<PAGE>
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 2-26983
THE PEOPLES GAS LIGHT AND COKE COMPANY
(Exact name of registrant as specified in its charter)
ILLINOIS 36-1613900
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
122 SOUTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60603
(Address of principal executive offices) (Zip Code)
(312) 431-4000
(Registrant's telephone number, including area code)
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 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 24,817,566 shares of Common
Stock, without par value, outstanding at January 31, 1994.
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<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE PEOPLES GAS LIGHT AND COKE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------- --------------------------
1993 1992 1993 1992
---------- ---------- ----------- -----------
(Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Gas sales $ 295,976 $ 291,245 $ 984,436 $ 855,901
Transportation of customer-owned gas 30,134 34,119 102,213 119,570
Other 4,087 3,534 16,070 14,468
---------- ---------- ----------- -----------
Total Operating Revenues 330,197 328,898 1,102,719 989,939
---------- ---------- ----------- -----------
OPERATING EXPENSES:
Gas costs 171,678 169,831 557,102 480,900
Operation 48,588 45,848 191,481 172,616
Maintenance 7,752 7,208 32,964 33,270
Depreciation 13,671 13,028 55,259 52,499
Taxes - Income 14,845 16,191 31,605 28,569
- State and local revenue 36,028 35,930 121,149 110,550
- Other 4,288 4,238 18,543 17,917
---------- ---------- ----------- -----------
Total Operating Expenses 296,850 292,274 1,008,103 896,321
---------- ---------- ----------- -----------
OPERATING INCOME: 33,347 36,624 94,616 93,618
---------- ---------- ----------- -----------
OTHER INCOME:
Interest income 177 239 1,340 2,923
Allowance for funds used during
construction -- -- -- 216
Miscellaneous 10,601 824 12,848 2,135
---------- ---------- ----------- -----------
Total Other Income 10,778 1,063 14,188 5,274
---------- ---------- ----------- -----------
GROSS INCOME 44,125 37,687 108,804 98,892
---------- ---------- ----------- -----------
INCOME DEDUCTIONS:
Interest on long-term debt 8,653 8,653 34,908 35,760
Other interest 1,283 1,041 2,651 3,289
Amortization of debt discount and expense 162 151 626 629
Miscellaneous 34 12 101 55
---------- ---------- ----------- -----------
Total Income Deductions 10,132 9,857 38,286 39,733
---------- ---------- ----------- -----------
NET INCOME $ 33,993 $ 27,830 $ 70,518 $ 59,159
Preferred stock dividends -- 230 488 1,147
---------- ---------- ----------- -----------
NET INCOME APPLICABLE TO
COMMON STOCK $ 33,993 $ 27,600 $ 70,030 $ 58,012
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
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</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
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<PAGE>
<TABLE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, December 31,
1993 September 30, 1992
(Unaudited) 1993 (Unaudited)
----------- ------------- -----------
(Thousands)
<S> <C> <C> <C>
PROPERTIES AND OTHER ASSETS
CAPITAL INVESTMENTS
Property, plant and equipment,
at original cost $ 1,719,025 $ 1,702,401 $ 1,633,054
Less - Accumulated depreciation 567,651 557,855 538,027
------------ ------------ ------------
Net property, plant and equipment 1,151,374 1,144,546 1,095,027
Gas supply advances and investments 825 825 872
Other investments 7,282 7,470 7,879
------------ ------------ ------------
TOTAL CAPITAL INVESTMENTS - NET 1,159,481 1,152,841 1,103,778
------------ ------------ ------------
CURRENT ASSETS
Cash 15,478 7,909 14,345
Cash equivalents -- -- 900
Other temporary cash investments,
at cost that approximates market value 600 600 400
Trust fund, utility construction 68,256 -- --
Receivables -
Customers, net of allowance for
uncollectible accounts of $16,120,
$18,934, and $16,301, respectively 133,372 75,382 126,703
Other 31,619 28,274 1,764
Accrued unbilled revenues 72,184 26,199 64,809
Materials and supplies, at average cost 23,593 23,673 25,173
Gas in storage, at last-in, first-out cost 100,295 119,654 95,852
Gas costs recoverable through rate adjustments 43,082 43,047 56,660
Prepayments 1,476 2,018 1,293
------------ ------------ ------------
TOTAL CURRENT ASSETS 489,955 326,756 387,899
------------ ------------ ------------
DEFERRED CHARGES 35,753 26,510 23,875
------------ ------------ ------------
TOTAL PROPERTIES AND OTHER ASSETS $ 1,685,189 $ 1,506,107 $ 1,515,552
------------ ------------ ------------
------------ ------------ ------------
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</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
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<PAGE>
<TABLE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, December 31,
1993 September 30, 1992
(Unaudited) 1993 (Unaudited)
----------- ------------ -----------
CAPITALIZATION AND LIABILITIES (Thousands, except share data)
<S> <C> <C> <C>
CAPITALIZATION
Common Stockholder's Equity:
Common stock, without par value
Authorized - 40,000,000 shares
Outstanding - 24,817,566 shares $ 165,307 $ 165,307 $ 165,307
Retained earnings 378,029 357,686 363,012
------------ ------------ ------------
Total Common Stockholder's Equity 543,336 522,993 528,319
Redeemable cumulative preferred stock,
$100 par value, exclusive of sinking
fund payments and redemptions due within one year -- -- 8,950
Long-term debt, exclusive of sinking
fund payments and maturities due within one year 549,150 447,150 433,500
------------ ------------ ------------
TOTAL CAPITALIZATION 1,092,486 970,143 970,769
------------ ------------ ------------
CURRENT LIABILITIES
Interim loans 80,650 63,200 62,000
Accounts payable 119,215 101,682 91,083
Dividends payable on common stock 13,650 14,146 14,146
Customer gas service and credit deposits 37,500 38,493 38,490
Sinking fund payments, maturities, and redemptions
due within one year -
Long-term debt -- -- 1,895
Redeemable cumulative preferred stock -- 3,400 1,950
Accrued taxes 51,048 25,249 52,019
Gas sales revenue refundable through rate adjustments 6,487 7,262 8,731
Accrued interest 7,945 8,271 8,647
Temporary LIFO liquidation credit 18,452 -- 28,527
------------ ------------ ------------
TOTAL CURRENT LIABILITIES 334,947 261,703 307,488
------------ ------------ ------------
RESERVES AND DEFERRED CREDITS
Deferred income taxes - primarily
accelerated depreciation 186,413 180,882 170,979
Investment tax credits being amortized
over the average lives of related property 37,076 37,478 38,523
Other 34,267 55,901 27,793
------------ ------------ ------------
TOTAL RESERVES AND DEFERRED CREDITS 257,756 274,261 237,295
------------ ------------ ------------
TOTAL CAPITALIZATION AND LIABILITIES $ 1,685,189 $ 1,506,107 $ 1,515,552
------------ ------------ ------------
------------ ------------ ------------
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</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
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<PAGE>
<TABLE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
December 31,
--------------------------
1993 1992
----------- ------------
(Thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 33,993 $ 27,830
Adjustments to reconcile net income to net cash:
Depreciation 13,671 13,028
Deferred income taxes and investment tax credits - net 1,498 1,084
Change in other deferred credits and reserves (18,003) (4,811)
Change in deferred charges (9,243) 2,303
Other -- 8
----------- -----------
21,916 39,442
Change in certain current assets and liabilities:
Receivables - net (61,335) (71,212)
Accrued unbilled revenues (45,985) (44,335)
Gas in storage 19,359 20,814
Rate adjustments recoverable or refundable (810) (32,740)
Accounts payable 17,533 12,269
Customer gas service and credit deposits (993) (5,065)
Accrued taxes 25,799 35,946
Temporary LIFO liquidation credit 18,452 28,527
Other 368 1,284
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (5,696) (15,070)
----------- -----------
INVESTING ACTIVITIES:
Capital expenditures - construction (20,040) (21,071)
Other assets (459) (476)
Other capital investments 187 583
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (20,312) (20,964)
----------- -----------
FINANCING ACTIVITIES:
Issuance of long-term debt 102,000 --
Redemption of preferred stock (3,400) (3,900)
Trust fund, utility construction (68,256) --
Interim loans - net 17,450 53,100
Dividends paid on preferred stock (71) (533)
Dividends paid on common stock (14,146) (10,175)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 33,577 38,492
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,569 2,458
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,909 12,787
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,478 $ 15,245
----------- -----------
----------- -----------
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<FN>
( ) Denotes red figure.
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of these
statements.
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by
The Peoples Gas Light and Coke Company (Company) in conformity with the rules
and regulations of the Securities and Exchange Commission (SEC) and reflect all
adjustments that are, in the opinion of management, necessary to present fairly
the results for the interim periods herein and to prevent the information from
being misleading.
Certain footnote disclosures and other information, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted from these interim financial
statements, pursuant to SEC rules and regulations. Therefore, the statements
should be read in conjunction with the consolidated financial statements and
related notes contained in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1993.
The business of the Company is influenced by seasonal weather conditions
because a large element of the Company's customer load consists of gas used for
space heating. Weather-related deliveries can, therefore, have a significant
positive or negative impact on net income. Therefore, the results of operations
for the interim periods presented are not indicative of the results to be
expected for all or any part of the balance of the current fiscal year.
2. SIGNIFICANT ACCOUNTING POLICIES
2(a) Revenue Recognition
Gas sales revenues for retail customers are recorded on the accrual
basis for all gas delivered during the month, including an estimate for gas
delivered but unbilled at the end of each month.
2(b) Statement of Cash Flows
For purposes of the balance sheet and the statement of cash flows, the
Company considers all short-term liquid investments with maturities of
three months or less to be cash equivalents.
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
2(b) Statement of Cash Flows (Continued)
Income taxes paid, net of refunds, and interest paid (excluding
capitalized interest) were as follows:
<TABLE>
<CAPTION>
For the three months
ended December 31, 1993 1992
----------------------------------------------------------------
(Thousands)
<S> <C> <C>
Income taxes paid $ 65 $ 113
Interest paid 10,108 8,999
</TABLE>
2(c) Income Taxes
In March 1993, the Company adopted, effective October 1, 1992, the
liability method of accounting for deferred income taxes required by the
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Under the liability method, deferred income taxes have been
recorded using currently enacted tax rates for the differences between the
tax basis of assets and liabilities and the basis reported in the financial
statements. Due to the effects of regulation on the Company, certain
adjustments made to deferred income taxes to reflect the adoption of SFAS
No. 109 are, in turn, debited or credited to regulatory assets or
liabilities. Such adjustments had no material impact on financial position
or results of operations of the Company.
2(d) Recovery of Gas Costs, Including Charges for Take-or-Pay
and Transition Costs
Under the tariffs of the Company, the difference for any fiscal year
between costs recoverable through the Gas Charge and revenues billed to
customers under the Gas Charge is refunded or recovered over a 12-month
billing cycle beginning the following January 1. Consistent with these
tariff provisions, such difference for any month is recorded either as a
current liability or as a current asset (with a contra entry to Gas Costs),
and the fiscal year-end balance is amortized over the 12-month period
beginning the following January 1.
The Illinois Commerce Commission (Commission) conducts annual
proceedings regarding, for each gas utility, the reconciliation of revenues
from the Gas Charge and related costs
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
2(d) Recovery of Gas Costs, Including Charges for Take-or-Pay
and Transition Costs (Continued)
incurred for gas. In such proceedings, costs recovered by a utility
through the Gas Charge are subject to challenge. Such proceedings
regarding the Company for fiscal years 1992 and 1993 are currently pending
before the Commission.
Pursuant to Federal Energy Regulatory Commission (FERC) Order No. 500,
and successor orders, pipelines were allowed to direct-bill firm sales
customers for a portion of so-called "past" take-or-pay costs. These costs
arose from the settlement of liabilities under agreements between pipelines
and producers whereby pipelines were required to pay for contracted
supplies, whether or not they were taken. The Company has recovered all
take-or-pay charges, billed by its pipeline suppliers, through the Gas
Charge. Although additional recoveries may be required in the future, any
amount is anticipated to be insignificant.
Pursuant to FERC Order No. 636 and successor orders, pipelines are
allowed to recover from their customers so-called transition costs. These
costs arise from the restructuring of pipeline service obligations required
by the 636 Orders. The Company is currently recovering pipeline charges
for transition costs through an existing provision of the Gas Charge.
Management believes that all such charges will be recoverable from
customers. (See Notes 3(a) and 3(b).)
3. RATES AND REGULATION
3(a) Utility Rate Proceedings
On October 6, 1992, the Commission issued an order approving changes
in the rates of the Company that are designed to increase annual revenues
by approximately $30.6 million, exclusive of additional charges for revenue
taxes. The new rates were implemented on October 10, 1992. The Company
was allowed a 10.40 percent return on its original-cost rate base,
reflecting a 12.25 percent cost of common equity. The Commission's order
also approved a rate mechanism by which the Company will recover costs
associated with environmental activities, principally the investigation and
remediation of residues associated with past manufactured gas operations.
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
3. RATES AND REGULATION (Continued)
3(a) Utility Rate Proceedings (Continued)
Consistent with the order it issued in separate rate proceedings (see
discussion below), the Commission directed that such costs be recovered
over a five-year period without recovery of carrying charges on unrecovered
balances. The Company and several parties have appealed the Commission's
order to the Illinois Appellate Court. Any change made pursuant to the
Appellate Court's order on appeal would have a prospective effect only.
On September 30, 1992, the Commission issued an order in its
consolidated proceedings, initiated in March 1991, regarding the
appropriate ratemaking treatment of costs incurred by Illinois utilities,
including the Company and North Shore Gas, in connection with the
investigation and treatment of residues associated with past manufactured
gas operations ("environmental costs"). In its order, the Commission
approved rate recovery of environmental costs but required that such
recovery occur over a five-year period without recovery of carrying charges
on unrecovered balances. Reimbursements of environmental costs from
insurance carriers or other entities are to be netted against costs and
reflected in rates over a five-year period. In November 1992, several
parties, including the Company and North Shore Gas, appealed the
Commission's order to the Illinois Appellate Court. Any change made
pursuant to the Appellate Court's order on appeal would have a prospective
effect only.On December 29, 1993, the Third District Appellate Court issued
its opinion affirming the Commission's order in the consolidated
proceedings. On February 2, 1994, the Citizens Utility Board, one of the
appellants in the Third District Court's appeal, filed a petition for leave
to appeal the Third District Court's decision to the Illinois Supreme
Court.
On September 15, 1993, the Commission entered an order initiating an
investigation into the appropriate means of recovery by Illinois gas
utilities of pipeline charges for FERC Order No. 636 transition costs. The
Commission plans to issue a final order in this proceeding by February 15,
1994. (See Notes 2(d) and 3(b).)
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
3. RATES AND REGULATION (Continued)
3(b) FERC Orders 636, 636-A, and 636-B
On April 8, 1992, the FERC issued Order No. 636, and on August 3,
1992, the FERC issued Order No. 636-A. On November 27, 1992, the FERC
issued Order No. 636-B, which substantially confirmed Order Nos. 636 and
636-A. There are numerous appeals of the 636 Orders pending before the
Federal Circuit Courts of Appeal for the D.C. and Eleventh Circuits.
The 636 Orders require substantial restructuring of the service
obligations of interstate pipelines. Among other things, the 636 Orders
mandate "unbundling" of existing pipeline gas sales services. Mandatory
unbundling requires pipelines to sell separately the various components of
their gas sales services (gathering, transportation and storage services,
and gas supply). These components were previously combined or "bundled" in
gas services such as those purchased by the Company. To address concerns
raised by utilities about reliability of service to their service
territories, the 636 Orders require pipelines to offer a "no-notice"
transportation service under which firm transporters can receive delivery
of gas up to their contractual capacity level on any day without prior
scheduling. Further, the 636 Orders provide for mechanisms for pipelines
to recover prudently incurred transition costs associated with the
restructuring process.
The FERC initiated individual restructuring proceedings for each
interstate pipeline. Each pipeline submitted a proposal to bring it into
compliance with the requirements of the 636 Orders. The restructured
tariffs of the principal pipeline serving the Company and North Shore Gas,
Natural Gas Pipeline Company of America (Natural), went into effect
December 1, 1993. The restructured tariffs of other pipelines serving the
Company had previously gone into effect. Several appeals of the orders
approving Natural's and other pipelines' restructured tariffs are pending
before the Federal Circuit Court of Appeal for the D.C. Circuit.
As part of the restructuring process, the Company elected necessary
levels of restructured services, including no-notice services, from the
menu of restructured services offered by the various pipelines. Also
during 1993, the Company took the steps necessary to obtain reliable gas
supply as a replacement for the bundled merchant service supply which was
no longer available from the interstate pipelines to any significant
extent.
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
3. RATES AND REGULATION (Continued)
3(b) FERC Orders 636, 636-A, and 636-B (Continued)
Under the 636 Orders, pipelines must make separate rate filings to
recover transition costs. There are four categories of such costs, the
largest of which for the Company is gas supply realignment (GSR) costs.
The Company is subject to charges for transition cost recovery by two
pipelines: Midwestern Gas Transmission Company/Tennessee Gas Pipeline
Company and Natural. Contracts with Midwestern and Tennessee having been
terminated effective November 30, 1993, transition cost billings by these
companies are limited to the period September 1993 through November 1993.
Charges for Natural's transition costs commenced on January 1, 1994. While
the total amount of the transition costs expected to be billed to the
Company by Natural are uncertain at this time, such total amount is
expected to be substantial. The Company has accrued and deferred transition
costs incurred through December 31, 1993. On February 1, 1994, Natural
filed a Stipulation and Agreement with the FERC addressing GSR costs. If
approved by the FERC, the Stipulation and Agreement would place a cap on
the amount of GSR costs recoverable by Natural from the Company.
The 636 Orders are not expected to have a material effect on financial
position or results of operations of the Company. (See Notes 2(d) and
3(a).)
4. ENVIRONMENTAL MATTERS
The Company, its predecessors, and certain former affiliates operated
facilities in the past for manufacturing gas and storing manufactured gas. In
connection with manufacturing and storing gas, various by-products and waste
materials were produced, some of which might have been disposed of on sites
where the facilities were located. Under certain laws and regulations
relating to the protection of the environment, the Company might be required
to undertake remedial action with respect to some of these materials, if found
at the sites.
The current owner of a site near Chicago has advised the Company that it
has found what appear to be wastes associated with by-products of the gas
manufacturing process under its property. The owner has asserted that these
wastes are the responsibility of the Company. The Company is currently
evaluating this claim.
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
4. ENVIRONMENTAL MATTERS (Continued)
The Company, in cooperation with the Illinois Environmental Protection
Agency (IEPA), is conducting investigations of certain sites (a total of 29)
to determine whether remedial action might be necessary. The investigations
were initiated pursuant to an informal request by the IEPA. To the best of
the Company's knowledge, similar informal requests have been made by the IEPA
to other major Illinois gas and electric utilities. The Company has engaged
environmental consulting firms to assist in the Company's investigations. At
this time, it is not known what, if any, remedial action will be necessary at
the sites or, if necessary, what the cost of any such action would be. As
discussed below, the Company may conduct a remedial investigation/feasibility
study (RI/FS) at two of these sites under the supervision of the IEPA and,
with the agreement of the IEPA, has commenced limited work at a third site.
In August 1988, the IEPA conducted an inspection at the Company's
Division Street property in Chicago. During the inspection, the IEPA and the
Company took several soil samples for laboratory analysis. The analysis of
the samples collected by the Company indicates the presence of certain
substances within the soil of the Division Street property that could be
attributable to former manufactured gas operations. The Company may conduct
an RI/FS of the property under the supervision of the IEPA.
The current owners at another site in Chicago have advised the Company
that they have found what appear to be gas manufacturing wastes underneath
their property. The owners have demanded monetary compensation from the
Company because of the presence of such wastes. The Company has rejected this
demand, but may conduct an RI/FS of the site under the supervision of the
IEPA.
The Company has observed what appear to be gas purification wastes on
another former site in Chicago and property contiguous thereto. The Company
has fenced the site and the contiguous property and has agreed with the IEPA
to study the feasibility of a limited removal action.
The Company is accruing and deferring the costs it incurs in connection
with all of the sites, including related legal expenses, pending recovery
through rates or from insurance carriers or other entities. As of December
31, 1993, the total of the costs deferred by the Company was $10.1 million,
and there were no recoveries or amounts billed to other entities. The costs
of remediation at the sites cannot be determined until more is known about the
nature and extent of contamination and the remedial action, if any, to be
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
4. ENVIRONMENTAL MATTERS (Continued)
required by the IEPA. While the Company intends to seek contribution by other
entities for the costs incurred at the sites, the extent of such contributions
cannot be determined at this time. Finally, the Company is currently
researching its insurance coverages and has initiated the claim process with
respect to certain carriers. At this time, management cannot determine the
timing and extent of the Company's recovery of costs from its insurance
carriers. Accordingly, the foregoing amount has not been reduced to reflect
recoveries from insurance carriers.
Costs incurred by the Company for environmental activities at the sites
will be recovered from insurance carriers or other entities or through rates
for utility service. Accordingly, management believes that the costs incurred
by the Company in connection with the sites will not have a material adverse
effect on financial position or results of operations. The Company is
authorized to recover the costs of environmental activities under a rate
mechanism approved by the Commission in its October 1992 order. As of
December 31, 1993, it had recovered $30,000 of such costs through rates. (See
Note 3(a) for a discussion of proceedings regarding the recovery of these
costs through utility rates.)
5. GAS OVER-PRESSURE CONDITION
On January 17, 1992, an over-pressure condition occurred in the gas
mains of the Company serving an approximately one-square-mile area of the Near
Northwest Side of the City of Chicago. The over-pressure condition caused a
major explosion and numerous fires. The Company is aware of four deaths and
14 personal injuries allegedly resulting from the explosion and fires. The
Company also has been informed that damage occurred in an estimated 28
buildings. There was also damage, such as broken windows, wall cracks, and
water damage, to additional buildings.
A number of lawsuits have been filed against the Company as a result of
the over-pressure condition. The lawsuits include wrongful-death claims and
several class actions that seek to certify as a class those persons who
suffered bodily harm and/or property damage. All of the suits allege
negligence and seek compensatory damages. Some of the lawsuits also seek
punitive damages. These suits have not quantified the alleged damages except
for certain amounts that are not material.
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<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. GAS OVER-PRESSURE CONDITION (Continued)
In January 1993, the National Transportation Safety Board (NTSB)
completed its report regarding its investigation of the over-pressure incident
that occurred on January 17, 1992. In its report, the NTSB stated that "the
probable cause of the over-pressure accident and the resulting losses was the
failure of Peoples Gas Light Coke Company to adequately train its gas
operations section employees in recognizing and correctly responding to
abnormal situations, which consequently led to the failure of the gas
operations section crew to properly monitor and control the pressure of the
gas being supplied to the low-pressure gas system during a routine
inspection."
In June 1993, the Staff of the Illinois Commerce Commission (Commission
Staff) released its report concerning the over-pressure incident. In its
report, the Commission Staff concluded that employee error was the probable
cause of the over-pressurization. The report was critical of the Company's
training of its personnel in its gas operations section and of some of the
Company's practices at the time of the incident.
The Company strongly disagrees with the criticisms by the NTSB and the
Commission Staff of the training given by the Company to personnel in its gas
operations section. The Company also disagrees with some of the findings and
conclusions of the Commission Staff, including several of the Commission
Staff's findings and its theory, analysis, and conclusions pertaining to the
probable cause of the over-pressurization.
The Company carries substantial insurance coverage. If liability were
found on the part of the Company, management believes that any costs incurred
for damages will be adequately covered by insurance. However, the Company's
primary insurance carrier has asserted that under Illinois law, liability for
punitive damages is not insurable. The Company has advised the insurance
carrier that it disagrees and intends to assert all of its rights against the
carrier including its right to obtain recovery for punitive damages, if any.
Management is not aware of any conduct on its part or by employees of the
Company that would give rise to punitive damages under Illinois law.
Accordingly, management believes that the incident will not have a material
adverse effect on financial position or results of operations of the Company.
- 14 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. TAX MATTERS
On September 30, 1993, the Company received notification from the
Internal Revenue Service (IRS) that settlement of past income tax returns had
been reached for fiscal years 1978 through 1990. The IRS settlement will
result in a payment of principal and interest to the Company in total amount
of approximately $25 million, or $19 million after income taxes. The Company
has received regulatory authorization to defer the recording of the settlement
amount in income for fiscal year 1993, and to record its portion of the
settlement amount in income for fiscal years 1994 and 1995. The Company has
represented to the Commission that, having received this accounting
authorization, it will not file a request for an increase in base rates before
December 1994. The regulatory treatment of the IRS settlement having been
resolved in November 1993, the Company included $12.6 million, or $9.7 million
after income taxes, in income for that month; the amount after income taxes is
included in Other Income - Miscellaneous. At December 31, 1993, approximately
$25 million and $12.6 million are included in Receivables - Other and Reserves
and Deferred Credits - Other, respectively. The Company will amortize its
remaining portion of the settlement amount in income in fiscal year 1995, the
effect of which will be to offset increases in costs that the utility will
incur during that year.
7. ISSUANCE OF BONDS
On December 22, 1993, the City of Chicago issued $102 million, in
aggregate principal amount, of gas supply revenue bonds, which were
collateralized by an equal amount of the Company's 30-year first mortgage
bonds. The proceeds were lent to the Company for the purpose of financing the
construction of certain facilities within the City. The proceeds are being
held in a trust fund until drawn down by the Company for reimbursement of
construction expenditures.
In accordance with provisions of the Internal Revenue Code and
regulations thereunder, any arbitrage income must be paid to the federal
government. Additionally, all assets financed through this arrangement must
be depreciated on a straight-line basis for tax purposes.
- 15 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
8. INTEREST-RATE ADJUSTMENTS
The rate of interest on the City of Joliet 1984 Series C Bonds, which
are secured by the Company's Adjustable-Rate Bonds, Series W, is subject to
adjustment annually on October 1. Owners of the Series C Bonds have the right
to tender such bonds at par during a limited period prior to that date. The
Company is obligated to purchase any such bonds tendered if they cannot be
remarketed. All Series C Bonds that were tendered prior to October 1, 1993,
have been remarketed. The interest rate on such bonds is 3 percent for the
period October 1, 1993, through September 30, 1994.
9. RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS
In December 1990, the Financial Accounting Standards Board (FASB) issued
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Company adopted SFAS No. 106 effective October 1, 1993. SFAS
No. 106 requires the accrual of the expected costs of such benefits during the
employees' years of service. The Accumulated Postretirement Benefit
Obligation at October 1, 1993, was approximately $105.3 million. The unfunded
obligation will be amortized over 20 years. The estimated cost for fiscal
1994 is approximately $16.1 million.
- 16 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
9. RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS (Continued)
The following table sets forth the funded status for the postretirement
health care and life insurance plans as of October 1, 1993, reconciled with
the amounts contained in the Company's Balance Sheet at December 31, 1993:
<TABLE>
<CAPTION>
Accumulated postretirement benefit obligation (APBO): (millions)
<S> <C>
Retirees $ 56.1
Fully Eligible Active Plan Participants 18.4
Other Active Plan Participants 30.8
----------
Total APBO as of October 1, 1993 105.3
Less: Plan Assets at Market Value 11.8
----------
APBO in Excess of Plan Assets 93.5
Unrecognized Transition Obligation (93.5)
----------
Accrued Postretirement Benefit Cost at October 1, 1993 0
Cost, Net of Funding, October to December 31, 1993 2.3
----------
Accrued Postretirement Benefit Cost at December 31, 1993 $ 2.3
----------
----------
Discount rate 7.0%
Rate of compensation increase 5.0%
Expected long-term rate of return on plan assets 7.5%
</TABLE>
For measurement purposes, a health care cost trend rate of 11 percent
was assumed for fiscal 1994, and that rate thereafter will decline to
4.25 percent in 2003 and subsequent years. The health care cost trend rate
assumption has a significant effect on the amounts reported. Increasing the
assumed health care cost trend rate by one percentage point in each year would
increase the APBO as of October 1, 1993, by $7.7 million and the aggregate of
service and interest cost components of the net periodic postretirement benefit
cost by $1.1 million annually.
- 17 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9. RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS (Continued)
In October 1992, the Company was granted rates by the Commission that
included its estimated postretirement benefit costs determined on the accrual
basis of accounting. (See Note 3(a).) The financial reporting for
postretirement benefit costs is consistent with the related rate treatment.
Due to regulatory treatment, the adoption of SFAS No. 106 will not have a
material effect on financial position or results of operations.
In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting
for Postemployment Benefits." This statement requires the accrual of certain
benefits provided to former or inactive employees after employment but before
retirement. Adoption of SFAS No. 112 is required by the Company no later than
fiscal 1995. The Company does not expect the adoption of SFAS No. 112 to have
a material effect on financial position or results of operations.
- 18 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
NET INCOME
Net income applicable to common stock increased $6.4 million, to $34.0
million, for the three-month period, due principally to the recording, in
income, of one-half of an IRS settlement (increasing net income by $9.7
million). A similar amount from the settlement will be recorded in income
during fiscal 1995. (See Note 6 of the Notes to Consolidated Financial
Statements.) The positive benefit of the tax settlement was partially offset
by increased operating expenses, by an increase in the federal income tax rate
(34 percent to 35 percent effective January 1, 1993), and by slightly warmer
weather as compared to the corresponding period of the prior year.
Net income applicable to common stock increased $12.0 million, to $70.0
million, for the 12-month period, due mainly to the aforementioned IRS
settlement. In addition, the current 12-month period benefited from a rate
increase that went into effect on October 10, 1992, for the Company (see Note
3(a) of the Notes to Consolidated Financial Statements) and from weather that
was nearly five percent colder than the prior 12-month period. These benefits
were partially offset by higher operating expenses, including the accrual of
postretirement benefit costs consistent with rate treatment granted the
Company in October 1992 (see Note 9 of the Notes to Consolidated Financial
Statements) and by energy conservation measures undertaken by customers.
A summary of variations affecting income between periods is presented
below, with explanations of significant differences following:
<TABLE>
<CAPTION>
Three Months Ended 12 Months Ended
December 31, December 31,
1993 Over 1992 1993 Over 1992
--------------------- ------------------------
(Thousands of dollars) Amount % Amount %
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net operating revenues* $ (646) (0.5) $25,979 6.5
Operation and maintenance expenses 3,284 6.2 18,559 9.0
Depreciation expense 643 4.9 2,760 5.3
Income taxes (1,346) (8.3) 3,036 10.6
Other income 9,715 913.9 8,914 169.0
Income deductions 275 2.8 (1,447) (3.6)
Net Income Applicable to Common Stock 6,393 23.2 12,018 20.7
- --------------------------------------------------------------------------------------------------
<FN>
( ) Denotes red figure.
* Operating revenues, net of gas costs and revenue taxes.
</TABLE>
- 19 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
NET OPERATING REVENUES
Gross revenues of the Company have been affected in recent years by
customers who purchase gas directly from producers and marketers, rather than
from the Company, and also by changes in the unit cost of the Company's gas
purchases. These direct customer purchases have no effect on net income
because the Company provides transportation service for such gas volumes and
recovers margins similar to those applicable to conventional gas sales.
Changes in the unit cost of gas do not significantly affect net income because
the Company's tariffs provide for dollar-for-dollar recovery of gas costs.
(See Note 2(d) of Notes to Consolidated Financial Statements.) The Company's
tariffs also provide for dollar-for-dollar recovery of the cost of revenue
taxes imposed by the State and the City.
Since income is not significantly affected by changes in revenue from
customers' direct gas purchases rather than from the Company, changes in gas
costs, or changes in revenue taxes, the discussion below pertains to "net
operating revenues" (operating revenues, net of gas costs and revenue taxes).
The Company considers net operating revenues to be a more pertinent measure of
operating results than gross revenues.
Net operating revenues decreased $646,000, to $122.5 million, for the
three-month period, due primarily to slightly warmer weather, as compared to
the year-ago period.
Net operating revenues increased $26.0 million, to $424.5 million, for
the 12-month period, due principally to the impact of the October 1992 rate
increase for the Company (increasing net operating revenues by $26.1 million,
or $16.0 million after income taxes). The 12-month period also benefited from
slightly higher gas deliveries. This was attributable to colder weather, as
compared to the prior 12-month period, substantially offset by a rise in
customers' energy conservation measures.
OPERATION AND MAINTENANCE
Operation and maintenance expenses increased $3.3 million, to $56.3
million, for the three-month period, due mainly to increased labor costs,
group insurance expense, and underground storage activities.
- 20 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
OPERATION AND MAINTENANCE (Continued)
Operation and maintenance expenses increased $18.6 million, to $224.4
million, for the 12-month period, due principally to increased group insurance
expenses, primarily attributable to the accrual of postretirement benefit
costs (approximately $7.1 for the current 12-month period compared to the
prior 12-month period) consistent with the rate treatment allowed the Company
in October 1992 (see Note 9 of the Notes to Consolidated Financial
Statements), and higher labor costs. Also, higher expenses resulted from the
provision for uncollectible accounts, injuries and damages, and underground
storage activities.
DEPRECIATION EXPENSE
Depreciation expense increased $643,000, to $13.7 million, and $2.8
million, to $55.3 million, for the three- and 12-month periods, respectively,
due primarily to higher depreciable property balances.
INCOME TAXES
Income taxes, exclusive of the $2.9 million included in other income
related to the IRS settlement (see Note 6 of the Notes to Consolidated
Financial Statements), decreased $1.3 million, to $14.8 million, for the
three-month period, due principally to lower pre-tax income, partially offset
by the federal tax rate change from 34 percent to 35 percent effective January
1, 1993.
Income taxes, exclusive of the $2.9 million included in other income
related to the IRS settlement, increased $3.0 million, to $31.6 million, for
the 12-month period, due chiefly to higher pre-tax income and the federal tax
rate change from 34 percent to 35 percent effective January 1, 1993.
OTHER INCOME
Other income increased $9.7 million, to $10.8 million, for the
three-month period, due mainly to recording the IRS settlement of
approximately $9.7 million after income taxes. (See Note 6 of the Notes to
Consolidated Financial Statements.)
Other income increased $8.9 million, to $14.2 million, for the 12-month
period, due primarily to the aforementioned IRS settlement.
- 21 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
INCOME DEDUCTIONS
Income deductions decreased $1.4 million, to $38.3 million, for the
12-month period, due chiefly to reduced interest on gas bill credit deposits,
budget accounts, and amounts refundable to customers, partially offset by
increased interest on notes and commercial paper.
OTHER MATTERS
Weather variations affect the volumes of gas delivered for heating
purposes and, therefore, can have a significant positive or negative impact on
net income.
On September 30, 1993, the Company received notification from the IRS
that settlement of past income tax returns had been reached for fiscal years
1978 through 1990. The IRS settlement will result in a payment of principal
and interest to the Company in total amount of approximately $25 million, or
$19 million after income taxes. (See Note 6 of the Notes to Consolidated
Financial Statements.)
In March 1993, the Company adopted, effective October 1, 1992, the
liability method of accounting for deferred income taxes required by SFAS No.
109. (See Note 2(c) of the Notes to Consolidated Financial Statements.)
In November 1992, the FASB issued SFAS No. 112, "Employers' Accounting
for Postemployment Benefits." This statement requires the accrual of certain
benefits provided to former or inactive employees after employment but before
retirement. SFAS No. 112 requires adoption by the Company no later than
fiscal 1995. (See Note 9 of the Notes to Consolidated Financial Statements.)
Effective October 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This statement
requires the accrual of the expected costs of such benefits during the
employees' years of service. (See Note 9 of the Notes to Consolidated
Financial Statements.)
In 1992, the FERC issued Order No. 636 and successor orders that require
substantial restructuring of the service obligations of interstate pipelines.
(See Notes 2(d), 3(a), and 3(b) of the Notes to Consolidated Financial
Statements.)
- 22 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
OTHER MATTERS (Continued)
On September 15, 1993, the Commission entered an order initiating an
investigation into the appropriate means of recovery by Illinois gas utilities
of pipeline charges for FERC Order No. 636 transition costs. The Commission
plans to issue a final order in this proceeding by February 15, 1994. (See
Notes 2(d), 3(a), and 3(b) of the Notes to Consolidated Financial Statements.)
On November 17, 1993, the Chicago City Council passed a use tax on
natural gas as part of its 1994 budget ordinance. The use tax will be
effective on May 1, 1994, at a rate of 1.5 cents per therm on the use or
consumption of natural gas in Chicago. The use tax does not apply to gas used
or consumed by a governmental body, a purchaser exempt from the municipal
utility tax, a gas public utility, or a person using natural gas as vehicle
fuel. To prevent multiple taxation, the use tax also does not apply to the
use of gas by persons who are charged for a state or municipal tax with
respect to the purchase of such gas. Because the Company is subject to such
state and municipal taxes and recovers the cost of such taxes from its
customers, the use tax does not apply to the use of gas which is purchased
from the Company. Rather, the tax is directed at users who are transportation
customers of the Company; these users have been avoiding local taxation on
purchases of gas by purchasing gas from out-of-state sellers. The Company
will collect the tax for the City and will be paid a fee of three percent of
the taxes collected. The Company will not be liable for failure of users to
pay the use tax.
LIQUIDITY AND CAPITAL RESOURCES
INTEREST COVERAGE. The Company's fixed charges coverage ratios for the 12
months ended December 31, 1993, and for fiscal 1993 and 1992 were 3.75, 3.57,
and 3.18, respectively. The current 12-month period ratio reflects the
recording of the Company's fiscal 1994 portion of the IRS settlement in
income. (See Note 6 of the Notes to Consolidated Financial Statements.) In
addition, the increase in the current 12-month period and fiscal 1993 ratios
as compared to fiscal 1992 is primarily attributable to the benefit of the
rate increase approved in October 1992 and decreased fixed charges, primarily
lower interest expense on long-term debt, partially offset by increased
operating expenses.
- 23 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
ENVIRONMENTAL MATTERS. The Company is conducting environmental
investigations and work at certain sites that were the location of former
manufactured gas operations. (See Note 4 of the Notes to Consolidated
Financial Statements.)
REGULATORY ACTIONS. On September 30, 1992, the Commission issued an order
in its consolidated proceedings, initiated in March 1991, regarding the
appropriate ratemaking treatment of environmental costs incurred by Illinois
utilities, including the Company. In its order, the Commission approved rate
recovery of environmental costs but required that such recovery occur over a
five-year period without recovery of carrying charges on unrecovered balances.
(See Note 3(a) of the Notes to Consolidated Financial Statements.)
OVER-PRESSURE CONDITION. On January 17, 1992, an over-pressure condition
occurred in the gas mains of the Company serving an approximately
one-square-mile area of the Near Northwest Side of the City of Chicago. The
over-pressure condition caused a major explosion and numerous fires. Four
deaths, 14 personal injuries, and extensive property damage allegedly resulted
from the explosion and fires. (See Note 5 of the Notes to Consolidated
Financial Statements.)
STOCK ISSUED. In January 1992, Peoples Energy Corporation issued 1,950,000
shares of common stock. Net proceeds of the offering, which amounted to
approximately $49.7 million, were used for general corporate purposes,
primarily as a means of making equity funds available to the Company. Funds
so made available, together with internally generated funds, satisfied the
Company's 1992 cash needs for capital expenditures plus sinking fund
requirements and maturities for long-term debt and preferred stock.
- 24 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART I. FINANCIAL INFORMATION (Continued)
DECEMBER 31, 1993
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
BONDS ISSUED. On December 22, 1993, the City of Chicago issued $102
million, in aggregate principal amount, of gas supply revenue bonds, which
were collateralized by an equal amount of the Company's 30-year first mortgage
bonds. The proceeds were lent to the Company for the purpose of financing the
construction of certain facilities within the City. (See Note 7 of the Notes
to Consolidated Financial Statements.)
CREDIT LINES. On February 1, 1994, the Company's lines of credit were
reduced to approximately $154 million from $184 million in effect since
November 1, 1993. North Shore Gas may borrow up to $20 million of the
aggregate $154 million.
- 25 -
<PAGE>
THE PEOPLES GAS LIGHT AND COKE COMPANY
PART II. OTHER INFORMATION
DECEMBER 31, 1993
ITEM 1. LEGAL PROCEEDINGS
See Note 4 of the Notes to Consolidated Financial Statements for a
discussion of matters pertaining to environmental investigations of certain
Company sites that were formerly locations of manufactured gas production and
storage operations.
See Note 5 of the Notes to Consolidated Financial Statements for a
discussion of an over-pressure condition that occurred on January 17, 1992, in
the Company's gas mains on the Near Northwest Side of the City of Chicago.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit
Number Description of Document
------- -----------------------
4(a) Supplemental Indenture dated as of December 1,
1993.
4(b) Supplemental Indenture dated as of December 1,
1993.
10(a) Lease dated October 20, 1993, between Prudential
Plaza Associates, as Landlord, and the Company, as
Tenant.
10(b) Firm Transportation Service Agreement Under Rate
Schedule FTS between the Company and Natural Gas
Pipeline Company of America, dated as of December
1, 1993.
10(c) Firm Transportation Service Agreement Under Rate
Schedule S-2 between the Company and Natural Gas
Pipeline Company of America, dated as of December
1, 1993.
b. Reports on Form 8-K filed during the quarter ended December 31,
1993
None
- 26 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE PEOPLES GAS LIGHT AND COKE COMPANY
--------------------------------------
(Registrant)
FEBRUARY 11, 1994 By: K. S. BALASKOVITS
- -------------------------- ----------------------------------
(Date) K. S. Balaskovits
Vice President and Controller
(SAME AS ABOVE)
---------------------------------
Principal Accounting Officer
- 27 -
<PAGE>
EXHIBIT 4(A)
[Conformed Copy]
-------------------------------------------------------------
THE PEOPLES GAS LIGHT AND COKE COMPANY
TO
CONTINENTAL BANK, NATIONAL ASSOCIATION
TRUSTEE
-----------------------------
SUPPLEMENTAL INDENTURE
-----------------
DATED AS OF DECEMBER 1, 1993
------------------
FIRST AND REFUNDING MORTGAGE 5-3/4% BONDS, SERIES DD
-------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals
Status of Mortgage . . . . . . . . . . . . . . . . . . . . 1
First and Refunding Mortgage Bonds
issued and outstanding . . . . . . . . . . . . . . . . 2
Basis for issuance of $75,000,000
Series DD Bonds . . . . . . . . . . . . . . . . . . . 2
Reservation of right to amend the Mortgage. . . . . . . . . 2
Form of Series DD registered bond without
coupons . . . . . . . . . . . . . . . . . . . . . . . 3
Supplemental Indenture authorized by
Directors . . . . . . . . . . . . . . . . . . . . . . 9
Description of certain property. . . . . . . . . . . . . . 9
ARTICLE I
FIRST AND REFUNDING MORTGAGE 5-3/4 % BONDS,
SERIES DD
Sec. 1:Designation, amount limited to
$75,000,000, maturity and
interest rate . . . . . . . . . . . . . . . . . . 11
Place and medium of interest and
principal payments. . . . . . . . . . . . . . . . 11
Sec. 2:Form of bonds. . . . . . . . . . . . . . . . . . . . . . 12
Denominations of registered bonds
without coupons . . . . . . . . . . . . . . . . . 12
Date of bonds. . . . . . . . . . . . . . . . . . . . . 12
Sec. 3:Interdenominational exchanges of
registered bonds. . . . . . . . . . . . . . . . . 12
Sec. 4:Execution, authentication and issue of
Series DD Bonds . . . . . . . . . . . . . . . . . 13
Sec. 5:Redemption of Series DD Bonds
by Company. . . . . . . . . . . . . . . . . . . . 13
<PAGE>
ii
PAGE
Sec. 6:Notice of Redemption . . . . . . . . . . . . . . . . . . 15
Sec. 7:Legend on Series DD Bonds . . . . . . . . . . . . . . . . 15
Sec. 8: Payments, notices and actions due on
Saturdays, Sundays and holidays
to take place on next succeeding
Business Day . . . . . . . . . . . . . . . . . . . 15
Sec. 9:Definitions. . . . . . . . . . . . . . . . . . . . . . . 16
Sec. 10: Reservation of right to amend
the Mortgage. . . . . . . . . . . . . . . . . . . 17
ARTICLE II
COVENANTS OF THE COMPANY
Sec. 1: Company each year shall charge against
income and place to credit of
Depreciation Reserve Account the greater
of $1,550,000 or 2-1/2% of the sum of
the aggregate principal amount of all
indebtedness of the Company secured by
the Mortgage and liens superior to
the Mortgage. . . . . . . . . . . . . . . . . . . 19
Company after issuing any Series DD
Bonds shall not request the Trustee to:
Authenticate any bonds under
Mortgage pursuant to Sections 2,
4 or 5 of Article III or pay cash
to the Company pursuant to Section 6
of Article III on account of
transactions effected prior to
January 1, 1951 . . . . . . . . . . . . . . 20
Authenticate any series of bonds or pay
any moneys to Company on account
of payment of any Refunding
Mortgage 5% bonds on or after
January 1, 1944 . . . . . . . . . . . . . . 20
<PAGE>
iii
PAGE
Company shall not request the Trustee to
authenticate bonds of any series or to
pay to the Company any cash deposited
with or received by the Trustee, unless it
delivers to the Trustee a certificate
signed by the President or an Executive
or other Vice President and Treasurer
or Assistant Treasurer containing
specified information . . . . . . . . . . . . . . 21
Company shall not obtain authentication of
bonds or payment of cash in excess of
75% of amount shown on such certificate . . . . . 23
Explanation of terms--
Mortgage and Prior Lien Debt of Company . . . . . 23
Net Earnings . . . . . . . . . . . . . . . . . . 24
Permanent Property . . . . . . . . . . . . . . . 26
Original Cost. . . . . . . . . . . . . . . . . . 26
Company to furnish Trustee in connection
with authentication of bonds pursuant
to Section 5 of Article III or payment
of cash pursuant to Section 6 of
Article III or of Article IX of the Mortgage:
Opinion of counsel that
Company has acquired good title to
property . . . . . . . . . . . . . . . . . . . . 26
Certificate of President or any
Executive or other Vice President
and also by the Treasurer or an
Assistant Treasurer certifying
that the property involved is
"permanent property". . . . . . . . . . . . . . . 27
Company shall not hereafter issue any bonds
under any underlying mortgage. . . . . . . . . . 27
Company not to request Trustee to authenticate
bonds or to pay to it cash on account
of bonds purchased or redeemed through
operation of, or bonds deposited in,
the sinking funds provided for in
supplemental indentures. . . . . . . . . . . . . 27
<PAGE>
iv
PAGE
In event of acquisition of substantially
all properties subject to lien of
Mortgage by federal, state or municipal
authority, Company shall be deemed to
have requested Trustee to redeem all
bonds of all series under Mortgage . . . . . . . 27
Classifying of "property replaced or retired". . . . . 28
If Company consolidates or merges with
another corporation, successor must
assume payment of principal and
interest on all bonds outstanding
under Mortgage . . . . . . . . . . . . . . . . . 29
Sec. 2:After-acquired property shall be
subject to lien of Mortgage . . . . . . . . 29
Sec. 3:Company to furnish certificates,
mortgages, deeds, opinions of
counsel to Trustee within sixty
(60) days after acquiring land,
plants or interests in lands or
plants the aggregate cost of
which shall equal or
exceed $500,000 . . . . . . . . . . . . . . 29
Sec. 4:Company covenants that upon cancellation
of any "prior lien" it shall cause
all cash or obligations held by
trustee of such "prior lien" to be
paid over to Trustee. . . . . . . . . . . . 31
ARTICLE III
MISCELLANEOUS
Sec. 1:Trustee's Acceptance . . . . . . . . . . . . . . . . . . 32
<PAGE>
v
PAGE
Sec. 2:Supplemental Indenture executed
pursuant to Article XVI of Mortgage. . . . . 32
Sec. 3:All covenants and conditions by or
on behalf of Company to bind its
successors and assigns. . . . . . . . . . . 32
Sec. 4:Supplemental Indenture to become
effective only from time of its
actual execution and delivery
by the Company and Trustee. . . . . . . . . 32
Execution in counterparts. . . . . . . . . . . . . . . . . . . . 32
Attestation clause . . . . . . . . . . . . . . . . . . . . . . . 33
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Acknowledgment by Company. . . . . . . . . . . . . . . . . . . . 34
Acknowledgment by Trustee. . . . . . . . . . . . . . . . . . . . 35
Schedule A . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
<PAGE>
This Supplemental Indenture, dated as of December 1, 1993, made and
entered into by and between THE PEOPLES GAS LIGHT AND COKE COMPANY, a
corporation organized and existing under the laws of the State of Illinois
(hereinafter called the "Company") and CONTINENTAL BANK, NATIONAL ASSOCIATION
(hereinafter called the "Trustee"), a corporation organized and existing under
laws of the United States of America and successor to Illinois Merchants Trust
Company, as trustee under the indenture of Chicago By-Product Coke Company to
said Illinois Merchants Trust Company, as trustee, dated January 2, 1926,
WITNESSETH:
WHEREAS, Chicago By-Product Coke Company, a corporation organized and
existing under the laws of the State of Delaware, heretofore gave its mortgage
in the form of an indenture (hereinafter called the "Original Mortgage") to
Illinois Merchants Trust Company, as trustee, under date of the second day of
January, 1926; and
WHEREAS, the Company executed and delivered to said Illinois Merchants Trust
Company, as trustee under the Original Mortgage, an indenture bearing date the
first day of March, 1928, whereby, among other things, the Company assumed and
agreed to pay the principal and interest of all bonds issued or to be issued
under the Original Mortgage and secured thereby, and to perform and fulfill
all of the terms, covenants, and conditions of the Original Mortgage binding
upon said Chicago By-Product Coke Company, and in and by said indenture the
Company subjected to the lien of the Original Mortgage, subject to the
existing liens permitted by Section 2 of Article XIV of the Original Mortgage
but with statements required by said Section 2 with regard to such existing
liens, all of the property then owned by the Company or thereafter acquired by
it (excepting such of its property as the Company was by said Section 2 of
Article XIV of the Original Mortgage expressly authorized to reserve from the
lien of the Original Mortgage); and
WHEREAS, by virtue of all the things done as in the next preceding paragraph
recited, the Company has become the successor corporation under the Original
Mortgage, subject to all the terms, conditions and restrictions thereof; and
WHEREAS, thereafter the Company has made, executed and delivered other
indentures supplemental to the Original Mortgage, of which the indentures
supplemental to the Original Mortgage delivered to Continental Bank, National
Association (formerly known as Continental Illinois National Bank and Trust
Company of Chicago), as Trustee, successor to Illinois Merchants Trust Company,
as Trustee under the Original Mortgage, dated, respectively, May 20, 1936, March
10, 1950, as of June 1, 1951, as of August 15, 1967, as of September 15, 1970,
as of June 1, 1984, as of June 1, 1984, as of October 1, 1984, as of March 1,
1985, as of March 1, 1985, as of March 1, 1985, as of March 1, 1985, as of May
1, 1990 and as
<PAGE>
of April 1, 1993 are wholly or partially in full force and effect (said Original
Mortgage, and said Indenture dated March 1, 1928, as so supplemented and
amended, being collectively called the "Mortgage", and said Mortgage, as
supplemented by this Supplemental Indenture, being collectively called the
"Mortgage as supplemented"); and
WHEREAS, all bonds which have heretofore been issued and outstanding under
the Mortgage have been retired and cancelled, except that as of December 1,
1993, there were bonds of the following series outstanding in the aggregate
principal amounts indicated below:
<TABLE>
<CAPTION>
Aggregate
BONDS DUE DATE PRINCIPAL AMOUNT
<S> <C> <C>
Series U June 1, 1999 $43,375,000
Series V June 1, 1999 $43,375,000
Series W October 1, 1999 $10,400,000
Series X March 1, 2015 $50,000,000
Series Y March 1, 2015 $50,000,000
Series Z March 1, 2015 $50,000,000
Series AA March 1, 2015 $50,000,000
Series BB May 1, 2020 $75,000,000
Series CC May 1, 2003 $75,000,000
</TABLE>
and;
WHEREAS, it is provided in Article III of the Mortgage that bonds of any
series may from time to time be issued by the Company under the Mortgage in a
principal amount equal to 75% of expenditures made for the acquisition of any
permanent property as defined in the mortgage or upon the deposit of cash with
the Trustee equal to the aggregate principal amount of bonds whose
authentication and delivery is then applied for; and
WHEREAS, the Company has duly determined to create an additional series of
its bonds to be issued under the Mortgage as supplemented designated "The
Peoples Gas Light and Coke Company First and Refunding Mortgage 5-3/4% Bonds,
Series DD" (herein sometimes referred to as "bonds of Series DD") and to issue
an aggregate of $75,000,000 principal amount of said bonds all of which bonds
shall be fully registered without coupons; and
WHEREAS, the Company desires to reserve the right to amend the Mortgage
without any consent or other action by holders of the bonds of Series DD or
any subsequent series, to provide that the Mortgage, the rights and
obligations of the Company and the rights of the bondholders may be modified
with the consent of the holders of not less than 60% in aggregate principal
amount of the bonds adversely
2
<PAGE>
affected; provided, however, that no modification shall (1) extend the time, or
reduce the amount, of any payment on any bond, without the consent of the holder
of each bond so affected, (2) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the Mortgage, without the
consent of the holders of all bonds then outstanding, or (3) reduce the above
percentage of the aggregate principal amount of bonds the holders of which are
required to approve any such modification without the consent of the holders of
all bonds then outstanding; and
WHEREAS, the Company also desires in and by this Supplemental Indenture to
record the description of, and confirm unto the Trustee, certain property
which is subject to the lien of the Mortgage; and
WHEREAS, the form of registered bond of Series DD and the form of the
Trustee's Certificate to appear on all bonds of Series DD shall be
substantially as follows:
(Form of Series DD Registered Bond Without Coupons)
No. R . . . . . . . . $. . . . . . .
THE PEOPLES GAS LIGHT AND COKE COMPANY
FIRST AND REFUNDING MORTGAGE 5-3/4% BOND,
SERIES DD
DUE December 1, 2023
THE PEOPLES GAS LIGHT AND COKE COMPANY, an Illinois corporation (hereinafter
called the "Company"), for value received, hereby promises to pay to. . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . ., or registered assigns on December 1, 2023, unless this Bond
shall have been called for redemption and payment of the redemption price
shall have been duly made or provided for in accordance with the hereinafter
described Mortgage, the principal sum of . . . . . . . . . . . . . . . Dollars
($ ), and to pay interest on the balance of said principal sum from time to
time remaining unpaid from the December 1 or June 1 to which interest has been
paid next preceding the date of authentication of this Bond, unless this Bond is
authenticated on a December 1 or June 1 to which interest has been paid, in
which event this Bond shall bear interest from such December 1 or June 1, or
unless no interest has been paid on this Bond, in which event this Bond shall
bear interest from December 1, 1993, at the rate of five and three-quarters
percent (5-3/4%) per annum (calculated on the basis of a year of 360 days
consisting of twelve 30-day months), payable at or before 9:00 a.m., Chicago
time, on December 1 and June 1 of
3
<PAGE>
each year, commencing June 1, 1994, until payment in full of such principal sum.
Interest shall also accrue on any overdue principal, premium, if any, and (to
the extent that such interest shall be legally enforceable) on any overdue
installment of interest until paid at the same rate per annum. The interest so
payable on any interest payment date will, subject to certain exceptions
provided in the Mortgage hereinafter referred to, be paid to the person who is
the registered owner of this Bond at the close of business on the applicable
record date, as provided in the Mortgage, next preceding such interest payment
date. Principal of, premium, if any, and interest on this Bond shall be payable
in lawful money of the United States of America at the principal corporate
office or agency of the Company in Chicago, Illinois.
This Bond is one of the First and Refunding Mortgage Bonds of the Company,
all issued and to be issued in series, from time to time, under and in
accordance with and, irrespective of the time of issue or of the series in
which issued or the designation thereof, equally secured by an Indenture,
dated the second day of January, 1926, executed by Chicago By-Product Coke
Company, a Delaware corporation, to Illinois Merchants Trust Company, as
trustee, and recorded on January 19, 1926, as Document No. 9154395 in Book
22219 of Records, at page 283, in the Recorder's Office of Cook County,
Illinois, which Indenture was assumed by the Company as a successor
corporation, as defined therein, by an indenture, dated the first day of
March, 1928, executed by the Company to said trustee, and recorded on April 7,
1928, as Document No. 9980547 in Book 25701 of Records, at page 599, in the
Recorder's Office of Cook County, Illinois, and has heretofore been, and from
time to time hereafter may be, amended and supplemented by indentures
supplemental thereto, including the Supplemental Indenture dated as of
December 1, 1993 relating to the hereinafter described Series DD Bonds (the
"Supplemental Indenture"). The word "Mortgage", as used in this Bond, shall mean
said Indenture, as amended and supplemented from time to time by indentures
supplemental thereto, including the Supplemental Indenture. The word "Company",
as used in this Bond, shall be construed to include any successor corporation,
as defined in the Mortgage. The word "Trustee", as used in this Bond, shall be
construed to mean and include Continental Bank, National Association (successor
to Illinois Merchants Trust Company), as trustee under the Mortgage, and any
successor trustee thereunder. Reference is hereby made to the Mortgage and all
indentures supplemental thereto for a description of the property mortgaged and
pledged (except that certain parcels described in the Mortgage and in said
supplemental indentures have been released from the lien of the Mortgage
pursuant to the terms thereof), the nature and extent of the security and the
terms and conditions governing the issuance and security of the bonds issued or
to be issued under the Mortgage. As provided in the Mortgage, the bonds may be
for various principal sums, are issuable in series, may bear interest at
different rates and may otherwise vary as provided therein. This Bond is one of
the series of such First and Refunding Mortgage Bonds designated as "The Peoples
Gas Light and Coke Company First and Refunding Mortgage 5-3/4% Bonds, Series
DD", hereinafter called the "Series DD Bonds".
4
<PAGE>
As more fully described in the Supplemental Indenture, the Company reserves
the right, without any consent or other action by holders of the Series DD
Bonds or the bonds of any subsequent series, to amend the Mortgage to provide
that the Mortgage, the rights and obligations of the Company and the rights of
the bondholders may be modified with the consent of the holders of not less
than 60% in aggregate principal amount of the bonds adversely affected;
provided, however, that no modification shall (1) extend the time, or reduce
the amount, of any payment on any bond, without the consent of the holder of
each bond so affected, (2) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the Mortgage, without the
consent of the holders of all bonds then outstanding, or (3) reduce the above
percentage of the principal amount of bonds the holders of which are required
to approve any such modification without the consent of the holders of all
bonds then outstanding.
The Series DD Bonds are subject to optional redemption prior to maturity by
the Company, in whole or in part, on any date on or after December 1, 2003,
and at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued interest, if any, to the redemption date:
<TABLE>
<CAPTION>
REDEMPTION DATES REDEMPTION PRICES
<S> <C>
December 1, 2003 through
November 30, 2004 102%
December 1, 2004 through
November 30, 2005 101%
December 1, 2005 and 100%
thereafter
</TABLE>
All of the outstanding Series DD Bonds may be redeemed at any time by the
Company, by the payment of the principal amount thereof and accrued interest
thereon to the date of redemption, without the payment of any premium, in the
event of the acquisition by any federal, state or municipal authority of any
substantial portion (which shall be not less than one-third as determined by
book values) of the income-producing properties of the Company which are
subject to the lien of the Mortgage.
All of the outstanding bonds under the Mortgage shall be redeemed by the
Company by the payment of the respective applicable redemption price or prices
and accrued interest thereon to the date of redemption, without the payment of
any premium, in the event of the acquisition by any federal, state or
municipal authority of all or substantially all of the income-producing
properties of the Company which are subject to the lien of the Mortgage.
5
<PAGE>
All of the outstanding Series DD Bonds shall be redeemed by the Company not
more than sixty (60) days after the Trustee receives written notice from the
Revenue Bond Trustee (as defined in the Supplemental Indenture) stating that
the principal on the Chicago Revenue Bonds (as defined in the Supplemental
Indenture) has been declared to be immediately due and payable as a result of
an event of default under the Revenue Bond Indenture (as defined in the
Supplemental Indenture). The redemption price for any such redemption shall
be 100% of the principal amount of the Series DD Bonds to be redeemed, plus
interest thereon accrued to the date fixed for redemption.
The Series DD Bonds are subject to optional redemption by the Company, in
whole but not in part, at any time, at a redemption price of 100% of the
principal amount thereof, plus accrued interest, if any, to the redemption
date, upon the occurrence of certain events described in the Supplemental
Indenture (relating to unreasonable burdens or excessive liabilities imposed
upon the Company; changes in the economic availability of raw materials,
operating supplies, fuel or other energy sources or supplies or technological or
other changes rendering the Project (as defined in the Supplemental Indenture)
uneconomic; court order or decree preventing operations at the Project or
rendering the continuation of the Project's operations economically unfeasible).
Series DD Bonds are also subject to mandatory redemption at any time, in
whole (or in part as hereinafter provided), at 100% of the principal amount
thereof, plus accrued interest, if any, to the redemption date, in the event
that it is finally determined by the Internal Revenue Service or by a court of
competent jurisdiction that, as a result of the failure by the Company to
observe any covenant, agreement or representation in that certain Loan
Agreement dated as of December 1, 1993 between the Company and the City of
Chicago, Illinois, the interest payable on the Chicago Revenue Bonds is
includable for federal income tax purposes in the gross income of any owner
thereof, other than an owner who is a "substantial user" of the Project or a
"related person", as provided in Section 147(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the applicable regulations thereunder.
Any such determination will not be considered final for this purpose unless
the Company has been given written notice and, if it so desires, has been
afforded the opportunity to contest the same, either directly or in the name
of any owner of a Chicago Revenue Bond, and until the conclusion of any
appellate review, if sought. The Series DD Bonds shall be redeemed in whole
after such determination unless redemption of a portion of the Chicago Revenue
Bonds outstanding would have the result that interest payable on the Chicago
Revenue Bonds remaining outstanding after such redemption would not be
includable for federal income tax purposes in the gross income of any owner of
the Chicago Revenue Bonds (other than an owner who is a "substantial user" of
the Project or a "related person" within the meaning of Section 147(a) of the
Code), and in such event the Series DD Bonds shall be redeemed in such amount
as to accomplish that result.
6
<PAGE>
Notice of any redemption of the Series DD Bonds shall be given by mailing by
first-class mail, postage prepaid, at least thirty (30) days and not more than
sixty (60) days prior to the redemption date, to the holders of all such bonds
to be redeemed at their last addresses that shall appear upon the registry
book, all as more fully provided in the Mortgage. Notice of redemption having
been duly given, the bonds called for redemption shall become due and payable
upon the redemption date and, if the redemption price shall have been
deposited with the Trustee, interest thereon shall cease to accrue on and after
the redemption date, and whenever the redemption price thereof shall have
been deposited with the Trustee and notice of redemption shall have been duly
given or provision therefore made, such bonds shall no longer be entitled to any
lien or benefit of the Mortgage.
In case of certain events of default specified in the Mortgage, the
principal of all bonds issued and outstanding thereunder may be declared or
may become due and payable in the manner and with the effect provided in the
Mortgage.
No recourse shall be had for the payment of the principal of or interest on
this Bond, or for any claim based hereon, or otherwise in respect hereof or of
the Mortgage, to or against any incorporator, stockholder, director or
officer, past, present or future, of the Company, either directly or through
the Company, under any constitution or statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability of
incorporators, stockholders, directors and officers being released by the
holder hereof by the acceptance of this Bond, and being likewise waived and
released by the terms of the Mortgage.
This Bond is transferable by the registered holder hereof in person or by a
duly authorized attorney at the office or agency of the Company in the City of
Chicago, State of Illinois, upon surrender and cancellation of this Bond, and
thereupon a new registered bond or bonds, without coupons, of the same series
and for the same aggregate principal amount will be issued to the transferee
in exchange herefor. In the manner provided in the Mortgage, registered Bonds
without coupons of this series may, at the option of the registered owner and
upon surrender at said office or agency of the Company, be exchanged for
registered Bonds without coupons of this series of the same aggregate
principal amount of other authorized denominations. Notwithstanding the
foregoing, this Bond may not be sold, transferred, pledged or hypothecated
except as required to effect assignment to the Revenue Bond Trustee and to any
successor trustee.
The Company and the Trustee and any paying agent may deem and treat the
person in whose name this Bond is registered as the absolute owner hereof for
the purpose of receiving payment and for all other purposes and neither the
Company nor the Trustee nor any paying agent shall be affected by any notice
to the contrary.
This Bond shall not be entitled to any security or benefit under the Mortgage,
and shall not become valid or obligatory for any purpose, until this Bond shall
have been
7
<PAGE>
authenticated by the execution of the certificate, hereon endorsed, by the
Trustee or its successor in trust under the Mortgage.
IN WITNESS WHEREOF, the Company has caused this Bond to be executed in its
name by its President, an Executive Vice President or a Vice President
manually or in facsimile, and has caused its corporate seal manually or in
facsimile to be hereto affixed, attested by the manual or facsimile signature
of its Secretary or of an Assistant Secretary.
Dated: . . . . . . . . . . . . .
THE PEOPLES GAS LIGHT AND COKE COMPANY
By . . . . . . . . . . . . . . . .
. . . . .President
Attest:
. . . . . . . . . . . . . . . .
. . . . .Secretary.
(Form of Trustee's Certificate)
This bond is one of the bonds of the series designated, referred to and
described in the within-mentioned Mortgage.
CONTINENTAL BANK, NATIONAL ASSOCIATION
By . . . . . . . . . . . . . . .
Authorized Officer.
_______________________
8
<PAGE>
ASSIGNMENT
For value received, the undersigned hereby sell(s) and transfer(s) unto:
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE: _____________________
______________________________________________________
______________________________________________________
(Please print or typewrite name and address, including zip code of assignee)
the within Bond and all rights thereunder, hereby irrevocably constituting and
appointing _____________ Attorney to transfer said Note on the books of the
Trustee with full power of substitution in the premises.
Dated: __________________ _______________________
Notice: The signature to this Assignment
must correspond with the name as written
upon the face of the within instrument in
every particular, without alteration or
enlargement, or any changes whatever.
and
WHEREAS, all acts and things necessary to make the bonds of Series DD, when
authenticated by the Trustee and issued as in the Mortgage and in this
Supplemental Indenture provided, the valid, binding and legal obligations of
the Company, entitled in all respects to the security of the Mortgage, have
been done and performed and the creation, execution and delivery of this
Supplemental Indenture have in all respects been duly authorized by a
resolution adopted by the Board of Directors of the Company; and
WHEREAS, the Company has requested the Trustee, pursuant to the provisions
of Article XVI of the Mortgage, to enter into this Supplemental Indenture for
the purpose of supplementing and amending the Mortgage as herein provided;
NOW, THEREFORE, in consideration of the premises and of the sum of One
Dollar ($1.00) duly paid by the Trustee to the Company and for other good and
valuable considerations, the receipt whereof is hereby acknowledged, the parties
hereto agree as follows:
9
<PAGE>
DESCRIPTION OF CERTAIN PROPERTY SUBJECT TO THE LIEN OF
THE MORTGAGE
The Company hereby mortgages and conveys unto the Trustee, its successor or
successors in trust, the property described in Schedule A hereto attached and
expressly made a part hereof.
TO HAVE AND TO HOLD all of said property hereby conveyed and mortgaged or
intended to be conveyed and mortgaged, together with the rents, issues and
profits thereof, unto Trustee, and its successor or successors in trust and
their assigns in trust, under the and subject to all of the terms, conditions
and provisions of the Mortgage (as the Mortgage is defined herein) and of this
Supplemental Indenture as fully and in all respects as if said property had
originally been described in said Mortgage.
Subject, however, to the reservations, exceptions, limitations and
restrictions contained in the several deeds, leases, servitudes, contracts or
other instruments through which the Company acquired and/or claimed title to
and/or enjoys the use of the mortgaged property, and subject also to any
mortgages or easements existing or placed on any of said property at the time
of its acquisition, liens for taxes and assessments not due or, if due, in the
course of contests, judgments in the course of appeal or otherwise in contest
and secured by sufficient bond, liens arising out of proceedings in court in
the course of contests and undetermined liens or charges (if any) incidental
to construction, and subject also to such servitude, easements, rights and
privileges in, over, on or through said property as may have been granted by
the Company to other persons prior to the date of this Supplemental Indenture.
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and
security of the holders of all bonds and interest coupons now or hereafter
issued under the Mortgage and for the enforcement of and payment of said bonds
and coupons when payable and the performance of and compliance with the
covenants and conditions of the Mortgage without any preference, distinction
or priority as to lien or otherwise of any bond or bonds over others by reason
of difference in time of the actual issue, sale or negotiation thereof; but so
that each and every bond now or hereafter issued under the Mortgage shall have
the same lien so that the interest and principal of any and all of such bonds
shall, subject to the terms of the Mortgage, be equally and proportionately
secured thereby, as if they had been made, executed, delivered, sold and
negotiated simultaneously with the execution thereof.
UPON CONDITION that, until the happening of an event of default as provided
in the Mortgage, the Company shall be suffered and permitted to possess, use
and enjoy the property, rights, privileges and franchises conveyed herein and
to receive and use the rents, issues, income, revenues, earnings and profits
thereof.
10
<PAGE>
IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the Company and
the Trustee, and its successor or successors in trust, as follows:
ARTICLE I
FIRST AND REFUNDING MORTGAGE 5-3/4% BONDS,
SERIES DD
SECTION 1. A new series of bonds of the Company shall be issued under and
secured by the Mortgage as supplemented, which shall be designated as the
Company's "First and Refunding Mortgage 5-3/4% Bonds, Series DD". The
aggregate principal amount of bonds of Series DD which may be executed by the
Company and authenticated by the Trustee shall be limited to $75,000,000
(exclusive of bonds authenticated and delivered upon interdenominational or
other exchanges and transfers pursuant to Section 3 of Article I hereof and
Sections 2, 5, 11 and 12 of Article I of the Original Mortgage and delivered
pursuant to Section 3 of Article VI of the Original Mortgage as the same may
relate to fully registered bonds). Bonds of Series DD all shall be registered
bonds without coupons, and shall be due and payable December 1, 2023. All
bonds of Series DD shall bear interest from the date thereof, payable
half-yearly at or before 9:00 o'clock a.m. Chicago time on the first day of
December and the first day of June in each year, commencing June 1, 1994,
until the principal thereof shall have become due and payable, at the rate of
5-3/4% per annum, and on any overdue principal and (to the extent that payment
of such interest is enforceable under the applicable law) on any overdue
installment of interest at the same rate per annum, and shall be payable both
as to principal and interest, and as to premium, if any, in coin or currency
of the United States of America which at the time of payment is legal tender
for the payment of public and private debts, at the office or agency of the
Company in the City of Chicago, Illinois.
So long as there is no existing default in the payment of interest on the
bonds of Series DD, the interest payable on any interest payment day shall
be to the person in whose name any bond of Series DD is registered at the close
of business on any record date with respect to any interest payment day, and
such person shall be entitled to receive the interest payable on such interest
payment day notwithstanding any transfer or exchange of such bond of Series DD
subsequent to the record date and on or prior to such interest payment day,
except as and to the extent the Company shall default in the payment of the
interest due on such interest payment day, in which case such defaulted interest
shall be paid to the person in whose name such bond of Series DD is registered
at the close business on a subsequent record date, which shall not be less than
five (5) days prior to the date of payment of such defaulted interest
established by notice given by mail by or on behalf of the Company to the person
in whose name such bond of Series DD is then registered and to the Trustee not
less than ten (10) days preceding such subsequent record date.
11
<PAGE>
The term "record date" as used herein with respect to any interest payment
day (December 1 or June 1, as the case may be) shall mean the fifteenth day of
November or the fifteenth day of May, as the case may be, next preceding such
interest payment day.
As used in this Section I, the term "default in the payment of interest"
means failure to pay interest on the applicable interest payment day
disregarding any period of grace permitted by Article X of the Mortgage.
SECTION 2. Bonds of Series DD may be issued only as registered bonds
without coupons (hereinafter sometimes referred to as "registered bonds"), and
they shall be substantially in the form hereinbefore recited. They shall be
issuable in denominations which shall be multiples of $5,000 and the execution
by the Company of any bond of Series DD shall evidence conclusively the due
authorization of the denomination of such bond. Each registered bond of Series
DD shall be dated as of the date of the interest payment day on which interest
was paid on other bonds of said Series next preceding the date of issue of
such registered bond, except that (i) so long as there is no existing default
in the payment of interest upon the bonds of Series DD, any bond of Series DD
issued after the close of business on any record date, as hereinbefore
defined, with respect to any interest payment day (December 1 or June 1, as
the case may be) and prior to such interest payment day, shall be dated as of
such interest payment day, and (ii) any bond of Series DD issued on an
interest payment day on which interest on other bonds of Series DD was paid
shall be dated as of the date of issue and (iii) any bond of Series DD issued
before June 1, 1994, shall be dated December 1, 1993, the date of commencement
of the first interest period for the bonds of Series DD, unless (i)
above is applicable.
The registered owner of any bond of Series DD dated as of an interest
payment day as provided in (i) above shall, if the Company shall default in
the payment of interest due on such interest payment day and such default
shall be continuing, be entitled to exchange such bond for a bond or bonds of
Series DD of the same aggregate principal amount dated as of the interest
payment day next preceding the interest payment day first mentioned in this
sentence, or, if the Company shall default in the payment of interest on the
first interest payment day for bonds of Series DD, such owner shall be
entitled to exchange such bond for a bond or bonds of Series DD of the same
aggregate principal amount dated as of December 1, 1993. If the Trustee shall
have knowledge at any time that any registered owner of a bond of Series DD
shall be entitled by the provision of the next preceding sentence to exchange
such bond, the Trustee shall within thirty (30) days mail to such owner at the
address of such owner appearing upon the registry book, a notice informing
such owner that such owner has such right of exchange.
SECTION 3. In the manner prescribed in the Mortgage, the holder of a
registered bond or bonds of Series DD may, at the office or agency of the
Company in the City of Chicago, State of Illinois, surrender such bond or
bonds in exchange
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<PAGE>
for a like aggregate principal amount of one or more registered bonds of Series
DD of any authorized denomination or denominations.
No charge will be made by the Company to the registered owner of a bond of
Series DD for the transfer thereof or for the exchange thereof for bonds of
Series DD of other authorized denominations, except, in the case of transfer,
a charge sufficient to reimburse the Company for any stamp or other tax or
governmental charge required to be paid by the Company or the Trustee.
SECTION 4. All bonds of Series DD shall be executed on behalf of the
Company by the manual or facsimile signature of its President or an Executive
Vice President or a Vice President and shall have affixed thereon the manual
or facsimile seal of the Company attested by the manual or facsimile signature
of its Secretary or one of its Assistant Secretaries and be authenticated by
the execution by the Trustee of the certificate endorsed on said bonds, and
said bonds shall be issued from time to time, as the Board of Directors of the
Company may determine, but in accordance with the terms, provisions,
conditions and restrictions set forth in the Mortgage and in this Supplemental
Indenture. The definitive bonds of Series DD may be issued in typewritten or
printed form or otherwise as provided in the Mortgage.
SECTION 5. (a) The bonds of Series DD are subject to optional redemption
by the Company, in whole but not in part, at any time, at a redemption price
of 100% of the principal amount thereof plus accrued interest, if any, to the
redemption date, if any of the following shall have occurred and if within one
hundred and eighty (180) days following said occurrence the Company files
written notice with the City and the Revenue Bond Trustee and directs that the
Chicago Revenue Bonds are to be redeemed:
(i) if, in the Company's reasonable judgment, unreasonable
burdens or excessive liabilities shall, have been imposed upon the City or
the Company with respect to the Project or the operation thereof,
including, without limitation, federal, state or other ad valorem property,
income or other taxes, other than ad valorem taxes presently levied upon
privately owned property used for the same general purposes as the Project;
or
(ii) if changes in the economic availability of raw materials,
operating supplies, fuel or other energy sources or supplies, or facilities
necessary for the operation of the Project or such technological or other
changes shall have occurred which, in the Company's reasonable judgment,
render the Project uneconomic for such purposes; or
(iii) any court or administrative body shall enter an order or
decree preventing operations at the Project for six consecutive months; or
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<PAGE>
(iv) any court or administrative agency shall issue an order,
decree or regulation the compliance with which would, in the opinion of the
Company, render the continuation of the Project's operations economically
unfeasible.
