<PAGE>
--------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 30, 1995
COMMISSION FILE NUMBER 0-13804
------------------------
THE CHICAGO DOCK AND CANAL TRUST
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
ILLINOIS 36-2476640
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
</TABLE>
455 EAST ILLINOIS STREET, SUITE 565, CHICAGO, ILLINOIS 60611
(Address of Principal Executive Offices)
(312) 467-1870
(Registrant's Telephone Number, Including Area Code)
------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------------------------------------ ----------------------
<S> <C>
Common Shares of Beneficial Interest-no par Not Listed
value
</TABLE>
------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) with the Commission, and (2) has
been subject to the filing requirements for at least the past 90 days.
<TABLE>
<S> <C>
Yes X No
---------
------------
</TABLE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
MARKET VALUE
Based on the last sale price on June 1, 1995 of $11.50 per share, as
reported on NASDAQ, the aggregate market value of the outstanding Shares of
Beneficial Interest held by non-affiliates of the Registrant as of June 1, 1995
was $65,012,502.
OUTSTANDING SHARES
The number of Common Shares of Beneficial Interest, no par value,
outstanding as of June 1, 1995 was 5,783,800.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
PORTION OF FORM 10-K
DESCRIPTION OF DOCUMENT WHERE INCORPORATED
--------------------------------------------------------------------------- -------------------------------
<S> <C>
Portions of the Registrant's definitive Proxy Statement, to be filed
pursuant to Regulation 14A, issued in connection with its Annual Meeting of Part III Items 10, 11, 12 and
Shareholders to be held on October 5, 1995. 13.
</TABLE>
2
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST
FORM 10-K
ANNUAL REPORT FOR THE FISCAL YEAR ENDED APRIL 30, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
DESCRIPTION PAGE
----------- -----
<S> <C> <C>
PART I
Item 1. Business...................................................................................... 4
Item 2. Properties.................................................................................... 11
Item 3. Legal Proceedings............................................................................. 13
Item 4. Submission of Matters to a Vote of Security Holders........................................... 13
Executive Officers of the Trust............................................................... 14
PART II
Item 5. Market for the Trust's Common Shares and Related Security Holder Matters...................... 15
Item 6. Selected Financial Data....................................................................... 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 18
Item 8. Financial Statements and Supplementary Data................................................... 27
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......... 48
PART III
Item 10. Trustees and Executive Officers of the Trust.................................................. 48
Item 11. Executive Compensation........................................................................ 48
Item 12. Security Ownership of Certain Beneficial Owners and Management................................ 48
Item 13. Certain Relationships and Related Transactions................................................ 48
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.............................. 48
</TABLE>
3
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST
FORM 10-K, ANNUAL REPORT
FOR FISCAL YEAR ENDED APRIL 30, 1995
PART I
ITEM 1. BUSINESS
The Chicago Dock and Canal Trust ("Trust") is an equity oriented real estate
investment trust which owns partially developed land located in downtown
Chicago, Illinois and income producing real property in Chicago and elsewhere.
The Trust was organized in 1962, succeeding to the business of its corporate
predecessor. The Trust has elected to continue its operation as a real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as amended
("Code"). The Trust is self administered. Its principal executive offices are
located at 455 East Illinois Street, Suite 565, Chicago, Illinois, 60611. The
telephone number is (312) 467-1870.
As of April 30, 1995, the Trust's principal real estate investments
consisted of: (i) fee title or other interests in approximately 22 acres of
partially developed land in Cityfront Center in downtown Chicago (including
certain developed sites discussed below); (ii) Waterplace Park, an office
complex in Indianapolis, Indiana; and (iii) Lincoln Garden, an office complex in
Tampa, Florida.
The corporate predecessor of the Trust was formed in 1857 to own and develop
certain land located on the north side of the Chicago River at its intersection
with Lake Michigan. That land, together with neighboring parcels acquired
thereafter, represents the primary asset of the Trust. During the latter part of
the 19th century, the land was developed for industrial use, benefiting from its
prime location as a transportation hub with water and rail access.
In the early 1960's, the Trust adopted a program to redevelop its property
for residential and commercial use commencing with the orderly termination of
industrial and warehouse leases. Initial redevelopment occurred in 1965 with the
long-term ground lease of a site for Lake Point Tower, a 70 story apartment
building; this site was exchanged in 1983 for other developed real estate, an
installment note and cash.
In 1983 the Trust contributed its remaining land and industrial buildings to
Chicago Dock-Equitable Venture ("CDEV"), a joint venture with The Equitable Life
Assurance Society of the United States ("Equitable"). Equitable contributed cash
and two buildings adjoining the Trust's land: the Equitable Building, a 35 story
office building, and the Mandel Building, an older mixed use warehouse, office
and storage building. In 1985, the Chicago City Council approved a Planned
Development Ordinance for the property owned by CDEV and the project was named
Cityfront Center. In November 1985, the Venturers agreed to dissolve CDEV
because of their inability to agree on basic business strategies relating to the
development of CDEV's property. The Trust received the portion of the Cityfront
Center property lying east of Columbus Drive in Chicago that it had originally
contributed to CDEV and a 62% interest in the Equitable Building. The Trust
entered into a lease with Equitable for the Trust's 62% interest in the
Equitable Building and granted Equitable an option to acquire the Trust's
interest. Equitable exercised this option and acquired the Trust's interest in
the Equitable Building on December 17, 1991.
Since the dissolution of CDEV, the following developments have been
completed on the Trust's portion of Cityfront Center:
4
<PAGE>
NORTH PIER
In fiscal 1987, the Trust disposed of a portion of the property it received
in the dissolution of CDEV to enable the redevelopment of North Pier, an
existing warehouse building in Cityfront Center. The disposition was structured
as an exchange of property and resulted in the acquisition of Waterplace Park.
The redevelopment was completed in June 1989 and contains 250,000 square feet of
office space and 200,000 square feet of retail space. During fiscal 1993, the
Trust relocated its administrative offices to North Pier.
In April 1989, the Trust sold the site adjacent to North Pier on the east to
Brick Venture for an installment note, the final installment of which was
collected in June 1992. A 61 story residential building containing 505 units was
completed on the site in early calendar 1991.
SHERATON CHICAGO HOTEL & TOWERS
In October 1988, the Trust entered into a 50 year ground lease (with lessee
options to extend the term 49 more years) for 2.3 acres of land with Tishman
Realty Corporation of Cook County ("Tishman Realty"). The lease required the
development of a convention hotel containing 1,200 rooms. The ground lease also
contains a lessee option to purchase the property first exercisable in the year
2003. The Trust was obligated to provide certain infrastructure improvements in
the area of the hotel prior to its completion. Construction of the required
infrastructure began in July 1990 and was completed in March 1992. The hotel
also opened in March 1992.
CITYFRONT PLACE MID-RISE
On December 17, 1991, the Trust acquired the Cityfront Place Mid-Rise
apartment complex ("Mid-Rise"). The acquisition of the Mid-Rise was part of a
transaction in which the Trust exchanged its 62% undivided interest in the
Equitable Building in Chicago for the Mid-Rise. The Mid-Rise, which is part of
the three building complex known as Cityfront Place, consists of two 12-story
buildings containing a total of 424 rental units and parking for 339 cars. The
Mid-Rise first opened in May 1991 and was acquired by the Trust for $52.5
million.
CITYFRONT PLACE HIGH-RISE
In August 1989, the Trust contributed a 0.6 acre site (the "High-Rise"
site), to a wholly owned subsidiary, CDCT Residence Corporation (the "Residence
Corp."). The Residence Corp. then contributed the High-Rise site as its capital
contribution to a partnership, LCD Partnership ("LCD"), with Daniel E. Levin
("Levin"). The Residence Corp. is a two-thirds partner in LCD and Levin is a
one-third partner. LCD then entered into a joint venture, New Street Joint
Venture ("NSJV"), with Northwestern Mutual Life Insurance Company ("Northwestern
Mutual") to develop the site with a 39 story building containing 480 rental
units, a health club and parking for 288 cars. Northwestern Mutual and LCD are
50/50 partners in NSJV (resulting in the Trust effectively owning one-third of
NSJV) subject to Northwestern Mutual's priority over LCD in certain
distributions of cash flow and proceeds from sale or refinancing. The building
opened in July 1991. The High-Rise and Mid-Rise are jointly managed and leased.
OGDEN PLAZA PARKING FACILITY
In conjunction with the infrastructure associated with the Sheraton Chicago
Hotel & Towers, the Trust constructed a 300 stall parking facility under and
adjacent to Ogden Plaza. The facility contains an additional 100 stalls in an
area under Columbus Drive, adjacent to Ogden Plaza. This area is occupied
pursuant to a license from the City of Chicago. This public facility, which
opened in March 1992, serves parking needs for the hotel and the current
surrounding office and residential buildings. It will also serve
5
<PAGE>
the future planned developments adjacent to the east and north of the facility,
including the performing arts theater discussed below.
CHICAGO MUSIC AND DANCE THEATER, INC.
During the third quarter of fiscal 1995, the Trust sold a parcel of land to
the Chicago Music and Dance Theater, Inc. (the "Theater") for the construction
of a 1,500 seat performing arts theater in Cityfront Center. The site is
approximately 41,000 square feet and is located in the view corridor on the
east-west axis with Ogden Slip. Under the zoning applicable to the site, there
is a height limitation of 150 feet. The Theater is currently raising funds for
the construction of the project. Ground breaking is expected to occur in late
calendar 1995.
UNDEVELOPED LAND
In addition to the developments described above, the zoning applicable to
the Trust's portion of Cityfront Center pertains to the following areas owned or
controlled by the Trust and permits the following uses and building areas:
<TABLE>
<CAPTION>
TOTAL DEVELOPABLE BUILDING
SITE AREA AREA
(IN ACRES) (IN MILLION SQ. FT)
------------------------------ ------------------------------
INCREASE/ INCREASE/
4/30/94 (DECREASE) 4/30/95 4/30/94 (DECREASE) 4/30/95
------- ---------- ------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Commercial...................................................... 5.1 (.9) 4.2 5.6 (.1) 5.5
Residentia1..................................................... 9.0 -- 9.0 4.1 -- 4.1
</TABLE>
The decrease in site area and developable building area in the above table
represents the land and building areas sold to the Chicago Music and Dance
Theater, Inc. in fiscal 1995.
The Trust has some flexibility in the uses allowed under its zoning. It can
substitute up to 500,000 square feet of residential building area for commercial
building area or substitute up to 3,650,000 square feet of commercial building
area for residential building area.
In addition to the above, the Trust owns a 2.1 acre site in Cityfront Center
which is currently occupied by the Kraft Building. It is under lease until April
2016, at which time the improvements thereon will revert to the Trust. Due to
the length of the lease, this site was not included in the Planned Development
Ordinance.
INFRASTRUCTURE IMPROVEMENTS
The Trust plans to construct infrastructure at Cityfront Center in three
phases, two of which are now complete. In fiscal 1988, Phase I infrastructure
was completed. The major elements of Phase I consisted of filling a portion of
Ogden Slip, constructing a portion of the River Esplanade, upgrading Illinois
Street and a portion of East North Water Street and the construction of three
new roads: (1) McClurg Court between Grand Avenue and the Chicago River, (2) New
Street, a street west of McClurg Court between Illinois and East North Water
Streets and (3) River Drive, a street adjacent to the River Esplanade, west of
McClurg Court.
In conjunction with the development of the Sheraton Chicago Hotel & Towers,
the Trust completed the construction of Phase II in fiscal 1992. Phase II
consists of Ogden Plaza, elevated roadways adjacent
6
<PAGE>
to Columbus Drive and surrounding the plaza and a parking facility under and
adjacent to the plaza. The portion of the River Esplanade adjacent to the hotel
was also completed at that time by the developers of the hotel.
Phase III infrastructure will consist primarily of the River Esplanade and
River Drive east of McClurg Court, Du Sable Park (a 3 acre park east of Lake
Shore Drive), the slip promenade on the south bank of the Ogden Slip and the
upgrading of the remainder of East North Water Street. The current cost of Phase
III is estimated to be approximately $12 million. The Trust is obligated to
contribute $600,000 for improvements to be made in Du Sable Park, which are
expected to be completed during calendar 1996. The remainder of Phase III will
be constructed as needed to support additional development in the area but not
later than the completion of 2,500 units of residential development on the east
portion of Cityfront Center of which approximately 1,400 units have been
completed to date.
INVESTMENT PORTFOLIO DIVERSIFICATION
As of April 30, 1995, the Trust owned property located in Chicago, Illinois,
Tampa, Florida and Indianapolis, Indiana.
The Tampa property was acquired on July 31, 1986 as part of the exchange of
the Trust's interests in the Palmolive Building located in Chicago, Illinois.
The Indianapolis property was acquired on September 30, 1986 in exchange for a
portion of North Pier in Chicago, Illinois. These acquisitions enabled the Trust
to diversify into other geographic markets, thereby reducing the impact of
adverse market conditions in any single geographic area.
REAL ESTATE INVESTMENTS
The following table summarizes the Trust's real estate investments by type
as of April 30, 1995:
<TABLE>
<CAPTION>
FINANCIAL STATEMENT
NET CARRYING VALUE
NUMBER OF ----------------------
TYPE OF INVESTMENT INVESTMENTS AMOUNT PERCENT
------------------------------------------------------------------ ----------------- ----------- ---------
<S> <C> <C> <C>
Residential (Outright ownership and partnership interest)......... 2 $46,343,601 56.3%
Land and land improvements held for development................... 1 15,247,084 18.5%
Office............................................................ 2 12,545,134 15.3%
Ground lease (Hotel).............................................. 1 5,626,644 6.8%
Parking garage.................................................... 1 2,551,900 3.1%
-
----------- ---------
Total........................................................... 7 $82,314,363 100.0%
-
-
----------- ---------
----------- ---------
</TABLE>
INVESTMENT STRATEGY
The Trust emphasizes long-term asset appreciation related to its undeveloped
properties and the maximization of cash flow and asset value of its interests in
currently developed properties. It seeks to develop its property expeditiously
while limiting the amount of risk it assumes in that development. It also seeks
to participate in potential increases in cash flows and residual values in its
development projects. To accomplish these objectives, the Trust has entered into
a participating, unsubordinated ground lease, formed a joint venture and
exchanged other assets to acquire a completed residential building in Cityfront
Center. It continues to seek future development opportunities for its property
in Cityfront Center in similar arrangements, but will also consider other
transaction structures which it believes will maximize the value of its assets.
In order to maximize the value of the undeveloped property it owns in
Chicago, substantial land improvements are required (See Item 7: Management's
Discussion and Analysis of Financial Condition
7
<PAGE>
and Results of Operations). The Trust views these expenditures as consistent
with its investment philosophy of maximizing future asset value.
The Trust is not currently seeking to make mortgage loan investments, its
present intention being to invest principally in real estate equities. However,
the Trust in the future may also invest in mortgages. The Trust has entered into
and may consider entering into additional partnerships, joint ventures or
similar arrangements with other parties for the development of individual
parcels in Cityfront Center.
While the Trust may not, under federal tax law applicable to REIT's, hold
property for sale in the ordinary course of business, its policy is to evaluate
periodically its portfolio of properties which might be considered for sale,
lease or exchange, for example, the recent sale transaction with the Chicago
Music and Dance Theater, Inc. (See Item 7: Management's Discussion and Analysis
of Financial Condition and Results of Operations). The Trust's preference is to
structure transactions to defer the current recognition of taxable gain, either
through exchanges, installment sales or long-term ground leases.
The Trust also evaluates the acquisition of properties for its portfolio.
Currently, it has limited its focus to properties in the vicinity of its
Cityfront Center property in Chicago.
COMPETITION
With respect to its property in Chicago, the Trust is faced with competition
from existing buildings and other undeveloped sites. The office segment of the
Chicago real estate market remains overbuilt, making it unlikely that any
significant office project will be started on the Trust property during the next
several years. Development of the Trust's Chicago property will require
substantial financing (See Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations). The real estate development and
investment business in Chicago is highly competitive and many of the Trust's
competitors have substantially greater financial resources. As a REIT, the Trust
is also subject to certain limitations on its ability to sell and develop
properties which are not applicable to non-REIT competitors.
As an owner of developed commercial and residential real estate properties,
the Trust competes with other owners of similar properties. The Trust competes
with other residential buildings in the area, including the Cityfront Place
High-Rise, in which the Trust is also a partner, and North Pier Apartment Tower,
both of which are located in Cityfront Center. With respect to its ground lease
on the Sheraton Chicago Hotel & Towers site, the minimum rent is payable without
regard to the occupancy of the hotel. Beginning July 1, 1995, the Trust will
receive percentage rent based on the hotel's gross revenues if and to the extent
such percentage rent exceeds base rent.
EMPLOYEES
The Trust is self administered and had eight full time employees as of June
1, 1995.
FEDERAL INCOME TAXATION
The Trust has elected to be treated as a REIT under sections 856 through 860
of the Code. While the Trust expects to continue to operate and invest in a
manner which will maintain its qualification as a REIT, it continually evaluates
the benefits of qualifying as a REIT and the operating and investment
restrictions imposed by the Code. The Trust elected to be taxed as a REIT in
1962 and believes that in all intervening years it has qualified as a REIT.
During this period, Arthur Andersen LLP, independent public accountants,
annually audited the Trust's financial statements and in conjunction with Wilson
& McIlvaine, general counsel to the Trust, concluded that the Trust has met the
REIT qualification tests.
8
<PAGE>
TRUSTEES
At April 30, 1995 there were nine Trustees of the Trust, one of whom was
also an employee of the Trust. The non-employee Trustees are paid base fees
(currently in the form of stock options), meeting fees and committee fees and
are reimbursed for travel and related expenses. The non-employee Trustees also
participate in two Trustee Stock Option Plans.
ENVIRONMENTAL MATTERS
A number of jurisdictions, including Illinois, have laws and regulations
related to environmental controls in the development or transfer of real estate.
These laws and regulations may reduce the number of investment opportunities
available to the Trust, impose remediation costs associated with any adverse
conditions discovered or increase the cost of development opportunities which
the Trust elects to pursue.
In June 1993, the U.S. Environmental Protection Agency (the "EPA") conducted
preliminary surface tests on a 2.8 acre site currently used as a surface parking
lot (the "Tested Site"). The Tested Site was examined because thorium, a
radioactive element, may have been used on the Tested Site earlier in the
century by a former tenant, in a building which was demolished in the mid 1930's
after the expiry of the tenant's lease.
In January 1994, the Trust entered into a consent order with the EPA
regarding preliminary testing to be performed on the Tested Site. Initial
on-site tests were conducted pursuant to that order in May 1994 and laboratory
analysis was completed on these samples in June 1994. The results of the tests
indicate one concentrated area which appears to be contaminated by thorium, and
other scattered areas on the Tested Site with significantly lower levels of
contamination. The most contaminated area is within the footprint of the former
building previously occupied by the former tenant. The Trust submitted the
results of the testing to the EPA in September 1994. The EPA is currently
evaluating the results of those tests.
The Trust's consultants have prepared cost estimates to remediate the
contaminated areas on the Tested Site which range from $1 million to $5 million,
with $3.5 million representing the most likely amount. That range of costs is
estimated based on the results of surface measurements and the analysis of
samples gathered from nine borings taken on the site. While these tests were
made pursuant to the consent order with the EPA, additional conditions may exist
on the site which would be discovered only upon excavation.
On August 11, 1995, the Trust entered into an agreement with Kerr-McGee
Chemical Corporation ("KMCC"), the successor to a former tenant of the Tested
Site, regarding the financial responsibilities of the parties for the
remediation of the Tested Site (the "Reimbursement Agreement"). Under the terms
of the Reimbursement Agreement, KMCC will be responsible for the remediation of
the Tested Site and the Trust has the obligation to reimburse KMCC for 25% of
the cost of remediation, not to exceed a maximum reimbursement obligation of the
Trust of $750,000. Legal counsel has advised the Trust that it may have claims
for coverage for some or all of its share of the remediation costs under its
current or prior insurance policies.
The EPA has not made a ruling on whether current remediation will be
required nor the form or scope of such remediation. At the latest, the Tested
Site will be remediated when redevelopment occurs. The remediation will most
likely be in the form of excavation and disposal of the soil in specified
disposal areas. It is probable that the Trust and/or KMCC will enter into a
subsequent consent order regarding remediation.
In connection with the option to lease three parcels in Cityfront Center
which the Trust granted to Northwestern Memorial Hospital (the "Hospital") in
June 1992 and which terminated in November 1992,
9
<PAGE>
the Hospital hired an independent consultant to conduct certain tests on the
parcels subject to option. The results of those tests were consistent with the
findings reported based on the Trust's preliminary environmental reconnaissance
conducted in 1989, but also noted the presence of petroleum products spread over
an approximate 24,000 square foot area, a portion of which is located under the
Tested Site. Based on chemical testing results, the soil is not considered to be
hazardous waste. There is no current requirement to remediate the site for this
condition.
In connection with the development of the convention hotel by Tishman
Realty, excavation on that parcel revealed an underground fuel storage tank
installed by an earlier lessee of the parcel. The tank and contaminated soil
were removed and disposed of as required by law, with Tishman Realty bearing the
majority of such expense.
In light of the earlier industrial uses of portions of the Trust's property
in Chicago, other kinds of adverse environmental conditions may exist on the
property, although the Trust is not currently aware of any such material
conditions. The Trust commissioned a preliminary environmental reconnaissance of
the property in 1989 by an independent consultant. The consultant's report,
while noting the presence of certain materials in trace amounts, concluded that
there were no known unusual conditions at the property, given its prior
manufacturing and warehousing uses. However, this reconnaissance did not test
for radioactive materials. The Trust is not aware of any conditions, other than
the Tested Site as discussed above, which would require current remediation or
which would materially increase the cost of future development of its property
in Chicago.
10
<PAGE>
ITEM 2. PROPERTIES
The following tables and accompanying discussion set forth information
concerning each property in which the Trust owns an equity interest or has a
leasehold interest as of April 30, 1995. See also Schedule III in Item 8 for
additional information.
<TABLE>
<CAPTION>
RENTABLE
YEAR YEAR BUILDING AREA NUMBER OF OCCUPANCY AT
COMPLETED ACQUIRED (SQUARE FEET) TENANTS 4/30/95
------------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
OFFICE COMPLEXES--
Lincoln Garden 1981 1986 72,800 31 87%
Tampa, Florida
Waterplace Park 1980 1986 105,000 26 60%
Indianapolis, Indiana
<CAPTION>
PRINCIPAL TENANTS
-----------------------------
<S> <C>
OFFICE COMPLEXES--
Lincoln Garden Engineering Science
Tampa, Florida Nationwide Insurance
Managed Care
Waterplace Park General Services Admin.
Indianapolis, Indiana Indianapolis Physical Therapy
Center for Neuro Rehab
</TABLE>
<TABLE>
<CAPTION>
TOTAL UNIT MIX
RENTABLE AREA ---------------------------------------------
YEAR YEAR (1) (SQUARE
COMPLETED ACQUIRED FEET) STUDIOS CONVERTIBLES 1-BEDROOM
------------- ----------- ------------- ----------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
APARTMENTS--
Cityfront Place Mid-Rise 1991 1991 343,519 80 40 210
Chicago, Illinois
Cityfront Place High-Rise (2) 1991 1989 368,442 120 120 180
Chicago, Illinois
<CAPTION>
RESIDENTIAL
2-BEDROOM + PARKING OCCUPANCY AT
DUPLEXES STALLS 4/30/95
----------------- ----------- -------------
<S> <C> <C> <C>
APARTMENTS--
Cityfront Place Mid-Rise 94 339 97%
Chicago, Illinois
Cityfront Place High-Rise (2) 60 288 96%
Chicago, Illinois
</TABLE>
<TABLE>
<CAPTION>
YEAR YEAR SITE AREA
COMPLETED ACQUIRED (ACRES)
------------- ------------ -------------
<S> <C> <C> <C> <C>
OTHER--
Parking Facility-- 1992 1992 1.8
Ogden Plaza
Chicago, Illinois
Ground lease (Hotel)- 1992 1985(4) 2.3
Sheraton Chicago Hotel & Towers
Chicago, Illinois
Land and land improvements N/A 1985(4) 15.3
held for development--
Chicago, Illinois
NOTES:
<CAPTION>
OTHER
---------------------------------------------
<S> <C>
OTHER--
Parking Facility-- 400 stalls (3)
Ogden Plaza
Chicago, Illinois
Ground lease (Hotel)- 1,200 rooms
Sheraton Chicago Hotel & Towers
Chicago, Illinois
Land and land improvements Current uses include Surface Parking, Vacant
held for development-- Land and Ground Lease (Kraft Building)
Chicago, Illinois
NOTES:
<FN>
------------------------------
(1) The Mid-Rise includes 11,000 square feet of commercial space, all of which
was occupied at April 30, 1995. The High-Rise includes 7,708 square feet of
commercial space, of which 3,424 square feet was occupied at April 30,
1995.
(2) The Trust owns an effective 1/3 interest in this building, subject to
priority distributions to one of the Venture partners.
(3) Of these stalls, 100 stalls are in an area under Columbus Drive, adjacent
to Ogden Plaza, which is subject to a license from the City of Chicago.
(4) Received in the dissolution of CDEV in 1985. The Trust initially
contributed this property, a substantial portion of which was owned by the
Trust since 1857, to CDEV in 1983 (See Item 1).
</TABLE>
11
<PAGE>
LINCOLN GARDEN
At Lincoln Garden, the Trust's office complex in Tampa, Florida, rent and
vacancy levels remain stable. Occupancy averaged 90% during fiscal 1995 and was
87% at April 30, 1995. For the remainder of calendar 1995, leases are due to
expire on 15% of the total leasable area.
WATERPLACE PARK
Occupancy at Waterplace Park averaged 89% during the fiscal year. However,
occupancy at April 30, 1995 had dropped to 60% due to the expiration of the
lease for Tri-County Mental Health ("Tri-County") in March 1995. Tri-County,
which had occupied approximately 28% of Waterplace Park, was the largest tenant
at the property. The Trust has had constructive discussions with an existing
tenant about leasing 50% of the old Tri-County space, and is actively pursuing
new tenants for the remainder of Tri-County's space. For the remainder of
calendar 1995, 8% of the total leasable area is due to expire.
CITYFRONT PLACE
During fiscal 1995, occupancy averaged 92% and 96% for the Mid-Rise and
High-Rise buildings, respectively.Average rental rates per square foot at April
30, 1995 were 4% higher in the Mid-Rise and 5% higher in the High-Rise compared
to rates in effect at April 30, 1994.
OGDEN PLAZA PARKING FACILITY
At the Ogden Plaza parking facility, net revenues for fiscal 1995 were
$512,000, approximately the same as in the prior fiscal year. The parking
facility continues to benefit from the usage of the adjacent Sheraton Chicago
Hotel & Towers as well as special events in the vicinity of the facility.
SHERATON CHICAGO HOTEL & TOWERS
The Trust's ground lease related to the Sheraton Chicago Hotel & Towers
provides that minimum base rent is due to the Trust regardless of the operations
of the hotel. However, the Trust will receive percentage rent beginning July 1,
1995 if gross revenues from the operations of the hotel multiplied by applicable
percentages exceed base rent (See Note 3 to the financial statements). Calendar
1994 gross revenues from operations of the hotel equaled $58 million. In
comparison, during calendar 1993 the hotel recognized gross revenues from
operations of $54 million. Average occupancy during calendar 1994 was
approximately 68%, an increase over the average occupancy during calendar 1993
of 65%.
LAND AND LAND IMPROVEMENTS
Land and land improvements held for development includes surface parking
lots, vacant land and a 2.1 acre site which is currently occupied by the Kraft
Building. The surface lots are leased on a triple-net basis to North Pier
Chicago through December 31, 1995. Net rent from the surface parking lots
received by the Trust during fiscal 1995 equaled approximately $300,000. In
addition, the Trust recorded revenues from real estate taxes payable by lessees
of $1,013,000 from the surface parking lots during fiscal 1995. Real estate
taxes payable by lessees are also reflected as an expense, and therefore, do not
affect net income.
One of the surface parking lots includes the Tested Site (See Item 1). In
the fourth quarter of fiscal 1995, the Trust recorded environmental remediation
expense of $1,035,000 based upon the resolution of accounting and other issues
related to environmental remediation costs of property held for development.
This amount includes the Trust's share of testing and legal costs related to the
Tested Site through April 30, 1995, plus $750,000, which is the maximum
reimbursement obligation of the Trust pursuant to the
12
<PAGE>
Reimbursement Agreement entered into with KMCC (See Item 1: Business).
ITEM 3. LEGAL PROCEEDINGS
In January 1994, the Trust entered into a consent order with the EPA
regarding the Tested Site. Preliminary tests indicate that the Tested Site is
contaminated by thorium, which was used by a prior tenant on the site. On August
11, 1995, the Trust entered into an agreement with KMCC regarding the financial
responsibilities of the parties for the remediation of the Tested Site (See Item
1: Business).
The Trust's legal counsel has advised the Trust that it may have claims for
coverage for some or all of its share of the remediation costs under its current
or prior insurance policies.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Trust's security holders during
the last quarter of its fiscal year ended April 30, 1995.
13
<PAGE>
EXECUTIVE OFFICERS OF THE TRUST
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS AND
AFFILIATIONS DURING THE
NAME AGE PAST FIVE YEARS
------------------- --- -------------------------------------------------------------------------
<S> <C> <C>
Charles R. Gardner 50 President and Chief Executive Officer of the Trust since January 1982.
David R. Tinkham 40 Vice President-Finance, of the Trust since June 1985. Treasurer of the
Trust since September 1993, and Assistant Secretary since December 1993.
</TABLE>
There is no family relationship among any of the officers listed above nor any
arrangements or understandings between any such officer and any other person
pursuant to which he was elected an officer. Each officer may be removed by the
Trustees at any time subject to severance payments as stipulated in his
employment contract.
All required filings by officers and Trustees were timely.
14
<PAGE>
PART II
ITEM 5. MARKET FOR THE TRUST'S COMMON SHARES AND RELATED SECURITY HOLDER MATTERS
MARKET INFORMATION AND DIVIDENDS DECLARED
The Trust's Common Shares of Beneficial Interest (the "shares") are traded
in the over-the-counter market and the prices are quoted on the National Market
System of the National Association of Securities Dealers' Automated Quotations
System ("NASDAQ"). The symbol is "DOCKS".
The following table sets forth the high and low closing sale prices of the
shares, as reported by NASDAQ, and dividends declared per share:
<TABLE>
<CAPTION>
FISCAL 1996
---------------------------------
DIVIDENDS
QUARTER HIGH LOW DECLARED
----------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
First, through June 1, 1995.................................................. $ 12.25 $ 11.50 (Note 1)
<CAPTION>
FISCAL 1995
---------------------------------
DIVIDENDS
QUARTER HIGH LOW DECLARED
----------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
Fourth....................................................................... $ 11.50 $ 10.25 $ .01
Third........................................................................ 12.00 10.00 .01
Second....................................................................... 11.50 9.50 .01
First........................................................................ 10.25 9.00 .01
<CAPTION>
FISCAL 1994
---------------------------------
DIVIDENDS
QUARTER HIGH LOW DECLARED
----------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
Fourth....................................................................... $ 11.00 $ 8.75 $ .01
Third........................................................................ 10.50 8.625 .01
Second....................................................................... 10.75 8.25 .01
First........................................................................ 10.25 7.75 .01
<FN>
------------------------------
(1) A dividend of $.01 per share for the first quarter of fiscal 1996 was
declared at the July 19, 1995 meeting of the Board of Trustees.
