Document:

Nicor Gas Annual Incentive Comp Plan - Officers

    Nicor
      Gas
      Company

    Form
      10-Q

    Exhibit
      10.1

    

    2006
      NICOR GAS ANNUAL INCENTIVE COMPENSATION PLAN FOR
      OFFICERS

    

    

    
      	 	
              The
                2006 Nicor Gas Annual Incentive Compensation Plan for Officers is
                designed
                to link participant incentive compensation to the accomplishment
                of
                corporate and operating unit financial performance as well as
                non-financial measures of operating performance across the Company
                and
                operating units. It ties the pay an individual receives to Company
                performance and non-financial goals. This plan is intended to provide
                a
                framework for a performance-based bonus program for Nicor
                Gas.

            

    

    

    
      	 	
              Purpose

            

    

    The
      purpose of this Plan is to provide meaningful annual incentive award opportunity
      to the participants. Awards will be directly tied to the achievement of
      corporate financial and operating goals and non-financial objectives. The Plan
      has been structured to encourage teamwork among business units and encourage
      the
      achievement of both shareholder and ratepayer oriented goals.

    

    
      	 	
              Eligible
                Group

            

    

    Officers
      of Nicor Gas in Salary Bands 1 or higher are eligible for participation. As
      such, participation is limited to employees in positions which enable them
      to
      make significant contributions to the performance and growth of the
      Company.

    

    Compensation
      Objective

    Base
      Salary + Bonus Target = Short-Term Compensation Objective

    

    An
      individual's short-term compensation objective will be based on salary plus
      a
      bonus, expected to be earned if established performance targets are met.
      Short-term compensation above (or below) target levels may be paid in the event
      performance exceeds (or falls short of) goals.

    

    Base
      Salary

    Standards
      for base salaries will be targeted to the 50th
      percentile of the appropriate industry survey data. Base salaries are reviewed
      annually by the Compensation Committee of the Board of Directors.

    

    Bonus
      Targets

    The
      bonus
      target amount varies according to pay, job responsibilities and ability to
      impact the organization and is consistent with the bonus opportunity ranges
      set
      by officer salary bands. Higher responsibility and impact levels result in
      greater dollars at risk.

    

    Performance
      Targets

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Performance
      criteria focus on the achievement of established and documented strategic goals.
      Performance targets may include measures of corporate financial and operating
      performance, defined group objectives or individual performance objectives.
      Each
      particular performance target will be assigned weighting reflected as a
      percentage of bonus target.

    

    Goal
      Setting Guidelines

    The
      most
      important aspect of this Plan will be the establishment of effective goals.
      In
      addition to measures of corporate financial and operating performance, other
      non-financial measures of performance will also be established. The goals should
      be realistic and measurable wherever possible by quantifiable performance
      criteria. It is recognized that measurement of some goals will require
      subjective assessments of performance. Goals must be consistent with the
      longer-term strategic plan.

    

    A
      set of
      guidelines will be devised by the Nicor Human Resources Department to aid in
      this process. These guidelines will provide direction as to the formulation
      and
      reporting of non-financial goals.

    

    Amount
      of
      bonus payment for financial/budget related goals can vary above and below target
      based upon results achieved. For targets met, bonus amount will be 100% of
      bonus
      target. When targets are exceeded or are not reached, bonus will be
      proportionately more or less than the target.

    

    The
      Compensation Committee may make appropriate upward or downward adjustments
      if,
      after taking into consideration all of the facts and circumstances of the
      performance period, it determines that adjustments are warranted.

    

    Plan
      Schedule

    The
      2006
      Nicor Gas Incentive Compensation Plan runs on a calendar year basis, with the
      strategic planning cycle and budgeting process serving as the primary link
      to
      performance and bonus targets. The Accounting Department is responsible for
      the
      determination of actual financial results. Performance will be reviewed at
      least
      twice a year to monitor progress and adjust accruals.

    

    Year-end
      results should be available and evaluated as early as possible in the following
      year. No bonus shall be paid until the Compensation Committee of the Board
      of
      Directors (the “Compensation Committee”) approves such payment. Following
      approval by the Compensation Committee, bonuses will be paid to participants
      by
      March 15 of the year in which such approval is given, unless payment by March
      15
      is not administratively practicable, in which case payment shall be made by
      December 31.

    

    Form
      of Payment

    All
      awards will be paid in cash, except that a participant in the Stock Deferral
      Plan may elect to defer up to 50% of their award into that plan and a
      participant in the Salary Deferral Plan may elect to defer 10% to 20% of their
      award into that plan. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Deferral
      elections must meet the guidelines and timing of the Stock Deferral and/or
      Salary Deferral Plans to be effective. Appropriate taxes for the entire award
      amount will be withheld from the portion of the award being paid in
      cash.

    

    
      	 	
              Integration
                with Existing Programs

            

    

    Base
      salaries will be managed with range bands at the appropriate blend of general
      and industry data for comparable positions, with total compensation objectives
      to be managed at a level appropriate with the performance of the company, as
      determined by the Compensation Committee. Salaries will be monitored each year
      and increases granted based on merit and range bands. Bonus targets will be
      set
      as a percentage of base salary. A change, other than the annual salary review,
      in the compensation objective will customarily occur during the year only
      through promotion to various levels, at which time the base salary and bonus
      target are also likely to change. 

    

    Promotion
      of an employee during the year or reassignment to responsibilities in which
      new
      performance objectives apply will result in proration of the existing
      performance objectives and bonus target and assignment of new performance
      objectives and if appropriate, a new bonus target as determined by the
      Compensation Committee. Promotion into an Executive Salary Band would create
      eligibility for bonus at a prorated amount, based on the effective date of
      the
      promotion.

    

    If
      a
      participant voluntarily terminates or is terminated for cause prior to the
      end
      of the performance period, then no award shall be granted. In the event a
      participant shall die, become disabled, or retire before the end of the
      performance period, an award is payable prorated or the Compensation Committee
      may authorize payment of an award to the participant, or beneficiary, in such
      other amount as the Committee deems appropriate.

    

    
      	 	
              Responsibility

            

    

    The
      Human
      Resources Department will be responsible for the administration of the process
      for the company. This will include:

     

    
      	1)  	
              monitoring
                market salary and total compensation
                levels;

            

    

     

    
      	2)  	
              recommending
                structural changes in base salary and compensation objective
                adjustments;

            

    

     

    
      	3)  	
              assisting
                the Nicor Gas CEO in progress and exception reporting to the Compensation
                Committee;

            

    

    

    
      	4)  	
              assist
                the Nicor Gas CEO in monitoring financial performance targets through
                the
                Accounting Department and communicating progress reports to the
                participants;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	5)  	
              monitoring
                compliance with related financial controls;
                and

            

    

    

    
      	6)  	
              maintaining
                the accuracy of the plan document(s) governing the
                plan.

            

    

    

    The
      Nicor
      Gas CEO shall be responsible for:

    

    
      	  	
               
                1)

            	
              reviewing
                market salary and compensation levels and approving recommendations
                before
                presentation to the Compensation
                Committee;

            

    

    

    
      	 	
               
                2)

            	
              approving
                structural changes in base salary and compensation objective adjustments
                before presentation to the Compensation
                Committee;

            

    

    

    
      	 	
               
                3)

            	
              recommending
                eligibility, performance targets and goals to the Compensation
                Committee;

            

    

    

    
      	 	
               
                4)

            	
              monitoring
                performance targets through the Accounting Department and other sources
                of
                necessary documentation;

            

    

    

    
      	 	
               
                5)

            	
              communicating
                progress reports to the participants;
                and,

            

    

    

    
      	 	
               
                6)

            	
              reporting
                performance results and making award recommendations to the Compensation
                Committee.

            

    

    

    The
      Company's 2006 Nicor Gas Annual Incentive Compensation Plan for Officers and
      changes to its performance targets and measurement criteria will be reviewed
      and
      approved by the Compensation Committee.

    

    In
      determining the actual bonus awards to be made, the Compensation Committee
      may
      take into account all of the facts and circumstances which exist during the
      year
      and may make appropriate upward or downward revisions in performance criteria,
      add or delete objectives, or change the relative percentages assigned to the
      various performance objectives.

    

    
      	 	
              Amendment
                and Termination

            

    

    The
      Board
      of Directors may amend or terminate the Plan at any time without the consent
      of
      the participants. No such amendment or termination shall negatively impact
      any
      participant's amount which accrued under the Plan prior to the calendar year
      in
      which the amendment is made.

    

    

    Nicor
      Human Resources

    March
      2006Exhibit 10.2

    Nicor
      Gas
      Company

    Form
      10-Q

    Exhibit
      10.2

     

    

      
        INTERIM
          COOPERATIVE AGREEMENT

        

        This
          agreement is made this 28th
          day of
          October 1993 by and between Commonwealth Edison Company (“Edison”), an Illinois
          corporation, and Northern Illinois Gas Company (“NI-Gas”), an Illinois
          corporation, (collectively, “Utilities”) to provide an interim cooperative
          arrangement for the Utilities to address certain issues at certain former
          manufactured gas plant (“MGP”) sites in Illinois.

        

        WHEREAS,
          without admitting any liability, Edison and NI-Gas currently believe that
          certain actions should be taken with regard to particular MGP sites;
          and

        

        WHEREAS,
          without admitting any liability, Edison and NI-Gas may agree in the future
          that
          certain actions should be taken with regard to other MGP sites; and

        

        WHEREAS,
          Edison and NI-Gas have determined that it is in the public interest and
          in their
          mutual best interest to work together on an interim basis to perform mutually
          acceptable actions with regard to certain MGP sites; and

        

        WHEREAS,
          Edison and NI-Gas have determined that it is in their mutual best interest
          to
          pursue negotiation, and binding arbitration to the extent set forth in
          this
          Agreement, to attempt to resolve issues regarding payment of the cost of
          performing actions at certain MGP sites;

        

        NOW
          THEREFORE, based on the covenants and mutual promises contained herein,
          Edison
          and NI-Gas agree as follows.

        

        
          	 	
                  1.

                	
                  Interim
                    Cost Allocation.

                

        

        
          	 	
                  1.1

                	
                  If
                    either of the Utilities believes that costs should be incurred
                    at one or
                    more MGP sites listed on Attachment A (“Site List”), it shall contact the
                    other and the Utilities shall meet as soon as reasonably possible
                    to
                    discuss whether they agree that costs should be incurred and,
                    if so, the
                    nature of those costs. If the Utilities reach agreement on those
                    issues,
                    each of the Utilities shall pay 50% of the agreed upon costs
                    (“Interim
                    Cost Allocation”), subject to the final allocation of costs between the
                    Utilities pursuant to Sections 4, 5 and 6 of this Agreement (“Final Cost
                    Allocation”). If either of the Utilities believes that an MGP site should
                    be added to the Site List, it shall contact the other and the
                    Utilities
                    shall meet as soon as reasonably possible to discuss whether
                    they agree
                    that the site should be added.

                

        

        
          	 	
                  1.2

                	
                  If,
                    after discussion, the Utilities do not agree that costs should
                    be incurred
                    for a particular site listed on Attachment A, they may pursue
                    or continue
                    to pursue any and all rights which they would otherwise have
                    under
                    applicable law; provided, however, that neither of the Utilities
                    may
                    commence litigation against the other regarding any site on the
                    Site List
                    unless this Agreement has been terminated in accordance with
                    Section 14
                    or
                    unless ninety (90) days before the Utility intends to commence
                    such
                    litigation it sends the other Utility, by telecopy and U.S. mail,
                    written
                    notice of such intent (“Initial Litigation Notice”). The Initial
                    Litigation Notice shall specify the MGP site or sites that would
                    be the
                    subject of the litigation, and the Utility sending such notice
                    may
                    commence litigation on the ninetieth (90th)
                    day after the date of the Initial Litigation Notice (said 90th
                    day being hereinafter called the “Litigation Date”). On the Litigation
                    Date, the Utility that received the Initial Litigation Notice
                    may commence
                    litigation against the other Utility regarding any MGP site or
                    sites on
                    the Site List, provided that within forty (40) days of the date
                    of the
                    Initial Litigation Notice the Utility receiving such notice sent
                    the other
                    Utility written notice (“Responsive Litigation Notice”), by telecopy and
                    U.S. main, of its intent to commence litigation, including an
                    identification of the site or sites that would be the subject
                    of the
                    litigation to be initiated by it. If a Utility commences litigation
                    in
                    accordance with this Section 1 without terminating this Agreement
                    in
                    accordance with Section 14, this Agreement shall be terminated
                    with regard
                    to the site or sites subject to the litigation (“Termination of Agreement
                    for Litigated Sites”), and the provisions of Section 14 (b) and (c) shall
                    be applicable to such termination. A Utility may not commence
                    litigation
                    in accordance with this Section 1 for a site for which any arbitration
                    proceeding has begun under this
                    Agreement.

                

        

        
          	 	
                  2.

                	
                  Shared
                    Costs.

                

        

        
          	 	
                  2.1

                	
                  The
                    Utilities in the Interim and Final Cost Allocation under this
                    Agreement
                    shall seek recovery from each other solely for Shared Costs,
                    which shall
                    be defined as third party costs of investigation and/or remediation
                    of a
                    particular MGP site (which investigation and/or remediation has
                    been
                    agreed to by both Utilities in accordance with Section 1 of this
                    Agreement) and any expenditures incurred by the Coordinator/Utility
                    for
                    audits under Section 17(b) or in prosecuting, defending, compromising,
                    settling or paying suits or claims pursuant to Section 2.4 of
                    Attachment
                    C. Examples of Shared Costs are the costs of third party investigation
                    and/or remediation of an MGP site (which the Utilities have agreed
                    to
                    perform in accordance with Section 1 of this Agreement) pursuant
                    to:

                

        

        
          	 	
                  a)

                	
                  a
                    work plan agreed upon by the Utilities in accordance with Attachment
                    C;

                

        

        b)   
a
          work
          plan ordered by a federal or state regulatory agency; 

        or

        
          	 	
                  c)

                	
                  a
                    work plan ordered by a court with appropriate jurisdiction, involving
                    litigation with a third party.

                

        

        
          	 	
                  2.2

                	
                  Examples
                    of costs that are not Shared Costs under this Agreement
                    are:

                

        

        
          	 	
                  a)

                	
                  a
                    Utility’s payroll costs, overhead or internal or external legal costs
                    (except for external legal costs that the Defending Utility may
                    incur in
                    accordance with Section 2.4 of Attachment
                    C);

                

        

        
          	 	
                  b)

                	
                  a
                    Utility’s ordinary costs of owning a particular former MGP site
                    (including, but not limited to, taxes, insurance, maintenance
                    and other
                    similar costs);

                

        

        
          	 	
                  c)

                	
                  costs
                    incurred by a Utility in pursuit of recovery of insurance proceeds
                    from
                    insurance carriers; 

                

        

        
          	 	
                  d)

                	
                  costs
                    of prosecuting, defending, compromising or settling third party
                    litigation
                    relating to an MGP site, except to the extent allowed by Section
                    2.4 of
                    Attachment C; and 

                

        

        
          	 	
                  e)

                	
                  costs
                    incurred by either Utility prior to the date of this Agreement,
                    unless the
                    Utilities have agreed pursuant to Section 3 to incur such
                    costs.

                

        

        
          	 	
                  2.3

                	
                  Nothing
                    in this Agreement shall limit the types of costs associated with
                    MGP sites
                    that one Utility can recover from the other in
                    litigation.

                

        

        
          	 	
                  3.

                	
                  Costs
                    Currently Subject to Interim Cost
                    Allocation.

                

        

        
          	 	
                  3.1

                	
                  Edison
                    and NI-Gas have incurred and/or agree to incur the following
                    costs as
                    Shared Costs, subject to the terms of this Agreement, including,
                    but not
                    limited to, the Final Cost Allocation procedures set forth in
                    Sections 4,
                    5 and 6 of this Agreement:

                

        

        
          	 	
                  a)

                	
                  the
                    cost of any settlement - acceptable to both Edison and NI-Gas
                    -- and the
                    cost of any judgment entered against either or both Utilities
                    in
                    Alcan-Toyo
                    America, Inc. v. Northern Illinois Gas Co.,
                    No. 92C 7142 (N.D. Ill. filed 10/27/92);

                

        

        
          	 	
                  b)

                	
                  the
                    cost of air monitoring - - and any other related activities acceptable
                    to
                    both NI-Gas and Edison - - at the Oak Park site; and
                    

                

        

        
          	 	
                  c)

                	
                  the
                    cost of response activities - - acceptable to both NI-Gas and
                    Edison - -
                    at the Streator site.

                

        

        
          	 	
                  3.2

                	
                  The
                    following costs shall be subject to audit and final allocation
                    as Shared
                    Costs in accordance with Sections 4, 5 and 6 of this
                    Agreement:

                

        

        
          	 	
                  a)

                	
                  with
                    regard to the Streator site, approximately $700,000 of costs
                    that Edison
                    has incurred at the site prior to the date of this Agreement;
                    and
                    

                

        

        
          	 	
                  b)

                	
                  with
                    regard to the Alcan site, approximately $45,000 of costs that
                    NI-Gas has
                    incurred at the Alcan site prior to the date of this
                    Agreement.

                

        

        
          	 	
                  4.

                	
                  Final
                    Cost Allocation.

