<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, 1995
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-12538
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First Capital Institutional Real Estate, Ltd. - 1
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2197264
- -------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
- -------------------------------------------------------- --------------
(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
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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 definitive Prospectus dated October 25, 1982, included
in the Registrant's Registration Statement on Form S-11 (Registration
No. 2-79092), is incorporated herein by reference in Part IV of this report.
Exhibit Index - Page A-1
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<PAGE>
PART I
ITEM 1. BUSINESS
- ------- --------
The registrant, First Capital Institutional Real Estate, Ltd.- 1 (the
"Partnership") is a limited partnership organized in 1982 under the Florida
Uniform Limited Partnership Law. The Partnership sold $60,000,000 in Limited
Partnership Units (the "Units") to the public from November 1982 through March
1983, pursuant to a Registration Statement on Form S-11 filed with the
Securities and Exchange Commission (Registration Statement No. 2-79092).
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement.
The business of the Partnership is to invest primarily in existing, improved,
income-producing commercial real estate, such as shopping centers, warehouses,
office buildings, and, to a lesser extent, in other types of income-producing
commercial real estate. From May 1983 to January 1985, the Partnership made
three real property investments and purchased 50% interests in three joint
ventures with an Affiliated partnership. Each of these joint ventures was formed
for the purpose of acquiring a 100% interest in certain real property and are
operated under the common control of First Capital Financial Corporation (the
"Managing General Partner"). As of December 31, 1995, the Partnership has sold
two of the real property investments.
Property management services for one of the Partnership's real estate
investments is provided by an independent real estate management company for
fees calculated as a percentage of gross rents received from the property. In
addition, Affiliates of the Managing General Partner provide property management
and/or supervisory services for fees calculated as a percentage of gross rents
received from each of the Partnership's properties.
The real estate business is highly competitive. The results of operations of the
Partnership will depend upon the availability of suitable tenants, real estate
market conditions and general economic conditions which may impact the success
of those tenants. Properties owned by the Partnership frequently compete for
tenants with similar properties owned by others.
As of March 1, 1996, there were nine employees at the Partnership's properties
for on-site property maintenance and administration.
ITEM 2. PROPERTIES(a)(b)
- ------- ----------------
As of December 31, 1995, the Partnership owned, directly or through joint
venture interests, the following four property interests, all of which were
owned in fee simple, except as noted in note (e).
<TABLE>
<CAPTION> Net Leasable Number of
Property Name Location Sq. Footage Tenants (c)
- ---------------------------- -------------------- ------------ -----------
<S> <C> <C> <C>
Shopping Center:
- ----------------
Lakewood Square (d) Lakewood, California 150,711 30(1)
Office Buildings:
- -----------------
Foxhall Square (d) Washington, D.C. 141,902 63
Peachtree Palisades East (e) Atlanta, Georgia 128,276 30(2)
12621 Featherwood (d) Houston, Texas 88,811 1(1)
</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 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(b) For Federal income tax purposes, the Partnership depreciates the
portion of the acquisition costs of its properties allocable to real
property (exclusive of land) and all improvements thereafter, over
useful lives ranging from 18 years utilizing Accelerated Cost
Recovery System ("ACRS") to 39 years utilizing Modified ACRS
straight-line method. The Partnership's portion of real estate taxes
for Foxhall Square Building ("Foxhall"), Lakewood Square Shopping
Center ("Lakewood"), 12621 Featherwood Building ("Featherwood") and
Peachtree Palisades East Office Building ("Peachtree") was
$184,600, $68,900, $59,800 and $30,700, respectively, for the year
ended December 31, 1995. In the opinion of the Managing General
Partner, the Partnership's properties are adequately insured and
serviced by all necessary utilities.
(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 property.
(d) The Partnership owns a 50% joint venture interest in this property.
(e) The Partnership leases the land on which this property is situated.
The following table presents each of the Partnership's properties' occupancy
rates as of December 31 for each of the last five years:
<TABLE>
<CAPTION>
Property Name 1995 1994 1993 1992 1991
- ----------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Lakewood 96% 84% 86% 94% 94%
Foxhall 83% 88% 85% 82% 81%
Peachtree 90% 81% 77% 85% 86%
Featherwood 100% 100% 100% 100% 100%
</TABLE>
The amounts in the following table represent each of the Partnership properties'
average annual rental rate per square foot for each of the last five years ended
December 31 which were computed by dividing each property's base rental revenues
by its average occupied square footage:
<TABLE>
<CAPTION>
Property Name 1995 1994 1993 1992 1991
- ----------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Lakewood $13.67 $14.56 $14.17 $15.15 $15.22
Foxhall $22.99 $22.64 $21.94 $21.94 $26.01
Peachtree $11.73 $11.62 $11.95 $12.41 $12.18
Featherwood $11.18 $10.61 $10.05 $10.23 $10.23
</TABLE>
3
<PAGE>
ITEM 2. PROPERTIES - Continued
- ------- ----------------------
The following table summarizes the principal provisions of the leases for the
tenants which occupy ten percent or more of the rentable square footage at each
of the Partnership's properties. No individual tenant at Foxhall, the
Partnership's other property, occupies ten percent or more of the rentable
square footage of this building.
<TABLE>
<CAPTION>
Partnership's Share of Percentage
per Annum Base Rents (a) for of Net Renewal
---------------------------- Leasable Options
Final Twelve Expiration Square (Renewal
Months of Date of Footage Options/
1996 Lease Lease Occupied Years)
--------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Lakewood
- --------
Cost Plus
(specialty store) $123,500 $123,500 10/28/07 13% 2/10
Peachtree
- ---------
Railcar Management, Inc.
(railway management) $198,100 $213,400 4/30/98 12% NONE
Jacor
Communications, Inc.
(radio broadcasting) $270,800 $367,500 8/31/07 15% NONE
Featherwood
- -----------
Parsons S.I.P, Inc.
(engineering firm) $496,500 $496,500 12/14/96 100% NONE
</TABLE>
(a) The Partnership's share of per annum base rents for each of the
tenants listed above for the years between 1996 and the final twelve
months of each of the above leases is no lesser or greater than the
amounts listed in the above table.
The amounts in the following table represent the Partnership's portion of leases
in the year of expiration (assuming no lease renewals) for the Partnership
through the year ended December 31, 2005:
<TABLE>
<CAPTION>
Number Base Rents
of in Year of % of Total
Year Tenants Square Feet Expiration(a) Base Rents(b)
------ --------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
1996 25 140,623 $809,669 19.75%
1997 15 19,722 $147,850 4.47%
1998 27 92,820 $481,852 17.84%
1999 15 28,777 $285,759 13.38%
2000 10 27,208 $168,985 9.45%
2001 4 15,698 $ 79,077 5.31%
2002 3 8,223 $ 67,231 4.89%
2003 11 23,521 $159,154 13.10%
2004 1 2,913 $ 43,551 4.08%
2005 7 38,364 $250,037 47.86%
</TABLE>
4
<PAGE>
ITEM 2. PROPERTIES - Continued
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(a) Represents the Partnership's portion of base rents to be collected
each year on expiring leases.
(b) Represents the Partnership's portion of base rents to be collected
each year on expiring leases as a percentage of the Partnership's
portion of the total base rents to be collected on leases existing
as of December 31, 1995.
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
(a & b) The Partnership and its properties were 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, 1995. Ordinary routine
litigation incidental to the business which is not deemed material was
maintained during the quarter ended December 31, 1995.
ITEM 4. 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 Units.
As of March 1, 1996, there were 8,809 Holders of Units.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 4,877,200 $ 4,604,600 $ 4,682,700 $ 5,742,100 $ 6,133,500
Net income (loss) $ 173,300 $ 434,400 $ 1,167,800 $ (194,800) $ 1,966,100
Net income (loss) allocated to Limited Partners $ 276,900 $ 532,200 $ 1,262,200 $ (199,800) $ 2,066,700
Net income (loss) allocated to Limited
Partners per Unit (60,000 Units issued
and outstanding) $ 4.62 $ 8.87 $ 21.04 $ (3.33) $ 34.45
Total assets $28,553,900 $29,792,600 $ 30,524,900 $30,432,200 $36,630,300
Distributions to Limited Partners per Unit
(60,000 Units issued and outstanding) (a) $ 25.68 $ 23.32 $ 13.32 $ 102.12 $ 32.12
Return of capital to Limited Partners per Unit
(60,000 Units issued and outstanding) (b) $ 21.06 $ 14.45 N/A $ 102.12 N/A
Other data:
Investment in commercial rental properties
(net of accumulated depreciation and
amortization) $24,149,000 $25,324,600 $ 25,990,100 $26,455,500 $34,554,400
Number of real property interests
owned at December 31 4 4 4 4 5
</TABLE>
6
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA -- Continued
Notes:
(a) Distributions per Unit to Limited Partners for the year ended December
31, 1992 included Sale Proceeds of $70.00.
(b) For purposes of this table, return of capital represents either: 1) the
amount by which distributions, if any, exceed net income for the
respective year or 2) total distributions, if any, when the Partnership
incurs a net loss for the respective year. Pursuant to the Partnership
Agreement, Capital Investment is only reduced by distributions of Sale
Proceeds. Accordingly, return of capital as used in this table does not
impact Capital Investment.
The following table is a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by generally accepted accounting principles ("GAAP"):
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Cash Flow (as defined in the Partnership
Agreement) (a) $ 2,443,600 $ 2,069,000 $ 2,346,700 $ 2,953,900 $ 3,302,300
Items of reconciliation:
Changes in assets and liabilities:
Decrease (increase) in current assets 79,400 59,500 (29,000) (21,100) 184,700
Increase (decrease) in current liabilities 85,600 61,000 7,600 69,000 (110,600)
----------- ----------- ----------- ----------- -----------
Net cash provided by operating activities $ 2,608,600 $ 2,189,500 $ 2,325,300 $ 3,001,800 $ 3,376,400
=========== =========== =========== =========== ===========
Net cash (used for) provided by investing
activities $(1,094,700) $ (969,200) $ (713,500) $ 5,025,000 $ (495,800)
=========== =========== =========== =========== ===========
Net cash (used for) financing activities $(1,497,600) $(1,227,600) $(1,082,700) $(6,147,100) $(2,312,400)
=========== =========== =========== =========== ===========
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as Partnership
revenues earned from operations (excluding tenant deposits and proceeds
from the sale or disposition of any Partnership properties), minus all
expenses incurred (including Operating Expenses and any reserves deemed
reasonably necessary by the Managing General Partner), except
depreciation and amortization expenses and capital expenditures, lease
acquisition expenditures and the General Partners' Subordinated
Partnership Management Fee.
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-7
in this report and the supplemental schedule on pages A-8 and A-9.
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 on November 16, 1982 and began
operations on January 3, 1983, after reaching the required minimum subscription
level. In March, 1983, the Offering was terminated upon the sale of 60,000
Units. During the period of 1983 to 1985 the Partnership purchased a total of
six properties, including three 50% joint venture interests.
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
1990 the Partnership, in addition to being in the operation of properties
phase, entered the disposition phase of its life cycle. During the disposition
phase of the Partnership's life cycle, comparisons of operating results are
complicated due to the timing and effect of property sales. Partnership
operating results are generally expected to decline as real property interests
are sold since the Partnership no longer receives income generated from such
real property interests. As of December 31, 1995 the Partnership has sold two
real property investments.
The Partnership's three office buildings accounted for 73% of the Partnership's
total revenue for the year ended December 31, 1995. Several factors have had an
effect on operating performance and market values of the Partnership's office
buildings. While occupancy rates have generally continued to gradually improve,
the age of the Partnership's office properties and increased competition from
newer buildings with higher vacancy has caused rental rates to either decline
or remain relatively flat in most instances. 12621 Featherwood ("Featherwood")
is occupied by one tenant, whose lease expires in December 1996. It is unknown
whether the tenant will vacate the property upon expiration of its lease. Costs
to the Partnership of retenanting the property could be substantial.
The General Partner has historically reviewed significant factors regarding the
properties, such as those mentioned above, to determine that the properties are
carried at lower of cost or fair market value, and where appropriate has made
value impairment adjustments. These factors include, but are not limited to 1)
recent and/or budgeted operating performance; 2) research of market conditions;
3) economic trends affecting major tenants; 4) economic factors related to the
region where the properties are located and 5) when available, recent property
appraisals. As a result of the current year review, the Partnership has
recorded provisions for value impairment totaling $1,100,000 related to the
Partnership's office properties for the year ended December 31, 1995. For more
details related to these provisions, see Note 7 of Notes to Financial
Statements. The General Partner will continue to evaluate real estate market
conditions affecting each of the Partnership's properties, in its efforts to
maximize the realization of proceeds on their eventual disposition. The
recording of the provisions for value impairment does not impact cash flows as
defined by generally accepted accounting principles or Cash Flow (as defined in
the Partnership Agreement).
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the years ended December 31, 1995, 1994 and 1993.
The discussion following the table should be read in conjunction with the
Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating Results
(a)
For the Years Ended December 31,
---------------------------------
1995 1994 1993
- -----------------------------------------------------------------
<S> <C> <C> <C>
PEACHTREE PALISADES OFFICE BUILDING
Rental revenues $1,402,200 $1,249,000 $1,408,600
- -----------------------------------------------------------------
Property net income (loss) (b) $ 9,300 $ (67,700) $ 156,500
- -----------------------------------------------------------------
Average occupancy 84% 80% 83%
- -----------------------------------------------------------------
LAKEWOOD SQUARE SHOPPING CENTER
Rental revenues $1,170,100 $1,168,900 $1,121,700
- -----------------------------------------------------------------
Property net income $ 602,500 $ 496,600 $ 473,000
- -----------------------------------------------------------------
Average occupancy 91% 84% 85%
- -----------------------------------------------------------------
FOXHALL SQUARE BUILDING
Rental revenues $1,574,000 $1,554,700 $1,619,000
- -----------------------------------------------------------------
Property net income (b) $ 483,800 $ 449,400 $ 429,900
- -----------------------------------------------------------------
Average occupancy 85% 86% 83%
- -----------------------------------------------------------------
12621 FEATHERWOOD BUILDING
Rental revenues $ 498,700 $ 456,600 $ 417,900
- -----------------------------------------------------------------
Property net income (b) $ 154,400 $ 94,800 $ 248,700
- -----------------------------------------------------------------
Average occupancy 100% 100% 100%
- -----------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are either not directly
related to individual property operating results such as interest income
and general and administrative expenses or are related to properties
previously owned by the Partnership.
(b) Property net income (loss) excludes provisions for value impairment which
were included in the Statements of Income and Expenses for the years ended
December 31, 1995 and 1994 (see Note 7 of Notes to Financial Statements for
additional information).
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE YEAR ENDED DECEMBER 31,
1994
Net income for the year ended December 31, 1995 decreased $261,100 when
compared to the year ended December 31, 1994. The effects of the provisions for
value impairment recorded for the years ended December 31, 1995 and December
31, 1994 of $1,100,000 and $500,000, respectively, had significant impact on
the comparison of net income. For additional information see Note 7 of Notes to
Financial Statements.
Net income for the year ended December 31, 1995, exclusive of the provisions
for value impairment, increased $338,900 when compared to the year ended
December 31, 1994. The increase in net income for the years under comparison
was primarily due to: 1) improved operating results at all of the Partnership's
properties totaling $276,900; 2) increased interest income of $57,900 resulting
from an increase in
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
rates available on the Partnership's short-term investments and 3) decreased
general and administrative costs of $4,100 resulting from a decrease in data
processing and appraisal fees partially offset by increases in salaries and
printing and mailing costs.
Total rental revenues increased $215,700, or 4.9%, for the year ended December
31, 1995, when compared to the year ended December 31, 1994. Rental revenues
increased at all of the Partnership's properties due to: 1) increased base
rents and tenant expense reimbursements for real estate tax expense at
Peachtree Palisades Office Building ("Peachtree") resulting from an increase in
occupancy; 2) increased base rents, tenant expense reimbursements and net
income from the operations of the parking garage at Foxhall Square Building
("Foxhall"); 3) increased base rents and tenant expense reimbursements for real
estate taxes and common area costs charged to the sole tenant at Featherwood
and 4) increased base rents at Lakewood Square Shopping Center ("Lakewood")
primarily due to an increase in occupancy, partially offset by a decrease in
tenant expense reimbursements for real estate taxes due to the receipt of real
estate tax refunds for the 1993/1994 and 1994/1995 tax years.
Total real estate tax expense decreased $89,100 for the year ended December 31,
1995 when compared to the year ended December 31, 1994. The decrease was
primarily due to the receipt of refunds in 1995 of $27,800 for 1993/1994 and
$29,400 for 1994/1995 real estate taxes at Lakewood and $38,700 for 1992 real
estate taxes at Peachtree. Also contributing to the decrease was a decrease in
real estate taxes at Featherwood resulting from a decrease in both the assessed
value and tax rate imposed by the taxing authority. Although the assessed value
at Foxhall has decreased and the actual taxes paid in 1995 were lower than in
1994, real estate tax expense was higher in 1995 due to the fact that 1994
included a refund for real estate taxes for the 1992/1993 tax year.
Total property operating expenses for the year ended December 31, 1995
increased $18,800 when compared to the year ended December 31, 1994. The
primary factors which caused this increase were: 1) increased personnel costs
(due to the hiring of a full time on-site property manager), utilities and
professional fees at Peachtree; 2) increased security costs at Peachtree,
Featherwood and Lakewood and 3) increased professional fees at Foxhall.
