Document Summary:
Document: 0805E
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Creation Date: 03/30/1994
Modification Date: 03/30/1994
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1993, or
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-15420
IWC RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 35-1668886
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1220 Waterway Boulevard, Indianapolis, Indiana 46202
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (317) 639-1501
NONE
Securities registered pursuant to Section 12(b) of the Act
Common Stock
Title of Class
Securities registered pursuant to Section 12(g) of the Act
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days: Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or in any amendment to
this Form 10-K. (X)
$145,127,631
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of January 31, 1994
6,835,593
Indicate the number of shares of common stock outstanding March 1, 1994
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into
this annual report on Form 10-K:
PARTS OF FORM 10-K INTO WHICH
IDENTITY OF DOCUMENT DOCUMENT IS INCORPORATED
Annual Report to Shareholders of Registrant
for the Year Ended December 31, 1993 Parts I and II
Definitive Proxy Statement to be
filed for the 1994 Annual Meeting
of Shareholders of Registrant Part III
0805s
IWC RESOURCES CORPORATION
INDIANAPOLIS, INDIANA
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
December 31, 1993
PART I
Item 1. BUSINESS
PRODUCTS AND SERVICES
IWC Resources Corporation (Resources or, together with
its subsidiaries, the Company) is a holding company
which owns and operates seven subsidiaries, including
three waterworks systems which supply water for
residential, commercial, and industrial uses and for
fire protection service in Indianapolis, Indiana and
surrounding areas. The territory served by the three
utilities covers an area of approximately 185 square
miles and includes areas in Marion, Hancock, Hamilton,
Hendricks, and Boone counties.
At year end, Indianapolis Water Company (IWC) was
providing service to 219,600 customers. Harbour Water
Corporation (Harbour), in the Morse Reservoir area of
Hamilton County, was serving 2,309 customers.
Zionsville Water Corporation (Zionsville), located
northwest of Indianapolis, was serving 2,233 customers.
In addition to the three water utilities, Resources has
four other wholly owned subsidiaries, IWC Services,
Inc., Utility Data Corporation, Waterway Holdings,
Inc., and SM&P Conduit Co., Inc. IWC Services, Inc.
offers water-related services to contractors and other
water and wastewater utilities. Utility Data
Corporation provides customer billing, customer
relations, and data processing services to the
Company's water utilities, the city of Indianapolis
sewer operations, and to several other unaffiliated
utilities. The Company, principally through Waterway
Holdings, Inc., owns approximately 360 acres of real
estate located primarily in the Geist Reservoir area
that it intends to sell or develop in the future. SM&P
Conduit Co., Inc., which was acquired in June 1993,
provides underground facility locating services for
utility companies including electric, telephone, gas,
cable television, water and sewer utilities.
In November 1993, a subsidiary of the Company became
majority partner in White River Environmental
Partnership (Partnership). In December 1993, the
Partnership was awarded a five-year contract by the
city of Indianapolis to manage and operate its two
Advanced Wastewater Treatment plants commencing
January 30, 1994. At December 31, 1993, this
Partnership was still in the development stage and had
no significant assets.
The Company's majority-owned subsidiary, L&K Noe
Pin-Point Boring, Inc., which provided directional
boring services, was liquidated in 1993.
The Company continues to explore the possibility of
involving itself in other water utilities and
utility-related activities through the acquisition or
formation of additional subsidiaries. However, the
Company does not intend to enter into any business that
would impair the Company's primary commitment to
maintain and develop its water utilities to meet the
current and future needs of their customers.
INDUSTRY SEGMENT FINANCIAL INFORMATION
The Company's operations include two business segments:
regulated water utilities and unregulated
utility-related services. The water utilities segment
includes the operations of the Company's three water
utility subsidiaries. The utility-related services
segment provides utility line locating services, data
processing and billing and payment processing, and
other utility-related services to both unaffiliated
utilities and to the Company's water utilities. The
discussion of segment information, including selected
financial data included on pages 31 through 32 of the
1993 Annual Report under "Segment Information", is
incorporated herein by reference.
SECURITIES AND RATE REGULATION
The utility subsidiaries of the Company are subject to
regulation by the Indiana Utility Regulatory Commission
(Commission) which has jurisdiction over rates,
standards of service, accounting procedures, issuance
of securities and related matters. The Commission
consists of five Commissioners, appointed by the
Governor of Indiana from a list of persons selected by
a 7-member nominating committee whose members are:
appointed by the Governor (3); and the majority (2) and
minority (2) leaders of the Indiana House and Senate.
Decisions of the Commission are appealable directly to
the Indiana Court of Appeals.
Securities. The issuance of securities by
Resources is not subject to approval by the
Commission. The issuance of securities by, and changes
in the equity capital of, the Company's utility
subsidiaries, including IWC, must be approved.
Water Rates. Rates charged by the Company for
water service are approved by the Commission. It is
the Company's policy to seek rate relief when necessary
to maintain its service and financial soundness. The
Company is not permitted to submit petitions for
general rate relief more frequently than every fifteen
months and the Commission is not required to act upon
petitions within any particular time period.
Rate Case. On May 17, 1993, Indianapolis Water
Company and Zionsville Water Corporation, both wholly
owned subsidiaries of the Company, filed a petition
with the Commission for approval of a merger of the two
companies and a new schedule of rates and charges
applicable to their interconnected systems. The
increase in combined revenues sought by the companies
is approximately $8.9 million, or 14%. This request
for new rates includes the increased costs associated
with adoption of accrual accounting for postretirement
benefits other than pensions. On November 10, 1993,
the Utility Consumer Counselor, representing
ratepayers, prefiled its testimony and exhibits in the
case, the effect of which, if adopted by the
Commission, would result in a decrease in current rates
of approximately $4.6 million, or 7.2%. Hearings
before the Commission were concluded in December 1993,
and the Company anticipates a final order in the second
quarter of 1994.
COMPETITIVE CONDITIONS
The Company conducts its water utility operations,
subject to regulation by the Commission, under
indeterminate permit and related franchise rights, all
of which may be revoked for cause. Under such permit
and franchise rights, the Company may lay, maintain and
operate its mains and conduits in public streets and
ways throughout the area which it serves. Although the
permit and franchise rights granted to the Company are
not exclusive, other than private wells, there are
presently no other significant competitors operating
within most of the Company's service area, and the
Company does not anticipate that any significant
general competition will develop within the area. As
the Indianapolis metropolitan area has expanded to
include surrounding communities or previously rural
areas, the Company has faced competition for new
customers from town or rural water utilities.
The continuing regulation of the Commission covers,
among other things, matters relating to rates, service,
acquisition of properties, accounting practices, and
the issuance of securities by IWC, Harbour or
Zionsville. The Company does not pay a franchise tax
and is not required to renew its franchise rights
periodically.
The Company's unregulated utility-related services are
currently provided in eight states. Data processing
and billing and payment processing services are
provided to the city of Indianapolis, the Company's
water utilities, and to other unaffiliated utilities
located in the state of Indiana. Underground facility
locating services are provided in the states of
Indiana, Ilinois, Missouri, Ohio, Texas, Wisconsin,
Arkansas and Minnesota. Services provided by this
segment are subject to competitive conditions and are
generally contracted for a period of three to five
years.
RECENT AND PROPOSED CHANGES IN FACILITIES
During the year ended December 31, 1993, the Company
added $18,988,000 (including $5,021,000 from the
acquisition of SM&P) to utility plant and other
property, including 58 miles of new mains and 515 fire
hydrants.
During the past five years, additions to utility plant
and other property have averaged $22,694,000 annually.
The Company plans capital expenditures of approximately
$125,000,000 during the five-year period 1994-1998
primarily for further extensions and improvements to
the Company's utility distribution systems and further
additions and improvements to its treatment, pumping
and storage facilities. In 1993, the Company installed
an additional filter at its Harding Station facility,
on the south side of its service area, increasing the
facility's treatment capacity to 5.5 MGD, at an
approximate cost of $415,000. Construction of an
additional well at Harbour was started in 1993 to
increase the reliable supply to the existing filter
plant, at an approximate cost of $40,000. For possible
capital expenditures relating to environmental matters,
which are not included above, see "Environmental
Matters."
CAPACITY OF FACILITIES AND SOURCES OF WATER SUPPLY
The combined maximum daily capacity of the Company's
treatment plants, together with the maximum daily
capacity of its two primary well fields, is 219 million
gallons per day (MGD). During 1993, the average
consumption was 118 MGD and the maximum consumption was
154 MGD. See "Operating Information by Industry
Segment."
The principal sources of IWC's present water supply are
(a) the White River, which flows through Indianapolis
from north to south and is supplemented by Morse
Reservoir on a tributary, Cicero Creek, (b) Fall Creek,
which flows from the northeast and is supplemented by
Geist Reservoir, and (c) the city of Indianapolis'
Eagle Creek Reservoir, located on Eagle Creek in
northwest Marion County, from which water is purchased
under a long-term contract. See "Properties-Source of
Water Supply."
The three large surface reservoirs are essential to
providing an adequate supply during dry periods. Two
are used to supplement low stream flows in the White
River and Fall Creek, respectively, and water is drawn
directly from the third. The reservoirs are rated at a
dependable capacity designed to maintain an adequate
supply during a repetition of the worst two-year
drought ever recorded in the Indianapolis area.
The theoretical dependable supply impounded by the
three combined reservoirs represents about 65 percent
of the total dependable supply available today with the
balance coming from natural stream flow and wells.
Wells constitute the source of supply for Harbour. The
Zionsville system is connected to IWC's system.
In 1993, the Company completed its aquifer protection
plan for the south well field in southwest Marion
County. This plan will guide the Company's development
of its newest major source of supply (40 to 50 MGD),
and result in a land use plan to protect the aquifer
system from potential contamination sources.
SEASONAL NATURE OF BUSINESS
Typically, the seasonal nature of the Company's
business results in a higher proportion of operating
revenues being realized in the second and third
quarters of the year than the first and fourth quarters
of the year.