</TABLE>
APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
<TABLE>
<CAPTION>
APPROXIMATE NUMBER OF RECORD
TITLE OF CLASS HOLDERS AS OF JUNE 1, 1995
-------------------------------------------------------------------- -------------------------------
<S> <C>
Common Shares of Beneficial Interest 540
</TABLE>
15
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the Trust and
should be read in conjunction with the financial statements and notes thereto
included in Part II, Item 8.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
REVENUES..................................................... $ 22,389 $ 20,714 $ 20,554 $ 19,224 $ 20,431
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
OPERATING INCOME (LOSS)...................................... $ (1,019) $ 309 $ (1,412) $ 1,484 $ 4,021
INVESTMENT AND OTHER INCOME.................................. 342 321 376 706 898
EQUITY IN NET LOSS OF LCD PARTNERSHIP........................ (475) (530) (1,218) (830) --
NET GAIN (LOSS) FROM DISPOSITION OF REAL ESTATE.............. (1,729) -- -- 43,849 --
RESERVE FOR ASSET IMPAIRMENT................................. -- -- -- -- (787)
--------- --------- --------- --------- ---------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM.................. (2,881) 100 (2,254) 45,209 4,132
EXTRAORDINARY ITEM:
GAIN FROM EXTINGUISHMENT OF DEBT 2,067 -- -- -- --
--------- --------- --------- --------- ---------
NET INCOME (LOSS)............................................ $ (814) $ 100 $ (2,254) $ 45,209 $ 4,132
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
REAL ESTATE, net............................................. $ 82,314 $ 103,029 $ 106,329 $ 110,157 $ 69,193
TOTAL ASSETS................................................. 123,276 140,156 139,573 138,320 101,620
MORTGAGE NOTES PAYABLE....................................... 27,369 44,121 42,493 41,080 42,196
SHAREHOLDERS' EQUITY......................................... 82,897 83,942 84,073 87,773 44,357
PER SHARE:
EARNINGS (LOSS)............................................ $ (.14) $ .02 $ (.39) $ 7.82 $ .71
DIVIDENDS DECLARED......................................... .04 .04 .25 .31 .31
BOOK VALUE................................................. 14.33 14.51 14.54 15.18 7.67
OTHER SUPPLEMENTARY DATA:
CASH FLOWS PROVIDED BY (USED IN):
OPERATING ACTIVITIES....................................... $ 2,115 $ 2,468 $ (26) $ 1,145 $ 3,448
INVESTING ACTIVITIES....................................... 2,225 (2,148) 1,953 (3,290) (15,470)
FINANCING ACTIVITIES....................................... (4,483) (409) (2,033) 1,946 12,063
FUNDS FROM OPERATIONS (See Note 1)........................... 2,859 4,454 2,328 4,225 6,888
NOTE 1
The Board of Governors of the National Association of Real Estate Investment Trusts in 1991 adopted a definition of
"Funds From Operations" as follows:
Funds from Operations means net income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the
same basis.
</TABLE>
In March 1995, the Board of Governors clarified this definition with respect
to the treatment of certain items, although the clarification did not affect the
Trust's reporting of such funds. The above definition of Funds from Operations
includes certain material non-cash items which are reported in income and
expense of the Trust. Specifically, accrued environmental remediation, the
effect of averaging rental revenue from the hotel ground lease, and the
difference between current interest payable and contractual interest on the note
secured by the rents from and the land under the hotel, are included in Funds
from Operations. Please refer to the Consolidated Statements of Cash Flows in
the financial statements for the computation of cash flows from operating,
investing and financing activities.
16
<PAGE>
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
------------------------------------------------------
JULY 31, OCTOBER 31, JANUARY 31, APRIL 30,
1994 1994 1995 1995
----------- ------------- ------------- -----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUES-
Revenue from rental property...................................... $ 3,956 $ 4,045 $ 3,894 $ 3,630
Real estate taxes payable by lessees.............................. 1,886 1,660 1,659 1,659
----------- ------------- ------------- -----------
Total revenues.................................................. 5,842 5,705 5,553 5,289
----------- ------------- ------------- -----------
EXPENSES-
Real estate taxes................................................. 788 805 761 743
Real estate taxes payable by lessees.............................. 1,886 1,660 1,659 1,659
Property operating expenses....................................... 846 967 703 791
Environmental remediation expense................................. -- -- -- 1,035
General and administrative........................................ 409 441 520 487
Depreciation and amortization..................................... 926 951 863 757
Interest expense.................................................. 913 1,060 1,015 763
----------- ------------- ------------- -----------
Total expenses.................................................. 5,768 5,884 5,521 6,235
----------- ------------- ------------- -----------
Operating income (loss)......................................... 74 (179) 32 (946)
INVESTMENT AND OTHER INCOME......................................... 76 88 101 77
EQUITY IN NET LOSS OF LCD PARTNERSHIP............................... (141) (112) (119) (103)
NET LOSS FROM DISPOSITION OF REAL ESTATE............................ -- -- (1,729) --
----------- ------------- ------------- -----------
Net income (loss) before extraordinary item....................... 9 (203) (1,715) (972)
EXTRAORDINARY ITEM -
Gain from extinguishment of debt -- -- 2,067 --
----------- ------------- ------------- -----------
Net income (loss)............................................... $ 9 $ (203) $ 352 $ (972)
----------- ------------- ------------- -----------
----------- ------------- ------------- -----------
EARNINGS (LOSS) PER SHARE........................................... $ .00 $ (.03) $ .06 $ (.17)
----------- ------------- ------------- -----------
----------- ------------- ------------- -----------
<CAPTION>
FOR THE QUARTER ENDED
------------------------------------------------------
JULY 31, OCTOBER 31, JANUARY 31, APRIL 30,
1993 1993 1994 1994
----------- ------------- ------------- -----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUES-
Revenue from rental property...................................... $ 4,224 $ 4,173 $ 4,050 $ 4,099
Real estate taxes payable by lessees.............................. 1,619 1,152 674 723
----------- ------------- ------------- -----------
Total revenues.................................................. 5,843 5,325 4,724 4,822
----------- ------------- ------------- -----------
EXPENSES-
Real estate taxes................................................. 754 778 769 702
Real estate taxes payable by lessees.............................. 1,619 1,152 674 723
Property operating expenses....................................... 871 855 800 918
General and administrative........................................ 477 470 450 468
Depreciation and amortization..................................... 938 942 936 965
Interest expense.................................................. 1,040 1,051 1,062 991
----------- ------------- ------------- -----------
Total expenses.................................................. 5,699 5,248 4,691 4,767
----------- ------------- ------------- -----------
Operating income................................................ 144 77 33 55
INVESTMENT AND OTHER INCOME......................................... 79 78 81 83
EQUITY IN NET LOSS OF LCD PARTNERSHIP............................... (186) (149) (83) (112)
----------- ------------- ------------- -----------
Net income...................................................... $ 37 $ 6 $ 31 $ 26
----------- ------------- ------------- -----------
----------- ------------- ------------- -----------
EARNINGS PER SHARE.................................................. $ .01 $ .00 $ .01 $ .00
----------- ------------- ------------- -----------
----------- ------------- ------------- -----------
</TABLE>
17
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
During the third quarter of fiscal 1995, the Trust completed the sale of a
parcel of land located in Cityfront Center to the Chicago Music and Dance
Theater, Inc. The site is scheduled to be improved with a new 1,500 seat
performing arts theater and an adjacent concourse for public pedestrian traffic.
The parcel contains approximately 41,000 square feet. The Trust recognized a
gain from disposition of real estate of $1,603,000 from this transaction.
On December 16, 1994, the Trust permitted the sale by foreclosure of One
Michigan Avenue, an office building in Lansing, Michigan to its lender, Pacific
Mutual Life Insurance Company, in full satisfaction of the note secured by One
Michigan Avenue. The One Michigan Avenue note, issued in August 1987, modified
in March 1994 and further modified in August 1994 (the "August modification")
was non-recourse with respect to the Trust. Accordingly, the Trust's financial
exposure was limited to the loss of the property. The Trust concluded that the
property's reasonably estimated future value was insufficient to warrant the
future capital investment required to satisfy the terms of the August
modification agreement to the loan. The Trust recognized a net loss of
$1,265,000 during the third quarter of fiscal 1995 as a result of the sale by
foreclosure (See Net Loss From Disposition of Real Estate and Gain From
Extinguishment of Debt which follows in Results of Operations for a more
complete discussion).
During fiscal 1995, average occupancy of the Mid-Rise and High-Rise
Buildings of Cityfront Place was 92% and 96%, respectively. However, occupancy
had risen to 97% at the Mid-Rise and equaled 96% at the High-Rise as of April
30, 1995. At the Trust's property in Tampa, occupancy declined slightly to 87%
at April 30, 1995 compared with 90% a year earlier. Average occupancy for the
Tampa property during fiscal 1995 equaled 90%. Occupancy at the Trust's property
in Indianapolis averaged 89% during fiscal 1995. However, occupancy at April 30,
1995 had dropped to 60% due to the expiration of the lease for Tri-County Mental
Health ("Tri-County") in March 1995. Tri-County, which had occupied
approximately 28% of Waterplace Park, was the largest tenant at the property.
The Trust has had constructive discussions with an existing tenant about leasing
50% of the old Tri-County space, and is actively pursuing new tenants for the
remainder of Tri-County's space. Neither the Waterplace Park property nor the
Lincoln Garden property is subject to any debt.
During fiscal 1995, the Trust completed the testing specified in the consent
order which it entered into in 1994 with the United States Environmental
Protection Agency (the "EPA"). The results of this testing confirmed that a
portion of the Tested Site (See Item 1) has concentrations of thorium in excess
of normal amounts. The highest concentrations are within the footprint of a
building which was demolished in the mid 1930's and which had been occupied by a
former tenant of the Trust. The tests also confirmed that, in its current state,
the site does not pose a hazard to human health.
After completing the testing, the Trust submitted the results to the EPA in
September 1994 as required under the terms of the consent order. The EPA has not
completed its review of the data and accordingly has not specified when
remediation may be required nor the scope of such remediation. The subsurface
testing also confirmed the range of estimated remediation costs which had been
previously reported. That range is from a minimum of approximately $1 million to
as much as $5 million. The most likely amount of estimated remediation costs
equals $3.5 million.
On August 11, 1995, the Trust entered into an agreement with Kerr-McGee
Chemical Corporation ("KMCC") regarding the financial responsibilities of the
parties for the remediation of the Tested Site (the "Reimbursement Agreement").
Under the terms of the Reimbursement Agreement, KMCC will be responsible for the
remediation of the Tested Site and the Trust has the obligation to reimburse
KMCC for 25% of the cost of remediation, not to exceed a maximum reimbursement
obligation of the Trust of $750,000. The Trust may recover some or all of its
share of the remediation costs from its insurance
18
<PAGE>
carriers.
The Ogden Plaza parking facility continued to produce good operating results
during fiscal 1995. During the year, the Trust recorded $512,000 of net revenue
from the operation of the facility, approximately the same as in the prior
fiscal year. Revenues from both years reflect demand for parking created by the
adjacent Sheraton Chicago Hotel & Towers, as well as attendance at special
events nearby.
Certain tenants are required to pay real estate taxes on land they lease
from the Trust. These real estate taxes payable by lessees are reflected as both
revenue and expense, and therefore, do not affect net income. Real estate taxes
payable by lessees are also reflected as both a receivable and payable in the
Trust's consolidated balance sheets. The difference between the receivable and
the payable amounts reflects monthly escrow payments made by the owners of North
Pier Chicago to the Trust for real estate taxes on surface parking lots leased
by North Pier. These monthly escrow payments are included in security deposit
cash in the Trust's consolidated balance sheets until they are paid to the Cook
County Collector.
The office segment of the Chicago real estate market remains overbuilt. It
is unlikely that there will be any significant office project started on the
Trust property for at least the next several years. While occupancy in the
residential segment of the market has remained relatively strong, current rent
levels do not justify new construction. The Trust has eight residential sites
currently available for development, two of which require no additional
infrastructure improvements. The Trust continues to pursue development
opportunities in the form of ground leases, joint ventures or outright
ownership.
RESULTS OF OPERATIONS
FISCAL 1995 VERSUS FISCAL 1994
REVENUES:
Revenue from rental property decreased in fiscal 1995 compared to fiscal
1994 primarily due to the disposition of One Michigan Avenue in December 1994.
Furthermore, revenues at One Michigan Avenue declined in the current fiscal year
prior to the disposition, due to the decrease in occupancy and rental rate under
the terms of IBM's new lease at the property. The combination of these two
factors resulted in a decrease in revenue from One Michigan Avenue during fiscal
1995 of $1,054,000.
The increase in real estate taxes payable by lessees during fiscal 1995
reflects an increase in the estimated tax assessment on the Sheraton Chicago
Hotel & Towers. Real estate taxes payable by lessees are also reflected as an
expense, and therefore, do not affect net income.
Equity in Net Loss of LCD Partnership reflects the Trust's effective
one-third share of the operations of New Street Joint Venture, the entity which
owns the Cityfront Place High-Rise. The fiscal 1995 loss reflects the building's
operations from January 1, 1994 through December 31, 1994, New Street Joint
Venture's fiscal year. The 1995 loss had no impact on Trust cash flows since New
Street Joint Venture had positive income before depreciation and amortization
expense and because of the cash flow priority of LCD's partner in New Street
Joint Venture.
EXPENSES:
Real estate taxes increased in fiscal 1995 compared to fiscal 1994 due to
refunds of prior year real estate taxes received in fiscal 1994. Refunds of
prior year real estate taxes received during fiscal 1995 were significantly
less. The fiscal 1995 increase was partially offset by the disposition of One
Michigan Avenue in December 1994 and by the sale in December 1994 of a parcel of
land located in Cityfront Center to the Chicago Music and Dance Theater, Inc.
19
<PAGE>
The decreases in property operating expenses and in depreciation and
amortization expense during fiscal 1995 reflect the disposition of One Michigan
Avenue in December 1994. The Trust stopped recording these expenses on December
16, 1994, the date of the sale by foreclosure of One Michigan Avenue.
Accordingly, for fiscal 1995, the Trust recorded only seven and a half months of
these expenses compared to twelve months for fiscal 1994.
In the fourth quarter of fiscal 1995, the Trust recorded environmental
remediation expense of $1,035,000 based upon the resolution of accounting and
other issues related to environmental remediation costs of property held for
development and the execution of the Reimbursement Agreement with KMCC (See Item
1: Business). No such expense was recorded during fiscal 1994. This amount
includes the Trust's share of testing and legal costs related to the Tested Site
through April 30, 1995, plus $750,000, which is the maximum reimbursement
obligation of the Trust pursuant to the terms of the Reimbursement Agreement.
This amount excludes the amount of the potential claims for some or all of the
Trust's share of the remediation costs under the Trust's current or prior
insurance policies.
Interest expense for fiscal 1995 decreased compared to fiscal 1994 primarily
due to the disposition of One Michigan Avenue in December 1994. Although the
Trust suspended regular debt service on the One Michigan Avenue note subsequent
to the September 1, 1993 payment, the Trust continued to accrue interest on the
loan through the date of the disposition of the property. See Note 4 to the
financial statements for a more complete discussion of the One Michigan Avenue
note. The decrease in interest expense was partially offset by an increase in
interest expense on the note secured by the rents from and the land under the
Sheraton Chicago Hotel & Towers due to the increased principal balance of this
note resulting from the additional accrual of interest under the terms of the
note.
NET LOSS FROM DISPOSITION OF REAL ESTATE AND GAIN FROM EXTINGUISHMENT OF
DEBT:
The Trust recognized a gain of $1,603,000 from the sale of a parcel of land
to the Chicago Music and Dance Theater, Inc. during the third quarter of fiscal
1995. Total consideration from the sale equaled $2,638,000 which consisted of
cash received of $1,250,000 plus the value of a construction obligation of
$1,388,000 assumed by the Theater which will benefit the surrounding parcels
still owned by the Trust. This construction obligation is a pedestrian concourse
through the theater site which was required under the Planned Development
Ordinance affecting the Trust's land at Cityfront Center.
During the third quarter of fiscal 1995, the Trust also recognized a net
loss of $1,265,000 as a result of the sale by foreclosure of One Michigan
Avenue. The net loss consisted of a loss from disposition of real estate of
$3,332,000 and an extraordinary gain from the extinguishment of debt of
$2,067,000. The loss from real estate represents the difference between the
carrying value of the property and the estimated fair market value of the
property on the date of foreclosure. The extraordinary gain represents the
difference between the principal amount of the note plus accrued interest and
the estimated fair market value of the property on the date of the foreclosure.
FISCAL 1994 VERSUS FISCAL 1993
REVENUES:
Revenue from rental property increased in fiscal 1994 compared to fiscal
1993 primarily due to higher occupancy at the Mid-Rise. During fiscal 1993, the
initial lease-up of the Mid-Rise was still in progress, while the building was
substantially fully occupied throughout fiscal 1994. As a result, revenues from
the Mid-Rise increased by $1,004,000. In addition, fiscal 1994 parking revenues
increased by $150,000 due to increased activity at the Ogden Plaza parking
garage. These increases were partially offset by the $220,000 of revenue the
Trust recorded during fiscal 1993 from the lease option granted to Northwestern
Memorial Hospital. No such revenue was recorded during fiscal 1994.
20
<PAGE>
The decrease in real estate taxes payable by lessees during fiscal 1994
reflects a lower than estimated tax assessment on the Sheraton Chicago Hotel &
Towers. This decrease was partially offset by an increase in real estate taxes
on the Kraft Building. Real estate taxes payable by lessees are also reflected
as an expense, and therefore, do not affect net income.
Equity in Net Loss of LCD Partnership reflects the Trust's effective
one-third share of the operations of New Street Joint Venture, the entity which
owns the Cityfront Place High-Rise. The fiscal 1994 loss reflects the building's
operations from January 1, 1993 through December 31, 1993, New Street Joint
Venture's fiscal year. The fiscal 1994 loss was smaller than the loss in fiscal
1993 due to higher occupancy. The fiscal 1993 loss reflects the ongoing initial
lease-up of the High-Rise during that period. The 1994 loss had no impact on
Trust cash flows since New Street Joint Venture had positive income before
depreciation and amortization expense and because of the cash flow priority of
LCD's partner in New Street Joint Venture.
EXPENSES:
The decrease in real estate taxes during fiscal 1994 reflects refunds of
prior year real estate taxes received during the first quarter of fiscal 1994.
The decrease in general and administrative expense during fiscal 1994
reflects the substitution of stock options for 100% of the Trustees' retainer
fees and 20% of key employees' cash compensation.
The increase in interest expense during fiscal 1994 was due to the increased
balance on the note secured by the rents from and the land under the Sheraton
Chicago Hotel & Towers. However, the impact of aggregate interest expense on the
cash flows of the Trust was favorable compared to fiscal 1993. The Trust
suspended regular debt service on the One Michigan Avenue note subsequent to the
September 1, 1993 payment. The Trust continued, however, to accrue interest on
the loan for the entire fiscal year. The accrued but unpaid interest related to
One Michigan Avenue totaled $644,000 during fiscal 1994. See Note 4 to the
financial statements for a more complete discussion of the One Michigan Avenue
note.
LIQUIDITY AND CAPITAL RESOURCES
FISCAL 1995 VERSUS FISCAL 1994
CASH FLOWS:
Operating:
Cash flows from operating activities decreased in fiscal 1995 compared to
fiscal 1994 by $353,000. This decrease was primarily due to a decrease during
fiscal 1995 of $359,000 in refunds of prior year real estate taxes. The amount
of refunds received during fiscal 1994 was unusually high. During fiscal 1994
the Trust received $473,000 in refunds compared to just $114,000 received during
fiscal 1995.
Cash flows from operating activities from the Mid-Rise increased during
fiscal 1995 due to lower real estate tax payments. Fiscal 1994 payments were
unusually high due to the change in the assessment of the Mid-Rise site from
partially developed. This increase in fiscal 1995 cash flows was partially
offset by higher real estate tax payments on the Trust's other Cityfront Center
land. Cash flows from operating activities for the Trust's other operating
properties as a group were substantially unchanged from fiscal 1994 to fiscal
1995.
No change occurred from fiscal 1994 to fiscal 1995 in the effect of
averaging rental revenue. This item represents the difference between revenue
recognized and cash rent received during the year on the hotel ground lease. In
both fiscal years the Trust recorded revenue of $4,848,000 while receiving cash
of
21
<PAGE>
$150,000.
The difference between current interest payable and contractual interest
represents the difference between interest expense on the note secured by the
rents from and the land under the hotel, and the interest paid on this note.
This difference was $160,000 greater in fiscal 1995 due to the increase in the
outstanding principal balance of the loan. The cash interest paid equals the
minimum cash rent from the hotel ground lease through December 31, 1998.
Investing:
Cash flows from investing activities increased in fiscal 1995 compared to
fiscal 1994 due to several factors. First, cash received from the sale of land
to the Chicago Music and Dance Theater, Inc. equaled $1,250,000 during fiscal
1995. Second, the $1,000,000 One Michigan Avenue loan escrow funded during
fiscal 1994 was returned to the Trust during fiscal 1995. Finally, the Trust
sold United States Treasury Notes with a par value of $1,250,000 to facilitate
the paydown of the $4,000,000 advance on its line of credit with First Bank,
N.A.
Additions to investments in real estate during fiscal 1995 consisted
primarily of tenant improvements of $694,000 and building improvements of
$245,000. In contrast, fiscal 1994 additions to investments in real estate
consisted primarily of tenant improvements of $254,000, costs related to
environmental matters of $203,000 and building improvements of $90,000.
Financing:
Cash flows used in financing activities increased in fiscal 1995 compared to
fiscal 1994 due to the paydown of the Trust's $4,000,000 advance on its line of
credit with First Bank, N.A., during fiscal 1995. Earlier in fiscal 1995 the
Trust prepaid the $4,000,000 Cityfront Place Mid-Rise note issued February 25,
1992, using the proceeds from a $4,000,000 advance on its available $20,000,000
line of credit with First Bank, N.A.
FUNDS FROM OPERATIONS:
Funds from Operations decreased during fiscal 1995 compared to fiscal 1994
by $1,595,000 primarily due to three factors. First, the Trust recorded
environmental remediation expense of $1,035,000 during fiscal 1995. No such
expense was recorded during fiscal 1994. Second, refunds of prior year real
estate taxes decreased during fiscal 1995 by $359,000. Third, interest expense
increased by $160,000 during fiscal 1995 on the note secured by the rents from
and the land under the Sheraton Chicago Hotel & Towers due to the increasing
balance of this note resulting from the additional accrual of interest under the
terms of the note. Funds from Operations includes certain material non-cash
items which are reported in income and expense of the Trust. Please refer to the
Consolidated Statements of Cash Flows in the financial statements for the
computation of cash flows from operating, investing and financing activities.
FISCAL 1994 VERSUS FISCAL 1993
CASH FLOWS:
Operating:
Cash flows from operating activities increased in fiscal 1994 compared to
fiscal 1993 by $2,494,000. The change in net income from fiscal 1993 to fiscal
1994 accounts for $2,354,000 of this increase. Included in the change in net
income are depreciation and amortization and equity in net loss of LCD
Partnership. Both are non-cash items and had no impact on cash flows from
operating activities.
22
<PAGE>
No change occurred from fiscal 1993 to fiscal 1994 in the effect of
averaging rental revenue. This item represents the difference between revenue
recognized and cash rent received during the year on the hotel ground lease. In
both fiscal years the Trust recorded revenue of $4,848,000 while receiving cash
of $150,000.
The difference between current interest payable and contractual interest
represents the difference between interest expense on the note secured by the
rents from and the land under the hotel, and the interest paid on this note.
This difference was $171,000 greater in fiscal 1994 due to the increase in the
outstanding principal balance of the loan. The cash interest paid equals the
minimum cash rent from the hotel ground lease through December 31, 1998.
Mid-Rise real estate taxes paid during fiscal 1994 reflect an increase of
$1,056,000 over the prior fiscal year. Since real estate taxes in Chicago are
assessed on a calendar-year basis, one year in arrears, Mid-Rise real estate
taxes paid during fiscal 1993 reflected a period when the Mid-Rise site was
assessed as partially developed.
The Trust suspended regular debt service on the One Michigan Avenue note
subsequent to the September 1, 1993 payment. The Trust continued, however, to
accrue interest on the loan for the entire fiscal year. The accrued but unpaid
interest related to One Michigan Avenue totaled $644,000 during fiscal 1994.
This amount was reflected as an expense, but was not paid.
Investing:
Cash flows from investing activities decreased in fiscal 1994 compared to
fiscal 1993 primarily due to the receipt of the second and final installment
payment on the Brick Venture note of $2,950,000 during fiscal 1993. A second
factor occurred during the fourth quarter of fiscal 1994 when the Trust placed
$1,000,000 into an escrow account as part of the One Michigan Avenue loan
modification agreement.
Additions to investments in real estate during fiscal 1994 consisted
primarily of tenant improvements of $254,000, costs related to environmental
matters of $203,000 and building improvements of $90,000. In contrast, fiscal
1993 additions to investments in real estate consisted primarily of tenant
improvements of $496,000, Phase II infrastructure costs of $389,000 and building
improvements of $107,000.
FINANCING:
Cash flows used in financing activities decreased in fiscal 1994 compared to
fiscal 1993 primarily as a result of the reduction of the Trust's quarterly
dividend from $.08 per share to $.01 per share effective beginning for the
dividend payable on June 1, 1993.
FUNDS FROM OPERATIONS:
Funds from Operations increased during fiscal 1994 compared to fiscal 1993
due primarily to three factors. First, higher occupancy at the Mid-Rise
increased revenues by $1,004,000. Second, higher occupancy at the High-Rise led
to a reduction in the Equity in Net Loss of LCD Partnership of $688,000. Third,
refunds of prior year real estate taxes led to a decrease in real estate tax
expense of $404,000. Funds from Operations includes certain material non-cash
items which are reported in income and expense of the Trust. Please refer to the
Consolidated Statements of Cash Flows in the financial statements for the
computation of cash flows from operating, investing and financing activities.
23
<PAGE>
The Trust has historically used non-recourse debt secured by individual
properties as the primary source of additional capital, when needed, to fund
acquisitions or development. It has also acquired income producing properties in
tax-deferred exchanges in which little or no debt was required. The Trust
currently has four income producing properties with no debt -- Waterplace Park,
Lincoln Garden, the Cityfront Place Mid-Rise and the Ogden Plaza parking
facility.
During the third quarter of fiscal 1995, the Trust entered into a three year
$20,000,000 revolving credit agreement with First Bank, N.A. secured by the
Mid-Rise apartment building. At April 30, 1995, the full amount of the facility
is available. The Trust agreed to make monthly payments into an escrow account
to fund the semi-annual real estate tax payments due on the Cityfront Place
Mid-Rise. At April 30, 1995 the balance in this account equaled $130,000.
At April 30, 1995, total interest bearing debt of the Trust equaled
$27,369,000, all of which was fixed rate debt.
The Trust has occasionally sold properties. The most recent sale occurred
during the third quarter of fiscal 1995 when the Trust sold a parcel containing
approximately 41,000 square feet to the Chicago Music and Dance Theater, Inc.
The Trust received total consideration of $2,638,000 from this sale, of which
$1,250,000 was in cash and $1,388,000 represents the assumption by the Theater
of an obligation under the Planned Development Ordinance affecting the Trust's
land at Cityfront Center, to construct a pedestrian concourse adjacent to the
theater site. Prior to this, the Trust sold the land under the Brick Venture
apartment building adjacent to North Pier at Cityfront Center in fiscal 1989.
The Trust received installment payments of $1.5 million in fiscal 1992 and $2.95
million in fiscal 1993 related to that sale.
In January 1994, the Trust entered into a consent order with the EPA
regarding preliminary testing to be performed on a 2.8 acre site in Cityfront
Center currently used as a parking lot (the "Tested Site"). The EPA has not made
a ruling on whether current remediation will be required nor the form or scope
of such remediation. The Trust's consultants have prepared cost estimates to
remediate the contaminated areas on the Tested Site which range from $1 million
to $5 million, with $3.5 million representing the most likely amount.
On August 11, 1995, the Trust entered into an agreement with KMCC regarding
the financial responsibilities of the parties for the remediation of the Tested
Site (the "Reimbursement Agreement"). Under the terms of the Reimbursement
Agreement, KMCC will be responsible for the remediation of the Tested Site and
the Trust has the obligation to reimburse KMCC for 25% of the cost of
remediation, not to exceed a maximum reimbursement obligation of the Trust of
$750,000.
The Trust will consider using its current cash, investments available for
sale or its current credit facility, to fund its obligations under the
Reimbursement Agreement with KMCC. The Trust may have claims for coverage for
some or all of its share of the remediation costs under its current or prior
insurance policies.
In order to fully develop the land owned by the Trust in Chicago, additional
infrastructure expenditures will be required. These improvements are necessary
to fully redevelop the property in accordance with the Planned Development
Ordinance approved by the Chicago City Council on November 6, 1985.
The Trust completed Phase I infrastructure in fiscal 1988 using the proceeds
from borrowings secured by the Kraft Building and One Michigan Avenue. Total
Phase I expenditures amounted to approximately $10 million. The Trust completed
Phase II infrastructure in fiscal 1992 using the proceeds from a borrowing
secured by the rents from and land under the Sheraton Chicago Hotel & Towers
ground lease.
Phase III infrastructure consists primarily of the River Esplanade and River
Drive east of McClurg Court, Du Sable Park (a 3 acre park east of Lake Shore
Drive), the slip promenade on the south bank
24
<PAGE>
of the Ogden Slip and the upgrading of the remainder of East North Water Street.
The total current cost of the improvements is estimated to be approximately $12
million. The Trust is obligated to contribute $600,000 for improvements to be
made in Du Sable Park, which are expected to be completed during calendar 1996.
The remainder of Phase III will be constructed as needed to support additional
development in the area. However, certain improvements are required to be
completed no later than the completion of 2,500 units of residential development
on the east portion of Cityfront Center. It is the intention of the Trust to
finance future infrastructure with cash on hand, its current credit facility,
general corporate indebtedness, borrowings secured by its income producing
properties and ground leases, asset sales or some combination of these sources.
The New Street Joint Venture Agreement obligates LCD and Northwestern Mutual
to contribute, if necessary, their prorata shares of funds related to the
operation of the High-Rise building. As of April 30, 1995, LCD had funded
$335,000 as its share of additional capital contributions, all of which was
contributed prior to fiscal 1994. LCD currently holds approximately $800,000 in
short term investments. The Trust's two-thirds share of these short term
investments is not reflected on the Trust's balance sheet and is in addition to
the Trust's cash and investments. The New Street Joint Venture agreement
provides for Northwestern Mutual to receive a priority return of operating cash
flow and the proceeds from sale or refinancing of the High-Rise. Cash flow must
increase significantly from its current level for LCD to receive any cash
distributions from New Street Joint Venture after the payment of Northwestern's
preferential return.
On December 16, 1994 the Trust agreed to permit the sale by foreclosure of
One Michigan Avenue, an office building in Lansing, Michigan to its lender,
Pacific Mutual Life Insurance Company, in full satisfaction of the note secured
by One Michigan Avenue. The One Michigan Avenue note, issued in August 1987,
modified in March 1994 and further modified in August 1994 had an interest rate
of 10% and carrying value at December 15, 1994 of $14,590,000. The disposition
of the property will not have a significant impact on the future cash flow of
the Trust. Cash flow from the property was not significant in fiscal 1995.
At Waterplace Park in Indianapolis, the lease for the largest tenant expired
at the end of March 1995. The Trust is currently seeking replacement tenants for
the 29,000 square feet, or 28% of the total building which the tenant vacated.
It is expected that substantial tenant improvement work will be required to
attract new tenants and that brokerage commissions will also be paid in
releasing the space. All of the space is currently vacant.
The Trust currently leases three surface parking lots to the owner of North
Pier Chicago. The lease expires at the end of December 1995. It is anticipated
that there will be an increase in the net cash flow to the Trust after the
expiry of the lease from either a renegotiation of the current lease terms or
from the Trust regaining control of the lots.