Partially offsetting the increase in property operating expenses was a decrease
in utilities at Foxhall and a decrease in Affiliated management fees at
Lakewood and Foxhall. Although management fee payments were higher in 1995 than
1994, the Affiliated management fees decreased for the comparable periods due
to the fact that leasing related costs, which are ordinarily paid to and
provided by an Affiliate of the Managing General Partner as part of its
property management fee, were paid to outside brokers and the expense was
capitalized as lease commissions and amortized over the respective lease terms
of new tenants.
Total insurance expense decreased $17,300 for the year ended December 31, 1995,
when compared to the year ended December 31, 1994. This decrease was primarily
due to lower group rates on the Partnership's combined insurance coverage as a
result of a minimal amount of claims made over the past several years.
Total repairs and maintenance expense decreased $9,100 for the year ended
December 31, 1995 when compared to the year ended December 31, 1994. The
decrease was primarily due to a decrease in repairs to the HVAC system and
decreased architectural costs associated with space planning for new and
relocating tenants at Peachtree and a decrease in janitorial costs at Foxhall.
Partially offsetting the above decrease was increased repairs and maintenance
expense at Featherwood resulting from an increase in minor repairs required to
maintain the HVAC system and increased expenses associated with patching,
resurfacing and striping of the parking lots at Foxhall and Lakewood.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1994 TO THE YEAR ENDED DECEMBER 31,
1993
Net income for the Partnership decreased by $733,400 for the year ended
December 31, 1994 when compared to the year ended December 31, 1993. The
provision for value impairment recorded for the year ended December 31, 1994 of
$500,000 had a significant impact on the comparison of net income. For
additional information see Note 7 of Notes to the Financial Statements.
Net income, exclusive of the provision for value impairment, decreased $233,400
for the comparable periods. The significant factors causing the decrease were
lower operating results at Peachtree and Featherwood of $224,200 and $153,900,
respectively. Partially offsetting the decrease in net income was: 1) improved
operating results at Lakewood and Foxhall of $23,600 and $19,500, respectively;
2) increased interest income of $57,800 due to a trend in higher rates earned
on short-term investments and 3) decreased general and administrative costs of
$10,200 resulting primarily from a decrease in printing and mailing costs.
Rental revenues decreased by $135,900, or 3%, for the year ended December 31,
1994 when compared to the year ended December 31, 1993. The decrease in rental
revenues was primarily due to: 1) lower escalation income at Foxhall resulting
from overpayments by tenants in prior years as well as changes in tenants' base
years caused by lease rollovers, partially offset by an increase in base rents
and 2) a decrease in the average annual occupancy rate at Peachtree. Partially
offsetting the decrease in rental revenues was: 1) increased rental revenues at
Lakewood primarily due to the write-off in 1993 of approximately $51,000 in
uncollectible tenant receivables and 2) increased rental revenues at
Featherwood due to an increase in base rents resulting from the expiration of
the prior tenant's lease, which was on a net basis, as discussed below.
On December 14, 1993, the lease expired for the sole tenant at Featherwood. On
December 14, 1993, the Partnership and First Capital Institutional Real Estate,
Ltd.--2, an Affiliated partnership, (collectively "FCIRE 1 & 2") entered into a
three-year lease agreement with one of the former subtenants to occupy the
entire building. The terms of the new lease provided for minimum rents to be
earned by FCIRE 1 & 2 of approximately $992,900 per annum throughout the term
of the lease, of which the Partnership has a 50% interest. The Partnership's
share of total operating expenses, real estate taxes, and repairs and
maintenance increased for the year ended December 31, 1994 when compared to the
year ended December 31, 1993 due to the assumption of these obligations by the
Partnership resulting from the expiration of the prior tenant's lease, which
was on a net basis.
9
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
Total repairs and maintenance expense increased $144,800 for the year ended
December 31, 1994 when compared to the year ended December 31, 1993. The
increase was primarily due to: 1) increased repairs and maintenance at
Peachtree due to repairs made to the HVAC and fire protection systems and minor
tenant improvements; 2) increased repairs and maintenance at Featherwood as
discussed above and 3) increased personnel costs at Foxhall resulting from an
increase in janitorial payroll.
Total property operating expenses increased $66,100 for the year ended December
31, 1994 when compared to the year ended December 31, 1993. The increase was
primarily due to: 1) increased utility expenses at Featherwood for the reasons
discussed above and 2) increased personnel costs resulting from increased
common area security at Lakewood. Partially offsetting the increase in property
operating expenses was decreased promotional and advertising expenditures at
Foxhall.
Total real estate tax expense and insurance expense remained relatively flat
for the year ended December 31, 1994 when compared to the year ended December
31, 1993.
To increase and/or maintain occupancy levels at the Partnership's properties,
the Managing General Partner, through its Affiliated asset and property
management groups, continues to take the following actions: 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 tenant leases
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 tenants lease clauses protects the
Partnership, to some extent, from increases in the rate of inflation. Certain
of the lease clauses provide for the following: 1) annual rent increases based
on the Consumer Price Index or graduated rental increases; 2) percentage
rentals at shopping centers, 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
A primary objective of the Partnership is to provide cash distributions to
Partners from Partnership operations. Cash Flow (as defined in the Partnership
Agreement) is generally not equal to Partnership net income or cash flow as
defined by GAAP, since certain items are treated differently under the
Partnership Agreement than under GAAP. The Managing General Partner believes
that to facilitate a clear understanding of the Partnership's operations, an
analysis of Cash Flow (as defined in the Partnership Agreement) should be
examined in conjunction with an analysis of net income or cash flow as defined
by GAAP. The table in Item 6. Selected Financial Data includes a reconciliation
of Cash Flow (as defined in the Partnership Agreement) to cash flow provided by
operating activities as defined by GAAP. Such amounts are not indicative of
actual distributions to Partners and should not necessarily be considered as an
alternative to the results disclosed in the Statements of Income and Expenses
and Statements of Cash Flows.
Cash Flow (as defined in the Partnership Agreement) for the year ended December
31, 1995 was $2,443,600, a $374,600 increase when compared to the year ended
December 31, 1994. This increase was primarily due to the increase in net
income, exclusive of depreciation, amortization, and provisions for value
impairment for the comparable periods, as previously discussed.
The increase in the Partnership's cash position of $16,300 as of December 31,
1995 when compared to December 31, 1994 was primarily the result of net cash
provided by operating activities exceeding payments made for capital and tenant
improvements and leasing costs and distributions paid to Limited Partners.
Liquid assets of the Partnership as of December 31, 1995 were comprised of
undistributed cash from operations retained for working capital purposes.
Net cash provided by operating activities continues to be the Partnership's
primary source of funds. Net cash provided by operating activities for the year
ended December 31, 1995 was $2,608,600, a $419,100 increase when compared to
the year ended December 31, 1994. This increase was primarily due to the
increase in net income as previously discussed, and the decrease in other
assets due to the receipt of a rebate for a previous purchase at Foxhall in the
amount of $155,000, which previously has been included in other assets on the
Partnership's balance sheet.
The increase in net cash used for investing activities of $125,500 for the year
ended December 31, 1995 when compared to the year ended December 31, 1994 was
due to an increase in expenditures for capital and tenant improvements and
leasing costs for the Partnership's properties. The Partnership maintains
working capital reserves to pay for these types of capital expenditures. During
the year ended December 31, 1995, the Partnership spent $1,094,700 for building
and tenant improvements and leasing costs and has budgeted to spend
approximately $1,164,000 during the year ending December 31, 1996. Included in
the 1996 budgeted amount are capital and tenant improvements and leasing costs
of approximately $425,000, $374,000, $332,000 and $33,000 at Foxhall, Lakewood,
Peachtree and Featherwood, respectively. The Managing General Partner believes
these expenditures are necessary to increase and/or maintain occupancy levels
in very competitive markets, maximize rental rates charged to new and renewing
tenants and prepare the properties for eventual disposition.
The increase in net cash used for financing activities of $270,000 for the year
ended December 31, 1995 when compared to the year ended December 31, 1994 was
due primarily to an increase in distributions paid to Limited Partners.
The Managing General Partner continues to take a conservative approach to
projections of future rental income and to maintain higher levels of cash
reserves due to the anticipated capital and tenant improvements and leasing
costs necessary to be made at the Partnership's properties during the next
several years. As a result of this, cash continues to be retained to supplement
working capital reserves. For the year ended December 31, 1995, Cash Flow (as
defined in the Partnership Agreement) retained to supplement working capital
was $902,800.
10
<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.
11
<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 29, 1996, 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 June 1996.
Name Office
---- ------
Samuel Zell........................................ Chairman of the Board
Douglas Crocker II................................. Director
Sheli Z. Rosenberg................................. Director
Sanford Shkolnik................................... Director
Samuel Zell, 54, 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. ("EGI"), and is a
trustee and beneficiary of a general partner of Equity Holdings Limited, an
Illinois Limited Partnership, a privately owned investment partnership. He
is also Chairman of the Board of Directors of Anixter International 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 Quality Food Centers, Inc. and Sealy Corporation.
He is 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 protection under the Federal bankruptcy laws on November 8, 1991.
Douglas Crocker II, 55, 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, Chief Executive
Officer and trustee 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. Mr. Crocker is a member of the Board of Directors of Horizon
Group, Inc.
Sheli Z. Rosenberg, 54, 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
EGI 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 Anixter International Inc., Capsure Holdings Corp.,
American Classic Voyages Co., Falcon Building Products, Inc., Jacor
Communications, Inc., Revco D.S., Inc., Sealy Corporation and CFI
Industries, Inc. She was Chairman of the Board from January 1994 to
September 1994; Co-Chairman of the Board from September 1994 until March
1995 of CFI Industries, Inc. She is also a trustee of Equity Residential
Properties Trust. Ms. Rosenberg is a Principal 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,
12
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -- Continued
- -------- --------------------------------------------------
(a) DIRECTORS (continued)
---------------------
1991. Madison filed for protection 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 protection under the Federal Bankruptcy
laws on January 3, 1995.
Sanford Shkolnik, 57, 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
management company.
(b,c & e) EXECUTIVE OFFICERS
------------------
The Partnership does not have any executive officers. The executive
officers of the Managing General Partner as of March 29, 1996 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, 55, 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 an Executive Vice President 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. 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 protection
under the Federal bankruptcy laws on November 8, 1991.
Norman M. Field, 47, has been Vice President of Finance 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.
He also served as Vice President of Madison until October 4, 1991. He was
Chief Financial Officer of Equality Specialties, Inc. ("Equality"),
subsidiary of Great American, from August 1994 to April 1995. Equality was
sold in April 1995.
(d) FAMILY RELATIONSHIPS
--------------------
There are no family relationships among any of the foregoing directors and
officers.
(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
----------------------------------------
With the exception of the bankruptcy matters disclosed under Items 10 (a),
(b), (c) and (e), there are no involvements in certain legal proceedings
among any of the foregoing directors and officers.
13
<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, 1995. However, the Managing General Partner
and Affiliates of the Managing General Partner do compensate the directors and
officers of the Managing General Partner. For additional information see Item
13 (a) Certain Relationships and Related Transactions.
(e) None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
(a) As of March 1, 1996 no person owned of record or was known by the
Partnership to own beneficially more than 5% of the Partnership's 60,000 Units
then outstanding.
(b) The Partnership has no directors or executive officers. As of March 1, 1996,
the executive officers and directors of First Capital Financial Corporation, the
Managing General Partner, as a group, did not own any Units.
(c) None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
(a) On February 23, 1993, First Capital Properties Corporation changed its name
to First Capital Financial Corporation.
Certain Affiliates of the Managing General Partner, provide leasing, property
management and supervisory services to the Partnership. Compensation for these
property management services may not exceed 6% of the gross receipts from the
property being managed where the Managing General Partner or Affiliates provide
leasing, re-leasing, or leasing related services, or 3% of gross receipts where
the Managing General Partner or Affiliates do not perform leasing, re-leasing or
leasing related services. For the year ended December 31, 1995, these Affiliates
were entitled to supervisory and property management and leasing fees of
approximately $168,100. In addition, other Affiliates of the Managing General
Partner were entitled to compensation and reimbursement of approximately $93,400
from the Partnership for insurance, personnel, and other miscellaneous services.
Services of Affiliates shall be on terms which are fair, reasonable and no less
favorable to the Partnership than reasonably could be obtained from unaffiliated
persons. As of December 31, 1995, total fees and reimbursements of $21,900 were
due to Affiliates.
Jacor Communications, Inc. ("Jacor"), a radio broadcasting company, of which an
approximate 65% interest is owned by Zell Chilmark Fund L.P., an Affiliate of
the Managing General Partner, is obligated to the Partnership under a lease for
office space at Peachtree. During the year ended December 31, 1995, Jacor paid
rent of $59,800. The rent paid by Jacor is comparable to that paid by other
tenants at Peachtree.
As of December 31, 1995, the Partnership has a recorded liability in the total
amount of $403,000 payable to the Managing General Partner for real estate
commissions earned in connection with the sale of Partnership properties. Under
the terms of the Partnership Agreement, these commissions 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
14
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -- Continued
- -------- -----------------------------------------------------------
(including all Cash Flow which has been distributed to the Limited Partners from
the initial date of investment) of 6% simple interest per annum on their Capital
Investment from the initial date of investment.
In accordance with the Partnership Agreement, subsequent to March 31, 1983, the
Termination of the Offering, the General Partners are entitled to 10% of
distributable Cash Flow (as defined by the Partnership Agreement) as their
Subordinated Partnership Management Fee, provided that Limited Partners first
receive specified non-cumulative annual rates of return on their Capital
Investment.
In accordance with the Partnership Agreement, Net Profits (exclusive of
depreciation and Net Profits from the sale or disposition of Partnership
properties) are allocated: first, to the General Partners, in an amount equal to
the greater of the General Partners' Subordinated Partnership Management Fee or
1% of such Net Profits; second, the balance, if any, to the Limited Partners.
Net Profits from the sale or disposition of a Partnership property are
allocated: first, to the General Partners, in an amount equal to the aggregate
amount of depreciation previously allocated to them; second, to the General
Partners and the Limited Partners with negative balances in their capital
accounts pro rata in proportion to such respective negative balances, to the
extent of the total of such negative balances; third, to the General Partners,
in an amount necessary to make the aggregate amount of their capital accounts
equal to the greater of the Sale 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 fourth, the balance, if any, to the Limited Partners. Net
Losses (exclusive of depreciation and Net Losses from the sale or disposition of
Partnership properties) are allocated 1% to the General Partners and 99% to the
Limited Partners. All depreciation is allocated 10% to the General Partners and
90% to the Limited Partners. Net Losses from the sale or disposition of
Partnership properties are allocated: first, to the extent that the balance in
the General Partners' capital accounts exceeds their Capital Investment or the
balance in the capital accounts of the Limited Partners exceeds the amount of
their Capital Investment (the "Excess Balances"), to the General Partners and
the Limited Partners pro rata in proportion to such Excess Balances until such
Excess Balances are reduced to zero; second, to the General Partners and the
Limited Partners and among them (in the ratio which their respective capital
account balances bear to the aggregate of all capital account balances) until
the balance in their capital accounts shall be reduced to zero; third, the
balance, if any, 99% to the Limited Partners and 1% to the General partners. 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. The General Partners were not entitled to cash distributions but were
allocated a Net (Loss) of $(103,600) which included a (loss) from
provisions for value impairment of $(11,000) for the year ended December 31,
1995.
(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 Rosenberg. 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. Total legal fees paid to Rosenberg for the year ended December 31, 1995
were $37,600.
(c) No management person is indebted to the Partnership.
(d) None.
15
<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:
There were no reports filed on Form 8-K for the quarter ended December 31,
1995.
16
<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 INSTITUTIONAL REAL ESTATE, LTD. - 1
BY: FIRST CAPITAL FINANCIAL CORPORATION
MANAGING GENERAL PARTNER
Dated: March 29, 1996 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 29, 1996 Chairman of the Board and
- ----------------------- -------------- Director of the Managing
SAMUEL ZELL General Partner
/s/ DOUGLAS CROCKER II March 29, 1996 President, Chief Executive
- ----------------------- -------------- Officer and Director of the
DOUGLAS CROCKER II Managing General Partner
/s/ SHELI Z. ROSENBERG March 29, 1996 Director of the Managing
- ----------------------- -------------- General Partner
SHELI Z. ROSENBERG
/s/ SANFORD SHKOLNIK March 29, 1996 Director of the Managing
- ----------------------- -------------- General Partner
SANFORD SHKOLNIK
/s/ NORMAN M. FIELD March 29, 1996 Vice President - Finance and
- ----------------------- -------------- Treasurer
NORMAN M. FIELD
<PAGE>
INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
<TABLE>
<CAPTION>
Pages
----------
<S> <C>
Report of Independent Auditors A-2
Balance Sheets at December 31, 1995 and 1994 A-3
Statements of Partners' Capital for the Years Ended
December 31, 1995, 1994, and 1993 A-3
Statements of Income and Expenses for the Years Ended
December 31, 1995, 1994, and 1993 A-4
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994, and 1993 A-4
Notes to Financial Statements A-5 to A-7
SCHEDULE FILED AS PART OF THIS REPORT
III -- Real Estate and Accumulated Depreciation as of
December 31, 1995 A-8 to 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.
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-29 of the Partnership's
definitive Prospectus dated October 25, 1982; Registration Statement No.
2-79092, filed pursuant to Rule 424 (b), is incorporated herein by reference.
The Partnership agreement as filed has subsequently been amended to reflect the
admission, withdrawal and substitution of Limited Partners, the reduction of
Limited Partners' Capital Contributions, and the withdrawal of an individual
General Partner.
EXHIBIT (10) Lease Agreement for a tenant that occupies more than 10% of the net
leasable square footage of one of the Partnership's properties.