                

        

        4.1 The
          final
          allocation of Shared Costs shall be determined on a site-by-site basis
          through
          negotiation or arbitration as set forth in this Agreement, although the
          Utilities may, if they so agree, aggregate individual sites for Final Cost
          Allocation. If a Utility, pursuant to the Interim Cost Allocation, has
          paid a
          greater percentage of Shared Costs for an MGP site or group of sites than
          is
          allocated to it by the Final Cost Allocation, the other Utility shall pay
          it the
          difference between the amount it actually paid pursuant to the Interim
          Cost
          Allocation and the amount allocated to it by the Final Cost Allocation.
          The time
          for Final Cost Allocation shall be determined as follows:

        
          	 	
                  a)

                	
                  During
                    the twelve months following the completion of both a Phase I
                    and a Phase
                    II investigation at a particular site, the Utilities shall attempt
                    to
                    negotiate the final allocation of the Shared Costs already incurred
                    and
                    the estimated future costs to be incurred in any Phase III remediation.
                    If
                    the Utilities are unable to agree within such twelve months,
                    either
                    Utility may seek binding arbitration as provided for in Section
                    5 after
                    the conclusion of such twelve months; or

                

        

        
          	 	
                  b)

                	
                  If
                    the Utilities have completed a Phase I investigation, either
                    Utility may
                    seek binding arbitration as provided for in Section 5 no earlier
                    than
                    three years following the completion of the Phase I investigation
                    at a
                    particular site; or

                

        

        
          	 	
                  c)

                	
                  If
                    the Utilities are unable to agree to continue to fund work at
                    a particular
                    site on a 50/50 interim allocation basis at anytime during Phase
                    I, Phase
                    II or Phase III, and for any reason (including, but not limited
                    to, an
                    inability to agree on a consultant or the type of remediation
                    to be
                    performed in Phase III), either Utility may commence arbitration
                    in
                    accordance with Section 5; but in no event prior to two years
                    after the
                    date of this Agreement; or 

                

        

        
          	 	
                  d)

                	
                  By
                    Section 4.4 of Attachment C to this
                    Agreement.

                

        

        
          	 	
                  4.2

                	
                  For
                    purposes of this Section, Phase I, Phase II and Phase III are
                    defined as
                    follows:

                

        

        
          	 	
                  a)

                	
                  A
                    Phase I investigation is an investigation to collect data needed
                    to
                    adequately characterize an MGP site for the purpose of developing
                    and
                    evaluating effective response action alternatives. This investigation
                    may
                    be conducted in one or more stages.

                

        

        
          	 	
                  b)

                	
                  A
                    Phase II investigation is the process of evaluating the data
                    from the
                    Phase I investigation in order to select a response action. A
                    Phase II
                    investigation is complete when the Utilities have agreed upon
                    a response
                    action that will be implemented for MGP
                    site.

                

        

        
          	 	
                  c)

                	
                  A
                    Phase III remediation is the implementation of a response action
                    for a
                    site.

                

        

        
          	 	
                  5.

                	
                  Initiation
                    of Arbitration and Selection of
                    Arbitrators.

                

        

        
          	 	
                  5.1

                	
                  Subject
                    to Section 4, one Utility shall initiate the arbitration (“Initiating
                    Utility”) by requesting the Center For Public Resources, Inc. to send
                    to
                    it and the other Utility a list of nine (9) potential arbitrators
                    (“List
                    of Potential Arbitrators”). The initiating Utility shall inform the Center
                    for Public Resources, Inc. that:

                

        

        
          	 	
                  a)

                	
                  Before
                    an arbitrator is included on the List of Potential Arbitrators,
                    the Center
                    for Public Resources, Inc. should confirm with the arbitrator
                    that he/she
                    (i) is interested in performing the arbitration and could do
                    so in
                    accordance with the schedule set forth in this Agreement, and
                    (ii) does
                    not have any conflict of interest that would interfere with impartial
                    decision making;

                

        

        
          	 	
                  b)

                	
                  Each
                    potential arbitrator must have legal training and experience
                    in
                    environmental matters and contract dispute resolution; and
                    

                

        

        
          	 	
                  c)

                	
                  The
                    List of Potential Arbitrators must be accompanied by a curriculum
                    vitae
                    for each arbitrator.

                

        

        
          	 	
                  5.2

                	
                  Within
                    thirty (30) days of receipt of the List of Potential Arbitrators
                    by both
                    Utilities, the Initiating Utility shall select an arbitrator
                    from it and
                    mail to the other Utility notice of the selection. Within forty-five
                    (45)
                    days of the receipt of the List of Potential Arbitrators the
                    other Utility
                    shall select an arbitrator from it and mail to the initiating
                    Utility
                    notice of the selection. Within sixty (60) days of the receipt
                    of the List
                    of Potential Arbitrators, the Utilities shall meet to select
                    a third
                    arbitrator from the List of Potential Arbitrators. If the Utilities
                    cannot
                    agree on a third arbitrator during their meeting, before concluding
                    such
                    meeting they shall select an arbitrator by having each Utility—beginning
                    with the Initiating Utility—alternate in deleting one name from the List
                    of Potential Arbitrators until only one name remains (other than
                    the names
                    of the two (2) arbitrators previously selected by the Utilities).
                    That
                    name shall be the third arbitrator. The date such arbitrator
                    is selected
                    shall be the Commencement Date for purposes of
                    arbitration.

                

        

        
          	 	
                  5.3

                	
                  Each
                    party shall pay the costs of the arbitrator it has selected and
                    one-half
                    the costs of the third arbitrator together with its own costs
                    of
                    arbitration. Such costs shall not be Shared Costs within the
                    meaning of
                    Section 2.

                

        

        
          	 	
                  6.

                	
                  Arbitration
                    Procedure.

                

        

        
          	 	
                  6.1

                	
                  Within
                    ten (10) days of the Commencement Date, the Utilities shall provide
                    the
                    arbitrators a copy of this Section 6 and a copy of all publicly
                    available
                    documents or portions of such documents, including those obtained
                    from the
                    U.S. Environmental Protection Agency or the Illinois Environmental
                    Protection Agency, which the Utilities believe will provide the
                    arbitrators with useful background information about the site
                    (or sites)
                    that is the subject of the arbitration. If the Utilities disagree
                    regarding which documents should be provided to the arbitrators,
                    each
                    Utility may provide whatever documents it
                    chooses.

                

        

        
          	 	
                  6.2

                	
                  Within
                    thirty (30) days (“Document Production Date”) of the Commencement Date,
                    each Utility shall submit to the other all non-privileged documents
                    that
                    it has regarding the site (or sites) that is the subject of the
                    arbitration, as well as a certification—from its Vice President with
                    responsibility for environmental affairs—stating that the Utility is
                    providing all such documents.

                

        

        
          	 	
                  6.3

                	
                  Within
                    thirty (30) days after the Document Production Date, the Utilities
                    and the
                    arbitrators shall have a Scheduling Conference. At this conference,
                    the
                    Utilities and the arbitrators
                    shall:

                

        

        
          	 	
                  a)

                	
                  decide
                    what, if any, additional discovery shall be conducted and establish
                    a
                    schedule for such discovery;

                

        

        
          	 	
                  b)

                	
                  schedule
                    the filing of written testimony by the Utilities, a hearing for
                    cross-examination, the filing of memoranda by the Utilities prior
                    to oral
                    argument, the oral argument, the filing of a brief by each Utility
                    after
                    the oral argument, and the provision to the Utilities by the
                    arbitrators
                    of the Final Cost Allocation Report (“FCAR”) which shall be binding on the
                    Utilities; and

                

        

        
          	 	
                  c)

                	
                  decide
                    any other issues that the Utilities and the arbitrators agree
                    should be
                    decided during the Scheduling Conference to facilitate the
                    arbitration.

                

        

        If
          the
          Utilities disagree about any matter discussed during the Scheduling Conference,
          the arbitrators shall resolve such matter. The Utilities and the arbitrators
          shall take all steps reasonably possible to ensure that the arbitration
          process
          will be cost-effective, efficient and fair.

        
          	 	
                  6.4

                	
                  Notwithstanding
                    any other provision of this Agreement, no Utility shall be required
                    to
                    disclose to the other Utility or to the arbitrators any communications
                    with, or work product of, its
                    attorneys.

                

        

        
          	 	
                  6.5

                	
                  The
                    arbitrators may, in their sole discretion, communicate in writing
                    with any
                    Utility to inquire about any gaps in the records, or to request
                    further
                    information on any matter relevant to the development of an allocation,
                    and shall provide a copy of such inquiry to the other Utility.
                    Each
                    Utility shall use its best efforts to comply in writing with
                    an inquiry by
                    the arbitrators pursuant to this paragraph and shall provide
                    a copy of its
                    response to the other Utility.

                

        

        
          	 	
                  6.6

                	
                  The
                    provisions of this Agreement shall govern arbitration performed
                    pursuant
                    to this Agreement; provided that the Center for Public Resources’ Rules
                    for Non-Administered arbitration of Business Disputes (1990)
                    (“CPR’s
                    Rules”), shall govern the procedural issues, if any, that are not
                    addressed by this Agreement, although CPR’s Rules shall not govern any
                    action that Edison or NI-Gas may have against CPR or any arbitrator
                    in
                    connection with any arbitration performed under this Agreement.
                    In the
                    event of any conflict between the provisions of this Agreement
                    and the
                    procedural provisions of CPR’s Rules, this Agreement’s provisions shall
                    govern. CPR’s Rules are set forth in Attachment
                    B.

                

        

        
          	 	
                  6.7

                	
                  The
                    arbitrators shall be responsible for developing the Final Cost
                    Allocation
                    in accordance with the procedures set forth in this Agreement.
                    In
                    developing the Final Cost Allocation, the arbitrators shall consider
                    all
                    documents, information and comments or other evidence submitted
                    to or
                    solicited by the arbitrators pursuant to this
                    Agreement.

                

        

        
          	 	
                  6.8

                	
                  The
                    parties agree that notwithstanding the determination by the arbitrators
                    in
                    accordance with this Agreement, neither party shall be allocated
                    less than
                    20% or more than 80% of the Shared Costs in the Final Cost Allocation
                    and
                    the Final Cost Allocation Report. For
                    instance,

                

        

        
          	 	
                  a)

                	
                  a
                    determination by the arbitrators that one party should pay only
                    10% of the
                    total Shared Costs would mean that the party would be allocated
                    20% in the
                    Final Cost Allocation and FCAR, and the remaining party would
                    be allocated
                    80%; and

                

        

        
          	 	
                  b)

                	
                  a
                    determination that one party should be allocated 40% of the total
                    Shared
                    Costs would mean that the party would pay 40% and the remaining
                    party 60%
                    as the Final Costs Allocation. The arbitrators shall be informed
                    that in
                    no event shall the Final Cost Allocation of FCAR assign to either
                    party
                    less than 20% or more than 80% of the Shared
                    Costs.

                

        

        
          	 	
                  6.9

                	
                  The
                    agreement of a majority of the arbitrators shall be the judgment
                    of the
                    arbitrators.

                

        

        
          	 	
                  6.10

                	
                  The
                    FCAR tendered by the arbitrators shall be final and binding.
                    If one
                    Utility does not comply with the FCAR, the other Utility may
                    have judgment
                    entered thereon and the FCAR shall be enforced in or by any court
                    having
                    jurisdiction thereof. Such judgment shall be the judgment refered
                    to in
                    Section 7.1 and 7.4.

                

        

        
          	 	
                  6.11

                	
                  The
                    arbitrators’ sole responsibility shall be to determine an allocation of
                    the Shared Cost for the site or sites subject to the arbitration.
                    After a
                    Final Cost Allocation has been determined for a site, that allocation
                    shall binding upon the Utilities for all past or future Shared
                    Costs for
                    that site (incurred after the date of this Agreement or specified
                    in
                    Section 3) that the Utilities agree to incur, and/or for which
                    the
                    Utilities are legally liable. If one Utility decides that Shared
                    Costs
                    should be incurred at a site for which a FCAR has been issued,
                    but the
                    other Utility refuses to contribute to those costs, the former
                    Utility may
                    commence litigation against the latter Utility to establish the
                    latter’s
                    liability; provided, however, that if the latter Utility is found
                    liable,
                    the Shared Costs will be allocated among the Utilities pursuant
                    to the
                    FCAR. The arbitrators shall not have the right
                    to:

                

        

        
          	 	
                  a)

                	
                  enforce
                    an allocation;

                

        

        
          	 	
                  b)

                	
                  award
                    damages or punitive damages;

                

        

        
          	 	
                  c)

                	
                  grant
                    injunctive relief or specific performance;
                    or

                

        

        
          	 	
                  d)

                	
                  require
                    any Utility to follow a specific work plan or course of remediation
                    for a
                    particular site.

                

        

        
          	 	
                  6.12

                	
                  It
                    is the hope and intention of the parties that common questions
                    of fact and
                    law will not need to be arbitrated at each site and that after
                    one or two
                    arbitrations the parties will be able to stipulate as to such
                    common
                    questions. Notwithstanding the foregoing, the doctrines of collateral
                    estoppel and res judicata shall not be applicable to any
                    arbitration.

                

        

        
          	 	
                  7.

                	
                  Interest.

                

        

        
          	 	
                  7.1

                	
                  The
                    parties agree that prejudgment interest shall be available to
                    the Utility
                    which is finally determined to have paid as its Interim Cost
                    Allocation
                    more than its proportionate share of the final allocated Shared
                    Costs. For
                    example, if a Utility pay 50% of the interim allocated costs
                    and the final
                    Shared Costs allocated to that Utility represent 40% of that
                    total, the
                    Utility would be entitled to interest on 10% of the interim allocated
                    costs from the date of payment of such
                    costs.

                

        

        
          	 	
                  7.2

                	
                  Interest
                    shall be based on the U.S. Treasury rate for three year notes
                    in effect
                    from time to time from the date of this Agreement, plus 50 basis
                    points.

                

        

        
          	 	
                  7.3

                	
                  Interest
                    shall not be paid on amounts already incurred prior to the date
                    of this
                    Agreement by both parties as set forth in small subparagraphs
                    a) and b) of
                    Section 3.2 of this Agreement.

                

        

        
          	 	
                  7.4

                	
                  The
                    interest rate set forth in Section 7.2 shall also apply as post
                    judgment
                    until the judgment is paid.

                

        

        
          	 	
                  8.

                	
                  Performance
                    of Activities at a Site. 

                

        

        If
          the
          Utilities decide to incur costs at a site pursuant to the terms of this
          Agreement, they shall:

        
          	 	
                  a)

                	
                  select
                    mutually acceptable consultants for the performance of services
                    agreed to
                    by the Utilities;

                

        

        
          	 	
                  b)

                	
                  decide
                    whether one Utility will act as the coordinator of agreed upon
                    activities
                    involving the site (referred to as the Coordinator/Utility in
                    Attachment
                    C) provided, however, that if a coordinator is selected, both
                    Utilities
                    will participate in any significant decision making as more fully
                    set
                    forth in Attachment C;

                

        

        
          	 	
                  c)

                	
                  exchange
                    their technical information regarding that
                    site;

                

        

        
          	 	
                  d)

                	
                  cooperate
                    reasonably with each other regarding agreed upon activities involving
                    the
                    site as more fully set forth in Attachment
                    C;

                

        

        
          	 	
                  e)

                	
                  each
                    Utility will sign as a cogenerator of any manifests needed involving
                    the
                    removal of waste;

                

        

        
          	 	
                  f)

                	
                  cooperate
                    reasonably with each other in any proceedings (including prudence
                    reviews), regarding the recovery from ratepayer, insurance carriers,
                    or
                    other third parties of costs incurred pursuant to this Agreement,
                    which
                    cooperation shall include: (i) providing documents and information
                    regarding costs incurred and activities performed under this
                    Agreement;
                    and (ii) allowing employees to testify regarding such costs and
                    activities; provided, however, that no Utility shall be required
                    to
                    disclose work product of or communications with the Utility’s legal
                    counsel.

                

        

        
          	 	
                  9.

                	
                  Reservation
                    of Rights. 

                

        

        This
          Agreement shall not constitute, nor be interpreted, construed or used as
          evidence of any admission of liability, law or fact, or a waiver of any
          right or
          defense, provided, however, that:

        
          	 	
                  a)

                	
                  except
                    as provided in Section 1 above, during the term of this Agreement,
                    neither
                    of the Utilities may commence litigation against the other regarding
                    claims associated with manufactured gas plants that arise from,
                    or are
                    related to, any of the sites on the Site List unless suit is
                    brought by a
                    third party or government agency against a Utility concerning
                    a site on
                    the Site List, in which case all claims, cross claims or third-party
                    claims may be brought by each Utility against the other; provided,
                    however, that to the maximum extent possible the Utilities shall
                    attempt
                    to resolve their differences under the terms of this
                    Agreement;

                

        

        
          	 	
                  b)

                	
                  neither
                    Edison nor NI-Gas will assert in any proceeding any challenges
                    to costs
                    that the Utilities agreed to incur after the date of this Agreement
                    or for
                    costs identified under Section 3 of this Agreement, including,
                    but not
                    limited to, challenges to the reasonableness of the costs or
                    assertions
                    that the costs were not consistent with the National Contingency
                    Plan;

                

        

        
          	 	
                  c)

                	
                  during
                    the term of the Agreement, this Agreement tolls the statute of
                    limitations
                    for any cause of action that Edison or NI-Gas may have against
                    each other
                    regarding possible remediation arising from or relating to any
                    of the
                    sites on the Site List.

                

        

        
          	 	
                  10.

                	
                  Settlement
                    Negotiations. 

                

        

        The
          Utilities agree that all activities undertaken pursuant to this Agreement
          constitute negotiations for the purpose of compromise and settlement. Neither
          the fact of participation of either Utility in the Agreement, nor any documents
          or other information generated by either Utility or by the arbitrators
          pursuant
          to this Agreement, may be introduced as evidence in any other proceeding,
          except
          in proceedings regarding a request for regulatory approval of the Agreement,
          or
          the recovery from ratepayers, insurance carriers or other third parties
          (collectively, “Third Party Proceeding”) of costs incurred pursuant to this
          Agreement and except for those documents or such information which is in
          the
          public domain or obtainable in accordance with the following provisions
          of this
          section. The arbitrators shall be prohibited from testifying on matters
          related
          to an MGP site subject to arbitration under this Agreement or to this Agreement,
          in any judicial or administrative proceeding, except for Third Party Proceedings
          and except in proceedings to enforce the arbitration judgment. No Utility
          may
          call as a witness, or seek discovery from, the arbitrators, or any of the
          arbitrators’ partners, agents, employees, or representatives, in any judicial or
          administrative proceeding, except for Third Party Proceedings related to
          an MGP
          site subject to arbitration under this Agreement, or to this Agreement.
          Nothing
          in this Agreement shall be construed to prohibit a Utility from using that
          Utility’s own documents, publicly available documents or documents otherwise
          available to the Utility other than from activities conducted under this
          Agreement, in any judicial or administrative proceeding. Nothing in this
          Agreement shall be construed to limit or otherwise affect the discovery
          rights
          of any Utility to the Agreement against the other in any other proceeding
          with
          respect to documents or information not generated by the
          arbitrators.

