are to be made based on an 11-year amortization and an interest
rate of 9.5%. In addition, the Partnership must pay as additional principal
amortization, 50% of all cash flow from the property for each prior calendar
year. The Partnership's share of loan acquisition costs incurred in 1994
related to this refinancing was $85,000.
Copies of the Partnership's Form 10-K are
available upon written request to the
General Partner at no charge.
A-6
<PAGE>
FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES IX
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
------------------------ ---------- ------------------------ ------------------------- --------------------------------------
Initial cost Costs capitalized Gross amount at which
to Partnership (1) subsequent to acquisition carried at close of period
------------------------ ------------------------- -----------------------------------------
Buildings Buildings
and and
Encum- Improve- Improve- Carrying Improve-
Description brances Land ments ments Costs (2) Land ments Total (3)(4)
------------------------ ---------- ----------- ----------- ---------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Centers:
Richmond Plaza
Shopping Center
(Augusta, GA)
(100% interest) (5) $ 2,152,300 $ 7,630,900 $1,025,900 $ 56,900 $ 2,156,000 $ 8,710,000 $10,866,000
Glendale Center
Shopping Mall
(Indianapolis, IN)
(50% Interest) $6,650,000 4,932,600 18,556,900 1,399,200 67,600 4,887,600 (8) 20,068,700 24,956,300
Shoppes of West
Melbourne (West
Melbourne, FL)
(100% interest) (10) 4,133,000 8,782,800 221,600 222,800 4,204,300 9,155,900 13,360,200
Office Buildings:
Citrus Center
(f/k/a Firstate Tower)
(Orlando, FL)
(100% Interest (11)) (12) 4,475,000 18,113,100 5,769,400 87,600 4,475,000 23,970,100 28,445,100
---------- ----------- ----------- ---------- --------- ----------- ----------- -----------
$6,650,000 $15,692,900 $53,083,700 $8,416,100 $434,900 $15,722,900 $61,904,700 $77,627,600
========== =========== =========== ========== ========= =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Column A Column F Column G Column H Column I
------------------------ ----------- --------- ---------- ----------------
Life on which
Accumu- depreciation
lated Date of in latest income
Deprecia- construc- Date statements is
Description tion (3) tion Acquired computed
------------------------ ----------- --------- ---------- ----------------
<S> <C> <C> <C> <C>
Shopping Centers:
Richmond Plaza
Shopping Center 35 (6)
(Augusta, GA) $ 2,226,900 1980 Sept. 1984 3-10 (7)
(100% interest)
Glendale Center
Shopping Mall 35 (6)
(Indianapolis, IN) 5,254,500 1958 (9) May 1985 3-13 (7)
(50% Interest)
Shoppes of West
Melbourne (West 35 (6)
Melbourne, FL) 2,210,000 1984 Nov. 1985 3-10 (7)
(100% interest)
Office Buildings:
Citrus Center
(f/k/a Firstate Tower) 35 (6)
(Orlando, FL) 5,003,800 1971 May 1986 2-10 (7)
(100% Interest (11))
-----------
$14,695,200
===========
</TABLE>
See accompanying notes on the following page.
A-7
<PAGE>
FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES IX
NOTES TO SCHEDULE III
Note 1. Amounts presented are net of rent guarantees.
Note 2. Consists of legal fees, appraisal fees, title costs and
other related professional fees.
Note 3. The following is a reconciliation of activity in columns E and F:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993 December 31, 1992
----------------------------------- ------------------------------- -----------------------------
Accumulated Accumulated Accumulated
Cost Depreciation Cost Depreciation Cost Depreciation
------------ ------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
beginning
of the year $129,477,700 $ 27,239,500 $125,161,100 $23,881,000 $131,231,400 $21,093,500
Additions
during the
year:
Acquisition of
commercial
rental
property (11) 7,950,000
Improvements 3,892,500 1,866,600 1,074,800
Provisions
for deprec-
iation and
amortization 2,851,200 3,358,500 3,305,600
Deductions
during the
year:
Cost of real
estate sold
or disposed (55,742,600) (3,145,100)
Accumulated
depreciation
on real
estate sold
or disposed (15,395,500) (518,100)
Provisions
for value
impairment (5,500,000) (4,000,000)
------------ ------------ ------------ ----------- ------------ -----------
Balance
at end of
the year $ 77,627,600 $ 14,695,200 $129,477,700 $27,239,500 $125,161,100 $23,881,000
============ ============ ============ =========== ============ ===========
</TABLE>
Note 4. The aggregate cost for Federal income tax purposes is $77,627,600.
Note 5. Mortgage balance repaid in January 1993.
Note 6. Estimated useful life for building.
Note 7. Estimated useful life for improvements.
Note 8. A parcel of land at Glendale Shopping Center was sold on October 9,
1992. The basis of the land was approximately $59,400.
Note 9. Renovated in 1983 and 1984.
Note 10. Mortgage balance repaid in June, 1994.
Note 11. In January 1993 the Partnership effectively purchased the remaining 50%
joint venture interest of this property from an Affiliated partnership.
Note 12. Mortgage balance repaid in May, 1994.
A - 8
<PAGE>
EXHIBIT 10(a)
FIRSTATE TOWER
STANDARD FORM OFFICE LEASE
BETWEEN
SOUTH ORANGE AVENUE ASSOCIATES, an Illinois joint venture ("LANDLORD"),
by its agent, Equity Office Properties, Inc., an Illinois corporation
AND
AKERMAN, SENTERFITT & EIDSON, P.A. a Professional Association ("TENANT")
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<C> <S> <C>
I. BASIC LEASE INFORMATION; DEFINITIONS.................. 1
II. LEASE GRANT........................................... 3
III. POSSESSION OF PREMISES................................ 3
IV. USE................................................... 3
V. RENT.................................................. 3
VI. SECURITY DEPOSIT...................................... 4
VII. SERVICES TO BE FURNISHED BY LANDLORD.................. 4
VIII. LEASEHOLD IMPROVEMENTS................................ 5
IX. GRAPHICS.............................................. 6
X. REPAIRS AND ALTERATIONS............................... 6
XI. USE OF ELECTRICAL AND HVAC SERVICES BY TENANT......... 6
XII. ENTRY BY LANDLORD..................................... 7
XIII. ASSIGNMENT AND SUBLETTING............................. 7
XIV. LIENS................................................. 8
XV. INDEMNITY AND WAIVER OF CLAIMS........................ 8
XVI. TENANT'S INSURANCE.................................... 9
XVII. SUBROGATION........................................... 10
XVIII. LANDLORD'S INSURANCE.................................. 10
XIX. CASUALTY DAMAGE....................................... 11
XX. DEMOLITION............................................ 12
XXI. CONDEMNATION.......................................... 12
XXII. EVENTS OF DEFAULT..................................... 12
XXIII. REMEDIES.............................................. 13
XXIV. LIMITATION OF LIABILITY............................... 14
XXV. NO WAIVER............................................. 14
XXVI. EVENT OF BANKRUPTCY................................... 14
XXVII. QUIET ENJOYMENT....................................... 15
XXVIII. RELOCATION............................................ 15
XXIX. HOLDING OVER.......................................... 16
XXX. SUBORDINATION TO MORTGAGES............................ 16
XXXI. ATTORNEY'S FEES....................................... 17
XXXII. NOTICE................................................ 17
XXXIII. LANDLORD'S LIEN....................................... 17
XXXIV. EXCEPTED RIGHTS....................................... 17
i
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
XXXV. SURRENDER OF PREMISES................................. 18
XXXVI. MISCELLANEOUS......................................... 18
XXXVII. ENTIRE AGREEMENT...................................... 20
</TABLE>
ii
<PAGE>
OFFICE LEASE AGREEMENT
----------------------
This Office Lease Agreement (the "Lease"), is made and entered into as of the
24th day of June, 1994, by and between SOUTH ORANGE AVENUE ASSOCIATES, AN
ILLINOIS JOINT VENTURE ("Landlord"), by its agent, Equity Office Properties,
Inc., an Illinois corporation and AKERMAN, SENTERFITT & EIDSON, P.A. A
PROFESSIONAL ASSOCIATION ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA
("Tenant").
I. BASIC LEASE INFORMATION; DEFINITIONS.
------------------------------------
A. The following is some of the basic lease information and defined terms
used in this Lease.
1. "Broker" means Pizzuti Realty, Inc.
2. "Building" shall mean the office building located at 255 South Orange
Avenue, Orlando, Orange County, State of Florida, commonly known as Firstate
Tower (and soon to be known as Citrus Center).
3. The "Lease Term" shall mean a period of twelve (12) years commencing
on January 1, 1994 (the "Commencement Date") and, unless sooner terminated as
provided herein, ending on December 31, 2005 (the "Termination Date").
4. INTENTIONALLY OMITTED.
5. INTENTIONALLY OMITTED.
6. "Notice Addresses" shall mean the following addresses for Tenant and
Landlord, respectively:
Tenant: All notices shall be sent to Tenant at both of the following
addresses:
Akerman, Senterfitt & Eidson, P.A.
255 South Orange Avenue
Post Office Box 231
Orlando, Florida 32802-0231
Attention: Executive Director
and
Akerman, Senterfitt & Eidson, P.A.
255 South Orange Avenue
Post Office Box 231
Orlando, Florida 32802-0231
Attention: Managing Shareholder
Landlord:
Equity Office Properties, Inc.
255 South Orange Avenue
Suite 1111
Orlando, Florida 32801
Attention: Building Manager
With a copy to:
Equity Office Properties, Inc.
Two North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Attention: General Counsel
1
<PAGE>
Payments of Rent only shall be made payable
to the order of South Orange Avenue Associates
at the following address:
Equity Office Properties, Inc.
255 South Orange Avenue
Suite 1111
Orlando, Florida 32801
Attention: Building Manager
7. "Permitted Use" shall mean: Maintaining and operating offices for the
practice of law and related activities, or, subject to the provisions of
Section XIII.A. hereof, any other general office use permitted by law.
8. "Premises" shall mean the areas located on the 1st, 10th, 11th and
17th floors of the Building and outlined on Exhibits A-1, A-2, A-3 and A-4
attached hereto and incorporated herein and respectively known as Suites
#0102, #1000, #1185 and #1700.
9. "INTENTIONALLY OMITTED.
10. "Rentable Area of the Premises" shall mean the area contained within
the demising walls of the Premises and any other area designated for the
exclusive use of Tenant, without deduction for any columns or projections
necessary to the Building, plus a proportionate share of any Common Areas
located on the floor(s) on which the Premises is located and a proportionate
share of the Building's public areas, management office, engineer's office and
"Mechanical Spaces" i.e. spaces housing service areas, equipment and/or access
corridors for HVAC and communications facilities, plumbing, fire protection
and elevators. The Rentable Area of the Premises is deemed for all purposes
under this Lease to be 43,646 square feet, consisting of 4,012 square feet of
Rentable Area on the First Floor, 16,480 square feet of Rentable Area on the
10th floor, 6,674 square feet of Rentable Area on the 11th floor and 16,480
square feet of Rentable Area on the 17th floor. The "Rentable Area of the
Building" is deemed for all purposes under this Lease to be 242,560 square
feet. The square footage amounts set forth for the Rentable Area of the
Premises and the Rentable Area of the Building constitute a material part of
the economic basis of this Lease and the execution thereof by Landlord and
shall not be adjusted without the written consent of Landlord.
11. INTENTIONALLY OMITTED.
12. "Tenant's Pro Rata Share" shall mean seventeen and ninety-nine
hundredths of one percent (17.99%), which is the sum (expressed as a
percentage) derived by dividing the Rentable Area of the Premises by The
Rentable Area of the Building and multiplying the result thereof by one
hundred (100).
B. The following are additional definitions of some of the defined terms
used in the Lease.
1. "Basic Costs" shall mean all direct and indirect costs and expenses
incurred in connection with the Property as more fully defined in Exhibit B-2.
2. "Building Standard" shall mean the type, grade, brand, quality and/or
quantity of materials Landlord designates from time to time to be the minimum
quality and/or quantity to be used in the Building. Notwithstanding the
foregoing, Landlord, without Tenant's reasonable consent, shall not lower the
current Building Standard quality of materials with respect to the Premises
and Common Areas if the lowering of such standard would have a materially
adverse effect on (i) the services to be provided by Landlord to Tenant
hereunder, or (ii) the market value of the Building and/or Premises. It is
understood and agreed that the foregoing restrictions upon Landlord relate to
the quality of any materials used by Landlord and, in no event, shall be
construed to grant Tenant the right to consent to any aesthetic matters such
as color and design.
3. "Business Day(s)" shall mean Mondays through Fridays exclusive of the
normal business holidays ("Holidays") of New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day, and such
other days as Landlord may designate.
4. "Common Areas" shall mean those areas provided for the common use or
benefit of all tenants generally and/or the public, such as corridors,
elevator foyers, common
2
<PAGE>
mail rooms, restrooms, vending areas, and lobby areas (whether at ground level
or otherwise), and other similar facilities.
5. "Maximum Rate" shall mean the greatest per annum rate of interest
permitted from time to time under applicable federal and state law.
6. "Normal Business Hours" for the Building shall mean 8:00 a.m. to 6:00
p.m. Mondays through Fridays, and 9:00 a.m. to 1:00 p.m. on Saturdays,
exclusive of Holidays, and such other hours as Landlord may designate from
time to time.
7. "Prime Rate" shall mean the per annum interest rate publicly announced
by The First Union Bank from time to time (whether or not charged in each
instance) as its prime or base rate.
8. "Property" shall mean the parcel of land described on Exhibit A
attached hereto and made a part hereof and the Building, Building Garage and
all other improvements located thereon and serving the Building and the
tenants thereof.
II. LEASE GRANT. Subject to and upon the terms herein set forth, Landlord
leases to Tenant and Tenant leases from Landlord the Premises.
III. POSSESSION OF PREMISES. Landlord and Tenant acknowledge that Tenant is
currently in possession of the Premises and Tenant hereby accepts the Premises
in an "AS-IS" condition with no representation or warranty by Landlord as to the
condition or suitability of the Premises or of the Building for Tenant's use
thereof. Tenant further agrees that, except as specifically provided in Exhibit
C and elsewhere in this Lease to the contrary, Landlord has no obligation to
clean, decorate, alter, remodel, improve or repair the Premises.
IV. USE.
---
A. The Premises shall be used for the Permitted Use and for no other
purpose. Tenant agrees not to use or permit the use of the Premises for any
purpose which is illegal, dangerous to life, limb or property or which, in
Landlord's opinion, creates a nuisance or which would increase the cost of
insurance coverage with respect to the Building. Tenant shall conduct its
business and control its agents, servants, contractors and employees in such a
manner as not to interfere with, annoy or disturb other tenants, or in any way
interfere with Landlord in the management and operation of the Building. Tenant
will maintain the Premises in a clean and healthful condition, and comply with
all laws, ordinances, orders, rules and regulations of any governmental entity
with reference to the operation of Tenant's business and to the use, condition,
configuration or occupancy of the Premises, including without limitation, the
Americans with Disabilities Act. Tenant will comply with the rules and
regulations of the Building adopted and altered by Landlord from time to time
and will cause all of its agents, servants, contractors and employees to do so.
In addition, Tenant shall use reasonable efforts to cause its customers,
licensees and invitees to comply with the rules and regulations while in the
Premises. All changes to such rules and regulations will be sent by Landlord to
Tenant in writing. A copy of the existing rules and regulations is attached
hereto as Exhibit D and made a part hereof. Landlord shall make reasonable
efforts to enforce all such rules and regulations in a non-discriminatory and
uniform manner. Tenant agrees not to commit or allow any waste to be committed
on any portion of the Premises, and at the termination of this Lease to deliver
up the Premises to Landlord in accordance with Article XXXV hereof.
B. Notwithstanding anything in Section IV.A. above to the contrary,
Landlord shall be responsible for complying with Title III of the Americans with
Disabilities Act (ADA) with respect to the Common Areas of the Building.
Notwithstanding the foregoing, Landlord shall have the right to contest any
alleged violation in good faith, including, without limitation, the right to
apply for and obtain a waiver or deferment of compliance, the right to assert
any and all defenses allowed by law and the right to appeal any decisions,
judgments or rulings to the fullest extent permitted by law. Landlord, after
the exhaustion of any and all rights to appeal or contest, will make all
repairs, additions, alterations or improvements necessary to comply with the
terms of any final order or judgment, provided that if Landlord elects not to
contest any alleged violation, Landlord will promptly make all repairs,
additions, alterations or improvements necessary to comply with the notice of
violation.
V. RENT.
----
A. Tenant covenants and agrees to pay to Landlord during the Lease Term,
without any setoff or deduction whatsoever, the full amount of all Base Rental
payments, and any adjustments thereof, due in accordance with the rental
schedule set forth in Exhibit B-1 hereof
3
<PAGE>
(the "Base Rental"), the full amount of all payments of Additional Base Rental
due in accordance with Exhibit B-2 hereof and the full amount of all parking
charges, if any, due in accordance with this Lease (the "Additional Base
Rental") and all such other sums of money as shall become due under this Lease
(including, without limitation, any charges for replacement of electric lamps
and ballasts and any other services, goods or materials furnished by Landlord at
Tenant's request), all of which hereinafter may be collectively called "Rent."
Except as otherwise provided herein, the Base Rental and Additional Base Rental
for each calendar year or portion thereof during the Lease Term, shall be due
and payable in advance in equal monthly installments on the first day of each
calendar month during the Lease Term and any extensions or renewals hereof, and
Tenant hereby agrees to pay such Base Rental and Additional Base Rental to
Landlord without demand, provided that the installment of Base Rental for the
first full calendar month of the Lease Term shall be payable upon the execution
of this Lease by Tenant. If the Lease Term commences on a day other than the
first day of a month or terminates on a day other than the last day of a month,
then the installments of Base Rental and Additional Base Rental for such month
or months shall be prorated, based on the number of days in such month. All
such payments shall be by a good and sufficient check. No payment by Tenant or
receipt or acceptance by Landlord of a lesser amount than the correct amount of
Rent due under this Lease shall be deemed to be other than a payment on account
of the earliest Rent due hereunder, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment be deemed an accord
and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance or pursue any other
available remedy. The acceptance by Landlord of any Rent on a date after the
due date of such payment shall not be construed to be a waiver of Landlord's
right to declare a default for any other late payment. Tenant's covenant to pay
Rent shall be independent of every other covenant set forth in this Lease.
Tenant shall, however, be entitled to exercise the rights set forth in Section 4
of Exhibit E with respect to a default by Landlord of its obligations under this
Lease.
B. All Rent not paid when due and payable shall bear interest from ten (10)
days after the date due until paid at the lesser of: 1. the Prime Rate plus 4%;
or 2. the Maximum Rate. In addition, if Tenant fails to pay any installment of
Base Rental, Additional Base Rental or any other item of Rent when due and
payable hereunder and such failure continues for ten (10) days after written
notice from Landlord, a service fee equal to five percent (5%) of such unpaid
amount will be due and payable immediately by Tenant to Landlord.
VI. SECURITY DEPOSIT. INTENTIONALLY OMITTED.
----------------
VII. SERVICES TO BE FURNISHED BY LANDLORD.
------------------------------------
A. Subject to the provisions of Article XI below, Landlord, as part of
Basic Costs, agrees to furnish Tenant the following services:
1. Cold water at those points of supply provided for general use of
tenants in the Building, central heat and air conditioning, at such
temperatures and in such amounts as are reasonably considered by Landlord to
be standard for buildings of similar class, size and location, or as required
by governmental authority; provided, however, heating and air conditioning
service at times other than for Normal Business Hours for the Building shall
be furnished only upon the written request of Tenant delivered to Landlord at
the office of the Building prior to 3:00 p.m. at least one Business Day in
advance of the date for which such usage is requested. Tenant shall pay
Landlord, upon demand as additional rent, the cost of additional service.
2. Routine maintenance and electric lighting service for all Common Areas
of the Building in the manner and to the extent deemed to be standard for
buildings of similar class, size and location. Landlord shall also provide
repairs to the Premises in accordance with Section X.C. hereof and electricity
to the Premises in accordance with Article XI hereof.
3. Janitor service on Business Days; provided, however, if Tenant's use,
floor covering or other improvements require special services (being those
services that are over and above what is provided to the tenants of the
Building in general as part of Basic Costs), Tenant shall, at Tenant's option,
either (i) retain its own contractors (which contractor shall be subject to
Landlord's reasonable approval) to do such work or, (ii) pay the additional
cost reasonably attributable thereto as additional Rent upon presentation of
statements therefor by Landlord.