ENVIRONMENTAL MATTERS
The Company's utility operations are subject to
pollution control and water quality control
regulations, including those issued by the
Environmental Protection Agency (EPA), the Indiana
Department of Environmental Management (IDEM), the
Indiana Water Pollution Control Board and the Indiana
Department of Natural Resources. Under the Federal
Clean Water Act and Indiana's regulations, the Company
must obtain National Pollutant Discharge Elimination
System (NPDES) permits for discharges from its White
River, White River North, Fall Creek, and Thomas W.
Moses treatment stations.
The Company's current NPDES permits were to expire
June 30, 1989, for White River and Fall Creek stations
and December 31, 1990, for Thomas W. Moses treatment
station. Applications for renewal of the permits have
been filed with, but have not been acted upon by, IDEM
(these permits continue in effect pending review of the
applications). The Company received an NPDES permit
for its White River North Station on April 1, 1991, and
it has complied with the reporting requirements for the
initial 12-month period of the permit. IDEM has
authority to reopen this permit and it could propose in
some or all of these permits additional limitations
that could be difficult and expensive. Accordingly,
the full impact of such restrictions cannot be assessed
with certainty at this time. The Company anticipates,
however, that the capital costs and expense of
compliance with any such permits are likely to be
significant.
Under the federal Safe Drinking Water Act (SDWA), the
Company is subject to regulation by EPA of the quality
of water it sells and treatment techniques it uses to
make the water potable. EPA promulgates nationally
applicable maximum contaminants levels (MCLs) for
"contaminants" found in drinking water. Management
believes that the Company is currently in compliance
with all MCLs promulgated to date. EPA has continuing
authority, however, to issue additional regulations
under the SDWA, and Congress amended the SDWA in July
1986 to require EPA, within a three-year period, to
promulgate MCLs for over 80 chemicals not then
regulated. EPA has been unable to meet the three-year
deadline, but has promulgated MCLs for many of these
chemicals and has proposed additional MCLs.
Management of the Company believes that it will be able
to comply with the promulgated MCLs and those now
proposed without any change in treatment technique, but
anticipates that in the future, because of EPA
regulations, the Company may have to change its method
of treating drinking water to include ozonation and/or
granular activated carbon (GAC). In either case, the
capital costs could be significant (currently estimated
at $37,000,000 for ozonation and $90,000,000 for GAC),
as would be the Company's increase in annual operating
costs (currently estimated at $1,600,000 for ozonation
and $4,300,000 for GAC). Actual costs could exceed
these estimates. The Company would expect to recover
such costs through its water rates; however, such
recovery may not necessarily be timely.
Under a 1991 law enacted by the Indiana Legislature, a
water utility, including the utility subsidiaries of
the Company, may petition the Indiana Utility
Regulatory Commission (Commission) for prior approval
of its plans and estimated expenditures required to
comply with provisions of, and regulations under, the
Federal Clean Water Act and SDWA. Upon obtaining such
approval, the utility may include, to the extent of its
estimated costs as approved by the Commission, such
costs in its rate base for ratemaking purposes and
recover its costs of developing and implementing the
approved plans if statutory standards are met. The
capital costs for such new systems, equipment or
facilities or modifications of existing facilities may
be included in the utility's rate base upon completion
of construction of the project or any part thereof.
While use of this statute is voluntary on the part of a
utility, if utilized, it should allow utilities a
greater degree of confidence in recovering major costs
incurred to comply with environmental related laws on a
timely basis.
EMPLOYEES
At December 31, 1993, the Company had 904 employees
including the addition of 499 employees as a result of
the acquisition of SM&P. Approximately one-half of the
Company's water utility employees are members of the
International Brotherhood of Firemen and Oilers Local
131, AFL-CIO (Union).
The three-year contract between IWC and the Union is
due to expire December 31, 1994.
OPERATING INFORMATION BY INDUSTRY SEGMENT
Operating information by industry segment for each of the past five years
follows:
Operating Revenues-Industry Segment (in thousands)
1993 1992 1991 1990 1989
Water Utilities:
Residential $41,513 40,633 38,901 34,231 31,924
Commercial and
Industrial 18,032 16,696 15,393 14,225 13,589
Public Fire Protection 945 2,157 1,953 1,743 1,718
Other 3,849 3,966 3,683 3,43l 2,984
Total Water Utilities 64,339 63,452 59,930 53,630 50,215
Utility-Related Services(1) 17,982 - - - -
Total Operating Revenues $82,321 63,452 59,930 53,630 50,215
====== ====== ====== ====== ======
(1) Reporting by segment was adopted in 1993 as a result of the
acquisition of SM&P. Utility-related services for prior periods are
not material and, accordingly, have not been reclassified to conform
with the 1993 presentation.
Operating Statistics-Water Utilities
1993 1992 1991 1990 1989
Water Sold (million gallons)
Residential 20,232 20,664 22,493 20,168 19,645
Commercial and
Industrial 15,337 14,660 15,312 14,835 14,856
Public Fire Protection 39 29 32 46 50
Other 717 808 912 820 715
Total Water Sold 36,325 36,161 38,749 35,869 35,266
====== ====== ====== ====== ======
Daily Pumpage
(million gallons)
Maximum 154 161 202 177 181
Minimum 93 90 91 95 92
Average 118 115 124 117 116
Utility Customers (end of
year, in thousands) 224 219 214 210 204
Fire Hydrants (end of year) 24,730 24,215 23,465 23,124 22,229
Miles of Mains (end of year) 2,817 2,759 2,673 2,624 2,533
Item 2. PROPERTIES
GENERAL DESCRIPTION
The Company's water utilities' properties consist of
land, easements, rights (including water rights),
buildings, reservoirs, canal, wells, supply lines,
purification pla3ts, pumping stations, transmission and
distribution pipes, mains and conduits, meters and
other facilities used for the collection, purification,
and storage of water, and the distribution of water to
its customers. The water systems extend from well
fields and raw water reservoirs on Cicero Creek and
Fall Creek, north and northeast of Indianapolis, and
from the intake structure in Indianapolis' Eagle Creek
Reservoir, northwest of Indianapolis, to the service
connections of the ultimate consumers. The principal
properties are all located in or near Indianapolis and,
except for Eagle Creek Reservoir, which is owned by the
city of Indianapolis, are all owned by the Company, in
fee, with the exception of its easements.
Substantially all its utility property rights and
interests, both tangible and intangible, are subject to
the lien securing first mortgage bonds.
The Company's utility-related properties consist of
data processing equipment used to provide data
processing and billing and payment processing to both
unaffiliated utilities and to the Company's water
utilities, and land, building, vehicles and locating
equipment used to provide line locating services to
unaffiliated utilities. The Company also owns parcels
of land which it holds for possible sale or
development. A general description of the principal
properties is set forth in the following paragraphs.
SOURCE OF WATER SUPPLY
WHITE RIVER: White River, supplemented by Morse
Reservoir, furnished 70% of IWC's water supply during
1993, of which 64% was provided by IWC's White River
plant and 6% was provided by IWC's new White River
North plant (placed in service in 1991). The drainage
area of the White River above the intake of IWC's canal
is approximately 1,200 square miles. In 1956, IWC
completed Morse Reservoir on Cicero Creek, a tributary
of the White River. It is located on approximately
1,692 acres of land owned by IWC of which about 1,500
acres are inundated. The storage capacity of this
reservoir is approximately 6.9 billion gallons. With
the reservoir supplementing the natural flow, it is
estimated by IWC that the combined dependable flow in
the White River can be maintained at a volume
sufficient to produce 88 MGD. IWC owns and maintains a
dam across White River at Broad Ripple which serves to
divert the flow into the canal. Water diverted at the
Broad Ripple dam flows by gravity in an open canal to
the White River treatment and pumping station. IWC's
White River North plant has its intake directly on the
White River.
FALL CREEK: Fall Creek, supplemented by Geist
Reservoir, provided 20% of IWC's water supply in 1993.
The area of the watershed drained by Fall Creek
upstream from the Fall Creek Station intake is
approximately 300 square miles. In 1943, IWC completed
the Geist Reservoir on Fall Creek. The reservoir is
situated on about 1,983 acres of land owned by IWC, of
which 1,890 acres are inundated, and has a storage
capacity of approximately 6.1 billion gallons. With
the reservoir supplementing the natural flow in Fall
Creek, it is estimated by IWC that the combined
dependable flow in Fall Creek can be maintained at a
volume sufficient to provide 25 MGD. At the Fall Creek
Station, IWC owns and maintains a concrete dam which
diverts the flow of the creek into the station intake.
EAGLE CREEK RESERVOIR: Raw water purchased from Eagle
Creek Reservoir, a multipurpose reservoir owned and
operated by the city of Indianapolis, provided 8% of
IWC's water supply in 1993. On October 18, 1971, IWC
and the City signed a 50-year contract, with an option
for an additional 25 years, providing for the
withdrawal, subject to certain restrictions, of up to
12.4 MGD on an annual average basis. IWC owns and
maintains a raw water intake structure, pumping
station, and pipeline within the reservoir property,
which delivers the allotted supply to its Thomas W.
Moses Treatment Plant.
WELLS: IWC owns 37 wells, of which 31 are
supplementary or auxiliary supply and six are primary
sources of supply. The Company owns a total of 823
acres of well station land, of which 777 acres are
located in Marion County and 46 acres are located in
Johnson County. It is estimated that the aggregate
dependable annual average yield under a repetition of
the most severe two-year drought on record is
approximately 14 MGD from the wells. In 1993, wells
provided approximately 2% of IWC's water supply
utilized.
The source of supply for Harbour consists of five wells
having a total rated capacity and actual pumping
capacity of 3.8 MGD. Zionsville purchases its entire
treated water supply from IWC.
PURIFICATION
Treatment of surface water in IWC's system involves
coagulation and flocculation, after which the water
flows through the sedimentation basins and then to
gravity-type rapid filters. IWC has four primary
surface water filtration and purification plants--two
for the White River supply sources, one for the Fall
Creek supply source, and one for the Eagle Creek supply
source--equipped with rapid filters having a maximum
operating capacity aggregating 180 MGD and two ground
water treatment plants totaling 9 MGD.