        
          	 	
                  11.

                	
                  Confidentiality.

                

        

        
          	 	
                  a)

                	
                  Except
                    as provided to the contrary in Section 10, each Utility agrees
                    that all
                    documents and information marked confidential and received from
                    the other
                    Utility or its counsel, pursuant to the Agreement, and all reports
                    and
                    communications from the arbitrator, shall be held in strict confidence
                    by
                    the receiving Utility.

                

        

        
          	 	
                  b)

                	
                  Each
                    Utility shall take all necessary and appropriate measures to
                    ensure that
                    any person who is granted access to any documents or information
                    received
                    pursuant to this Agreement is familiar with the confidentiality
                    terms of
                    this Agreement and complies with the confidentiality
                    obligation.

                

        

        
          	 	
                  c)

                	
                  The
                    confidentiality obligations of the Utility shall remain in full
                    force and
                    effect, without regard to whether a Utility terminates the Agreement,
                    or
                    this Agreement results in a final allocation among the parties.
                    The
                    provisions of this section shall not apply to information which
                    is now or
                    hereafter becomes public knowledge without violation of the Agreement,
                    which is sought and obtained from a Utility pursuant to applicable
                    discovery procedures and not otherwise protected from disclosure,
                    which is
                    available to a Utility other than from activities conducted under
                    this
                    Agreement, or which a Utility is required by law to disclose
                    (provided
                    that the disclosing Utility notifies the other Utility of such
                    disclosure).

                

        

        
          	 	
                  d)

                	
                  The
                    submission of document or information to the arbitrators does
                    not
                    constitute a waiver of any Utility’s right to argue that such documents or
                    information are not discoverable in another
                    proceeding.

                

        

        
          	 	
                  12.

                	
                  Preservation
                    of Privilege. 

                

        

        Each
          Utility agrees that the disclosure of any documents or information to the
          arbitrators or to another Utility shall not be deemed a waiver of the
          attorney-client privilege, work product, joint defense or self-evaluation
          or any
          other privilege by the Utility providing the documents or
          information.

        
          	 	
                  13.

                	
                  New
                    Parties. 

                

        

        The
          Utilities may make provision for the addition of new parties after the
          effective
          date of this Agreement. The Utilities may impose such additional terms
          and
          conditions upon prospective new parties as may be agreed to by the
          Utilities.

        
          	 	
                  14.

                	
                  Termination. 

                

        

        Either
          of
          the Utilities may terminate this Agreement upon sixty (60) days written
          notice
          to the other, provided that:

        
          	 	
                  a)

                	
                  any
                    arbitration proceeding begun prior to the termination of this
                    Agreement
                    shall be concluded in accordance with this Agreement, notwithstanding
                    the
                    intervening termination;

                

        

        
          	 	
                  b)

                	
                  any
                    obligations the Utilities have incurred to third parties (e.g.,
                    contractors, government agencies) in accordance with this Agreement
                    will
                    not be terminated, and such obligations will be fulfilled in
                    accordance
                    with the terms of this Agreement, unless both Edison and NI-Gas
                    agree to
                    such termination;

                

        

        
          	 	
                  c)

                	
                  The
                    following sections of this Agreement shall survive termination:
                    Section
                    6.10, 6.11, 7, 8(f), 9, 10, 11, 12, 15, 17, 19 through 23, and
                    Sections
                    2.5 and 4.5 of Attachment C.

                

        

        
          	 	
                  15.

                	
                  Nature
                    of Agreement. 

                

        

        Nothing
          herein shall be deemed to create a partnership, joint venture or principal/agent
          relationship between Edison and NI-Gas.

        
          	 	
                  16.

                	
                  Entire
                    Agreement. 

                

        

        This
          Agreement and Attachments hereto (which Attachments are part of this Agreement)
          constitute the entire understanding of Edison and NI-Gas with respect to
          the
          Agreement’s subject matter. No modification may be made to this Agreement except
          one signed by both Utilities which expressly states that it is a modification
          of
          the Agreement.

        
          	 	
                  17.

                	
                  Audit. 

                

        

        
          	 	
                  a)

                	
                  The
                    Non-Coordinator/Utility, upon written notice to Coordinator/Utility
                    thirty
                    days in advance, shall have the right to audit the accounts and
                    records of
                    Coordinator/Utility and/or its contractors relating to the accounting
                    hereunder for any calendar year, within the twenty-four month
                    period
                    following the end of such calendar year. Provided, however, that
                    the
                    Non-Coordinator/Utility must take written exception to and make
                    claim upon
                    the Coordinator/Utility for all discrepancies disclosed by said
                    audit
                    within said twenty-four month period. Where there are two or
                    more
                    Non-Coordinators/Utilities, the Non-Coordinators/Utilities shall
                    make
                    every reasonable effort to conduct joint or simultaneous audits
                    in a
                    manner which will result in a minimum of inconvenience to the
                    Coordinator/Utility.

                

        

        
          	 	
                  b)

                	
                  In
                    the event that the Coordinator/Utility is required by law or
                    under the
                    Agreement to employ a public accounting firm to audit the records
                    of the
                    activities for which the Utility is the Coordinator/Utility,
                    the cost
                    thereof shall be a Shared Cost, and a copy of the audit shall
                    be furnished
                    to each Utility.

                

        

        
          	 	
                  c)

                	
                  Except
                    in the event that an audit is conducted under subparagraph b
                    above, the
                    cost shall be borne by the
                    Non-Coordinator/Utility.

                

        

        
          	 	
                  d)

                	
                  If
                    the Coordinator/Utility is subject to an audit required by the
                    Illinois
                    Commerce Commission, it shall notify the other Utility prior
                    to the
                    commencement of such audit.

                

        

        
          	 	
                  18.

                	
                  Alternative
                    Dispute Resolution. 

                

        

        If
          the
          Utilities cannot reach agreement on any issue arising in connection with
          this
          Agreement, they will consider using alternative dispute resolution- -including,
          but not limited to, mediation, arbitration, or reliance upon the decision
          of a
          mutually acceptable environmental consultant- -to resolve such
          dispute.

        
          	 	
                  19.

                	
                  Successors
                    and Assigns. 

                

        

        This
          Agreement shall be binding upon the successors and assigns of the Utilities;
          provided that no Utility can assign its rights under the Agreement without
          the
          other Utility’s consent.

        
          	 	
                  20.

                	
                  Law. 

                

        

        This
          Agreement shall be interpreted under the laws of the State of
          Illinois.

        
          	 	
                  21.

                	
                  Severability. 

                

        

        If
          any
          provision of this Agreement is deemed invalid or unenforceable, the balance
          of
          this Agreement shall remain in full force and effect.

        
          	 	
                  22.

                	
                  Effective
                    Date, Method of Execution. 

                

        

        The
          effective date of this Agreement shall be October 28, 1993. This Agreement
          may
          be executed in multiple counterparts, each of which shall be deemed an
          original,
          but all of which together shall constitute one and the same
          instrument.

        
          	 	
                  23.

                	
                  Nonwaiver. 

                

        

        Nothing
          in this Agreement shall be construed to waive any rights, claims, privileges,
          or
          defenses which any Utility shall have against any other Utility or any
          other
          person or entity.

        
          	 	
                  24.

                	
                  Exchange
                    of Insurance Policies.
                    If
                    one Utility learns of the existence of a general liability insurance
                    policy which it believes may provide coverage to the other Utility
                    with
                    regard to an MGP Site, the former shall notify the latter of
                    such a
                    policy.

                

        

        
          	 	
                  25.

                	
                  Captions. 

                

        

        The
          captions in this Agreement are for convenience only and shall not affect
          the
          construction or interpretation of any term or provision hereof.

        
          	 	
                  26.

                	
                  Certain
                    Costs. 

                

        

        If
          the
          Utilities incur Shared Costs that they agree that they need to incur prior
          to
          the approval or disapproval of this Agreement by the Illinois Commerce
          Commission (to the extent such approval is required by Section 7-102 of
          the
          Public Utilities Act), the Utilities shall act in accordance with this
          Agreement
          with regard to such Shared Costs, including, but not limited to, the condition
          that each Utility will pay, on an interim basis, 50% of the costs that
          it agrees
          to incur for a site.

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

        IN
          WITNESS WHEREOF, each Utility designated below enters into this Agreement.
          Each
          person signing this Agreement represents and warrants that he or she has
          been
          duly authorized to enter into this Agreement by the company or entity on
          whose
          behalf it is indicated that the person is signing.

        

        

        Dated
          October
          25, 1993                       Party:
          Northern Illinois Gas Company_ 

        

        

        By:_/s/
          RICHARD J. LANNON     Richard
          J. Lannon, Vice President       

        (Name
          and
          Title)

        

        Designated
          Representative for Receipt of Notice and Invoices

        

        Name:
          David
          L. Cyranoski, Secretery       

        

        Address:
          1844
          Ferry Road, Naperville, IL 60563-9600     

        

        Telephone
          Number: (708)
          983-8676       

        

        Facsimile
          Machine Number: (708)
          983-8966      

        

        

        

        

        Dated
          10/28/93                    Party:
          Commonwealth
          Edison Company 

        

        

        By:
          /s/ ROBERT J. MANNING     Robert
          J. Manning, Senior Vice President      

        (Name
          and
          Title)

         

        Designated
          Representative for Receipt of Notice and Invoices

        Name:
          Thomas
          E. Hemminger        

        

        Address:
          Commonwealth
          Edison Company, One First National Plaza, 35th
          Floor, 
          Chicago, Illinois 60603         

        

        Telephone
          Number: (312)
          394-4433       

        

        Facsimile
          Machine Number: (312)
          394-4466      

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Attachment
          A

        

        

        Former
          MGP/Site Address

        

        
          	
                  1.

                	
                  Aurora
                    Gas Light Company

                	 
	 	
                  River
                    St. at North Avenue Bridge

                	
                  Aurora

                
	 	 	 
	
                  2.

                	
                  Belvidere
                    Gas, Light & Fuel

                	 
	 	
                  Locust
                    Street

                	
                  Belvidere

                
	 	 	 
	
                  3.

                	
                  Chicago
                    Heights Gas Company

                	 
	 	
                  17th&
                    State Street

                	
                  Chicago
                    Heights

                
	 	 	 
	
                  4.

                	
                  Cicero
                    Gas Company

                	 
	 	
                  Lombard
                    & Garfield

                	
                  Oak
                    Park

                
	 	 	 
	
                  5.

                	
                  Coal
                    Products Manufacturing Company

                	 
	 	
                  North
                    Broadway

                	
                  Lockport

                
	 	 	 
	
                  6.

                	
                  Freeport
                    Gas, Light & Coke Company

                	 
	 	
                  Liberty
                    & Jackson St.

                	
                  Freeport

                
	 	 	 
	
                  7.

                	
                  Geneseo
                    Electric Light & Gas Company

                	 
	 	
                  Oakwood
                    & First St.

                	
                  Geneseo

                
	 	 	 
	
                  8.

                	
                  Illinois
                    Northern Utility Company

                	 
	 	
                  Market
                    & 14th

                	
                  DeKalb

                
	 	 	 
	
                  9.

                	
                  Illinois
                    Northern Utilities Company

                	 
	 	
                  227
                    Miller

                	
                  Sterling

                
	 	 	 
	
                  10.

                	
                  Joliet
                    Gaslight Company, Station B

                	 
	 	
                  North
                    Broadway & Ingalls St.

                	
                  Joliet

                
	 	 	 
	
                  11.

                	
                  Kankakee
                    Gas Company

                	 
	 	
                  Birch
                    & Harrison St.

                	
                  Kankakee

                
	 	 	 
	
                  12.

                	
                  LaGrange
                    Gas Company

                	 
	 	
                  47th&
                    Bluff St.

                	
                  LaGrange

                
	 	 	 
	
                  13.

                	
                  Lemont
                    Gas, Light Company

                	 
	 	
                  Main
                    & Lockport Rd.

                	
                  Lemont

                
	 	 	 
	
                  14.

                	
                  Lincoln
                    Water, Light & Gas Company

                	 
	 	
                  Sangamon
                    & Dacatur St.

                	
                  Lincoln

                
	 	 	 
	
                  15.

                	
                  Lockport
                    Gas Company

                	 
	 	
                  17th&
                    I & M Canal

                	
                  Lockport

                

        

        

        

        NOTE:
          Edison and NI-Gas are not admitting liability at any of these sites, or
          waiving
          any rights or defenses.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Former
          MGP/Site Address (cont’d)

        

        
          	
                  16.

                	
                  Mendota
                    Gas Company

                	 
	 	
                  Fifth
                    St. & Ninth Ave.

                	
                  Mendota

                
	 	 	 
	
                  17.

                	
                  Morris
                    Gas Company

                	 
	 	
                  Nettle
                    & Jackson St.

                	
                  Morris

                
	 	 	 
	
                  18.

                	
                  Morrison
                    Gas & Electric

                	 
	 	
                  Market
                    & S. Orange

                	
                  Morrison

                
	 	 	 
	
                  19.

                	
                  Northwestern
                    Gas, Light & Coke Company

                	 
	 	
                  912
                    Clark St.

                	
                  Evanston

                
	 	 	 
	
                  20.

                	
                  Northwestern
                    Gas, Light & Coke Company

                	 
	 	
                  Maple
                    & Vermont

                	
                  Blue
                    Island

                
	 	 	 
	
                  21.

                	
                  Northwestern
                    Gas, Light & Coke Co./

                	 
	 	
                  Niles
                    Center Station

                	 
	 	
                  Oakton
                    St. & McCormick Blvd.

                	
                  Skokie

                
	 	 	 
	
                  22.

                	
                  Ottawa
                    Gas, Light & Coke Company

                	 
	 	
                  Illinois
                    & Walker St.

                	
                  Ottawa

                
	 	 	 
	
                  23.

                	
                  Pontiac
                    Light & Water Company

                	 
	 	
                  Vermillion
                    & Water St.

                	
                  Pontiac

                
	 	 	 
	
                  24.

                	
                  Streator
                    Gas, Light & Coke Co.

                	 
	 	
                  Water
                    St. & Vermillion Rr.

                	
                  Streator

                

        

        

         

        

        

         

        

        

        

        

        

        

        

        NOTE:
          Edison and NI-Gas are not admitting liability at any of these sites, or
          waiving
          any rights or defenses.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

        CPR
          LEGAL
          PROGRAM

        TO
          DEVELOP ALTERNATIVES TO LITIGATION

        

        

        

        

        

        

        

        RULES
          AND
          COMMENTARY FOR NON-ADMINISTERED

        ARBITRATION
          OF BUSINESS DISPUTES

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        CENTER
          FOR PUBLIC RESOURCES, INC.

        366
          Madison Avenue New York, N.Y. 10017 Tel (212) 949 6490 Fax (212) 949
          8859

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        CPR
          COMMITTEE ON PRIVATE ADJUDICATION

        

        

        GERALD
          AKSEN, CHAIRMAN

        Reid
          & Priest

        

        GEOFFRY
          D.C. BEST

        LeBoeuf,
          Lamb, Leiby & MacRae

        

        RICHARD
          CHERNICK

        Gibson,
          Dunn & Crutcher

        

        WINSLOW
          CHRISTIAN

        Senior
          Vice President and Director of Litigation

        Bank
          of
          America

        

        MARTIN
          GLENN

        O’Melveny
          & Myers

        

        ROBERT
          GORSKE

        Vice
          President and General Counsel

        Wisconsin
          Electric Power Company

        

        JAMES
          P. GROTON

        Sutherland,
          Asbill & Brennan

        

        BERTHOLD
          H. HOENIGER

        Bailey,
          Marshall & Hoeniger

        

        STEPHEN
          D. HOUCK

        Donovan
          Leisure Newton & Irvine

        

        THE
          HONORABLE JOSEPH W. MORRIS

        Gable
          & Gotwals

        

        MICHAEL
          J. PLISHNER

        McCutchen,
          Doyle, Brown & Enersen

        

        PROFESSOR
          MAURICE ROSENBERG

        Columbia
          Law School

        

        JOHN
          M. TOWNSEND

        Hughes
          Hubbard & Reed

        

        ROBERT
          VON MEHREN

        Debevoise
          & Plimpton

        

        CLIFFORD
          L. WHITEHILL

        Vice
          President and General Counsel

        General
          Mills, Inc.

        

        

        CPR
          STAFF

        

        PETER
          H. KASKELL

        Senior
          Vice President

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        TABLE
          OF CONTENTS

        

        

        INTRODUCTION

        

        STANDARD
          PROVISIONS

        

        
          	 	
                  A.

                	
                  Pre-dispute
                    Clause

                

        

        
          	 	
                  B.

                	
                  Existing
                    Dispute Submission Agreement

                

        

        

        THE
          RULES

        

        
          	 	
                  A.

                	
                  General
                    and Introductory Rules

                

        

        

        Rule
          1.  Scope
          of
          Application

        Rule
          2.  Notices

        Rule
          3.  Commencement

        Rule
          4.  Representation

        

        
          	 	
                  B.

                	
                  Rules
                    with Respect to the Tribunal

                

        

        

        Rule
          5.  Selection
          of Arbitrators by the Parties

        Rule
          6.  Selection
          of Arbitrators by CPR

        Rule
          7.  Qualifications,
          Challenges and Replacement of Arbitrators

        Rule
          8.  Challenges
          to the Jurisdiction of the Panel

        

        
          	 	
                  C.

                	
                  Rules
                    with Respect to the Conduct of the Arbitral
                    Proceedings

                

        

        

        Rule
          9.     General
          Provisions

        Rule
          10.    Discovery

        Rule
          11.    Evidence
          and Hearings

        Rule
          12.    Interim
          Measures of Protection

        Rule
          13.    The
          Award

        

        
          	 	
                  D.