EXHIBIT (13) Annual Report to Security Holders
The 1994 Annual Report to Limited Partners is being sent under separate cover,
not as a filed document and not via EDGAR, for the information of the
Commission.
EXHIBIT (27) Financial Data Schedule
A-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partners
First Capital Institutional Real Estate, Ltd. - 1
Chicago, Illinois
We have audited the accompanying balance sheets of First Capital Institutional
Real Estate, Ltd. - 1 as of December 31, 1995 and 1994, and the related
statements of income and expenses, partners' capital and cash flows for each of
the three years in the period ended December 31, 1995, 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 Institutional
Real Estate, Ltd. - 1 at December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
Ernst & Young LLP
Chicago, Illinois
March 1, 1996
A-2
<PAGE>
BALANCE SHEETS
December 31, 1995 and 1994
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 5,501,700 $ 5,501,700
Buildings and improvements 30,584,800 30,590,100
36,086,500 36,091,800
Accumulated depreciation and amortization (11,937,500) (10,767,200)
- --------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 24,149,000 25,324,600
Cash and cash equivalents 4,254,900 4,238,600
Rents receivable 149,800 67,300
Other assets 200 162,100
- --------------------------------------------------------------------------
$28,553,900 $29,792,600
- --------------------------------------------------------------------------
</TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<S> <C> <C>
Liabilities:
Accounts payable and accrued expenses $ 432,500 $ 363,000
Due to Affiliates 21,900 44,700
Real estate commissions due to Managing General
Partner 403,000 403,000
Security deposits 145,800 138,000
Distributions payable 385,200 349,800
Other liabilities 109,000 70,100
- --------------------------------------------------------------------------
1,497,400 1,368,600
- --------------------------------------------------------------------------
Partners' (deficit) capital:
General Partners (359,300) (255,700)
Limited Partners (60,000 Units issued and
outstanding) 27,415,800 28,679,700
- --------------------------------------------------------------------------
27,056,500 28,424,000
- --------------------------------------------------------------------------
$28,553,900 $29,792,600
- --------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994 and 1993
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1993 $ (63,500) $29,083,700 $29,020,200
Net (loss) income for the
year ended December 31, 1993 (94,400) 1,262,200 1,167,800
Distributions for the year ended December
31, 1993 (799,200) (799,200)
- -------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1993 (157,900) 29,546,700 29,388,800
Net (loss) income for the
year ended December 31, 1994 (97,800) 532,200 434,400
Distributions for
the year ended December 31, 1994 (1,399,200) (1,399,200)
- -------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1994 (255,700) 28,679,700 28,424,000
Net (loss) income for the
year ended December 31, 1995 (103,600) 276,900 173,300
Distributions for the year ended December
31, 1995 (1,540,800) (1,540,800)
- -------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1995 $(359,300) $27,415,800 $27,056,500
- -------------------------------------------------------------------------------
</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, 1995, 1994 and 1993
(All dollars rounded to nearest 00s except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rental $4,644,000 $4,429,300 $4,565,200
Interest 233,200 175,300 117,500
- -----------------------------------------------------------------------------
4,877,200 4,604,600 4,682,700
- -----------------------------------------------------------------------------
Expenses:
Depreciation and amortization 1,170,300 1,134,600 1,178,900
Property operating:
Affiliates 199,200 221,900 251,400
Nonaffiliates 950,500 909,000 813,400
Real estate taxes 344,000 433,100 427,500
Insurance--Affiliate 46,300 63,600 70,300
Repairs and maintenance 685,300 694,400 549,600
General and administrative:
Affiliates 47,300 37,000 30,100
Nonaffiliates 161,000 176,600 193,700
Provisions for value impairment 1,100,000 500,000
- -----------------------------------------------------------------------------
4,703,900 4,170,200 3,514,900
- -----------------------------------------------------------------------------
Net income $ 173,300 $ 434,400 $1,167,800
- -----------------------------------------------------------------------------
Net (loss) allocated to General Partners $ (103,600) $ (97,800) $ (94,400)
- -----------------------------------------------------------------------------
Net income allocated to Limited Partners $ 276,900 $ 532,200 $1,262,200
- -----------------------------------------------------------------------------
Net income allocated to Limited Partners
per Unit (60,000 Units outstanding) $ 4.62 $ 8.87 $ 21.04
- -----------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 173,300 $ 434,400 $1,167,800
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,170,300 1,134,600 1,178,900
Provisions for value impairment 1,100,000 500,000
Changes in assets and liabilities:
(Increase) decrease in rents receivable (82,500) 179,300 (85,000)
Decrease (increase) in other assets 161,900 (119,800) 56,000
Increase in accounts payable and accrued
expenses 69,500 41,500 62,300
(Decrease) increase in due to Affiliates (22,800) 16,000 (9,400)
Increase (decrease) in other liabilities 38,900 3,500 (45,300)
- ----------------------------------------------------------------------------------
Net cash provided by operating activities 2,608,600 2,189,500 2,325,300
- ----------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant improvements (1,094,700) (969,200) (713,500)
- ----------------------------------------------------------------------------------
Net cash (used for) investing activities (1,094,700) (969,200) (713,500)
- ----------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions paid to Partners (1,505,400) (1,249,100) (1,081,200)
Increase (decrease) in security deposits 7,800 21,500 (1,500)
- ----------------------------------------------------------------------------------
Net cash (used for) financing activities (1,497,600) (1,227,600) (1,082,700)
- ----------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 16,300 (7,300) 529,100
Cash and cash equivalents at the beginning of
the year 4,238,600 4,245,900 3,716,800
- ----------------------------------------------------------------------------------
Cash and cash equivalents at the end of the
year $4,254,900 $4,238,600 $4,245,900
- ----------------------------------------------------------------------------------
</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 in
the Partnership's Registration Statement filed with the Securities and Exchange
Commission on Form S-11. Definitions of these terms are contained in Article
III of the First Amended and Restated Certificate and Agreement of Limited
Partnership, which is included in the Registration Statement and incorporated
herein by reference.
ORGANIZATION:
The Partnership was formed on June 6, 1982, 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 November 16, 1982. The
Certificate and Agreement, as amended and restated, authorized the sale to the
public of up to 50,000 Units (with the Managing General Partner's option to
increase to 60,000 Units) and not less than 1,300 Units. On January 3, 1983,
the required minimum subscription level was reached and the Partnership
operations commenced. The Managing General Partner exercised its option to
increase the Offering to 60,000 Units, which amount was sold prior to the
Termination of the Offering in March 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, 2013. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
The preparation of the Partnership's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The financial statements include the Partnership's 50% interest in three joint
ventures. 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 on their
individual tax returns; therefore, no provision for income taxes is made in the
financial statements of the Partnership. It is not practicable for the
Partnership to determine the aggregate tax bases of the Limited Partners;
therefore, the disclosure of the difference 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 provision 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 against operations as incurred; expenditures for
improvements are capitalized and depreciated over the estimated life of the
improvements.
The Managing General Partner periodically reviews significant factors regarding
the properties to determine that the properties are carried at lower of cost or
fair market value. These factors include, but are not limited to, the Managing
General Partner's experience in the real estate industry, an evaluation of
recent operating performance against expected results, economic trends or
factors affecting major tenants or the regions in which the properties are
located and, where available, information included in recent appraisals of
properties.
Based on this analysis, where it is anticipated that the carrying value of an
investment property will not be recovered, the Managing General Partner has
deemed it appropriate to reduce the basis of the properties for financial
reporting purposes to fair market value. Such fair market value is the Managing
General Partner's best estimate of the amounts expected to be realized were
such properties sold as of the Balance Sheet date, based on current information
available. The ultimate realization may differ from these amounts. Provisions,
where applicable, are reflected in the accompanying Statements of Income and
Expenses in the year such evaluations have been made. See Note 7 for additional
information.
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 are removed from the respective
accounts. Any gain or loss on disposition is recognized in accordance with
generally accepted accounting principles.
Cash equivalents are considered all highly liquid investments with an original
maturity of three months or less when purchased.
The Partnership's financial statements include financial instruments, including
receivables and trade liabilities. The fair value of all financial instruments,
including cash and cash equivalents, was not materially different from their
carrying value at December 31, 1995 and 1994.
Certain reclassifications have been made to the previously reported 1994 and
1993 statements in order to provide comparability with the 1995 statements.
These reclassifications have no effect on net (loss) income or Partners'
(deficit) capital.
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, subsequent to March 31, 1983, the
Termination of the Offering, the General Partners are entitled to 10% of
distributable Cash Flow (as defined by the Partnership Agreement) as their
Subordinated Partnership Management Fee, provided that Limited Partners first
receive specified non-cumulative annual rates of return on their Capital
Investment.
A-5
<PAGE>
In accordance with the Partnership Agreement, Net Profits (exclusive of
depreciation and Net Profits from the sale or disposition of Partnership
properties) are allocated: first, to the General Partners, in an amount equal
to the greater of the General Partners' Subordinated Partnership Management Fee
or 1% of such Net Profits; second, the balance, if any, to the Limited
Partners. Net Profits from the sale or disposition of a Partnership property
are allocated: first, to the General Partners, in an amount equal to the
aggregate amount of depreciation previously allocated to them; second, to the
General Partners and the Limited Partners with negative balances in their
capital accounts pro rata in proportion to such respective negative balances,
to the extent of the total of such negative balances; third, to the General
Partners, in an amount necessary to make the aggregate amount of their capital
accounts equal to the greater of the Sale 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 fourth, the balance, if any, to the Limited Partners.
Net Losses (exclusive of depreciation and Net Losses from the sale or
disposition of Partnership properties) are allocated 1% to the General Partners
and 99% to the Limited Partners. All depreciation is allocated 10% to the
General Partners and 90% to the Limited Partners. Net Losses from the sale or
disposition of Partnership properties are allocated: first, to the extent that
the balance in the General Partners' capital accounts exceeds their Capital
Investment or the balance in the capital accounts of the Limited Partners
exceeds the amount of their Capital Investment (the "Excess Balances"), to the
General Partners and the Limited Partners pro rata in proportion to such Excess
Balances until such Excess Balances are reduced to zero; second, to the General
Partners and the Limited Partners and among them (in the ratio which their
respective capital account balances bear to the aggregate of all capital acount
balances) until the balance in their capital accounts shall be reduced to zero;
third, the balance, if any, 99% to the Limited Partners and 1% to the General
Partners. 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. The General Partners were not entitled to cash
distributions for the years ended December 31, 1995, 1994 and 1993. During the
year ended December 31, 1995, the General Partners were allocated a Net (Loss)
of $(103,600) which included a (loss) from provisions for value impairment of
$(11,000). During the year ended December 31, 1994, the General Partners were
allocated a Net (Loss) of $(97,800), which included a (loss) from provision for
value impairment of $(5,000). For the year ended December 31, 1993, the General
Partners were allocated a Net (Loss) of $(94,400).
Affiliates of the Managing General Partner provide property management services
to the Partnership. They receive management fees ranging from 1% to 6% of rents
collected plus reimbursement of specified costs.
Fees and reimbursements paid and payable by the Partnership to Affiliates for
the years ended December 31, 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
Paid Payable Paid Payable Paid Payable
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property management and
leasing fees $195,400 $13,000 $179,200 $40,300 $247,400 $19,600
Reimbursement of property
insurance premiums, at
cost 46,300 61,700 58,300
Reimbursement of expenses,
at cost:
--Accounting 18,600 5,900 19,800 2,000 17,600 2,100
--Investor communication 23,200 3,000 14,900 2,400 11,300 1,100
--Legal 37,600 38,400 31,300 5,900
- ------------------------------------------------------------------------------
$321,100 $21,900 $314,000 $44,700 $365,900 $28,700
- ------------------------------------------------------------------------------
</TABLE>
As of December 31, 1995, the Partnership has recorded a liability in the total
amount of $403,000 payable to the Managing General Partner for real estate
commissions earned in connection with the sale of Partnership properties in
prior years. Under the terms of the Partnership Agreement, these commissions
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 from the initial date of
investment) of 6% simple interest per annum on their Capital Investment from
the initial date of investment.
Jacor Communications, Inc. ("Jacor"), a radio broadcasting company, which is
approximately 65% owned by Zell Chilmark Fund L.P., an Affiliate of the
Managing General Partner, is obligated to the Partnership under a lease for
office space at Peachtree Palisades Office Building for the year ended December
31, 1995, Jacor paid approximately $59,800 in total rents. The rents paid by
Jacor are comparable to those paid by other tenants at Peachtree Palisades
Office Building.
3. FUTURE MINIMUM RENTALS:
The Partnership's share of future minimum rental income due on noncancelable
leases as of December 31, 1995 was as follows:
<TABLE>
<S> <C>
1996 $ 4,098,700
1997 3,309,300
1998 2,701,400
1999 2,136,100
2000 1,788,900
Thereafter 7,247,200
--------------
$21,281,600
--------------
</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, 1995, 1994 and 1993 were $30,800,
$22,800 and $4,400, respectively.
A-6
<PAGE>
4. NET LEASE AGREEMENT:
The Partnership acquired the 12621 Featherwood Building, formerly known as
Houston Lighting and Power Building, under a net lease agreement with a single
tenant (the "Tenant"). The Tenant was responsible for the maintenance and
operating expenses of the property and the payment of real estate taxes and
insurance costs. On December 14, 1993, the Tenant's lease expired. The
Partnership received a final payment for amounts due under the net lease
agreement in January 1994. On December 14, 1993, the Partnership executed a
three-year gross lease with a former subtenant (the "Lessee"). Amounts due
under this lease for 1996 are included in Note 3.
5. INCOME TAX:
The Partnership utilizes the accrual basis 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 use of
differing methods in computing the gain on sale of property and the
Partnership's provision for value impairment. The net effect of these
accounting differences for the year ended December 31, 1995 was that net income
for tax reporting purposes was less than the net income for financial statement
purposes by $574,000. The aggregate cost of commercial rental properties for
federal income tax purposes at December 31, 1995 was $39,796,600.
6. MANAGEMENT AGREEMENT:
On-site management for the Lakewood Square Shopping Center is provided by an
independent real estate management company for fees calculated as a percentage
of gross rents received from the property.
An Affiliate of the Managing General Partner provides supervisory management
for this property for fees calculated as a percentage of gross rents received
from this property.
7. PROVISIONS FOR VALUE IMPAIRMENT:
Due to regional factors and other matters affecting the Partnership's office
properties, there is uncertainty as to the Partnership's ability to recover the
net carrying value of certain of its properties during the remaining estimated
holding periods. Accordingly, it was deemed appropriate to reduce the bases of
such properties in the Partnership's financial statements during the years
ended December 31, 1995 and 1994. The provisions for value impairment were
considered non-cash for the purposes of the Statements of Cash Flows and were
not utilized in the determination of Cash Flow (as defined in the Partnership
Agreement). The following is a summary of the provisions for value impairment
reported by the Partnership for the years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Property 1995 1994
----------------------------
<S> <C> <C>
12621
Featherwood $ 300,000 $500,000
Peachtree
Palisades 600,000
Foxhall Square 200,000
----------------------------
$1,100,000 $500,000
----------------------------
</TABLE>
The provisions for value impairment were material fourth quarter adjustments
pursuant to Accounting Principles Board Opinion No. 28, "Interim Financial
Reporting". No other material adjustments were made in the fourth quarters.
Beginning on January 1, 1996, the Partnership will adopt the Financial
Accounting Standards Board Statement No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (the
"Standard"). The Standard established guidance for determining if the value
defined assets are impaired, and if so, how impairment losses should be
measured and reported in the financial standared. The Standard is effective for
fiscal years beginning after December 15, 1995. The Managing General Partner
believes that based on current circumstances, the adoption on January 1, 1996
of the Standard will not materially affect the Partnership's financial position
or results of operations.
A-7
<PAGE>
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 1
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column Column Column Column Column Column Column Column
A C D E F G H I
- ---------------- ---------------------- -------------------- ------------------------------------ ----------- ---- ---- -------
Life on
which de-
Costs capitalized preciation
Initial cost to subsequent Gross amount at which in latest
Partnership to acquisition carried at close of period income
---------------------- -------------------- ------------------------------------ Accum- Date state-
Buildings Buildings ulated of con- Date ments
and Im- Improve- Carrying and Im- Deprecia- struc- Ac- is com-
Description Land provements ments Costs(1) Land provements Total(2)(3) tion (2) tion quired puted
- ---------------- ---------- ----------- ---------- -------- ---------- ----------- ----------- ----------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Lakewood Square
Shopping Center
(Lakewood, CA) 35(4)
(50% interest) $2,652,800 $ 7,988,700 $ 444,600 $ 40,200 $2,652,800 $ 8,473,500 $11,126,300 $ 2,664,000 1982 5/84 2-10(5)
OFFICE BUILDINGS:
Foxhall Square
Building
(Washington, D.C.) 35(4)
(50% interest) 2,351,100 5,893,400 2,011,400 188,500 2,351,100 7,893,300(6) 10,244,400 3,018,000 1972 6/84 1-10(5)
Peachtree Palisades
Office Building 35(4)
(Atlanta, GA) (7) 8,273,500 4,111,700 46,400 (7) 11,831,600(8) 11,831,600 4,965,200 1965 9/83 1-10(5)
12621 Featherwood
Building
(Houston, TX)
(50% interest) 497,800 5,037,700 91,300 57,400 497,800 2,386,400(9) 2,884,200 1,290,300 1983 1/85 35(4)
---------- ----------- ---------- -------- ---------- ----------- ----------- -----------
$5,501,700 $27,193,300 $6,659,000 $332,500 $5,501,700 $30,584,800 $36,086,500 $11,937,500
========== =========== ========== ======== ========== =========== =========== ===========
</TABLE>
Column B - Not Applicable.
See accompanying notes on following page.