The water treatment plant for Harbour Water Corporation
consists of four packaged filter iron removal units
with a combined rated capacity of 3.5 MGD, including
the new east plant which increased rated capacity by
1.5 MGD.
PUMPING
IWC owns seven principal pumping stations and eleven
booster stations. The principal pumping stations have
a total of 37 primary distribution pumps and have a
maximum capacity of 311 MGD. The booster stations have
39 pumps, all of which are electrically driven with a
maximum capacity of 99 MGD. IWC has not to date
experienced, nor does it anticipate, any shortage of
electrical energy to run its pumps.
The high service pumping facilities for Harbour consist
of six electric motor-driven pumps housed in the same
buildings as the treatment plants and have a maximum
capacity of approximately 3.5 MGD.
FILTERED WATER STORAGE
The Company's aggregate storage capacity for finished
water is approximately 55 million gallons. IWC owns
six filtered-water underground reservoirs at its five
principal pumping stations which have an aggregate
storage capacity of 39 million gallons. The filtered
water in storage has been treated and is available to
be pumped into the distribution system. Also, there
are three elevated storage tanks with an aggregate
storage capacity of over four million gallons and two
ground storage tanks with an aggregate storage capacity
of 12 million gallons.
The filtered water in the two ground storage tanks has
been pumped by the principal pumping stations and is
available to the respective booster stations to be
pumped into the distribution system served by these
stations. The three outlying elevated storage tanks
"ride on" the distribution system and provide water by
gravity flow.
There is one ground storage tank for Harbour located
adjacent to the treatment plant with a storage capacity
of 50,000 gallons. There is also an elevated storage
tank in the distribution system which "rides on" the
system and has a capacity of 250,000 gallons.
Zionsville has one elevated storage tank located in the
town of Zionsville with a storage capacity of 400,000
gallons.
TRANSMISSION AND DISTRIBUTION
The Company's utility transmission and distribution
systems are composed of 2,817 miles of mains, most of
which are cast iron and ductile iron. During the past
ten years, an aggregate of 654 miles of mains, or
approximately 23% of the total, were added to the
systems. In general, the mains are located in city
streets, other public ways and occasionally in
easements. The supply mains are located partly in city
streets and partly in rights-of-way and land owned by
the Company. The Company furnishes public fire
protection service through hydrants owned by the
Company and located generally within the limits of
street rights-of-way.
UTILITY-RELATED PROPERTIES
The Company's data processing equipment is located at
IWC's general office in Indianapolis, Indiana. The
Company also owns land and a building in Noblesville,
Indiana which is the headquarters for its line locating
services, and leases (operating leases) fourteen
buildings located in eight states which are used as
district offices. Vehicles and locating equipment used
in these operations are located at the various
operating offices.
REAL ESTATE INTERESTS
At December 31, 1993, the Company owned approximately
360 acres of undeveloped non-utility land. Most of
the holdings consist of land located generally north
and west of Geist Reservoir in Hamilton County, and
several additional parcels in Marion County. The
Company continues to explore the possible sale or
development of this land.
OFFICE BUILDING
The Company's main office building and service center
was constructed in 1957 on 20 acres of land located
approximately two miles from the center of the main
business district of Indianapolis. The building houses
the general and local commercial offices of the Company
and provides a garage and building for storage of
materials and vehicles, as well as shop space for
repairs to automotive and other equipment. To provide
for additional space and enhancement of customer
service, the Company, in 1993, began construction of an
office building adjacent to its existing building which
will house certain general office employees. The new
building is scheduled for completion in May 1994 at an
approximate cost of $2,000,000.
Item 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other
than ordinary routine litigation incidental to the
Company's business, to which the Company is a party or
of which any of their property is the subject, except
for the rate case described on page 3 under SECURITIES
AND RATE REGULATION - Rate Case.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of
1993 to a vote of security holders of the Registrant,
through the solicitation of proxies or otherwise.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information regarding the trading market for the
Company's Common Shares, the range of selling prices
for each quarterly period during the past two years
with respect to the Common Shares, the approximate
number of holders of shares of Common Shares as of
December 31, 1993, the frequency and amount of
dividends paid during the past two years with respect
to the Common Shares and other matters is included
under the captions "Stock Statistics" and "Distribution
of Shareholders" on page 39 of the 1993 Annual Report,
which information is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
The data included on page 34 of the 1993 Annual Report
under "Selected Financial Data" is incorporated herein
by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The discussion entitled "Management's Discussion and
Analysis of Financial Condition and Results of
Operations" included in the 1993 Annual Report on pages
35 through 38 is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements included in the
1993 Annual Report and listed in Item 14.1. of this
Report are incorporated herein by reference from the
1993 Annual Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item regarding
nominees for Director of the Company is incorporated
herein by reference to the Company's definitive proxy
statement for its 1994 annual meeting of common
stockholders filed with the Commission pursuant to
Regulation 14A (the "1994 Proxy Statement").
The following table sets forth the current officers of
IWC Resources Corporation and its principal subsidiary,
Indianapolis Water Company, their ages, and (as
presented below in parentheses) their positions during
the past five years. There is no family relationship
between any of the officers of the Company. All
officers are elected for a term of one year.
IWC RESOURCES CORPORATION
Name Age Position
James T. Morris 50 Chairman of the Board,
Chief Executive Officer and
President (President and
Chief Operating Officer)
J. A. Rosenfeld 62 Executive Vice President
(Senior Vice President
and Treasurer; Financial
Consultant)
Kenneth N. Giffin 50 Senior Vice President-
Governmental Relations and
Real Estate
John M. Davis 42 Vice President, General
Counsel and Secretary
Alan R. Kimbell 62 Vice President-Marketing
James P. Lathrop 48 Controller
Jane G. Ryan 53 Assistant Secretary
INDIANAPOLIS WATER COMPANY
James T. Morris 50 Chairman of the Board and Chief
Executive Officer (President
and Chief Operating Officer)
Joseph R. Broyles 51 President and Chief Operating
Officer (Executive Vice President;
Senior Vice President-Operations)
Paul J. Doane 71 Executive Vice President
(Senior Vice President-Operations;
Vice President-Operations)
J. A. Rosenfeld 62 Executive Vice President (Senior
Vice President and Treasurer)
Kenneth N. Giffin 50 Senior Vice President-Governmental
Relations (Senior Vice President-
Human Resources and Corporate
Relations; Vice President-Human
Resources and Corporate Relations)
John M. Davis 42 Vice President, General Counsel
and Secretary
Robert F. Miller 49 Vice President-Engineering
(Principal Projects Engineer)
David S. Probst 55 Vice President-Business Development
(Vice President-Engineering
Services; Vice President-Customer
Service)
Tim K. Bumgardner 45 Vice President-Operations
(Vice President-Production;
Director of Purification)
Ronald H. Carrell 57 Vice President - Customer Service
(Director of Customer Services;
Director of Corporate
Communications)
Martha L. Wharton 64 Vice President-Customer Relations
(Assistant Secretary)
L. M. Williams 50 Vice President - Human Resources
(Director of Human Resources and
Industrial Relations)
James P. Lathrop 48 Assistant Treasurer
Jane G. Ryan 53 Assistant Secretary
(Executive Secretary)
All of the above have been employed by the Company for more
than five years except for J. A. Rosenfeld and John M. Davis.
Mr. Rosenfeld has been employed since January, 1992 and was
previously employed by Melvin Simon & Associates. Mr. Davis has
been employed since June, 1993 and was previously employed by
KPMG Peat Marwick.
Item 11. EXECUTIVE COMPENSATION
The information required by this Item regarding
compensation of the Company's officers and directors is
incorporated herein by reference to the Company's 1994
Proxy Statement. The Compensation Committee Report to
Shareholders and Comparative Stock Performance sections
of the Company's 1994 Proxy Statement shall not be
deemed "filed" herewith.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) The Company knows of no person who is the
beneficial owner of more than 5% of the Company's
Common Stock. Information required by this item
applicable to the Company's Redeemable Preferred Stock
follows:
Title Name and Address Amount and Nature Percent
of of of Beneficial of
Class Beneficial Owner Ownership Class
Redeemable Patrick J. Baker 17,204 shares 33-1/3%
Preferred 1913 W. 116th St.
Stock Carmel, IN 46032
Daniel S. Baker (1) 17,204 shares 33-1/3%
7285 Waterview Pt.
Noblesville, IN 46060
Diana L. Sosbey 17,204 shares 33-1/3%
8596 Twin Pt. Cir.
Indianapolis, IN 46236
(1) Mr. Daniel S. Baker is President of SM&P Conduit Co., Inc.,
a wholly owned subsidiary of the Company.
(b) The information required by this Item regarding
the number of shares of the Company's Common Stock,
beneficially owned by the nominees for Director and the
officers of the Company is incorporated herein by
reference to the Company's 1994 Proxy Statement.
(c) The Company knows of no arrangements the operation
of which may at a subsequent date result in a change of
control of the Company.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item regarding certain
relationships and related transactions is incorporated
herein by reference to the Company's 1994 Proxy
Statement.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
The documents listed below are filed as a part of this
report except as otherwise indicated:
1. Financial Statements. The following described
consolidated financial statements found on the
pages of the 1993 Annual Report indicated below
are incorporated into Item 8 of this Report by
reference.