Starting July 1, 1995, the base rent payable to the Trust from its lease
with Cityfront Hotel Associates Limited Partnership for the Sheraton Chicago
Hotel & Towers increases to an annual rate of $1.8 million from the current
annual amount of $150,000. While all of this increase will be paid as additional
debt service on the loan which financed the infrastructure improvements
associated with the hotel, it is the starting point for future increases in
minimum base rent and minimum rent will exceed the debt service beginning in
1999. Also starting July 1, 1995, the percentage rent provisions of the ground
lease become effective.
On April 14, 1993 the Board of Trustees of the Trust declared a reduction of
the Trust's quarterly dividend to $.01 per share from $.08 per share effective
for the dividend payable on June 1, 1993. Quarterly dividends declared since
that date have remained at $.01 per share. The dividend reduction is part of an
overall asset management program implemented in order to conserve cash within
the Trust.
25
<PAGE>
Management considers that the Trust's liquidity at April 30, 1995 is
adequate to meet its operating needs and commitments.
26
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of
The Chicago Dock and Canal Trust:
We have audited the accompanying consolidated balance sheets of The Chicago
Dock and Canal Trust and Subsidiaries as of April 30, 1995 and 1994, and the
related consolidated statements of income, cash flows, and shareholders' equity
for each of the three years in the period ended April 30, 1995. These financial
statements are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The Chicago
Dock and Canal Trust and Subsidiaries as of April 30, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended April 30, 1995, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
August 14, 1995
27
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF APRIL 30, 1995 AND 1994
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
INVESTMENT IN REAL ESTATE, at cost:
Developed properties (Note 3)........................................................... $ 70,487 $ 91,771
Land and land improvements held for development (Note 3)................................ 16,916 18,298
Land subject to hotel ground lease (Note 3)............................................. 6,549 6,500
Less-Accumulated depreciation and amortization.......................................... (11,638) (13,540)
---------- ----------
Net investment in real estate......................................................... 82,314 103,029
---------- ----------
OTHER ASSETS:
Cash and cash equivalents............................................................... 344 487
---------- ----------
Investments available for sale, at cost (approximate market value of $3,721 and $4,985
in 1995 and 1994, respectively)........................................................ 3,725 5,023
---------- ----------
Short-term investments-restricted (approximate market value of $130 and $1,001 in 1995
and 1994, respectively) (Note 10)...................................................... 130 1,000
---------- ----------
Security deposit cash................................................................... 1,330 1,240
---------- ----------
Receivables-
Tenants (including $25,887 and $21,491 of accrued but unbilled rents in 1995 and 1994,
respectively) (Note 3)............................................................... 26,009 21,926
Real estate taxes payable by lessees.................................................. 6,012 5,016
Land improvements (Note 3)............................................................ 1,388 --
Interest.............................................................................. 91 85
Other................................................................................. 506 478
---------- ----------
Total receivables................................................................... 34,006 27,505
---------- ----------
Other assets, net....................................................................... 1,427 1,872
---------- ----------
$ 123,276 $ 140,156
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses:
Real estate taxes..................................................................... $ 3,817 $ 3,815
Real estate taxes payable by lessees.................................................. 6,893 5,861
Accrued environmental remediation costs (Note 11)..................................... 750 --
Other................................................................................. 1,492 2,359
Cash dividends payable (Note 5)......................................................... 58 58
Mortgage notes payable (Note 4)......................................................... 27,369 44,121
---------- ----------
Total liabilities................................................................... 40,379 56,214
---------- ----------
SHAREHOLDERS' EQUITY (Note 5):
Common shares of beneficial interest:
No par value, 20,000,000 authorized, 5,944,200 issued.................................. 3,101 3,101
---------- ----------
Preferred shares of beneficial interest:
No par value, 1,000,000 authorized, none issued........................................ -- --
---------- ----------
Undistributed income before net gain from sale of real estate properties................ 7,870 9,022
Undistributed net gain from sale of real estate properties.............................. 72,545 72,438
---------- ----------
Total undistributed net income...................................................... 80,415 81,460
---------- ----------
Less-
Treasury shares of beneficial interest, at cost-160,400 at April 30, 1995 and 1994.... (619) (619)
---------- ----------
Total shareholders' equity.......................................................... 82,897 83,942
---------- ----------
$ 123,276 $ 140,156
---------- ----------
---------- ----------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
28
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
REVENUES:
Revenue from rental property......................................................................... $15,525 $16,546 $15,609
Real estate taxes payable by lessees................................................................. 6,864 4,168 4,945
------- ------- -------
Total revenues..................................................................................... 22,389 20,714 20,554..
------- ------- -------
EXPENSES:
Real estate taxes.................................................................................... 3,097 3,003 3,407
Real estate taxes payable by lessees................................................................. 6,864 4,168 4,945
Property operating expenses.......................................................................... 3,307 3,444 3,390
Environmental remediation expense (Note 11).......................................................... 1,035 -- --
General and administrative........................................................................... 1,857 1,865 2,156
Depreciation and amortization........................................................................ 3,497 3,781 3,982
Interest expense..................................................................................... 3,751 4,144 4,086
------- ------- -------
Total expenses..................................................................................... 23,408 20,405 21,966
------- ------- -------
Operating income (loss)............................................................................ (1,019) 309 (1,412)
INVESTMENT AND OTHER INCOME............................................................................ 342 321 376
EQUITY IN NET LOSS OF LCD PARTNERSHIP (Note 2)......................................................... (475) (530) (1,218)
NET LOSS FROM DISPOSITION OF REAL ESTATE (Note 3)...................................................... (1,729) -- --
------- ------- -------
Net income (loss) before extraordinary item.......................................................... (2,881) 100 (2,254)
EXTRAORDINARY ITEM:
Gain from extinguishment of debt (Note 3)............................................................ 2,067 -- --
------- ------- -------
Net income (loss).................................................................................... $ (814) $ 100 $(2,254)
------- ------- -------
------- ------- -------
EARNINGS (LOSS) PER SHARE.............................................................................. $(.14) $.02 $(.39)
------- ------- -------
------- ------- -------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
29
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................................................................... $ (814) $ 100 $(2,254)
Add (deduct)-Adjustments to reconcile net income to net cash flows from operating activities:
Net loss from disposition of real estate........................................................... 1,729 -- --
Gain from extinguishment of debt................................................................... (2,067) -- --
Depreciation and amortization...................................................................... 3,497 3,781 3,982
Environmental remediation costs.................................................................... 953 -- --
Effect of averaging rental revenue................................................................. (4,698) (4,698) (4,698)
Equity in net loss of LCD Partnership.............................................................. 475 530 1,218
Changes in receivables............................................................................. (871) 1,815 (4,225)
Changes in accounts payable and accrued expenses................................................... 1,834 (898) 4,290
Difference between current interest payable and contractual interest............................... 1,922 1,762 1,591
Amortization of loan fees.......................................................................... 155 90 89
Other.............................................................................................. -- (14) (19)
------- ------- -------
Cash flows provided by (used in) operating activities................................................ 2,115 2,468 (26)
------- ------- -------
Cash flows from investing activities:
Proceeds from sales and maturities of investments available for sale............................... 1,755 500 --
Purchases of investments available for sale........................................................ (1,963) (1,006) (1,553)
Net (acquisition) disposition of short-term investments............................................ 1,506 273 1,594
Net (acquisition) disposition of short-term investments-restricted................................. 870 (1,000) 438
Additions to investments in real estate............................................................ (1,099) (620) (1,149)
Music and Dance Theater land sale.................................................................. 1,250 -- --
Receipt of installment payment on Brick Venture transaction........................................ -- -- 2,950
Lease commissions and other........................................................................ (94) (295) (327)
------- ------- -------
Cash flows provided by (used in) investing activities................................................ 2,225 (2,148) 1,953
------- ------- -------
Cash flows from financing activities:
Cash dividends declared............................................................................ (231) (231) (1,446)
Change in dividends payable........................................................................ -- -- (405)
Proceeds from bank line of credit.................................................................. 4,000 -- --
Payment of mortgage loan fees...................................................................... (168) (44) (4)
Principal payments on loans........................................................................ (8,084) (134) (178)
------- ------- -------
Cash flows provided by (used in) financing activities................................................ (4,483) (409) (2,033)
------- ------- -------
Increase (decrease) in cash and cash equivalents....................................................... (143) (89) (106)
Cash and cash equivalents, beginning of period......................................................... 487 576 682
------- ------- -------
Cash and cash equivalents, end of period............................................................... $ 344 $ 487 $ 576
------- ------- -------
------- ------- -------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
30
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNDISTRIBUTED
INCOME BEFORE UNDISTRIBUTED
COMMON NET GAIN FROM NET GAIN FROM TREASURY
SHARES OF SALE OF REAL SALE OF REAL SHARES OF
BENEFICIAL ESTATE ESTATE BENEFICIAL
INTEREST PROPERTIES PROPERTIES INTEREST TOTAL
--------- ------------- ------------- --------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, April 30, 1992.......................................... $3,101 $11,407 $73,884 $(619) $87,773
Net loss for the year.......................................... -- (2,254) -- -- (2,254)
Cash dividends declared, $.25 per share (Note 5)............... -- -- (1,446) -- (1,446)
--------- ------------- ------------- --------- -------
BALANCE, April 30, 1993.......................................... 3,101 9,153 72,438 (619) 84,073
Net income for the year........................................ -- 100 -- -- 100
Cash dividends declared, $.04 per share (Note 5)............... -- (231) -- -- (231)
--------- ------------- ------------- --------- -------
BALANCE, April 30, 1994.......................................... 3,101 9,022 72,438 (619) 83,942
Net income (loss) for the year................................. -- (1,152) 338 -- (814)
Cash dividends declared, $.04 per share (Note 5)............... -- -- (231) -- (231)
--------- ------------- ------------- --------- -------
BALANCE, April 30, 1995.......................................... $3,101 $ 7,870 $72,545 $(619) $82,897
--------- ------------- ------------- --------- -------
--------- ------------- ------------- --------- -------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
31
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1995, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(A) PRINCIPLES OF CONSOLIDATION --
The consolidated financial statements include the accounts of the Trust and
its wholly owned subsidiaries. All material intercompany accounts are eliminated
in consolidation.
(B) INCOME TAXES --
The Trust has elected to be taxed as a real estate investment trust and
intends to make distributions to its shareholders so as to be relieved of
substantially all federal income taxes relating to ordinary income under
provisions of current tax regulations (See Note 5).
(C) EARNINGS PER SHARE --
The computation of earnings per share is based on 5,783,800 shares
outstanding for 1995, 1994 and 1993.
(D) INVESTMENTS IN REAL ESTATE --
Real estate investments are stated at the cost incurred to acquire the
properties. In addition, costs to develop the properties, including interest,
taxes, development, legal and architectural fees are added to the cost of land
or buildings, as appropriate. No interest or taxes were capitalized in fiscal
1995, 1994 or 1993.
Costs incurred for improving tenant spaces in the Trust's office buildings
in conjunction with new leases and renewals are capitalized. Costs incurred in
connection with leasing apartments in the Trust's residential building such as
painting and carpeting are charged to expense when incurred.
(E) ENVIRONMENTAL REMEDIATION COSTS --
In general, the Trust charges environmental remediation costs to expense.
However, the Trust capitalizes these costs, if recoverable and if one of the
following criteria is met:
1. The costs extend the life, increase the capacity, or improve the safety
or efficiency of property owned by the company. However, the condition of
the property after the costs are incurred must be improved as compared
with the condition of the property when originally constructed or
acquired, if later.
2. The costs mitigate or prevent environmental contamination that has yet
to occur.
3. The costs are incurred in preparing for sale that property currently
held for sale.
The Trust accrues for losses related to environmental remediation, if it is
probable that a liability has been incurred and if the amount of the loss can be
reasonably estimated. If the amount of the liability falls within a range and no
amount within that range can be determined to be the better estimate, the Trust
recognizes the minimum amount of the range. The Trust does not discount
environmental liabilities unless
32
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
the amount of the liability and the timing of cash payments are fixed or
reliably determinable. The Trust does not offset claims for potential recoveries
against environmental remediation costs.
(F) DEPRECIATION AND AMORTIZATION --
Developed properties and infrastructure improvements are depreciated over
their estimated useful lives, using the straight-line method of depreciation.
Depreciation of leasehold improvements is computed using the straight-line
method over the terms of the related leases and commences when the improvements
are placed in service. Amortization of leasing commissions is computed using the
straight-line method over the terms of the related leases.
(G) REAL ESTATE TAXES --
In Chicago and certain other jurisdictions in which the Trust owns property,
real estate taxes are assessed on a calendar-year basis, one year in arrears. At
April 30, 1995 the Trust has accrued $10,710,000 as its estimate of unpaid 1994
and 1995 real estate taxes including $6,893,000 payable by lessees pursuant to
ground leases. The Trust does not believe that the difference between the actual
real estate taxes and the current estimates will be material to the financial
statements.
(H) RENTAL INCOME RECOGNITION --
Aggregate rentals from tenant leases are recognized as revenue ratably over
the lives of the leases when collection of all amounts is reasonably assured.
Rental payments received prior to their recognition as income are classified as
deferred rental income and are included in other accrued expenses. Rental
revenues recognized prior to their billing are classified as unbilled rents and
are included in tenant receivables.
(I) PENSION PLANS --
The Trust adopted two defined benefit pension plans in fiscal 1987 which
have been subsequently amended: (1) The Chicago Dock and Canal Trust Retirement
Plan which covers all employees of the Trust; and (2) The Chicago Dock and Canal
Trust Supplemental Executive Retirement Plan which covers the executive officers
of the Trust. The total pension expense for fiscal 1995, 1994 and 1993 was
$87,480, $91,634 and $81,557, respectively, of which $0, $19,842 and $0, was
funded in fiscal 1995, 1994 and 1993, respectively. A comparison of accumulated
plan benefits and plan net assets for the plans, at April 30, 1995, is presented
below:
<TABLE>
<CAPTION>
SUPPLEMENTAL
EXECUTIVE
RETIREMENT RETIREMENT
PLAN PLAN
----------- ------------
<S> <C> <C>
Actuarial present value of accumulated plan benefits:
Vested............................................................................... $ 196,529 $ 75,769
Non-vested........................................................................... 17,987 11,675
----------- ------------
$ 214,516 $ 87,444
----------- ------------
----------- ------------
Net assets available for benefits...................................................... $ 282,898 $ 160,150
----------- ------------
----------- ------------
</TABLE>
The assumed rate of return used in determining the actuarial present value
of accumulated plan
33
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
benefits was 8% for 1995, 1994 and 1993.
(J) CONSOLIDATED STATEMENTS OF CASH FLOWS --
In fiscal 1995, 1994 and 1993, the Trust, in non-cash transactions, retired
fully depreciated leasehold improvements of $170,000, $843,000 and $536,000,
respectively. In fiscal 1995, the Trust, in a non-cash transaction, eliminated
net investment in real estate of $17,332,000, accrued interest payable of
$1,477,000 and mortgage note payable of $14,590,000 related to the One Michigan
Avenue foreclosure. In fiscal 1995, the Trust received total consideration of
$2,638,000 from the sale to the Chicago Music and Dance Theater, Inc. Total
consideration included a non-cash transaction of $1,388,000 which represents the
assumption by the Theater of an obligation under the Planned Development
Ordinance affecting the Trust's land at Cityfront Center to construct a
pedestrian concourse adjacent to the theater site. The Trust paid $977,000,
$1,646,000 and $2,410,000 in interest on borrowings in fiscal 1995, 1994 and
1993, respectively.
(K) CASH AND CASH EQUIVALENTS --
For purposes of the Consolidated Balance Sheets and Consolidated Statements
of Cash Flows, Cash and Cash Equivalents consist of amounts held in demand
deposit and money market accounts.
(L) INVESTMENTS --
The Trust has designated all unrestricted investment securities as available
for sale. As of April 30, 1995 the cost of these securities approximated market
value.
(M) RECLASSIFICATIONS --
Certain reclassifications have been made to prior year statements to make
them comparable with the classifications used in fiscal 1995.
(2) SUBSIDIARIES AND JOINT VENTURE:
CDCT PLAZA CORPORATION --
CDCT Plaza Corporation (the "Plaza Corp.") was formed by the Trust as a
wholly owned subsidiary. The Plaza Corp. owns or controls the 400 stall parking
facility under and adjacent to Ogden Plaza. The Plaza Corp. owns the area under
Park Drive, adjacent to Ogden Plaza, has a lessee's interest in a long term
lease from the Chicago Park District in the area under Ogden Plaza, and has a
licensee's interest in the area under Columbus Drive, adjacent to Ogden Plaza,
from the City of Chicago. The license expires February 2002, subject to the City
of Chicago's right to cancel the license for the payment of a fee to the Plaza
Corp. The area subject to the license contains 100 parking stalls and is
separate from the main portion of the parking facility which contains 300
stalls. An independent contractor operates the 400 stall parking facility, with
the Plaza Corp. receiving a varying percentage of gross revenues. The Trust
consolidates the operations of the Plaza Corp. in these financial statements.
OMA LANSING CORPORATION --
OMA Lansing Corporation (the "Lansing Corp.") was formed by the Trust during
fiscal 1994 as a wholly owned subsidiary. Lansing Corp. owned One Michigan
Avenue, a 148,000 sq. ft. office building located
34
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(2) SUBSIDIARIES AND JOINT VENTURE: (CONTINUED)
in Lansing, Michigan until December 16, 1994 when the Trust agreed to permit the
sale by foreclosure of the building to its lender, Pacific Mutual Life Insurance
Company. The Trust consolidates the operations of the Lansing Corp. in these
financial statements.
CDCT RESIDENCE CORPORATION --
CDCT Residence Corporation (the "Residence Corp.") is a wholly owned
subsidiary which was capitalized with land located at the southeast corner of
East North Water and New Streets, (the "High-Rise" site) in Cityfront Center.
The Trust consolidates the operations of the Residence Corp. in these financial
statements.
In August 1989, the Residence Corp. entered into a partnership, LCD
Partnership ("LCD"), with Daniel E. Levin ("Levin"). The Residence Corp.
contributed the High-Rise site which was valued at $6,602,000 and which had an
historic cost of $1,689,000. Levin contributed cash, building plans for the
High-Rise building and a note for $903,000 which matured and was paid in
September 1991. Levin's contribution was valued at $3,301,000. The Residence
Corp. is a two-thirds partner in LCD and Levin is a one-third partner. Major
decisions of LCD, however, require unanimous approval. Accordingly, the
Residence Corp. accounts for its investment in LCD under the equity method.
In August 1989, LCD entered into a joint venture, New Street Joint Venture
("NSJV"), with Northwestern Mutual Life Insurance Company ("Northwestern
Mutual"). LCD contributed the High-Rise site, the plans and other assets related
to the development of the building (excluding the $903,000 note from Levin).
LCD's capital account was credited with $9,000,000. Northwestern Mutual
contributed an equal amount of cash. Northwestern Mutual and LCD are 50/50
partners in NSJV, subject, however, to Northwestern Mutual's priority over LCD
in certain distributions of cash flow and proceeds from sale or refinancing. LCD
accounts for its investment in NSJV under the equity method. The NSJV agreement
provides for Northwestern Mutual to receive a priority return of operating cash
flow and the proceeds from sale or refinancing of the High-Rise. Cash flow must
increase significantly from its current level for LCD to receive any cash
distributions from NSJV after the payment of Northwestern's preferential return.
Northwestern Mutual also loaned NSJV $36,700,000 on a non-recourse basis. In
addition, the NSJV Agreement calls for LCD and Northwestern Mutual to
contribute, if necessary, their prorata shares of shortfalls in operating and
capital requirements. The High-Rise building opened in July 1991 and contains
480 units.
As of December 31, 1994, total assets and liabilities of NSJV were
$47,928,000 and $38,903,000, respectively. For the year ended December 31, 1994,
NSJV recorded gross revenues of $6,637,000 and total expenses of $8,203,000,
which resulted in a net loss of $1,566,000. Included in total expenses is
depreciation and amortization expense, which for the year equaled $1,700,000.
LCD has a fiscal year which ends on April 30 and NSJV uses the calendar year.
Accordingly, LCD records its proportionate share of NSJV's operating results
four months in arrears.
(3) INVESTMENTS IN REAL ESTATE:
DEVELOPED PROPERTIES --
At April 30, 1995 and 1994, the Trust's investment in developed properties,
including leasehold interests, underlying land and a partnership interest in LCD
(which is accounted for under the equity method) consisted of the following:
35
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(3) INVESTMENTS IN REAL ESTATE: (CONTINUED)
<TABLE>
<CAPTION>
1995 1994
(IN 000'S) (IN 000'S)
---------- ----------
<S> <C> <C>
Apartment buildings..................................................................................... $51,648 $51,983
Office buildings........................................................................................ 16,036 37,018
Parking facility........................................................................................ 2,803 2,770
---------- ----------
70,487 91,771
Accumulated depreciation and amortization............................................................... (9,046) (11,428)
---------- ----------
$61,441 $80,343
---------- ----------
---------- ----------
</TABLE>
CITYFRONT PLACE MID-RISE -- On December 17, 1991, the Trust acquired the
Mid-Rise apartment complex and related leasehold. The acquisition of the
Mid-Rise was part of a transaction in which the Trust exchanged its 62%
undivided interest in the Equitable Building in Chicago for the Mid-Rise. The
Mid-Rise is a residential complex located in Cityfront Center in downtown
Chicago. It consists of two 12-story buildings containing a total of 424 rental
units. The Mid-Rise was acquired at a total cost of $52.5 million. The price was
determined pursuant to a Sale Option Agreement dated August 31, 1989, between
the Trust and Levin.
The Equitable Life Assurance Society of the United States ("Equitable")
acquired the Trust's 62% interest in the Equitable Building pursuant to an
option granted to Equitable as part of the dissolution of the Chicago
Dock-Equitable Venture. The price for such interest was $50 million. In December
1990, Equitable exercised its option under the Option Agreement to acquire the
Trust's interest in the Equitable Building and acquired the Trust's interest on
December 17, 1991.
ONE MICHIGAN AVENUE -- On December 16, 1994 the Trust permitted the sale by
foreclosure of One Michigan Avenue, an office building in Lansing, Michigan to
its lender, Pacific Mutual Life Insurance Company, in full satisfaction of the
note secured by One Michigan Avenue. The Trust conducted extensive negotiations
with the lender including modifications to the note in March 1994 and again in
August 1994 (the "August modification"), in an effort to restructure the loan.
However, the Trust concluded that the property's reasonably estimated future
value was insufficient to warrant the future capital investment required to
satisfy the terms of the August modification agreement to the loan. The loan was
non-recourse with respect to the Trust. Accordingly, the Trust's financial
exposure was limited to the loss of the building. The Trust recognized a net
loss of $1,265,000 on the transaction; of this, $3,332,000 was recorded as a
loss from disposition of real estate representing the difference between the
carrying value of the property and the fair market value of the property on the
date of the foreclosure. An extraordinary gain from the extinguishment of
indebtedness of $2,067,000 was also recorded during the third quarter of fiscal
1995, representing the difference between the principal amount of the note plus
accrued interest and the fair market value of the property on the date of the
foreclosure.
LAND AND LAND IMPROVEMENTS HELD FOR DEVELOPMENT --
MUSIC AND DANCE THEATER SITE -- On December 30, 1994, the Chicago Music and
Dance Theater, Inc. (the "Theater") acquired from the Trust a parcel of land
containing approximately 41,000 square feet, located in Cityfront Center which
is planned to be the site of a new 1,500 seat performing arts theater. The Trust
received $1,250,000 in cash shortly after the closing. The contract also
obligates the Theater to construct a pedestrian concourse through the theater
site. This concourse is an obligation under the Planned Development Ordinance
affecting the Trust's land at Cityfront Center and will benefit not only the
theater site but also the future buildings planned for the sites owned by the
Trust adjacent to the theater.
36
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(3) INVESTMENTS IN REAL ESTATE: (CONTINUED)
The estimated cost of this work is $1,500,000. The Theater is required to
commence construction by September 1, 1996, subject to force majeure delays.
In computing the gain on the sale of $1,603,000, total consideration
includes the cash received plus the value of the construction obligation assumed
by the Theater which will benefit the surrounding parcels still owned by the
Trust.
The Trust, together with other businesses near the theater site, agreed to
provide the Theater with an annual operating subsidy for up to twenty years. The
Trust agreed to provide up to $50,000 in the first year of the theater's
operation. This amount increases annually in years 2 through 10 by the increase
in the Consumer Price Index, but no more than 5% over the prior year amount.
During years 11 through 14, the amount is the same as the year 10 amount. The
amount declines during the 15th through 20th years. The amount of the subsidy
may be reduced based on the number of annual public performances at the theater.
The Trust agreed to provide the subsidy in light of the anticipated increase in
parking revenues at its Ogden Plaza parking facility from the theater patrons.
In management's opinion this increase in parking revenues will equal or exceed
the subsidy on an annual basis. The parking facility is adjacent to the theater
site and will be connected to the theater at grade level providing direct access
to the parking facility from the theater.
LAND SUBJECT TO HOTEL GROUND LEASE --
SHERATON CHICAGO HOTEL & TOWERS -- During fiscal 1989, the Trust entered
into a 50 year ground lease (with lessee options to extend the term 49 more
years) with Tishman Realty Corporation of Cook County ("Tishman Realty") for
approximately 2.3 acres of land in Cityfront Center in Chicago. Tishman Realty
subsequently assigned this lease to Cityfront Hotel Associates Limited
Partnership ("Cityfront Hotel Associates"), the current lessee. The site is
currently improved with a 1,200 room convention hotel called the Sheraton
Chicago Hotel & Towers which opened in March 1992. The lease provides for
minimum annual rental payments which are fixed at $150,000 through calendar
1994, and for payments totaling $75,000 for the six month period January 1, 1995
through June 30, 1995. The payments increase to $900,000 for the six month
period July 1, 1995 through December 31, 1995, and to $2,100,000 for calendar
1996. After 1996, the base rent increases annually by the increase in the
Consumer Price Index, but not less than 5% nor more than 10% per year. In
addition to the base rent, percentage rent is also payable beginning July 1,
1995. Percentage rent equals the amount by which base rent is exceeded by the
product obtained by multiplying gross revenues from operations by the following
applicable percentages:
APPLICABLE PERCENTAGES
<TABLE>
<CAPTION>
ROOM FOOD BEVERAGE OTHER
DATE REVENUES REVENUES REVENUES REVENUES
-------------------------------------------------------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
July 1, 1995 -- February 28, 1999..................................................... 3.50% 2.00% 3.00% 3.00%
March 1, 1999 -- February 28, 2001.................................................... 3.75% 2.50% 3.25% 3.50%
March 1, 2001 -- February 28, 2003.................................................... 4.00% 3.00% 3.50% 4.00%
March 1, 2003 -- February 28, 2007.................................................... 4.50% 4.50% 4.50% 4.50%
March 1, 2007 and after............................................................... 5.00% 5.00% 5.00% 5.00%
</TABLE>
The lessee also acquired an option to purchase the land. The earliest date
on which the land could be acquired pursuant to the option is July 1, 2003. The
purchase option provides that the land price will be the greater of (i) $40
million at January 1, 1999 escalating thereafter by the increase in the Consumer
37
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(3) INVESTMENTS IN REAL ESTATE: (CONTINUED)
Price Index, but not less than 5% nor more than 10% per year or (ii) the highest
annual ground rent payable during the thirty-six month period preceding the
closing date divided by the following Applicable Capitalization Rates:
<TABLE>
<CAPTION>
APPLICABLE
CAPITALIZATION
OPTION EXERCISE DATE RATE
----------------------------------------------------------------------------------------------------------------- --------------
<S> <C>
March 1, 2003 -- February 28, 2004............................................................................... 7.5%
March 1, 2004 -- February 28, 2007............................................................................... 7.2%
March 1, 2007 -- February 29, 2008............................................................................... 7.3%
March 1, 2008 and after.......................................................................................... 7.5%
</TABLE>
In addition, in the event the option is exercised during the twelfth
operating year beginning March 1, 2003, a supplemental amount of $2.5 million
will be added to the purchase price. If the option were exercised at its
earliest date, March 1, 2003, the minimum purchase price which the Trust would
receive is approximately $52 million.
The Trust recognizes as rental revenue the average minimum base rent payable
over the initial 50 year term of the lease. This rent increases from $150,000 in
1989 to $16.1 million in 2038. The average rent calculation also considers the
minimum purchase price pursuant to the terms of the above described purchase
option. Under the Trust's method of revenue recognition, the total carrying
value of the land and the related accrued rent receivable will never exceed the
minimum option purchase price. The annual rental income recognized on the lease
is approximately $4,848,000. The cash rent received during fiscal 1995 equaled
$150,000.
The lease obligated the Trust to construct certain Phase II infrastructure
prior to the opening of the hotel. These development obligations consisted
primarily of Ogden Plaza and the elevated roadways adjacent to Columbus Drive
and surrounding the plaza. In addition to the infrastructure obligation under
the terms of the lease, the Trust also constructed the parking facility under
Ogden Plaza (See Note 2). Phase II infrastructure was substantially completed in
March 1992. This infrastructure was financed with the proceeds from a loan which
has debt service payments which, for the first eight years, correspond to the
base rent payable on the ground lease (See Note 4).
OPTION --
OPEN AREAS -- In December 1988, the Trust dedicated to the Chicago Park
District a portion of the Ogden Slip Turning Basin and the three major open
areas called for in the Planned Development Ordinance for Cityfront Center: (1)
Approximately 1.3 acres of River Esplanade extending east along the north bank
of the Chicago River from Columbus Drive to Lake Shore Drive; (2) Ogden Plaza,
approximately 1.2 acres of land adjacent to Columbus Drive; and (3) Du Sable
Park, which consists of approximately 3 acres of land east of Lake Shore Drive.
The dedication restricts all of these areas for use as public parks. However,
the Trust has the right and is exercising this right to lease the area under
Ogden Plaza for parking. The Trust is responsible for the construction of the
infrastructure as described in the Planned Development Ordinance. The Trust is
obligated to contribute $600,000 for improvements to be made in Du Sable Park.
These improvements are expected to be completed during calendar 1996. The Trust
retained an option to lease a portion of Du Sable Park to construct and operate
a public facility such as a restaurant.
38
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(4) MORTGAGE NOTES PAYABLE:
At April 30, 1995, mortgage notes payable consisted of two notes secured by
first mortgages on the rents from and the land under the Kraft Building, and the
rents from and the land under the Sheraton Chicago Hotel & Towers. Both notes
are non-recourse with respect to the Trust.
The principal balance of the Kraft Building note issued in May 1987, was
$5,812,000 at April 30, 1995. It is due in April 2016, bears interest at an
annual rate of 9.5%, payable monthly, and is self-amortizing over its term. The
carrying value of collateral pledged on this note at April 30, 1995 equaled
$15,000.
At April 30, 1995, the principal balance of the note secured by the rents
from and the land under the Sheraton Chicago Hotel & Towers was $21,557,000. The
note is due January 1, 2005. The initial principal amount of the loan was
$14,367,000 and the interest rate is 10.25%. Amounts are payable monthly, but
through December 31, 1998, the debt service currently payable coincides with the
ground rent due under the Sheraton lease. The difference between current
interest payable and the contractual interest is added to principal. Starting in
1999, debt service will be computed on a 30 year amortization based on the then
current principal balance. The carrying value of collateral pledged on this note
at April 30, 1995 was $31,466,000 and consisted of land, the depreciated basis
in land improvements and accrued but unbilled rent.
On December 16, 1994, the Trust permitted the sale by foreclosure of One
Michigan Avenue, an office building in Lansing, Michigan to its lender, Pacific
Mutual Life Insurance Company, in full satisfaction of the note secured by One
Michigan Avenue. The One Michigan Avenue note, issued in August 1987, modified
in March 1994 (the "March modification") and further modified in August 1994
(the "August modification") had an interest rate of 10% and a carrying value at
December 15, 1994 of $14,590,000.