4. Elevator service in common with other tenants of the Building for
ingress and egress to and from the floor of the Premises during Normal
Business Hours, provided that,
4
<PAGE>
subject to Force Majeure, at least one (1) passenger elevator servicing the
Premises shall be available for the use of Tenant, twenty-four (24) hours a
day, 365/6 days per year.
B. Except as otherwise expressly provided herein, the failure by Landlord
to any extent to furnish, or the interruption or termination of these services
in whole or in part, resulting from adherence to laws, regulations and
administrative orders, wear, use, repairs, improvements, alterations, Force
Majeure (as hereinafter defined) or any causes beyond the reasonable control of
Landlord shall not render Landlord liable in any respect nor be construed as an
eviction of Tenant, nor give rise to an abatement of Rent, nor relieve Tenant
from the obligation to fulfill any covenant or agreement hereof. Should any of
the equipment or machinery used in the provision of such services for any cause
cease to function properly, Landlord shall use its best efforts to repair such
equipment or machinery as soon as reasonably possible, but except as otherwise
expressly provided herein, Tenant shall have no claim for offset or abatement of
Rent or damages on account of an interruption in service or resulting therefrom.
C. Landlord shall not be deemed to have warranted the efficiency of any
security personnel, service, procedures or equipment and shall not be deemed to
have represented to Tenant that such security personnel, services, procedures or
equipment will be sufficient to protect Tenant or any of Tenant's agents,
servants, contractors, employees, customers, licensees or invitees from physical
harm or any of such parties personal property from damage or theft. Nothing
herein, however, shall be construed as a waiver or release by Tenant of any
rights Tenant may have with respect to any such services provided by Landlord.
VIII. LEASEHOLD IMPROVEMENTS.
----------------------
A. Except as otherwise specifically provided elsewhere in this Lease, all
installations and improvements now or hereafter placed on or in the Premises
shall be for Tenant's account and at Tenant's cost.
B. Any and all alterations, additions and improvements to the Premises, all
attached furniture, equipment and non-trade fixtures (collectively, "Leasehold
Improvements") shall be owned and insured by Landlord and shall remain upon the
Premises, all without compensation, allowance or credit to Tenant. Any
unattached and movable equipment or furniture, trade fixtures or other
personalty of Tenant ("Tenant's Property") shall be owned and insured by Tenant.
Landlord may, nonetheless, require Tenant, at its sole cost and expense, to
remove any vault, internal staircase, structural alterations or cabling
installed after the execution of this Lease (the "Required Removables"),
provided that Landlord shall not require Tenant to remove any cabling unless
such removal would be required in order for Landlord to provide sufficient space
for any future tenant of the Premises to run electrical, telephone and computer
cabling for normal office use. In no event, however, shall Landlord require
Tenant to remove any usual office improvements such as gypsum board, partitions,
ceiling grids and tiles, fluorescent lighting panels, building standard doors
and carpeting. In addition, Tenant shall not be required to remove any
Leasehold Improvements presently installed in the Premises other than any vaults
located within the Premises. In the event that Landlord so elects, Tenant shall
remove such Required Removables as soon as reasonably possible after the
expiration or earlier termination of this Lease (but in no event more than 30
days after such expiration or earlier termination) and repair any damage caused
by such removal. If Tenant fails to remove the Required Removables within the
time period provided above after Landlord's request therefor, Landlord may
remove, store or dispose of the Required Removables at Tenant's cost, and repair
any damage caused by such removal and Tenant shall pay Landlord as additional
Rent hereunder, on demand, all such costs.
C. Notwithstanding anything in Section VIII.B. above to the contrary,
Tenant may request in writing at the time it submits its plans and
specifications for an alteration, addition or improvement, that Landlord advise
Tenant whether Landlord will require Tenant to remove, at the termination of
this Lease or Tenant's right to possession hereunder, any Required Removable
that is included within such alteration, addition or improvement. Landlord,
within ten (10) days after such request, shall advise Tenant as to whether
Landlord will require removal and, if Landlord does not require removal at such
time, Landlord shall be deemed to have waived its right to require removal at
the expiration or earlier termination of this Lease. Unless Landlord has waived
its right to require Tenant to remove any Required Removable pursuant to the
foregoing sentence, Landlord shall have the right to exercise its right to have
Tenant remove any vault or staircase at any time within one (1) year after the
expiration or earlier termination of this Lease.
5
<PAGE>
IX. GRAPHICS. With respect to any multi-tenant floor on which a portion of
the Premises are located, all letters or numerals installed on the exterior of
the Premises shall be in the standard graphics for the Building and no others
shall be used or permitted on the Premises without Landlord's prior written
consent. With respect to any full floor leased by Tenant, any and all signage
and other identification shall be subject to Landlord's reasonable approval and
shall be installed at Tenant's sole cost and expense, provided that Tenant shall
have the right to apply the Work Allowance toward the cost of such signage and
other identification.
X. REPAIRS AND ALTERATIONS.
-----------------------
A. Tenant shall, at Tenant's own cost and expense, keep the Premises in
good condition and repair. Such repairs shall be done in a good and workmanlike
manner with new or like-new materials. If Tenant fails to make such repairs to
the Premises within thirty (30) days after notice from Landlord (or immediately
in the event of an emergency), Landlord may, at its option, make such repairs,
and Tenant shall pay the reasonable cost thereof to the Landlord on demand as
additional Rent.
B. Tenant shall not make or allow to be made any alterations, additions or
improvements to the Premises, nor place signs or window coverings on the
Premises which are visible from outside the Premises, without first obtaining
the written consent of Landlord in each such instance. Prior to commencing any
such work, Tenant must furnish Landlord with plans and specifications; names and
addresses of contractors; necessary permits; and evidence of contractor's and
subcontractor's insurance in accordance with section XVI.B. hereof. All such
improvements, alterations or additions shall be installed in a good workmanlike
manner using new materials. Upon completion, Tenant shall furnish "as-built"
plans, contractor's affidavits and full and final waivers of lien and receipted
bills covering all labor and materials. All improvements, alterations and
additions shall comply with all insurance requirements, codes, ordinances, laws
and regulations, including without limitation, the Americans with Disabilities
Act. Tenant shall reimburse Landlord upon demand as additional Rent for all
reasonable sums expended by Landlord for examination by Landlord's architects
and engineers of the architectural, mechanical, electric and plumbing plans for
any alterations, additions or improvements (if examination is deemed reasonably
necessary by Landlord due to the nature of the work being performed) and for the
costs of repairing any damage done to the Building caused by Tenant or Tenant's
agents, servants, employees, customers, licensees, or invitees. Upon request
from Tenant, Landlord shall provide Tenant with a good faith estimate of any
such architectural and engineering review costs. Landlord's approval of
Tenant's plans and specifications or supervision of any work performed for or on
behalf of Tenant shall not be deemed to be a representation by Landlord that
such plans and specifications comply with applicable insurance requirements,
building codes, ordinances, laws or regulations, Landlord shall, however, advise
Tenant of any violations or potential violations of which it is aware.
C. Landlord shall, at its expense (except as included in Basic Costs), keep
and maintain in good repair and working order and make all repairs to and
perform necessary maintenance upon: 1) all structural elements of the Building,
unless the need to make a structural alteration or repair results from Tenant's
particular manner of use of the Premises, Tenant's particular design of the
Premises, or any alterations, additions or improvements (including the Landlord
Work) performed by or on behalf of Tenant in the Premises; and 2) all mechanical
systems within or servicing the Premises, but only to the extent such have not
been installed by Tenant or its contractors; and 3) all elements of the Building
and the Premises necessary to provide the services described in Article VII, but
only to the extent such have not been installed by Tenant or its contractors;
and 4) the Building facilities common to all tenants including, but not limited
to, the ceilings, lighting, HVAC, plumbing, walls and floors in the Common
Areas. Notwithstanding the foregoing, Tenant shall be responsible for the cost
of any alterations, repairs, changes and additions necessitated by the negligent
or wrongful acts or omissions of Tenant, Tenant's agents, employees and
contractors.
XI. USE OF ELECTRICAL AND HVAC SERVICES BY TENANT. All electricity used by
Tenant in the Premises shall be paid for by Tenant through inclusion in Base
Rental or Basic Costs. Notwithstanding the foregoing, Tenant shall pay Landlord
directly for the cost of any electricity consumed in the following areas: (i)
employee break room on the first floor, (ii) executive dining room, (iii)
computer room, (iv) accounting department, (v) telephone room in basement (the
"Submetered Areas"). Tenant, within fifteen (15) days after receipt of an
invoice from Landlord, shall reimburse Landlord for the cost of electricity
consumed in the Submetered Areas, as such electricity is measured based on the
submeters currently installed in and about the Submetered Areas. Tenant's use
of electrical and heating, ventilating and air conditioning ("HVAC") services
furnished by Landlord shall not exceed, either in voltage, rated capacity, use
or overall load, that would be standard for the Building. In the event Tenant
shall request that it be allowed to consume electrical services in excess of the
Building standard, Landlord may condition Tenant's
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right to consume such additional electric service upon the installation of
utility service upgrades, submeters, air handlers or cooling units), and all
such additional usage (to the extent permitted by law), installation and
maintenance thereof shall be paid for by Tenant as additional Rent. Landlord
shall have the right to separately meter any such excess electrical usage for
the Premises at any time during the Lease Term or to use any other method of
measuring electrical usage that Landlord, in its reasonable judgment, deems to
be appropriate.
XII. ENTRY BY LANDLORD. Landlord and its agents or representatives shall
have the right to enter the Premises with reasonable prior notice (and in
emergencies at all times, without prior notice) to inspect the same, or to show
the Premises to prospective purchasers, mortgagees, tenants (during the last
twelve (12) months of the Lease Term) or insurers, or to clean or make repairs,
alterations or additions thereto, including any work that Landlord deems
necessary for the safety, protection or preservation of the Building or any
occupants thereof, or to facilitate repairs, alterations or additions to the
Building or any other tenants premises. If reasonably necessary for the
protection and safety of Tenant and its employees, Landlord shall have the right
to temporarily close the Premises to perform repairs, alterations or additions
in the Premises, provided that Landlord shall use reasonable efforts to perform
all such work on weekends and after Normal Business Hours. Entry by Landlord
hereunder shall not constitute a constructive eviction or entitle Tenant to any
abatement or reduction of Rent by reason thereof. Nothing herein shall be
construed as to grant Landlord, any Landlord Related Parties or any of their
respective agents, employees or contractors the right to access any of Tenant's
files, books or records while within the Premises.
XIII. ASSIGNMENT AND SUBLETTING.
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A. Tenant shall not assign, sublease, transfer or encumber this Lease or
any interest therein or grant any license, concession or other right of
occupancy of the Premises or any portion thereof or otherwise permit the use of
the Premises or any portion thereof by any party other than Tenant (any of which
events is hereinafter called a "Transfer") without the prior written consent of
Landlord, which consent shall not be unreasonably withheld with respect to any
proposed assignment or subletting. Landlord's consent shall not be considered
unreasonably withheld if: 1. the proposed transferee's financial responsibility
does not meet the criteria Landlord reasonably uses to select Building tenants;
2. the proposed transferee's business is not suitable for the Class A Buildings
considering the business of the other tenants and the Building's prestige
generally or would result in a violation of an exclusive right granted to
another tenant in the Building; 3. the proposed use is different than the
Permitted Use; 4. the proposed transferee is a government agency or occupant of
the Building (provided that Landlord will not withhold its consent solely
because the transferee is a government agency if the Transfer would not impose
any additional obligations on Landlord, result in an excessive amount of foot
traffic to and from the Premises or an excessive amount of people per square
foot within the Premises or detract from the Building's image, class or
prestige); or 5. Tenant is in default. Tenant acknowledges that the foregoing
is not intended to be an exclusive list of the reasons for which Landlord may
reasonably withhold its consent to a proposed Transfer. Any attempted Transfer
in violation of the terms of this Article shall, at Landlord's option, be void.
Consent by Landlord to one or more Transfers shall not operate as a waiver of
Landlord's rights as to any subsequent Transfers. In addition, Tenant shall
not, without Landlord's consent, publicly offer or advertise the asking rental
rate for any proposed Transfer in any media. In the event Tenant or anyone
acting on behalf of Tenant or with Tenant's knowledge violates the provisions of
the foregoing sentence, Landlord, in addition to its other remedies, shall be
entitled to seek injunctive relief preventing such action, and Tenant shall be
responsible for all costs incurred by Landlord in connection therewith.
B. If Tenant requests Landlord's consent to a Transfer, Tenant shall notify
Landlord in writing at least 45 days prior to the effective date of the proposed
Transfer of the name of the proposed transferee and the nature of the business
of the proposed transferee, the term, use, rental rate and all other material
terms and conditions of the proposed Transfer, including, without limitation,
evidence satisfactory to Landlord that the proposed transferee is financially
responsible. Notwithstanding the provisions of Section XIII.A. above, Landlord
may, during said 45-day period, 1. consent to or refuse to consent to such
Transfer in writing; or 2. negotiate directly with the proposed transferee and
(in the event Landlord is able to reach agreement with such proposed transferee)
upon execution of a lease with such transferee, terminate this Lease (in part or
in whole, as appropriate) upon thirty (30) days' notice; or 3. cancel and
terminate this Lease, in whole or in part as appropriate, upon 30 days notice.
Notwithstanding the foregoing, if Landlord would be entitled to terminate this
Lease hereunder with respect to all or any portion of the Premises, Tenant,
prior to entering into a sublease or assignment, shall have the right to advise
Landlord (the "Prior Notice") of its intention to sublet the Premises or assign
this Lease. Such Prior Notice shall describe the space Tenant intends to sublet
or assign and the effective date thereof. Landlord, within thirty (30) days
after receipt of the Prior Notice, shall have the
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right to terminate this Lease with respect to the space that Tenant intends to
sublet or assign as of the effective date set forth in the Prior Notice. If
Landlord fails to exercise its right to terminate within thirty (30) days after
the Prior Notice, Landlord shall not have the right to cancel and terminate this
Lease in connection with any proposed sublease or assignment with respect to the
space described in the Prior Notice that Tenant enters into within a period of
six (6) months after the expiration of such thirty (30) day period.
Notwithstanding anything herein to the contrary, it is understood and agreed
that Landlord shall not have a termination right hereunder with respect to a
proposed subletting of all or any portion of the Premises unless the proposed
lease term of such subletting is for substantially all of the remaining portion
of the Lease Term. In the event Landlord consents to any such Transfer, the
Transfer shall be in a form approved by Landlord, and Tenant shall bear all
costs and expenses incurred by Landlord in connection with the review and
approval of such documentation, which costs and expenses shall be deemed to be
at least Seven Hundred Fifty Dollars ($750.00).
C. In addition to the Rent hereunder, Tenant hereby covenants and agrees to
pay to Landlord fifty percent (50%) of all rent and other consideration which it
receives which is in excess of the Rent payable hereunder within ten (10) days
following receipt thereof by Tenant. In determining excess rent in connection
with an assignment or subletting, Tenant may, on an amortized basis, deduct the
following expenditures resulting from such subletting or assignment: (1)
brokerage and marketing fees; (2) legal fees; (3) construction costs and (4)
financial concessions granted in such sublease or assignment. In addition to
any other rights Landlord may have, Landlord shall have the right to contact any
transferee and require that all payments made pursuant to the Transfer shall be
made directly to Landlord.
D. Any Transfer consented to by Landlord in accordance with this Article
XIII shall be only for the Permitted Use and for no other purpose, and in no
event shall any Transfer release or relieve Tenant from any obligations under
this Lease.
XIV. LIENS. Tenant will not permit any mechanic's liens or other liens to be
placed upon the Premises or Tenant's leasehold interest therein, the Building,
or the real estate associated therewith. Landlord's title to the Building and
Property is and always shall be paramount to the interest of Tenant, and nothing
herein contained shall empower Tenant to do any act that can, shall or may
encumber Landlord's title. In the event any such lien does attach, Tenant
shall, within 5 days of notice of the filing of said lien, either discharge or
bond over such lien to the satisfaction of Landlord and Landlord's Mortgagee (as
hereinafter defined), and in such a manner as to stay the enforcement or
foreclosure of such lien. If Tenant shall fail to so discharge or bond over
such lien, then, in addition to any other right or remedy of Landlord, Landlord
may, but shall not be obligated to, discharge the same. Any amount paid by
Landlord for any of the aforesaid purposes, including reasonable attorneys fees
(if and to the extent permitted by law) shall be paid by Tenant to Landlord on
demand as additional Rent.
XV. INDEMNITY AND WAIVER OF CLAIMS.
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A. Except for losses, liabilities, obligations, damages, penalties, claims,
costs, charges, and expenses resulting from Landlord's failure to perform any of
its obligations under this Lease or the negligence of Landlord and/or its
agents, employees or contractors, Tenant shall indemnify, defend and hold
Landlord, its principals, beneficiaries, partners, officers, directors, agents,
employees and any Mortgagee(s) (collectively the "Landlord Related Parties")
harmless against and from all liabilities, obligations, damages, penalties,
claims, costs, charges and expenses, including, without limitation, reasonable
architects' and attorneys' fees (if and to the extent permitted by law), which
may be imposed upon, incurred by, or asserted against Landlord or any of the
Landlord Related Parties and arising, directly or indirectly, out of or in
connection with the use, occupancy or maintenance of the Premises by, through or
under Tenant, and (without limiting the generality of the foregoing) any of the
following: 1. any work or thing done in, on or about the Premises or any part
thereof by Tenant or any of its transferees, agents, servants, contractors or
employees; 2. any use, non-use, possession, occupation, condition, operation or
maintenance of the Premises or any part thereof; 3. any act or omission of
Tenant or any of its transferees, agents, servants, contractors and employees,
regardless of whether such act or omission occurred within the Premises; 4. any
injury or damage to any person or property occurring in, on or about the
Premises or any part thereof; or 5. any failure on the part of Tenant to perform
or comply with any of the covenants, agreements, terms or conditions contained
in this Lease with which Tenant must comply or perform. In case any action or
proceeding is brought against Landlord or any of the Landlord Related Parties by
reason of any of the foregoing, Tenant shall, at Tenant's sole cost and expense,
resist and defend such action or proceeding with counsel approved by Landlord
or, at Landlord's option, reimburse Landlord for the cost of any counsel
retained directly by Landlord to defend and resist such action or proceeding.
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B. Except for losses, liabilities, obligations, damages, penalties, claims,
costs, charges, and expenses resulting from the negligence of Landlord and/or
any Landlord Related Parties, Landlord and the Landlord Related Parties shall
not be liable for, and Tenant waives, all claims for loss or damage to Tenant's
business or damage to person or property sustained by Tenant resulting from any
accident or occurrence in, on or about the Premises, the Building or the
Property that was not reasonably within the control of Landlord to prevent,
including, without limitation, claims for loss, theft or damage resulting from:
1. wind or weather; 2. any latent defect in any sprinkler, heating or air-
conditioning equipment, electric wiring, gas, water or steam pipes; 3. broken
glass; 4. the backing up of any sewer pipe or downspout; 5. the bursting,
leaking or running of any tank, water closet, drain or other pipe; 6. the escape
of steam or water; 7. water, snow or ice being upon or coming through the roof,
skylight, stairs, doorways, windows, walks or any other place upon or near the
Building; 8. any act, omission or negligence of other tenants, licensees or any
other persons or occupants of the Building or of adjoining or contiguous
buildings, of owners of adjacent or contiguous property or the public, or by
construction of any private, public or quasi-public work; except where such loss
or damage is due to Landlord's willful failure to make repairs required to be
made pursuant to other provisions of this Lease, after the expiration of a
reasonable time after written notice to Landlord of the need for such repairs.
XVI. TENANT'S INSURANCE.
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A. At all times commencing on and after the earlier of the Commencement
Date and the date Tenant or its agents, employees or contractors enters the
Premises for any purpose, Tenant shall carry and maintain, at its sole cost and
expense:
1. Commercial General Liability Insurance with a Broad Form General
Liability Endorsement applicable to the Premises and its appurtenances
providing, on an occurrence basis, a minimum combined single limit of Two
Million Dollars ($2,000,000).
2. All Risks of Physical Loss Insurance written at replacement cost value
and with a replacement cost endorsement covering all of Tenant's Property in
the Premises.
3. Workers Compensation Insurance as required by the state in which the
Premises is located and in amounts as may be required by applicable statute,
and Employers Liability Coverage of One Million Dollars ($1,000,000) per
occurrence.