                	
                  Miscellaneous
                    Rules

                

        

        

        Rule
          14.    Failure
          to Comply with Rules

        Rule
          15.    Costs

        Rule
          16.    Confidentiality

        Rule
          17.    Settlement
          and Mediation

        Rule
          18.    Actions
          against CPR or Arbitrators

        Rule
          19.    Waiver

        

        

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        CENTER
          FOR PUBLIC RESOURCES

        

        RULES
          FOR NON-ADMINISTERED

        ARBITRATION
          OF BUSINESS DISPUTES

        

        

        INTRODUCTION

        

        

        These
          Rules for Non-Administered Arbitration of Business Disputes (the “Rules”) have
          been developed by a committee of leading arbitrators and practitioners
          convened
          by the Center for Public Resources (“CPR”) and have been adopted by CPR. CPR
          itself will not undertake to function as an administrative body with respect
          to
          the Rules. Under the Rules, CPR’s responsibilities are limited to acting as the
          appointing authority in certain circumstances (see Rule 6) and deciding
          challenges to an arbitrator (see Rule 7.7).

        

        

        STANDARD
          PROVISIONS

        

        

        The
          Rules, which are intended in particular for use in complex commercial
          arbitrations, may be adopted by parties wishing to do so by using one of
          the
          following standard provisions:

        

        

        A.
          Pre-dispute Clause

        

        

        “Any
          controversy or claim arising out of or relating to this contract, or the
          breach,
          termination or validity thereof, shall be settled by arbitration in accordance
          with the Center for Public Resources Rules for Non-Administered Arbitration
          of
          Business Disputes, by (a sole arbitrator) (three arbitrators, of whom each
          party
          shall appoint one) (three arbitrators, none of whom shall be appointed
          by either
          party). The arbitration shall be governed by the United States Arbitration
          Act,
          9 U.S.C. § 1-16, and judgment upon the award rendered by the Arbitrator(s) may
          be entered by any court having jurisdiction thereof.”

        

        

        B.
          Existing Dispute Submission Agreement

        

        

        “We,
          the
          undersigned parties, hereby agree to submit to arbitration in accordance
          with
          the Center for Public Resources Rules for Non-Administered Arbitration
          of
          Business Disputes (the “Rules”) the following controversy:

        [Describe
          briefly]

        We
          further agree that the above controversy shall be submitted to (a sole
          arbitrator) (three arbitrators, of whom each party shall appoint one) (three
          arbitrators, none of whom shall be appointed by either party). We further
          agree
          that we shall faithfully observe this agreement and the Rules and that
          we shall
          abide by and perform any award rendered by the arbitrator(s). The arbitration
          shall be governed by the United States Arbitration Act, 9 U.S.C. § 1-16, and
          judgment upon the award may be entered by any court having jurisdiction
          thereof.”

        

        The
          Rules
          are designed to provide a procedural basis for the settling of disputes.
          They
          are not intended to change substantive provisions of applicable law. Therefore,
          it is recommended that parties consider the inclusion in their agreement
          of
          specific clauses as to the place of arbitration and as to the law governing
          the
          contract and the arbitration.

        

        

        

        RULES
          FOR ARBITRATION

        

        

         A.GENERAL
          AND INTRODUCTORY RULES

        

        Rule
          1. Scope of Application

        

        1.1
          Where
          the parties to a contract have provided for arbitration under the Rules,
          they
          shall be deemed to have made these Rules a part of their arbitration agreement,
          except to the extent that they have agreed in writing, or on the record
          during
          the course of the arbitral proceeding, to modify these Rules. These Rules,
          and
          any amendment thereof adopted by CPR, shall apply in the form obtaining
          at the
          time the arbitration is commenced.

        

        1.2
          These
          Rules shall govern the arbitration except that where any of these Rules
          is in
          conflict with a mandatory provision of applicable law, that provision of
          law
          shall prevail.

        

        

        Rule
          2. Notices

        

        

        2.1
          Notices
          shall be given in writing at the address specified in writing by the recipient
          or, if no address has been specified, to the then business or residence
          address
          of the recipient. Notices may be given by mail, telex or facsimile transmission.
          Notices shall be deemed to have been received on the date of
          delivery.

        

        2.2
          Time
          periods specified by these Rules or established by the Arbitral Tribunal
          (the
“Tribunal”) shall start to run on the day a notice is received, unless the
          Tribunal shall specifically provide otherwise.

        

        

        

        Rule
          3. Commencement of Arbitration

        

        

        3.1
          The
          party commencing arbitration (the “Claimant”) shall address to the other party
          (the “Respondent”) a notice of arbitration.

        

        3.2
          The
          arbitration shall be deemed commenced on the date on which the notice of
          arbitration is received by the Respondent.

        

        3.3
          The
          notice of arbitration shall include in the text or in attachments
          thereto:

        

        (a)
          The full
          names, descriptions and addresses of the parties;

        

        (b)
          A demand
          that the dispute be referred to arbitration pursuant to the Rules;

        

        (c)
          The
          verbatim text of the arbitration clause or the separate arbitration agreement
          that is involved;

        

        (d)
          A
          statement of the general nature of the claimant’s claim;

        

        (e)
          The
          relief or remedy sought; and

        

        (f)
          The name
          and address of the arbitrator appointed by the Claimant, unless the parties
          have
          agreed that neither shall appoint an arbitrator.

        

        3.4
          Within
          twenty days after receipt of the notice of arbitration, the Respondent
          shall
          deliver to the Claimant a notice of defense. Failure to deliver a notice
          of
          defense shall not delay the arbitration; in the event of such failure,
          all
          claims set forth in the demand shall be deemed denied.

        

        3.5
          The
          notice of defense shall include:

        

        (a)
          Any
          comment on items (a), (b), and (c) of the notice of arbitration that the
          Respondent may deem appropriate;

        

        (b)
          A
          statement of the general nature of the Respondent’s defense; and

        

        (c)
          The name
          and address of the arbitrator appointed by the Respondent, unless the parties
          have agreed that neither shall appoint an arbitrator.

        

        3.6
          The
          Respondent may include in it’s notice of defense any counterclaim within the
          scope of the arbitration clause. If it does so, the counterclaim in the
          notice
          of defense shall include items (a), (b), (c), (d) and (e) of Rule
          3.3.

        

        3.7
          If a
          counterclaim is asserted, within twenty days after receipt of the notice
          of
          defense, the Claimant shall deliver to the Respondent a reply to counterclaim
          which shall have the same elements as provided in Rule 3.5 for the notice
          of
          defense.

        

        3.8
          Claims
          or counterclaims may be freely added or amended prior to the establishment
          of
          the Tribunal and thereafter with the consent of the Tribunal. Notices of
          defense
          or replies to amended claims or counterclaims shall be delivered within
          twenty
          days after the addition or amendment.

        

        3.9
          If a
          dispute is submitted to arbitration pursuant to a submission agreement,
          Rule 3
          shall apply to the extent that it is not inconsistent with the submission
          agreement.

        

        

        

        Rule
          4. Representation

        

        4.1
          The
          parties may be represented or assisted by persons of their choice.

        

        4.2
          Each
          party shall communicate the name, address and function of such persons
          in
          writing to the other party and to the Tribunal.

         

        

        B.
          RULES WITH RESPECT TO THE TRIBUNAL

        

        

        Rule
          5. Selection of Arbitrators by the Parties

        

        

        5.1
          Unless
          the parties have agreed in writing on a Tribunal consisting of a sole arbitrator
          or of three arbitrators not appointed by the parties, the Tribunal shall
          consist
          of two arbitrators appointed by the parties and a third arbitrator, who
          shall
          chair the Tribunal, selected as provided in Rule 5.2.

        

        5.2
          As soon
          as possible after the appointment of two party-appointed arbitrators and
          delivery of the notice of defense provided for in Rule 3.4 and in any event
          within fifteen days thereafter, the party-appointed arbitrators shall discuss
          potential candidates for the third arbitrator and shall proceed to select
          the
          third arbitrator. They shall attempt to make their selection within twenty
          days
          of their initial discussion, but they may extend their selection process
          until
          one or both of them have concluded, and have so advised the appointing
          parties,
          that a deadlock has been reached. In this event, the third arbitrator shall
          be
          selected as provided in Rule 6.

        

        

        

        Rule
          6. Selection of Arbitrator(s) by CPR

        

        

        6.1
          Whenever
          (i) a party has failed to appoint the arbitrator to be appointed by it;
          (ii) the
          parties have failed to appoint the arbitrators to be appointed by them
          acting
          jointly; (iii) the party appointed arbitrators have failed to appoint the
          third
          arbitrator; or (iv) the parties have provided that one or more arbitrators
          shall
          be appointed by CPR, the arbitrator(s) required to complete the Tribunal
          shall
          be selected as provided in Rule 6, and either party may request CPR in
          writing,
          with copy to the other party, to proceed pursuant to Rule 6.

        

        6.2
          The
          written request may be made as follows:

        

        (a)
          If a
          party has failed to appoint the arbitrator to be appointed by it, or the
          parties
          have failed to appoint the arbitrator(s) to be appointed by them through
          agreement, at any time after such failure has occurred.

        

        (b)
          If the
          party-appointed arbitrators have failed to appoint the third arbitrator,
          as soon
          as the procedure contemplated by Rule 5.2 has been completed.

        

        (c)
          If the
          arbitrator(s) are to be appointed by CPR, as soon as the arbitration has
          been
          commenced.

        

        6.3
          The
          written request shall include complete copies of the notice of arbitration
          and
          the notice of defense or, if the dispute is submitted under a submission
          agreement, a copy of the agreement supplemented by the notice of arbitration
          and
          notice of defense if they are not part of the agreement.

        

        6.4
          CPR
          shall then proceed as follows:

        

        (a)
          Promptly
          following receipt by it of the request provided for in Rule 6.3, CPR shall
          convene the parties in person or by telephone one or more times to attempt
          to
          select the arbitrator(s) by agreement of the parties.

        

        (b)
          If the
          procedure provided for in (a) does not result in the selection of the required
          number of arbitrators, CPR shall submit to the parties a list of not less
          than
          five candidates if one arbitrator remains to be selected, and of not less
          than
          seven candidates if two or three arbitrators are to be selected. Such list
          shall
          include a brief statement of each candidate’s qualifications. Each party shall
          number the candidates in order of preference, shall note any objection
          it may
          have to any candidate, and shall deliver the list so marked to CPR. Any
          party
          failing without good cause to return the candidate list so marked within
          ten
          days after receipt shall be deemed to have assented to all candidates listed
          thereon. CPR shall designate as arbitrator(s) the nominee(s) willing to
          serve
          for whom the parties collectively have indicated the highest preference
          and who
          does not appear to have a conflict of interest. If a tie should result
          between
          two candidates, CPR may designate either candidate. If this procedure for
          any
          reason should fail to result in designation of the required number of
          arbitrators, CPR shall appoint a person or persons whom it deems qualified
          to
          fill any remaining vacancy.

        

        

        

        Rule
          7. Qualifications, Challenges and Replacement of
          Arbitrators

        

        

        7.1
          Each
          arbitrator shall be independent and impartial.

        

        7.2
          By
          accepting appointment, each arbitrator shall be deemed to be bound by these
          Rules and any modification agreed to by the parties.

        

        7.3
          Each
          arbitrator shall promptly disclose in writing to the Tribunal and the parties
          any circumstances that might cause doubt regarding the arbitrator’s independence
          or impartiality. Such circumstances include bias, interest in the result
          of the
          arbitration, and past or present relations with a party or its
          counsel.

        

        7.4
          Any
          arbitrator may be challenged if circumstances exist or arise that give
          rise to
          justifiable doubt regarding that arbitrator’s independence or impartiality,
provided,
          that a
          party may challenge an arbitrator whom it has appointed only for reasons
          of
          which it becomes aware after the appointment has been made.

        

        7.5
          A party
          may challenge an arbitrator only by a notice in writing to the Tribunal,
          with
          copy to the other party, given no later than fifteen days after (i) the
          parties
          have been notified that the Tribunal has been constituted, or (ii) the
          challenging party has become aware of the circumstances specified in Rule
          7.4,
          whichever shall last occur. The notice shall state the reasons for the
          challenge
          with specificity.

        

        7.6
          When an
          arbitrator has been challenged by a party, the other party may agree to
          the
          challenge or the arbitrator may voluntarily withdraw. Neither of these
          actions
          implies acceptance of the validity of the challenge.

        

        7.7
          If
          neither agreed disqualification nor voluntary withdrawal occurs, the challenge
          shall be decided as follows:

        

        (a)
          By
          unanimous vote of the remaining members of the Tribunal;

        

        (b)
          If the
          Tribunal consists of a sole Arbitrator or fails or refuses to decide the
          challenge, by the President of CPR.

        

        7.8
          In the
          event of death, resignation or successful challenge of an arbitrator, a
          substitute arbitrator shall be selected pursuant to the procedure by which
          the
          arbitrator being replaced was selected.

        

        7.9
          In the
          event that an arbitrator fails to act, or in the event the Tribunal determines
          that an arbitrator is de jure
          or
de facto
          prevented from duly performing the functions of an arbitrator, the procedures
          provided in Rule 7.8 shall apply to the selection of a replacement.

        

        7.10
          If the
          sole arbitrator or the chairman of the Tribunal is replaced, the successor
          shall
          decide the extent to which any hearings held previously shall be repeated.
          If
          any other arbitrator is replaced, the Tribunal in its discretion may require
          that some or all prior hearings be repeated.

        

        Rule
          8. Challenges to the Jurisdiction of the Tribunal

        

        

        8.1
          The
          Tribunal shall have the power to hear and determine challenges to its
          jurisdiction.

        

        8.2
          The
          Tribunal shall have the power to determine the existence, validity or scope
          of
          the contract of which an arbitration clause forms a part, and/or of the
          arbitration clause itself. For the purposes of challenges to the jurisdiction
          of
          the Tribunal, the arbitration clause shall be considered as separable from
          any
          contract of which it forms a part.

        

        8.3
          Any
          challenges to the jurisdiction of the Tribunal, except challenges based
          on the
          award itself, shall be made not later than the notice of defense, or with
          respect to a counterclaim, the reply to the counterclaim.

        

        

        

        C.
          RULES WITH RESPECT TO THE CONDUCT

        OF
          THE ARBITRAL PROCEEDINGS

        

        

        

        Rule
          9. General Provisions

        

        9.1
          Subject
          to these Rules, the Tribunal may conduct the arbitration in such manner
          as it
          shall deem appropriate. The chairman shall be responsible for the organization
          of arbitral conferences and hearings and arrangements with respect to the
          functioning of the Tribunal.

        

        9.2
          The
          proceedings shall be conducted in an expeditious manner. The Tribunal is
          empowered to impose time limits it considers reasonable on each phase of
          the
          proceeding, including without limitation the time allotted to each party
          for
          presentation of its case and for rebuttal.

        

        9.3
          Except
          as otherwise provided in these Rules or permitted by the Tribunal, no party
          or
          anyone acting on its behalf shall have any ex
          parte
          communication with any arbitrator with respect to any matter of substance
          relating to the proceeding, or on any matter with the arbitrator it appointed,
          except that a party and the arbitrator it appointed may confer regarding
          the
          selection of the chairman of the Tribunal.

        

        9.4
          As
          promptly as possible after the selection of the Tribunal, the Tribunal
          shall
          hold an initial pre-hearing conference for the planning and scheduling
          of the
          proceeding. The objective of this conference shall be to discuss all elements
          of
          the arbitration with a view to planning for its future conduct. Matters
          to be
          considered in the initial pre-hearing conference may include, inter alia,
          the
          following:

        

        (a)
          Procedural matters such as the timing and manner of any required discovery;
          the
          desirability of bifurcation or other separation of the issues in the
          arbitration; the scheduling of conferences and hearings; the scheduling
          of
          pre-hearing memoranda; the need for and type of record of conferences and
          hearings, including the need for transcripts; the amount of time allotted
          to
          each party for presentation of its case and for rebuttal; the mode, manner
          and
          order for presenting proof; the need for expert witnesses and how expert
          testimony should be presented; and the necessity for any on-site inspection
          by
          the Tribunal;

        

        (b)
          The
          early identification and narrowing of the issues in the
          arbitration;

        

        (c)
          The
          possibility of stipulations of fact and admissions by the parties solely
          for
          purposes of the arbitration, as well as simplification of document
          authentication; and

        

        (d)
          The
          possibility of the parties engaging in settlement negotiations, with or
          without
          the assistance of a mediator.

        

        After
          the
          initial conference, further pre-hearing or other conferences may be held
          as the
          Tribunal deems appropriate.

        

        9.5
          In order
          to define the issues to be heard and determined, the Tribunal may inter alia
          make
          pre-hearing orders for the arbitration and instruct the parties to file
          more
          detailed statements of claim and of defense and pre-hearing
          memoranda.

        

        9.6
          Unless
          the parties have agreed upon the place of arbitration, the Tribunal shall
          fix
          the place of arbitration. The award shall be deemed made at such place.
          Hearings
          may be held and the Tribunal may schedule meetings, including telephone
          meetings, wherever it deems appropriate.

        

        Rule
          10. Discovery

        

        

        The
          Tribunal shall permit and facilitate such discovery as it shall determine
          is
          appropriate in the circumstances, taking into account the needs of the
          parties
          and the desirability of making discovery expeditious and cost-effective.
          The
          Tribunal may issue orders to protect the confidentiality of proprietary
          information, trade secrets and other sensitive information disclosed in
          discovery.

        

        

        

        Rule
          11. Evidence and Hearings

        

        

        11.1
          The
          Tribunal shall determine the manner in which the parties shall present
          their
          cases. Unless otherwise determined by the Tribunal, the presentation of
          a
          party’s case shall include the submission of a pre-hearing memorandum including
          the following elements:

        

        (a)
          A
          statement of facts;

        

        (b)
          A
          statement of each claim being asserted;

        

        (c)
          A
          statement of the applicable law upon which the party relies;

        

        (d)
          A
          statement of the relief requested, including the basis for any damages
          claimed;
          and

        

        (e)
          A
          statement of the evidence to be presented, including the name, capacity
          and
          subject of testimony of any witnesses to be called and an estimate of the
          amount
          of time required for the witness’ direct testimony.