(b) The bonds of Series DD are subject to optional redemption prior
to maturity by the Company, in whole or in part, on any date on or after
December 1, 2003, and at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued interest, if any, to the
redemption date:
<TABLE>
<CAPTION>
REDEMPTION DATES REDEMPTION PRICES
<S> <C>
December 1, 2003 through
November 30, 2004 102%
December 1, 2004 through
November 30, 2005 101%
December 1, 2005 and 100%
thereafter
</TABLE>
(c) All of the outstanding bonds of Series DD may be redeemed at any
time by the Company, by the payment of the principal amount thereof and
accrued interest thereon to the date of redemption, without the payment of any
premium, in the event of the acquisition by any federal, state or municipal
authority of any substantial portion (which shall be not less than one-third
as determined by book values) of the income-producing properties of the
Company which are subject to the lien of the Mortgage.
(d) The bonds of Series DD are subject to mandatory redemption at any
time, in whole (or in part, as hereinafter provided), at 100% of the principal
amount thereof, plus accrued interest, if any, to the redemption date, in the
event that it is finally determined by the Internal Revenue Service or by a
court of competent jurisdiction that, as a result of the failure by the
Company to observe any covenant, agreement or representation in the Agreement,
the interest payable on the Chicago Revenue Bonds is includable for federal
income tax purposes in the gross income of any owner thereof, other than an
owner who is a "substantial user" of the Project or a "related person", as
provided in Section 147(a) of the Code, and the applicable regulations
thereunder. For purposes of this paragraph (d), the "owner" of a Chicago
Revenue Bond includes the "Beneficial Owner", as defined in the Revenue Bond
Indenture. Any such determination will not be considered final for this
purpose unless the Company has been given written notice and, if it so
desires, has been afforded the opportunity to contest the same, either
directly or in the name of any owner of a Chicago Revenue Bond, and until the
conclusion of any appellate review, if sought. The bonds of Series DD shall
be redeemed in whole after such
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<PAGE>
determination unless redemption of a portion of the Chicago Revenue Bonds
outstanding would have the result that interest payable on the Chicago Revenue
Bonds remaining outstanding after such redemption would not be includable for
federal income tax purposes in the gross income of any owner of the Chicago
Revenue Bonds (other than an owner who is a "substantial user" of the Project or
a "related person" within the meaning of Section 147(a) of the Code) and in such
event the bonds of Series DD shall be redeemed (in the principal amount of
$5,000 or any integral multiple thereof) in such amount as to accomplish that
result. Any redemption pursuant to this subparagraph (d) shall be on any date
within one hundred and eighty (180) days from the time of such final
determination.
(e) All of the outstanding bonds of Series DD shall be redeemed by the
Company not more than sixty (60) days after the Trustee receives written
notice from the Revenue Bond Trustee stating that the principal on the Chicago
Revenue Bonds has been declared to be immediately due and payable as a result
of an event of default under the Revenue Bond Indenture. The redemption price
for any such redemption shall be 100% of the principal amount of the bonds of
Series DD to be redeemed, plus interest thereon accrued to the date fixed for
redemption.
SECTION 6. If bonds of Series DD are to be redeemed as provided in
Section 5 of this Article I, notice of redemption shall be mailed by or on
behalf of the Company, postage prepaid, at least thirty (30) days and not more
than sixty (60) days prior to such date of redemption, to the registered
owners of all bonds of Series DD to be so redeemed, at their respective
addresses appearing upon the registry book. Any notice which is mailed as
herein provided shall be conclusively presumed to have been properly and
sufficiently given on the date of such mailing, whether or not the holder
receives the notice. In any case, failure to give due notice by mail, or any
defect in the notice, to the registered owners of any bonds of Series DD
designated for redemption as a whole or in part, shall not affect the validity
of the proceedings for the redemption of any other bond of Series DD. In case
of any redemption of bonds of Series DD by the Trustee pursuant to the
provisions of the Mortgage or any indenture supplemental thereto, notice of
redemption shall be given in a similar manner by the Trustee.
Except as provided above, the provisions of Article VI of the Mortgage shall
in all respects apply to any such redemption.
SECTION 7. Bonds of Series DD shall bear the following legend: "This Bond
may not be sold, transferred, pledged or hypothecated except as required to
effect assignment to the Revenue Bond Trustee and to any successor trustee."
SECTION 8. In any case where the date of maturity of interest on or
principal of the bonds of Series DD or the date fixed for redemption of any
bonds of Series DD shall be in the location of the principal office of the
Revenue Bond Trustee, a Saturday, Sunday or a legal holiday or a day on which
banking institutions are
15
<PAGE>
authorized by law to close in the State of Illinois, then payment of interest or
principal (and primium, if any) need not be made on such date but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the date fixed for redemption, and no interest shall
accrue for the period after such date.
SECTION 9. In this Supplemental Indenture, the following terms shall have
the meanings specified in this Section 8, unless the context otherwise
requires:
"Agreement" or "Loan Agreement" means the Loan Agreement
executed by and between the City and the Company dated December 1, 1993, as
from time to time amended and supplemented.
"Business Day" means any day which is not a Sunday or a legal
holiday ro a day (including Saturday) on which banking institutions in
Chicago, Illinois, in New York, New York, and in the city where the
principal office of the Revenue Bond Trustee is located are not required or
authorized to remain closed and on which the New York Stock Exchange is not
closed.
"Chicago Revenue Bonds" means the Gas Supply Revenue Bonds,
1993 Series A (The Peoples Gas Light and Coke Company Project), issued by
the City in the aggregate principal amount of $75,000,000.
"City" means the City of Chicago, Illinois.
"Code" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
"Project" means the land, structures, machinery, equipment,
systems or processes, or any portion thereof, which are described in
Exhibit A to the Agreement, as said Exhibit A may from time to time be
amended.
"Revenue Bond Indenture" means that certain Indenture of Trust
executed by and between the City and the Revenue Bond Trustee, dated
December 1, 1993, and any amendments or supplements thereto, pursuant to
which the Chicago Revenue Bonds may be issued.
"Revenue Bond Trustee" means The First National Bank of
Chicago, and any successor trustee appointed pursuant to Sections 1105 or
1108 of the Revenue Bond Indenture at the time serving as successor trustee
thereunder and shall include any co-trustee serving as such thereunder.
16
<PAGE>
SECTION 10. The Company reserves the right, without any consent or other
action by holders of the bonds of Series DD or any subsequent series of bonds,
to amend the Mortgage by inserting the following language as Section 4 of
Article XVI immediately following current Section 3 of Article XVI of the
Mortgage:
SECTION 4. Anything in Section 1 of this Article to
the contrary notwithstanding, with the consent of the
holders of not less than sixty per centum (60%) in aggregate
principal amount of the bonds at the time outstanding or
their attorneys-in-fact duly authorized, or, if the rights
of the holders of one or more, but not all, series then
outstanding are affected, the consent of the holders of not
less than sixty per centum (60%) in aggregate principal
amount of the bonds at the time outstanding of all affected
series, taken together, and not any other series, the
Company, when authorized by resolution of its Board of
Directors, and the Trustee, from time to time and at any
time, subject to the restrictions in this Mortgage
contained, may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions
to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental
indenture or modifying the rights and obligations of the
Company and the rights of the holders of any of the bonds
and coupons; provided, however, that no such supplemental
indenture shall (1) extend the maturity of any of the bonds
or reduce the rate or extend the time of payment of interest
thereon, or reduce the amount of the principal thereof, or
reduce any premium payable on the redemption thereof or
change the coin or currency in which any bond or interest
thereon is payable, without the consent of the holder of
each bond so affected, or (2) permit the creation of any
lien, not otherwise permitted, prior to or on a parity with
the lien of the Mortgage, without the consent of the holders
of all the bonds then outstanding, or (3) reduce the
aforesaid percentage of the aggregate principal amount of
bonds the holders of which are required to approve any such
supplemental indenture, without the consent of the holders
of all the bonds then outstanding. For the purposes of this
Section 4, bonds shall be deemed to be affected by a
supplemental indenture if such supplemental indenture
adversely affects or diminishes the rights of holders
thereof against the Company or against its property.
Upon the written request of the Company, accompanied by
resolution of its Board of Directors authorizing the
execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of
bondholders as aforesaid (the instrument or instruments
evidencing such consent to be dated within one year of
17
<PAGE>
such request), the Trustee shall join with the Company in
the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee's own rights,
duties or immunities under this Mortgage or otherwise, in
which case the Trustee may in its discretion but shall not
be obligated to enter into such supplemental indenture. The
Trustee shall be entitled to receive and, subject to Section
7 of Article XV hereof, may rely upon, an opinion of counsel
as conclusive evidence that any such supplemental indenture
is authorized or permitted by the provisions of this Section
4.
It shall not be necessary for the consent of the
bond holders under this Section 4 to approve the particular
form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the
substance thereof.
The Company and the Trustee, if they so elect, and
either before or after such 60% or greater consent has been
obtained, may require the holder of any bond consenting to
the execution of any such supplemental indenture to submit
his bond to the Trustee or to such bank, banker or trust
company as may be designated by the Trustee for the purpose,
for the notation thereon of the fact that the holder of such
bond has consented to the execution of such supplemental
indenture, and in such case such notation, in form
satisfactory to the Trustee, shall be made upon all bonds so
submitted, and such bonds bearing such notation shall
forth with be returned to the persons entitled thereto. All
subsequent holders of bonds bearing such notation shall
bedeemed to have consented to the execution of such
supplemental indenture, and consent, once given or deemed to
be given, may not be withdrawn.
Prior to the execution by the Company and the Trustee
of any supplemental indenture pursuant to the provisions of
this Section 4, the Company shall publish a notice, setting
forth in general terms the substance of such supplemental
indenture, at least once in one daily newspaper of general
circulation in each city in which the principal of any of
the bonds shall be payable, or, if all bonds outstanding of
any series shall be registered bonds without coupons or
coupon bonds registered as to principal,such notice with
respect to such series shall be mailed first class,
postage prepaid, and registered if the Company so elects, to
each registered holder of bonds of such series at the last
address of such holder appearing on the registry books, such
publication or mailing, as the case may be, to be made not
less than thirty (30) days prior to such execution. Any
failure of the Company to give such notice, or any defect
therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture.
18
<PAGE>
ARTICLE II
COVENANTS OF THE COMPANY
SECTION 1. The Company covenants and agrees, so long as any of the bonds
of Series DD are outstanding or until provision shall have been made for the
redemption or payment thereof by the deposit with the Trustee of money
necessary to effect such redemption or payment, as follows:
(a) The Company, during or at the close of the calendar year
1993, and during or at the close of each calendar year thereafter, shall
charge against the income for such calendar year and place to the credit of a
"depreciation reserve account" to be kept on its books, the greater of the
following two amounts: (i) the amount of $1,550,000, or (ii) an amount equal
to 2 1/2% of the sum of
(i) the aggregate principal amount of all bonds which, at the
time such credit is placed to said "depreciation reserve account", shall be
outstanding and shall have been outstanding under the Mortgage as
supplemented for a period of not less than six (6) months, or which at such
time shall have been outstanding under the Mortgage supplemented for less
than six (6) months, if such bonds shall have been issued, or the proceeds
thereof shall have been used, directly or indirectly, for or on account of
the pledge, acquisition, exchange, cancellation, payment, refundment,
redemption or discharge at, before or after maturity of the bonds of any
series theretofore issued under the Mortgage or of any "underlying bonds"
or "specified obligations" as defined in Section 4 of Article III of the
Mortgage; and
(ii) the aggregate principal of all indebtedness of the Company
secured by a mortgage lien upon the properties or assets of the Company,
which is a lien superior to the lien of the Mortgage, except (A) any such
mortgage indebtedness the evidences of which shall then be pledged with the
Trustee under the provisions of the Mortgage or pledged with the Trustee
under any mortgage constituting a lien superior to the lien of the Mortgage
on any part of the properties or assets of the Company, and (B) any such
mortgage indebtedness for the payment or redemption of which the necessary
moneys shall have been deposited with the Trustee under the Mortgage
securing the same;
provided, however, that (1) the amount required by this subparagraph (a) to
be placed to the credit of such "depreciation reserve account" in or for
any calendar year shall be deemed to include and not to be in addition to
amounts
19
<PAGE>
which, by the provisions of the Mortgage, the Company is required to add to
any depreciation reserve account for such year, (2) nothing in this
subparagraph (a) shall prevent the Company from crediting to such
"depreciation reserve account", during or at the close of any calendar
year, an amount greater than the amount required by this subparagraph (a)
for such year, and (3) the Company may, from time to time, during each such
calendar year, charge against such "depreciation reserve account" the cost
of depreciable property retired by it during such year, including the cost,
if any, of dismantling such retired property, less any salvage credits
applicable thereto.
(b) The Company after it shall have issued bonds of Series DD in the
aggregate principal amount of $75,000,000, shall not request the Trustee
(i) to authenticate bonds of any series under the Mortgage
(A) pursuant to Section 2 of Article III of the Mortgage
for or on account of the acquisition and cancellation, or of the
payment, cancellation, redemption or other discharge at, before or
after maturity, affected prior to January 1, 1951, of any bonds of
any series theretofore issued under the Mortgage, or
(B) pursuant to Section 4 of Article III of the Mortgage,
for or on account of the pledge, acquisition, exchange, cancellation,
payment, refundment, redemption or discharge effected prior to January
1, 1951, of "underlying bonds" or "specified obligations" mentioned in
said Section 4, or
(C) pursuant to Section 5 of Article III of the Mortgage, for
or in respect of expenditures made prior to January 1, 1951, for or on
account of "permanent property", or
(ii) to pay to the Company any cash pursuant to Section 6 of said
Article III for or on account of any transactions mentioned in clause
(A) or clause (B) of subdivision (i) of this subparagraph (b) or for
or in respect of any expenditures mentioned in clause (C) of
subdivision (i) of this subparagraph (b).
Neither shall the Company request the Trustee to authenticate
bonds of any series under the provisions of Section 4 of Article III
of the Mortgage or to pay the Company any moneys under Section 6 of
said Article III or under Article IX of the Mortgage for or on account
of the payment, discharge and cancellation effected on or after
January 1, 1944, at, before or after maturity of any of the Refunding
Mortgage Five Per Cent Gold Bonds of the Company, dated September 1,
1897, due September 1, 1947.
20
<PAGE>
(C) The Company shall not request the Trustee to authenticate
bonds of any series under the Mortgage or to pay to the Company any cash
deposited with or received by the Trustee under the Mortgage (except cash
deposited with or received by the Trustee as and for a sinking fund for any
series of bonds which have been or may hereafter be issued under the
Mortgage), unless the Company as a part of such request, and in addition to
all other documents required by the Mortgage to be delivered to the Trustee
in connection with such request, shall deliver to the Trustee a certificate
or certificates, signed by the President or an Executive Vice President or
a Vice President and by the Treasurer or an Assistant Treasurer of the
Company
(i) showing, in case such request is for the authentication of
bonds pursuant to Section 5 of Article III of the Mortgage or for the
payment of cash pursuant to Section 6 of said Article III for or in
respect of expenditures made by the Company on or after January 1,
1951, for or on account of "permanent property":
(A) the total amount of expenditures (reduced to the extent
required, if any, by the provisions of clause (G) of this
subdivision (i)) made on or after January 1, 1951, for or on
account of "permanent property";
(B) the original cost of all properties, subject to the lien
of the Mortgage at any time on or after January 1, 1951,
replaced or retired on or after January 1, 1951, less, if any
such property shall have been released from the lien of the
Mortgage pursuant to any applicable provision of the Mortgage
and to obtain such release cash shall have been deposited with
the Trustee, the amount of such cash;
(C) an amount equal to the sum of (1) 133-1/3% of the
aggregate principal amount of bonds which have been authenticated
after January 1, 1951, pursuant to Section 5 of Article III of
the Mortgage for or on account of such expenditures made on or
after January 1, 1951, plus (2) 133-1/3% of the aggregate amount
of deposited cash withdrawn after January 1, 1951, pursuant to
the provisions of Section 6 of Article III of the Mortgage for or
in respect of such expenditures made on or after January 1, 1951,
plus (3) 133-1/3% of the aggregate amount of excess of the nature
described in subdivision (2) of Section 4 of Article III of the
Mortgage eliminated or compensated, as in said subdivision (2)
provided, for or in respect of expenditures of the Company for or
on account of "permanent property" during said period commencing
January 1, 1951;
21
<PAGE>
(D) an amount equal to 100% of the aggregate amount
of moneys withdrawn by the Company pursuant to the provisions of
Article IX of the Mortgage on or after January 1, 1951, for or in
respect of expenditures made for or on account of "permanent
property";
(E) an amount equal to the excess, if any, of the amount
shown pursuant to clause (A) above over the sum of the amounts shown
pursuant to clauses (B), (C) and (D) above;
(F) that, for a period of twelve (12) consecutive calendar
months (to be selected by the Company) ending within ninety (90) days
next preceding such request, the "net earnings of the Company" shall
have been at least twice the amount of the annual interest
requirement of all "mortgage and prior lien debt of the Company";
(G) that the amount of the expenditure, if any, included in
the expenditures set forth in clause (A) above in respect of any
particular"permanent property", which at the time of its acquisition
was subject to the lien of any mortgage existing or placed thereon at
the time of its acquisition, does not exceed an amount equal to the
excess, if any, of the value (determined as provided in the first
paragraph of Section 8 of Article III of the Mortgage) of such
particular "permanent property" at the time of acquisition of such
property over 133-1/3% of the principal amount of all indebtedness
secured by all such mortgages existing or placed on such particular
property at the time of the acquisition thereof, and that the amount
of the expenditure, if any, included in the expenditures set forth
in clause (A) above in respect of any particular "permanent property",
which at the time of its acquisition was not subject to any such lien,
does not exceed an amount equal to the value (determined as provided
in the first paragraph of Section 8 of Article III of the Mortgage) of
such particular "permanent property" at the time of acquisition of
such property;
(ii) showing, in case such request is for the authentication of
bonds pursuant to Section 4 of Article III of the Mortgage or for the
payment of cash pursuant to Section 6 of said Article III for or on account
of the pledge, acquisition, exchange, cancellation, payment, refundment,
redemption or discharge effected on or after January 1, 1951, at, before or
after maturity of any "specified obligations" mentioned in said Section 4,
that at the time such "specified obligations" became "specified
obligations" or at some later date the
22
<PAGE>
Company, pursuant to the provisions of Section 5 of Article III of the
Mortgage, as limited by the provisions of this Section I, shall have
obtained, or shall have had the right to obtain, the authentication
and delivery of bonds in any principal amount for or in respect of
expenditures made on or after January 1, 1951, for or on account of
"permanent property";
(iii) showing, in case such request shall be for the payment of
moneys pursuant to Article IX of the Mortgage for or in respect of
expenditures made for or on account of "permanent property", that none
of such expenditures were made (1) prior to January 1, 1951, or (2)
for or on account of "permanent property" acquired more than six
months prior to the date when the Trustee received the moneys so to be
paid (or in case of moneys representing the proceeds of obligations,
referred to in said Article IX, the date when the Trustee received
such obligations); and
(iv) showing, in case such request is for the application of any
moneys pursuant to Article IX of the Mortgage to the payment,
redemption or purchase of any "specified obligations", that such
"specified obligations", if pledged under the Mortgage, would permit
the Company to obtain the authentication of bonds in a principal
amount equal to the principal amount of such "specified obligations"
pursuant to the provisions of Section 4 of Article III of the Mortgage
as limited by the provisions of this Section 1.
(D) In connection with any request for the authentication of bonds
pursuant to Section 5 of Article III of the Mortgage or the payment of cash
pursuant to Section 6 of said Article III of Mortgage, for or in respect of
expenditures made by the Company on or after January 1, 1951, the Company
shall not obtain the authentication of bonds of any series under the
Mortgage or the payment of any cash in excess of 75% of the amount shown in
the certificate delivered as a part of such request pursuant to clause (E)
of subdivision (i) of subparagraph (c) of this Section 1; and the Company
shall not obtain the authentication of any bonds or the payment of any cash
deposited with or received by the Trustee under the Mortgage otherwise than
in accordance with the provisions of the Mortgage as supplemented.
(E) Wherever used in this Supplemental Indenture
(i) "mortgage and prior lien debt of the Company", as of the
date of any request to the Trustee for the authentication of
bonds or the payment of cash, shall mean:
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<PAGE>
(A) all the bonds then outstanding under the Mortgage,
less the amount of any of such bonds which shall then be held by or be
delivered to the Trustee for cancellation under any of the provisions
of the Mortgage, and less the amount of any such bonds for the payment
or redemption of which the necessary moneys shall have been deposited
under the Mortgage with the Trustee to effect such payment or
redemption;
(B) the bonds then requested to be authenticated under the
Mortgage; and
(C) all mortgage indebtedness secured by a lien superior to
the lien of the Mortgage on any part of the properties and assets of
the Company, except any such mortgage indebtedness the evidences of
which shall then be pledged with the Trustee under the provisions of
the Mortgage or pledged with the Trustee under any mortgage
constituting a lien superior to the lien of the Mortgage on any part
of the properties and assets of the Company, and except any such
mortgage indebtedness for the payment or redemption of which the
necessary moneys shall have been deposited with the trustee under the
mortgage securing the same to effect such payment or redemption;
(ii) "net earnings of the Company" for any twelve (12) months'
period shall mean the amount remaining after deducting from the sum of
(A) the gross operating revenues of the Company for such
period derived from its property subject to the lien of the Mortgage,
including but not limited to revenues derived from electrical energy,
gas or steam purchased by the Company and resold by it, and the net
income derived by the Company from its merchandising and jobbing
operations; and
(B) other income of the Company for such period derived from
interest on bank balances and from current working capital invested in
unpledged obligations of the United States of America or of any state
or of any municipality or subdivision thereof, and other currently
earned income of the Company derived from the ownership of securities,
in the treasury of the Company and unpledged, of operating electric,
gas or steam companies (including natural or mixed gas production,
storage, transportation or distribution companies) or from unpledged
advances to such companies any of the securities of which are so
owned,
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<PAGE>
the sum of the following:
(C) operating expenses of the Company for such period,
including maintenance and repairs, rentals, taxes (except taxes
based upon net income), insurance and the cost of electrical
energy, gas or steam purchased for resale, but excepting expenses
in connection with operations, the net income only of which is
included in clause (A) of subdivision (ii) of this subparagraph
(e), and excepting all reserves or charges for amortization of
debt discount and expense; and
(D) an amount, if such period shall end with the close of a
calendar year, equal to the amount which the Company is required
by subparagraph (a) of this Section 1 to place, during or at the
close of such calendar year, to the credit of the "depreciation
reserve account", mentioned in said subparagraph (a) (all
determined without deduction for any charge made to the
"depreciation reserve account" permitted by clause (3) of the
proviso of subparagraph (a) of this Section 1), or, if such
period shall include parts of two (2) calendar years, then an
amount which shall be determined by (1) prorating, on a monthly
basis over the portion of the earlier year thus included, the
amount which the Company shall have been so required to credit to
the "depreciation reserve account" during or at the close of such
earlier year, and (2) prorating, on a monthly basis over the
portion of the later of said two (2) years thus included, the
amount which the Company would be required to credit to such
"depreciation reserve account" if such credit were placed to such
account at the close of such period;
provided, however, that the amount of other income of the Company, referred
to in clause (B) of subdivision (ii) of this subparagraph (e), shall
not exceed 10% of said net earnings; and income in the form of dividends
received by the Company upon stock of any class owned by it shall be
considered as currently earned under the provisions of said clause (B) to
the extent that during such period the earnings of the paying company shall
be sufficient for the payment of dividends upon all stock of such class
during such period; and income in the form of interest received by the
Company upon evidences of indebtedness of any class owned by it shall be
considered as currently earned under the provisions of said clause (B) to
the extent that during such period the earnings of the paying company shall
be available for the payment of the interest accruing during such period
upon all indebtedness of such class, after deducting from such earnings all
interest charges accruing during such period upon obligations
25
<PAGE>
secured by prior liens; and, in case any property owned by the Company at
the date of the request to the Trustee for the authentication of bonds or
payment or withdrawal of cash shall not have been owned by it during any
part of any such period, or shall have been owned by it during a part only
of such period, then and in every such case the net earnings (or net
losses) of such property (ascertained in like manner as above provided)
during said period, or during such part thereof as shall have preceded the
acquisition of such property by the Company, shall be considered and
treated as net earnings (or net losses) of the Company for such period, and
shall be included in (or, if a net loss, deducted in determining) such net
earnings of the Company;
(iii) "permanent property" shall mean any and all plants,
equipment, additions, improvements, betterments, facilities, or other
property of any kind (and includes "extensions" and "purchased
property" as those terms are used in the Mortgage) acquired through
construction, purchase, consolidation, exchange or otherwise, as and
for a part of the permanent or fixed investment for the business of
the Company and used or useful in connection with the generation and
conversion of electrical energy or in the manufacture of gas or steam
or in the distribution or transmission of electrical energy or gas or
steam in the territory in which the Company is now operating its
present properties, or in territory contiguous thereto, or in
territory capable of economic interconnection therewith, but
"permanent property" shall not include cash, accounts or bills
receivable, securities, supplies, fuel or other assets ordinarily
classed as quick assets, or leasehold estates;
(iv) "original cost" of property shall mean the original cost
of such property to the Company if ascertainable from its records or, if
such original cost is not ascertainable, the value of such property at the
time of its acquisition, such value to be determined by an engineer or firm
of engineers to be selected by the Company and to be acceptable to the
Trustee, and the Trustee under such circumstances shall be furnished with a
certificate of such value signed by such engineer or firm of engineers.
(F) In connection with any request to the Trustee for the
authentication of bonds, pursuant to the provisions of Section 5 of Article
III of the Mortgage or the payment of cash pursuant to the provisions of
Section 6 of said Article III or the provisions of Article IX of the
Mortgage or the elimination or compensation of any excess of the nature
described in subdivision (2) of Section 4 of said Article III, for or on
account of expenditures for "permanent property", the Company shall furnish
to the Trustee, in addition to the certificates and other documents
required to be
26
<PAGE>
delivered by the provisions of the Mortgage and the provisions of other
subparagraphs of this Section 1, the following:
(i) An opinion of counsel (who may be counsel for the Company),
selected by the Company and satisfactory to the Trustee, stating that
the Company has acquired good title to the property for or on account
of the expenditures for which additional bonds are requested to be
authenticated and that such property is subject to the Mortgage as a
direct lien thereon, subject only to the lien of any mortgages or
easements existing or placed on any of such property at the time of
its acquisition, liens for taxes and assessments not due or, if due,
in the course of contest, judgments in the course of appeal or
otherwise in contest and secured by sufficient bond, liens arising out
of proceedings in court in the course of contest and undetermined
liens charges (if any) incidental to current construction; and
(ii) A certificate signed by the President or an Executive Vice
President or a Vice President and also by the Treasurer or an
Assistant Treasurer of the Company certifying that the property for or
on account of the expenditures for which bonds are requested to be
authenticated or cash is requested to be paid is "permanent property".
(g) The Company shall not hereafter issue any bonds under any
"underlying mortgage" as defined in Section 4 of Article III of the
Mortgage, or under any mortgage which could become such an "underlying
mortgage" upon compliance with clause (b) of the proviso of subdivision (2)
of said Section 4.
(h) The Company shall not request the Trustee to authenticate any
bonds under the provisions of Section 2 or Section 3 or Section 4 of
Article III of the Mortgage and shall not apply for the payment of cash
under Section 6 of said Article or under Article IX of the Mortgage (i) for
or on account of bonds of Series J deposited by the Company with the
Trustee in lieu of cash under the provisions of the sinking fund provided
for in the supplemental indenture, dated as of May 1, 1961, or for or on
account of bonds of Series J redeemed through the operation of said sinking
fund, or (ii) for or on account of bonds of Series K redeemed through the
operation of the sinking fund provided for in the supplemental indenture
dated as of July 15, 1966, or (iii) for or on account of bonds of Series L
redeemed through the operation of the sinking fund provided for in the
supplemental indenture dated as of August 15, 1967, or (iv) for or on
account of bonds of Series M redeemed through the operation of the sinking
fund provided for in the supplemental indenture dated as of September 15,
1970, or (v) for or on account of bonds of Series N redeemed through the
operation of the sinking fund provided for in the supplemental indenture
dated as of April 1, 1972, or (vi) for or on account of
27
<PAGE>
bonds of Series 0 redeemed through the operation of the sinking fund
provided for in the supplemental indenture dated as of July 15, 1973, or
(vii) for or on account of bonds of Series T redeemed through the operation
of the sinking fund provided for in the supplemental indenture dated as of
August 15, 1980, or (viii) on account of any cancelled or uncancelled
underlying bonds (or any uncancelled underlying bonds deposited as
collateral under Section 4 of Article III of the Mortgage) which shall have
been deposited under the provisions of the supplemental indenture, dated as
of August 1, 1941, in lieu of cash.
(I) In the event of the acquisition at any time by any federal, state
or municipal authority of all or substantially all of the income-producing
properties of the Company which are subject to the lien of the Mortgage,
the Company shall be deemed to have elected to redeem and to have requested
the Trustee to redeem all the bonds of all series at the respective
applicable redemption price or prices (together with accrued interest to
the date of redemption), without the payment of any premium, on a date
determined by the Trustee in its discretion to be the earliest practicable
redemption date after receipt by the Trustee of all cash which the Trustee
is entitled to receive in respect of such acquisition by such federal,
state or municipal authority. If the cash so received by the Trustee and
all other cash then held by the Trustee as such, except funds held in trust
for the benefit of the holders of particular bonds and coupons, is not
sufficient to effect the redemption of all the bonds of all series as
aforesaid and to pay all amounts owing to the Trustee under the Mortgage as
supplemented (including fees and expenses to be incurred by the Trustee in
connection with such redemption), the Company covenants and agrees that,
within five (5) days after receipt by the Trustee of all cash which the
Trustee is entitled to receive as aforesaid in respect of such acquisition,
the Company will deposit with the Trustee for that purpose cash in an
amount sufficient to make up such deficiency.
Upon receipt by the Trustee of moneys sufficient for said purposes,
notice of such redemption shall be given by the Trustee for and on behalf
and in the name of the Company. To the extent that such cash received,
held and deposited as aforesaid shall be required for the purpose of
redeeming bonds pursuant to this subparagraph (i), the Company shall be
deemed to have directed the Trustee to apply the same for the purpose, and
the balance, if any, after payment of all said amounts owing to the
Trustee, shall be paid to or upon the order of the Company.
(j) The Company shall promptly classify as "property replaced or
retired", for the purposes of clause (B) of subdivision (i) of subparagraph
(c) of this Section 1 during any period all property which has been
replaced or has permanently ceased to be used or useful in the business of
the Company, but the Company shall not, in making such classification, be
bound by
28
<PAGE>
determinations, rulings or orders made by regulatory authorities for
rate-making or other purposes.
(k) The Company shall not consolidate with or merge into any other
corporation or transfer or lease all or substantially all the mortgaged
property as an entirety to any other corporation, unless the corporation
resulting from such consolidation or the corporation into which the Company
shall have been merged or the corporation to which such transfer or lease
shall have been made shall, by an instrument executed and delivered to the
Trustee, assume the due and punctual payment of the principal of and
premium, if any, and interest on all the bonds of all series according to
their tenor at the time outstanding under the Mortgage and the due and
punctual performance and observance of all the covenants and conditions of
the Mortgage and all indentures supplemental thereto to be performed or
observed by the Company.
SECTION 2. The Company covenants and agrees that any and all property
hereafter acquired by the Company and any and all improvements, extensions,
betterments or additions to property of the Company, which by the Original
Mortgage or any indenture supplemental thereto are to become subject to the
Mortgage, immediately upon the acquisition thereof by the Company or upon such
improvements, extension, betterments, or addition being made, as the case may
be, and without any further conveyance, mortgage, assignment or act on the
part of the Company or the Trustee, or either of them shall become and be
subject to the lien of the Mortgage fully and completely as though owned by
the Company at the date of the execution of the Original Mortgage and at the
date of the Indenture dated the first day of March, 1928, mentioned in the
second paragraph of the recitals of this Supplemental Indenture and at the dates
of the supplemental indentures dated May 20, 1936, May 10, 1950, as of June 1,
1951, as of August 15, 1967, as of September 15, 1970, as of June 1, 1984, as of
June 1, 1984, as of October 1, 1984, as of March 1, 1985, as of March 1, 1985,
as of March 1, 1985, as of March 1, 1985, as of May 1, 1990 and as of April 1,
1993, respectively, mentioned in the fourth paragraph of the recitals of this
Supplemental Indenture, and at the date of this Supplemental Indenture, and
specifically described in the granting clauses of the Original Mortgage or said
Indenture or said supplemental indentures, but the provisions of this Section 2
shall not limit the generality of the provisions of Sections 12 and 13 of
Article IV of the Original Mortgage.
SECTION 3. The Company covenants and agrees that in the furtherance of, but
without limiting the generality of, the provisions of Sections 12 and 13 of
Article IV of the Mortgage or of Section 2 of this Article II, the Company
will furnish to the Trustee on November 1, 1944, and thereafter within sixty
(60) days after and as often as the Company shall have acquired, subsequent to
September 3, 1944, any additional land or lands or interest or interests in
land, or any new plant or plants, not included in any certificate theretofore
furnished pursuant to this Section 3, the
29
<PAGE>
aggregate cost of which shall equal or exceed $500,000, and at such other times
as thirty-six (36) months shall have elapsed since the date of furnishing the
last preceding certificate to the Trustee pursuant to this Section 3, the
following:
(a) a certificate, signed by the President or an Executive Vice
President or a Vice President and by the Treasurer or an Assistant
Treasurer of the Company and dated as of a date not more than sixty (60)
days preceding the date as of which such certificate is required to be
filed pursuant to this Section 3, briefly describing any additional land or
interest in land and any new plant which the Company may have acquired
since the date of the most recent Certificate furnished to the Trustee
pursuant to this Section, or, in the case of the first such certificate,
since the date of the execution and delivery of the Indenture dated the
first day of March, 1928 mentioned in the second paragraph of the recitals
of this Supplemental Indenture, which is required by the provisions of the
Mortgage and this Supplemental Indenture to be subjected to the lien of the
Mortgage;
(b) the mortgages, deeds, covenants, assignments, transfers and
instruments of further assurance, if any, specified in the opinion of
counsel referred to in the following subparagraph (c); and
(c) an opinion of counsel, who may be counsel for the Company,
specifying the mortgages, deeds, covenants, assignments, transfers and
instruments of further assurance which will be sufficient to subject to the
direct lien of the Mortgage (so far as permitted by law) all the Company's
right, title and interest in and to the land and interest in land and any
plant described in said certificate, or stating that no such mortgage,
deed, conveyance, assignment, transfer or instrument of further assurance
is necessary for such purpose, and that, upon the recordation or filing or
registering, in the manner stated in such opinion, of the instruments so
specified, if any, and upon the recordation and filing and registering of
the Mortgage or any supplemental indenture in the manner stated in such
opinion, or without any such recordation or filing or registering if such
opinion shall so state, the Mortgage will (so far as permitted by law)
constitute a valid lien upon all the Company's right, title and interest in
and to such land, interest in land or plant as against all creditors and
subsequent purchasers, subject only to the lien of any mortgages or
easements existing or placed on such property at the time of its
acquisition by the Company, liens for taxes and assessments not due, or, if
due, in the course of appeal or otherwise in contest, liens arising out of
proceedings in court in the course of contest and undetermined liens and
charges (if any) incidental to current construction.
For the purposes of this Section 3, any certificate heretofore or hereafter
delivered to the Trustee pursuant to Section 3 of Article III of Division B of
the supplemental indenture dated as of June 1, 1951, or pursuant to Section 3
of Article II of the
30
<PAGE>
Supplemental Indenture dated as of July 1, 1954, or pursuant to Section 3 of
Article III of the supplemental indenture dated as of May 1, 1961, or pursuant
to Section 3 of Article III of the supplemental indenture dated as of July 15,
1966, or pursuant to Section 3 of Article III of the supplemental indenture
dated as of August 15, 1967, or pursuant to Section 3 of Article III of the
supplemental indenture dated as of September 15, 1970, or pursuant to Section 3
of Article III of the supplemental indenture dated as of April 1, 1972, or
pursuant to Section 3 of Article III of the supplemental indenture dated as of
July 15, 1973, or pursuant to Section 3 of Article II of the Supplemental
Indenture dated as of October 1, 1973, or pursuant to Section 3 of Article II of
the Supplemental Indenture dated as of October 1, 1974, or pursuant to Section 3
of Article II of the Supplemental Indenture dated as of December 1, 1974, or
pursuant to Section 3 of Article II of the Supplemental Indenture dated as of
April 1, 1975, or pursuant to Section 3 of Article III of the Supplemental
Indenture dated as of August 15, 1980, or pursuant to Section 3 of Article II of
the supplemental indenture dated as of June 1, 1984, or pursuant to Section 3 of
Article II of the supplemental indenture dated as of June 1, 1984, or pursuant
to Section 3 of Article II of the supplemental indenture dated as of October 1,
1984, or pursuant to Section 3 of Article II of the supplemental indenture dated
as of March 1, 1985, or pursuant to Section 3 of Article II of the supplemental
indenture dated as of March 1, 1985, or pursuant to Section 3 of Article II of
the supplemental indenture dated as of March 1, 1985, or pursuant to Section 3
of Article II of the supplemental indenture dated as of March 1, 1985, or
pursuant to Section 3 of Article II of the supplemental indenture dated as of
May 1, 1990, or pursuant to Section 3 of Article II of the supplemental
indenture dated as of April 1, 1993, shall be deemed to have been delivered in
compliance with this Section 3.
SECTION 4. The Company covenants and agrees that, upon cancellation and
discharge of any "prior lien", the Company shall cause all cash or obligations
then held by the trustee or other holder of such prior lien, which were
received by such trustee or other holder by reason of the release of, or which
represent the proceeds of the taking by eminent domain or any disposition of,
or the proceeds of insurance on, any of the properties at any time subject to
the lien of the Mortgage (including all proceeds of or substitutions for any
thereof), to be paid to or deposited and pledged with the Trustee, subject to
any lien or charge prior to the lien of the Mortgage, such cash to be held and
paid over or applied by the Trustee, and such obligations to be held and
disposed of, as provided in Article IX of the Mortgage; provided, however,
that in lieu of taking or delivering to the Trustee all or any part of such
cash or obligations, the Company may deliver to the Trustee a certificate of
the trustee or such other holder of such prior lien, stating that a specified
amount thereof has been deposited with such trustee or other holder pursuant
to the requirements of such other prior lien, in which case there shall also
be delivered to the Trustee an opinion of counsel, who may be counsel for the
Company, stating that such deposit is required by such other prior lien. The
term "prior lien" as used in this Section 4 shall mean and include any
"underlying mortgage" and shall also mean and include any other lien (except
liens for taxes and assessments not due, or, if due, in the course of
31
<PAGE>
appeal or otherwise in contest, liens arising out of proceedings in court in
course of contest and undetermined liens and charges, if any, incidental to
current construction) prior to the lien of the Mortgage upon property acquired
by the Company after the execution and delivery of the Indenture, dated the
first day of March, 1928, referred to in the second paragraph of the recitals of
this Supplemental Indenture, existing on said property or placed thereon to
secure unpaid portions of the purchase price, at the time of such acquisition.
ARTICLE III
MISCELLANEOUS
SECTION 1. The Trustee hereby accepts the trusts hereunder and agrees to
perform the same upon the terms and subject to the applicable provisions of the
Mortgage and the indentures supplemental thereto now in effect.
SECTION 2. This Supplemental Indenture is executed by the parties hereto
pursuant to the provisions of Article XVI of the Mortgage, and so long as any
of the bonds of Series DD are or shall be outstanding the terms and conditions
of this Supplemental Indenture shall be deemed to be a part of the terms and
conditions of the Mortgage for any and all purposes. The provisions of this
Supplemental Indenture shall be inapplicable and shall terminate and become
void and of no effect upon the payment or redemption of all of the bonds of
Series DD in accordance with the provisions of the Mortgage and of the bonds
of Series DD.
SECTION 3. All covenants, conditions and provisions contained in this
Supplemental Indenture by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not, legally or equitably
under or by reason of this Supplemental Indenture.
SECTION 4. Although this Supplemental Indenture is dated as of December 1,
1993, it shall be effective only from the actual time of its execution and
delivery by the Company and the Trustee on the date indicated by their
respective acknowledgments hereto annexed.
This Supplemental Indenture may be simultaneously executed in any number of
counterparts and all such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument entered into by the
parties hereto pursuant to the provisions of Article XVI of the Mortgage.
32
<PAGE>
IN WITNESS WHEREOF, THE PEOPLES GAS LIGHT AND COKE COMPANY has caused this
instrument to be executed in its corporate name by its Chairman, President, an
Executive Vice President or a Vice President, and its corporate seal to be
hereunto affixed and attested by its Secretary or an Assistant Secretary, and
Continental Bank, National Association, as Trustee under the Mortgage, has
caused this instrument to be executed in its corporate name by one of its Vice
Presidents and its corporate seal to be hereto affixed and attested by one of
its Trust Officers, all as of the day and year first above written.
THE PEOPLES GAS LIGHT AND COKE COMPANY
By /s/ KENNETH S. BALASKOVITS
--------------------------------------
Kenneth S. Balaskovits
Vice President and Controller
ATTEST:
/S/ E. P. CASSIDY
- ------------------------
E. P. Cassidy
Secretary
CONTINENTAL BANK, NATIONAL ASSOCIATION
By /s/ JOHN W. PORTER
--------------------------------
John W. Porter
Vice President
ATTEST:
/s/ MELISSA A. ROSAL
- -------------------------------
Melissa A. Rosal
Trust Officer
33
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
I, PATRICIA ABREGO-SANTUCCI, a Notary Public in and for said County and
State aforesaid, DO HEREBY CERTIFY that KENNETH S. BALASKOVITS, a Vice
President of The Peoples Gas Light and Coke Company, an Illinois corporation,
and E. P. CASSIDY, Secretary of said corporation, who are both personally
known to me to be the same persons whose names are subscribed to the foregoing
instrument as such Vice President and Secretary, respectively, and who are
both personally known to me to be Vice President and Secretary, respectively,
of said corporation, appeared before me this day in person and severally
acknowledged that they signed, sealed and delivered said instrument as their
free and voluntary act as such Vice President and Secretary, respectively, of
said corporation, and as the free and voluntary act of said corporation, for
the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 1st day of December, 1993.
/s/ PATRICIA ABREGO-SANTUCCI
----------------------------------
Patricia Abrego-Santucci
Notary Public
My commission expires July 29, 1995.
34
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
I, PATRICIA ABREGO-SANTUCCI, a Notary Public in and for said County and
State aforesaid, DO HEREBY CERTIFY that JOHN W. PORTER, a Vice President of
Continental Bank, National Association, a corporation organized under the laws
of the United States of America, and MELISSA A. ROSAL, a Trust Officer of said
corporation, who are both personally known to me to be the same persons whose
names are subscribed to the foregoing instrument as such Vice President and
Trust Officer, respectively, and who are both personally known to me to be a
Vice President and Trust Officer, respectively, of said corporation, appeared
before me this day in person and severally acknowledged that they signed,
sealed and delivered said instrument as their free and voluntary act as Vice
President and Trust Officer, respectively, of said corporation, and as the
free and voluntary act of said corporation, for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this 1st day of December, 1993.
/s/ PATRICIA ABREGO-SANTUCCI
----------------------------------
Patricia Abrego-Santucci
Notary Public
My commission expires July 29, 1995.
35
<PAGE>
SCHEDULE A
EASEMENTS AND OTHER INTERESTS IN LAND
1. All rights of way, easements, franchises, licenses, permits,
privileges, leases, leaseholds and other authority granted to the Company for
the purpose of constructing, installing, operating, using, maintaining,
renewing, replacing or relocating gas mains, pipelines, services and other
facilities on, over or in private property owned by others and situated in the
County of Cook in the State of Illinois, including, without limiting the
generality of the foregoing, those certain easements granted to the Company by
the grantors hereinafter named and filed for record and recorded as hereinafter
set forth, to-wit:
<TABLE>
<CAPTION>
Permanent
Index Document Date of Date
Number Number Instrument Recorded
--------- -------- ---------- --------
Grantor
-------
Cook County
- -----------
<S> <C> <C> <C> <C>
South Holland Trust & Savings
Bank, Trust No. 9398
-- 92-950573 12-01-92 12-16-92
East View Park Condominium
Association 20-12-114-052-0000 92-389926 05-11-92 06-30-92
Bethel New Life, Incorporated -- 92-742335 10-05-92 10-06-92
MAE Puch, Ltd. 27-35-90-1529 92-851511 11-09-92 11-13-92
D & F Builders, Inc. -- 92-851510 11-02-92 11-13-92
Larry Burke -- 93-099209 01-18-93 02-05-93
Ms. Patricia Ramirez 17-17-317-019 92-831841 11-03-92 11-06-92
American National Bank and
Trust Company of Chicago
Trust No.114699-05 17-21-214-001/
17-21-214-039 93-133289 02-05-93 02-19-93
Harlem Cove Corporation 13-31-124-008-00093-099210 01-11-93 02-05-93
Roscoe Limited Partnership 14-20-311-01493-099211 01-20-93 02-05-93
Marsulex, Inc. -- 93-209458 11-23-92 03-19-93
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Permanent
Index Document Date of Date
Number Number Instrument Recorded
--------- -------- ---------- --------
GRANTOR
-------
COOK COUNTY
- -----------
<S> <C> <C> <C> <C>
S.E.E. Terminal, Inc. 25-25-401-014 92-586388 06-02-92 08-07-92
American National Bank and
Trust Company of Chicago
Trust No. 116057-0-6 4-20-206-016-017 93-316111 04-13-93 04-28-93
American National Bank and
Trust Company of Chicago
Trust No. 114699-0-5 17-21-214-001-0000/
17-21-214-002-0000 93-316110 04-22-93 04-28-93
Mr. Michael Flannery 17-32-200-002 93-527988 06-29-93 07-09-93
Chicago Transit Authority -- 93-527987 05-11-93 07-09-93
Bank of Chicago -- 93-527986 06-30-93 07-09-93
Honey Bee Owners Association 12-11-310-069/
12-11-310-054 92-715618 09-08-92 09-25-92
</TABLE>
37
<PAGE>
EXHIBIT 4(B)
[Conformed Copy]
------------------------------------------------------------
THE PEOPLES GAS LIGHT AND COKE COMPANY
to
CONTINENTAL BANK, NATIONAL ASSOCIATION
Trustee
--------------------------
SUPPLEMENTAL INDENTURE
--------------------------
Dated as of December 1, 1993
First and Refunding Mortgage Multi-Modal Bonds, Series EE
------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals
Status of Mortgage . . . . . . . . . . . . . . . . . . 1
First and Refunding Mortgage Bonds
issued and outstanding. . . . . . . . . . . . . . 2
Basis for issuance of $27,000,000
Series EE Bonds . . . . . . . . . . . . . . . . . 2
Reservation of right to amend the Mortgage . . . . . . 2
Form of Series EE registered bond without
coupons . . . . . . . . . . . . . . . . . . . . . 3
Supplemental Indenture authorized by
Directors . . . . . . . . . . . . . . . . . . . . 11
ARTICLE I
FIRST AND REFUNDING MORTGAGE MULTI-MODAL BONDS,
SERIES EE
Sec. 1:Designation, amount limited to
$27,000,000, maturity and
interest rate . . . . . . . . . . . . . . . 12
Place and medium of interest and
principal payments. . . . . . . . . . . . . 12
Sec. 2:Form of bonds. . . . . . . . . . . . . . . . . . . . . . 13
Denominations of registered bonds
without coupons . . . . . . . . . . . . . . 13
Date of bonds. . . . . . . . . . . . . . . . . . 13
Sec. 3:Interdenominational exchanges of
registered bonds. . . . . . . . . . . . . . 13
Sec. 4:Execution, authentication and issue of
Series EE Bonds . . . . . . . . . . . . . . 14
Sec. 5:Redemption of Series EE Bonds
by Company. . . . . . . . . . . . . . . . . 14
<PAGE>
Page
Sec. 6:Notice of Redemption . . . . . . . . . . . . . . . . . . 16
Sec. 7:Legend on Series EE Bonds. . . . . . . . . . . . . . . . 17
Sec. 8:Determination of Interest Rate Modes and
Interest Rates; Adjustment of Interest Rate Modes 17
Sec. 9:Definitions. . . . . . . . . . . . . . . . . . . . . . . 23
Sec. 10: Payments, notices and actions due on
Saturdays, Sundays and holidays
to take place on next succeeding
Business Day . .. . . . . . . . . . . . . . . . . 27
Sec. 10: Reservation of right to amend
the Mortgage. . . . . . . . . . . . . . . . 27
ARTICLE II
COVENANTS OF THE COMPANY
Sec. 1: Company each year shall charge against
income and place to credit of
Depreciation Reserve Account the greater
of $1,550,000 or 2-1/2% of the sum of
the aggregate principal amount of all
indebtedness of the Company secured by
the Mortgage and liens superior to
the Mortgage. . . . . . . . . . . . . . . . . . . 29
Company after issuing any Series EE
Bonds shall not request the Trustee to:
Authenticate any bonds under
Mortgage pursuant to Sections 2,
4 or 5 of Article III or pay cash
to the Company pursuant to Section 6
of Article III on account of
transactions effected prior to
January 1, 1951 . . . . . . . . . . . . . . 30
Authenticate any series of bonds or pay
any moneys to Company on account
<PAGE>
Page
of payment of any Refunding
Mortgage 5% bonds on or after
January 1, 1944 . . . . . . . . . . . . . . 31
Company shall not request the Trustee to
authenticate bonds of any series or to
pay to the Company any cash deposited
with or received by the Trustee, unless it
delivers to the Trustee a certificate
signed by the President or an Executive
or other Vice President and Treasurer
or Assistant Treasurer containing
specified information. . . . . . . . . . . . . . 31
Company shall not obtain authentication of
bonds or payment of cash in excess of
75% of amount shown on such certificate.. . . . . 33
Explanation of terms--
Mortgage and Prior Lien Debt of Company. . . . . 34
Net Earnings . . . . . . . . . . . . . . . . . . 34
Permanent Property . . . . . . . . . . . . . . . 36
Original Cost. . . . . . . . . . . . . . . . . . 36
Company to furnish Trustee in connection
with authentication of bonds pursuant
to Section 5 of Article III or payment
of cash pursuant to Section 6 of
Article III or of Article IX of the Mortgage:
Opinion of counsel that
Company has acquired good title to
property . . . . . . . . . . . . . . . . . . . . 36
Certificate of President or any
Executive or other Vice President
and also by the Treasurer or an
Assistant Treasurer certifying
that the property involved is
"permanent property". . . . . . . . . . . . . . . 37
<PAGE>
Page
Company shall not hereafter issue any bonds
under any underlying mortgage . . . . . . . . . . 37
Company not to request Trustee to authenticate
bonds or to pay to it cash on account
of bonds purchased or redeemed through
operation of, or bonds deposited in,
the sinking funds provided for in
supplemental indentures. . . . . . . . . . . . . 37
In event of acquisition of substantially
all properties subject to lien of
Mortgage by federal, state or municipal
authority, Company shall be deemed to
have requested Trustee to redeem all
bonds of all series under Mortgage . . . . . . . 38
Classifying of "property replaced or retired". . . . . 38
If Company consolidates or merges with
another corporation, successor must
assume payment of principal and
interest on all bonds outstanding
under Mortgage . . . . . . . . . . . . . . . . . 38
Sec. 2:After-acquired property shall be
subject to lien of Mortgage . . . . . . . . 39
Sec. 3:Company to furnish certificates,
mortgages, deeds, opinions of
counsel to Trustee within sixty
(60) days after acquiring land,
plants or interests in lands or
plants the aggregate cost of
which shall equal or
exceed $500,000 . . . . . . . . . . . . . . 39
Sec. 4:Company covenants that upon cancellation
of any "prior lien" it shall cause
all cash or obligations held by
trustee of such "prior lien" to be
paid over to Trustee . . . . . . . . . . . . 41
<PAGE>
ARTICLE III
MISCELLANEOUS
Page
Sec. 1:Trustee's Acceptance . . . . . . . . . . . . . . . . . . 42
Sec. 2:Supplemental Indenture executed
pursuant to Article XVI of Mortgage. . . . . 42
Sec. 3:All covenants and conditions by or
on behalf of Company to bind its
successors and assigns. . . . . . . . . . . 42
Sec. 4:Supplemental Indenture to become
effective only from time of its
actual execution and delivery
by the Company and Trustee. . . . . . . . . 42
Execution in counterparts. . . . . . . . . . . . . . . . . . . . 42
Attestation clause . . . . . . . . . . . . . . . . . . . . . . 43
Signatures.......... . . . . . . . . . . . . . . . . . . . . . . 43
Acknowledgment by Company. . . . . . . . . . . . . . . . . . . . 44
Acknowledgment by Trustee. . . . . . . . . . . . . . . . . . . . 45
<PAGE>
This Supplemental Indenture, dated as of December 1, 1993, made and
entered into by and between THE PEOPLES GAS LIGHT AND COKE COMPANY, a
corporation organized and existing under the laws of the State of Illinois
(hereinafter called the "Company") and CONTINENTAL BANK, NATIONAL ASSOCIATION
(hereinafter called the "Trustee"), a corporation organized and existing under
laws of the United States of America and successor to Illinois Merchants Trust
Company, as trustee under the indenture of Chicago By-Product Coke Company to
said Illinois Merchants Trust Company, as trustee, dated January 2, 1926,
WITNESSETH:
WHEREAS, Chicago By-Product Coke Company, a corporation organized and
existing under the laws of the State of Delaware, heretofore gave its mortgage
in the form of an indenture (hereinafter called the "Original Mortgage") to
Illinois Merchants Trust Company, as trustee, under date of the second day of
January, 1926; and
WHEREAS, the Company executed and delivered to said Illinois Merchants
Trust Company, as trustee under the Original Mortgage, an indenture bearing date
the first day of March, 1928, whereby, among other things, the Company assumed
and agreed to pay the principal and interest of all bonds issued or to be issued
under the Original Mortgage and secured thereby, and to perform and fulfill all
of the terms, covenants, and conditions of the Original Mortgage binding upon
said Chicago By-Product Coke Company, and in and by said indenture the Company
subjected to the lien of the Original Mortgage, subject to the existing liens
permitted by Section 2 of Article XIV of the Original Mortgage but with
statements required by said Section 2 with regard to such existing liens, all of
the property then owned by the Company or thereafter acquired by it (excepting
such of its property as the Company was by said Section 2 of Article XIV of the
Original Mortgage expressly authorized to reserve from the lien of the Original
Mortgage); and
WHEREAS, by virtue of all the things done as in the next preceding
paragraph recited, the Company has become the successor corporation under the
Original Mortgage, subject to all the terms, conditions and restrictions
thereof; and
WHEREAS, thereafter the Company has made, executed and delivered other
indentures supplemental to the Original Mortgage, of which the indentures
supplemental to the Original Mortgage delivered to Continental Bank, National
Association (formerly known as Continental Illinois National Bank and Trust
Company of Chicago), as Trustee, successor to Illinois Merchants Trust Company,
as Trustee under the Original Mortgage, dated, respectively, May 20, 1936, March
10, 1950, as of June 1, 1951, as of August 15, 1967, as of September 15, 1970,
as of June 1, 1984, as of June 1, 1984, as of October 1, 1984, as of March 1,
1985, as of March 1, 1985, as of March 1, 1985, as of March 1, 1985, as of
May 1, 1990 and as of April 1, 1993 are wholly or partially in full force and
effect (said Original Mortgage, and said Indenture dated March 1, 1928, as so
supplemented and amended, being collectively called the "Mortgage", and said
Mortgage,
<PAGE>
as supplemented by this Supplemental Indenture, being collectively called the
"Mortgage as supplemented"); and
WHEREAS, all bonds which have heretofore been issued and outstanding under
the Mortgage have been retired and cancelled, except that as of December 1,
1993, there were bonds of the following series outstanding in the aggregate
principal amounts indicated below:
<TABLE>
<CAPTION>
Aggregate
Bonds Due Date Principal Amount
----- -------- ----------------
<S> <C> <C>
Series U June 1, 1999 $43,375,000
Series V June 1, 1999 $43,375,000
Series W October 1, 1999 $10,400,000
Series X March 1, 2015 $50,000,000
Series Y March 1, 2015 $50,000,000
Series Z March 1, 2015 $50,000,000
Series AA March 1, 2015 $50,000,000
Series BB May 1, 2020 $75,000,000
Series CC May 1, 2003 $75,000,000
</TABLE>
and;
WHEREAS, it is provided in Article III of the Mortgage that bonds of any
series may from time to time be issued by the Company under the Mortgage in a
principal amount equal to 75% of expenditures made for the acquisition of any
permanent property as defined in the mortgage or upon the deposit of cash with
the Trustee equal to the aggregate principal amount of bonds whose
authentication and delivery is then applied for; and
WHEREAS, the Company has duly determined to create an additional series of
its bonds to be issued under the Mortgage as supplemented designated "The
Peoples Gas Light and Coke Company First and Refunding Mortgage Multi-Modal
Bonds, Series EE" (herein sometimes referred to as "bonds of Series EE") and to
issue an aggregate of $27,000,000 principal amount of said bonds all of which
bonds shall be fully registered without coupons; and
WHEREAS, the Company desires to reserve the right to amend the Mortgage
without any consent or other action by holders of the bonds of Series EE or any
subsequent series, to provide that the Mortgage, the rights and obligations of
the Company and the rights of the bondholders may be modified with the consent
of the holders of not less than 60% in aggregate principal amount of the bonds
adversely affected; provided, however, that no modification shall (1) extend the
time, or reduce the amount, of any payment on any bond, without the consent of
the holder of each bond so affected, (2) permit the creation of any lien, not
otherwise permitted, prior to or on a parity with the lien of the
2
<PAGE>
Mortgage, without the consent of the holders of all bonds then outstanding, or
(3) reduce the above percentage of the aggregate principal amount of bonds the
holders of which are required to approve any such modification without the
consent of the holders of all bonds then outstanding; and
WHEREAS, the form of registered bond of Series EE and the form of the
Trustee's Certificate to appear on all bonds of Series EE shall be substantially
as follows:
(Form of Series EE Registered Bond Without Coupons)
No. R . . . . . . . . $. . . . . . .
THE PEOPLES GAS LIGHT AND COKE COMPANY
FIRST AND REFUNDING MORTGAGE MULTI-MODAL BOND,
SERIES EE
DUE December 1, 2023
THE PEOPLES GAS LIGHT AND COKE COMPANY, an Illinois corporation
(hereinafter called the "Company"), for value received, hereby promises to pay
to. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . ., or registered assigns on December 1, 2023, unless
this Bond shall have been called for redemption and payment of the redemption
price shall have been duly made or provided for in accordance with the
hereinafter described Mortgage, the principal sum of . . . . . . . . . . . . . .
. Dollars ($ ), and to pay interest on the balance of said principal
sum from time to time remaining unpaid until payment of said principal amount
has been made or duly provided for, at the rates and on the dates determined as
described herein and in the Supplemental Indenture (as hereinafter defined),
unless this Bond is authenticated on a date to which interest has been paid, in
which event this Bond shall bear interest from such date, or unless no interest
has been paid on this Bond, in which event this Bond shall bear interest from
December 1, 1993, at the rate borne by this Bond on the date on which such
principal became due and payable, payable at or before 9:00 a.m., Chicago time,
on the dates determined as described herein and in the Supplemental Indenture,
until payment in full of such principal sum. Interest shall also accrue on any
overdue principal, premium, if any, and (to the extent that such interest shall
be legally enforceable) on any overdue installment of interest until paid at the
same rate of interest borne by this Bond for the applicable period that such
principal, premium, if any, or interest, as the case may be, is overdue. The
interest so payable on any Interest Payment Date (as hereinafter defined) will,
subject to certain exceptions provided in the Mortgage, be paid to the person
who is the registered owner of this Bond at the close of business on the
applicable Record Date (as hereinafter defined) next preceding such Interest
Payment Date. Principal of,
3
<PAGE>
premium, if any, and interest on this Bond shall be payable in lawful money of
the United States of America at the principal corporate office or agency of the
Company in Chicago, Illinois.
This Bond is one of the First and Refunding Mortgage Bonds of the Company,
all issued and to be issued in series, from time to time, under and in
accordance with and, irrespective of the time of issue or of the series in which
issued or the designation thereof, equally secured by an Indenture, dated the
second day of January, 1926, executed by Chicago By-Product Coke Company, a
Delaware corporation, to Illinois Merchants Trust Company, as trustee, and
recorded on January 19, 1926, as Document No. 9154395 in Book 22219 of Records,
at page 283, in the Recorder's Office of Cook County, Illinois, which Indenture
was assumed by the Company as a successor corporation, as defined therein, by an
indenture, dated the first day of March, 1928, executed by the Company to said
trustee, and recorded on April 7, 1928, as Document No. 9980547 in Book 25701 of
Records, at page 599, in the Recorder's Office of Cook County, Illinois, and has
heretofore been, and from time to time hereafter may be, amended and
supplemented by indentures supplemental thereto, including the Supplemental
Indenture dated as of December 1, 1993 relating to the hereinafter described
Series EE Bonds (the "Supplemental Indenture"). Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings ascribed
thereto in the Supplemental Indenture. The word "Mortgage", as used in this
Bond, shall mean said Indenture, as amended and supplemented from time to time
by indentures supplemental thereto, including the Supplemental Indenture. The
word "Company", as used in this Bond, shall be construed to include any
successor corporation, as defined in the Mortgage. The word "Trustee", as used
in this Bond, shall be construed to mean and include Continental Bank, National
Association (successor to Illinois Merchants Trust Company), as trustee under
the Mortgage, and any successor trustee thereunder. Reference is hereby made to
the Mortgage and all indentures supplemental thereto for a description of the
property mortgaged and pledged (except that certain parcels described in the
Mortgage and in said supplemental indentures have been released from the lien of
the Mortgage pursuant to the terms thereof), the nature and extent of the
security and the terms and conditions governing the issuance and security of the
bonds issued or to be issued under the Mortgage. As provided in the Mortgage,
the bonds may be for various principal sums, are issuable in series, may bear
interest at different rates and may otherwise vary as provided therein. This
Bond is one of the series of such First and Refunding Mortgage Bonds designated
as "The Peoples Gas Light and Coke Company First and Refunding Mortgage Multi-
Modal Bonds, Series EE", hereinafter called the "Series EE Bonds".
In the manner provided and subject to the provisions of the
Supplemental Indenture, the term of the Series EE Bonds will be divided into
consecutive Interest Rate Modes during each of which the Series EE Bonds shall
bear interest at either a Daily Rate, a Weekly Rate, a Quarterly Rate, a
Semiannual Rate, a Term Rate or a Flexible Rate, each of which shall be
determined in the manner provided in the Supplemental Indenture. In no event
shall the interest rate on any Series EE Bond be greater than the Maximum Rate
(as hereinafter defined).
4
<PAGE>
Interest shall be computed (1) during a Semiannual Rate Mode or in the
case of a Term Rate Period, on the basis of a 360-day year consisting of twelve
30-day months, and (2) during any other Interest Rate Mode, on the basis of a
365 or 366-day year, as appropriate, and the actual number of days elapsed.
As provided in the Supplemental Indenture, the Company may from time
to time elect to exercise its option to designate an Interest Rate Mode of a
type other than the then current Interest Rate Mode. The Company shall evidence
such election by notifying the City, the Revenue Bond Trustee and the
Remarketing Agent of such election not later than the time specified in the
Supplemental Indenture for the respective Interest Rate Mode selected. Such
notice shall (i) specify the effective date of the adjustment to the Interest
Rate Mode so designated, and (ii) with respect to certain adjustments to the
Interest Rate Mode described in the Supplemental Indenture, be accompanied by an
opinion of Bond Counsel to the effect that such adjustment in the Interest Rate
Mode is authorized or permitted by the Revenue Bond Indenture and that such
adjustment will not adversely affect the exclusion of the interest on the
Chicago Revenue Bonds from federal gross income. Upon any such designation of
an Interest Rate Mode by the Company, such Interest Rate Mode shall continue as
so designated until such time as the Company shall elect to again designate an
Interest Rate Mode except as provided in the Supplemental Indenture and except
that the final interest rate period shall terminate on the day immediately
preceding December 1, 2023 .
The term "Interest Payment Date" means (i) during a Daily Rate Mode or
Weekly Rate Mode, the first Business Day of each calendar month, (ii) during a
Quarterly Rate Mode, the first Business Day of the third calendar month
following the effective date of such Quarterly Rate Mode, and the first Business
Day of each third month thereafter, (iii) during a Semiannual Rate Mode or Term
Rate Period, the first day of the sixth calendar month following the effective
date of such Semiannual Rate Mode or Term Rate Period, as applicable, and the
first day of each successive sixth calendar month thereafter, (iv) with respect
to any Flexible Segment, the Business Day next succeeding the last day thereof
and (v) with respect to each particular Interest Rate Mode, the day next
succeeding the last day thereof.
The term "Record Date" means with respect to any Interest Payment Date
during a Daily Rate, Weekly Rate or Quarterly Rate Mode, or with respect to a
Flexible Segment, the Business Day next preceding such Interest Payment Date
and, with respect to any Interest Payment Date during a Semiannual Rate Mode or
a Term Rate Period, the fifteenth day of the calendar month next preceding such
Interest Payment Date.
The term "Maximum Rate" means the lesser of 14% per annum or the
maximum rate permitted by law.
The Series EE Bonds shall be deliverable in the form of registered
Bonds without coupons in the denominations of $5,000 and any integral multiple
thereof.
5
<PAGE>
The Company has appointed a Remarketing Agent pursuant to the terms of
the Revenue Bond Indenture. The Company may remove or replace the Remarketing
Agent. The determination of each Daily Rate, Weekly Rate, Quarterly Rate,
Semiannual Rate and Term Rate and each Flexible Segment and Flexible Rate by the
Remarketing Agent shall be conclusive and binding upon the Trustee, the Company
and the owners of the Series EE Bonds. The Revenue Bond Trustee shall provide
the Trustee with notice of each Daily Rate, Weekly Rate, Quarterly Rate,
Semiannual Rate and Term Rate and each Flexible Segment and Flexible Rate as
provided in the Supplemental Indenture.
As more fully described in the Supplemental Indenture, the Company reserves
the right, without any consent or other action by holders of the Series EE Bonds
or the bonds of any subsequent series, to amend the Mortgage to provide that the
Mortgage, the rights and obligations of the Company and the rights of the
bondholders may be modified with the consent of the holders of not less than 60%
in aggregate principal amount of the bonds adversely affected; provided,
however, that no modification shall (1) extend the time, or reduce the amount,
of any payment on any bond, without the consent of the holder of each bond so
affected, (2) permit the creation of any lien, not otherwise permitted, prior to
or on a parity with the lien of the Mortgage, without the consent of the holders
of all bonds then outstanding, or (3) reduce the above percentage of the
principal amount of bonds the holders of which are required to approve any such
modification without the consent of the holders of all bonds then outstanding.
On any Business Day during a Daily Rate Mode, a Weekly Rate Mode or a
Quarterly Rate Mode, and on the day next succeeding the last day of each such
Interest Rate Mode, the Series EE Bonds shall be subject to optional redemption
by the Company, in whole or in part, at 100% of the principal amount thereof,
plus accrued interest, if any, to the redemption date.
On the day next succeeding the last day of any Flexible Segment with
respect to any Series EE Bond (or portion of the principal amount thereof, in
the event Chicago Revenue Bonds of different Flexible Segments shall apply to
the same Series EE Bond), such bond (or portion thereof, as the case may be)
shall be subject to optional redemption by the Company, in whole or in part, at
100% of the principal amount thereof.
On the day next succeeding the last day of any Semiannual Rate Period, the
Series EE Bonds shall be subject to optional redemption by the Company, in whole
or in part, at 100% of the principal amount thereof.
During any Term Rate Period, and on the day next succeeding the last day of
such Term Rate Period, the Bonds shall be subject to optional redemption by the
Company, during the periods specified below, in whole at any time or in part
from time to time on any Interest Payment Date, at the redemption prices
(expressed as percentages of principal amount) hereinafter indicated plus
accrued interest, if any, to the redemption date:
6
<PAGE>
<TABLE>
<CAPTION>
LENGTH OF TERMRATE PERIOD
(EXPRESSED IN YEARS) REDEMPTION PRICES
------------------------- -----------------
<S> <C>
greater than 17 after 10 years at 102%, declining by
1/2 of 1% annually to 100%
less than or equal to 17 and greater after 5 years at 102%, declining by
than 10 1/2 of 1% annually to 100%
less than or equal to 10 and greater after 5 years at 101-1/2%, declining
than 8 annually by 1% to 100-1/2% and
then by 1/2 of 1% to 100%
less than or equal to 8 and greater after 3 years at 101-1/2%, declining
than 6 annually by 1% to 100-1/2 and then by
1/2 of 1% to 100%
less than or equal to 6 and greater after 2 years at 101%, declining by
than 4 1/2 of 1% annually to 100%
less than or equal to 4 and greater after 2 years at 100-1/2%, declining
than 3 by 1/2 of 1% annually to 100%
less than or equal to 3 only on the day next succeeding the last
day of the period at 100%
</TABLE>
With respect to any Term Rate Period, the Company may specify in the
notice required by the Revenue Bond Indenture hereof redemption prices and
periods other than those set forth above; provided, however, that such notice
shall be accompanied by an opinion of Bond Counsel stating that such changes in
redemption prices and periods (i) are authorized or permitted by the Revenue
Bond Indenture and (ii) will not adversely affect the exclusion of the interest
on the Chicago Revenue Bonds from federal gross income.
The Series EE Bonds are subject to optional redemption by the Company, in
whole but not in part, at any time, at a redemption price of 100% of the
principal amount thereof, plus accrued interest, if any, to the redemption date,
upon the occurrence of certain events described in the Supplemental Indenture
(relating to unreasonable burdens or excessive liabilities imposed upon the
Company; changes in the economic availability of raw materials, operating
supplies, fuel or other energy sources or supplies or technological or other
changes rendering the Project uneconomic; court order or decree preventing
operations at the Project or rendering the continuation of the Project's
operations economically unfeasible).
All of the outstanding Series EE Bonds may be redeemed at any time by the
Company, by the payment of the principal amount thereof and accrued interest
thereon to the date of redemption, without the payment of any premium, in the
event of the acquisition by any
7
<PAGE>
federal, state or municipal authority of any substantial portion (which shall be
not less than one-third as determined by book values) of the income-producing
properties of the Company which are subject to the lien of the Mortgage.
All of the outstanding bonds under the Mortgage shall be redeemed by the
Company by the payment of the respective applicable redemption price or prices
and accrued interest thereon to the date of redemption, without the payment of
any premium, in the event of the acquisition by any federal, state or municipal
authority of all or substantially all of the income-producing properties of the
Company which are subject to the lien of the Mortgage.
All of the outstanding Series EE Bonds shall be redeemed by the Company not
more than sixty (60) days after the Trustee receives written notice from the
Revenue Bond Trustee stating that the principal on the Chicago Revenue Bonds has
been declared to be immediately due and payable as a result of an event of
default under the Revenue Bond Indenture (as defined in the Mortgage). The
redemption price for any such redemption shall be 100% of the principal amount
of the Series EE Bonds to be redeemed, plus interest thereon accrued to the date
fixed for redemption.
Series EE Bonds are also subject to mandatory redemption at any time, in
whole (or in part as hereinafter provided), at 100% of the principal amount
thereof, plus accrued interest, if any, to the redemption date, in the event
that it is finally determined by the Internal Revenue Service or by a court of
competent jurisdiction that, as a result of the failure by the Company to
observe any covenant, agreement or representation in that certain Loan Agreement
dated as of December 1, 1993 between the Company and the City, the interest
payable on the Chicago Revenue Bonds is includable for federal income tax
purposes in the gross income of any owner thereof, other than an owner who is a
"substantial user" of the Project or a "related person", as provided in Section
147(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
applicable regulations thereunder. Any such determination will not be
considered final for this purpose unless the Company has been given written
notice and, if it so desires, has been afforded the opportunity to contest the
same, either directly or in the name of any owner of a Chicago Revenue Bond, and
until the conclusion of any appellate review, if sought. The Series EE Bonds
shall be redeemed in whole after such determination unless redemption of a
portion of the Chicago Revenue Bonds outstanding would have the result that
interest payable on the Chicago Revenue Bonds remaining outstanding after such
redemption would not be includable for federal income tax purposes in the gross
income of any owner of the Chicago Revenue Bonds (other than an owner who is a
"substantial user" of the Project or a "related person" within the meaning of
Section 147(a) of the Code), and in such event the Series EE Bonds shall be
redeemed in such amount as to accomplish that result.
Notice of any redemption of the Series EE Bonds shall be given by mailing
by first-class mail, postage prepaid, at least thirty (30) days and not more
than sixty (60) days prior to the redemption date, to the holders of all such
bonds to be redeemed at their
8
<PAGE>
last addresses that shall appear upon the registry book, all as more fully
provided in the Mortgage. Notice of redemption having been duly given, the
bonds called for redemption shall become due and payable upon the redemption
date and, if the redemption price shall have been deposited with the Trustee,
interest thereon shall cease to accrue on and after the redemption date, and
whenever the redemption price thereof shall have been deposited with the Trustee
and notice of redemption shall have been duly given or provision therefore made,
such bonds shall no longer be entitled to any lien or benefit of the Mortgage.
In case of certain events of default specified in the Mortgage, the
principal of all bonds issued and outstanding thereunder may be declared or may
become due and payable in the manner and with the effect provided in the
Mortgage.
No recourse shall be had for the payment of the principal of or interest on
this Bond, or for any claim based hereon, or otherwise in respect hereof or of
the Mortgage, to or against any incorporator, stockholder, director or officer,
past, present or future, of the Company, either directly or through the Company,
under any constitution or statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability of incorporators,
stockholders, directors and officers being released by the holder hereof by the
acceptance of this Bond, and being likewise waived and released by the terms of
the Mortgage.
This Bond is transferable by the registered holder hereof in person or by a
duly authorized attorney at the office or agency of the Company in the City of
Chicago, State of Illinois, upon surrender and cancellation of this Bond, and
thereupon a new registered bond or bonds, without coupons, of the same series
and for the same aggregate principal amount will be issued to the transferee in
exchange herefor. In the manner provided in the Mortgage, registered Bonds
without coupons of this series may, at the option of the registered owner and
upon surrender at said office or agency of the Company, be exchanged for
registered Bonds without coupons of this series of the same aggregate principal
amount of other authorized denominations. Notwithstanding the foregoing, this
Bond may not be sold, transferred, pledged or hypothecated except as required to
effect assignment to the Revenue Bond Trustee and to any successor trustee.
The Company and the Trustee and any paying agent may deem and treat the
person in whose name this Bond is registered as the absolute owner hereof for
the purpose of receiving payment and for all other purposes and neither the
Company nor the Trustee nor any paying agent shall be affected by any notice to
the contrary.
This Bond shall not be entitled to any security or benefit under the
Mortgage, and shall not become valid or obligatory for any purpose, until this
Bond shall have been authenticated by the execution of the certificate, hereon
endorsed, by the Trustee or its successor in trust under the Mortgage.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Bond to be executed in its
name by its President, an Executive Vice President or a Vice President manually
or in facsimile, and has caused its corporate seal manually or in facsimile to
be hereto affixed, attested by the manual or facsimile signature of its
Secretary or of an Assistant Secretary.
Dated: . . . . . . . . . . . . .
THE PEOPLES GAS LIGHT AND COKE COMPANY
By . . . . . . . . . . . . . . . .
. . . . .President
Attest:
. . . . . . . . . . . . . . . .
. . . . .Secretary
(Form of Trustee's Certificate)
This bond is one of the bonds of the series designated, referred to and
described in the within-mentioned Mortgage.
CONTINENTAL BANK, NATIONAL ASSOCIATION
By . . . . . . . . . . . . . . .
Authorized Officer.