4. Whenever good business practice, in Landlord's reasonable judgment,
indicates the need to increase the limits of the Commercial General Liability
Insurance maintained by Tenant hereunder, Tenant shall, upon request, obtain
such insurance at Tenant's expense and provide Landlord with evidence thereof,
provided that Landlord shall not require Tenant to increase such insurance
coverage unless such increased coverage is required by the majority of other
Class A office buildings in the area.
B. Before any repairs, alterations, additions, improvements, or
construction are undertaken by or on behalf of Tenant, Tenant shall carry and
maintain, at its expense, or Tenant shall require any contractor performing work
on the Premises to carry and maintain, at no expense to Landlord, in addition to
worker's compensation insurance as required by the jurisdiction in which the
Building is located, All Risk Builder's Risk Insurance in the amount of the
replacement cost of any alterations, additions or improvements (or such other
amount reasonably required by Landlord) and Commercial General Liability
Insurance (including, without limitation, Contractor's Liability coverage,
Contractual Liability coverage, Completed Operations coverage, a Broad Form
Property Damage coverage and Contractor's Protective liability) written on an
occurrence basis with a minimum combined single limit of Two Million Dollars
($2,000,000); such limit may be accomplished by means of an umbrella policy.
C. Any company writing any insurance which Tenant is required to maintain
or cause to be maintained pursuant to the terms of this Lease (all such
insurance as well as any other insurance pertaining to the Premises or the
operation of Tenant's business therein being referred to as "Tenant's
Insurance"), as well as the form of such insurance, shall at all times be
subject to Landlord's reasonable approval, and each such insurance company shall
have an A.M. Best rating of "A7" or better and shall be licensed and qualified
to do business in the state in which the Premises are located. All policies
evidencing Tenant's Insurance (except for Workers Compensation) shall specify
Tenant and the "owner[s] of the Building and its (or their) respective
principals, beneficiaries, partners, officers, directors, employees, agents and
mortgagee[s]" (and any other designees of Landlord as the interest of such
designees shall appear) as additional insureds. Provided that the coverage
afforded Landlord and any designees of Landlord shall not be reduced or
otherwise adversely affected, all of Tenant's Insurance may be carried under a
blanket policy covering the Premises and any other of
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Tenant's locations. All policies of Tenant's Insurance shall contain
endorsements that the insurer(s) will give to Landlord and its designees at
least thirty (30) days' advance written notice of any change, cancellation,
termination or lapse of said insurance. Tenant shall be solely responsible for
payment of premiums for all of Tenant's Insurance. Tenant shall deliver to
Landlord at least fifteen (15) days prior to the time Tenant's Insurance is
first required to be carried by Tenant, and upon renewals at least fifteen (15)
days prior to the expiration of any such insurance coverage, a certificate of
insurance of all policies procured by Tenant in compliance with its obligations
under this Lease. The limits of Tenant's Insurance shall in no event limit
Tenant's liability under this Lease.
D. Tenant shall not do or fail to do anything in, upon or about the
Premises which will: 1. violate the terms of any of Landlord's insurance
policies; 2. prevent Landlord from obtaining policies of insurance acceptable to
Landlord or any Mortgagees; or 3. result in an increase in the rate of any
insurance on the Premises, the Building, any other property of Landlord or of
others within the Building. In the event of the occurrence of any of the events
set forth in this Section, Tenant shall pay Landlord upon demand, as additional
Rent, the cost of the amount of any increase in any such insurance premium. If
Tenant fails to obtain the insurance coverage required by this Lease, Landlord
may, at its option, obtain such insurance for Tenant, and Tenant shall pay, as
additional Rent, the cost of all premiums thereon and all of Landlord's costs
associated therewith. Notwithstanding the foregoing, so long as Tenant complies
with all of the terms and conditions of this Lease, Tenant shall not be
responsible for any increase in the cost of insurance coverage (other than
through inclusion in Basic Costs).
XVII. SUBROGATION. Notwithstanding anything set forth in this Lease to the
contrary, Landlord and Tenant do hereby waive any and all right of recovery,
claim, action or cause of action against the other, their respective principals,
beneficiaries, partners, officers, directors, agents, and employees, and, with
respect to Landlord, its Mortgagee[s], for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to their respective property, the
Building, the Property or the Premises or any addition or improvements thereto,
or any contents therein, by reason of fire, the elements or any other cause,
regardless of cause or origin, including the negligence of Landlord or Tenant,
or their respective principals, beneficiaries, partners, officers, directors,
agents and employees and, with respect to Landlord, its Mortgagee[s], which loss
or damage is (or would have been, had the insurance required by this Lease been
carried) covered by insurance. Since this mutual waiver will preclude the
assignment of any such claim by subrogation (or otherwise) to an insurance
company (or any other person), Landlord and Tenant each agree to give each
insurance company which has issued, or in the future may issue, its policies of
fire, extended coverage or material damage insurance, written notice of the
terms of this mutual waiver, and to have such insurance policies properly
endorsed, if necessary, to prevent the invalidation of any of the coverage
provided by such insurance policies by reason of such mutual waiver. For the
purpose of the foregoing waiver, the amount of any deductible applicable to any
loss or damage shall be deemed covered by, and recoverable by the insured under
the insurance policy to which such deductible relates. In the event that Tenant
is permitted to and self-insures any risk which would have been covered by the
insurance required to be carried by Tenant pursuant to Article XVI of the Lease,
or if Tenant fails to carry any insurance required to be carried by Tenant
pursuant to Article XVI of this Lease, then all loss or damage to Tenant, its
leasehold interest, its business, its property, the Premises or any additions or
improvements thereto or contents thereof shall be deemed covered by and
recoverable by Tenant under valid and collectible policies of insurance.
XVIII. LANDLORD'S INSURANCE. Landlord shall at all times during the Lease
Term and as part of Basic Costs procure and continue or cause to be procured and
continued comprehensive general liability insurance. The comprehensive general
liability insurance shall be in an amount of not less than Two Million Dollars
($2,000,000), combined single limit to protect Landlord against liability for
injury to or death of any person or damage to property in connection with the
use, occupancy, operation or condition of the Building. Landlord shall at all
times during the Lease Term maintain in effect policies of "All Risk" property
insurance covering the entire Building (other than trade fixtures, merchandise
and other personal property of any individual tenant) in an amount not less than
one hundred percent (100%) of their actual replacement cost from time to time
during the Lease Term. The full replacement value of the items to be insured
under this paragraph shall be determined by the company issuing the insurance
policy at the time the policy is initially obtained, and shall be increased as
reasonably determined by Landlord from time to time. The cost of all such
insurance shall be included as a part of the Basic Costs, and payments for
losses thereunder shall be made solely to Landlord or the Mortgagees of Landlord
as their interests shall appear.
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XIX. CASUALTY DAMAGE
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A. If the Premises or any part thereof shall be damaged by fire or other
casualty, Tenant shall give prompt written notice thereof to Landlord. In case
(i) the Building shall be damaged by fire or other casualty to the extent that
such damage cannot reasonably be repaired within two hundred seventy (270) days
after the date of such fire or other casualty (whether or not the Premises shall
have been damaged by such casualty), or (ii) in the event the Premises have been
materially damaged and there is less than two (2) years of the Lease Term
remaining on the date of such casualty, or (iii) in the event any Mortgagee
should require that the insurance proceeds payable as a result of a casualty be
applied to the payment of the mortgage debt, or (iv) in the event of any
material uninsured loss to the Building, Landlord may, at its option, terminate
this Lease by notifying Tenant in writing of such termination within ninety (90)
days after the date of such casualty. Such termination shall be effective as of
the date of fire or casualty, with respect to any portion of the Premises that
was rendered untenantable, and the date specified in Landlord's notice, with
respect to any portion of the Premises that remained tenantable. Landlord
agrees that it will not discriminate against Tenant in arriving at its decision
of whether to terminate or rebuild and, in no event, shall Landlord elect to
terminate solely because the Rent payable by Tenant hereunder is below the
prevailing market rent for the Premises. If Landlord does not elect to
terminate this Lease, Landlord shall commence and proceed with reasonable
diligence to restore the Building (provided that Landlord shall not be required
to restore any unleased premises in the Building) and the Leasehold Improvements
(but excluding any improvements, alterations or additions made by Tenant in
violation of this Lease) located within the Premises, if any, to substantially
the same condition they were in immediately prior to the happening of the
casualty. Notwithstanding the foregoing, Landlord's obligation to restore the
Building, and the Leasehold Improvements, if any, shall not require Landlord to
expend for such repair and restoration work more than the insurance proceeds
actually received by the Landlord as a result of the casualty, provided that if
Landlord does not have sufficient proceeds to substantially complete the
restoration of the Leasehold Improvements in the Premises and Landlord elects
not to fund any shortfall, Landlord shall so notify Tenant and Tenant, within
ten (10) days thereafter, shall have the right to terminate this Lease by the
giving of written notice to Landlord. When repairs to the Premises have been
completed by Landlord, Tenant shall complete the restoration or replacement of
all Tenant's Property necessary to permit Tenant's reoccupancy of the Premises,
and Tenant shall present Landlord with evidence satisfactory to Landlord of
Tenant's ability to pay such costs prior to Landlord's commencement of repair
and restoration of the Premises. Landlord shall not be liable for any
inconvenience or annoyance to Tenant or injury to the business of Tenant
resulting in any way from such damage or the repair thereof, except that
Landlord shall allow Tenant a fair diminution of Rent on a per diem basis during
the time and to the extent the Premises are untenantable. Provided if the
Premises or any other portion of the Building is damaged by fire or other
casualty resulting from the fault or negligence of Tenant or any of Tenant's
agents, employees, or contractors, the Rent hereunder shall not be diminished
during any period during which the Premises, or any portion thereof, is
untenantable, and Tenant shall be liable to Landlord for the cost of the repair
and restoration of the Building caused thereby to the extent such cost and
expense is not covered by insurance proceeds. Landlord and Tenant hereby waive
the provisions of any law from time to time in effect during the Lease Term
relating to the effect upon leases of partial or total destruction of leased
property. Landlord and Tenant agree that their respective rights in the event
of any damage to or destruction of the Premises shall be those specifically set
forth herein.
B. Notwithstanding anything in Section XIX.A. above to the contrary, if all
or any portion of the Premises shall be made untenantable by a fire or other
casualty, Landlord shall with reasonable promptness, cause an architect or
general contractor selected by Landlord to estimate the amount of time required
to substantially complete repair and restoration of the Premises and make the
Premises tenantable again, using standard working methods (the "Completion
Estimate"). If the Completion Estimate indicates that the Premises cannot be
made tenantable within two hundred seventy (270) days from the date of the fire
or other casualty, Tenant shall have the right to terminate this Lease by giving
written notice to Landlord of such election within ten (10) days after its
receipt of the Completion Estimate. If the Completion Estimate indicates that
the Premises can be made tenantable within two hundred seventy (270) days from
the date of the fire or other casualty and Landlord has not otherwise exercised
its right to terminate the Lease pursuant to the terms hereof, or if the
Completion Estimate indicates that the Premises cannot be made tenantable within
two hundred seventy (270) days but neither party terminates this Lease pursuant
to this Article XIX, Landlord shall proceed with reasonable promptness to repair
and restore the Premises. Notwithstanding the foregoing, if Landlord does not
substantially complete the repair and restoration the Premises within two (2)
months after the expiration of the estimated period of time set forth in the
Completion Estimate, which period shall be extended to the extent of any
Reconstruction Delays, then Tenant may terminate this Lease by written notice to
Landlord within fifteen (15) days after the expiration of such period,
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as the same may be extended. For purposes of this Lease, the term
"Reconstruction Delays" shall mean: (i) any delays caused by Tenant, and (ii)
any delays caused by events of Force Majeure.
XX. DEMOLITION. INTENTIONALLY OMITTED.
XXI. CONDEMNATION. If 1. the whole or any substantial part of the Premises
or 2. any portion of the Building or Property which would leave the remainder of
the Building unsuitable for use by Tenant as an office building comparable to
its use on the date of taking, shall be taken or condemned for any public or
quasi-public use under governmental law, ordinance or regulation, or by right of
eminent domain, or in lieu thereof, then Landlord and Tenant may, at its option,
terminate this Lease effective as of the date the physical taking of said
Premises or said portion of the Building or Property shall occur. In the event
this Lease is not terminated, the Rentable Area of the Building, the Rentable
Area of the Premises and Tenant's Pro Rata Share shall be appropriately
adjusted. In addition, Rent for any portion of the Premises so taken or
condemned shall be abated during the unexpired term of this Lease effective when
the physical taking of said portion of the Premises shall occur. All
compensation awarded for any such taking or condemnation, or sale proceeds in
lieu thereof, shall be the property of Landlord, and Tenant shall have no claim
thereto, the same being hereby expressly waived by Tenant, except for any
portions of such award or proceeds which are specifically allocated by the
condemning or purchasing party for the bonus value of Tenant's leasehold estate
or the taking of or damage to trade fixtures of Tenant, which Tenant
specifically reserves to itself.
XXII. EVENTS OF DEFAULT. The following events shall be deemed to be events
of default under this Lease:
A. Tenant shall fail to pay when due any Base Rental, Additional Base
Rental or other Rent under this Lease and such failure shall continue for 10
days after delivery of written notice to Tenant (hereinafter sometimes referred
to as a "Monetary Default").
B. Any failure by Tenant (other than a Monetary Default) to comply with any
term, provision or covenant of this Lease, which failure is not cured within
twenty (20) days after delivery to Tenant of notice of the occurrence of such
failure, (or such longer period of time as may be reasonably necessary to cure,
provided that Tenant commences to cure such default within twenty (20) days
after notice from Landlord and, from time to time upon request of Landlord,
furnishes Landlord with evidence that demonstrates, in Landlord's reasonable
judgment, that Tenant is diligently pursuing a course that will remedy such
failure) provided that if any such failure creates a hazardous condition, such
failure must be cured immediately.
C. Tenant shall become insolvent, or shall make a transfer in fraud of
creditors, or shall commit an act of bankruptcy or shall make an assignment for
the benefit of creditors, or Tenant shall admit in writing its inability to pay
its debts as they become due.
D. Tenant shall file a petition under any section or chapter of the United
States Bankruptcy Code, as amended, pertaining to bankruptcy, or under any
similar law or statute of the United States or any State thereof, or Tenant
shall be adjudged bankrupt or insolvent in proceedings filed against Tenant
thereunder; or a petition or answer proposing the adjudication of Tenant as a
debtor or its reorganization under any present or future federal or state
bankruptcy or similar law shall be filed in any court and such petition or
answer shall not be discharged or denied within sixty (60) days after the filing
thereof.
E. A receiver or trustee shall be appointed for all or substantially all of
the assets of Tenant or of the Premises or of any of Tenant's property located
thereon in any proceeding brought by Tenant, or any such receiver or trustee
shall be appointed in any proceeding brought against Tenant and shall not be
discharged within sixty (60) days after such appointment or Tenant shall consent
to or acquiesce in such appointment.
F. The leasehold estate hereunder shall be taken on execution or other
process of law or equity in any action against Tenant.
G. INTENTIONALLY OMITTED.
H. INTENTIONALLY OMITTED.
I. The liquidation, termination, dissolution, forfeiture of right to do
business or death of Tenant.
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J. Tenant shall be in default beyond any notice and cure period under any
other lease with Landlord.
XXIII. REMEDIES.
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A. Upon the occurrence of any event or events of default under this Lease,
whether enumerated in Article XXII or not, Landlord shall have the option to
pursue any one or more of the following remedies:
1. Enter upon and take possession of the Premises by court order and
expel or remove Tenant or any other person who may be occupying said Premises,
or any part thereof, without terminating this Lease. Landlord shall use
reasonable efforts to relet the Premises, provided, however, a) Landlord shall
not be required to relet the Premises in preference to any other space that is
available for lease in the Building, b) Landlord shall not be required to give
notice to Tenant or obtain Tenant's approval to the terms of any such
reletting, c) the lease term for any reletting may be greater or less than the
period which would otherwise have constituted the balance of the Lease Term,
d) the terms and conditions of any reletting (which may include concessions,
free rent and alterations of the Premises) shall be determined in Landlord's
reasonable discretion, and e) Landlord may collect and receive any rents
payable by reason of such reletting. Tenant agrees to pay Landlord on demand
all Costs of Reletting and any deficiency that may arise by reason of such
reletting or failure to relet. Landlord shall not be responsible or liable
for any failure to relet the Premises or any part thereof or for any failure
to collect any Rent due upon any such reletting. No such re-entry or taking
of possession of the Premises by Landlord shall be construed as an election on
Landlord's part to terminate this Lease unless a written notice of such
termination is given to Tenant.
2. Enter upon the Premises and do whatever Tenant is obligated to do
under the terms of this Lease, and Tenant agrees to reimburse Landlord on
demand for any expense which Landlord may incur in thus affecting compliance
with Tenant's obligations under this Lease together with interest at the
lesser of a per annum rate equal to: a. the Maximum Rate, or b. the Prime Rate
plus five percent (5%), and Tenant further agrees that Landlord shall not be
liable for any damages resulting to Tenant from such action, except to the
extent caused by the negligence or wilful misconduct of Landlord.
3. Terminate this Lease, in which event, Tenant shall immediately
surrender the Premises to Landlord and pay to Landlord the sum of: a. all
Rent accrued hereunder through the date of termination, and, upon Landlord's
determination thereof, b. an amount equal to (i) the total Rent that Tenant
would have been required to pay for the remainder of the Lease Term discounted
to present value at the prime rate then in effect, minus (ii) the then present
fair rental value of the Premises for the remainder of the Lease Term,
similarly discounted, after deducting all anticipated Costs of Reletting.
Landlord's determination of such amount shall be conclusive and binding on
Tenant, and shall be deemed to have been made in good faith, subject only to
manifest error.
4. Exercise any other rights permitted by the common law of the State of
Florida and\or the statutory law of the State of Florida, including, without
limitation, any rights of possession, distress for rent and landlord's lien
provided under the nonresidential tenancy section of Chapter 83 of the Florida
Statutes.
B. For purposes of this Lease, the term "Costs of Reletting" shall mean all
commercially reasonable costs and expenses (based upon market conditions
existing at the time) incurred by Landlord in connection with the reletting of
the Premises, including without limitation, Rent loss during the period the
Premises are vacant prior to reletting, the cost of cleaning, renovation,
repairs, decoration and alteration of the Premises for a new tenant or tenants,
advertisement, marketing, brokerage and legal fees (if and to the extent
permitted by law), the cost of protecting or caring for the Premises while
vacant, the cost of removing and storing any property located on the Premises,
any increase in insurance premiums caused by the vacancy of the Premises and any
other out-of-pocket expenses incurred by Landlord including tenant inducements
such as the cost of moving the new tenant or tenants and the cost of assuming
any portion of the existing lease(s) of the new tenant(s), which costs and
expenses are reasonable and customary based on the prevailing market conditions.
C. Except as otherwise herein provided, no repossession or re-entering on
the Premises or any part thereof pursuant to Article XXIII hereof or otherwise
shall relieve Tenant of its liabilities and obligations hereunder, all of which
shall survive such repossession or re-entering. Notwithstanding any such
repossession or re-entering by reason of the occurrence of an event
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of default, Tenant will pay to Landlord the Rent required to be paid by Tenant
pursuant to this Lease.
D. No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy, and each and every right
and remedy shall be cumulative and in addition to any other right or remedy
given hereunder or now or hereafter existing by agreement, applicable law or in
equity. In addition to other remedies provided in this Lease, Landlord shall be
entitled, to the extent permitted by applicable law, to injunctive relief, or to
a decree compelling performance of any of the covenants, agreements, conditions
or provisions of this Lease, or to any other remedy allowed to Landlord at law
or in equity. Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an event of default shall not be deemed or construed to
constitute a waiver of such default.
E. This Article XXIII shall be enforceable to the maximum extent such
enforcement is not prohibited by applicable law, and the unenforceability of any
portion thereof shall not thereby render unenforceable any other portion.
XXIV. LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR
LANDLORD HEREUNDER) TO TENANT SHALL BE LIMITED TO THE INTEREST OF LANDLORD IN
THE BUILDING, AND TENANT AGREES TO LOOK SOLELY TO LANDLORD'S INTEREST IN THE
BUILDING FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST THE LANDLORD, IT
BEING INTENDED THAT LANDLORD SHALL NOT BE PERSONALLY LIABLE FOR ANY JUDGMENT OR
DEFICIENCY. TENANT HEREBY COVENANTS THAT, PRIOR TO THE FILING OF ANY SUIT FOR
AN ALLEGED DEFAULT BY LANDLORD HEREUNDER, IT SHALL GIVE LANDLORD AND ALL
MORTGAGEES WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES OR DEED OF TRUST LIENS
ON THE PROPERTY, BUILDING OR PREMISES NOTICE AND REASONABLE TIME TO CURE SUCH
ALLEGED DEFAULT BY LANDLORD. IN ADDITION, TENANT ACKNOWLEDGES THAT EQUITY
OFFICE PROPERTIES, INC. IS ACTING SOLELY IN ITS CAPACITY AS AGENT FOR LANDLORD
AND SHALL NOT BE LIABLE FOR ANY OBLIGATIONS, LIABILITIES, LOSSES OR DAMAGES
ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, ALL OF WHICH ARE EXPRESSLY
WAIVED BY TENANT.