        

        11.2
          Evidence
          may be presented in written or oral form as the Tribunal may determine
          is
          appropriate. The Tribunal is not required to apply the rules of evidence
          used in
          judicial proceedings, provided,
          however,
          that
          the Tribunal shall apply the lawyer-client privilege and the work product
          immunity. The Tribunal shall determine the applicability of any privilege
          or
          immunity and the admissibility, relevance, materiality and weight of the
          evidence offered.

        

        11.3
          The
          Tribunal, in its discretion, may require the parties to produce evidence
          in
          addition to that initially offered. It may also appoint experts whose testimony
          shall be subject to cross examination and rebuttal.

        

        11.4
          The
          Tribunal shall determine the manner in which witnesses are to be examined.
          The
          Tribunal shall have the right to exclude witnesses from hearings during
          the
          testimony of other witnesses.

        

        

        

        Rule
          12. Interim Measures of Protection

        

        

        12.1
          At the
          request of a party, the Tribunal may take such interim measures as it deems
          necessary in respect of the subject matter of the dispute, including measures
          for the preservation of assets, the conservation of goods or the sale of
          perishable goods. The Tribunal may require security for the costs of such
          measures.

        

        12.2
          A
          request for interim measures by a party to a court shall not be deemed
          incompatible with the agreement to arbitrate or as a waiver of that
          agreement.

        

        

        

        Rule
          13. The Award

        

        

        13.1
          The
          Tribunal may make final, interim, interlocutory and partial awards. An
          award may
          grant any remedy or relief which the Tribunal deems just and equitable
          and
          within the scope of the agreement of the parties, including but not limited
          to
          specific performance of a contract. With respect to any interim, interlocutory
          or partial award, the Tribunal may state in its award whether or not it
          views
          the award as final, for purposes of any judicial proceedings in connection
          therewith.

        

        13.2
          All
          awards shall be in writing and shall state the reasoning on which the award
          rests unless the parties agree otherwise. When there are three arbitrators,
          the
          award shall be made and signed by at least a majority of the arbitrators;
          and if
          the award decides a number of issues, the part of the award relating to
          each
          issue shall be made and signed by at least a majority of the
          arbitrators.

        

        13.3
          A member
          of the Tribunal who does not join in an award may file a dissenting opinion.
          Such opinion shall not constitute part of the award.

        

        13.4
          Executed
          copies of awards and of any dissenting opinion shall be delivered by the
          Tribunal to the parties.

        

        13.5
          Within
          fifteen days after receipt of the award, either party, with notice to the
          other
          party, may request the Tribunal to correct in an award any errors in
          computation, any clerical or typographical errors, or any errors of a similar
          nature.

        

        Within
          thirty days after the delivery of an award to the parties, the Tribunal
          may make
          corrections on its own initiative and corrections requested by either party.
          All
          such corrections shall be in writing, and the provisions of Rule 13 shall
          apply
          to them.

        

        13.6
          After
          expiration of the thirty-day period provided in Rule 13.5, awards shall
          be final
          and binding on the parties, and the parties undertake to carry out awards
          without delay.

        

        13.7
          The
          dispute should in most circumstances be submitted to the Tribunal for decision
          within six months after the initial pre-hearing conference required by
          Rule 9.4.
          The final award should in most circumstances be rendered within one month
          thereafter. The parties and the arbitrators shall use their best efforts
          to
          comply with this schedule.

        

        

        

        D.
          MISCELLANEOUS RULES

        

        

        

        Rule
          14. Failure to Comply with Rules

        

        

        Whenever
          a party fails to comply with these Rules in a manner deemed material by
          the
          Tribunal, the Tribunal shall fix a reasonable period of time for compliance
          and,
          if the party does not comply within said period, the Tribunal may impose
          a
          remedy it deems just, including an award on default. Prior to entering
          an award
          on default the Tribunal may require the non-defaulting party to produce
          evidence
          and legal argument in support of its contentions, which the Tribunal may
          receive
          without the defaulting party’s presence or participation.

        

        

        

        Rule
          15. Costs

        

        

        15.1
          Each
          arbitrator shall be compensated at an hourly rate determined at the time
          of
          appointment for all time spent in connection with the proceeding and shall
          be
          reimbursed for any travel and other expenses.

        

        15.2
          The
          Tribunal shall fix the costs of arbitration. The costs of arbitration
          include:

        

        (a)
          The fees
          and expenses of member of the Tribunal;

        

        (b)
          The
          costs of expert advice and other assistance engaged by the
          Tribunal;

        

        (c)
          The
          travel and other expenses of witnesses to such extent as the Tribunal may
          deem
          appropriate;

        

        (d)
          The
          costs for legal representation and assistance and experts of the successful
          party to such extent as the Tribunal may deem appropriate;

        

        (e)
          The
          charges and expenses of CPR with respect to the arbitration.

        

        (f)
          The
          costs of transcript; and

        

        (g)
          The
          costs of meeting and hearing facilities.

        

        15.3
          Subject
          to any agreement between the parties to the contrary, the Tribunal may
          apportion
          the costs of arbitration between or among the parties in such manner as
          it deems
          reasonable taking into account the circumstances of the case, the conduct
          of the
          parties during the proceeding, and the result of the arbitration.

        

        15.4
          The
          Tribunal may request each party to deposit an equal amount as an advance
          for the
          costs referred to in Rule 15.2, except those specified in subparagraph
          (d), and,
          during the course of the proceeding, it may request supplementary deposits
          from
          the parties. Any such funds shall be held and disbursed in such a manner
          as the
          Tribunal may deem appropriate.

        

        15.5
          If the
          requested deposits are not paid in full within twenty days after receipt
          of the
          request, the Tribunal shall so inform the parties in order that jointly
          or
          severally they may make the required payment. If such payment is not made,
          the
          Tribunal may suspend or terminate the proceedings.

        

        15.6
          After
          the award has been rendered, the Tribunal shall return any unexpended balance
          from deposits made to the parties as may be appropriate.

        

        

        Rule
          16. Confidentiality

        

        

        The
          parties and the arbitrators shall treat the proceedings, any related discovery
          and the decisions of the Tribunal, as confidential, except in connection
          with a
          judicial challenge to, or enforcement of, an award, and unless otherwise
          required by law.

        

        

        

        Rule
          17. Settlement and Mediation

        

        

        17.1
          Either
          party may propose settlement negotiations to the other party at any time.
          The
          Tribunal may suggest that the parties explore settlement at such times
          as the
          Tribunal may deem appropriate and shall suggest that they do so at or before
          conclusion of the hearing. The Tribunal shall give such assistance in settlement
          negotiations as the parties may request and the Tribunal may deem
          appropriate.

        

        17.2
          With the
          consent of the parties, the Tribunal at any stage of the proceeding may
          arrange
          for mediation of the claims asserted in the arbitration by a mediator acceptable
          to the parties. The Mediator shall be a person other than a member of the
          Tribunal, unless the parties request and the Tribunal agrees that a member
          of
          the Tribunal designated by the parties may serve as Mediator. The Tribunal
          may
          provide the Mediator with whatever factual and legal material developed
          in the
          arbitration it deems appropriate and may permit the Mediator to attend
          conferences and hearings held in connection with the arbitration. Unless
          the
          parties agree otherwise, any such mediation shall be conducted under the
          CPR
          Model Procedure for Mediation of Business Disputes.

        

        

        

        

        Rule
          18. Actions against CPR or Arbitrators

        

        

        Neither
          CPR nor any arbitrator shall be liable to any party for any act or omission
          in
          connection with any arbitration conducted under these Rules.

        

        

        

        Rule
          19. Waiver

        

        

        A
          party
          knowing of a failure to comply with any provision of these Rules and neglecting
          to state its objections promptly waives any objection thereto.

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        COMMENTARY
          ON CENTER FOR PUBLIC RESOURCES RULES

        

        FOR
          NON-ADMINISTERED ARBITRATION OF BUSINESS DISPUTES

        

        

        

        INTRODUCTION

        

        

        The
          Center for Public Resources, Inc. (“CPR”) brings a distinct viewpoint to the
          field of business dispute resolution. Its tenets:

        

        1.     Most
          business disputes are best resolved privately and by agreement.

        

        
          	 	
                  2.

                	
                  Executives
                    should play a key role in business dispute resolution and should
                    approach
                    a dispute as a problem to be solved, not a contest to be
                    won.

                

        

        

        
          	 	
                  3.

                	
                  A
                    skilled and respected neutral third party can play a critical
                    role in
                    bringing about agreement.

                

        

        

        4.     Efforts
          should first be made to reach agreement by unaided negotiation.

        

        
          	 	
                  5.

                	
                  If
                    such efforts are unsuccessful, resolution by a non-adjudicative
                    procedure
                    such as mediation or the minitrial should next be pursued. These
                    procedures remain available even while litigation or arbitration
                    is
                    pending.

                

        

        

        
          	 	
                  6.

                	
                  If
                    adjudication by a neutral third party is required, a well conducted
                    arbitration proceeding usually is preferable to
                    litigation.

                

        

        

        
          	 	
                  7.

                	
                  During
                    an arbitration proceeding the door to settlement should remain
                    open;
                    arbitrators should encourage the parties to discuss settlement,
                    if
                    appropriate employing a mediator.

                

        

        

        
          	 	
                  8.

                	
                  Arbitration
                    proceedings often can be conducted efficiently by the arbitral
                    tribunal
                    without administration by a neutral organization, or limiting
                    the role of
                    such an organization to assistance in arbitrator selection, if
                    required.

                

        

        

        FEATURES
          OF WELL MANAGED ARBITRATION PROCEEDINGS

        

        

        Primary
          objectives of arbitration are to arrive at a just and enforceable result,
          based
          on a private procedure that is

        

        
          	 	
                  ·

                	
                  fair,

                

        

        
          	 	
                  ·

                	
                  expeditious,

                

        

        
          	 	
                  ·

                	
                  economical,
                    and

                

        

        
          	 	
                  ·

                	
                  less
                    burdensome or adversarial than
                    litigation.

                

        

        

        

        The
          above
          objectives are most likely to be achieved if the parties and their
          attorneys

        

        
          	 	
                  ·

                	
                  adopt
                    well designed rules of procedure;

                

        

        
          	 	
                  ·

                	
                  select
                    skilled arbitrators who are able and willing to actively manage
                    the
                    process;

                

        

        
          	 	
                  ·

                	
                  limit
                    the issues to focus on the core of the dispute;
                    and

                

        

        
          	 	
                  ·

                	
                  cooperate
                    on procedural matters even while acting as effective advocates
                    on
                    substantive issues.

                

        

        

        

        

        GENERAL
          COMMENTARY ON THE RULES

        

        

        The
          CPR
          Rules for Non-Administered Arbitration of Business Disputes (the “Rules”) were
          developed by a committee (the “Committee”) of leading arbitrators and
          practitioners convened by CPR to develop procedures to facilitate the conduct
          of
          arbitration fairly, expeditiously and economically. The Rules are designed
          to be
          easily comprehended. The Rules are intended in particular for the complex
          case
          but are suitable regardless of the complexity of the case or the amount
          in
          dispute.

        

        The
          Rules
          reflect CPR’s view that disputants should make all reasonable efforts to resolve
          their dispute by agreement. Rule 16 requires the Arbitral Tribunal (the
          “Tribunal”) to suggest at or before conclusion of the hearing that the parties
          engage in settlement negotiations, and authorizes the Tribunal to arrange
          mediation with the consent of the parties.

        

        The
          standard arbitration clauses in the Rules have been drafted to make proceedings
          under the Rules subject to the United States Arbitration Act, 9 U.S.C.
§ 1 et
          seq. If parties desire a different law, or if the federal law does not
          apply
          (where, for example, the underlying transaction is not “in commerce”), another
          law should be specified. [See reference to Volt
          v.
Stanford
          below at
          page 8.]

        

        

        Every
          disputant wants to have a reasonable opportunity to develop and present
          its
          case. Parties that choose arbitration over litigation do so in large part
          out of
          a need or desire for a proceeding that is also speedy and economical -
          factors
          which tend to go hand in hand. The rules were designed with each of these
          objectives in mind.

        

        The
          complexity of cases will vary greatly. In rules of general application
          it is not
          appropriate to fix hard and fast deadlines. Rule 13.7 commits the parties
          and
          the arbitrator(s) to use their best efforts to assure that the dispute
          will be
          submitted to the Tribunal for decision within six months after the initial
          pre-hearing conference, and that the final award will be rendered within
          one
          month thereafter. Rule 9.2 empowers the arbitrator(s) to establish time
          limits
          for each phase of the proceeding, including specifically the time allotted
          to
          each party for presentation of its case and for rebuttal.

        

        Counsel
          are expected to cooperate fully with the Tribunal and with each other to
          assure
          that the proceeding will be conducted with civility in an efficient, expeditious
          and economical manner. Rule 15 empowers the arbitrators in apportioning
          costs to
          take into account “the circumstances of the case.” This broad power is intended
          to permit the arbitrators to apportion a greater share of costs than they
          otherwise might to a party which has employed tactics the arbitrators consider
          dilatory, or in other ways has failed to cooperate in assuring the efficient
          conduct of the proceeding.

        

        The
          Rules
          may be modified by written agreement. The Rules are designed for an arbitration
          between two parties but may be amended to provide for a proceeding among
          three
          or more parties.

        

        

        

        TYPES
          OF DISPUTES

        

        

        The
          Rules
          are designed for “business disputes”. This term is intended to encompass
          disputes of any nature between business enterprises, including not only
          “commercial” disputes but also, by way of example, intellectual property
          disputes, construction disputes, disputes between manufacturers and distributors
          or franchisees, and disputes between joint venturers. The Rules may be
          adopted
          by parties which did not have a contractual or other business relationship,
          e.g.
          for a patent infringement dispute. The Rules may even be employed to adjudicate
          a dispute between a government agency and a contractor, subject to any
          legal
          restraints on that government’s submission to arbitration. The parties may find
          it appropriate to modify the Rules to adapt them to a specific type of
          dispute.

        

        

        ADMINISTERED
          VS. NON-ADMINISTERED ARBITRATION

        

        

        The
          principal functions normally performed by an organization administering
          arbitration proceedings are to:

        

        
          	 	
                  ·

                	
                  provide
                    a set of rules which the parties can adopt in a pre-dispute agreement
                    or
                    for an existing dispute;

                

        

        

        
          	 	
                  ·

                	
                  provide
                    administrative staff to render impartial services required for
                    smooth case
                    handling and to insulate arbitrators from
                    parties.

                

        

        

        
          	 	
                  ·

                	
                  provide
                    lists of persons from which arbitrators may be
                    chosen;

                

        

        

        
          	 	
                  ·

                	
                  appoint
                    the arbitrator(s) if necessary;

                

        

        

        
          	 	
                  ·

                	
                  decide
                    arbitrator conflict of interest challenges if
                    necessary;

                

        

        

        
          	 	
                  ·

                	
                  determine
                    arbitrator fees and bill the parties for such
                    fees.

                

        

        

        
          	 	
                  ·

                	
                  schedule
                    hearings and send notices of
                    hearings;

                

        

        

        
          	 	
                  ·

                	
                  provide
                    hearing rooms;

                

        

        

        
          	 	
                  ·

                	
                  distribute
                    documents;

                

        

        

        
          	 	
                  ·

                	
                  review
                    awards for procedural comments.

                

        

        

        The
          charges of administering organizations typically are related to the amount
          in
          dispute, but rates vary.

        

        Many
          arbitration practitioners and arbitrators see a need for administered
          arbitration, but others favor non-administered or “ad hoc” arbitration,
          particularly for large or complex cases. They believe that the arbitrator(s)
          and
          the parties’ advocates are capable of performing most of the functions general
          performed by the administering organization, and that the arbitrator(s)
          and
          advocates often may be better able to control the conduct of the proceeding
          than
          such an organization. The fees charged by an administering organization
          also may
          be a factor. The assistance of a neutral third party may be needed in selecting
          the tribunal or deciding a conflict of interest challenge to an arbitrator.
          Under the Rules, CPR is available to perform these limited
          functions.

        

        

        Over
          ninety percent of arbitrations take place pursuant to the parties’ binding
          commitment in their business agreement to submit possible futures disputes
          to
          arbitration in accordance with specified rules. Once a dispute has arisen,
          it is
          usually much more difficult for the parties to agree on any alternative
          to
          litigation. Our committee recommends the inclusion of a dispute resolution
          clause in most business agreements. The parties should also consider whether
          to
          provide for administered or non-administered arbitration. Rules for administered
          arbitration have long been available for incorporation by reference. The
          availability of rules well designed for the efficient conduct of a
          non-administered proceeding will facilitate the choice between these alternative
          procedures.

        

        The
          Rules
          are intended primarily for disputes between responsible parties which will
          not
          attempt to obstruct the process. However, the Rules do permit the process
          to go
          forward even if a respondent fails to deliver a notice of defense, fails
          to
          participate in selection of the Tribunal, or ultimately fails to appear
          at a
          hearing.

        

        

        

        SALIENT
          FEATURES OF THE RULES

        

        

        The
          Rules
          differ in numerous respects from arbitration rules promulgated by other
          organizations. Features which our Committee considers particularly significant
          are:

        

        
          	 	
                  1.

                	
                  The
                    Rules call for non-administered
                    arbitration.

                

        

        

        
          	 	
                  2.

                	
                  The
                    Rules require the expeditious conduct of the proceeding, empowering
                    the
                    arbitrator(s) to establish time limits for each phase of the
                    proceeding
                    (Rule 9.2), and to penalize a party engaging in dilatory tactics
                    (Rule
                    15.3).

                

        

        

        
          	 	
                  3.

                	
                  All
                    arbitrators, including those appointed by either party, are required
                    to be
                    independent and impartial (Rule 7.1). Such a requirement enhances
                    the
                    acceptability of the arbitration process, albeit a departure
                    from existing
                    U.S. practice.

                

        

        

        
          	 	
                  4.

                	
                  The
                    parties are given ample opportunity to select a sole arbitrator
                    or a panel
                    of three arbitrators without intervention of CPR. If they fail,
                    either
                    party may request CPR’s assistance (Rule
                    5).

                

        

        

        
          	 	
                  5.