A-8
<PAGE>
FIRST CAPITAL INSTITUTIONAL REAL ESTATE , LTD. - 1
NOTES TO SCHEDULE III
Note 1. Consists of legal fees, appraisal fees, title costs and other related
professional fees.
Note 2. The following is a reconciliation of activity in columns E and F:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994 December 31, 1993
-------------------------- -------------------------- --------------------------
Accumulated Accumulated Accumulated
Cost Depreciation Cost Depreciation Cost Depreciation
----------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
beginning of year $36,091,800 $10,767,200 $35,622,600 $ 9,632,500 $34,909,100 $8,453,600
Additions during
year:
Improvements 1,094,700 969,200 713,500
Provision for
depreciation
and amortization 1,170,300 1,134,700 1,178,900
Deductions
during year:
Provisions for value
impairment (1,100,000) (500,000)
----------- ----------- ----------- ----------- ----------- ----------
Balance at
end of year $36,086,500 $11,937,500 $36,091,800 $10,767,200 $35,622,600 $9,632,500
=========== =========== =========== =========== =========== ==========
</TABLE>
Note 3. The aggregate cost for Federal income tax purposes as of December 31,
1995 was $39,796,600.
Note 4. Estimated useful life for building.
Note 5. Ranges of estimated useful life for improvements.
Note 6. Includes provision for value impairment of $200,000.
Note 7. The Partnership leases the land on which this property is situated. The
lease expires on December 31, 2021.
Note 8. Includes provision for value impairment of $600,000.
Note 9. Includes provisions for value impairment of $2,800,000.
A-9
<PAGE>
FIRST AMENDMENT
This First Amendment (the "Amendment") is made and entered into as of the
24th day of April, 1995, by and between First Capital Institutional Real Estate,
Ltd. -1 ("Landlord") by its agent Equity Office Properties, Inc., an Illinois
Corporation, and JACOR Broadcasting of Atlanta, Inc., a Georgia Corporation
("Tenant").
WITNESSETH
A. WHEREAS, Landlord and Tenant are parties to that certain lease dated
August 4, 1994 currently containing approximately 19,500 rentable square feet of
space on the seventh (7th) floor of the building commonly known as Peachtree
Palisades East and the address of which is 1819 Peachtree Rd, NE, Atlanta,
Georgia (the "Building"), which lease has been previously amended by that
certain Lease Modification Agreement dated October 11, 1994 (collectively, the
"Lease"); and
B. WHEREAS, Tenant and Landlord mutually desire that the Lease be amended on
and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:
I. WORK LETTER. The Work Letter attached as Exhibit C to the Lease is
hereby amended as follows:
A. The second to last sentence of Section 1 of Exhibit C is hereby deleted
and replaced with the following: "Landlord shall enter into a direct contract
for the Landlord's Work with Neal Loia Construction Company."
B. The first sentence of Section 5 of Exhibit C is hereby deleted and
replaced with the following: "In the event the actual cost of the Landlord Work
shall exceed the Allowance (such amounts exceeding the Allowance being herein
referred to as the "Excess Costs"), Tenant shall pay such Excess Costs to
Landlord as follows: Upon receipt of a request for payment from the
contractor(s) retained to perform the Landlord Work, Landlord shall provide
Tenant with a copy of such request for payment, together with an invoice for
Tenant's Share (hereinafter defined) thereof. If Landlord has previously made
any payments for the Landlord Work with respect to which it has not request
reimbursement for Tenant's Share thereof (e.g. architectural costs for which
Tenant is liable), Landlord shall have the right to include such costs within
its invoice for Tenant's Share. Tenant, within fifteen (15) days after receipt
of an invoice from Landlord, shall pay Landlord an amount equal to Tenant's
Share of the requested payment. For purposes hereof, "Tenant's Share" shall be
the percentage that the total amount of the Excess bears to total cost of the
Landlord Work (including any permit costs and architectural and engineering
fees). For example only, assume the following: (i) total cost of Landlord Work
(inclusive of the cost of architectural and engineering drawings) =
$1,000,000.00, (ii) total Excess = $512,500.00, and (iii) prior to the first
payment to the general contractor performing the Landlord Work, Landlord has
paid $35,000.00 in architectural and engineering costs. If Landlord receives an
initial request for payment from the general contractor in the amount of
$500,000.00, Landlord shall provide Tenant with an invoice in the amount of
$535,000.00 ($500,000.00 + $35,000.00). Tenant's Share of such invoice shall be
$274,187.50. Such amount is calculated as follows: Total cost of the Landlord
Work = $1,000,000.00; Total Excess = $512,500.00; Tenant's Share equals .5125
(($512,500/$1,000,000.00); .5125 x $535,000.00 = $274,187.50. If Landlord
receives a final request for payment from the general contractor for
$465,000.00, Tenant's Share of such $465,000.00 payment shall be $238,312.50
($465,000 x .1525).
C. Section 7 of Exhibit C shall be deleted in its entirety and replaced
with the following:
"7. Within five (5) business days following the execution of this First
Amendment by Tenant, Landlord shall enter into the contract for the
Landlord Work. Landlord shall notify Tenant of substantial completion of
the Landlord Work.
D. The following shall be added as Section 10 of Exhibit C:
"10. Landlord shall be responsible for any increases in the cost of the
Landlord Work (after the awarding of the contract for the Landlord Work)
that arise as a result of any reason other than the acts, omissions or
Delays of Tenant, conditions within the
<PAGE>
Premises that were not adequately or properly addressed in the Plans or
improper design specifications. Without limiting the scope of the foregoing
sentence, Landlord shall be responsible for any increases in the cost of
the Landlord Work that arise as a result of Landlord's failure to cause
Scogin, Elam & Bray to vacate the portion of the Premises currently
occupied by Scogin, Elam & Bray. Notwithstanding the foregoing, in no event
shall Landlord be responsible for any increase in the cost of any work
contracted directly by Tenant (e.g. moving costs and the installation of
telephone and computer cabling)."
II. TERMINATION RIGHTS. The first sentence of Section 11 of Exhibit E
(Addendum) to the Lease is hereby deleted in its entirety and replaced with the
following:
"Tenant acknowledges that a portion of the Premises is currently occupied
by Scogin, Elam & Bray ("Scogin"). In the event Scogin fails to vacate
such portion of the Premises by May 1, 1995, Landlord shall take reasonable
efforts to cause Scogin to vacate, including, without limitation, the
commencement of eviction proceedings. Notwithstanding anything herein to
the contrary, if the Commencement Date does not occur by September 15, 1995
(the "Outside Completion Date"), as the same may be extended due to Delays
and Force Majeure, Tenant, as its sole remedy, may terminate this Lease by
giving Landlord notice on or before ten (10) days after the Outside
Completion Date, as the same may be extended due to Delays and Force
Majeure."
III. MISCELLANEOUS.
A. This Amendment sets forth the entire agreement between the parties with
respect to the matters set forth herein. There have been no additional oral or
written representations or agreements.
B. Except as herein modified or amended, the provisions, conditions and
terms of the Lease shall remain unchanged and in full force and effect.
C. In the case of any inconsistency between the provisions of the Lease
and this Amendment, the provisions of this Amendment shall govern and control.
D. Submission of this Amendment by Landlord is not an offer to enter into
this Amendment but rather is a solicitation for such an offer by Tenant.
Landlord shall not be bound by this Amendment until Landlord has executed and
delivered the same to Tenant.
E. The capitalized terms used in this Amendment shall have the same
definitions as set forth in the Lease to the extent that such capitalized terms
are defined therein and not redefined in this Amendment.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment
as of the day and year first above written.
WITNESSES; ATTESTATION LANDLORD: FIRST CAPITAL INSTITUTIONAL REAL
(Two for each signatory ESTATE LTD. - 1
mandatory if Building
is in Florida or Ohio) BY: EQUITY OFFICE PROPERTIES, INC.,
as Agent
By: /s/ Arvid A. Povilaitis
----------------------------------------
Name: ARVID POVILAITIS
--------------------------------------
Angel Rivera
- --------------------------- Title: VICE-PRESIDENT - ASSET MANAGEMENT
-------------------------------------
- ---------------------------
TENANT: JACOR BROADCASTING OF ATLANTA,
INC.
- --------------------------- By: /s/ John Hogan
----------------------------------------
Name: JOHN HOGAN
--------------------------------------
Title: VICE-PRESIDENT GM
-------------------------------------
LINDA D. PODRAT
- ---------------------------
Notary Public, Fulton County, Georgia
My Commission Expires March 22, 1998.
<PAGE>
LEASE MODIFICATION AGREEMENT
This Agreement (the "Agreement") is made and entered into as of the 11th day of
October, 1994, by and between FIRST CAPITAL INSTITUTION REAL ESTATE LTD. - 1, a
Florida limited partnership ("Landlord") by its agent, Equity Office Properties,
Inc., an Illinois corporation and JACOR Broadcasting of Atlanta, Inc., a Georgia
corporation ("Tenant").
WITNESSETH
A. WHEREAS, Landlord and Tenant are parties to that certain lease dated the 4th
day of August, 1994 for approximately 19,500 rentable square feet of space
described as the Seventh (7th) Floor of the building commonly known as
Peachtree Palisades East Office Building and the address of which is 1819
Peachtree Road, N.E., Atlanta, Georgia 30309 (the "Premises"), (the
"Lease"); and
B. WHEREAS, both parties desire to amend the Lease by acknowledging that the
"zoning contingency" as outlined in the Addendum labeled Exhibit "E" has
been satisfied as of October 7, 1994.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, Landlord and Tenant agree as follows:
1) Landlord and Tenant agree that the zoning contingency contained in
Paragraph 20 of the Addendum labeled Exhibit "E" of the Lease has been
satisfied as of October 7, 1994, accordingly the Target Commencement Date
under the Lease shall be December 16, 1994.
2) Miscellaneous.
-------------
A. This Agreement sets forth the entire agreement between the parties with
respect to the matters set forth herein. There have been no additional
oral or written representations or agreements.
B. Except as herein modified or amended, the provisions, conditions and
terms of the Lease shall remain unchanged and in full force and effect.
C. In the case of any inconsistency between the provisions of the Lease and
this Agreement, the provision of this Agreement shall govern and
control.
D. Submission of this Agreement by Landlord is not an offer to enter into
this Agreement but rather is a solicitation for such an offer by Tenant.
Landlord shall not be bound by this Agreement until Landlord has
executed and delivered the same to Tenant.
E. The capitalized terms used in this Agreement shall have the same
definitions as set forth in the Lease to the extent that such
capitalized terms are defined therein and not redefined in this
Agreement.
F. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which, when taken together,
shall constitute one and the same instrument.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Agreement as of
the day and year first above written.
ATTESTATION: LANDLORD: FIRST CAPITAL INSTITUTIONAL REAL ESTATE
LTD. - 1, a Florida limited Partnership
BY: EQUITY OFFICE PROPERTIES, INC.,
an Illinois corporation as Agent
By: /s/ ARVID A. POVILAITIS
------------------------------------------------
/s/ KAREN MIKOS Name: ARVID A. POVILAITIS
- ------------------------- ----------------------------------------------
- ------------------------- Title: VICE-PRESIDENT - ASSET MANAGEMENT
---------------------------------------------
(Corporate Seal)
ATTESTATION: TENANT: JACOR BROADCASTING OF ATLANTA, INC.
By: /s/ JOHN HOGAN
------------------------------------------------
Name: JOHN HOGAN
- ------------------------- ----------------------------------------------
/s/ LINDA PODRAT Title: VICE-PRESIDENT - GENERAL MANAGER
- ------------------------- ---------------------------------------------
Notary Public, Fulton County, (Corporate Seal)
Georgia
My Commission Expires March 22, 1998.
<PAGE>
THE PEACHTREE PALISADES EAST BUILDING
---------------------------------------------------
[NAME OF BUILDING]
STANDARD FORM OFFICE LEASE
BETWEEN
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 1
- ------------------------------------------------------------------ ("LANDLORD"),
by its agent, Equity Office Properties, Inc.
AND
JACOR Broadcasting of Atlanta, Inc.
- -------------------------------------------------------------------- ("TENANT")
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
I. BASIC LEASE INFORMATION; DEFINITIONS............ 1
II. LEASE GRANT..................................... 3
III. ADJUSTMENT OF COMMENCEMENT DATE/POSSESSION...... 3
IV. USE............................................. 4
V. RENT............................................ 4
VI. SECURITY DEPOSIT................................ 5
VII. SERVICES TO BE FURNISHED BY LANDLORD............ 5
VIII. LEASEHOLD IMPROVEMENTS.......................... 6
IX. GRAPHICS........................................ 6
X. REPAIRS AND ALTERATIONS BY TENANT............... 6
XI. USE OF ELECTRICAL AND HVAC SERVICES BY TENANT... 6
XII. ENTRY BY LANDLORD............................... 6
XIII. ASSIGNMENT AND SUBLETTING....................... 7
XIV. LIENS........................................... 7
XV. INDEMNITY AND WAIVER OF CLAIMS.................. 8
XVI. TENANT'S INSURANCE.............................. 8
XVII. SUBROGATION..................................... 9
XVIII. LANDLORD'S INSURANCE............................ 10
XIX. CASUALTY DAMAGE................................. 10
XX. DEMOLITION...................................... 10
XXI. CONDEMNATION.................................... 11
XXII. EVENTS OF DEFAULT............................... 11
XXIII. REMEDIES........................................ 11
XXIV. LIMITATION OF LIABILITY......................... 13
XXV. NO WAIVER....................................... 13
XXVI. EVENT OF BANKRUPTCY............................. 13
XXVII. QUIET ENJOYMENT................................. 14
XXVIII. RELOCATION...................................... 14
XXIX. HOLDING OVER.................................... 14
XXX. SUBORDINATION TO MORTGAGES...................... 15
XXXI. ATTORNEY'S FEES................................. 15
XXXII. NOTICE.......................................... 15
XXXIII. LANDLORD'S LIEN................................. 15
XXXIV. EXCEPTED RIGHTS................................. 16
XXXV. SURRENDER OF PREMISES........................... 16
XXXVI. MISCELLANEOUS................................... 16
XXXVII. ENTIRE AGREEMENT................................ 17
</TABLE>
<PAGE>
OFFICE LEASE AGREEMENT
----------------------
This Office Lease Agreement (the "Lease"), is made and entered into as of the
4th day of August, 1994, by and between First Capital Institutional Real Estate,
Ltd-1 by its Agent, Equity Office Properties, Inc. ("Landlord") and JACOR
Broadcasting of Atlanta, Inc., a Georgia Corporation ("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 Office Associates, Inc.
2. "Building" shall mean the office building located at 1819 Peachtree
Road, NE Atlanta, Georgia, Fulton County, State of Georgia, commonly
known as Peachtree Palisades East.
3. If Landlord is not required to perform Landlord Work (hereinafter
defined) in the Premises, the "Commencement Date," "Lease Term" and
"Termination Date" shall be as set forth in subsection I.A.3.a. below.
If Landlord is required to perform Landlord Work in the Premises, the
"Commencement Date," "Lease Term" and "Termination Date" shall be
determined pursuant to subsection I.A.3.b. below (delete one):
a. Intentionally omitted.
b. The "Lease Term" shall mean a period of 144 months commencing on the
later to occur of (i) September 1, 1994 (the "Target Commencement
Date") and (ii) the date upon which Landlord Work in the Premises has
been substantially completed, as such date is determined pursuant to
Section III.A. hereof (the later to occur of such dates being defined
as the "Commencement Date"). The "Termination Date" shall, unless
sooner terminated as provided herein, mean the last day of the Lease
Term. Notwithstanding the foregoing, if the Termination Date, as
determined herein, does not occur on the last day of a calendar
month, Landlord, at its option, may extend the Lease Term by the
number of days necessary to cause the Termination Date to occur on
the last day of the last calendar month of the Lease Term. Tenant
shall pay Base Rental and Additional Base Rental for such additional
days at the same rate payable for the portion of the last calendar
month immediately preceding such extension. The Commencement Date,
Lease Term (including any extension by Landlord pursuant to this
subsection I.A.3.b.) and Termination Date shall be set forth in a
Commencement Letter prepared by Landlord and executed by Tenant in
accordance with the provisions of Section III.A. hereof.
4. "Guarantor(s)" shall mean N/A and any other party that agrees in writing
to guarantee the Lease.
5. "Landlord Work" shall mean the work, if any, that Landlord is obligated
to perform in the Premises pursuant to the Work Letter Agreement
attached hereto as Exhibit "C."
6. "Notice Addresses" shall mean the following addresses for Tenant and
Landlord, respectively:
Tenant:
Prior to the Commencement Date, notices shall be sent to Tenant at the
following address:
JACOR Broadcasting of Atlanta, Inc. JACOR Broadcasting of Atlanta,
----------------------------------- Inc.
550 Pharr Road, NE 201 East 5th Street
------------------
Atlanta, Georgia 30363 Cincinnati, Ohio 45202
----------------------
On or after the Commencement Date, notices shall be sent to
Tenant at the Premises.
<PAGE>
Landlord:
Equity Office Properties, Inc.
------------------------------
1819 Peachtree Rd. NE
---------------------
Suite 555
---------
Atlanta, Georgia 30309
----------------------
Attention: Building Manager
With a copy to:
Equity Office Properties, Inc.
Two North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Attention: General Counsel
Payments of Rent only shall be made payable to the order of
First Capital Institutional Real Estate, Ltd - 1 at the
following address:
1819 Peachtree Road, NE
-----------------------
Atlanta, Georgia 30309
----------------------
Attn: Building Manager
----------------------
7. "Permitted Use" shall mean: General Office use, including General
Office use for JACOR Broadcasting of Atlanta, including Radio
Broadcasting.
