M.I.C. Limited - Page 6

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               MIC leased the Property to Beverly under a 5-year lease that           
          ran from March 1986 to February 1991.  The lease provided that              
          Beverly would pay MIC rent at an annual rate of $3.42 per square            
          foot, the landlord would pay the real estate taxes, and the                 
          tenant would pay all other property expenses.  The Property was             
          zoned B-3, General Business District, which permitted adult uses,           
          including adult bookstores, cabarets, conversation/rap parlors,             
          health/sports clubs, massage parlors, and motion picture                    
          theaters.  The B-3 zoning also permitted the Property to offer              
          more than one adult use at that site.  The Property enjoyed value           
          due to its zoning, location, traffic, and its ability to offer a            
          number of adult uses at one site.                                           
               In the early 1980's, the City of St. Paul (the City) had               
          begun to make a sweeping attempt to drive out of the City all               
          adult oriented businesses.  The first business owner to be                  
          subjected to the City's scrutiny was Ferris Alexander                       
          (Alexander), an owner and operator of a number of adult related             
          bookstores, bars, theaters and other entertainment facilities in            
          St. Paul.  One of Alexander's assets was the Flick Theater (the             
          Flick), a 9,760 square foot establishment that offered the same             
          types of adult entertainment as the Faust.  The Flick, which was            
          situated across the street from the Faust, was in worse physical            
          condition than the Faust.  The Flick was rundown and "seedy", and           
          it had limited usable footage.                                              






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Last modified: May 25, 2011