                	
                  CPR
                    will first convene the parties to attempt to select the arbitrator(s)
                    by
                    agreement of the parties. Only if that attempt fails will CPR
                    submit a
                    list of candidates to the parties for ranking (Rule
                    6.4).

                

        

        

        
          	 	
                  6.

                	
                  The
                    Tribunal may decide challenges to its jurisdiction (Rule 8).
                    This should
                    allow arbitrators to decide all issues, including arbitrability
                    questions,
                    without the necessity for court
                    intervention.

                

        

        

        
          	 	
                  7.

                	
                  The
                    chairman of the Tribunal is assigned responsibility for the organization
                    of conferences and hearings and arrangements with respect to
                    the
                    functioning of the Tribunal (Rule
                    9.1).

                

        

        

        
          	 	
                  8.

                	
                  The
                    Tribunal is required to hold at least one pre-hearing conference
                    to plan
                    and schedule the proceeding (Rule 9.4). Such conference should
                    result in
                    the smooth scheduling of the case, and may aid possible
                    settlement.

                

        

        

        
          	 	
                  9.

                	
                  The
                    Tribunal is given great leeway in matters of procedure. The Tribunal
                    is
                    specifically empowered, for instance,
                    to

                

        

        

        
          	 	
                  ·

                	
                  establish
                    time limits for each phase of the proceeding (Rule
                    9.2);

                

        

        

        
          	 	
                  ·

                	
                  limit
                    the time allotted to each party for presentation of its case
                    (Rule
                    9.2);

                

        

        

        
          	 	
                  ·

                	
                  make
                    pre-hearing orders (Rule 9.5);

                

        

        

        
          	 	
                  ·

                	
                  permit
                    such discovery as it deems appropriate (Rule
                    10);

                

        

        

        
          	 	
                  ·

                	
                  require
                    the submission of pre-hearing memoranda (Rule
                    11.1);

                

        

        

        
          	 	
                  ·

                	
                  require
                    evidence to be presented in written form (Rule
                    11.2).

                

        

        

        
          	 	
                  10.

                	
                  The
                    Tribunal is empowered to appoint neutral experts (Rule
                    11.3).

                

        

        

        
          	 	
                  11.

                	
                  The
                    Tribunal may take interim measures for the preservation of assets
                    or other
                    interim measures (Rule 12.1).

                

        

        

        
          	 	
                  12.

                	
                  The
                    Tribunal is required to state the reasoning on which its award
                    rests
                    unless the parties agree otherwise (Rule 13.2). Our committee
                    believes the
                    parties are entitled to know how the decision was
                    reached.

                

        

        

        
          	 	
                  13.

                	
                  Each
                    arbitrator is to be fully compensated at an hourly rate determined
                    at the
                    time of appointment for all time spent in connection with the
                    proceeding
                    (Rule 15.1).

                

        

        

        
          	 	
                  14.

                	
                  The
                    Tribunal is empowered to apportion costs, including attorneys’ fees and
                    other costs incurred by the successful party, between the parties,
                    taking
                    into account the circumstances of the case, the conduct of the
                    parties
                    during the proceeding and the result (Rule
                    15.3).

                

        

        

        
          	 	
                  15.

                	
                  the
                    proceedings are confidential (Rule
                    16).

                

        

        

        
          	 	
                  16.

                	
                  The
                    Tribunal may suggest at any time that the parties engage in settlement
                    negotiations and shall make that suggestion at or before conclusion
                    of the
                    hearing (Rule 17.1).

                

        

        

        
          	 	
                  17.

                	
                  The
                    Tribunal may arrange for mediation of the dispute at any time
                    with the
                    consent of the parties (Rule 17.2).

                

        

        

        

        

        INTERNATIONAL
          ARBITRATION

        

        

        The
          Rules
          were designed in the first instance for disputes between parties located
          in the
          United States; however, the Rules also are suitable for disputes involving
          parties located in different countries. In the transnational context it
          may be
          advisable to specify in the pre-dispute clause or the submission
          agreement:

        

        
          	 	
                  ·

                	
                  the
                    place of arbitration;

                

        

        
          	 	
                  ·

                	
                  the
                    language(s) in which the proceedings are to be
                    conducted;

                

        

        
          	 	
                  ·

                	
                  the
                    substantive law governing the merits of the
                    dispute;

                

        

        
          	 	
                  ·

                	
                  the
                    nationality of the arbitrator(s);
                    and

                

        

        
          	 	
                  ·

                	
                  the
                    arbitration law which will govern.

                

        

        

        The
          parties also may consider certain modifications of the Rules when adopting
          them
          for transnational disputes. For instance, if the parties prefer that the
          functions assigned to CPR under Rule 6 and Rule 7.7 (b) be performed by
          another
          neutral organization or official, they may so provide.

        

        

        STANDARD
          CONTRACTUAL PROVISIONS

        

        

        The
          suggested standard pre-dispute clause and submission agreement which precede
          the
          Rules may be modified and may be supplemented. It is desirable that the
          parties
          specify the place of arbitration and the law governing the contract and
          the
          arbitration. If a governing law is specified it may be advisable to state
          whether or not the conflict of laws rules of that law are included.

        

        In
          light
          of the decision of the United States Supreme Court in Volt
          Information Sciences, Inc. v Board of Trustees of Leland Stanford Junior
          University,
          109 S.
          Ct. 1248, _______ U.S. ________, No. 87-1318 (March 6, 1989), our Committee
          has
          inserted language in the standard pre-dispute clause and submission agreement
          to
          the effect that the governing law for the arbitration shall be the United
          States
          Arbitration Act.

        

        The
          laws
          of various jurisdictions differ on the question of whether arbitrators
          are
          empowered to award punitive damages. If
          the parties wish to preclude the arbitrators from awarding punitive or
          trebled
          damages, it would be advisable to include a provision to that effect in
          the
          pre-dispute clause or the submission agreement.

        

        As
          stated
          above, CPR as a rule considers it highly desirable for disputants to attempt
          to
          resolve their dispute without adjudication. Attached to this commentary
          as
          Appendix A are suggested contract clauses calling for negotiations or mediation
          before
          a
          dispute is submitted to arbitration.

        

        The
          pre-dispute clause and the submission agreement call for an election as
          to
          whether the Tribunal will be composed of

        

        
          	 	
                  ·

                	
                  three
                    arbitrators, of whom each party appoints one, and the two arbitrators
                    thus
                    appointed attempt to select the
                    third,

                

        

        

        
          	 	
                  ·

                	
                  three
                    arbitrators, none of whom are appointed by the parties,
                    or

                

        

        

        
          	 	
                  ·

                	
                  a
                    sole arbitrator.

                

        

        

        Such
          an
          election made in a pre-dispute clause may be changed by further agreement
          once a
          specific dispute has arisen. If the parties fail to make an election, the
          first
          mentioned procedure will apply in accordance with Rule 5.1.

        

        Rules
          5
          and 6 govern the selection of arbitrators not appointed by either
          party.

        

        It
          is
          essential for the parties to stipulate that judgment may be entered upon
          the
          award, in order to comply with the requirement of the United States Arbitration
          Act, 9 U.S.C. § 9.

        

        

        COMMENTARY
          ON INDIVIDUAL RULES

        

        

        

        A. General
          and Introductory Rules

        

        

        Rule
          3. Commencement of Arbitration

        

        

        Rule
          3
          sets forth the procedure to be followed when a proceeding is commenced
          pursuant
          to a pre-dispute arbitration clause. Under Rule 3.4, the arbitration will
          proceed even if the respondent should fail to file a timely notice of defense.
          If the pre-dispute clause required each party to appoint an arbitrator,
          and
          either party fails to do so, the other party may request CPR to step in
          pursuant
          to Rule 6.

        

        A
          submission agreement entered into after a dispute has arisen may include
          all or
          some of the material called for by Rules 3.3 and 3.5 and may eliminate
          the need
          for a notice of arbitration and a notice of defense. Rule 3.9 provides
          that
“Rule 3 shall apply to the extent that it is not inconsistent with the
          submission agreement.” If the parties so desire, the submission agreement can
          provide that Rule 3 notices will not be required or will be
          modified.

        

        

        

        Rule
          4. Representation

        

        

        It
          is
          assumed that parties normally would be represented by a law firm or an
          individual attorney; however, the Rules permit parties to be represented
          or
          assisted by any persons of their choice.

        

        Under
          the
          laws of certain jurisdictions, representation of a party in an arbitration
          proceeding may constitute the practice of law, in which case representation
          by
          an attorney would be required.

        

        

        B. Rules
          with Respect to the Tribunal

        

        

        Rule
          5. Selection of Arbitrators by the Parties

        

        

        Most
          practitioners, when confronted with a large or complex dispute, have greater
          confidence in a panel of three arbitrators than in a single arbitrator.
          Moreover, they usually

        prefer
          to
          permit each party to appoint an arbitrator. Rule 5.1 provides, therefore,
          that
          the Tribunal shall consist of two arbitrators appointed by the parties
          and a
          third arbitrator who shall chair the Tribunal, unless the parties have
          agreed on
          a Tribunal consisting of a sole arbitrator or three arbitrators not appointed
          by
          the parties.

        

        For
          many
          companies the ability to select a tribunal well qualified to hear and decide
          their dispute is a primary motivation to opt for arbitration. The selection
          of
          highly qualified, experienced arbitrators is critical, the more so if the
          amount
          in dispute is large and the issues are complex. Our Committee believes
          that at
          least the chairman of the Tribunal usually should be a respected attorney
          experienced in arbitration.

        

        The
          arbitrators should be persons able and willing to control the course of
          the
          proceeding and to make definitive rulings on substantive and procedural
          matters.

        

        Sophisticated
          counsel representing the parties are likely to know of the individuals,
          especially of attorneys, who are well qualified and who meet the “independent
          and impartial” standard of Rule 7.1. CPR has established Panels of leading
          members of the bar, including former judges, who are highly qualified to
          serve
          as arbitrators. CPR’s lists of panelists are available on request, and panel
          members may be contacted directly.

        

        Tribunals
          of two arbitrators have been used on occasion, typically in complex
          technological disputes in which the objective was to structure a modus vivendi
          rather
          than only to arrive at conclusions as to liability and damages. The Rules
          may be
          modified to provide for a two arbitrator Tribunal.

        

        

        

        Rule
          6. Selection of Arbitrator(s) by CPR

        

        

        Selection
          of arbitrators by the parties is the preferred course, and the parties
          are given
          ample opportunity to select a Tribunal without CPR’s assistance. However, if
          they fail, either party may request CPR’s assistance at the time and in the
          manner specified in Rules 6.2 and 6.3.

        

        In
          accordance with Rule 6.4(a), CPR then will convene the parties and will
          propose
          candidates in an attempt to complete the Tribunal in this informal and
          speedy
          manner. If this procedure is not wholly successful, CPR will submit a list
          of
          candidates to the parties in writing. The parties are required to rank
          the
          nominees in order of preference. The nominee(s) willing to serve for whom
          the
          parties collectively have indicated the highest preference will be
          selected.

        

        The
          parties will be encouraged to inform CPR of the qualifications they seek
          in an
          arbitrator. Individuals nominated by CPR are likely to be members of CPR’s
          Panels.

        

        

        Rule
          7. Qualifications, Challenges and Replacement of
          Arbitrators

        

        

        The
          degree of independence expected of a party-appointed arbitrator in the
          United
          States is not always clear. Parties often expect the arbitrator they appoint
          to
          act as their advocate on the panel. Our Committee does not favor this approach.
          The Committee believes that the advocacy role should be performed exclusively
          by
          each party’s counsel or other representative, and that permitting arbitrators to
          play such a role is prejudicial to the disinterested and candid deliberations
          in
          which the panel should engage. Consequently, Rule 7.1 states that “Each
          arbitrator shall be independent and impartial.”

        

        The
          rationale for party appointment is to enable each party to select an individual
          it considers well qualified and whom it expects in turn to select a capable
          chairman of the Tribunal. A party may discuss the case in general terms
          with an
          individual before appointment, and the appointee may discuss the selection
          of
          the chairman with that party. Once the Tribunal has been constituted, no
          further
ex
          parte
          communication is permitted between a party and the arbitrator it appointed
          (Rule
          9.3).

        

        Rules
          7.3
          - 7.7 set forth a formal procedure for disclosure of “circumstances that might
          cause doubt regarding the arbitrator’s independence or impartiality,” and for a
          challenge for “justifiable doubt,” after the Tribunal has been constituted. It
          is anticipated that normally an individual’s possible conflicts of interest
          would be disclosed and resolved informally before selection, and that it
          would
          rarely become necessary to invoke the formal procedure. In general, we
          believe
          all the arbitrators should be held to the standards for independent arbitrators
          promulgated in the ABA-AAA Code of Ethics for Arbitrators in Commercial
          Disputes.

        

        

        

        Rule
          8. Challenges to the Jurisdiction of the Tribunal

        

        

        This
          Rule
          expresses the generally accepted principle that arbitrator(s) have the
          competence initially to determine their own jurisdiction. The arbitrator(s)
          will
          decide whether the arbitration proceeds in the face of a jurisdictional
          challenge.

        

        

        

        C.
          Rules with Respect to the Conduct of the Arbitral
          Proceedings

        

        

        Rule
          9. General Provisions

        

        

        Under
          Rule 9.1 the chairman is “responsible for the organization of the arbitral
          conferences and hearings and arrangements with respect to the functioning
          of the
          Tribunal.”

        

        The
          efficiency of the proceeding will depend in large part on the chairman’s taking
          the lead in asserting the Tribunal’s control over critical aspects of the
          procedure, including the setting of time limits as authorized by Rule
          9.2.

        

        The
          Rules
          give the Tribunal wide latitude as to the manner in which the proceeding
          will be
          conducted. It is expected that the procedure will be determined in large
          part
          during the pre-hearing conference(s) held pursuant to Rule 9.4 and that
          following the conference(s) the Tribunal will issue one or more orders
          on
          procedural matters.

        

        Narrowing
          issues to those central to the controversy, fact stipulations and admissions
          should be strongly encouraged by the Tribunal in the interest of focusing
          on
          core issues and simplifying the proceeding.

        

        Some
          controversies hinge on one or two key issues of law which in litigation
          may be
          decided early on motion for partial summary judgment. At the pre-hearing
          conference, the desirability of the Tribunal’s ruling on such issues before the
          hearings can be considered.

        

        Other
          controversies hinge on a key issue of a technical nature on which a neutral
          expert can be helpful in bringing about a resolution. The appointment by
          the
          Tribunal of such an expert is authorized by Rule 11.3 and also can be discussed
          at the pre-hearing conference.

        

        The
          Tribunal may bifurcate the proceeding. If the proceeding is bifurcated
          to first
          decide the issue of liability, the parties then may well be able to agree
          on the
          remedy. Often parties have options not available to a judge or to
          arbitrators.

        

        A
          pre-hearing conference may well give the arbitrators an opportunity to
          encourage
          settlement discussions or mediation, as contemplated by Rule 17. Simply
          bringing
          the attorneys together for purposes of a conference may lead to such
          discussions.

        

        

        Rule
          10. Discovery

        

        

        These
          Rules, unlike most other arbitration rules, specifically empower the
          Tribunal

        

        “to
          permit and facilitate such discovery as it shall determine is appropriate
          in the
          circumstances taking into account the needs of the parties and the desirability
          of making discovery expeditious and cost-effective.”

        

        Arbitration
          is not for the litigator who will “leave no stone unturned.” Unlimited discovery
          is incompatible with the goals of efficiency and economy. The Federal Rules
          of
          Civil Procedure are not applicable. Discovery should be limited to that
          for
          which a party has a substantial, demonstrable need. Rule 11.2 provides
          for the
          application of the attorney-client privilege and the work product immunity.
          That
          protection is intended to apply to discovery as well as to
          hearings.

        

        It
          is
          desirable for the parties’ counsel to agree, preferably before the initial
          pre-hearing conference, on a discovery plan and schedule and to submit
          the same
          to the Tribunal for its approval.

        

        A
          party
          may encounter difficulties if it needs to secure documents or testimony
          from an
          uncooperative third party. The arbitrators may well be of assistance in
          such a
          situation through the exercise of their subpoena power or in other ways.
          If the
          third party’s location is beyond subpoena range, holding a hearing at that
          location may be an option.

        

        

        

        Rule
          11. Evidence and Hearings

        

        

        The
          Rules
          do not establish a detailed mandatory hearing procedure but permit the
          Tribunal
          to determine the procedure. At least the main features should be established
          during the pre-hearing conference(s). The Tribunal need not apply rules
          of
          evidence used in judicial proceedings, except that the Tribunal is required
          to
          apply the attorney-client privilege and the work product immunity when
          it
          determines that the same are applicable (Rule 11.2).

        

        Self-authentication
          of documentary exhibits the authenticity of which is not disputed is a
          widely
          used practice which reduces hearing time. In cases in which voluminous
          testimony
          is expected the hearings will be expedited considerably if the Tribunal
          requires
          the direct testimony of all or most witnesses to be submitted in written
          form
          before the witness is to appear. This procedure also enables opposing counsel
          to
          better prepare for cross-examination. Depositions and affidavits would
          be
          admissible in evidence unless the Tribunal rules otherwise.

        

        The
          Tribunal should consider at the pre-hearing conference the imposition of
          time
          limits on case presentation, as authorized by Rule 9.2. If necessary, any
          such
          limits can be extended.

        

        The
          Rules
          do not provide specifically for the notice the parties are to be given
          of
          hearing dates and times. It is assumed that the Tribunal will give notice
          in
          such form and with such lead time as is reasonable under the
          circumstances.

        

        The
          efficiency of the proceeding will be enhanced substantially if hearings
          are held
          consecutively. If the Tribunal heeds every schedule conflict claim and
          adjournment request by either counsel, the hearings may drag on quite
          unnecessarily.

        

        The
          Tribunal and/or the parties are likely to request a hearing
          transcript.