XXV. NO WAIVER. Failure of Landlord to declare any default immediately upon
its occurrence, or delay in taking any action in connection with an event of
default shall not constitute a waiver of such default, nor shall it constitute
an estoppel against Landlord, but, provided such default is ongoing, Landlord
shall have the right to declare the default at any time and, following notice to
Tenant and the expiration of the cure periods provided in this Lease, take such
action as is lawful or authorized under this Lease. Failure by Landlord to
enforce its rights with respect to any one default shall not constitute a waiver
of its rights with respect to any subsequent default. Receipt by Landlord of
Tenant's keys to the Premises shall not constitute an acceptance or surrender of
the Premises.
XXVI. EVENT OF BANKRUPTCY. In addition to, and in no way limiting the other
remedies set forth herein, Landlord and Tenant agree that if Tenant ever becomes
the subject of a voluntary or involuntary bankruptcy, reorganization,
composition, or other similar type proceeding under the federal bankruptcy laws,
as now enacted or hereinafter amended, then:
A. "Adequate protection" of Landlord's interest in the Premises pursuant to
the provisions of Section 361 and 363 (or their successor sections) of the
Bankruptcy Code, 11 U.S.C. Section 101 et seq., (such Bankruptcy Code as
amended from time to time being herein referred to as the "Bankruptcy Code"),
prior to assumption and/or assignment of the Lease by Tenant shall include, but
not be limited to all (or any part) of the following:
1. the continued payment by Tenant of the Base Rental and all other Rent
due and owing hereunder and the performance of all other covenants and
obligations hereunder by Tenant;
2. the hiring of security guards to protect the Premises if Tenant
abandons and/or ceases operations; such obligation of Tenant only to be
effective so long as Tenant remains in possession and control of the Premises
to the exclusion of Landlord;
3. the furnishing of an additional/new security deposit by Tenant in the
amount of three (3) times the then-current monthly Base Rental.
B. "Adequate assurance of future performance" by Tenant and/or any assignee
of Tenant pursuant to Bankruptcy Code Section 365 will include (but not be
limited to) payment
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of an additional/new Security Deposit in the amount of three (3) times the then-
current Base Rental payable hereunder.
C. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code, shall be deemed without further act or deed
to have assumed all of the obligations of Tenant arising under this Lease on and
after the effective date of such assignment. Any such assignee shall, upon
demand by Landlord, execute and deliver to Landlord an instrument confirming
such assumption of liability.
D. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Tenant to or on behalf of the Landlord under this Lease, whether or
not expressly denominated as "Rent", shall constitute "rent" for the purposes of
Section 502(b) (6) of the Bankruptcy Code.
E. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, any and all monies or other considerations
payable or otherwise to be delivered to Landlord (including Base Rentals and
other Rent hereunder), shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the bankruptcy estate of
Tenant. Any and all monies or other considerations constituting Landlord's
property under the preceding sentence not paid or delivered to Landlord shall be
held in trust by Tenant or Tenant's bankruptcy estate for the benefit of
Landlord and shall be promptly paid to or turned over to Landlord.
F. If Tenant assumes this Lease and proposes to assign the same pursuant to
the provisions of the Bankruptcy Code to any person or entity who shall have
made a bona fide offer to accept an assignment of this Lease on terms acceptable
to the Tenant, then notice of such proposed offer/assignment, setting forth 1.
the name and address of such person or entity, 2. all of the terms and
conditions of such offer, and 3. the adequate assurance to be provided Landlord
to assure such person's or entity's future performance under the Lease, shall be
given to Landlord by Tenant no later than twenty (20) days after receipt by
Tenant, but in any event no later than ten (10) days prior to the date that
Tenant shall make application to a court of competent jurisdiction for authority
and approval to enter into such assumption and assignment, and Landlord shall
thereupon have the prior right and option, to be exercised by notice to Tenant
given at any time prior to the effective date of such proposed assignment, to
accept an assignment of this Lease upon the same terms and conditions and for
the same consideration, if any, as the bona fide offer made by such persons or
entity, less any brokerage commission which may be payable out of the
consideration to be paid by such person for the assignment of this Lease.
G. To the extent permitted by law, Landlord and Tenant agree that this
Lease is a contract under which applicable law excuses Landlord from accepting
performance from (or rendering performance to) any person or entity other than
Tenant within the meaning of Sections 365(c) and 365(e) (2) of the Bankruptcy
Code.
XXVII. QUIET ENJOYMENT. Tenant shall, and may peacefully have, hold, and
enjoy the Premises, subject to the other terms of this Lease (including, without
limitation, Article XXX hereof), provided that Tenant pays the Rent herein
recited to be paid by Tenant and performs all of Tenant's covenants and
agreements herein contained. This covenant and any and all other covenants of
Landlord shall be binding upon Landlord and its successors only during its or
their respective periods of ownership of the Landlord's interest hereunder.
XXVIII. RELOCATION. Landlord shall be entitled to cause Tenant to relocate
from any Applicable Space (hereinafter defined) to comparable space within the
Building (the "Relocation Space") containing approximately the same Rentable
Area as the Applicable Space at any time upon sixty (60) days prior written
notice to Tenant. For purposes hereof, "Applicable Space" shall mean any
portion of the Premises that, from time to time, (i) is located on a multi-
tenant floor, and (ii) contains less than 6,000 square feet of Rentable Area.
Any such relocation shall be performed at Landlord's sole cost and expense and
in such a manner as to minimize any disruption to the operation of Tenant's
business in the Applicable Space. Landlord agrees to reimburse Tenant for all
reasonable costs actually incurred in connection with the relocation, including
the cost of reprinting existing stationery and business cards, moving
telephones, graphics and similar items of expense. Such a relocation shall not
affect this Lease except that from and after the date of such relocation,
"Premises" shall refer to the Relocation Space into which Tenant has been moved,
rather than the original Premises as herein defined, and the Base Rental shall
be adjusted so that immediately following such relocation the Base Rental for
the Relocation Space per annum on a per square foot of Rentable Area basis shall
be the same as the Base Rental per annum immediately prior to such relocation
for the original Premises on a per square foot of Rentable Area basis.
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XXIX. HOLDING OVER. In the event of holding over by Tenant after expiration
or other termination of this Lease or in the event Tenant continues to occupy
the Premises after the termination of Tenant's right of possession pursuant to
Articles XXII and XXIII hereof, occupancy of the Premises subsequent to such
termination or expiration shall be that of a tenancy at sufferance and in no
event for month-to-month or year-to-year, but Tenant shall, pay rent (on a per
month basis without reduction for any partial months during any such holdover)
equal to the greater of the prevailing market rate and the Base Rental and
Additional Base Rental due for the period immediately preceding such holding
over, provided if the holding over continues for more than thirty (30) days,
effective as of the thirty-first day, holdover rent shall increase to 200% of
the sum of the Base Rental and Additional Base Rental due for the period
immediately preceding such holding over. No holding over by Tenant or payments
of money by Tenant to Landlord after the expiration of the term of this Lease
shall be construed to extend the Lease Term or prevent Landlord from recovery of
immediate possession of the Premises by summary proceedings or otherwise.
Tenant shall be liable to Landlord for all damage, including any consequential
damage, which Landlord may suffer by reason of any holding over by Tenant, and
Tenant shall indemnify Landlord against any and all claims made by any other
tenant or prospective tenant against Landlord for delay by Landlord in
delivering possession of the Premises to such other tenant or prospective
tenant.
XXX. SUBORDINATION TO MORTGAGES.
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A. Tenant accepts this Lease subject and subordinate to any mortgage, deed
of trust, ground lease or other lien presently existing or hereafter arising
upon the Premises, or upon the Building and/or the Property and to any renewals,
modifications, refinancings and extensions thereof (any such mortgage, deed of
trust, lease or other lien being hereinafter referred to as a "Mortgage", and
the person or entity having the benefit of same being referred to hereinafter as
a "Mortgagee"), but Tenant agrees that any such Mortgagee shall have the right
at any time to subordinate such Mortgage to this Lease on such terms and subject
to such conditions as such Mortgagee may deem appropriate in its discretion.
This clause shall be self-operative and no further instrument of subordination
shall be required. However, Landlord is hereby irrevocably vested with full
power and authority to subordinate this Lease to any Mortgage, and Tenant agrees
upon demand to execute such further instruments subordinating this Lease,
acknowledging the subordination of this Lease or attorning to the holder of any
such Mortgage as Landlord may request. The terms of this Lease are subject to
approval by the Landlord's existing lender(s) and any lender(s) who, at the time
of the execution of this Lease, have committed or are considering committing to
Landlord to make a loan secured by all or any portion of the Property, and such
approval is a condition precedent to Landlord's obligations hereunder. In the
event that Tenant should fail to execute any subordination or other agreement
required by this Article promptly as requested, Tenant hereby irrevocably
constitutes Landlord as its attorney-in-fact to execute such instrument in
Tenant's name, place and stead, it being agreed that such power is one coupled
with an interest in Landlord and is accordingly irrevocable. If any person
shall succeed to all or part of Landlord's interests in the Premises whether by
purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination
of lease or otherwise, and if and as so requested or required by such successor-
in-interest, Tenant shall, without charge, attorn to such successor-in-interest.
Tenant agrees that it will from time to time upon request by Landlord and,
within five days of the date of such request, execute and deliver to such
persons as Landlord shall request an estoppel certificate or other similar
statement in recordable form certifying that this Lease is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as so modified), stating the dates to which Rent and other
charges payable under this Lease have been paid, stating that Landlord is not in
default hereunder (or if Tenant alleges a default stating the nature of such
alleged default) and further stating such other matters as Landlord shall
reasonably require.
B. Notwithstanding Section XXX.A. to the contrary, provided that Tenant is
not then in default of its obligations under this Lease after the expiration of
any applicable notice and cure periods, Landlord will obtain a non-disturbance,
subordination and attornment agreement in favor of Tenant from any future
Mortgagee(s) on such Mortgagee's then current standard form of agreement,
provided that Tenant shall be responsible for any reasonable review and approval
costs charged by such Mortgagee in connection with such non-disturbance,
subordination and attornment agreement. Upon request of Landlord, Tenant will
execute any such Mortgagees' form of non-disturbance, subordination and
attornment agreement and return the same to Landlord for execution by such
Mortgagee. Landlord's failure to obtain a non-disturbance, subordination and
attornment agreement for Tenant from any such Mortgagee shall not be considered
to be a default by Landlord hereunder, provided that if such Mortgagee is
unwilling to enter into a non-disturbance, attornment and subordination
agreement with Tenant, Tenant shall not be required to subordinate its leasehold
interest to the interest of such Mortgagee.
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XXXI. ATTORNEY'S FEES. In the event that Landlord should retain counsel
and/or institute any suit against Tenant for violation of or to enforce any of
the covenants or conditions of this Lease, or should Tenant institute any suit
against Landlord for violation of any of the covenants or conditions of this
Lease, or should either party intervene in any suit in which the other is a
party to enforce or protect its interest or rights hereunder, the prevailing
party in any such suit shall be entitled to all of its costs, expenses and
reasonable fees of its attorney(s) (if and to the extent permitted by law) in
connection therewith.
XXXII. NOTICE. Whenever any demand, request, approval, consent or notice
("Notice") shall or may be given to either of the parties by the other, each
such Notice shall be in writing and shall be sent by registered or certified
mail with return receipt requested, or sent by overnight courier service (such
as Federal Express) at the respective addresses of the parties for notices as
set forth in Section I.A.6. of this Lease, provided that if Tenant has vacated
the Premises or is in default of this Lease Landlord may serve Notice by any
manner permitted by Law. Any Notice under this Lease delivered by registered or
certified mail shall be deemed to have been given and effective on the earlier
of (a) the third day following the day on which the same shall have been mailed
with sufficient postage prepaid or (b) the delivery date indicated on the return
receipt. Notice sent by overnight courier service shall be deemed given and
effective upon the day after such notice is delivered to or picked up by the
overnight courier service. Either party may, at any time, change its Notice
Address by giving the other party Notice stating the change and setting forth
the new address.
XXXIII. LANDLORD'S LIEN. In addition to any statutory lien for rent in
Landlord's favor, Landlord (the secured party for purposes hereof) shall have
and Tenant (the debtor for purposes hereof) hereby grants to Landlord, an
express contract lien and a continuing security interest to secure the payment
of all Rent due hereunder from Tenant, upon all equipment, fixtures and
furniture of Tenant (and any transferees or other occupants of the Premises)
presently or hereafter situated on the Premises and upon all proceeds of any
insurance which may accrue to Tenant by reason of damage or destruction of any
such property. Landlord shall not, however, have a express contract lien and
continuing security interest in the portion of Tenant's main frame computer
system that contains Tenant's files, client lists and other confidential
information. Landlord shall, however, has a express contract lien and
continuing security interest in any personal computers that are tied into such
system or otherwise located in the Premises. In the event of a default under
this Lease, Landlord shall have, in addition to any other remedies provided
herein or by law, all rights and remedies under the Uniform Commercial Code of
the state in which the Premises is located, including without limitation the
right to sell the property described in this paragraph at public or private sale
upon ten (10) days notice to Tenant, which notice Tenant hereby agrees is
adequate and reasonable. Tenant hereby agrees to execute such other instruments
necessary or desirable in Landlord's discretion to perfect the security interest
hereby created. Any statutory lien for rent is not hereby waived, the express
contractual lien herein granted being in addition and supplementary thereto.
Landlord and Tenant agree that this Lease and the security interest granted
herein serve as a financing statement, and a copy or photographic or other
reproduction of this Paragraph of this Lease may be filed of record by Landlord
and have the same force and effect as the original. Tenant warrants and
represents that the collateral subject to the security interest granted herein
is not purchased or used by Tenant for personal, family or household purposes.
Notwithstanding the foregoing, the lien herein granted shall be subject and
subordinate to any liens existing on such equipment, fixtures and furniture as
of the date hereof. In addition, provided Tenant is not in default hereunder,
Landlord agrees to subordinate its security interest as described in this
Article XXXIII to Tenant's lenders, ("Lender") if any, requiring a priority
position under the following circumstances: (a) Lender is financing Tenant's
purchase of the equipment or inventory in which Landlord is subordinating its
security interest (the "Equipment"); (b) Tenant shall furnish Landlord with a
complete schedule of the Equipment financed pursuant to the terms hereof, which
schedule shall be updated in the event of any changes; (c) Tenant shall be
prohibited from financing any non-moveable fixture or permanent improvement to
the leasehold; (d) Tenant shall cause any and all Lenders to give Landlord
notice of any public or private sale by such Lender of Tenant's Equipment; (e)
no public or private sale by any Lender shall be held on the Premises; and (f)
Lender can enter the Premises for purpose of removal of the Equipment only if:
(1) permitted by the agreement between Lender and Tenant; and (2) Lender agrees
to restore or repair all damage to the Premises caused by such removal; and
(3)Lender gives Landlord notice in the event that any of Tenant's moveable trade
fixtures or Equipment are removed from the Premises. Notwithstanding anything
herein to the contrary, Landlord agrees that its statutory lien shall be limited
to Tenant's furniture, fixtures and equipment.
XXXIV. EXCEPTED RIGHTS. This Lease does not grant any rights to light or air
over or about the Building. Landlord specifically excepts and reserves to
itself the use of any roofs, the exterior portions of the Premises, all rights
to and the land and improvements below the improved floor level of the Premises,
the improvements and air rights above the Premises and
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the improvements and air rights located outside the demising walls of the
Premises, and suchareas within the Premises as are required for installation of
utility lines and other installations required to serve any occupants of the
Building and the right to maintain and repair the same, and no rights with
respect thereto are conferred upon Tenant unless otherwise specifically provided
herein. Landlord further reserves to itself the right from time to time: A. to
change the Building's name or street address; B. to install, fix and maintain
signs on the exterior and interior of the Building, provided that in no event
shall any signs block Tenant's signs or cover the exterior windows to the
Premises; C. to designate and approve window coverings; D. to make any
decorations, alterations, additions, improvements to the Building, or any part
thereof (including the Premises) which Landlord shall desire, or deem necessary
for the safety, protection, preservation or improvement of the Building, or as
Landlord may be required to do by law, provided, unless required by law or
necessary for the safety, protection or preservation of the Building, Landlord
shall not perform any alterations, additions or improvements that would
adversely affect (i) the services to be provided by Landlord to Tenant
hereunder, or (ii) the market value of the Building and/or Premises; E. subject
to the terms of Article XII, to have access to the Premises to perform its
duties and obligations and to exercise its rights under this Lease; F. to
retain at all times and to use pass-keys to all locks within and into the
Premises; G. to approve the weight, size, or location of heavy equipment,
articles in and about the Premises; H. to close or restrict access to the
Building at all times other than Normal Business Hours subject to Tenant's right
to admittance at all times under such regulations as Landlord may prescribe from
time to time, or to close (temporarily or permanently) any of the entrances to
the Building; I. to change the arrangement and/or location of entrances of
passageways, doors and doorways, corridors, elevators, stairs, toilets and
public parts of the Building; and J. to grant to anyone the exclusive right to
conduct any business or undertaking in the Building. Landlord, in accordance
with Article XII hereof, shall have the right to enter the Premises in
connection with the exercise of any of the rights set forth herein and such
entry into the Premises and the performance of any work therein shall not
constitute a constructive eviction or entitle Tenant to any abatement or
reduction of Rent by reason thereof.
XXXV. SURRENDER OF PREMISES. At the expiration or earlier termination of
this Lease or Tenant's right of possession hereunder, Tenant shall quit and
surrender the Premises to Landlord, broom clean, and in good order, condition
and repair, ordinary wear and tear excepted. If Tenant fails to remove any of
Tenant's Property within one (1) day after the termination of this Lease or
Tenant's right to possession hereunder, such Tenant's Property, or any portion
thereof designated by Landlord, shall at Landlord's option, and without notice
to Tenant, (a) be conclusively presumed to have been abandoned by Tenant and
title to such items shall pass to Landlord, and/or (b) be removed and/or stored
by Landlord at the risk, cost and expense of Tenant and Landlord shall in no
event be responsible for the value, preservation or safekeeping thereof. Tenant
shall pay Landlord, upon demand, any and all expenses caused by such removal and
all storage charges against such property so long as the same shall be in the
possession of Landlord or under the control of Landlord.
XXXVI. MISCELLANEOUS.
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A. 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 held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and enforced to the fullest extent permitted by law.
B. Tenant agrees not to record this Lease or any memorandum hereof without
Landlord's prior written consent.
C. This Lease and the rights and obligations of the parties hereto shall be
interpreted, construed, and enforced in accordance with the laws of the state in
which the Building is located.
D. Events of "Force Majeure" shall include strikes, riots, acts of God,
shortages of labor or materials, war, governmental law, regulations or
restrictions and any other cause whatsoever that is beyond the control of
Landlord. Whenever a period of time is herein prescribed for the taking of any
action by Landlord, Landlord shall not be liable or responsible for, and there
shall be excluded from the computation of such period of time, any delays due to
events of Force Majeure.
E. Landlord shall have the right to transfer and assign, in whole or in
part, all of its rights and obligations hereunder and in the Building and
Property referred to herein, and in such event and upon such transfer Landlord
shall be released from any further obligations hereunder,
18
<PAGE>
and Tenant agrees to look solely to such successor in interest of Landlord for
the performance of such obligations.
F. Tenant hereby represents to Landlord that it has dealt directly with and
only with the Broker as a broker in connection with this Lease. Tenant agrees
to indemnify and hold Landlord and the Landlord Related Parties harmless from
all claims of any brokers claiming to have represented Tenant in connection with
this Lease.
G. If there is more than one Tenant, or if the Tenant is comprised of more
than one person or entity, the obligations hereunder imposed upon Tenant shall
be joint and several obligations of all such parties. All notices, payments,
and agreements given or made by, with or to any one of such persons or entities
shall be deemed to have been given or made by, with or to all of them.