8. "Premises" shall mean the area located on the 7th floor of the
Building and outlined on Exhibit A attached hereto and
incorporated herein.
9. "Prepaid Rental": Twenty-two thousand, three hundred forty-three
dollars & 75/100 Dollars ($22,343.75) payable by Tenant upon
execution of this Lease by Tenant in accordance with Article V
hereof.
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 any
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
19,500 square feet. The "Rentable Area of the Building" is
deemed for all purposes under this Lease to be 128,276 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. "Security Deposit" shall mean the sum of Twenty-two thousand
three hundred forty-three dollars & 75/100 Dollars ($22,343.75).
12. "Tenant's Pro Rata Share" shall mean fifteen and two tenths
percent (15.2%), which is the sum 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 Building 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.
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.
<PAGE>
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 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 8:00 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 American National Bank and Trust Company of Chicago
from time to time (whether or not charged in each instance) as
its prime or base rate.
8. "Property" shall mean the Building, the Building Garage, if any,
all other improvements serving the Building and the tenants
thereof and the parcel(s) of land on which they are located.
II. LEASE GRANT. Subject to and upon the terms herein set forth, Landlord
leases to Tenant and Tenant leases from Landlord the Premises.
III. ADJUSTMENT OF COMMENCEMENT DATE/POSSESSION.
A. If Landlord is performing Landlord Work in the Premises, the Lease
Term shall not commence until the later to occur of the Target
Commencement Date and the date that Landlord has substantially
completed the Landlord Work; provided, however, that if Landlord
shall be delayed in substantially completing the Landlord Work as a
result of the occurrence of any of the following (a "Delay"):
1. Tenant's failure to furnish information in accordance with the
Work Letter Agreement or to respond to any request by Landlord
for any approval or information within any time period
prescribed, or if no time period is prescribed, then within two
(2) Business Days of such request; or
2. Tenant's insistence on materials, finishes or installations that
have long lead times after having first been informed by Landlord
that such materials, finishes or installations will cause a
Delay; or
3. Changes in any plans and specifications; or
4. The performance or nonperformance by a person or entity employed
by Tenant in the completion of any work (all such work and such
persons or entities being subject to the prior approval of
Landlord); or
5. Any request by Tenant that Landlord delay the completion of any
of the Landlord Work; or
6. Any breach or default by Tenant in the performance of Tenant's
obligations under this Lease; or
7. Any delay resulting from Tenant's having taken possession of the
Premises for any reason prior to substantial completion of the
Landlord Work; or
8. Any other delay chargeable to Tenant, its agents, employees or
independent contractors; or
9. Any other cause beyond Landlord's control;
then, for purposes of determining the Commencement Date, the date
of substantial completion shall be deemed to be the day that said
Landlord Work would have been substantially completed absent any
such Delay(s). The Premises shall be deemed to be substantially
completed on the date that Landlord reasonably determines that
all Landlord's Work has been performed (or would have been
performed absent any Delays), other than any details of
construction, mechanical adjustment or any other matter, the
noncompletion of which does not materially interfere with
Tenant's use of the Premises. The adjustment of the Commencement
Date and, accordingly, the postponement of Tenant's obligation to
pay Rent shall be Tenant's sole remedy and shall constitute full
settlement of all claims that Tenant might otherwise have against
Landlord by reason of the Premises not being ready for occupancy
by Tenant on the Target Commencement Date. Absent manifest
error, Landlord's determination of the Commencement Date shall be
final and binding on all parties for all purposes, including,
without limitation, determination of the date of commencement of
the Lease Term and of Tenant's obligation to pay Rent hereunder.
Promptly after the determination of the Commencement Date by
Landlord, Landlord and Tenant shall enter into a letter agreement
(the "Commencement Letter") acknowledging the Commencement Date,
the Termination Date and any other dates that are affected by the
adjustment of the Commencement Date.
<PAGE>
Notwithstanding the foregoing, Landlord in its sole discretion,
may elect, by written notice to Tenant, not to adjust the
Commencement Date as provided above, in which case Rent shall not
commence until the date that Landlord Work has been substantially
completed (or would have been substantially completed absent any
Delays) and the Commencement Date shall be the Target
Commencement Date. See Exhibit E Addendum, Paragraph 11.
B. By taking possession of the Premises, Tenant is deemed to have:
1. accepted the Premises and agreed that the Premises is in good
order and satisfactory 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 subject to
completion of a punch list and provided all permits and a
Certificate of Occupancy have been obtained by Landlord; and
2. agreed that Landlord has no obligation to clean, decorate, alter,
remodel, improve or repair the Premises or the Building unless
said obligation is specifically set forth in this Lease.
C. Notwithstanding anything to the contrary contained in the Lease,
Landlord shall not be obligated to tender possession of any portion
of the Premises that is currently occupied by a tenant or other
occupant or that is subject to the rights of any other tenant or
occupant, nor shall Landlord have any other obligations to Tenant
under this Lease until the date Landlord (1) recaptures such space
from such existing tenant or occupant; and (2) regains the legal
right to possession thereof. This Lease shall not be affected by any
such failure to deliver possession and Tenant shall have no claim for
damages against Landlord as a result thereof, all of which are hereby
waived and released by Tenant. If the Lease Term is to be determined
pursuant to Section I.A.3.(a) hereof, the Commencement Date shall be
postponed until the date Landlord delivers possession of the Premises
to Tenant, in which event the Termination Date shall correspondingly
be postponed on a per diem basis. If the Lease Term is to be
determined pursuant to Section I.A.3.(b), the Commencement Date and
Termination Date shall be determined as provided in Section III.A.
above, provided that Landlord's failure to deliver possession shall
not be deemed to be a Delay by Tenant.
D. If Tenant takes possession of the Premises prior to the Commencement
Date for any reason whatsoever (other than the performance of work in
the Premises with Landlord's prior approval) such possession shall be
subject to all the terms and conditions of the Lease and Tenant shall
pay Base Rental and Additional Base Rental to Landlord on a per diem
basis for each day of occupancy prior to the Commencement Date.
IV. USE. 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, creates a nuisance or which would increase the cost of insurance
coverage with respect to the Building. Tenant shall conduct its business
and Tenant shall use reasonable care to control its agents, servants,
employees, customers, licensees, and invitees 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 Tenant shall use reasonable
care to cause all of its agents, employees, invitees, and visitors to do
so. 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. 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.
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
(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
<PAGE>
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.
B. All Rent not paid within five (5) days of the date when due
and payable shall bear interest from the date due until paid
at the lesser of (1) eighteen percent (18%) per annum, 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, 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.
The Security Deposit shall be held by Landlord without liability for
interest (except as required by law) and as security for the
performance of Tenant's obligations under this Lease. The Security
Deposit shall not be considered an advance payment of Rent or a
measure of Tenant's liability for damages. Landlord may, from time to
time, without prejudice to any other remedy, use all or a portion of
the Security Deposit to make good any arrearages of Rent or to satisfy
any other covenant or obligation of Tenant hereunder. Following any
such application of the Security Deposit, Tenant shall pay to Landlord
on demand the amount so applied in order to restore the Security
Deposit to its original amount. If Tenant is not in default at the
termination of this Lease, after Tenant surrenders the Premises to
Landlord in accordance with this Lease and all amounts due Landlord
from Tenant are finally determined and paid, the balance of the
Security Deposit remaining after any such application shall be
returned to Tenant. If Landlord transfers its interest in the
Premises during the Lease Term, Landlord may assign the Security
Deposit to the transferee and thereafter shall have no further
liability for the return of such Security Deposit. Tenant agrees to
look solely to such transferee or assignee for the return of the
Security Deposit. Landlord and its successors and assigns shall not
be bound by any actual or attempted assignment or encumbrance of the
Security Deposit by Tenant, provided, however, if Tenant's interest in
this Lease has been assigned, Landlord may, at its option, and
provided the assignee provides Landlord with written evidence of such
assignment, return the Security Deposit to such assignee, provided
further that the assignee has complied with the other terms of this
paragraph. If Landlord elects to return the Security Deposit to
Tenant's assignee as aforesaid, Landlord will have no further
obligation to the original tenant with respect thereto. Landlord
shall not be required to keep the Security Deposit separate from its
other accounts.
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 in season, at such
temperatures and in such amounts as are considered
by Landlord to be standard for buildings of
similar class, size, age 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
entire cost of additional service as such costs
are determined by Landlord from time to time.
2. Routine maintenance and electric lighting service
for all Common Areas of the Building in the manner
and to the extent deemed by Landlord to be
standard for buildings of similar class, size, age
and location.
3. See Exhibit "E"; Addendum, Paragraph 6.
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 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 per 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
<PAGE>
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 reasonable diligence to repair and
replace such equipment or machinery, 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. Landlord's entire obligation with
respect to the repair and maintenance of the Premises are set forth
above.
VIII. LEASEHOLD IMPROVEMENTS.
A. Except as otherwise specifically provided elsewhere in this Lease or
in the Work Letter Agreement, if any, attached hereto as Exhibit C
and incorporated herein, all installations and improvements now or
hereafter placed on or in the Premises shall be for Tenant's account
and at Tenant's cost, which cost shall be payable by Tenant to
Landlord upon demand as additional Rent.
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 to remove any
Leasehold Improvements performed by or for the benefit of Tenant and
all electronic, phone and data cabling as are designated by Landlord
(the "Required Removables") at Tenant's sole cost. In the event
that Landlord so elects, Tenant shall promptly remove such Required
Removables and repair any damage caused by such removal. If Tenant
fails to remove the Required Removables within five (5) days 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. See Exhibit E Addendum
Paragraph 12.
IX. GRAPHICS. Landlord shall provide and install, at Tenant's cost, all
letters or numerals on the exterior of the Premises; all such letters and
numerals 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.
X. REPAIRS AND ALTERATIONS BY TENANT.
A. Tenant shall, at Tenant's own cost and expense, keep the Premises in
good condition and repair. Such repairs shall restore the Premises
to as good a condition as it was in prior to such damage except
where damage is covered by Fire and Casualty Insurance of the type
required to be maintained by the Landlord under Section XVIII hereof
and shall be effected in compliance with the reasonable directions
of Landlord. If Tenant falls to make such repairs to the Premises
promptly, Landlord may, at its option, make such repairs, and Tenant
shall pay the cost thereof to the Landlord on demand as additional
Rent. See Exhibit E Addendum Paragraph 13.
B. Tenant shall not make or allow to be made any alterations, additions
or improvements to the Premises, nor install any vending machines,
safes or other heavy property or equipment within 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; copies of
contracts; necessary permits; evidence of contractor's and
subcontractor's insurance in accordance with section XVI.B. hereof;
and indemnification in form and amount satisfactory to Landlord.
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 sums expended by Landlord for examination
of the architectural, mechanical, electric and plumbing plans for
any alterations, additions or improvements 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. If Landlord so requests, Tenant shall permit Landlord to
supervise construction operations, but no such supervision shall
impose any liability upon Landlord. In the event Landlord
supervises such construction, Landlord shall be entitled to a
supervisory fee in the amount of ten percent (10%) of the cost of
such construction. 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. See
Exhibit E Addendum Paragraph 14.
XI. USE OF ELECTRICAL AND HVAC SERVICES BY TENANT.
A. Except as provided in Exhibit "E" to the contrary all electricity
used by Tenant in the Premises shall be paid for by Tenant through
inclusion in Basic Costs (to the extent Tenant's usage doesn't
exceed the standard for the Building, it being agreed that Tenant
shall pay for the cost of any excess electrical usage as additional
Rent).
<PAGE>
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
which Landlord deems to be standard for the Building. In the event
Tenant shall request that it be allowed to consume electrical or
HVAC services in excess of that deemed by Landlord to be standard
for the Building, Landlord may refuse to consent to such usage or
may consent upon such conditions as Landlord elects (including the
installation of utility service upgrades, submeters, air handlers or
cooling units), and all such additional usage, installation and
maintenance thereof shall be paid for by Tenant as additional Rent.
Landlord shall have the right to separately meter 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.
B. If Landlord generates or distributes electric current for the
Building, Tenant shall obtain all current from Landlord and pay as
additional Rent Landlord's charges therefor, provided, however, that
such charges shall not exceed the rate that would be charged Tenant
if billed directly by the local utility for the same services.
XII. ENTRY BY LANDLORD. Landlord and its agents or representatives shall have
the right upon reasonable notice except in the event of an emergency to
enter the Premises to inspect the same, or to show the Premises to
prospective purchasers, mortgagees, tenants 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.
XIII. ASSIGNMENT AND SUBLETTING.
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 same criteria Landlord
uses to select Building tenants; (2) the proposed transferee's
business is not suitable for the Building considering the business
of the other tenants and the Building's prestige 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; 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 Lease for 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 forty-five (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 thirty (30) days notice. 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).
<PAGE>
C. All cash or other proceeds (the "Transfer Consideration") of any
Transfer of Tenant's interest in this Lease and/or the Premises,
whether consented to by Landlord or not, shall be paid to Landlord
and Tenant hereby assigns all rights it might have or ever acquire
in any such proceeds to Landlord. In addition to the Rent
hereunder, Tenant hereby covenants and agrees to pay to Landlord 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 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. If Tenant is a corporation and if at any time during the Lease Term
the person or persons who own the voting shares at the time of the
execution of this Lease cease for any reason, including but not
limited to merger, consolidation or other reorganization involving
another corporation, to own a majority of such shares, or if Tenant
is a partnership and if at any time during the Lease Term the
general partner or partners who own the general partnership
interests in the partnership at the time of the execution of this
Lease, cease for any reason to own a majority of such interests
(except as the result of transfers by gift, bequest or inheritance
to or for the benefit of members of the immediate family of such
original shareholder(s) or partner(s)), such an event shall be
deemed to be a Transfer. The preceding sentence shall not apply
whenever Tenant is a corporation the outstanding stock of which is
listed on a recognized security exchange, or if at least eighty per
cent (80%) of its voting stock is owned by another corporation, the
voting stock of which is so listed. See Exhibit E Addendum
Paragraph 15.
E. 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 or any Guarantors 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 five (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 shall be paid by Tenant to Landlord on demand
as additional Rent.
XV. INDEMNITY AND WAIVER OF CLAIMS.
A. 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, 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, contractors, employees, or
invitees; (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,
contractors, employees, or invitees; (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.
B. 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 or any
person claiming by, through or under Tenant (including Tenant's
employees) resulting from any accident or occurrence in, on or about
the Premises, the Building or the Property, including, without
limitation, claims for loss, theft or damage resulting from (1) the
Premises, Building, or Property, or any equipment or appurtenances
becoming out of repair; (2) wind or weather; (3) any defect in or
failure to operate, for whatever reason, any sprinkler, heating or
air-conditioning equipment, electric wiring, gas, water or steam
pipes; (4) broken glass; (5) the backing up of any sewer pipe or
downspout; (6) the bursting, leaking or running of any tank, water
closet, drain or other pipe; (7) the escape of steam or water; (8)
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; (9) the falling of any fixture, plaster, tile or other
material; (10) any act, omission or negligence of other tenants,
licensees or any other persons or occupants of the Building or of
adjoining or contiguous buildings,
<PAGE>
of owners of adjacent or contiguous property or the public, or by
construction of any private, public or quasi-public work; or (11)
any other cause of any nature except, as to items (1) - (9), 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. To the maximum
extent permitted by law, Tenant agrees to use and occupy the
Premises, and to use such other portions of the Building as Tenant
is herein given the right to use, at Tenant's own risk.
XVI. TENANT'S INSURANCE.
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. Intentionally omitted.
B. Except for items for which Landlord is responsible under the Work
Letter Agreement, 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 Installation Floater
Insurance in the amount of the replacement cost of any alterations,
additions or improvements (or such other amount reasonably required
by Landlord), however, such insurance shall be required only for
alterations, additions, or improvements undertaken by or on behalf
of Tenant after the Commencement Date hereof; 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 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,
<PAGE>
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. See
Exhibit E Addendum Paragraph 19.
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. Notwithstanding the
foregoing, Landlord hereby represents that its insurance carrier has
agreed to waive its Right of Subrogation and that no further notice by
Landlord is necessary to effectuate such 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 maintain property insurance on the Building in such
amounts as Landlord reasonably elects. The cost of 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. Landlord may, at its
option, elect to self insure.
XIX. CASUALTY DAMAGE.
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 the Building shall be so damaged that substantial alteration
or reconstruction of the Building shall, in Landlord's sole opinion,
be required (whether or not the Premises shall have been damaged by
such casualty) or in the event the Premises have been damaged and
there is less than two (2) years of the Lease Term remaining on the
date of such casualty or 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 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.
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, which
Landlord has insured 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
plus Landlord's deductible actually received by the Landlord as a
result of the casualty. When the repairs described in the preceding
two sentences 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, subject to the provisions of the next sentence, 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. See
Exhibit E Addendum Paragraph 16.
XX. DEMOLITION.
Intentionally omitted.
<PAGE>
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 as an office building comparable to
its use on the Commencement Date, 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 by private purchase in
lieu thereof, then Landlord 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 taking of or damage to trade
fixtures of Tenant, which Tenant specifically reserves to itself. See
Exhibit E Addendum Paragraph 17.
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
(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 Tenant has not begun to cure within ten (10)
days after delivery to Tenant of notice of the occurrence
of such failure and thereafter Tenant does not continue to
diligently pursue said cure, provided that if any such
failure creates a hazardous condition, such failure must be
cured immediately.
C. Tenant or any Guarantor 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 or any Guarantor shall
admit in writing its inability to pay its debts as they
become due.