10
<PAGE>
_______________________
ASSIGNMENT
For value received, the undersigned hereby sell(s) and transfer(s) unto:
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE: ____________________________________
_________________________________________________________________
_________________________________________________________________
(Please print or typewrite name and address, including zip code of assignee)
the within Bond and all rights thereunder, hereby irrevocably constituting and
appointing _____________ Attorney to transfer said Note on the books of the
Trustee with full power of substitution in the premises.
Dated: __________________ _______________________
Notice: The signature to this
Assignment must correspond with the name
as written upon the face of the within
instrument in every particular, without
alteration or enlargement, or any
changes whatever.
and
WHEREAS, all acts and things necessary to make the bonds of Series EE, when
authenticated by the Trustee and issued as in the Mortgage and in this
Supplemental Indenture provided, the valid, binding and legal obligations of the
Company, entitled in all respects to the security of the Mortgage, have been
done and performed and the creation, execution and delivery of this Supplemental
Indenture have in all respects been duly authorized by a resolution adopted by
the Board of Directors of the Company; and
WHEREAS, the Company has requested the Trustee, pursuant to the provisions
of Article XVI of the Mortgage, to enter into this Supplemental Indenture for
the purpose of supplementing the Mortgage as herein provided;
NOW, THEREFORE, in consideration of the premises and of the sum of One
Dollar ($1.00) duly paid by the Trustee to the Company and for other good and
valuable considerations, the receipt whereof is hereby acknowledged, the parties
hereto agree as follows:
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<PAGE>
ARTICLE I
FIRST AND REFUNDING MORTGAGE MULTI-MODAL BONDS,
SERIES EE
SECTION 1. A new series of bonds of the Company shall be issued under and
secured by the Mortgage as supplemented, which shall be designated as the
Company's "First and Refunding Mortgage Multi-Modal Bonds, Series EE". The
aggregate principal amount of bonds of Series EE which may be executed by the
Company and authenticated by the Trustee shall be limited to $27,000,000
(exclusive of bonds authenticated and delivered upon interdenominational or
other exchanges and transfers pursuant to Section 3 of Article I hereof and
Sections 2, 5, 11 and 12 of Article I of the Original Mortgage and delivered
pursuant to Section 3 of Article VI of the Original Mortgage as the same may
relate to fully registered bonds). Bonds of Series EE all shall be registered
bonds without coupons, and shall be due and payable December 1, 2023. All bonds
of Series EE shall bear interest from the date thereof, payable at or before
9:00 o'clock a.m. Chicago time on the Interest Payment Date until the principal
thereof shall have become due and payable, at the rates determined as provided
in Section 8 of this Article I, and on any overdue principal and (to the extent
that payment of such interest is enforceable under the applicable law) on any
overdue installment of interest at the same rate per annum, and shall be payable
both as to principal and interest, and as to premium, if any, in coin or
currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts, at the office or agency of
the Company in the City of Chicago, Illinois.
So long as there is no existing default in the payment of interest on the
bonds of Series EE, the interest payable on any Interest Payment Date shall be
to the person in whose name any bond of Series EE is registered at the close of
business on any Record Date with respect to any Interest Payment Date, and such
person shall be entitled to receive the interest payable on such Interest
Payment Date notwithstanding any transfer or exchange of such bond of Series EE
subsequent to the Record Date and on or prior to such Interest Payment Date,
except as and to the extent the Company shall default in the payment of the
interest due on such Interest Payment Date, in which case such defaulted
interest shall be paid to the person in whose name such bond of Series EE is
registered at the close business on a subsequent Record Date, which shall not be
less than five (5) days prior to the date of payment of such defaulted interest
established by notice given by mail by or on behalf of the Company to the person
in whose name such bond of Series EE is then registered and to the Trustee not
less than ten (10) days preceding such subsequent record date.
As used in this Section I, the term "default in the payment of interest"
means failure to pay interest on the applicable Interest Payment Date
disregarding any period of grace permitted by Article X of the Mortgage.
12
<PAGE>
SECTION 2. Bonds of Series EE may be issued only as registered bonds
without coupons (hereinafter sometimes referred to as "registered bonds"), and
they shall be substantially in the form hereinbefore recited. They shall be
issuable in denominations which shall be multiples of $5,000 and the execution
by the Company of any bond of Series EE shall evidence conclusively the due
authorization of the denomination of such bond. Each registered bond of Series
EE shall be dated as of the date of the Interest Payment Date on which interest
was paid on other bonds of said Series next preceding the date of issue of such
registered bond, except that (i) so long as there is no existing default in the
payment of interest upon the bonds of Series EE, any bond of Series EE issued
after the close of business on any Record Date with respect to any Interest
Payment Date and prior to such Interest Payment Date, shall be dated as of such
Interest Payment Date, and (ii) any bond of Series EE issued on an Interest
Payment Date on which interest on other bonds of Series EE was paid shall be
dated as of the date of issue and (iii) any bond of Series EE issued before the
initial Interest Payment Date, shall be dated December 1, 1993, the date of
commencement of the first interest period for the bonds of Series EE, unless (i)
above is applicable.
The registered owner of any bond of Series EE dated as of an Interest
Payment Date as provided in (i) above shall, if the Company shall default in the
payment of interest due on such Interest Payment Date and such default shall be
continuing, be entitled to exchange such bond for a bond or bonds of Series EE
of the same aggregate principal amount dated as of the Interest Payment Date
next preceding the Interest Payment Date first mentioned in this sentence, or,
if the Company shall default in the payment of interest on the first Interest
Payment Date for bonds of Series EE, such owner shall be entitled to exchange
such bond for a bond or bonds of Series EE of the same aggregate principal
amount dated as of December 1, 1993. If the Trustee shall have knowledge at any
time that any registered owner of a bond of Series EE shall be entitled by the
provision of the next preceding sentence to exchange such bond, the Trustee
shall within thirty (30) days mail to such owner at the address of such owner
appearing upon the registry book, a notice informing such owner that such owner
has such right of exchange.
SECTION 3. In the manner prescribed in the Mortgage, the holder of a
registered bond or bonds of Series EE may, at the office or agency of the
Company in the City of Chicago, State of Illinois, surrender such bond or bonds
in exchange for a like aggregate principal amount of one or more registered
bonds of Series EE of any authorized denomination or denominations.
No charge will be made by the Company to the registered owner of a bond of
Series EE for the transfer thereof or for the exchange thereof for bonds of
Series EE of other authorized denominations, except, in the case of transfer, a
charge sufficient to reimburse the Company for any stamp or other tax or
governmental charge required to be paid by the Company or the Trustee.
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<PAGE>
SECTION 4. All bonds of Series EE shall be executed on behalf of the
Company by the manual or facsimile signature of its President or an Executive
Vice President or a Vice President and shall have affixed thereon the manual or
facsimile seal of the Company attested by the manual or facsimile signature of
its Secretary or one of its Assistant Secretaries and be authenticated by the
execution by the Trustee of the certificate endorsed on said bonds, and said
bonds shall be issued from time to time, as the Board of Directors of the
Company may determine, but in accordance with the terms, provisions, conditions
and restrictions set forth in the Mortgage and in this Supplemental Indenture.
The definitive bonds of Series EE may be issued in typewritten or printed form
or otherwise as provided in the Mortgage.
SECTION 5. (a) The bonds of Series EE are subject to optional redemption
by the Company, in whole but not in part, at any time, at a redemption price of
100% of the principal amount thereof plus accrued interest, if any, to the
redemption date, if any of the following shall have occurred and if within one
hundred and eighty (180) days following said occurrence the Company files
written notice with the City and the Revenue Bond Trustee and directs that the
Chicago Revenue Bonds are to be redeemed:
(i) if, in the Company's reasonable judgment, unreasonable
burdens or excessive liabilities shall, have been imposed upon the
City or the Company with respect to the Project or the operation
thereof, including, without limitation, federal, state or other ad
valorem property, income or other taxes, other than ad valorem taxes
presently levied upon privately owned property used for the same
general purposes as the Project; or
(ii) if changes in the economic availability of raw materials,
operating supplies, fuel or other energy sources or supplies, or
facilities necessary for the operation of the Project or such
technological or other changes shall have occurred which, in the
Company's reasonable judgment, render the Project uneconomic for such
purposes; or
(iii) any court or administrative body shall enter an order or
decree preventing operations at the Project for six consecutive
months; or
(iv) any court or administrative agency shall issue an order,
decree or regulation the compliance with which would, in the opinion
of the Company, render the continuation of the Project's operations
economically unfeasible.
(b) On any Business Day during a Daily Rate Mode, a Weekly Rate Mode
or a Quarterly Rate Mode, and on the day next succeeding the last day of each
such Interest Rate Mode, the bonds of Series EE shall be subject to optional
redemption by the Company, in whole or in part, at 100% of the principal amount
thereof, plus accrued interest, if any, to the redemption date.
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<PAGE>
On the day next succeeding the last day of any Flexible Segment with
respect to any bond of Series EE, such bond of Series EE shall be subject to
optional redemption by the Company, in whole or in part, at 100% of the
principal amount thereof.
On the day next succeeding the last day of any Semiannual Rate Period,
the Bonds shall be subject to optional redemption by the Company, in whole or in
part, at 100% of the principal amount thereof.
During any Term Rate Period, and on the day next succeeding the last
day of each Term Rate Period, the bonds of Series EE shall be subject to
optional redemption by the Company, during the periods specified below, in whole
at any time or in part from time to time on any Interest Payment Date, at the
redemption prices (expressed as percentages of principal amount) hereinafter
indicated plus accrued interest, if any, to the redemption date:
<TABLE>
<CAPTION>
LENGTH OF TERMRATE PERIOD
(EXPRESSED IN YEARS) REDEMPTION PRICES
------------------------- -----------------
<S> <C>
greater than 17 after 10 years at 102%, declining by
1/2 of 1% annually to 100%
less than or equal to 17 and greater after 5 years at 102%, declining by
than 10 1/2 of 1% annually to 100%
less than or equal to 10 and greater after 5 years at 101-1/2%, declining
than 8 annually by 1% to 100-1/2% and
then by 1/2 of 1% to 100%
less than or equal to 8 and greater after 3 years at 101-1/2%, declining
than 6 annually by 1% to 100-1/2 and then by
1/2 of 1% to 100%
less than or equal to 6 and greater after 2 years at 101%, declining by
than 4 1/2 of 1% annually to 100%
less than or equal to 4 and greater after 2 years at 100-1/2%, declining
than 3 by 1/2 of 1% annually to 100%
less than or equal to 3 only on the day next succeeding the last
day of the period at 100%
</TABLE>
With respect to any Term Rate Period, the Company may specify in the
notice required by Section 8(e)(ii) of this Article I redemption prices and
periods other than those set forth above; provided, however, that such notice
shall be accompanied by an opinion of Bond Counsel stating that such changes in
redemption prices and periods (i) are authorized or permitted by the Act and the
Revenue Bond Indenture and (ii) will not adversely affect the exclusion of the
interest on the Chicago Revenue Bonds from federal gross income.
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<PAGE>
(c) All of the outstanding bonds of Series EE may be redeemed at any
time by the Company, by the payment of the principal amount thereof and accrued
interest thereon to the date of redemption, without the payment of any premium,
in the event of the acquisition by any federal, state or municipal authority of
any substantial portion (which shall be not less than one-third as determined by
book values) of the income-producing properties of the Company which are subject
to the lien of the Mortgage.
(d) The bonds of Series EE are subject to mandatory redemption at any
time, in whole (or in part, as hereinafter provided), at 100% of the principal
amount thereof, plus accrued interest, if any, to the redemption date, in the
event that it is finally determined by the Internal Revenue Service or by a
court of competent jurisdiction that, as a result of the failure by the Company
to observe any covenant, agreement or representation in the Agreement, the
interest payable on the Chicago Revenue Bonds is includable for federal income
tax purposes in the gross income of any owner thereof, other than an owner who
is a "substantial user" of the Project or a "related person", as provided in
Section 147(a) of the Code, and the applicable regulations thereunder. For
purposes of this paragraph (d), the "owner" of a Chicago Revenue Bond includes a
"Beneficial Owner" as defined in the Revenue Bond Indenture. Any such
determination will not be considered final for this purpose unless the Company
has been given written notice and, if it so desires, has been afforded the
opportunity to contest the same, either directly or in the name of any owner of
a Chicago Revenue Bond, and until the conclusion of any appellate review, if
sought. The bonds of Series EE shall be redeemed in whole after such
determination unless redemption of a portion of the Chicago Revenue Bonds
outstanding would have the result that interest payable on the Chicago Revenue
Bonds remaining outstanding after such redemption would not be includable for
federal income tax purposes in the gross income of any owner of the Chicago
Revenue Bonds (other than an owner who is a "substantial user" of the Project or
a "related person" within the meaning of Section 147(a) of the Code) and in such
event the bonds of Series EE shall be redeemed (in the principal amount of
$5,000 or any integral multiple thereof) in such amount as to accomplish that
result. Any redemption pursuant to this subparagraph (d) shall be on any date
within one hundred and eighty (180) days from the time of such final
determination.
(e) All of the outstanding bonds of Series EE shall be redeemed by the
Company not more than sixty (60) days after the Trustee receives written notice
from the Revenue Bond Trustee stating that the principal on the Chicago Revenue
Bonds has been declared to be immediately due and payable as a result of an
event of default under the Revenue Bond Indenture. The redemption price for any
such redemption shall be 100% of the principal amount of the bonds of Series EE
to be redeemed, plus interest thereon accrued to the date fixed for redemption.
SECTION 6. If bonds of Series EE are to be redeemed as provided in Section
5 of this Article I, notice of redemption shall be mailed by or on behalf of the
Company, postage prepaid, at least thirty (30) days and not more than sixty (60)
days prior to such date of redemption, to the registered owners of all bonds of
Series EE to be so redeemed, at their respective addresses appearing upon the
registry book. Any notice which is
16
<PAGE>
mailed as herein provided shall be conclusively presumed to have been properly
and sufficiently given on the date of such mailing, whether or not the holder
receives the notice. In any case, failure to give due notice by mail, or any
defect in the notice, to the registered owners of any bonds of Series EE
designated for redemption as a whole or in part, shall not affect the validity
of the proceedings for the redemption of any other bond of Series EE. In case
of any redemption of bonds of Series EE by the Trustee pursuant to the
provisions of the Mortgage or any indenture supplemental thereto, notice of
redemption shall be given in a similar manner by the Trustee.
Except as provided above, the provisions of Article VI of the Mortgage
shall in all respects apply to any such redemption.
SECTION 7. Bonds of Series EE shall bear the following legend: "This Bond
may not be sold, transferred, pledged or hypothecated except as required to
effect assignment to the Revenue Bond Trustee and to any successor trustee."
SECTION 8. For the Term Rate Period commencing on the Dated Date to but
not including December 1, 1994, the bonds of Series EE shall bear interest at
the Term Rate of 2.55% per annum. Thereafter, in the manner hereinafter
provided, the bonds of Series EE shall bear interest at the Daily Rate, the
Weekly Rate, the Quarterly Rate, the Flexible Rate, the Semiannual Rate or the
Term Rate, but in no event shall the bonds of Series EE be in more than one
Interest Rate Mode at any one time.
(a) (i) For each Daily Rate Period, the bonds of Series EE shall bear
interest at the applicable Daily Rate, which in each case shall be determined by
the Remarketing Agent not later than 10:00 a.m., New York City time, on the
commencement of such Daily Rate Period. The Daily Rate for each Daily Rate
Period shall be the lowest rate which, in the judgment of the Remarketing Agent,
would enable the Remarketing Agent to sell the Chicago Revenue Bonds on the
effective date of such Daily Rate at a price equal to 100% of the principal
amount thereof; provided, however, that with respect to any day which is not a
Business Day and any other day for which the Remarketing Agent shall not have
determined a Daily Rate, the Daily Rate for such day shall be the same as the
Daily Rate for the immediately preceding day. In no event shall the Daily Rate
exceed the Maximum Rate. The Revenue Bond Trustee shall provide the Trustee
with written notice on a monthly basis of each Daily Rate, as determined.
(ii) At any time, the Company, by written direction to the City, the
Revenue Bond Trustee and the Remarketing Agent, may elect that the Chicago
Revenue Bonds shall bear interest at a Daily Rate. Such direction shall
(A) specify the effective date of such adjustment to a Daily Rate Mode which
shall be (1) a day not earlier than the 25th day following the fifth Business
Day after the date of receipt by the Revenue Bond Trustee of such direction,
(2) in the case of an adjustment from a Semiannual Rate Mode or a Term Rate
Period, the day immediately following the last day of the then current
Semiannual Rate Mode or Term Rate Period, as applicable, and (3) in the case of
an adjustment from a Flexible Rate Mode, the day immediately following the last
day of the
17
<PAGE>
then current Flexible Rate Mode as determined in accordance with
Section 8(f)(iii) hereof; and (B) in the case of an adjustment from a Term Rate
Period, be accompanied by an opinion of Bond Counsel stating that such
adjustment (1) is authorized or permitted by the Revenue Bond Indenture and
(2) will not adversely affect the exclusion of the interest on the Chicago
Revenue Bonds from federal gross income. During each Daily Rate Mode commencing
on a date so specified or determined (provided that the opinion of Bond Counsel
described in clause (B) above, if required, is reaffirmed as of such date) and
ending on the day immediately preceding the effective date of the next
succeeding Interest Rate Mode, the interest rate borne by the bonds of Series EE
shall be a Daily Rate determined as provided above.
(b) (i) For each Weekly Rate Period, the bonds of Series EE shall bear
interest at the applicable Weekly Rate, which, in each case, shall be determined
by the Remarketing Agent no later than 4:00 p.m., New York City time, on the
Business Day immediately preceding the commencement of the initial Weekly Rate
Period of a Weekly Rate Mode and thereafter no later than 10:00 a.m., New York
City time, on the first day of each succeeding Weekly Rate Period to which it
relates. The Weekly Rate for each Weekly Rate Period shall be the lowest rate
which, in the judgement of the Remarketing Agent, would enable the Remarketing
Agent to sell the Chicago Revenue Bonds on the effective date of such Weekly
Rate at a price equal to 100% of the principal amount thereof; provided,
however, that if the Remarketing Agent shall not have determined a Weekly Rate
for any Weekly Rate Period, the Weekly Rate for such Weekly Rate Period shall be
the same as the Weekly Rate for the immediately preceding Weekly Rate Period.
In no event shall the Weekly Rate exceed the Maximum Rate. The Revenue Bond
Trustee shall provide the Trustee with written notice on a monthly basis of each
Weekly Rate, as determined.
(ii) At any time, the Company, by written direction to the City, the
Revenue Bond Trustee and the Remarketing Agent, may elect that the Chicago
Revenue Bonds shall bear interest at a Weekly Rate. Such direction shall
(A) specify the effective date of such adjustment to a Weekly Rate Mode which
shall be (1) a day not earlier than the 25th day following the fifth Business
Day after the date of receipt by the Trustee of such direction, (2) in the case
of an adjustment from a Semiannual Rate Mode or a Term Rate Period, the day
immediately following the last day of the then current Semiannual Rate Mode or
Term Rate Period, as applicable, and (3) in the case of an adjustment from a
Flexible Rate Mode, the day immediately following the last day of the then
current Flexible Rate Mode as determined in accordance with Section 8(f) hereof;
and (B) in the case of an adjustment from a Term Rate Period, be accompanied by
an opinion of Bond Counsel stating that such adjustment (1) is authorized or
permitted by the Revenue Bond Indenture and (2) will not adversely affect the
exclusion of the interest on the Chicago Revenue Bonds from federal gross
income. During each Weekly Rate Mode commencing on a date so specified or
determined (provided that the opinion of Bond Counsel described in clause (B)
above, if required, is reaffirmed as of such date) and ending on the day
immediately preceding the effective date of the next succeeding Interest
18
<PAGE>
Rate Mode, the interest rate borne by the bonds of Series EE shall be a Weekly
Rate determined as provided above.
(c) (i) For each Quarterly Rate Period, the bonds of Series EE shall bear
interest at the applicable Quarterly Rate, which in each case shall be
determined by the Remarketing Agent no later than 12:00 noon, New York City
time, on the Business Day immediately preceding the commencement of the
Quarterly Rate Period to which it relates. The Quarterly Rate for each
Quarterly Rate Period shall be the lowest rate which, in the judgement of the
Remarketing Agent, would enable the Remarketing Agent to sell the Chicago
Revenue Bonds on the effective date of such Quarterly Rate at a price equal to
100% of the principal amount thereof; provided, however, that if, for any
reason, a Quarterly Rate for any Quarterly Rate Period shall not be determined
or be effective, the Interest Rate Mode for the bonds of Series EE shall
automatically convert to a Daily Rate Mode. If a Daily Rate for the first day
of such Daily Rate Mode is not determined as provided in Section 8(a)(i) hereof,
the Daily Rate for the first day of such Daily Rate Mode shall be 100% of the
PSA Municipal Index. In no event shall any Quarterly Rate be greater than the
Maximum Rate. The Revenue Bond Trustee shall provide the Trustee with prompt
written notice of each Quarterly Rate, as determined.
(ii) At any time, the Company, by written direction to the City, the
Revenue Bond Trustee and the Remarketing Agent, may elect that the Chicago
Revenue Bonds shall bear interest at a Quarterly Rate. Such direction shall
(A) specify the effective date of such adjustment to a Quarterly Rate Mode which
shall be (1) a day not earlier than the 25th day following the fifth Business
Day after the date of receipt by the Revenue Bond Trustee of such direction,
(2) in the case of an adjustment from a Semiannual Rate Mode or a Term Rate
Period, the day immediately following the last day of the then current
Semiannual Rate Mode or Term Rate Period, as applicable, and (3) in the case of
an adjustment from a Flexible Rate Mode, the day immediately following the last
day of the then current Flexible Rate Mode as determined in accordance with
Section 8(f)(iii) hereof; and (B) in the case of an adjustment from a Term Rate
Period, be accompanied by an opinion of Bond Counsel stating that such
adjustment (1) is authorized or permitted by the Revenue Bond Indenture and
(2) will not adversely affect the exclusion of the interest on the Chicago
Revenue Bonds from federal gross income. During each Quarterly Rate Mode
commencing on a date so specified or determined (provided that the opinion of
Bond Counsel described in clause (B) above, if required, is reaffirmed as of
such date) and ending on the day immediately preceding the effective date of the
next succeeding Interest Rate Mode, the interest rate borne by the bonds of
Series EE shall be a Quarterly Rate determined as provided above.
(d) (i) For each Semiannual Rate Period, the bonds of Series EE shall
bear interest at the applicable Semiannual Rate determined by the Remarketing
Agent on a Business Day selected by it, but not more than 15 days prior to the
first day of such Semiannual Rate Period. The Semiannual Rate for each
Semiannual Rate Period shall be the rate determined by the Remarketing Agent on
such date, and filed on such date with the Revenue Bond Trustee and the Company,
by written notice or by telephone promptly
19
<PAGE>
confirmed by telecopy or other writing, as being the lowest rate which would
enable the Remarketing Agent to sell the Chicago Revenue Bonds on the effective
date of such Semiannual Rate at a price equal to 100% of the principal amount
thereof; provided, however, that if, for any reason, a Semiannual Rate for any
Semiannual Rate Period shall not be determined or effective, the Interest Rate
Mode for the bonds of Series EE shall automatically convert to a Daily Rate
Mode. If a Daily Rate for the first day of such Daily Rate Mode is not
determined as provided in Section 8(a)(i) hereof, the Daily Rate for the first
day of such Daily Rate Mode shall be 100% of the PSA Municipal Index. In no
event shall any Semiannual Rate be greater than the Maximum Rate. The Revenue
Bond Trustee shall provide the Trustee with prompt written notice of each
Semiannual Rate, as determined.
(ii) At any time, the Company, by written direction to the Issuer, the
Trustee and the Remarketing Agent, may elect that the Chicago Revenue Bonds
shall bear interest at a Semiannual Rate. Such direction shall (A) specify the
effective date of such adjustment to a Semiannual Rate Mode (which shall be
(1) a day not earlier than the 25th day following the fifth Business Day after
the date of receipt by the Revenue Bond Trustee of such direction, (2) in the
case of an adjustment from a Flexible Rate Mode, the day immediately following
the last day of the then current Flexible Rate Mode as determined in accordance
with Section 8(f)(iii) hereof and (3) in the case of an adjustment from a Term
Rate Period, the day immediately following the last day of the then current Term
Rate Period and (B) in the case of an adjustment from a Term Rate Period, be
accompanied by an opinion of Bond Counsel stating that such adjustment (1) is
authorized or permitted by the Revenue Bond Indenture and (2) will not adversely
affect the exclusion of the interest on the Chicago Revenue Bonds from federal
gross income.
(e) (i) For each Term Rate Period, the bonds of Series EE shall bear
interest at the Term Rate determined by the Remarketing Agent on a Business Day
selected by it, but not more than 15 days prior to the first day of such Term
Rate Period. The Term Rate shall be the rate determined by the Remarketing
Agent on such date, and filed on such date with the Revenue Bond Trustee and the
Company, by written notice or by telephone promptly confirmed by telecopy or
other writing, as being the lowest rate which would enable the Remarketing Agent
to sell the Chicago Revenue Bonds on the effective date of such Term Rate at a
price equal to 100% of the principal amount thereof; provided, however, that if,
for any reason, a Term Rate for any Term Rate Period shall not be determined or
effective, the Interest Rate Mode for the bonds of Series EE shall automatically
convert to a Daily Rate Mode. If a Daily Rate for the first day of such Daily
Rate Mode is not determined as provided in Section 8(a)(i) hereof, the Daily
Rate for the first day of such Daily Rate Mode shall be 100% of the PSA
Municipal Index. The Revenue Bond Trustee shall provide promptly the Trustee
with written notice of each Term Rate, as determined. In no event shall any
Term Rate be greater than the Maximum Rate.
(ii) At any time, the Company, by written direction to the City, the
Revenue Bond Trustee and the Remarketing Agent, may elect that the Chicago
Revenue Bonds
20
<PAGE>
shall bear, or continue to bear, interest at a Term Rate, and if it shall so
elect, shall determine the duration of the Term Rate Period during which the
bonds of Series EE shall bear interest at such Term Rate. As a part of such
election, the Company also may determine that the initial Term Rate Period shall
be followed by successive Term Rate Periods and, if the Company so elects, shall
specify the duration of each such successive Term Rate Period as provided in
this subparagraph (ii). Such direction shall (A) specify the effective date of
each Term Rate Period (which shall be (1) a day not earlier than the 25th day
following the fifth Business Day after the date of receipt by the Revenue Bond
Trustee of such direction, (2) in the case of an adjustment from a Flexible Rate
Mode, the day immediately following the last day of the then current Flexible
Rate Mode as determined in accordance with Section 8(f)(iii) of this Article I
and (3) in the case of an adjustment from a Semiannual Rate Mode or a Term Rate
Period, the day immediately following the last day of the then current
Semiannual Rate Mode or Term Rate Period, as appropriate); (B) specify the last
day of such Term Rate Period or, if successive Term Rate Periods shall have been
designated, the last day of each such Term Rate Period (which shall be for each
Term Rate Period either the day immediately preceding the Maturity Date or the
day immediately preceding the first day of the twelfth (or any integral multiple
of 12) succeeding calendar month after the effective date thereof); and
(C) unless the adjustment is from a Term Rate Period of equal duration, be
accompanied by an opinion of Bond Counsel stating that such adjustment (1) is
authorized or permitted by the Revenue Bond Indenture and (2) will not adversely
affect the exclusion of the interest on the Chicago Revenue Bonds from federal
gross income. If the Company shall designate successive Term Rate Periods, but
shall not, with respect to the second or any subsequent Term Rate Period,
specify any of the information described in clause (A) above, the Company, by
written direction to the City, the Revenue Bond Trustee and the Remarketing
Agent, given not later than the fifth Business Day preceding the 25th day prior
to the first day of such successive Term Rate Period, may specify any of such
information not previously specified with respect to such Term Rate Period which
information shall be accompanied by an opinion of Bond Counsel as described
above, if required. During the Term Rate Period commencing and ending on the
dates so determined and during each successive Term Rate Period, if any, the
interest rate borne by the bonds of Series EE shall be a Term Rate (provided
that the opinion of Bond Counsel described in clause (C) above, if required, is
reaffirmed as of such date of commencement). If, by the fifth Business Day
preceding the 24th day prior to the last day of any Term Rate Period, the
Revenue Bond Trustee shall not have received notice of the Company's election
that, during the next succeeding Interest Rate Mode, the bonds of Series EE
shall bear interest at a Daily Rate, a Weekly Rate, a Quarterly Rate, a Flexible
Rate, a Semiannual Rate or a Term Rate, the next succeeding Interest Rate Mode
shall be a Term Rate Period of the same duration as the immediately preceding
Term Rate Period; provided, however, that if the last day of any successive Term
Rate Period would end after the day prior to the Maturity Date, the next
succeeding Interest Rate Mode shall be a Term Rate Period ending on the day
prior to the Maturity Date.
(f) (i) During each Flexible Rate Mode, each bond of Series EE (or portion
of the principal amount thereof, in the event Chicago Revenue Bonds of different
Flexible
21
<PAGE>
Segments shall apply to the same bond of Series EE) shall bear interest during
each Flexible Segment for a related Chicago Revenue Bond at the Flexible Rate
for such Chicago Revenue Bond as described herein. Different Flexible Segments
may apply to different Chicago Revenue Bonds at any time and from time to time.
Chicago Revenue Bonds of different Flexible Segments may relate to the same bond
of Series EE at any time and from time to time. The Flexible Segment for each
Chicago Revenue Bond shall be a period of at least one day and not more than 270
days ending on a day that immediately precedes a Business Day, determined by the
Remarketing Agent to be the period which, together with all such other Flexible
Segments for all Chicago Revenue Bonds then outstanding, will result in the
lowest overall interest expense on the Chicago Revenue Bonds over the next
succeeding 270 days. The Flexible Rate for each Flexible Segment for each
Chicago Revenue Bond shall be determined by the Remarketing Agent no later than
the first day of such Flexible Segment (and in time to enable the Remarketing
Agent to give to the Revenue Bond Trustee the notice required by Section 404(c)
of the Revenue Bond Indenture) to be the lowest interest rate which would enable
the Remarketing Agent to sell the Chicago Revenue Bonds on the effective date of
such rate at a price equal to 100% of the principal amount thereof. If a
Flexible Segment or a Flexible Rate for a Flexible Segment is not determined or
effective, the Flexible Segment for such Chicago Revenue Bond shall be a
Flexible Segment of one day, and the interest rate for such Flexible Segment of
one day shall be 100% of the PSA Municipal Index. In no event shall the
Flexible Rate for any Flexible Segment exceed the Maximum Rate. The Revenue
Bond Trustee shall provide the Trustee with facsimile or telephonic notice of
each Flexible Segment and Flexible Rate.
(ii) At any time, the Company, by written direction to the City, the
Revenue Bond Trustee and the Remarketing Agent, may elect that the Chicago
Revenue Bonds shall bear interest at Flexible Rates. Such direction shall (A)
specify the effective date of the Flexible Rate Mode during which the bonds of
Series EE shall bear interest at Flexible Rates which shall be (1) a Business
Day not earlier than the 25th day following the fifth Business Day after the
date of receipt by the Trustee of such direction, and (2) in the case of an
adjustment from a Semiannual Rate Mode or a Term Rate Period, the day
immediately following the last day of the then current Semiannual Rate Mode or
Term Rate Period, as applicable; and (B) in the case of an adjustment from a
Term Rate Period, be accompanied by an opinion of Bond Counsel stating that such
adjustment (1) is authorized or permitted by the Revenue Bond Indenture and
(2) will not adversely affect the exclusion of the interest on the Chicago
Revenue Bonds from federal gross income. During each Flexible Rate Mode
commencing on the date so specified (provided that the opinion of Bond Counsel
described in clause (B) above, if required, is reaffirmed as of such date) and
ending on the day immediately preceding the effective date of the next
succeeding Interest Rate Mode, each bond of Series EE shall bear interest at a
Flexible Rate during each Flexible Segment for such bond of Series EE.
(iii) As a condition precedent to the election during a Flexible Rate
Mode to adjust to a different Interest Rate Mode for the Chicago Revenue Bonds
pursuant to Section 8(a)(ii), (b)(ii), (c)(ii) or (d)(ii) of this Article I, the
Remarketing Agent shall
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determine Flexible Segments of such duration that, as soon as possible, all
Flexible Segments shall end on the same date, not less than the 24th day
following the fifth Business Day after the receipt by the Revenue Bond Trustee
of the direction of the Company effecting such election. The date on which all
Flexible Segments so determined shall end shall be the last day of the then
current Flexible Rate Mode and the day next succeeding such date shall be the
effective date of the Daily Rate Mode, the Weekly Rate Mode, the Quarterly Rate
Mode, the Semiannual Rate Mode or the Term Rate Period elected by the Company.
(g) The determination of each Daily Rate, Weekly Rate, Quarterly Rate,
Semiannual Rate and Term Rate and each Flexible Segment and Flexible Rate by the
Remarketing Agent shall be conclusive and binding upon the Trustee, the Company
and the owners of the bonds of Series EE.
(h) Notwithstanding anything herein to the contrary, the Company may
rescind any election by it to adjust to or continue an Interest Rate Mode
pursuant to Section 8(a)(ii), (b)(ii), (c)(ii), (d)(ii), (e)(ii) or (f)(ii) of
this Article I prior to the effective date of such adjustment or continuation by
written notice thereof to the City, the Revenue Bond Trustee and the Remarketing
Agent prior to such effective date. If the Revenue Bond Trustee receives notice
of such rescission prior to the time the Revenue Bond Trustee has given notice
to the owners of the Chicago Revenue Bonds pursuant to Section 203(a)(iii),
(b)(iii), (c)(iii), (d)(iii), (e)(iii) or (f)(iii) of the Revenue Bond
Indenture, then such notice of adjustment or continuation shall be of no force
and effect. If the Revenue Bond Trustee receives notice of such rescission
after the Revenue Bond Trustee has given notice to the owners of the Chicago
Revenue Bonds pursuant to Section 203(a)(iii), (b)(iii), (c)(iii), (d)(iii) or
(e)(iii) or (f)(iii) of the Revenue Bond Indenture, then the Interest Rate Mode
for the bonds of Series EE shall automatically adjust to a Daily Rate Mode. In
the event that an attempted adjustment from one Interest Rate Mode to another
Interest Rate Mode as herein provided does not become effective, the Interest
Rate Mode for the bonds of Series EE shall automatically adjust to a Daily Rate
Mode. If a Daily Rate for the first day of any such Daily Rate Mode is not
determined as provided in Section 8(a)(i) of this Article I, the Daily Rate for
the first day of such Daily Rate Mode shall be 100% of the PSA Municipal Index.
No opinion of Bond Counsel shall be required in connection with any automatic
adjustment to a Daily Rate Mode as in this Section 8(h) provided.
SECTION 9. In this Supplemental Indenture, the following terms shall have
the meanings specified in this Section 9, unless the context otherwise requires:
"Agreement" or "Loan Agreement" means the Loan Agreement
executed by and between the City and the Company dated December 1,
1993 with respect to the Chicago Revenue Bonds, as from time to time
amended and supplemented.
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"Bond Counsel" means an attorney at law or a firm of attorneys
(who is of nationally recognized standing in matters pertaining to the
tax-exempt nature of interest on bonds issued by states and their
political subdivisions) duly admitted to the practice of law before
the highest court of any state of the United States of America.
"Business Day" means any day which is not a Sunday or a legal
holiday or a day (including Saturday) on which banking institutions in
Chicago, Illinois, in New York, New York, and in the city where the
Principal Office of the Revenue Bond Trustee is located are not
required or authorized to remain closed and on which the New York
Stock Exchange is not closed.
"Chicago Revenue Bonds" means the Gas Supply Revenue Bonds,
1993 Series B (The Peoples Gas Light and Coke Company Project), issued
by the City in the aggregate principal amount of $27,000,000.
"City" means the City of Chicago, Illinois.
"Code" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
"Daily Rate" means the variable interest rate on the bonds of
Series EE established in accordance with Section 8(a) of this Article
I.
"Daily Rate Mode" means each period of time during which the
bonds of Series EE bear interest at a Daily Rate.
"Daily Rate Period" means each period during a Daily Rate Mode
from and commencing on a Business Day to and including the day
immediately preceding the first Business Day thereafter, provided that
the first Daily Rate Period in any Daily Rate Mode shall commence on
the effective date of such Daily Rate Mode.
"Flexible Rate" shall mean, with respect to any Chicago Revenue
Bond, the non-variable interest rate associated with such Chicago
Revenue Bond established in accordance with Section 8(f) of this
Article I and Section 203(f) of the Revenue Bond Indenture.
"Flexible Rate Mode" means each period, comprised of Flexible
Segments, during which Chicago Revenue Bonds and bonds of Series EE
bear interest at Flexible Rates.
"Flexible Segment" shall mean, with respect to each Chicago
Revenue Bond bearing interest at a Flexible Rate, the period
established in accordance
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with Section 8(f) of this Article I and Section 203(f) of the Revenue
Bond Indenture.
"Interest Payment Date" means (i) during a Daily Rate Mode or
Weekly Rate Mode, the first Business Day of each calendar month, (ii)
during a Quarterly Rate Mode, the first Business Day of the third
calendar month following the effective date of such Quarterly Rate
Mode, and the first Business Day of each third month thereafter,
(iii) during a Semiannual Rate Mode or Term Rate Period, the first day
of the sixth calendar month following the effective date of such
Semiannual Rate Mode or Term Rate Period, as applicable, and the first
day of each successive sixth calendar month thereafter, (iv) with
respect to any Flexible Segment, the Business Day next succeeding the
last day thereof and (v) with respect to each Interest Rate Mode, the
day next succeeding the last day thereof.
"Interest Rate Mode" means any Daily Rate Mode, Weekly Rate
Mode, Quarterly Rate Mode, Flexible Rate Mode, Semiannual Rate Mode or
Term Rate Period.
"Maturity Date" means December 1, 2023.
"Maximum Rate" means the lesser of 14% per annum or the maximum
rate permitted by law.
"Project" means the land, structures, machinery, equipment,
systems or processes, or any portion thereof, which are described in
Exhibit A to the Agreement, as said Exhibit A may from time to time be
amended.
"PSA Municipal Index" means the Public Securities Association
(PSA) Municipal Swap Index, as of the most recent date for which the
index was published, or such other weekly high grade index comprised
of seven-day, tax-exempt variable rate demand notes produced by
Municipal Market Data, Inc., or its successors, or as otherwise
designated by the Public Securities Association.
"Quarterly Rate" means the variable interest rate on the bonds
of Series EE established in accordance with Section 8(c) of this
Article I.
"Quarterly Rate Mode" means each period of time during which
the bonds of Series EE bear interest at a Quarterly Rate.
"Quarterly Rate Period" means each period during a Quarterly
Rate Mode from and commencing on the first Business Day of a calendar
month to but not including the first Business Day of the third
succeeding calendar month, provided that the first Quarterly Rate
Period in any Quarterly Rate
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Mode shall be the period commencing on the effective date of such
Quarterly Rate Mode to but not including the first Business Day of the
third succeeding calendar month thereafter.
"Record Date" as used herein means with respect to any Interest
Payment Date during a Variable Rate Mode or with respect to a Flexible
Segment, the Business Day next preceding such Interest Payment Date,
and, with respect to any Interest Payment Date during a Semiannual
Rate Mode or a Term Rate Period, the fifteenth day of the calendar
month next preceding such Interest Payment Date.
"Remarketing Agent" means the remarketing agent appointed by
the Company in accordance with Section 408 of the Revenue Bond
Indenture and any permitted successor thereto.
"Revenue Bond Indenture" means that certain Indenture of Trust
executed by and between the City and the Revenue Bond Trustee, dated
December 1, 1993, and any amendments or supplements thereto, pursuant
to which the Chicago Revenue Bonds may be issued.
"Revenue Bond Trustee" means The First National Bank of
Chicago, and any successor trustee appointed pursuant to Sections 1105
or 1109 of the Revenue Bond Indenture at the time serving as successor
trustee thereunder and shall include any co-trustee serving as such
thereunder.
"Semiannual Rate" means the non-variable interest rate on the
bonds of Series EE established in accordance with Section 8(d) of this
Article I.
"Semiannual Rate Mode" means each period of time during which
the bonds of Series EE bear interest at a Semiannual Rate.
"Seminannual Rate Period" means each period during a Semiannual
Rate Mode from and commencing on the first day of a calendar month and
to but not including the first day of the sixth succeeding calendar
month, provided that the first Semiannual Rate Period in any
Semiannual Rate Mode shall be the period commencing on the effective
date of such Semiannual Rate Mode to but not including the first day
of the sixth calendar month thereafter.
"Term Rate" means a non-variable interest rate on the bonds of
Series EE established in accordance with Section 8(e) of this Article
I.
"Term Rate Period" means each period during which a Term Rate
is in effect.
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"Variable Rate Mode" means each Daily Rate Mode, Weekly Rate
Mode and Quarterly Rate Mode.
"Weekly Rate" means the variable interest rate on the bonds of
Series EE established in accordance with Section 8(b) of this Article
I.
"Weekly Rate Mode" means each period of time during which the
bonds of Series EE bear interest at a Weekly Rate.
"Weekly Rate Period" means each period during a Weekly Rate
Mode from and commencing on a Wednesday and ending on the next
succeeding Tuesday; provided, however, that if a Weekly Rate Mode
shall end on a day other than a Tuesday, the last Weekly Rate Period
during such Weekly Rate Mode shall end on the last day of such Weekly
Rate Mode; provided, further, that the first Weekly Rate Period during
a Weekly Rate Mode shall be the period from and commencing on the
first day of such Weekly Rate Mode and ending on the next succeeding
Tuesday.
SECTION 10. In any case where the date of maturity of interest on or
principal of the bonds of Series EE or the date fixed for redemption of any
bonds of Series EE shall be in the location of the principal office of the
Trustee, a Saturday, Sunday or a legal holiday or a day on which banking
institutions are authorized by law to close in the State of Illinois, then
payment of interest or principal (and primium, if any) need not be made on such
date but may be made on the next succeeding Business Day with the same force and
effect as if made on the date of maturity or the date fixed for redemption, and
no interest shall accrue for the period after such date.
SECTION 11. The Company reserves the right, without any consent or other
action by holders of the bonds of Series EE or any subsequent series of bonds,
to amend the Mortgage by inserting the following language as Section 4 of
Article XVI immediately following current Section 3 of Article XVI of the
Mortgage:
SECTION 4. Anything in Section 1 of this Article to the
contrary notwithstanding, with the consent of the holders of not less
than sixty per centum (60%) in aggregate principal amount of the bonds
at the time outstanding or their attorneys-in-fact duly authorized,
or, if the rights of the holders of one or more, but not all, series
then outstanding are affected, the consent of the holders of not less
than sixty per centum (60%) in aggregate principal amount of the bonds
at the time outstanding of all affected series, taken together, and
not any other series, the Company, when authorized by resolution of
its Board of Directors, and the Trustee, from time to time and at any
time, subject to the restrictions in this Mortgage contained, may
enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this
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Indenture or of any supplemental indenture or modifying the rights and
obligations of the Company and the rights of the holders of any of the
bonds and coupons; provided, however, that no such supplemental
indenture shall (1) extend the maturity of any of the bonds or reduce
the rate or extend the time of payment of interest thereon, or reduce
the amount of the principal thereof, or reduce any premium payable on
the redemption thereof or change the coin or currency in which any
bond or interest thereon is payable, without the consent of the holder
of each bond so affected, or (2) permit the creation of any lien, not
otherwise permitted, prior to or on a parity with the lien of the
Mortgage, without the consent of the holders of all the bonds then
outstanding, or (3) reduce the aforesaid percentage of the aggregate
principal amount of bonds the holders of which are required to approve
any such supplemental indenture, without the consent of the holders of
all the bonds then outstanding. For the purposes of this Section 4,
bonds shall be deemed to be affected by a supplemental indenture if
such supplemental indenture adversely affects or diminishes the rights
of holders thereof against the Company or against its property.
Upon the written request of the Company, accompanied by
resolution of its Board of Directors authorizing the execution of any
such supplemental indenture, and upon the filing with the Trustee of
evidence of the consent of bondholders as aforesaid (the instrument or
instruments evidencing such consent to be dated within one year of
such request), the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under
this Mortgage or otherwise, in which case the Trustee may in its
discretion but shall not be obligated to enter into such supplemental
indenture. The Trustee shall be entitled to receive and, subject to
Section 7 of Article XV hereof, may rely upon, an opinion of counsel
as conclusive evidence that any such supplemental indenture is
authorized or permitted by the provisions of this Section 4.
It shall not be necessary for the consent of the bondholders
under this Section 4 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
The Company and the Trustee, if they so elect, and either
before or after such 60% or greater consent has been obtained, may
require the holder of any bond consenting to the execution of any such
supplemental indenture to submit his bond to the Trustee or to such
bank, banker or trust company as may be designated by the Trustee for
the purpose, for the notation thereon of the fact that the holder of
such bond has consented to the execution of such supplemental
indenture, and in such case such
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notation, in form satisfactory to the Trustee, shall be made upon all
bonds so submitted, and such bonds bearing such notation shall
forthwith be returned to the persons entitled thereto. All subsequent
holders of bonds bearing such notation shall be deemed to have
consented to the execution of such supplemental indenture, and
consent, once given or deemed to be given, may not be withdrawn.
Prior to the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 4,
the Company shall publish a notice, setting forth in general terms the
substance of such supplemental indenture, at least once in one daily
newspaper of general circulation in each city in which the principal
of any of the bonds shall be payable, or, if all bonds outstanding of
any series shall be registered bonds without coupons or coupon bonds
registered as to principal, such notice with respect to such series
shall be mailed first class, postage prepaid, and registered if the
Company so elects, to each registered holder of bonds of such series
at the last address of such holder appearing on the registry books,
such publication or mailing, as the case may be, to be made not less
than thirty (30) days prior to such execution. Any failure of the
Company to give such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE II
COVENANTS OF THE COMPANY
SECTION 1. The Company covenants and agrees, so long as any of the bonds
of Series EE are outstanding or until provision shall have been made for the
redemption or payment thereof by the deposit with the Trustee of money necessary
to effect such redemption or payment, as follows:
(a) The Company, during or at the close of the calendar year
1993, and during or at the close of each calendar year thereafter,
shall charge against the income for such calendar year and place to
the credit of a "depreciation reserve account" to be kept on its
books, the greater of the following two amounts: (i) the amount of
$1,550,000, or (ii) an amount equal to 2 1/2% of the sum of
(i) the aggregate principal amount of all bonds which, at
the time such credit is placed to said "depreciation reserve
account", shall be outstanding and shall have been outstanding
under the Mortgage as supplemented for a period of not less than
six (6) months, or which at such time shall have been outstanding
under the Mortgage supplemented for less than six (6) months, if
such bonds shall have been issued, or the proceeds thereof shall
have been
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used, directly or indirectly, for or on account of the pledge,
acquisition, exchange, cancellation, payment, refundment,
redemption or discharge at, before or after maturity of the bonds
of any series theretofore issued under the Mortgage or of any
"underlying bonds" or "specified obligations" as defined in
Section 4 of Article III of the Mortgage; and
(ii) the aggregate principal of all indebtedness of the
Company secured by a mortgage lien upon the properties or assets
of the Company, which is a lien superior to the lien of the
Mortgage, except (A) any such mortgage indebtedness the evidences
of which shall then be pledged with the Trustee under the
provisions of the Mortgage or pledged with the Trustee under any
mortgage constituting a lien superior to the lien of the Mortgage
on any part of the properties or assets of the Company, and (B)
any such mortgage indebtedness for the payment or redemption of
which the necessary moneys shall have been deposited with the
Trustee under the Mortgage securing the same;
provided, however, that (1) the amount required by this subparagraph
(a) to be placed to the credit of such "depreciation reserve account"
in or for any calendar year shall be deemed to include and not to be
in addition to amounts which, by the provisions of the Mortgage, the
Company is required to add to any depreciation reserve account for
such year, (2) nothing in this subparagraph (a) shall prevent the
Company from crediting to such "depreciation reserve account", during
or at the close of any calendar year, an amount greater than the
amount required by this subparagraph (a) for such year, and (3) the
Company may, from time to time, during each such calendar year, charge
against such "depreciation reserve account" the cost of depreciable
property retired by it during such year, including the cost, if any,
of dismantling such retired property, less any salvage credits
applicable thereto.
(b) The Company after it shall have issued bonds of Series EE in
the aggregate principal amount of $27,000,000, shall not request the
Trustee
(i) to authenticate bonds of any series under the Mortgage
(A) pursuant to Section 2 of Article III of the
Mortgage for or on account of the acquisition and
cancellation, or of the payment, cancellation, redemption or
other discharge at, before or after maturity, affected prior
to January 1, 1951, of any bonds of any series theretofore
issued under the Mortgage, or
(B) pursuant to Section 4 of Article III of the
Mortgage, for or on account of the pledge, acquisition,
exchange, cancellation, payment, refundment, redemption or
discharge effected prior to January 1,
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1951, of "underlying bonds" or "specified obligations"
mentioned in said Section 4, or
(C) pursuant to Section 5 of Article III of the
Mortgage, for or in respect of expenditures made prior to
January 1, 1951, for or on account of "permanent property",
or
(ii) to pay to the Company any cash pursuant to Section 6 of
said Article III for or on account of any transactions mentioned
in clause (A) or clause (B) of subdivision (i) of this
subparagraph (b) or for or in respect of any expenditures
mentioned in clause (C) of subdivision (i) of this subparagraph
(b).
Neither shall the Company request the Trustee to authenticate bonds of
any series under the provisions of Section 4 of Article III of the
Mortgage or to pay the Company any moneys under Section 6 of said
Article III or under Article IX of the Mortgage for or on account of
the payment, discharge and cancellation effected on or after January
1, 1944, at, before or after maturity of any of the Refunding Mortgage
Five Per Cent Gold Bonds of the Company, dated September 1, 1897, due
September 1, 1947.
(c) The Company shall not request the Trustee to authenticate
bonds of any series under the Mortgage or to pay to the Company any
cash deposited with or received by the Trustee under the Mortgage
(except cash deposited with or received by the Trustee as and for a
sinking fund for any series of bonds which have been or may hereafter
be issued under the Mortgage), unless the Company as a part of such
request, and in addition to all other documents required by the
Mortgage to be delivered to the Trustee in connection with such
request, shall deliver to the Trustee a certificate or certificates,
signed by the President or an Executive Vice President or a Vice
President and by the Treasurer or an Assistant Treasurer of the
Company
(i) showing, in case such request is for the authentication
of bonds pursuant to Section 5 of Article III of the Mortgage or
for the payment of cash pursuant to Section 6 of said Article III
for or in respect of expenditures made by the Company on or after
January 1, 1951, for or on account of "permanent property":
(A) the total amount of expenditures (reduced to the
extent required, if any, by the provisions of clause (G) of
this subdivision (i)) made on or after January 1, 1951, for
or on account of "permanent property";
(B) the original cost of all properties, subject to the
lien of the Mortgage at any time on or after January 1,
1951, replaced or retired
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on or after January 1, 1951, less, if any such property
shall have been released from the lien of the Mortgage
pursuant to any applicable provision of the Mortgage and to
obtain such release cash shall have been deposited with the
Trustee, the amount of such cash;
(C) an amount equal to the sum of (1) 133-1/3% of the
aggregate principal amount of bonds which have been
authenticated after January 1, 1951, pursuant to Section 5
of Article III of the Mortgage for or on account of such
expenditures made on or after January 1, 1951, plus (2) 133-
1/3% of the aggregate amount of deposited cash withdrawn
after January 1, 1951, pursuant to the provisions of Section
6 of Article III of the Mortgage for or in respect of such
expenditures made on or after January 1, 1951, plus (3) 133-
1/3% of the aggregate amount of excess of the nature
described in subdivision (2) of Section 4 of Article III of
the Mortgage eliminated or compensated, as in said
subdivision (2) provided, for or in respect of expenditures
of the Company for or on account of "permanent property"
during said period commencing January 1, 1951;
(D) an amount equal to 100% of the aggregate amount of
moneys withdrawn by the Company pursuant to the provisions
of Article IX of the Mortgage on or after January 1, 1951,
for or in respect of expenditures made for or on account of
"permanent property";
(E) an amount equal to the excess, if any, of the
amount shown pursuant to clause (A) above over the sum of
the amounts shown pursuant to clauses (B), (C) and (D)
above;
(F) that, for a period of twelve (12) consecutive
calendar months (to be selected by the Company) ending
within ninety (90) days next preceding such request, the
"net earnings of the Company" shall have been at least twice
the amount of the annual interest requirement of all
"mortgage and prior lien debt of the Company";
(G) that the amount of the expenditure, if any,
included in the expenditures set forth in clause (A) above
in respect of any particular "permanent property", which at
the time of its acquisition was subject to the lien of any
mortgage existing or placed thereon at the time of its
acquisition, does not exceed an amount equal to the excess,
if any, of the value (determined as provided in the first
paragraph of Section 8 of Article III of the Mortgage) of
such particular "permanent property" at the time of
acquisition of such property over 133-1/3% of the principal
amount of all indebtedness secured by all such mortgages
existing or placed on such particular property at the time
of the acquisition thereof, and that the amount of the
expenditure, if any, included in the
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expenditures set forth in clause (A) above in respect of any
particular "permanent property", which at the time of its
acquisition was not subject to any such lien, does not
exceed an amount equal to the value (determined as provided
in the first paragraph of Section 8 of Article III of the
Mortgage) of such particular "permanent property" at the
time of acquisition of such property;
(ii) showing, in case such request is for the authentication
of bonds pursuant to Section 4 of Article III of the Mortgage or
for the payment of cash pursuant to Section 6 of said Article III
for or on account of the pledge, acquisition, exchange,
cancellation, payment, refundment, redemption or discharge
effected on or after January 1, 1951, at, before or after
maturity of any "specified obligations" mentioned in said Section
4, that at the time such "specified obligations" became
"specified obligations" or at some later date the Company,
pursuant to the provisions of Section 5 of Article III of the
Mortgage, as limited by the provisions of this Section I, shall
have obtained, or shall have had the right to obtain, the
authentication and delivery of bonds in any principal amount for
or in respect of expenditures made on or after January 1, 1951,
for or on account of "permanent property";
(iii) showing, in case such request shall be for the payment
of moneys pursuant to Article IX of the Mortgage for or in
respect of expenditures made for or on account of "permanent
property", that none of such expenditures were made (1) prior to
January 1, 1951, or (2) for or on account of "permanent property"
acquired more than six months prior to the date when the Trustee
received the moneys so to be paid (or in case of moneys
representing the proceeds of obligations, referred to in said
Article IX, the date when the Trustee received such obligations);
and
(iv) showing, in case such request is for the application of
any moneys pursuant to Article IX of the Mortgage to the payment,
redemption or purchase of any "specified obligations", that such
"specified obligations", if pledged under the Mortgage, would
permit the Company to obtain the authentication of bonds in a
principal amount equal to the principal amount of such
"specified obligations" pursuant to the provisions of Section 4
of Article III of the Mortgage as limited by the provisions of
this Section 1.
(d) In connection with any request for the authentication of
bonds pursuant to Section 5 of Article III of the Mortgage or the
payment of cash pursuant to Section 6 of said Article III of Mortgage,
for or in respect of expenditures made by the Company on or after
January 1, 1951, the Company shall not obtain the authentication of
bonds of any series under the Mortgage or the payment of any cash in
excess of 75% of the amount shown in the certificate delivered as a
part of such request pursuant to clause (E) of subdivision (i) of
subparagraph (c) of this
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Section 1; and the Company shall not obtain the authentication of any
bonds or the payment of any cash deposited with or received by the
Trustee under the Mortgage otherwise than in accordance with the
provisions of the Mortgage as supplemented.
(e) Wherever used in this Supplemental Indenture
(i) "mortgage and prior lien debt of the Company", as of the
date of any request to the Trustee for the authentication of
bonds or the payment of cash, shall mean:
(A) all the bonds then outstanding under the Mortgage,
less the amount of any of such bonds which shall then be
held by or be delivered to the Trustee for cancellation
under any of the provisions of the Mortgage, and less the
amount of any such bonds for the payment or redemption of
which the necessary moneys shall have been deposited under
the Mortgage with the Trustee to effect such payment or
redemption;
(B) the bonds then requested to be authenticated under
the Mortgage; and
(C) all mortgage indebtedness secured by a lien
superior to the lien of the Mortgage on any part of the
properties and assets of the Company, except any such
mortgage indebtedness the evidences of which shall then be
pledged with the Trustee under the provisions of the
Mortgage or pledged with the Trustee under any mortgage
constituting a lien superior to the lien of the Mortgage on
any part of the properties and assets of the Company, and
except any such mortgage indebtedness for the payment or
redemption of which the necessary moneys shall have been
deposited with the trustee under the mortgage securing the
same to effect such payment or redemption;
(ii) "net earnings of the Company" for any twelve (12)
months' period shall mean the amount remaining after deducting
from the sum of
(A) the gross operating revenues of the Company for
such period derived from its property subject to the lien of
the Mortgage, including but not limited to revenues derived
from electrical energy, gas or steam purchased by the
Company and resold by it, and the net income derived by the
Company from its merchandising and jobbing operations; and
(B) other income of the Company for such period derived
from interest on bank balances and from current working
capital invested in
34
<PAGE>
unpledged obligations of the United States of America or of
any state or of any municipality or subdivision thereof, and
other currently earned income of the Company derived from
the ownership of securities, in the treasury of the Company
and unpledged, of operating electric, gas or steam companies
(including natural or mixed gas production, storage,
transportation or distribution companies) or from unpledged
advances to such companies any of the securities of which
are so owned, the sum of the following:
(C) operating expenses of the Company for such period,
including maintenance and repairs, rentals, taxes (except
taxes based upon net income), insurance and the cost of
electrical energy, gas or steam purchased for resale, but
excepting expenses in connection with operations, the net
income only of which is included in clause (A) of
subdivision (ii) of this subparagraph (e), and excepting
all reserves or charges for amortization of debt discount
and expense; and
(D) an amount, if such period shall end with the close
of a calendar year, equal to the amount which the Company is
required by subparagraph (a) of this Section 1 to place,
during or at the close of such calendar year, to the credit
of the "depreciation reserve account", mentioned in said
subparagraph (a) (all determined without deduction for any
charge made to the "depreciation reserve account" permitted
by clause (3) of the proviso of subparagraph (a) of this
Section 1), or, if such period shall include parts of two
(2) calendar years, then an amount which shall be determined
by (1) prorating, on a monthly basis over the portion of the
earlier year thus included, the amount which the Company
shall have been so required to credit to the "depreciation
reserve account" during or at the close of such earlier
year, and (2) prorating, on a monthly basis over the portion
of the later of said two (2) years thus included, the amount
which the Company would be required to credit to such
"depreciation reserve account" if such credit were placed to
such account at the close of such period;
provided, however, that the amount of other income of the Company,
referred to in clause (B) of subdivision (ii) of this subparagraph
(e), shall not exceed 10% of said net earnings; and income in the form
of dividends received by the Company upon stock of any class owned by
it shall be considered as currently earned under the provisions of
said clause (B) to the extent that during such period the earnings of
the paying company shall be sufficient for the payment of dividends
upon all stock of such class during such period; and income in the
form of interest received by the Company upon evidences of
indebtedness of any class owned by it shall be considered as currently
earned under the provisions of said clause (B) to the extent that
during such period the earnings of the paying company shall be
available for the payment of the interest
35
<PAGE>
accruing during such period upon all indebtedness of such class, after
deducting from such earnings all interest charges accruing during such
period upon obligations secured by prior liens; and, in case any
property owned by the Company at the date of the request to the
Trustee for the authentication of bonds or payment or withdrawal of
cash shall not have been owned by it during any part of any such
period, or shall have been owned by it during a part only of such
period, then and in every such case the net earnings (or net losses)
of such property (ascertained in like manner as above provided) during
said period, or during such part thereof as shall have preceded the
acquisition of such property by the Company, shall be considered and
treated as net earnings (or net losses) of the Company for such
period, and shall be included in (or, if a net loss, deducted in
determining) such net earnings of the Company;
(iii) "permanent property" shall mean any and all plants,
equipment, additions, improvements, betterments, facilities, or
other property of any kind (and includes "extensions" and
"purchased property" as those terms are used in the Mortgage)
acquired through construction, purchase, consolidation, exchange
or otherwise, as and for a part of the permanent or fixed
investment for the business of the Company and used or useful in
connection with the generation and conversion of electrical
energy or in the manufacture of gas or steam or in the
distribution or transmission of electrical energy or gas or steam
in the territory in which the Company is now operating its
present properties, or in territory contiguous thereto, or in
territory capable of economic interconnection therewith, but
"permanent property" shall not include cash, accounts or bills
receivable, securities, supplies, fuel or other assets ordinarily
classed as quick assets, or leasehold estates;
(iv) "original cost" of property shall mean the original
cost of such property to the Company if ascertainable from its
records or, if such original cost is not ascertainable, the value
of such property at the time of its acquisition, such value to be
determined by an engineer or firm of engineers to be selected by
the Company and to be acceptable to the Trustee, and the Trustee
under such circumstances shall be furnished with a certificate of
such value signed by such engineer or firm of engineers.
(f) In connection with any request to the Trustee for the
authentication of bonds, pursuant to the provisions of Section 5 of
Article III of the Mortgage or the payment of cash pursuant to the
provisions of Section 6 of said Article III or the provisions of
Article IX of the Mortgage or the elimination or compensation of any
excess of the nature described in subdivision (2) of Section 4 of said
Article III, for or on account of expenditures for "permanent
property", the Company shall furnish to the Trustee, in addition to
the certificates and other documents
36
<PAGE>
required to be delivered by the provisions of the Mortgage and the
provisions of other subparagraphs of this Section 1, the following:
(i) An opinion of counsel (who may be counsel for the
Company), selected by the Company and satisfactory to the
Trustee, stating that the Company has acquired good title to the
property for or on account of the expenditures for which
additional bonds are requested to be authenticated and that such
property is subject to the Mortgage as a direct lien thereon,
subject only to the lien of any mortgages or easements existing
or placed on any of such property at the time of its acquisition,
liens for taxes and assessments not due or, if due, in the course
of contest, judgments in the course of appeal or otherwise in
contest and secured by sufficient bond, liens arising out of
proceedings in court in the course of contest and undetermined
liens charges (if any) incidental to current construction; and
(ii) A certificate signed by the President or an Executive
Vice President or a Vice President and also by the Treasurer or
an Assistant Treasurer of the Company certifying that the
property for or on account of the expenditures for which bonds
are requested to be authenticated or cash is requested to be paid
is "permanent property".
(g) The Company shall not hereafter issue any bonds under any
"underlying mortgage" as defined in Section 4 of Article III of the
Mortgage, or under any mortgage which could become such an "underlying
mortgage" upon compliance with clause (b) of the proviso of
subdivision (2) of said Section 4.
(h) The Company shall not request the Trustee to authenticate any
bonds under the provisions of Section 2 or Section 3 or Section 4 of
Article III of the Mortgage and shall not apply for the payment of
cash under Section 6 of said Article or under Article IX of the
Mortgage (i) for or on account of bonds of Series J deposited by the
Company with the Trustee in lieu of cash under the provisions of the
sinking fund provided for in the supplemental indenture, dated as of
May 1, 1961, or for or on account of bonds of Series J redeemed
through the operation of said sinking fund, or (ii) for or on account
of bonds of Series K redeemed through the operation of the sinking
fund provided for in the supplemental indenture dated as of July 15,
1966, or (iii) for or on account of bonds of Series L redeemed through
the operation of the sinking fund provided for in the supplemental
indenture dated as of August 15, 1967, or (iv) for or on account of
bonds of Series M redeemed through the operation of the sinking fund
provided for in the supplemental indenture dated as of September 15,
1970, or (v) for or on account of bonds of Series N redeemed through
the operation of the sinking fund provided for in the supplemental
indenture dated as of April 1, 1972, or (vi) for or on account of
bonds of Series 0 redeemed through the operation of the sinking fund
provided for in the supplemental indenture dated as of July 15, 1973,
or (vii) for or on account of bonds of Series T redeemed through the
37
<PAGE>
operation of the sinking fund provided for in the supplemental
indenture dated as of August 15, 1980, or (viii) on account of any
cancelled or uncancelled underlying bonds (or any uncancelled
underlying bonds deposited as collateral under Section 4 of Article
III of the Mortgage) which shall have been deposited under the
provisions of the supplemental indenture, dated as of August 1, 1941,
in lieu of cash.
(i) In the event of the acquisition at any time by any federal,
state or municipal authority of all or substantially all of the
income-producing properties of the Company which are subject to the
lien of the Mortgage, the Company shall be deemed to have elected to
redeem and to have requested the Trustee to redeem all the bonds of
all series at the respective applicable redemption price or prices
(together with accrued interest to the date of redemption), without
the payment of any premium, on a date determined by the Trustee in its
discretion to be the earliest practicable redemption date after
receipt by the Trustee of all cash which the Trustee is entitled to
receive in respect of such acquisition by such federal, state or
municipal authority. If the cash so received by the Trustee and all
other cash then held by the Trustee as such, except funds held in
trust for the benefit of the holders of particular bonds and coupons,
is not sufficient to effect the redemption of all the bonds of all
series as aforesaid and to pay all amounts owing to the Trustee under
the Mortgage as supplemented (including fees and expenses to be
incurred by the Trustee in connection with such redemption), the
Company covenants and agrees that, within five (5) days after receipt
by the Trustee of all cash which the Trustee is entitled to receive as
aforesaid in respect of such acquisition, the Company will deposit
with the Trustee for that purpose cash in an amount sufficient to make
up such deficiency.
Upon receipt by the Trustee of moneys sufficient for said purposes,
notice of such redemption shall be given by the Trustee for and on
behalf and in the name of the Company. To the extent that such cash
received, held and deposited as aforesaid shall be required for the
purpose of redeeming bonds pursuant to this subparagraph (i), the
Company shall be deemed to have directed the Trustee to apply the same
for the purpose, and the balance, if any, after payment of all said
amounts owing to the Trustee, shall be paid to or upon the order of
the Company.
(j) The Company shall promptly classify as "property replaced or
retired", for the purposes of clause (B) of subdivision (i) of
subparagraph (c) of this Section 1 during any period all property
which has been replaced or has permanently ceased to be used or useful
in the business of the Company, but the Company shall not, in making
such classification, be bound by determinations, rulings or orders
made by regulatory authorities for rate-making or other purposes.
(k) The Company shall not consolidate with or merge into any
other corporation or transfer or lease all or substantially all the
mortgaged property as
38
<PAGE>
an entirety to any other corporation, unless the corporation resulting
from such consolidation or the corporation into which the Company
shall have been merged or the corporation to which such transfer or
lease shall have been made shall, by an instrument executed and
delivered to the Trustee, assume the due and punctual payment of the
principal of and premium, if any, and interest on all the bonds of all
series according to their tenor at the time outstanding under the
Mortgage and the due and punctual performance and observance of all
the covenants and conditions of the Mortgage and all indentures
supplemental thereto to be performed or observed by the Company.
SECTION 2. The Company covenants and agrees that any and all property
hereafter acquired by the Company and any and all improvements, extensions,
betterments or additions to property of the Company, which by the Original
Mortgage or any indenture supplemental thereto are to become subject to the
Mortgage, immediately upon the acquisition thereof by the Company or upon such
improvements, extension, betterments, or addition being made, as the case may
be, and without any further conveyance, mortgage, assignment or act on the part
of the Company or the Trustee, or either of them shall become and be subject to
the lien of the Mortgage fully and completely as though owned by the Company at
the date of the execution of the Original Mortgage and at the date of the
Indenture dated the first day of March, 1928, mentioned in the second paragraph
of the recitals of this Supplemental Indenture and at the dates of the
supplemental indentures dated May 20, 1936, May 10, 1950, as of June 1, 1951, as
of August 15, 1967, as of September 15, 1970, as of June 1, 1984, as of June 1,
1984, as of October 1, 1984, as of March 1, 1985, as of March 1, 1985, as of
March 1, 1985, as of March 1, 1985, as of May 1, 1990 and as of April 1, 1993,
respectively, mentioned in the fourth paragraph of the recitals of this
Supplemental Indenture, and at the date of this Supplemental Indenture, and
specifically described in the granting clauses of the Original Mortgage or said
Indenture or said supplemental indentures, but the provisions of this Section 2
shall not limit the generality of the provisions of Sections 12 and 13 of
Article IV of the Original Mortgage.
SECTION 3. The Company covenants and agrees that in the furtherance of, but
without limiting the generality of, the provisions of Sections 12 and 13 of
Article IV of the Mortgage or of Section 2 of this Article II, the Company will
furnish to the Trustee on November 1, 1944, and thereafter within sixty (60)
days after and as often as the Company shall have acquired, subsequent to
September 3, 1944, any additional land or lands or interest or interests in
land, or any new plant or plants, not included in any certificate theretofore
furnished pursuant to this Section 3, the aggregate cost of which shall equal or
exceed $500,000, and at such other times as thirty-six (36) months shall have
elapsed since the date of furnishing the last preceding certificate to the
Trustee pursuant to this Section 3, the following:
(a) a certificate, signed by the President or an Executive Vice
President or a Vice President and by the Treasurer or an Assistant
Treasurer of the Company and dated as of a date not more than sixty
(60) days preceding the date as of
39
<PAGE>
which such certificate is required to be filed pursuant to this
Section 3, briefly describing any additional land or interest in land
and any new plant which the Company may have acquired since the date
of the most recent Certificate furnished to the Trustee pursuant to
this Section, or, in the case of the first such certificate, since the
date of the execution and delivery of the Indenture dated the first
day of March, 1928 mentioned in the second paragraph of the recitals
of this Supplemental Indenture, which is required by the provisions of
the Mortgage and this Supplemental Indenture to be subjected to the
lien of the Mortgage;
(b) the mortgages, deeds, covenants, assignments, transfers and
instruments of further assurance, if any, specified in the opinion of
counsel referred to in the following subparagraph (c); and
(c) an opinion of counsel, who may be counsel for the Company,
specifying the mortgages, deeds, covenants, assignments, transfers and
instruments of further assurance which will be sufficient to subject
to the direct lien of the Mortgage (so far as permitted by law) all
the Company's right, title and interest in and to the land and
interest in land and any plant described in said certificate, or
stating that no such mortgage, deed, conveyance, assignment, transfer
or instrument of further assurance is necessary for such purpose, and
that, upon the recordation or filing or registering, in the manner
stated in such opinion, of the instruments so specified, if any, and
upon the recordation and filing and registering of the Mortgage or any
supplemental indenture in the manner stated in such opinion, or
without any such recordation or filing or registering if such opinion
shall so state, the Mortgage will (so far as permitted by law)
constitute a valid lien upon all the Company's right, title and
interest in and to such land, interest in land or plant as against all
creditors and subsequent purchasers, subject only to the lien of any
mortgages or easements existing or placed on such property at the time
of its acquisition by the Company, liens for taxes and assessments not
due, or, if due, in the course of appeal or otherwise in contest,
liens arising out of proceedings in court in the course of contest and
undetermined liens and charges (if any) incidental to current
construction.
For the purposes of this Section 3, any certificate heretofore or hereafter
delivered to the Trustee pursuant to Section 3 of Article III of Division B of
the supplemental indenture dated as of June 1, 1951, or pursuant to Section 3 of
Article II of the Supplemental Indenture dated as of July 1, 1954, or pursuant
to Section 3 of Article III of the supplemental indenture dated as of May 1,
1961, or pursuant to Section 3 of Article III of the supplemental indenture
dated as of July 15, 1966, or pursuant to Section 3 of Article III of the
supplemental indenture dated as of August 15, 1967, or pursuant to Section 3 of
Article III of the supplemental indenture dated as of September 15, 1970, or
pursuant to Section 3 of Article III of the supplemental indenture dated as of
April 1, 1972, or pursuant to Section 3 of Article III of the supplemental
indenture dated as of July 15, 1973, or pursuant to Section 3 of Article II of
the Supplemental Indenture dated as of October 1, 1973, or pursuant to Section 3
of Article II of the Supplemental
40
<PAGE>
Indenture dated as of October 1, 1974, or pursuant to Section 3 of Article II of
the Supplemental Indenture dated as of December 1, 1974, or pursuant to Section
3 of Article II of the Supplemental Indenture dated as of April 1, 1975, or
pursuant to Section 3 of Article III of the Supplemental Indenture dated as of
August 15, 1980, or pursuant to Section 3 of Article II of the supplemental
indenture dated as of June 1, 1984, or pursuant to Section 3 of Article II of
the supplemental indenture dated as of June 1, 1984, or pursuant to Section 3 of
Article II of the supplemental indenture dated as of October 1, 1984, or
pursuant to Section 3 of Article II of the supplemental indenture dated as of
March 1, 1985, or pursuant to Section 3 of Article II of the supplemental
indenture dated as of March 1, 1985, or pursuant to Section 3 of Article II of
the supplemental indenture dated as of March 1, 1985, or pursuant to Section 3
of Article II of the supplemental indenture dated as of March 1, 1985, or
pursuant to Section 3 of Article II of the supplemental indenture dated as of
May 1, 1990, or pursuant to Section 3 of Article II of the supplemental
indenture dated as of April 1, 1993, shall be deemed to have been delivered in
compliance with this Section 3.
SECTION 4. The Company covenants and agrees that, upon cancellation and
discharge of any "prior lien", the Company shall cause all cash or obligations
then held by the trustee or other holder of such prior lien, which were received
by such trustee or other holder by reason of the release of, or which represent
the proceeds of the taking by eminent domain or any disposition of, or the
proceeds of insurance on, any of the properties at any time subject to the lien
of the Mortgage (including all proceeds of or substitutions for any thereof), to
be paid to or deposited and pledged with the Trustee, subject to any lien or
charge prior to the lien of the Mortgage, such cash to be held and paid over or
applied by the Trustee, and such obligations to be held and disposed of, as
provided in Article IX of the Mortgage; provided, however, that in lieu of
taking or delivering to the Trustee all or any part of such cash or obligations,
the Company may deliver to the Trustee a certificate of the trustee or such
other holder of such prior lien, stating that a specified amount thereof has
been deposited with such trustee or other holder pursuant to the requirements of
such other prior lien, in which case there shall also be delivered to the
Trustee an opinion of counsel, who may be counsel for the Company, stating that
such deposit is required by such other prior lien. The term "prior lien" as
used in this Section 4 shall mean and include any "underlying mortgage" and
shall also mean and include any other lien (except liens for taxes and
assessments not due, or, if due, in the course of appeal or otherwise in
contest, liens arising out of proceedings in court in course of contest and
undetermined liens and charges, if any, incidental to current construction)
prior to the lien of the Mortgage upon property acquired by the Company after
the execution and delivery of the Indenture, dated the first day of March, 1928,
referred to in the second paragraph of the recitals of this Supplemental
Indenture, existing on said property or placed thereon to secure unpaid portions
of the purchase price, at the time of such acquisition.
41
<PAGE>
ARTICLE III
MISCELLANEOUS
SECTION 1. The Trustee hereby accepts the trusts hereunder and agrees to
perform the same upon the terms and subject to the applicable provisions of the
Mortgage and the indentures supplemental thereto now in effect.
SECTION 2. This Supplemental Indenture is executed by the parties hereto
pursuant to the provisions of Article XVI of the Mortgage, and so long as any of
the bonds of Series EE are or shall be outstanding the terms and conditions of
this Supplemental Indenture shall be deemed to be a part of the terms and
conditions of the Mortgage for any and all purposes. The provisions of this
Supplemental Indenture shall be inapplicable and shall terminate and become void
and of no effect upon the payment or redemption of all of the bonds of Series EE
in accordance with the provisions of the Mortgage and of the bonds of Series EE.
SECTION 3. All covenants, conditions and provisions contained in this
Supplemental Indenture by or on behalf of the Company shall bind its successors
and assigns, whether so expressed or not, legally or equitably under or by
reason of this Supplemental Indenture.
SECTION 4. Although this Supplemental Indenture is dated as of December 1,
1993, it shall be effective only from the actual time of its execution and
delivery by the Company and the Trustee on the date indicated by their
respective acknowledgments hereto annexed.
This Supplemental Indenture may be simultaneously executed in any number of
counterparts and all such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument entered into by the
parties hereto pursuant to the provisions of Article XVI of the Mortgage.