Due to the significant reduction in cash flow from One Michigan Avenue after
the IBM (the building's largest tenant) lease renewal took effect, the Trust
suspended regular debt service subsequent to the September 1, 1993 payment.
Under the terms of the March modification agreement, the lender received the
cash flow from the property from September 1, 1993 to August 31, 1994, in place
of regular debt service. Under the terms of the August modification agreement,
cash flow from the property also replaced regular debt service to the lender
from September 1, 1994 to December 15, 1994.
The Trust continued to accrue interest on the loan at the contractual rate
through the effective date of the March modification agreement. Subsequent to
the date of the March modification agreement and up until the date of the August
modification agreement, the Trust accrued interest at a rate which applied a
constant effective interest rate to the carrying amount of the note for each
period from the March modification date to the maturity of the note taking into
account the accrued interest to be forgiven under the March modification
agreement. This constant effective interest rate was approximately 5.5%. After
the August modification agreement was signed and through the date of the
foreclosure sale on December 16, 1994, the Trust accrued interest on the loan at
the original contractual rate of 10%. At December 15, 1994, accrued interest on
this note equaled $1,477,000.
This loan was non-recourse with respect to the Trust. Accordingly, the
Trust's financial exposure was limited to the loss of the property. The Trust
recognized a net loss of $1,265,000 during the third quarter of fiscal 1995 as a
result of the sale by foreclosure.
39
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(4) MORTGAGE NOTES PAYABLE: (CONTINUED)
Principal repayments are due on the two outstanding notes as follows during
the next five years:
<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
------------------------------------------------------------------------------------------------------------------------ --------
<S> <C>
1996.................................................................................................................... $ 92,000
1997.................................................................................................................... 101,000
1998.................................................................................................................... 111,000
1999.................................................................................................................... 160,000
2000.................................................................................................................... 256,000
</TABLE>
REVOLVING CREDIT FACILITY --
On December 23, 1994, the Trust entered into a revolving credit agreement
with First Bank, N.A. The agreement has a three year term and provides for a
maximum commitment by the lender of $20,000,000. The agreement is secured by the
Cityfront Place Mid-Rise. Initially the Trust borrowed $4,000,000 of the
available credit and used the proceeds to retire the $4,000,000 Cityfront Place
Mid-Rise note issued February 25, 1992. During the fourth quarter of fiscal
1995, the Trust repaid the $4,000,000 initially advanced under the credit
facility using available cash and cash equivalents and investments available for
sale. Accordingly, at April 30, 1995, the full amount of the facility is
available. Interest only, based on LIBOR plus 135 basis points, is due monthly
on the amount advanced under the revolving credit agreement. The carrying value
of collateral pledged on this revolving credit agreement at April 30, 1995
equaled $47,700,000.
(5) SHAREHOLDERS' EQUITY:
On July 20, 1988, the Board of Trustees of the Trust declared a dividend of
one Right for each common share of the Trust entitling the holder to purchase
from the Trust one common share at a price of $75.00 per share, subject to
adjustment. The Rights are not exercisable until a date (the "Distribution
Date") ten days after a person (or group of affiliated persons) acquires 25% or
more of the common shares and thereby becomes an "Acquiring Person" or announces
its intention to make a tender offer which would result in the beneficial
ownership by a person of greater than 30% of the Trust's common shares. If the
Distribution Date has occurred and a person becomes an Acquiring Person, each
holder of a Right, other than the Rights held by the Acquiring Person, will,
thereafter, have the right to receive upon exercise that number of common shares
having a market value of two times the exercise price of the Right. The Rights
may be redeemed in whole at a price of one cent per Right by the Board of
Trustees at any time until ten days following the public announcement that a
person has become an Acquiring Person, and any exercise of the Rights is subject
to such redemption right.
Included in undistributed income before net gain from the sale of real
estate properties is approximately $2,385,000, representing total retained
earnings at January 22, 1962, the date on which The Chicago Dock and Canal
Company converted to a REIT.
In order to retain its status as a qualified real estate investment trust,
the Trust is required to distribute at least 95% of taxable ordinary income
computed in accordance with Federal income tax laws and regulations. The amount
of taxable income differs from reported net income due to differences in the
treatment of certain items for tax and financial reporting purposes. Dividends
paid may be applied to
40
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(5) SHAREHOLDERS' EQUITY: (CONTINUED)
different fiscal years for tax and financial reporting purposes.
The following analysis reconciles reported net loss for fiscal 1995 to
estimated taxable loss for that period:
<TABLE>
<CAPTION>
PER
TOTAL SHARE
---------- ------
<S> <C> <C>
(IN 000'S)
Net loss per statement of income......................................................................... $ (814) $ (.14)
Adjustments required to determine taxable income--
Book to tax adjustment on property transactions........................................................ 10,037 1.73
Net operating loss carry forward from prior years...................................................... (7,129) (1.23)
Accrued rent on hotel ground lease..................................................................... (4,698) (.81)
Book depreciation in excess of tax..................................................................... 1,388 .24
Environmental remediation expense...................................................................... 750 .13
Other, net............................................................................................. (381) (.07)
---------- ------
Taxable loss............................................................................................. $ (847) $ (.15)
---------- ------
---------- ------
</TABLE>
The tax status of dividends for Federal income tax purposes for each of the
last three fiscal years was:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Ordinary income................................. $-- $.04 $--
Capital gain.................................... .04 -- .25
---- ---- ----
Total......................................... $.04 $.04 $.25
---- ---- ----
---- ---- ----
</TABLE>
(6) RELATED-PARTY TRANSACTIONS:
The Trust incurred legal fees of approximately $209,000, $309,000 and
$220,000, with the law firm of Wilson & McIlvaine for services rendered in
fiscal 1995, 1994 and 1993, respectively. Frank A. Reichelderfer, who retired as
the Secretary of the Trust on September 23, 1992, is a former partner in Wilson
& McIlvaine. Michael F. Csar, who has served as Secretary or Assistant Secretary
of the Trust since 1992, is a partner in Wilson & McIlvaine.
The Trust incurred management fees of approximately $109,000, $108,000 and
$88,000, with the Habitat Company, for property management services for the
Mid-Rise, in fiscal 1995, 1994 and 1993, respectively, pursuant to a long term
management agreement with the Habitat Company. The Habitat Company is
substantially owned by Daniel E. Levin, a partner in LCD Partnership ("LCD"),
along with the Trust's wholly owned subsidiary, CDCT Residence Corporation. LCD
entered into a joint venture, NSJV, with Northwestern Mutual Life Insurance
Company. NSJV, which owns the High-Rise, retained the Habitat Company to provide
property management services for the High-Rise. NSJV incurred management fees
for the High-Rise of approximately $166,000, $157,000 and $102,000 for the years
ended December 31, 1994, 1993 and 1992, respectively. The Habitat Company has
retained LCD to provide consulting services regarding operation of the High-Rise
and incurred fees of approximately $41,000, $39,000 and $26,000 for the years
ended December 31, 1994, 1993 and 1992, respectively.
41
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(7) FUTURE MINIMUM RENTALS:
The following is a schedule of minimum lease payments receivable under
operating leases signed as of April 30, 1995 that have initial or noncancelable
lease terms in excess of one year, reported on a cash basis:
<TABLE>
<CAPTION>
Fiscal Year --
<S> <C>
1996............................................................................. $ 3,974,000
1997............................................................................. 4,101,000
1998............................................................................. 3,736,000
1999............................................................................. 3,436,000
2000............................................................................. 3,482,000
Thereafter....................................................................... 301,082,000
-------------
$ 319,811,000
-------------
-------------
</TABLE>
In addition to the above listed amounts, certain tenants are required to pay
a portion of executory costs, including real estate taxes, insurance,
maintenance and other operating expenses. Real estate taxes payable by all
tenants under "net" leases, which are reflected as both revenue and expense,
were $6,864,000, $4,168,000 and $4,945,000, in fiscal years 1995, 1994 and 1993,
respectively.
Revenues recognized during fiscal 1995 from Cityfront Hotel Associates for
average minimum base rent and real estate taxes payable were $4,848,000 and
$5,524,000, respectively, for a total of $10,372,000 or 46% of total revenues of
$22,389,000. In management's opinion the collection of this lease obligation is
reasonably assured, given that the Trust's interest in the land is not
subordinated to any of the debt or equity invested in the improvements.
Accordingly, the Trust will either collect the rent due under the lease, or in
the case of a default and termination of the lease, succeed to ownership of the
improvements not subject to any of the debt. Gross revenues from operations of
the hotel equaled $58 million during calendar 1994 and $54 million during
calendar 1993. Average occupancy during calendar 1994 equaled 68% and during
calendar 1993 equaled 65%.
The following tenants comprise a significant amount of the total minimum
rentals disclosed above (See Note 3):
<TABLE>
<CAPTION>
AMOUNT PERCENT
------------- ------------
<S> <C> <C>
Cityfront Hotel Associates (Sheraton Chicago Hotel & Towers)...................... $ 301,017,000 94.1%
Kraft............................................................................. 13,440,000 4.2%
------------- ---
$ 314,457,000 98.3%
------------- ---
------------- ---
</TABLE>
(8) EMPLOYEE STOCK OPTIONS:
At April 30, 1995, there are outstanding, under both incentive and
non-qualified plans, options to purchase 423,276 shares of Beneficial Interest
which were granted to certain key employees. The exercise prices of the options
range from $9.00 to $24.75 per share, which represent the fair market values at
the dates of grant. Generally, the non-qualified options have a term of 20 years
and are exercisable at the rate of 10% per year starting one year from the date
of grant. Incentive stock options have a term of 10 years and are exercisable at
the rate of 20% per year starting one year from the date
42
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(8) EMPLOYEE STOCK OPTIONS: (CONTINUED)
of grant.
On April 14, 1993, the Trust amended the employment agreements for Messrs.
Gardner and Tinkham allowing up to 20% of stipulated cash compensation to be
paid in stock options in lieu of cash at the discretion of the Trust. On May 2,
1995, for fiscal year 1996, options to purchase 20,316 and 8,804 shares were
granted to Messrs. Gardner and Tinkham, respectively, in lieu of cash pursuant
to the terms of The Chicago Dock and Canal Trust 1993 Employees' Stock Option
Plan. Twenty-five percent of these options first become exercisable quarterly in
the applicable fiscal year, starting August 1, and the options have a term of 20
years. During fiscal year 1995, 20% of stipulated cash compensation for Messrs.
Gardner and Tinkham was replaced with options to purchase 22,588 and 9,788
shares, respectively. During fiscal year 1994, 20% of stipulated cash
compensation for Messrs. Gardner and Tinkham was replaced with options to
purchase 24,000 and 10,400 shares, respectively.
At April 30, 1995, no options have been exercised; options granted pursuant
to all plans covering 228,038 shares had vested and were exercisable.
(9) TRUSTEE STOCK OPTIONS:
At April 30, 1995, there are outstanding options to purchase 25,500 shares
of Beneficial Interest which, were granted to non-employee Trustees pursuant to
The Chicago Dock and Canal Trust 1988 Trustees' Stock Option Plan. The exercise
prices of the options range from $9.00 to $25.00 per share, which represent the
fair market values at the dates of grant. The options generally become
exercisable one year after their grant except in the case of death or qualified
retirement of a Trustee, in which case they become exercisable immediately.
On April 12, 1995, the Trustees unanimously voted to replace the annual cash
retainer for fiscal 1996 with the grant of Trustee stock options pursuant to The
Chicago Dock and Canal Trust 1993 Trustees' Stock Option Plan. Each Trustee
received a grant to acquire 3,676 shares at $10.875 per share, the market price
on the date of grant. During fiscal years 1995 and 1994, stock options also
replaced the annual cash retainer for the Trustees at exercise prices equal to
the market price on the dates of grant. Each Trustee received a grant to acquire
3,764 shares at $10.625 per share during fiscal year 1995 and 4,000 shares at
$10.00 per share during fiscal year 1994. Twenty-five percent of these options
first become exercisable quarterly, in the applicable fiscal year, starting May
1, and the options have a term of 20 years.
At April 30, 1995, no options have been exercised; options granted and
outstanding pursuant to both plans equaled 114,138, of which 80,730 shares were
exercisable.
(10) SHORT-TERM INVESTMENTS -- RESTRICTED:
During the fourth quarter of fiscal 1994, the Trust placed $1,000,000 into
an escrow account as part of the loan modification agreement (subsequently
amended) entered into with the lender of the loan secured by the property at One
Michigan Avenue. On December 16, 1994, the Trust permitted the sale by
foreclosure of One Michigan Avenue to its lender, Pacific Mutual Life Insurance
Company, and the funds in the escrow were returned to the Trust during the third
quarter of fiscal 1995.
As a requirement of the revolving credit agreement entered into by the Trust
on December 23, 1994 with First Bank, N.A., the Trust agreed to make monthly
payments into an escrow account. This account funds the semi-annual real estate
tax payments due on the Cityfront Place Mid-Rise. At April 30, 1995,
43
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1995, 1994 AND 1993
(10) SHORT-TERM INVESTMENTS -- RESTRICTED: (CONTINUED)
the balance in this account equaled $130,000.
(11) ENVIRONMENTAL REMEDIATION COSTS:
In June 1993, the U.S. Environmental Protection Agency (the "EPA") conducted
preliminary surface tests on a 2.8 acre site currently used as a surface parking
lot (the "Tested Site"). The Tested Site was examined because thorium, a
radioactive element, may have been used on the Tested Site earlier in the
century by a former tenant, in a building which was demolished in the mid 1930's
after the expiry of the tenant's lease.
In January 1994, the Trust entered into a consent order with the EPA
regarding preliminary testing to be performed on the Tested Site. Initial
on-site tests were conducted pursuant to that order in May 1994 and laboratory
analysis was completed on the samples in June 1994. The results of the tests
indicate one concentrated area which appears to be contaminated by thorium, and
other scattered areas on the Tested Site with significantly lower levels of
contamination. The most contaminated area is within the footprint of the
building previously occupied by the former tenant. The Trust submitted the
results of the testing to the EPA in September 1994. The EPA is currently
evaluating the results of these tests.
The Trust's consultants have prepared cost estimates to remediate the
contaminated areas on the Tested Site which range from $1 million to $5 million,
with $3.5 million representing the most likely amount. That range of costs is
estimated based on the results of surface measurements and the analysis of
samples gathered from nine borings taken on the site. While these tests were
made pursuant to the consent order with the EPA, additional conditions may exist
on the site which would be discovered only upon excavation.
On August 11, 1995, the Trust entered into an agreement with Kerr-McGee
Chemical Corporation ("KMCC"), the successor to a former tenant of the Tested
Site, regarding the financial responsibilities of the parties for the
remediation of the Tested Site (the "Reimbursement Agreement"). Under the terms
of the Reimbursement Agreement, KMCC will be responsible for the remediation of
the Tested Site and the Trust has the obligation to reimburse KMCC for 25% of
the cost of remediation, not to exceed a maximum reimbursement obligation of the
Trust of $750,000. Legal counsel has advised the Trust that it may have claims
for coverage for some or all of its share of the remediation costs under its
current or prior insurance policies.
The EPA has not made a ruling on whether current remediation will be
required nor the form or scope of such remediation. At the latest, the Tested
Site will be remediated when redevelopment occurs. The remediation will most
likely be in the form of excavation and disposal of the soil in specified
disposal areas. It is probable that the Trust and/or KMCC will enter into a
subsequent consent order regarding remediation.
In the fourth quarter of fiscal 1995, the Trust recorded environmental
remediation expense of $1,035,000 based upon the resolution of accounting and
other issues related to environmental remediation costs of property held for
development and the execution of the Reimbursement Agreement with KMCC. This
amount includes the Trust's share of testing and legal costs related to the
Tested Site through April 30, 1995, plus $750,000, which is the maximum
reimbursement obligation of the Trust pursuant to the terms of the Reimbursement
Agreement. This amount excludes the amount of the potential claims for some or
all of the Trust's share of the remediation costs under the Trust's current or
prior insurance policies.
44
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
To the Shareholders and Trustees of
The Chicago Dock and Canal Trust:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of THE CHICAGO DOCK AND CANAL TRUST AND
SUBSIDIARIES included in this Form 10-K, and have issued our report thereon
dated August 14, 1995. Our audit was made for the purpose of forming an opinion
on those statements taken as a whole. Supplemental schedule III is the
responsibility of the Trust's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
August 14, 1995
45
<PAGE>
SCHEDULE III
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF APRIL 30, 1995
<TABLE>
<CAPTION>
INITIAL COST
----------------------- COST SUBSEQUENT TO
LAND AND BUILDINGS ACQUISITION
LAND AND ------------------------
IMPROVE- IMPROVE- IMPROVE- CARRYING
DESCRIPTION ENCUMBRANCES MENTS MENTS MENTS COSTS
---------------------------------------- ------------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Office Complexes-
Lincoln Garden
2901 West Busch Boulevard
Tampa, Florida........................ -- $1,600,000 $ 5,200,041 $ 610,355 --
Waterplace Park
8925-9011 N. Meridian St.
Indianapolis, Indiana................. -- 1,400,000 6,300,000 925,808 --
Apartment Complex-
Cityfront Place Mid-Rise
440-480 North McClurg Court
Chicago, Illinois..................... -- 214,428 52,593,152 196,074 --
Parking Facility-
Ogden Plaza
300 East North Water Street
Chicago, Illinois..................... -- -- 2,762,698 40,471 --
Ground lease (Hotel)-
Sheraton Chicago Hotel & Towers
301 East North Water Street
Chicago, Illinois..................... 21,557,146 643,284 -- 5,562,854 343,100
Investment in LCD Partnership (66 2/3%
partnership interest) LCD Partnership
has 50% partnership interest in New
Street Joint Venture which owns:
Apartment Building -
Cityfront Place High-Rise
400 North McClurg Court
Chicago, Illinois (1)................. -- 1,689,161 -- -- (3,045,359)
Land and land improvements held for
development: approximately 15 acres in
Chicago, Illinois, boundaries being the
Chicago River on the South, Grand
Avenue on the North, Lake Shore Drive
and the Ogden Slip Turning Basin on the
East and Columbus Drive on the West.... 5,812,372 3,052,228 -- 11,910,507 1,953,334
------------ ---------- ----------- ----------- -----------
Total (2)........................... $27,369,518 $8,599,101 $66,855,891 $19,246,069 $ (748,925)
------------ ---------- ----------- ----------- -----------
------------ ---------- ----------- ----------- -----------
<CAPTION>
GROSS AMOUNT AT APRIL
30, 1995 GROSS
------------------------ AMOUNT AT
LAND AND BUILDINGS APRIL 30,
LAND AND 1995
IMPROVE- IMPROVE- ----------- ACCUMULATED DATE OF DATE
DESCRIPTION MENTS MENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED
---------------------------------------- ----------- ----------- ----------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Office Complexes-
Lincoln Garden
2901 West Busch Boulevard
Tampa, Florida........................ $ 1,600,000 $ 5,810,396 $ 7,410,396 $1,559,846 1981 7/31/86
Waterplace Park
8925-9011 N. Meridian St.
Indianapolis, Indiana................. 1,400,000 7,225,808 8,625,808 1,931,224 1980 9/30/86
Apartment Complex-
Cityfront Place Mid-Rise
440-480 North McClurg Court
Chicago, Illinois..................... 214,428 52,789,226 53,003,654 5,303,855 1991 12/17/91
Parking Facility-
Ogden Plaza
300 East North Water Street
Chicago, Illinois..................... -- 2,803,169 2,803,169 251,269 1992 3/01/92
Ground lease (Hotel)-
Sheraton Chicago Hotel & Towers
301 East North Water Street
Chicago, Illinois..................... 6,549,238 -- 6,549,238 922,594 -- 12/31/85
Investment in LCD Partnership (66 2/3%
partnership interest) LCD Partnership
has 50% partnership interest in New
Street Joint Venture which owns:
Apartment Building -
Cityfront Place High-Rise
400 North McClurg Court
Chicago, Illinois (1)................. (1,356,198) -- (1,356,198) -- -- 8/31/89
Land and land improvements held for
development: approximately 15 acres in
Chicago, Illinois, boundaries being the
Chicago River on the South, Grand
Avenue on the North, Lake Shore Drive
and the Ogden Slip Turning Basin on the
East and Columbus Drive on the West.... 16,916,069 -- 16,916,069 1,668,985 -- 12/31/85
----------- ----------- ----------- -----------
Total (2)........................... $25,323,537 $68,628,599 $93,952,136 $11,637,773
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<FN>
----------------------------------------
NOTES:
(1) Initial cost represents the carrying value of assets contributed to LCD
Partnership as of August 31, 1989, the date of formation of LCD. Costs
subsequent to acquisition include net distributions from LCD to the Trust
of $45,798 and the Trust's Equity in Net Loss of LCD Partnership of
$2,999,561 most of which represents the development loss from New Street
Joint Venture during the period from opening of the High-Rise, July 1, 1991
to December 31, 1994.
(2) Aggregate basis for Federal income tax purposes is approximately
$49,000,000.
</TABLE>
46
<PAGE>
SCHEDULE III
CONTINUED
<TABLE>
<CAPTION>
LAND AND LAND BUILDINGS AND
IMPROVEMENTS IMPROVEMENTS TOTAL
------------- ------------- -------------
<S> <C> <C> <C>
Real estate-
Balance at April 30, 1992.......................................... $29,170,405 $89,118,081 $ 118,288,486
Additions during the year........................................ 327,350 627,304 954,654
Deductions of property transferred (1)........................... (1,345,437) (559,256) (1,904,693)
------------- ------------- -------------
Balance at April 30, 1993.......................................... 28,152,318 89,186,129 117,338,447
Additions during the year........................................ 259,900 343,488 603,388
Deductions of property transferred (1)........................... (530,238) (842,789) (1,373,027)
------------- ------------- -------------
Balance at April 30, 1994.......................................... 27,881,980 88,686,828 116,568,808
Additions during the year........................................ 158,458 940,074 1,098,532
Deductions of property transferred (1)........................... (2,716,901) (20,998,303) (23,715,204)
------------- ------------- -------------
Balance at April 30, 1995.......................................... $25,323,537 $68,628,599 $ 93,952,136
------------- ------------- -------------
------------- ------------- -------------
Accumulated depreciation-
Balance at April 30, 1992.......................................... $ 8,131,041
Add-Depreciation charged to expense during period (2)............ 3,414,136
Deduct-assets transferred........................................ (535,794)
-------------
Balance at April 30, 1993.......................................... 11,009,383
Add-Depreciation charged to expense during period (2)............ 3,373,373
Deduct-assets transferred........................................ (842,789)
-------------
Balance at April 30, 1994.......................................... 13,539,967
Add-Depreciation charged to expense during period (2)............ 3,181,826
Deduct-assets transferred........................................ (5,084,020)
-------------
Balance at April 30, 1995.......................................... $ 11,637,773
-------------
-------------
<FN>
------------------------------
Note (1) Includes the Trust's Equity in Net Loss of LCD Partnership of $475,571,
$530,238 and $1,217,719 during fiscal 1995, 1994 and 1993,
respectively.
Note (2) Developed properties and infrastructure improvements are depreciated
over 35 years or their remaining estimated useful lives, using the
straight-line method of depreciation. Depreciation of leasehold
improvements is computed using the straight-line method over the terms
of the related leases and commences when the improvements are placed in
service.
</TABLE>
47
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE TRUST
Incorporated herein by reference from the Trust's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on October 5, 1995.
Information concerning the Executive Officers is included in Part I on page 14.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference from the Trust's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on October 5, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference from the Trust's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on October 5, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference from the Trust's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on October 5, 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The financial statements listed in the accompanying index to financial
statements on page 49 are filed as part of this annual report.
2. FINANCIAL STATEMENT SCHEDULES
The financial statement schedule listed in the accompanying index to
financial statements on page 49 is filed as part of this annual report.
3. EXHIBITS
The exhibits listed in the accompanying index to exhibits on pages 50-51
are filed as part of this annual report.
(B) REPORTS ON FORM 8-K
A Form 8-K was filed February 9, 1995 by the Trust reporting the sale of a
parcel of land containing approximately 41,000 square feet, located in Cityfront
Center to the Chicago Music and Dance Theater, Inc.
48
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENTS SCHEDULES
(ITEM 14(A))
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of independent public accountants................................................................... 27
Consolidated balance sheets as of April 30, 1995 and 1994.................................................. 28
Consolidated statements of income for each of the three years in the period ended April 30, 1995........... 29
Consolidated statements of cash flows for each of the three years in the period ended April 30, 1995....... 30
Consolidated statements of shareholders' equity for each of the three years in the period ended April 30,
1995...................................................................................................... 31
Notes to consolidated financial statements................................................................. 32
Schedule as of April 30, 1995:
III-Real estate and accumulated depreciation........................................................... 46
</TABLE>
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
49
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST AND SUBSIDIARIES
INDEX TO EXHIBITS
(ITEM 14(A))
<TABLE>
<CAPTION>
DESCRIPTION
<C> <S>
3 Articles of Incorporation.
3.1 Declaration of Trust (as amended September 16, 1986) incorporated herein by reference to Exhibit 3.1 to
Form 10-K dated July 29, 1987 and further amended September 19, 1989 incorporated herein by reference to
Appendices A through C of the Trust's definitive proxy statement dated August 7, 1989 and further amended
September 22, 1993 incorporated herein by reference to Appendix A of the Trust's definitive proxy statement
dated August 9, 1993 (Commission File No. 0-13804).
4 Instruments Defining the Rights of Security Holders and Holders of Long-Term Debt.
4.1 Promissory Note, dated May 29, 1987 between The Chicago Dock and Canal Trust and Pacific Mutual Life
Insurance Company and related mortgage and assignment documents will be filed in accordance with Item
601(b)(4)(iii) of Regulation S-K if so requested by the Commission.
4.2 Rights Agreement dated as of July 20, 1988 between The Chicago Dock and Canal Trust and Harris Trust and
Savings Bank is incorporated herein by reference to the Form 8-K, dated July 8, 1988 (Commission File No.
0-13804).
4.3 Promissory Note dated December 27, 1990 between The Chicago Dock and Canal Trust and National Home Life
Assurance Company and related guaranty, mortgage and assignment documents are incorporated herein by
reference to Exhibit 4.5 to Form 10-K dated July 29, 1991 (Commission File No. 0-13804).
4.4 Revolving Credit Agreement dated December 23, 1994 between The Chicago Dock and Canal Trust and First Bank
N.A. and related promissory note, mortgage and assignment documents are filed herewith.
10 Material Contracts.
10.1 The Chicago Dock and Canal Trust 1982 Employees' Stock Option Plan, as amended and restated effective April
10, 1991, is incorporated herein by reference to Appendix B of the Trust's 1991 definitive proxy statement
dated August 9, 1991 (Commission File No. 0-13804).
10.2 The Chicago Dock and Canal Trust 1986 Employees' Stock Option Plan, as amended and restated effective April
10, 1991, is incorporated herein by reference to Appendix C of the Trust's 1991 definitive proxy statement
dated August 9, 1991 (Commission File No. 0-13804).
10.3 The Chicago Dock and Canal Trust 1988 Employees' Stock Option Plan, as amended and restated effective April
10, 1991, is incorporated herein by reference to Appendix D of the Trust's 1991 definitive proxy statement
dated August 9, 1991 (Commission File No. 0-13804).
10.4 The Chicago Dock and Canal Trust 1988 Trustees' Stock Option Plan, as amended September 22, 1993, is
incorporated herein by reference to Appendix D of the Trust's definitive proxy statement
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION
dated August 9, 1993 (Commission File No. 0-13804).
<C> <S>
10.5 The Chicago Dock and Canal Trust 1991 Employees' Stock Option Plan is incorporated herein by reference to
Appendix A of the Trust's 1991 definitive proxy statement dated August 9, 1991 (Commission File No.
0-13804).
10.6 Supplemental Executive Retirement Plan dated January 1, 1986 is incorporated herein by reference to Exhibit
10.6 to Form 10-K dated July 29, 1987 (Commission File No. 0-13804).
10.7 Employment Agreement between the Trust and Charles R. Gardner dated April 14, 1993, is incorporated herein
by reference to Exhibit 10.7 to Form 10-K filed July 29, 1993 (Commission File No. 0-13804).
10.8 Employment Agreement between the Trust and David R. Tinkham dated April 14, 1993, is incorporated herein by
reference to Exhibit 10.8 to Form 10-K filed July 29, 1993 (Commission File No. 0-13804).
10.9 Amendments effective May 1, 1993 to the Supplemental Executive Retirement Plan dated January 1, 1986, are
incorporated herein by reference to Exhibit 10.9 to Form 10-K filed July 29, 1993 (Commission File No.
0-13804).
10.10 The Chicago Dock and Canal Trust 1993 Trustees' Stock Option Plan is incorporated herein by reference to
Appendix C of the Trust's 1993 definitive proxy statement dated August 9, 1993 (Commission File No.
0-13804) .
10.11 The Chicago Dock and Canal Trust 1993 Employees' Stock Option Plan is incorporated herein by reference to
Appendix B of the Trust's 1993 definitive proxy statement dated August 9, 1993 (Commission File No.
0-13804).
10.12 Letter agreement among the Trust, Private Capital Management, Inc. and Mr. Bruce Sherman is incorporated
herein by reference to Exhibit 1 to the Form 8-K dated April 27, 1994 (Commission File No. 0-13804).
10.13 Amendment to Employment Agreement between the Trust and Charles R. Gardner dated July 19, 1995 is filed
herewith.
10.14 Amendment to Employment Agreement between the Trust and David R. Tinkham dated July 19, 1995 is filed
herewith.
10.15 Agreement between the Trust and Kerr-McGee Chemical Corporation dated August 11, 1995 is filed herewith.
</TABLE>
51
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed in
its behalf by the undersigned, thereunto duly authorized.
THE CHICAGO DOCK AND CANAL TRUST
By /s/ CHARLES R. GARDNER
------------------------------------
Charles R. Gardner, President and
Trustee (Principal Executive
Officer)
Date _________August 14, 1995_________
By /s/ DAVID R. TINKHAM
------------------------------------
David R. Tinkham, Vice President
(Principal Financial Officer)
Date _________August 14, 1995_________
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<S> <C>
/s/ KENNETH S. AXELSON
------------------------------------------------------------------------------------------ Date August 14, 1995
Kenneth S. Axelson, Trustee
/s/ EDWARD MCCORMICK BLAIR, JR.
------------------------------------------------------------------------------------------ Date August 14, 1995
Edward McCormick Blair, Jr., Trustee
/s/ PETER J.P. BRICKFIELD
------------------------------------------------------------------------------------------ Date August 14, 1995
Peter J.P. Brickfield, Trustee
/s/ OGDEN MCCLURG HUNNEWELL
------------------------------------------------------------------------------------------ Date August 14, 1995
Ogden McClurg Hunnewell, Trustee
/s/ GEORGE A. RANNEY, JR.
------------------------------------------------------------------------------------------ Date August 14, 1995
George A. Ranney, Jr., Trustee
/s/ CHARLES N. SEIDLITZ
------------------------------------------------------------------------------------------ Date August 14, 1995
Charles N. Seidlitz, Trustee
/s/ NANCY W. TROWBRIDGE
------------------------------------------------------------------------------------------ Date August 14, 1995
Nancy W. Trowbridge, Trustee
/s/ ROBERT E. WOOD II
------------------------------------------------------------------------------------------ Date August 14, 1995
Robert E. Wood II, Trustee
</TABLE>
52
<PAGE>
EXHIBIT 4.4
REVOLVING CREDIT AGREEMENT
DATED AS OF DECEMBER ____, 1994
BETWEEN
THE CHICAGO DOCK AND CANAL TRUST
AND
FIRST BANK, N.A., A NATIONAL BANKING ASSOCIATION
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is entered into this _____ day of December,
1994, by and between the following:
THE CHICAGO DOCK AND CANAL TRUST, an Illinois business trust, established
under declaration of trust dated January 22, 1962, and restated under
declaration of trust dated September 16, 1986, and subsequently amended, having
its principal place of business at 455 East Illinois Street, Chicago, IL 60611
("BORROWER"); and
FIRST BANK, N.A., a national banking organization under the laws of the
United States of America ("LENDER"), having an office at Wrigley Building, 400-
410 North Michigan Avenue, Chicago, IL 60611.
RECITALS
A. Borrower is the owner of real estate commonly known as Cityfront Place
Midrise, located at 440 & 480 North McClurg Court, Chicago, Illinois.