Description of Financial Location in 1993
Statement Item Annual Report
Independent Auditors' Report Page 33
Consolidated Balance Sheets,
December 31, 1993 and 1992 Pages 18 and 19
Consolidated Statements of
Shareholders' Equity, Years
ended December 31, 1993,
1992 and 1991 Page 20
Consolidated Statements of
Earnings, Years ended
December 31, 1993,
1992 and 1991 Page 21
Consolidated Statements of
Cash Flows, Years ended
December 31, 1993,
1992 and 1991 Page 22
Notes to Consolidated Financial
Statements, Years ended Pages 23
December 31, 1993, 1992 and 1991 through 33
2. Financial Statement Schedules.
(a) Independent Auditors' Report
on Financial Statement Schedules
(b) Supplemental Schedules for the
Years ended December 31, 1993, 1992 and 1991
The supplementary schedules of short-term
borrowings and supplementary income statement
information required by Rule 12-10 and Rule 12-11,
respectively, of Regulation S-X for 1993, 1992 and
1991 are as follows:
1. Schedule IX Short-term Borrowings
2. Schedule X Supplementary Income Statement
Information
(c) Other Financial Statement Schedules
The schedules of property, plant and equipment and
accumulated depreciation as required by Rule 12-06
are omitted for 1993, 1992 and 1991 because
neither total additions nor total retirements
during these years exceeded 10% of the ending
balances and the other information required by
this rule is set forth in the consolidated
financial statements or notes thereto. All other
schedules for which provision is made in
Regulation S-X have been omitted for the reason
that they are not required, are not applicable, or
the required information is set forth in the
consolidated financial statements or notes
thereto.
Independent Auditors' Report
The Board of Directors and Shareholders
IWC Resources Corporation:
Under date of January 26, 1994, we reported on the consolidated
balance sheets of IWC Resources Corporation and subsidiaries as
of December 31, 1993 and 1992, and the related consolidated
statements of earnings, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31,
1993, as contained in the 1993 annual report to shareholders.
These consolidated financial statements and our report thereon
are incorporated by reference in the annual report on Form 10-K
for the year 1993. In connection with our audits of the
aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedules
as listed in Item 14 of the Form 10-K. These financial
statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these financial statement schedules based on our audits.
In our opinion, such schedules, when considered in relation to
the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set
forth therein.
As discussed in the notes to the consolidated financial
statements, the Company changed its method of revenue
recognition in 1991 and, effective January 1, 1993, the Company
changed its method of accounting for income taxes and
postretirement benefits other than pensions.
KPMG PEAT MARWICK
Indianapolis, Indiana
January 26, 1994
Schedule IX
IWC Resources Corporation
Short-term Borrowings
Years Ended December 31, 1993, 1992 and 1991
(in thousands)
Description 1993 1992 1991
Short-term Bank Borrowings:
Balance at end of year $21,779 5,071 16,618
====== ====== ======
Weighted average interest rate 3.70% 3.12% 6.5%
====== ====== ======
Maximum amount outstanding
during year (1) $23,673 18,873 16,618
====== ====== ======
Average amount outstanding
during year (1) $15,257 15,735 10,787
====== ====== ======
Weighted average interest rate
during the year (1) 3.21% 5.02% 7.42%
====== ====== ======
(1) Calculated as determined using end of month amounts or rates during
the year.
Schedule X
IWC Resources Corporation
Supplementary Income Statement Information
Years Ended December 31, 1993, 1992 and 1991
(in thousands)
Account Charges to Expense
Description 1993 1992 1991
Maintenance and repairs $3,768 $2,994 $3,176
===== ===== =====
The other items required to be disclosed in this schedule,
depreciation and property taxes, are omitted because they are
included in the consolidated financial statements or notes thereto.
OTHER MATTERS
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the
Securities Act of 1933, the undersigned registrant hereby
undertakes as follows, which undertaking shall be incorporated
by reference into registrant's Registration Statement on Form
S-8 No. 33-33021 (filed August 17, 1989):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized.
IWC RESOURCES CORPORATION
Registrant
Date March 25, 1994 J. A. Rosenfeld, Executive
Vice President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Date March 25, 1994 James T. Morris, Chairman of the
Board, Chief Executive Officer
and President and Director
Date March 25, 1994 Robert B. McConnell, Chairman of
the Executive Committee
Date March 25, 1994 J. A. Rosenfeld, Executive Vice
President (Principal Financial
Officer)
Date March 25, 1994 James P. Lathrop, Controller
(Principal Accounting Officer)
Date March 25, 1994 Joseph R. Broyles, President
and Chief Operating Officer,
Indianapolis Water Company
and Director
Date March 25, 1994 Joseph D. Barnette, Jr., Director
Date March 25, 1994 Thomas W. Binford, Director
Date March 25, 1994 Murvin S. Enders, Director
Date March 25, 1994 Otto N. Frenzel III, Director
Date March 25, 1994 Elizabeth Grube, Director
Date March 25, 1994 J. B. King, Director
Date March 25, 1994 J. George Mikelsons, Director
Date March 25, 1994 Thomas M. Miller, Director
Date March 25, 1994 Jack E. Reich, Director
Date March 25, 1994 Fred E. Schlegel, Director
3. Exhibits. The following exhibits are filed as part of this
Report:
3-A-1 Restated Articles of Incorporation of
Registrant, as amended to date. The copy of
this exhibit filed as Exhibit 3-A to
Registrant's Registration Statement on Form S-8
effective August 17, 1989 "Registration
No. 33-30221," is incorporated by reference.
3-B Bylaws of Registrant, as amended to date. The
copy of this exhibit filed as Exhibit 3-B to
Registrant's Registration Statement on Form S-8
effective August 17, 1989 "Registration
No. 33-30221," is incorporated by reference.
4.1 Sixteenth Supplemental Indenture dated as of
November 1, 1985, between Fidelity Bank,
National Association, and IWC. The copy of
this exhibit filed as Exhibit 4-A1 to IWC's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1985, is incorporated herein
by reference.
4.2 Ninth Supplemental Indenture dated as of
August 1, 1967. The copy of this exhibit filed
as Exhibit 4-B5 to IWC's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1980, is incorporated herein by
reference.
4.3 Eleventh Supplemental Indenture dated as of
December 1, 1971. The copy of this exhibit
filed as Exhibit 4-B6 to IWC's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1980, is incorporated herein by
reference.
4.4 Seventeenth Supplemental Indenture dated as of
March 1, 1989, between Fidelity Bank, National
Association, and IWC. The copy of this exhibit
filed as Exhibit 4-A9 to Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1988, is incorporated herein by
reference.
4.5 Eighteenth Supplemental Indenture dated as of
March 1, 1989, between Fidelity Bank, National
Association, and IWC. The copy of this exhibit
filed as Exhibit 4-A10 to Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1988, is incorporated herein by
reference.
<PAGE>
4.6 Nineteenth Supplemental Indenture dated as of
June 1, 1989, between Fidelity Bank, National
Association, and IWC. The copy of this exhibit
filed as Exhibit 4-A9 to Registrant's
Registration Statement on Form S-2 effective
December 12, 1991 (Registration No. 33-43939),
is incorporated herein by reference.
4.7 Fourteenth Supplemental Indenture dated as of
January 15, 1978, between the Fidelity Bank
(formerly Fidelity-Philadelphia Trust Company)
and IWC, including as Appendix A the
"Restatement of Principal Indenture of
Indianapolis Water Company," which, except as
otherwise specified, restates the granting
clauses and all other sections contained in the
First Mortgage dated July 1, 1936, between
Fidelity-Philadelphia Trust Company and
Registrant as amended by the Fourth, Fifth,
Sixth, Eighth, Twelfth and Fourteenth
Supplemental Indentures. A copy of this
exhibit filed as Exhibit 4-B1 to IWC's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1980, is incorporated herein by
reference.
4.8 Twentieth Supplemental Indenture dated as of
December 1, 1992, between Fidelity Bank,
National Association, and IWC. The copy of
this Exhibit filed as Exhibit 4-A9 to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, is
incorporated herein by reference.
4.9 Twenty-First Supplemental Indenture dated as of
December 1, 1992, between Fidelity Bank,
National Association, and IWC. The copy of
this Exhibit filed as Exhibit 4-A10 to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, is
incorporated herein by reference.
4.10 Rights Agreement, dated as of February 9, 1988,
between IWC Resources Corporation and Bank One,
Indianapolis, NA (as Rights Agent), which
includes the Form of Certificate of
Designations of Series A Junior Participating
Preferred Stock as Exhibit A, the Form of Right
Certificate as Exhibit B and the Summary of
Rights to Purchase Preferred Shares as
Exhibit C. The copy of this exhibit filed as
Exhibit 4 to the Registrant's Current Report on
Form 8-K dated February 9, 1988, is
incorporated by reference.
<PAGE>
4.11 Indenture of Trust dated as of March 1, 1989,
between IWC, City of Indianapolis, Indiana, and
Merchants National Bank & Trust Company of
Indianapolis, as Trustee. The copy of this
exhibit filed as Exhibit 10-F to Registrant's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, is incorporated herein
by reference.
4.12 Indenture of Trust dated as of March 1, 1989,
between IWC, Town of Fishers, Indiana, and
Merchants National Bank & Trust Company of
Indianapolis, as Trustee. The copy of this
exhibit filed as Exhibit 10-G to Registrant's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, is incorporated herein
by reference.
4.13 Indenture of Trust dated as of December 1,
1992, between City of Indianapolis, Indiana,
and IWC to National City Bank, Indiana, as
Trustee. The copy of this Exhibit filed as
Exhibit 10-J to Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1992, is incorporated herein by
reference.
4.14 Indenture of Trust, City of Indianapolis,
Indiana, and Indianapolis Water Company to
National City Bank, Indiana, as Trustee, dated
as of April 1, 1993.
4.15 Twenty-Second Supplemental Indenture dated as
of April 1, 1993, between Indianapolis Water
Company and Fidelity Bank, National
Association.
10.1 Agreement dated October 18, 1971, between IWC
and the Department of Public Works of the City
of Indianapolis, Indiana, relating to the
purchase of water at Eagle Creek Reservoir.
The copy of this exhibit filed as Exhibit 5 to
IWC's Statement (No. 2-55201), effective
January 14, 1976, is incorporated herein by
reference.
*10.2 The description of "split dollar" life
insurance policies owned by IWC with respect to
certain officers of Registrant is incorporated
hereby by reference to the Company's 1988 Proxy
Statement.
*10.3 Form of Executive Supplemental Benefits Plan of
IWC. The copy of this exhibit filed on
<PAGE>
Exhibit 10-D to IWC's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1985, is incorporated herein by
reference.