42
<PAGE>
IN WITNESS WHEREOF, THE PEOPLES GAS LIGHT AND COKE COMPANY has caused this
instrument to be executed in its corporate name by its Chairman, President, an
Executive Vice President or a Vice President, and its corporate seal to be
hereunto affixed and attested by its Secretary or an Assistant Secretary, and
Continental Bank, National Association, as Trustee under the Mortgage, has
caused this instrument to be executed in its corporate name by one of its Vice
Presidents and its corporate seal to be hereto affixed and attested by one of
its Trust Officers, all as of the day and year first above written.
THE PEOPLES GAS LIGHT AND COKE COMPANY
By /s/ KENNETH S. BALASKOVITS
-------------------------------------
Kenneth S. Balaskovits
Vice President and Controller
ATTEST:
/s/ E. P. CASSIDY
- ---------------------------
E. P. Cassidy
Secretary
CONTINENTAL BANK, NATIONAL ASSOCIATION
By /s/ JOHN W. PORTER
-------------------------------------
John W. Porter
Vice President
ATTEST:
/s/ MELISSA A. ROSAL
- ---------------------------
Melissa A. Rosal
Trust Officer
43
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
I, PATRICIA ABREGO-SANTUCCI, a Notary Public in and for said County and
State aforesaid, DO HEREBY CERTIFY that KENNETH S. BALASKOVITS, a Vice
President of The Peoples Gas Light and Coke Company, an Illinois corporation,
and E. P. CASSIDY, Secretary of said corporation, who are both personally known
to me to be the same persons whose names are subscribed to the foregoing
instrument as such Executive Vice President and Secretary, respectively, and who
are both personally known to me to be a Vice President and Secretary,
respectively, of said corporation, appeared before me this day in person and
severally acknowledged that they signed, sealed and delivered said instrument as
their free and voluntary act as such Executive Vice President and Secretary,
respectively, of said corporation, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 1st day of December, 1993.
/s/ PATRICIA ABREGO-SANTUCCI
---------------------------------------
Patricia Abrego-Santucci
Notary Public
My commission expires July 29, 1995.
44
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
I, PATRICIA ABREGO-SANTUCCI, a Notary Public in and for said County and
State aforesaid, DO HEREBY CERTIFY that JOHN W. PORTER, a Vice President of
Continental Bank, National Association, a corporation organized under the laws
of the United States of America, and MELISSA A . ROSAL, a Trust Officer of said
corporation, who are both personally known to me to be the same persons whose
names are subscribed to the foregoing instrument as such Vice President and
Trust Officer, respectively, and who are both personally known to me to be a
Vice President and Trust Officer, respectively, of said corporation, appeared
before me this day in person and severally acknowledged that they signed, sealed
and delivered said instrument as their free and voluntary act as Vice President
and Trust Officer, respectively, of said corporation, and as the free and
voluntary act of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 1st day of December, 1993.
/s/ PATRICIA ABREGO-SANTUCCI
----------------------------------------
Patricia Abrego-Santucci
Notary Public
My commission expires July 29, 1995.
45
<PAGE>
LEASE
BETWEEN
PRUDENTIAL PLAZA ASSOCIATES,
LANDLORD
AND
THE PEOPLES GAS LIGHT AND COKE COMPANY,
TENANT
OCTOBER 20, 1993
DATE OF LEASE
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
1. LEASE OF PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . 1
2. BASIC PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. "Base Rent". . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. "Base Year". . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3. "Brokers". . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. "CPI Factor" [intentionally omitted] . . . . . . . . . . . . 2
2.5. "First and Refunding Mortgage" . . . . . . . . . . . . . . . 2
2.6. "Permitted Use". . . . . . . . . . . . . . . . . . . . . . . 2
2.7. "Rentable Area Of The Demised Premises". . . . . . . . . . . 3
2.8. "Security Deposit" [intentionally omitted] . . . . . . . . . 3
2.9. "Storage Space". . . . . . . . . . . . . . . . . . . . . . . 3
2.10. "Tenant's Proportion". . . . . . . . . . . . . . . . . . . . 3
2.11. "Tenant's HVAC Proportion" . . . . . . . . . . . . . . . . . 3
2.12. "Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. "Additional Rent". . . . . . . . . . . . . . . . . . . . . . 3
3.2. "Building" . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3. "Building Manager" . . . . . . . . . . . . . . . . . . . . . 3
3.4. "Business day" and "business days" . . . . . . . . . . . . . 4
3.5. "Comparison Year". . . . . . . . . . . . . . . . . . . . . . 4
3.6. "Consumer Price Index" . . . . . . . . . . . . . . . . . . . 4
3.7. "Fully Occupied" . . . . . . . . . . . . . . . . . . . . . . 4
3.8. "HVAC Energy Costs". . . . . . . . . . . . . . . . . . . . . 4
3.9. "Lease Year" . . . . . . . . . . . . . . . . . . . . . . . . 4
3.10. "Normal Business Hours". . . . . . . . . . . . . . . . . . . 4
3.11. "Operating Expenses" . . . . . . . . . . . . . . . . . . . . 4
3.12. "Rent Adjustment". . . . . . . . . . . . . . . . . . . . . . 6
3.13. "Rent Adjustment Payment". . . . . . . . . . . . . . . . . . 6
3.14. "Rentable Area". . . . . . . . . . . . . . . . . . . . . . . 6
3.15. "Rentable Area Of The Building". . . . . . . . . . . . . . . 7
3.16. "Rentable Area Of The Tower" . . . . . . . . . . . . . . . . 7
3.17. "Subject Premises" . . . . . . . . . . . . . . . . . . . . . 7
3.18. "Taxes". . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.19. "Workletter" . . . . . . . . . . . . . . . . . . . . . . . . 8
4. BASE RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5. RENT ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1. Consumer Price Index Adjustment. . . . . . . . . . . . . . . 8
5.2. Operating Expense Adjustment . . . . . . . . . . . . . . . . 8
5.3. Estimates of Adjustments . . . . . . . . . . . . . . . . . . 8
5.4. Readjustments. . . . . . . . . . . . . . . . . . . . . . . . 9
5.5. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.6. Yearly Proration . . . . . . . . . . . . . . . . . . . . . . 10
5.7. Capital Costs. . . . . . . . . . . . . . . . . . . . . . . . 10
5.8. Occupancy. . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.9. Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. DIRECTLY CHARGED EXPENSES. . . . . . . . . . . . . . . . . . . . . 12
6.1. Electrical Use . . . . . . . . . . . . . . . . . . . . . . . 12
6.2. Water Use. . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3. Telephone Service. . . . . . . . . . . . . . . . . . . . . . 12
7. SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
7.1. Ventilation, Air-Cooling and Heating. . . . . . . . . . . . 12
7.2. Water . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3. Elevator Service. . . . . . . . . . . . . . . . . . . . . . 13
7.4. Janitorial. . . . . . . . . . . . . . . . . . . . . . . . . 13
7.5. Additional Service Hours. . . . . . . . . . . . . . . . . . 14
7.6. Building Security . . . . . . . . . . . . . . . . . . . . . 14
7.7. Electrical Connections. . . . . . . . . . . . . . . . . . . 14
7.8. Pest Control. . . . . . . . . . . . . . . . . . . . . . . . 15
7.9. Other Services. . . . . . . . . . . . . . . . . . . . . . . 15
7.10. Service Interruptions . . . . . . . . . . . . . . . . . . . 15
8. CONDITION OF DEMISED PREMISES AND COMMON FACILITIES. . . . . . . . 16
8.1. Acceptance of Premises. . . . . . . . . . . . . . . . . . . 16
8.2. Landlord's Obligations. . . . . . . . . . . . . . . . . . . 16
8.3. Light and Air . . . . . . . . . . . . . . . . . . . . . . . 16
9. POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. USE OF DEMISED PREMISES. . . . . . . . . . . . . . . . . . . . . . 17
10.1. Government Use Regulation. . . . . . . . . . . . . . . . . . 17
10.2. Hazardous Material . . . . . . . . . . . . . . . . . . . . . 17
10.3. Use Affecting Insurance. . . . . . . . . . . . . . . . . . . 17
10.4. Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11. CARE AND MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . 18
12. ALTERATIONS AND ADDITIONS. . . . . . . . . . . . . . . . . . . . . 18
13. ACCESS TO DEMISED PREMISES . . . . . . . . . . . . . . . . . . . . 20
14. DAMAGE OR DESTRUCTION. . . . . . . . . . . . . . . . . . . . . . . 21
14.1. Total Destruction. . . . . . . . . . . . . . . . . . . . . . 21
14.2. Partial Destruction. . . . . . . . . . . . . . . . . . . . . 22
14.3. Commencement of Restoration. . . . . . . . . . . . . . . . . 22
14.4. Completion of Restoration. . . . . . . . . . . . . . . . . . 23
14.5. Effect of Termination of Lease . . . . . . . . . . . . . . . 23
14.6. Abatement of Rent for Untenantability. . . . . . . . . . . . 23
15. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15.1. Taking of the Entire Demised Premises. . . . . . . . . . . . 24
15.2. Partial Takings. . . . . . . . . . . . . . . . . . . . . . . 24
15.3. Impeded Access . . . . . . . . . . . . . . . . . . . . . . . 24
15.4. Eminent Domain Proceedings . . . . . . . . . . . . . . . . . 24
15.5. Temporary Takings. . . . . . . . . . . . . . . . . . . . . . 25
16. ASSIGNMENT - SUBLETTING. . . . . . . . . . . . . . . . . . . . . . 25
16.1. Prohibition of Assignment - Subletting . . . . . . . . . . . 25
16.2. Landlord's Recapture Right . . . . . . . . . . . . . . . . . 25
16.3. Submission of Proposed Assignment or Sublease. . . . . . . . 26
16.4. Landlord's Response. . . . . . . . . . . . . . . . . . . . . 26
16.5. Landlord's Failure to Terminate Lease. . . . . . . . . . . . 26
16.6. Landlord's Consent Conditions. . . . . . . . . . . . . . . . 27
16.7. Net Income or Profits. . . . . . . . . . . . . . . . . . . . 27
16.8. Excess Payments Pursuant to Assignment or Sublease . . . . . 27
17. LANDLORD'S MORTGAGE - GROUND LEASE . . . . . . . . . . . . . . . . 28
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
17.1. Foreclosure. . . . . . . . . . . . . . . . . . . . . . . . . 28
17.2. Notice to Mortgagee; Mortgagee Protection. . . . . . . . . . 29
18. CERTAIN RIGHTS RESERVED TO LANDLORD. . . . . . . . . . . . . . . . 29
19. DEFAULT; LANDLORD'S REMEDIES . . . . . . . . . . . . . . . . . . . 30
19.1. Tenant Default . . . . . . . . . . . . . . . . . . . . . . . 30
19.2. Landlord's Rights and Remedies Upon Default. . . . . . . . . 30
19.3. Tenant's Property. . . . . . . . . . . . . . . . . . . . . . 32
19.4. Lease Lien . . . . . . . . . . . . . . . . . . . . . . . . . 33
19.5. Personal Property Lien. [intentionally omitted]. . . . . . . 33
19.6. Cost of Enforcement. . . . . . . . . . . . . . . . . . . . . 33
20. CROSS-DEFAULT FOR OTHER LEASE. . . . . . . . . . . . . . . . . . . 33
21. SURRENDER OF POSSESSION. . . . . . . . . . . . . . . . . . . . . . 33
22. HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
23. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
24. RELOCATION OF TENANT . . . . . . . . . . . . . . . . . . . . . . . 35
25. SECURITY DEPOSIT. [INTENTIONALLY OMITTED]. . . . . . . . . . . . . 35
26. TENANT'S RESPONSIBILITY AND INDEMNIFICATIONS . . . . . . . . . . . 35
26.1. Tenant's Responsibility and Indemnification . . . . . . . . 35
26.2. Landlord's Indemnification . . . . . . . . . . . . . . . . . 35
27. DEMISED PREMISES SECURITY. . . . . . . . . . . . . . . . . . . . . 36
28. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
28.1. Tenant's Required Protection . . . . . . . . . . . . . . . . 36
28.2. Tenant's Insurance Certificates. . . . . . . . . . . . . . . 37
28.3. Tenant's Self-Insurance. . . . . . . . . . . . . . . . . . . 37
28.4. Tenant's Blanket Policy. . . . . . . . . . . . . . . . . . . 37
28.5. Landlord's Insurance . . . . . . . . . . . . . . . . . . . . 37
28.6. Landlord's Insurance Certificates. . . . . . . . . . . . . . 38
28.7. Landlord's Blanket Policy. . . . . . . . . . . . . . . . . . 39
29. MUTUAL WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . 39
30. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
30.1. Post-Default Payment . . . . . . . . . . . . . . . . . . . . 39
30.2. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . 39
30.3. Singular and Plural, Gender. . . . . . . . . . . . . . . . . 39
30.4. Successors . . . . . . . . . . . . . . . . . . . . . . . . . 39
30.5. No Option. . . . . . . . . . . . . . . . . . . . . . . . . . 39
30.6. Interest on Overdue Payments . . . . . . . . . . . . . . . . 39
30.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 39
30.8. Early Occupancy. . . . . . . . . . . . . . . . . . . . . . . 40
30.9. Modification for Mortgage. . . . . . . . . . . . . . . . . . 40
30.10. Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . 40
30.11. Estoppel Certificates . . . . . . . . . . . . . . . . . . . 40
30.12. Tenant Not To Encumber Title. . . . . . . . . . . . . . . . 41
30.13. Election of Laws. . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
30.14. Severability. . . . . . . . . . . . . . . . . . . . . . . . 41
30.15. Authorization . . . . . . . . . . . . . . . . . . . . . . . 41
30.16. Fire Doors. . . . . . . . . . . . . . . . . . . . . . . . . 41
30.17. Waiver of Jury. . . . . . . . . . . . . . . . . . . . . . . 41
30.18. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 41
30.19. Sale by Landlord. . . . . . . . . . . . . . . . . . . . . . 42
30.20. Investment Tax Credit . . . . . . . . . . . . . . . . . . . 42
30.21. Short Form. . . . . . . . . . . . . . . . . . . . . . . . . 42
30.22. Construction of Lease . . . . . . . . . . . . . . . . . . . 42
30.23. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . 42
30.24. Asbestos Existence and Abatement Program. . . . . . . . . . 43
30.25. Landlord Liability. . . . . . . . . . . . . . . . . . . . . 43
30.26. Move-In Rights. . . . . . . . . . . . . . . . . . . . . . . 43
30.27. Parking . . . . . . . . . . . . . . . . . . . . . . . . . . 44
30.28. Internal Stairwell. . . . . . . . . . . . . . . . . . . . . 45
30.29. Directory Board . . . . . . . . . . . . . . . . . . . . . . 45
30.30. Tenant's Competitors. . . . . . . . . . . . . . . . . . . . 45
30.31. Plaza Club Memberships. . . . . . . . . . . . . . . . . . . 45
30.32. Landlord's Defaults and Tenant's Remedies . . . . . . . . . 46
30.33. Signage . . . . . . . . . . . . . . . . . . . . . . . . . . 46
30.34. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . 46
30.35. Definition of "Downtown Chicago". . . . . . . . . . . . . . 47
30.36. Rule Against Perpetuities . . . . . . . . . . . . . . . . .. 47
30.37. Storage Space . . . . . . . . . . . . . . . . . . . . . . .. 47
30.38. Rooftop Communications Equipment. . . . . . . . . . . . . . 47
30.39. Hazardous and Toxic Materials in the Demised Premises.. . . 47
30.40. Title Insurance . . . . . . . . . . . . . . . . . . . . . .. 49
30.41. Landlord's Authority. . . . . . . . . . . . . . . . . . . . 49
31. OPTIONS TO EXPAND. . . . . . . . . . . . . . . . . . . . . . . . . 49
31.1. Grant of Options . . . . . . . . . . . . . . . . . . . . . . 49
31.2. Exercise of Options. . . . . . . . . . . . . . . . . . . . .. 49
31.3. Landlord's Expansion Space Notice. . . . . . . . . . . . . .. 49
31.4. Terms of Lease of Expansion Space. . . . . . . . . . . . . .. 50
31.5. Option Rights Not Severable. . . . . . . . . . . . . . . . . 50
32. RIGHT OF FIRST OFFER . . . . . . . . . . . . . . . . . . . . . . .. 50
32.1. Right of First Offer . . . . . . . . . . . . . . . . . . . . 50
32.2. Landlord's Notice. . . . . . . . . . . . . . . . . . . . . . 51
32.3. Tenant's Notice. . . . . . . . . . . . . . . . . . . . . . . 51
32.4. Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
32.5. Option Rights Not Severable. . . . . . . . . . . . . . . . . 52
33. CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
34. CONTRACTION OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . 53
34.1. First Contraction Options. . . . . . . . . . . . . . . . . . 53
34.2. Second Contraction Option. . . . . . . . . . . . . . . . . . 54
35. OPTION TO EXTEND . . . . . . . . . . . . . . . . . . . . . . . . . 55
35.1. Grant of Option. . . . . . . . . . . . . . . . . . . . . . . 55
35.2. Exercise of Option . . . . . . . . . . . . . . . . . . . . . 55
35.3. Terms of Extension Period. . . . . . . . . . . . . . . . . . 55
35.4. Lease Supplement . . . . . . . . . . . . . . . . . . . . . . 55
36. FAIR MARKET BASE RENTAL RATE . . . . . . . . . . . . . . . . . . . 56
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
36.1. Definition . . . . . . . . . . . . . . . . . . . . . . . . . 56
36.2. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
36.3. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . 56
37. EARLY DEMISED PREMISES ADJUSTMENTS . . . . . . . . . . . . . . . . 58
37.1. Demised Premises Reduction.. . . . . . . . . . . . . . . . . 58
37.2. Demised Premises Increase. . . . . . . . . . . . . . . . . . 58
37.3. Lease Supplement . . . . . . . . . . . . . . . . . . . . . . 60
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
Landlord Acknowledgment
Tenant Acknowledgment
Exhibits:
Exhibit A - Floor Plan
Exhibit B - Storage Space
Exhibit C - Workletter
Exhibit D - HVAC Specifications
Exhibit E - Cleaning and Janitorial Service
Exhibit F - Current After-Hours HVAC Charges
Exhibit G - Acceptance of Premises Memorandum
Exhibit H - Rules and Regulations
Exhibit I - Reserved Parking
Exhibit J - Pre-Approved Signage
Exhibit K - Storage Space Terms and Conditions
Exhibit L - Antenna Terms and Conditions
Exhibit M - Termination Fee Example
Exhibit N - Existing Tenant Rights
Exhibit 0 - Hazardous Substance Surveys
Exhibit P - 26th Floor Early Increase Space
Exhibit Q - Plaza Level Early Increase Space
v
<PAGE>
LEASE
THIS LEASE is entered into and made as of the 20th day of October, 1993, by
and between PRUDENTIAL PLAZA ASSOCIATES, an Illinois general partnership
("Landlord"), and THE PEOPLES GAS LIGHT AND COKE COMPANY, an Illinois
corporation ("Tenant").
WITNESSETH
1. LEASE OF PREMISES.
In consideration of the rents and covenants hereinafter set forth, Landlord
hereby leases to Tenant, and Tenant hereby leases from Landlord, the premises
depicted on Exhibit A attached hereto and incorporated herein (the "Demised
Premises"), to be known as Suite 2400 and to be located on all of floors 3 and
16 through 24, inclusive, and a portion of the plaza level and floor 14 in the
tower commonly known as One Prudential Plaza (the "Tower") of the Building (as
more fully defined below in Section 3.2) commonly known as Prudential Plaza,
located at 130 East Randolph Drive, Chicago, Illinois, all subject to the terms
and conditions of this Lease. The Demised Premises shall also include the Tenant
Improvements (as defined in the Workletter) owned by Landlord as described in
the Workletter and as paid for out of Landlord's Build-Out Commitment pursuant
to the Workletter. Notwithstanding anything contained herein to the contrary,
Tenant acknowledges and agrees that Landlord shall not be responsible for
maintenance of the Tenant Improvements. Additionally, the Demised Premises shall
also include the Storage Space (as hereinafter defined) for all purposes
hereunder, except as specifically hereinafter provided. The foregoing demise
includes 24-hour per day, 7-day per week right of ingress and egress thereto and
the right in common with other tenants of the Building to use the common areas
of the Building, such as public corridors, main building lobby, elevator
lobbies, public restrooms, loading docks and service areas, and all present and
future easements, additions, improvements and other rights appurtenant thereto,
subject to the terms and conditions set forth herein. This Lease shall be for a
term of approximately fifteen (15) years, (a) commencing on the date (the
"Commencement Date") that is the earlier of (i) the date Tenant occupies
substantially all of the Demised Premises for the conduct of business and (ii)
the later of (A) the date that is nine (9) months and fifteen (15) days
following the date Landlord substantially completes the Base Building Work (as
defined in the Workletter (as hereinafter defined)) for all of the Demised
Premises other than floors 17 and 19 of the Tower, and delivers exclusive
possession of such floors to Tenant for construction of Tenant Improvements (as
defined in the Workletter) and (B) the date that is three (3) months and fifteen
(15) days after the date Landlord delivers the balance of the Demised Premises
to Tenant for the construction of Tenant Improvements (which three (3) months
and fifteen (15) day period is subject to extension due to delays caused by
Landlord's failure for any reason to complete Base Building Work in said balance
of the Demised Premises in accordance with the schedule of milestone dates
attached as Attachment B to the Workletter and otherwise in accordance with
Paragraph 2 of the Workletter (notwithstanding anything contained in this Lease
to the contrary, Landlord acknowledges that its obligations under said Paragraph
2 of the Workletter are not subject to extension for Force Majeure (as defined
in Section 30.34 below), and ending on the date (the "Expiration Date") that is
the last day of the calendar month in which the fifteenth (15th) anniversary of
the Commencement Date occurs, unless extended or sooner terminated as provided
herein. Notwithstanding anything contained herein to the contrary, the nine (9)
month and fifteen (15) day period and the three (3) month and fifteen (15) day
period set forth above, are not subject to extensions due to Force Majeure, (as
described in Section 30.34 below) effecting Tenant's construction of Tenant
Improvements.
<PAGE>
2. BASIC PROVISIONS.
2.1. "BASE RENT" for the Demised Premises, not including the Storage
Space, shall mean the following amounts for the following Lease Years (as
hereinafter defined):
<TABLE>
<CAPTION>
LEASE ANNUAL MONTHLY
YEAR BASE RENT BASE RENT
----- --------- ---------
<S> <C> <C>
1 $2,297,907.00 $191,492.25
2 2,343,865.20 195,322.10
3 2,390,742.48 199,228.54
4 2,438,557.32 203,213.11
5 2,487,328.44 207,277.37
6 2,537,075.04 211,422.92
7 2,587,816.56 215,651.38
8 2,639,572.80 219,964.40
9 2,692,364.28 224,363.69
10 2,746,211.64 228,850.97
11 3,567,104.76 297,258.73
12 3,638,446.92 303,203.91
13 3,711,215.88 309,267.99
14 3,785,440.20 315,453.35
15 3,861,148.92 321,762.41
</TABLE>
2.2. "BASE YEAR" [intentionally omitted]
2.3. "BROKERS" shall mean J.F. McKinney & Associates, Ltd., Witkowsky
Associates, Inc., and Equis Corporation.
2.4. "CPI FACTOR" [intentionally omitted]
2.5. "FIRST AND REFUNDING MORTGAGE" shall mean that certain Mortgage
dated January 2, 1926, from Chicago By-Product Coke Company to Illinois
Merchants Trust Company (succeeded through consolidation and merger by
Continental Bank, National Association), as Trustee and assumed by The
Peoples Gas Light and Coke Company by Indenture dated March 1, 1928, as the
same has been and may be supplemented and amended by indentures
supplemental thereto.
2.6. "PERMITTED USE" shall mean general office use and related
ancillary uses consistent with a first-class office building in downtown
Chicago, Illinois, including, but not limited to, an ancillary medical
department providing medical care to Tenant's employees and retirees and
insured members of their families (provided, that Tenant shall be
responsible for satisfying all governmental requirements respecting such
medical facility, including any special waste disposal requirements), an
ancillary exercise facility for use by Tenant's employees (provided,
however that if such exercise facility is located on the plaza level of the
Tower, Tenant shall construct tenant improvements within such portion of
the Demised Premises so that such exercise facility is not visible from
outside of the Demised Premises), customer relations and customer billing
facilities (provided, however, that customer bill payment facilities, if
any, shall be located in a portion of the Demised Premises mutually
acceptable to Landlord and Tenant, but if Landlord and Tenant are unable to
mutually agree on a location, Tenant may select a location within the
Demised Premises so long as such location selected by Tenant is not on the
plaza level of the Building), computer and word processing facilities,
television and radio production studios, office printing facilities
(provided, however, that if such facilities utilize machinery or equipment
which produces excessive noise or vibration or which require excessive
deliveries of supplies, then such facilities shall be limited to the
portion of the Storage Space (as hereinafter defined) located on the B-1
level of the Building),
2
<PAGE>
filing and library facilities, kitchen, dining and vending machine
facilities (for the convenience of Tenant and its employees and provided
that Tenant shall be responsible for satisfying all governmental
requirements respecting said facilities, including any special ventilating
requirements) and, subject to the provisions of Section 30.38 below,
microwave, laser and other communications facilities. Subject to the terms
and conditions of this Lease, Tenant may also install and operate any
machines or mechanical or electronic equipment necessary and ancillary to
Tenant's permitted use and occupancy of the Demised Premises.
2.7. "RENTABLE AREA OF THE DEMISED PREMISES" shall mean two hundred
fifty-five thousand three hundred twenty-three (255,323) square feet, which
does not include any rentable area of the Storage Space.
2.8. "SECURITY DEPOSIT" [intentionally omitted]
2.9. "STORAGE SPACE" shall mean those certain storage spaces located
in the Building and depicted on Exhibit B attached hereto and incorporated
herein consisting of approximately twenty-one thousand two hundred ninety-
seven (21,297) square feet. "OFFICE STORAGE SPACE" shall mean those
portions of the Storage Space located on floors 3 and 16 through 24,
inclusive, of the Tower. "NON -OFFICE STORAGE SPACE" shall mean all other
portions of the Storage Space other than the Office Storage Space.
2.10. "TENANT'S PROPORTION" shall mean twelve and two hundred thirty-
nine one-thousandths percent (12.239%) which is the proportion the Rentable
Area Of The Demised Premises bears to the Rentable Area Of The Building (as
hereinafter defined) and may be adjusted from time to time as provided
herein.
2.11. "TENANT'S HVAC PROPORTION" shall mean twenty-and two hundred
thirty-nine one-thousandths percent (22.493%) which is the proportion the
Rentable Area Of The Demised Premises bears to the Rentable Area Of The
Tower (as hereinafter defined) and may be adjusted from time to time as
provided herein.
2.12. "TERM" shall mean the term described in Article I above, as the
same may be renewed or extended as set forth in this Lease.
3. DEFINITIONS.
For the purposes of this Lease the following terms shall have the following
meanings:
3.1. "ADDITIONAL RENT" shall mean all other charges to be paid by
Tenant as provided for in this Lease other than Base Rent, Rent Adjustment
(as defined in Section 3.12 below) and Tenant's Proportion of Taxes (as
provided in Section 5.5).
3.2. "BUILDING" shall mean all buildings and improvements as may from
time to time be established in the area bounded by Randolph Street,
Beaubien Court, Lake Street and Stetson Avenue in Chicago, Illinois,
sometimes commonly referred to as Prudential Plaza, which includes all
buildings located in such area and all common use facilities established in
connection therewith including, without limitation, common lobby areas
among such towers as may from time to time be erected thereon and under-
surface walkways and tunnels connecting such towers with adjacent buildings
as may from time to time be constructed, all of said towers and common
areas to be operated as one unit.
3.3 "BUILDING MANAGER" shall mean Premisys Real Estate Service, Inc.,
or such other company as Landlord shall designate. Any such substitute
Building Manager designated by Landlord shall be experienced and fully
qualified in the management of comparable first-class, institutionally-
owned office buildings in the United States.
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3.4. "BUSINESS DAY" and "BUSINESS DAYS" shall mean Monday, Tuesday,
Wednesday, Thursday and Friday, excluding such holidays ("Holidays") as
shall be determined by Landlord. Such Holidays shall only include New
Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day and other national, state or local holidays generally
observed by first-class office buildings (other than governmental and bank
buildings) in the downtown Chicago, Illinois, area. Landlord shall give
Tenant prior written notice of any change in Building Holidays.
3.5. "COMPARISON YEAR" shall mean each calendar year during which any
portion of the Term of this Lease falls.
3.6. "CONSUMER PRICE INDEX", also referred to as "CPI", shall mean
the United States Department of Labor's Bureau of Labor Statistics' Revised
Consumer Price Index, All Urban Consumers, All Items (1982-84 equals 100)
for Chicago-Gary-Lake County, IL-IN-WI, or other corresponding SMSA for
which such CPI may at anytime be published. If the Bureau of Labor
Statistics substantially revises the manner in which the CPI is determined,
an adjustment shall be made in the revised index which would produce
results equivalent, as nearly as possible, to those which would be obtained
if the CPI had not been so revised. If the 1982-84 average shall no longer
be used as an index of 100, such change shall constitute a substantial
revision. If the CPI becomes unavailable to the public because publication
is discontinued, or otherwise becomes unavailable, or if equivalent data is
not readily available to enable Landlord to make the adjustment to the
revised index referred to above, Landlord shall substitute a comparable
index based upon changes in the cost of living or purchasing power of the
consumer dollar published by any other governmental agency or, if no such
index is available, then a comparable index published by a major bank,
other financial institution, university or recognized financial
publication.
3.7. "FULLY OCCUPIED" shall mean that ninety-five percent (95%) or
more of the Rentable Area Of The Building is leased or occupied by tenants
under lease.
3.8. "HVAC ENERGY COSTS" shall mean the cost of energy consumption
for providing heating, ventilating and air-conditioning to the Building or
Tower, as the case may be.
3.9. "LEASE YEAR" shall mean each twelve (12) month period commencing
on the Commencement Date (or the first day of the first month following the
Commencement Date in the event that the Commencement Date is not the first
day of a month), and each anniversary thereof. In the event that the
Commencement Date is not the first day of a calendar month, the first Lease
Year hereunder shall include the partial month commencing on the
Commencement Date and ending on the first day of the first month following
the Commencement Date.
3.10. "NORMAL BUSINESS HOURS" shall mean that period of time
commencing at eight o'clock a.m. (8:00 a.m.) and terminating at six o'clock
p.m. (6:00 p.m.) on Monday, Tuesday, Wednesday, Thursday and Friday and
commencing at eight o'clock a.m. (8:00 a.m.) and terminating at one
o'clock p.m. (1:00 p.m.) on Saturday, excluding Holidays, which hours are
subject to change by Landlord or Building Manager on behalf of Landlord,
subject to Tenant's approval, which approval may be withheld in Tenant's
sole discretion to the extent such change would affect services to be
provided to Tenant under the this Lease or the amounts to be paid by Tenant
for such services; provided, however, Landlord may increase Normal Business
Hours without Tenant's approval.
3.11. "OPERATING EXPENSES" shall mean all reasonable costs and
disbursements, other than Taxes (as herein defined), paid or incurred by
Landlord in connection with the ownership, management, maintenance, repair
or operation of the Building, including (without limitation) the cost of
electricity, steam, water, gas, fuel, heating,
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lighting, air-conditioning, window cleaning, janitorial service, insurance,
including (without limitation) fire, extended coverage, liability,
workmen's compensation, elevator or any other insurance carried by Landlord
and applicable to the Building under Section 28.5 below, and any other
insurance applicable to the Building carried in good faith by Landlord
consistent with the practices of first-class office buildings in downtown
Chicago, Illinois, painting, uniforms, management fees, supplies, sundries,
sales or use taxes on supplies or services, cost of wages and salaries of
all persons engaged in the operation, administration, maintenance and
repair of the Building, and fringe benefits, including (without limitation)
social security taxes, unemployment insurance taxes, cost for providing
coverage for disability benefits, cost of any pension, hospitalization,
welfare or retirement plans, or any other similar or like expenses incurred
under the provisions of any collective bargaining agreement, or any other
cost or expense which Landlord pays or incurs to provide benefits for
employees so engaged in the operation, administration, maintenance and
repair of the Building, the charges of any independent contractor who,
under contract with Landlord or its representative, does any of the work
of operating, maintaining or repairing of the Building, legal and
accounting expenses, or any other expense or charge, whether or not
hereinbefore mentioned, which in accordance with generally accepted
accounting principles respecting first-class office buildings in downtown
Chicago, Illinois, would be considered as an expense of owning, managing,
operating, maintaining or repairing the Building. Operating Expenses shall
not include the following: (a) costs of alterations, renovation,
subdivision layout and finish of any tenant's premises in the Building at
any time; (b) principal or interest payments on Landlord's unsecured loans
or loans secured by mortgages or trust deeds on Landlord's interest in the
Building, or any ground lease interest or other underlying lease interest
held by Landlord; (c) any ground rental payments or other underlying lease
rentals and associated costs paid by Landlord; (d) costs of capital
improvements (the costs of capital improvements shall be covered by
Section 5.7 below); (e) real estate brokers' leasing commissions and any
advertising and promotional fees and other expenses incurred by Landlord in
connection with the leasing of space in the Building to tenants, (f)
depreciation or amortization charges; (g) any expenditures or portions
thereof for which Landlord is reimbursed (other than by tenants pursuant to
lease provisions providing for pass-through of Operating Expenses and
Taxes) whether by insurance proceeds or otherwise (including, without
limitation, reimbursement for electricity used by any tenant (including
Tenant)), and Landlord agrees to use its reasonable good faith efforts to
collect any amounts which third-parties are obligated to reimburse to
Landlord; (h) executive salaries of employees of Landlord above the rank of
building manager or equivalent position (it being acknowledged that the
current title for such position is general manager); (i) costs of repairs
or replacements to the Building and to the personal property, fixtures,
machinery, equipment and apparatus located therein or used in connection
therewith incurred by reason of fire or other casualty, except that
Operating Expenses shall include the amount of any deductible permitted
pursuant to Section 28.5 below that must be satisfied by Landlord prior to
Qualifying for reimbursement of the cost of such repairs and replacements
under any applicable insurance policy so long as such deductible was
satisfied by Landlord; (j) costs incurred in performing work or furnishing
services for any tenant (including Tenant), whether at such tenant's or
Landlord's expense, to the extent that such work or service is in excess of
any work or service that is made available to Tenant without additional
payment by Tenant; (k) the cost of any work or service, including the
provision of electricity, performed for any tenant (including Tenant) which
is paid for by such tenant other than pursuant to lease provisions
providing for pass-through of Operating Expenses; (l) any fee or other
expenditure paid to any corporation or entity related to or
affiliated with Landlord in excess of the amount which would be paid in the
absence of such relationship; (m) any judgment, settlement or arbitration
award paid by Landlord to third parties for personal injury or property
damage resulting from any negligence of Landlord or its contractors or
agents other than the cost of (i) normal repairs and maintenance or (ii)
minor repairs equivalent to those normally undertaken by Landlord whether
or not resulting from such judgment, settlement or award: (n) the cost of
any electricity used by any tenant
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(including Tenant) on the premises (exclusive of common areas) demised by
such tenant; (o) attorney's and other professional fees, costs,
disbursements and other expenses incurred in connection with negotiations
or disputes with tenants, other occupants or prospective tenants of the
Building; (p) damages, penalties and fines incurred due to violation by
Landlord of the terms and conditions of any lease; (q) any compensation
paid to clerks, attendants or other persons in commercial concessions
operated by Landlord (except for the Building concierge); (r) charitable
and political contributions (except, however, dues and fees paid to
building or area organizations such as BOMA or the New East Side
Association); (s) costs for acquisition of sculptures, paintings or other
objects of art; (t) costs and expenses pertaining to the operation and
maintenance of the garage located in the Building or the commuter shuttle
service currently provided between the Building and Union Station and
Northwestern Station; (u) management fees paid to Building Manager to the
extent such fees are in excess of the prevailing rate for management of
first-class office buildings in downtown Chicago, Illinois, by management
agents providing comparable levels of service and assuming comparable
levels of liability to those then being provided and assumed by Building
Manager; (v) rentals and other related expenses incurred in leasing air-
conditioning systems, elevators or other equipment ordinarily considered
to be of a capital nature (which shall be covered by Section 5.7 below),
except equipment which is used in providing janitorial services and which
is not permanently affixed to the Building and except typical office
furniture, fixtures and equipment, such as computers and photocopy
machines, used in the Building office; (w) to the extent the Building, as
of the date of this Lease, is not in compliance with applicable federal,
state or municipal laws, rules, regulations and orders, the costs of
correcting such non-compliance, including, without limitation, the cost of
compliance with the requirements of the Americans With Disabilities Act of
1990 as applicable as of the date of the Lease and compliance with the
requirements of any such laws, rules, regulations and orders pertaining to
Hazardous Materials (as hereinafter defined) as applicable as of the date
of this Lease; (x) HVAC Energy Costs for the Building; (y) any vault
payments made to the City of Chicago to the extent the use of such vault is
for the benefit of occupants or tenants of the Building other than Tenant;
and (z) cost and expenses, including legal and accounting fees, associated
with operation of the business of Landlord's partnership or other entity
which is the Landlord, such as those associated with internal partnership
accounting and legal matters and the sale or mortgage of the Building or
defense of Landlord's title to the Building, as distinguished from costs of
operation of the Building. Landlord agrees to competitively bid all major
service contracts for the Building, including the janitorial contract, at
least once every three (3) years. Additionally, Landlord agrees that
Operating Expenses for the Building on a per square foot basis will be
comparable to the amount of total operating expenses per square foot set
forth in the BOMA EXPERIENCE EXCHANGE REPORT, INCOME/EXPENSES ANALYSIS FOR
OFFICE BUILDINGS, or similar guide, for office space in office buildings in
downtown Chicago, Illinois, which are more than 600,000 square feet in
size, using the expense history data for the high end of the mid-range of
buildings.
3.12. "RENT ADJUSTMENT" shall mean any amounts owed by Tenant for
Operating Expense Adjustment (as hereinafter defined) or capital costs
pursuant to Section 5.7.
3.13. "RENT ADJUSTMENT PAYMENT" shall mean an amount reasonably
estimated by Landlord pursuant to Section 5.3 below and required to be paid
monthly by Tenant to Landlord, which amount shall be equal to one-twelfth
(1/12th) of Landlord's estimate of the Rent Adjustment due for the
Comparison Year or part thereof of the Term to which such estimate is
applicable.
3.14. "RENTABLE AREA" shall be determined as follows: The gross
area of a floor is determined by measuring from the inside of the glass and
from the inside of the exterior walls for the entire floor with no
deductions for columns. The non-useable areas are the penetrations,
toilets, fan room, telephone, and electrical closets, Building storage
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space for rent (including the Storage Space) and minimum corridors and
lobbies to enable multi-tenant occupancy. Deducting the non-useable area
from the gross area produces a useable area. The useable area is then
multiplied by an add-on factor to determine the Rentable Area for the
floor. The add-on factor for the plaza level, floors 3, 13, 14, 16-24, 26
and 27 of the Tower is 1.1655.
3.15. "RENTABLE AREA OF THE BUILDING" shall mean two million eighty-
six thousand one hundred thirty-six (2,086,136) square feet. Rentable Area
Of The Building and Tenant's Proportion may be adjusted from time to time
through the addition and/or deletion of office or retail space to the
Building; provided, however, that in adjusting Tenant's Proportion as a
result of any such deletion of office or retail space in the Building, if
as a result of such deletion the Rentable Area Of The Building is reduced
by more than ten percent (10%), then the denominator (regardless of the
actual Rentable Area Of The Building after such deletion) of the fraction
used to determine Tenant's Proportion shall not be decreased in excess of
the percentage amount by which the yearly Operating Expenses can reasonably
be expected to decrease as a result of such deletion. Landlord shall
provide Tenant with written notification of the effective date of such
addition and deletion and any such change.
3.16. "RENTABLE AREA OF THE TOWER" shall mean one million one hundred
thirty-five thousand ninety-eight (1,135,098) square feet. Rentable Area
Of The Tower and Tenant's HVAC Proportion may be adjusted from time to time
through the addition and/or deletion of office or retail space to the
Tower. Landlord shall provide Tenant with written notification of the
effective date of such addition and deletion and any such change.
3.17. "SUBJECT PREMISES" is that portion of the Demised Premises (up
to and including the entire Demised Premises) for which a sublease or
assignment of lease has been proposed, accepted or rejected.
3.18. "TAXES" shall mean all real estate taxes, installments of
special assessments, sewer charges, transit taxes, taxes based upon receipt
of rent and any other federal, state or local governmental charge, general,
special, ordinary or extraordinary (excluding income, capital stock,
transfer or franchise or other taxes based upon or measured by Landlord's
income or profit) which shall now or hereafter be assessed against the
Building; provided, however, if special assessments are permitted to be
paid in installments (except for such minimal assessments which in
Landlord's judgment would be reasonable to pay in a lump sum rather than in
periodic installments), Landlord shall pay such special assessments in the
maximum number of installments permitted. Taxes shall include all
reasonable fees and costs, including attorneys' fees, appraisals and
consultants' fees incurred by Landlord in seeking to obtain a reduction of,
or a limit on the increase in, any Taxes for a Comparison Year falling in
whole or in part within the Term, regardless of whether any reduction or
limitation is obtained (except that the amount of such fees and expenses
included in Taxes shall be amortized over the period of the reduction if
such a payment arrangement is made available to and utilized by Landlord in
its reasonable discretion). Taxes "for" a given Comparison Year shall mean
Taxes which are assessed or become a lien during such Comparison Year
rather than Taxes which are due for payment or paid in such Comparison
Year. If at any time the method of taxation then prevailing shall be
altered so that any new or additional tax, assessment, levy, imposition or
charge or any part thereof shall be imposed upon Landlord in place or
partly in place of any such Taxes or contemplated increase therein, or in
addition to Taxes, and shall be measured by or be based in whole or in part
upon the Building or any part thereof or the real estate upon which the
Building or any part thereof is located or the rents or other income
therefrom, then all such new taxes, assessments, levies, impositions or
charges or part thereof, to the extent that they are so measured or based,
shall be included in Taxes to the extent that such items would be payable
if the Building were the only property of Landlord subject thereto and the
income
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received by Landlord from the Building were the only income of Landlord.
Taxes shall not include: (i) interest or penalties arising as a result of a
late payment by Landlord, (ii) any sales tax on any materials used by
Landlord in connection with the redevelopment or construction of any tenant
improvements in the Building and (iii) any vault payments made to the City
of Chicago to the extent the use of such vault is for the benefit of
occupants or tenants the Building other than Tenant.
3.19. "WORKLETTER" shall mean the Workletter Agreement of even
date herewith executed by Landlord and Tenant and attached hereto and
incorporated herein as Exhibit C.
4. BASE RENT.
Tenant shall pay to Landlord at the office of the Building Manager, or to
such other person or at such other place as Landlord may from time to time
direct in writing, in lawful money of the United States of America, the Base
Rent, as set forth in Section 2.1, payable in equal monthly installments, as
set forth in Section 2.1, in advance on or before the first day of each and
every calendar month of the Term. The payment of Base Rent, Rent Adjustment
Payment, Rent Adjustment and Additional Rent hereunder is independent of each
and every other covenant and agreement contained in this Lease and shall be made
without any setoff, abatement, counterclaim or deduction whatsoever, except as
expressly provided herein. Base Rent, Rent Adjustment Payment, Rent Adjustment
and Additional Rent are sometimes hereinafter collectively referred to as
"Rent". Unpaid Rent shall bear interest at the rate set forth in Section 30.6,
from the date due until paid. If the Term commences on a day other than the
first day of a calendar month, or ends on a day other than the last day of a
calendar month, then the Base Rent for such fractional month shall be prorated
on the basis of a 365 day year.
5. RENT ADJUSTMENTS.
For each Comparison Year, Tenant shall pay as additional Rent the Rent
Adjustments hereinafter set forth.
5.1. CONSUMER PRICE INDEX ADJUSTMENT. [intentionally omitted]
5.2. OPERATING EXPENSE ADJUSTMENT. The Rent Adjustment for Operating
Expenses ("Operating Expense Adjustment") shall be the aggregate of (a)
Tenant's Proportion of all Operating Expenses for the Comparison Year for
which Rent Adjustment is being determined plus (b) Tenant's HVAC Proportion
of all HVAC Energy Costs for the Tower for the Comparison Year for which
Rent Adjustment is being determined. Notwithstanding anything contained
herein to the contrary, for Lease Years 2 through 5, the Operating Expense
Adjustment shall not exceed the following amounts:
<TABLE>
<CAPTION>
LEASE YEAR EXPENSE CAP
<S> <C>
2 107% of the Operating Expense Adjustment for Lease Year 1
3 114% of the Operating Expense Adjustment for Lease Year 1
4 123% of the Operating Expense Adjustment for Lease Year 1
5 131% of the Operating Expense Adjustment for Lease Year 1
</TABLE>
Notwithstanding the foregoing, however, if there shall be imposed upon
Landlord or the Building by any governmental authority a new or additional
energy tax, then the foregoing cap shall be adjusted upward to reflect any
such tax, it being the intent that the foregoing cap not apply to such tax.
5.3 ESTIMATES OF ADJUSTMENTS. Tenant's Operating Expense Adjustment
for each Comparison Year shall be reasonably estimated by Landlord or by
Building Manager on behalf of Landlord, and written notice of such
estimates shall be given to
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Tenant prior to the Commencement Date and the beginning of each Comparison
Year. Tenant shall pay Landlord each month, at the same time as the Base
Rent payment is due, an amount equal to one twelfth (1/12) of said annual
estimate as Rent Adjustment Payment. In the event Landlord's or Building
Manager's estimate of Tenant's Operating Expense Adjustment is not given to
Tenant prior to the beginning of the applicable Comparison Year or the
Commencement Date, as the case may be, Tenant shall continue to pay to
Landlord Rent Adjustment Payments on the basis of the then most current
estimate by Landlord or Building Manager and, in addition, on the first day
of the calendar month following the date which is twenty-one (21) days
after the date on which Landlord or Building Manager notifies Tenant of
Landlord's or Building Manager's estimate for such Comparison Year, Tenant
shall pay to Landlord a lump sum equal to the estimated Rent Adjustment as
revised by Landlord minus (a) any previous Rent Adjustment Payments made by
Tenant for such Comparison Year and (b) monthly installments of Rent
Adjustment Payments not yet due and payable for the remainder of such
Comparison Year. Subsequent to Landlord's initial estimate for a Comparison
Year, Landlord may increase the amount to be paid as Rent Adjustment
Payment up to one (1) additional time during such year by giving Tenant
written notice to that effect, and, in addition, on the first day of the
calendar month following the date which is twenty-one (21) days after the
date on which Landlord or Building Manager notifies Tenant of any such
increase, Tenant shall pay Landlord a lump sum equal to the estimated Rent
Adjustment as revised by Landlord or Building Manager minus (a) any
previous Rent Adjustment Payments made by Tenant for such Comparison Year
and (b) monthly installments of Rent Adjustment Payments not yet due and
payable for the remainder of such Comparison Year.
5.4. READJUSTMENTS. On or before June 30 of each Comparison Year
beginning in 1996, Landlord or Building Manager on behalf of Landlord shall
prepare and deliver to Tenant statements showing the Operating Expenses and
HVAC Energy Costs component of Rent Adjustments for each Comparison Year
and a reasonably detailed itemized statement of Operating Expenses as soon
as reasonably feasible after same are determined. Such statements shall set
forth Tenant's actual Rent Adjustment attributable to such component and
the amount of Rent Adjustment Payment attributable to such component for
such Comparison Year. The failure of Landlord to deliver Landlord's
statement on or before June 30 of each Comparison Year as aforesaid shall
not relieve Tenant from the obligation to pay any balance due to Landlord
after Landlord's statement is actually delivered; provided, however,
interest shall accrue on any over-payment shown in Landlord's statement at
the rate specified in Section 30.6 below from June 30 of such Comparison
Year to the date Landlord's statement for such year is actually delivered
to Tenant and shall be paid or credited to Tenant as provided below with
the payment or credit of such over-payment.
Within thirty (30) days after service of each of the aforementioned
statements, Tenant shall pay to Landlord, or Landlord shall either (i)
credit against the next Rent payment or payments due from Tenant or (ii) at
Tenant's request exercised by means of a notice to Landlord given within
thirty (30) days of the effective date of Landlord's statement, refund said
credit to Tenant in cash, as the case may be, the difference between
Tenant's actual Rent Adjustment attributable to such component for the
preceding Comparison Year and the sum of the Rent Adjustment Payments
attributable to such component paid by Tenant during such Comparison Year.
Tenant's obligation to pay Landlord such difference, if applicable, shall
survive the expiration or termination of this Lease. If this Lease expires
prior to full application of any credit to Tenant for such difference,
Landlord shall pay to Tenant that portion of such difference not reasonably
required for payment of Rent for the Comparison Year in which this Lease
expires, provided Tenant is not in Default under this Lease. Subject to the
terms of this Section 5.4 and to Section 5.9 below, no interest or
penalties shall accrue on any amounts which Landlord is obligated to credit
or pay to Tenant hereunder and, if paid
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when due, no interest or penalties shall accrue on any amounts which Tenant
is obligated to pay Landlord hereunder.
5.5. TAXES. Landlord covenants to pay all Taxes before accrual of any
interest or penalty. Tenant shall pay to Landlord Tenant's Proportion of
Taxes no later than thirty (30) days after the effective date of Landlord's
delivery to Tenant of a copy of a bill for Taxes along with Landlord's
computation of Tenant's Proportion of such bill for Taxes, but in no event
shall Tenant be required to make such payment sooner than thirty (30) days
prior to the applicable due date. Said payment for general real estate
taxes may be made jointly to the order of Landlord and the county
collector. This covenant shall survive the expiration or termination of
this Lease. Landlord covenants to contest components of Taxes in a manner
that is, in Landlord's reasonable judgement, reasonably consistent with the
practices of a prudent owner of first-class office buildings. If any refund
of Taxes is received by Landlord for a Comparison Year for which Tenant has
paid Tenant's Proportion of Taxes, Landlord shall promptly refund to
Tenant, Tenant's Proportion (in effect for such Comparison Year) of the
net amount of such refund after deduction of any reasonable costs and
expenses, including attorneys fees, incurred in obtaining such refund and
not previously collected from tenants of the Building. Notwithstanding
anything contained in this Lease to the contrary, in no event shall
Landlord collect from tenants of the Building more than 100% of the actual
Taxes incurred with respect to the Building, it being the intent that
Landlord not make a profit on the payment of Taxes.
5.6. YEARLY PRORATION. If the Term commences on any day other than
the first day of January, or if the Term ends on any day other than the
last day of December, any Rent Adjustment and Tenant's Proportion of Taxes
due Landlord shall be prorated so that Tenant shall pay a pro rata share
equal to said Rent Adjustment and Tenant's Proportion of Taxes multiplied
by a fraction the numerator of which is the number of days of the Term
falling within the Comparison Year and the denominator of which is 365.
This covenant shall survive the expiration or termination of this Lease.
5.7. CAPITAL COSTS. Tenant shall pay as Rent Adjustment, when and as
billed by Landlord or Building Manager on behalf of Landlord, Tenant's
Proportion of the cost of capital improvements made to the Building by
Landlord after the date of this Lease which are intended in good faith to
result in a reduction of Operating Expenses or which are made to the
Building by Landlord after the date of this Lease that are required under
any governmental law or regulation that was not applicable to the Building
as of the date of this Lease, amortized over such reasonable period as
Landlord shall determine in accordance with generally accepted accounting
principles, together with interest on the unamortized balance at the rate
of interest available to Landlord for the borrowing of funds for
construction of such capital improvement, but in no event greater than the
annual rate announced by The First National Bank of Chicago as its
corporate base rate ("Base Rate"), which is in effect as of the date such
capital improvement is put into service, plus three percent (3%). In the
event The First National Bank of Chicago ceases to use the term "corporate
base rate" in setting a base rate of interest for commercial loans, then
Landlord or Building Manager on behalf of Landlord shall utilize an
equivalent Base Rate. In the case of any capital improvement which is
intended to result in a reduction in Operating Expenses, the total cost of
such capital improvement included in Operating Expenses shall not exceed
the reduction in Operating Expenses resulting from such capital
improvement as reasonably estimated, in accordance with accepted
engineering practices, by Landlord's engineer at the time of installation.
Notwithstanding anything contained herein to the contrary, in no event
shall Tenant be responsible for paying the costs of the asbestos abatement
program for the Tower as more fully described in Section 30.24 below nor
shall Tenant be responsible for any capital costs which may fall within the
description set forth in clause (w) of Section 3.11 above. Additionally,
notwithstanding contained herein to the contrary, in no event shall amounts
payable by Tenant pursuant to this Section 5.7 in any Comparison Year
falling within the
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initial fifteen (15) year Term of this Lease with respect to capital
improvements required under any governmental law or regulation adopted
subsequent to the date of this Lease exceed an amount equal to forty cents
($.40) per square foot of Rentable Area Of The Demised Premises, increased
by the percentage increase in the average of the monthly CPIs for each
calendar year falling within the Term hereof over the average of the
monthly CPIs for the calendar year 1995.
5.8. OCCUPANCY. In the event the Building is not Fully Occupied during
any Comparison Year or any portion thereof, the components of HVAC Energy
Costs for the Tower and Operating Expenses which vary with the level of
occupancy will be equitably adjusted for that year to reflect HVAC Energy
Costs for the Tower and Operating Expenses which would have been paid or
incurred by Landlord for such Comparison Year had the Building or Tower, as
the case may be, been Fully Occupied. The foregoing adjustments are to
fully reimburse Landlord for HVAC Energy Costs for the Tower and Operating
Expenses, but are not to result in a profit to Landlord. Notwithstanding
anything in this Lease to the contrary, in no event shall Landlord be
relieved of its liability for that portion of Operating Expenses and HVAC
Energy Costs for the Tower which do not vary with occupancy and which are
attributable to vacant or unleased tenant spaces in the Building or
otherwise collect from tenants more than 100% of actual Operating
Expenses incurred with respect to the Building.
5.9. AUDIT. Landlord shall cause to be kept books and records of HVAC
Energy Costs for the Tower and Operating Expenses in accordance with a
generally accepted system of accounts and accounting practices for real
estate consistently maintained. Tenant or its agents or designees shall
have the right to begin inspecting Landlord's accounting records relative
to HVAC Energy Costs for the Tower and Operating Expenses and Taxes at
Landlord's office in the Building during Normal Business Hours at any time
within one hundred twenty (120) days following the furnishing by Landlord
to Tenant of any Landlord's annual statement. If such inspection shall
indicate that Tenant was overcharged for Tenant's Proportion of Taxes,
Operating Expense Adjustment or Tenant's Proportion of HVAC Costs for the
Tower, and Landlord agrees with such results, then Landlord shall refund to
Tenant the full amount of such overcharge. If the amount of any overcharge,
together with the amount of any prior refunds for overcharges during the
subject Comparison Year, exceeds the Tenant's actual liability for HVAC
Energy Costs for the Tower, Taxes and Operating Expenses by more than three
percent (3%) (that part of the overcharge is herein referred to as the
"excess overcharge") then Landlord shall pay interest to Tenant on the
excess overcharge at the interest rate described in Section 30.6 below from
the date paid to the date repaid or credited by Landlord. If Landlord shall
disagree with the findings of the Tenant's inspection, then the Landlord's
records shall be audited by an independent certified public accounting firm
(the "Auditor") mutually selected by Landlord and Tenant (provided,
however, if Landlord and Tenant cannot agree upon the Auditor, Landlord may
select a firm that is one of the six (6) largest national certified public
accounting firms to act as Auditor, provided that such firm selected by
Landlord did not prepare the initial Operating Expense statement on behalf
of Landlord and is acceptable to a majority of the tenants in the Building
requesting an audit for the subject period). The results of the Auditor's
audit shall be conclusive on Landlord and Tenant. The audit conducted by
the Auditor shall be paid for by Tenant if the final determination of the
amount of the total overcharge for the Comparison Year is three percent
(3%) or less and if the final determination of the amount of the total
overcharge for the Comparison Year exceeds three percent (3%) an excess
overcharge), then Landlord shall pay the costs of such audit. Pending the
results of an such audit, Tenant shall be required to pay the sums shown as
due on Landlord's initial statement, and if it shall be determined that any
portion of such sums were not properly chargeable to Tenant, then upon such
determination Landlord shall immediately credit or pay the appropriate sum
to Tenant as provided in Section 5.4 and in this Section 5.9.
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6. DIRECTLY CHARGED EXPENSES.
The following services shall be charged directly to Tenant:
6.1. ELECTRICAL USE. The Demised Premises, other than the Storage
Space on the 40 Mezzanine level and the Storage Space identified as BL-9B,
shall be separately metered for electrical use in accordance with the
description of Landlord's Base Building Work (as defined in the
Workletter). Landlord, Commonwealth Edison or such other utility company as
may be selected by Landlord or Building Manager on behalf of Landlord for
the Building, shall charge Tenant directly for all electrical services
furnished to the Demised Premises. Tenant shall pay for said electrical
services in a timely and current manner. In the event electricity is
metered by Landlord, Landlord or Building Manager on behalf of Landlord
shall not charge Tenant an amount therefor exceeding the rate schedules
from time to time in effect of the public utility furnishing electricity to
the Building for direct supply of electricity to the Demised Premises.
6.2. WATER USE. If amounts of water utilized in the Demised Premises
are in excess of amounts typically utilized in general offices of
comparable size in downtown, Chicago, Illinois, office buildings all water
supplied to the Demised Premises shall at Landlord's or Building Manager's
option be separately metered. In that event, Landlord or Building Manager
on behalf of Landlord or the appropriate municipality, district or utility
shall separately charge Tenant for all water used in the Demised Premises.
Tenant shall pay for said separately metered water in a timely and current
manner.
6.3. TELEPHONE SERVICE. Subject to Landlord's obligations under the
Workletter, Tenant shall be responsible for the procurement and
installation of all telephone equipment and service. Tenant shall pay for
the same and for all charges for telephone service used in the Demised
Premises in a timely and current manner.
7. SERVICES.
During the Term of this Lease, so long as Tenant is not in Default under
any covenant or condition of this Lease, Landlord shall provide, in addition to
its obligations under Section 8.2 below, the following items and services:
7.1. VENTILATION, AIR-COOLING AND HEATING. Ventilation, air-cooling
and heating ("HVAC") during Normal Business Hours year round, Holidays
excepted, consistent with Exhibit D attached hereto. Whenever Tenant's use
or occupancy of the Demised Premises, including lighting, personnel or heat
generating machines or equipment in the Demised Premises, in Landlord's
judgment affects the temperature or humidity otherwise maintained by the
air-cooling and heating system, Landlord reserves the right to install
supplementary heat or air-conditioning units in the Demised Premises or
elsewhere, as necessary, and the expenses of such installation and
equipment and of the operation and maintenance of any supplementary heat or
air-conditioning units shall be paid by Tenant to Landlord as Additional
Rent at rates established by Landlord. Landlord hereby covenants and agrees
that, at all times during the Term of this lease and for so long as the
original Tenant hereunder continues to directly (i.e., not including any
space subleased or assigned) occupy at least 100,000 square feet of
Rentable Area in the Building, the Demised Premises and the Tower will be
heated with natural gas, in contradistinction to any other form of power.
Landlord further covenants and agrees that in the event Landlord defaults
in its aforesaid obligation, Tenant may elect, in addition to any rights
or remedies available at law or in equity, to obtain specific performance
of Landlord's aforesaid covenant and obligation. With respect to cooling
of the Demised Premises and the Tower, in the event Landlord elects to
utilize a source of power different from the source currently used as of
the date of this Lease, Landlord shall notify Tenant of same and Tenant
shall have an opportunity to submit a bid to Landlord for providing power
to cool the Tower.
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7.2. WATER. Hot and cold water for use in the lavatories which
Landlord has installed for use in the common areas of the Building. If
Tenant desires water in the Demised Premises, cold water only may be
supplied from municipal water mains drawn through a line and fixtures
installed at Tenant's expense, with Landlord's written consent.
7.3. ELEVATOR SERVICE. Passenger elevator service in common with
Landlord and other tenants shall be furnished during Normal Business Hours
which service during Normal Business Hours shall consist of no less than
one (1) elevator servicing the Bl level from the lobby level, seven (7)
elevators exclusively servicing floors 16 through 24 of the Tower only,
seven (7) elevators servicing floors 7 through 15 of the Tower, and four
(4) elevators serving floors 3 to 6, except in the case of emergency
repairs and except that Landlord may take one (1) elevator out of service
in each such bank for extended periods of time for renovation,
refurbishment or extended preventive maintenance. Freight elevator service
in common with Landlord and other tenants shall be furnished Monday,
Tuesday, Wednesday, Thursday and Friday commencing at eight o'clock a.m.
(8:00 a.m.) and terminating at six o'clock p.m. (6:00 p.m.). Except as
provided in the Workletter, no freight elevator service shall be provided
on Holidays, Saturday or Sunday. Except as provided in the Workletter,
normal freight or passenger elevator service at other than the set times
shall be at Landlord's option and such services shall create no continuing
obligation to provide said service, provided that limited passenger service
shall be furnished at all such times normal passenger elevator service is
not furnished (it being acknowledged that normal passenger elevator service
is required during Normal Business Hours as more fully provided in the
first sentence of this Section 7.3), subject to security rules and
regulations for the Building, it being agreed that Tenant have access to
the Demised Premises 24 hours a day, 7 days a week. Such limited passenger
service after Normal Business Hours for floors 16 through 24 of the Tower
shall be exclusive to Tenant only as provided in the first sentence of this
Section 7.3. Operatorless, automatic passenger and freight elevator service
shall be deemed elevator service under this section.
7.4. JANITORIAL. Janitorial service and customary cleaning in and
about the Demised Premises, other than the Non-Office Storage Space, shall
be provided, except for Saturday, Sunday and Holidays, substantially in
accordance with the specifications set forth in Exhibit E attached hereto
and made a part hereof.
Subject to Tenant's right under the immediately following paragraph,
Tenant shall not provide any janitorial services or cleaning without
Landlord's written consent and then only subject to reasonable regulation
by Landlord, with Tenant assuming sole responsibility therefor.
Notwithstanding anything herein to the contrary, Tenant may contract with
its own janitorial service to provide supplemental janitorial services to
the Demised Premises provided that Tenant shall provide Landlord thirty
(30) days prior written notice that Tenant intends to provide such
supplemental janitorial services to the Demised Premises and provided that
any such janitor or janitors providing supplemental cleaning services for
the Demised Premises are capable of working in harmony with the cleaning
contractor for the Building. Tenant agrees to use commercially good faith
efforts to contract with the Building janitorial contractor to provide for
such supplemental janitorial services.
Tenant may convene meetings from time to time with Landlord to discuss
any complaints which Tenant may have with the services being provided by
the janitorial contractor. Further, in the event Landlord does not provide
janitorial services in accordance with this Section 7.4 Tenant may give
Landlord written notice specifying any such failure. Upon receipt of such
notice, Landlord shall meet with Landlord's janitorial contractor to cure
any failures or, if necessary in Landlord's reasonable judgment, Landlord
shall replace such janitorial contractor within ninety (90) days of receipt
of Tenant's notice. If Landlord replaces such janitorial contractor, and
such failure to provide services continues for thirty (30) days after such
replacement, or if Landlord
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does not replace such janitorial contractor and Landlord does not cure any
such failure within thirty (30) days after receipt of Tenant's initial
notice, Tenant may deliver an additional written notice to Landlord
specifying any continuing failures. If Landlord does not reasonably satisfy
the deficiency or deficiencies set forth in Tenant's additional notice
within thirty (30) days after receipt of such notice, Tenant may, upon an
additional fifteen (15) day written notice to Landlord, provide janitorial
services and cleaning for the Demised Premises to satisfy the deficiency or
deficiencies set forth in Tenant's notice, provided, however, that such
janitorial services and cleaning provided by Tenant shall be subject to
reasonable regulation by Landlord, with Tenant assuming sole responsibility
therefor, including, responsibility for causing Tenant's janitorial
services and cleaning contractors and employees to coordinate and work in
harmony with janitorial services and cleaning contractors and employees of
Landlord and Landlord shall have no duty to provide facilities, such as
locker rooms or equipment storage areas, for such janitorial contractor
employed by Tenant. If Tenant provides janitorial services and cleaning for
the Demised Premises in lieu of janitorial services and cleaning to be
provided by Landlord hereunder, then, for purposes of determining Tenant's
Proportion of Operating Expenses, the costs of providing janitorial
services and cleaning to office areas of the Building only (but not the
costs of providing janitorial service and cleaning for the lobby and other
common areas of the Building) shall be excluded from Operating Expenses.
Other than as specifically provided herein, Tenant acknowledges and
agrees that notwithstanding any provision of janitorial services or
cleaning by Tenant hereunder, with Landlord's consent, Tenant shall remain
fully responsible for payment of Tenant's Proportion of Operating Expenses
for the Building.
7.5. ADDITIONAL SERVICE HOURS. If Tenant requests Landlord to supply
HVAC at times other than Normal Business Hours, and if such request is in
writing and received by Landlord at the office of the Building prior to
5:00 p.m. on the day for which such additional services are requested (and
prior to 5:00 p.m. on Friday in the event such additional services are
requested for Saturday or Sunday and prior to 5:00 p.m. on the day before a
Holiday or Holiday period in the event such additional services are
requested for a Holiday or Holiday period, respectively), Landlord will
supply the necessary HVAC at rates set by Landlord, and Tenant will pay all
Landlord's charges therefor within thirty (30) days after Tenant receives
Landlord's bills for such charges. Tenant shall deliver to Landlord a
written designation of no more than five (5) representatives of Tenant who
are authorized to request such additional HVAC and Landlord shall only be
required to provide such additional services upon the written request as
provided above of one (1) of such designated representatives. Subject to
Landlord's preventive maintenance scheduling, Tenant may request such
additional HVAC by means of a standing order for such additional services.
The current charges for after-hours HVAC are set forth on Exhibit F
attached hereto and made a part hereof.
7.6. BUILDING SECURITY Landlord shall provide security services for
the common areas of the Building on a twenty-four (24) hour a day, seven
(7) day a week basis at levels which, at a minimum, are consistent with the
current level of security services being provided at the Building as of the
date of this Lease (subject to changes in security technology and
procedures) and otherwise at least generally consistent with personnel and
systems customarily purchased, leased or contacted for in first-class
office buildings in the downtown Chicago, Illinois, area.
7.7. ELECTRICAL CONNECTIONS. To the extent electric and
communications service to the Demised Premises requires use of existing
lines, wires, feeds, connectors, utility closets or other equipment located
in portions of the Building other than the Demised Premises, Landlord shall
allow Tenant reasonable access thereto and use thereof.
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7.8. PEST CONTROL. To the extent necessary, Landlord will provide
periodic pest control services for the Demised Premises.
7.9. OTHER SERVICES. Landlord may from time to time provide
additional services (including, without limitation, furnishing and
installing light ballasts) to Tenant at Tenant's request. Tenant shall
reimburse Landlord one hundred eight percent (108%) of the cost of such
services; provided, however, that the foregoing charge shall not be
applicable to after-hours HVAC services which is provided for in Section
7.5 above. Any such services shall be invoiced by Landlord on a monthly
basis or at the time such services are rendered.
7.10. SERVICE INTERRUPTIONS. In the event landlord performs any
preventive maintenance upon any common areas or facilities of the Building,
including but not limited to the Building elevators and electrical, HVAC,
plumbing, sewerage or other Building systems, which maintenance will
interrupt the services Landlord is obligated to provide Tenant under this
Lease, Landlord agrees to give Tenant notice of such preventive maintenance
at least two (2) business days (except in the event of emergencies) prior
to the date scheduled for such preventive maintenance. Landlord also agrees
to schedule preventive maintenance at such time or times which, after
consultation with Tenant, will reasonably minimize inconvenience or
interruption to Tenant or its business or operations; provided, however,
that any preventive maintenance to the electrical breakers of the Building
which would cause a break in electrical service to Tenant's computer or
communication facilities (presently intended to be located on floor 3 of
the Demised Premises and to contain no more than 11,806 useable square
feet) or gas control section (presently intended to be located on floor 20
of the Demised Premises and to contain no more than 3,915 useable square
feet) shall be performed after Normal Business Hours.
Tenant agrees that Landlord shall not be liable for any damages
resulting from the failure to furnish or for delay in furnishing any
service when such failure or delay is occasioned, in whole or in part, by
Tenant or its agents, servants, employees, guests, licensees or invitees or
Force Majeure (as defined below in Section 30.34) and except as hereafter
stated such failures or delays shall never be deemed to constitute an
eviction or disturbance of Tenant's use and possession of the Demised
Premises or relieve Tenant from paying Rent or the Storage Space Fee (as
defined in Exhibit K attached hereto) or performing any of its obligations
under this Lease. Notwithstanding the foregoing, if Landlord ceases to
furnish any of the services referred to in this Article 7 and such
cessation is not caused by a casualty described in Article 14 below (in
which case Article 14 shall control) or caused by Tenant or its agents,
servants, employees, guests, licensees or invitees or by Force Majeure,
and, as a result thereof, the Demised Premises, or any portion thereof, are
rendered untenantable for a period in excess of two (2) consecutive
business days (and Tenant does not, in fact, conduct business from such
untenantable portion of the Demised Premises) then, commencing with the
beginning of such cessation, Tenant shall be entitled to an abatement of
Rent or Storage Space Fee, as the case may be, with respect to those
portions of the Demised Premises that are rendered untenantable for the
duration of such untenantability until Tenant resumes or can resume tenancy
of the affected portion of the Demised Premises. Additionally,
notwithstanding anything contained hereto the contrary, if any such period
of untenantability involving more than fifty percent (50%) of the Rentable
Area Of The Demised Premises is longer than sixty (60) consecutive days,
then subject to the provisions of Article 14 and unless the same stoppage
of services affects the majority of office building in downtown Chicago,
Illinois, Tenant may elect to terminate this Lease by written notice to
Landlord within the ten (10) day period following such sixty (60)
consecutive day period; provided, however, that if such stoppage of service
requires work to be performed, acts to be done, or conditions to be removed
which, by their nature, cannot reasonably be performed, done or removed, as
the case may be, within such sixty (60) day period, then if Landlord shall
have commenced curing or correcting
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the same within such period and shall have diligently prosecuted such
correction or cure, such sixty (60) day period shall be extended by such
additional time period not to exceed an additional ninety (90) days, for a
total of one hundred fifty (150) days in the aggregate. Nothing in this
Section 7.10 shall be construed to relieve Landlord of its obligation to
furnish the services described in this Article 7, to make the repairs
described in Article 8 below and to effect the repair and restoration to
the extent required of Landlord pursuant to Articles 14 and 15 below. For
purposes of this Section 7.10, "untenantable" shall mean, as to any
portion of the Demised Premises, that Tenant cannot reasonably use the
respective portion of the Demised Premises for their intended purposes.
8. CONDITION OF DEMISED PREMISES AND COMMON FACILITIES.
8.1. ACCEPTANCE OF PREMISES. Tenant's taking possession of the
Demised Premises or any portion thereof for occupancy or construction of
Tenant Improvements (as defined in the Workletter) shall be conclusive
evidence against Tenant that the portion of the Demised Premises taken
possession of was then in good order and satisfactory condition, subject
to the terms of the Workletter (including warranties and guarantees set
forth therein and including Landlord's obligation to complete Base Building
Work on floors 17 and 19 of the Demised Premises after delivery to Tenant),
to any exceptions previously agreed upon in writing by Landlord and Tenant,
to any punchlist items and to latent defects in the Base Building Work (as
defined in the Workletter). No promises of Landlord to alter, remodel,
improve, repair, decorate or clean the Demised Premises or any part thereof
have been made, and no representation respecting the condition of the
Demised Premises or the Building has been made to Tenant by or on behalf of
Landlord, except to the extent set forth in this Lease.
8.2. LANDLORD'S OBLIGATIONS. Landlord shall perform all maintenance
and make all repairs and replacements to common areas of the Building and
to base Building systems to keep the Building in a condition comparable to
other first-class office buildings in downtown Chicago, Illinois, and shall
provide such services, facilities, supplies and personnel as are consistent
with comparable first-class office buildings in downtown Chicago, Illinois,
including a staff of building engineers. Landlord agrees that its operation
of the Building shall be efficient and economical in a manner reasonably
comparable with other first-class office buildings in downtown Chicago,
Illinois. Without limiting the generality of the foregoing, Landlord shall
maintain, repair and replace, as reasonably necessary for first-class
office buildings in downtown Chicago, Illinois, (a) base Building plumbing,
sprinkler, HVAC, electrical and mechanical lines and equipment associated
therewith (and not including Tenant installed systems) and elevators and
escalators which serve the Demised Premises or common areas of the
Building; (b) the exterior wall system, including exterior glass windows,
and interior and exterior structural components of the Building, including
the roof; and (c) the common areas of the Building, including Building
lobby and common entrances, corridors, doors, windows, loading docks,
stairways, lavatory facilities and elevator cabs; provided, however,
Landlord shall not be obligated to provide any repair, replacement or
maintenance (i) which Tenant is specifically obligated to perform under the
terms hereof or (ii) of Tenant's Improvements or subsequent Alterations and
Additions.
8.3. LIGHT AND AIR. This Lease does not grant any rights to light or
air over property, nor to a view of or from the Building.
9. POSSESSION
As more fully provided in the Workletter, Landlord shall complete the Base
Building Work for all of the Demised Premises, other than those portions located
on floors 17 and 19 of the Tower, and deliver possession of same to Tenant for
construction by Tenant of Tenant Improvements therein on or before May 15, 1994.
Landlord shall deliver possession of the
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remaining balance of the Demised Premises to Tenant for construction of Tenant
Improvements by Tenant, and shall complete the Base Building Work for such
remaining balance of the Demised Premises in accordance with the milestone dates
schedule attached to the Workletter as Attachment B, as more fully provided in
the Workletter. Upon substantial completion of the each respective portion of
the Base Building Work and delivery of possession of same to Tenant, Tenant and
Landlord shall execute an Acceptance of Premises Memorandum, the form of which
is attached hereto as Exhibit G. If the Demised Premises are ready for occupancy
prior to the Commencement Date and Tenant occupies all or any portion of the
Demised Premises prior to said date for the conduct of business, Tenant shall
pay Base Rent, Additional Rent, Tenant's Proportion of Taxes and Rent Adjustment
and the Storage Space Fee for the period of occupancy prior to the Commencement
Date on a per diem basis apportioned for the proportionate area so occupied;
provided, however, that notwithstanding the foregoing, if Tenant occupies all or
a portion of the Demised Premises for the conduct of business after January 1,
1995, or sixty (60) days prior to the Commencement Date, whichever first occurs,
Tenant shall not be required to pay Base Rent, Additional Rent, Tenant's
Proportion of Taxes or Rent Adjustment or the Storage Space Fee for the period
of occupancy prior to the Commencement Date.
10. USE OF DEMISED PREMISES.
Tenant shall occupy and use the Demised Premises during the Term for the
Permitted Use, as set forth in Section 2.6, and for no other purpose, subject to
the agreements herein contained.
10.1. GOVERNMENT USE REGULATION. Tenant will not make or permit to
be made any use of the Demised Premises or the Stairwell (as hereinafter
defined) or do, or permit to be done, any act or thing upon the Demised
Premises or the Stairwell which, directly or indirectly, is forbidden by
public law, ordinance or governmental regulation or which may be dangerous
to persons or property. Tenant, at its sole expense, shall comply with all
laws, statutes, ordinances, codes and regulations now or hereafter in force
relating to the Demised Premises and the Stairwell and the use and
occupancy hereof by Tenant, except to the extent they are the
responsibility of Landlord under Section 8.2 above.
10.2. HAZARDOUS MATERIAL. In the event any Hazardous Material
(hereinafter defined) is brought into or onto the Demised Premises by
Tenant, Tenant shall handle any such material in compliance with all
applicable federal, state and/or local regulations. For purposes of this
Section, "Hazardous Material" means and includes any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for purposes
of) the Comprehensive Environmental Response, Compensation and Liability
Act, any so-called "Superfund" or "Superlien" law, or any federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material,
as now or at any time hereafter in effect (collectively "Environmental
Laws"). Tenant shall submit to Landlord on an annual basis copies of its
approved hazardous materials communication plan, and OSHA monitoring plan,
if Tenant is required to prepare, file or obtain any such plans. Tenant
will indemnify and hold harmless Landlord from any losses, liabilities,
damages, costs or expenses (including reasonable attorneys' fees) which
Landlord may suffer or incur as a result of Tenant's introduction into or
unto the Demised Premises of any Hazardous Material. This Section shall
survive the expiration or sooner termination of this Lease.