("Property") which is comprised of two twelve-story mid-rise apartment buildings
with 424 total units and indoor parking for 346 cars, more particularly
described on EXHIBIT H hereto.
B. Borrower has requested, and Lender has agreed to provide, a revolving
credit facility to Borrower in the aggregate principal amount of Twenty Million
and No/100 Dollars ($20,000,000.00) upon the terms and conditions hereafter
specified, secured by, among other things, the Property.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. As used in this Agreement, the following terms have the
meanings set forth below:
"ADJUSTED LIBOR RATE" means, with respect to a LIBOR Advance for the
relevant LIBOR Interest Period, the sum of the Base LIBOR Rate applicable to
such LIBOR Interest Period, adjusted for required reserves and assessments, plus
135 basis points per annum.
"ADVANCE" means a loan to the Borrower hereunder by the Lender pursuant to
SECTION 2.1(a) hereof, including the Initial Advance and all subsequent
Advances.
<PAGE>
"AFFILIATE" means any Person directly or indirectly controlling, controlled
by or under direct or indirect common control with any other Person. A Person
shall be deemed to control another Person if the controlling Person owns ten
percent (10%) or more of any class of voting stock or securities of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"AGREEMENT" means this Revolving Credit Agreement and all amendments,
modifications and supplements hereto.
"APPRAISAL" means an appraisal in form and substance satisfactory to the
Lender and prepared by an appraiser acceptable to the Lender in accordance with
the requirements established under FIRREA and FDICIA.
"APPRAISED VALUE" means, with respect to the Property the appraised value
set forth in the Appraisal.
"ASSIGNMENT OF OPERATING AGREEMENTS AND CONTRACTS" means the assignment or
assignments of any operating or management agreements and contracts with respect
to the Property, the form of which is attached hereto as EXHIBIT C.
"ASSIGNMENT OF RENTS AND LEASES" means the assignments of the rents and
leases for the Property, the form of which is attached hereto as EXHIBIT F.
"BASE LIBOR RATE" means, the offered rate for deposits in United States
Dollars (rounded upwards, if necessary, to the nearest 1/32 of 1%), for delivery
of such deposits on the first day of such LIBOR Interest Period, for the number
of days comprised therein, which appears on the Reuters Screen LIBO Page as of
11:00 a.m., London time, on the day that is two Business Days preceding the date
of such Advance. If at least two rates appear on the Reuters Screen LIBO Page,
the rate for such LIBOR Interest Period shall be the arithmetic mean of such
rates (rounded as provided above). If fewer than two rates appear, the rate for
such LIBOR Interest Period shall be determined by the Bank based on rates
offered to the Bank for United States Dollar deposits in the London interbank
market. "Reuters Screen LIBO Page" means the display designated as page "LIBO"
on the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO Page on that service for the purpose of displaying London interbank offered
rates of major banks for United States Dollar deposits).
"BORROWER" shall have the meaning set forth in the introductory paragraph
of this Agreement, along with its permitted successors and assigns.
"BUDGET" means (i) a detailed budget showing expected revenues and expenses
of the Property for a given fiscal year of the Borrower, and (ii) a schedule for
all renovation and tenant improvement work at the Property, all of which are
approved in form and substance by the Lender.
-2-
<PAGE>
"BUSINESS DAY" means a day, other than a Saturday, Sunday or holiday, on
which banks are open for business in Chicago, Illinois and in London, England.
"CLOSING DATE" means the date that all of the conditions precedent to the
funding of the Initial Advance have been fulfilled or waived, all in accordance
with SECTION 4.1 hereof.
"CODE" means the Internal Revenue Code of 1986 as amended from time to
time, or any replacement or successor statute, and the regulations promulgated
thereunder from time to time.
"COLLATERAL" means all of the now existing or hereafter acquired rights of
the Borrower in the Property and all rents, leases, easements, options, personal
property and other rights and property related to the ownership or operation
thereof.
"COMMITMENT FEE" means the fee to be paid by Borrower to Lender in
accordance with SECTION 2.3 hereof equal to One Hundred Thousand and No/100
Dollars ($100,000.00).
"COMMERCIAL LEASES" means any Lease to a tenant for use of the Property or
a portion thereof for purposes other than for use as an apartment residence.
"COMMITMENT" means the obligation of Lender, subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties herein, to make Advances not exceeding the applicable amounts in
effect from time to time as described in SECTION 2.1(b) hereof.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with all or any of the entities in the Borrower and/or its
Affiliates, are treated as a single employer under Sections 414(b) or 414(c) of
the Code.
"DEFAULT" means an event which, with notice or lapse of time or both, would
become an Event of Default.
"DEFAULT RATE" means with respect to any LIBOR Advance, a rate equal to the
applicable Adjusted LIBOR Rate plus four percent (4%) per annum.
"DOLLARS" and "$" mean United States Dollars.
"DRAW REQUEST" means a written request of the Borrower to Lender for an
Advance, specifying (i) the date of the proposed Advance, which shall be a
Business Day; (ii) the aggregate principal amount of such proposed Advance,
which amount shall be at least Five Hundred Thousand and No/100 Dollars
($500,000.00), provided that LIBOR Advances shall be made only in multiples of
One Hundred Thousand and No/100 Dollars ($100,000.00); and (iii) the LIBOR
Interest Period applicable thereto.
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"DRAW REQUEST DOCUMENTS" shall include, without limitation, the following:
(i) a Draw Request;
(ii) a certificate executed by an authorized officer of the Borrower
(1) reaffirming the representations and warranties of Borrower contained in
the Loan Documents, and (2) confirming that no Default or Event of Default
exists; and
(iii) such other information or documents as Lender may reasonably
request.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity Agreement dated
as of the Closing Date executed by Borrower substantially in the form of EXHIBIT
D hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder from time to time.
"EVENT OF DEFAULT" means any event set forth in ARTICLE VIII hereof.
"EXISTING LEASES" means all of the leases with respect to the Property in
effect as of the Closing Date.
"FACILITY" means the revolving credit facility described in SECTION 2.1
hereof.
"FDICIA" means the Federal Deposit Insurance Corporation Improvement Act of
1991, as the same may be amended from time to time, and the regulations
promulgated thereunder from time to time.
"FINANCING STATEMENT" means Form UCC-1 and Form UCC-2 financing statements,
in form and content acceptable to Lender.
"FIRREA" means the Financial Institutions, Reform, Recovery and Enforcement
Act, as amended, and the regulations promulgated thereunder from time to time.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GROSS REVENUES" means total revenues, calculated in accordance with GAAP.
"HAZARDOUS MATERIAL" means any hazardous, toxic or dangerous waste,
substance or material subject to regulation under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, and federal,
state or local so-called "Superfund" or "Superlien" laws, or any other federal,
state or local laws, ordinances, rules or regulations governing or regulating
hazardous materials, pollution, the environment or public health, as now or at
any time hereafter in effect.
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"INITIAL ADVANCE" means the first Advance made to Borrower by Lender upon
the fulfillment of all of the terms and conditions of SECTION 4.1 hereof.
"INSOLVENCY" means insolvency as defined in the United States Bankruptcy
Code, as amended. "INSOLVENT" when used with respect to a Person, shall refer
to a Person who satisfies the definition of Insolvency.
"LENDER" has the meaning ascribed to it in the introductory paragraph of
this Agreement along with its permitted successors and assigns.
"LIBOR ADVANCE" means an Advance that bears interest at the Adjusted LIBOR
Rate.
"LIBOR INTEREST PERIOD" means, with respect to a LIBOR Advance, a period of
one (1), two (2), three (3) or six (6) months, as selected in advance by
Borrower, but only to the extent such periods in excess of three (3) months are
generally available from Lender.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof.
"LOAN DOCUMENTS" means this Agreement, the Note, the Environmental
Indemnity, the Security Documents and any and all other agreements or
instruments creating or evidencing the Lender's interest in any Collateral
provided to the Lender by the Borrower and any other instrument or agreement
required and/or provided to Lender hereunder or thereunder, as any of the
foregoing may be amended from time to time.
"MARGIN STOCK" has the meaning ascribed to it in Regulation U of the Board
of Governors of the Federal Reserve System.
"MATURITY DATE" means the earliest to occur of:
(a) the last Business Day immediately prior to the third (3rd)
anniversary of the Closing Date; or
(b) the date on which the Lender accelerates the Obligations pursuant
to ARTICLE IX hereof.
"MORTGAGE" means the first priority mortgage executed by the Borrower as
the owner of fee title with respect to the Property, including all improvements
thereon and rights and easements appurtenant thereto, in connection with this
Facility, the form of which is attached hereto as EXHIBITS B.
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"MULTIEMPLOYER PLAN" means a Plan maintained pursuant to a collective
bargaining agreement or other arrangement to which Borrower or any member of the
Controlled Group is a party to which more than one employer is obligated to
make contributions.
"NET WORTH" means the total shareholder's equity of Borrower as determined
on Borrower's financial statements, prepared in accordance with GAAP.
"NOTE" means the promissory note payable to the order of Lender in the
amount of the Commitment, in the form attached hereto as EXHIBIT A.
"OBLIGATIONS" means the Advances, all accrued and unpaid fees and all other
obligations of Borrower to the Lender arising under this Agreement or any of the
other Loan Documents.
"PBGC" - means Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED EXCEPTIONS" means those matters to which the interest of
Borrower in the Property is permitted by the Lender to be subject, on the
Closing Date and thereafter, and such other title exceptions or objections, if
any, as the Lender or its counsel may approve in advance in writing.
"PERMITTED LIENS" means:
(a) Liens for current taxes, assessments or other governmental
charges which are not delinquent or remain payable without any penalty, or the
validity of which are being contested in good faith by appropriate proceedings
which have the effect of staying any enforcement for non-payment thereof;
(b) Liens imposed by mandatory provisions of law such as for
materialmen, mechanics, warehousemen, workmen and repairmen arising in the
ordinary course of business and which have been bonded over and removed of
record or have otherwise been insured over by the title insurer for the
Property;
(c) Liens imposed by mandatory provisions of law related to workers'
compensation, unemployment insurance, social security or other similar
legislation arising in the ordinary course of business and which are being
contested and/or removed in a continuous and businesslike manner;
(d) Judgment and other similar liens arising in connection with court
proceedings, provided that the execution or other enforcement of such liens is
effectively stayed and the claims secured thereby are vigorously and
continuously contested by appropriate proceedings;
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(e) Easements, rights of way, restrictions and other similar
encumbrances which alone and/or in the aggregate, do not materially interfere
with the occupation, use and enjoyment of the Property; and
(f) Permitted Exceptions.
"PERSON" means an individual, a corporation, a limited or general
partnership, an association, a joint venture or any other entity or
organization, including a governmental or political subdivision or an agent or
instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"PROPERTY" shall have the meaning set forth in the introductory paragraph
of this Agreement.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
Reportable Event regardless of the issuance of any such waivers in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"SECURITY AGREEMENT" means the pledge of the personal property which is a
part of the Collateral, the form of which is attached hereto as EXHIBIT E.
"SECURITY DOCUMENTS" means:
(a) the Mortgage;
(b) the Assignment of Operating Agreements and Contracts;
(c) the Assignment of Rents and Leases;
(d) the Security Agreement;
(e) Financing Statements securing the first priority security
interest of the Lender in all of Borrower's interest in the fixtures on the
Property and all personal property owned by Borrower and located on the Property
and/or necessary or useful in the operation of the Property;
(f) The Subordination, Non-Disturbance and Attornment Agreements;
and
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(g) all estoppels, consents, acknowledgements and other documentation
executed in connection with the creation and perfection of the Lender's security
interest.
"SINGLE EMPLOYER PLAN" - means a Plan maintained by Borrower or any member
of the Controlled Group for employees of Borrower or any member of the
Controlled Group.
"SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENTS" means those
subordination, non-disturbance and attornment agreements executed from time to
time between the Lender and the Manager, Garage Manager, and with tenants under
Commercial Leases, in the form attached hereto as EXHIBIT I, with such
modifications as Lender may deem appropriate.
"TAX AND INSURANCE ACCOUNT" means an interest-bearing account required by
Lender to be established by Borrower with the Lender which shall be funded in
amounts satisfactory to Lender to be used as a reserve which may be used by
Borrower solely for the payment of real estate taxes and insurance premiums on
the Property becoming due thereafter.
"TRANSFEREE" is defined in SECTION 10.2 hereof.
"UNFUNDED LIABILITIES" means, (x) in the case of Single Employer Plans, the
amount (if any) by which the present value of all vested nonforfeitable benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for such
Plans, and (y) in the case of Multiemployer Plans, the withdrawal liability that
would be incurred by the Controlled Group if all members of the Controlled Group
completely withdrew from all Multiemployer Plans.
The foregoing definitions shall be equally applicable to both the singular
and the plural forms of the defined terms.
1.2 FINANCIAL STANDARDS. All financial computations required of a Person
under this Agreement shall be made, and all financial information required under
this Agreement shall be prepared, in accordance with GAAP, except that if any
Person's financial statements are not audited, such Person's financial
statements shall be prepared in accordance with the same sound accounting
principles utilized in connection with the financial information submitted to
Lender with respect to the Borrower or the Property in connection with this
Agreement and shall be certified by an authorized representative of such Person.
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ARTICLE II
THE FACILITY
2.1 THE FACILITY.
(a) Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower contained herein,
Lender agrees to make Advances to Borrower from time to time prior to the
Maturity Date, PROVIDED THAT the making of any such Advance will not cause the
sum of all then outstanding Advances to violate any financial covenants of
Borrower set forth herein. This facility ("FACILITY") is a revolving credit
facility and, subject to the provisions of this Agreement, Borrower may request
Advances hereunder, repay such Advances and reborrow Advances.
(b) The Commitment of Lender shall be Twenty Million and No/100
Dollars ($20,000,000.00).
(c) The Facility created by this Agreement has a term of three (3)
years and shall terminate on the Maturity Date.
(d) If the Closing Date has not occurred by December 30, 1994 for any
reason, the Lender shall have the right, by written notice to the Borrower, to
terminate this Agreement and any obligations Lender may have to the Borrower
hereunder.
2.2 EVIDENCE OF CREDIT EXTENSIONS. The Advances of Lender outstanding at
any time shall be accounted for by Lender's internal books and records, which
shall be deemed to be dispositive evidence of the aggregate Advances hereunder
outstanding, from time to time, absent manifest error.
2.3 FEES.
On or prior to the Closing Date, the Borrower shall pay to Lender the
Commitment Fee of One Hundred Thousand and No/100 Dollars ($100,000.00).
2.4 INTEREST.
(a) The outstanding principal balance under the Note shall bear
interest from time to time at a rate per annum equal to the Adjusted LIBOR Rate.
(b) All interest shall be calculated for actual days elapsed on the
basis of a 360-day year. Interest accrued on each LIBOR Advance shall be
payable (i) on the first day of each calendar month, (ii) on any date on which
the LIBOR Advance is prepaid, whether due to acceleration or otherwise, and
(iii) on the Maturity Date. If any payment of principal or interest under the
Notes shall become due on a day that is not a Business Day, such payment shall
be
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made on the next succeeding Business Day and, in the case of a payment of
principal, such extension of time shall be included in computing interest due in
connection with such payment.
2.5 LIBOR ADVANCES, LIBOR INTEREST PERIODS AND LIBOR RATES.
(a) Borrower, from time to time, may select the commencement date
(which must be a Business Day) and length of the LIBOR Interest Period
applicable to each LIBOR Advance. Borrower shall provide Lender with a Draw
Request not later than 11:00 a.m. (Chicago time) at least three (3) Business
Days prior to a LIBOR Advance. Not later than noon (Chicago time) on each
proposed borrowing date, the Lender shall make available the Advance requested
in funds immediately available in Chicago, Illinois by transfer to Borrower's
account at Lender.
(b) Lender shall, as soon as practicable after receipt of a Draw
Request, determine the Adjusted LIBOR Rate applicable to the requested LIBOR
Advance and inform Borrower of the same. Each determination of the Adjusted
LIBOR Rate by Lender shall be conclusive and binding upon Borrower in the
absence of manifest error.
(c) If Borrower shall prepay a LIBOR Advance other than on the last
day of the LIBOR Interest Period applicable thereto, Borrower shall be
responsible to pay all amounts due Lender as required by SECTION 3.2 hereof.
(d) As of the end of each LIBOR Interest Period for a LIBOR Advance,
the interest rate on the LIBOR Advance will be readjusted to the applicable
LIBOR Rate for the same LIBOR Interest Period as that most recently ended,
unless Borrower has once again selected a LIBOR Interest Period in accordance
with the timing and procedures set forth in this SECTION 2.5.
(e) The right of Borrower to request a LIBOR Advance pursuant to this
Agreement is subject to the availability to Lender of a similar option. If
Lender determines that (i) deposits of U.S. dollars in an amount approximately
equal to the LIBOR Advance for any LIBOR Interest Rate Period are not generally
available at such time in the London interbank eurodollar market, or (ii) the
rate at which the deposits described in subsection (i) herein are being offered
will not adequately and fairly reflect the costs to Lender of maintaining an
Adjusted LIBOR Rate on an Advance or of funding the same in such market for such
LIBOR Interest Period, or (iii) reasonable means do not exist for determining an
Adjusted LIBOR Rate, or (iv) the Adjusted LIBOR Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then in any of such events,
Lender shall so notify Borrower and such Advance shall bear interest at the
prime rate of interest minus twenty-five (25) basis points ("Alternate Rate").
A certificate made by an officer of Lender stating the prime rate in effect on
any given day shall, for purposes hereof, be conclusive evidence of the prime
rate in effect on such day. In the event Lender ceases to use the term "prime
rate" then prime rate herein shall be determined by reference to the rate used
by Lender as a base rate of interest for commercial loans as the same shall be
designated by Lender to Borrower. The "prime rate" is
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a base reference rate of interest adopted by Lender as a general benchmark from
which the Lender determines the floating interest rates chargeable on various
loans to borrowers with varying degrees of credit worthiness, and Borrower
acknowledges and agrees that Lender has made no representations whatsoever that
the "prime rate" is the interest rate actually offered by Lenders to borrowers
of any particular credit worthiness.
(f) If at any time due to the adoption of any law, rule, regulation,
treaty or directive, or any change therein or in the interpretation or
administration thereof by any court, central bank, governmental authority,
agency or instrumentality, or comparable agency charged with the interpretation
or administration thereof, or for any other reason arising subsequent to the
date of this Agreement, other than the business conditions of Lender, it shall
become unlawful or impossible for the Lender to make or fund any Advance, the
obligation of the Lender to provide such LIBOR Advance shall, upon the happening
of such event, forthwith be suspended for the duration of such illegality or
impossibility. If any such event shall make it unlawful or impossible for the
Lender to continue any LIBOR Advance previously made by it hereunder, the Lender
shall, upon the happening of such event, notify the Borrower thereof in writing,
and the Borrower shall, at the time notified by the Bank, either convert each
such unlawful Advance to an Advance bearing interest at the Alternate Rate or
repay such Advance in full, together with accrued interest thereon, subject to
the provisions of this SECTION 2.5.
(g) In no event may Borrower elect a LIBOR Interest Period which
would extend beyond the Maturity Date. Unless Lender agrees thereto, in no
event may Borrower have more than six (6) different LIBOR Interest Periods for
LIBOR Advances outstanding at any one time.
2.6 METHOD OF PAYMENT. All payments of the Obligations hereunder shall be
made, without set-off, deduction, or counterclaim, in immediately available
funds to Lender at Lender's address specified herein, by noon (Chicago time) on
the date when due.
2.7 DEFAULT. Notwithstanding the foregoing, during the continuance of an
Event of Default, Borrower shall not have the right to request a LIBOR Advance,
or select a new LIBOR Interest Period for an existing LIBOR Advance. During the
continuance of a Default, outstanding Advances shall bear interest at the
Default Rate until such Default is cured or the Obligations are paid in full.
2.8 TAX AND INSURANCE ACCOUNT. The Borrower shall establish with the
Lender the Tax and Insurance Account prior to or on the Closing Date.
2.9 GRANT OF SECURITY INTEREST. The Borrower hereby grants to Lender a
security interest in the Collateral to secure payment of the Obligations.
2.10 NON-RECOURSE. Anything contained herein notwithstanding, the Borrower
shall have no liability for the payment or performance of any of the covenants,
obligations or indemnifications contained in this Agreement, the Note, the
Mortgage or the other Loan
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Documents under any rule of law, statute or constitution, or by the enforcement
of any assessment or penalty or otherwise, except as provided below; PROVIDED,
HOWEVER, that nothing contained herein (a) shall be taken to prevent unlimited
recourse to, and the enforcement against, the Collateral and the leases and
rents connected therewith, for any and all liabilities, obligations and
undertakings contained herein, in the Note, the Mortgage or other Loan
Documents; or (b) shall limit, restrict or impair Lender's rights or the rights
of the holder of the Note to accelerate the maturity thereof upon an Event of
Default under this Agreement, the Note, the Mortgage or the other Loan
Documents, to bring suit and obtain a judgment against the Borrower (provided
execution thereof shall be limited to the Collateral and to the lease and rents
connected therewith, and any income and proceeds in respect thereof) on the
Note, or to exercise all rights and remedies provided under the Note and under
this Agreement, the Mortgage and the other Loan Documents so as to otherwise
realize upon said Collateral, leases and rents. And PROVIDED FURTHER, nothing
contained in this Agreement, the Note, the Mortgage, or the other Loan Documents
shall be taken to prevent enforcement of any claim with respect to, and the
Borrower and all other applicable parties shall remain fully liable to the
extent they would otherwise be, for (i) a breach or failure of any of the
representations or warranties of the Borrower contained herein, in the Mortgage,
the Note or the other Loan Documents; (ii) for fraud or a material
misrepresentation; (iii) the misapplication of condemnation awards and insurance
proceeds received by the Borrower; (iv) any and all security deposits; (v)
prepaid rents, income and profits collected with respect to the Collateral more
than thirty (30) days in advance and not applied to the payment of debt service
or operating expenses; (vi) any and all of the Lender's costs, expenses, damages
or liabilities (including, without limitation, all attorney's fees and court
costs) directly or indirectly arising out of, or attributable to, the use,
generation, storage, release, threatened release, discharge, disposal or
presence, on, under or about the Property of any Hazardous Materials; (vii) real
estate taxes and insurance premiums due and payable through the date on which
the Lender (or its assignee or designee) acquires title to the Property; (viii)
any claims made by tenants of the Property arising out of matters that occur
prior to the date on which the Lender (or its assignee or designee) acquires
title to the Property; (ix) any rental or other income arising with respect to
the Collateral and collected by the Borrower after the Lender gives notice that
the Borrower is in Default, and for so long as said Default continues, to the
full extent of such rental or other income after payment of ordinary and usual
costs and expenses of ownership and operation of the Collateral; and (x) waste
committed by Borrower at the Collateral.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 YIELD PROTECTION. If, after the date hereof, the adoption of or
change in any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
interpretation thereof, or the compliance of the Lender therewith,
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(i) subjects Lender to any tax, duty, charge or withholding on
or from payments due from Borrower (excluding federal and state
taxation of the overall net income of any Lender), or changes the
basis of such taxation of payments to Lender in respect of its
Advances, the funding thereof, or other amounts due it hereunder; or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by Lender, (other than reserves and assessments taken into
account in determining the interest rate applicable to LIBOR
Advances); or
(iii) imposes any other condition, and the result is to
increase the cost to Lender of making, funding or maintaining loans or
reduces any amount receivable by Lender in connection with loans, or
requires Lender to make any payment calculated by reference to the
amount of loans held or interest received by it, by an amount deemed
material by Lender,
THEN, within fifteen (15) days of demand by Lender, Borrower shall pay Lender
that portion of such increased expense incurred or a reduction in an amount
received which Lender reasonably determines is attributable to making, funding
and maintaining its Advances and its Commitment.
3.2 FUNDING INDEMNIFICATION. If any payment of a LIBOR Advance occurs on
a date which is not the last day of an applicable LIBOR Interest Period, whether
because of acceleration, prepayment or otherwise, or a LIBOR Advance is not made
on the date specified by Borrower for any reason other than default by the
Lender, Borrower will indemnify Lender for any loss or cost incurred by Lender
resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the LIBOR
Advance.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of Lender to make its
Initial Advance is subject to the condition precedent that on the Closing Date,
the following shall have been delivered to the Lender in form and substance
reasonably satisfactory to the Lender:
(a) TRUST AGREEMENT OF BORROWER. A copy of the trust agreement of
Borrower, including all amendments thereto, certified by an officer of Borrower
as being in full force and effect on the Closing Date.
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(b) LOAN DOCUMENTS. Originals of the Loan Documents (in such
quantities as the Lender may reasonably request), duly executed by authorized
officers of the appropriate entity.
(c) OPINION OF BORROWER'S COUNSEL. A written opinion, dated as of
the Closing Date, from outside counsel for the Borrower which counsel is
reasonably satisfactory to Lender, substantially in the form attached hereto as
EXHIBIT G.
(d) FINANCING STATEMENTS. UCC-1 and UCC-2 Financing Statements, duly
executed by Borrower, as reasonably requested by Lender.
(e) ALTA LOAN POLICY. An ALTA loan policy of title insurance in the
amount of the Commitment as of the Closing Date issued by a title insurance
company satisfactory to the Lender insuring Lender's first mortgage lien with
respect to the Property, showing only Permitted Exceptions and containing all
endorsements (including, without limitation, a so-called "comprehensive"
endorsement or, if applicable, an endorsement deleting the "standard exceptions"
from such title policy) required by the Lender, together with:
(i) copies of all documents referred to therein; and
(ii) satisfactory reinsurance agreements relating thereto, if
required by Lender.
(f) ALTA SURVEY. Survey of the Property prepared in accordance with
the "Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys
(1992)" and which is dated not earlier than thirty (30) days prior to the
Closing Date and certified to the Lender.
(g) PROPERTY AGREEMENTS. Copies of all management and leasing
agreements (including, without limitation, all reciprocal easement agreements
and parking management agreements) for the Property in full force and effect as
of the Closing Date.
(h) MANAGER'S AND TENANT'S SUBORDINATION. Subordination, Non-
Disturbance and Attornment Agreement of The Habitat Company ("Manager"), and of
326 South Wells Corporation ("Garage Manager"), and/or such other person engaged
to manage or lease the Property, whereby such Manager, Garage Manager and such
other parties, and The Market Place, Inc., a tenant under a Commercial Lease,
agree to subordinate any present or future liens or interests they may have
against such Property in favor of Lender's interest in the Property.
(i) RENT ROLL. Copies of current rent rolls and leasing status
report prepared by Manager for or such other person engaged to manage or lease
the Property dated as of the Closing Date and certified as complete, true and
correct by the Manager.
(j) OCCUPANCY LEASES. Copies of all of the existing Commercial
Leases.
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(k) TENANT ESTOPPEL LETTERS. Estoppel letters, dated within thirty
(30) days of the Closing Date, in form and content satisfactory to the Lender,
executed by The Market Place, Inc.
(l) INSURANCE. Original or certified copies of insurance policies or
binders therefor, with accompanying receipts showing prepayment of all premiums
evidencing that Borrower carries insurance on the Property which satisfies the
requirements of Lender, including, without limitation:
(i) Property and casualty insurance (including coverage for
flood and other water damage for Property located within a 100-year
flood plain) in the amount of the replacement cost of the improvements
at the Property;
(ii) Loss of rental income insurance in the amount not less
than one year's Gross Revenues from the Properties; and
(iii) Comprehensive general liability insurance in the amount of
Ten Million and No/100 Dollars ($10,000,000.00) per occurrence.
All insurance must be carried by companies with a Best Insurance
Reports (1992) Policyholder's and Financial Size Rating of "A-VII" or better.
All insurance required under this Agreement shall have endorsed thereon the
standard Mortgagee clause in favor of Lender and shall include the Lender as
loss payee. All insurance required under this Agreement shall contain
provisions stating that (i) the insurance policy is non-cancelable without at
least thirty (30) days' notice to the Lender, and (ii) no claims shall be paid
without at least ten (10) days' notice to the Lender.
(m) SEARCHES. UCC financing statement, judgment, and tax lien
searches with respect to the Borrower.
(n) REPORTS. The following reports:
(i) A Phase I environmental survey or audit for the Property
dated within ninety (90) days of the Closing Date in form and
substance satisfactory to the Lender and prepared by a qualified
environmental consultant satisfactory to the Lender.
(ii) An engineering building inspection report for the
Properties dated within ninety (90) days of the Closing Date in form
and substance satisfactory to the Lender and prepared by a qualified,
licensed engineer/architect satisfactory to the Lender, including a
certification that the Property complies in all material respects with
the Americans with Disabilities Act of 1990.
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(o) FINANCIAL AND OPERATING STATEMENTS. The following certified
operating statements for the Property for the one (1) year period ending
December 31, 1993 and certified operating statements for the ten (10) month
period ending October 31, 1994, and annual audited statements for the Borrower
for the one (1) year period ending April 30, 1994 and certified statements for
the three (3) month period ending October 31, 1994:
(1) Balance sheet for the Borrower;
(2) Statement of profit and loss
for the Borrower and the Property; and
(3) Statement of cash flows for the Borrower.
(p) BUDGET. A copy of the Budget for the 1995 fiscal year, a copy of
which is attached hereto as SCHEDULE A.
(q) NO ERISA VIOLATIONS. Evidence that the Facility and the Plan do
not violate any laws, statutes, orders or regulations governing pension or ERISA
plans.
(r) APPRAISAL. An Appraisal for the Property dated not earlier than
sixty (60) days prior to the Closing Date. Lender, not Borrower, shall order
the Appraisal. The costs of the Appraisal shall be the responsibility of the
Borrower.
(s) PERSONAL PROPERTY INVENTORY. A detailed personal property
inventory for the Property.
(t) REA ESTOPPELS. Estoppel Letters, dated within thirty (30) days
of the Closing Date, in form and content satisfactory to the Lender, executed by
any parties to reciprocal easements and operating agreements affecting the
Property.
(u) REA SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENTS.
Subordination, Non-Disturbance and Attornment Agreements, in form and content
satisfactory to the Lender, executed by the Borrower and by any parties to
reciprocal easement and/or operating agreements affecting any of the Property.
(v) OTHER EVIDENCE AS LENDER MAY REQUIRE. Such other evidence as
Lender may reasonably request to establish the consummation of the transactions
contemplated hereby, the taking of all necessary actions in any proceedings in
connection herewith and compliance with the conditions set forth in this
Agreement.