        

        Rule
          11.3
          empowers the Tribunal to appoint neutral experts. We would expect this
          power to
          be exercised sparingly, and usually upon consultation with the parties
          as to the
          need for a neutral expert, the scope of the assignment, and identification
          of
          well qualified candidates. It is not intended that the expert give advice
          to the
          Tribunal ex parte;
          indeed,
          the Rule entitles the parties to cross examine and to rebut the expert.
          The
          conflicting views of partisan experts can lead to confusion rather than
          elightenment of arbitrators. In appropriate cases the arbitrators might
          encourage the parties early on, e.g. at the pre-hearing conference, to
          agree on
          the joint appointment of a neutral expert.

        

        The
          Rules
          do not automatically require the submission of post-hearing briefs, but
          it is
          likely that the Tribunal will order the submission of such briefs. Final
          oral
          argument also may be scheduled.

        

        The
          Tribunal’s powers with respect to subpoenas are determined by applicable law and
          are not dealt with specifically in the Rules.

        

        

        

        

        Rule
          13. The Award

        

        

        Rule
          13.2
          provides:

        

        “All
          awards shall be in writing and shall state the reasoning on which the award
          rests unless the parties agree otherwise. When there are three arbitrators,
          the
          award and any part thereof shall be made and signed by at least a majority
          of
          the arbitrators; ...”

        

        Most
          parties engaging in arbitration want to know the basis on which the
          arbitrator(s) reached their decision. Our Committee, moreover, considers
          it good
          discipline for arbitrators to require them to spell out their reasoning.
          Sometimes this process gives rise to second thoughts as to the soundness
          of the
          result. The Rule 13.2 mandate gives the arbitrator(s) greater leeway than
          would
          a requirement to state “conclusions of law and findings of fact.”

        

        Some
          parties hesitate to arbitrate out of a concern that arbitrators are prone
          to
“split the baby”, i.e. to make compromise awards. Any tendency on the part of
          the arbitrators to reach compromise awards should be restrained by the
          requirement of a reasoned award.

        

        Certain
          administering organizations and practitioners favor “bare” awards without
          explanation of any sort, in the belief that such awards are the least likely
          to
          be challenged and overturned by a court. In the Committee’s view the risk that a
          reasoned award will be successfully challenged normally is small and is
          outweighed by the other considerations mentioned above.

        

        If
          an
          award consists of two or more parts, it is sufficient if any two out of
          three
          arbitrators approve each part, even if the same two arbitrators do not
          approve
          each part.

        

        Unless
          the parties shall have agreed in their business agreement or otherwise
          as to
          which law shall govern, the Tribunal is free to determine the law which
          is to
          govern the award.

        

        Rule
          13.7
          requires the parties and the arbitrators to use their best efforts to submit
          the
          dispute to the Tribunal for decision within six months of the initial
          pre-hearing conference, and to render the final award within one month
          following
          such submission.

        

        The
          Rules
          do not deal expressly with confirmation of an award, as the matter is covered
          by
          the United States Arbitration Act, 9 U.S.C. § 9 and its state
          counterparts.

        

        

        

        Rule
          14. Failure to Comply with Rules

        

        

        Rule
          14
          empowers the Tribunal to impose a remedy it deems just whenever a party
          materially fails to comply with the Rules. The power to make an award on
          default
          is specifically included. Pursuant to Rule 15.3 the Tribunal also may take
          a
          party’s conduct during the proceeding into account in assessing
          costs.

        

        

        

        Rule
          15. Costs

        

        

        Our
          Committee believes that highly qualified arbitrators are entitled to be
          fully
          compensated for all time devoted to the arbitration. If an arbitrator is
          a
          member of a law firm, he is likely to expect compensation at approximately
          the
          hourly rates normally charged for his services. The rates payable to
          party-appointed arbitrators should be agreed to between the appointee and
          the
          appointing party. The rates of other arbitrators should be established
          by
          agreement with both parties. The members of a three member Tribunal are
          likely
          to be compensated at different rates, but gross variations may present
          problems.

        

        Normally,
          the parties are expected to make advances for costs to a fund pursuant
          to Rule
          15.4, and the arbitrators’ fees, as well as other expenses, would be paid from
          such a fund.

        

        The
          “costs of arbitration” enumerated in Rule 15.2 include the costs for legal
          representation and assistance and experts of the successful party to such
          extent
          as the Tribunal may deem appropriate,

        

        In
          accordance with Rule 15.3, unless the parties otherwise agreed, the Tribunal
          may
          apportion the costs of arbitration between the parties “in such manner as it
          deems reasonable taking into account the circumstances of the case, the
          conduct
          of the parties during the proceeding, and the result of the arbitration.” As
          stated above, the arbitrator(s) may take into account tactics by either
          party
          which unreasonably interfered with the expeditious conduct of the
          proceeding.

        

        

        

        Rule
          17. Settlement and Mediation

        

        

        Over
          ninety percent of civil lawsuits and a high percentage of business arbitration
          proceedings are disposed of before a trial or hearings take place, most
          by
          settlement. Yet often each party is reluctant to propose settlement
          negotiations, if only out of concern that the proposal will be seen as
          a sign of
          weakness. A proposal to that effect by the Tribunal at one or more appropriate
          junctures in the proceeding should launch negotiations, without either
          party’s
          bearing the onus of being the proposer.

        

        A
          skilled
          mediator can play a critical role in brining about agreement between
          adversaries, even if bilateral negotiations did not bring them within reach
          of
          agreement. If the Tribunal believes that mediation may result in a settlement,
          the Tribunal is encouraged to urge the parties to engage in such a process
          and
          to assist in arranging the same. As a rule, arbitration proceedings should
          be
          suspended while mediation is in progress, at least for a limited
          time.

        

        It
          may
          well be desirable for senior executives to play an active role in a mediation
          proceeding. Often, the parties have settlement options that are business
          oriented and less onerous than the payment of money. Business executives
          are
          likely to be best able to explore such options.

        

        The
          members of the Tribunal will be thoroughly familiar with the case, and
          an
          arbitrator not appointed by either party may well be able to serve as mediator.
          However, the parties may hesitate to confide in an arbitrator, and an arbitrator
          would be inhibited in making settlement proposals or giving advice to the
          parties. As a rule, therefore, it would be preferable for an individual
          not an
          arbitrator in the case to serve as mediator. The Tribunal can be helpful
          by
          proposing well qualified candidates and by familiarizing the mediator with
          the
          case.

        

        It
          is
          assumed that if a settlement does not come about, the terms of any settlement
          offers will not be admitted into evidence at the hearings. If the parties
          enter
          into a settlement agreement, they may wish to request the Tribunal to issue
          an
          award incorporating the settlement terms.

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

        

        Appendix
          A-1

        

        

        SAMPLE
          BUSINESS AGREEMENT DISPUTE RESOLUTION CLAUSE

        (Mediation
          - Arbitration)

        

        

        The
          parties will attempt in good faith to resolve any controversy or claim
          arising
          out of or relating to this agreement by mediation in accordance with the
          Center
          for Public Resources Model Procedure for Mediation of Business Disputes.
          *

        

        If
          the
          matter has not been resolved pursuant to the aforesaid mediation procedure
          within sixty days of the commencement of such procedure (which period may
          be
          extended by mutual agreement), the controversy shall be settled by arbitration
          in accordance with the Center for Public Resources Rules for Non-Administered
          Arbitration of Business Disputes, by (a sole arbitrator) (three arbitrators,
          or
          whom each party shall appoint one) (three arbitrators, none of whom shall
          be
          appointed by either party). The arbitration shall be governed by the United
          States Arbitration Act, 9 U.S.C. § 1-16, and judgment upon the award rendered by
          the Arbitrator(s) may be entered by any court having jurisdiction thereof.
          The
          place of arbitration shall be ___________.

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        

        _________________________

        
          	 	
                  *

                	
                  The
                    Center for Public Resources Model Minitrial Procedures may be
                    substituted
                    for the mediation procedure.

                

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

        Appendix
          A-2

        

        

        SAMPLE
          BUSINESS AGREEMENT DISPUTE RESOLUTION CLAUSE

        

        (Two
          Step
          Negotiation - Mediation - Arbitration)

        

        

        The
          parties will attempt in good faith to resolve any controversy or claim
          arising
          out of or relating to this agreement promptly by negotiations between executives
          of the parties.

        

        If
          a
          controversy or claim should arise, ____________________________ of X Co.
          and
          _________________________ of Y Co., or their respective successors in the
          positions they now hold (herein called the “project managers”), will meet at
          least once and will attempt to resolve the matter. Either project manager
          may
          request the other to meet within fourteen days, at a mutually agreed time.
          

        

        If
          the
          matter has not been resolved within twenty days of their first meeting,
          the
          project managers shall refer the matter to senior executives, who shall
          have
          authority to settle the dispute (herein called “the senior executives”).
          Thereupon, the project managers shall promptly prepare and exchange memoranda
          stating the issues in dispute and their positions, summarizing the negotiations
          which have taken place, and attaching relevant documents. The senior executives
          will meet for negotiations within fourteen days of the end of the twenty-day
          period referred to above, at a mutually agreed time.

        

        The
          first
          meeting shall be held at the offices of the project manager receiving the
          request to meet. If more than one meeting is held, the meetings shall be
          held in
          rotation at the offices of X Co. and Y Co.

        

        If
          the
          matter has not been resolved within thirty days of the meeting of the senior
          executives (which period may be extended by mutual agreement), the parties
          will
          attempt in good faith to resolve the controversy or claim in accordance
          the
          Center for Public Resources Model Procedure for Mediation of Business
          Disputes.*

        

        If
          the
          matter has not been resolved pursuant to the aforesaid mediation procedure
          within sixty days of the commencement of such procedure (which period may
          be
          extended by mutual agreement), the controversy shall be settled by arbitration
          in accordance with the Center for Public Resources rules for Non-Administered
          Arbitration of Business Disputes, by (a sole arbitrator) (three arbitrators,
          of
          whom each party shall appoint one) (three arbitrators, none of whom shall
          be
          appointed by either party). The arbitration shall be governed by the United
          States Arbitration Act, 9 U.S.C § 1-16, and judgment upon the award rendered by
          the Arbitrator(s) may be entered by any court having jurisdiction thereof.
          The
          place of arbitration shall be ____________________.

        ____________________

        * The
          Center for Public Resources Model Minitrial Procedure may be substituted
          for
          mediation procedures.

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        

          Attachment
            C

          

          MANAGEMENT
            COMMITTEE

          

          
            	
                    1.1

                  	
                    To
                      provide for the orderly supervision of operations to be carried
                      out under
                      this Agreement at MGP sites, there will be a Management Committee
                      for each
                      site for which the Utilities agree to incur costs under this
                      Agreement.
                      Upon the designation of a site as one as to which the Utilities
                      agree to
                      incur costs under this Agreement, each Utility shall designate
                      a
                      representative to such Management Committee who shall be authorized
                      to act
                      for such Utility by which designated, and an alternate representative
                      who
                      shall be authorized to act for such Utility in the absence
                      of its
                      representative. Such designation shall be made by notice given
                      to the
                      other Utility, stating the names and addresses of the representative
                      and
                      alternate representative designated by such Utility for such
                      Management
                      Committee for a particular MGP site. Any Utility may change
                      its
                      representative at any time by giving written notice to the
                      other Utility.
                      In addition, any Utility may designate a special representative
                      for a
                      particular Management Committee meeting by delivering to the
                      other
                      Utility’s representative notice of such designation at or before such
                      meeting. Any special representative shall be authorized to
                      act for the
                      Utility by which designated only at such meeting. In any matter
                      arising
                      under this Agreement, a representative or alternate or special
                      representative shall represent only the Utility which appointed
                      him. Such
                      representative (or, in his absence the alternate or special
                      representative) shall have full power and authority to represent
                      and bind
                      such Utility in all matters, and all acts done by him or his
                      alternate or
                      special representative pursuant to the authority conferred
                      on him shall be
                      deemed to be the acts of the Utility which appointed him. The
                      representative or his alternate or special representative of
                      the
                      Utility/Coordinator (as defined in Section 2 below) shall be
                      Chairman at
                      all meetings of the Management Committee. If neither the representative,
                      alternate representative, nor a special representative of a
                      Utility is
                      able to attend any meeting held pursuant to this Agreement,
                      the vote of
                      such Utility on any matter to be considered at such meeting
                      may be cast by
                      written notice delivered to the other Utility representative
                      at or before
                      the meeting but not thereafter.

                  

          

          
            	
                    1.2

                  	
                    The
                      Management Committee may appoint such subcommittees, to be
                      composed of
                      representatives of the Utilities as it deems advisable, for
                      the study of
                      any problem in connection with operations
                      hereunder.

                  

          

          
            	
                    1.3

                  	
                    The
                      members of the Management Committee shall be fully empowered
                      by the
                      Utility which they, respectively, represent to make all determinations
                      required hereunder to be made by the
                      Utilities.

                  

          

          
            	
                    1.4

                  	
                    The
                      Coordinator/Utility shall prepare and furnish to each Utility
                      representative and alternate representative a copy of the agenda
                      and such
                      supplementary information as may be appropriate for each meeting
                      of the
                      Management Committee, together with notice of the date, time
                      and place of
                      such meeting, to be received at least fifteen (15) days in
                      advance of the
                      date of such meeting. The Coordinator/Utility shall work with
                      the
                      representatives and alternate representatives to select meeting
                      dates,
                      times and places that are acceptable to all representatives
                      and alternate
                      representatives. All meetings of the Management Committee shall
                      be held in
                      either Chicago or Naperville, Illinois, or at such other place
                      as is
                      mutually agreed to by the Utilities. Each representative or
                      alternate or
                      special representative shall be entitled to have present at
                      any meeting
                      such agents and employees of his principal as he may desire.
                      The expenses
                      incurred by a representative, alternates or special representatives
                      and
                      agents and employees of any Utility attending a meeting shall
                      be borne
                      solely by such Utility.

                  

          

          
            	
                    1.5

                  	
                    At
                      all meetings of the Management Committee, only such matters
                      as may be on
                      the agenda shall be considered, but at any such meeting, the
                      agenda may be
                      amended, by unanimous consent, to include additional matters
                      raised by any
                      representative. The Coordinator/Utility may call a meeting
                      of the
                      Management Committee at any time it shall deem appropriate
                      and shall do so
                      upon the request of any Utility by giving each Utility written
                      notice
                      thereof (pursuant to Paragraph 1.4) with the agenda reflecting
                      the matters
                      requested by the Utility or Utilities requesting the meeting.
                      Written
                      minutes of each meeting shall be prepared by the Coordinator/Utility
                      and
                      copies thereof shall be made available promptly to the Utilities.
                      Each
                      representative or alternate shall notify the other representatives
                      in
                      writing of its approval or objection to said minutes within
                      fifteen (15)
                      days after receipt thereof, and if a representative fails to
                      so notify the
                      other representatives, it shall be deemed to have approved
                      said minutes.
                      The determinations of the Management Committee made in accordance
                      with the
                      voting procedure in Section 1.8 shall be binding on the
                      Utilities.

                  

          

          
            	
                    1.6

                  	
                    Any
                      matter arising under the Agreement may be submitted to the
                      Management
                      Committee for consideration and to a vote without holding a
                      meeting,
                      provided that such matter is submitted by notice in writing
                      to all
                      Utilities. Within fifteen (15) days after receipt of such notice,
                      each
                      Utility shall give to each other Utility notice in writing
                      of its vote.
                      Any proposal which thus receives the affirmative vote provided
                      for in
                      Section 1.8 shall be deemed to be a proposal decided upon by
                      the
                      Utilities, and the determination thus made shall be binding
                      upon them to
                      the same extent as votes cast at a meeting of the Management
                      Committee.
                      Coordinator/Utility shall keep a record of the vote open to
                      inspection by
                      the Utilities at all reasonable
                      times.

                  

          

          
            	
                    1.7

                  	
                    The
                      Management Committee shall meet at least once each Calendar
                      Year prior to
                      August 1 to consider the program of activities and budget for
                      the relevant
                      MGP site that is proposed by the Coordinator/Utility for the
                      succeeding
                      Calendar Year, and such other matters as may be on the agenda;
                      provided,
                      however, that any such meeting may be waived by the unanimous
                      consent of
                      the Utilities and any matters on the agenda may be submitted
                      to the
                      Management Committee as provided in Section 1.6. No program
                      of activities
                      or budget may be implemented unless approved unanimously by
                      the
                      Utilities.

                  

          

          
            	
                    1.8

                  	
                    Each
                      Utility shall be entitled to one vote on any matter or proposal
                      submitted
                      to the Management Committee in accordance with this Agreement
                      and all
                      decisions of the Management Committee must be
                      unanimous.

                  

          

          

          COORDINATOR/UTILITY

          
            	
                    2.1

                  	
                    The
                      Coordinator/Utility shall facilitate the performance of all
                      operations
                      conducted by the Utilities under this Agreement for the MGP
                      site. There
                      shall be a separate Coordinator/Utility for each
                      site.

                  

          

          
            	 	
                    2.1.1

                  	
                    Any
                      Coordinator/Utility at any time may resign as Coordinator/Utility
                      hereunder by giving to the other Utility notice in writing
                      of such
                      resignation. Such resignation shall be effective one hundred
                      eighty (180)
                      days after the date of notice thereof as provided above, or
                      on the date on
                      which a successor Coordinator/Utility appointed by the Utilities
                      as
                      provided herein shall be ready and able to assume the obligations
                      of
                      Coordinator/Utility hereunder, whichever shall first
                      occur.

                  

          

          
            	 	
                    2.1.2

                  	
                    The
                      Coordinator/Utility may be removed at any time upon ninety
                      (90) days’
                      notice by determination of the Management Committee. The Utilities
                      shall
                      promptly give to Coordinator/Utility notice in writing of such
                      removal.

                  

          

          
            	 	
                    2.1.3

                  	
                    Removal
                      or resignation of any Coordinator/Utility shall not in any
                      way affect its
                      right, title or interest or obligations under this Agreement.
                      On the
                      effective date of removal or resignation, Coordinator/Utility
                      shall
                      deliver to the successor Coordinator/Utility possession of
                      all funds,
                      equipment, materials, appurtenances, books, records, reports,
                      data and
                      rights acquired by or in the custody of Coordinator/Utility
                      for the joint
                      account of the Utilities and shall make an accounting to the
                      Utilities for
                      such items mentioned herein as shall not be so
                      delivered.