10.3. USE AFFECTING INSURANCE. Tenant shall not do, or permit
anything to be done upon the Demised Premises or the Stairwell, or bring or
keep anything thereon in violation of rules, regulations or requirements of
the City of Chicago fire department or other authority having jurisdiction,
and then only in such quantity and manner of storage as not to increase the
rate of fire insurance applicable to the Building. Without limiting the
foregoing covenant of Tenant, if as a result of Tenant's use of the Demised
Premises
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or the Stairwell (a) the amount of insurance premiums payable by Landlord
for insurance maintained by Landlord for or in respect to the Building is
increased, (b) any such insurance coverage is decreased, or (c)
cancellation or refusal to renew any such insurance policy is threatened,
Landlord shall so notify Tenant, whereupon Tenant shall immediately pay any
such increased premium attributable to Tenant's use of the Demised Premises
or the Stairwell or cease any such use, failing which (or in the event of a
threatened cancellation or refusal to renew any such insurance policy which
may not be cured by the payment of an additional premium) Landlord shall
have the right and option, in addition to Landlord's other rights and
remedies hereunder, to terminate this Lease upon written notice to Tenant
effective on the date set forth in such notice.
10.4. RULES. Tenant shall faithfully observe and comply with rules
and regulations attached to and made a part of this Lease as Exhibit H,
and, after notice thereof, all reasonable modifications, amendments and
additions thereto from time to time adopted by Landlord or its agent.
Landlord agrees that it will not adopt, modify or enforce such rules and
regulations in a manner that discriminates against Tenant. If any rules and
regulations adopted by Landlord are contrary to the terms of this Lease,
the terms of this Lease shall govern.
11. CARE AND MAINTENANCE.
Subject to the provisions of Articles 7, 8 and 9 above, Tenant shall, at
Tenant's own expense, keep the Demised Premises in good order, condition and
repair during the Term, ordinary wear excepted. If Tenant does not make repairs
required of Tenant under this Lease within thirty (30) days after written notice
from Landlord (or immediately without notice in the event of an emergency) of
Tenant's failure to make such repairs (provided, however, that if such default
cannot be cured with said thirty (30) days, then such thirty (30) day period
shall be extended so long as Tenant has promptly commenced to cure such default
within said thirty (30) day period and diligently proceeds to cure such
default), Landlord may, but shall have no obligation to, make repairs, and
Tenant shall promptly pay the cost thereof as Additional Rent including a
reasonable fee established by Landlord for Landlord's performing said repairs.
Tenant shall pay Landlord for premium time and for any other expense incurred in
the event repairs, alterations, decorating or other work in the Demised Premises
are not made during Normal Business Hours at Tenant's request.
12. ALTERATIONS AND ADDITIONS.
Tenant shall not erect any partitions or make any alterations, additions,
changes or repairs (hereinafter referred to as "Alterations and Additions") to
the Demised Premises without obtaining in each instance Landlord's prior written
consent; provided, however, Landlord shall not unreasonably withhold its consent
to any such requested Alterations and Additions and shall respond to any such
request within ten (10) business days (and failure to respond within said ten
(10) business days shall be deemed consent to the requested Alterations and
Additions); provided further, however, Tenant may perform Alterations and
Additions without Landlord's consent if such Alterations and Additions (a) do
not affect the mechanical, plumbing, electrical, HVAC or life safety systems of
the Building (not including, however, any non-material Alterations and Additions
which affect the foregoing systems within the Demised Premises only), (b) do not
affect, structural components of the Building or require any new penetration of
the floor or ceiling, (c) are not visible from outside the Demised Premises, (d)
would not require entry into another tenant's premises, (e) would not
substantially reduce the value of the Tenant Improvements in the Demised
Premises as provided in the Workletter, and (f) in the aggregate do not cost
more than Two Hundred Fifty Thousand Dollars ($250,000.00) in any twelve (12)
month period; provided further, however, that even if Landlord's consent is not
required, Tenant shall notify Landlord in writing of any such Alterations and
Additions. Notwithstanding the foregoing, Landlord's consent shall not be
required for any painting or decorating within the Demised Premises, provided
that Tenant shall notify in writing Landlord of such painting and decorating.
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Landlord may impose such reasonable conditions with respect to Alterations
and Additions as Landlord deems appropriate, including, without limitation,
requiring copies of permits necessary for such Alterations and Additions and
requiring use of a general contractor reasonably acceptable to Landlord;
provided, however, that Landlord may not impose any conditions which would in
effect prohibit Tenant from performing the Alterations and Additions which
Tenant may perform without Landlord's consent as described in the immediately
prior paragraph. Alterations and Additions are not required to be performed by
Landlord, but if Alterations and Additions are not performed by Landlord, they
shall be performed under Landlord's regulation (which regulation, however, shall
not be materially different from the regulation set forth in the Workletter) and
Tenant shall pay to Landlord all reasonable actual costs and expenses (but not a
supervisory fee) incurred by Landlord in connection with its review, approval
and monitoring of the completion of such Alterations and Additions.
Unless otherwise provided by written agreement, all Alterations and
Additions shall remain upon and be surrendered with the Demised Premises,
provided that, at Landlord's option, Tenant shall, at its expense, when
surrendering the Demised Premises, remove from the Demised Premises all such
Alterations and Additions installed in the Demised Premises by Tenant and
restore the Demised Premises to their condition as of the commencement of the
Term, normal wear excepted. If Tenant does not remove said Alterations and
Additions after request to do so by Landlord, Landlord may remove the same and
Tenant shall pay the cost of such removal to Landlord, plus a fee for Landlord's
removal of same equal to twenty percent (20%) of the cost of such removal, upon
demand. Notwithstanding the foregoing, at the time Tenant seeks Landlord's
consent to any Alterations and Additions, Landlord shall, if Tenant shall
request in writing, advise Tenant whether or not Landlord will require removal
of such Alterations and Additions. Landlord may not designate for removal any
Alterations and Additions which replace or are otherwise reasonably comparable
in nature and scope to the initial Tenant Improvements installed by Tenant in
accordance with the Workletter. At the time Tenant vacates the Demised Premises,
Landlord may not designate for removal any Alterations and Additions which
Landlord has so advised Tenant Landlord would not require Tenant to remove.
Additionally, notwithstanding anything contained herein to the contrary, Tenant
shall not be required to remove the Tenant Improvements from the Demised
Premises.
To the extent permitted by law, Tenant hereby agrees to protect, defend,
and indemnify Landlord, its agents and employees, with regard to the Demised
Premises and the Building, from any and all liabilities of every kind and
description which may arise out of or be connected in any way with said
Alterations or Additions, except for any loss or damage to the extent caused by
the negligence or wilful misconduct of Landlord, its employees and agents, and
except for the presence of asbestos containing material in the Demised Premises
or the Building (provided that Tenant complies with the provisions of the last
paragraph of this Article 12), including, without limitation, the failure of
Landlord to abate asbestos containing materials in the Demised Premises as part
of the Base Building Work as more fully described in the Workletter. Any
mechanic's lien filed against the Demised Premises or the Building or any
notice which is received by either Landlord or Tenant for work claimed to have
been furnished to Tenant shall be released and discharged, within thirty (30)
days after such filing or receipt, whichever is applicable, at Tenant's expense,
and if such lien or notice is filed, it shall be released and discharged of
record by Tenant within said thirty (30) days; provided, however, that Tenant
shall have the right to contest any such lien provided that Tenant does so in
good faith and diligently pursues the same and that Tenant gives to Landlord
security adequate in the reasonable opinion of Landlord to assure payment
thereof and any interest thereon and costs and expenses with respect thereto
(which security may consist of satisfactory bonds, personal undertakings or
title indemnities or endorsements) and to prevent any foreclosure of the lien or
sale of the Demised Premises, Tower or Building by reason of non-payment
thereof; provided further, however, that on final determination of the lien,
Tenant shall promptly pay and satisfy any judgment rendered, including all costs
and charges, and shall have the lien released of record; provided further,
however, that Tenant shall have any and all liens which affect title to the
Demised Premises, Tower or Building released of record prior to the expiration
or termination of the Term. For Alterations and Additions performed other than
by Landlord, upon completion Tenant shall
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furnish Landlord with contractors' affidavits and full and final waivers of lien
and receipted bills covering all labor and materials expended and used. With
respect to any and all Alterations and Additions, Tenant shall be responsible
for compliance with all insurance requirements and with all applicable
governmental laws, statutes, ordinances, codes and regulations, including,
without limitation, all requirements of the Americans with Disabilities Act of
1990, and Landlord's review and approval of plans for any such Alterations and
Additions or supervision, coordination or other activities in connection with
any of such Alterations and Additions shall not create any obligation or
liability on the part of Landlord for such compliance. All Alterations and
Additions shall be constructed in a good and workmanlike manner and only first
class material shall be used. All work performed by Tenant or Tenant's
contractors or subcontractors shall be coordinated with any general construction
work in the Building in order not to adversely affect construction of the
Building or other work being performed by or for Landlord or Landlord's
contractors or subcontractors, it being understood that Landlord shall
reasonably control scheduling of use of the loading docks, freight elevators and
other common facilities of the Building.
As more fully provided in the Workletter Agreement, as part of Landlord's
Base Building Work for the Demised Premises, Landlord will perform certain
asbestos abatement work in the Demised Premises. After such abatement work,
certain asbestos containing material may remain within certain portions of the
Demised Premises. In the event that any Tenant Alterations and Additions
hereunder would involve penetrating, removing or otherwise disturbing any of
such asbestos containing material which remains in the Demised Premises or the
Building, Tenant shall notify Landlord thereof and Landlord shall be
responsible, at its sole cost and expense, for either promptly removing the
remaining asbestos containing materials which would be involved in such
Alterations and Additions or promptly performing the portion of the Alterations
and Additions which involves removing, penetrating or otherwise disturbing the
asbestos containing material. Notwithstanding anything contained in this Lease
to the contrary, any indemnifications by Tenant hereunder shall not be
applicable to any of such asbestos abatement work to be performed by Landlord
hereunder.
13. ACCESS TO DEMISED PREMISES.
Tenant shall permit Landlord to erect, use and maintain pipes, ducts,
wiring and conduits in and through the Demised Premises; provided, however, that
with respect to erection of pipes, ducts, wiring and conduits in and through the
Demised Premises (other than the Non-Office Storage Space located on the 40
Mezzanine Level and the Non-Office Storage Space identified as BL-9B), the same
shall be in finished areas that are architecturally compatible with and of
minimal visual impact on the balance of the Demised Premises and subject to the
requirement that the exercise of such right does not materially interfere with
Tenant's use and enjoyment of the Demised Premises. Upon reasonable prior notice
(except that no prior notice shall be required in the case of emergency or in
connection with providing janitorial or other services required under this
Lease), Landlord or Landlord's agents shall have the right to enter upon the
Demised Premises to inspect or exhibit the same (provided, however, that
Landlord shall have the right to enter the Demised Premises to exhibit the same
only in the last eighteen (18) months of the Term), to perform janitorial and
cleaning services and other services to be provided to Tenant hereunder, and to
make such inspections, decorations, repairs, alterations, improvements or
additions to the Demised Premises or the Building as Landlord may deem
necessary. Landlord shall be allowed to take all material into and upon said
Demised Premises that may be required therefor without the same constituting an
eviction of Tenant in whole or in part and Rent shall in no way abate while said
decorations, repairs, alterations, improvements, or additions are being made, by
reason of loss or interruption of business of Tenant, or otherwise; provided
however, that Landlord shall use reasonable efforts to not materially interfere
with the conduct of Tenant's business, which reasonable efforts include
consulting with Tenant to schedule the work in such manner as to minimize the
impact on the conduct of Tenant's business, and provided further that nothing in
this Article 13 nullifies the provisions of Section 7.10 above respecting
interruption of Landlord's services required hereunder and Tenant's rights to
abate Rent. Prior to commencing any work within the Demised Premises
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herein authorized, Landlord shall give Tenant at least forty-eight (48) hours
advance notice (except that no prior notice shall be required in the case of an
emergency or in connection with providing janitorial or other services required
under this Lease and except that in connection with access to mechanical,
electrical and plumbing systems in the core of the Building which requires
access through the Demised Premises, Landlord shall only be required to give
reasonable notice under the circumstances) advising Tenant in reasonable detail
of the nature of such work, and when such work has been completed, Landlord
shall remove waste and debris and otherwise restore the Demised Premises to
substantially the condition they were in prior to such work except for such
changes therein as were intended by such work. If, after receiving any required
notices, Tenant shall not be personally present to open and permit entry into
said Demised Premises, at any time, when for any reason entry therein shall be
necessary or permissible, Landlord may enter the same by a master key, or may in
the event of an emergency forcibly enter the same, without rendering Landlord
liable therefor (provided that during such entry Landlord shall accord
reasonable care to Tenant's property). Nothing herein contained, however, shall
be deemed or construed to impose upon Landlord any obligations, responsibility
or liability whatsoever for the care, supervision or repair of the Building or
any part thereof, other than as herein provided. Landlord shall also have the
right at any time, without the same constituting an actual or constructive
eviction and without incurring any liability to Tenant therefor, to change the
arrangement and/or location of entrances or passageways, doors and doorways, and
corridors, elevators, stairs, toilets or other public parts of the Building
(provided, however, that notwithstanding such change in the arrangement and/or
location, reasonable access will be provided to the Demised Premises and in any
event the foregoing shall not permit Landlord to reduce the level of elevator
service Landlord is required to provide under Section 7.3 above or deprive
Tenant of the exclusive use of no less than seven (7) elevators serving floors
16 through 24 of the Tower as required under Section 7.3 above), and to close
entrances, doors, corridors, elevators or other facilities, and to erect
scaffolding and other structures reasonably required for the performance of work
which Landlord is entitled or obligated to perform; provided, however, that if
Landlord prohibits Tenant's use or access to a portion of the Demised Premises,
then Tenant shall be entitled to a proportionate abatement of Rent or Storage
Space Fee, as the case may be, (based on the square footage of the area which is
inaccessible) for the period that such portion of the Demised Premises is
unusable or inaccessible. Landlord shall not be liable to Tenant for any
expense, injury, loss or damage resulting from work done in or upon, or the use
of, any adjacent or nearby buildings, land, streets or alleys. Notwithstanding
anything contained herein to the contrary, Tenant shall have the right to
designate and maintain locked, secured room or rooms in the Demised Premises,
other than the Non-Office Storage Space, aggregating no more than 4,000 feet per
floor. Tenant shall not be required to give Landlord a key for such secured room
or rooms and Landlord and Landlord's agents shall not be allowed access to such
secured room or rooms; provided, however, that Landlord and Landlord's agent
may, in the event of an emergency, forcefully enter such room or rooms. In no
event shall Landlord or Landlord's agent have any responsibility for any damage
to any such secured room or rooms or any personnel or property located therein
nor shall Landlord or Landlord's agent have any liability for any damage caused
by forceful entry as provided above, provided, however, Landlord shall use
reasonable care to not damage Tenant's property. Landlord shall not be required
to provide janitorial services and cleaning for such designated secured room or
rooms unless Tenant's personnel are present to allow Landlord's janitorial
contractor into such room and Tenant's personnel accompany Landlord's cleaning
contractor's employees in such secured areas and Tenant acknowledges that the
foregoing shall not reduce Tenant's share of Operating Expenses for the
Building.
14. DAMAGE OR DESTRUCTION.
14.1. TOTAL DESTRUCTION. If the Tower or the Demised Premises shall
be totally destroyed by fire or other casualty, then either party shall
have the right to cancel and terminate this Lease as of the date of such
destruction. Any such right to terminate must be exercised by written
notice to the other party served within ninety (90) days after the date of
such destruction.
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14.2. PARTIAL DESTRUCTION. If (a) the Building shall be damaged by
fire or other casualty and if such damage renders the Demised Premises
untenantable, in whole or in part, or (b) the Demised Premises is not
rendered untenantable but the Tower is substantially damaged or (c) the
Demised Premises shall be damaged by fire or other casualty, then within
thirty (30) days of the occurrence of said fire or casualty, either party
shall have the right to request the selection of a registered architect or
architectural firm experienced in design and construction similar to the
Building, for the purpose of determining and certifying whether or not
restoration of the Demised Premises and the Building can be accomplished by
using standard working methods and procedures so as to make the Building
and Demised Premises tenantable within two hundred seventy (270) days from
commencement of restoration efforts. Said architect or firm shall be
selected by mutual agreement of Landlord and Tenant within fifteen (15)
days after notice from either party to the other requesting the selection
of an architect. If the parties fail to agree on the selection of the
architect or architectural firm within said fifteen (15) day period, the
architect shall be selected within the following five (5) day period, by
lot as follows: Landlord and Tenant shall each notify the other of the
names of an architect or architectural firm having the above qualifications
and an employee of Tenant shall draw the name. In the event only one party
issues notice of the name of an architect within the aforesaid five (5) day
period, the architect named by such party shall make the determination and
certification. The fees of the architect or architectural firm making
such determination and certification shall be shared equally by Landlord
and Tenant.
In the event the architect making the aforesaid determination and
certification concludes that the aforesaid restoration cannot be
accomplished within two hundred seventy (270) days from commencement of
restoration, either party shall have the right to terminate this Lease by
giving the other party notice of such election within twenty (20) days
after the effective date of the determination and certification of said
architect.
Notwithstanding anything contained herein to the contrary, if a
portion of the Demised Premises is made untenantable as aforesaid during
the last year of the Term hereof, Landlord shall have the right to
terminate this Lease as of the date of the fire or other casualty by giving
written notice thereof to Tenant within thirty (30) days after the date of
such fire or other casualty, in which event the Rent shall be apportioned
on a per diem basis and paid to the date of such fire or other casualty.
Additionally, notwithstanding anything contained herein to the contrary,
Landlord shall have no duty to repair or restore the Demised Premises or
Building if the damage is due to a casualty which is uninsurable under
commercially available casualty insurance; provided, however, if Landlord
elects not to repair or restore the Demised Premises or Building because of
such uninsurable casualty, Tenant shall have the option to terminate this
Lease.
14.3. COMMENCEMENT OF RESTORATION. If the Demised Premises or the
Building are so damaged or destroyed by fire or other casualty from any
cause and whether such damage or destruction occurred before or after the
Commencement Date, then unless the Lease has been terminated pursuant to
Sections 14.1 or 14.2 above, restoration shall be commenced by Landlord
within thirty (30) days after the effective date of the determination and
certification of the architect selected pursuant to Section 14.2 above (or
within ninety (90) days of the occurrence of the fire or other casualty
in the event neither party has initiated the determination process set
forth in Section 14.2 in a timely manner (hereinafter, the "Restoration
Commencement Date")), and shall be completed with reasonable diligence. If
Landlord does not commence such restoration as of the Restoration
Commencement Date, or thereafter with reasonable diligence to complete such
restoration, then Tenant may terminate this Lease as of the date of such
fire or other casualty by serving notice on Landlord subsequent to the
Restoration Commencement Date but prior to the date Landlord commences such
restoration; provided, however, that Tenant shall not be entitled to
terminate this Lease if and so long
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as Landlord's failure to commence restoration is due to reasonable delays
in the adjustment of the insurance loss or to the occurrence of an event of
Force Majeure.
Landlord shall have no duty to repair or restore any improvements in the
Demised Premises other than the Base Building Work and the Tenant
Improvements to the extent paid by Landlord's Build-Out Commitment (other
than furniture, fixtures and equipment). By way of example, and not in
limitation, of the foregoing, Landlord shall have no duty to repair or
restore any Alterations and Additions made by or on behalf of Tenant, or
Tenant's personal property, special lighting fixtures, built-in cabinets or
bookshelves, equipment or trade fixtures.
14.4. COMPLETION OF RESTORATION. If the Demised Premises or the
Building are so damaged or destroyed by fire or other casualty from any
cause and whether such damage or destruction occurred before or after the
Commencement Date, and neither Landlord or Tenant have terminated this
Lease pursuant to Sections 14.l or 14.2, and Landlord has not substantially
completed the restoration of the Building and the Demised Premises within
two hundred seventy (270) days after the Restoration Commencement Date (or
such longer period for restoration as is certified under Section 14.2),
then Tenant shall have the right to terminate this Lease at any time after
the end of said two hundred seventy (270) day period (or such longer period
for restoration as is certified under Section 14.2) and prior to such
substantial completion, by giving Landlord written notice of such election,
provided that such termination shall not be effective if Landlord
substantially completes the restoration of the Building and the Demised
Premises within thirty (30) days after the effective date of Tenant's
notice of termination and provided further that such two hundred seventy
(270) day period (or such longer period for restoration as is certified
under Section 14.2) shall be extended by the period of time such
restoration is reasonably delayed by reason of Force Majeure or
commencement of such restoration is reasonably delayed by adjustment of the
insurance loss. For the purposes of this Article 14, the Demised Premises
shall not be deemed restored unless reasonable and safe access to the
Building is available and the existence of any damage or destruction to any
other portion of the Building (including, without limitation, common areas,
the Building's elevators and electrical, HVAC, plumbing, sewerage or other
Building systems) which has not been restored has no material adverse
effect on Tenant's use, occupation or enjoyment of the Demised Premises.
14.5. EFFECT OF TERMINATION OF LEASE. If Tenant shall exercise its
option under Sections 14.1, 14.2, 14.3 or 14.4 to terminate this Lease, or
if Landlord shall exercise its option under Sections 14.1 or 14.2, then the
Term shall end on the date of the fire or other casualty to the Demised
Premises or to the Building, and thereupon all the rights and obligations
of Landlord and Tenant under this Lease shall terminate except with respect
to the obligations and liabilities of Landlord and Tenant, actual or
contingent, under this Lease which arose on or prior to the date of
termination.
14.6. ABATEMENT OF RENT FOR UNTENANTABILITY. In the event all or any
part of the Demised Premises are rendered untenantable because of damage by
fire or other casualty to the Demised Premises, the Tower or the Building
from any cause and whether such damage occurred before or after the
Commencement Date, the Rent and Storage Space Fee, as the case may be,
payable by Tenant shall equitably abate (given the rent structure for the
various portions of the Demised Premises) on a per diem basis during the
period in which the Demised Premises or any portion thereof is untenantable
or reasonable and safe access to the Demised Premises is unavailable.
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15. CONDEMNATION.
15.1. TAKING OF THE ENTIRE DEMISED PREMISES. In the event that
the whole of the Demised Premises, or so much thereof as to render the
balance of the Demised Premises impractical for the operation of Tenant's
business (including loss of access to the Demised Premises), shall be taken
or condemned, by any authority under power of eminent domain or any similar
power for any public or quasi-public use or purpose, or shall be
transferred by agreement in connection with such public or quasi-public use
or purpose with or without a condemnation action or proceeding being
instituted, then this Lease shall terminate and Tenant's obligation to pay
Rent shall cease as of the date of such taking, condemnation or transfer.
15.2. PARTIAL TAKINGS. In the event that either before or after
the Commencement Date (a) any portion of the Building, not including the
Demised Premises, shall be taken or condemned by any authority under power
of eminent domain or any similar power for any public or quasi-public use
or purpose, or shall be transferred by agreement in connection with such
public or quasi-public use or purpose with or without a condemnation action
or proceeding being instituted, or (b) any portion of the Demised Premises,
but not so much thereof as to render the balance of the Demised Premises
impractical for the operation of Tenant's business, shall be taken or
condemned by any authority under power of eminent domain or any similar
power for any public or quasi-public use or purpose, or shall be
transferred by agreement in connection with such public or quasi-public use
or purpose with or without a condemnation action or proceeding being
instituted, this Lease shall remain in full force and effect, except that
Rent and Storage Space Fee, as the case may be, shall equitably abate
(given the rent structure for the various portions of the Demised Premises)
as hereinafter provided and Landlord shall, within a reasonable time after
the occurrence or transfer, repair, restore and rebuild any portion of the
Demised Premises and the Building damaged by such taking, condemnation or
transfer to a condition as near as practicable as that which existed
immediately prior to such taking, condemnation or transfer. The aforesaid
Rent and Storage Space Fee abatement shall continue until such time as such
repair, restoration and rebuilding is sufficiently completed to allow
reasonable and safe access to the Demised Premises and Rent and Storage
Space Fee shall abate as to any portion of the balance of the Demised
Premises not so taken, condemned or transferred, the use and occupancy of
which by Tenant is materially impeded by such repair, restoration and
rebuilding, for the period of such inconvenience.
15.3. IMPEDED ACCESS. If the configuration of any street, alley,
building or structure adjacent to the Building is changed by any competent
authority to such an extent that reasonable and safe access to the Building
is not available or is materially adversely affected, Landlord shall,
within a reasonable time after such change and at Landlord's expense,
perform such remodeling or reconstruction of the Building as may be
necessary or desirable to provide access comparable as to reasonableness
and safety to that which existed prior to such change.
15.4. EMINENT DOMAIN PROCEEDINGS. Landlord shall inform Tenant
promptly if Landlord has knowledge of the pendency of any such taking,
condemnation or transfer of all or a portion of the Demised Premises or the
Building and shall keep Tenant informed about such action. Tenant shall
have the right to assert, pursue and realize its claims against the
condemnor whether such proceeding was commenced before or after the
Commencement Date for (a) the value of any improvements installed by Tenant
at its expense, Alterations and Additions, trade fixtures and personal
property on the Demised Premises, (b) Tenant's damage for business
interruption, relocation expenses and moving expenses and (c), if such
taking, condemnation or transfer occurs at any time (i)during the last ten
(10) years if the initial fifteen (15) year Term of this Lease or (ii) in
the event Tenant exercises its First Extension Option (as herein defined)
for a ten (10) year period (i.e., simultaneous exercise of the Second
Extension Option along
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with the First Extension Option), then during the last five (5) years of
the ten (10) year extension period, the value of Tenant's leasehold
interest.
15.5. TEMPORARY TAKINGS. If all or any portion of the Demised
Premises taken, condemned or transferred as aforesaid is returned to
Landlord prior to the termination of this Lease (including any renewals or
extensions of this Lease whether or not Tenant has then exercised its
option to renew), Tenant shall have the option of retaking possession of
the portion so taken, condemned or transferred for the remaining Term on
the same terms and conditions as are contained in this Lease. Landlord,
within thirty (30) days after receiving notice that a portion of the
Demised Premises so taken, condemned or transferred is being returned to
Landlord, shall notify Tenant of such fact and Tenant shall have a period
of thirty (30) days after receipt of such notice to notify Landlord of the
exercise of this option. If Tenant exercises this option, possession of a
portion of the Demised Premises so returned shall be given to Tenant on the
date that such portion is returned to Landlord, and Rent and Storage Space
Fee, as the case may be, with respect to such portion shall commence on the
date possession is taken by Tenant.
16. ASSIGNMENT - SUBLETTING.
16.1. PROHIBITION OF ASSIGNMENT - SUBLETTING. Tenant shall not,
except as hereinafter provided in this Article 16, (a) assign,
hypothecate, mortgage, encumber, or convey this Lease; (b) allow any
transfer hereof or any lien upon Tenant's interest by operation of law
(except, however, for the First and Refunding Mortgage and except that
Tenant shall have the right to contest mechanic liens as provided in
Article 12 above); (c) sublet the Demised Premises or any part thereof, or
(d) permit the use or occupancy of the Demised Premises or any part thereof
by anyone other than Tenant or for any purpose not provided for in Article
10. If Tenant is a corporation (other than a corporation whose stock is
traded through a national or regional exchange or over-the-counter), any
transaction or series of transactions (including, without limitation, any
dissolution, merger, consolidation or other reorganization of Tenant, or
any issuance, sale, gift, transfer or redemption of any capital stock of
Tenant, whether voluntary, involuntary or by operation of law, or any
combination of any of the foregoing transactions) resulting in the transfer
of control of Tenant, other than by reason of death, shall be deemed to be
a transfer prohibited under this Section 16.1. If Tenant is a partnership,
any transaction or series of transactions (including, without limitation,
any withdrawal or admittance of a general partner or any change in any
general partner's interest in Tenant, whether voluntary, involuntary or by
operation of law, or any combination of any of the foregoing transactions)
resulting in the transfer of control of Tenant, other then by reason of
death, shall be deemed to be a transfer prohibited under this Section
16.1. The term "control" as used in this Section 16.1 means the power to
directly or indirectly direct or cause the direction of the management or
policies of Tenant. Notwithstanding anything contained herein to the
contrary, Tenant may at any time assign this Lease or sublease the Demised
Premises, or any portion thereof, to (a) any entity which is (i) a wholly
owned subsidiary of Tenant, (ii) Peoples Energy Corporation, an Illinois
corporation ("PEC"), which wholly owns all of the common stock of Tenant,
(iii) North Shore Gas Company, an Illinois corporation, all of the common
stock of which is owned by PEC or (iv) a wholly owned subsidiary of PEC or
(b) any joint venture or partnership in which either Tenant, PEC or a
wholly owned subsidiary of Tenant or PEC is at least a fifty percent (50%)
general partner (any entity described under (a) or (b) above is referred to
herein as an "Affiliate").
16.2 LANDLORD'S RECAPTURE RIGHT. In the event Tenant desires to
sublet any portion of the Demised Premises located on the plaza level,
floors 3 or 14 of the Tower or any space leased pursuant to Articles 31, 32
and 37 below, other than to any Affiliate, Tenant shall deliver written
notice ("Tenant's Recapture Notice") to Landlord of such desire and Tenant
shall specify the Subject Premises and the date such Subject Premises
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is available. Within thirty (30) days after receipt of Tenant's Recapture
Notice, Landlord may elect, by written notice ("Landlord's Recapture
Notice") given to Tenant, terminate this Lease as to the Subject Premises.
If Landlord elects to terminate this Lease as to the Subject Premises, the
termination date shall be the date specified in Tenant's Recapture Notice
as the date of availability, but in no event shall the termination date be
sooner than sixty (60) days after delivery of Tenant's Recapture Notice.
In the event of such termination, from and after the effective date of such
termination, Base Rent, Tenant's Proportion, Tenant's HVAC Proportion and
the Storage Space Fee (if applicable) shall be proportionately reduced.
Tenant shall remain liable for all payments due under this Lease through
the date of termination even though such amounts may be billed subsequent
to termination. If Landlord does not elect to terminate this Lease as to
the Subject Premises, Tenant may proceed to offer the Subject Premises for
sublease, subject, however, to Landlord's right to consent to the assignee
or sublessee as hereafter provided. Notwithstanding the foregoing, if
Tenant does not enter into a sublease for the Subject Premises within nine
(9) months after the date of Tenant's Recapture Notice, then Tenant shall
be required to resubmit such Subject Premises to Landlord for Landlord's
recapture right hereunder before offering the Subject Premises again for
sublease.
16.3. SUBMISSION OF PROPOSED ASSIGNMENT OR SUBLEASE. In the event
Tenant desires to assign this Lease or sublet a portion of the Demised
Premises which is not subject to Landlord's recapture right under Section
16.2 above or if Tenant desires to sublet a portion of the Demised Premises
which is subject to Landlord's recapture right above and if Landlord did
not elect to recapture the Subject Premises as provided under Sections 16.2
above, Tenant shall submit to Landlord written notice ("Tenant's Assignment
or Sublease Notice") identifying the proposed assignee or sublessee and
providing commercially reasonable information to permit Landlord to
determine the acceptability, financial responsibility and character of the
assignee or sublessee and otherwise sufficient to allow Landlord to make
its determination under Section 16.5 below.
16.4. LANDLORD'S RESPONSE. Within thirty (30) days after receipt
of the materials and information set forth in Section 16.2, Landlord shall
respond by granting or refusing its consent to the proposed sublease or
assignment, as provided in Section 16.5. In the event that Landlord fails
to respond within said thirty (30) day period, Landlord shall be deemed to
have granted its consent to the proposed sublease or assignment.
16.5. LANDLORD'S FAILURE TO TERMINATE LEASE. If Landlord does not
terminate this Lease as to the Subject Premises pursuant to Section 16.2,
Landlord shall not unreasonably withhold its consent to a proposed sublease
or assignment. Such consent shall be deemed to be reasonably withheld if:
(a) in the reasonable judgment of Landlord the subtenant or assignee is not
financially sound, is engaged in a business which is not in keeping with
the standards of a first-class office building in downtown Chicago,
Illinois, or does not have a good business reputation in keeping with the
standards of a first-class office building in downtown Chicago, Illinois;
(b) in the reasonable judgment of Landlord the purposes for which the
subtenant or assignee intends to use the Subject Premises are not in
keeping with the terms of this Lease, or (except for assignments or
subleases to Affiliates) are in violation of the restrictive terms of any
other lease in the Building (a summary of which is set forth on Exhibit N
attached hereto), including, without limitation, any existing leases in the
retail area of the Building, provided Landlord has previously notified
Tenant of such restrictive terms of other leases in the Building or Tenant
otherwise has actual knowledge thereof; provided further, however, that any
restrictive terms of other leases in the Building entered into by Landlord
during the initial fifteen (15) year Term of this Lease shall not be
applicable to any assignment of this Lease or subleasing of Subject
Premises and for any restrictive terms of other leases in the Building
entered into by Landlord after the initial fifteen (15) year Term of this
Lease, such restrictive terms shall not be applicable to any assignment of
this Lease
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in any case or any subleasing of Subject Premises unless, in the case of
subleasing of Subject Premises, such restrictive terms are in favor of a
tenant which occupies more space in the Building than Tenant; provided
further, however, that in the event Tenant elects to sublease or assign a
portion of the Demised Premises located on the plaza level of the Tower to
parties other than an Affiliate and if such sublease violates any
restrictive terms of other leases in the Building, then Landlord shall have
the right to recapture the Subject Premises under the terms of and as
provided in Section 16.2 above; (c) Tenant is in Default under this Lease;
(d) the Subject Premises or the remaining balance of the Demised Premises,
if any, is not regular in shape with appropriate means of ingress and
egress and suitable for normal renting purposes; (e) the proposed subtenant
or assignee is either a governmental unit (or subdivision or agency
thereof) or a present occupant of or negotiating for space in the Building;
provided, however, Tenant may sublease space to a present occupant of space
in the Building which is horizontally or vertically contiguous to the
Subject Premises so long as the rental rates and other terms which Tenant
offers to such present occupant are no lower or more favorable than the
rates and other terms offered by Landlord; or (f) the proposed use or
occupancy of the Subject Premises by the assignee or sublessee would either
violate any applicable law, statute, ordinance, code or regulation or would
impose any obligation upon Landlord to comply with any of the foregoing or
increase Landlord's obligation to comply with any of the foregoing.
16.6. LANDLORD'S CONSENT CONDITIONS. If Landlord grants consent
to any assignment or sublease hereunder, it shall be upon and subject to
the following terms: (a) the terms and conditions of this Lease, including
among other things, Tenant's liability for the Subject Premises shall in no
way be deemed modified, abrogated or amended; provided, however, if Tenant
assigns this Lease to PEC, Tenant shall be released from the terms and
conditions of this Lease to the extent assumed by PEC; (b) Tenant shall pay
Landlord Landlord's reasonable out-of-pocket costs and expenses (including
a reasonable hourly fee for Landlord's in-house attorneys) for each
sublease or assignment submitted, except, however, no such payment shall be
required in connection with a sublease or assignment to an Affiliate; and
(c) the consent shall not be deemed a consent to any further subletting or
assignments by either Tenant, subtenants or assignees. In addition to the
foregoing conditions, if Tenant shall assign this Lease, the assignee shall
expressly assume all obligations of Tenant hereunder in a written
instrument reasonably satisfactory to Landlord and furnished to Landlord by
Tenant not later than fifteen (15) days prior to the effective date of the
assignment; if Tenant shall sublease any portion or all of the Demised
Premises as permitted herein, Tenant shall obtain and furnish to Landlord,
not later than fifteen (15) days prior to the effective date of such
sublease and in form reasonably satisfactory to Landlord, the written
agreement of such subtenant to the effect that the subtenant will attorn to
Landlord, at Landlord's option and written request, in the event this Lease
terminates before the expiration of the sublease.
16.7. NET INCOME OR PROFITS. Without thereby limiting the
generality of the foregoing provisions of this Article 16, Tenant expressly
covenants and agrees not to enter into any lease, sublease, license,
concession or other agreement for use, occupancy or utilization of the
Demised Premises which provides for rental or other payment for such use,
occupancy or utilization based in whole or in part on the net income or
profits derived by any person from the property leased, used, occupied or
utilized (other than an amount based on a fixed percentage or percentages
of receipts or sales), and that any such purported lease, sublease,
license, concession or other agreement shall be absolutely void and
ineffective as a conveyance of any right or interest in the possession,
use, occupancy or utilization of any part of the Demised Premises.
16.8. EXCESS PAYMENTS PURSUANT TO ASSIGNMENT OR SUBLEASE. If
Tenant shall assign this Lease or sublet a portion of the Demised Premises
pursuant to the terms of this Article 16, or if Tenant, as debtor or as
debtor in possession, or a trustee in bankruptcy
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for Tenant pursuant to the Bankruptcy Code, 11 U.S.C. 101 et seq., as
amended from time to time (the "Bankruptcy Code") shall assign this Lease
or sublet the Demised Premises, or any part thereof, then Tenant shall pay
Landlord as additional Base Rent, 50% of the excess payments or other
economic consideration whether denominated as rent or otherwise (together
with escalations) payable to Tenant under the sublease or assignment which
might be in excess of the Base Rent plus Tenant's Proportion of Taxes and
Rent Adjustment plus the Storage Space Fee, as the case may be, payable to
Landlord under this Lease (or, if only a portion of the Demised Premises is
being sublet, 50% of the excess payments or other economic consideration
allocable on a rentable square footage basis to the space sublet), after
deduction at the outset from such payments or other economic consideration
of all reasonable costs and expenses associated with such subleasing,
including, without limitation, leasing commissions, advertising costs,
reasonable legal fees and alterations required to be made to the Subject
Premises or other portions of the Demised Premises to accommodate the
Subject Premises (including, without limitation, the cost of reconfiguring
the elevator bank which exclusively serves floors 16 through 24 of the
Tower if necessary to accommodate the Subject Premises), and rent
concessions and deducting any Rent and Storage Space Fee, as the case may
be, payable for the Subject Premises for the period that said Subject
Premises were vacant and Tenant was actively marketing the Subject Premises
(and Tenant shall give Landlord written notice prior to actively marketing
any Subject Premises).
17. LANDLORD'S MORTGAGE - GROUND LEASE.
Landlord may have heretofore executed and delivered or may hereafter
execute and deliver a mortgage or trust deed in the nature of mortgage, both
sometimes hereinafter referred to as "Mortgage," encumbering the Building, or
portion thereof or any interest therein, and may sell and lease back the
underlying land on which the Building, or portion thereof, is situated. If
requested by the holder of a Mortgage ("Mortgagee") or by the lessor of any
ground or underlying lease ("Ground Lessor"), Tenant will either subordinate its
interest in this Lease to said Mortgage or ground lease or make such interest
superior, and will execute such agreement or agreements as may be reasonably
required by such Mortgagee or Ground Lessor to confirm same; provided, however,
that any such agreement which provides for Tenant's subordination of its
interest in this Lease shall also provide that so long as Tenant is not in
Default under this Lease, Tenant may remain in possession of the Demised
Premises under the terms and conditions of this Lease notwithstanding the
foreclosure of such Mortgage or termination of such ground lease, shall also
provide that notwithstanding such subordination, insurance proceeds and
condemnation awards will be applied as provided in this Lease and that no right,
option or privilege accorded to Tenant under this Lease shall be affected in any
way by such subordination, and shall otherwise be in form and substance
reasonable satisfactory to Tenant. Landlord and Mortgagee or Ground Lessor, as
the case may be. Notwithstanding the foregoing, Tenant covenants it will not
subordinate this Lease to any Mortgage other than a mortgage which is a first
lien against the Building, or portion thereof, the leasehold estate under a
ground lease or any interest therein, without the prior written consent of the
holder of such first lien.
17.1. FORECLOSURE. Should any Mortgage affecting the Building, or
portion thereof, be foreclosed or if any ground or underlying lease be
terminated: (a) the liability of the Mortgagee or purchaser at such
foreclosure sale or the liability of a subsequent owner designated as
Landlord under this Lease shall exist only so long as said Mortgagee,
purchaser or subsequent owner is the owner of the Building, or applicable
portion thereof, and such liability shall not continue or survive after
further transfer of ownership; and (b) upon request of the Mortgagee or
trustee, Tenant will attorn, as tenant under this Lease to the purchaser at
any foreclosure sale thereunder, or if any ground or underlying lease be
terminated for any reason, Tenant will attorn as tenant under this Lease to
the Ground Lessor and will execute such instruments as may be necessary or
appropriate to evidence such attornment, provided that any such instrument
will also provide for (i) recognition by such purchaser or Ground Lessor of
Tenant as
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tenant under this Lease and of all rights, options and privilege accorded
Tenant hereunder, and (ii) an assumption by such purchaser or Ground Lessor
of all obligations of Landlord hereunder, subject to the limitation on
liability specified above.
17.2. NOTICE TO MORTGAGEE: MORTGAGEE PROTECTION. In the event of a
ground lease, Mortgage or other similar financing arrangement, and notice
thereof being given to Tenant, Tenant agrees that this Lease may not be
modified or amended so as to reduce the Rent or shorten the Term provided
hereunder, or so as to adversely affect in any other respect to any
material extent the rights of Landlord, nor shall this Lease be cancelled
or surrendered without the prior written consent, in each instance, of the
Ground Lessor, the Mortgagee, or similar financing entity. In addition,
Tenant agrees to give any Mortgagee or Ground Lessor a copy, by registered
or certified mail, of any notice or claim of default served upon Landlord
by Tenant, provided that prior to such notice Tenant has been notified in
writing (by service on Tenant of a copy of an assignment of Landlord's
interests in leases, or otherwise) of the address of such Mortgagee or
Ground Lessor. If Landlord has failed to cure such default within twenty
(20) days after such notice to Landlord (or if such default cannot be cured
or corrected within that time, then such additional time as may be
necessary if Landlord has commenced within such twenty (20) days and is
diligently pursuing the remedies or steps necessary to cure or correct such
default), then the Mortgagee shall have an additional thirty (30) days (or
such shorter period of time as is reasonable in the event of an emergency)
within which to cure or correct such default (or if such default cannot be
cured or corrected within that time, then such additional time as may be
necessary if such Mortgagee has commenced within such thirty (30) days and
is diligently pursuing the remedies or steps necessary to cure or correct
such default, including the time necessary to obtain possession if
possession is necessary to cure or correct such default) before Tenant may
exercise any right or remedy which it may have on account of any such
default of Landlord.
18. CERTAIN RIGHTS RESERVED TO LANDLORD.
Landlord reserves and may at Landlord's option exercise the following
rights without affecting Tenant's obligations hereunder: (a) subject to the
terms of Section 30.30 below, to change the name or street address of the
Building; (b) subject to the terms of Section 30.30 below, to install and
maintain a sign or signs on the exterior of the Tower or the Building; (c) to
have access for Landlord and the other tenants of the Building to any mail
chutes located on the Demised Premises according to the rules of the United
States Postal Service; (d) subject to the terms of Section 30.33 below, to
approve all sources furnishing sign painting and lettering, and lamps and bulbs
used on the Demised Premises and the style of suite number and lettering used in
identification signs for the Demised Premises, which approval shall not be
unreasonably withheld or unduly delayed; (e) subject to the terms of Article 13
above, to retain at all times, and to use in appropriate instances, pass keys to
the Demised Premises; (f) subject to the terms of Section 30.30 below, to grant
to anyone the exclusive right to conduct any particular business or undertaking
in the Building; provided, however, that Landlord shall be prohibited from
allowing the Building to be utilized for "porno" shops, "massage" parlors,
"video" arcades or similar game rooms, and other noxious uses which are
inappropriate for a first-class office building in downtown Chicago, Illinois;
(g) subject to the terms of Section 30.33 below, to exercise reasonable or
necessary control over signage in, on and about the Building; (h) to close the
Tower or the Building after regular working hours and on Holidays, subject,
however, to Tenant's right of admittance, under such regulations as Landlord may
prescribe from time to time pursuant to Section 10.4 above, which may include,
by way of example but not of limitation, that persons entering or leaving the
Tower or the Building identify themselves to a watchman by registration or
otherwise, and that said persons establish their right to enter or leave the
Tower or Building; (i) subject to the terms of the Workletter, to approve the
weight, size and location of safes or other heavy equipment or articles, which
articles may be moved in, about, or out of the Building or Demised Premises only
at such times and in such manner as Landlord shall reasonably direct, and in all
events, however, at Tenant's sole risk and
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responsibility; (j) to Provide exterior lighting of or for the Building; (k)
subject to the terms of Article 13 above, to take any and all measures,
including inspections, repairs, alterations, decorations, additions and
improvements to the Demised Premises or to the Building, as may be necessary or
desirable for the safety, protection or preservation of the Demised Premises or
the Building or Landlord's interests, or as may be necessary or desirable in the
operation of the Building; and (l) to exercise all rights set forth in Article
13 and elsewhere in this Lease.
19. DEFAULT: LANDLORD'S REMEDIES.
19.1. TENANT DEFAULT. The occurrence of any one or more of the
following constitutes a "Default" by Tenant under this Lease: (a) If Tenant
defaults in the payment of Rent or any other monies required to be paid by
Tenant under this Lease when due and fails to cure such default within ten
(10) business days after Landlord gives written notice thereof to Tenant;
provided, however, Landlord shall only be required to give notice, and
Tenant shall only have such cure period, two (2) times in any twelve (12)
consecutive month period; or (b) if Tenant defaults in the prompt and full
performance of any other provisions of this Lease, and Tenant does not cure
the default within thirty (30) days after written demand by Landlord or its
authorized agent that the default be cured (unless the default involves a
hazardous condition, which shall be cured forthwith); provided, however,
that if such default cannot be cured, within said thirty (30) days, Tenant
shall have a reasonable additional period to cure such default so long as
Tenant shall promptly commence to cure such default within such thirty (30)
day period and diligently proceeds to cure such default; or (c) if Tenant
vacates or abandons, without the intent to reoccupy within a reasonable
period of time, the portion of Demised Premises located on the plaza level
(provided, however, that if Tenant provides illuminated window displays
within such portion of the Demised Premises visible in the Building lobby,
which displays are subject to the reasonable approval of Landlord, and
closes window blinds on exterior windows, then Tenant shall not be deemed
to be in Default hereunder) or (d) the levy upon execution or the
attachment by legal process of the leasehold interest of Tenant, or the
filing or creation of a lien in respect of such leasehold interest, which
lien shall not be released or discharged within thirty (30) days from the
date of such filing, subject to Tenant's rights to contest liens as
provided in Article 12 above and subject to the First and Refunding
Mortgage; or (e) Tenant becomes insolvent or bankrupt or admits in writing
its inability to pay its debts as they mature, or makes an assignment for
the benefit of creditors, or applies for or consents to the appointment of
a trustee or receiver for Tenant or for the major part of its property; (f)
a trustee or receiver is appointed for Tenant or for the major part of its
property and is not discharged within thirty (30) days after such
appointment; or (g) bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings for relief under any bankruptcy law, or similar law
for the relief of debtors are instituted either by or against Tenant and
are allowed against it or are consented to by it or are not dismissed
within sixty (60) days after such institution.
19.2. LANDLORD'S RIGHTS AND REMEDIES UPON DEFAULT.
(a) If a Default occurs, Landlord shall have the rights and
remedies hereinafter set forth, which shall be distinct, separate and
cumulative and shall not operate to exclude or deprive Landlord of any
other right or remedy allowed at law or in equity or elsewhere in this
Lease:
(i) Landlord may terminate this Lease by giving to
Tenant written notice of Landlord's election to do
so, in which event the Term of this Lease shall
end, and all right, title and interest of Tenant
hereunder shall expire, on the date stated in such
notice;
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(ii) Landlord may terminate the right of Tenant to
possession of the Demised Premises without
terminating this Lease by giving written notice to
Tenant that Tenant's right of possession shall end
on the date stated in such notice, whereupon the
right of Tenant to possession of the Demised
Premises or any part thereof shall cease on the
date stated in such notice; and
(iii) Landlord may enforce the provisions of this Lease
and may enforce and protect the rights of Landlord
hereunder by a suit or suits in equity or at law
for the specific performance of any covenant or
agreement contained herein, and for the
enforcement of any other appropriate legal or
equitable remedy, including without limitation
injunctive relief, and for recovery of all monies
due or to become due from Tenant under any of the
provisions of this Lease.
(b) If Landlord exercises any of the remedies provided
for in (i) and (ii) of the foregoing Section 19.2(a), Tenant
shall surrender possession of and vacate the Demised Premises and
immediately deliver possession thereof to Landlord, and Landlord
may re-enter and take complete and peaceful possession of the
Demised Premises, with process of law, but without the
requirement of any additional notice and without relinquishing
Landlord's right to Rent and the Storage Space Fee or any other
right given to Landlord hereunder or by law or in equity.
(c) If Landlord terminates the right of Tenant to
possession of the Demised Premises without terminating this
Lease, such termination of possession shall not release Tenant,
in whole or in part, from Tenant's obligation to pay the Rent
hereunder for the full Term, and the aggregate amount of the Base
Rent and the Storage Space Fee for the period from the date
stated in the notice terminating possession to the end of the
Term shall be immediately due and payable by Tenant to Landlord
discounted at a rate of five percent (5%) per annum, together
with any other monies due hereunder, and Landlord shall have the
right to immediate recovery of all such amounts. In addition,
Landlord shall have the right, from time to time, to recover from
Tenant, and Tenant shall remain liable for, all Rent and the
Storage Space Fee not theretofore accelerated and paid pursuant
to the foregoing sentence and any other sums thereafter accruing
as they become due under this Lease during the period from the
date of such notice of termination of possession to the stated
end of the Term in any such case.
(d) Landlord may relet the Demised Premises or any
part thereof for the account of Tenant to any person, firm or
corporation other than Tenant for such rent, for such time, and
upon such terms as Landlord in Landlord's reasonable discretion
shall determine, and Landlord shall not be required to accept any
tenant offered by Tenant or to observe any instructions given by
Tenant relative to such reletting or to offer the Demised
Premises to prospective tenants before offering other similar
space in the Building for rent to such prospective tenants.
Notwithstanding the foregoing, Landlord shall use reasonable
efforts to relet the Demised Premises or portions thereof for the
account of Tenant at such rent, for such time (which may be for a
term extending beyond the Term hereof) and upon such terms as
Landlord in Landlord's reasonable discretion shall determine. In
any such case, Landlord may make repairs, alterations and
additions in or to the Demised Premises, and redecorate the same
to the extent deemed by Landlord necessary or desirable, and
Tenant shall, upon demand, pay the reasonable cost thereof,
together with Landlord's expenses of the reletting. Landlord may
collect the rents from any such reletting
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and apply them first to the expenses of reentry, repairs,
alterations and additions and second to the payment of Rent and
the Storage Space Fee herein provided to be paid by Tenant and
any excess shall operate only as an offsetting credit against
Rent and the Storage Space Fee due and owing or paid as a result
of acceleration or as the same thereafter becomes due and
payable. If the consideration collected by Landlord for
reletting upon Tenant's account is insufficient to meet all of
Tenant's obligations under this Lease, and all expenses incurred
by Landlord in reletting, including but not limited to costs for
leasing commissions, redecoration and repairs, Tenant shall
remain liable for the unmet obligations and expenses. The
aforesaid costs of reletting shall not include costs which would
be amortized during periods after the then remaining Term or
leasing commissions computed with respect to periods after the
then remaining Term. However, Landlord shall have no obligation
to return sums collected from Tenant in the event of such
reletting in excess of sums owed to Landlord by Tenant. No such
re-entry, repossession, repairs, alterations, additions or
reletting shall be construed as an eviction or ouster of Tenant
or as an election on Landlord's part to terminate this Lease,
unless a written notice of such intention is given to Tenant, or
shall operate to release Tenant in whole or in part from any of
Tenant's obligations hereunder, and Landlord may, at any time and
from time to time, sue and recover judgment for any deficiencies
from time to time remaining after the application from time to
time of the proceeds of any such reletting.
(e) In the event of the termination of this Lease by
Landlord as provided for by subparagraph (i) of Section 19.2(a),
Landlord shall be entitled to recover from Tenant all the fixed
dollar amounts of Rent and the Storage Space Fee accrued and
unpaid for the period up to and including such termination date,
as well as all other additional sums payable by Tenant, or for
which Tenant is liable or in respect of which Tenant has agreed
to indemnify Landlord under any of the provisions of this Lease,
which may be then owing and unpaid, and all costs and expenses,
including without limitation court costs and reasonable
attorneys' fees incurred by Landlord in the enforcement of its
rights and remedies hereunder, and in addition, Landlord shall be
entitled to recover as damages for loss of the bargain and not as
a penalty (i) the aggregate sum which at the time of such
termination represents the excess, if any, of the present value
of the aggregate rents at the same annual rate for the remainder
of the Term as then in effect pursuant to the applicable
provisions of Articles 4 and 5 of this Lease, over the then
present value of the then aggregate fair rental value of the
Demised Premises for the balance of the Term, such present value
to be computed in each case on the basis of a five percent (5%)
per annum discount from the respective dates upon which such
rentals would have been payable hereunder had this Lease not been
terminated, and (ii) any damages in addition thereto, including
reasonable attorneys' fees and court costs, which Landlord shall
have sustained by reason of the breach of any of the covenants of
this Lease other than for the payment of Rent and the Storage
Space Fee.
19.3. TENANT'S PROPERTY. In the event of a Default by
Tenant, any and all property which may be removed from the Demised Premises
by Landlord pursuant to the authority of this Lease or of law, to which
Tenant is or may be entitled, may be handled, removed 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 to Landlord, upon demand, any and all expenses incurred in such
removal, plus a fee for Landlord's removal of same equal to twenty percent
(20%) of the expenses of such removal, and all storage charges against such
property so long as the same shall be in Landlord's possession or under
Landlord's control. Any such property of Tenant not retaken from storage
by Tenant within thirty (30) days after the end of this Lease, however
terminated, shall be conclusively presumed to have been conveyed by Tenant
to Landlord under this Lease as a bill of sale without further payment or
credit
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by Landlord to Tenant, and Tenant hereby waives any claim to such property
or against Landlord for such property, or for any damages to such property.
19.4. LEASE LIEN. Subject to the First and Refunding
Mortgage, Tenant hereby grants to Landlord a first lien upon the leasehold
interest of Tenant under this Lease to secure the payment of monies due
under this Lease, which lien may be enforced in equity; and Landlord shall
be entitled as a matter of right to have a receiver appointed to take
possession of the Demised Premises and relet the same under order of court.
19.5. PERSONAL PROPERTY LIEN. [intentionally omitted]
19.6. COST OF ENFORCEMENT. In the event of legal action
between Landlord and Tenant on account of any alleged default by either
hereunder, the prevailing party in such action shall be entitled to be
reimbursed by the other party in the amount of all reasonable attorneys'
fees and other costs incurred by the prevailing party in connection with
such action.
20. CROSS-DEFAULT FOR OTHER LEASE.
If during the term of any lease or leases, other than this Lease, made by
Tenant for any other premises in the Building of more than ten thousand (10,000)
square feet of Rentable Area, said lease or leases shall be terminated or
terminable after the making of this Lease because of any default by Tenant under
such other lease or leases, such fact shall empower Landlord, at Landlord's sole
option, to terminate this Lease pursuant to Section 19.2 above.
21. SURRENDER OF POSSESSION.
Upon any termination of this Lease, whether by lapse of time or otherwise,
or upon any termination of Tenant's right to possession without termination of
the Lease, Tenant shall surrender possession and vacate the Demised Premises
immediately, and deliver possession thereof to Landlord, and deliver all keys to
Landlord and the combinations of all locks of vaults remaining in the Demised
Premises, and, subject to the terms of Section 19.2 above, hereby grants to
Landlord full and free license to enter into and upon the Demised Premises in
such event with process of law and to repossess the Demised Premises as of
Landlord's former estate and to expel or remove Tenant and any others who may be
occupying or are within the Demised Premises and to remove any and all property
therefrom, without being deemed in any manner guilty of trespass, eviction or
forcible entry or detainer, and without relinquishing Landlord's rights to Rent
or any other right given to Landlord hereunder or by operation of law. Tenant
shall quit and surrender to Landlord the Demised Premises, broom clean, in good
order and condition, except for ordinary wear and tear, loss or damage by fire
or other insured casualty and damage resulting from the failure of Landlord to
satisfy its obligations under this Lease, and Tenant shall remove all
Alterations and Additions which Tenant is obligated to remove pursuant to
Article 12 above and all personal property (I.E., office furniture, trade
fixtures, office equipment and other items of Tenant's personal property on the
Demised Premises), and repair any damage occasioned by such removal. In the
event that Tenant fails to repair any damage to the Demised Premises occasioned
by such removal or to restore the Demised Premises to the condition required
hereunder, or to remove its personal property, Landlord may perform such
obligation of Tenant and Tenant shall pay the cost of such performance to
Landlord as Additional Rent on written demand. Tenant's obligations under this
Article 21 shall survive the expiration of the Term or sooner termination of
this Lease.
22. HOLDING OVER.
If Tenant retains actual or constructive possession of the Demised Premises
or any part thereof without Landlord's prior written consent after the
expiration or termination of this Lease or any extension thereof, by lapse of
time or otherwise, in addition to Rent Adjustment and all other sums due
hereunder, Tenant shall pay Landlord the monthly Base Rent and Storage Space
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Fee, as the case may be, for the Demised Premises or proportionate part thereof
that Tenant retains such possession at double the rate payable for the month
immediately preceding said holding over, computed on a per-month basis, for each
month or part thereof (without apportionment for any such partial month) that
Tenant thus remains in possession, and in addition thereto, Tenant shall pay
Landlord all damages, consequential (provided, that Landlord can reasonably
demonstrate any consequential damages) as well as direct, sustained by reason of
Tenant's retention of possession. The provisions of this Article 22 do not
preclude Landlord's right of re-entry or exercise of any other rights afforded
Landlord hereunder or by law; provided, however, if Tenant timely pays the
monthly holdover rent as provided above, then Landlord hereby agrees that it
shall not have the right to eject Tenant from the Demised Premises for a period
of ninety (90) days following the Expiration Date, but Landlord shall be
entitled to all its other remedies hereunder, including any reasonably
demonstrated consequential damages. Landlord specifically waives its right to
renew this Lease for a one (1) year period as a result of any holdover by
Tenant.
23. NOTICES.
All notices, demands, consents, approvals, statements, requests and
invoices to be given under this Lease shall be in writing, signed by the party,
or an authorized officer, agent or attorney of the party, and shall be deemed to
have been effective (a) upon delivery if served personally or (b) upon the third
day from and including the day of posting if deposited in the United States
mail, postage prepaid, registered or certified mail, return receipt requested or
(c) upon the second day from and including the day of sending if sent by a
nationally recognized overnight courier providing for signed receipt, addressed
as follows:
For Landlord: The Prudential Realty Group
One Prudential Plaza
130 E. Randolph Street
Suite 1200
Chicago, IL 60601
Attention: V-507
With Copies To: Office of the Building
One Prudential Plaza
130 E. Randolph Street
Suite 2310
Chicago, IL 60601
Attention: Building Manager
For Tenant (prior to initial occupancy for business):
The Peoples Gas Light and Coke Company
122 South Michigan Avenue
Chicago, IL 60603
Attention: Secretary and Treasurer
For Tenant (subsequent to initial occupancy for business):
The Peoples Gas Light and Coke Company
One Prudential Plaza
130 E. Randolph Street
Suite 2400
Chicago, IL 60601
Attention: Secretary and Treasurer
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With Copies To: John J. Lawlor, Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, IL 60606
Either party may from time to time by written notice to the other as aforesaid
change the address to which notices shall be sent by mail.
24. RELOCATION OF TENANT.
Landlord shall have the right, upon not less than sixty (60) days' written
notice, to relocate the portion of the Storage Space located on B-1 or GL to
another location of similar size and configuration with similar improvements in
the Building at no cost or expense to Tenant (including reimbursement of
Tenant's reasonable moving costs and reasonable costs of relocating Tenant's
equipment). Unless otherwise agreed by Tenant, such relocation shall be
performed after Normal Business Hours.
25. SECURITY DEPOSIT. [INTENTIONALLY OMITTED]
26. TENANT'S RESPONSIBILITY AND INDEMNIFICATIONS.
26.1. TENANT'S RESPONSIBILITY AND INDEMNIFICATION. To the
extent permitted by law, Tenant shall indemnify Landlord, its partners and
its and their employees and agents, and hold them harmless from, any and
all, judgement, claim, expense, cost or liability (including reasonable
attorney's fees) for any loss of or damage or injury to any person
(including death resulting therefrom) or property occurring in, on or about
the Demised Premises or the Stairwell, regardless of cause, except for any
loss or damage to the extent caused by the negligence or wilful misconduct
of the indemnified party and except to the extent arising out of the
presence of asbestos containing material in the Demised Premises or the
Building (so long as Tenant complies with the requirements of the last
paragraph of Article 12 above) or out of the failure of Landlord to abate
asbestos containing materials as part of the Base Building Work described
in Attachment A to the Workletter, and Tenant hereby releases Landlord from
any and all liability for same. Tenant acknowledges that the foregoing
indemnification and hold harmless agreement applies, without limitation, to
any loss, damage or injury resulting from access to the Demised Premises
through the Stairwell or access to the Stairwell through the Demised
Premises and any loss, damage or injury suffered by Tenant's employees,
guests or invitees while in said Stairwell. Tenant's obligation to
indemnify Landlord hereunder shall include the duty to defend, if requested
by the indemnified party, against any claims asserted by reason of such
loss, damage or injury and to pay any judgments, settlements, costs, fees
and expenses, including attorneys' fees, incurred in connection therewith.
It is understood and agreed that the foregoing indemnity shall be in
addition to the insurance requirements set forth herein and shall not be in
discharge or substitution for same or any other indemnity or insurance
provision of this Lease.
26.2. LANDLORD'S INDEMNIFICATION. To the extent permitted by law,
Landlord shall indemnify and hold harmless Tenant and its employees and
agents from any and all, judgement, claim, expense, cost or liability
(including reasonable attorney's fees) for any loss of or damage or injury
to any person (including, death resulting therefrom) or property (a)
incurring in, on or about the common areas of the Building (and
specifically excluding and any floors on which Tenant leases premises or
premises of other tenants of the Building) or (b) attributable to common
mechanical, plumbing, electrical or structural facilities of the Building,
such as elevators, the common heating, ventilating and air-conditioning
equipment and curtain wall system, but not including any portion of such
system installed in the Demised Premises or elsewhere by or on behalf of
Tenant, regardless of cause, except to the extent that any loss or damage
is caused by the negligence or wilful misconduct of the indemnified party.
Landlord's obligation to
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indemnify Tenant hereunder shall include the duty to defend, if requested
by the indemnified party, against any claims asserted by reason of such
loss, damage or injury and to pay any judgments, settlements, costs, fees
and expenses, including attorneys' fees, incurred in connection therewith.
It is understood and agreed that the foregoing indemnity shall be in
addition to the insurance requirements set forth herein and shall not be in
discharge or substitution for same or any other indemnity or insurance
provision of this Lease.
27. DEMISED PREMISES SECURITY.
Tenant, and not Landlord, shall: (a) protect the Demised Premises from
theft, robbery and pilferage, (b) keep the Demised Premises secure, and (c) lock
the doors in and to the Demised Premises. Additionally, if Tenant uses the
Stairwell for inter-floor access, Tenant shall keep the Tower secure from
unauthorized entry by any persons entering the Stairwell via the Demised
Premises. Tenant shall have the right, at its sole cost, to provide Tenant
controlled security for access to and within the Demised Premises as follows:
(i) Tenant shall have the right to maintain an access
security system to the elevators which shall
exclusively serve floors 16 through 24 of the Tower,
utilizing an elevator lobby security kiosk and console.
All security areas shall be tastefully designed and be
in keeping with the aesthetics of the Building lobby
and shall be subject to the reasonable approval of
Landlord, which approval shall not be unreasonably
withheld or delayed. At the request of Landlord, at
the expiration or termination of this Lease, such
security kiosk shall be removed by Tenant at its sole
cost and expense; and
(ii) Tenant shall have the right to employ and control its
own security personnel and install at its cost security
devices and systems in the Demised Premises to control
access to the Demised Premises. All security devices
or systems installed by Tenant under this subsection
(ii) shall comply with all applicable governmental
regulations and codes and upon expiration or
termination of this Lease, at the request of Landlord,
any such security devices or systems shall be removed
by Tenant at its sole cost and expense.
Nothing contained in this Lease shall be construed to impose any obligations or
duty or responsibility on Tenant to provide security for or protect the public
areas of the Building, the premises occupied by other tenants or Landlord or any
other area in or about the Building and not constituting a part of the Demised
Premises or to protect any tenant or other person in or about the Building.
28. INSURANCE.
28.1. TENANT'S REQUIRED PROTECTION.
(a) At all times during the Term, Tenant shall
maintain in full force a comprehensive public liability policy
with a combined single limit of not less than $5,000,000.00 per
occurrence for injury or deaths to persons and for damage to
property; provided that, if Tenant is neither The Peoples Gas
Light and Coke Company nor the Peoples Energy Corporation, and if
Landlord requires the limits of said insurance policy to be
changed by reason of changed economic conditions, the size of
liability judgments or circumstances making such protection
inadequate, at Landlords' request, Tenant shall increase such
limits to reflect the customary levels of insurance then being
maintained by tenants in comparable buildings in downtown
Chicago, Illinois. At any time or times during the Term
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that Tenant is either The Peoples Gas Light and Coke Company or
Peoples Energy Corporation, any such insurance may have a
deductible amount of $500,000.00 or such greater amount that
either The Peoples Gas Light and Coke Company or the Peoples
Energy Corporation deem reasonable under the then existing
circumstances; at all other times any such insurance may have a
deductible amount of not more than $100,000.00 or such other
amount as is reasonable, prudent, and not in excess of the
customary deductible for insurance policies covering the same or
similar risks carried by comparable tenants in comparable first-
class office buildings in downtown Chicago, Illinois.
(b) At all times during the Term, Tenant shall
maintain in full force "all risk" fire and extended coverage
insurance covering Tenant's Improvements, Alterations and
Additions and personal property in the Demised Premises against
loss or damage by fire, lightning, windstorm, tornado and hail,
and against loss or damage by such other, further and additional
risks as now are or hereafter may be embraced by all risk
coverage forms of endorsements (including, but not limited to,
explosion, riot, riot attending a strike and civil commotion,
damage from aircraft and vehicles, vandalism and malicious
mischief, and smoke damage) in each case in their full insurable
value and written with a replacement cost endorsement. At any
time or times during the Term that Tenant is either The Peoples
Gas Light and Coke Company or Peoples Energy Corporation, any
such insurance may have a deductible amount of $250,000.00 or
such greater amount that either The Peoples Gas Light and Coke
Company or the Peoples Energy Corporation deem reasonable under
the then existing circumstances; at all other times any such
insurance may have a deductible amount of not more than
$100,000.00 or such other amount as is reasonable, prudent and
not in excess of the customary deductible for insurance policies
covering the same or similar risks carried by comparable tenants
in comparable first-class office buildings in downtown Chicago,
Illinois.
28.2. TENANT'S INSURANCE CERTIFICATES. The aforesaid
insurance policies shall be secured from a reputable insurer or
insurers reasonably acceptable to Landlord. Tenant shall, prior to
the commencement of the Term, and from time to time thereafter at
Landlord's request, furnish to Landlord certificates evidencing the
coverage required of Tenant pursuant to Section 28.1, above, which
certificates shall state that such insurance coverage may not be
materially changed or canceled without at least thirty (30) days prior
written notice to Landlord and Tenant.
28.3. TENANT'S SELF-INSURANCE. At any time or times during
the Term that Tenant hereunder is either The Peoples Gas Light and
Coke Company or the Peoples Energy Corporation then, notwithstanding
anything contained herein to the contrary, Tenant may satisfy its
obligations pursuant to this Article 28, in whole or in part, by means
of a plan of self-insurance providing for adequate reserves and claim
procedures and satisfying all regulatory requirements.
28.4. TENANT'S BLANKET POLICY. Notwithstanding any thing
contained herein to the contrary, Tenant may satisfy its obligations
pursuant to this Article 28, in whole or in part, by means of a so-
called blanket policy. Any such blanket policy shall contain limits
equal to or in excess of the amounts of insurance required pursuant to
this Article 28.
28.5. LANDLORD'S INSURANCE. During the entire term of this
Lease, Landlord shall maintain in full force and effect, the following
described insurance:
(a) "all risk" fire and extended coverage insurance,
including flood and earthquake property insurance, against the
loss or damage to the Building (excluding, however, Alterations
and Additions and Tenant Improvements)
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occurring any time during the Term hereof, including any period
or periods of time during which any of the Building is being
constructed or altered;
(i) by or from fire, lightning, windstorm,
tornado and hail, and against loss or
damage by such other, further and additional
risk as now are or hereafter may be embraced
by "all risk" coverage forms of endorsements
(including, but not limited to, explosion,
riot, riot attending a strike and civil
commotion, damage from aircraft and vehicles,
vandalism and malicious mischief and smoke
damage) and providing one hundred percent
(100%) full replacement cost coverage for the
Building; and
(ii) from any explosion, rupture or bursting of
steam boilers, steam pipes, steam turbines,
steam engines or flywheels applying to all
such apparatus in use or connected ready for
use wherever located within the Building in
amounts that are then customarily maintained
by institutional owners of buildings similar
in character, size, general location, use and
occupancy to the Building.
(b) Insurance against consequential losses and costs
attributable to any loss or damage to the Building, such as, but
not limited to, any increased cost of repair, reconstruction,
debris removal or demolition by reason of any ordinance or law
regulating construction or repair or demolition, provided that
such insurance is available and customarily obtained with respect
to buildings similar in character, size, general location, use
and occupancy to the Building in amounts consistent with such
custom.
(c) Commercial general liability insurance (occurrence
form) including broad form comprehensive general liability
coverages, including broad form contractual, broad form property
damage, personal injury and deletion of any exclusion pertaining
to explosion, collapse and underground property damage hazards,
with limits of not less than $3,000,000.00 combined single limit
for bodily injury and property damage. Such liability insurance
shall be endorsed to include as additional insured parties Tenant
and its partners, directors, officers, employees and agents.
The aforesaid insurance may have such deductible amounts as are
reasonable, prudent and are not materially in excess of the customary
deductibles for insurance policies covering the same or similar risks
carried by comparable landlords in comparable first-class office
buildings in the downtown Chicago, Illinois, area. Additionally, the
foregoing insurance limits shall be adjusted to an amount reasonably
consistent with amounts (including any liability umbrella coverage, if
applicable) carried by comparable landlords in comparable first-class
office buildings in the downtown Chicago, Illinois. area. The costs
and premiums for the insurance herein specified to be maintained by
Landlord shall be part of the Operating Expenses.
28.6. LANDLORD'S INSURANCE CERTIFICATES. The aforesaid
insurance policies shall be secured from a reputable insurer or
insurers. Landlord shall, prior to the commencement of the Term, and
from time to time thereafter at Tenant's request, furnish to Tenant
certificates evidencing such coverage, which certificates shall state
that such insurance coverage may not be materially changed or canceled
without at least thirty (30) days prior written notice to Landlord and
Tenant.
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28.7. LANDLORD'S BLANKET POLICY. Notwithstanding anything
contained herein to the contrary, Landlord may satisfy its obligations
pursuant to this Article 28, in whole or in part, by means of a so-
called blanket policy. Any such blanket policy shall contain limits
equal to or in excess of the amounts of insurance required pursuant to
this Article.
29. MUTUAL WAIVER OF SUBROGATION. Landlord and Tenant each
hereby waive any and every claim for recovery from the other for any
and all loss of or damage to the Building or Demised Premises or to
the contents thereof, which loss or damage is recoverable under any
insurance policies. Inasmuch as 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 to each insurance company which has issued, or in the
future may issue, its policies of fire and extended coverage
insurance, written notice of the terms of this mutual waiver, and to
have said insurance policies properly endorsed, if necessary, to
prevent the invalidation of said insurance coverage by reason of said
waiver. The aforesaid waiver shall apply only when it is either
permitted or, by the use of good faith efforts could have been so
permitted by a policy of insurance.
30. MISCELLANEOUS.
30.1. POST-DEFAULT PAYMENT. No receipt of money by Landlord
from Tenant after the termination of this Lease or after the service
of any notice of default or after the commencement of any suit, or
after final judgment for possession of the Demised Premises shall
reinstate, continue or extend the Term of this Lease or affect any
such notice, demand or suit.
30.2. WAIVER OF DEFAULTS. No waiver of any default of either
party hereunder shall be implied from any omission by the other party
to take any action on account of such default if such default persists
or is repeated, and no express waiver by either party shall affect any
default other than the default specified in the waiver and that only
for the time and to the extent therein stated.
30.3. SINGULAR AND PLURAL, GENDER. Wherever appropriate in
this Lease, the singular shall be construed to mean plural where
necessary, and the necessary grammatical changes required to make the
provisions hereof apply either to corporations, partnerships or
individuals, men or women, shall in all cases be assumed as though in
each case fully expressed.
30.4. SUCCESSORS. Without limiting the provisions of Article
16, each provision hereof shall extend to and shall, as the case may
require, bind and inure to the benefit of Landlord and Tenant and
their respective legal representatives, successors and permitted
assigns.
30.5. NO OPTION. Submission of this instrument for
examination does not constitute a reservation of or option for the
Demised Premises. The instrument does not become effective as a lease
or otherwise until execution and delivery by both Landlord and Tenant.
30.6. INTEREST ON OVERDUE PAYMENTS. All amounts owed by
Tenant to Landlord or by Landlord to Tenant under this Lease
(including Base Rent, Rent Adjustment Payment, Rent Adjustment,
Additional Rent and Storage Space Fee) not received on the date due
shall bear interest from the date due until the date paid at the rate
of five percent (5%) per annum over the Base Rate or at the maximum
legal rate of interest, whichever is lower.
30.7 HEADINGS. The headings of sections are for convenience
only and do not limit or construe the contents of the sections.
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30.8. EARLY OCCUPANCY. Subject to the terms and conditions
of the Workletter and Article 9 above, if Tenant shall occupy the
Demised Premises prior to the Commencement Date with Landlord's
consent, all the provisions of this Lease shall be in full force and
effect as soon as Tenant occupies the Demised Premises.
30.9. MODIFICATION FOR MORTGAGE. [intentionally omitted].
30.10. BROKERAGE. Tenant represents and warrants that Tenant
has dealt directly with and only with the Brokers, as set forth in
Section 2.3, as a broker or brokers in connection with this Lease, and
that no other broker or brokers are entitled to any commission in
connection therewith. Tenant agrees to indemnify, defend and hold
Landlord, its successors and assigns and their respective agents and
employees, harmless from all claims of any other broker or brokers in
connection with this Lease. Landlord represents and warrants to
Tenant that Landlord has dealt directly with and only with the
Brokers, as set forth in Section 2.3, as a broker or brokers in
connection with this Lease and that no other broker or brokers are
entitled to any commission in connection therewith. Landlord agrees
to indemnify, defend and hold Tenant, its successors and assigns and
their respective agents and employees, harmless from all claims of any
other broker or brokers in connection with this Lease. Landlord shall
be responsible for paying any and all commissions due and payable to
J.F. McKinney & Associates, Ltd., Equis Corporation and Witkowsky
Associates, Inc., in connection with this Lease pursuant to separate
agreements.