D. Tenant or any Guarantor 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 or any Guarantor shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant or any
Guarantor thereunder; or a petition or answer proposing the
adjudication of Tenant or any Guarantor 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 any Guarantor
or of the Premises or of any of Tenant's property located
thereon in any proceeding brought by Tenant or any
Guarantor, or any such receiver or trustee shall be
appointed in any proceeding brought against Tenant or any
Guarantor and shall not be discharged within sixty (60)
days after such appointment or Tenant or such Guarantor
shall consent to or acquiesce in such appointment.
F. The leasehold estate hereunder shall be taken on execution
or other process of law in any action against Tenant.
G. Tenant shall abandon or vacate any substantial portion of
the Premises without the prior written permission of
Landlord.
H. Tenant shall fail to take possession of and occupy the
Premises within thirty (30) days following the Commencement
Date and thereafter continuously conduct its operations in
the Premises for the Permitted Use as set forth in
Paragraph 4 hereof.
I. The liquidation, termination, dissolution, forfeiture of
right to do business or death of Tenant or any Guarantor.
J. Tenant shall be in default beyond any notice and cure
period under any other lease with Landlord.
XXIII. REMEDIES.
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 without any notice (except as
expressly prescribed herein) or demand whatsoever (and
<PAGE>
without limiting the generality of the foregoing):
1. Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord. If Tenant
fails to surrender the Premises upon termination of the
Lease hereunder, Landlord may without prejudice to any
other remedy which it may have, enter upon and take
possession of the Premises and expel or remove Tenant and
any other person who may be occupying said Premises, or
any part thereof, without being liable for prosecution or
any claim of damages therefor, and Tenant hereby agrees to
pay to Landlord on demand the amount of all loss and
damage which Landlord may suffer by reason of such
termination, whether through inability to relet the
Premises on satisfactory terms or otherwise, specifically
including but not limited to all Costs of Reletting
(hereinafter defined) and any deficiency that may arise by
reason of any reletting or failure to relet.
2. Enter upon and take possession of the Premises and expel
or remove Tenant or any other person who may be occupying
said Premises, or any part thereof, without having any
civil or criminal liability therefor and without
terminating this Lease. Landlord may (but shall be under
no obligation to) relet the Premises or any part thereof
for the account of Tenant, in the name of Tenant or
Landlord or otherwise, without notice to Tenant for such
term or terms which may be greater or less than the period
which would otherwise have constituted the balance of the
Lease Term and on such conditions (which may include
concessions or free rent) and for such uses as Landlord in
its absolute discretion may determine, and 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.
3. Enter upon the Premises without having any civil or
criminal liability therefor, 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, whether caused by the negligence of Landlord or
otherwise.
4. In order to regain possession of the Premises and to deny
Tenant access thereto in any instance in which Landlord
has terminated this Lease or Tenant's right to possession,
or to limit access to the Premises in accordance with
local law in the event of a default by Tenant, Landlord or
its agent may, at the expense and liability of the Tenant,
alter or change any or all locks or other security devices
controlling access to the Premises without posting or
giving notice of any kind to Tenant. Landlord shall have
no obligation to provide Tenant a key or grant Tenant
access to the Premises so long as Tenant is in default
under this Lease. Tenant shall not be entitled to recover
possession of the Premises, terminate this Lease, or
recover any actual, incidental, consequential, punitive,
statutory or other damages or award of attorneys fees, by
reason of Landlord's alteration or change of any lock or
other security device and the resulting exclusion from the
Premises of the Tenant or Tenant's agents, servants,
employees, customers, licensees, invitees or any other
persons from the Premises. Landlord may, without notice,
remove and either dispose of or store, at Tenant's
expense, any property belonging to Tenant that remains in
the Premises after Landlord has regained possession
thereof.
5. 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.
B. For purposes of this Lease, the term "Costs of Reletting"
shall mean all costs and expenses 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, 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
<PAGE>
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).
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 or
any Guarantor 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 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 DIRECT AND PROXIMATE DAMAGES, 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 ANY 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 or Tenant 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, but Landlord or Tenant, as the case
may be, shall have the right to declare the default at any time and
take such action as is lawful or authorized under this Lease. Failure
by Landlord or Tenant 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 of an
additional/new security deposit in the amount of three (3)
times the then-current Base Rental payable hereunder.
<PAGE>
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, at its expense, shall be entitled to cause Tenant to
relocate from the Premises to space containing approximately the same
Rentable Area as the Premises (the "Relocation Space") within the
Building or adjacent buildings within the same project at any time
upon sixty (60) days prior written notice to Tenant. 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. Notwithstanding anything to the contrary herein,
this provision shall not apply to Floor 7 of the Building.
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 will and in no event for month-to-month or year-to-year,
but Tenant shall, throughout the entire holdover period, pay rent (on
a per month basis without reduction for any partial months during any
such holdover) equal to the sum of the Base Rental and Additional Base
Rental due for the period immediately preceding such holding over,
provided that in no event shall Base Rental and Additional Base Rental
during the holdover period be less than the fair market rental for the
Premises. 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.
<PAGE>
XXX. SUBORDINATION TO MORTGAGES. 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 (5) 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.
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) 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 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.
Intentionally omitted.
<PAGE>
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 the improvements and air rights located outside the
demising walls of the Premises, and such areas 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 except as
otherwise provided in Exhibit "E"; (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; (E) 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. However, no exclusive
rights would prohibit Tenant from conducting its business. 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 and damages caused
by fire or other casualty excepted. If Tenant fails to remove any of
Tenant's Property within three (3) days 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, 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. See Exhibit E Addendum
Paragraph 10.
XXXVI. MISCELLANEOUS.
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. See Exhibit "E" Addendum Paragraph 8.
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, 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
<PAGE>
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, 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, time is of the
essence of 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. Upon any sale or
other transfer by Landlord of its interest in the Premises, Landlord
shall be relieved of any obligations under this Lease occurring or
applicable to the period subsequent to such sale or other transfer.
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 EXECUTED BY BOTH LANDLORD AND TENANT AND AN
ORIGINAL GUARANTY, IF ANY, EXECUTED BY EACH GUARANTOR IS DELIVERED
TO AND ACCEPTED BY LANDLORD, AND THIS LEASE HAS BEEN APPROVED BY
LANDLORD'S MORTGAGEES, IF REQUIRED.
XXXVII. ENTIRE AGREEMENT. This Lease Agreement, including the following
Exhibits:
Exhibit A - Outline and Location of 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 - Addendum
Exhibit E-1 - Addendum
Exhibit E-2 - Addendum
<PAGE>
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.
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: First Capital Institutional
--------------------------------
Real Estate Ltd. - 1
----------------------------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
as agent
/s/ Karen Mikos By: /s/ Victoria R. Gorman
- ------------------------------------- -----------------------------------
Name (print): KAREN MIKOS Name: VICTORIA GORMAN
------------------------ ----------------------------------
Title: VICE-PRESIDENT
- ------------------------------------- ---------------------------------
Name (print):
------------------------
ATTEST: TENANT: JACOR Broadcasting of Atlanta,
Inc.
----------------------------------
-----------------------------------------
/s/ Marquis D. Higginbotham By: /s/ R. Christopher Weber
- ------------------------------------- ------------------------------------
Name (print): MARQUIS D. HIGGINBOTHAM Name: R. CHRISTOPHER WEBER
------------------------ ----------------------------------
/s/ Michael P. Hall Title: SENIOR VICE-PRESIDENT
- ------------------------------------- ---------------------------------
Name (print): MICHAEL P. HALL
------------------------
<PAGE>
EXHIBIT "A"
[PRELIMINARY FLOOR PLAN - JACOR BROADCASTING APPEARS HERE]
<PAGE>
EXHIBIT B-1
SCHEDULE OF BASE RENTAL
-----------------------
This Exhibit is attached to and made a part of the Lease dated August 4,
1994 by and between First Capital Institutional Real Estate, Ltd.-1,
("Landlord") by its agent Equity Office Properties, Inc. and JACOR Broadcasting
of Atlanta, Inc. ("Tenant") for space in the Building located at 1819 Peachtree
Road, NE, Atlanta, Georgia 30309.
Tenant shall pay Landlord the sum of Three million eight hundred five
thousand two hundred thirty-eight dollars and 16/100 Dollars ($3,805,238.16).
A. 12 equal installments of $22,343.75 each payable on or before the first
day of each month during the period beginning September 1, 1994 and ending
August 31, 1995.
B. 12 equal installments of $23,014.06 each payable on or before the first
day of each month during the period beginning September 1, 1995 and ending
August 31, 1996.
C. 12 equal installments of $23,704.48 each payable on or before the first
day of each month during the period beginning September 1, 1996 and ending
August 31, 1997.
D. 12 equal installments of $24,415.62 each payable on or before the first
day of each month during the period beginning September 1, 1997 and ending
August 31, 1998.
E. 12 equal installments of $25,148.09 each payable on or before the first
day of each month during the period beginning September 1, 1998 and ending
August 31, 1999.
F. 12 equal installments of $25,902.53 each payable on or before the first
day of each month during the period beginning September 1, 1999 and ending
August 31, 2000.
G. 12 equal installments of $26,679.61 each payable on or before the first
day of each month during the period beginning September 1, 2000 and ending
August 31, 2001.
H. 12 equal installments of $27,480.00 each payable on or before the first
day of each month during the period beginning September 1, 2001 and ending
August 31, 2002.
I. 12 equal installments of $28,304.40 each payable on or before the first
day of each month during the period beginning September 1, 2002 and ending
August 31, 2003.
J. 12 equal installments of $29,153.53 each payable on or before the first
day of each month during the period beginning September 1, 2003 and ending
August 31, 2004.
K. 12 equal installments of $30,028.13 each payable on or before the first
day of each month during the period beginning September 1, 2004 and ending
August 31, 2005.
L. 12 equal installments of $30,928.98 each payable on or before the first
day of each month during the period beginning September 1, 2005 and ending
August 31, 2006.
<PAGE>
EXHIBIT B-1
SCHEDULE OF BASE RENTAL
Page 2
All such Base Rental shall be payable by Tenant in accordance with the
terms of Article V of the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of
the date first written above.
LANDLORD: FIRST CAPITAL INSTITUTIONAL REAL
--------------------------------
ESTATE, LTD-1
-------------
ATTEST: BY: EQUITY OFFICE PROPERTIES, INC.
as agent
/s/ Karen Mikos By: /s/ Victoria R. Gorman
- ----------------------------- ------------------------------------
Name (print): KAREN MIKOS Name: VICTORIA GORMAN
---------------- -----------------------------------
Title: Title: VICE-PRESIDENT
----------------------- ----------------------------------
TENANT: JACOR Broadcasting of Atlanta, Inc.
-----------------------------------------
ATTEST: BY: /s/ R. Christopher Weber
--------------------------------------
/s/ Marquis D. Higginbotham Name: R. CHRISTOPHER WEBER
- ----------------------------- ------------------------------------
Name (print): MARQUIS D. HIGGINBOTHAM Title: SENIOR VICE PRESIDENT
----------------------- ----------------------
<PAGE>
EXHIBIT B-2
PAYMENT OF BASIC COSTS
----------------------
This Exhibit is attached to and made a part of the Lease dated August 4,
1994 by and between First Capital Institutional Real Estate, Ltd - 1, by its
agent Equity Office Properties, Inc. for Owner ("Landlord") and JACOR
Broadcasting of Atlanta, Inc. ("Tenant") for space in the Building located at
1819 Peachtree Road, NE Atlanta, Georgia 30309.
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 the sum of (1) Tenant's Pro Rata Share of the amount, if any,
by which Taxes (hereinafter defined) for the applicable calendar year exceed
Taxes for the Base Year (hereinafter defined) plus (2) Tenant's Pro Rata Share
of the amount, if any, by which Expenses (hereinafter defined) for the
applicable calendar year exceed Expenses for the Base Year. For purposes
hereof, the "Base Year" shall mean the calendar year 1993. Tenant's Pro Rata
Share of increases in Taxes and Tenant's Pro Rata Share of increases in Expenses
shall be computed separate and independent of each other prior to being added
together to determine the "Excess." In the event that Taxes and/or Expenses, as
the case may be, in any calendar year decrease below the amount of Taxes or
Expenses for the Base Year, Tenant's Pro Rata Share of Taxes and/or Expenses, as
the case may be, for such calendar year shall be deemed to be $0, it being
understood that Tenant shall not be entitled to any credit or offset if Taxes
and/or Expenses decrease below the corresponding amount for The Base Year.
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. Definitions.
1. "Basic Costs" for any calendar year shall mean the total, computed in
accordance herewith, of Taxes for such calendar year and Expenses for such
calendar year.
2. "Expenses" 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) All labor costs for all persons performing services required or
utilized in connection with the operation, repair and maintenance of
an control of access to the Building and the Property, including but
not limited to amounts incurred for wages, salaries and other
compensation for services, 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. In the event
any employee provides services to buildings other than "The
Building", then such costs shall be prorated based upon total amount
of time allocated to such other building at Landlord's reasonable
discretion.
(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.
(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) All amounts charged to Landlord by contractors and/or suppliers for
services, materials, equipment and supplies furnished in connection
with the operation, repair, maintenance, replacement of and
FOM-1308 11/93
Page 1
<PAGE>
control of access to any part of the Building, or the Property
generally, including the heating, air conditioning, ventilating,
plumbing, electrical, elevator and other systems.
(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) Charges for all utilities, including but not limited to water,
electricity, gas and sewer, but excluding those charges for which
tenants are individually responsible.
(vii) All landscape expenses and costs of repairing, resurfacing and
striping of the parking areas of the Property, if any.
(viii) Cost of all maintenance service agreements, including those for
equipment, alarm service, window cleaning, drapery or venetian
blind cleaning, janitorial services, pest control, uniform supply,
landscaping, and any parking equipment.
(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 otherwise improving the operating
efficiency of the Property or Building 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.
3. "Taxes," shall mean (i) all real estate taxes and assessments on the
Property, the Building or the Premises, and taxes and assessments levied
in substitution or supplementation in whole or in part of such taxes, (ii)
all personal property taxes for the Building's personal property,
including license expenses, (iii) all franchise fees, (iv) all taxes
imposed on services of Landlord's agents and employees, (v) all sales, use
or other tax, excluding state and/or federal income tax, now or hereafter
imposed by any governmental authority upon Rent received by Landlord, (vi)
all other taxes, fees or assessments now or hereafter levied by any
governmental authority on the Property, the Building or its contents or on
the operation and use thereof (except as relate to specific tenants), and
(vii) 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.
4. "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.
C. Exclusions From Basic Costs. Basic Costs shall not include the costs 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.
D. 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.
ATTEST: LANDLORD: FIRST CAPITAL INSTITUTIONAL
--------------------------------
REAL ESTATE, LTD - 1
----------------------------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
as agent
/s/ Karen Mikos By: /s/ Victoria L. Gorman
- ------------------------------------- ------------------------------------
Name (print): KAREN MIKOS Name: VICTORIA GORMAN
------------------------ ----------------------------------
Title: VICE-PRESIDENT
- ------------------------------------- ---------------------------------
Name (print):
------------------------
ATTEST: TENANT: JACOR Broadcasting of Atlanta,
Inc.
----------------------------------
-----------------------------------------
/s/ Marquis D. Higginbotham By: /s/ R Christopher Weber
- ------------------------------------- ------------------------------------
Name (print): MARQUIS D. HIGGINBOTHAM Name: R CHRISTOPHER WEBER
------------------------ ---------------------------------
Michael P. Hall Title: SENIOR VICE-PRESIDENT
- ------------------------------------- ---------------------------------
Name (print): MICHAEL P. HALL
------------------------
FOM-1308 11/93
Page 2
<PAGE>
EXHIBIT C
---------
WORK LETTER
-----------
This Exhibit is attached to and made a part of the Lease dated August 4,
1994 by and between FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD.-1 , by its
agent Equity Office Properties, Inc. ("Landlord") and JACOR Broadcasting of
Atlanta, Inc. ("Tenant") for space in the Building located at 1819 Peachtree
Rd., NE, Atlanta, Georgia 30309 (Peachtree Palisades East Building) .
1. This Work Letter shall set forth the obligations of Landlord and Tenant
with respect to the preparation of the Premises for Tenant's occupancy. All
improvements described in this Work Letter to be constructed in and upon the
Premises by Landlord are hereinafter referred to as the "Landlord Work." It is
agreed that construction of the Landlord Work will be completed at Tenant's sole
cost and expense, subject to the Allowance (as defined below). Landlord shall
enter into a direct contract for the Landlord Work with a general contractor
selected jointly by Tenant and Landlord. In addition, Landlord shall have the
right to select and/or approve of any subcontractors used in connection with the
Landlord Work.
2. Space planning, architectural, and when deemed necessary by Landlord,
engineering (mechanical, electrical and plumbing) drawings for the Landlord Work
(collectively referred to as the "Plans") shall be prepared by Landlord's
architect or engineers. Landlord shall bear the cost of the initial space
planning drawings, to include one revision, which shall be prepared by
Landlord's architect. Tenant shall be responsible for the cost of all other
plans, including any additional space planning services and drawings beyond
those specified above and all related services in connection with the Landlord
Work. The cost of such Plans and services may be paid out of the Allowance, if
any, provided for below. In addition, Tenant shall be responsible for the
design, function and maintenance of all special improvements, whether installed
by Landlord at Tenant's request or installed by Tenant with Landlord's prior
written approval. Tenant shall use only those materials which Landlord has
approved in writing.