10.4 Loan Agreement dated as of March 1, 1989,
between IWC and the City of Indianapolis,
Indiana. The copy of this exhibit filed as
Exhibit 10-D to Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1988, is incorporated herein by
reference.
10.5 Loan Agreement dated as of March 1, 1989,
between IWC and Town of Fishers, Indiana. The
copy of this exhibit filed as Exhibit 10-E to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988, is
incorporated herein by reference.
10.6 Guaranty Agreement dated as of March 1, 1989,
between Registrant and Merchants National
Bank & Trust Company of Indianapolis re: City
of Indianapolis, Indiana Industrial Development
Bonds. The copy of this exhibit filed as
Exhibit 10-H to Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1988, is incorporated herein by
reference.
10.7 Guaranty Agreement dated as of March 1, 1989,
between Registrant and Merchants National
Bank & Trust Company of Indianapolis re: Town
of Fishers, Indiana Industrial Development
Bonds. The copy of this exhibit filed as
Exhibit 10-I to Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1988, is incorporated herein by
reference.
10.8 Loan Agreement dated as of December 1, 1992,
between IWC and City of Indianapolis, Indiana.
The copy of this exhibit filed as Exhibit 10-K
to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, is
incorporated herein by reference.
10.9 Guaranty Agreement dated as of December 1,
1992, between Resources and National City Bank,
Indiana, as Trustee. The copy of this exhibit
filed as Exhibit 10-L to Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992, is incorporated herein by
reference.
<PAGE>
10.10 Note Agreement dated as of March 1, 1994,
between Registrant and American United Life
Insurance Company.
10.11 Loan Agreement dated as of April 1, 1993,
between Indianapolis Water Company and City of
Indianapolis.
10.12 Guaranty Agreement between Registrant and
National City Bank, Indiana, as Trustee, dated
as of April 1, 1993.
10.13 Agreement for the Operation and Maintenance of
the City of Indianapolis, Indiana, Advanced
Wastewater Treatment Facilities dated as of
December 20, 1993, among the City of
Indianapolis, White River Environmental
Partnership, the Registrant and certain other
parties.
10.14 White River Environmental Partnership Agreement
between IWC Services, Inc., JMM White River
Corporation and LAH White River Corporation,
dated as of August 20, 1993.
10.15 Plan and Agreement of Merger among Registrant,
Resources Acquisition Corp., S. M. & P. Conduit
Co., Inc., and its shareholders dated as of
June 14, 1993.
10.16 Executive Employment Agreement between
Registrant and James T. Morris, dated as of
December 31, 1993 (substantially similar
agreements in favor of J.A. Rosenfeld,
Joseph R. Broyles and Kenneth N. Giffin have
been omitted pursuant to Instruction 2 to
Item 601 of Regulation S-K).
13 Registrant's Annual Report to Stockholders for the year
ended December 31, 1993. This exhibit, except for the
portions thereof that have expressly been incorporated by
reference into this Report, is furnished for the information
of the Commission and shall not be deemed "filed" as part
hereof.
21 Subsidiaries.
23 Consent of Independent Certified Public Accounts.
4. Reports on Form 8-K. No reports on Form 8-K were filed
during the three months ended December 31, 1992.
<PAGE>
_______
* This exhibit relates to executive compensation or benefit
plans.
<PAGE>
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed as part of this Report and not
incorporated by reference from another document:
3A-1 Restated Articles of Incorporation of Registrant,
as amended to date.
4.14 Indenture of Trust, City of Indianapolis, Indiana,
and Indianapolis Water Company to National City
Bank, Indiana, as Trustee, dated as of April 1,
1993.
4.15 Twenty-Second Supplemental Indenture dated as of
April 1, 1993, between Indianapolis Water Company
and Fidelity Bank, National Association.
10.10 Note Agreement dated as of March 1, 1994, between
Registrant and American United Life Insurance Company.
10.11 Loan Agreement dated as of April 1, 1993, between
Indianapolis Water Company and City of Indianapolis.
10.12 Guaranty Agreement between Registrant and National City
Bank, Indiana, as Trustee, dated as of April 1, 1993.
10.13 Agreement for the Operation and Maintenance of the City
of Indianapolis, Indiana, Advanced Wastewater Treatment
Facilities dated as of December 20, 1993, among the
City of Indianapolis, White River Environmental
Partnership, the Registrant and certain other parties.
10.14 White River Environmental Partnership Agreement between
IWC Services, Inc., JMM White River Corporation and LAH
White River Corporation, dated as of August 20, 1993.
10.15 Plan and Agreement of Merger among Registrant,
Resources Acquisition Corp., S. M. & P. Conduit Co.,
Inc., and its shareholders dated as of June 14, 1993.
10.16 Executive Employment Agreement between Registrant and
James T. Morris, dated as of December 31, 1993
(substantially similar agreements in favor of J.A.
Rosenfeld, Joseph R. Broyles and Kenneth N. Giffin have
been omitted pursuant to Instruction 2 to Item 601 of
Regulation S-K).
13 Registrant's Annual Report to Stockholders for the year
ended December 31, 1993. This exhibit, except for the
portions thereof that have expressly been incorporated
by reference into this Report, is furnished for the
information of the Commission and shall not be deemed
"filed" as part hereof.
<PAGE>
21 Subsidiaries.
23 Consent of Independent Certified Public Accounts.
See Item 14 of this Report for a list of other Exhibits that
have been filed as part of this Report through incorporation by
reference from other documents.
<PAGE>
Exhibit A
RESTATED ARTICLES OF INCORPORATION
OF
IWC RESOURCES CORPORATION
IWC Resources Corporation (hereinafter referred to as
the "Corporation"), having duly elected to be governed by
IC 23-1-18 through IC 23-1-54 (except for IC 23-1-18-3,
IC 23-1-21 and IC 23-1-53-3) effective April 1, 1986, and
desiring to amend and restate its Articles of Incorporation
effective April 1, 1986, pursuant to the provisions of the
Indiana Business Corporation Law (hereinafter referred to as
the "Corporation Law"), submits the following Restated Articles
of Incorporation:
ARTICLE I
Name
The name of the Corporation is IWC Resources
Corporation.
ARTICLE II
Purposes and Powers
Section 1. Purposes of the Corporation. The purposes
for which the Corporation is formed are (a) to engage in the
general business of holding the stock, securities or other
obligations of various other corporations or entities, either
in existence or subsequently formed, and to carry on such
activities of every kind and nature as may be allied or
incidental to such general business, and (b) to engage in the
transaction of any or all lawful business for which
corporations may now or hereafter be incorporated under the
Corporation Law.
Section 2. Powers of the Corporation. The Corporation
shall have (a) all powers now or hereafter authorized by or
vested in corporations pursuant to the provisions of the
Corporation Law, (b) all powers now or hereafter vested in
corporations by common law or any other statute or act, and
(c) all powers authorized by or vested in the Corporation by
the provisions of these Restated Articles of Incorporation or
by the provisions of its Bylaws as from time to time in effect.
<PAGE>
ARTICLE III
Terms of Existence
The period during which the Corporation shall continue
is perpetual.
ARTICLE IV
Registered Office and Agent
The street address of the Corporation's registered
office at the time of adoption of these Restated Articles of
Incorporation is 1220 Waterway Boulevard, Indianapolis, Indiana
46202, and the name of its Resident Agent at such office at the
time of adoption of these Restated Articles of Incorporation is
Dale B. Luther.
ARTICLE V
Shares
The total number of shares which the Corporation has
authority to issue shall be 12,000,000 shares, consisting of
10,000,000 common shares (the "Common Shares") and
2,000,000 special shares (the "Special Shares"). The
Corporation's shares do not have any par or stated value,
except that, solely for the purpose of any statute or
regulation imposing any tax or fee based upon the
capitalization of the Corporation, all of the Corporation's
shares shall be deemed to have a par value of $1.00 per share.
ARTICLE VI
Terms of Shares
Section 1. General Terms of All Shares. The
Corporation shall have the power to acquire (by purchase,
redemption or otherwise), hold, own, pledge, sell, transfer,
assign, reissue, cancel or otherwise dispose of the shares of
the Corporation in the manner and to the extent now or
hereafter permitted by the laws of the State of Indiana,
including the power to purchase, redeem or otherwise acquire
the Corporation's own shares, directly or indirectly, and
without pro rata treatment of the owners or holders of any
class or series of shares, unless, after giving effect thereto,
the Corporation would not be able to pay its debts as they
become due in the usual course of business or the Corporation's
total assets would be less than its total liabilities (and
without regard to any amounts that would be needed, if the
Corporation were to be dissolved at the time of the purchase,
redemption or other acquisition, to satisfy the preferential
<PAGE>
rights upon dissolution of shareholders whose preferential
rights are superior to those of the holders of the shares of
the Corporation being purchased, redeemed or otherwise
acquired, unless otherwise expressly provided with respect to a
series of Special Shares in the provisions of these Restated
Articles of Incorporation adopted by the Board of Directors
pursuant to Section 3(a) of Article VI hereof describing the
terms of such series). Shares of the Corporation purchased,
redeemed or otherwise acquired by it shall constitute
authorized but unissued shares, unless prior to any such
purchase, redemption or other acquisition, or within thirty
(30) days thereafter, the Board of Directors adopts a
resolution providing that such shares constitute authorized and
issued but not outstanding shares.
The Board of Directors of the Corporation may dispose
of, issue and sell shares in accordance with, and in such
amounts as may be permitted by, the laws of the State of
Indiana and the provisions of these Restated Articles of
Incorporation and for such consideration, at such price or
prices, at such time or times and upon such terms and
conditions (including the privilege of selectively repurchasing
the same) as the Board of Directors of the Corporation shall
determine, without the authorization or approval by any
shareholders of the Corporation. Shares may be disposed of,
issued and sold to such persons, firms or corporations as the
Board of Directors may determine, without any preemptive or
other right on the part of the owners or holders of other
shares of the Corporation of any class or kind to acquire such
shares by reason of their ownership of such other shares.