H. In the event Tenant is a corporation (including any form of professional
association), partnership (general or limited), or other form of organization
other than an individual, then each individual executing or attesting this Lease
on behalf of Tenant hereby covenants, warrants and represents: 1. that such
individual is duly authorized to execute or attest and deliver this Lease on
behalf of Tenant in accordance with the organizational documents of Tenant; 2.
that this Lease is binding upon Tenant; 3. that Tenant is duly organized and
legally existing in the state of its organization, and is qualified to do
business in the state in which the Premises is located; 4. that upon request,
Tenant will provide Landlord with true and correct copies of all organizational
documents of Tenant, and any amendments thereto; and 5. that the execution and
delivery of this Lease by Tenant will not result in any breach of, or constitute
a default under any mortgage, deed of trust, lease, loan, credit agreement,
partnership agreement or other contract or instrument to which Tenant is a party
or by which Tenant may be bound. If Tenant is a corporation, Tenant will, prior
to the Commencement Date, deliver to Landlord a copy of a resolution of Tenant's
board of directors authorizing or ratifying the execution and delivery of this
Lease, which resolution will be duly certified to Landlord's satisfaction by the
secretary or assistant secretary of Tenant.
I. Tenant acknowledges that the financial capability of Tenant to perform
its obligations hereunder is material to Landlord and that Landlord would not
enter into this Lease but for its belief, based on its review of Tenant's
financial statements, that Tenant is capable of performing such financial
obligations. Tenant hereby represents, warrants and certifies to Landlord that
its financial statements previously furnished to Landlord were at the time given
true and correct in all material respects and that there have been no material
subsequent changes thereto as of the date of this Lease. At any time during the
Lease Term, Tenant shall provide Landlord, upon ten (10) days' prior written
notice from Landlord, with a current financial statement and financial
statements of the two (2) years prior to the current financial statement year.
Such statement shall be prepared in accordance with generally accepted
accounting principles and, if such is the normal practice of Tenant, shall be
audited by an independent certified public accountant.
J. Except as expressly otherwise herein provided, with respect to all
required acts of Tenant, time is of the essence of this Lease. This Lease shall
create the relationship of Landlord and Tenant between the parties hereto, and
no estate shall pass out of Landlord. Tenant has only a usufruct, not subject
to purchase or sale, which may not be assigned by Tenant except as expressly
provided in this Lease.
K. This Lease and the covenants and conditions herein contained shall inure
to the benefit of and be binding upon Landlord and Tenant and their respective
permitted successors and assigns.
L. Notwithstanding anything to the contrary contained in this Lease, the
expiration of the Lease Term, whether by lapse of time or otherwise, shall not
relieve Tenant from Tenant's obligations accruing prior to the expiration of the
Lease Term.
M. The headings and titles to the paragraphs of this Lease are for
convenience only and shall have no effect upon the construction or
interpretation of any part hereof.
N. LANDLORD HAS DELIVERED A COPY OF THIS LEASE TO TENANT FOR TENANT'S
REVIEW ONLY, AND THE DELIVERY HEREOF DOES NOT CONSTITUTE AN OFFER TO TENANT OR
OPTION. THIS LEASE SHALL NOT BE EFFECTIVE UNTIL AN ORIGINAL OF THIS LEASE HAS
BEEN EXECUTED BY BOTH LANDLORD AND TENANT.
19
<PAGE>
XXXVII. ENTIRE AGREEMENT. This Lease Agreement, including the following
Exhibits:
Exhibit A - Legal Description of Property
---------
Exhibit A-1 - Outline and Location of First Floor Premises
-----------
Exhibit A-2 - Outline and Location of Tenth Floor Premises
-----------
Exhibit A-3 - Outline and Location of Eleventh Floor Premises
-----------
Exhibit A-4 - Outline and Location of Seventeenth Floor Premises
-----------
Exhibit B-1 - Schedule of Base Rental
-----------
Exhibit B-2 - Payment of Basic Costs
-----------
Exhibit C - Work Letter Agreement (if required)
-----------
Exhibit D - Rules and Regulations
-----------
Exhibit E - Additional Terms
-----------
Exhibit F - Expansion Space
-----------
Storage Space Supplement
------------------------
constitutes the entire agreement between the parties hereto with respect to the
subject matter of this Lease. TENANT EXPRESSLY ACKNOWLEDGES AND AGREES THAT
LANDLORD HAS NOT MADE AND IS NOT MAKING, AND TENANT, IN EXECUTING AND DELIVERING
THIS LEASE, IS NOT RELYING UPON, ANY WARRANTIES, REPRESENTATIONS, PROMISES OR
STATEMENTS, EXCEPT TO THE EXTENT THAT THE SAME ARE EXPRESSLY SET FORTH IN THIS
LEASE. ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THE PARTIES
ARE MERGED IN THIS LEASE WHICH ALONE FULLY AND COMPLETELY EXPRESSES THE
AGREEMENT OF THE PARTIES, NEITHER PARTY RELYING UPON ANY STATEMENT OR
REPRESENTATION NOT EMBODIED IN THIS LEASE. THIS LEASE MAY BE MODIFIED ONLY BY A
WRITTEN AGREEMENT SIGNED BY LANDLORD AND TENANT. LANDLORD AND TENANT EXPRESSLY
AGREE THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY,
HABITABILITY, SUITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND
ARISING OUT OF THIS LEASE, ALL OF WHICH ARE HEREBY WAIVED BY TENANT, AND THAT
THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS
LEASE.
20
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in multiple
original counterparts as of the day and year first above written.
ATTEST: LANDLORD: SOUTH ORANGE AVENUE
ASSOCIATES, an Illinois joint venture
Karen Mikos
----------------------------------
Name (print): Karen Mikos
---------------------
Name (print):
---------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
an Illinois corporation as agent
By: Victoria R. Gorman
-----------------------------------
Name: Victoria Gorman
Title: Vice President
TENANT: AKERMAN, SENTERFITT &
EIDSON, P.A. a Professional Association
ATTEST:
Sharon Langley Thomas
-----------------------------------
Name (print): Sharon Langley Thomas
----------------------
Olivia Bellamy
-----------------------------------
Name (print): Olivia Bellamy
----------------------
By: William C. Martin
--------------------------------------
Name: William C. Martin III
-----------------------------------
Title: President
-----------------------------------
21
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
-----------------
This Exhibit is attached to and made a part of the Lease dated June 24, 1994,
by and between SOUTH ORANGE AVENUE ASSOCIATES, an Illinois joint venture, by its
agent Equity Office Properties, Inc., an Illinois corporation ("Landlord") and
AKERMAN, SENTERFITT & EIDSON, P.A. a Professional Association organized under
the laws of the state of Florida ("Tenant") for space in the Building located at
255 South Orange Avenue, Orlando, Florida, 32801.
Block 22, R.R. REED'S ADDITION TO ORLANDO, as recorded in Plat Book C, Pages 62
and 63, Public Records of Orange County, Florida. LESS: The East 5.00 feet
thereof; AND LESS: Beginning at the Northwest corner of Lot 8, Block 22,
R. R. REED'S ADDITION TO ORLANDO, as recorded in Plat Book C, Pages 62 and 63,
Public Records of Orange County, Florida, run South 00 degrees 01 minutes 07
seconds East 134.93 feet along the West boundary of said Block 22; thence run
North 89 degrees 53 minutes 19 seconds East 15.40 feet; thence run South 00
degrees 01 minutes 07 seconds East 13.17 feet; thence North 89 degrees
58 minutes 50 seconds East 426.35 feet to a point on a line parallel with and
5.00 feet Westerly of, when measured at right angles to the East boundary of
said Block 22; thence run North 00 degrees 01 minutes 07 seconds West 147.93
feet along said parallel line to a point on the North boundary of said Block 22;
thence run West 441.75 feet along said North boundary to the Point of Beginning;
AND ALSO LESS: From the Southeast corner of Lot 11, Block 22, R. R. REED'S
ADDITION TO ORLANDO, as recorded in Plat Book C, Pages 62 and 63, Public Records
of Orange County, Florida, run West 5.00 feet along the South boundary of said
Block 22 for the POINT OF BEGINNING; thence North 00 degrees 01 minutes
07 seconds West 133.06 feet along a line 5.00 feet West of, when measured at
right angles to, the East boundary of said Block 22; thence North 89 degrees
55 minutes 33 seconds West 163.53 feet; thence South 00 degrees 08 minutes
48 seconds West 6.13 feet; thence South 89 degrees 51 minutes 12 seconds East
8.82 feet; thence South 00 degrees 03 minutes 37 seconds West 127.12 feet;
thence Ease 154.91 feet along the aforesaid South boundary of Block 22 to the
Point of Beginning.
<PAGE>
EXHIBIT A-1
OUTLINE AND LOCATION OF FIRST FLOOR PREMISES
<PAGE>
EXHIBIT A-2
OUTLINE AND LOCATION OF TENTH FLOOR PREMISES
<PAGE>
EXHIBIT A-3
OUTLINE AND LOCATION OF ELEVENTH FLOOR PREMISES
<PAGE>
EXHIBIT A-4
OUTLINE AND LOCATION OF SEVENTEENTH FLOOR PREMISES
<PAGE>
EXHIBIT B-1
SCHEDULE OF BASE RENTAL
-----------------------
This Exhibit is attached to and made a part of the Lease dated June 24, 1994,
by and between SOUTH ORANGE AVENUE ASSOCIATES, an Illinois joint venture, by its
agent Equity Office Properties, Inc., an Illinois corporation ("Landlord") and
AKERMAN, SENTERFITT & EIDSON, P.A. a Professional Association organized under
the laws of the state of Florida ("Tenant") for space in the Building located at
255 South Orange Avenue, Orlando, Florida, 32801.
A. Tenant shall pay Landlord the sum of nine million eight hundred twenty
thousand three hundred fifty and no/100 Dollars ($9,820,350.00) as Base Rental
for the Lease Term in monthly installments as follows (except to the extent such
schedule is adjusted as provided below):
1. Twelve (12) equal monthly installments of $58,194.67* each payable on
or before the first day of each month during the period beginning
January 1, 1994 and ending December 31, 1994.
2. Twelve (12) equal monthly installments of $60,013.25* each payable on
or before the first day of each month during the period beginning
January 1, 1995 and ending December 31, 1995.
3. Twelve (12) equal monthly installments of $61,831.83* each payable on
or before the first day of each month during the period beginning
January 1, 1996 and ending December 31, 1996.
4. Twelve (12) equal monthly installments of $63,650.42* each payable on
or before the first day of each month during the period beginning
January 1, 1997 and ending December 31, 1997.
5. Twelve (12) equal monthly installments of $65,469.00* each payable on
or before the first day of each month during the period beginning
January 1, 1998 and ending December 31, 1998.
6. Twelve (12) equal monthly installments of $67,287.58* each payable on
or before the first day of each month during the period beginning
January 1, 1999 and ending December 31, 1999.
7. Twelve (12) equal monthly installments of $69,106.17* each payable on
or before the first day of each month during the period beginning
January 1, 2000 and ending December 31, 2000.
8. Twelve (12) equal monthly installments of $70,924.75* each payable on
or before the first day of each month during the period beginning
January 1, 2001 and ending December 31, 2001.
9. Twelve (12) equal monthly installments of $72,743.33* each payable on
or before the first day of each month during the period beginning
January 1, 2002 and ending December 31, 2002.
10. Twelve (12) equal monthly installments of $74,561.92* each payable on
or before the first day of each month during the period beginning
January 1, 2003 and ending December 31, 2003.
11. Twelve (12) equal monthly installments of $76,380.50* each payable on
or before the first day of each month during the period beginning
January 1, 2004 and ending December 31, 2004.
12. Twelve (12) equal monthly installments of $78,199.08* each payable on
or before the first day of each month during the period beginning
January 1, 2005 and ending December 31, 2005.
* Plus Florida Sales Tax
B. All such Base Rental shall be payable by Tenant in accordance with the
terms of Article V of the Lease.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Exhibit B-1 to the
Lease as of the day and year first above written.
ATTEST: LANDLORD: SOUTH ORANGE AVENUE
ASSOCIATES, an Illinois joint venture
Karen Mikos
----------------------------------
Name (print): Karen Mikos
---------------------
----------------------------------
Name (print):
---------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
an Illinois corporation as agent
By: Victoria R. Gorman
-----------------------------------
Name: Victoria Gorman
Title: Vice President
TENANT: AKERMAN, SENTERFITT &
EIDSON, P.A. a Professional Association
ATTEST:
Sharon Langley Thomas
-----------------------------------
Name (print): Sharon Langley Thomas
----------------------
-----------------------------------
Name (print):
----------------------
By: William C. Martin
--------------------------------------
Name: William C. Martin III
-----------------------------------
Title: President
-----------------------------------
<PAGE>
EXHIBIT B-2
PAYMENT OF BASIC COSTS
----------------------
This Exhibit is attached to and made a part of the Lease dated June 24, 1994,
by and between SOUTH ORANGE AVENUE ASSOCIATES, an Illinois joint venture, by its
agent Equity Office Properties, Inc., an Illinois corporation ("Landlord") and
AKERMAN, SENTERFITT & EIDSON, P.A. a Professional Association organized under
the laws of the state of Florida ("Tenant") for space in the Building located at
255 South Orange Avenue, Orlando, Florida, 32801.
BASIC COST ADJUSTMENT. During each calendar year, or portion thereof,
falling within the Lease Term, Tenant shall pay to Landlord as Additional Base
Rental hereunder Tenant's Pro Rata Share of the amount, if any, by which Basic
Costs (as defined below) for the applicable calendar year exceed the Basic Costs
for the Base Year (the "Excess"). For purposes hereof, the "Base Year" shall
mean the calendar year 1994. Prior to the Commencement Date and prior to
January 1 of each calendar year during the Lease Term, or as soon thereafter as
practical, Landlord shall make a good faith estimate of the Excess for the
applicable calendar year. On or before the first day of each month during such
calendar year, Tenant shall pay Landlord, as Additional Base Rental, a monthly
installment equal to one-twelfth of Tenant's Pro Rata Share of Landlord's
estimate of the Excess. Landlord shall have the right from time to time during
any such calendar year to revise the estimate of the Excess for such year and
provide Tenant with a revised statement therefor, and thereafter the amount
Tenant shall pay each month shall be based upon such revised estimate. If
Landlord does not provide Tenant with an estimate of the Excess by January 1 of
any calendar year, Tenant shall continue to pay a monthly installment based on
the previous year's estimate until such time as Landlord provides Tenant with an
estimate of the Excess for the current year. Upon receipt of such current
year's estimate, an adjustment shall be made for any month during the current
year with respect to which Tenant paid monthly installments of Additional Base
Rental based on the previous years estimate of the Excess. Tenant shall pay
Landlord for any underpayment upon demand. Any overpayment shall, at Landlord's
option, be refunded to Tenant or credited against the installment of Additional
Base Rental due for the month immediately following the furnishing of such
estimate. Any amounts paid by Tenant based on any estimate shall be subject to
adjustment pursuant to Paragraph A below, when actual Basic Costs are determined
for such calendar year.
A. Basic Costs Reconciliation. As soon as is practical following the end of
each calendar year during the Lease Term, Landlord shall furnish to Tenant a
statement of Landlord's actual Basic Costs and the actual Excess for the
previous calendar year. If for any calendar year the Additional Base Rental
collected for the prior year, as a result of Landlord's estimate of Basic
Costs, is in excess of Tenant's actual Pro Rata Share of the Excess for such
prior year, then Landlord shall refund to Tenant any overpayment (or at
Landlord's option, apply such amount against Additional Base Rental due or to
become due hereunder). Likewise, Tenant shall pay to Landlord, on demand,
any underpayment with respect to the prior year, whether or not the Lease has
terminated prior to receipt by Tenant of a statement for such underpayment,
it being understood that this clause shall survive the expiration of the
Lease.
B. Basic Costs Defined. Basic Costs shall mean all direct and indirect
costs and expenses paid or incurred in each calendar year in connection with
operating, maintaining, repairing, managing and owning the Building and the
Property (inclusive of the Exterior Common Areas), including, without
limitation, the following:
(i) Wages and salaries of all employees (including management personnel at
or below the grade of building manager) engaged in operation and
maintenance, or security of the Building and personnel who may provide
traffic control relating to ingress and egress to and from the Parking
Area to the adjacent public streets. All taxes, insurance and benefits
relating to employees providing these services shall be included,
including, without limitation all payroll, social security, unemployment
and other similar taxes, workmen's compensation insurance, uniforms,
disability benefits, pensions, hospitalization, retirement plans, group
insurance or any other similar or like expenses incurred under the
provisions of any collective bargaining agreement. If Landlord elects to
provide or contract for management services under an arrangement where
wages, salaries, and benefits otherwise reimbursable under the
subparagraph are included within a management fee, then the wages,
salaries and benefits covered thereby shall no longer be directly
reimbursable.
(ii) All management fees, the cost of maintaining a management office at
the Building, and all fees for legal and accounting services relating to
the Building and the Property. Notwithstanding the foregoing, management
fees (excluding reimbursed expenses of the management company) shall not
to exceed in any one year the greater of (i) four percent (4%) of gross
rents from the Building for such year, or (ii) the prevailing market
management fee; provided, however, that if Landlord elects to provide or
contract for management services under an arrangement where wages,
salaries and benefits otherwise reimbursable under subparagraph (i) above
are included within a management fee, then the management fee may exceed
the
<PAGE>
foregoing management fee limitation by an amount or percentage equal to
the wages, salaries, and benefits no longer directly reimbursable.
(iii) All rental and/or purchase costs of materials, supplies, hand tools
and equipment used in the operation, repair, replacement and maintenance
and the control of access to the Building and the Property.
(iv) Cost of all reasonable maintenance and service agreements for the
Building and the equipment therein, including, but not limited to, alarm
service, window cleaning, elevator maintenance, drapery or venetian blind
cleaning, janitorial services, pest control, uniform supply, landscaping,
and any parking equipment.
(v) All premiums and deductibles paid by Landlord for fire and extended
coverage insurance, earthquake and extended coverage insurance, liability
and extended coverage insurance, rental loss insurance, elevator
insurance, boiler insurance and other insurance customarily carried from
time to time by lessors of comparable office buildings or required to be
carried by Landlord's Mortgagee.
(vi) Cost of all utilities for the Building including the cost of water
and power, heating, lighting, air conditioning and ventilating for the
Building.
(vii) All taxes and assessments and governmental charges whether federal,
state, county or municipal, and whether they be by taxing districts or
authorities presently taxing the Building and/or leased premises or by
others, subsequently created or otherwise, and any other taxes and
assessments attributable to the Building or its operation. It is agreed
that Tenant will be responsible for ad valorem taxes on its personal
property and on the value of leasehold improvements to the extent that
same exceed the Tenant Improvement Allowance. In addition, Basic Costs
shall include all costs and fees incurred in connection with seeking
reductions in or refunds in Taxes including, without limitation, any costs
incurred by Landlord to challenge the tax valuation of the Building, but
excluding income taxes.
(viii) All landscape expenses and costs of repairing, resurfacing and
striping of the parking areas of the Property, if any.
(ix) Cost of all other repairs, replacements and general maintenance of
the Property and Building neither specified above nor directly billed to
tenants.
(x) The amortized cost of capital improvements made to the Building or the
Property which are primarily for the purpose of reducing operating expense
costs or which are required to comply with any laws, rules or regulations
of any governmental authority, the cost of such items to be amortized over
a period of at least five (5) years. Such amortization shall be in
accordance with generally accepted accounting principles and shall include
interest at the rate of fifteen percent (15%) per annum compounded
monthly. Notwithstanding the foregoing, the portion of the annual
amortized costs to be included in Basic Costs in any calendar year with
respect to a capital improvement which is intended to reduce expenses or
improve the operating efficiency of the Property or Building shall equal
the lesser of: a) such annual amortized costs; and b) the actual annual
amortized reduction in expenses for that portion of the useful life of the
capital improvement which falls within the Lease Term.
C. "Exterior Common Areas" shall mean those areas of the Property which are
not located within the Building and which are provided and maintained for the
use and benefit of Landlord and tenants of the Building generally and the
employees, invitees and licensees of Landlord and such tenants, including,
without limitation, any parking garage, plaza, roads, sidewalks and
landscapes.