3. Tenant and Tenant's Architect, if any, shall devote such time in
consultation with Landlord or Landlord's agent as may be required to provide all
information Landlord deems necessary in order to enable Landlord to complete,
and obtain Tenant's written approval of, Plans for the Landlord Work. Tenant
shall furnish any such requested information, and approve or disapprove any
preliminary or final layout, drawings, or plans within three (3) Business Days
after written request. Any failure to approve or disapprove shall be deemed a
Delay (as defined in Article III of the Lease). Tenant agrees to pay on demand
all costs, expenses and increased unit prices incurred by Landlord on account of
Tenant's failure to furnish such information and/or approve drawings within such
prescribed times. Any disapproval shall be in writing and shall specifically set
forth the reasons for such disapproval. All of Tenant's Plans shall be subject
to Landlord's consent, the granting or denial of which shall be in Landlord's
sole discretion.
4. Prior to commencing any construction of Landlord Work, Landlord shall
submit to Tenant a written estimate setting forth the anticipated cost of the
Landlord Work, including but not limited to labor and materials, contractor's
fees (whether paid to independent contractors or charged by Landlord for acting
as a general contractor), permit fees, and the cost of Plans and related
services. Within three (3) Business Days thereafter, Tenant shall either notify
Landlord in writing of its approval of the cost estimate, or specify its
objections thereto and any desired changes to the proposed Landlord Work. In the
event Tenant notifies Landlord of such objections and desired changes, Tenant
shall work with Landlord to reach a mutually acceptable alternative cost
estimate; provided, however, if Tenant fails to give written approval of an
alternative cost estimate within five (5) Business Days following delivery to
Tenant of the original cost estimate, Tenant shall be chargeable with one day of
Delay for each day thereafter until Tenant provides to Landlord its written
approval of the alternative cost estimate.
5. In the event Landlord's estimate and/or the actual cost of construction
shall exceed the Allowance, if any (such amounts exceeding the Allowance being
herein referred to as the "Excess Costs"), Tenant shall pay to Landlord such
Excess Costs on demand.
The statements of costs submitted to Landlord by Landlord's contractors
shall be conclusive for purposes of determining the actual cost of the items
described therein. The amounts payable hereunder constitute Rent payable
pursuant to the Lease, and the failure to timely pay same constitutes an event
of default under the Lease.
-1-
<PAGE>
6. If Tenant shall request any change, addition or alteration in any of
the Plans after approval by Landlord, Landlord shall have such revisions to the
drawings prepared, and Tenant shall reimburse Landlord for the cost thereof upon
demand. Promptly upon completion of the revisions, Landlord shall notify Tenant
in writing of the increased cost which will be chargeable to Tenant by reason of
such change, addition or deletion. Tenant shall, within three (3) Business Days,
notify Landlord in writing whether it desires to proceed with such change,
addition or deletion. In the absence of such written authorization, Landlord
shall have the option to continue work on the Premises disregarding the
requested change, addition or alteration, or Landlord may elect to discontinue
work on the Premises until it receives notice of Tenant's decision, in which
event Tenant shall be responsible for any Delay in completion of the Premises
resulting therefrom. In the event such revisions result in a higher estimate of
the cost of construction and/or higher actual construction costs which exceed
the Allowance, such increased estimate or costs shall be deemed Excess Costs
pursuant to Paragraph 5 hereof and Tenant shall pay such Excess Costs in
accordance with said Paragraph 5.
7. Following approval of the Plans and the payment by Tenant of the
required portion of the Excess Costs, if any, Landlord shall cause the Landlord
Work to be constructed substantially in accordance with the approved Plans.
Landlord shall notify Tenant of substantial completion of the Landlord Work.
8. Landlord, provided Tenant is not in default, agrees to provide Tenant
with an allowance (the "Allowance") in an amount not to exceed Four hundred
eigthty-seven thousand five hundred Dollars ($487,500 ) to be applied toward
the cost of the Landlord Work in the Premises. In the event the Allowance shall
not be sufficient to complete the Landlord Work, Tenant shall pay the Excess
Costs as prescribed in paragraph 5, above. In the event the Allowance exceeds
the cost of the Landlord Work, any remaining Allowance shall accrue to the sole
benefit of Landlord, it being agreed that Tenant shall not be entitled to any
credit, offset, abatement or payment with respect thereto.
9. This Exhibit C shall not be deemed applicable to any additional space
added to the original Premises at any time or from time to time, whether by any
options under the Lease or otherwise, or to any portion of the original Premises
or any additions to the Premises in the event of a renewal or extension of the
original Term of this Lease, whether by any options under the Lease or
otherwise, unless expressly so provided in the Lease or any amendment or
supplement to the Lease.
ATTEST: LANDLORD:
BY: EQUITY OFFICE PROPERTIES,
INC., as agent
/s/ Karen Mikos By: /s/ Victoria Gorman
- ------------------------------------- ------------------------------------
KAREN MIKOS Name: VICTORIA GORMAN
- ------------------------------------- ----------------------------------
Title: VICE-PRESIDENT
---------------------------------
ATTEST: TENANT: JACOR Broadcasting of Atlanta,
Inc.
-----------------------------------------
/s/ Marquis D. Higginbotham /s/ R. Christopher Weber
- ------------------------------------- ---------------------------------------
Name (print): MARQUIS D. HIGGINBOTHAM Name: R. CHRISTOPHER WEBER
----------------------- ----------------------------------
Michael P. Hall Title: SENIOR VICE-PRESIDENT
- ------------------------------------- ---------------------------------
Name (print): MICHAEL P. HALL
------------------------
-2-
<PAGE>
EXHIBIT D
BUILDING RULES AND REGULATIONS
------------------------------
This Exhibit is attached to and made a part of the Lease dated August 4,
1994 by and between FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD-1, by its agent
Equity Office Properties, Inc., for Owner ("Landlord") and JACOR Broadcasting of
Atlanta, Inc. ("Tenant") for space in the Building located at 1819 Peachtree
Rd., Atlanta, Georgia 30309.
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 purposes 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 person 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 damages 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.
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.
<PAGE>
12. No inflammable, explosive or dangerous fluid or substance shall be used or
kept by Tenant in the Premises or Building.
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 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.
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.
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 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 sue which is inconsistent with good
business practice.
<PAGE>
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.
ATTEST: LANDLORD: First Capital Institutional
Real Estate, Ltd - 1
---------------------------------------
BY: EQUITY OFFICE PROPERTIES, INC.,
as agent
/s/ Karen Mikos By: /s/ Victoria R. Gorman
- ------------------------------------- ------------------------------------
Name (print): KAREN MIKOS Name: VICTORIA GORMAN
------------------------ ----------------------------------
Title: VICE-PRESIDENT
---------------------------------
Name (print):
------------------------
ATTEST: TENANT: JACOR Broadcasting of Atlanta,
Inc.
------------------------------
By: /s/. R. Christopher Weber
/s/ Marquis D. Higginbotham ----------------------------------
- -------------------------------------
Name (print): MARQUIS D. HIGGINBOTHAM Name: R. CHRISTOPHER WEBER
------------------------ --------------------------------
Michael P. Hall Title: SENIOR VICE-PRESIDENT
- ------------------------------------- -------------------------------
Name (print): MICHAEL P. HALL
------------------------
FOM 1311 11\93
Page 3
<PAGE>
EXHIBIT E
ADDENDUM
--------
This Exhibit is attached to and made a part of the Lease dated August 4,
1994 by and between First Capital Institutional Real Estate Ltd.-1, ("Landlord")
by its agent Equity Office Properties, Inc. and JACOR Broadcasting of Atlanta,
Inc. ("Tenant") for space in the Building located at 1819 Peachtree Road,
Atlanta, Georgia 30309 (Peachtree Palisades East Building).
W I T N E S S E T H
-------------------
A. Landlord and Tenant are entering into a certain Lease Agreement
simultaneously with the execution of this Addendum (the "Lease"), under which
Landlord leases to Tenant and Tenant leases from Landlord approximately 19,500
square feet of net rentable area known as Suite 700 on the seventh (7th) floor
at Peachtree Palisades East Building (the "Building").
B. Landlord and Tenant desire this Addendum to form a part of the Lease.
1. Pharr Center Lease
A. JACOR Broadcasting of Atlanta, Inc. is currently the lessee under that
certain lease dated November 4, 1985, by and between Pharr Associates as
lessor, and JACOR Broadcasting of Atlanta, Inc. as lessee for approximately
15,497 square feet in the building located at 550 Pharr Road, Suite 400,
Atlanta, Georgia 30305 (the "Pharr Center Lease"). Landlord, provided
that Tenant is not in default hereunder after the expiration of any
applicable cure period or under the lease terms of the Pharr Center Lease,
and, provided further, that Tenant complies with all of its obligations
under section C. below, shall provide Tenant with a monthly credit against
Base Rental due hereunder with respect to the period beginning on the
Commencement Date and ending no later than June 30, 1996 (the
"Reimbursement Period"). The credit for each individual month during the
Reimbursement Period shall equal the total amount that Tenant actually pays
under the Pharr Center Lease (as evidenced by copies of cancelled checks
from Tenant) for such month for (i) Base Rent, and (ii) CPI increases,
provided that the maximum credit that Tenant shall be entitled to receive
hereunder shall be $455,960 ("Lease Takeover Amount"). The total amount
that Tenant actually pays under the Pharr Center Lease with respect to
items (i) and (ii) for each month during the Reimbursement Period shall be
referred to herein as the "Reimbursement Amount". In addition, in the
event Tenant is declared to be in default under the Pharr Center Lease as a
direct result of its vacation of the premises thereunder, the reimbursement
amount shall also include any damages that Tenant is required to pay in
connection with such default. Such Reimbursement Amount shall be deducted
from the Base Rental Tenant is required to pay hereunder during the
Reimbursement Period in accordance with this Lease, provided that in no
event shall Tenant be entitled to deduct more than $455,960.
Notwithstanding the foregoing to the contrary, in the event that the
Commencement Date is delayed beyond August 1, 1994 for any reason
whatsoever, the Lease Takeover Amount shall be reduced by 1/699 (or
$651.37/day) for each day of delay. For example, if the Commencement Date
is September 1, 1994, the Lease Takeover Amount shall adjust to
$455,960.00 - $20,192.47 = $435,767.53.
B. Notwithstanding anything in Section A. above to the contrary, Landlord's
obligation to provide Tenant with a credit against Base Rental as provided
above shall terminate immediately upon the termination of the Pharr Center
Lease, it being agreed that Landlord shall not be required to provide
Tenant with a credit hereunder with respect to any period subsequent to the
termination date of the Pharr Center Lease. Likewise, if Tenant's
obligation to pay rental under the Pharr Center Lease is reduced for any
reason, including, without limitation, a rental restructuring or the
termination of less than all of the Premises under the Pharr Center Lease,
Landlord's obligation to provide Tenant with a credit shall also be
reduced, it being understood that Landlord shall only be required to
provide Tenant with a credit for the Reimbursement Amount as defined in
Section A above.
C. In consideration of Landlord's agreement to grant Tenant a credit
against Base Rental, Landlord shall be entitled to act as Tenant's agent in
connection with any assignment or subletting of the premises under the
Pharr Center Lease and in connection with any buy-out or reduction of
Tenant's obligation under the Pharr Center Lease. Tenant agrees to
cooperate with Landlord in connection with Landlord's efforts to assign,
sublease, reduce or buy-out Tenant's obligation under the Pharr Center
Lease. Such cooperation shall include, without limitation, execution by
Tenant of (i) any assignment of the Pharr Center Lease, (ii) any sublease
with respect to all or any portion of
<PAGE>
the premises under the Pharr Center Lease, (iii) any lease termination
agreement with respect to all or any portion of the premises under the
Pharr Center Lease, provided that Landlord shall be responsible for any
termination fee in connection therewith, and (iv) any additional agreements
or documentation requested by Landlord to evidence Landlord's right to act
as agent for Tenant in connection with the Pharr Center Lease. In addition,
Tenant upon the request of Landlord, shall execute any rights to expand the
premises under the Pharr Center Lease or to extend the term of the Pharr
Center Lease, provided that Landlord agrees to be liable for any and all
obligations under the Pharr Center Lease with respect to any such expansion
space and any such extended term. Notwithstanding anything herein to the
contrary, Tenant shall not be required to incur any cost or expense in
connection with the assignment or termination of any of the Pharr Center
Lease or in the subletting of any portion of premises leased under the
Pharr Center Lease.
2. Parking.
The Landlord will provide Tenant with up to thirty-five (35) parking spaces
in the parking garage (See attached drawing, Exhibit "E-1"), and twenty-
five (25) parking spaces in the adjacent surface parking lot. (See attached
drawing, Exhibit "E-2") Up to six (6) of these spaces located in the
adjacent surface parking lot will be reserved for 24 hours per day seven
days per week access. All sixty (60) spaces will be at no charge for the
initial term of the lease. The parking garage and the surface parking area
to be known as the "Parking Area". Landlord reserves the right during the
term of the lease to relocate the twenty-five (25) surface parking spaces
to other parking locations as reasonably designated by Landlord.
Landlord will provide thirty (30) additional parking cards for Tenant at no
additional cost for short term access (as defined herein as periods of
three (3) hours or less) to the parking garage. Landlord reserves the
right to monitor the use of such access cards and restrict access if
Landlord determines that Tenants use exceeds the short term use
contemplated herein.
Landlord shall not be responsible for money, jewelry, automobiles or other
personal property lost in or stolen from the Parking Area regardless of
whether such loss or theft occurs when the Parking Area or other areas
therein are locked or otherwise secured against entry. Except as caused by
negligence or willful misconduct of Landlord, Landlord shall not be liable
for any loss, injury or damage to persons using the Parking Area or
automobiles or other property therein, it being agreed that, to the fullest
extent permitted by law, the use of the Parking Area shall be at the sole
risk of Tenant and its employees.
Landlord shall have the right from time to time to promulgate reasonable
rules and regulations regarding the Parking Area, 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 the cause its employees to
comply with all such rules and regulations as well as all reasonable
additions and amendments thereto.
Tenant shall not store or permit its employees to store any automobiles in
the Parking Area 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 Parking Area or on the Property. If
it is necessary for Tenant or its employees to leave an automobile in the
Parking Area overnight, Tenant shall provide landlord with prior notice
thereof, designating the license plate number and model of such automobile
other than those in the reserved area in the surface lot.
Landlord shall have the right to temporarily close the Parking Area or
certain areas therein in order to perform necessary repairs, maintenance
and improvements to the Parking Area.
Tenant shall not assign or sublease any of the Spaces without the consent
of Landlord. Landlord shall have the right to terminate this Parking
Agreement with respect to any Spaces that Tenant desires to sublet or
assign.
<PAGE>
3. Roof Space.
A. Tenant shall use and occupy the Premises as a broadcasting studio and
general offices or for such other uses as shall not be incompatible with
the foregoing specified uses. Tenant shall transmit its AM and FM
broadcasts to the general public from a transmitting tower at a location
other than at the Building. However, Tenant may cause to be erected on the
roof of the Building six (6) STL antennae 8' x 0", three (3) small
satellite antennae 30", two (2) Remote Pick-up (RPU) antenna 3' x 6' two
(2) satellite receive dish type antennae not to exceed 3 meters in height.
Two (2) Towers not to exceed 40' in height located at the back of the
penthouse on the North and South sides of the building. Two (2) 2-way
antennae - 10' in length for receiving from mobile units. Landlord agrees
to permit Tenant, at Tenant's sole cost and expense, to erect such antennae
and related equipment in the number and of the type described in this
paragraph 3-A subject to Landlord's prior written consent, which consent
should not be unreasonably withheld. Tenant's right to erect and maintain
such antennae and related equipment on the roof shall be subject to the
following:
(i) the antennae shall be erected at the locations on the roof of the
Building approved by Landlord. Said antennae are not to detract from the
building aesthetics.
(ii) Tenant, at its sole cost and expense, shall carry the insurance
described in paragraph B of these Special Stipulations.
(iii) Tenant, at its sole cost and expense, shall obtain such permits
and licenses as shall be required for the erection and use of such antennae
and related equipment.
(iv) Tenant, at its sole cost and expense, shall be responsible for
the maintenance and repair of such antennae, including maintenance of the
structural soundness thereof, and the water tight condition of the building
surface; and
(v) Tenant, shall indemnify Landlord against, and hold Landlord
harmless from, any loss or damage whatsoever to the Building or to the
person or property of anyone whosoever, arising out of or occasioned by
said antennae and related equipment, including, but not limited to their
erection, maintenance, use, destruction (by windstorm or otherwise) and
removal.
(vi) All installations and operations in connection with Tenant's
antenna and related equipment shall meet with all applicable rules and
regulations of the Federal Communications Commission ("FCC"), Federal
Aviation Administration ("FAA") and all applicable codes and regulations of
the city, county and state concerned. Under this Lease, the Landlord
assumes no responsibility for the licensing, operation and/or maintenance
of Tenant's equipment. Tenant has the responsibility of carrying out the
terms of its FCC license in all respects.
(vii) Upon the expiration or earlier termination of this Lease,
Tenant, at its sole cost and expense, shall remove its antenna and related
equipment from the roof of the Building. Tenant shall repair any damage
cause by such removal, including the patching of any holes to match, as
closely as possible, the color surrounding the area where the equipment and
appurtenances were attached. Such maintenance and operation shall be
performed in a manner to avoid any interference with any other tenants or
Landlord. Tenant agrees to maintain all of Tenant's equipment placed on or
about the roof or in any Building in proper operating condition and
maintain same in satisfactory condition as to appearance and safety.
Tenant agrees that at all times during the term of this Lease, it will keep
the Premises free of all trash or waste materials by Tenant.
Subject to all other terms and conditions of this Lease, Tenant may use and
occupy the Premises for the purposes set forth in this paragraph 3A during
any hours of the day or night and for such durations of the day and night
as is necessary and proper, subject only to this Lease and any restrictions
imposed by any governmental authority or law or municipal ordinance now or
hereafter in effect. Notwithstanding the foregoing, Tenant further agrees
to exercise firm control over the people requiring access to the roof in
order to keep to a minimum the number of people having access to the roof
and the frequency of their visits.