When the Corporation receives the consideration
specified in a subscription agreement entered into before
incorporation, or for which the Board of Directors authorized
the issuance of shares, as the case may be, the shares issued
therefor shall be fully paid and nonassessable.
The Corporation shall have the power to declare and pay
dividends or other distributions upon the issued and
outstanding shares of the Corporation, subject to the
limitation that a dividend or other distribution may not be
made if, after giving it effect, the Corporation would not be
able to pay its debts as they become due in the usual course of
business or the Corporation's total assets would be less than
its total liabilities (and without regard to any amounts that
would be needed, if the Corporation were to be dissolved at the
time of the dividend or other distribution, to satisfy the
preferential rights upon dissolution of shareholders whose
preferential rights are superior to those of the holders of
shares receiving the dividend or other distribution, unless
otherwise expressly provided with respect to a series of
Special Shares in the provisions of these Restated Articles of
Incorporation adopted by the Board of Directors pursuant to
Section 3(a) of this Article VI describing the terms of such
<PAGE>
series). The Corporation shall have the power to issue shares
of one class or series as a share dividend or other
distribution in respect of that class or series or one or more
other classes or series.
Section 2. Terms of Common Shares. The Common Shares
shall be equal in every respect insofar as their relationship
to the Corporation is concerned, but such equality of rights
shall not imply equality of treatment as to redemption or other
acquisition of shares by the Corporation. Subject to the
rights of the holders of any outstanding Special Shares issued
under this Article VI, the holders of Common Shares shall be
entitled to share ratably in such dividends or other
distributions (other than purchases, redemptions or other
acquisitions of Common Shares by the Corporation), if any, as
are declared and paid from time to time on the Common Shares at
the discretion of the Board of Directors. In the event of any
liquidation, dissolution or winding up of the Corporation,
either voluntary or involuntary, after payment shall have been
made to the holders of the Special Shares of the full amount to
which they shall be entitled under this Article VI, the holders
of Common Shares shall be entitled, to the exclusion of the
holders of the Special Shares of any and all series, to share,
ratably according to the number of shares of Common Shares held
by them, in all remaining assets of the Corporation available
for distribution to its shareholders.
Section 3. Terms of Special Shares.
(a) Special Shares may be issued from time to time
in one or more series, each such series to have such
distinctive designation and such preferences,
limitations and relative voting and other rights as
shall be set forth in these Restated Articles of
Incorporation. Subject to the requirements of the
Corporation Law and subject to all other provisions of
these Restated Articles of Incorporation, the Board of
Directors of the Corporation may create one or more
series of Special Shares and may determine the
preferences, limitations and relative voting and other
rights of one or more series of Special Shares before
the issuance of any shares of that series by the
adoption of an amendment to these Restated Articles of
Incorporation that specifies the terms of the series of
Special Shares. All shares of a series of Special
Shares must have preferences, limitations and relative
voting and other rights identical with those of other
shares of the same series and, if the description of the
series set forth in these Restated Articles of
Incorporation so provides, no series of Special Shares
need have preferences, limitations or relative voting or
other rights identical with those of any other series of
Special Shares.
<PAGE>
Before issuing any shares of a series of Special
Shares, the Board of Directors shall adopt an amendment
to these Restated Articles of Incorporation, which shall
be effective without any shareholder approval or other
action, that sets forth the preferences, limitations and
relative voting and other rights of the series, and
authority is hereby expressly vested in the Board of
Directors, by such amendment:
(i) To fix the distinctive
designation of such series and the number of
shares which shall constitute such series,
which number may be increased or decreased
(but not below the number of shares thereof
then outstanding) from time to time by action
of the Board of Directors;
(ii) To fix the voting rights
of such series, which may consist of special,
conditional, limited or unlimited voting
rights, or no right to vote (except to the
extent prohibited by the Corporation Law);
(iii) To fix the dividend or
distribution rights of such series and the
manner of calculating the amount and time for
payment of dividends or distributions,
including, but not limited to:
(1) the dividend rate, if any, of
such series;
(2) any limitations, restrictions
or conditions on the payment of dividends
or other distributions, including whether
dividends or other distributions shall be
noncumulative or cumulative or partially
cumulative and, if so, from which date or
dates;
(3) the relative rights of
priority, if any, of payment of dividends
or other distributions on shares of that
series in relation to Common Shares and
shares of any other series of Special
Shares; and
(4) the form of dividends or other
distributions, which may be payable at
the option of the Corporation, the
shareholder, or another person (and in
such case to prescribe the terms and
conditions of exercising such option), or
upon the occurrence of a designated event
<PAGE>
in cash, indebtedness, stock or other
securities or other property, or in any
combination thereof,
and to make provisions, in the case of
dividends or other distributions payable in
stock or other securities, for adjustment of
the dividend or distribution rate in such
events as the Board of Director shall
determine;
(iv) To fix the price or
prices at which, and the terms and conditions
on which, the shares of such series may be
redeemed or converted, which may be
(A) at the option of the
Corporation, the shareholder or another
person or upon the occurrence of a
designated event;
(B) for cash, indebtedness,
securities, or other property or any
combination thereof; and
(C) in a designated amount or in an
amount determined in accordance with a
designated formula or by reference to
extrinsic data or events;
(v) To fix the amount or
amounts payable upon the shares of such
series in the event of any liquidation,
dissolution or winding up of the Corporation
and the relative rights of priority, if any,
of payment upon shares of such series; and to
determine whether or not any such
preferential rights upon dissolution need be
considered in determining whether or not the
Corporation may make dividends, repurchases
or other distributions;
(vi) To determine whether or
not the shares of such series shall be
entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of
such series and, if so entitled, the amount
of such fund and the manner of its
application;
(vii) To determine whether or
not the shares of such series shall be made
convertible into, or exchangeable for, shares
of any other class or classes of shares of
<PAGE>
the Corporation or shares of any other series
of Special Shares, and, if made so
convertible or exchangeable, the conversion
price or prices, or the rate or rates of
exchange, and the adjustments thereof, if
any, at which such conversion or exchange may
be made, and any other terms and conditions
of such conversion or exchange;
(viii) To determine whether or
not the issued of any additional shares of
such series or of any other series in
addition to such series shall be subject to
restrictions in addition to restrictions, if
any, on the issue of additional shares
imposed in the provisions of these Restated
Articles of Incorporation fixing the terms of
any outstanding series of Special Shares
theretofore issued pursuant to this Section 3
and, if subject to additional restrictions,
the extent of such additional restrictions;
and
(ix) Generally to fix the
other preferences or rights, and any
qualifications, limitations or restrictions
of such preferences or rights, of such series
to the full extent permitted by the
Corporation Law; provided, however, that no
such preferences, rights, qualifications,
limitations or restrictions shall be in
conflict with these Restated Articles of
Incorporation or any amendment thereof.
(b) Special Shares of any series that have been
redeemed (whether through the operation of a sinking
fund or otherwise) or purchased by the Corporation, or
which, if convertible, have been converted into shares
of the Corporation of any other class or series, may be
reissued as a part of such series or of any other series
of Special Shares, subject to such limitations (if any)
as may be fixed by the Board of Directors with respect
to such series of Special Shares in accordance with
Section 3(a) of this Article VI.
Section 4. Terms of Series A Junior Participating
Preferred Stock.
I. Designation and Amount
The Corporation shall have a series of Special Shares
which shall be designated as "Series A Junior Participating
Preferred Stock" (the "Series A Preferred Stock") and the
number of shares constituting the Series A Preferred Stock
<PAGE>
shall be 100,000. Such number of shares may be increased or
decreased by amendment to these Articles of Incorporation
without shareholder approval; provided, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
II. Dividends and Distribution
(A) Subject to the rights of the holders of any shares
of any series of Special Shares (or any similar stock) ranking
prior and superior to the Series A Preferred Stock with respect
to dividends, the holders of shares of Series A Preferred
Stock, in preference to the holders of Common Shares of the
Corporation, and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June,
September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $1 or (b) subject
to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Shares or a subdivision of
the outstanding shares of Common Shares (by reclassification or
otherwise), declared on the Common Shares since the immediately
preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Shares payable
in shares of Common Shares, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Shares (by reclassification or otherwise than by payment
of a dividend in shares of Common Shares) into a greater or
lesser number of shares of Common Shares, then in each such
case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
the number of shares of Common Shares that were outstanding
immediately prior to such event.
<PAGE>
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares a
dividend or distribution on the Common Shares (other than a
dividend payable in shares of Common Shares); provided that, in
the event no dividend or distribution shall have been declared
on the Common Shares during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1 per share on the
Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred
Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for the
payment thereof.
III. Voting Rights
The holders of shares of Series A Preferred Stock shall
have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock
shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of the Corporation. In
the event the Corporation shall at any time declare or pay any
dividend on the Common Shares payable in shares of Common
Shares, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Shares (by reclassification
or otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were
<PAGE>
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which
is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
the number of shares of Common Shares that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designation creating a series of Special Shares
or any similar stock, or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common
Shares and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall have
no voting rights.
IV. Certain Restrictions
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as
provided in Section II are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends,
or make any other distributions, on any
shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends,
or make any other distributions, on any
shares of stock ranking on a parity (either
as to dividends or upon liquidation,
dissolution or winding up) with the Series A
Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and
all such parity stock on which dividends are
payable or in arrears in proportion to the
total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or
otherwise acquire for consideration shares of
any stock ranking junior (either as to
dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for
<PAGE>
shares of any stock of the Corporation
ranking junior (either as to dividends or
upon dissolution, liquidation winding up) to
the Series A Preferred Stock; or
(iv) redeem or purchase or
otherwise acquire for consideration any
shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the
Series A Preferred Stock, except in
accordance with a purchase offer made in
writing or by publication (as determined by
the Board of Directors) to all holders of
such shares upon such terms as the Board of
Directors, after consideration of the
respective annual dividend rates and other
relative rights and preferences of the
respective series and classes, shall
determine in good faith will result in fair
and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the
Corporation could, under paragraph (A) of this Section IV
purchase or otherwise acquire such shares at such time and in
such manner.