D. Exclusions From Basic Costs. Basic Costs shall not include the cost of
capital improvements (except as above set forth), depreciation, interest
(except as provided above with respect to the amortization of capital
improvements), lease commissions, and principal payments on mortgage and
other non-operating debts of Landlord. In addition, Basic Costs shall not
include the following:
(i) Costs incurred in connection with the initial construction or
subsequent remodeling of the Building or of any other improvements now or
hereafter located on the Building, including construction or remodeling of
improvements in the space occupied by other tenants, complete resurfacing or
restriping of parking areas, correction of defects in the initial design or
construction of the Building, or any other costs required to be capitalized
in accordance with generally accepted accounting principles (except as
provided in subsection B.(x) above);
(ii) interest, principal, or other payments on account of any
indebtedness secured by any mortgages on any part of the Building except as
permitted by subparagraph B.(x) above, rental or other payments under any
ground lease, or payments in the nature of returns on or of equity of any
kind;
<PAGE>
(iii) costs of selling, syndicating, financing, mortgaging or
hypothecating any part of or interest in the Building, except as permitted by
subparagraph B.(x) above;
(iv) taxes on income, franchise taxes, inheritance taxes, or real estate
transfer taxes;
(v) depreciation, reserves of any kind, including replacement reserves
and reserves for bad debts or lost rent (or premiums for insurance against
rent abatements not on account of fire or other casualty);
(vi) costs associated with the operation and internal organization and
function of Landlord as a business entity;
(vii) costs of defending or prosecuting litigation with any party,
including tenants, mortgagees, or others, unless a favorable judgment would
reduce or avoid an increase in Basic Costs, preserve or enhance Building
service and amenities for the general benefit of the tenants of the Building,
or unless the litigation is to enforce compliance with the Building rules and
regulations or other standards or requirements for the general benefit of the
tenants in the Building;
(viii) fines and penalties imposed by any governmental authority for the
failure to comply with any rules or regulations of such governmental entity
and late charges, interest and penalties for late or improper payment of any
public or private obligations, including ad valorem taxes, however,
Landlord's failure to obtain a discount for early payment shall not be
considered the imposition of a later charge, interest or late penalty;
(ix) costs of removing from the Building any asbestos containing
materials or hazardous wastes in the Building;
(x) costs to the extent Landlord is reimbursed therefor from any source,
including costs covered by proceeds of insurance, condemnation awards, or
court judgments, amounts specifically billed to or payable by individual
tenants, or costs recovered by Landlord under the terms or any
manufacturer's, contractor's or other warranty;
(xi) costs related to any other building or land not a part of the
Building or the land in its immediate proximity including any allocation of
costs incurred on a shared basis, such as centralized accounting costs,
unless the allocation is made on a reasonable and consistent basis that
fairly reflects the share of such costs actually attributable to the Building
and/or the land in its immediate proximity;
(xii) the part of any cost or other sum paid to any affiliate of
Landlord that may exceed the fair market price or cost generally payable for
comparable goods or services in the area of the Building;
(xiii) costs of leasing or marketing the Building, including, without
limitation, attorney's fees, brokerage commissions, space planning costs and
advertising expenses;
(xiv) costs of facilities and services which are furnished to a single
tenant exclusively or to a particular category of tenant exclusively and
which are not furnished or available to use by Tenant;
(xv) damage paid by Landlord for breach of its obligations under the
lease of any other tenant in the Building or under any other contractual
obligation, to the extent that such damages exceed the cost, which would
otherwise be includable in Basic Costs, or complying with any such
obligation;
(xvi) cost of operation of commercial concessions operated by Landlord
(as distinguished from concessions providing products and services related to
the operation and maintenance of the Building); and
(xvii) any expenses resulting directly from the adjudicated negligence
or wilful misconduct of Landlord, its agents, servants or employees to the
extent that such expenses are in excess of the expenses Landlord would have
incurred had there been no such negligence or wilful misconduct.
E. Occupancy. Notwithstanding any language in the Lease seemingly to the
contrary, if the Building is not fully occupied during any calendar year of
the Lease Term, actual Basic Costs for purposes of this Exhibit B-2 shall, at
Landlord's option, be determined as if the Building had been fully occupied
during such year.
F. Limitations of Basic Costs. Notwithstanding the foregoing, for purposes
of computing Tenant's Pro Rata Share of Basic Costs, Controllable Basic Costs
(hereinafter defined) shall not increase by more than 6% per calendar year on
a cumulative basis over the course of the Lease Term. In other words,
Controllable Basic Costs for the first calendar year after the Base Year
shall not exceed 106% of the Controllable Basic Costs for the Base Year.
Controllable Basic Costs for the second calendar year after the Base Year
shall not exceed
<PAGE>
112.36% of the Controllable Basic Costs for the Base Year, etc.
"Controllable Basic Costs" shall mean all Basic Costs exclusive of the cost
of Taxes, insurance, utilities and costs Landlord is required to incur in
connection with changes in applicable law.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Exhibit B-2 to the
Lease in multiple original counterparts as of the day and year first above
written.
ATTEST: LANDLORD: SOUTH ORANGE AVENUE
ASSOCIATES, an Illinois joint venture
Karen Mikos
----------------------------------
Name (print): Karen Mikos
---------------------
----------------------------------
Name (print):
---------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
an Illinois corporation as agent
By: Victoria R. Gorman
-----------------------------------
Name: Victoria Gorman
Title: Vice President
TENANT: AKERMAN, SENTERFITT &
EIDSON, P.A. a Professional Association
ATTEST:
Sharon Langley Thomas
-----------------------------------
Name (print): Sharon Langley Thomas
----------------------
Olivia Bellamy
-----------------------------------
Name (print): Olivia Bellamy
----------------------
By: William C. Martin
--------------------------------------
Name: William C. Martin III
-----------------------------------
Title: President
-----------------------------------
<PAGE>
EXHIBIT C
WORK LETTER
-----------
This Exhibit is attached to and made a part of the Lease dated June 24, 1994,
by and between SOUTH ORANGE AVENUE ASSOCIATES, an Illinois joint venture, by its
agent Equity Office Properties, Inc., an Illinois corporation ("Landlord") and
AKERMAN, SENTERFITT & EIDSON, P.A. a Professional Association organized under
the laws of the state of Florida ("Tenant") for space in the Building located at
255 South Orange Avenue, Orlando, Florida, 32801.
Except with respect to Landlord's obligation to provide Tenant with a Work
Allowance in accordance with the terms and conditions of Exhibit E to the Lease,
Landlord shall have no obligation to perform any additions, alterations or
improvements to the Premises, it being agreed that the Premises are being
delivered to Tenant in its "AS-IS" condition and configuration. Notwithstanding
the foregoing, Landlord, at its sole cost and expense, shall be required to
renovate the base building bathrooms on the 10th and 17th floors of the Building
in a manner that is consistent with the Building Standard currently being used
by Landlord for other bathrooms in the Building.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in multiple
original counterparts as of the day and year first above written.
ATTEST: LANDLORD: SOUTH ORANGE AVENUE
ASSOCIATES, an Illinois joint venture
Karen Mikos
----------------------------------
Name (print): Karen Mikos
---------------------
----------------------------------
Name (print):
---------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
an Illinois corporation as agent
By: Victoria R. Gorman
-----------------------------------
Name: Victoria Gorman
Title: Vice President
TENANT: AKERMAN, SENTERFITT &
EIDSON, P.A. a Professional Association
ATTEST:
Sharon Langley Thomas
-----------------------------------
Name (print): Sharon Langley Thomas
----------------------
Olivia Bellamy
-----------------------------------
Name (print): Olivia Bellamy
----------------------
By: William C. Martin
--------------------------------------
Name: William C. Martin III
-----------------------------------
Title: President
-----------------------------------
<PAGE>
EXHIBIT D
---------
BUILDING RULES AND REGULATIONS
------------------------------
This Exhibit is attached to and made a part of the Lease dated June 24, 1994,
by and between SOUTH ORANGE AVENUE ASSOCIATES, an Illinois joint venture, by its
agent Equity Office Properties, Inc., an Illinois corporation ("Landlord") and
AKERMAN, SENTERFITT & EIDSON, P.A. a Professional Association organized under
the laws of the state of Florida ("Tenant") for space in the Building located at
255 South Orange Avenue, Orlando, Florida, 32801.
The following rules and regulations shall apply, where applicable, to the
Premises, the Building, the parking garage associated therewith (if any), the
Property and the appurtenances thereto:
1. Sidewalks, doorways, vestibules, halls, stairways and other similar areas
shall not be obstructed by Tenant or used by Tenant for any purpose other than
ingress and egress to and from the Premises. No rubbish, litter, trash, or
material of any nature shall be placed, emptied, or thrown in those areas. At
no time shall Tenant permit Tenant's employees to loiter in common areas or
elsewhere in or about the Building or Property.
2. Plumbing fixtures and appliances shall be used only for the purposes for
which designed, and no sweepings, rubbish, rags or other unsuitable material
shall be thrown or placed therein. Damage resulting to any such fixtures or
appliances from misuse by Tenant or its agents, employees or invitees, shall be
paid for by Tenant, and Landlord shall not in any case be responsible therefor.
3. No signs, advertisements or notices shall be painted or affixed on or to
any windows, doors or other parts of the Building, except those of such color,
size, style and in such places as shall be first approved in writing by
Landlord. No nails, hooks or screws shall be driven or inserted into any part
of the Premises or Building except by the Building maintenance personnel, nor
shall any part of the Building be defaced by Tenant.
4. Landlord may provide and maintain in the first floor (main lobby) of the
Building an alphabetical directory board listing all Tenants, and no other
directory shall be permitted unless previously consented to by Landlord in
writing.
5. Tenant shall not place any additional lock or locks on any door in the
Premises or Building without Landlord's prior written consent. A reasonable
number of keys to the locks on the doors in the Premises shall be furnished by
Landlord to Tenant at the cost of Tenant, and Tenant shall not have any
duplicate keys made. All keys shall be returned to Landlord at the expiration
or earlier termination of this Lease.
6. Tenant will refer to Landlord for Landlord's supervision, approval, and
control all contractors, contractor's representatives, and installation
technicians rendering any service to Tenant, before performance of any
contractual service. Such supervisory action by Landlord shall not render
Landlord responsible for any work performed for Tenant. This provision shall
apply to all work performed in the Building, including but not limited to the
installation of telephones, computer wiring, cabling, equipment, electrical
devices, attachments and installations of any nature. Tenant shall be solely
responsible for complying with all applicable laws, codes and ordinances
pursuant to which said work shall be performed.
7. Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by Tenant of any merchandise or materials which require the
use of elevators, stairways, lobby areas, or loading dock areas, shall be
restricted to hours designated by Landlord. Tenant must seek Landlord's prior
approval by providing in writing a detailed listing of any such activity. If
approved by Landlord, such activity shall be under the supervision of Landlord
and performed in the manner stated by Landlord. Landlord may prohibit any
article, equipment or any other item from being brought into the Building.
Tenant is to assume all risk for damage to articles moved and injury to any
persons resulting from such activity. If any equipment, property, and/or
personnel of Landlord or any of any other tenant is damaged or injured as a
result of or in connection with such activity, Tenant shall be solely liable for
any and all damage or loss resulting therefrom.
8. Landlord shall have the power to prescribe the weight and position of
safes and other heavy equipment or items, which in all cases shall not in the
opinion of Landlord exceed acceptable floor loading and weight distribution
requirements. All damage done to the Building by the installation or removal of
any property of Tenant, or done by Tenant's property while in the Building,
shall be repaired at the expense of Tenant. Notwithstanding the foregoing,
Landlord hereby acknowledges that the equipment and other personal property
currently located within the Premises is not in violation of the terms of this
rule with respect to floor loading and weight distribution.
<PAGE>
9. Corridor doors, when not in use, shall be kept closed.
10. Tenant shall not: (i) make or permit any improper, objectionable or
unpleasant noises or odors in the Building, or otherwise interfere in any way
with other tenants or persons having business with them; (ii) solicit business
or distribute, or cause to be distributed, in any portion of the Building any
handbills, promotional materials or other advertising; or (iii) conduct or
permit any other activities in the Building that might constitute a nuisance.
11. No animals, except seeing eye dogs, shall be brought into or kept in, on
or about the Premises.
12. No inflammable, explosive or dangerous fluid or substance shall be used
or kept by Tenant in the Premises or Building. Tenant shall not, without
Landlord's prior written consent, use, store, install, spill, remove, release or
dispose of within or about the Premises or any other portion of the Property,
any asbestos-containing materials or any solid, liquid or gaseous material now
or hereafter considered toxic or hazardous under the provisions of 42 U.S.C. (S)
9601 et seq. or any other applicable environmental law which may now or
hereafter be in effect. If Landlord does give written consent to Tenant
pursuant to the foregoing sentence, Tenant shall comply with all applicable
laws, rules and regulations pertaining to and governing such use by Tenant, and
shall remain liable for all costs of cleanup or removal in connection therewith.
13. Tenant shall not use or occupy the Premises in any manner or for any
purpose which would injure the reputation or impair the present or future value
of the Premises or the Building; without limiting the foregoing, Tenant shall
not use or permit the Premises or any portion thereof to be used for lodging,
sleeping or for any illegal purpose.
14. Tenant shall not take any action which would violate Landlord's labor
contracts affecting the Building or which would cause any work stoppage,
picketing, labor disruption or dispute, or any interference with the business of
Landlord or any other tenant or occupant of the Building or with the rights and
privileges of any person lawfully in the Building. Tenant shall take any
actions necessary to resolve any such work stoppage, picketing, labor
disruption, dispute or interference and shall have pickets removed and, at the
request of Landlord, immediately terminate at any time any construction work
being performed in the Premises giving rise to such labor problems, until such
time as Landlord shall have given its written consent for the resumption of such
work. Tenant shall have no claim for damages of any nature against Landlord or
any of the Landlord Related Parties in connection therewith, nor shall the date
of the commencement of the Term be extended as a result thereof.
15. Tenant shall utilize the termite and pest extermination service
designated by Landlord to control termites and pests in the Premises. Tenant
shall bear the cost and expense of such extermination services, provided that
Tenant shall not be obligated to pay more for its participation in such termite
and pest extermination services than the prevailing competitive rates charged by
reputable independent termite and pest control exterminators for the same
service on a direct and individual basis.
16. Tenant shall not install, operate or maintain in the Premises or in any
other area of the Building, any electrical equipment which does not bear the U/L
(Underwriters Laboratories) seal of approval, or which would overload the
electrical system or any part thereof beyond its capacity for proper, efficient
and safe operation as determined by Landlord, taking into consideration the
overall electrical system and the present and future requirements therefor in
the Building. Tenant shall not furnish any cooling or heating to the Premises,
including, without limitation the use of any electronic or gas heating devices,
without Landlord's prior written consent.
17. Tenant shall not operate or permit to be operated on the Premises any
coin or token operated vending machine or similar device (including, without
limitation, telephones, lockers, toilets, scales, amusement devices and machines
for sale of beverages, foods, candy, cigarettes or other goods), except for
those vending machines or similar devices which are for the sole and exclusive
use of Tenant's employees, and then only if such operation does not violate the
lease of any other tenant of the Building.
18. Bicycles and other vehicles are not permitted inside or on the walkways
outside the Building, except in those areas specifically designated by Landlord
for such purposes.
19. Landlord may from time to time adopt appropriate systems and procedures
for the security or safety of the Building, its occupants, entry and use, or its
contents. Tenant, Tenant's agents, employees, contractors, guests and invitees
shall comply with Landlord's reasonable requirements relative thereto.
20. Landlord shall have the right to prohibit the use of the name of the
Building or any other publicity by Tenant that in Landlord's opinion may tend to
impair the reputation of the Building or its desirability for Landlord or other
tenants. Upon written notice from Landlord, Tenant will refrain from and/or
discontinue such publicity immediately.
<PAGE>
21. Tenant shall carry out Tenant's permitted repair, maintenance,
alterations, and improvements in the Premises only during times agreed to in
advance by Landlord and in a manner which will not interfere with the rights of
other tenants in the Building.
22. Canvassing, soliciting, and peddling in or about the Building is
prohibited. Tenant shall cooperate and use its best efforts to prevent the
same.
23. At no time shall Tenant permit or shall Tenant's agents, employees,
contractors, guests, or invitees smoke in any common area of the Building,
unless such common area has been declared a designated smoking area by Landlord.
24. Tenant shall observe Landlord's rules with respect to maintaining
standard window coverings at all windows in the Premises so that the Building
presents a uniform exterior appearance. Tenant shall ensure that to the extent
reasonably practicable, window coverings are closed on all windows in the
Premises while they are exposed to the direct rays of the sun.
25. All deliveries to or from the Premises shall be made only at such times,
in the areas and through the entrances and exits designated for such purposes by
Landlord. Tenant shall not permit the process of receiving deliveries to or
from the Premises outside of said areas or in a manner which may interfere with
the use by any other tenant of its premises or of any common areas, any
pedestrian use of such area, or any use which is inconsistent with good business
practice.
26. The work of cleaning personnel shall not be hindered by Tenant after 5:30
p.m., and such cleaning work may be done at any time when the offices are
vacant. Windows, doors and fixtures may be cleaned at any time. Tenant shall
provide adequate waste and rubbish receptacles necessary to prevent unreasonable
hardship to Landlord regarding cleaning service.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in multiple
original counterparts as of the day and year first above written.
ATTEST: LANDLORD: SOUTH ORANGE AVENUE
ASSOCIATES, an Illinois joint venture
Karen Mikos
----------------------------------
Name (print): Karen Mikos
---------------------
----------------------------------
Name (print):
---------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
an Illinois corporation as agent
By: Victoria R. Gorman
-----------------------------------
Name: Victoria Gorman
Title: Vice President
TENANT: AKERMAN, SENTERFITT &
EIDSON, P.A. a Professional Association
ATTEST:
Sharon Langley Thomas
-----------------------------------
Name (print): Sharon Langley Thomas
----------------------
Olivia Bellamy
-----------------------------------
Name (print): Olivia Bellamy
----------------------
By: William C. Martin
--------------------------------------
Name: William C. Martin III
-----------------------------------
Title: President
-----------------------------------
<PAGE>
EXHIBIT E
---------
ADDITIONAL TERMS
----------------
This Exhibit is attached to and made a part of the Lease dated June 24, 1994,
by and between SOUTH ORANGE AVENUE ASSOCIATES, an Illinois joint venture, by its
agent Equity Office Properties, Inc., an Illinois corporation ("Landlord") and
AKERMAN, SENTERFITT & EIDSON, P.A. a Professional Association organized under
the laws of the state of Florida ("Tenant") for space in the Building located at
255 South Orange Avenue, Orlando, Florida, 32801.
1) Initial Work Allowance. Landlord agrees to contribute an amount not to
exceed Five Hundred Twenty-Three Thousand Seven Hundred Fifty-Two and 00/100
Dollars ($523,752.00) (the "Work Allowance") toward the cost of performing
improvements to the Premises (the "Initial Improvements") on or after September
30, 1994. All such Initial Improvements shall be performed in compliance with
the terms and conditions of the Lease, including, without limitation, the prior
approval of Landlord with respect to the Initial Improvements to be performed
and the contractors to be retained to perform such Initial Improvements. The
Work Allowance shall be paid as follows: During construction of the Initial
Improvements, upon receipt by Landlord of necessary waivers of mechanics liens
from the general contractor and the subcontractors retained by Tenant,
percentage completion certificates from Tenant, the general contractor and
Tenant's architect, a sworn contractor's affidavit from the general contractor
and a request to disburse from Tenant containing an approval by Tenant of the
work done, Landlord shall disburse the Work Allowance funds within thirty (30)
days of receipt of the documentation provided above, subject to ten percent
(10%) retention, to the order of the general contractor or, and Landlord's
election, to the joint order of the general contractor and all included
subcontractors. If the cost of the Initial Improvements exceeds the Work
Allowance then the Work Allowance will be disbursed in the proportion that the
Work Allowance bears to the total cost of the Initial Improvements. Upon
completion of the Initial Improvements, and prior to final disbursement of the
Work Allowance, Tenant shall furnish Landlord with: A. general contractor and
architectural completion affidavits, B. full and final waivers of lien, C.
receipted bills covering all labor and materials expended and used, D. as-built
plans of the Initial Improvements and E. the certification of Tenant and its
architect that the Initial Improvements have been installed in a good and
workmanlike manner in accordance with the approved plans, and in accordance with
applicable codes and ordinances. Notwithstanding anything herein to the
contrary, Landlord shall not be obligated to disburse any portion of the Work
Allowance during the continuance of an uncured default under the Lease, and
Landlord's obligation to disburse shall only resume when and if such default is
cured. The Work Allowance may only be used for the cost of labor, material and
contractors fees for the Initial Improvements to the Premises and the cost of
preparing plans and drawings in connection therewith. In no event shall the
Work Allowance be used for the purchase of equipment, furniture and other items
of personal property of Tenant. In the event Tenant does not use the entire
Work Allowance for the performance of Initial Improvements, Tenant, at its
option, shall be entitled to apply any unused portion of such Work Allowance (i)
toward the cost of any improvements performed on or before August, 1996 in the
Expansion Space (hereinafter defined), 11th Floor Offering Space (hereinafter
defined) or 16th Floor Offering Space (hereinafter defined), or (ii) as a credit
against Base Rental due hereunder, provided that in no event shall the aggregate
amount of any credit against Base Rental exceed One Hundred Fifty-Seven Thousand
One Hundred Twenty-Five and 60/100 Dollars ($157,125.60). Tenant, by written
notice to Landlord, shall advise Landlord of the manner in which any unused Work
Allowance shall be applied and, with respect to any credit against Base Rental,
the months for which such credit will be applicable. Notwithstanding the
foregoing, if Tenant has not applied the entire unused portion of the Work
Allowance by August 1, 1996, any remaining Work Allowance shall, subject to the
$157,125.60 limitation set forth above, be applied as a credit against Base
Rental for the month of September, 1996 and each subsequent month until the
unapplied balance of the Work Allowance has been reduced to $0.00.