<PAGE>
Anything contained in this paragraph 3A to the contrary notwithstanding
Tenant shall not use or occupy or permit the Premises to be used or
occupied, or permit anything to be done in or on the Premises, in a manner
which will in any way violate any certificate of occupancy affecting the
Building, or make void or voidable any insurance then in force with respect
thereto, or which will make it difficult or impossible to obtain fire,
public liability or other insurance covering the Building, or which will
cause to be likely to cause structural damage to the Building or any part
thereof, or which will constitute a public or private nuisance, and shall
not use or occupy or permit the Premises to be used or occupied in any
manner which will violate any present of future laws or regulations of any
governmental authority or zoning or other municipal ordinance, or to permit
anything to be done in or about the Premises which will in any way obstruct
or interfere with the rights of other tenants of the Building. If by
reason of failure of Tenant to comply with the provisions of this paragraph
3A or if by reason of the mere use to which Tenant puts the Premises
including increasing rates for the Building charged to Landlord, than
otherwise would be charged, then Tenant shall pay Landlord, as additional
Rent hereunder, that part of insurance premiums thereafter paid by Landlord
which shall have been charged because of such failure by Tenant to comply
with the provisions of this paragraph or by virtue of the mere use to which
Tenant puts the Premises, such as additional rent to be payable by Tenant
upon receipt of an invoice thereof from Landlord.
B. Tenant, at its sole cost and expense, shall carry with an insurance
company acceptable to Landlord public liability and property damage
insurance in the following amounts: $1,000,000/$5,000,000. Such insurance
shall make provision for the antennae, described in paragraph 3-A of these
special stipulations, and for the call letters to be installed described in
paragraph 3-C of these special stipulations, and shall contain a waiver of
subrogation clause and shall designate Landlord as a party additionally
insured. Tenant further agrees to deliver to Landlord a certified copy of
the policy or policies which provide such insurance. If Tenant fails to
maintain such insurance in full force and effect during the term of this
Lease, Landlord may procure an equivalent policy and the cost thereof shall
be deemed additional rent, payable by Tenant upon receipt of an invoice
thereof from Landlord.
C. Landlord agrees to permit Tenant to erect on two sides of the Building
on the penthouse siding the call letters of the AM and FM stations WGST and
WPCH, the exact location, appearance, type and configuration shall be
subject to Landlord's prior written consent and the following:
(i) the call letters shall be erected at the locations on the roof of
the building approved by Landlord. Said call letters are not to detract
from the buildings aesthetics.
(ii) Tenant, at its sole cost and expense, shall carry the insurance
described in paragraph 3-B of this Addendum.
(iii) Tenant, at its sole cost and expense, shall be responsible for
the maintenance and repair of such call letters, including, maintenance of
the structural soundness thereof, and the water tight condition of the
building surface;
(iv) Tenant, at its sole cost and expense, shall obtain such permits
and licenses as shall be required for the reaction and use of such call
letters; and
(v) Tenant shall indemnify Landlord against, and hold Landlord
harmless from, any loss of damage whatsoever to the Building or to the
person or property of anyone whomsoever, arising out of or occasioned by
said call letters, including, but not limited to their erection,
maintenance, use, destruction (by windstorm or other wise).
(vi) As long as Tenant leases at least 19,500 rentable square feet of
space at Peachtree Palisades East Building and is not in adjudicated
default of the Lease and does not sublease over twenty percent (20%) of
it's space to a non-affiliate, Tenant will have the exclusive right to
place it's name and call letters on the penthouse of the building.
Landlord specifically retains the right to all other forms and locations of
building signage. The signage design and location must be mutually
acceptable to both Tenant and Landlord. Tenant shall be responsible for
assuring that the building signage is in complete compliance with all
required City of Atlanta building signage codes. All costs associated with
the design and installation of this signage may be paid from the Tenant
Improvement Allowance. Tenant shall be responsible for any ongoing costs
associated with the maintenance of such signage.
<PAGE>
Upon expiration or termination of this Lease, or if Tenant assigns
this Lease or vacates the Premises or Subleases over 20% of its space to a
non-affiliate, Tenant shall remove all signage within fifteen (15) days of
such aforementioned instance, and repair the mounting location to a useable
condition acceptable to Landlord.
Should Tenant elect not to install it's Building Signage by the end of
year 1 of the Lease term, Landlord shall have the right to offer exclusive
Building Signage to another tenant with the consent of Tenant, which
consent shall not be unreasonably withheld.
4. Building Directory.
Landlord will provide sufficient space on the building directory in the
lobby for JACOR Broadcasting of Atlanta, Inc. and a reasonable number of
it's senior executives.
5. Monument Signage.
During the lease term and so long as Tenant occupies at least nineteen
thousand five hundred (19,500) rentable square feet at Peachtree Palisades
East Building, Tenant shall have the right to place its name on the
building monument sign located on Peachtree Road at the visitor parking
entrance at Tenant's sole cost and expense. If Tenant ever occupies less
than nineteen thousand five hundred (19,500) rentable square feet, Landlord
shall have the right to remove Tenant's name from the monument sign.
Landlord reserves the right to approve or disapprove Tenants signage
design, finish and size, subject to City of Atlanta signage ordinances.
The Landlord reserves the right to retain approximately 50% of the
Monument Sign for another Tenant's use.
6. Janitorial Credit. Tenant, at Tenant's sole cost and expense, shall
provide its own general cleaning and janitorial services for the Premises
and shall remove all trash from the Premises to the garbage bin provided by
Landlord at the rear of the Building. If Landlord deems Tenant's trash
removal service to be below the standard, Landlord may provide such trash
removal service and charge Tenant therefore, at cost. Tenant will be
credited with $912.00 per month for such general cleaning, janitorial and
trash removal services provided by Tenant. Such credit is being provided
in order to offset the inclusion of such items in "Basic Costs".
Included in the service which Landlord agrees to provide Tenant, shall be
outside window cleaning in accordance with such schedule therefore as
Landlord may establish for the Building but not less than once annually.
Landlord agrees to keep common areas of the building and appurtenant
property owned by Landlord (including the Parking Area) in good repair and
free of debris. Tenant, however, shall also be responsible for the proper
and timely maintenance of all special equipment servicing the Premises,
such equipment shall include but not be limited to supplemental HVAC, non-
standard lighting, over standard electrical service.
Power for studio air conditioning and studio equipment shall be separately
metered twenty-four (24) hours a day, seven days a week through one meter
to be as part of Landlord work. As measured by such meter and based on the
power rates applicable to the Building, Tenant shall pay monthly (as
additional base rental) for such power provided.
7. Gas Fired Generator. Tenant shall have the right, subject to Landlord
review and approval to install and vent a gas fired generator in the
building equipment room located on the basement level. Tenant shall be
responsible for the cost of installation, maintenance, repair, insurance,
and if Landlord elects, the proper removal of such equipment upon lease
expiration. See Attached Drawing - Exhibit "E-1".
8. Moving Allowance. Landlord will provide Tenant with a moving allowance,
which is not a part of the attached Exhibit "C" Work Letter and is in the
amount of $1.00 per rentable square foot or $19,500. All moving costs in
excess of the allowance shall be borne by Tenant.
Notwithstanding anything in Article XII or elsewhere in the Lease to the
contrary, Tenant may, at its own expense, provide its own locks to an area
within the Premises ("Secured Area"). Tenant need not furnish Landlord
with a key but upon the Expiration Date, Tenant shall surrender all such
keys to Landlord. If Landlord must gain access to a Secured Area in a non-
emergency situation, Landlord
<PAGE>
shall contact Tenant and Landlord shall comply with all reasonable security
measures pertaining to the Secured Area and Landlord needs to gain access
to the Secured Area in connection with an emergency in the Premises or
Building, Tenant hereby authorizes Landlord to forcibly enter the Secured
Area. In all reasonable expenses incurred by Landlord in repairing or
reconstructing any entrance, corridor, door or other portions of the
Premises damaged as a result of a forcible entry by Landlord.
9. Disclosure. Office Associates represents the Landlord in this transaction
and shall be paid a commission by the Landlord. Office Associates does not
represent the Tenant.
10. In the event Tenant fails to remove any of Tenants property from the
premises or storage, as the case may be, within thirty (30) days after the
expiration or earlier termination of this Lease or Tenants right to
possession, Landlord, at its option, may deem such Tenants property to have
been abandoned and title to such items shall pass to Landlord.
11. Notwithstanding the foregoing, if the Commencement Date does not occur by
one hundred eighty (180) days after the Target Commencement Date (the
"Outside Completion Date"), as the same may be extended due to Delays and
Force Majeure, Tenant, as its sole remedy, may terminate this Lease by
giving Landlord notice on or before ten (10) days after the Outside
Completion Date, as the same may be extended due to Delays and Force
Majeure. In such event, this Lease shall be deemed null and void and of no
further force and effect and Landlord shall promptly refund all funds
previously advanced by Tenant under this Lease and the parties hereto shall
have no further responsibilities or obligations to each other with respect
to this Lease. If circumstances resulting from Force Majeure arise,
Landlord shall use reasonable efforts to advise Tenant of such within five
(5) days after such circumstances arise. Notwithstanding the foregoing, in
the event that Landlord determines that it will be unable to complete the
Landlord Work by the Outside Completion Date, Landlord shall have the right
to provide Tenant with written notice setting forth the date on which
Landlord reasonable believes it will be able to complete the Landlord Work
("Extended Completion Date"). Upon receipt of such notice, Tenant shall
have ten (10) days in which to notify Landlord of its intent to terminate
the Lease. If Tenant fails to provide Landlord with the termination notice
within such ten (10) day period, the Outside Completion Date shall be
amended to be the Extended Completion Date, as the same may be extended due
to Delays and events of Force Majeure.
12. Notwithstanding the foregoing to the contrary, Landlord shall not require
Tenant to remove any improvements performed by Landlord as part of the
Landlord Work, provided that (i) Landlord, at any time within one (1) year
following the expiration or earlier termination of the Lease, shall have
the right, at Tenant's sole cost and expense, to (a) remove the "sound
envelope" to be installed in connection with Tenant's operation of a
studio, and (b) to repair any and all damage caused by the removal of the
sound envelope. In addition, with respect to improvements performed
subsequent to the Landlord Work, Tenant may request in writing at the time
it submits its plans and specifications, that landlord advise Tenant
whether Landlord will require Tenant to remove, at the termination of this
Lease or Tenant's right to possession hereunder, such alteration, addition
or improvement, or any particular portion thereof and Landlord shall advise
Tenant within fifteen (15) days after receipt of Tenant's request as to
whether Landlord will require removal; provided, however, Landlord shall
have the right to require Tenant to remove any vault, stairway or computer
room alterations installed in the Premises, regardless of whether Landlord
timely notified Tenant that it would require such removal. Landlord shall
not, however, 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.
13. 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 an
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, including, without
limitation, the maintenance and repair of the sewer system and any
utilities between the point where they enter the Building and the point
where they enter the Premises; and 4) the Building
<PAGE>
facilities common to all tenants including, but not limited to, the
ceilings, lighting, HVAC, plumbing, walls and floors in the Common Areas.
14. Notwithstanding anything above to the contrary, it is understood and agreed
by Landlord and Tenant that Section X.B. is applicable to improvements
performed subsequent to the Landlord Work and shall not be applicable to
the Landlord Work to be performed by Landlord.
15. Notwithstanding anything to the contrary contained in Article XIII, Tenant
may assign its entire interest under this Lease or sublet the Premises to a
wholly owned corporation or controlled subsidiary or parent of Tenant or to
any successor to Tenant by purchase, merger, consolidation or
reorganization (hereinafter collectively referred to as "Corporate
Transfer") without the consent of Landlord, provided: (i) Tenant is not in
default under this Lease; (ii) if such proposed transferee is a successor
to Tenant by purchase, said proposed transferee shall acquire all or
substantially all of the stock or assets of Tenant's business or, if such
proposed transferee is a successor to Tenant by merger, consolidation or
reorganization, the continuing or surviving corporation shall own all or
substantially all of the assets of Tenant; (iii) such proposed transferee
shall have a net worth which is at least equal to the greater of Tenant's
net worth at the date of this Lease or Tenant's net worth at the date of
the Transfer; (iv) such proposed transferee operates the business in the
Premises for the Permitted Use and no other purpose; and (v) in no event
shall any Transfer release or relieve Tenant from any of its obligations
under this Lease. Tenant shall give Landlord written notice at least thirty
(30) days prior to the effective date of such Corporate Transfer. As used
herein, the terms "controlled" or "subsidiary" shall mean a corporate
entity wholly owned by Tenant or at least fifty-one percent (51%) of whose
voting stock is owned by Tenant.
16. Notwithstanding anything in this Article XIX 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) month after the expiration of the estimate 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, 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.
17. Notwithstanding the foregoing, if the whole or any substantial part of the
Premises 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 by private purchase in lieu thereof, Tenant shall also have the
right to terminate this Lease effective as of the date the physical taking
of the Premises occurs. Such right to terminate shall be exercised by
written notice to Landlord within thirty (30) days after the date on which
Tenant is first notified of the taking.
18. Events of "Force Majeure" shall include strikes, riots, acts of God,
shortages of labor or materials and war. Whenever a period of time is
herein prescribed for the taking of any action by Landlord or Tenant, as
the case may be, other than the payment of Rent or any other sums due
hereunder, such party 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.
<PAGE>
19. Landlord hereby represents that so long as Tenant complies with all of the
terms and conditions of this Lease, the use of Premises for the
Permitted Use will not violate any insurance maintained by Landlord,
prevent Landlord from obtaining insurance, or result in an increase in the
cost of insurance coverage for which Tenant will be responsible (other than
through inclusion in Basic Costs).
20. Zoning Contingency.
A. Notwithstanding anything in this Lease to the contrary, Landlord and
Tenant acknowledge that the Building is not currently zoned for the
operation of a radio broadcasting station and that the obligations of
Landlord and Tenant hereunder are contingent upon Tenant obtaining all
necessary approvals that are required in order to allow Tenant to
operate a radio broadcasting station in the Building during the Lease
Term, including (to the extent necessary), the issuance of a zoning
variance or special use permit from the Atlanta zoning board or other
necessary and applicable governing entity(ies) (the procurement of such
approvals is referred to herein as the "Contingency"). In the event
that Tenant fails to satisfy the contingency by December 31, 1994,
either party shall thereafter have the right to terminate this Lease by
written notice to other given at any time prior to the date Tenant
notifies Landlord that the contingency has been satisfied.
B. Upon the execution of this Lease, Tenant, at its sole cost and expense,
shall take all steps reasonably necessary to satisfy the Contingency as
soon as reasonably possible. Notwithstanding anything herein to the
contrary, it is understood and agreed that in no event shall Tenant
have the right to change or apply for a change of the underlying zoning
for the Building. Tenant shall obtain Landlord's prior approval with
respect to any petitions, memorandums or other documents that will be
submitted to the applicable government entities for consideration,
which approval shall not be unreasonably withheld or delayed. In
addition, Tenant shall keep Landlord apprised of the dates, times and
locations of any meetings and hearing it has with the applicable
governmental agencies, it being understood that Landlord shall have the
right to be present at and participate in all such meetings and
hearings.
C. Notwithstanding anything in the Lease to the contrary, it is understood
and agreed that, except with regard to Landlord's and Tenant's
obligations hereunder with respect to the satisfaction of the
Contingency, Landlord and Tenant shall have no obligations to each
other under the Lease until such time as the Contingency has been
satisfied, including, without limitation, the obligation to perform any
Landlord Work. It is further agreed that if Tenant does not satisfy
the Contingency by July 1, 1994, the "Target Commencement Date" of the
Lease shall automatically be amended to be the date that is seventy
(70) days after the date on which the Contingency is satisfied.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Exhibit to the
Lease as of the day and year first above written.
LANDLORD: First Capital Institutional
Real Estate Ltd.-1
BY: Equity Office Properties, Inc.,
as agent
ATTEST:
/s/ Karen Mikos By: /s/ Victoria R. Gorman
- ------------------------------------ --------------------------------------
Name (print) KAREN MIKOS Name: VICTORIA GORMAN
------------------------ ------------------------------------
Title: Vice-President
-----------------------------------
TENANT: JACOR Broadcasting of Atlanta,
Inc.
/s/ Marquis D. Higginbotham By: /s/ R. Christopher Weber
- ------------------------------------ --------------------------------------
Name (print) MARQUIS D. HIGGINBOTHAM Name: R. CHRISTOPHER WEBER
----------------------- ------------------------------------
/s/ Michael P. Hall Title: SENIOR VICE-PRESIDENT
- ------------------------------------ -----------------------------------
Name (print) MICHAEL P. HALL
------------------------
<PAGE>
EXHIBIT E-1
[DRAWING OF PARKING GARAGE AT PEACHTREE PALISADES EAST, 1819 PEACHTREE ROAD,
N.E., ATLANTA, GEORGIA APPEARS HERE]
<PAGE>
EXHIBIT "E-2"
[DRAWING SHOWING SURFACE PARKING LOT ADJACENT TO PEACHTREE
PALISADES EAST APPEARS HERE
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,254,900
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<RECEIVABLES> 149,800
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<PP&E> 36,086,500
<DEPRECIATION> 11,937,500
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<CURRENT-LIABILITIES> 985,400
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0
0
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<CGS> 0
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<INCOME-TAX> 0
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<EPS-PRIMARY> 4.62
<EPS-DILUTED> 4.62
</TABLE>