30.11. ESTOPPEL CERTIFICATES.
(a) Tenant agrees that from time to time at Landlord's
request, Tenant will deliver to Landlord within thirty (30) days
of Landlord's request, a statement in writing certifying: (i)
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 modified and identifying the modifications); (ii) the
dates to which the Rent and other charges have been paid; (iii)
that, to the best of Tenant's knowledge, Landlord is not in
default under any provision of this Lease (or if Landlord is in
default, reasonably specifying said default); (iv) no payments
other than as currently due have been made (or specifying such
payments as have been made); (v) that the Demised Premises have
been completed in accordance with the terms and provisions hereof
or the Workletter, that Tenant has accepted the Demised Premises
and the condition thereof and of improvements thereto and has no
claims against Landlord or any other party with respect thereto
(or if there are any such claims, reasonably specifying the
nature of such claims); and (vi) such other matters as may
reasonably be requested by Landlord. Such certificate shall
provide that it may be relied upon by any prospective purchaser,
mortgagee or beneficiary thereof.
(b) Landlord agrees that from time to time at Tenant's
request, Landlord will deliver to Tenant within thirty (30) days
of Tenant's request, a statement certifying: (i) that this Lease
in unmodified and in full force and effect (or if there have been
modifications that the same is in full force and effect as
modified and identifying the modifications); (ii) the dates to
which the Rent and other charges have been paid; (iii) that, to
the best of Landlord's knowledge, Tenant is not in default under
any provision of this Lease (or, if Tenant is in default, the
nature thereof in reasonable detail); (iv) that the Tenant
Improvements have been in accordance with the terms and
provisions of the Workletter and that Landlord has no claims
against Tenant or any other party with respect thereto (or if
there are any such claims, reasonably specifying the nature of
such claims); and (v) such other matters as may reasonably be
requested by Tenant. Such certificate shall provide that it may
be relied upon by the person to whom it is addressed.
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30.12. TENANT NOT TO ENCUMBER TITLE. Landlord's title is and
always shall be paramount to the title of Tenant, and nothing herein
contained shall empower or authorize Tenant to do any act which can,
shall or may encumber such title; provided, however, that the First
and Refunding Mortgage may encumber Tenant's leasehold estate created
hereunder. Tenant covenants and agrees not to suffer or permit any
lien of mechanics or materialmen to be placed upon or against the
Demised Premises, the Tower, or the Building or against the Tenant's
leasehold interest in the Demised Premises. In the event Tenant does
or permits any act which encumbers Landlord's title or causes a lien
to attach to the Tower or Building, Tenant agrees to immediately
remove or secure the release of same, subject, however, to Tenant's
right to contest liens as set forth in Article 12 above. If any such
encumbrance occurs or if any lien attaches and Tenant fails to remove
or secure the release of the same within thirty (30) days after filing
or demand by Landlord, whichever occurs first, Landlord at its
election may pay and satisfy the same, and in such event the sum so
paid by Landlord, with interest from the date of payment at the rate
set forth in Section 30.6 above shall be deemed to be Additional Rent
due and payable by Tenant within thirty (30) days after notice from
Landlord; provided, however, Tenant shall have the right to contest
liens as set forth in Article 12 above. Tenant further agrees to
furnish Landlord lien waivers and affidavits for all lienable work
done in connection with the Demised Premises.
30.13. ELECTION OF LAWS. The laws of the State in which the
Demised Premises are located shall govern the validity, performance,
construction and enforcement of this Lease.
30.14. SEVERABILITY. If any term, covenant or condition 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, covenant or condition to
persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term,
covenant or condition of this Lease shall be valid and be enforced to
the fullest extent permitted by law.
30.15. AUTHORIZATION. Tenant represents and warrants that
Tenant has full power and authority to enter into this Lease and to
perform all of its obligations hereunder, and that execution and
delivery of this Lease does not and will not violate or conflict with
any provisions of any law, contract, mortgage, lien, lease,
instrument, agreement or judgment to which Tenant is a party or which
is binding on Tenant and that the persons executing this Lease on
behalf of such corporation hereby represent and warrant that they have
been duly authorized to execute this Lease for and on behalf of such
corporation pursuant to a duly adopted resolution of its board of
directors or by virtue of its bylaws.
30.16. FIRE DOORS. Landlord and Tenant agree that should
Landlord, in the exercise of its sole discretion, determine that a
fire emergency exit (crash door) is required to satisfy governmental
requirements, Landlord may, at its sole expense, install such fire
emergency exit (crash door) in any demising wall of the Demised
Premises; provided, however, to the extent Landlord has discretion as
to exactly where to locate such emergency exit (crash door), Landlord
shall coordinate the location of same with Tenant.
30.17. WAIVER OF JURY. Landlord and Tenant agree, to the
extent permitted by law, to waive trial by jury in any action,
proceeding or counterclaim on any matter whatsoever arising out of or
in any way connected with this Lease.
30.18 ENTIRE AGREEMENT. There are no oral agreements between
Landlord and Tenant affecting this Lease, and this Lease supersedes
and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between Landlord and
Tenant or displayed by Landlord to Tenant with respect to the subject
matter of this Lease.
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30.19. SALE BY LANDLORD. In the event the original Landlord
hereunder, or any successor-owner of the Tower or the Building, shall
sell or convey same, all liabilities and obligations on the part of
the original Landlord, or such successor-owner, under this Lease
accruing thereafter shall terminate, and thereupon all such
liabilities and obligations shall be binding upon the new owner,
provided and on the condition that (i) Tenant is first provided with
the new owner's unqualified written assumption of all covenants and
obligations hereunder and (ii) the original Landlord hereunder shall
not be relieved from its liability for making Landlord's Build-Out
Commitment as and when due in accordance with the requirements of the
Workletter and for its obligations under Paragraph 2 of the
Workletter, and in such case, Tenant agrees to attorn to each such new
owner.
30.20. INVESTMENT TAX CREDIT. The Landlord reserves to itself
all Investment Tax Credit for tenant finish and related items which
are the cost and responsibility of Landlord.
30.21. SHORT FORM. This Lease shall not be recorded.
However, at the election of either party a Memorandum of Lease, or
Short Form Lease will be executed and made available for recording by
the requesting party.
30.22. CONSTRUCTION OF LEASE. This Lease shall not be
construed more strictly against one party than against the other
merely by virtue of the fact that it may have been prepared by counsel
for one of the parties, it being recognized that both Landlord and
Tenant have been represented by counsel, that both parties have
contributed substantially and materially to the preparation of this
Lease and that this Lease is the product of joint negotiations of the
parties.
30.23. EXHIBITS. All exhibits attached to this Lease are
hereby made a part of this Lease as though inserted in this Lease.
The following exhibits are attached to this Lease:
<TABLE>
<S> <C>
Exhibit A Floor Plan
Exhibit B Storage Space
Exhibit C Workletter Agreement
Exhibit D HVAC Specifications
Exhibit E Cleaning and Janitorial Service
Exhibit F Current After-Hours HVAC Charges
Exhibit G Acceptance of Premises Memorandum
Exhibit H Rules and Regulations
Exhibit I Reserved Parking
Exhibit J Pre-approved Signage
Exhibit K Storage Space Terms and Conditions
Exhibit L Antenna Terms and Conditions
Exhibit M Termination Fee Amortization Schedule
</TABLE>
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<TABLE>
<S> <C>
Exhibit N Existing Tenant Rights
Exhibit 0 Hazardous Substance Surveys
Exhibit P 26th Floor Early Increase Space
Exhibit Q Plaza Level Early Increase Space
</TABLE>
30.24. ASBESTOS EXISTENCE AND ABATEMENT PROGRAM. The Tower
has been confirmed as containing asbestos containing material ("ACM").
A report detailing the ACM is on file with and may be obtained on
request from the Building management. The Tower is undergoing an
asbestos abatement program which will be completed for the Demised
Premises and the floor(s) upon which the Demised Premises are located.
A certificate from the firm which will serve as the engineer with
respect to said abatement will be on file with and may be obtained
upon request from the Building management.
30.25. LANDLORD LIABILITY. It is expressly understood and
agreed by and between the parties hereto, anything here to the
contrary notwithstanding, that the liability of the Landlord hereunder
shall be limited to and enforceable only against the Landlord's
interest in the Tower or the Building and in the case of any judgment
against Landlord for breach of any obligation under this Lease or
imposing liability upon Landlord, Tenant shall look solely to the
interest of Landlord in the Tower or Building and not to any other
assets of Landlord. Undertakings and agreements herein made on the
part of any Landlord while in form purporting to be the
representations, warranties, covenants, undertakings and agreements of
such Landlord are nevertheless each and every one of them made and
intended, not as personal representations, warranties, covenants,
undertakings and agreements by such Landlord or for the purpose or
with the intention of binding such Landlord personally, but are made
and intended for the purpose only of subjecting such Landlord's
interest in the Tower, the Building, the Demised Premises and the land
underlying the Building to the terms of this Lease and for no other
purpose whatsoever, and in case of default hereunder by Landlord, the
Tenant shall look solely to the interests of such Landlord in the
Tower, the Building, and the underlying land; that no Landlord nor any
of its partners, or their respective officers or directors shall have
any personal ability to pay any indebtedness accruing hereunder or to
perform any covenant, either express or implied, herein contained that
no personal liability or personal responsibility of any sort is
assumed by, nor shall at any time be asserted or enforceable against,
Landlord, its partners, or their respective officers or directors, or
any beneficiaries under any land trust which may become the owner of
the underlying land or Tower or Building, on account of this Lease or
on account of any representation, warranty, covenant, undertaking or
agreement of Landlord in this Lease contained, either express or
implied, all such personal liability, if any, being expressly waived
and released by Tenant and by all persons claiming by, through or
under Tenant. Notwithstanding anything contained herein to the
contrary, Landlord, its respective partners and their respective
successors and assigns, shall be personally liable for (i) making
Landlord's Build-Out Commitment, as and when due, in accordance with
the requirements of the Workletter and (ii) the obligations of
Landlord under Paragraph 2 of the Workletter.
30.26. MOVE-IN RIGHTS. Subject to reasonable scheduling by
Landlord to coordinate with use by Landlord and other tenants of the
Building, Landlord shall permit Tenant use of the Building freight
elevators and other common facilities for Tenant's move-in to the
Demised Premises, which use shall be at no charge to Tenant other than
the direct cost of the freight elevator operator for use after Normal
Business Hours.
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30.27. PARKING.
(a) Landlord agrees to make available to Tenant during
the entire Term of this Lease, subject to the remaining
provisions of this Section 30.27, fortyfive (45) unreserved
parking spaces in the parking garage in the Building at the
standard monthly rate, as same may be set from time to time, and
twenty-five (25) reserved parking spaces on level P2 in the
locations set forth on Exhibit I attached hereto at the standard
monthly rate, as same may be set from time to time, which rates
shall be competitive with rates charged in parking garages in
other first-class office buildings in downtown Chicago, Illinois.
The current monthly rate for unreserved spaces is $190.00 per
month and for reserved spaces is $220.00 per month. As part of
the Base Building Work to be performed under the Workletter,
prior to the Commencement Date, Landlord shall install and
thereafter maintain access control devices for the reserved
parking spaces. Such access controls shall be subject to the
prior review and approval of Tenant, which approval shall not be
unreasonably withheld or delayed. Upon forfeiture by Tenant of
any such reserved spaces as hereinafter provided, Tenant shall,
at Landlord's request, remove any such access control devices at
Tenant's sole cost and expense.
(b) Tenant may cancel its right to use any parking
space by giving not less than thirty (30) days prior written
notice to Landlord and the parking garage operator. Tenant may
also forfeit its right to use any parking space by failing to
make payment of the monthly charge when due. Tenant agrees that
if it cancels or forfeits its right to use any one (1) or more
parking spaces pursuant to the foregoing, or if Landlord
terminates Tenant's right to use one (1) or more or all of the
spaces referred to in this Section 30.27, Landlord shall have no
obligation (other than to place Tenant on Landlord's regular
waiting list) to make available to Tenant any other parking
spaces; provided, however, if Tenant uses less than the forty-
five (45) unreserved parking spaces, Landlord shall offer to
Tenant at least once per calendar year a number of unreserved
parking spaces equal to the lesser of (a) twenty (20) and (b)
forty-five (45) minus the number of such unreserved parking
spaces used by Tenant, it being the intent that Tenant have the
right to use no more than forty-five (45) unreserved parking
spaces hereunder. Tenant understands, except as provided herein,
that Tenant will have no further rights to any parking spaces
which Tenant cancels or forfeits its right to use.
(c) Tenant agrees to lease such unreserved parking
spaces commencing on the Commencement Date hereof. Said parking
spaces shall only be available so long as Tenant is not in
Default of any provision of this Lease. If Tenant assigns this
Lease or sublets all or a portion of the Demised Premises, Tenant
may assign or sublet to the assignee or sublessee a proportionate
number of unreserved parking spaces equal to forty-five (45)
multiplied by a fractions the numerator of which is the Rentable
Area Of The Demised Premises assigned or subleased and the
denominator of which is the Rentable Area Of The Demised Premises
(not including any Expansion Space (as hereinafter defined) or
First Offer Space (as hereinafter defined) and not including any
Early Reduction Space (as hereinafter defined), but including any
Early Increase Space (as hereinafter defined)) rounded to the
nearest whole number. If this Lease is terminated as to any
portion of the Demised Premises, Tenant shall forfeit a
proportionate number of unreserved parking spaces equal to forty-
five (45) multiplied by a fraction, the numerator of which is the
Rentable Area Of The Demised Premises for which this Lease is
terminated and the denominator of which is the Rentable Area Of
The Demised Premises (not including any Expansion Space or First
Offer Space or Early Reduction Space, but including any Early
Increase Space) rounded to the nearest whole number.
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(d) Except as set forth in Section 30.27(c) above,
Tenant's rights to use parking spaces may not be assigned or
subleased. The provisions of Articles 26 and 27 of this Lease
shall apply to parking and to the parking garage and property
therein. Tenant may be required to periodically execute parking
agreements with the operator from time to time of the parking
garage, which shall not conflict with any provision of this
Section 30.27.
(e) Notwithstanding any of the foregoing, Landlord
shall not be required to provide parking at any time at which
Landlord is prohibited by any governmental authority from
operating or permitting a parking garage operator to operate a
parking garage in the Building, during a temporary closing of the
garage or when the parking garage is inaccessible or unusable by
reason of fire, other casualty, act of God, or any other reason
beyond Landlord's control.
30.28. INTERNAL STAIRWELL. Subject to the terms and
conditions hereof, Landlord grants to Tenant the non-exclusive right
and license coupled with an interest to use during the entire Term
hereof the one (1) interior fire stairwell identified as "Stairwell
No. 2" on Exhibit A attached hereto (the "Stairwell") for access
between the floors 16 through 24 of the Demised Premises only and for
no other purpose (other than for the intended use of emergency
evacuations). Tenant shall be responsible for obtaining any and all
required governmental approvals and permits in connection with such
use of the Stairwell and for compliance with all applicable laws,
statutes, ordinances, codes and regulations in connection with such
use and in the event of failure to obtain any such approvals or
permits or non-compliance, in addition to any other rights or remedies
available to Landlord, the right and license granted hereunder shall
terminate.
30.29. DIRECTORY BOARD. Landlord shall provide Tenant, at no
cost to Tenant, sufficient space in the Building's electronic
directory to list the names of the department heads and senior
managers of Tenant as provided by and updated from time to time by
Tenant. In the event Landlord discontinues use of an electronic
directory for the Building, and in lieu thereof utilizes a non-
electronic directory, or in the event Landlord utilizes a non-
electronic directory to supplement its existing electronic directory,
Tenant shall be entitled to the greater of (a) a proportionate number
of spaces on such nonelectronic directory or (b) one hundred fifty
(150) spaces.
30.30. TENANT'S COMPETITORS. Provided that this Lease is in
full force and effect, there is no Default by Tenant under this Lease,
Tenant has not assigned this Lease and continues to directly (i.e.,
not including any space subleased or assigned) occupy at least 135,000
square feet of Rentable Area in the Tower, Landlord shall not rename
the Tower after any natural gas or electric company (with the term
"natural gas or electric company" defined herein as a producer,
distributor, wholesaler, transmission company, broker or marketer of
natural gas, electricity, steam or hot or chilled water which derives
in excess of 50% of its gross income from the production,
distribution, wholesaling, transmission, brokering or marketing of
natural gas, electricity, steam or hot or chilled water) (hereinafter,
"Competitors"), and Landlord shall not, without Tenant's prior
approval (which can be withheld in Tenant's sole discretion) enter
into a lease or other occupancy agreement for more than ten thousand
(10,000) square feet of Rentable Area in the Tower with a Competitor.
Without limiting the generality of the foregoing, "Competitors" shall
include Commonwealth Edison and its subsidiaries and affiliates.
Notwithstanding anything contained herein to the contrary, the
provisions of this Section 30.30 shall not apply in a manner which
prohibits leases or other occupancy agreement between Landlord and
either Amoco Oil Company, or its affiliates, or Mobil Oil Corporation
or its affiliates.
30.31. PLAZA CLUB MEMBERSHIPS. Prior to the Commencement
Date, but in no event prior to January 1, 1994, Landlord shall obtain
for Tenant fifteen (15) memberships to the Plaza Club in the Tower and
Landlord shall pay for the initiation
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fees with respect to such memberships. Tenant acknowledges that
Landlord shall have no obligations or responsibilities with respect to
or in connection with Tenant's memberships to the Plaza Club, except
as expressly provided in this Section 30.31.
30.32. LANDLORD'S DEFAULTS AND TENANT'S REMEDIES. If Landlord
fails to observe or perform any covenant, agreement or obligation to
be performed by Landlord under this Lease, and if such failure shall
continue for more than thirty (30) days (or such shorter period of
time as is reasonable in the case of an emergency) after written
notice thereof from Tenant to Landlord (unless such failure requires
work to be performed, acts to be done, or conditions to be removed
which, by their nature, cannot reasonably be performed, done or
removed, as the case may be, within such period, in which event, if
Landlord shall have commenced curing or correcting the same within
such period and shall have diligently prosecuted such cure or
correction, such 30-day period shall be extended by such additional
time period as may be reasonably required for Landlord to cure or
correct such failure) ("Landlord Default"), then, subject to the
provisions, of Section 17.2 above (respecting a Mortgagee's right to
cure a Landlord Default), Tenant may enforce and protect the rights of
Tenant hereunder by a suit or suits at law or in equity for the
specific performance of any covenant or agreement contained herein or
injunctive relief. Additionally and notwithstanding anything
contained in this Lease to the contrary, in the event of a Landlord
Default, if Tenant obtains a final monetary judgment from a court of
competent jurisdiction against Landlord, and if Landlord does not
properly satisfy such monetary judgment, including any attorneys fees
due and payable pursuant to Section 19.6 above, Tenant shall have the
right to set-off against Rent and the Storage Space Fee, next becoming
due hereunder the amount of any such monetary judgment and attorneys
fees that Landlord fails to pay Tenant. The rights and remedies of
Tenant shall be cumulative and shall be in addition to every other
right or remedy now or hereafter existing in law or in equity or by
statute or otherwise and the exercise or the beginning of the exercise
by Tenant of any one or more of the rights and remedies provided for
by this Lease or otherwise available to Tenant shall not preclude the
simultaneous or later exercise by Tenant of any or all other rights or
remedies provided for in this Lease or otherwise.
30.33. SIGNAGE.
(a) Tenant shall have the right to install, at its
sole cost and expense, signage identifying Tenant, using Tenant's
standard graphics, in the elevator lobby on each floor of the
Tower which is wholly occupied by Tenant. Landlord has pre-
approved the sign package designed by Tenant described on Exhibit
J attached hereto and made part hereof. Plans for any additional
or replacement signage shall be submitted to Landlord for written
approval prior to any installation, which approval shall not be
unreasonably withheld or delayed.
(b) So long as Tenant continues to directly (i.e., not
including any space subleased or assigned by Tenant) occupy at
least 135,000 square feet of Rentable Area on floors 16 through
24 of the Tower, inclusive, Tenant shall have the right to
request Landlord to install, at Tenant's sole cost and expense,
signage identifying Tenant on the wall in the elevator dispatch
lobby of the high mid-rise bank of elevators of the Tower (i.e.,
the bank of elevators serving floors 16 through 24 of the Tower)
consistent with the Building signage program, including the
typeface style. Landlord has pre-approved the sign package
designed by Tenant described in Exhibit J attached hereto and
made part hereof. Plans for any additional or replacement
signage shall be submitted to Landlord for written approval prior
to any installation, which approval shall not be unreasonably
withheld or delayed.
30.34. FORCE MAJEURE. A party shall not be deemed in default
with respect to any of the terms, covenants and conditions of this
Lease on such party's part to be
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performed except, in the case of Tenant, the obligation to pay Rent
and the Storage Spare Fee (subject to the provisions of Articles 14
and 15, above), if such party fails to timely perform same and such
failure is due in whole or in part to any strike, lock-out, labor
trouble (whether legal or illegal), civil disorder, inability to
procure materials, failure or interruption of power, condemnation,
riots, insurrections, war, fuel shortages, accidents, casualties, Acts
of God, acts caused directly or indirectly by the other party (or the
other party's agents, employees or invitees) or any other cause beyond
the reasonable control of such party (herein "Force Majeure");
provided, however, that notwithstanding anything contained herein to
the contrary (but subject, however, to the provisions of Article 14
and 15 above) neither Tenant's obligation to pay Rent nor the Storage
Space Fee commencing on the Commencement Date nor Landlord's
obligations under the Workletter to substantially complete the Base
Building Work and to indemnify Tenant pursuant to Paragraph 2 of the
Workletter are subject to extensions attributable to Force Majeure.
30.35. DEFINITION OF "DOWNTOWN CHICAGO". For the purposes of
this Lease, the term "downtown Chicago" shall be conclusively presumed
to mean the area bounded by the Chicago River on the north, Wacker
Drive on the west, Jackson Street on the south and Lake Michigan on
the east.
30.36. RULE AGAINST PERPETUITIES. If the rule against
perpetuities or any other rule of law limits the time within which any
provision of this Lease must be effective, then each such provision
must be effective within twenty-one (21) years after the death of the
last survivor of Mayor Richard M. Daley, Mayor of the City of Chicago,
and all of his children and grandchildren living on the date of
execution of this Lease.
30.37. STORAGE SPACE. Additional terms and conditions
respecting the Storage Space are set forth in Exhibit K attached
hereto.
30.38. ROOFTOP COMMUNICATIONS EQUIPMENT. Landlord agrees that
Tenant may locate, install and maintain, at Tenant's sole cost and
expense, microwave or other antenna communication system equipment on
the roof of the Tower under the terms and conditions set forth on
Exhibit L attached hereto.
30.39. HAZARDOUS AND TOXIC MATERIALS IN THE DEMISED PREMISES.
(a) STUDIES. Tenant acknowledges that it has reviewed
those certain reports described on Exhibit 0 attached hereto
("Hazardous Substance Surveys"). Other than for materials to be
removed as part of the Base Building Work under the Workletter,
the Hazardous Substance Surveys do not indicate the presence of
toxic or hazardous materials (as defined hereafter) in the
Demised Premises based on the present levels or content of said
toxic or hazardous materials in the materials sampled and tested
at the Building as said levels or content are presently set by
the U.S. Environmental Protection Agency ("EPA") or the U.S.
Occupational Safety and Health Administration ("OSHA"). Landlord
has no knowledge of toxic or hazardous materials in the Demised
Premises or the Building, but Landlord's knowledge regarding the
absence of said toxic or hazardous materials is limited to the
Hazardous Substance Surveys. For purposes of the preceding
sentence, knowledge by Landlord shall be limited to the actual
knowledge of the following persons: the general manager of the
Building Landlord, except as provided in the following sentence
of this paragraph, makes no representations or warranties
whatsoever to Tenant regarding: (i) the Hazardous Substance
Surveys (including, without limitation, the contents and/or
accuracy thereof) or (ii) the presence or absence of toxic or
hazardous materials in, at, or under the Demised Premises or the
Building. Landlord does acknowledge to Tenant that: (i) other
than as required under the Workletter, Landlord has not
authorized any other studies for hazardous or toxic materials in
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the Demised Premises or Building other than the Hazardous
Substance Surveys; (ii) Landlord does not know of any surveys for
toxic or hazardous materials in the Demised Premises or the
Building other than the Hazardous Substance Surveys; and (iii)
Landlord does not know of any reason that the Hazardous Substance
Surveys are not true and correct. Notwithstanding the preceding
sentence, Tenant: (a) shall not rely on and Tenant hereby
represents to Landlord that it has not relied on the Hazardous
Substance Surveys; (b) shall make such studies and
investigations, conduct such tests and surveys, and engage such
specialists as Tenant deems appropriate to fairly evaluate the
Demised Premises and any risks from hazardous or toxic materials.
In connection with any inspections or tests to be conducted by
Tenant at the Demised Premises or Building, Tenant shall first
notify Landlord of each proposed inspection or test and the
scope, impact and intent thereof and obtain Landlord's written
consent to perform the same. Tenant shall restore the Demised
Premises and the Building to the condition existing immediately
prior to any such test and/or inspection and will provide
Landlord with true and complete copies of any survey or report
obtained by or for the benefit of Tenant in connection with
hazardous or toxic materials that concern the Building or the
Demised Premises.
(b) PROHIBITION ON PLACEMENT OR DISPOSAL. Neither
Tenant nor Landlord shall ever knowingly permit to remain in,
incorporate into, use or otherwise place or dispose of in the
Demised Premises or in the Building any toxic or hazardous
materials in concentrations or levels sufficient that by the then
applicable EPA, OSHA or other applicable governmental standards
cause the specific materials so identified to be classified or
identified as toxic or hazardous materials unless (i) such
materials are in small quantities, properly labeled and
contained, (ii) such materials are handled and disposed of in
accordance with the highest accepted industry standards for
safety, storage, use and disposal, (iii) such materials are for
use in the ordinary course of business (i.e., as with office or
cleaning supplies), (iv) notice of and a copy of the current
material safety data sheet is provided to the other party for
each such hazardous or toxic material and (v) such materials are
handled and disposed of in accordance with all applicable
governmental laws, rules and regulations. If Landlord or Tenant
ever has knowledge of the presence in the Demised Premises or the
Building of such toxic or hazardous materials which affect the
Demised Premises, the party having knowledge shall notify the
other party thereof in writing promptly after obtaining such
knowledge. For purposes of this Lease, hazardous or toxic
materials shall mean hazardous or toxic chemicals or any
materials containing hazardous or toxic chemicals at levels or
content which cause such materials to be classified as hazardous
or toxic as then prescribed by the prevalent industry practice
and standards or by the then current levels or content as set
from time to time by EPA or OSHA or as defined under 29 CFR 1910
or 29 CFR 1925 or other applicable governmental laws, rules or
regulations.
(c) TENANT'S COVENANTS TO REMOVE. If Tenant or its
employees, agents, or contractors shall ever violate the
provisions of Section 30.39(b) above (that apply to Tenant
regarding toxic or hazardous materials), or if Tenant's acts,
negligence, breach of this provision or business operations
directly and materially expand the scope of any contamination
from toxic or hazardous materials, then Tenant shall clean-up,
remove and dispose of the material causing the violation, in
compliance with all applicable governmental standards, laws,
rules and regulations and repair any damage to the Demised
Premises or Building within such period of time as may be
reasonable under the circumstances after written notice by
Landlord, provided that such work shall commence not later than
thirty (30) days' from such notice and be diligently and
continuously carried to completion by Tenant or Tenant's
designated contractors. Tenant shall notify Landlord of its
methods, time and procedure for any clean-up or removal of toxic
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or hazardous materials under this provision and Landlord shall
have the right to require reasonable changes in such method, time
or procedure or to require the same to be done after Normal
Business Hours.
30.40. TITLE INSURANCE. Landlord hereby agrees to deliver to
Tenant, contemporaneously with the execution and delivery of the
Lease, a leasehold title insurance policy of even date with this Lease
issued by Chicago Title Insurance Company in the amount of two million
dollars ($2,000,000.00) insuring Tenant's leasehold estate hereunder.
30.41. LANDLORD'S AUTHORITY. Landlord represents and warrants to
Tenant that (i) Landlord is a general partnership formed under the laws of
the State of Illinois, whose only partners are The Prudential Insurance
Company of America, a New Jersey corporation, and NLI Properties, Inc., a
New York corporation, (ii) Landlord has full power and authority to enter
into this Lease and to perform all of its obligations hereunder, and
execution and delivery of this Lease does not and will not violate or
conflict with any provisions of any law, contract, mortgage, lien, lease,
instrument, agreement or judgment to which Landlord is a party or which is
binding on Landlord and (iii) this Lease has been executed and delivered
pursuant to and in conformity with a valid and effective authorization
therefor and constitutes the valid and binding agreement of the partnership
and each partner therein in accordance with its terms.
31. OPTIONS TO EXPAND.
31.1. GRANT OF OPTIONS. Provided that at the time Tenant
exercises the options granted below and upon the respective Expansion
Space Commencement Date (as hereinafter defined), this Lease is in
full force and effect, Tenant is not in Default under this Lease and
Tenant has not exercised a Contraction Option (as hereinafter
defined), Tenant shall have the options (each an "Expansion Option")
(a) to lease either or both of (i) the balance of floor 14 of the
Tower, the Rentable Area of which is thirteen thousand two hundred
sixty-one (13,261) square feet along with any storage space which is
available for leasing on the balance of floor 14 of the Tower, and
(ii) all of floor 13 of the Tower, the Rentable Area of which is
twenty-three thousand ninety-eight (23,098) square feet along with any
storage space which is available for leasing on floor 13 of the Tower
(the "Expansion Space"), effective as of the first Expansion Space
Commencement Date (as hereinafter determined and defined) and (b) in
the event Tenant does not lease all of the Expansion Space pursuant to
the first Expansion Option, to lease any or all of the remaining
balance of the Expansion Space effective as of the second Expansion
Space Commencement Date (as hereinafter determined and defined).
31.2. EXERCISE OF OPTIONS. If Tenant elects to exercise the
first Expansion Option, Tenant must give Landlord written notice no
later than May 31, 2001 and if Tenant elects to exercise the second
Expansion Option, Tenant must give Landlord written notice no later
than May 31, 2006. Once given, Tenant's election to exercise an
Expansion Option shall be irrevocable. If Tenant fails to give
landlord notice of its election to exercise an Expansion Option by the
date set forth above, Tenant shall be deemed to have waived the right
to exercise the respective Expansion Option, but Tenant shall not be
deemed to have waived its right to exercise its first offer right
pursuant to Article 32 below.
31.3. LANDLORD'S EXPANSION SPACE NOTICE. If Tenant elects
to exercise an Expansion Option, Landlord shall, within thirty (30)
days thereafter, notify Tenant of the date Landlord will make the
Expansion Space, or applicable portion thereof, available to Tenant
for construction by Tenant of tenant improvements therein (an
"Expansion Space Availability Date") (which date shall be between May
31, 2002, and November 30, 2002, with respect to the first Expansion
Option and between May 31, 2007, and May 31, 2008, with respect to the
second Expansion Option), and Landlord's
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determination of the fair market base rental rate for the respective
Expansion Space, or applicable portion thereof.
31.4. TERMS OF LEASE OF EXPANSION SPACE. If Tenant exercises
an Expansion Option, then Landlord shall deliver possession of the
Expansion Space, or applicable portion thereof, on the applicable
Expansion Space Availability Date and the Expansion Space, or
applicable portion thereof, shall be included in the Demised Premises
and shall be subject to all of the terms, conditions and provisions of
this Lease, except as follows:
(a) the Rentable Area Of The Demised Premises shall be
increased by the Rentable Area of the Expansion Space, or
applicable portion thereof;
(b) Tenant's Proportion and Tenant's HVAC Proportion shall
be increased by a percentage derived by dividing the number of
square feet of Rentable Area of the Expansion Space, or
applicable portion thereof, by the Rentable Area Of The Building;
(c) The Base Rent shall be the fair market base rental rate
(as determined and defined in Article 36 below) of the Expansion
Space, or applicable portion thereof, as of the applicable
Expansion Space Commencement Date.
(d) The commencement date (the "Expansion Space
Commencement Date") of the term with respect to the Expansion
Space, or applicable portion thereof, shall be the earlier of (i)
the date Tenant completes its tenant improvements in the
Expansion Space, or applicable portion thereof, and first
occupies the Expansion Space, or applicable portion thereof, for
the conduct of business or (ii) one hundred eighty (180) days
after the applicable Expansion Space Availability Date.
(e) Except as may otherwise be determined in the course of
determining the fair market base rental rate, Tenant shall take
possession of the Expansion Space, or applicable portion thereof,
in an "as is" condition.
31.5. OPTION RIGHTS NOT SEVERABLE. Tenant's rights under
this Article 31 shall not be severed from this Lease or separately
sold, assigned or otherwise transferred to third parties, but the
foregoing shall not prohibit Tenant's right to assign all of its
rights under this Lease, including its rights under this Article 31 to
a permitted assignee under Article 16 above. Additionally, Tenant may
not sublease any Expansion Space within six (6) months after the
Expansion Space Commencement Date. After said six (6) month period,
Tenant may sublease any such Expansion Space.
32. RIGHT OF FIRST OFFER.
32.1. RIGHT OF FIRST OFFER. Provided that at the time Tenant
exercise its rights described in this Article 32 and on the respective
commencement date for such First Offer Space (as hereinafter defined),
this Lease is in full force and effect, Tenant is not in Default
hereunder and Tenant hereunder continues to directly (i.e., not
including any space subleased or assigned) occupy at least 135,000
square feet of Rentable Area in the Tower, subject to rights granted
to other tenants of the Building as of the date of this Lease (as set
forth on Exhibit N attached hereto) and future rights which may be
granted by Landlord as hereinafter provided in the last sentence of
Section 32.3 below, Landlord shall, from and after December 31, 1995,
offer space,including any storage space (except, however, any storage
areas utilized by Landlord or Landlord's agents in connection with
providing services for the Building or other storage areas leased to
tenants of the Building), other than the Demised Premises and any
Expansion Space which Tenant leases pursuant to Article 31 above or
any other portion of the First Offer
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space which Tenant leases hereunder or otherwise, on floors 4 through
15, inclusive, of the Tower (the "First Offer Space"), which is
"available for leasing", to Tenant prior to offering such space to the
public for lease in accordance with the provisions hereinafter set
forth. Notwithstanding anything contained herein to the contrary, if
Tenant directly (i.e., not including any space subleased or assigned)
occupies less than 200,000 square feet of Rentable Area in the Tower,
then the First Offer Space shall be reduced to only floors 4 and 5 and
11 through 15, inclusive, of the Tower. A portion of the First Offer
Space shall be deemed to be "available for leasing" if such space is
vacant or if not vacant, such space shall become "available for
leasing" upon the expiration or termination of the existing tenant's
lease of such space, unless such lease is renewed or a new lease for
such space is entered into with the existing tenant. Notwithstanding
anything contained herein to the contrary, a portion of the First
Offer Space shall not be deemed "available for leasing" if Landlord
previously offered such portion of the First Offer Space to Tenant
under the terms of this Article 32 and Tenant did not elect to lease
such space hereunder and Landlord is thereafter in good faith
negotiating with a bona fide prospective tenant for such portion of
the First Offer Space at the time any of Landlord's subsequent notices
required in Article 32.2 below are given; provided, however, if
Landlord does not conclude negotiations with such bona fide
prospective tenant within ninety (90) days after the date such notice
was required, Landlord shall then be required to give Tenant notice of
such available portion of the First Offer Space.
32.2. LANDLORD'S NOTICE. During January, 1996, and during
each subsequent January during the Term of this Lease, Landlord shall
give Tenant written notice ("Landlord's First Offer Notice") of the
First Offer Space which is available for leasing or which Landlord
anticipates will become available for leasing during the twelve (12)
month period following such notice. Additionally, if during any year
a portion of the First Offer Space which is in excess of 10,000 square
feet of Rentable Area becomes available for leasing and of which
Landlord had not previously notified Tenant, Landlord shall promptly
give Tenant written notice of such availability (also referred to
herein as a "Landlord's First Offer Notice"). In addition, Tenant may
request that Landlord issue an additional Landlord's First Offer
Notice during any calendar year, in which event Landlord shall
promptly give Tenant written notice of any additional space which has
or may become available during such calendar year.
32.3. TENANT'S NOTICE. If Tenant is interested in any First
Offer Space identified in Landlord's First Offer Notice, Tenant shall
notify Landlord in writing of such interest not later than fifteen
(15) business days after Landlord's First Offer Notice is given, time
being of the essence. If Tenant does not notify Landlord of such
interest within said 15-business day period, Tenant's right of first
offer shall terminate with respect to such portion of the First Offer
Space, and Landlord may thereafter lease such portion of the First
Offer Space to other tenants or otherwise grant to other tenants
rights of first refusal, rights of first offer, expansion rights or
otherwise encumber such portion of the First Offer Space without
further obligation to Tenant; provided, however, that if such offered
space remains available, Landlord shall include such space in
subsequent Landlord's First Offer Notices or if after Landlord enters
into a lease for such First Offer Space such lease expires or
terminates, then, subject to any rights, such as rights of refusal,
rights of offer, expansion rights or extension rights which Landlord
granted to such First Offer Space, Tenant shall again have its right
of first offer hereunder with respect to such space.
32.4. TERMS. If Tenant so notifies Landlord of Tenant's
interest, Landlord and Tenant shall negotiate in good faith for the
lease of such First Offer Space. If Landlord and Tenant cannot
mutually agree on terms for such First Offer Space within fifteen (15)
business days after the date Tenant exercises its right hereunder,
Tenant's right of first offer shall terminate with respect to said
portion of the First Offer Space and Landlord may thereafter lease
such portion of the First Offer Space to other tenants.
Notwithstanding the foregoing, if Landlord and Tenant cannot mutually
agree on terms
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for such First Offer Space within said 15-business day period, and if
the subject portion of the First Offer Space is greater than 10,000
square feet of Rentable Area, Tenant may elect, upon written notice
given to Landlord within five (5) business days after the end of such
15-business day negotiation period to lease such First Offer Space
under the terms and conditions of this Lease at the then fair market
base rental rate, in which event the fair market base rental rate for
such First Offer Space shall be determined in accordance with Article
36 below. If Landlord and Tenant mutually agree upon terms, or if the
fair market base rental rate is determined under Article 36 as herein
provided, Landlord and Tenant shall execute and deliver an amendment
to this Lease reflecting the lease of such First Offer Space, which
shall provide, among other things, the commencement date with respect
to such First Offer Space, that the "Rentable Area Of The Demised
Premises" shall be increased by the Rentable Area of the First Offer
Space leased to Tenant and that "Tenant's Proportion" and "Tenant's
HVAC Proportion" shall be increased to the percentage determined by
dividing the Rentable Area Of The Demised Premises (after inclusion of
the leased First Offer Space) by the Rentable Area Of The Building.
32.5. OPTION RIGHTS NOT SEVERABLE. Tenant's rights under
this Article 32 shall not be severed from this Lease or separately
sold, assigned or otherwise transferred to third parties, but the
foregoing shall not prohibit Tenant's right to assign all of its
rights under this Lease, including its rights under this Article 32,
to a permitted assignee under Article 16 above. Additionally, Tenant
may not sublease any First Offer Space within six (6) months after the
applicable First Offer Space Commencement Date. After said six (6)
month period, Tenant may sublease any such First Offer Space.
33. CANCELLATION.
Tenant shall have the option, to be exercised as hereinafter provided,
to terminate the Term of this Lease effective as of the tenth (10th)
anniversary of the Commencement Date (the "Termination Date"). Such option
shall be exercised, if at all, time being of the essence, by written notice
given by Tenant to Landlord no later than eighteen (18) months prior to the
Termination Date, and subject to payment by Tenant to Landlord of the sum
of (a) $14,042,765.00 (the "Termination Fee"), which (i) shall be reduced
if Tenant exercises its Early Reduction Option (as hereinafter defined) by
an amount equal to $55.00 per square foot multiplied by the Rentable Area
of the applicable Early Reduction Space (as hereinafter defined) and (ii)
shall be increased if Tenant exercises the Early Increase Option (as
hereinafter defined) with respect to the Early Increase Space (as
hereinafter defined) located on the plaza level of the Tower by an amount
equal to $55.00 per square foot multiplied by the Rentable Area of such
Early Increase Space located on the plaza level of the Tower, (b) plus,
with respect to any Early Increase Space located on floors 26 or 27 of the
Tower or First Offer Space or Expansion Space, the unamortized rent
abatements, tenant improvements allowances, moving allowances,
architectural fee reimbursements, commission, if any, and like expenses.
For purposes hereof, such unamortized amounts shall be calculated by
determining the outstanding principal of a loan as of the date of
termination, which loan has (i) an original principal balance equal to the
amount of all rent abatements, tenant improvement allowances, moving
allowances, architectural fee reimbursements, commission, if any, and other
expenses directly associated with the lease of such First Offer Space,
Expansion Space or Early Increase Space and a final principal balance of
zero dollars ($O), (ii) an interest rate of ten percent (10%) per annum
compounded on a monthly basis, (iii) a term equal to the remaining Term of
this Lease from and after the respective First Offer Space Commencement
Date, Expansion Space Commencement Date or Commencement Date with respect
to such Early Increase Space located on floors 26 and 27 of the Tower and
(iv) been reduced by payments made by Tenant to Landlord from the First
Offer Space Commencement Date, expansion Space Commencement Date or
Commencement Date with respect to the Early Increase Space located on
floors 26 and 27 of the tower, respectively, to the date of termination in
monthly installments proportionate with the monthly payments of Base Rent
and Storage Space Fee, if applicable, including fixed or reasonably
estimated financial escalations to Base Rent, if any, for such First Offer
Space, Expansion Space
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Or Early Increase Space. Attached hereto as Exhibit M is a sample
calculation of the termination fee for Early Increase Space located on
floors 26 or 27 of the Tower, First Offer Space and Expansion Space. A
portion of the Termination Fee equal to $27.50 per square foot of Rentable
Area Of The Demised Premises (not including, however, the Rentable Area of
any First Offer Space, Expansion Space or Early Increase Space located on
floors 26 or 27 of the Tower) plus fifty percent (50%) of the portion of
the Termination Fee described under clause (b) of the preceding sentence
(if clause (b) is applicable) shall be paid simultaneously with the giving
of Tenant's termination notice and the balance no later than six (6) months
prior to the Termination Date. Tenant may not, unless Landlord otherwise
agrees, exercise its option to terminate this Lease pursuant to this
Article 33 at any time at which a Default by Tenant exists under this
Lease, and no such termination shall be effective if such Default exists
unless Landlord otherwise agrees. Any notice of exercise of Tenant's
option to terminate the Term of this Lease pursuant to this Article 33
shall be irrevocable by Tenant once given. If Tenant so exercises its
option to terminate the Term of this Lease and pays to Landlord the
Termination Fee as above provided (provided, however, that if Tenant
miscalculates the portion of the Termination Fee described under clause (b)
above, the termination shall remain effective so long as Tenant's error was
made in good faith and Landlord and Tenant mutually agree upon such portion
of the Termination Fee prior to the Termination Date), then effective as of
the Termination Date, this Lease shall be deemed to have expired by lapse
of time, and Tenant shall return the Demised Premises to Landlord on the
Termination Date in accordance with the requirements of this Lease. All
obligations of Tenant and Landlord which accrue under this Lease on or
before the Termination Date shall survive such termination.
34. CONTRACTION OPTIONS.
34.1. FIRST CONTRACTION OPTIONS. Tenant shall have the
option ("First Contraction Option"), to be exercised as hereinafter
provided, to terminate this Lease effective as of the seventh (7th)
anniversary of the Commencement Date (the "First Contraction Date")
with respect to floor 3 or any one (1) or two (2) of floors CL-3, 14,
16 or 24 of the Demised Premises, including any Storage Space which
may be located on such respective floors, including any Storage Space
which may be located on such respective floor; provided, however,
Tenant may not elect to terminate this Lease with respect to floor 14
of the Demised Premises if Tenant had previously exercised its option
to expand to the balance of floor 14 of the Tower pursuant to Article
31 above. Such option shall be exercised, if at all, time being of
the essence, by written notice given by Tenant to Landlord no later
than eighteen (18) months prior to the First Contraction Date with
respect to floor 3 and twelve (12) months prior to the First
Contraction Date with respect to floor CL-3, 14, 16 or 24, and subject
to payment by Tenant to Landlord on or before the First Contraction
Date of (a) the sum of $3,700,972.00 with respect to floor 3 of the
Tower, (b) the sum of $1,757,500.00 with respect to floor 16 of the
Tower, (c) the sum of $1,656,952.00 with respect to floor 24 of the
Tower, (d) the sum of $634,904.00 with respect to floor 14 of the
Tower or (e) the sum of $628,064.00 with respect to floor CL-3 of the
Tower (each respectively the "First Contraction Fee"). In Tenant's
written exercise notice, Tenant shall designate whether it is
exercising its option with respect to floor 3, CL-3, 14, 16 or 24 of
the Demised Premises. Tenant may not, unless Landlord otherwise
agrees, exercise its option to contract pursuant to this Section 34.1
at any time at which a Default by Tenant exists under this Lease and
no such contraction shall be effective if such Default exists unless
Landlord otherwise agrees. Any notice of exercise of Tenant's First
Contraction Option shall be irrevocable by Tenant once given. If
Tenant so exercises its First Contraction Option and pays to Landlord
the First Contraction Fee as provided above, then effective as of the
First Contraction Date, this Lease shall be deemed to have expired by
lapse of time with respect to the floor designated in Tenant's
exercise notice, Tenant shall return such floor to Landlord on the
First Contraction Date in accordance with the requirements of this
Lease and the Base Rent and the Storage Space Fee, if applicable, and
Tenant's Proportion and Tenant's HVAC Proportion shall be adjusted
accordingly. All obligations of Landlord and Tenant which accrue
under this Lease on or before the First Contraction
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Date shall survive such termination with respect to such floor. In
the event Tenant exercises its First Contraction Option with respect
to either of floors 16 or 24 of the Tower, in addition to the payment
of the First Contraction Fee as provided above, on or before the First
Contraction Date, Tenant shall be responsible for either removing the
security kiosk, if any, installed by Tenant pursuant to Article 27
above or, if Tenant does not so move the security kiosk on or before
the First Contraction Date, Landlord shall have the right to perform
such work as is necessary to cause floor 16 or 24 of the Tower, as the
case may be, to be served by another elevator bank of the Tower.
Tenant shall be responsible for the reasonable cost of causing floor
16 or 24 of the Tower, as the case may be, to be served by another
elevator bank of the Tower; provided, however, that Landlord shall
competitively bid portions of such work and Landlord shall not be
entitled to any markup or profit in connection with such work.
34.2. SECOND CONTRACTION OPTION. Tenant shall have the
option (the "Second Contraction Option"; each of the First Contraction
Option and Second Contraction Option is referred to herein as a
"Contraction Option"), to be exercised as hereinafter provided, to
terminate this Lease effective as of the tenth (10th) anniversary of
the Commencement Date (the "Second Contraction Date") with respect to
any one (1) of floors 3, CL-3, 14, 16 or 24 of the Demised Premises,
including any Storage Space which may be located on such respective
floors. Such option shall be exercised, if at all, time being of the
essence, by written notice given by Tenant to Landlord no later than
eighteen (18) months prior to the Second Contraction Date with respect
to floor 3 and twelve (12) months prior to the Second Contraction Date
with respect to floor CL-3, 14, 16 or 24, and subject to payment by
Tenant to Landlord on or before the Second Contraction Date of (a) the
sum of $3,067,911.00 with respect to floor 3 of the Tower, (b) the sum
of $1,456,875.00 with respect to floor 16 of the Tower, (c) the sum of
$1,373,526.00 with respect to floor 24 of the Tower or (d) the sum of
$526,302.00 with respect to floor 14 of the Tower or (e) the sum of
$520,632.00 with respect to floor CL-3 of the Tower (each respectively
the "Second Contraction Fee"). In Tenant's written exercise notice,
Tenant shall designate whether it is exercising its option with
respect to floor 3, CL-3, 14, 16 or 24 of the Demised Premises.
Tenant may not, unless Landlord otherwise agrees, exercise its option
to contract pursuant to this Section 34.2 at any time at which a
Default by Tenant exists under this Lease and no such contraction
shall be effective if such Default exists unless Landlord otherwise
agrees. Any notice of exercise of Tenant's Second Contraction Option
shall be irrevocable by Tenant once given. If Tenant so exercises its
Second Contraction Option and pays to Landlord the Second Contraction
Fee as provided above, then effective as of the Second Contraction
Date, this Lease shall be deemed to have expired by lapse of time with
respect to the floor designated in Tenant's exercise notice and Tenant
shall return such floor to Landlord on the Second Contraction Date in
accordance with the requirements of this Lease and the Base Rent and
the Storage Space Fee, if applicable and Tenant's Proportion and
Tenant's HVAC Proportion shall be adjusted accordingly. All
obligations of Landlord and Tenant which accrue under this Lease on or
before the Second Contraction Date shall survive such termination with
respect to such floor. In the event Tenant exercises its Second
Contraction Option with respect to either of floors 16 or 24 of the
Tower, in addition to the payment of the Second Contraction Fee as
provided above, on or before the Second Contraction Date, Tenant shall
be responsible for either removing the security kiosk, if any,
installed by Tenant pursuant to Article 27 above or if Tenant does not
remove such security kiosk by the Second Contraction Date, Landlord
shall have the right to perform such work as is necessary to cause
floor 16 or 24 of the Tower, as the case may be, to be served by
another elevator bank of the Tower. Tenant shall be responsible for
the reasonable cost of causing floor 16 or 24 of the Tower, as the
case may be, to be served by another elevator bank of the Tower;
provided, however, that Landlord shall competitively bid portions of
such work and Landlord shall not be entitled to any markup or profit
in connection with such work.
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35. OPTION TO EXTEND.
35.1. GRANT OF OPTION. Provided that at the time Tenant
exercises the First Extension Option (as hereinafter defined) and on
the First Extension Period Commencement Date (as hereinafter defined)
this Lease is in full force and effect, and there is no Default by
Tenant under this Lease, Tenant shall have the option (the "First
Extension Option") to extend the Term of this Lease for one (1) period
of five (5) years (the "First Extension Period"), which First
Extension Period shall commence on the day after the Expiration Date
(the "First Extension Period Commencement Date") and expire on the
fifth (5th) anniversary of the Expiration Date; provided, however,
Tenant may elect to exercise the Second Extension Option (as
hereinafter defined) simultaneously with the First Extension Option
thereby extending the Term of the Lease for one (1) period of ten (10)
years. Provided that at the time Tenant exercises the Second
Extension Option and on the Second Extension Period Commencement Date
(as hereinafter defined) this Lease is in full force and effect, there
is no Default by Tenant under this Lease and Tenant hereunder
continues to directly (i.e., not including any space subleased or
assigned) occupy at least 135,000 square feet of Rentable Area in the
Tower Tenant shall have a second option (the "Second Extension
Option") to extend the Term of this Lease for one (1) period of five
(5) years (the "Second Extension Period") after the First Extension
Period, which Second Extension Period shall commence on the day after
the fifth (5th) anniversary of the Expiration Date (the "Second
Extension Period Commencement Date") and expire on the tenth (10th)
anniversary of the Expiration Date.
35.2. EXERCISE OF OPTION. If Tenant desires to exercise the
First Extension Option, Tenant shall notify Landlord in writing of
Tenant's desire not later than the thirteenth (13th) anniversary of
the Commencement Date. If Tenant desires to exercise the Second
Extension Option, Tenant shall notify Landlord in writing of Tenant's
desire not later than the third (3rd) anniversary of the Expiration
Date. If Tenant's extension options are not so exercised, said
extension options shall thereupon expire. Except as provided in
Article 36 below, Tenant's election to exercise the extension options
shall be irrevocable once notice of such election has been given by
Tenant.
35.3. TERM OF EXTENSION PERIOD. All terms of this Lease,
except as hereinafter provided, shall apply during the First Extension
Period and the Second Extension Period. The Base Rent payable during
the First Extension Period and the Second Extension Period shall each
be 95% of the fair market base rental rate, as determined under
Article 36 below, as of the applicable Extension Period Commencement
Date.
35.4. LEASE SUPPLEMENT. If Tenant exercises either extension
option pursuant to this Article 35, within thirty (30) days after
request by either party hereto, Landlord and Tenant shall enter into a
written declaration confirming the Base Rent and any other terms,
conditions and provisions applicable to such Extension Period as
determined in accordance with this Article 35.
35.5. OPTION RIGHTS NOT SEVERABLE. Tenant's rights under
this Article 35 are personal to Tenant and shall not be severed from
this Lease or separately sold, assigned or otherwise transferred to
third parties, but the foregoing shall not prohibit Tenant's right to
assign all its rights under this Lease, including its rights under
this Article 35, to any permitted assignee under Article 16 above.
Any exercise of the First Extension Option or Second Extension Option
shall be for the entire Demised Premises, including any space
subleased hereunder. Nothing contained herein shall be deemed to
prohibit permitted assignees or sublessee under Article 16 above from
enjoying the benefit of Tenant's exercise of this Article 35.
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36. FAIR MARKET BASE RENTAL RATE.
36.1. DEFINITION. As used in this Lease, the term "fair
market base rental rate" shall mean the then prevailing annual rental
rate per square foot of Rentable Area of space in the Building,
comparable in area and location to the space for which the fair market
base rental rate is being determined and being leased for a duration
comparable to the period for which such space is to be leased for
periods commencing on or about the commencement of the term of such
space. The fair market base rental rate shall be determined by taking
into consideration comparable fact situations during the prior twelve-
month period or any more recent relevant period in comparable office
buildings in downtown, Chicago, Illinois. In determining the fair
market base rental rate, the following shall be taken into
consideration: use, location and floor level within the applicable
building, the tenant improvements already in the space for which the
fair market base rental rate is being determined, construction
allowances (if any), the location, quality, age and reputation of the
building, the definition of rentable area or net rentable area, as the
case may be, with respect to which such rental rates are computed,
leasehold improvements being provided (if any), rental concessions,
abatements or other monetary inducements (if any), the term of the
lease under consideration and the extent of services provided
thereunder, applicable distinctions between "gross" leases and "net"
leases, base year figures (if any) for escalation purposes and other
adjustments (including by way of indexes) to base rental (if any); and
may take into consideration any other relevant term or condition in
making such evaluation.
36.2. NOTICE.
(a) With respect to the Expansion Option, Landlord
shall notify Tenant of Landlord's determination of the fair
market base rental rate within thirty (30) business days after
Tenant elects to exercise the Expansion Option as provided in
Section 31.3 above.
(b) With respect to First Offer Space, Landlord shall
notify Tenant of Landlord's determination of the fair market base
rental rate for any portion of the First Offer Space which is
greater than 10,000 square feet of Rentable Area within ten (10)
business days after Tenant elects to lease the First Offer Space
at the fair market base rental rate pursuant to Section 32.4
above.
(c) With respect to the First Extension Period and the
Second Extension Period, respectively, Landlord shall notify
Tenant of Landlord's determination of the fair market base rental
rate within thirty (30) days after receipt by Landlord of
Tenant's written notice to exercise the respective extension
option pursuant to Section 35.2 above.
36.3. ARBITRATION.
(a) (i) If Tenant disagrees with Landlord's
determination of the fair market base
rental rate with respect to the
Expansion Option, Tenant shall notify
landlord of Tenant's disagreement within
thirty (30) days after receipt of
Landlord's determination of the fair
market base rental rate for the
Expansion Space.
(ii) If Tenant disagrees with Landlord's
determination of the fair market base
rental rate for the applicable First
Offer Space, Tenant shall notify
Landlord of such disagreement within
fifteen (15) business days after receipt
of Landlord's determination of the
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fair market base rental rate for the
applicable First Offer Space.
(iii) If Tenant disagrees with Landlord's
determination of the fair market base
rental rate with respect to the First
Extension Option or the Second Extension
Option, respectively, Tenant shall
notify Landlord of such disagreement
within sixty (60) days after receipt of
Landlord's determination of the fair
market base rental rate for the
applicable extension option.
(b) In any case, if Tenant fails to so notify Landlord of Tenant's
disagreement within the required time period, Landlord's determination of the
fair market base rental rate shall be binding upon Tenant.
(c) If Tenant so notifies Landlord that landlord's determination of
fair market base rental rate is not acceptable to Tenant, Landlord and Tenant
shall, during the fifteen (15) day period after Tenant's notice, attempt to
agree on the fair market base rental rate. If Landlord and Tenant are unable to
agree, Tenant shall either (i) accept Landlord's most recent determination of
fair market base rental rate or (ii) submit the determination to binding
arbitration as provided below. If Tenant fails to so notify Landlord of
Tenant's election under the preceding sentence within five (5) days after said
fifteen (15) day period after Tenant's notice, Tenant shall be deemed to have
accepted Landlord's determination. If Tenant elects to submit to arbitration
the determination of fair market base rental rate, Landlord and Tenant shall
each select an expert (as hereinafter described) within five (5) business days
after Tenant's election to arbitrate. Such experts shall be independent and
experienced in leasing first-class office real estate and be familiar with
first-class high-rise office buildings in downtown Chicago, Illinois, and shall
be instructed to form their opinions based on the criteria specified above and
any other terms of this Lease pertaining to the space for which such fair market
base rental rate is being determined. Both experts so selected shall within
five (5) business days after their selection select a third expert who shall
also meet the same qualifications. The three (3) experts so selected shall
within fifteen (15) business days after the selection of the third expert each
independently formulate their opinion of the fair market base rental rate for
the space and period in question. The three (3) opinions shall then be averaged
and such average shall be the fair market base rental rate; provided, however,
that if any expert's opinion is more than five percent (5%) greater or less than
the middle opinion, then such greater or lesser opinion (or both if each is more
at variance from the middle opinion than 5%) shall be disregarded and the
remaining number of opinions shall be added together with the sum thereof
divided by the remaining number of opinions and the quotient thereof shall be
the fair market base rental rate. The determination of fair market base rental
rate by the three (3) experts shall be binding upon Landlord and Tenant;
provided. however, that with respect to the First Extension Option and the
Second Extension Option, Tenant shall have the right, by written notice given to
Landlord within ten (10) days after receipt of written notice of the final
determination by the experts of the fair market base rental rate, to revoke its
exercise of the First Extension Option or Second Extension Option, respectively,
in which event Tenant's respective extension option shall be deemed rescinded
and waived. Landlord and Tenant shall each pay for the services of its expert
and shall share equally the costs of the third expert; provided, however, in the
event Tenant rescinds its exercise of an option as provided above, Tenant shall
pay the costs of the third expert.
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37. EARLY DEMISED PREMISES ADJUSTMENTS.
37.1. DEMISED PREMISES REDUCTION. Tenant shall have the option
("Early Reduction Option"), to be exercised as hereinafter provided, to
terminate this Lease prior to the Commencement Date with respect to either or
both of floor 14 or the plaza level of the Demised Premises ("Early Reduction
Space"). Such option shall be exercised, if at all, time being of the essence,
by written notice given by Tenant to Landlord no later than December 1, 1993.
In Tenant's written exercise notice, Tenant shall designate whether it is
exercising its option with respect to either or both of floor 14 or the plaza
level of the Demised Premises. Tenant may not, unless Landlord otherwise
agrees, exercise its option to contract pursuant to this Section 37.1 at any
time at which a Default by Tenant exists under this Lease and no such
contraction shall be effective if such Default exists unless Landlord otherwise
agrees. Any notice of exercise of Tenant's Early Reduction Option shall be
irrevocable by Tenant once given. If Tenant so exercises its Early Reduction
Option, then this Lease shall be deemed to have expired by lapse of time with
respect to the floor or floors designated in Tenant's exercise notice and, if
Tenant is in possession, Tenant shall return such floor or floors to Landlord,
and the Base Rent, Tenant's Proportion, Tenant's HVAC Proportion and Landlord's
Build-Out Commitment shall be adjusted accordingly. If Tenant fails to give
Landlord notice of its election to exercise the Early Reduction Option by the
date set forth above, Tenant shall be deemed to have waived the right to
exercise the Early Reduction Option.
37.2. DEMISED PREMISES INCREASE. Provided that at the time Tenant
exercises the option granted below, this Lease is in full force and effect and
Tenant is not in Default under this Lease, Tenant shall have the option (the
"Early Increase Option") to lease (a) all of the portion of floor 26 of the
Tower depicted on Exhibit P attached hereto, the Rentable Area of which is
Thirteen Thousand Seven Hundred Twenty-Four (13,724) square feet, (b) all or any
portion (of no less than ten thousand (10,000) square feet of Rentable Area) of
floor 27 of the Tower, and (c) all of the portion of the plaza level of the
Tower depicted on Exhibit Q attached hereto, the Rentable Area of which is
eleven thousand five hundred seventy-two (11,572). square feet (the "Early
Increase Space"), effective as of the Commencement Date.
(a) If Tenant elects to exercise the Early Increase Option,
Tenant must give Landlord written notice no later than December, 1,
1993. In Tenant's notice, Tenant shall designate if Tenant desires to
lease all of the Early Increase Space located on floor 26 of the Tower
and/or all or any portion of the Early Increase Space located on floor
27 of the Tower and/or all of the Early Increase Space located on the
plaza level of the Tower, and in the event Tenant desires to lease a
portion of the Early Increase Space located on floor 27 of the Tower,
Tenant shall designate the approximate square footage (of no less than
ten thousand (10,000) square feet of Rentable Area) that Tenant
desires to lease on floor 27 of the Tower. If Tenant elects to lease
all of floor 27 of the Tower. Tenant shall also be granted the right
to use the storage space located on floor 27 of the Tower. Once
given, Tenant's election to exercise the Early Increase Option shall
be irrevocable. If Tenant fails to give Landlord notice of its
election to exercise the Early Increase Option by the date set forth
above, Tenant shall be deemed to have waived the right to exercise the
Early Increase Option.
(b) If Tenant elects to exercise the Early Increase Option,
Landlord shall, within thirty (30) days thereafter, notify Tenant of
the date (the "Early Increase Space Availability Date") Landlord will
make the Early Increase Space, or application portion thereof,
available to Tenant for construction by Tenant of Tenant Improvements
therein in accordance with the Workletter (which date shall be no
later than December 1, 1994). If Tenant elected to lease less than
all of the 27th floor of the Tower, Landlord shall designate to Tenant
the portion of the
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27th floor of the Tower which. shall be leased hereunder, provided
that such designated portion shall be no less than one thousand
(1,000) square feet less than the square footage Tenant notified
Landlord it desires to lease and no more than one thousand (1,000)
square feet greater than the square footage Tenant notified Landlord
it desires to lease.
(c) If Tenant exercises the Early Increase Option, then
Landlord shall deliver possession of the Early Increase Space, or
applicable portion thereof, and the storage space located on floor 27
of the Tower, if applicable, on the Early Increase Space Availability
Date and the Early Increase Space, or applicable portion thereof,
shall be included in the Demised Premises and the storage space
located on floor 27 of the Tower, if applicable, shall be included in
the Storage Space, and shall be subject to all of the terms,
conditions and provisions of this except as follows:
(i) the Rentable Area Of The Demised Premises
shall be increased by the Rentable Area of
the Early Increase Space, or applicable
portion thereof,
(ii) Tenant's Proportion and Tenant's HVAC
Proportion shall be increased by a percentage
derived by dividing the number of square feet
of Rentable Area of the Early Increase Space,
or applicable portion thereof, by the
Rentable Area Of The Building;
(iii) The Base Rent and Storage Space Fee, if
applicable, shall be increased
proportionately as of the Commencement Date;
(iv) Landlord shall substantially complete Base
Building Work in the Early Increase Space, or
applicable portion thereof, on or before the
Early Increase Space Availability Date and
Landlord shall provide Tenant an improvement
allowance of (A) $30.00 per square foot of
Rentable Area with respect to the Early
Increase Space on floor 27 of the Tower, (B)
$46.00 per square foot of Rentable Area with
respect to the Early Increase Space on floor
26 of the Tower and (C) $60.00 per square
foot of Rentable Area with respect to the
Early Increase Space on the plaza level of
the Tower; and
(v) The termination. date of the Term (A) with
respect to the Early Increase Space on floor
27 of the Tower shall be August 31, 2002, (B)
with respect to the Early Increase Space on
Floor 26 of the Tower shall be August 31,
2006, and (C) with respect to the Early
Increase Space on the plaza level of the
Tower shall be co-terminous with the Term
hereof, as the same may be extended under
this Lease. Upon such respect of termination
date, the Rentable Area Of The Demised
Premises, Tenant's Proportion, Tenant's HVAC
Proportion, Base Rent and Storage Space Fee,
if applicable, shall be proportionately
reduced.
(d) Tenant's rights under this Section 37.2 shall not be
severed from this Lease or separately sold, assigned or otherwise
transferred to third parties, but the foregoing shall not prohibit
Tenant's right to assign all of its rights under
59
<PAGE>
this Lease, including its rights under this Section 37.2 to a
permitted assignee under Article 16 above. Additionally, Tenant may
not sublease any Early Increase Space within six (6) months after the
Commencement Date. After said six (6) month period, Tenant may
sublease any such Early Increase Space.
37.3. LEASE SUPPLEMENT. If Tenant exercises any right under this
Article 37, within thirty (30) days after request by either party hereto,
Landlord and Tenant shall enter into a written declaration confirming the
terms and conditions of the Lease as amended pursuant to this Article 37.
The parties hereto have executed this Lease in a manner sufficient to bind
them as of the first day aforewritten.
LANDLORD:
PRUDENTIAL PLAZA ASSOCIATES, an
Illinois general partnership
By: The Prudential Insurance Company
of America, general partner
By: /s/ Raphael Dawson
_____________________________
Its: Vice President
TENANT:
ATTEST: THE PEOPLES GAS LIGHT AND
COKE COMPANY, an Illinois corporation
By: /s/ T. P. Browne By: /s/ E. P. Cassidy
_____________________________ ____________________________
Its: Asst. Secty Its: Secretary and Treasurer
------------------------ -----------------------
60
<PAGE>
LANDLORD ACKNOWLEDGMENT
STATE OF ILLINOIS
SS
COUNTY OF COOK
On this 20th day of October, 1993, before me appeared Raphael Dawson, to me
personally known, who, being by me duly sworn, did say that he is a Vice
President of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation, a general partner of PRUDENTIAL PLAZA ASSOCIATES, an Illinois
general partnership, and that said instrument was executed in behalf of said
corporation as such general partner by authority of its Board of Directors; and
the said Vice President acknowledged said instrument to be the free act and deed
of said corporation as such general partner.
/s/ Janice K. Gonzales
----------------------------
Notary Public
My Commission Expires: 7/10/96
--------------
TENANT ACKNOWLEDGMENT
STATE OF ILLINOIS
SS
COUNTY OF COOK
On this 20th day of October, 1993, before me appeared Emmet P. Cassidy and
Thomas P. Browne, to me personally known, who, being by me duly sworn, did say
that they are the Sec'y and Treasurer and Asst. Sec'y, respectively of THE
PEOPLES GAS LIGHT AND COKE COMPANY OF AMERICA, an Illinois corporation, the
corporation that executed the within and foregoing and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and that the seal affixed is the corporate seal of said corporation
and said Emmet P. Cassidy and Thomas P. Browne, respectively, acknowledged said
instrument to be the free act and deed of said corporation.
/s/ Judith E. Willhoite
----------------------------
Notary Public
My Commission Expires: 8/1/97
--------------
<PAGE>
EXHIBIT A
FLOOR PLAN
<TABLE>
<CAPTION>
FLOOR RENTABLE AREA (AS DEFINED IN SECTION 3.14)
<S> <C>
CL-3 8,264
3 46,680
14 8,354
16 21,614
17 21,564
18 19,121
19 20,702
20 22,645
21 22,389
22 21,330
23 21,330
24 21,330
-------
255,323
</TABLE>
A-1
<PAGE>
ARCHITECT'S DRAWING OF FIRST FLOOR PLAZA LEVEL FLOOR PLAN, DATED 8-01-93
USEABLE AREA = 7,090.5 S.F.
RENTABLE AREA = 8,263.9 S.F.
<PAGE>
ARCHITECT'S DRAWING OF 3RD FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 14TH FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 16TH FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 17TH FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 18TH FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 19TH FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 20TH FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 21ST FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 22ND FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 23RD FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
ARCHITECT'S DRAWING OF 24TH FLOOR FLOOR PLAN, DATED 10-06-93
<PAGE>
EXHIBIT B
STORAGE SPACE
<TABLE>
<CAPTION>
LOCATION SQUARE FEET
<S> <C>
B1-16B
B1-16C,
B1-50 9,953
BL-9B 1,942
3 2,017
16 1,512
17 1,639
18 807
19 619
20 619
21 473
22 473
23 473
24 473
40 Mezz. 297
---
21,297
</TABLE>
B-1
<PAGE>
ARCHITECT'S DRAWING OF STORAGE PLAN LOCATED ON FIRST BASEMENT FLOOR,
DATED 7-01-93
STORAGE
9,953 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF STORAGE PLAN LOCATED ON GROUND FLOOR, DATED 7-01-93
STORAGE
1,942 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF STORAGE PLAN LOCATED ON GROUND FLOOR, DATED 7-01-93
STORAGE
2,017 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF STORAGE PLAN LOCATED ON GROUND FLOOR, DATED 7-01-93
STORAGE
1,512 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 18TH GROUND FLOOR, DATED 4-01-93
STORAGE
1,679 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 18TH FLOOR, DATED 7-01-93
STORAGE
807 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 19TH FLOOR, DATED 7-01-93
STORAGE
619 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 20TH ON GROUND FLOOR, DATED 7-01-93
STORAGE
619 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 21ST FLOOR, DATED 7-01-93
STORAGE
473 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 22ND FLOOR, DATED 7-01-93
STORAGE
473 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 23RD FLOOR, DATED 7-01-93
STORAGE
473 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 24TH FLOOR, DATED 7-01-93
STORAGE
473 R.S.F.
<PAGE>
ARCHITECT'S DRAWING OF STORAGE PLAN FOR 40TH MEZZANINE, DATED 9-01-93
USEABLE STORAGE USEABLE SQ. FT. RENTABLE SQ. FT.
1-40 MOS 254.9 297.1
<PAGE>
EXHIBIT C
WORKLETTER AGREEMENT
THIS WORKLETTER AGREEMENT ("Agreement") is made and entered into this
day of October, 1993, by and between PRUDENTIAL PLAZA ASSOCIATES, an Illinois
general partnership ("Landlord"), and THE PEOPLES GAS LIGHT AND COKE COMPANY,
an Illinois corporation ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant have entered into a lease of even date
herewith (the "Lease"), for certain Demised Premises (as defined in the Lease)
in the tower commonly known as One Prudential Plaza (the "Tower") in the
Building (as defined in the Lease) commonly known as Prudential Plaza; and
WHEREAS, certain tenant improvement work is to be completed
upon the Demised Premises;
NOW THEREFORE, for and in consideration of the agreement to lease the
Demised Premises and pay rent and the mutual covenants contained herein, the
parties agree as follows:
1 . TENANT IMPROVEMENTS. Tenant, at its sole cost and expense, but
subject to payment of Landlord's Build-Out Commitment (as hereinafter defined)
as provided under Paragraph 9 below, shall perform, or cause to be performed,
the work (the "Tenant Improvements") in the Demised Premises provided for in the
Plans (as hereinafter defined) submitted to and approved by Landlord. Tenant
Improvements shall be constructed in a good and workmanlike fashion, in
accordance with the requirements set forth herein and in compliance with all
applicable statutes, laws, ordinances, orders, codes, rules, regulations,
building and fire codes and other governmental requirements, including, without
limitation, the Americans With Disabilities Act. Landlord's review and approval
of the Plans or any other submission of Tenant shall create no responsibility or
liability on the part of Landlord for such compliance or for their completeness
or design sufficiency. Tenant shall commence the construction of the Tenant
Improvements following completion of the pre-construction activities provided
for in Paragraph 3 below in sufficient time to complete the Tenant Improvements
on or before March 1, 1995, subject to Force Majeure (as defined in the Lease)
and the timely performance of Landlord's obligations hereunder.
2. LANDLORD'S BASE BUILDING TENANT IMPROVEMENTS. Landlord, at its
sole cost and expense, has performed or will cause to be performed in all of the
Demised Premises certain base building work as described on Attachment A hereto
(the "Base Building "Work"). Landlord shall substantially complete the Base
Building Work for all floors of the Demised Premises, other than those portions
of the Demised Premises located on floors 17 and 19 of the Tower, and deliver
possession of such floors to Tenant for the construction of Tenant Improvements,
on or before May 15, 1994. Additionally, Landlord shall deliver possession of
floors 17 and 19 of the Tower to Tenant for the construction of Tenant
Improvements and shall substantially complete the balance of the Base Building
Work for such floors in accordance with the milestone dates schedule attached
hereto as Attachment B, which Base Building Work shall be completed
simultaneously with construction by Tenant of Tenant Improvements therein in
accordance with the milestone dates schedule attached hereto as Attachment B.
Notwithstanding anything contained herein to the contrary, the timing of
delivery of possession of any Early Increase Space (as defined in the Lease)
shall be governed by the terms and conditions of Section 37.2 of the Lease.
Landlord shall be responsible for coordinating the construction of the Base
Building Work for floors 17 and 19 of the Tower with the construction of Tenant
Improvements
C-1
<PAGE>
on such floors. In the event of any scheduling conflict with respect to
hoisting materials or personnel to said floors, Tenant's material and
personnel shall have reasonable priority.
Landlord's Base Building Work shall be constructed in a good and
workmanlike fashion, in accordance with the requirements set forth herein and in
compliance with all applicable statutes, laws, ordinances, orders, codes, rules,
regulations, building and fire codes and other governmental requirements,
including, without limitation, the Americans With Disabilities Act as applicable
as of the date hereof. Landlord shall obtain, promptly after completion of the
Base Building Work, warranties of at least one (1) year duration from the
Commencement Date against defects in workmanship and materials on all work
performed and equipment installed in the Demised Premises as part of the Base
Building Work. Landlord further covenants that upon written request from Tenant,
Landlord shall enforce such warranties on behalf of Tenant against the
contractors performing the Base Building Work.
Subject to Tenant caused delays , in the event Landlord fails (i) to
substantially complete construction of any portion of Landlord's Base Building
Work in accordance with the foregoing schedule (including, without limitation,
substantial completion of the respective components of Base Building Work for
floors 17 and 19 of the Tower in accordance with the milestone dates schedule
attached hereto as Attachment B), or (ii) fails to deliver possession of any
portion of the Demised Premises to Tenant in accordance with the foregoing
schedule, then Landlord shall, among other remedies available to Tenant at law
or in equity, indemnify Tenant for damages incurred by Tenant and caused by such
failure. Without limiting the generality of the foregoing:
(a) Tenant shall use reasonable efforts to mitigate the effect
of any such delay in delivery by Landlord and Landlord shall reimburse
Tenant for all reasonably documented costs incurred by Tenant as a result
of Landlord's failure, including but not limited to overtime costs and
special charges imposed by Tenant's contractors, subcontractors and
vendors (including, without limitation, overtime charges for moving and
relocation services and for correcting Landlord's failure to perform the
respective components of Base Building Work on or before the milestone
dates set forth on Attachment B hereto) in attempting to mitigate the
effects of any such failure by Landlord; and
(b) Landlord shall hold harmless and indemnify Tenant from any
losses, damages, judgments, claims, expenses, costs and liabilities
(collectively, "Delay Liabilities") imposed upon or incurred by or
asserted against Tenant, including reasonable attorneys' fees and
expenses, arising out of Tenant's existing lease at the building commonly
known as 122 South Michigan Avenue, including without limitation, Tenant's
liability for holdover rent under said lease; provided, however, Tenant
agrees to use reasonable efforts to mitigate any said Delay Liabilities
and shall inform Landlord of said mitigation efforts and, in addition,
shall provide Landlord a reasonable opportunity to mitigate damages.
Tenant acknowledges that Delay Liabilities include only those rent
obligations which are in excess of the Rent and Storage Space Fee
obligations Tenant would otherwise have had under this Lease, it being the
intent that Landlord be responsible for all costs, expenses and damages
incurred by Tenant as a result of Landlord's failure to timely complete
the Base Building Work and deliver possession of the Demised Premises as
provided above, but that Tenant not receive a double payment of rent or a
free rent period as a result of such failure. In case any action, suit or
proceeding is brought against Tenant as aforesaid, then Landlord will, at
the Landlord's expense and at the option of Tenant, by counsel reasonably
approved by Tenant, resist and defend such action, suit or proceeding.
Notwithstanding anything contained in this Workletter or in the Lease to the
contrary, Landlord's obligations under this Paragraph 2 are not subject to
extensions due to Force Majeure as described in Section 30.34 of the Lease.