2) Refurbishment Allowance. Landlord agrees to contribute an amount not to
exceed Two Hundred Sixty-One Thousand Eight Hundred Seventy-Six and 00/100
Dollars ($261,876.00) (the "Refurbishment Allowance") toward the cost of
performing improvements to the Premises (the "Refurbishment Improvements") on or
after January 1, 2000. All such Refurbishment Improvements shall be performed
in compliance with the terms and conditions of the Lease, including, without
limitation, the prior approval of Landlord with respect to the Refurbishment
Improvements to be performed and the contractors to be retained to perform such
Refurbishment Improvements. The Refurbishment Allowance shall be paid as
follows: During construction of the Refurbishment Improvements, upon receipt by
Landlord of necessary waivers of mechanics liens from the general contractor and
the subcontractors retained by Tenant, percentage completion certificates from
Tenant, the general contractor and Tenant's architect, a sworn contractor's
affidavit from the general contractor and a request to disburse from Tenant
containing an approval by Tenant of the work done, Landlord shall disburse the
Refurbishment Allowance funds within thirty (30) days of receipt of the
documentation provided above, subject to ten percent (10%) retention, to the
order of the general contractor or, and Landlord's election, to the joint order
of the general contractor and all included subcontractors. If the cost of the
<PAGE>
Refurbishment Improvements exceeds the Refurbishment Allowance then the
Refurbishment Allowance will be disbursed in the proportion that the
Refurbishment Allowance bears to the total cost of the Refurbishment
Improvements. Upon completion of the Refurbishment Improvements, and prior to
final disbursement of the Refurbishment Allowance, Tenant shall furnish Landlord
with: A. general contractor and architectural completion affidavits, B. full
and final waivers of lien, C. receipted bills covering all labor and materials
expended and used, D. as-built plans of the Refurbishment Improvements and E.
the certification of Tenant and its architect that the Refurbishment
Improvements have been installed in a good and workmanlike manner in accordance
with the approved plans, and in accordance with applicable codes and ordinances.
Notwithstanding anything herein to the contrary, Landlord shall not be obligated
to disburse any portion of the Refurbishment Allowance during the continuance of
an uncured default under the Lease, and Landlord's obligation to disburse shall
only resume when and if such default is cured. The Refurbishment Allowance may
only be used for the cost of labor, material and contractors fees for the
Refurbishment Improvements to the Premises and the cost of preparing plans and
drawings in connection therewith. In no event shall the Refurbishment Allowance
be used for the purchase of equipment, furniture and other items of personal
property of Tenant. In the event Tenant does not use the entire Refurbishment
Allowance for the performance of Refurbishment Improvements, any unused amount
shall accrue to the sole benefit of Landlord, it being understood that Tenant
shall not be entitled to any credit, abatement or other concession in connection
therewith.
3) Parking.
-------
A. During the Lease Term, Tenant shall have the right to lease from Landlord
or, to the extent applicable, the third party manager retained by Landlord to
operate the Building Garage, up to a total of one hundred twenty (120) parking
spaces (the "Spaces") for the use of Tenant and its employees. Fifty-one (51)
of the One Hundred Twenty Spaces shall be preferred parking located below the
fifth level of the Building Garage and in a covered area. Tenant shall pay
Landlord, or the Building Garage operator, as the case may be, rent for the
Spaces (the Parking Rent") in monthly installments at the initial rate of $65.00
per Space per month for the period beginning on the execution of this Lease and
ending December 31, 1999 and $80.00 per Space per month for the period beginning
January 1, 2000 and ending December 31, 2005. No deductions or allowances shall
be made for days when Tenant or any of its employees does not utilize the
parking facilities or for Tenant utilizing less than all of the Spaces. Tenant
shall not have the right to lease or otherwise use more than the number set
forth above, provided if Tenant leases additional office space from Landlord
during the Lease Term, Tenant shall be entitled to lease additional non-
preferred Spaces at the rate of 2.25 spaces for each additional 1,000 square
feet of Rentable Area leased by Tenant. Tenant shall pay rental for each such
additional space at the prevailing rate being charged by Landlord from time to
time. Any of Tenant's visitors shall be required to pay for visitor parking at
the rate established by Landlord from time to time, provided that Landlord shall
provide Tenant with a visitor validation allowance of $500.00 per month for the
Lease Term.
B. Except for particular spaces and areas designated by Landlord for
reserved parking or preferred parking, all parking in the Building Garage shall
be on an unreserved, first-come, first-served basis.
C. Landlord shall not be responsible for money, jewelry, automobiles or
other personal property lost in or stolen from the Garage regardless of whether
such loss or theft occurs when the Garage or other areas therein are locked or
otherwise secured against entry. Except as caused by the negligence or wilful
misconduct of Landlord, Landlord shall not be liable for any loss, injury or
damage to persons using the Garage or automobiles or other property therein, it
being agreed that, to the fullest extent permitted by law, the use of the Garage
and the Spaces shall be at the sole risk of Tenant and its employees.
D. Landlord shall have the right from time to time to promulgate reasonable
rules and regulations regarding the Garage, the Spaces and the use thereof,
including, but not limited to, rules and regulations controlling the flow of
traffic to and from various parking areas, the angle and direction of parking
and the like. Tenant shall comply with and cause its employees to comply with
all such rules and regulations as well as all reasonable additions and
amendments thereto.
E. Tenant shall not store or permit its employees to store any automobiles
in the Garage without the prior written consent of Landlord. Except for
emergency repairs, Tenant and its employees shall not perform any work on any
automobiles while located in the Garage or on the Property. If it is necessary
for Tenant or its employees to leave an automobile in the Garage overnight,
Tenant shall provide Landlord with prior notice thereof designating the license
plate number and model of such automobile.
F. Landlord shall have the right to temporarily close the Garage or certain
areas therein in order to perform necessary repairs, maintenance and
improvements to the Garage.
<PAGE>
G. Tenant shall not assign or sublease any of the Spaces without the consent
of Landlord.
H. Landlord may elect to provide parking cards or keys to control access to
the Garage. In such event, Landlord shall provide Tenant with one card or key
for each Space that Tenant is leasing hereunder, provided that Landlord shall
have the right to require Tenant or its employees to place a deposit on such
access cards or keys and to pay a fee for any lost or damaged cards or keys.
4. Landlord Default. Landlord shall be in default under this Lease if Landlord
fails to perform any of its obligations hereunder and said failure continues for
a period of thirty (30) days after written notice from Tenant to Landlord and
Landlord's Mortgagee describing the default in reasonable detail (provided that
if such failure cannot reasonably be cured within thirty (30) days, Landlord
shall be in default hereunder only if Landlord fails to commence to cure such
default within thirty (30) days after notice from Tenant or having commenced the
curative action within thirty (30) days, fails to diligently pursue same).
Tenant shall be entitled to pursue any and all applicable remedies provided by
Florida law in connection with a default by Landlord hereunder. In addition, if
Tenant files suit against Landlord for any alleged default by Landlord of its
obligations hereunder, Tenant shall have the right to pay Base Rental and
Additional Base Rental into a court approved interest bearing escrow account
until such time as the legal action in question has been resolved by final
judgment, settlement or dismissal. Notwithstanding the foregoing, Tenant shall
only be entitled to pay into escrow the amount that Tenant could reasonably be
expected to recover as compensatory damages in the event that it prevails in its
action against Landlord, taking into consideration the amount, if any, that
Landlord could reasonably be expected to recover in the event that it prevails
in any counterclaim brought against Tenant. Any amounts due and owing from
Tenant to Landlord pursuant to this Lease in excess of the amount that Tenant
could reasonably be expected to recover shall be paid by Tenant to Landlord, and
not into the escrow, as and when they come due. In no event shall any claims
for punitive or other non-compensatory damages be considered in determining the
amount that Tenant shall be entitled to pay into escrow. Upon resolution by
final judgment or settlement, any sums held in escrow, including any interest
earned thereon, shall be disbursed to Landlord and Tenant pursuant to the terms
of such judgment or settlement. In the event of a dismissal, all sums held in
escrow, including any interest thereon, shall be disbursed to Landlord.
5. Shared Monument Signage.
-----------------------
A. In the event that Landlord replaces its existing non-exclusive monument
sign on Orange Avenue or installs a new non-exclusive monument sign at the
entrance to the Building on Orange Avenue (such replacement or new sign being
referred to herein as the "Monument Sign"), Tenant shall have the right to have
its name listed on such Monument Sign, if:
1. Tenant is not in monetary default or material non-monetary default under
the Lease after the expiration of applicable cure periods; and
2. No more than twenty-five percent (25%) of the Premises is sublet; and
3. The Lease has not been assigned; and
4. Tenant has not vacated or abandoned the Premises.
B. If Landlord elects to install a non-exclusive Monument Sign, the cost of
such sign shall be split equally by Tenant and all other tenants initially
included on such Monument sign, provided that Tenant shall have the right to
elect not to be listed on the Monument Sign and, accordingly, not be required to
share in the cost thereof. Landlord, in its sole discretion, shall have the
right to determine the design of the Monument Sign (including, without
limitation, the size, material, shape and lettering of the Monument Sign) and
the precise location and method of installation provided, however, the size,
material, shape and lettering of the various tenant's names shall be reasonably
uniform. Landlord shall have the right to remove Tenant's name from the
Monument Sign at any time during the Lease Term if Akerman, Senterfitt & Eidson
(or any successor by means of a purchase, consolidation or merger) occupies less
than 60% of the Rentable Area of the Premises.
6. Right of First Offer for 16th Floor.
-----------------------------------
A. Landlord, at any time after it has determined to lease space on the 16th
floor of the Building to a third party other than the then existing tenant in
such space (but prior to leasing such space to a third party), shall advise
Tenant (the "Advice") that such space is available for lease. Space on the 16th
Floor of the Building that is available for lease shall be referred to herein as
"16th Floor Offering Space". Landlord's Advice shall set forth the square
footage of the 16th Floor Offering Space and the date the 16th Floor Offering
Space will be available for lease by Tenant. Tenant may lease the portion of
the 16th Floor Offering Space that is available for lease ("Right of First
Offer") under the terms set forth herein by providing Landlord with
<PAGE>
written notice of exercise ("Notice of Exercise") within five (5) days after the
date of the Advice. Notwithstanding the foregoing, Tenant shall have no right
to lease 16th Floor Offering Space, and Landlord need not give the Advice, if:
1. Tenant is in default under the Lease after the expiration of applicable
cure periods at the time Landlord would otherwise deliver the Advice; or
2. the Premises, or any portion thereof, is sublet at the time Landlord
would otherwise deliver the Advice; or
3. the Lease has been assigned prior to the time Landlord would otherwise
deliver the Advice; or
4. there is less than five (5) years remaining on the initial Lease Term on
the date Landlord otherwise would have provided Tenant with an Advice; or
5. the 16th Floor Offering Space is subject to the rights of any other tenant
in the Building existing on the date hereof, regardless of whether such
rights are identified as a right of first offer, right of first refusal,
expansion option or otherwise.
B. The annual Base Rental rate per square foot for the 16th Floor Offering Space
shall be the Prevailing Market Rate (hereinafter defined) per square foot for
the 16th Floor Offering Space, provided that, with respect to the first 4,000
rentable square feet of 16th Floor Offering Space leased by Tenant, the Base
Rental rate shall not be more than 110% of the Base Rental rate for the initial
Premises or less than 90% of the Base Rental rate for the initial Premises. The
Base Rental shall increase, if at all, in accordance with the increases assumed
in the determination of the Prevailing Market Rate. Landlord, within ten (10)
days after receipt of Tenant's Notice of Exercise, shall advise Tenant of the
applicable Base Rental rate for the 16th Floor Offering Space. Tenant, within
five (5) days after the date on which Landlord advises Tenant of the applicable
Base Rental rate shall either (i) give Landlord final binding written notice
("Binding Notice") of Tenant's exercise of its option for the 16th Floor
Offering Space, or (ii) if Tenant disagrees with Landlord's determination of the
Prevailing Market Rate, provide Landlord with written notice of rejection (the
"Rejection Notice"). If Tenant fails to provide Landlord with either a Binding
Notice or Rejection Notice within such five (5) day period, Tenant's exercise of
its Right of First Offer shall be null and void and of no further force and
effect. If Tenant provides Landlord with a Binding Notice, Landlord and Tenant
shall enter into the Offering Amendment (hereinafter defined) upon the terms and
conditions set forth herein. If Tenant provides Landlord with a Rejection
Notice, Landlord and Tenant shall work together in good faith to agree upon the
Prevailing Market Rate for the 16th Floor Offering Space. Upon agreement,
Landlord and Tenant shall enter into the Offering Amendment in accordance with
the terms and conditions hereof. Notwithstanding the foregoing, if Landlord and
Tenant are unable to agree upon the Prevailing Market Rate for the 16th Floor
Offering Space within ten (10) days after the date on which Tenant provides
Landlord with a Rejection Notice, Tenant's exercise of its Right of First Offer
shall be null and void and of no force and effect.
C. Tenant shall pay Additional Base Rental (i.e. Basic Costs) for the 16th
Floor Offering Space on the same terms and conditions set forth in Exhibit B-2
of this Lease, provided that Tenant's Pro Rata Share shall increase
appropriately to account for the addition of the 16th Floor Offering Space.
D. Upon Tenant's exercise of its Right of First Offer, Tenant, at its sole
cost and expense (subject to the Offering Allowance provided below) shall
proceed in good faith and with due diligence to cause space plans and
construction drawings for the initial improvements to the 16th Floor Offering
Space to be completed and ready for bid by no later than thirty (30) days after
Tenant's exercise of its Right of First Offer. Tenant shall enter into a
contract for the initial improvements to the 16th Floor Offering Space with a
general contractor selected by Tenant and approved by Landlord, which
improvements shall be performed at Tenant's sole cost and expense, subject to
the Offering Allowance. The lease term for the 16th Floor Offering Space leased
by Tenant shall commence upon the earlier of (i) substantial completion of the
initial improvements therein, (ii) the date Tenant occupies the 16th Floor
Offering Space for the purpose of conducting its business therein, and (iii)
ninety (90) days after Tenant is provided with possession of the 16th Floor
Offering Space for the purpose of performing improvements therein. The Lease
Term for the 16th Floor Offering Space shall expire on the Termination Date.
Notwithstanding anything herein to the contrary, Tenant shall be entitled to
receive an improvement allowance to be applied toward the cost of initial
improvements to be performed in the 16th Floor Offering Space (the "Offering
Improvements"), including the cost of preparing plans, drawings and
specifications in connection therewith, in an amount not to exceed the sum
derived by multiplying $.139 by the number of full calendar months remaining in
the initial Lease Term on the commencement date for the 16th Floor Offering
Space (the "Offering Allowance"). Such Offering Allowance shall be taken into
consideration in the determination of the Prevailing Market Base Rental rate for
the 16th Floor Offering Space. Such Offering Allowance shall be payable in the
same manner set forth in Section 1 of Exhibit E to the Lease with respect to the
<PAGE>
payment of the Work Allowance. In no event shall the Offering Allowance be
applied toward the cost of purchasing furniture, equipment or other personal
property of Tenant.
E. If Tenant exercises its Right of First Offer, Landlord shall prepare an
amendment (the "16th Floor Offering Space Amendment") adding the 16th Floor
Offering Space to the Premises on the applicable terms set forth herein and
reflecting the changes in the Base Rental, Rentable Area of the Premises,
Tenant's Pro Rata Share and other appropriate terms. A copy of the 16th Floor
Offering Space Amendment shall be (i) sent to Tenant within a reasonable time
after Landlord's receipt of the Notice of Exercise, and (ii) executed by Tenant
and returned to Landlord within fifteen (15) days thereafter.
F. The rights of Tenant hereunder with respect to any 16th Floor Offering
Space shall terminate on the earlier to occur of (i) Tenant's failure to
exercise its Right of First Offer within the five (5) day period provided in
paragraph A above, and (ii) the date Landlord would have provided Tenant an
Advice if Tenant had not been in violation of one or more of the conditions set
forth in Paragraph A above.
G. For purposes hereof, "Prevailing Market Rate" shall mean the annual
rental rate per square foot for space comparable to the 16th Floor Offering
Space in the Building and office buildings comparable to the Building under
leases and renewal and extension amendments being entered into at or about the
time that the Prevailing Market Rate is being determined giving appropriate
consideration to tenant concessions, brokerage commissions, tenant improvement
allowances, and the method of allocating Basic Costs. Notwithstanding the
foregoing, space leased under any of the following circumstances shall not be
considered to be comparable for purposes hereof: (i) the lease term is for less
than five (5) years, (ii) the space is encumbered by the option rights of
another tenant, or (iii) the space has a lack of windows and\or an awkward or
unusual shape or configuration. The foregoing is not intended to be an
exclusive list of space that will not be considered to be comparable.
7. Expansion Option.
----------------
A. Tenant shall have the option (the "Expansion Option") to lease the 3,988
square feet of Rentable Area located on the 11th floor of the Building and shown
cross-hatched on Exhibit F to this Lease (the "Expansion Space") if:
1. Landlord receives written notice (the "Expansion Notice") from Tenant of
the exercise of its Expansion Option on or before June 30, 1995; and
2. Tenant is not in default under this Lease at the time Landlord receives
the Expansion Notice; and
3. no part of the Premises is sublet at the time Landlord receives the
Expansion Notice; and
4. this Lease has not been assigned prior to the time Landlord receives the
Expansion Notice.
B. The annual Base Rental rate per square foot for the Expansion Space shall
be the Prevailing Market Rate (hereinafter defined) per square foot for the
Expansion Space. The Base Rental shall increase, if at all, in accordance with
the increases assumed in the determination of the Prevailing Market Rate.
Landlord, within fifteen (15) days after receipt of Tenant's Expansion Notice,
shall advise Tenant of the applicable Base Rental rate for the Expansion Space.
Tenant, within fifteen (15) days after the date on which Landlord advises Tenant
of the applicable Base Rental rate shall either (i) give Landlord final binding
written notice ("Binding Notice") of Tenant's exercise of its option for the
Expansion Space, or (ii) if Tenant disagrees with Landlord's determination of
the Prevailing Market Rate, provide Landlord with written notice of rejection
(the "Rejection Notice"). If Tenant fails to provide Landlord with either a
Binding Notice or Rejection Notice within such fifteen (15) day period, Tenant's
exercise of its Expansion Option shall be null and void and of no further force
and effect. If Tenant provides Landlord with a Binding Notice, Landlord and
Tenant shall enter into the Expansion Amendment (hereinafter defined) upon the
terms and conditions set forth herein. If Tenant provides Landlord with a
Rejection Notice, Landlord and Tenant shall work together in good faith to agree
upon the Prevailing Market Rate for the Expansion Space. Upon agreement,
Landlord and Tenant shall enter into the Expansion Amendment in accordance with
the terms and conditions hereof. Notwithstanding the foregoing, if Landlord and
Tenant are unable to agree upon the Prevailing Market Rate for the Expansion
Space within thirty (30) days after the date on which Tenant provides Landlord
with a Rejection Notice, Tenant's exercise of its Expansion Option shall be null
and void and of no force and effect.
C. Tenant shall pay Additional Base Rental (i.e. Basic Costs) for the
Expansion Space on the same terms and conditions set forth in Exhibit B-2 of
this Lease, provided that Tenant's Pro Rata Share shall increase appropriately
to account for the addition of the Expansion Space.