V. Reacquired Shares
Any share of Series A Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Special Shares and may be
reissued as part of a new series of Special Shares subject to
the conditions and restrictions on issuance set forth herein,
in the Articles of Incorporation, or in any other Certificate
of Designations creating a series of Special Shares or any
similar stock or as otherwise required by law.
VI. Liquidation, Dissolution or Winding Up
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders
of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock shall have received $100 per share,
plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate
<PAGE>
amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of Common
Shares, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and
all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Shares payable in shares of Common Shares, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification or
otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the aggregate amount of which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1)
of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Shares outstanding immediately after such
event and the denominator of which is the number of shares of
Common Shares that were outstanding immediately prior to such
event.
VII. Consolidation, Merger, etc.
In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in
which the shares of Common Shares are exchanged for or changed
into other stock or securities, cash and/or any other property,
then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into
an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount
of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each
share of Common Shares is changed or exchanged. In the event
the Corporation shall at any time declare or pay any dividend
on the Common Shares payable in shares of Common Shares, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification or
otherwise than by payment of a dividend in shares of Common
Shares), into a greater or lesser number of shares of Common
Shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
the number of shares of Common Shares that were outstanding
immediately prior to such event.
<PAGE>
VIII. Redemption
The shares of Series A Preferred Stock shall not be
redeemable.
IX. Rank
The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's
Special Shares.
X. Amendment
The Articles of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or
change the powers, preference or special rights of the Series A
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting together
as a single series.
Section 5. Terms of Series B Convertible Redeemable
Preferred Stock.
I. Designation and Amount
The Corporation shall have a series of Special Shares
which shall be designated as "Series B Convertible Preferred
Stock" (the "Series B Preferred Stock") and the number of
shares constituting the Series B Preferred Stock shall be
60,000. Such number of shares may be increased or decreased by
amendment to these Articles of Incorporation without
shareholder approval; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number
less than the number of shares then outstanding plus the number
of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation
convertible into Series B Preferred Stock.
II. Dividends and Distributions
(A) Subject to the rights of the holders of any shares
of any series of Special Shares (or any similar stock) ranking
prior and superior to the Series B Preferred Stock and the
Common Shares with respect to dividends, the holders of shares
of Series B Preferred Stock shall be entitled to participate
with the holders of the Common Shares in the receipt of
dividends and distributions and to receive, when, as and if
declared by the Board of Directors out of funds legally
available for the purpose, dividends equal to the per share
amount of each cash dividend, and the per share amount (payable
in kind) of each non-cash dividend or other distribution, other
<PAGE>
than a dividend payable in shares of Common Shares or a
subdivision of the outstanding shares of Common Shares (by
reclassification or otherwise), declared on the Common Shares.
In the event the Corporation shall at any time declare or pay
any dividend on the Common Shares payable in shares of Common
Shares, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Shares (by reclassification
or otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the amount to which holders of
shares of Series B Preferred Stock were entitled immediately
prior to such event under the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Shares
outstanding immediately after such event and the denominator of
which is the number of shares of Common Shares that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series B Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares a
dividend or distribution on the Common Shares (other than a
dividend payable in shares of Common Shares). The Board of
Directors may fix a record date for the determination of
holders of shares of Series B Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
III. Voting Rights
The holders of shares of Series B Preferred Stock shall
have the following voting rights:
(A) Each share of Series B Preferred Stock shall
entitle the holder thereof to one (1) vote on all matters
submitted to a vote of the shareholders of the Corporation. In
the event the Corporation shall at any time declare or pay any
dividend on the Common Shares payable in shares of Common
Shares, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Shares (by reclassification
or otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the number of votes per share to
which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which
is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
the number of shares of Common Shares that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, by the
provisions creating any other series of Special Shares or any
<PAGE>
similar stock, or by law, the holders of shares of Series B
Preferred Stock and the holders of shares of Common Shares and
any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series B Preferred Stock shall have
no voting rights.
IV. Conversion
(A) General. Any holder of outstanding Series B
Preferred Stock may, at any time, convert all but not less than
all of said shares owned by said holder into Common Shares, at
the Conversion Rate (as such term is defined below) as then in
effect.
<PAGE>
(B) Conversion Rate and Adjustments. The initial
Conversion Rate shall be one (1) Common Share for each share of
Series B Preferred Stock (the "Conversion Rate"). In the event
the Corporation shall at any time declare or pay any dividend
on the Common Shares payable in shares of Common Shares, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification or
otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the amount to which holders of
shares of Series B Preferred Stock were entitled immediately
prior to such event under the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Shares
outstanding immediately after such event and the denominator of
which is the number of shares of Common Shares that were
outstanding immediately prior to such event.
V. Redemption
(A) Mandatory Redemption. On July 14, 1998 (the
"Redemption Date") the Corporation shall redeem all of the
shares of Series B Preferred Stock then outstanding out of
funds legally available therefor at a redemption price equal to
$23.25 per share, subject to adjustment as set forth below (as
adjusted, the "Redemption Price"), together with an amount
equal to unpaid dividends thereon to the date of redemption.
In the event of any change in the Series B Preferred Stock by
reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, exchanges of shares or the
like, the Redemption Price shall be appropriately adjusted.
(B) Notice of Redemption. At least thirty (30) days
prior to the Redemption Date, the Corporation shall notify the
holders of the Series B Preferred Stock of the procedures to be
followed in connection with the redemption; provided, however,
that the failure to give such notice (the "Redemption Notice")
shall not affect any of the Corporation's rights hereunder or
the validity of such redemption. The Redemption Notice shall
be sent to the holders of the Series B Preferred Stock at their
addresses as they appear on the records of the Corporation.
The holders of the Series B Preferred Stock may continue to
exercise the right of conversion provided in Article IV hereof
until the Redemption Date notwithstanding the Corporation's
giving of the Redemption Notice.
(C) Procedures for Redemption. If, on or prior to the
Redemption Date, all funds necessary for such redemption shall
have been set aside by the Corporation, separate and apart from
its other funds, in trust with a bank or trust company for the
account of the holders of the shares so to be redeemed (so as
to be and continue to be available therefor), then on and after
the Redemption Date, notwithstanding that any certificate for
shares of the Series B Preferred Stock so called for redemption
<PAGE>
shall not have been surrendered for cancellation, all shares of
the Series B Preferred Stock shall be deemed to be no longer
outstanding, and all rights with respect to such shares of the
Series B Preferred Stock shall forthwith cease and terminate,
except the right of the holders thereof to receive out of the
funds so set aside in trust the amount payable on redemption
thereof without interest thereon.
In case the holders of shares of the Series B Preferred
Stock which shall have been redeemed shall not within one year
(or any longer period if required by law) after the Redemption
Date claim any amount so deposited in trust for the redemption
of such shares, such bank or trust company shall, upon demand
and if permitted by applicable law, pay over to the Corporation
any such unclaimed amount so deposited with it, and shall
thereupon be relieved of all responsibility in respect thereof,
and thereafter the holders of such shares shall, subject to
applicable escheat laws, look only to the Corporation for
payment of the Redemption Price thereof without interest
thereon.
(D) Status After Redemption. Shares of Series B
Preferred Stock redeemed, purchased or otherwise acquired for
value by the Corporation shall, after such acquisition, have
the status of authorized and unissued shares of Special Shares
of the Corporation and may be reissued by the Corporation at
any time as shares of any class or series of Special Shares
other than as shares of Series B Preferred Stock.
VI. Liquidation, Dissolution or Winding Up
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of shares of Series B Preferred Stock
shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to the aggregate amount to be distributed per share to
holders of shares of Common Shares. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Shares payable in shares of Common Shares, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification or
otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the aggregate amount of which
holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such amount by a fraction the numerator of which is
the number of shares of Common Shares outstanding immediately
after such event and the denominator of which is the number of
shares of Common Shares that were outstanding immediately prior
to such event.
<PAGE>
VII. Consolidation, Merger, etc.
In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in
which the shares of Common Shares are exchanged for or changed
into other stock or securities, cash and/or any other property,
then in any such case each share of Series B Preferred Stock
shall at the same time be similarly exchanged or changed into
an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Shares is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Shares payable in shares of Common Shares, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification or
otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series B Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
the number of shares of Common Shares that were outstanding
immediately prior to such event.
VIII. Rank
The Series B Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's
Special Shares.
IX. Amendment
The Articles of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or
change the powers, preference or special rights of the Series B
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least a majority of the
outstanding shares of Series B Preferred Stock, voting together
as a single series.
ARTICLE VII
Voting Rights
Section 1. Common Shares. Except as otherwise
provided by the Corporation Law and subject to such shareholder
disclosure and recognition procedures (which may include voting
prohibition sanctions) as the Corporation may by action of the
<PAGE>
Board of Directors establish, the Common Shares have unlimited
voting rights and each Common Share shall, when validly issued
by the Corporation, entitle the record holder thereof to one
vote at all shareholders' meetings on all matters submitted to
a vote of the shareholders of the Corporation.
Section 2. Special Shares. Except as required by the
Corporation Law or by the provisions of these Restated Articles
of Incorporation adopted by the Board of Directors pursuant to
Section 3(a) of Article VI hereof describing the terms of
Special Shares or a series thereof, the holders of Special
Shares shall have no voting rights or powers. Special Shares
shall, when validly issued by the Corporation, entitle the
record holder thereof to vote as and on such matters, but only
as and on such matters, as the holders thereof are entitled to
vote under the Corporation Law or under the provisions of these
Restated Articles of Incorporation adopted by the Board of
Directors pursuant to Section 3(a) of Article VI hereof
describing the terms of Special Shares or a series thereof
(which provisions may provide for special, conditional, limited
or unlimited voting rights, including multiple or fractional
votes per share, or for no right to vote, except to the extent
required by the Corporation Law) and subject to such
shareholder disclosure and recognition procedures (which may
include voting prohibition sanctions) as the Corporation may by
action of the Board of Directors establish.