4.2 CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES. Advances after the
Initial Advance shall be made from time to time as requested by Borrower, and
the obligation of Lender to make any Advance is subject to the following terms
and conditions:
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(a) prior to each such Advance, no Default shall have occurred and be
continuing under this Agreement or any of the Loan Documents and, if required by
Lender, Borrower shall deliver a certificate of Borrower to such effect;
(b) the Lender shall have received and approved the Draw Request
Documents;
(c) if applicable and if the Lender so requests, Lender has received
and approved copies of all permits and governmental approvals necessary for any
renovation or tenant improvement work at the Properties to be funded from such
Advance;
(d) if applicable and if the Lender so requests, copies of all
leases, lease amendments and other material contracts or agreements relating to
the use or uses of the Advance;
(e) reaffirmation by Borrower of the representations and warranties
stated herein and in the Loan Documents;
(f) the Borrower is not Insolvent;
(g) if there has been a casualty or condemnation at the Property and
Lender has elected or was required to reimburse Borrower out of the insurance
proceeds or condemnation award, as applicable, pursuant to the Mortgage, the
undisbursed balance of such insurance proceeds or condemnation awards, as
applicable, together with the then-current undisbursed portion of the Commitment
under the Facility (subject to the financial covenants and restrictions
contained herein) are sufficient to pay for the cost of completion of the work
free and clear of liens and if such proceeds are insufficient, Borrower has
deposited the amount of such deficiency with Lender prior to the disbursement of
the Advance; and
(h) if at any time the Net Worth falls below Fifty Million and No/100
Dollars ($50,000,000.00).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants that:
5.1 EXISTENCE. Borrower is a business trust duly organized and existing
under the laws of the State of Illinois, with its principal place of business in
the State of Illinois.
5.2 TRUST POWERS. The execution, delivery and performance of the Loan
Documents required to be delivered by Borrower hereunder are within the trust
authority of Borrower have been duly authorized by all requisite action, and
are not in conflict with the terms of any
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organizational instruments of Borrower, or any instrument or agreement to which
Borrower is a party or by which Borrower or any of its assets is bound or
affected.
5.3 GOVERNMENT AND OTHER APPROVALS. No approval, consent, exemption or
other action by, or notice to or filing with, any governmental authority is
necessary in connection with the execution, delivery or performance of the Loan
Documents required hereunder.
5.4 ZONING AND USE. There are no pending, or to Borrower's knowledge
threatened, actions, suits or proceedings to revoke, attack, invalidate, rescind
or modify the zoning of the Property or any part thereof, or any building or
other permits heretofore issued with respect thereto, or asserting that such
zoning or permits do not permit the continued use of the Property as
contemplated by this Agreement. To the best of Borrower's knowledge, the use of
the Property does not and will not materially violate in any respect (i) any
laws of any kind whatsoever (including zoning laws), or (ii) any building
permits or other approvals, restrictions of record, or any agreement affecting
the Property or any part thereof. Neither the zoning nor any other right to use
the Property is to any extent dependent upon or related to any real property
other than the Property except as disclosed pursuant to the Permitted
Exceptions.
5.5 COMPLIANCE WITH LAWS. There is no judgment, decree or order or any
law, rule or regulation of any court or governmental authority binding on the
Borrower which would be contravened by the execution, delivery or performance of
the Loan Documents required hereunder.
5.6 ENFORCEABILITY OF AGREEMENT. This Agreement is the legal, valid and
binding obligation of the Borrower, and the Note when executed and delivered
will be the legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its respective terms, and the Loan
Documents required hereunder, when executed and delivered, will be similarly
legal, valid, binding and enforceable except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the rights of creditors generally.
5.7 TITLE TO PROPERTY. To the best of Borrower's knowledge, the Borrower
has good and marketable title to the Property free and clear of Liens except for
the Permitted Liens. The execution, delivery or performance of the Loan
Documents required to be delivered by the Borrower hereunder will not result in
the creation of any Lien on the Property other than in favor of the Lender. No
consent to the transactions contemplated hereunder is required from any ground
lessor or mortgagee or beneficiary under a deed of trust or any other party
except as has been delivered to the Lender.
5.8 LITIGATION. There are no material suits, arbitrations, claims,
disputes or other proceedings (including, without limitation, any civil,
criminal, administrative or environmental proceedings), pending or, to the best
of Borrower's knowledge, threatened against or affecting the Borrower or the
Property, except as disclosed on SCHEDULE 5.8 hereto.
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5.9 EVENTS OF DEFAULT. No Default or Event of Default has occurred and is
continuing or would result from the incurring of obligations by the Borrower
under any of the Loan Documents.
5.10 INVESTMENT COMPANY ACT OF 1940. The Borrower is not, and will by such
acts as may be necessary continue not to be, an investment company within the
meaning of the Investment Company Act of 1940.
5.11 PUBLIC UTILITY HOLDING COMPANY ACT. The Borrower is not a "holding
company" or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company," or of a "subsidiary company" of a "holding company," within
the definitions of the Public Utility Holding Company Act of 1935, as amended.
5.12 REGULATION U. The proceeds of the Advances will not be used, directly
or indirectly, to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock.
5.13 FINANCIAL INFORMATION. All financial statements furnished to the
Lender by or at the direction of the Borrower and all other financial
information and data furnished by the Borrower to the Lender are complete and
correct in all material respects as of the date thereof, and such financial
statements have been prepared in accordance with GAAP and fairly present the
consolidated financial condition and results of operations of the Borrower as of
such date. The Borrower has no contingent obligations, liabilities for taxes or
other outstanding financial obligations which are material in the aggregate,
except as disclosed in such statements, information and data.
5.14 FACTUAL INFORMATION. All factual information heretofore or
contemporaneously furnished by (or, to the best of Borrower's knowledge, on
behalf of) the Borrower to the Lender for purposes of or in connection with this
Agreement and the other Loan Documents and the transactions contemplated therein
is, and all other such factual information hereafter furnished by (or, to the
best of Borrower's knowledge, on behalf of) the Borrower to the Lender will be,
true and accurate (taken as a whole) on the date as of which such information is
dated or certified and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time.
5.15 ERISA. There are no Unfunded Liabilities in any Plan. Each Plan
complies in all material respects with all applicable requirements of law and
regulations, no Reportable Event has occurred with respect to any Plan, neither
the Borrower nor any other member of the Controlled Group has withdrawn from any
Plan or initiated steps to do so, and no steps have been taken to terminate any
Plan. The assets of the Borrower are not "plan assets" of any employee benefit
plan covered by ERISA or Section 4975 of the Code.
5.16 TAXES. All required tax returns have been filed by the Borrower with
the appropriate authorities except to the extent that extensions of time to file
have been requested,
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granted and have not expired or except to the extent such taxes are being
contested in good faith and for which adequate reserves, in accordance with
GAAP, are being maintained.
5.17 ENVIRONMENTAL COMPLIANCE. Except as set forth on SCHEDULE 5.17
hereto, the Borrower has not, nor, to the best knowledge of the Borrower, has
any other Person, ever caused or permitted any Hazardous Material to be
generated, used, transported, placed, held, located or disposed of on, under, at
or about the Property except in compliance with all applicable federal, state,
foreign and local laws, rules, regulations and orders, nor has the Property ever
been used (either by the Borrower or, to the best knowledge of the Borrower, by
any other Person) as a dump site, a storage (whether permanent or temporary)
site for any Hazardous Material nor is there or have there been any underground
storage tanks on, in or under the Property, and no governmental or regulatory
authorities have filed any actions or issued any orders against the Borrower
with respect to Hazardous Material at, on, or under the Property. The Borrower
has not nor, to the best knowledge of the Borrower, has any other Person,
installed any friable asbestos or any substance containing asbestos deemed
hazardous by federal or any state governmental or regulatory authorities in the
Property. The representations contained in this SECTION 5.17 shall survive in
perpetuity (or for such period as may be permitted by law), notwithstanding the
payment in full of the Note and the performance of all other obligations under
the Loan Documents.
5.18 INSURANCE. Borrower has obtained the insurance which Borrower is
required to furnish to Lender under SECTION 4.1(l) hereof.
5.19 LEASES. Borrower and its agents have not entered into any lease or
leases or other arrangements for occupancy of space within the Property other
than Existing Leases and any leases entered into after the Closing Date in
accordance with the terms and conditions of this Agreement and any of the other
Loan Documents. The Existing Leases are in full force and effect. Except as
set forth on SCHEDULE 5.19 hereto, neither Borrower nor, to the best of
Borrower's knowledge, any tenant thereunder has defaulted in the performance of
their respective obligations under the Commercial Leases.
5.20 NO BROKERS. Borrower has dealt with no brokers in connection with
this Facility, and no brokerage fees or commissions are payable by or to any
person in connection with this Agreement or the Advances. Lender shall not be
responsible for the payment of any fees or commissions to any broker and
Borrower shall indemnify, defend and hold Lender harmless from and against any
claims, liabilities, obligations, damages, costs and expenses (including
reasonable attorneys' fees and disbursements) made against or incurred by Lender
as a result of claims made or actions instituted by any broker or person
claiming by, through or under Borrower in connection with the Facility.
5.21 NO VIOLATION OF USURY LAWS. No aspect of any of the transactions
contemplated herein violate or will violate any usury laws or laws regarding the
validity of agreements to pay interest in effect on the date hereof.
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5.22 NOT A FOREIGN PERSON. Borrower is not a "foreign person" within the
meaning of Section 1445 or 7701 of the Code.
5.23 NO MANAGEMENT AND LEASING AGREEMENTS; NO GROUND LEASES. There are no
management and/or leasing agreements with any Person for, concerning or with
respect to the Property or any portions thereof, other than the existing
agreement with Manager and the parking agreement with the Parking Manager.
Neither the Property, nor any portions thereof are subject to, covered by and/or
owned pursuant to any ground lease.
Borrower agrees that all of its representations and warranties set forth in
ARTICLE V of this Agreement and elsewhere in this Agreement will be true on the
Closing Date, and will be true upon the date of each request for disbursement of
an Advance. Each request for disbursement hereunder shall constitute a
reaffirmation of such representations and warranties as deemed modified in
accordance with the disclosures made and approved, as aforesaid, as of the date
of such request for disbursement of an Advance.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as the Commitment shall
remain available and until the full and final payment of all obligations
incurred under the Loan Documents they will:
6.1 NOTICES. Promptly give written notice to Lender of:
(a) all litigation or arbitration proceedings affecting the Borrower
or the Collateral where the amount claimed is One Million and No/100 Dollars
($1,000,000.00) or more;
(b) any Default or Event of Default, specifying the nature and the
period of existence thereof and what action has been taken or been proposed to
be taken with respect thereto;
(c) all material claims filed against the Property;
(d) any change in the equity ownership of any Collateral other than
dispositions of personal property in the ordinary course of business;
(e) any Reportable Event or any "prohibited transaction" (as such
term is defined in Section 4975 of the Code) in connection with any Plan or any
trust created thereunder, which may, singly or in the aggregate materially
impair the ability of the Borrower
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to repay any of its obligations under the Loan Documents, describing the nature
of each such event and the action, if any, the Borrower proposes to take with
respect thereto;
(f) any default under any ground lease, operating agreement,
reciprocal easement agreement, deed of trust or mortgage relating to any
Collateral, or any breach or default under any material agreement relating to
any Collateral; and
(g) any notice from any federal, state, local or foreign authority
regarding any Hazardous Material, asbestos, or other environmental condition,
proceeding, order, claim or violation affecting the Property.
6.2 FINANCIAL STATEMENTS, REPORTS, ETC. Deliver to Lender, for the
Borrower, and/or the Property, as the case may be, unless otherwise specified:
(a) CALENDAR YEAR. Promptly upon completion, but in any event not
later than sixty (60) days after the end of each calendar year, (A) a copy of
the Budget for operation and management of the Property for the succeeding
fiscal year, which Budget shall be satisfactory to the Lender, in their
reasonable discretion; and (B) annual operating reports (including capital
expenditures) for the Property, certified by the Manager;
(b) FISCAL YEAR. Not later than ninety (90) days after the end of
each fiscal year, annual operating statements for the Borrower prepared on an
accrual basis and audited and certified by independent accountants satisfactory
to Lender as being complete and correct;
(c) FISCAL QUARTER. Not later than forty-five (45) days after the
end of each fiscal quarter:
(i) the then most recent quarterly operating statements
(including a balance sheet, statement of profit and loss and statement
of cash flows) for the Borrower for such fiscal quarter and for the
calendar year to date, prepared on an accrual basis and certified as
complete and correct by an authorized representative of Borrower; and
(ii) A statement from the Chief Financial Officer of Borrower
stating that after reviewing the books, records and affairs of the
Borrower as of the end of such fiscal quarter, Borrower is in
compliance with all of the covenants contained in this Agreement, and
that there is no Default or Event of Default, to the best of such
officer's knowledge, hereunder or under any of the Loan Documents.
(d) SEMI-ANNUAL. Not later than thirty (30) after the end of each
calendar year and each six-month anniversary thereof, a copy of the rent roll
for the Property certified as being true, correct and complete by an officer of
the Borrower or the Manager;
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(e) REAL ESTATE TAXES. Not later than thirty (30) days after the due
date of each installment of real estate taxes with respect to the Property,
evidence satisfactory to the Lender of the payment in full of such installment;
and
(b) OTHER DOCUMENTS. Such other statements or reports as the Lender
may reasonably request in form and detail satisfactory to the Lender.
6.3 EXISTENCE AND CONDUCT OF OPERATIONS. Except as permitted herein,
maintain and preserve its existence and all rights, privileges and franchises
now enjoyed and necessary for the operation of its business, including remaining
in good standing in each jurisdiction in which its business is operated. The
Borrower shall carry on and conduct its businesses in substantially the same
manner and in substantially the same fields of enterprise as presently
conducted.
6.4 LEASES. Borrower shall be free to lease space within the Property for
residential purposes so long as same is for a period of twenty-six months or
less and is at a competitive market rental, and on a form of lease substantially
in accordance with the form of lease approved by Lender. Borrower will provide
Lender with copies of all Commercial Leases and amendments thereto within thirty
(30) days of the full execution of same, all of which must be approved by Lender
in advance as required by Section 7.6 hereof.
6.5 APPRAISALS OF PROPERTY. Reimburse the Lender for all costs and
expenses incurred in connection with Lender's obtaining Appraisals for the
Property as requested from time to time by the Lender provided that Borrower
shall only be obligated to reimburse the Lender for all costs and expenses
incurred in connection with an Appraisal prior to the Closing Date or after an
Event of Default.
6.6 MAINTENANCE OF THE COLLATERAL. Maintain, preserve, protect and keep
the Collateral in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements, normal wear and tear
excepted.
6.7 INSURANCE. Provide a certificate of insurance from all insurance
carriers who maintain policies with respect to the Property within thirty (30)
days after the end of each fiscal year, evidencing that the insurance required
to be furnished to Lender pursuant to SECTION 4.1(l) hereof is in full force and
effect. Borrower shall timely pay, or cause to be paid, all premiums on all
insurance policies required under this Agreement from time to time. Borrower
shall promptly notify its insurance carrier or agent therefor (with a copy of
such notification being provided simultaneously to Lender) if there is any
occurrence which, under the terms of any insurance policy then in effect with
respect to the Property, requires such notification.
6.8 PAYMENT OF OBLIGATIONS. Pay all taxes, assessments, governmental
charges and other obligations of the Property when due, except such as may be
contested in good faith or as to which a bona fide dispute may exist, and for
which adequate reserves have been provided in accordance with sound accounting
principles used by Borrower on the date hereof.
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6.9 COMPLIANCE WITH LAWS. Comply in all material respects with all
applicable laws, rules, regulations, orders and directions of any governmental
authority in respect of the Property.
6.10 COMPLIANCE WITH BUDGET. Do all things commercially reasonable to
comply with the Budget, including limiting expenditures and distributions as set
forth herein and therein.
6.11 ADEQUATE BOOKS. Maintain, or cause to be maintained, adequate books,
accounts and records in order to provide financial statements in accordance with
GAAP (as to the Borrower) and, if requested by Lender, permit employees or
representatives of Lender at any reasonable time and upon reasonable notice to
inspect and audit the Property and Borrower and to examine or audit the
inventory, books, accounts and records of each of them and make copies and
memoranda thereof.
6.12 ERISA. Comply in all material respects with all requirements of ERISA
applicable to it with respect to each Plan.
6.13 ACCOUNTS. Borrower will continue to maintain all existing trust and
deposit accounts with Lender. Additionally, Borrower will deposit and maintain
with Lender all security deposit accounts, operating accounts, and capital
reserve accounts for the Property, and the Tax and Insurance Account.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as the Commitment shall
remain available and until full and final payment of all obligations incurred
under the Loan Documents, without the prior written consent of the Lender, it
will not:
HI\ CHANGE OF OWNERSHIP/MANAGEMENT OF PROPERTY. Permit a change in
ownership of the Property and/or terminate the Manager without the prior written
consent of Lender to the replacement manager, and/or permit the Property to
operate without a manager. For purposes hereof, the conveyance of the Property
to an entity owned entirely by Borrower ("Subsidiary") or the change in
ownership of forty-nine percent or less of the undivided interests in the
Property, so long as Borrower remains the manager of any co-ownership
arrangement, shall not be a violation of this covenant not to change ownership
of the Property. Notwithstanding the foregoing, any transfer or change in
ownership of the Subsidiary without the prior written consent of the Lender is
not permitted.
7.2 USE OF PROCEEDS. Apply or permit to be applied any proceeds of any
Advance directly or indirectly, to the funding of any purchase of, or offer for,
any share of capital stock of any publicly held corporation unless the board of
directors of such corporation has consented
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to such offer prior to any public announcements relating thereto and the Lender
have consented to such use of the proceeds of the Facility.
7.3 LIENS. Create, assume or suffer to exist any Lien (including the Lien
of an attachment, judgment or execution) on the Property or on any Collateral,
whether now owned or hereafter acquired, except the Permitted Liens.
7.4 REGULATION U. Use any of the proceeds of the Advances to purchase or
carry any Margin Stock.
7.5 COMMERCIAL LEASES. Execute, amend or terminate the Commercial Leases
at the Property or execute any additional Commercial Leases without the prior
written consent of the Lender, which consent will not be unreasonably withheld
or delayed.
ARTICLE VIII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
an Event of Default:
8.1 NONPAYMENT OF PRINCIPAL. The Borrower fails to pay any principal
portion of the Obligations when due, whether under SECTION 2.4 hereof, on the
Maturity Date or otherwise.
8.2 CERTAIN NEGATIVE COVENANTS. The Borrower, is not in compliance with
SECTION 7.1 hereof.
8.3 NONPAYMENT OF INTEREST AND OTHER OBLIGATIONS. The Borrower fails to
pay any interest or other portion of the Obligations, other than payments of
principal, and such failure continues for a period of five (5) days after the
date same becomes due.
8.4 LOAN DOCUMENTS. Any Loan Document is not in full force and effect or
a Default has occurred and is continuing thereunder after giving effect to any
cure or grace period in any such document.
8.5 REPRESENTATION OR WARRANTY. At any time or times hereafter any
representation or warranty set forth in Articles V of this Agreement or in any
statement, report or certificate now or hereafter made by the Borrower to the
Lender is not true and correct in any material respect.
8.6 COVENANTS, AGREEMENTS AND OTHER CONDITIONS. The Borrower fails to
perform or observe any of the other covenants, agreements and conditions
contained in ARTICLES VI and VII (except for SECTION 7.1 hereof) and elsewhere
in this Agreement or any of the other Loan Documents in accordance with the
terms hereof or thereof, not specifically referred to herein,
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and such Default continues unremedied for a period of thirty (30) days after
written notice from Lender, PROVIDED, HOWEVER, that if such Default is
susceptible of cure but cannot by the use of reasonable efforts be cured within
such thirty (30) day period, such Default shall not constitute an Event of
Default hereunder so long as (i) the Borrower has commenced a cure within such
thirty-day period and (ii) thereafter, Borrower is proceeding to cure such
default continuously and diligently and in a manner reasonably satisfactory to
Lender and (iii) such default is cured not later than sixty (60) days after the
expiration of such thirty (30) day period.
8.7 DUE ON SALE. Any transfer, assignment or sale of the Property or any
portion thereof occurs without the prior written consent of the Lender, except
as expressly permitted in SECTION 7.1 hereof.
8.8 INSOLVENCY OF BORROWER. The Borrower is Insolvent.
8.9 BANKRUPTCY.
(a) VOLUNTARY. The Borrower generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, or files any
petition or action for relief as to itself under any bankruptcy, reorganization,
insolvency or moratorium law, or any other similar law or laws for the relief
of, or relating to, debtors, or applies for or consents to a receiver, trustee
or custodian for it or a substantial portion of its property, or makes a general
assignment for the benefit of creditors.
(b) INVOLUNTARY. An involuntary petition is filed under any federal
or state bankruptcy or similar statute, whether now or hereafter existing,
against the Borrower or a custodian, receiver, trustee, assignee for the benefit
of creditors (or other similar official) is appointed to take possession,
custody or control of any Collateral unless such petition or appointment is set
aside or withdrawn or ceases to be in effect within sixty (60) days from the
date of such filing or appointment.
8.10 LEGAL PROCEEDINGS. The Borrower is enjoined, restrained or in any way
prevented by any court order or judgment or if a notice of lien, levy, or
assessment is filed of record with respect to all or any part of the Collateral
by any governmental department, office or agency, which could materially
adversely affect the performance of the obligations of such parties hereunder or
under the Loan Documents, as the case may be, or if any proceeding is filed or
commenced seeking to enjoin, restrain or in any way prevent the foregoing
parties from conducting all or a substantial part of their respective business
affairs and failure to vacate, stay, dismiss, set aside or remedy the same
within sixty (60) days after the occurrence thereof.
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ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
9.1 ACCELERATION.
If any Event of Default described in SECTION 8.9 hereof occurs, the
obligation of the Lender to make Advances hereunder shall automatically
terminate and the Obligations shall immediately become due and payable. If any
other Event of Default described in ARTICLE VIII hereof occurs, such obligation
to make Advances shall be terminated and at the election of the Lender, the
Obligations may be declared to be due and payable.
9.2 PRESERVATION OF RIGHTS; AMENDMENTS. No delay or omission of the
Lender in exercising any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or Event of Default or an
acquiescence therein, and the making of an Advance notwithstanding the existence
of a Default or Event of Default or the inability of the Borrower to satisfy the
conditions precedent to such Advance shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lender and then only to the extent in such writing specifically
set forth. All remedies contained in the Loan Documents or by law afforded
shall be cumulative and all shall be available to the Lender until the
Obligations have been paid in full.
ARTICLE X
PARTICIPATIONS
10.1 PARTICIPATIONS. Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time sell to one or more banks or
other entities ("PARTICIPANTS") participating interests in any Advance owing to
the Lender, the Note held by Lender, the Commitment of the Lender or any other
interest of the Lender under the Loan Documents. In the event of any such sale
by Lender of participating interests to a Participant, the Lender's obligations
under the Loan Documents shall remain unchanged, the Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
the Lender shall remain the holder of any such Note for all purposes under the
Loan Documents, all amounts payable by Borrower under this Agreement shall be
determined as if the Lender had not sold such participating interests, and
Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under the Loan Documents.
Notwithstanding the foregoing, in all events Lender will hold at least fifty-one
(51%) percent of the outstanding Advances made pursuant hereto. Nothing herein
stated shall limit the right of the Lender to assign any interest in any
Advance, or in the Note, to the Federal Reserve Bank.
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10.2 DISSEMINATION OF INFORMATION. Borrower authorizes Lender to disclose
to any Participant or any other Person acquiring an interest in the Loan
Documents by operation of law (each a "TRANSFEREE") and any prospective
Transferee any and all information in the Lender's possession concerning the
creditworthiness of Borrower.
ARTICLE XI
GENERAL PROVISIONS
11.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties
contained in this Agreement shall survive delivery of the Note and the making of
the Advances herein contemplated.
11.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to the
contrary notwithstanding, Lender shall not be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
11.3 TAXES. Any recording and other taxes (excluding franchise, income or
similar taxes) or other similar assessments or charges payable or ruled payable
by any governmental authority incurred in connection with the consummation of
the transactions contemplated by this Agreement shall be paid by the Borrower,
together with interest and penalties, if any.
11.4 HEADINGS. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
11.5 NO THIRD PARTY BENEFICIARIES. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
11.6 EXPENSES; INDEMNIFICATION. Subject to the provisions of this
Agreement, Borrower will pay (a) all out-of-pocket costs and expenses incurred
by the Lender (including the reasonable fees, out-of-pocket expenses and other
reasonable expenses of counsel, which counsel may be employees of Lender) in
connection with the preparation, execution and delivery of this Agreement, the
Note, the Other Loan Documents and any other agreements or documents referred to
herein or therein and any amendments thereto, (b) all out-of-pocket costs and
expenses incurred by the Lender (including the reasonable fees, out-of-pocket
expenses and other reasonable expenses of counsel to the Lender, which counsel
may be employees of the Lender) in connection with the successful enforcement
and protection of the rights of the Lender under this Agreement, the Note, the
Other Loan Documents or any other agreement or document referred to herein or
therein, and (c) all costs of obtaining all Appraisals, environmental reports,
engineering reports and all other documents or reports required to be furnished
to the Lender
-28-
<PAGE>
pursuant to SECTION 4.1 hereof. The obligations of the Borrower under this
Section 11.6 shall survive the termination of this Agreement.
11.7 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
11.8 NONLIABILITY OF THE LENDER. The relationship between the Borrower and
the Lender shall be solely that of borrower and lender. The Lender shall not
have any fiduciary responsibility to the Borrower. The Lender undertakes no
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations.
11.9 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
11.10 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
LENDER OR ANY AFFILIATE OF THE LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
11.11 WAIVER OF JURY TRIAL. THE BORROWER, AND THE LENDER HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
-29-
<PAGE>
11.12 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lender and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents. Any assignee or transferee of the Note agrees by acceptance thereof
to be bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of the Note, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any note or notes issued in exchange therefor.
11.13 ENTIRE AGREEMENT; MODIFICATION OF AGREEMENT. The Loan Documents
embody the entire agreement among the Borrower and Lender and supersede all
prior conversations, agreements, understandings, commitments and term sheets
among any or all of such parties with respect to the subject matter hereof. Any
provisions of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and Lender.
11.14 SET-OFF. If an Event of Default shall have occurred, Lender
shall have the right, at any time and from time to time without notice to the
Borrower, any such notice being hereby expressly waived, to set-off and to
appropriate or apply any and all money or property existing in accounts related
to the Property (excepting therefrom accounts solely containing the money of
another (i.e. security deposit accounts) or the Tax and Insurance Account) or
any other indebtedness at any time held or owing by Lender to or for the credit
or the account of the Borrower against and on account of all outstanding
Obligations and all Obligations which from time to time may become due hereunder
and all other obligations and liabilities of the Borrower under this Agreement,
irrespective of whether or not Lender shall have made any demand hereunder and
whether or not said obligations and liabilities shall have matured.
11.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower and the Lender.
ARTICLE XII
NOTICES
12.1 GIVING NOTICE. All notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in writing
and addressed or delivered to such party at its address set forth below or at
such other address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid,
shall be deemed given three (3) Business Days after same is mailed, if by
regular mail, upon acceptance or rejection if sent Certified Mail, upon delivery
if
-30-
<PAGE>
sent via recognized overnight courier, and upon receipt if personally delivered.
Notice may be given as follows:
To the Borrower:
The Chicago Dock and Canal Trust
455 East Illinois Street
Chicago, Illinois 60611
Attention: Mr. David R. Tinkham
With a copy to:
Wilson & McIlvaine
500 West Madison Street
Suite 3700
Chicago, Illinois 60661
Attention: Michael F. Csar, Esq.
To the Lender:
First Bank, N.A.
Wrigley Building
400-410 North Michigan Avenue
Chicago, Illinois 60611
Attention: Mr. Gregory T. Warsek
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attention: Gary I. Levenstein, Esq.
12.2 CHANGE OF ADDRESS. Each party may change the address for service of notice
upon it by a notice in writing to the other parties hereto.
* * *
-31-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
BORROWER: THE CHICAGO DOCK AND CANAL TRUST,
an Illinois business trust
By: ___________________________________________
Name: ____________________________________
Title: __________________________________
ATTEST:
By: __________________________________________
Name: ___________________________________
Title:____________________________________
LENDER: FIRST BANK, N.A., a National Banking Association
By: ___________________________________________
Name: ____________________________________
Title: __________________________________
-32-
<PAGE>
EXHIBIT A
FORM OF NOTE
<PAGE>
EXHIBIT B
FORM OF MORTGAGE
<PAGE>
EXHIBIT C
FORM OF ASSIGNMENT OF OPERATING AGREEMENTS
<PAGE>
EXHIBIT D
FORM OF ENVIRONMENTAL INDEMNITY
<PAGE>
EXHIBIT E
FORM OF SECURITY AGREEMENT
<PAGE>
EXHIBIT F
FORM OF ASSIGNMENT OF RENTS AND LEASES
<PAGE>
EXHIBIT G
LEGAL OPINION - BORROWER
<PAGE>
EXHIBIT H
DESCRIPTION OF PROPERTY
LOTS 1 AND 2 (EXCEPT THE SOUTH 6.5 FEET THEREOF) IN BLOCK 7 IN CITYFRONT CENTER,
BEING A SUBDIVISION IN THE NORTH FRACTION OF SECTION 10, TOWNSHIP 39 NORTH,
RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.
<PAGE>
EXHIBIT I
FORM OF SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
<PAGE>
SCHEDULE A
BUDGET
To Be Attached When Available
<PAGE>
SCHEDULE 5.8
LITIGATION
As disclosed in the Form 10-Q for Borrower for the quarter ended October 31,
1994, a copy of which has been provided to Lender.