C-2
<PAGE>
3. PRE-CONSTRUCTION ACTIVITIES
(a) On or before May 15, 1994, Tenant shall submit the following
information and items to Landlord for Landlord's review and approval:
(i) A detailed construction schedule containing the major
components of the Tenant Improvements and the time
required for each, including the scheduled commencement
date of construction of the Tenant Improvements, milestone
dates and the estimated date of completion of constriction.
(ii) An itemized statement of estimated construction costs,
including permits and architectural and engineering fees
and a preliminary budget for furniture, fixtures and
equipment.
(iii) The names and addresses of Tenant's contractors (and the
contractor's subcontractors and vendors) to be engaged by
Tenant for the Tenant Improvements (collectively,
"Tenant's Contractors"). Landlord has the right to approve
or disapprove Tenant's Contractors, which approval shall
not be unreasonably withheld or unduly delayed (and in the
event Landlord has failed to either approve or disapprove
a Tenant's Contractor proposed by Tenant within ten (10)
business days of the effective date of Tenant's inquiry,
said approval shall be deemed given); provided, however,
Landlord hereby preapproves the contractors listed on
Attachment C hereto. Tenant shall not employ as Tenant's
Contractors any persons or entities disapproved by Landlord.
(iv) Certified copies of insurance policies or certificates of
insurance as hereinafter described. Tenant shall not permit
Tenant's Contractors to commence work until the required
insurance has been obtained and certified copies of policies
or certificates have been delivered to Landlord.
(v) The final Plans for the Tenant Improvements, which Plans
shall be subject to Landlord's approval in accordance with
Paragraph 3(b) below.
Tenant will update such information and items by notice to Landlord of any
changes. Landlord shall not unreasonably withhold its approval to any of the
foregoing submittals by Tenant and shall respond to any submittal within ten
(10) business days after receipt. If Landlord fails to respond within said ten
(10) business days, Landlord shall be deemed to have approved such submittal.
(b) As used herein the term "Plans" shall mean full and detailed
architectural and engineering plans and specifications covering the Tenant
Improvements (including, without limitation, structural, architectural,
mechanical (including the HVAC work), electrical, life safety, fire protection
and plumbing working drawings for the Tenant Improvements). The Plans shall
include the minimum information shown on Attachment D attached hereto and
incorporated herein. Subject to Landlord's Build-Out Commitment, Tenant shall
pay all costs and expenses of preparing the Plans. Tenant shall submit space
utilization plans in no more than two (2) submittals, commensurate with the
floor turnover schedule and preliminary specifications and 75% complete plans to
Landlord, in each case when the same have been completed, and Landlord shall
cooperate with Tenant by discussing or reviewing such submittals prior to
completion of
C-3
<PAGE>
the full, final detailed Plans in order to expedite the preparation of and the
subsequent approval process concerning the final Plans.
The Plans shall be subject to Landlord's approval and the approval of all
local governmental authorities requiring approval, if any. Landlord shall give
its approval or disapproval (giving reasons in case of disapproval) of the Plans
within ten (10) business days after their delivery to Landlord. If Landlord
fails to respond within said ten (10) business days, Landlord shall be deemed to
have approved the Plans. Landlord agrees not to unreasonably withhold its
approval of said Plans; provided, however, that Landlord shall not be deemed to
have acted unreasonably if it withholds its consent because, in Landlord's
opinion: (i) the Tenant, Improvements are likely to adversely affect Building
systems, the structure of the Building or the safety of the Building and its
occupants; (ii) the Tenant Improvements would adversely affect Landlord's
ability to furnish services to Tenant or other tenants; (iii) the Tenant
Improvements would increase the cost of operating the Building; (iv) the Tenant
Improvements would violate any governmental laws, rules or ordinances; (v) the
Tenant Improvements contain or would require the use of hazardous or toxic
materials; (vi) the Tenant Improvements would adversely affect the exterior
appearance of the Building; or (vii) the Tenant Improvements would adversely
affect another tenant's premises. The foregoing reasons, however, shall not be
exclusive of the reasons for which Landlord may withhold consent, whether or not
such other reasons are similar or dissimilar to the foregoing. Landlord shall
cooperate with Tenant by discussing or reviewing preliminary plans and
specifications at Tenant's request prior to completion of the full, final
detailed Plans in order to expedite the preparation of and the subsequent
approval process concerning the final Plans. If Landlord notifies Tenant that
changes are required to the final Plans submitted by Tenant, Tenant shall submit
to Landlord, for its approval, the Plans amended in accordance with the changes
so required. Such submission of revised Plans shall be accompanied by a written
response from Tenant specifically responding to any disapprovals or other
responses delivered by Landlord to Tenant. The Plans shall also be revised, and
the Tenant Improvements shall be changed, to incorporate any work in the Demised
Premises required by applicable law. Landlord's approval of the Plans shall in
no way be deemed to be acceptance or approval of any element therein contained
which is in violation of any applicable statutes, laws, ordinances, orders,
codes, rules, regulations, building or fire codes or other governmental
requirements, but Landlord's approval of the Plans shall be deemed an
acknowledgement that the Plans are in compliance with standards set by Landlord
for the Building. Notwithstanding anything contained herein to the contrary, in
the event of disagreement between Landlord and Tenant respecting specifications
and quantities for furniture, fixtures and equipment, the decision of Tenant
shall be binding and conclusive.
(c) No Tenant Improvements shall be undertaken or commenced by Tenant
in the Demised Premises until:
(i) The Plans for the Demised Premises have been submitted
to and approved by Landlord.
(ii) All necessary building permits have been obtained by
Tenant.
(iii) All required insurance coverages have been obtained by Tenant
or Tenant's Contractor, it being understood that failure of
Landlord to receive evidence of such coverage upon commencement
of the Tenant Improvements shall not waive Tenant's obligations
to obtain such coverages or cause Tenant's Contractors to obtain
such coverages.
C-4
<PAGE>
(iv) Items required to be submitted to Landlord pursuant to the terms
and conditions of this Workletter prior to commencement of
construction of the Tenant Improvements have been so submitted
and have been approved, where required.
4. [INTENTIONALLY OMITTED]
5. CHARGES AND FEES. Subject to Paragraph 9 below, Tenant shall be respon-
sible for all costs and expenses attributable to the Tenant Improvements,
including charges, fees and costs paid by Landlord in connection with its review
and approval of the Plans and other Tenant submittals and supervision of the
Tenant Improvements, but in no event shall such charges, fees and costs exceed
$100,000.00. The hourly, rates payable by Landlord to Landlord's representative
are set forth on Attachment E hereto.
6. CHANGE ORDERS. Changes to the final Plans requested by Tenant which (a)
affect mechanical, plumbing, electric, heating, ventilating, air-cooling or life
safety systems of the base Building, (b) affect any structural components of the
Building or require any penetration of the floor or ceiling, (c) are visible
from outside of the Tower, (d) would require entry into another tenant's
premises or (e) individually cost more than $20,000.00 or in the aggregate cost
more than $100,000.00 must be approved by Landlord in advance of the
implementation of such changes as part of the Tenant Improvements. Subject to
Paragraph 9 below, Tenant shall be responsible for all costs and expenses
attributable to any changes, including, without limitation, the costs and
expenses incurred by Landlord in reviewing change order requests pursuant to
this paragraph 6, but any such costs and expenses shall be included in the
$100,000.00 limit set forth in Paragraph 5 above. All delays caused by Tenant
initiated change orders, including, without limitation, any stoppage of work
during the change order review process, are solely the responsibility of Tenant
and shall cause no delay in the Commencement Date, or payment of Rent and
performance of other obligations set forth in the Lease. Landlord will respond
to all change order requests within ten (10) business days after receipt.
Failure to respond in writing within said ten (10) business days will be deemed
an acceptance.
7. STANDARDS OF DESIGN AND CONSTRUCTION AND CONDITIONS OF TENANT'S
PERFORMANCE. All work done in or upon the Demised Premises by Tenant shall be
done according to the standards set forth, in this Paragraph 7, except as the
same may be modified in the Plans approved by both Landlord and Tenant.
(a) Tenant's Plans and all design and construction of the Tenant
Improvements shall comply with all applicable governmental statutes,
ordinances, regulations, laws and codes, including, but not limited to, the
requirements of the Americans With Disabilities Act. Approval by Landlord of
the Plans shall not constitute a waiver of this requirement or assumption by
Landlord of responsibility for compliance. Where several sets of the foregoing
laws, codes and standards must be met, the strictest shall apply where not
prohibited by another law, code or standard.
(b) Tenant shall, at its own cost and expense, but subject to payment
by Landlord of Landlord's Build-Out Commitment under Paragraph 9 below, obtain
all required building permits and, when construction has been completed, shall,
at its own cost and expense, obtain an occupancy permit for the Demised
Premises, which shall be delivered to Landlord. Tenant's failure to obtain such
permits shall not cause a delay in the Commencement Date, or the payment of Rent
and performance of other obligations under the Lease.
(c) Tenant's Contractors and Landlord's contractors performing the
Base Building Work shall be licensed contractors, possessing good labor
relations, capable of performing quality workmanship and working in harmony with
the other party's
C-5
<PAGE>
contractors and subcontractors and with other contractors and subcontractors in
the Building. All work shall be coordinated with any other construction or other
work in the Building in order not to adversely affect construction work being
performed by or for Tenant, Landlord or its tenants, it being understood that in
the event of any conflict, Landlord shall reasonably control scheduling and use
of the Building elevators, loading docks and other common facilities in a manner
which does not discriminate against Tenant or Tenant's Contractors and does not
unreasonably prohibit or delay Tenant's Contractors or Tenant from performing
the Tenant Improvements work. Notwithstanding anything contained herein to the
contrary, Landlord agrees that Tenant shall be entitled to priority access to a
loading dock of the Building for delivery of materials and equipment for the
Tenant Improvements work.
(d) Landlord shall have the right, but not the obligation, to perform, on
behalf of and for the account of Tenant, subject to reimbursement by Tenant, any
work (not including, however, purchase of any furniture, fixtures or equipment)
(i) which Landlord deems necessary to be done on an emergency basis or (ii)
which pertains to structural components, Building systems or the general utility
systems for the Building or (iii) which pertains to the erection of temporary
safety barricades or signs during construction or (iv) which pertains to
connecting the Tenant Improvements with any other work in the Building, provided
and on the condition that:
(A) with respect to the work described in Subparagraph 7(d)(i) and
(iii), Landlord provides Tenant with 48 hours prior written notice
of its intention to perform such work, or such shorter period of
time which is reasonable under the circumstances;
(B) with respect to the work described in Subparagraph 7(d)(ii) and
(iv), Landlord provides Tenant with written notice of Landlord's
intention to perform such work within ten (10) business days of
Tenant's submission to Landlord of the final Plans for the work in
question pursuant to Paragraph 3(c) above; and
(C) Tenant's obligation to reimburse Landlord for work conducted at
Landlord's request pursuant to the foregoing shall be limited to the
reasonable,'actual cost of such work.
(e) Tenant shall use only new, first-class materials in the Tenant
Improvements, except where explicitly shown in the Plans approved by Landlord
and Tenant. Tenant shall obtain, promptly after completion of the Tenant
Improvements, warranties of at least one (1) year duration from the completion
of the Tenant Improvements against defects in workmanship and materials on all
work performed and equipment installed in the Demised Premises as part of the
Tenant Improvements, a copy of which warranties shall be delivered to Landlord
upon Tenant's receipt of the same; provided, however, that the foregoing
obligation to obtain warranties shall not apply to furniture, fixtures and
equipment portions of the Tenant Improvements to the extent not commercially
available or customarily obtained.
(f) Tenant and Tenant's Contractors, in performing work, shall do so in
conformance with the Prudential Plaza Contractor Regulations attached hereto
as Attachment F and shall not interfere with other tenants and occupants of the
Building. Tenant and Tenant's Contractors shall make all efforts and take all
steps appropriate to construction activities undertaken in a fully-occupied
first-class office building so as not to interfere with the operation of the
Building. Tenant and Tenant's Contractors shall take all precautionary steps to
minimize dust, noise and construction traffic, and to protect their facilities
and the facilities of others affected by the Tenant Improvements and to properly
police same. Construction equipment and materials are to be kept within the
Demised Premises and delivery and loading of equipment and materials shall be
done
C-6
<PAGE>
at such locations and at such time as Landlord shall reasonably direct so as not
to burden the construction or operation of the Building.
(g) Landlord shall have the right to order Tenant or any of Tenant's
Contractors who materially violate the requirements imposed on Tenant or
Tenant's Contractors in performing work as set forth herein to cease work and
remove its equipment and employees from the Building, provided Tenant is first
provided a minimum of forty-eight (48) hours prior written notice and an
opportunity to cure the alleged violations within the aforesaid 48-hour period.
No such action by Landlord shall delay the Commencement Date, or the payment of
Rent and performance of other obligations under the Lease.
(h) Utility costs or charges for any service (including, but not limited
to, HVAC, electrical, hoisting and the like) to the Demised Premises shall be
the responsibility of Tenant from the date Tenant is obligated to commence or
commences the Tenant Improvements and shall be paid for by Tenant at Landlord's
rates. With respect to electrical charges, Landlord shall cause the Demised
Premises to be separately metered during the period of construction of the
Tenant Improvements by Tenant and Tenant shall directly pay for the electricity
consumed in the Demised Premises during the construction of the Tenant
Improvements. Use of freight elevators is subject to reasonable scheduling by
Landlord. Use of the freight elevators during normal construction hours (i.e.,
6:30 a.m. to 3:30 p.m. Mondays through Fridays, holidays excepted) shall be at
no charge to Tenant. Any use of the freight elevators at other than normal
construction hours shall be at Tenant's cost and expense, however, Landlord
shall not charge a markup for such use of the freight elevators, it being the
intent that Tenant only be obligated to pay for actual costs incurred in
providing freight elevator service after normal construction hours. Tenant shall
arrange and pay for removal of construction debris and shall not place debris in
the Building's waste containers.
(i) On prior reasonable notice, from and after the date Tenant commences
construction of Tenant Improvements through the Commencement Date of the
Lease, Tenant shall permit access to the Demised Premises, and the Tenant
Improvements shall be subject to inspection, by Landlord and Landlord's
architects, engineers, contractors and other representatives, at all times
during the period in which the Tenant Improvements are being constructed and
installed and following completion of the Tenant Improvements.
(j) Tenant shall proceed with its work expeditiously, continuously and
efficiently. Tenant shall notify Landlord upon completion of the Tenant
Improvements and shall furnish Landlord and Landlord's title insurance company
with such further documentation as may be necessary under Paragraph 9 below.
(k) Tenant shall perform the Tenant Improvements in substantial compliance
with the Plans, except, however, Tenant shall be permitted to make change orders
as provided under Paragraph 6 above and except, however, Tenant may substitute
for any furniture, fixtures or equipment which it has previously specified to
Landlord. Tenant shall furnish to Landlord one (1) full set of paper sepia
reproducible "as-built" drawings of the Tenant Improvements consisting of record
drawings of the installed condition of each component of the Tenant Improvements
completed from the Plans marked up in the field by the various trades. Such
record drawings shall be submitted in a final package by Tenant's general
contractor to Landlord within ninety (90) days after completion of the Tenant
Improvements. Final disbursement of any remaining amounts of Landlord's Build-
Out Commitment will not occur until such record drawings have been received by
Landlord.
(l) Subject to the terms and conditions of Article 13 of the Lease and
provided that, except for any Base Building Work, Landlord shall not run any of
the following
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through Tenant's proposed gas control room, television studio or computer room
without the prior written consent of Tenant, Landlord shall have the right to
run utility lines, pipes, conduits, duct work and component parts of all
mechanical and electrical systems where necessary or desirable through the
Demised Premises, to repair, alter, replace or remove the same, and to require
Tenant to install and maintain proper access panels thereto.
(m) Tenant shall impose on and enforce all applicable terms of this
Workletter against Tenant's Architect and Tenant's Contractors.
8. INSURANCE AND INDEMNIFICATION.
(a) In addition to any insurance which may be required under the Lease,
Tenant shall secure, pay for and maintain or cause Tenant's Contractors to
secure, pay for and maintain during the continuance of construction and
fixturing work within the Building or Demised Premises, insurance in the
following minimum coverages and limits of liability:
(i) Tenant Workmen's Compensation and Employer's Liability Insurance
with limits of not less than $100,000.00, or such higher amounts
as may be required from time to time by any employee benefit acts
or other statutes applicable where the work is to be performed.
(ii) Comprehensive General Liability Insurance including Broad Form
Contractual, Broad Form Property Damage, Personal Injury,
Completed Operations and Products coverages (such Completed
Operations and Products shall be provided for a period of one (1)
year after the date of final acceptance of the Tenant
Improvements), and deletion of any exclusion pertaining to
explosion, collapse and underground property damage hazards, with
limits of not less than $1,000,000.00 combined single limit for
bodily injury and property damage.
(iii) Comprehensive Automobile Liability Insurance including Owned,
Non-Owned and Hired Car coverages, with limits of not less than
$1,000,000.00 combined single limit for both bodily injury and
property damage.
(iv) "All-risk" builder's risk insurance upon the entire Tenant
Improvements to the full insurable value thereof. This
insurance shall include the interests of Landlord and Tenant
(and their respective contractors and subcontractors of any
tier to the extent of any insurable interest therein) in the
Tenant Improvements and shall insure against the perils of
fire and extended coverage and shall include "all-risk"
builder's risk insurance for physical loss or damage including,
without duplication of coverage, theft, vandalism and
malicious mischief. If portions of the Tenant
Improvements are stored off the site of the Building or in
transit to said site, such portion shall be covered under said
"all-risk" builder's risk insurance. Any loss insured under said
"all-risk" builder's risk insurance is to be adjusted among
Landlord, Tenant and Tenant's Contractors, to the extent of their
interest. Landlord, Landlord's contractors, Tenant and Tenant's
Contractors each hereby waive any
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<PAGE>
and every claim for recovery from the other for any and all loss
of or damage to the Building or Demised Premises or to the
contents thereof, which loss or damage is recoverable under the
insurance policies described in this Paragraph 8(a)(iv).
Inasmuch as this mutual waiver will preclude the assignment of
any such claim by subrogation (or otherwise) to an insurance
company (or any other person), Landlord, Landlord's contractors,
Tenant and Tenant's Contractors each agree to give to each
insurance company which has issued, or in the future may issue,
policies under this Paragraph 8(a)(iv), written notice of the
terms of this mutual waiver, and to have said insurance policies
properly endorsed, if necessary, to prevent the invalidation of
said insurance coverage by reason of said waiver. The aforesaid
waiver shall apply only when it is either permitted or, by the
use of good faith efforts could have been so permitted by a
policy of insurance.
All policies (except the workmen's compensation policy) shall be endorsed to
include as additional insured parties Landlord and its partners, directors,
officers and employees. The insurance policy endorsements shall also provide
that all additional insured parties shall be given thirty (30) days' prior
written notice of any cancellation or non-renewal of coverage (except that
ten (10) days' notice shall be sufficient in the case of cancellation
for non-payment of premium) and shall provide that the insurance coverage
afforded to the additional insured parties thereunder shall be primary to
any insurance carried independently by said additional insured parties.
Additionally, where applicable, each policy shall contain a cross-liability
and severability of interest clause.
Notwithstanding the foregoing, with respect to Tenant's Contractors
supplying or installing any furniture, fixtures and equipment and other
subcontractors providing minimal amounts of work, Tenant may maintain
reduced levels of insurance coverage, subject to Landlord's reasonable
approval.
(b) Without limitation of the indemnification provisions contained in
the Lease, to the fullest extent permitted by law Tenant agrees to indemnify,
protect, defend and hold harmless Landlord, Landlord's contractors and
Landlord's architects and their partners, directors, officers, employees and
agents, from and against all claims, liabilities, losses, damages and expenses
of whatever nature arising out of or in connection with the Tenant Improvements
or the entry of Tenant or Tenant's Contractors into the Building and the Demised
Premises, including, without limitation, mechanic's liens or the cost of any
repairs to the Demised Premises or Building necessitated by activities of Tenant
or Tenant's Contractors and bodily injury to persons (including, to the maximum
extent provided by law, claims arising under the Illinois Structural Work Act)
or damage to the property of Tenant, its employees, agents, invitees, licensees
or others, except and to the extent that such claims, liabilities, losses,
damages and expenses arise out of the presence of asbestos containing materials
in the Building (provided Tenant has complied with its obligations under
Paragraph 10(l) below) or the negligent act or omission of Landlord, including,
without limitation, the failure of Landlord to abate asbestos containing
materials as part of the Base Building Work which is more fully described in
Attachment A hereto. It is understood and agreed that the foregoing indemnity
shall be in addition to the insurance requirements set forth above and shall not
be in discharge of or in substitution for same or any other indemnity or
insurance provision of the Lease.
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<PAGE>
9. LANDLORD'S BUILD-OUT COMMITMENT; PERIODIC PAYMENTS.
(a) Landlord shall make a dollar commitment ("Landlord's Build-Out
Commitment") in an amount equal to $15,319,380.00 (which is $60.00 per square
foot of Rentable Area Of The Demised Premises), for application to the extent
thereof to the cost of the Tenant Improvements (including, without limitation,
payment of architectural and engineering fees and Landlord's supervisory fee).
If the cost of the Tenant improvements exceed Landlord's Build-Out Commitment,
Tenant shall have sole responsibility for the payment of such excess cost. Up to
$7,659,690.00 (which is $30.00 per square foot of Rentable Area Of The Demised
Premises) of Landlord's Build-Out Commitment ("Available Soft Cost
Contribution") may be applied by Tenant to pay for soft costs associated with
Tenant's construction of the Tenant Improvements and relocation to the Demised
Premises, which soft costs include architectural and engineering fees, moving
expenses, consultant's fees and reimbursable expenses, and furniture, fixtures
and equipment cost. Any unused portion of Landlord's Build-Out Commitment up to
$1,276,615.00 (which is $5.00 per square foot of Rentable Area Of The Demised
Premises) shall be applied against Base Rent next becoming due and payable under
the Lease. Landlord's and Tenant's payments for the Tenant Improvements shall
be made prorata as costs of the Tenant Improvements are incurred based on the
then most current estimate of the cost of the Tenant Improvements submitted to
and approved by Landlord under Paragraph 3(a) above.
(b) Periodically, but not more frequently than once per month, Tenant
may submit to Landlord a payment request for costs of the Tenant Improvements
incurred and not previously paid naming the parties to be paid and the
respective amounts of such payments, which payment request shall be accompanied
by:
(i) A statement in writing under oath signed by Tenant stating
the various contracts entered into by Tenant for the Tenant
Improvements and with respect to each: the total contract
price of all labor, work, services and materials; the
amounts theretofore paid thereon; the amount requested for
the current disbursement; the balance due for such labor,
work, services and materials, after payment of the current
disbursement, to complete the Tenant Improvements in
accordance with the Plans;
(ii) A written application for payment from each of Tenant's
Contractors disclosed in the aforesaid sworn Tenant's
statement wherein each of Tenant's Contractors certifies
completion and the cost of that portion of the Tenant
Improvements for which payment is requested and further
certifies that the cost to complete the Tenant Improvements
remaining to be done under said contract will not exceed
the balance due thereunder (without including in such
balance any required retainages) and a statement in writing
under oath or verified by affidavit of Tenant's Contractor
stating: the names of all persons, firms, associations,
corporations or other parties by whom labor, materials,
services or work will be rendered or furnished pursuant to
the contract with Tenant's Contractor; the nature of labor,
work, services and materials to be rendered or furnished by
each of the foregoing; the amounts (in the case of firm
subcontracts) and estimated amounts (in other cases) to be
paid for such labor, work, services and materials; the
amounts theretofore paid thereon; the amount requested for
the current disbursement; the balance due for such labor,
C-10
<PAGE>
work, services and materials, after payment of the current
disbursement, to complete the work described in such sub-
contract;
(iii) A statement from each of the subcontractors and material-
men disclosed in the aforesaid Tenant's Contractor's sworn
statement, in writing under oath or verified by affidavit of
a duly authorized agent of such subcontractor of the parties
furnishing materials and labor to it or for their account,
and of the amounts due or to become due each;
(iv) Certificate for payment executed by Tenant's Architect (as
hereinafter defined) on American Institute of Architect's
Form G-703;
(v) Originals of partial waivers of lien from each of Tenant's
Contractors and all materialmen and vendors requesting
payment covering the requested payment (provided,
however, that such partial waivers of lien from any
contractors, vendors, subcontractors or materialmen who
have not entered into contracts directly with Tenant
(herein, "Subcontractors") need only be delivered as
provided in the construction escrow instructions entered
into pursuant to Paragraph 9(c) below); and
(vi) If the estimated cost of the Tenant Improvements exceeds
Landlord's Build-Out Commitment and consequently Tenant is
responsible for paying for any such excess, then evidence
reasonably satisfactory to Landlord that Tenant has paid or
will pay, simultaneous with payment by Landlord, Tenant's
proportionate share of the costs of the Tenant
Improvements.
Provided such documentation is submitted by the 25th day of a month, Landlord
will approve or disapprove such documentation, or portions thereof, by the lst
day of the following month. If Landlord disapproves of any such documentation,
Landlord shall notify Tenant of the reason therefor. If said disputed items
remain unresolved after five (5) business days, Landlord will process for
payment all undisputed items. Disputed items will be processed as soon as they
are resolved. Thereafter, to the extent such documentation is approved, payment
shall be made no later than the last day of the month following receipt by
Landlord of the payment request and accompanying documentation. Landlord shall
make payments through an escrowee as provided in Paragraph 9(c) below.
(c) Landlord shall make payments of Landlord's Build-Out Commitment
through a construction escrow established with Chicago Title and Trust Company
pursuant to instructions in the form of Attachment H hereto. The escrowee's
charges therefor shall not be deemed part of the costs of the Tenant
Improvements and shall be paid for by Landlord, provided however, Landlord shall
not pay for any additional insurance requested by Tenant.
(d) Within thirty (30) days after final completion and installation
of the Tenant Improvements, Tenant shall submit to Landlord a detailed breakdown
of the total amount of the costs of the Tenant Improvements, together with final
waivers of liens, contractors' affidavits, and architects' certificates in such
form as may be reasonably required by Landlord, Landlord's title insurance
company and Landlord's lender, if any, from all parties performing labor or
supplying materials or services in connection with
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<PAGE>
the Tenant Improvements, showing that all of said parties have been compensated
in full and waiving all liens in connection with the Demised Premises and
Building (provided, however, that such final waivers of lien from Subcontractors
need only be delivered as provided in the construction escrow instructions
entered into pursuant to Paragraph 9(c) above). In addition, within thirty (30)
days after final completion and installation of the Tenant Improvements, Tenant
shall submit to Landlord a detailed inventory of the furniture, fixtures and
equipment purchased with Landlord's Build-Out Commitment.
(e) Subject to payment of Landlord's Build-Out Commitment as provided
under this Paragraph 9, both Landlord's Base Building Work and the Tenant
Improvements to the extent funded by means of Landlord's Build-Out Commitment
shall be and constitute Landlord's property, subject to Landlord's demise to
Tenant under Section 1 of the Lease. Landlord will take no position for federal,
state or local income or property tax purposes inconsistent with Landlord's
aforesaid ownership of the Base Building Work and Tenant Improvements. In the
event the Internal Revenue Service notifies Landlord that the Internal Revenue
Service is challenging, or intends to challenge, Landlord's ownership of the
Base Building Work and Tenant Improvements, Landlord shall notify Tenant of such
challenge, or intent to challenge, with ten (10) business days from the date the
Internal Revenue Service notifies Landlord of such challenge or intent to
challenge. Landlord will consult with and cooperate fully with Tenant or
Tenant's representative in defending against any such challenge, provided,
however, Tenant shall be responsible for all reasonable costs and expenses
incurred in any such defense.
(f) (i) To secure its obligations under this Paragraph 9, simultaneous
with the execution and delivery of the Lease, Landlord shall
deposit into an escrow ("Build-Out Commitment Escrow"), with an
escrowee and under instructions in the form attached hereto as
Attachment I, an amount equal to one-half (1/2) of Landlord's
Build-Out Commitment and shall deliver to Tenant an unconditional
irrevocable letter of credit ("Letter of Credit") in an amount
equal to or greater than Landlord's Minimum Letter of Credit
Amount (as hereinafter defined) and in the form attached hereto
as Attachment G. Renewals of said Letter of Credit shall also be
substantially in the form of Attachment G hereto.
(ii) As used herein "Landlord's Minimum Letter of Credit Amount" shall
mean an amount equal to one-half (1/2) of Landlord's Build-Out
Commitment, as may be reduced pursuant to clause (iii) below.
(iii) Landlord may cause amounts to be withdrawn from the Build-Out
Commitment Escrow to pay periodic disbursements of Landlord's
Build-Out Commitment in accordance with this Workletter and upon
any disbursement of Landlord's Build-Out Commitment other than
from the Build-Out Commitment Escrow, Landlord and Tenant agree
to cause the Letter of Credit to be reduced by a corresponding
amount.
(iv) If Landlord defaults in respect to its obligation to make any
disbursement of Landlord's Build-Out Commitment under the terms
and conditions hereof and such default is not cured by Landlord
within ten (10) business days after written notice from Tenant,
Tenant may draw upon the Letter of Credit for the payment of any
such disbursement of Landlord's Build-Out Commitment in default.
(v) Upon final disbursement of Landlord's Build-Out Commitment, the
Letter of Credit shall be promptly returned to Landlord.
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<PAGE>
10. MISCELLANEOUS.
(a) Except as herein expressly set forth or in the Lease, Landlord
has no agreement with Tenant and has no obligation to do any work with respect
to the Demised Premises.
(b) Time is of the essence under this Workletter.
(c) Any person signing this Workletter on behalf of Landlord and
Tenant warrants and represents he has authority to do so.
(d) Tenant's failure to pay any amounts owed by Tenant hereunder
when due or Tenant's failure to perform its obligations hereunder shall also
constitute a default under the Lease and Landlord shall have all the rights and
remedies granted to Landlord under the Lease for nonpayment of any amounts owed
thereunder or failure by Tenant to perform its obligations thereunder.
(e) Notices under this Workletter shall be given in the same manner
as under the Lease.
(f) The liability of Landlord hereunder or under any amendment
hereto or any instrument or document executed in connection herewith shall be
limited as provided in Section 30.25 of the Lease.
(g) The headings set forth herein are for convenience only.
(h) This Workletter sets forth the entire agreement of Tenant and
Landlord regarding the Tenant Improvements. This Workletter may only be amended
if in writing, duly executed by both Landlord and Tenant.
(i) Tenant has designated Techno Ltd. (whose address is 1147 W. Ohio
Street, Chicago, Illinois 60622, and whose telephone number is (312) 421-0505)
as its architect ("Tenant's Architect") for purposes of preparing the
architectural portions of the Plans for the Tenant Improvements and shall select
a qualified and licensed engineer as its engineer for preparing the structural,
mechanical (including all HVAC work), plumbing, electrical, fire protection and
life safety portions of the Plans, which engineer shall be subject to the
approval of Landlord, which shall not be unreasonably withheld or delayed.
(j) This Agreement shall not be deemed applicable to any additional
space added to the original Demised 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 Demised Premises or any additions thereto in the event of a renewal or
extension of the original term of the Lease, whether by any options under the
Lease or otherwise, unless expressly so provided in the Lease or any amendment
or supplement thereto.
(k) Landlord and Tenant shall each appoint one (1) qualified and
readily available representative with the authority to give and receive notices,
other materials and information relating to the Tenant Improvements, and
approvals under this Agreement. Initially, Landlord's representative shall be
Garrison Associates, Inc., whose address is 130 East Randolph Drive, Suite L-1,
Chicago, Illinois 60601, and whose telephone number is (312) 819-4250, and
Tenant's representative shall be Robert F. Donohue, whose address is 122 S.
Michigan Avenue, Suite 839, Chicago, Illinois 60603, and whose telephone number
is (312) 431-4499.
(l) As more fully described in Attachment A hereto, as part of
Landlord's Base Building Work, Landlord will be removing asbestos containing
material from the
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<PAGE>
floors of the Demised Premises and will be performing certain abatement work of
asbestos containing material in the core areas of the Demised Premises. If any
of the Tenant Improvements involves cutting, patching or otherwise penetrating
or disturbing any asbestos containing material left in place in the core areas,
such work shall be done promptly by Landlord at its sole cost and expense. In
the event that during the course of performing Tenant Improvements Tenant
discovers any asbestos containing material other than in the core areas, Tenant
shall notify Landlord of such presence and Landlord shall thereafter promptly
cause such asbestos containing material to be removed at Landlord's sole cost
and expense.
IN WITNESS HEREOF, the parties have executed this Workletter as of the
first day aforewritten.
LANDLORD:
PRUDENTIAL PLAZA ASSOCIATES,
an Illinois general partnership
By: The Prudential Insurance Company
of America, general partner
By:____________________________________
Its: Vice President
TENANT:
THE PEOPLES GAS LIGHT
AND COKE COMPANY,
an Illinois corporation
By:____________________________________
Its:________________________________
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<PAGE>
ATTACHMENT A TO WORKLETTER
DESCRIPTION OF BASE BUILDING WORK
1. ABATEMENT
Containment, testing, consulting, pipe wrap abatement and VAT floor tile
abatement in the Demised Premises. Upon completion of the asbestos
abatement for each floor, the abatement contractor shall certify to
Landlord that such abatement has been completed in accordance with all
currently applicable statutes and ordinances governing asbestos handling
removal and disposal.
(a) The asbestos abatement work shall be done by a contractor licensed by
the Illinois Department of Public Health (IDPH) ("Asbestos Abatement
Contractor") in accordance with all current requirements of all
applicable statutes and ordinances, including, but not limited to, the
following regulations governing asbestos handling, removal and
disposal:
(i) U.S. Environmental Protection Agency National Standards for
Asbestos (Code of Federal Regulations), Title 40, Part 61,
Sub-part M;
(ii) U.S. Environmental Protection Agency National Emissions
Standards for Hazardous Air Pollutants (NESHAPS) (Code of
Federal Regulations), Title 40, Part 61;
(iii) U.S. Department of Labor Occupational Safety and Health
Administration (OSHA) Asbestos Regulations (Code of Federal
Regulations, Title 29, part 1926);
(iv) National Institute for Occupational Safety and Health (NIOSH)
standards and techniques pertaining to the encapsulation,
removal and testing for the presence of asbestos;
(v) Department of Transportation (DOT) CFS, Title 49, Parts 171-177;
and
(vi) Any other applicable federal, state, county or local rules or
regulations governing the encapsulation and/or removal of
asbestos.
(b) Prior to commencement of the asbestos removal, Landlord and the
Asbestos Abatement Contractor shall serve all appropriate notices,
including, but not limited to, notice to the Regional Office of the
U.S. EPA, the Illinois EPA and appropriate local agencies.
(c) During the removal process, Landlord and the Asbestos Abatement
Contractor shall perform certain safety functions including, but not
limited to, the following:
(i) Periodic (personnel and area) monitoring with air sample
analysis by Phase Contrast Microscopy (PCM) in accordance with
NIOSH Method 7400, completed by an authorized hygienist, having
successfully completed NIOSH course 582, with documented
laboratory results:
(ii) Full personal and respiratory protection for employees going
into the restricted areas;
(iii) Full training and medical surveillance for their employees that
have access to the restricted areas;
ATTACHMENT A-1
<PAGE>
(iv) Full usage of air filtration and reduced pressure equipment and
HEPA vacuum systems when necessary;
(v) Maintenance of daily records of work done and protection
measures employed; and
(vi) Full usage of decontamination equipment and methods for
personnel entering and leaving restricted areas.
(d) All asbestos shall be removed using wet removal techniques, double
bagging and disposal at approved waste disposal sites in compliance
with appropriate regulations.
2. PERIMETER AND CORE WALLS
All perimeter walls, core walls and columns are furred, drywalled, taped,
sanded and primed ready to receive paint or vinyl wall covering selected
and installed by Tenant. Landlord will refurbish window gaskets on all
perimeter windows and repair hardware to ensure a watertight seal. Landlord
will repair water damage, as required, to existing perimeter walls,
including priming of damaged areas. The requirements of this paragraph 2 do
not apply to the Non-Office Storage Space. Additionally, the requirements
of this paragraph 2 do not apply to the portion of the Early Increase Space
identified as space CL-1. With respect to such space CL-1, Landlord will
replace the interior south and southeast windows to meet code requirements.
3. FLOOR LOADING & LEVELING
The typical Tower floor load capacity for the plaza level and floors 7
through 38 of the Tower is 100 pounds per square foot live load and 20
pounds per square foot for partitions with the exception of the structural
beams, where the live load is 80 pounds per square foot. The 15' adjacent
to the core on such floors can support up to 100 pounds per square foot.
For floors 3 through 6 the live load is 200 pounds per square foot live
load and 20 pounds for partitions, with the exception of structural beams,
where the live load is 100 pounds per square foot.
Floors for the Demised Premises, other than the Non-Office Storage Space,
will be flat to a tolerance of +/- one-quarter inch (1/4") over each ten
foot (10') radius on a non-cumulative basis.
4. CELLULAR FLOOR SYSTEM
All floors (except the plaza level and any Storage Space) include a two-
cell floor duct system which will be cleared of all existing wiring prior
to turnover to Tenant. The system is provided for floor wiring with one
cell available for 120 volt power and the other cell for telephone and data
terminal wiring. Cells can be further subdivided at Tenant's expense.
5. ELECTRICAL SYSTEM
Tenant may utilize the existing floor duct system for distribution of power
wiring at no charge. Each floor of the Demised Premises, other than the
Non-Office Storage Space, shall have electrical service equating to eight
(8) watts per net useable square foot of office areas of connected load
based on capacities of three (3) watts per net useable square foot of
office areas for lighting and five (5) watts per net useable square foot of
office areas for receptacle and miscellaneous power. Service will be
delivered at 120/208 volt, 3 phase, 4 wire to each floor of the Demised
Premises, other than the Non-Office Storage Space, as follows:
ATTACHMENT A-2
<PAGE>
<TABLE>
<CAPTION>
FLOOR LOAD
FLOOR AMPS
<S> <C>
Plaza Level 200 Amps
3 1,000 Amps
14 200 Amps
16 400 Amps
17 400 Amps
18 400 Amps
19 400 Amps
20 400 Amps
21 400 Amps
22 400 Amps
23 400 Amps
24 400 Amps
</TABLE>
Landlord will provide, at Tenant's expense, to the respective floor of the
Demised Premises, other than the Non-Office Storage Space, additional
electrical connected capacities totalling up to twenty-five (25) watts
(which includes the above referenced 8 watts) per net useable square foot
for the following special use areas:
Computer Room 3rd Floor 11,806 useable square feet
Gas Control Room 20th Floor 3,915 useable square feet
Television Studio 18th Floor 756 useable square feet
The meter location on each floor of the Demised Premises will be determined
by Landlord's engineer.
6. METERING
Tenant's floors will be direct-metered by Commonwealth Edison Co. A bus
duct tap box, meter enclosure, CT cabinet, and main disconnect switch will
be provided at Landlord expense on each floor, with the exception of the
3rd floor which will have two (2) such configurations and except the
Non-Office Storage Space. With respect to the B-1 level, Landlord will
provide a meter enclosure, CT cabinet and main disconnect switch sized to
8 watts/square foot of net useable area. Commonwealth Edison Company will
provide meters directly to Tenant, Landlord will be responsible for the
installation charge, if any, and Tenant will be responsible for procuring
the meter and the monthly meter rentals and electric billing.
7. SPRINKLER SYSTEM
A fully supervised sprinkler system within the core area on each floor
(except the plaza level and the Non-Office Storage Space) along with
existing temporary heads in unoccupied spaces per code is provided. Any
existing branch or main piping will be left in place for Tenant's use, and
including any existing system on the plaza level and Non-Office Storage
Space. Additionally, for the Early Increase Space located on the plaza
level, a tap will be provided at the existing standpipe for Tenant's use.
8. STANDPIPE RISERS
As required by code, fire standpipe connections are provided per floor and
fire extinguisher cabinets, with code approved extinguishers, in the core
area of each floor are provided. Tenant shall provide all required cabinets
and extinguishers within the balance of the Demised Premises as required by
code.
ATTACHMENT A-3
<PAGE>
9. PLUMBING
Each floor (except the plaza level, which has one (1) location for the
space identified as CL-3, two (2) locations for the space identified as
CL-1 and one (1) location for the space identified as CL-16) also has a
minimum of four (4) locations available for water, waste, and vent at wet
columns. Existing unused plumbing on the floors will be removed back to the
tap and valved at that location.
10. WATER FOUNTAINS
One (1) electric water fountain per floor (except the Non-Office Storage
Space) is provided. All fountains will comply with ADA and applicable
codes.
11. EXIT SIGNS & EMERGENCY LIGHTING
As required by code, emergency lighting and exit signs within the core are
provided by the Landlord. Emergency lighting and exit signs within the
Demised Premises are provided by Tenant, at Tenant's expense. Base Building
exit signs will be edge glow, and will be furnished and temporarily
suspended, at Landlord's expense. Tenant will have access to base Building
circuits.
12. LIFE-SAFETY SYSTEM
The Landlord provides a Tower life-safety system including smoke detectors
at elevator lobbies and electrical equipment closets and switchboard rooms,
water flow and tamper devices, life-safety speakers in the core area and
stairwell door releases. Code required life-safety speakers in the Demised
Premises are connected to the main speaker loop, but furnished and
installed at Tenant's expense along with the required conduit, backboxes
and speaker wire.
Landlord has installed a building life-safety system riser to accommodate
ADA strobe requirements. Strobe devices approved by the Landlord and
compatible with the Building system will be furnished and installed in
Tenant areas at Tenant's expense and in core areas at Landlord's expense.
Tenant's electrical contractor will wire said devices to the nearest
Landlord multiplex equipment panel located not more than one (1) floor away
in accord with Simplex system requirements and perform both grounding and
continuity testing. Landlord will terminate Tenant wiring on terminal
strips in Landlord equipment panels at no cost to Tenant.
Core and core bathroom area strobe devices will be provided by Landlord.
13. SECURITY
Tenant has an opportunity to connect to the Building's proximity card
reader security system. Such connection, however, is a Tenant option and is
not provided under Base Building Work; therefore, connection would be a
part of Tenant development at Tenant's expense and Tenant would be required
to enter into the Landlord's security system license agreement. Security
devices approved by Landlord and compatible with the base Building system
will be furnished and installed in Tenant areas at Tenant's expense.
Tenant's Contractor will wire said devices to a Landlord provided panel on
each floor and Landlord will perform grounding and continuity testing.
Landlord will furnish and install restroom doors, frames and hardware with
electric striker ready for installation of Tenant wiring on floors 3 and 16
through 24 of the Demised Premises.
ATTACHMENT A-4
<PAGE>
14. HVAC CONSIDERATIONS
For all floors of the Demised Premises, other than the Non-Office Storage
Space and other than the Early Increase Space located on the plaza level:
(a) INTERIOR ZONE - Heating, ventilating and air-conditioning service is
provided to each floor via a medium pressure main supply duct
extending from the core and running east to west on the floor. A
single HVAC zone for core area requirements is provided under Base
Building Work, including a fan-powered box, duct work, diffusers and
temperature control. The furnishing, locating and connecting of all
additional fan powered VAV boxes, electrical connections, downstream
duct work, diffusers and temperature controls, as well as connection
to the medium pressure main supply duct are provided by Tenant, at
Tenant's expense, as required by the final Tenant plans. Any existing
branch or main duct work as well as any VAV boxes will be left in
place for Tenant's use unless otherwise agreed upon by Landlord and
Tenant.
(b) Existing perimeter induction units at each exterior window are to
service perimeter zones not to exceed 15 feet in depth as measured
from the glass line. Landlord will inspect, repair and clean where
required all perimeter induction units, refurbish grills, provide new
lint screens prior to move-in and provide the unit primed and ready
for finish paint. Landlord certifies that each perimeter unit provides
a minimum of 90 cfm.
(c) Landlord installed base Building chilled water system provides
year-round supplemental cooling capacity providing treated condenser
water for Tenant-supplied supplemental air-conditioning units that
can be operated concurrently with the Tower's HVAC system or
independently on a 24-hour basis. With respect to the Demised
Premises, including the Non-Office Storage Space, Tenant can elect to
utilize a reasonable proportionate amount of the condenser water
system (with a maximum of 1 ton per 2,500 rentable square feet) for a
tap-on fee of $50.00 per ton plus a current usage fee of $.0055 per
cubic foot for actual useage of condenser water as metered.
HVAC will be installed in the Early Increase Space located on the plaza level
sufficient to meet code requirements in accordance with the specifications set
forth on Exhibit D attached to the Lease.
15. LIFE-SAFETY AND HANDICAP CODE ITEMS
Landlord will provide the following code required items on all floors of
the Demised Premises, other than the 40 Mezzanine level:
(a) Elevator hall lanterns and call buttons are mounted per the current
handicap code and all requirements of the ADA if installed by
Landlord.
(b) Toilet room lavatories are installed per the handicap code and ADA and
one (1) toilet in each of the men's and women's bathrooms on each
floor is modified per the current handicap code and requirements of
the ADA.
(c) With respect to the Early Increase Space on the plaza level, Landlord
will provide handicapped wheelchair access devices to meet ADA and
applicable code requirements.
Landlord verifies that base Building core and shell areas comply with all
applicable codes and requirements of the ADA.
ATTACHMENT A-5
<PAGE>
16. FINISHES FOR CORE AREA
The Landlord shall provide the following items on all floors of the Demised
Premises, other than the plaza level and Non-Office Storage Space, which
will be reasonably consistent with the typical finishes as currently
installed on the 24th floor of the Tower:
Washrooms: Suspended acoustic ceilings, cove lighting, toilet partitions,
paint and wall coverings, granite vanities, mirrors and terrazzo floor with
vestibule carpet.
Fire Exit Corridors (on Multi-Tenant Floors only): Painted walls, building
standard carpet or vinyl tile, suspended acoustic ceiling and light
fixtures, sprinkler heads and life-safety voice and visual annunciation as
required.
Service Elevator Lobby: Painted walls, building standard resilient base and
vinyl floor tile, suspended building standard ceiling tile and light
fixtures, sprinkler heads, smoke detector and life safety voice and visual
annunciation as required, and prime painted hollow metal frames and doors.
Main Elevator Lobby: Building standard carpet with black border, granite
elevator door surrounds and base with granite call button and ash tray
receptacle; a stepped, coved drywall ceiling with cove lighting, soffit and
pilasters at end of lobby; and painted drywall ceilings with vinyl wall
covering at closed end of lobby and panels between door openings.
17. WINDOW BLINDS
For the Demised Premises, other than the Non-Office Storage Space, the
Landlord shall provide and install new building standard window blinds for
each perimeter window opening that are gray, horizontal and 1" wide.
Installation will be coordinated with Tenant's work.
18. CONVERSION OF ELEVATOR BANK
Landlord shall cause the bank of elevators which currently services floors
17 through 24 of the Tower to service floors 16 through 24 of the Tower
exclusively.
19. B-1 LEVEL STORAGE SPACE
Landlord shall repair areas of flaking or spalled concrete within the B-1
level Storage Space.
ATTACHMENT A-6
<PAGE>
ATTACHMENT B TO WORKLETTER
MILESTONE DATES FOR FLOORS 17 AND 19
May 15, 1994 - Substantial completion and delivery of
possession of phase one of the Base Building
Work on floor 17 with the exception of core
area work and 7,381 R.S.F. of area at the
west end of the floor.
Phase one of Base Building Work on floor 17
consists of demolition, abatement, floor
leveling and perimeter and column drywall
work (per Attachment A to Workletter) for
approximately 14,000 R.S.F. of area on the
east and center portions of the floor.
May 15, 1994 - Substantial completion and delivery of
possession of phase one of the Base Building
Work on floor 19 with the exception of the
balance of core area work and 8,109 R.S.F. of
area at the east end of the floor.
Phase one of Base Building Work on floor 19
consists of demolition, abatement, floor
leveling and perimeter and column drywall
work (per Attachment A to Workletter) or
approximately 11,329 R.S.F. of area on the
center and west portions of the floor.
September 1, 1994 - Substantial completion of phase two of Base
Building Work on floor 19 and delivery of
possession.
Phase two of Base Building Work on floor 19
consists of demolition, floor leveling,
perimeter and column drywall work (per
Attachment A to Workletter) for the balance
of the floor (approximately 8,109 R.S.F. on
the east portion of the floor) and the
balance of core work to include passenger
elevator lobby granite, carpet and wall
finishes (drywall work is complete), freight
elevator, storage corridor and bathroom
finishes, balance of core plumbing,
sprinkler, electrical and HVAC work per
Attachment A of the Workletter.
December 1, 1994 - The remainder of floor 17 (approximately
7,381 R.S.F. of area on the west portion of
the floor) will be turned over to Tenant for
commencement of the Tenant Improvements with
all Base Building Work, other than in core
area on floor 17, substantially complete.
ATTACHMENT B-1
<PAGE>
February 1, 1995 - Substantial completion of Base Building Work
in the core area of floor 17.
Floor numbering revisions on lobby granite
will also be complete by this time.
ATTACHMENT B-2
<PAGE>
ATTACHMENT C TO WORKLETTER
APPROVED CONTRACTORS
1. Pepper Construction
2. Interior Construction Group, Inc.
3. LaSalle Construction
4. W. E. O'Neil
5. Inland Construction
6. Walsh Construction
7. Harbour Construction, Inc.
ATTACHMENT C-1
<PAGE>
ATTACHMENT D TO WORKLETTER
MINIMUM INFORMATION FOR PLANS
Plans and specifications (including architectural, engineering and structural,
if applicable, working drawings) required for the supply, installation and
finishing of the Demised Premises and including, without limitation: finish
schedule; graphics and signage exterior to the Demised Premises; interior and
demising partitions; doors and hardware; furniture, fixtures and equipment
lay-out plans and quantities; ceilings; wiring; lights and switches; telephone
and electrical outlets; floor coverings; wall coverings; built-ins; appliances
and plumbing fixtures; security, audio visual, telecommunications, computer and
other system cabling requirements, fire suppression requirements and emergency
power requirements; and other equipment, connections and facilities attached to
and forming part of the Tower/Building.
ATTACHMENT D-1
<PAGE>
ATTACHMENT E TO WORKLETTER
LANDLORD'S REPRESENTATIVE'S RATES
<TABLE>
<CAPTION>
HOURLY RATES
<S> <C>
Project Architect $100.00
Administrative Architect $ 85.00
Owner's Representative $ 95.00
Owner's Project Manager $ 75.00
Project Accountant $ 60.00
</TABLE>
REIMBURSABLE EXPENSES
In addition to the above hourly rates, normal reimbursable expenses at cost,
such as plan reproduction, xeroxing costs, postage, long distance telephone and
fax charges, transportation and other normal expenses on behalf of the project.
ATTACHMENT E-1
<PAGE>
ATTACHMENT F TO WORKLETTER
PRUDENTIAL PLAZA CONTRACTOR REGULATIONS
1. DEFINITIONS
All defined terms used in these regulations shall have the meanings
ascribed to them in the Workletter Agreement and Lease to which these
regulations are attached, unless otherwise defined herein.
2. SERVICES REQUIRED OF TENANT
Tenant shall assume full responsibility to Landlord, Building Manager,
Landlord's Architect, Landlord's Engineer and Landlord's Representative
for full conformance with these regulations by Tenant, Tenant's
Architect, Tenant's Representative, Tenant's Contractors and other
persons and entities retained by Tenant.
3. TENANT'S ARCHITECT
(a) Tenant's Architect and other professionals retained by Tenant
shall be responsible for visiting the site and familiarizing
themselves with local conditions under which the work is to be
performed, prior to commencing with their work.
(b) Tenant's Architect and other professionals retained by Tenant
shall review all Tower plans, specifications and details, which
are available to them in the office of the Building, before
commencing with their work. Tenant's Architect and other
professionals retained by Tenant shall be responsible for not
only reviewing the "as built" construction plans for the space
involved but also the base building plans for general
construction, lighting, electrical, ceiling, plumbing, heating,
ventilating and air-conditioning and structural. Tenant's
Architect and other professionals retained by Tenant shall
measure, survey and verify existing conditions at the site to
check any discrepancies between the "as built" construction plans
and the actual installation and dimensions of all equipment,
shown prior to completing their construction plans. The "as
built" construction plans may not always reflect all items such
as conduit, cables, wire troughs, ducts, etc. Tenant's Architect
and other professionals retained by Tenant shall reflect some
contingency in their plans for this possibility. With prior
approval, Landlord may grant Tenant's Architect, Tenant's
Contractors and other professionals access to such existing
conditions at such time as they may reasonably request. Landlord
will provide one (1) set of as-built drawings, if available, and
one (1) set of reproducible basesheets for each floor, at no cost
to Tenant.
(c) Tenant's Architect shall be licensed to practice architecture in
the State of Illinois. Licensed engineers for electrical,
mechanical and structural shall either be under Tenant's
Architect's employ or should be employed by Tenant to furnish a
complete job.
4. TENANT'S CONTRACTORS
(a) Tenant's Contractors shall be responsible for visiting the site
and familiarizing themselves with local conditions under which
the work is to be performed, prior to commencing with their work.
ATTACHMENT F-1
<PAGE>
(b) Tenant's Contractors shall be responsible for conformance to
proper construction means, methods, techniques, sequences or
procedures and for safety precautions and programs in connection
with their work.
(c) Tenant's Contractors shall be responsible for adequately bracing
and protecting all work during construction against damage,
breakage, collapse, distortion and misalignment according to
applicable codes, standards and good practice.
(d) Except as may be provided in the final approved Plans, under no
circumstances shall any of the Tenant's Contractors cut, drill,
burn or fasten to any structural component, including reinforced
concrete or structural steel members, without the prior written
consent of Landlord.
(e) Tenant's Contractors shall replace all fireproofing which may be
removed in making connection to structural members to meet the
required hours of fire-resistance for the location of the
supporting members, as set forth by the City of Chicago Building
Code.
5. LANDLORD RIGHTS
(a) If upon inspection of the premises by the Landlord, city building
inspector, electrical inspector, fire prevention bureau, etc.,
during construction or within one (1) year after construction is
completed, it is discovered that the work or any portion thereof
is defective or did not meet code in effect as of the respective
date of completion, the responsible Tenant's Contractor will be
notified by Landlord and shall promptly correct defective work at
its own expense or at Tenant's expense. If any such defect or
non-compliance is discovered after said one (1) year period,
Landlord may notify Tenant and Tenant shall be responsible for
correcting such defect.
(b) If a Tenant's Contractor defaults or neglects to carry out its
portion of the work in accordance with the Workletter and these
regulations and Tenant fails within seven (7) days after receipt
of written notice from Landlord to cause such Tenant's Contractor
to commence and continue correction of such default or neglect
with diligence and promptness, Landlord reserves the right, after
seven (7) days following receipt by Tenant of an additional
written notice, to make good such deficiencies and back charge
Tenant.
6. DELIVERY AND REMOVAL OF MATERIALS
(a) Tenant's Contractors shall visit the premises and familiarize
themselves with the operation of the freight elevators. No safes
or other objects heavier than the lift capacity of the freight
elevators of the Tower shall be brought into or installed in the
Demised Premises. No freight, furniture or bulky matter shall be
received into the Building or carried into the elevators except
during hours reasonably designated and in a manner approved by
Landlord or Building Manager on behalf of Landlord.
(b) All rubbish and debris shall be removed from the Building and
Demised Premises as quickly as it accumulates and all areas
occupied by Tenant's Contractors for the purpose of the work
shall be kept clean at all times. Tenant's Contractors shall
confine their operations within reasonable limits to the project
areas and shall maintain these areas in presentable condition.
(c) All demolished work to be removed from the project areas shall be
transported through and out of the Building in rubber-tired
containers at times as reasonably designated by Landlord. The
work shall be executed in an orderly and careful
ATTACHMENT F-2
<PAGE>
manner, with due consideration for neighbors and the public.
These areas shall be kept broom-swept clean at all times. Any
damage caused by Tenant's Contractors shall be repaired at
Tenant's Contractor's expense.
7. AFTER OFFICE HOURS WORK
(a) No work shall be done before 7:00 a.m. or after 3:00 p.m. or on
weekends without approval of Landlord or Building Manager on
behalf of Landlord. Tenant or Tenant's Contractors may have such
after-hours or weekend work preapproved on the basis of a written
schedule submitted to Landlord or Building Manager on behalf of
Landlord.
(b) All floor coring, pneumatic jackhammer work, ram set work or any
work where the noise level is such as to disturb any other tenant
shall not be permitted during regular office hours. This work
shall be done during hours approved by Landlord or Building
Manager on behalf of Landlord. Landlord may notify Tenant and the
respective contractor in the event of a violation of the
foregoing regulation. Landlord may, in its reasonable discretion,
fine the contractor Five Hundred Dollars ($500.00) for the first
offense and One Thousand Dollars ($1,000.00) for each subsequent
offense.
8. WORK IN OTHER TENANT SPACES
(a) Landlord must be notified during preliminary stages in the
planning of any work which may involve installation through other
tenant spaces, such as floor coring, piping, cables, etc. No work
of this nature will be permitted unless absolutely necessary and
will only be permitted with the prior written consent of
Landlord. Landlord's decision to refuse such consent shall be
conclusive. Landlord may require a security guard (whose current
cost is $20 per hour for straight time and $30 per hour for
overtime with a minimum of four (4) hours for each request) to be
with the Tenant's Contractors while in the other tenant's space
at Tenant's cost.
(b) The work when and if permitted shall be performed only after
office hours or on weekends agreeable to the other tenant and
Landlord.
(c) The work shall be done in a neat and orderly manner and each
Tenant's Contractor shall be responsible for replacing disturbed
materials back to their original form. The work shall only be
done by tradesmen experienced and skilled for the work involved.
(d) All finishes shall be protected from damage by the Tenant's
Contractors. The flooring, walls, ceiling, lighting, furnishings,
etc., shall be protected form dust and debris. If materials are
transported in and out in rubber tired containers, the flooring
shall be protected with masonite and construction paper.
9. ADVERTISEMENTS
Tenant's Architect, Tenant's Contractors and all other entities or
persons retained by Tenant shall not place or maintain any signs, bills,
posters or other advertisements in or about the Building except with
written consent of Landlord. Use of the Building name, Prudential Plaza,
shall not be permitted without the written consent of Landlord.
10. PROTECTION OF PERSONS AND PROPERTY
(a) Tenant's Contractors shall be responsible for initiating,
maintaining, and supervising all safety precautions and programs
in connection with the work. They
ATTACHMENT F-3
<PAGE>
shall take all reasonable precautions for the safety of, and
shall provide all reasonable protection to prevent damage, injury
or loss to (1) all employees on the job and other persons who may
be affected thereby, (2) all the work and all materials and
equipment to be incorporated therein, and (3) other property at
the site or adjacent thereto. They shall give all notices and
comply with all applicable laws, ordinances, rules, regulations
and orders of any public authority bearing on the safety of
persons and property and their protection from damage, injury or
loss. Tenant's Contractors shall promptly remedy all damage or
loss to any property caused by the Tenant's Contractors, or
anyone directly or indirectly employed by any of them, or by any
one for whose acts any of them are liable.
(b) Tenant's Contractors shall erect and maintain, as required by
existing conditions and progress of the work, all reasonable
safeguards for safety and protection, including posting danger
signs and other warnings against hazards and promulgating safety
regulation.
(c) Tenant's Contractors shall protect from damage, dust and debris
all surfaces in public areas, corridors, passageways, lobbies,
etc. The floor in public areas from the freight elevator to the
area of the work shall be covered with masonite panels with
construction paper over.
(d) In areas in Tenant's space which are to remain "as is" and are
adjacent to areas of alterations, these areas shall be protected
from damage by the Tenant's Contractors. The flooring, walls,
ceiling, lighting, furnishings, convectors, etc., shall be
protected from dust and debris. If materials are transported in
and out in rubber-tired containers, the flooring shall be
protected with masonite and construction paper. Plastic
barricades shall be installed to separate the remodeled areas.
11. MISCELLANEOUS BUILDING RULES AND REGULATIONS
(a) No scaffolding or any building material is to be left in the
Building public areas, freight lobbies, etc., at the end of each
working day.
(b) When using extension cords in the Building corridors, lobbies,
public areas or tenant spaces, they must be taped securely to the
floor, so as not to create a tripping hazard.
(c) When access covers to electrical and telephone floor ducts are
removed in corridors, safety cones will be positioned around each
opening to prevent accidents.
(d) During construction, all induction units and air returns shall
be protected from dust and debris.
(e) Tenant's Contractors shall provide "walk-off" mats at all
entrances and exits to remodeled spaces on multi-tenant floors.
(f) Welding shall be permitted only with the written consent of
Landlord.
(g) Each Tenant's Contractor performing work in the Building shall
adhere to the following:
(i) Any utility shutdown must be coordinated through the
Building Manager.
ATTACHMENT F-4
<PAGE>
(ii) The security and life safety regulations shall be adhered
to at all times by all Tenant's Contractors performing
work in the Building.
(iii) Cutting, welding and hot work must be coordinated with the
Building Manager and precautions must be followed by
Tenant's Contractors performing this type of work in the
Building.
(iv) No smoking, eating, drinking or bringing of food or
beverages into any work area is permitted on multi-tenant
floors.
(v) Protective head cover is required.
(vi) Warning signs are to be posted where appropriate and
personnel access restricted where appropriate.
(vii) Compliance to OSHA and other applicable regulations is
required.
(viii) Use of fire stairwells is strictly forbidden.
12. BUILDING IDENTIFICATION
(a) Tenant's Contractors and their employees will be required to
display a Building identification badge at all times while
engaged in work at Building.
(b) There will be two types of contractor identification badges:
1. Laminated badge with picture of individual - for
supervisory personnel.
2. Laminated badge with no picture - for general employees.
(c) Prior to commencing a specific job, the contractor representative
is required to fill out the "Contractor Badge Authorization
Form". Completion and execution of this form by Building Manager
authorizes the security department to issue identification badges
to the contractor. Any expansion or additions to the planned work
requires notification to Building Manager.
(d) Contractor Badge Authorization Form - will require the following
information:
1. Name of contracting company.
2. The name of the office based principal, the job site
foreman, plus all employee names then available.
3. Contractor's 24 hour emergency number.
4. Proposed start up date and completion date.
5. Specific location of work.
6. Areas of Building requiring contractor access.
7. Indicate hours of work and if overtime is apparent.
(e) To issue the required badges, supervisory personnel will be
required to report to the security control room where photographs
will be taken. The contractor's representative will otherwise be
issued a specific number of numbered badges for its general
employees.
13. USE OF IDENTIFICATION BADGES
(a) Tenant's Contractor employees are required to visibly display
badges at all times.
(b) No access will be allowed to the dock, freight elevators, roofs,
basements or restricted areas without a badge visibly displayed.
ATTACHMENT F-5
<PAGE>
(c) Tenant's Contractor personnel without badges will be escorted out
of the Building, as would be any unauthorized person on the
property.
(d) Tenant's Contractor supervisory personnel with picture badges
will be authorized to check out keys to Building common areas on
a daily basis. Keys to Tenant areas will be issued to Tenant's
Contractor's supervisory personnel upon written authorization of
Tenant Representative or Building Manager only. Keys lost by
Tenant's Contractors will result in charges to the contractor as
are reasonably required.
(e) Identification badges must be returned to the security department
when employment or project is terminated. A charge of $50.00 will
be assessed for badges lost, not returned or stolen.
14. ELEVATOR USAGE
(a) Notify security office staff in advance of all materials arriving
that require special elevator usage such as dry wall, lumber,
materials, etc. Deliveries of oversize materials may require
after 6:00 p.m., or Saturday freight elevator usage.
(b) All Tenant's Contractors shall refrain from holding elevators for
extended periods of time without having first notified the
security department.
(c) Under no circumstances are the passenger elevators to be used for
transporting workers, material or any other items directly or
indirectly connected with the work. Personnel will use freight
elevators only for access to job location. This includes leaving
the Building for lunch or the day.
(d) Normal freight elevator usage is available from 6:30 a.m. to 3:30
p.m. ("Construction Hours") Monday through Friday and Tenant
intends to hoist all construction materials and furniture,
fixtures and equipment, except for oversized deliveries, during
Construction Hours.
(e) All after hours elevator operator expenses shall be Tenant's or
Tenant's Contractor's responsibility.
(f) Large material deliveries must be scheduled through the Building
Security department. Tenant's Contractor will be strictly
responsible for any damage to the elevator which may occur.
(g) For after Construction Hours work, elevator operator charges will
be at actual union scale wages at Tenant's expense.
15. LIFE SAFETY
(a) All personnel working within the Building shall observe safe
working habits and conditions.
(b) Storage or accumulation of materials will be inspected frequently
by safety and security personnel and Tenant's Contractors will be
notified as to unsafe conditions.
(c) All materials used and/or stored such as paint or other
flammables must comply with all existing fire and safety codes.
ATTACHMENT F-6
<PAGE>
16. ADDITIONAL REGULATIONS
(a) Security office staff must be notified prior to 3:00 p.m. of all
off hour work such as late evening, nights or weekends.
(b) Tenant's Contractors are not allowed to park vehicles in, at or
near the dock except during loading or unloading, with a one-half
hour limit except by special permission by security office staff.
(c) The freight lobby areas shall be kept clear of all materials
belonging to Tenant's Contractors, in that this area is
considered to be a fire lane.
(d) Tenant's Contractor's personnel will enter and exit the Building
through the construction door (1B) located on Lower Beaubien
Court. Personnel will sign in and be issued a daily badge, which
must be returned when exiting for the day.
(e) Use of restrooms on full floors of the Demised Premises will be
permitted by the Landlord provided Tenant accepts in writing the
bathrooms completed as part of Landlord's Base Building Work and
that Landlord has NO FURTHER OBLIGATIONS related to finishes, or
further maintenance, of said bathroom fixtures which may be
broken, or caused to be unusable or inoperable due to Tenant or
Tenant's Contractor. Landlord, at Tenant's request and expense,
will repair said fixtures, and Tenant accepts liability for all
damages suffered by Landlord and other tenants due to Tenant's
Contractor's use of such restrooms. EXCEPT AS MAY BE DESIGNATED
BY LANDLORD, TENANT'S CONTRACTOR PERSONNEL ARE FORBIDDEN TO USE
BUILDING RESTROOMS, OTHER THAN RESTROOMS ON FULL FLOORS OF THE
DEMISED PREMISES AS PERMITTED ABOVE.
(f) Tenant's Contractors are not to use any tenant facilities,
including vending rooms, copiers, telephones, etc.
ATTACHMENT F-7
<PAGE>
ATTACHMENT G TO WORKLETTER
FORM OF LETTER OF CREDIT
ATTACHMENT G-1
<PAGE>
PLACE AND DATE OF ISSUE: NEWARK, NJ, OCTOBER 19, 1993
LETTER OF CREDIT NO.: N-303189
APPLICANT
************* DIRECT ************* PRUDENTIAL INSURANCE CO.
OF AMERICA
751 BROAD STREET
NEWARK, NEW JERSEY 07102
BENEFICIARY:
PEOPLES GAS LIGHT & COKE CO. AMOUNT: USD 7,659,690.00
122 SO. MICHIGAN AVE. (SEVEN MILLION SIX HUNDRED
CHICAGO, IL 60603 FIFTY NINE THOUSAND SIX
HUNDRED NINETY AND 00/100
UNITED STATES DOLLARS)
GENTLEMEN:
WE HEREBY ISSUE IN YOUR FAVOR THIS IRREVOCABLE LETTER OF CREDIT (THE "CREDIT")
IN FAVOR OF PEOPLES GAS LIGHT AND COKE COMPANY, AN ILLINOIS CORPORATION (THE
"BENEFICIARY") IN THE AGGREGATE AMOUNT OF $7,659,690 U.S. CURRENCY (SEVEN
MILLION, SIX HUNDRED FIFTY NINE THOUSAND, SIX HUNDRED NINETY DOLLARS).
ALL OR ANY PART OF THE CREDIT IS AVAILABLE BY SIGHT DRAFT OR DRAFTS DRAWN ON US
BY YOU. SUCH DRAFT OR DRAFTS MUST BE ACCOMPANIED BY A STATEMENT, PUPORTEDLY
SIGNED BY AN OFFICER OR AGENT OF THE "BENEFICIARY" SUBSTANTIALLY IN THE FORM OF
THE FOLLOWING FORM I OR FORM II, AS APPROPRIATE:
FORM I
"FIRST FIDELITY BANK, N.A., NEW JERSEY
570 BROAD STREET
TRADE SERVICES DEPT, 11TH FLOOR
NEWARK, NEW JERSEY 07102
ATTN: STANDBY L/C UNIT
RE: IRREVOCABLE LETTER OF CREDIT NO. N-303189
DEAR SIR OR MADAM:
THE UNDERSIGNED, A DULY AUTHORIZED OFFICER OF THE PEOPLES GAS LIGHT AND COKE
COMPANY (THE "BENEFICIARY"), HEREBY CERTIFIES TO YOU WITH REFERENCE TO YOUR
IRREVOCABLE LETTER OF CREDIT NO. N-303189 (THE "LETTER OF CREDIT") THAT:
1. THE BENEFICIARY IS MAKING A DRAWING UNDER THE LETTER OF CREDIT IN THE
AMOUNT OF $ ( ) AS A RESULT OF THE FAILURE OF THE LANDLORD (AS
DEFINED IN THE LEASE HEREINAFTER REFERRED TO) TO COMPLY WITH THE PROVISIONS
-CONTINUED-
-1-
<PAGE>
PLACE AND DATE OF ISSUE: NEWARK, NJ, OCTOBER 19, 1993
LETTER OF CREDIT NO.: N-303189
OF SECTION 9 OF THE WORKLETTER AGREEMENT SET FORTH IN EXHIBIT C OF THAT CERTAIN
LEASE BETWEEN PRUDENTIAL PLAZA ASSOCIATES AND THE BENEFICIARY, DATED AS OF
OCTOBER 20, 1993 (THE "LEASE").
2. THE AMOUNT OF THE SIGHT DRAFT(S) ACCOMPANYING THIS CERTIFICATE DOES NOT
EXCEED THE AMOUNT AVAILABLE ON THE DATE HEREOF TO BE DRAWN UNDER THE LETTER OF
CREDIT.
IN WITNESS WHEREOF, THE BENEFICIARY HAS EXECUTED AND DELIVERED THIS CERTIFICATE
AS OF THE ( ) DAY OF ( , 19 ( ).
THE PEOPLES GAS LIGHT AND COKE COMPANY
BY: --------------------------------.
TITLE:
FORM II
"FIRST FIDELITY BANK, N.A., NEW JERSEY
570 BROAD STREET
TRADE SERVICES DEPT., 11TH FLOOR
NEWARK, NEW JERSEY 07102
ATTN: STANDBY L/C UNIT
RE: IRREVOCABLE LETTER OF CREDIT NO. N-303189
DEAR SIR OR MADAM:
THE UNDERSIGNED, A DULY AUTHORIZED OFFICER OF THE PEOPLES GAS LIGHT AND COKE
COMPANY (THE "BENEFICIARY"), HEREBY CERTIFIES TO YOU WITH REFERENCE TO YOUR
IRREVOCABLE LETTER OF CREDIT NO. N-303189 (THE "LETTER OF CREDIT") THAT:
1. THE BENEFICIARY IS MAKING A DRAWING UNDER THE LETTER OF CREDIT IN THE
AMOUNT OF $ ( ), THE REMAINING AMOUNT AVAILABLE UNDER THE LETTER
OF CREDIT, BECAUSE THE LETTER OF CREDIT EXPIRES WITHIN THIRTY (30) DAYS FROM THE
DATE OF THE DRAWING AND THE LANDLORD (AS DEFINED IN THAT CERTAIN LEASE BETWEEN
PRUDENTIAL PLAZA ASSOCIATES AND THE PEOPLES GAS LIGHT AND COKE COMPANY, DATED AS
OF OCTOBER 20, 1993, HEREINAFTER THE "LEASE")
(I) HAS NOT FULLY PERFORMED AS OF THE DATE OF THE DRAWING THE OBLIGATIONS OF THE
WORKLETTER AGREEMENT SET FORTH IN EXHIBIT C OF THE LEASE AND
(II) HAS NOT CAUSED THE BANK OR A BANK REASONABLY ACCEPTABLE TO THE BENEFICIARY
TO ISSUE A REPLACEMENT LETTER OF CREDIT IN AN AMOUNT EQUAL TO THE UNDRAWN AMOUNT
OF THE LETTER OF CREDIT IMMEDIATELY PRIOR TO THIS DRAWING FOR A TWELVE-MONTH
PERIOD.
2. THE AMOUNT OF SIGHT DRAFT(S) ACCOMPANYING THIS CERTIFICATE DOES NOT EXCEED
THE AMOUNT AVAILABLE ON THE DATE HEREOF TO BE DRAWN UNDER THE LETTER OF CREDIT.
IN WITNESS WHEREOF, THE BENEFICIARY HAS EXECUTED AND DELIVERED THIS
-CONTINUED-
-2-
<PAGE>
PLACE AND DATE OF ISSUE: NEWARK, NJ, OCTOBER 19, 1993
LETTER OF CREDIT NO.: N-303189
CERTIFICATE AS OF THE ( ) DAY OF ( , 19 ( ).
THE PEOPLES GAS LIGHT AND COKE COMPANY
BY: --------------------------------.
TITLE:
THE AMOUNT OF THIS LETTER OF CREDIT MAY BE REDUCED UPON RECEIPT OF YOUR
STATEMENT PURPORTEDLY SIGNED BY AN OFFICER OR AGENT OF THE BENEFICIARY IN THE
FOLLOWING FORM AND PURPORTEDLY COUNTERSIGNED BY THE APPLICANT AS FOLLOWS:
*TO: FIRST FIDELITY BANK, N.A., NEW JERSEY
570 BROAD STREET
TRADE SERVICES DEPT., 11TH FLOOR
NEWARK, NEW JERSEY 07102
ATTN: STANDBY L/C UNIT
RE: IRREVOCABLE LETTER OF CREDIT NO. N-303189
DEAR SIR OR MADAM:
THE UNDERSIGNED AGREE THAT THE AMOUNT OF THE IRREVOCABLE LETTER OF CREDIT NO.
N-303189 MAY BE REDUCED BY $( ) TO AM AMOUNT OF $( ) AS OF THE
( )DAY OF ( ), 19( ).
THE PEOPLES GAS LIGHT AND COKE COMPANY
BY: --------------------------------
TITLE:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
BY: --------------------------------
TITLE:
ALL DOCUMENTS PRESENTED TO US IN CONNECTION WITH ANY DEMAND FOR PAYMENT OR
REDUCTION HEREUNDER, AS WELL AS ALL NOTICES AND OTHER COMMUNICATIONS TO US IN
RESPECT OF THIS CREDIT, SHALL BE IN WRITING AND SHALL MAKE SPECIFIC REFERENCE TO
THIS CREDIT BY NUMBER. ALL DRAFTS MUST BE MARKED "DRAWN UNDER FIRST FIDELITY
BANK, N.A., NEW JERSEY CREDIT NO. N-303189".
WE HEREBY AGREE THAT DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF
-CONTINUED-
-3-
<PAGE>
PLACE AND DATE OF ISSUE: NEWARK, NJ, OCTOBER 19, 1993
LETTER OF CREDIT NO.: N-303189
THIS CREDIT WILL BE HONORED UPON PRESENTATION AND DELIVERY OF DRAFTS AS
SPECIFIED, WITHOUT INQUIRY BY US INTO THE ACCURACY OF ANY OF THE STATEMENTS
CONTAINED IN ANY OF SUCH DRAFTS, IF PRESENTED AT OUR OFFICE LOCATED AT 570 BROAD
STREET, TRADE SERVICES DEPT., 11TH FLOOR, NEWARK, NEW JERSEY 07102 ATTN:
STANDBY L/C UNIT ON OR PRIOR TO APRIL 30, 1995, THE EXPIRATION DATE, NO LATER
THAN 5:00 P.M.
THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1983 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 400
(THE "UNIFORM CUSTOMS"). THIS CREDIT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF NEW JERSEY AND SHALL, AS TO MATTERS NOT GOVERNED BY THE UNIFORM
CUSTOMS, BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE.