                  

          

          
            	
                    2.2

                  	
                    In
                      accordance with agreed programs and budgets and the terms of
                      the Agreement
                      and subject to such instructions as may be given from time
                      to time by the
                      Management Committee, Coordinator/Utility shall on behalf of
                      the other
                      Utility conduct all operations for its applicable site under
                      this
                      Agreement, and in connection therewith, shall have the following
                      rights,
                      duties and obligations; provided, however, that Coordinator/Utility
                      shall
                      consult with the other Utilities when it deems
                      necessary.

                  

          

          
            	 	
                    2.2.1

                  	
                    All
                      such operations shall be conducted by Coordinator/Utility or
                      by its duly
                      authorized agents or by such independent contractors as may
                      be engaged by
                      it with the approval of the other
                      Utility.

                  

          

          
            	 	
                    2.2.2

                  	
                    Coordinator/Utility,
                      its agents or contractors, shall secure and furnish all supervision,
                      labor, services, materials, equipment, permits and rights necessary
                      or
                      appropriate to operations hereunder and shall have custody
                      of all
                      materials and equipment owned by the Utilities pursuant to
                      this Agreement.
                      The selection of employees, the number thereof, their hours
                      of labor and
                      their compensation shall be determined by Coordinator/Utility,
                      its agents
                      or contractors, exclusively. However, only those items which
                      are
                      designated Shared Costs in Section 2 of the Agreement are
                      recoverable.

                  

          

          
            	 	
                    2.2.3

                  	
                    Coordinator/Utility
                      shall conduct diligently all operations in accordance with
                      practices
                      generally followed in remediation operations for manufactured
                      gas plant
                      sites and shall perform such operations in an efficient and
                      economical
                      manner. All operations shall be conducted in compliance with
                      the terms of
                      this Agreement and all applicable laws and
                      regulations.

                  

          

          
            	 	
                    2.2.4

                  	
                    Coordinator/Utility
                      shall proceed with due diligence to secure or cause to be secured
                      such
                      permits, easements, and other rights to the use of land as
                      may be
                      requisite or appropriate to the conduct of operations and in
                      accordance
                      with all applicable laws and
                      regulations.

                  

          

          
            	 	
                    2.2.5

                  	
                    Coordinator/Utility
                      shall permit, upon receipt of request in writing by any Utility,
                      employees
                      and representatives of such Utility to have full access to
                      the area of
                      operations (for the relevant MGP site) at all reasonable times
                      and at
                      their own risk and expense, for the purpose of observing any
                      and all
                      operations being conducted for the joint benefit of the Utilities
                      and
                      inspecting all materials, equipment and property. Such inspecting
                      Utility
                      shall observe all established safety rules and procedures for
                      the site.
                      Each Utility, through its representatives, employees or agents
                      duly
                      authorized in writing for such purposes, shall be permitted
                      at reasonable
                      intervals and during usual business hours to examine and make
                      copies of
                      any and all data and interpretations thereof, including but
                      not limited to
                      cores, samples, logs and surveys concerning operations conducted
                      hereunder
                      at said Utility’s sole cost. Coordinator/Utility shall furnish drafts of
                      all reports (including, but not limited to plans and proposals)
                      to the
                      other Utility and all the Utilities shall have the right to
                      make comments
                      prior to the preparation of the final report or any report
                      submitted to
                      the government. Coordinator/Utility shall furnish an accurate
                      monthly
                      report to each Utility’s representative and alternate representative on
                      the Management Committee showing expenditures at the site.
                      Coordinator/Utility shall also furnish to any Utility any additional
                      information pertaining to operations at the site when a special
                      request
                      therefor is made; provided, however, that the cost of gathering
                      and
                      furnishing any additional information not ordinarily furnished
                      by
                      Coordinator/Utility shall be charged to the Utility who requests
                      the
                      information.

                  

          

          
            	 	
                    2.2.6

                  	
                    Coordinator/Utility
                      shall use its best efforts to keep the site free from liens,
                      charges and
                      encumbrances arising out of the operations
                      hereunder.

                  

          

          
            	 	
                    2.2.7

                  	
                    Coordinator/Utility
                      shall promptly pay all costs, expenses and taxes other than
                      corporate
                      income taxes incurred by its operations as Coordinator/Utility
                      hereunder
                      and, with such cooperation of the other Utility as may be necessary
                      or
                      appropriate, take such action as may at any time be necessary
                      to protect
                      the site.

                  

          

          
            	 	
                    2.2.8

                  	
                    With
                      regard to operations for a particular MGP site, Coordinator/Utility
                      shall
                      procure and maintain in force for the Utilities any and all
                      insurance
                      authorized by the Management Committee, without prejudice to
                      each
                      Utility’s right to provide independently for its own additional insurance
                      coverage with respect to its interest in the
                      site.

                  

          

          
            	 	
                    2.2.9

                  	
                    Coordinator/Utility
                      shall keep full and complete records of accounts and of technical
                      operations hereunder and prepare and furnish to the Management
                      Committee
                      and shall furnish, or cause to be furnished, to government
                      agencies (with
                      opportunity for comment and input on drafts by the other Utilities)
                      such
                      reports, statements, data and information as may be required
                      (by law or
                      the Management Committee) from time to time for the operations
                      conducted
                      hereunder, except such reports, statements, data and information
                      to
                      government agencies as the Utilities may respectively and individually
                      be
                      required to prepare and submit.

                  

          

          
            	 	
                    2.2.10

                  	
                    Unless
                      otherwise directed by the Management Committee, notwithstanding
                      prior
                      approval of the program of activities and budget set forth
                      in Section 1.7
                      of this Attachment, Coordinator/Utility shall submit to the
                      other Utility,
                      for its review and comments, all contracts which exceed US$50,000. 
                      The other Utility shall have the right of prior approval of
                      any contract
                      which exceeds US$50,000 or ten percent of the total amount
                      in the approved
                      program of activities and budget set forth in Section 1.7,
                      whichever is
                      less.

                  

          

          
            	 	
                    2.2.11

                  	
                    Notwithstanding
                      Section 2.2.10, no contract containing term provisions which
                      exceed two
                      years shall be executed prior to review and approval by both
                      Utilities.

                  

          

          
            	
                    2.3

                  	
                    Coordinator/Utility
                      shall undertake to carry out each program of activities adopted
                      by the
                      Utilities within the limits of the approved budget therefor.
                      Coordinator/Utility shall submit for approval to the Utilities
                      a copy of
                      Authority for Expenditure (“A.F.E.”), for any expenditure in excess of
                      US$100,000.00, or its equivalent, for the site. Such approval
                      of the
                      A.F.E. shall not be required if the expenditure in question
                      has been
                      included in an approved program of activities and budget.
                      Coordinator/Utility shall not undertake any operations not
                      included in any
                      approved program of activities or make any expenditures in
                      excess of the
                      approved budget and an approved A.F.E., if required, except
                      as
                      follows:

                  

          

          
            	 	
                    2.3.1

                  	
                    If
                      necessary to carry out an approved program of activities for
                      a calendar
                      year, the Coordinator/Utility is hereby authorized to make,
                      during such
                      year, expenditures in excess of the budget adopted therefor,
                      in an amount
                      not to exceed ten percent (10%) of such budget. Any such expenditures
                      in
                      excess of the budget shall be reported promptly in writing
                      to the
                      Utilities by Coordinator/Utility.

                  

          

          
            	 	
                    2.3.2

                  	
                    In
                      case of an emergency, Coordinator/Utility may make such immediate
                      expenditures as it may deem reasonably necessary for the protection
                      of
                      life or property, and such expenditures shall be reported promptly
                      to the
                      Utilities by Coordinator/Utility.

                  

          

          2.4   Any
            and
            all claims and suits by third parties arising out of operations conducted
            hereunder and brought against the Coordinator/Utility or the Utilities,
            or any
            of them and/or any of their officers, directors, shareholders, employees,
            agents
            or representatives (collectively, “Utility Representatives”), shall, to the
            extent not covered by insurance, be compromised and settled or defended
            by
            Coordinator/Utility; provided, however, that if the claim or suit is
            brought
            against the Utility (and/or its Utility Representatives) that is not
            the
            Coordinator/Utility, that Utility shall compromise and settle or defend
            the
            claim or suit in accordance with this Section 2.4. The Utility that  compromises
            and settles or defends a claim or suit pursuant to this Section 2.4 is
            hereinafter called the “Defending Utility.” Defending Utility shall promptly
            seek the advice of the Management Committee and shall comply with any
            decisions
            of said Committee with respect thereto. Each Utility shall have the right
            to
            participate through its own counsel, at its own expense, in the settlement,
            compromise or defense of any claims and suits hereunder; however, all
            expenditures incurred by Defending Utility in prosecuting, defending,
            compromising, settling or paying any such claims or suits as directed
            by
            decisions of the Management Committee shall be borne by the Utilities
            and
            charged as a Shared Cost. Defending Utility shall have authority to settle
            a
            suit for property damage or personal injury, brought against the Defending
            Utility or the Utilities, or any of them or any Utility Representatives,
            without
            the approval of the Management Committee, for an amount not to exceed
            $50,000.

          
            	
                    2.5

                  	
                    Neither
                      Utility nor any Utility Representative shall be liable to the
                      other
                      Utility for any acts done or omitted to be done including negligence,
                      in
                      the performance of operations hereunder including, but not
                      limited to,
                      functions as Coordinator/Utility, provided that such acts or
                      omissions
                      shall not have resulted from the gross negligence or willful
                      misconduct of
                      the Utility or its Utility
                      Representatives.

                  

          

          
            	
                    2.6

                  	
                    Coordinator/Utility
                      will maintain on behalf of the Utilities such offices as may
                      be necessary
                      or appropriate and approved by the Management
                      Committee.

                  

          

          

          OPERATING
            PROGRAMS AND BUDGETS

          
            	
                    3.1

                  	
                    After
                      Coordinator/Utility shall have submitted its proposed program
                      of
                      activities and budget for approval pursuant to Section 1.7
                      hereof, the
                      Management Committee shall, prior to October 20 of each calendar
                      year,
                      consider, agree upon and adopt a program of activities and
                      budget for the
                      next succeeding calendar year. Upon adopting a program of activities
                      and
                      budget as provided herein, the Management Committee shall provisionally
                      consider but not act upon, adopt or agree to, a program of
                      activities and
                      budget for the calendar year next following that for which
                      the program of
                      activities and budget shall have been
                      adopted.

                  

          

          
            	
                    3.2

                  	
                    Each
                      proposed budget shall contain a properly itemized estimate
                      of the cost of
                      the operations provided for in the respective program of activities
                      and of
                      all other expenditures proposed to be made by Coordinator/Utility
                      for each
                      relevant site during the calendar year. Each program of activities
                      and
                      budget adopted shall be subject to review and revision by the
                      Management
                      Committee from time to time; provided, however, that no revision
                      shall be
                      made which would prejudice commitments previously made by the
                      Coordinator/Utility within the limits of an existing approved
                      program of
                      activities and budget.

                  

          

          
            	
                    3.3

                  	
                    As
                      soon as reasonably possible after the adoption of a program
                      of activities
                      and budget, Coordinator/Utility shall deliver or send a copy
                      thereof to
                      each Utility.

                  

          

          

          COSTS,
            EXPENSES, AND DEFAULT

          
            	
                    4.1

                  	
                    All
                      Shared Costs incurred in the conduct of operations under this
                      Agreement
                      shall be borne on an interim basis by the Utilities in proportion
                      to their
                      respective percentages shown in Section 1 of the Interim Cooperative
                      Agreement except as otherwise herein provided. Such costs and
                      expenses
                      shall be determined and settled in accordance with generally
                      accepted
                      accounting principles (“Accounting Principles”) and Coordinator/Utility
                      shall keep its records of costs and expenses in accordance
                      with such
                      Accounting Principles. In the event of conflict between this
                      Agreement and
                      said Accounting Principles the provisions of this Agreement
                      shall
                      control.

                  

          

          
            	
                    4.2

                  	
                    At
                      least thirty (30) days prior to the beginning of each calendar
                      quarter,
                      Coordinator/Utility shall submit to each Utility an estimate
                      of cash
                      expenditures to be made per month of operation during such
                      quarter to
                      carry out the approved program of activities in accordance
                      with the budget
                      approved therefor. Coordinator/Utility may require each Utility
                      to advance
                      its share of estimated expenditures to be made each month in
                      accordance
                      with the terms of the Accounting Principles (such advance not
                      to be more
                      than two weeks prior to the start of the
                      month).

                  

          

          
            	
                    4.3

                  	
                    In
                      the event the other Utility fails to pay any invoice submitted,
                      or cash
                      call made by the Coordinator/Utility, or if the Coordinator/Utility
                      fails
                      to pay its share of costs and expenses hereunder, such non-paying
                      Utility
                      shall be in default. Any non-defaulting Utility shall proportionately
                      contribute to the payment of the share of costs and expenses
                      which the
                      defaulting Utility has failed to pay. Any defaulting Utility
                      shall
                      thereafter owe and be indebted to each non-defaulting Utility
                      for the
                      proportionate contribution made by each such non-defaulting
                      Utility along
                      with interest at the rate set out in Section 7 of the
                      Agreement.

                  

          

          
            	
                    4.4

                  	
                    In
                      addition to the other remedies available to them, each non-defaulting
                      Utility shall have the option (but only after consultation
                      with the
                      defaulting Utility) exercisable by notice in writing within
                      thirty (30)
                      days after the expiration of ninety (90) days after a Utility
                      first goes
                      into default, to bring a request for a final allocation of
                      costs within
                      the meaning of and subject to the limitations of Sections 4,
                      5 and 6 of
                      the Agreement for the site or sites in
                      default.

                  

          

          
            	
                    4.5

                  	
                    The
                      remedies contained in Section 4.1 through 4.4 above against
                      a defaulting
                      or non-defaulting Utility are not exclusive and are without
                      prejudice to
                      any remedies or actions at law or equity that are or may be
                      available to
                      any non-defaulting Utility for the enforcement of its rights
                      and
                      collection of all sums due and owing from any defaulting Utility.
                      The
                      failure to exercise any right or remedy at any time shall not
                      constitute a
                      waiver of such right or remedy or estop the future exercise
                      of such right
                      or remedy with respect to any default or subsequent defaults
                      in the
                      performance by any Utility of its obligations hereunder (including
                      but not
                      limited to the obligation to advance
                      funds).

                  

          

          

          MATERIALS
            AND EQUIPMENT

          
            	
                    5.1

                  	
                    Except
                      as may be specifically provided in this Agreement, all materials
                      and
                      equipment acquired by Coordinator/Utility for operations hereunder
                      shall
                      be owned by the Utilities in undivided shares in their proportion
                      of the
                      Interim Allocation of Costs, or, if determined, the Final Allocation
                      of
                      Costs.

                  

          

          
            	
                    5.2

                  	
                    Except
                      as may be otherwise approved by the Management Committee and
                      subject to
                      the provisions of the Agreement, Coordinator/Utility shall
                      purchase only
                      such materials and equipment as are reasonably required in
                      the conduct of
                      operations provided for in the approved programs of activities
                      or
                      revisions thereof. Coordinator/Utility shall not stockpile
                      materials or
                      equipment for future use without the approval of the Management
                      Committee.

                  

          

          
            	
                    5.3

                  	
                    Subject
                      to the provisions of this Agreement, materials or equipment
                      declared by
                      Coordinator/Utility to be surplus shall be disposed of in such
                      manner as
                      the Management Committee may direct; or if the fair market
                      value of an
                      item does not exceed US$10,000.00, Coordinator/Utility, upon
                      giving to the
                      Utilities twenty (20) days’ written notice of intention so to do, shall
                      dispose of said item in such manner as Coordinator/Utility
                      shall deem
                      appropriate; provided however, that each Utility may, if practicable,
                      separately sell and dispose of its interest in such materials
                      or equipment
                      or may purchase, at the prevailing market price in the area,
                      materials or
                      equipment which Coordinator/Utility has declared to be surplus
                      and which
                      Coordinator/Utility intends to dispose of on the open
                      market.

                  

          

          
            	
                    5.4

                  	
                    Upon
                      termination of this Agreement, Coordinator/Utility shall salvage
                      for the
                      joint account all jointly-owned materials and equipment which
                      can
                      reasonably be salvaged, to be disposed of as provided in Section
                      5.3
                      hereof.

                  

          

          

          FORCE
            MAJEURE

          
            	
                    6.1

                  	
                    The
                      obligations hereunder of each Utility shall be suspended while
                      and to the
                      extent that such Utility is prevented from complying with such
                      obligations
                      by force majeure, including, without limitation, strikes, lockouts,
                      labor
                      and civil disturbances, acts of God, unavoidable accidents,
                      laws, rules,
                      regulations or orders of any government or agent or instrumentality
                      thereof having at any time de facto or de jure control over
                      any of the
                      Utilities, acts of war or conditions arising out of or attributable
                      to
                      war, whether declared or undeclared, shortage of essential
                      equipment,
                      materials or labor, or restrictions thereof or limitations
                      upon the use
                      thereof, delays in transportation or communication, adverse
                      weather
                      conditions or other causes reasonably beyond the control of
                      any Utility
                      claiming force majeure hereunder, whether similar or dissimilar
                      to the
                      causes herein specified. If force majeure should result in
                      suspension of
                      performance of any of the obligations of any utility hereunder,
                      such
                      Utility shall give to the other Utility notice in writing of
                      such
                      suspension of performance as soon as reasonably possible, stating
                      therein
                      the date and extent of such suspension and whether in whole
                      or in part,
                      and specifying in reasonable detail the nature of the force
                      majeure
                      causing such suspension. Any Utility, the performance of whose
                      obligation
                      has been suspended as aforesaid, shall resume performance thereof
                      as soon
                      as reasonably possible after the circumstances preventing such
                      performance
                      as provided above shall have terminated or ceased to have such
                      effect, and
                      shall so notify the other Utility as herein provided. The provisions
                      of
                      this Article shall not suspend the obligation of a Utility
                      to make timely
                      payment of its share of costs and expenses hereunder or to
                      provide access
                      to the site to the other
                      Utility.

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