<PAGE>
D. Upon Tenant's exercise of its Expansion Option, Tenant, at its sole cost
and expense (subject to the Expansion Allowance provided below) shall proceed in
good faith and with due diligence to cause space plans and construction drawings
for the initial improvements to the Expansion Space to be completed and ready
for bid by no later than thirty (30) days prior to the date on which Tenant will
be provided with possession of the Expansion Space. Landlord hereby represents
that the Expansion Space is currently leased to Prudential Real Estate under the
terms of a lease that is scheduled to expire on December 31, 1995. If Tenant
exercises its Expansion Option, Landlord shall provide Tenant with possession of
the Expansion Space on the later to occur of January 1, 1996 or the date on
which Prudential Real Estate vacates the Expansion Space, provided that if
Prudential Real Estate fails to vacate the Expansion Space on December 31, 1995,
Landlord shall use good faith efforts to obtain possession of such Expansion
Space as soon as reasonably possible. Tenant shall enter into a contract for
the initial improvements to the Expansion Space with a general contractor
selected by Tenant and approved by Landlord, which improvements shall be
performed at Tenant's sole cost and expense, subject to the Expansion Allowance.
The lease term for the Expansion Space leased by Tenant shall commence upon the
earlier of (i) substantial completion of the initial improvements therein, (ii)
the date Tenant occupies the Expansion Space for the purpose of conducting its
business therein, and (iii) ninety (90) days after Tenant is provided with
possession of the Expansion Space for the purpose of performing improvements
therein. The Lease Term for the Expansion Space shall expire on the Termination
Date. Notwithstanding anything herein to the contrary, Tenant shall be entitled
to receive an improvement allowance to be applied toward the cost of initial
improvements to be performed in the Expansion Space (the "Expansion
Improvements"), including the cost of preparing plans, drawings and
specifications in connection therewith, in an amount not to exceed the sum
derived by multiplying $.139 by the number of full calendar months remaining in
the initial Lease Term on the commencement date for the Expansion Space (the
"Expansion Allowance"). Such Expansion Allowance shall be taken into
consideration in the determination of the Prevailing Market Base Rental rate for
the Expansion Space. Such Expansion Allowance shall be payable in the same
manner set forth in Section 1 of Exhibit E to the Lease with respect to the
payment of the Work Allowance. In no event shall the Expansion Allowance be
applied toward the cost of purchasing furniture, equipment or other personal
property of Tenant.
E. If Tenant exercises its Expansion Option, Landlord shall prepare an
amendment (the "Expansion Space Amendment") adding the Expansion Space to the
Premises on the applicable terms set forth herein and reflecting the changes in
the Base Rental, Rentable Area of the Premises, Tenant's Pro Rata Share and
other appropriate terms. A copy of the Expansion Space Amendment shall be (i)
sent to Tenant within a reasonable time after Landlord's receipt of the
Expansion Notice, and (ii) executed by Tenant and returned to Landlord within
fifteen (15) days thereafter.
F. For purposes hereof, "Prevailing Market Rate" shall mean the annual
rental rate per square foot for space comparable to the Expansion Space in the
Building and office buildings comparable to the Building under leases and
renewal and extension amendments being entered into at or about the time that
the Prevailing Market Rate is being determined giving appropriate consideration
to tenant concessions, brokerage commissions, tenant improvement allowances, and
the method of allocating Basic Costs. Notwithstanding the foregoing, space
leased under any of the following circumstances shall not be considered to be
comparable for purposes hereof: (i) the lease term is for less than five (5)
years, (ii) the space is encumbered by the option rights of another tenant, or
(iii) the space has a lack of windows and\or an awkward or unusual shape or
configuration. The foregoing is not intended to be an exclusive list of space
that will not be considered to be comparable.
8. Right of First Offer for 11th Floor.
-----------------------------------
A. Landlord, at any time after it has determined to lease space on the 11th
floor of the Building to a third party other than the then existing tenant in
such space (but prior to leasing such space to a third party), shall advise
Tenant (the "Advice") that such space is available for lease. Space on the 11th
Floor of the Building that is available for lease shall be referred to herein as
"11th Floor Offering Space". Landlord's Advice shall set forth the square
footage of the 11th Floor Offering Space and the date the 11th Floor Offering
Space will be available for lease by Tenant. Tenant may lease the portion of
the 11th Floor Offering Space that is available for lease ("Right of First
Offer") under the terms set forth herein by providing Landlord with written
notice of exercise ("Notice of Exercise") within five (5) days after the date of
the Advice. Notwithstanding the foregoing, Tenant shall have no right to lease
11th Floor Offering Space, and Landlord need not give the Advice, if:
1. Tenant is in default under the Lease after the expiration of applicable
cure periods at the time Landlord would otherwise deliver the Advice; or
2. the Premises, or any portion thereof, is sublet at the time Landlord
would otherwise deliver the Advice; or
<PAGE>
3. the Lease has been assigned prior to the time Landlord would otherwise
deliver the Advice; or
4. there is less than five (5) years remaining on the initial Lease Term on
the date Landlord otherwise would have provided Tenant with an Advice; or
5. the 11th Floor Offering Space is subject to the rights of any other
tenant in the Building existing on the date hereof, regardless of whether
such rights are identified as a right of first offer, right of first refusal,
expansion option or otherwise.
B. The annual Base Rental rate per square foot for the 11th Floor Offering
Space shall be the Prevailing Market Rate (hereinafter defined) per square foot
for the 11th Floor Offering Space. The Base Rental shall increase, if at all, in
accordance with the increases assumed in the determination of the Prevailing
Market Rate. Landlord, within ten (10) days after receipt of Tenant's Notice of
Exercise, shall advise Tenant of the applicable Base Rental rate for the 11th
Floor Offering Space. Tenant, within five (5) days after the date on which
Landlord advises Tenant of the applicable Base Rental rate shall either (i) give
Landlord final binding written notice ("Binding Notice") of Tenant's exercise of
its option for the 11th Floor Offering Space, or (ii) if Tenant disagrees with
Landlord's determination of the Prevailing Market Rate, provide Landlord with
written notice of rejection (the "Rejection Notice"). If Tenant fails to provide
Landlord with either a Binding Notice or Rejection Notice within such five (5)
day period, Tenant's exercise of its Right of First Offer shall be null and void
and of no further force and effect. If Tenant provides Landlord with a Binding
Notice, Landlord and Tenant shall enter into the Offering Amendment (hereinafter
defined) upon the terms and conditions set forth herein. If Tenant provides
Landlord with a Rejection Notice, Landlord and Tenant shall work together in
good faith to agree upon the Prevailing Market Rate for the 11th Floor Offering
Space. Upon agreement, Landlord and Tenant shall enter into the Offering
Amendment in accordance with the terms and conditions hereof. Notwithstanding
the foregoing, if Landlord and Tenant are unable to agree upon the Prevailing
Market Rate for the 11th Floor Offering Space within ten (10) days after the
date on which Tenant provides Landlord with a Rejection Notice, Tenant's
exercise of its Right of First Offer shall be null and void and of no force and
effect.
C. Tenant shall pay Additional Base Rental (i.e. Basic Costs) for the 11th
Floor Offering Space on the same terms and conditions set forth in Exhibit B-2
of this Lease, provided that Tenant's Pro Rata Share shall increase
appropriately to account for the addition of the 11th Floor Offering Space.
D. Upon Tenant's exercise of its Right of First Offer, Tenant, at its sole
cost and expense (subject to the Offering Allowance provided below) shall
proceed in good faith and with due diligence to cause space plans and
construction drawings for the initial improvements to the 11th Floor Offering
Space to be completed and ready for bid by no later than thirty (30) days after
Tenant's exercise of its Right of First Offer. Tenant shall enter into a
contract for the initial improvements to the 11th Floor Offering Space with a
general contractor selected by Tenant and approved by Landlord, which
improvements shall be performed at Tenant's sole cost and expense, subject to
the Offering Allowance. The lease term for the 11th Floor Offering Space leased
by Tenant shall commence upon the earlier of (i) substantial completion of the
initial improvements therein, (ii) the date Tenant occupies the 11th Floor
Offering Space for the purpose of conducting its business therein, and (iii)
ninety (90) days after Tenant is provided with possession of the 11th Floor
Offering Space for the purpose of performing improvements therein. The Lease
Term for the 11th Floor Offering Space shall expire on the Termination Date.
Notwithstanding anything herein to the contrary, Tenant shall be entitled to
receive an improvement allowance to be applied toward the cost of initial
improvements to be performed in the 11th Floor Offering Space (the "Offering
Improvements"), including the cost of preparing plans, drawings and
specifications in connection therewith, in an amount not to exceed the sum
derived by multiplying $.139 by the number of full calendar months remaining in
the initial Lease Term on the commencement date for the 11th Floor Offering
Space (the "Offering Allowance"). Such Offering Allowance shall be taken into
consideration in the determination of the Prevailing Market Rate for the 11th
Floor Offering Space. Such Offering Allowance shall be payable in the same
manner set forth in Section 1 of Exhibit E to the Lease with respect to the
payment of the Work Allowance. In no event shall the Offering Allowance be
applied toward the cost of purchasing furniture, equipment or other personal
property of Tenant.
E. If Tenant exercises its Right of First Offer, Landlord shall prepare an
amendment (the "11th Floor Offering Space Amendment") adding the 11th Floor
Offering Space to the Premises on the applicable terms set forth herein and
reflecting the changes in the Base Rental, Rentable Area of the Premises,
Tenant's Pro Rata Share and other appropriate terms. A copy of the 11th Floor
Offering Space Amendment shall be (i) sent to Tenant within a reasonable time
after Landlord's receipt of the Notice of Exercise, and (ii) executed by Tenant
and returned to Landlord within fifteen (15) days thereafter.
F. The rights of Tenant hereunder with respect to any 11th Floor Offering
Space shall terminate on the earlier to occur of (i) Tenant's failure to
exercise its Right of First Offer within the five (5) day period provided in
paragraph A above, and (ii) the date Landlord would have
<PAGE>
provided Tenant an Advice if Tenant had not been in violation of one or more of
the conditions set forth in Paragraph A above.
G. For purposes hereof, "Prevailing Market Rate" shall mean the annual
rental rate per square foot for space comparable to the 11th Floor Offering
Space in the Building and office buildings comparable to the Building under
leases and renewal and extension amendments being entered into at or about the
time that the Prevailing Market Rate is being determined giving appropriate
consideration to tenant concessions, brokerage commissions, tenant improvement
allowances, and the method of allocating Basic Costs. Notwithstanding the
foregoing, space leased under any of the following circumstances shall not be
considered to be comparable for purposes hereof: (i) the lease term is for less
than five (5) years, (ii) the space is encumbered by the option rights of
another tenant, or (iii) the space has a lack of windows and\or an awkward or
unusual shape or configuration. The foregoing is not intended to be an
exclusive list of space that will not be considered to be comparable.
9. Abandonment. Landlord hereby agrees that the vacation or abandonment of the
Premises by Tenant shall not by itself constitute a default by Tenant under the
Lease so long as no monetary Event of Default otherwise exists. Notwithstanding
the foregoing, Tenant, within thirty (30) days following its vacation of the
Premises, shall notify Landlord of its intentions regarding reoccupancy. If
Tenant abandons or vacates the Premises without plans to reoccupy within three
(3) months thereafter, Tenant shall use reasonable efforts to sublet or assign
the entire Premises, for the period that Tenant will not be in occupancy, to a
party that will occupy the Premises. Such reasonable efforts shall require
Tenant, at a minimum, to actively commence to market the Premises within thirty
(30) days after Tenant vacates or abandons the Premises (as the case may be).
If Tenant fails to use reasonable efforts to sublet or assign the Premises or,
even if reasonable efforts are used, fails to sublet or assign the Premises
within six (6) months after the date of such abandonment or vacation, Landlord
shall have the right to recapture the Premises and terminate this Lease by
notice to Tenant given at any time prior to the date that Tenant notifies
Landlord that it has assigned the Lease or sublet the entire Premises and
effective upon the date of such recapture and termination, Tenant shall be
relieved of all obligations under this Lease thereafter accruing. In addition,
Landlord shall have the right to recapture the Premises and terminate the Lease
by written notice to Tenant if the Premises are vacant for more than ninety (90)
consecutive days at any time during the last year of the term and effective upon
the date of such recapture and termination, Tenant shall be relieved of all
obligations under this Lease thereafter accruing. If Landlord elects to
recapture the Premises and terminate the Lease, Tenant shall use all due
diligence, but in no event shall Tenant have longer than thirty (30) days, to
remove any personal property remaining in the Premises. If Tenant fails to
remove its personal property within such thirty (30) day period, Landlord shall
have the right, but not the obligation, to: (a) provide for the storage of any
personal property remaining in the Premises without liability of any kind or
nature for the cost of storage or the return of the personal property to Tenant,
and/or (b) take title to the abandoned personal property, which title shall pass
to Landlord under this Lease as a Bill of Sale, without additional payments or
credit from Landlord to Tenant.
10. Consent by Landlord. Except with regard to requests for consent or approval
that require Landlord to make a determination of the aesthetics of certain
signage, alterations or other things that would be visible form outside the
Premises or Building or to assume certain risks, including, without limitation,
the risk that a certain alteration, addition and/or improvement could adversely
affect the mechanical systems or structure of the Building or require excess
removal costs, Landlord agrees to act reasonably in granting its approval or
disapproval of any requests by Tenant for the consent or approval of Landlord.
11. Existing Lease. Landlord and Tenant are currently landlord and tenant
under that certain lease for the Premises (the "Existing Lease") dated March 20,
1986. Landlord and Tenant hereby agree that the Existing Lease shall terminate
retroactively effective as of the day prior to the Commencement Date of this
Lease (the "Existing Lease Termination Date") as if such date were originally
stated to be the termination date of the Existing Lease. Tenant shall remain
liable for all monthly base rent, additional rent and other sums coming due
under the Existing Lease up to and including the Existing Lease Termination
Date, even if such sums are billed subsequent to the Existing Lease Termination
Date. The termination of the Existing Lease shall be effective without further
documentation, provided that Tenant, upon request from Landlord, shall enter
into an amendment to the Existing Lease to document such early termination.
Landlord shall provide Tenant with a credit against Base Rental due hereunder in
an amount equal to the difference between the Base Rent and Additional Rent paid
under the Existing Lease with respect to any period subsequent to January 1,
1994 and the Base Rental and Additional Base Rental that is payable under this
Lease with respect to such period. Such credit shall be applied against Base
Rental due hereunder beginning with the month of August, 1994 and continue
thereafter until the unapplied portion of the credit has been reduced to $0.00.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in multiple
original counterparts as of the day and year first above written.
ATTEST: LANDLORD: SOUTH ORANGE AVENUE
ASSOCIATES, an Illinois joint venture
Karen Mikos
----------------------------------
Name (print): Karen Mikos
---------------------
----------------------------------
Name (print):
---------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
an Illinois corporation as agent
By: Victoria R. Gorman
-----------------------------------
Name: Victoria Gorman
Title: Vice President
TENANT: AKERMAN, SENTERFITT &
EIDSON, P.A. a Professional Association
ATTEST:
Sharon Langley Thomas
-----------------------------------
Name (print): Sharon Langley Thomas
----------------------
Olivia Bellamy
-----------------------------------
Name (print): Olivia Bellamy
----------------------
By: William C. Martin
--------------------------------------
Name: William C. Martin III
-----------------------------------
Title: President
-----------------------------------
<PAGE>
EXHIBIT F
ELEVENTH FLOOR EXPANSION SPACE
<PAGE>
STORAGE SPACE SUPPLEMENT
THIS STORAGE SPACE SUPPLEMENT is made as of this 24th day of June, 1994,
between SOUTH ORANGE AVENUE ASSOCIATES, an Illinois joint venture, by its agent
Equity Office Properties, Inc., an Illinois corporation ("Landlord") and
AKERMAN, SENTERFITT & EIDSON, P.A. a Professional Association ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into a "Lease" dated ___________________,
for 43,646 square feet on the 1st, 10th, 11th and 17th floor(s) ("Office Space")
of the building located at 255 South Orange Avenue, Orlando, Florida, 32801
("Building"); and
WHEREAS, Landlord and Tenant desire to enter into this Storage Space
Supplement for the purpose of supplementing the Lease as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency whereof being acknowledged, Landlord and Tenant agree as follows:
1. Tenant, upon the full and final execution and delivery of this Lease,
shall have the right to lease from Landlord that certain "Storage Space" (as set
forth on Exhibit "F"), being 1,064 rentable square feet located in the basement
of the Building and 593 rentable square feet located on the second floor of the
Building to be used by Tenant for the storage of
________________________________________________________________________________
______, only. Tenant agrees to keep the Storage Space in a neat and orderly
fashion and to keep all stored items in cartons, file cabinets ore other
suitable containers. Landlord shall have the right to designate the location
within the Storage Space of any items to be placed therein.
2. Tenant shall pay "Storage Base Rental" for the storage space in monthly
installments in advance on or before the first day of each month during the
Storage Term. The initial Storage Base Rental shall be $8.00 per rentable
square foot, per month. The Storage Base Rental payable per month shall
increase on each anniversary of the Storage Commencement Date in accordance with
the following formula: [to be inserted]
3. All terms and provisions of the Lease shall be applicable to this Storage
Space Supplement, including, without limitation, Article XV (Indemnity and
Waiver of Claims) and Article XVI (Tenant's Insurance), except that Landlord
need not supply air-cooling, heat, water, janitorial service, cleaning,
passenger or freight elevator service, window washing or electricity to the
Storage Space and Tenant shall not be entitled to any work allowances, rent
credits, expansion rights or renewal rights with respect to the Storage Space
unless such concessions or rights are specifically provided for in the Lease
with respect to the Storage Space.
4. Tenant agrees to accept the Storage Space in its condition and "as-built"
configuration existing on the earlier of the date Tenant takes possession of the
Storage Space or the Storage Commencement Date.
5. Landlord shall have the right to relocate the Storage Space to a new
location which shall be substantially the same square footage as the Storage
Space. Such relocation shall be at no expense to Tenant.
6. Storage Base Rental is deemed Rent under the Lease.
7. In the event Tenant assigns its Lease or sublets more than fifty percent
(50%) of the Office Space, Landlord, at its option, may cancel the Storage Space
effective as of thirty (30) days after notice to Tenant.
8. Notwithstanding anything to the contrary contained in this section, the
liability of Landlord to Tenant shall be limited to the interest of Landlord in
the Building, and Tenant agrees to look solely to Landlord's interest in the
Building for the recovery of any judgment or award against the Landlord, it
being intended that Landlord shall not be personally liable for any judgment or
deficiency. Tenant hereby covenants that, prior to the filing of any suit for
direct and proximate damages, it shall give Landlord and all mortgagees whom
Tenant has ben notified hold mortgages or deed of trust liens on the property,
Building or premises notice and reasonable time to cure any alleged default by
Landlord.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in multiple
original counterparts as of the day and year first above written.
ATTEST: LANDLORD: SOUTH ORANGE AVENUE
ASSOCIATES, an Illinois joint venture
Karen Mikos
----------------------------------
Name (print): Karen Mikos
---------------------
----------------------------------
Name (print):
---------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
an Illinois corporation as agent
By: Victoria R. Gorman
-----------------------------------
Name: Victoria Gorman
Title: Vice President
ATTEST: TENANT: AKERMAN, SENTERFITT &
EIDSON, P.A. a Professional Association
Sharon Langley Thomas
-----------------------------------
Name (print): Sharon Langley Thomas
----------------------
Olivia Bellamy
-----------------------------------
Name (print): Olivia Bellamy
----------------------
By: William C. Martin
--------------------------------------
Name: William C. Martin III
-----------------------------------
Title: President
-----------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000716297
<NAME> FIRST CAPITAL INCOME PROPERTIES, LTD-SERIES IX
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<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 15,085,400
<SECURITIES> 0
<RECEIVABLES> 671,600
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<CURRENT-ASSETS> 15,757,000
<PP&E> 77,627,600
<DEPRECIATION> 14,695,200
<TOTAL-ASSETS> 78,938,800
<CURRENT-LIABILITIES> 1,935,500
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0
0
<OTHER-SE> 69,952,300
<TOTAL-LIABILITY-AND-EQUITY> 78,938,800
<SALES> 0
<TOTAL-REVENUES> 14,267,900
<CGS> 0
<TOTAL-COSTS> 6,798,100
<OTHER-EXPENSES> 288,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,471,500
<INCOME-PRETAX> 11,772,400
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,772,400
<DISCONTINUED> 0
<EXTRAORDINARY> 7,657,000
<CHANGES> 0
<NET-INCOME> 19,429,400
<EPS-PRIMARY> 191.60
<EPS-DILUTED> 191.60
</TABLE>