FIRST FIDELITY BANK, N.A., NEW JERSEY
---------------------------------------
AUTHORIZED SIGNATURE
-4-
<PAGE>
ATTACHMENT H TO WORKLETTER
FORM OF CONSTRUCTION ESCROW
OWNERS CONSTRUCTION ESCROW
WITH TITLE INSURANCE
ESCROW NUMBER 93067969-001 DATE October _____, 1993
------------ -------------------
Agreement
CHICAGO TITLE AND TRUST COMPANY, ESCROW TRUSTEE: Pursuant to that certain
workletter/dated ___________, 1993 (the "Workletter") by and between Prudential
Plaza Associates ("Landlord") and The Peoples Gas Light and Coke Company
("Tenant"), Landlord and/or Tenant will deposit from time to time certain sums
of money in connection with construction in progress on certain Demised
Premises (as defined in the Workletter) in the building commonly known as One
Prudential Plaza, Chicago, Illinois ("Building").
You are authorized and directed to disburse the funds deposited hereunder to:
1. Pay costs of constructions of an improvement to be erected on the
above described premises.
2. Obtain release and satisfaction of liens and other encumbrances, if
any, pursuant to statements of amounts due which must be approved by
Landlord and Tenant.
The Inspector/Architect is to be SH/Hague Richards and Techno Ltd. and the
General Contractor is to be __________________________________________________.
There will be monthly disbursements, which are to be made in accordance with
terms and conditions of this escrow as hereinafter set forth.
1. Prior to the first disbursement of funds hereunder it is a requirement
of this escrow that the Escrow Trustee be furnished:
A. Approval by the Tenant of the condition of the premises described
above:
B. A Sworn Owner's Statement disclosing the various contracts
entered into by the Tenant and setting forth the names of the
contractors, their addresses, work or materials to be furnished,
amounts of the contracts, amounts paid to date and balances due,
if any:
C. A Sworn General Contractor's Statement setting forth in detail
all contractors and material suppliers with whom he has
contracted, their addresses, work or material to be furnished,
amounts of the contracts, amounts paid to date and balances due,
if any.
2. Prior to each disbursement of funds hereunder it is a requirement of
this escrow that the Escrow Trustee be furnished:
A. A Sworn Owner's Statement disclosing the various contracts
entered into by the Tenant and setting forth the names of the
contractors, their addresses, work or materials to be furnished,
amounts of the contracts, amounts paid to date and balances due,
if any:
B. A Sworn General Contractor's Statement setting forth all
contractors and materialmen with whom they have contracted,
amounts of contracts, amounts paid to date, amounts being
requested and balances due:
C. A written approval by Landlord and Tenant # of the requested
disbursement:
D. A report of the inspector or a certification by the Architect
certifying that the work has been completed and materials are in
place as indicated by the request for payment of the General
Contractor. Said inspection is to be made and submitted by
LSH/Hague Richards and Techno Ltd.
E. Sufficient funds to cover the requested disbursement.
F. Statements, waivers, affidavits, supporting waivers and releases
of lien, if necessary, satisfactory to Chicago Title Insurance
Company covering the requested payment (provided that
disbursements may be made on a contractor by contractor basis as
described in Paragraph 3 below.
3. All disbursements for construction purposes will be made directly to
the (unless the Escrow Trustee is otherwise directed jointly by
Landlord and Tenant.) (strike one)
In the event that the General Contractor and any Subcontractor jointly
authorize the Escrow Trustee to pay any funds due one to the other,
the Escrow Trustee may comply with such authorization. The failure
of any given Subcontractor to deliver adequate lien waivers and
releases covering its requested payment will not delay disbursements
to other Subcontractors or the General Contractor made in accordance
with these instructions.
(i) each Subcontractor, upon Escrow. Trustee's receipt of adequate
lien waivers and releases from such Subcontractor and the General
Contractor covering the requested payment and (ii) the General
Contractor, for payments owed directly to the General Contractor, upon
Escrow Trustee's receipt of adequate lien waivers and releases from
the General Contractor covering the requested payment.
<PAGE>
4A. As the Escrow Trustee makes a partial disbursement of funds
hereunder it will furnish the Tenant with the following:
Chicago Title Insurance Company Date Down Endorsement #5 covering the
date of the deposit of funds by Owner together with the following
Interim Mechanic Lien Endorsement for Owner.
Chicago Title Insurance Company insures ___________________________ to
the extent of $__________________________ against all loss or damage
which may be suffered by ________________________________ by reason of
the entry of a final judgment or decree of a court of competent
jurisdiction enforcing any mechanics' lien claim on the premises
described in its commitment number __________________________ for that
part of the work or material performed and furnished as set forth and
itemized on the contractor's statements of __________________________
dated ____________________________ and prior dates which have been
certified as in place by ________________________________ and in
support of which subcontractor's statements and waivers have been
deposited with Chicago Title Insurance Company.
4B. [DELETED]
4C. Where after the first disbursement, a further title search reveals a
mechanics' lien claim(s) subsequently placed of record, over which
Chicago Title Insurance Company is unwilling to insure, the Escrow
Trustee will notify the Landlord and Tenant and will not disburse
the current deposit unless specifically directed in writing by the
Landlord to do so.
5. In conjunction with the final disbursement of funds hereunder it is a
requirement of this escrow that the Escrow Trustee be furnished with a
Sworn Owner's Statement disclosing the various contracts entered into
by the Tenant and setting forth the names of the contractors,
their addresses, work or material to be furnished, amounts of
contracts, amounts paid to date and balances due, together with
evidence of payment.
6. With respect to the conditions of title, the liability of the
Escrow Trustee in making any disbursement in reliance upon the title
commitment is limited to insuring that the condition of the title is
correctly set forth in said title commitment and shall not extend to
the determination of whether it is acceptable to the Tenant.
7. If the Escrow Trustee discovers a mis-statement in an affidavit
furnished by the General Contractor or Tenant, it shall stop
disbursements until the mis-statement has been corrected.
8. The functions and duties assumed by Chicago Title and Trust Company
includes only those described in this agreement, and the Escrow
Trustee is not obligated to act except in accordance with the terms
and conditions of this Escrow. Chicago Title and Trust Company does
not insure that the improvements will be completed, nor does it
insure that the improvements when completed will be in accordance
with the plans and specifications, nor that sufficient funds will be
available for completion, nor does it make the certification of the
Inspector/Architect its' own, nor does it assume any liability for
same other than procurement as one of the conditions precedent to each
disbursement.
9. Bill all title and escrow charges to Landlord (except, however,
that any title charges for title insurance requested by Tenant,
including title endorsements issued pursuant to section 4A above,
shall be billed to Tenant). Escrow fees are payable when billed. If
escrow fees are not paid within 10 days of billing, escrow trustee may
cease making any further disbursements until escrow fees have been
paid.
An annual maintenance fee, as determined by the then current rate
schedule, will commence [NOT APPLICABLE] and may be deducted from
the funds on deposit.
<PAGE>
10. General Conditions:
A. At any time prior to its' commencement of disbursement of funds
hereunder the Escrow Trustee reserves the right to decline any
risk offered for insurance hereunder, whereupon it shall return
to the Landlord all documents and funds received by it.
Commencement of disbursement makes this agreement effective as to
all funds received and disbursed on the construction in question.
B. Escrow Trustee has no liability for loss caused by any error in
the certification furnished it hereunder as to work in place.
C. Escrow Trustee shall not be responsible for any loss of documents
or funds while such documents or funds are not in its' custody.
Documents or funds deposited in the United States Mail shall not
be construed as being in the custody of the Escrow Trustee.
D. This agreement shall not inure to the benefit of any parties
other than the parties hereto, under a third party beneficiary
theory or otherwise; and any liability to such other parties is
expressly disclaimed.
E. Deposit made pursuant to these instructions may be invested on
behalf of any party or parties hereto: PROVIDED, that any
direction to Escrow Trustee for such investment shall be
expressed in writing and contain the consent of all other parties
to this escrow, and also provided that you are in receipt of the
taxpayer's identification number and investment forms as
required. Escrow Trustee will, upon request, furnish information
concerning its procedures and fee schedules for investment.
Except as to deposits of funds for which Escrow Trustee has
received express written direction concerning investment or other
handling, the parties hereto agree that the Escrow Trustee shall
be under no duty to invest or reinvest any deposits at any time
held by it hereunder: and, further, that Escrow Trustee may
commingle such deposits with other deposits or with its own funds
in the manner provided for the administration of funds under
Section 3 of the Illinois Banking Finance Act (c. 17 par 1555
Ill. Rev. Stat.) and may use any part or all such funds for its
own benefit without obligation to any party for interest or
earnings derived thereby, if any. Provided, however, nothing
herein shall diminish Escrow Trustee's obligation to apply the
full amount of the deposits in accordance with the terms of this
Agreement.
In the event the Escrow Trustee is requested to invest deposits hereunder,
Chicago Title and Trust Company is not to be held responsible for any loss of
principal or interest which may be incurred as a result of making the
investments or redeeming said investment for the purposes of this escrow trust.
TENANT: GENERAL CONTRACTOR:
THE PEOPLES GAS LIGHT AND COKE COMPANY
By:
- -------------------------------------- -----------------------------------
Its:__________________________________
LANDLORD:
PRUDENTIAL PLAZA ASSOCIATES
By: The Prudential Insurance Company of
America
Accepted by___________________________ By:_____________________________________
Chicago Title and Trust
Company, Escrow Trustee Its:____________________________________
<PAGE>
ATTACHMENT I TO WORKLETTER
FORM OF BUILD-OUT COMMITMENT ESCROW
ATTACHMENT I-1
<PAGE>
BUILD-OUT COMMITMENT ESCROW ACCOUNT AGREEMENT
Dated as of October ___, 1993
Boston Safe Deposit and
Trust Company
1 Cabot Road - 028-004G
Medford, Massachusetts 02155
Attention: Mr. Greg B. Lindsey
Re: One Prudential Plaza
Chicago, Illinois
--------------------
Ladies and Gentlemen:
Reference is made to Deposit Account Number NPIF 0206002 (the
"Account") maintained with you ("Bank") by NLI PROPERTIES, INC. ("NLI").
Pursuant to a Workletter Agreement, dated as of October ___, 1993, (the
"Workletter Agreement"), Prudential Plaza Associates ("Landlord") has agreed to
deposit cash in the amount of $7,659,690.00 in the Account with the Bank as
security in favor of The Peoples Gas Light and Coke Company ("Tenant") for
Landlord's obligations under Paragraph 9 of the Workletter Agreement.
Capitalized terms used but not otherwise defined herein shall have the
respective meaning as given thereto in the Workletter Agreement. It is a
condition of the continued maintenance of the Account with Bank that Bank agrees
to this letter agreement ("Letter Agreement").
By signing this Letter Agreement, the parties agree with each other as
follows:
1. Subject to the following terms of this Paragraph 1 and of
Paragraph 2 below, NLI shall be authorized to deposit funds into, and to
withdraw funds from, the Account; provided, however, that unless Tenant
otherwise consents in writing, and except for withdrawals of
<PAGE>
interest and dividends as provided in Paragraph 3 below, no transfer shall be
made from the Account except to:
Chicago Title and Trust Company
171 North Clark Street
Chicago, Illinois 60601
For credit to Owners Construction
Escrow No. 93067969-001
Attention:______________________________
ABA No. 171000039
Bank shall invest the Account as directed from time to time by NLI in
accordance with the Investment Guidelines attached hereto as Exhibit A.
2. Upon written certification by NLI and the Tenant to the Bank that
Landlord has fulfilled its obligations under the Workletter Agreement with
respect to Landlord's Build-Out Commitment (herein, the "Final Notice"), NLI
shall be entitled to exercise any and all rights in respect of the Account (and
Tenant shall not have any further rights with respect to the Account after
delivery of the Final Notice to Bank); and Tenant irrevocably authorizes and
directs Bank to permit NLI to exercise any and all rights in respect of the
Account (including the right to appropriate all funds contained in the Account
and the right to make withdrawals from the Account without restriction), as NLI
shall deem desirable.
The Bank shall be governed solely by the terms of this Letter
Agreement and shall only be responsible for the performance of the duties,
obligations and responsibilities set forth herein. The Bank shall be fully
protected in relying on the Final Notice or any other written instructions
furnished in accordance with this Letter Agreement in disbursing funds in the
Account and shall not be liable for any action taken or omitted to be taken by
it or any of its directors, officers or employees hereunder except in the case
of gross negligence, willful misconduct or lack of good faith. NLI and Tenant
jointly and severally hereby agree to indemnify the Bank against any liability,
including reasonable attorney's fees, loss or expense of any nature incurred by
the Bank arising out of or in connection with the administration of its duties
hereunder; PROVIDED, HOWEVER, that the Bank shall not be indemnified for gross
negligence, willful misconduct or lack of good faith.
2
<PAGE>
3. NLI shall pay to Bank the fees agreed upon by Bank and NLI with
respect to the Account and this Letter Agreement, as set forth in statements
delivered from time to time to NLI. NLI shall be entitled to all interest and
dividends earned on the Account, which interest and dividends may be withdrawn
from the Account by NLI at any time and from time to time without requiring
Tenant's consent thereto. NLI may pay the fees to the Bank from the interest and
dividends earned on the Account, but not from the principal of the Account.
4. This Letter Agreement shall be effective as of the date first
above written. To the extent that other agreements between NLI and the Bank are
inconsistent with this Letter Agreement, this Letter Agreement shall supersede
any other agreement relating to the matters referred to herein, including any
procedures agreement and any other agreement between NLI and Bank. Neither this
Letter Agreement nor any provisions hereof may be changed, amended, modified or
waived orally, but only by an instrument in writing signed by the parties
hereto. Any provisions of this Letter Agreement that may prove unenforceable
under any law or regulation shall not effect the validity of any other provision
thereof.
5. Except as otherwise provided in applicable rules and regulations
imposed by an agency with supervisory authority over the Bank, this Letter
Agreement shall not be assignable by Bank unless Bank first receives the prior
written consent of NLI and Tenant.
6. This Letter Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
conflicts of law principles of the Commonwealth.
7. This Letter Agreement may be executed in counterparts, all of
which shall together constitute one and the same Letter Agreement.
Very truly yours,
NLI PROPERTIES, INC.
By: _________________________________
Its: ___________________________
3
<PAGE>
Acknowledged and Agreed to
as of the date first above written.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: _________________________________
Its: ___________________________
THE PEOPLES GAS LIGHT AND COKE COMPANY
By: _________________________________
Its: ___________________________
4
<PAGE>
Schedule A
Investment Guidelines
---------------------
The Account shall be invested with the objective of current income
consistent with safety of principal. Investments shall be limited to deposits
(including time deposits and certificates of deposit) having a remaining
maturity not exceeding one month with commercial banks and trust companies
having short-term debt rated A-1 or better by Standard & Poor's Corporation or
P-1 or better by Moody's Investors Service, Inc., provided that investments may
be made in such deposits with the Bank without regard to such rating
requirement.
<PAGE>
EXHIBIT D
HVAC SPECIFICATIONS
1. VARIABLE AIR VOLUME SYSTEM. For each floor of the Demised Premises,
other than the Non-Office Storage Space, the Building fan system will
deliver air quantities not less than those shown in Attachment 1 and
Attachment 2 to this Exhibit D at a temperature not in excess of
fifty-five (55) degrees Fahrenheit (F) at the discharge of the fan in
the fan room serving such floor. If the air distribution system within
the Demised Premises is properly designed, constructed, installed and
maintained by Tenant, then the forgoing quantities will be sufficient to
satisfy the following criteria:
(a) Maintain an indoor space temperature of 72 degrees F +/- 2
degrees during the heating season based on an outside air
temperature not less than -10 degrees F.
(b) Maintain an indoor space temperature of 76 degrees F +/- 2
degrees and an indoor relative humidity level of 50% +/- 5% based
on a maximum outdoor air temperature of 95 degrees F dry bulb and
75 degrees wet bulb.
Tenant acknowledges that such design, construction, installation and
maintenance of the distribution system within the Demised Premises in
accordance with this Lease is Tenant's responsibility.
2. PERIMETER INDUCTION UNITS SYSTEM. For each floor of the Demised
Premises, other than the Non-Office Storage Space and the Early
Increase Space located on the plaza level (i.e., spaces CL-1 and
CL-16), the Building perimeter induction units shall provide the inside
temperature conditions for 112 square feet per induction unit in a
temperature range between 72 degrees F +/- 2 degrees F (when heating and
outside temperature is not less than -10 degrees F) and 75 degrees +/- 2
degrees F (when cooling and outside temperature is not more than 92
degrees F) at 50% relative humidity +/- 5%. Each induction unit shall
provide primary air of not less than 90 cfm per unit. Landlord shall
clean the perimeter induction units at least two (2) times each year,
cleaning or replacing the lint screens as needed, at the beginning, more
or less, of each heating and each cooling season.
3. VENTILATION. Outside air shall be provided to each floor of the Demised
Premises, other than the Non-Office Storage Space, when occupied at a
rate not less than 0.2 cfm per square foot. Exhaust air from bathrooms
and janitor closets shall be at a rate not less than 2.0 cfm per square
foot.
4. ASSUMPTIONS APPLICABLE TO HVAC SPECIFICATIONS. The foregoing
specifications shall be modified if necessary to account for the adverse
effect caused to the Building HVAC systems if the Tenant constructed
improvements or the use thereof do not conform to the following
assumptions made by Landlord in agreeing to such specifications:
(a) the depth of any perimeter office shall not exceed fifteen feet
(15') as measured from the glass line;
(b) blinds or light colored shades shall be on the windows and
closed to the direct sun;
(c) the average per floor density shall be no more than one person
per 100 square feet of net useable office area, on a space or
room basis;
(d) the average per floor electrical usage shall be no more than two
watts per square foot of net useable office area for lighting and
two watts per square foot of net useable office area for
equipment, both on a space or room basis;
D-1
<PAGE>
(e) ceiling heights shall not exceed nine feet (9');
(f) all office furniture and other objects shall be clear of the
perimeter induction units to allow for free air flow, if
applicable;
(g) Tenant required local or conference room exhaust fans shall be
installed in the ceiling plenum; and
(h) in perimeter spaces where improvements include partitions
extending from floor slab to the underside of the floor above,
transfer openings (which need not be ducts) shall be provided by
Tenant.
D-2
<PAGE>
ATTACHMENT 1 TO EXHIBIT D TO LEASE
SCHEDULE OF SUPPLY AIR QUANTITY FOR THE
OR ZONE AREA OF EACH FLOOR
<TABLE>
<S> <C>
3rd Floor - 28,100cfm
14th Floor - 4,223cfm
16th Floor - 10,200cfm
17th Floor - 10,200cfm
18th Floor - 10,200cfm
19th Floor - 10,200cfm
20th Floor - 10,200cfm
21st Floor - 10,200cfm
22nd Floor - 10,200cfm
23rd Floor - 10,200cfm
24th Floor - 10,200cfm
</TABLE>
D-1
<PAGE>
ATTACHMENT 2 TO EXHIBIT D TO LEASE
SCHEDULE OF SUPPLY AIR QUANTITIES FOR THE
FOLLOWING LOBBY LEVEL DEMISED SPACES
<TABLE>
<S> <C>
CL-1 - 4,873cfm
CL-3 - 8,000cfm
CL-16 - 5,055cfm
</TABLE>
D-1
<PAGE>
EXHIBIT E
CLEANING AND JANITORIAL SERVICE
I. OFFICE AREA
A. DAILY:
(During normal business hours Monday through Friday, inclusive,
Holidays excepted).
1. As requested and on as needed basis only, spot mopping (to pick
up spills) empty filled ash trays and waste receptacles in public
areas, cafeteria and other areas that require service.
B. NIGHTLY:
(Landlord will work with Tenant to accommodate Tenant's needs
when cleaning commences.
1. Empty, clean and wipe as needed all wastepaper baskets, ash trays
and receptacles. Wash as necessary. Line receptacles with plastic
trash bags.
2. Clean all cigarette urns and ash trays as necessary.
3. Collect and remove wastepaper and normal office waste materials.
Collect and remove flattened cardboard boxes from an area as
designated by Tenant.
4. Dust desk equipment and sanitize telephones or other similar
equipment using a disinfectant solution as necessary.
5. Dust and wipe clean all horizontal surfaces of office furniture,
book cases, fixtures, desk equipment, telephones, cabinets and
window sills, floor casings, baseboards and clean all glass table
and desk tops with impregnated cloths, and remove fingerprints as
needed.
6. Dust all baseboards and woodwork, as necessary.
7. All cleaning operations shall be scheduled so that a minimum of
lights are to be left on at all times. Upon completion of
cleaning, all lights are to be turned off except emergency
lights. All entrance doors are to be kept locked during the
cleaning operation.
8. Clean and sanitize all water fountains, sinks and coolers.
9. Dust and wipe clean all unpainted metal work, etc. within reach.
<PAGE>
10. Upon completion of the nightly cleaning, all lights shall be
turned off, doors and offices left as they were found. Slop
sinks, etc., shall be cleaned thoroughly and cleaning equipment
stored in a central location.
11. In the pantry, sanitize all sinks, counter tops and flooring if
other than carpeting, which will be vacuumed.
C. MONTHLY
1. Scrub ceramic tile, terrazzo, asphalt tile, linoleum, rubber,
vinyl and other similar type floors.
2. Vacuum upholstered furniture.
D. QUARTERLY
1. Dust all closet and coat room shelving, coat racks and flooring.
2. Vacuum upholstered furniture.
3. Wash both sides of all glass partitions entries and doors as
necessary to remove fingerprints, smudges and dust.
4. Do all high dusting unless otherwise specified, which includes
the following:
a. Dust all pictures, frames, charts, graphs and other
similar wall hangings not reached in nightly cleaning.
b. Dust all vertical surfaces, such as wall, partitions,
doors and ventilating louvers, HVAC supply and return
grills and other surfaces not reached in nightly cleaning.
C. Dust all overhead pipes, blinds, window frames and
exterior of lighting fixtures.
II. PUBLIC LAVATORIES
A. NIGHTLY SCHEDULE
1. Clean, sanitize using disinfectant solution and non-abrasive
disinfectant all vitreous fixtures including toilet bowls,
urinals and wash basins.
2. Empty all containers and disposal and insert new liners where
required.
3. Sweep, mop and sanitize all flooring.
<PAGE>
4. Wash and polish all mirrors, powder shelves, bright work, etc.,
including flushometers, piping and toilet seat hinges.
5. Wash both sides of all toilet seats. Wash all basins and bowls.
6. Damp wipe all partitions, tile walls, dispensers and receptacles.
7. Fill toilet tissue holders, soap, towel dispensers, and toilet
seat covers, etc.
B. MONTHLY
1. Scrub, wax and buff floors.
C. QUARTERLY
1. Wash all partitions, tile walls and enamel surfaces using proper
disinfectant when necessary.
2. Do all high dusting.
3. Dust all lighting fixtures (exterior surfaces only).
III. SPECIAL AREAS
A. COMPUTER ROOM - NIGHTLY
1. Empty, clean and wipe if necessary all wastepaper baskets, wash
as necessary and line receptacles with plastic trash bags;
cleaning to be done when tenant employee is present.
B. GAS CONTROL ROOM - NIGHTLY
1. Custodians are to stay out of the computer room unless requested
to clean when one of the Tenant's employees are present. The
office, control and kitchen areas are to be cleaned in accordance
with the office area specification. Dishes and utensils are an
additional charge. The shower room is only cleaned when requested
by Tenant and is an additional charge.
C. TELEPHONE EQUIPMENT ROOM - NIGHTLY
Cleaning service provided on a will call basis when a Tenant
Supervisor is present and charged to Tenant on a time and material
basis.
<PAGE>
D. LEGAL OFFICES - NIGHTLY
1. Landlord will reasonably delay the start of cleaning this space
to as late as possible each day because of long work days in this
department. However, any additional expense incurred due to
delay will be paid by Tenant.
E. CARPET CLEANING - QUARTERLY
1. Shampoo elevator corridors.
<PAGE>
EXHIBIT F
CURRENT AFTER-HOURS HVAC CHARGES
The following hourly charges are applicable for Tenant requested
after-hour heating, ventilating and air-conditioning ("HVAC") on a per hour, per
floor basis. The rate charges are based upon current utility costs and labor
rates and are subject to change, however, increases in said charges shall only
occur as a result of (and shall be reasonably consistent with the degree of)
increases in utility costs and labor rates. Landlord shall provide Tenant with
reasonable notice of contemplated rate increases, if any.
VENTILATION ONLY
$50.00 per hour, per floor, first hour
$20.00 per hour, per floor, second and subsequent hours
HEATING AND VENTILATION
$58.00 per hour, per floor, first hour
$28.00 per hour, per floor, second and subsequent hours
AIR-CONDITIONING AND VENTILATION
$85.50 per hour, per floor, first hour
$55.55 per hour, per floor, second and subsequent hours
The above charges are not cumulative. The "first hour" charges are applicable
for each floor that Tenant may request after-hours HVAC.
In the event that Tenant requests such after-hours HVAC for a floor of
the Tower which is not wholly occupied by Tenant, and if another tenant or
tenants on such floor orders such after-hours HVAC for the same time period as
Tenant, then the foregoing charges shall be appropriately prorated between
Tenant and the other tenant or tenants requesting after-hours HVAC for the same
time period on a proportionate basis.
F-1
<PAGE>
EXHIBIT G
ACCEPTANCE OF PREMISES MEMORANDUM
PRUDENTIAL PLAZA
THIS MEMORANDUM is executed pursuant to the terms of the Lease dated the day
of October, 1993, between PRUDENTIAL PLAZA ASSOCIATES, an Illinois general
partnership, as Landlord, and THE PEOPLES GAS LIGHT AND COKE COMPANY, an
Illinois corporation, as Tenant (the "Lease"), for the Demised Premises (as
defined in the Lease) in the tower known as One Prudential Plaza of the building
commonly known as Prudential Plaza; located at 180 North Stetson Avenue,
Chicago, Illinois.
Landlord and Tenant hereby agree that:
1. Except for those items shown on the "punchlist", Landlord
has fully completed the Base Building Work (as defined in the Lease)
required under the terms of the Lease and the Workletter with respect to
the portion of the Demised Premises identified on Attachment 1 hereto.
2. Landlord has no further obligation for construction
(except as specified above) with respect to such portion of the Demised
Premises and Tenant acknowledges that both the Building and such portion
of the Demised Premises are satisfactory in all respects.
3. Nothing contained herein shall be deemed to abrogate or
waive Landlord's warranties or guarantees set forth in the Lease or
Workletter.
Any initially capitalized words used as defined terms but not
specifically defined herein shall have the meaning ascribed to them in the
Lease. All other terms and conditions of the Lease are hereby ratified and
acknowledged to be unchanged.
Agreed and executed this day of , 19 .
---- ------------ --
LANDLORD:
PRUDENTIAL PLAZA ASSOCIATES, an
Illinois general partnership
By: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, its
general partner
By:
----------------------
Its:
------------------
TENANT:
THE PEOPLES GAS LIGHT AND COKE
COMPANY, an Illinois
corporation
By:
-----------------------------
Its:
-------------------------
G-1
<PAGE>
EXHIBIT H
RULES AND REGULATIONS
1. Tenant shall not place anything or allow anything to be placed
near the glass of any window, door, partition or wall which may in Landlord's
judgment appear unsightly from outside the Demised Premises or the Tower.
2. Subject to the terms of Section 30.29 of the Lease, the directory
located in the Building lobby as provided by Landlord shall be available to
Tenant solely to display its name and location in the Building, which display
shall be as directed by Landlord.
3. Subject to the terms of the Lease respecting the Stairwell and
Tenant's security kiosks, the sidewalks, halls, passages, exits, entrances,
elevators and stairways shall not be obstructed by Tenant or used by Tenant for
any purpose other than for ingress to and egress from the Demised Premises.
Subject to the terms of the Lease respecting Tenant's antenna, the halls,
passages, exits, entrances, elevators, stairways, balconies and roof are not for
the use of the general public and Landlord shall in all cases retain the right
to control and prevent access thereto by all persons whose presence in the
judgment of Landlord shall be prejudicial to the safety, character, reputation
and interests of the Building. Subject to the terms of the Lease respecting
Tenant's antenna, neither Tenant nor any employees or invitees of any tenant
shall go upon the roof of the Building.
4. The toilet rooms, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein and to the
extent damage is caused by Tenant, its employees or invitees, the expense of any
such damage shall be borne by Tenant.
5. Tenant shall not cause any unnecessary janitorial labor or
services by reason of Tenant's carelessness or indifference in the preservation
of good order and cleanliness.
6. The Demised Premises shall not be used for lodging.
7. Tenant shall not bring upon, use or keep in the Demised Premises
or the Building any kerosene, gasoline or inflammable or combustible fluid or
material, or firearms or explosives, or use any method of heating or
air-conditioning other than that supplied by Landlord.
8. Subject to Article 13 of the Lease and the Workletter, Landlord
shall have sole power to direct electricians as to where and how telephone and
other wires are to be introduced. No boring or cutting for wires will be
allowed without the consent of Landlord. The location of telephones, call boxes
and other office equipment affixed to the Demised Premises shall be subject to
the approval of Landlord.
9. Upon the termination of the tenancy, Tenant shall deliver to the
Landlord all keys and passes for offices, rooms, parking lot and toilet rooms
which shall have been furnished Tenant. In the event of loss of any keys so
furnished, Tenant shall pay the Landlord therefor Tenant shall not make or cause
to be made any such keys and shall order all such keys solely from Landlord and
shall pay Landlord for any additional such keys over and above the two sets of
keys furnished by Landlord.
10. Tenant shall not install linoleum, tile, carpet or other floor
covering so that the same shall be affixed to the floor of the Demised Premises
in any manner except as approved by the Landlord subject to Article 13 of the
Lease and the Workletter.
H-1
<PAGE>
11. No furniture, packages, supplies, equipment or merchandise will
be received in the Building or carried up or down in the elevators, except
between such hours and in such elevators as shall be designated by the Landlord.
12. Tenant shall cause all doors to the Demised Premises to be closed
and securely locked before leaving the Building at the end of the day.
13. Without the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed, Tenant shall not use the name of
the Building or Tower or any picture of the Building or Tower in connection with
or in promoting or advertising the business of Tenant except Tenant may use the
address of the Tower as the address of its business and except that Tenant may
use the name of the Building or Tower or a picture of the Building or Tower in
its prospectus or reports to shareholders.
14. Tenant shall not waste heat or air-conditioning and shall
cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air-conditioning, and shall refrain from attempting to
adjust any controls other than room thermostats installed for Tenant's use.
Tenant shall keep corridor doors closed.
15. Tenant assumes full responsibility for protecting the Demised
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means of entry to Demised Premises closed and secured.
16. Peddlers, solicitors and beggars shall be reported to the office
of the Building or as Landlord otherwise requests.
17. Tenant shall allow no animals or pets to be brought into or to
remain in the Building or any part thereof except for guide dogs assisting the
disabled.
18. Tenant shall comply with all rules and regulations adopted by the
Landlord concerning parking. Subject to the terms of Section 30.27 of the
Lease, Landlord may at its option reserve certain areas of parking for public
use and/or for the use of individual tenants.
19. No eating, drinking, sleeping, loitering or smoking shall be
permitted in the lobby areas of the Building.
20. Subject to the terms of Section 10.4 of the Lease, Landlord may
from time to time alter or amend these rules and regulations, and the Tenant
shall comply with the amended rules and regulations.
H-2
<PAGE>
EXHIBIT I
RESERVED PARKING
ARCHITECT'S DRAWING OF GARAGE PLAN AT LEVEL NO. 2, ILLUSTRATING NUMBERED
PARKING SPOTS AND PARKING GATE.
I-1
<PAGE>
EXHIBIT J
PRE-APPROVED SIGNAGE
To be submitted by Tenant to Landlord and subject to the review and approval of
Landlord, which review and approval shall not be unreasonably withheld or
delayed.
J-1
<PAGE>
EXHIBIT K
STORAGE SPACE TERMS AND CONDITIONS
A. STORAGE SPACE FEE
1. Tenant shall pay to Landlord at the office of Landlord or at such
other place as Landlord may from time to time direct in writing, in lawful money
of the United States of America, an annual gross fee of Two Hundred Sixty-Six
Thousand Two Hundred Twelve and 56/100 Dollars ($266,212.56) (the "Storage Space
Fee") (which is Twelve and 50/100 Dollars ($12.50) per rentable square foot of
the Storage Space) in equal monthly installments of Twenty-Two Thousand One
Hundred Eighty-Four and 38/100 dollars ($22,184.38) in advance on or before the
first day of each and every calendar month of the Term. If the Term commences
on a day other than the first day of a calendar month, or ends on a day other
than the last day of a calendar month, then the Storage Space Fee for such
fractional month shall be prorated on the basis of a thirty (30) day month.
2. The Storage Space Fee shall be increased by two percent (2%) per
year on a compounded basis through the Term of the Lease.
B. STORAGE SPACE BUILD-OUT
1. Tenant acknowledges that Landlord shall not be required to alter,
remodel or improve the Storage Space or to ready the Storage Space for Tenant's
occupancy, except as provided in the Workletter.
2. Tenant may make improvements to the Storage Space at Tenant's
sole cost and expense; provided, however, Tenant shall be entitled to a
refurbishment allowance from Landlord of Five Hundred Seventy-One Thousand Seven
Hundred Forty and 00/100 Dollars ($571,740.00). Such refurbishment allowance
shall be payable monthly as work progresses, in the same manner and under the
same conditions as Landlord's Build-Out Commitment is paid under the Workletter.
After the initial build-out, all improvement work shall be subject to the
provisions of Article 12 of the Lease.
C. NON-OFFICE STORAGE SPACE USES
1. Tenant shall occupy and use the Non-Office Storage Space during
the Term, as the same may be extended or earlier terminated pursuant to the
Lease, for storage and for no other purpose, except, however, the portion of the
Storage Space located on level B-1 may be used for Tenant's print shop. Tenant
may not use or occupy the Storage Space for any purpose or in any manner which
(a) is unlawful or in violation of any applicable legal or governmental
requirement, ordinance or rule; (b) may be dangerous to persons or property,
including, without limitation, the storage of any flammable or hazardous
substances; (c) may invalidate or increase the amount of premiums for any policy
of insurance affecting the Tower, Building or Storage Space, and if any
additional amounts of insurance premiums are so incurred, Tenant shall pay to
Landlord the additional amounts on demand; or (d) may create a nuisance,
disturbs any tenants of the Building or injure the reputation of the Building.
K-1
<PAGE>
EXHIBIT L
ANTENNA TERMS AND CONDITIONS
1. Landlord, for and in consideration of the covenants and
agreements made by Tenant herein contained, does hereby grant unto the Tenant,
and its permitted assignees and subleasees (provided, however, only a sublessee
of a full floor or more of the Demised Premises shall have the right to use the
license granted hereunder, and only for the duration of its sublease, it being
the intent that Tenant not separately transfer the license granted hereunder) a
nonexclusive license, coupled with an interest, for the Term of this Lease, as
the same may be extended or earlier terminated, to utilize space on the roof of
the Tower for the purpose of installing and using the antenna (or other antennas
as may be approved by Landlord from time to time) described in Attachment "1"
hereto and made a part hereof (the "Antenna").
2. The size, location and placement as well as the manner and method
of installation and removal of the Antenna and related equipment shall be
subject to the prior written approval of Landlord, which approval shall not be
unreasonably withheld or delayed. If Landlord elects to hire structural,
mechanical, roofing and/or other engineers or consultants to review such plans
and specifications, Tenant shall reimburse Landlord for the reasonable costs
thereof.
3. Tenant shall pay for all utilities consumed to install, maintain,
operate and remove its Antenna and equipment.
4. Prior to the installation of said Antenna and equipment, Tenant
shall secure and shall at all times thereafter maintain all required approvals
and permits of the Federal Communications Commission and all other governmental
bodies having jurisdiction over its business, including its communications,
operations and facilities. Tenant shall at all times comply with all laws and
ordinances and all rules and regulations of municipal, state and federal
governmental authorities relating to the installation, maintenance, height,
location, use, operation, and removal of said Antenna and equipment and shall
fully indemnify Landlord against any loss, cost, or expense which may be
sustained or incurred by it as a result of the installation, maintenance,
operation, or removal of said Antenna and equipment. Landlord makes no
representation that application laws, ordinances or regulations permit the
installation or operation of antennas on the subject real estate.
5. Landlord hereby grants unto Tenant the right, to be exercised as
herein set forth, to enter upon the roof of the Tower for the sole purpose of
gaining access to Tenant's installation. In addition thereto, Landlord grants
unto Tenant the right, to be exercised as herein set forth, to install such
equipment, conduits, cables and materials (hereinafter called "the connecting
equipment") in shafts, ducts, conduits, chases, utility closets and other
facilities of the Tower as designated by Landlord as is reasonably necessary to
connect the Antenna to the Demised Premises, subject to the requirements of any
permits or authority. Landlord further grants to Tenant the right of access to
the areas where such connecting equipment is located for the purposes of
maintaining, repairing, testing and replacing the connecting equipment;
provided, however, Tenant shall notify Landlord each time Tenant requires such
access, and provided further that such access and installations do not cause
damage to or interfere with the operation or maintenance of any part of the
Building or with any other tenant's operation.
6. Anything herein to the contrary notwithstanding, Tenant shall
notify Landlord each time Tenant desires to enter upon the roof of the Tower or
the areas outside the Demised Premises where Tenant's related equipment is
located, and Tenant shall enter upon the roof only at such times, in such manner
and under such circumstances as shall not cause damage or endangerment of life
or limb. Tenant shall promptly reimburse Landlord for the costs of repairs of
any property damage to the Tower directly or indirectly caused by Tenant's
installations or the operation, maintenance or removal thereof.
L-1
<PAGE>
7. Tenant, at its expense, shall be solely responsible for and shall
maintain its Antenna and related equipment in a safe, structural, sound, clean
and slightly condition and shall indemnify and save harmless Landlord against
all liens and claims of mechanics and materialmen furnishing labor and materials
in the construction and maintenance of same.
8. The indemnities of Tenant under the Lease regarding the Demised
Premises shall extend to and include, without limitation, the Antenna.
9. The rights hereby granted to Tenant shall not be deemed to give
to Tenant the exclusive right to use the roof of the Tower and shall not
preclude Landlord from granting a license or licenses to others. Similarly, the
rights of Tenant hereunder shall be exercised without causing interference with
the activities being carried on by others in accordance with their respective
rights. Tenant shall not change or materially alter the Antenna or related
equipment agreed to herein without the prior written consent of Landlord.
10. Any default hereunder shall be deemed a default under the Lease.
11. At the termination of the Term by lapse of time or otherwise, the
Antenna and the related equipment installed hereunder shall be removed by Tenant
and the area of the Tower where they were installed shall be restored by Tenant
to as good condition as existed immediately prior to installation of such
Antenna and related equipment.
L-2
<PAGE>
ATTACHMENT 1 TO EXHIBIT L
ANTENNA
<PAGE>
ATTACHMENT 1 TO EXHIBIT L ILLUSTRATES THE TYPICAL GEOMETRIC CONFIGURATION
WITH ANTENNA SUPPORTS AND FOOTING SUPPORTS.
<PAGE>
<PAGE>
SECTIONAL DIAGRAM OF ANTENNA
GENERAL NOTES:
- --------------
CODES AND STANDARDS
- -------------------
PARTIAL LIST OF APPLICABLE CODES AND STANDARDS
A. THE BOCA NATIONAL BUILDING CODE/1987.
B. BUILDING CODE REQUIREMENTS FOR REINFORCED CONCRETE (ACI 318-83)
(REVISED 1986)
C. MANUAL OF STEEL CONSTRUCTION, EIGHTH EDITION, 1980, AMERICAN INSTITUTE OF
STEEL CONSTRUCTION
LIVE LOAD
- ---------
ROOF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 PSF
(EXISTING ROOF WAS DESIGNED FOR 30 PSF LIVE LOAD)
WIND LOAD
- ---------
A. BASIC WIND VELOCITY . . . . . . . . . . . . . . . . . . . . . . . 70 MPH
B. EXPOSURE CATEGORY . . . . . . . . . . . . . . . . . . . . . . EXPOSURE C
C. HEIGHT OF PENTHOUSE ROOF ABOVE STREET . . . . . . . . . . . . . 306 FEET
D. WINDLOAD ON ALL EXPOSED MEMBERS OF GRIDWORK . . . . . . . . . . . 35 PSF
STRUCTURAL STEEL
- ----------------
<PAGE>
DETAIL SECTIONAL DIAGRAM OF ANTENNA
<PAGE>
EXHIBIT M
TERMINATION FEE EXAMPLE
EXAMPLE "ORIGINAL PRINCIPAL BALANCE" = $50.00 PER SQUARE FOOT OF RENTABLE AREA
INTEREST RATE = 10.0%
TERM = 60 MONTHS
<TABLE>
<CAPTION>
PV OF PERCENT OF EXAMPLE
EXAMPLE CUMULATIVE "ORIGINAL
BASE RENT PV TO TOTAL PRINCIPAL EXAMPLE
EXAMPLE AT CUMULATIVE EXAMPLE BALANCE* TERMINATION
MONTH BASE RENT 10.0% PV BASE RENT GROWN AT 10.0% FEE*
- ----- --------- --------- ---------- --------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 $0.75 $0.75 $0.75 2.0328% $50.00 $48.98
2 0.75 0.74 1.49 4.0487% 50.42 48.38
3 0.75 0.74 2.23 6.0480% 50.84 47.76
4 0.75 0.73 2.96 8.0308% 51.26 47.14
5 0.75 0.73 3.69 9.9972% 51.69 46.52
6 0.75 0.72 4 4l 11.9473% 52.12 45.89
7 0.75 0.71 5.12 13.8813% 52.55 45.26
8 0.75 0.71 5.83 15.7994% 52.99 44.62
9 0.75 0.70 6.53 17.7016% 53.43 43.97
10 0.75 0.70 7.23 19.5880% 53.88 43.32
11 0.75 0.69 7.92 21.4589% 54.33 42.67
12 0.75 O.68 8.60 23.3143% 54.78 42.01
13 0.77 0.69 9.29 25.1912% 55.24 41.32
14 0.77 0.69 9.98 27.0526% 55.70 40.63
15 0.77 0.68 10.66 28.8986% 56.16 39.93
16 0.77 0.68 11.34 30.7293% 56.63 39.23
17 0.77 0.67 12.01 32.5449% 57.10 38.52
18 0.77 0.66 12.67 34.3455% 57.58 37.80
19 0.77 0.66 13.33 36.1312% 58.06 37.08
20 0.77 0.65 13.98 37.9022% 58.54 36.35
21 0.77 0.65 14.63 39.6585% 59.03 35.62
22 0.77 O.64 15.27 41.4003% 59.52 34.88
23 0.77 0.64 15.91 43.1277% 60.02 34.13
24 0.77 0.63 16.54 44.8408% 60.52 33.38
25 0.78 0.64 17.18 46.5731% 61.02 32.60
26 0.78 0.63 17.82 48.2911% 61.53 31.82
27 0.78 0.63 18.45 49.9949% 62.04 31.02
28 0.78 0.62 19.07 51.6845% 62.56 30.23
29 0.78 0.62 19.69 53.3603% 63.08 29.42
30 0.78 0.61 20.30 55.0222% 63.60 28.61
31 0.78 0.61 20.91 56.6703% 64.13 27.79
32 0.78 0.60 21.51 58.3048% 64.67 26.96
33 0.78 0.60 22.11 59.9258% 65.21 26.13
34 0.78 0.59 22.70 61.5335% 65.75 25.29
35 0.78 0.59 23.29 63.1278% 66.30 24.45
36 0.78 0.58 23.87 64.7090% 66.85 23.59
37 0.80 0.59 24.47 66.3089% 67.41 22.71
38 0.80 0.59 25.05 67.8956% 67.97 21.82
39 0.80 0.58 25.63 69.4692% 68.54 20.93
40 0.80 0.58 26.21 71.0297% 69.11 20.02
41 0.80 0.57 26.78 72.5774% 69.68 19.11
42 0.80 0.57 27.34 74.1123% 70.27 18.19
43 0.8O 0.56 27.91 75.6345% 70.85 17.26
44 0.80 0.56 28.46 77.1441% 71.44 16.33
45 0.80 0.55 29.02 78.6413% 72.04 15.30
46 0.80 0.55 29.56 80.1261% 72.64 14.44
47 0.80 0.54 30.11 81.5986% 73.24 13.48
48 0.80 0.54 30.65 83.0582% 73.85 12.51
49 0.81 0.54 31.19 84.5360% 74.47 11.52
50 0.81 0.54 31.73 86.0009% 75.09 10.51
51 0.81 0.54 32.27 87.4536% 75.71 9.50
52 0.81 0.53 32.80 88.8944% 76.34 8.48
53 0.21 0.53 33.33 90.3233% 76.98 7.45
54 0.81 0.52 33.85 91.7403% 77.62 6.41
55 0.81 0.52 34.37 93.1456% 78.27 5.36
56 0.81 0.51 34.88 94.5394% 78.92 4.31
57 0.81 0.51 35.39 95.9216% 79.58 3.25
58 0.81 0.51 35.90 97.2923% 80.24 2.17
59 0.81 0.50 36.40 98.6518% 80.91 1.09
60 0.81 0.50 36.90 100.0000% 81.59 0.00
TOTAL EXAMPLE BASE RENT: $36.90
<FN>
PERCENT OF ORIGINAL
CUMULATIVE PRINCIPAL
*TERMINATION FEE = 1 - PV TO TOTAL X BALANCE GROWN
EXAMPLE AT 10%
BASE RENT
</TABLE>
IN THE ABOVE EXAMPLE, THE TERMINATION FEE, IF THE LEASE WERE TERMINATED AT THE
END OF THE 35TH MONTH, WOULD BE $24.45 PER SQUARE FOOT OF RENTABLE AREA
M-1
<PAGE>
EXHIBIT N
EXISTING TENANT RIGHTS
The following are restricted uses and users:
1. Sale of fresh flowers, fresh floral arrangements, blooming plants
and flowers by wire.
2. Sale of ice cream, frozen yogurt, espresso-based or fresh-brewed
gourmet coffee.
3. Full-service travel agencies.
4. Retail photoprocessing for the general public.
5. Retail banking institutions in the lobby areas of the Building.
6. Photocopying services.
7. Restaurants offering its services and facilities to the public.
8. A pizza, Italian pasta or Italian food restaurant.
9. The People's Republic of China or any governmental agency,
instrumentality, cultural institute or trade promotion
organization of the People's Republic of China.
10. Government or governmental agencies, other than those of the
United States of America or Canada, or an embassy or consulate
general on floors 23 and 25 of Two Prudential Plaza.
N-1
<PAGE>
EXHIBIT 0
HAZARDOUS SUBSTANCE SURVEYS
The following reports issued by BCM Engineers, Inc., for Environmental Hygene
Services at the Tower:
<TABLE>
<CAPTION>
Description Approximate Dates
<S> <C>
ASBESTOS SURVEYS:
Includes an initial general survey of the
building, plus comprehensive, pre-abatement
surveys for specific projects 1987-1993
ASBESTOS ABATEMENT:
Includes abatement reports for each asbestos
abatement project, plus periodic summary reports
updating abatement status 1987-1993
O&M PROGRAM:
Includes a baseline O&M program manual for
asbestos containing materials, plus hazard
assessment updates and air monitoring
data on a semi-annual basis 1989-1993
HAZCOM:
Includes a chemical inventory listing and
chemical storage assessment report,
with annual updates 1990-1993
</TABLE>
In addition to the above, BCM has reviewed and used previous asbestos survey and
abatement reports prepared by Clayton Environmental Consultants, which were
issued prior to 1987.
<PAGE>
EXHIBIT P
26TH FLOOR EARLY INCREASE SPACE
ARCHITECT'S DRAWING OF DEMISING PLAN FOR 26TH FLOOR, DATED 10-06-93
<PAGE>
EXHIBIT Q
PLAZA LEVEL EARLY INCREASE SPACE
ARCHITECT'S DRAWING OF RETAIL TENANT AREAS FOR FIRST FLOOR PLAZA LEVEL
USEABLE SQUARE FEET = 4,873.21
RENTABLE SQUARE FEET = 5,679.79
<PAGE>
ARCHITECT'S DRAWING OF RETAIL TENANT AREAS FOR FIRST FLOOR PLAZA LEVEL
USEABLE SQUARE FEET = 5,055.40
RENTABLE SQUARE FEET = 5,892.07
<PAGE>
EXHIBIT 10(b)
Contract No. 105565
NATURAL GAS PIPELINE COMPANY OF AMERICA (Natural)
TRANSPORTATION RATE SCHEDULE FTS
AGREEMENT DATED December 01, 1993
UNDER SUBPART G of Part 284 OF THE FERC'S REGULATIONS
1. SHIPPER is: THE PEOPLES GAS LIGHT & COKE COMPANY, a local distribution
company
2. MDQ totals: 234,026 MMBtu per day.
3. TERM: December 01, 1993 through November 30, 1995
4. Service will be ON BEHALF OF:
/X/ Shipper or
/ / Other: , a
5. The ULTIMATE END USERS are (check one):
/ / customers of the following LDC/pipeline company(ies): ______________ ;
/ / customers in these states: _____________________________________ ; or
/X/ customers within any state in the continental U.S.
6. / / This Agreement supersedes and cancels a _____________________ Agreement
dated __________
/ / Capacity rights for this Agreement were released from
/X/ [for firm service only] Service and reservation charges commence the
latter of:
(a) December 01, 1993, and
(b) the date capacity to provide the service hereunder is
available on Natural's System.
/X/ Other: Shipper is converting a portion of the Service Agreement dated
--------------------------------------------------------------
April 10, 1992, with Natural from sales service to
--------------------------------------------------------------
transportation under this Agreement
--------------------------------------------------------------
7. SHIPPER'S ADDRESSES Natural's ADDRESSES
GENERAL CORRESPONDENCE:
PEOPLES GAS LIGHT & COKE CO. NATURAL GAS PIPELINE COMPANY OF AMERICA
ATTN: Eckhard Blaumueller Attention: Gas Transportation Services
122 S. Michigan Avenue 3200 Southwest Freeway 77027-7523
Room 915 P. 0. Box 283 77001-0283
Chicago, Illinois 60603 Houston, Texas
STATEMENTS/INVOICES/ACCOUNTING RELATED MATERIALS:
PEOPLES GAS LIGHT & COKE CO. NATURAL GAS PIPELINE COMPANY OF AMERICA
ATTN: Eckhard Blaumueller Attention: Gas Accounting Department
122 S. Michigan Ave. 701 East 22nd Street
Chicago, Illinois 60603 Lombard, Illinois 60148
PAYMENTS:
NATURAL GAS PIPELINE COMPANY OF AMERICA
Attention: Controller
701 East 22nd Street
Lombard, Illinois 60148
8. The above stated Rate Schedule, as revised from time to time, controls this
Agreement and is incorporated herein. The attached Exhibits A, B, and C
(for firm service only) are a part of this Agreement. THIS AGREEMENT SHALL
BE CONSTRUED AND GOVERNED BY THE LAWS OF ILLINOIS, AND NO STATE LAW SHALL
APPLY TO REACH A DIFFERENT RESULT. This Agreement states the entire
agreement between the parties and no waiver, representation, or agreement
shall affect this Agreement unless it is in wrIting. Shipper shall provide
the actual end user purchaser name(s) to Natural if Natural must provide
them to FERC.
AGREED TO BY:
THE PEOPLES GAS LIGHT & COKE COMPANY NATURAL GAS PIPELINE COMPANY OF AMERICA
BY: /s/ Thomas M. Patrick BY:
------------------------------- ---------------------------------
NAME: Thomas M. Patrick NAME:
------------------------------- ----------------------------------
TITLE: Vice President TITLE:
------------------------------- ---------------------------------
<PAGE>
Exhibit A
Dated DECEMBER O1, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT: 105565
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY RECEIPT POINT/S
- -----------------------
1. ARKLA/NGPL HOT SPRING HOT SPRING AR 3853 01 39,026
INTERCONNECT WITH ARKLA ENERGY RESOURCES
ON TRANSPORTER'S GULF COAST MAINLINE IN
SEC. 22-T5S-R17W, HOT SPRING COUNTY,
ARKANSAS.
2. BRIDGEPORT PLT OUTLET MEC/NGPL WISE WISE TX 1850 02 25,000
AT THE TAILGATE OF THE MITCHELL ENERGY
BRIDGEPORT PLANT IN THE P. NICHOLAS,
A-654, WISE COUNTY, TEXAS.
3. LA GLORIA MOBIL/NGPL JIM WELLS JIM WELLS TX 439 04 13,745
AT OR NEAR THE TAILGATE OF MOBIL'S LA
GLORIA GAS PLANT ON TRANSPORTER'S LA
GLORIA-MOBIL LATERAL IN LOT #1, SUBD. OF
LANDS ADJ. TO TOWN OF LA GLORIA, JIM WELLS
COUNTY, TEXAS.
4. N BORDER/NGPL KEOKUK KEOKUK IA 8090 01 49,881
INTERCONNECT WITH NORTHERN BORDER
PIPELINE COMPANY ON TRANSPORTER'S
AMARILLO LINE IN SEC. 3O-T76N-R1OW,
KEOKUK COUNTY, IOWA.
5. NNG/NGPL MILLS MILLS IA 203 01 20,119
INTERCONNECT WITH NORTHERN NATURAL GAS
COMPANY IN SEC. 26-T72N-R43W, MILLS
COUNTY, IOWA.
6. UGPL/NGPL GOODRICH POLK POLK TX 6297 01 25,000
INTERCONNECT WITH UNITED GAS PIPE LINE
COMPANY UPSTREAM OF TRANSPORTER'S C.S.
# 340 IN THE A. VIESCA SURVEY, A-77.
</TABLE>
A-1
<PAGE>
Exhibit A (CONT'D)
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT : 105565
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY RECEIPT POINT/S
- -----------------------
7. VALTRANS/NGPL JIM HOGG JIM HOGG TX 24001 04 11,255
INTERCONNECT WITH VALERO TRANSMISSION
CO. ON TRANSPORTER'S NORTHEAST
THOMPSONVILLE LATERAL IN THE NW QUADRANT
OF "LAS AMINAS" HRS. OF SAN FELIPE DE LA
PENA SURVEY, A-244, JIM HOGG COUNTY, TEXAS.
8. VALTRANS/NGPL INTER #2 TAP PANOLA PANOLA TX 3352 01 50,000
INTERCONNECT WITH VALERO TRANSMISSION
COMPANY ON TRANSPORTER'S GULF COAST
MAINLINE IN THE J.A. WILLIAMS SURVEY,
A-717, PANOLA COUNTY, TEXAS.
</TABLE>
SECONDARY RECEIPT POINT/S
- -------------------------
All secondary receipt points, and the related priorities and volumes, as
provided under the Tariff provisions governing this agreement.
RATES
- -----
Except as provided to the contrary in any written agreement(s) between the
parties in effect during the term hereof, Shipper shall pay Natural the maximum
rate and all other lawful charges as specified in Natural's firm service rate
schedules.
FUEL GAS AND GAS LOST AND UNACCOUNTED FOR PERCENTAGE (%)
- --------------------------------------------------------
Shipper will be assessed the applicable percentage for Fuel Gas and Gas
Lost and Unaccounted for.
TRANSPORTATION OF LIQUIDS
- -------------------------
Transportation of liquids may occur at permitted points identified in
Natural's current Catalog of Receipt and Delivery Points, but only if the
parties execute a separate liquids agreement.
A-2
<PAGE>
Exhibit B
Dated DECEMBER 01, 1993
COMPANY: PEOPLES GAS LIGHT & COKE CO.
CONTRACT: 105565
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY DELIVERY POINT/S
- -------------------------
1. NO SHORE/NGPL GRAYSLAKE LAKE LAKE IL 1 01 50,215
INTERCONNECT WITH NORTH SHORE GAS
COMPANY LOCATED IN SEC. 12-T44N-R10E,
LAKE COUNTY, ILLINOIS.
LAKE, IL
2. PGLC/NGPL ROGERS PARK COOK COOK IL 4174 01 183,811
INTERCONNECT WITH THE PEOPLES GAS LIGHT
AND COKE COMPANY ON TRANSPORTER'S HOWARD
STREET LINE IN SEC. 36-T41N-R13E, COOK,
COUNTY, ILLINOIS.
COOK, IL
</TABLE>
SECONDARY DELIVERY POINT/S
- --------------------------
All secondary delivery points, and the related priorities and volumes, as
provided under the Tariff provisions governing this agreement.
B-1
<PAGE>
EXHIBIT C DATED DECEMBER 01, 1993
PRIMARY TRANSPORTATION PATH SEGMENT MDQs
CONTRACT: 105565
COMPANY : PEOPLES GAS LIGHT & COKE CO.
Pursuant to Natural's tariff, an MDQ exists for each primary transportation
path segment and direction under the Agreement. Such MDQ is the maximum daily
quantity of gas which Natural is obligated to transport on a firm basis along a
primary transportation path segment.
A primary transportation path segment is the path between a primary
receipt, delivery or node point and the next primary receipt, delivery or node
point. A node point is the point of interconnection between two or more of
Natural's pipeline facilities.
A map of Natural's pipeline system showing these primary transportation
path segment MDQs, and the direction to which each applies, is attached.
C-1
<PAGE>
NATURAL GAS PIPELINE CO. OF AMERICA
FTS PATH MAP - EXHIBIT C DATED 12-01-93
SHIPPER : Peoples Gas Light & Coke
CONTRACT NO. : 105565
MDQ : 234,026
Exhibit C depicts the relevant portion, including compressor stations, of
Natural Gas Pipeline Company of America's transmission system, the primary
receipt and delivery points under the transportation agreement, the volumes
associated with each point, and the transportation path defined by the primary
receipt and delivery points. Exhibit C also specifies the Maximum Daily
Quantity under the transportation agreement.
C-2
<PAGE>
EXHIBIT 10(c)
Contract No. 105559
NATURAL GAS PIPELINE COMPANY OF AMERICA (Natural)
TRANSPORTATION RATE SCHEDULE S-2
AGREEMENT DATED December 01, 1993
UNDER SUBPART G of Part 284 OF THE FERC'S REGULATIONS
1. SHIPPER is: THE PEOPLES GAS LIGHT & COKE COMPANY, a local distribution
company
2. MDQ totals: 300,000 MMBtu per day.
3. TERM: December 01, 1993 through November 30, 1995
4. ServIce will be ON BEHALF OF:
/X/ Shipper or
/ / Other: , a
5. The ULTIMATE END USERS are (check one):
/ / customers of the following LDC/pipeline company(ies): ______________ ;
/ / customers in these states: _____________________________________ ; or
/X/ customers within any state in the continental U.S.
6. / / This Agreement supersedes and cancels a _____________________ Agreement
dated __________
/ / Capacity rights for this Agreement were released from
/X/ [for firm service only] Service and reservation charges commence the
latter of:
(a) December 01, 1993, and
(b) the date capacity to provide the service hereunder is
available on Natural's System.
/X/ Other: Shipper is converting a portion of the Service Agreement dated
--------------------------------------------------------------
April 10, 1992, with Natural from sales service to
--------------------------------------------------------------
transportation under this Agreement .
--------------------------------------------------------------
7. SHIPPER'S ADDRESSES Natural's ADDRESSES
GENERAL CORRESPONDENCE:
PEOPLES GAS LIGHT & COKE CO. NATURAL GAS PIPELINE COMPANY OF AMERICA
ATTN: Eckhard Blaumueller Attention: Gas Transportation Services
122 S. Michigan Avenue 3200 Southwest Freeway 77027-7523
Room 915 P. 0. Box 283 77001-0283
Chicago, Illinois 60603 Houston, Texas
STATEMENTS/INVOICES/ACCOUNTING RELATED MATERIALS:
PEOPLES GAS LIGHT & COKE CO. NATURAL GAS PIPELINE COMPANY OF AMERICA
ATTN: Eckhard Blaumueller Attention: Gas Accounting Department
122 S. Michigan Ave. 701 East 22nd Street
Chicago, Illinois 60603 Lombard, Illinois 60148
PAYMENTS:
NATURAL GAS PIPELINE COMPANY OF AMERICA
Attention: Controller
701 East 22nd Street
Lombard, Illinois 60148
8. The above stated Rate Schedule, as revised from time to time, controls this
Agreement and is incorporated herein. The attached Exhibits A, B, and C
(for firm service only) are a part of this Agreement. THIS AGREEMENT SHALL
BE CONSTRUED AND GOVERNED BY THE LAWS OF ILLINOIS, AND NO STATE LAW SHALL
APPLY TO REACH A DIFFERENT RESULT. This Agreement states the entire
agreement between the parties and no waiver, representation, or agreement
shall affect this Agreement unless it is in writing. Shipper shall provide
the actual end user purchaser name(s) to Natural if Natural must provide
them to FERC.
AGREED TO BY:
THE PEOPLES GAS LIGHT & COKE COMPANY NATURAL GAS PIPELINE COMPANY OF AMERICA
BY: /s/ Thomas M. Patrick BY:
----------------------------- ---------------------------------
NAME: Thomas M. Patrick NAME:
----------------------------- ---------------------------------
TITLE: Vice President TITLE:
----------------------------- --------------------------------
<PAGE>
Exhibit A
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT : 105559
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY RECEIPT POINT/S
- -----------------------
1. AMOCO/NGPL EAST MAXINE LIVE OAK LIVE OAK TX 444 04 991
-------------------------------
INTERCONNECT WITH AMOCO ON TRANSPORTER'S
EAST MAXINE LATERAL IN DR. C. F. SIMMONS
NUECES RIVER VALLEY FARM SUBDIVISION
BLOCK 77, SURVEY NO. 18.
2. ASSOCNAT/NGPL RUSH SPRINGS GRADY GRADY OK 3071 02 1,231
--------------------------------
INTERCONNECT WITH SHIPPER'S DESIGNEE,
ASSOCIATED NATURAL GAS, INC. IN SEC.
7-T4N-R7W , GRADY COUNTY, OKLAHOMA.
3. BOWEN #1 GRADY GRADY OK 1468 02 3,048
--------------
INTERCONNECT WITH SHIPPER OR ITS
PRODUCER(S)/SUPPLIER(S) AT OR NEAR THE
BOWEN #1 WELL ON TRANSPORTER'S CHITWOOD
GATHERING SYSTEM IN SEC. 5-T5N-R6W,
GRADY COUNTY, OKLAHOMA.
4. BRIDGEPORT PLT OUTLET MEC/NGPL WISE WISE TX 1850 02 29,228
-----------------------------------
AT THE TAILGATE OF THE MITCHELL ENERGY
BRIDGEPORT PLANT IN THE P. NICHOLAS,
A-654, WISE COUNTY, TEXAS.
5. ENRON/NGPL REFUGIO REFUGIO TX 6490 04 3,355
------------------
INTERCONNECT WITH ENRON CORP. LOCATED IN
THE JAMES POWER & JAMES HEWITSON SURVEY,
A-53, REFUGIO COUNTY, TEXAS.
</TABLE>
A-1
<PAGE>
Exhibit A (CONT'D)
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT : 105559
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY RECEIPT POINT/S
- -----------------------
6. ENSERCH/NGPL ROUSE MASTER WASHITA WASHITA OK 1448 02 322
---------------------------------
INTERCONNECT WITH ENSERCH EXPLORATION AT
OR NEAR THE ROUSE MASTER METER ON
TRANSPORTER'S SOUTH WEST BURNS FLAT
GATHERING SYSTEM IN SEC. 23-T10N-R19E,
WASHITA COUNTY, OKLAHOMA
7. HOOKER PLT OUTLT P&P GAS/NGPL TEXAS TEXAS OK 1295 02 434
-----------------------------------
INTERCONNECT AT THE OUTLET OF THE PARKER
AND PARSLEY GAS PROCESSING HOOKER
PURIFICATION PLANT ON TRANSPORTER'S
HOOKER GATHERING SYSTEM IN SEC.
8-T4N-R17E, TEXAS COUNTY, OKLAHOMA.
8. INDIAN BASIN PLT MARATHON/NGPL EDDY EDDY NM 1753 05 25,273
-----------------------------------
OUTLET OF MARATHON'S INDIAN BASIN PLANT
IN SEC. 23-T21S-R23E, EDDY COUNTY, NEW
MEXICO.
9. KAISER/NGPL T.C.H. #1 LEA LEA NM 3509 05 509
--------------------------
INTERCONNECT WITH SHIPPER OR ITS
PRODUCER(S)/SUPPLIER(S) AT OR NEAR THE
KAISER-FRANCIS OIL COMPANY'S T.C.H. #1
WELL ON TRANSPORTER'S PERMIAN BASIN
MAINLINE IN SEC. 1-T16S-R33E, LEA
COUNTY, NEW MEXICO.
10. KN ENERG/NGPL INTER #1 HEMPHILL HEMPHILL TX 969 02 7,009
-------------------------------
INTERCONNECT WITH KN ENERGY, INC. ON
TRANSPORTER'S BUFFALO WALLOW GATHERING
SYSTEM IN SEC. 22, BLOCK M-1, H.&
G.N.R.R. SURVEY, HEMPHILL COUNTY, TEXAS.
UPSTREAM OF TRANSPORTER'S P.P. #163.
</TABLE>
A-2
<PAGE>
Exhibit A (CONT'D)
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT : 105559
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY RECEIPT POINT/S
- -----------------------
11. LA GLORIA MOBIL/NGPL JIM WELLS JIM WELLS TX 439 04 5,090
------------------------------
AT OR NEAR THE TAILGATE OF MOBIL'S LA
GLORIA GAS PLANT ON TRANSPORTER'S LA
GLORIA-MOBIL LATERAL IN LOT #1, SUBD. OF
LANDS ADJ. TO TOWN OF LA GLORIA, JIM
WELLS COUNTY, TEXAS.
12. LLANO/NGPL INTER #2 LEA LEA NM 7591 05 24,727
-----------------------
INTERCONNECT WITH LLANO, INC. ON
TRANSPORTER'S PERMIAN BASIN LINE IN SEC.
9-T22S-R34E, LEA COUNTY, NEW MEXICO.
13. MCCARICK/NGPL CLAYTON LIVE OAK LIVE OAK TX 425 04 6,683
------------------------------
INTERCONNECT WITH MCCARICK OIL COMPANY
LOCATED ON TRANSPORTER'S CLAYTON LATERAL
IN THE DR. C.F. SIMMONS NUECES RIVER
VALLEY FARM SUBDIVISION, BLOCK 77,
SURVEY NO. 18, LIVE OAK COUNTY, TEXAS.
14. MRT/NGPL MILLS RANCH WHEELER WHEELER TX 3033 02 5,191
----------------------------
INTERCONNECT WITH MISSISSIPPI RIVER
TRANSMISSION CORPORATION IN SEC. 2,
A.B.& M. SURVEY.
15. MTPC/NGPL HAGIST RANCH DUVAL DUVAL TX 6216 04 9,406
----------------------------
INTERCONNECT WITH MIDCON TEXAS PIPELINE
COMPANY IN OR NEAR THE B.S.&F. SURVEY
267, A-113.
16. MTPC/NGPL SOUTH TEXAS P/L NUECES NUECES TX 6213 04 18,323
--------------------------------
INTERCONNECT WITH MIDCON TEXAS PIPELINE
COMPANY IN THE ANDRES F. DE LA FUENTE
SURVEY, A-111, NUECES COUNTY, TEXAS.
</TABLE>
A-3
<PAGE>
Exhibit A (CONT'D)
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT : 105559
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY RECEIPT POINT/S
- -----------------------
17. MYERS #1-27 GRADY GRADY OK 2940 02 367
-----------------
INTERCONNECT WITH SHIPPER OR ITS
PRODUCER(S)/SUPPLIER(S) IN SEC.
27-T4N-R7W, GRADY COUNTY, OKLAHOMA.
18. N BORDER/NGPL KEOKUK KEOKUK IA 8090 01 11,993
--------------------
INTERCONNECT WITH NORTHERN BORDER
PIPELINE COMPANY ON TRANSPORTER'S
AMARILLO LINE IN SEC. 30-T76N-R10W,
KEOKUK COUNTY, IOWA.
19. NGPL/NGPL C.S. 112 INLET MOORE MOORE TX 3355 02 3,020
------------------------------
TRANSFER POINT FOR FIRM TRANSPORTATION
SERVICE FEEDER AGREEMENTS ON
TRANSPORTER'S AMARILLO MAINLINE IN SEC.
1 OF THE T.T. R.R. SURVEY, MOORE COUNTY,
TEXAS.
2O. NGPL/TPC GAGE GAGE NE 2900 01 2,923
-------------
INTERCONNECT WITH TRAILBLAZER PIPELINE
IN SEC. 15-T4N-R6E, GAGE COUNTY,
NEBRASKA.
21. NNG/NGPL MILLS MILLS IA 203 01 15,357
--------------
INTERCONNECT WITH NORTHERN NATURAL GAS
COMPANY IN SEC. 26-T72N-R43W, MILLS
COUNTY, IOWA.
22. OASIS/NGPL WARD WARD TX 5003 05 8,435
----------------
INTERCONNECT WITH OASIS PIPE LINE
COMPANY ON TRANSPORTER'S LOCKRIDGE
GATHERING SYSTEM IN SEC. 93, BLOCK 34,
H.& T.C.R.R. SURVEY, WARD COUNTY, TEXAS.
</TABLE>
A-4
<PAGE>
Exhibit A (CONT'D)
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT : 105559
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY RECEIPT POINT/S
- -----------------------
23. SABINEPL/NGPL HENRY PLT VERMILION VERMILION LA 3592 03 59,979
---------------------------------
INTERCONNECT WITH SABINE PIPELINE
COMPANY'S GAS PLANT ON TRANSPORTER'S
LOUISIANA MAINLINE IN SEC. 21-T13S-R4E,
VERMILION PARISH, LOUISIANA.
24. SAL DEL REY-MC CORMACK HIDALGO HIDALGO TX 453 04 3,718
------------------------------
INTERCONNECT WITH SHIPPER OR ITS
PRODUCER(S)/SUPPLIER(S) ON TRANSPORTER'S
SAL DEL REY LATERAL IN THE SAN SALVADOR
DEL TULE GRANT, JUAN JOSE BALLI SURVEY,
A-29O, HIDALGO COUNTY, TEXAS.
25. SNEED B-12 MOORE MOORE TX 1614 05 14,430
----------------
INTERCONNECT WITH SHIPPER OR ITS
PRODUCER(S)/SUPPLIER(S) AT OR NEAR THE
SNEED #B-12 WELL ON TRANSPORTER'S
PANHANDLE GATHERING SYSTEM IN SEC. 5 OF
THE J.S. JOHNSON SURVEY, MOORE COUNTY,
TEXAS. UPSTREAM OF TRANSPORTER'S B.S.
#2, C.S. #112 AND C.P. #170.
26. STINGRAY/NGPL CAMERON CAMERON LA 5433 03 10,040
---------------------
INTERCONNECT WITH STINGRAY PIPELINE IN
SEC. 27-T14S-R13W, CAMERON PARISH,
LOUISIANA.
27. TEX SW/NGPL WASHITA WASHITA OK 3695 02 2,000
-------------------
INTERCONNECT WITH TEXAS SOUTHWESTERN
GAS CORPORATION ON TRANSPORTER'S OKLAHOMA
EXTENSION MAINLINE IN OR NEAR SEC.
1-T8N-R19W, WASHITA COUNTY, OKLAHOMA.
</TABLE>
A-5
<PAGE>
Exhibit A (CONT'D)
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT: 105559
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY RECEIPT POINT/S
- -----------------------
28. TRANSCO/NGPL WHARTON WHARTON TX 967 04 19,595
--------------------
INTERCONNECT WITH TRANSCONTINENTAL GAS
PIPELINE COMPANY IN H.& T.C.R.R. SURVEY,
A-186.
29. TUBB #1-1 WINKLER WINKLER TX 1620 05 3,047
-----------------
INTERCONNECT WITH SHIPPER OR ITS
PRODUCER(S)/SUPPLIER(S) AT OR NEAR THE
ATLANTIC TUBB #1-1 WELL ON TRANSPORTER'S
CRITTENDON GATHERING SYSTEM IN SEC. 1,
BLOCK C24, WINKLER COUNTY, TEXAS.
30. WILLAMAR PLT AMOCO/NGPL WILLACY WILLACY TX 457 04 873
-------------------------------
OUTLET OF AMOCO'S WILLAMAR PLANT VIA
TRANSPORTER'S WILLAMAR LATERAL IN THE
SAN JUAN DE CARRICITOS GRANT, WILLACY
COUNTY, TEXAS.
31. YOUNG TRUST #1-4 HEMPHILL HEMPHILL TX 989 02 3,403
-------------------------
INTERCONNECT WITH THE FACILITIES OF
SHIPPER'S DESIGNEE ON TRANSPORTER'S
WASHITA CREEK LATERAL IN SEC. 4, H.&
G.N.R.R. SURVEY, BLOCK M-1. UPSTREAM OF
TRANSPORTER'S P.P. #163.
</TABLE>
SECONDARY RECEIPT POINT/S
- -------------------------
All secondary receipt points, and the related priorities and volumes, as
provided under the Tariff provisions governing this agreement.
A-6
<PAGE>
Exhibit A (CONT'D)
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT: 105559
RATES
Except as provided to the contrary in any written agreement(s) between the
parties in effect during the term hereof, Shipper shall pay Natural the maximum
rate and all other lawful charges as specified in Natural's firm service rate
schedules.
FUEL GAS AND GAS LOST AND UNACCOUNTED FOR PERCENTAGE (%)
Shipper will be assessed the applicable percentage for Fuel Gas and Gas
Lost and Unaccounted for.
TRANSPORTATION OF LIQUIDS
Transportation of liquids may occur at permitted points identified in
Natural's current Catalog of Receipt and Delivery Points, but only if the
parties execute a separate liquids agreement.
A-7
<PAGE>
Exhibit B
Dated DECEMBER 01, 1993
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT: 105559
<TABLE>
<CAPTION>
COUNTY/PARISH PIN MDQ
NAME / LOCATION AREA STATE NO. ZONE (MMBTU)
--------------- -------------- ----- ---- ---- -------
<S> <C> <C> <C> <C> <C>
PRIMARY DELIVERY POINT/S
- ------------------------
1. NO SHORE/NGPL GRAYSLAKE LAKE LAKE IL 1 01 64,370
-----------------------------
INTERCONNECT WITH NORTH SHORE GAS
COMPANY LOCATED IN SEC. 12-T44N-R10E,
LAKE COUNTY, ILLINOIS.
LAKE, IL
2. PGLC/NGPL ROGERS PARK COOK COOK IL 4174 01 235,630
---------------------------
INTERCONNECT WITH THE PEOPLES GAS LIGHT
AND COKE COMPANY ON TRANSPORTER'S HOWARD
STREET LINE IN SEC. 36-T41N-R13E, COOK,
COUNTY, ILLINOIS.
COOK, IL
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SECONDARY DELIVERY POINT/S
All secondary delivery points, and the related priorities and volumes, as
provided under the Tariff provisions governing this agreement.
B-1
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EXHIBIT C DATED DECEMBER 01, 1993
PRIMARY TRANSPORTATION PATH SEGMENT MDQs
COMPANY : PEOPLES GAS LIGHT & COKE CO.
CONTRACT: 105559
Pursuant to Natural's tariff, an MDQ exists for each primary transportation
path segment and direction under the Agreement. Such MDQ is the maximum daily
quantity of gas which Natural is obligated to transport on a firm basis along a
primary transportation path segment.
A primary transportation path segment is the path between a primary
receipt, delivery or node point and the next primary receipt, delivery or node
point. A node point is the point of interconnection between two or more of
Natural's pipeline facilities.
A map of Natural's pipeline system showing these primary transportation
path segment MDQs, and the direction to which each applies, is attached.
C-1
<PAGE>
NATURAL GAS PIPELINE CO. OF AMERICA
FTS PATH MAP - EXHIBIT C DATED DECEMBER 01, 1993
SHIPPER :Peoples Gas
CONTRACT NO.:105559
MDQ :
Exhibit C depicts the relevant portion, including compressor stations, of
Natural Gas Pipeline Company of America's transmission system, the primary
receipt and delivery points under the transportation agreement, the volumes
associated with each point, and the transportation path defined by the primary
receipt and delivery points. Exhibit C also specifies the Maximum Daily
Quantity under the transportation agreement.
C-2