<PAGE>
SCHEDULE 5.17
ENVIRONMENTAL COMPLIANCE
None
<PAGE>
SCHEDULE 5.19
LEASE DEFAULTS
None
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Financial Standards. . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II
THE FACILITY . . . . . . . . . . . . . . . 10
2.1 The Facility . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Evidence of Credit Extensions. . . . . . . . . . . . . . . . . . 11
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Required Principal Repayments. . . . . . . . . . . . . . . . . . 11
2.5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Selection of Rate Option and LIBOR Interest Periods. . . . . . . 12
2.7 Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . 13
2.8 Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9 Tax and Insurance Account. . . . . . . . . . . . . . . . . . . . 13
2.10 Grant of Security Interest . . . . . . . . . . . . . . . . . . . 13
2.10 Grant of Security Interest . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . 13
3.1 Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Funding Indemnification. . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . . 14
4.1 Conditions Precedent to Closing. . . . . . . . . . . . . . . . . 14
4.2 Conditions Precedent to Subsequent Advances. . . . . . . . . . . 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 18
5.1 Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Trust Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Government and Other Approvals . . . . . . . . . . . . . . . . . 18
-i-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
5.4 Zoning and Use . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Enforceability of Agreement. . . . . . . . . . . . . . . . . . . 19
5.7 Validity and Perfection of Security Documents. . . . . . . . . . 19
5.8 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . 19
5.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.10 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 19
5.11 Investment Company Act of 1940 . . . . . . . . . . . . . . . . . 19
5.12 Public Utility Holding Company Act . . . . . . . . . . . . . . . 19
5.13 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.14 No Material Adverse Financial Change . . . . . . . . . . . . . . 20
5.15 Financial Information. . . . . . . . . . . . . . . . . . . . . . 20
5.16 Factual Information. . . . . . . . . . . . . . . . . . . . . . . 20
5.17 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.18 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.19 Environmental Compliance . . . . . . . . . . . . . . . . . . . . 20
5.20 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.21 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.22 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.23 No Violation of Usury Laws . . . . . . . . . . . . . . . . . . . 21
5.24 Not a Foreign Person . . . . . . . . . . . . . . . . . . . . . . 21
5.25 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.26 Land Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.27 No Management and Leasing Agreements; No Ground Leases . . . . . 22
ARTICLE VI
AFFIRMATIVE COVENANTS. . . . . . . . . . . . . 22
6.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Financial Statements, Reports, Etc.. . . . . . . . . . . . . . . 23
6.3 Existence and Conduct of Operations. . . . . . . . . . . . . . . 24
6.4 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Appraisals of Properties . . . . . . . . . . . . . . . . . . . . 24
6.6 Maintenance of the Property. . . . . . . . . . . . . . . . . . . 24
6.7 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.8 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . 25
6.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 25
6.10 Compliance with Budget . . . . . . . . . . . . . . . . . . . . . 25
6.11 Adequate Books . . . . . . . . . . . . . . . . . . . . . . . . . 25
-ii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
6.12 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
NEGATIVE COVENANTS. . . . . . . . . . . . . . 25
7.1 Change of Ownership of Property. . . . . . . . . . . . . . . . . 25
7.2 Change of Borrower Ownership . . . . . . . . . . . . . . . . . . 25
7.3 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Maintenance of EBITDA. . . . . . . . . . . . . . . . . . . . . . 26
7.5 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.7 Minimum Net Worth. . . . . . . . . . . . . . . . . . . . . . . . 26
7.8 Commercial Leases. . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII
DEFAULTS . . . . . . . . . . . . . . . . 26
8.1 Nonpayment of Principal. . . . . . . . . . . . . . . . . . . . . 26
8.2 Certain Negative Covenants . . . . . . . . . . . . . . . . . . . 26
8.3 Nonpayment of Interest and Other Obligations . . . . . . . . . . 26
8.4 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.5 Representation or Warranty . . . . . . . . . . . . . . . . . . . 26
8.6 Covenants, Agreements and Other Conditions . . . . . . . . . . . 27
8.7 Due on Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.8 Material Adverse Financial Change. . . . . . . . . . . . . . . . 27
8.9 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.10 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES. . . . . . . 28
9.1 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Preservation of Rights; Amendments . . . . . . . . . . . . . . . 28
ARTICLE X
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS. . . . . . 28
10.1 Successors and Assigns.. . . . . . . . . . . . . . . . . . . . . 28
10.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . 28
-iii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
10.2.1 Permitted Participants; Effect . . . . . . . . . . . . . 28
10.3 Dissemination of Information . . . . . . . . . . . . . . . . . . 29
ARTICLE XI
GENERAL PROVISIONS. . . . . . . . . . . . . . 29
11.1 Survival of Representations. . . . . . . . . . . . . . . . . . . 29
11.2 Governmental Regulation. . . . . . . . . . . . . . . . . . . . . 29
11.3 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.5 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . 29
11.6 Expenses; Indemnification. . . . . . . . . . . . . . . . . . . . 29
11.7 Severability of Provisions . . . . . . . . . . . . . . . . . . . 30
11.8 Nonliability of the Lenders. . . . . . . . . . . . . . . . . . . 30
11.9 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.10 Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . . . 30
11.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 31
11.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 31
11.13 Entire Agreement; Modification of Agreement. . . . . . . . . . . 31
11.14 Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XII
NOTICES . . . . . . . . . . . . . . . . 32
12.1 Giving Notice. . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.2 Change of Address. . . . . . . . . . . . . . . . . . . . . . . . 33
EXHIBITS
A - Form of Note
B - Form of Mortgage
C - Form of Assignment of Operating Agreements and Contracts
D - Form of Environmental Indemnity
E - Form of Security Agreement
F - Form of Assignment of Rents and Leases
G - Legal Opinion - Borrower
H - Description of Property
I - Form of Subordination, Non-Disturbance and Attornment Agreement
-iv-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
SCHEDULES
A - Budget
5.8 - Litigation (Borrower)
5.17 - Environmental Compliance
5.18 - Lease Defaults
-v-
<PAGE>
PROMISSORY NOTE
$20,000,000.00 December ___, 1994
Chicago, Illinois
FOR VALUE RECEIVED, THE CHICAGO DOCK AND CANAL TRUST, an Illinois business
trust (the "Company), promises to pay to the order of FIRST BANK, N.A. (the
"Bank"), its successors and/or assigns at the Bank's office at 400-410 North
Michigan Avenue, Chicago, Illinois 60611, the principal amount of all loans
made by the Bank to the Company under the terms of this Note (each, an "Advance"
or collectively the "Advances"). The aggregate principal amount of all Advances
outstanding hereunder shall at no time exceed Twenty Million and No/100 Dollars
($20,000,000.00). This Note secures the obligations of the Company to Bank as
provided in that certain Revolving Credit Agreement (the "Agreement") dated of
even date herewith by and between the Company and Bank.
All terms capitalized herein shall have, unless otherwise set forth herein,
the meaning ascribed thereto as set forth in the Agreement.
Except as otherwise provided in the Agreement, the unpaid principal amount
of the Advances shall bear interest at the Adjusted LIBOR Rate and interest
shall be paid as provided in the Agreement. All outstanding principal and
accrued interest thereon shall be due and payable on the Maturity Date.
All payments of principal and interest shall be made in immediately
available funds in lawful money of the United States of America.
The Company may request an Advance on any Business Day. Such request shall
be made by 11:00 a.m. (Chicago time), three (3) Business Days prior to the day
of the requested Advance. Such request shall specify that amount of the
requested Advance (which shall be at least Five Hundred Thousand and No/100
Dollars ($500,000.00) and shall be in multiples of One Hundred Thousand and
No/100 Dollars ($100,000.00).
The Bank shall credit the proceeds of each Advance to the Company's demand
deposit account No. 199700019078, maintained at the Bank's office in Chicago,
Illinois.
If there is an Event of Default or Default under the Agreement or any of
the other Loan Documents and the Bank exercises its remedies provided under the
Agreement and/or any of the other Loan Documents, then in addition to all
amounts recoverable by the Bank under such documents, Bank shall be entitled to
receive reasonable
<PAGE>
attorneys' fees and expenses incurred by Bank in successfully exercising such
remedies.
Except as otherwise provided in the Agreement, the Bank may sell
participations in all or any part of any Advance to another bank or other entity
and may furnish information concerning the Company in the possession of the Bank
from time to time to participants or potential participants in any Advances.
The Company hereby waives presentment, demand, notice of dishonor, protest,
and all other demands and notices in connection with this Note. No act of
omission or commission of the Bank, including specifically any failure to
exercise any right or remedy, shall be deemed to be a waiver or release of the
same, such waiver or release to be made only in writing signed by the Bank.
THE COMPANY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE AND AGREES THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
This Note shall be governed by the internal laws of the State of Illinois,
but giving effect to the Federal Laws applicable to national banks.
Anything contained herein notwithstanding, the Company shall have no
liability for the payment or performance of any of the covenants, obligations or
indemnifications contained in this Note, the Agreement, the Mortgage or the
other Loan Documents under any rule of law, statute or constitution, or by the
enforcement of any assessment or penalty or otherwise, except as provided below;
provided, however, that nothing contained herein (a) shall be taken to prevent
unlimited recourse to, and the enforcement against, the Collateral and the
leases and rents connected therewith, for any and all liabilities, obligations
and undertakings contained herein, in the Agreement, the Mortgage or the other
Loan Documents; or (b) shall limit, restrict or impair Lender's rights or the
rights of the holder of this Note to accelerate the maturity thereof upon an
Event of Default under this Note, the Agreement, the Mortgage or the other Loan
Documents, to bring suit and obtain a judgment against the Company (provided
execution thereof shall be limited to the Collateral and to the lease and rents
connected therewith, and any income and proceeds in respect thereof) on this
Note, or to exercise all rights and remedies provided under this Note, the
Agreement, the Mortgage and the other Loan Documents so as to otherwise realize
upon said Collateral, leases and rents. And provided further, nothing contained
in this Note, the Agreement, the Mortgage, or the other Loan Documents shall be
taken to prevent enforcement of any claim with respect to, and the Company and
all other applicable parties shall remain fully liable to the extent they would
otherwise be, for (i) a breach or failure of any of the representations or
warranties of the Company contained herein, in
2
<PAGE>
the Agreement, the Mortgage, or the other Loan Documents; (ii) for fraud or a
material misrepresentation; (iii) the misapplication of condemnation awards and
insurance proceeds received by the Company; (iv) any and all security deposits;
(v) prepaid rents, income and profits collected with respect to the Collateral
more than thirty (30) days in advance and not applied to the payment of debt
service or operating expenses; (vi) any and all of the Bank's costs, expenses,
damages or liabilities (including, without limitation, all attorney's fees and
court costs) directly or indirectly arising out of, or attributable to, the use,
generation, storage, release, threatened release, discharge, disposal or
presence, on, under or about the Property of any Hazardous Materials; (vii) real
estate taxes and insurance premiums due and payable through the date on which
the Bank (or its assignee or designee) acquires title to the Collateral; (viii)
any claims made by tenants of the Property arising out of matters that occur
prior to the date on which the Bank (or its assignee or designee) acquires title
to the Property; (ix) any rental or other income arising with respect to the
Collateral and collected by the Company after the Bank gives notice that the
Company is in Default, and for so long as said Default continues, to the full
extent of such rental or other income after payment of ordinary and usual costs
and expenses of ownership and operation of the Collateral; and (x) waste
committed by the Company at the Collateral.
The Company is an Illinois business trust established under a Declaration
of Trust dated January 22, 1962, and restated as of September 16, 1986, and
subsequently amended, a copy of which is on file at the office of the Company
and is available for examination. The name "The Chicago Dock and Canal Trust"
refers to the Trustees under said Declaration as Trustees and not personally; no
Trustee, beneficiary, officer or agent of The Chicago Dock and Canal Trust shall
be held to any personal liability in connection with any representation or
agreement contained in this Note or in connection with the affairs of said
Trust, and the Bank shall look solely to the funds and property of said Trust
for the payment of any debt, demand or liability.
THE CHICAGO DOCK AND CANAL TRUST,
an Illinois business trust
By: ________________________________
Name: _________________________
Title: _________________________
ATTEST:
By: ________________________________
Name: _________________________
Title: _________________________
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THIS DOCUMENT PREPARED BY AND
AFTER RECORDING MAIL TO:
Jeffrey J. Stahl, Esq.
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
MORTGAGE, SECURITY AGREEMENT
AND FINANCING STATEMENT
(INCLUDES WAIVER OF RIGHT OF REDEMPTION
AND PROVISION FOR DUE ON SALE OR
FURTHER ENCUMBRANCE)
THIS MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT (the "Mortgage")
is made as of the _____ day of December, 1994, by and between The Chicago Dock
and Canal Trust, an Illinois business trust (the "Mortgagor"), with offices at
455 East Illinois Street, Chicago, Illinois 60611, and First Bank, N.A., a
National Banking Association (the "Mortgagee"), with offices at The Wrigley
Building, 400-410 North Michigan Avenue, Chicago, Illinois 60611.
W I T N E S S E T H:
WHEREAS the Mortgagor is justly indebted to the Mortgagee pursuant to that
Promissory Note of Mortgagor of even date herewith (the "Note") in the principal
sum of Twenty Million Dollars ($20,000,000.00), made payable to the order of
and delivered to the Mortgagee, pursuant to which the Mortgagor promised to pay
the said principal sum, late charges, and interest at the rate and in
installments, all as provided in the Note. The final payment of principal and
interest, if not sooner paid, shall be due on December , 1997. All payments
on account of the Indebtedness (as that term is defined in Paragraph 1 of this
Mortgage) secured hereby shall be applied (a) first to interest on the unpaid
principal balance, (b) secondly to any other sums due thereunder, (c) thirdly to
all other advances and sums secured hereby, and (d) finally, the remainder to
principal. Principal and interest due pursuant to the Note shall be made
payable at such place as the holder of the Note may from time to time in writing
appoint, and in the absence of such appointment, at the office of the Mortgagee;
and
WHEREAS, to secure the Note, the Mortgagee has required that the Mortgagor
cause this Mortgage to be duly executed and recorded in favor of Mortgagee.
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NOW, THEREFORE, the Mortgagor, to secure the payment of all sums of money
due pursuant to the Note, this Mortgage, the Revolving Credit Agreement of even
date herewith by and between Mortgagor and Mortgagee (the "Loan Agreement")
[capitalized terms used herein but not otherwise defined herein shall have the
meanings ascribed to each in the Loan Agreement] and any documents evidencing
or securing the same, inclusive of principal, interest and late charges, and the
performance of the covenants and agreements herein contained by the Mortgagor to
be performed, and also in consideration of the sum of ONE DOLLAR ($1.00) in hand
paid, the receipt whereof is hereby acknowledged, does by these presents
MORTGAGE, GRANT, REMISE, RELEASE, ALIEN AND CONVEY unto the Mortgagee and its
successors and assigns, the following described real estate and all of its
present and hereafter-acquired estate, rights, title and interest therein,
situated, lying and being in the County of Cook and State of Illinois, without
any relief whatsoever from valuation or appraisement laws of the State of
Illinois to-wit:
SEE LEGAL DESCRIPTION ATTACHED HERETO AS EXHIBIT A AND MADE A PART HEREOF
which, with the property hereinafter described, is collectively referred to
herein as the "Premises."
TOGETHER with all improvements, tenements, reversions, remainders,
easements, fixtures and appurtenances now or hereafter thereto belonging, and
all rents, issues and profits thereof for so long and during all such times as
Mortgagor may be entitled thereto (which are pledged primarily and on a parity
with said real estate and not secondarily); all tenant security deposits (but
only to be used in accordance with leases to tenants of the Premises), utility
deposits and insurance premium rebates to which Mortgagor may be entitled or
which Mortgagor may be holding. All of the land, estate and property
hereinabove described, real, personal and mixed, whether affixed or annexed or
not (except where otherwise hereinabove specified) and all rights hereby
conveyed and mortgaged are intended so to be as a unit and are hereby
understood, agreed and declared (to the maximum extent permitted by law) to form
part and parcel of the real estate and to be appropriated to the use of the real
estate, and shall be, for the purposes of this Mortgage, deemed to be real
estate and conveyed and mortgaged hereby.
TO HAVE AND TO HOLD the Premises unto the Mortgagee and its successors and
assigns forever, for the purposes and uses herein set forth.
IT IS FURTHER UNDERSTOOD AND AGREED THAT:
1. OPERATING COVENANTS OF MORTGAGOR. Mortgagor shall: (a) promptly
repair, restore or rebuild any buildings and other improvements now or hereafter
on the Premises which may become
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damaged or destroyed to substantially the same character as prior to such damage
or destruction, without regard to the availability or adequacy of any casualty
insurance proceeds or eminent domain awards; (b) keep the Premises constantly in
at least the condition and repair as of the date hereof, without waste; (c) keep
the Premises free from mechanics' liens or other liens or claims for liens
(collectively called "Liens"), (d) make no material structural alterations in or
on the Premises without Mortgagee's prior written consent; As used in this
Paragraph 1 and elsewhere in this Mortgage, the term "Indebtedness" means and
includes the unpaid principal sum evidenced by the Note, together with all
interest and late charges, and all other sums at any time as provided in the
Note, the Loan Agreement, this Mortgage or any document evidencing or securing
the same. Notwithstanding anything contained herein to the contrary, Mortgagor
may in good faith and with reasonable diligence contest the validity or amount
of any mechanic's lien and defer payment and discharge thereof during the
pendency of such contest, provided that:
(a) Such contest shall prevent the sale or forfeiture of the
Premises or any part thereof, or any interest therein, to satisfy such
mechanic's lien;
(b) Within thirty (30) days after Mortgagor has been notified of
the filing of such mechanic's lien, Mortgagor shall have notified Mortgagee in
writing of Mortgagor's intention to contest such mechanic's lien; and
(c) Mortgagor shall have either obtained a title insurance
policy endorsement over such mechanic's lien insuring Mortgagee against loss by
reason of the mechanic's lien, or Mortgagor shall have deposited with Mortgagee,
at such place as Mortgagee may from time to time in writing appoint, and in the
absence of such appointment, then at the place of payment designated in the
Note, a sum of money (the "Lien Deposit") which shall be sufficient, in the
reasonable judgment of Mortgagee, to pay in full such mechanic's lien and all
interest which might become due thereon. Mortgagor shall increase the Lien
Deposit whenever, in the reasonable judgment of Mortgagee, such increase is
advisable. The Lien Deposit is to be held without any allowance of interest.
Mortgagee may, at its option, pay the Lien Deposit, or any part
thereof, to the mechanic's lien claimant if Mortgagor (i) fails to maintain a
sufficient Lien Deposit or (ii) fails to act in good faith or with reasonable
diligence in contesting the mechanic's lien claims. If the mechanic's lien
contest is resolved in favor of the claimant and there exists no Default, Lender
shall pay the Lien Deposit, or any part thereof, to the claimant upon
Mortgagee's receipt of evidence satisfactory to Mortgagee of the amount to be
paid. Mortgagee shall pay any remaining Lien Deposit to Mortgagor, provided
there exists no Default.
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2. PAYMENT OF TAXES. Mortgagor shall pay all general taxes, special
assessments and other charges when due before any penalty or interest attaches.
Mortgagor shall furnish to Mortgagee duplicate receipts therefor within thirty
(30) days following the date of payment. Mortgagor shall pay in full "under
protest" any tax or assessment which Mortgagor may desire to contest, in the
manner provided by law.
3. TAX AND INSURANCE DEPOSITS
3.1. TAX DEPOSITS. Mortgagor shall deposit with the Mortgagee
commencing on the date of disbursement of any portion of the proceeds of the
loan secured hereby and on the first day of each month following the month in
which said disbursement occurs, a sum equal to 1/12 of 105% of the amount of all
real estate taxes and assessments (general and special) billed in the prior year
for the Premises. In addition, Mortgagor shall deposit with the Mortgagee on the
date of disbursement of the Initial Advance an amount equal to three (3) months
tax deposits in the amount provided pursuant to the foregoing sentence. Such
deposits are to be held in a separate interest-bearing account at the Mortgagee,
with interest for the benefit of Mortgagor, and are to be used for the payment
of taxes and assessments (general and special) on the Premises next due and
payable when they become due. If the funds so deposited are insufficient to pay
any such taxes or assessments (general or special) when the same become due and
payable, the Mortgagor shall, within ten (10) days after demand therefor from
the Mortgagee, deposit such additional funds as may be necessary to pay such
taxes and assessments (general and special) in full. If the funds so deposited
exceed the amount required to pay such taxes and assessments (general and
special) for any year the excess shall be applied to a subsequent deposit or
deposits.
3.2. INSURANCE DEPOSITS. For the purpose of providing funds with
which to pay premiums when due on all policies of fire and other hazard
insurance covering the Premises and the Collateral, as that term is defined in
this Mortgage, Mortgagor shall deposit with the Mortgagee on the first day of
each month a sum equal to 105% of the insurance premiums for the prior year
reduced by the amount, if any, then on deposit with the Mortgagee divided by the
number of months to elapse before one (1) month prior to the date when such
premiums become due and payable. No interest shall be allowed to Mortgagor on
account of any deposit made hereunder and said deposit need not be kept separate
and apart from any other funds of the Mortgagee.
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4. INSURANCE. Mortgagor shall carry property and casualty insurance
(including coverage for flood and other water damage if the Premises is located
within a 100-year flood plain) in the amount of the replacement cost of the
improvements at the Premises. Mortgagor shall also provide Comprehensive
General Liability insurance in the amount of $5,000,000.00 per occurrence.
Mortgagor shall also carry loss of rental income insurance in the amount of not
less than one year's gross revenues from the Premises. All policies of
insurance to be furnished hereunder shall be in forms, companies and amounts
satisfactory to Mortgagee, with waiver of subrogation and replacement cost
endorsements and a standard non-contributory Mortgagee clause attached to all
policies, including provisions requiring that (i) the coverage evidenced thereby
shall not be terminated or materially modified without thirty (30) days' prior
written notice to the Mortgagee, and ii) no claims shall be paid without at
least ten (10) days' prior written notice to the Mortgagee. Mortgagor shall
deliver certificates of insurance, including certificates for additional and
renewal policies, to Mortgagee and, in the case of insurance about to expire,
shall deliver renewal certificates not less than thirty (30) days prior to their
respective dates of expiration.
5. ADJUSTMENT OF LOSSES WITH INSURER AND APPLICATION OF PROCEEDS OF
INSURANCE.
(a) In case of loss or damage by fire or other casualty, Mortgagee
is authorized to settle and adjust any claim under insurance policies which
insure against such risks. Mortgagee is authorized to collect and receipt for
any such insurance monies. Such insurance proceeds may, at the option of the
Mortgagee be: (x) applied in reduction of the Indebtedness, whether due or not;
or (y) held by the Mortgagee and applied to pay for the cost of repair,
rebuilding or restoration of the buildings and other improvements on the
Premises. If the Mortgagee shall allow the insurance proceeds to be used for
repair, restoration or rebuilding, then the Mortgagee agrees to make said
proceeds available to reimburse Mortgagor for the cost of repair, rebuilding or
restoration of buildings or other improvements on the Premises, provided that
such proceeds shall be made available in the manner and under the conditions
that the Mortgagee may require, including a right to approve all plans and
specifications of such work before such work shall be commenced. If the
proceeds are made available by the Mortgagee to reimburse the Mortgagor or any
lessee for the cost of repair, rebuilding or restoration, any surplus, after
payment of the cost of repair, rebuilding, restoration and the reasonable
charges of the Disbursing Party, as that term is hereinafter defined, shall, at
the option of the Mortgagee, be applied on account of the Indebtedness or paid
to any party entitled thereto as the same appear on the records of the
Mortgagee. No interest shall be allowed to Mortgagor on any proceeds of
insurance held by the Disbursing Party.
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(b) As used in this Paragraph 5, the term "Disbursing Party" refers
to the Mortgagee and to any responsible trust or title insurance company
selected by the Mortgagee.
(c) Notwithstanding anything contained in Paragraph 5(a) of this
Mortgage to the contrary, provided that the Mortgagor is not in Default under
this Mortgage, the Loan Agreement or any of the other Loan Documents, Mortgagor
is hereby authorized to settle and adjust any claim under the insurance policies
which insure against such risks and collect and receipt for the proceeds thereof
so long as such claim does not exceed Two Hundred Fifty Thousand and no/100
Dollars ($250,000.00).
(d) Notwithstanding anything contained in Paragraph 5(a) of this
Mortgage to the contrary, Mortgagee agrees that the insurance proceeds may, at
the election of Mortgagor can be applied as provided in Paragraph 5(a)(y) hereof
if and so long as the following conditions are satisfied: (i) Mortgagor is not
then in Default under this Mortgage, the Loan Agreement or the other Loan
Documents; (ii) No fact, circumstance, event or other condition has occurred
which with the passage of time and/or the failure to cure would result in a
Default under this Mortgage, the Loan Agreement or the other Loan Documents;
(iii) proceeds of the insurance together with the funds of Mortgagor on deposit
with the Mortgagee is sufficient in Mortgagee's reasonable judgment to fully
repair and restore the Premises so damaged to its condition immediately prior to
the time of such casualty; and (iv) the Premises may legally be restored to the
condition and use existing immediately prior to such casualty.
6. STAMP TAX; EFFECT OF CHANGES IN LAWS REGARDING TAXATION. If, by
the laws of the United States of America or of any state or subdivision thereof
having jurisdiction over the Mortgagor, Mortgagee or the Premises, any tax is
due or becomes due in respect of the issuance of the Note or any document
securing same, the Mortgagor covenants and agrees to pay such tax in the manner
required by any such law. The Mortgagor further covenants to reimburse the
Mortgagee for any sums which Mortgagee may expend by reason of the imposition of
any such tax.
7. OBSERVANCE OF LEASE ASSIGNMENT
(a) As additional security for the payment of the Note and for the
faithful performance of the terms and conditions contained herein, Mortgagor has
assigned to the Mortgagee all of its rights, title and interest as landlord in
and to all current and future leases of the Premises.
(b) Mortgagor will not, without Mortgagee's prior written consent:
(i) execute any assignment or pledge of any rents or any
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leases of all or any portion of the Premises except an assignment or pledge
securing the Indebtedness; (ii) accept any payment of any installment of rent
more than thirty (30) days before the due date thereof; (iii) modify, alter,
amend or in any way change the terms and provisions of any Commercial Lease (as
defined in the Loan Agreement); (iv) execute any residential lease on a form of
lease not substantially in accordance with the form of lease approved by
Mortgagee, or at less than competitive market rental rates; or (v) waive the
obligation of any tenant under any of the leases to fully and timely perform in
strict accordance with the terms thereof, except in the normal course of
business.
(c) Nothing in this Mortgage or in any other documents relating to
the Note shall be construed to obligate Mortgagee, expressly or by implication,
to perform any of the covenants of any landlord under any of the leases assigned
to Mortgagee or to pay any sum of money or damages therein provided to be paid
by the landlord, each and all of which covenants and payments Mortgagor agrees
to perform and pay or cause to be performed and paid.
8. MORTGAGEE'S PERFORMANCE OF DEFAULTED ACTS. In case of default herein
by Mortgagor and same not being cured within the period, if any, hereinbelow
provided, Mortgagee may, but need not, make any payment or perform any act
herein required of Mortgagor in any form and manner Mortgagee deems expedient.
All monies paid for any of the purposes herein authorized and all expenses paid
or incurred to protect the Premises or the lien hereof, shall be so much
additional Indebtedness secured hereby, and shall become immediately due and
payable without notice and with interest thereon at the rate of interest set
forth in the Note applicable to a period when a default exists thereunder.
Inaction of Mortgagee shall never be considered as a waiver of any right
accruing to it on account of any default on the part of Mortgagor.
9. ACCELERATION OF INDEBTEDNESS IN CASE OF DEFAULT.
(a) Each of the following shall be deemed to be events of default
pursuant to this Mortgage: (i) failure of Mortgagor to make any due and
punctual payment of principal; (ii) the failure of Mortgagor to make any due and
punctual interest payment on the Note, or any other payment due in accordance
with the terms thereof or hereof, and such failure continues for a period of
five (5) days after the date the same becomes due; or (iii) the Mortgagor
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due with respect to the Premises, or files any petition or action
for relief as to itself under any bankruptcy, reorganization, insolvency or
moratorium law, or any other similar law or laws for the relief of, or relating
to, debtors, or applies for or consents to a receiver, trustee or custodian for
it or a substantial portion of its property; or (iv) an involuntary petition is
filed under any federal or state bankruptcy or similar statute, whether now or
hereafter existing,
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against the Mortgagor or a custodian, receiver, trustee, assignee for the
benefit of creditors (or other similar official) is appointed to take
possession, custody or control of any Collateral, as defined in the Loan
Agreement, unless such petition or appointment is set aside or withdrawn or
ceases to be in effect within sixty (60) days from the date of such filing or
appointment; or (v) the Mortgagor shall make an assignment for the benefit of
creditors; or (vi) the Mortgagor is enjoined, restrained or in any way prevented
by any court order or judgment or if a notice of lien, levy, or assessment is
filed of record with respect to all or any part of the Collateral, as defined in
the Loan Agreement, by any governmental department, office or agency, which
could materially adversely affect the performance of the obligations of such
parties hereunder or under the Loan Documents, as the case may be, or if any
proceeding is filed or commenced seeking to enjoin, restrain or in any way
prevent the foregoing parties from conducting all or a substantial part of their
respective business affairs and failure to vacate, stay, dismiss, set aside or
remedy the same within sixty (60) days after the occurrence thereof; or (vii)
default shall be made in the due observance or performance of any other
covenant, agreement or condition hereinbefore or hereinafter contained and
required to be kept or performed or observed by the Mortgagor and same is not
cured within thirty (30) days after written notice thereof from Mortgagee to
Mortgagor, provided however that if such cure has been commenced within said 30
day period but, despite diligent attempts by Mortgagor to cure, the cure cannot
be completed within said 30 day period, then Mortgagor shall have an additional
60 days to complete such cure so long as Mortgagor is diligently pursuing such
cure; or (viii) default shall be made and continue beyond the applicable cure
period set forth in the Loan Agreement for the due observance or performance of
any covenant, agreement or condition required to be kept or observed by
Mortgagor in the Loan Documents or in any other instrument given at any time to
secure the payment of the Note.
(b) Upon the occurrence of any of the events described in Paragraph
(a) above then and in any such event, the whole of the Indebtedness shall at
once, at the option of the Mortgagee, become immediately due and payable without
further notice to Mortgagor. If, while any insurance proceeds or condemnation
awards are held by or for the Mortgagee to reimburse Mortgagor or any lessee for
the cost of repair, rebuilding or restoration of building(s) or other
improvement(s) or other improvement(s) on the Premises, the Mortgagee shall be
or become entitled to accelerate the maturity of the Indebtedness, then and in
such event, the Mortgagee shall be entitled to apply all such insurance proceeds
and condemnation awards then held by or for it in reduction of the Indebtedness,
and any excess held by it over the amount of the Indebtedness shall be paid to
Mortgagor or any party entitled thereto, without interest, as the same appear on
the records of the Mortgagee.
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10. FORECLOSURE; EXPENSE OF LITIGATION.
(a) When the Indebtedness or any part thereof becomes due, whether
by acceleration or otherwise, Mortgagee shall have the right to foreclose the
lien hereof for such Indebtedness or any part thereof. In any civil action to
foreclose the lien hereof, there shall be allowed and included as additional
Indebtedness in the order or judgment for foreclosure and sale all reasonable
expenditures and expenses which may be paid or incurred by or on behalf of
Mortgagee for attorneys' fees, appraiser's fees (except as otherwise provided in
the Loan Agreement), outlays for documentary and expert evidence, stenographers'
charges, publication costs, and costs (which may be estimated as to items to be
expended after entry of said order or judgment) of procuring all such abstracts
of title, title searches and examinations, title insurance policies, and similar
data and assurances with respect to the title as Mortgagee may deem reasonably
necessary either to prosecute such civil action or to evidence to bidders at any
sale which may be had pursuant to such order or judgment the true condition of
the title to, or the value of, the Premises. All expenditures and expenses of
the nature in this paragraph mentioned and such expenses and fees as may be
incurred in the protection of the Premises and the maintenance of the lien of
this Mortgage, including the fees of any attorneys employed by Mortgagee in any
litigation or proceeding affecting this Mortgage, the Note or the Premises,
including probate, appellate and bankruptcy proceedings, or in preparations for
the commencement or defense of any action or proceeding or threatened action or
proceeding, shall be immediately due and payable by Mortgagor, with interest
thereon at the rate set forth in the Note applicable to a period when a default
exists thereunder, and shall be secured by this Mortgage.
(b) At all times that the Mortgagee shall appear in and defend any
suit, action or proceeding that might in any way in the reasonable judgment of
Mortgagee affect the value of the Premises, the priority of this Mortgage or the
rights and powers of Mortgagee hereunder or under any document given at any time
to secure the Indebtedness, Mortgagor shall, at all times, indemnify, hold
harmless and reimburse Mortgagee, its directors, officers and employees on
demand for any and all loss, damage, expense or cost, including cost of evidence
of title and reasonable attorneys' fees, arising out of or incurred in
connection with any such suit, action or proceeding, (including, without
limitations, all expenses of litigation or preparation therefor whether or not
Mortgagee is a party thereto) and the sum of such expenditures shall be secured
by this Mortgage and shall bear interest after demand at the rate specified in
the Note applicable to a period when a default exists thereunder, and such
interest shall be secured hereby and shall be due and payable on demand.
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11. APPLICATION OF PROCEEDS OF FORECLOSURE SALE. The proceeds of any
foreclosure sale of the Premises shall be distributed and applied in the
following order of priority: first, on account of all costs and expenses
incident to the foreclosure proceedings; second, all other items which may,
under the terms hereof, constitute Indebtedness additional to that evidenced by
the Note, with interest thereon as herein provided; third, all principal and
interest remaining unpaid on the Note; and fourth, any overplus to any party
entitled thereto as their rights may appear on the records of the Mortgagee.
12. APPOINTMENT OF RECEIVER OR MORTGAGEE-IN-POSSESSION. Upon, or at any
time after, the commencement of an action to foreclose this Mortgage, the court
in which such action was commenced may, upon request of the Mortgagee, appoint a
receiver of the Premises either before or after foreclosure sale, without notice
and without regard to the solvency or insolvency of Mortgagor at the time of
application for such receiver and without regard to the then value of the
Premises, the Mortgagee or any holder of the Note may be appointed as such
receiver or as mortgagee in possession. Such receiver, or the mortgagee-in-
possession, shall have power to collect the rents, issues and profits of the
Premises during the pendency of such foreclosure action and, in case of a sale
and a deficiency, during the full statutory period of redemption, if any,
whether there be redemption or not, as well as during any further times, if any,
when Mortgagor, except for the intervention of such receiver or mortgagee-in-
possession, would be entitled to collect such rents, issues and profits, and all
other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Premises during
the whole of said period. The court from time to time may authorize the
receiver or mortgagee-in-possession to apply the net income in its hands in
payment in whole or in part of: (a) the Indebtedness or the indebtedness secured
by a decree foreclosing the lien of this Mortgage, or any tax, special
assessment or other lien which may be or become superior to the lien hereof or
the lien of such order or judgment, provided such application is made prior to
the foreclosure sale; (b) the deficiency in case of a sale and deficiency.
13. RIGHTS CUMULATIVE. Each right, power and remedy conferred upon the
Mortgagee by this Mortgage and by all other documents evidencing or securing the
Indebtedness and conferred by law and in equity is cumulative and in addition to
every other right, power and remedy, express or implied, given now or hereafter
existing, at law and in equity.
14. MORTGAGEE'S RIGHT OF INSPECTION. Mortgagee shall have the right to
inspect the Premises at all reasonable times and access thereto shall be
permitted for that purpose.
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15. CONDEMNATION.
(a) Mortgagor hereby assigns, transfers and sets over unto the
Mortgagee the entire proceeds of any award and any claim for damages for any of
the Premises taken or damaged under the power of eminent domain or by
condemnation. The Mortgagee may elect at its option: (x) to apply the proceeds
of the award or claim upon or in reduction of the Indebtedness or (y) to make
those proceeds available to Mortgagor or any lessee for repair, restoration or
rebuilding of the Premises, in the manner and under the conditions that the
Mortgagee may require. In any event, if the improvement(s) are repaired,
restored or rebuilt, it shall be accomplished in accordance with plans and
specifications to be submitted to and approved by the Mortgagee. If the
proceeds are made available by the Mortgagee, any surplus which may remain out
of said award after payment of such cost of repair, rebuilding, restoration and
the reasonable charges of the Disbursing Party shall, at the option of the
Mortgagee, be applied on account of the Indebtedness or paid to any party
entitled thereto as the same appear on the records of the Mortgagee. If, as a
result of the condemnation or eminent domain, the balance of the Premises do
not, in Mortgagee's judgment, result in a complete economic unit having a
substantially equivalent value to the Premises as it existed before the taking,
Mortgagee can immediately demand repayment of the entire Indebtedness.
(b) Notwithstanding anything contained in Paragraph 15(a) of
this Mortgage to the contrary, provided that the Mortgagor is not in Default
under this Mortgage, the Loan Agreement or any of the other Loan Documents,
Mortgagor is hereby authorized to settle and adjust any claim for damages for
any of the Premises taken by or damaged under the power of eminent domain or by
condemnation, and collect and receipt for the proceeds thereof so long as such
claim does not exceed Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00).
(c) Notwithstanding anything contained in Paragraph 15(a) of
this Mortgage to the contrary, Mortgagee agrees that the proceeds from the
eminent domain or condemnation may, at the election of Mortgagor can be applied
as provided in Paragraph 15(a)(y) hereof if and so long as the following
conditions are satisfied: (i) Mortgagor is not then in Default under this
Mortgage, the Loan Agreement or the other Loan Documents; (ii) No fact,
circumstance, event or other condition has occurred which with the passage of
time and/or the failure to cure would result in a Default under this Mortgage,
the Loan Agreement or the other Loan Documents; (iii) proceeds from the eminent
domain or condemnation together with the funds of Mortgagor on deposit with the
Mortgagee is sufficient in Mortgagee's reasonable judgment to fully repair and
restore the Premises so damaged to its condition immediately prior to the time
of such taking; and (iv) the Premises may legally
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be restored to the condition and use existing immediately prior to such taking.
16. RELEASE UPON PAYMENT AND DISCHARGE OF MORTGAGOR'S OBLIGATIONS.
Mortgagee shall release this Mortgage and the lien hereof by proper
instrument upon indefeasible payment and discharge of all Indebtedness.
17. GIVING OF NOTICE. Any notice or other communication which any party
hereby may desire or may be required to give to any party hereto shall be in
writing, and shall be deemed given (i) when personally delivered, (ii) upon
receipt if sent by a nationally recognized overnight courier service (e.g.
Federal Express), addressed to a party at its address set forth below, or (iii)
on the second business day after being deposited with the United States Postal
Service, certified mail, postage prepaid, addressed to a party at its address
set forth below, or to such other address as the party to receive such notice
may have designated to all other parties by notice in accordance herewith:
If to Mortgagee: First Bank N.A., a National Banking
Association
The Wrigley Building
400-410 North Michigan Avenue
Chicago, Illinois 60611
Attention: Mr. Gregory T. Warsek
With a copy to: Shefsky & Froelich Ltd.
Suite 2500
444 North Michigan Avenue
Chicago, Illinois 60611
Attn: Gary I. Levenstein, Esq.
If to Mortgagor: The Chicago Dock and Canal Trust
455 East Illinois Street
Chicago, Illinois 60611
Attention: Mr. David R. Tinkham
With a copy to: Wilson & McIlvaine
500 West Madison Street
Suite 3700
Chicago, Illinois 60661
Attention: Michael F. Csar, Esq.
18. WAIVER OF DEFENSE. No action for the enforcement of the lien or of
any provision hereof shall be subject to any defense which would not be good and
available to the party interposing same in an action at law upon the Note.
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19. WAIVERS.
19.1. WAIVER OF STATUTORY RIGHTS INCLUDING RIGHT OF REDEMPTION.
Mortgagor shall not and will not apply for or avail itself of any appraisement,
valuation, stay, extension or exemption laws or any so-called "Moratorium Laws",
now existing or hereafter enacted, in order to prevent or hinder the enforcement
or foreclosure of the lien of this Mortgage, but hereby waives the benefit of
such laws. Mortgagor, for itself and all who may claim through or under it,
waives any and all right to have the property and estates comprising the
Premises marshalled upon any foreclosure of the lien hereof and agrees that any
court having jurisdiction to foreclose such lien may order the Premises sold as
an entirety. Mortgagor does hereby expressly waive any and all rights of
redemption from sale under any order or judgment of foreclosure of the lien of
this Mortgage on behalf of the Mortgagor, and each and every person, except
judgment creditors of the Mortgagor in its representative capacity, acquiring
any interest in or title to the Premises subsequent to the date of this
Mortgage. To the full extent permitted by law, Mortgagor agrees that it will
not, by invoking or utilizing any applicable law or laws or otherwise, hinder,
delay or impede the exercise of any right, power or remedy herein or otherwise
granted or delegated to Mortgagee, but will suffer and permit the exercise of
every such right, power and remedy as though no such law or laws have been or
will have been made or enacted. To the full extent permitted by law,
(i) Mortgagor hereby agrees that no action for the enforcement of the lien or
any provision hereof shall be subject to any defense which would not be good and
valid in an action at law upon the Loan Documents executed in connection
herewith; and (ii) to the extent not prohibited by law, Mortgagor does hereby
waive any right to a trial jury in any action or proceeding to enforce or defend
any rights of the Mortgagee under this Mortgage or any of the Loan Documents, or
relating thereto or arising therefrom and agree that any such action or
proceeding shall be tried before a court and not before a jury.
19.2. WAIVER OF MARSHALLING Notwithstanding the existence of any
other security interests in the Premises and/or Collateral held by Mortgagee or
by any other party, Mortgagee shall have the right to determine the order in
which any or all portions of the Indebtedness secured hereby are satisfied from
the proceeds realized upon the exercise of the remedies provided herein.
Mortgagor and any other party who consents to this Mortgage and any party who
now or hereafter acquires a security interest in the Premises and/or Collateral
hereby waives any and all right to require the marshalling of assets in
connection with the exercise of any of the remedies permitted by applicable law
or provided herein.
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20. FURNISHING OF FINANCIAL STATEMENTS, OPERATING STATEMENTS AND LEASING
REPORTS TO MORTGAGEE. Mortgagor covenants and agrees that it will keep and
maintain books and records of account in which full, true and correct entries
shall be made of all dealings and transactions relative to the Premises, which
books and records of account shall, at reasonable times and on reasonable
notice, be open to the inspection of the Mortgagee and its accountants and other
duly authorized representatives. Such books and records of account shall be
kept and maintained (i) in accordance with generally accepted accounting
principles consistently applied; and (ii) at the principal place of business of
the Mortgagor or the managing agent for the Premises.
21. MISCELLANEOUS
21.1. SEVERABILITY AND APPLICABLE LAW In the event one or more of
the provisions contained in this Mortgage or in the Note or in any other
document given at any time to secure the payment of the Note shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall, at the option of the
Mortgagee, not affect any other provision of this Mortgage, the Note or other
document and this Mortgage, the Note or other document shall be construed as if
such invalid, illegal or unenforceable provision had never been contained herein
or therein. The validity and interpretation of this Mortgage and the Note it
secures and any other document given at any time to secure the payment of the
Note are to be construed in accordance with and governed by the laws of the
State of Illinois.
21.2. ESTOPPEL CERTIFICATE
(a) Mortgagor, within fifteen (15) days of a request by the
Mortgagee, agrees to furnish from time to time a signed statement setting forth
the amount of the Indebtedness and whether or not any Default, offset or defense
then is alleged to exist against the Indebtedness and, if so, specifying the
nature thereof and such other items reasonably requested by Mortgagee.
(b) Mortgagee, within fifteen (15) days of a request by the
Mortgagor, agrees to furnish from time to time a signed statement setting forth
the amount of the Indebtedness and whether or not any Default then is alleged to
exist, and if so, specifying the nature thereof.
21.3. REGULATION G AND REGULATION U CLAUSE Mortgagor covenants
that no portion of the proceeds evidenced by the Note will not be used for the
purchase or carrying of registered equity securities within the purview and
operation of Regulation G or Regulation U issued by the Board of Governors of
the Federal Reserve System.
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21.4. INDEMNITY The Mortgagor hereby indemnifies, protects, saves
and holds forever harmless the Mortgagee, and its directors, officers,
employees, agents and independent contractors, (for the purposes of this
paragraph, the "Indemnified Parties") from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses,
including, without limitation, court costs and reasonable attorneys' fees and
expenses, imposed upon, incurred by or asserted against the Indemnified Parties,
or any of them, as a result of, in connection with or arising from any of the
following (however in no event shall this indemnity be construed to include
derivative suits of shareholders of Mortgagee against the directors and/or
officers of Mortgagee): (a) the ownership or operation of the Premises or any
interest therein or receipt by the Mortgagor of any rent or other sum therefrom;
(b) any accident, injury to or death of persons or loss or damage to property
occurring in, on or about the Premises or any part thereof or on the adjoining
sidewalks, curbs, vaults and vault space, if any, adjacent parking areas,
streets or ways, (c) the condition of the Premises or any part thereof or the
adjoining sidewalks, curbs, vaults and vault space, if any, the adjacent parking
areas, streets or ways; (d) any failure on the part of the Mortgagor to perform
or comply with any of the terms, covenants, conditions and provisions of the
loan documents; or (e) the performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or any
part thereof. Any amounts payable to the Indemnified Parties, or any of them,
under this paragraph which are not paid within ten (10) business days after
written demand therefor by the Indemnified Parties shall be so much additional
Indebtedness hereby secured and shall bear interest from the date of such demand
to the date of receipt by the Indemnified Parties of payment at the rate set
forth in the Note applicable to a period when a default exists thereunder, and
the Mortgagee shall, in addition to any other right, power or remedy available
to the Mortgagee, have the same rights, powers and remedies in the event of
nonpayment of any such sum by the Mortgagor as in the case of a default by the
Mortgagor in the payment of the Indebtedness. The obligations of the Mortgagor
under this paragraph shall survive any termination, release or satisfaction of
this Mortgage.
22. SECURITY AGREEMENT AND FINANCING STATEMENT
(a) Mortgagor and Mortgagee agree: (i) that this Mortgage shall
constitute a Security Agreement within the meaning of the Uniform Commercial
Code (the "Code") of the State of Illinois with respect to all sums on deposit
with the Mortgagee (the "Deposits") and with respect to any personal property
included in the definition herein of the word "Premises", which personal
property may not be deemed to form a part of the real estate described in
Exhibit "A" or may not constitute a "fixture" (within the meaning of Section
9-313 of the Code), and all replacements of such property, substitutions for
such property, additions to such
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<PAGE>
property, and the proceeds thereof (said property, replacements, substitutions,
additions and the proceeds thereof being sometimes herein collectively referred
to as the "Collateral"); and (ii) that a security interest in and to the
Collateral and the Deposits is hereby granted to the Mortgagee; and (iii) that
the Deposits and all of the Mortgagor's right, title and interest therein are
hereby assigned to the Mortgagee; all to secure payment of the Indebtedness and
to secure performance by the Mortgagor of the terms, covenants and provisions
hereof. Notwithstanding anything contained herein to the contrary, in no event
shall Mortgagee use the Tax and Insurance Account or the security deposit
accounts of tenants under leases to the Premises for anything other than their
intended use.
(b) In the event of a default under this Mortgage, and such is not
cured within the period, if any, so provided hereinabove, the Mortgagee,
pursuant to the appropriate provisions of the Code, shall have an option to
proceed with respect to both the real property and the improvements thereon and
Collateral in accordance with its rights, powers and remedies with respect to
the real property and the improvements thereon, in which event the default
provisions of the Code shall not apply. The parties agree that if the Mortgagee
shall elect to proceed with respect to the Collateral separately from the real
property and the improvements thereon, ten (10) days notice of the sale of the
Collateral shall be reasonable notice. The reasonable expenses of retaking,
holding, preparing for sale, selling and the like incurred by the Mortgagee
shall include, but not be limited to, reasonable attorneys' fees and legal
expenses incurred by Mortgagee, including, but not limited to, equitable actions
and all appeals. The Mortgagor shall, from time to time, on request of the
Mortgagee, deliver to the Mortgagee at the cost of the Mortgagor: (i) such
further financing statements and security documents and assurances as Mortgagee
may require, to the end that the liens and security interests created hereby
shall be and remain perfected and protected in accordance with the requirements
of any present or future law; and (ii) an inventory of the Collateral in
reasonable detail. The Mortgagor covenants and represents that all Collateral
now is, and that all replacements thereof, substitutions therefor or additions
thereto, unless the Mortgagee otherwise consents, will be free and clear of
liens, encumbrances, title retention devices and security interests of others.
(c) The Mortgagor and Mortgagee agree, to the extent permitted by
law, that: (i) all of the goods described within the definition of the word
"Premises" herein are or are to become fixtures on the land described in Exhibit
"A"; (ii) this instrument, upon recording or registration in the real estate
records of the proper office, shall constitute a "fixture filing" within the
meaning of Sections 9-313 and 9-402 of the Code; and (iii) Mortgagor is a record
owner of the land described in EXHIBIT A.
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(d) If the Collateral is sold in connection with a sale of the
Premises, Mortgagor shall notify the Mortgagee prior to such sale and shall
require as a condition of such sale that the purchaser specifically agree to
assume Mortgagor's obligations as to the security interests herein granted and
to execute whatever agreements and filings are deemed necessary by the Mortgagee
to maintain Mortgagee's first perfected security interest in the Collateral,
Deposits and the deposits described in Paragraph 3 above.
23. DUE ON SALE OR FURTHER ENCUMBRANCE CLAUSE.
(a) In determining whether or not to make the loan evidenced by the
Note and secured hereby, Mortgagee examined the credit-worthiness of Mortgagor
found it acceptable and relied and continues to rely upon same as the means of
repayment of the Note. Mortgagee also evaluated the background and experience
of Mortgagor in owning and operating property such as the Premises, found same
acceptable and relied and continues to rely upon same as the means of
maintaining the value of the Premises. Mortgagor is an entity/person well-
experienced in borrowing money and owning and operating property such as the
Premises, was ably represented by a licensed attorney at law in the negotiation
and documentation of the loan evidenced by the Note and secured hereby and
bargained at arm's length and without duress of any kind for all of the terms
and conditions of the loan, including this provision. Mortgagor recognizes that
Mortgagee is entitled to keep its loan portfolio at current interest rates by
either making new loans at such rates or collecting assumption fees and/or
increasing the interest rate on a loan, if the security for which is purchased
by a party other than the original Mortgagor. Mortgagor further recognizes that
any secondary or junior financing placed upon the Premises or any interest in
the Mortgagor, (i) may divert funds which would otherwise be used to pay the
Note; (ii) could result in acceleration and foreclosure by any such junior
encumbrance which would force Mortgagee to take measures and incur expenses to
protect its security; (iii) would detract from the value of the Premises should
Mortgagee come into possession thereof with the intention of selling same; and
(iv) impair Mortgagee's right to accept a deed in lieu of foreclosure, as a
foreclosure by Mortgagee would be necessary to clear the title to the Premises.
(b) In accordance with the foregoing and for the purposes of (i)
protecting Mortgagee's security, both of repayment and of the value of the
Premises; (ii) giving Mortgagee the full benefit of its bargain and contract
with Mortgagor; (iii) allowing Mortgagee to raise the interest rate and/or
collect assumption fees; and (iv) keeping the Premises free of subordinate
financing liens, Mortgagor agrees that if this paragraph be deemed a restraint
on alienation, that it is a reasonable one and that, except as otherwise
provided in the Loan Agreement, any sale, conveyance, assignment, further
encumbrance or other transfer of
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title to the Premises or any interest therein (whether voluntary or by operation
of law) without the Mortgagee's prior written consent shall be a default
hereunder for which no notice need be given and no cure period shall be
permitted.
Any consent by the Mortgagee, or any waiver of an event of default, under
this paragraph shall not constitute a consent to, or waiver of any right, remedy
or power of the Mortgagee upon a subsequent event of default under this
Paragraph.
24. HAZARDOUS SUBSTANCES - STATUS AND INDEMNITY
(a) As a material inducement to Mortgagee to disburse the funds
evidenced by the Note secured hereby, the Mortgagor does hereby represent and
covenant that to the best of Mortgagor's knowledge (i) there is no presence of
any Hazardous Substances, as that term is hereinafter defined, on, at, in or
affecting the Premises or the groundwater underlying same; (ii) no spills,
releases, discharges, or disposal of Hazardous Substances that have occurred or
are presently occurring on, in, at or onto the Premises; (iii) no spills or
disposal of Hazardous Substances that have occurred or are occurring off the
Premises as a result of any construction on, at, in or the operation and use of
the Premises; (iv) there is no presence of any equipment containing
polychlorinated biphenyl ("PCB"); and (v) there is no presence of any asbestos
in use or on the Premises.
(b) In connection with construction in, at or on the Premises or
the operation and use of the Premises, there has been no failure to comply with
all applicable local, state, and federal environmental laws, regulations,
ordinances, and administrative and judicial orders relating to the generation,
recycling, reuse, sale, storage, handling, transport, and disposal of any
Hazardous Substances.
(c) In addition to all other obligations of the Mortgagor to
indemnify the Mortgagee, Mortgagor agrees to indemnify and hold Mortgagee
harmless from and against any and all claims, demands, damages, losses, liens,
liabilities, penalties, fines, lawsuits, and other proceedings, costs, and
expenses (including without limitation reasonable attorney's fees) arising
directly or indirectly from, out of, or in any way connected with (i) the
presence of any Hazardous Substances in, at, on or off the Premises or (ii) any
violation or alleged violation of any local, state, or federal environmental
law, regulation, ordinance, or administrative or judicial order relating to
Hazardous Substances, whether attributable to events occurring before or after
Mortgagor's acquisition of the Premises, but excluding events occurring after
the Mortgagee (or its designee or assignee) acquires title to the Premises. The
obligations of Mortgagor under this paragraph shall survive any termination,
release or satisfaction of this Mortgage.
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(d) Mortgagor covenants that it shall not create, store, or release
or allow the creation, storage or release of any Hazardous Substances (except
for nominal amounts used in the ordinary course of business) on the Premises
and, at Mortgagor's sole cost and expense, it shall remove or cause to be
removed any Hazardous Substances on, at or in the Premises or the groundwater
underlying same, in accordance with such remediation as may be required by
applicable law.
(e) As used in this Mortgage, "Hazardous Substances" shall mean:
any hazardous, toxic or dangerous waste, substance or material subject to
regulation under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, and federal, state or local so-called "Superfund" or
"Superlien" laws, or any other federal, state or local laws, ordinances, rules
or regulations governing or regulating hazardous materials, pollution, the
environment or public health, as now or at any time hereafter in effect
25. FUTURE ADVANCE. At all times, regardless of whether any loan
proceeds have been disbursed, this Mortgage secures as part of the Indebtedness
the payment of all loan commissions, service charges, liquidated damages,
attorneys' fees, expenses and advances due to or incurred by Lender in
connection with the Indebtedness, all in accordance with the Note, this
Mortgage, and the Loan Agreement, provided, however, that in no event shall the
total amount of the Indebtedness, including loan proceeds disbursed plus any
additional charges, exceed two hundred percent (200%) of the face amount of the
Note. Mortgagor acknowledges that Mortgagee has bound itself to make advances
pursuant to the Loan Agreement and that all such future advances shall be a lien
from the time this Mortgage is recorded, as provided in the Act.
26. NON-RECOURSE. Anything contained herein notwithstanding, the
Mortgagor shall have no liability for the payment or performance of any of the
covenants, obligations or indemnifications contained in this Mortgage, the Loan
Agreement, the Note, or the other Loan Documents under any rule of law, statute
or constitution, or by the enforcement of any assessment or penalty or
otherwise, except as provided below; provided, however, that nothing contained
herein (a) shall be taken to prevent unlimited recourse to, and the enforcement
against the Premises and the lease and rents connected therewith, for any and
all liabilities, obligations and undertakings contained herein, in the Note, the
Loan Agreement or other Loan Documents; or (b) shall limit, restrict or impair
Mortgagee's rights or the rights of the holder of the Note to accelerate the
maturity thereof upon an Event of Default under this Mortgage, the Loan
Agreement, the Note or the other Loan Documents, to bring suit and obtain a
judgment against the Mortgagor (provided execution thereof shall be limited to
the Premises and to the lease and rents connected therewith, and any income and
proceeds in respect thereof) on the Note, or to exercise
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all rights and remedies provided under the Note and under this Mortgage, the
Loan Agreement and the other Loan Documents so as to otherwise realize upon said
Premises, leases and rents. And provided further, nothing contained in this
Mortgage, the Loan Agreement, the Note, or the other Loan Documents shall be
taken to prevent enforcement of any claim with respect to, and the Mortgagor and
all other applicable parties shall remain fully liable to the extent they would
otherwise be, for (i) a breach or failure of any of the representation or
warranties of the Mortgagor contained herein, in the Loan Agreement, the Note or
the other Loan Documents; (ii) for fraud or a material misrepresentation; (iii)
the misapplication of condemnation awards and insurance proceeds received by the
Mortgagor; (iv) any and all security deposits; (v) prepaid rents, income and
profits collected with respect to the Premises more than thirty (30) days in
advance and not applied to the payment of debt service or operating expenses;
(vi) any and all of the Mortgagee's costs, expenses, damages or liabilities
(including, without limitation, all attorney's fees and court costs) directly or
indirectly arising out of, or attributable to, the use, generation, storage,
release, threatened release, discharge, disposal or presence, on, under or about
the Premises of any Hazardous Materials; (vii) real estate taxes and insurance
premiums due and payable through the date on which the Mortgagee (or its
assignee or designee) acquires title to the Premises; (viii) any claims made by
tenants of the Premises arising out of matters that occur prior to the date on
which the Mortgagee (or its assignee or designee) acquires title to the
Premises; (ix) any rental or other income arising with respect to the Premises
and collected by the Mortgagor after the Mortgagee gives notice that the
Mortgagor is in Default, and for so long as said Default continues, to the full
extent of such rental or other income after payment of ordinary and usual costs
and expenses of ownership and operation of the Premises; and (x) waste committed
by Mortgagor at the Premises.
27. TRUSTEE EXCULPATION. The Mortgagor is an Illinois business trust
established under a Declaration of Trust dated January 22, 1962, and restated as
of September 16, 1986, and subsequently amended, a copy of which is on file at
the office of Mortgagor and is available for examination. The name "The Chicago
Dock and Canal Trust" refers to the Trustees under said Declaration as Trustees
and not personally; no Trustee, beneficiary, officer or agent of The Chicago
Dock and Canal Trust shall be held to any personal liability in connection with
any representation or agreement contained in this Mortgage or in connection with
the affairs of said Trust, and Mortgagee shall look solely to the funds
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and property of said Trust for the payment of any debt, demand or liability.
IN WITNESS WHEREOF, the Mortgagor has executed this instrument as of
the day and year first above written.
THE CHICAGO DOCK AND CANAL TRUST, an Illinois
business trust
By: __________________________________________
Name: ___________________________________
Title: __________________________________
ATTEST:
By: __________________________________
Name: ___________________________
Title: __________________________
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STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, the undersigned, a Notary Public, in and for the County and State
aforesaid, DO HEREBY CERTIFY, that _________________ personally known to me to
be the _______________________ of The Chicago Dock and Canal Trust, an Illinois
business trust aforesaid and ___________________, the ________________ of The
Chicago Dock and Canal Trust, an Illinois business trust, personally known to me
to be the same persons whose names are subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that as such
______________________ and ________________________ signed and delivered the
said instrument as _______________________ and _____________________ of said
_____________, given by the Board of Directors of said _____________ as his/her
free and voluntary act, and as the free and voluntary act and deed of said
____________, for the uses and purposes therein set forth.
Given under may hand and official seal this __ day of December, 1994.
_______________________________
Notary Public
Commission expires _____________________________
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT 10.13
AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT is made as of the 19th day
of July, 1995 between THE CHICAGO DOCK AND CANAL TRUST, an Illinois business
trust (the "Trust"), and CHARLES R. GARDNER ("Executive").
The Trust and Executive previously entered into an Executive Employment
Agreement dated as of April 14, 1993 (the "Employment Agreement") providing for
the employment arrangements between the Trust and Executive. The Trust and
Executive now desire to make certain changes in the Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the Trust and Executive hereby amend the Employment Agreement
as follows:
1. With respect to Section 2 of the Employment Agreement, the Trust and
Executive acknowledge and agree that: (a) the Trust previously exercised its
right not to have the term of the Employment Agreement further automatically
extended and the expiration of the term of the Employment Agreement was fixed at
the then applicable expiration date of December 31, 1997; and (b) the expiration
of the term of the Employment Agreement is hereby extended to April 30, 1998.
2. With respect to Section 5(c) of the Employment Agreement, the Trust
and Executive acknowledge and agree that (a) effective January 1, 1995, the
Trust has paid and will continue to pay the cost of Executive's disability
insurance, and (b) the Trust's obligation to maintain the benefit plans and
arrangements described in clauses (i) and (ii) of Section 5(c) shall continue
only so long and to the extent that such plans and arrangements or their
substantial equivalents are available to the Trust on commercially reasonable
terms.
3. As amended hereby, the Employment Agreement remains in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
THE CHICAGO DOCK AND CANAL TRUST
By___________________________________
Chairman, Compensation Committee
CHARLES R. GARDNER
_____________________________________
<PAGE>
EXHIBIT 10.14
AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT is made as of the 19th day
of July, 1995 between THE CHICAGO DOCK AND CANAL TRUST, an Illinois business
trust (the "Trust"), and DAVID R. TINKHAM ("Executive").
The Trust and Executive previously entered into an Executive Employment
Agreement dated as of April 14, 1993 (the "Employment Agreement") providing for
the employment arrangements between the Trust and Executive. The Trust and
Executive now desire to make certain changes in the Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the Trust and Executive hereby amend the Employment Agreement
as follows:
1. With respect to Section 2 of the Employment Agreement, the Trust and
Executive acknowledge and agree that: (a) the Trust previously exercised its
right not to have the term of the Employment Agreement further automatically
extended and the expiration of the term of the Employment Agreement was fixed at
the then applicable expiration date of December 31, 1997; and (b) the expiration
of the term of the Employment Agreement is hereby extended to April 30, 1998.
2. With respect to Section 5(c) of the Employment Agreement, the Trust
and Executive acknowledge and agree that (a) effective January 1, 1995, the
Trust has paid and will continue to pay the cost of Executive's disability
insurance, and (b) the Trust's obligation to maintain the benefit plans and
arrangements described in clauses (i) and (ii) of Section 5(c) shall continue
only so long and to the extent that such plans and arrangements or their
substantial equivalents are available to the Trust on commercially reasonable
terms.
3. As amended hereby, the Employment Agreement remains in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
THE CHICAGO DOCK AND CANAL TRUST
By____________________________________
President
DAVID R. TINKHAM
______________________________________
<PAGE>
EXHIBIT 10.15
August 11, 1995
Mr. Charles R. Gardner, President
The Chicago Dock & Canal Trust
455 East Illinois Street, Suite 565
Chicago, IL 60611
Dear Charlie:
The purpose of this letter is to confirm the binding agreement between Kerr-
McGee Chemical Corporation (KMCC) and The Chicago Dock & Canal Trust (Trust)
regarding environmental remediation necessitated by Lindsay Light Company's
occupancy of buildings formerly on the Lindsay Light II Site (Site).
Specifically, we have agreed as follows:
1. KMCC will immediately assume management of environmental remediation at the
Site; and, subject to timely regulatory approvals, KMCC will make all
reasonable efforts to complete remediation of the Site by December 31,
1996.
2. The Trust will reimburse KMCC for its costs associated with the Site (from
August 8, 1995 onward) in the following manner:
a. The Trust will reimburse KMCC 25% of the first $1,000,000 of cost as
follows: KMCC will invoice the Trust quarterly and the Trust will pay
KMCC within 30 days of receipt of the invoice.
b. The Trust will reimburse KMCC 25% of the next $2,000,000 of cost as
follows: The Trust will reimburse KMCC for the full amount plus
accrued interest no later than the earlier of either (i) the Trust
undertakes development on or sells the block on which the Site
resides, or (ii) the expiration of ten years following completion of
remediation of the Site. Interest will accrue on the unpaid balance
at the rate of LIBOR + 1% beginning three years following completion
of remediation of the Site.
c. Neither the Trust nor its insurers shall have any obligation to
reimburse KMCC for any portion of the total cost that exceeds
$3,000,000.
d. General: (i) KMCC will bill only direct costs to this project, (ii) in
the aggregate, but not necessarily in any given month or quarter, not
more than 10% of the amount KMCC bills to the Trust or a total of
$50,000, whichever is less, will be for in-house project support, and
(iii) KMCC will provide the Trust appropriate backup information and
the Trust may audit KMCC's books.
<PAGE>
Mr. Charles R. Gardner
August 11, 1995
Page 2
3. KMCC will consult with the Trust on all issues that would significantly
impact the cost of the remediation or the present or future use of the
site. Resolution of such issues will be subject to the approval of the
Trust. The Trust will not unreasonably withhold such approval.
4. KMCC will join as a party with the Trust in any administrative order
relating to the remediation of the Site.
5. The Trust and KMCC each reserves all rights and claims for its own benefit
under any applicable insurance policies maintained or previously maintained
by it or its predecessor entities.
6. KMCC and the Trust will, within 90 days incorporate this agreement in a
document that also addresses access to the site, cooperation in scheduling,
releases, and the like.
If the foregoing reflects the Trust's understanding of the agreement, please
execute and return the enclosed copy to me.
Very truly yours,
/s/ George B. Rice
George B. Rice
Senior Vice President
AGREED AND ACCEPTED:
THE CHICAGO DOCK & CANAL TRUST
/s/ Charles R. Gardner
----------------------------------
By: Charles R. Gardner, President