ARTICLE VIII
Approval of Business Combinations
Section 1. Supermajority Vote. Except as provided in
Sections 2 and 3 of this Article VIII, neither the Corporation
nor its Subsidiaries, if any, shall become a party to any
Business Combination with a Related Person without the prior
affirmative vote at a meeting of the Corporation's
shareholders:
(a) Of not less than sixty-six and two-thirds
percent (66-2/3%) of all the votes entitled to be cast
by the holders of the outstanding shares of all classes
of Voting Stock of the Corporation considered for
purposes of this Article VIII as a single class, and
(b) Of an Independent Majority of Shareholders.
Such favorable votes shall be in addition to any
shareholder vote which would be required without reference to
this Section 1 and shall be required notwithstanding the fact
that no vote may be required, or that some lesser percentage
may be specified by law or elsewhere in these Restated Articles
of Incorporation or the Bylaws of the Corporation or otherwise.
<PAGE>
Section 2. Fair Price Exception. The provisions of
Section 1 of this Article VIII shall not apply to a Business
Combination if all of the conditions set forth in
subsections (a) through (d) are satisfied.
(a) The fair market value of the property,
securities or other consideration to be received per
share by holders of each class or series of capital
stock of the Corporation in the Business Combination is
not less, as of the date of the consummation of the
Business Combination (the "Consummation Date") than the
higher of the following: (i) the highest per share
price (with appropriate adjustments for
recapitalizations and for stock splits, stock dividends
and like distributions) including brokerage commissions
and solicitation fees paid by the Related Person in
acquiring any of its holdings of such class or series of
capital stock within the two year period immediately
prior to the first public announcement of the proposed
Business Combination ("Announcement Date") plus interest
compounded annually from the date that the Related
Person became a Related Person (the "Determination
Date"), or if later from a date two years before the
Consummation Date, through the Consummation Date, at the
rate publicly announced as the "prime rate" of interest
of Citibank, N.A. (or of such other major bank
headquartered in New York as may be selected by a
majority of the Continuing Directors) from time to time
in effect, less the aggregate amount of any cash
dividends paid and the fair market value of any
dividends paid in other than cash on each share of such
stock from the date from which interest accrues under
the preceding clause through the Consummation Date up to
but not exceeding the amount of interest so payable per
share; OR (ii) the fair market value per share of such
class or series on the Announcement Date as determined
by the highest closing sale price during the 30-day
period immediately preceding the Announcement Date if
such stock is listed on a securities exchange registered
under the Securities Exchange Act of 1934 or, if such
stock is not listed on any such exchange, the highest
closing bid quotation with respect to such stock during
the 30-day period preceding the Announcement Date on the
National Association of Securities Dealers, Inc.
Automated Quotation System or any similar system then in
use, or if no such quotations are available, the fair
market value of such stock immediately prior to the
first public announcement of the proposed Business
Combination as determined by the Continuing Directors in
good faith. In the event of a Business Combination upon
the consummation of which the Corporation would be the
surviving corporation or company or would continue to
exist (unless it is provided, contemplated or intended
that as part of such Business Combination or within one
<PAGE>
year after consummation thereof a plan of liquidation or
dissolution of the Corporation will be effected), the
term "other consideration to be received" shall include
(without limitation) Common Shares and/or the shares of
any other class of stock retained by shareholders of the
Corporation other than Related Persons who are parties
to such Business Combination;
(b) The consideration to be received in such
Business Combination by holders of each class or series
of capital stock of the Corporation other than the
Related Person involved shall, except to the extent that
a shareholder agrees otherwise as to all or part of the
shares which he or she owns, be in the same form and of
the same kind as the consideration paid by the Related
Person in acquiring the majority of the shares of
capital stock of such class or series already
Beneficially Owned by it;
(c) After such Related Person became a Related
Person and prior to the consummation of such Business
Combination: (i) such Related Person shall have taken
steps to insure that the Board of Directors of the
Corporation included at all times representation by
Continuing Directors proportionate to the ratio that the
number of shares of Voting Stock of the Corporation from
time to time owned by shareholders who are not Related
Persons bears to all shares of Voting Stock of the
Corporation outstanding at the time in question (with a
Continuing Director to occupy any resulting fractional
position among the directors); (ii) such Related Person
shall not have acquired from the Corporation, directly
or indirectly, any shares of the Corporation (except
upon conversion of convertible securities acquired by it
prior to becoming a Related Person or as a result of a
pro rata stock dividend, stock split or division of
shares or in a transaction which satisfied all
applicable requirements of this Article VIII);
(iii) such Related Person shall not have acquired any
additional shares of Voting Stock of the Corporation or
securities convertible into or exchangeable for shares
of Voting Stock except as a part of the transaction
which resulted in such Related Person's becoming a
Related Person; and (iv) such Related Person shall not
have received the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial
assistance or tax credits provided by the Corporation or
any Subsidiary, or made any major change in the
Corporation's business or equity capital structure or
entered into any contract, arrangement or understanding
with the Corporation except any such change, contract,
arrangement or understanding as may have been approved
<PAGE>
by the favorable vote of not less than a majority of the
Continuing Directors of the Corporation; and
(d) A proxy or information statement complying
with the requirements of the Securities Exchange Act of
1934 and the rules and regulations of the Securities and
Exchange Commission thereunder, as then in force for
corporations subject to the requirements of Section 14
of such Act (even if the Corporation is not otherwise
subject to Section 14 of such Act), shall have been
mailed to all holders of shares of the Corporation's
capital stock entitled Act), shall have been mailed to
all holders of shares of the Corporation's capital stock
entitled to vote with respect to such Business
Combination. Such proxy or information statement shall
contain on the face page thereof, in a prominent place,
any recommendations as to the advisability (or
inadvisability) of the Business Combination which the
Continuing Directors, or any of them, may have furnished
in writing and, if deemed advisable by a majority of the
Continuing Directors, a fair summary of an opinion of a
reputable investment banking firm addressed to the
Corporation as to the fairness (or lack of fairness) of
the terms of such Business Combination from the point of
view of the holders of shares of Voting Stock other than
any Related Person (such investment banking firm to be
selected by a majority of the Continuing Directors, to
be furnished with all information it reasonably
requests, and to be paid a reasonable fee for its
services upon receipt by the Corporation of such
opinion).
Section 3. Director Approval Exception. The
provisions of Section 1 of this Article VIII shall not apply to
a Business Combination if:
(a) The Continuing Directors of the Corporation by
not less than a sixty-six and two-thirds percent
(66-2/3%) vote (i) have expressly approved a memorandum
of understanding with the Related Person with respect to
the Business Combination prior to the time that the
Related Person with respect to the Business Combination
prior to the time that the Related Person became a
Related Person and the Business Combination is effected
on substantially the same terms and conditions as are
provided by the memorandum of understanding, or
(ii) have otherwise approved the Business Combination
(this provision is incapable of satisfaction unless
there is at least one Continuing Director); or
(b) The Business Combination is solely between the
Corporation and another corporation, one hundred percent
of the Voting Stock of which is owned directly or
indirectly by the Corporation.
<PAGE>
Section 4. Definitions. For purposes of this
Article VIII:
(a) A "Business Combination" means:
(i) The sale, exchange,
lease, transfer or other disposition to or
with a Related Person or any Affiliate or
Associate of such Related Person by the
Corporation or any Subsidiaries (in a single
transaction or a Series of Related
Transactions) of all or substantially all, or
any Substantial Part, of its or their assets
or businesses (including, without limitation,
securities issued by a Subsidiary, if any);
(ii) The purchase, exchange,
lease or other acquisition by the Corporation
or any Subsidiaries (in a single transaction
or a Series of Related Transactions) of all
or substantially all, or any Substantial
Part, of the assets or business of a Related
Person or any Affiliate or Associate of such
Related Person;
(iii) Any merger or
consolidation of the Corporation or any
Subsidiary thereof into or with a Related
Person or any Affiliate or Associate of such
Related Person or into or with another Person
which, after such merger or consolidation,
would be an Affiliate or an Associate of a
Related Person, in each case irrespective of
which Person is the surviving entity in such
merger or consolidation;
(iv) Any reclassification of
securities, recapitalization or other
transaction (other than a redemption in
accordance with the terms of the security
redeemed) which has the effect, directly or
indirectly, of increasing the proportionate
amount of shares of Voting Stock of the
Corporation or any Subsidiary thereof which
are Beneficially Owned by a Related Person,
or any partial or complete liquidation,
spinoff, splitoff or splitup of the
Corporation or any Subsidiary thereof;
provided, however, that this Section 4(a)(iv)
shall not relate to any transaction that has
been approved by a majority of the Continuing
Directors; or
<PAGE>
(v) The acquisition upon the
issuance thereof of Beneficial Ownership by a
Related Person of shares of Voting Stock or
securities convertible into shares of Voting
Stock or any voting securities or securities
convertible into voting securities of any
Subsidiary of the Corporation, or the
acquisition upon the issuance thereof of
Beneficial Ownership by a Related Person of
any rights, warrants or options to acquire
any of the foregoing or any combination of
the foregoing shares of Voting Stock or
voting securities of a Subsidiary, if any.
(b) A "Series of Related Transactions" shall be
deemed to include not only a series of transactions with
the same Related Person but also a series of separate
transactions with a Related Person or any Affiliate or
Associate of such Related Person.
(c) A "Person" shall mean any individual, firm,
corporation or other entity and any partnership,
syndicate or other group.
(d) "Related Person" shall mean any Person (other
than the Corporation or any Subsidiary of the
Corporation or the Continuing Directors, singly or as a
group) who or that at any time described in the last
sentence of this first paragraph of this subsection (d):
(i) is the Beneficial Owner,
directly or indirectly, of more than ten
percent (10%) of the voting power of the
outstanding shares of Voting Stock and who
has not been the Beneficial Owner, directly
or indirectly, of more than ten percent (10%)
of the voting power of the outstanding shares
of Voting Stock for a continuous period of
two years prior to the date in question; or
(ii) is an Affiliate of the
Corporation and at any time within the two-
year period immediately prior to the date in
question (but not continuously during such
two-year period) was the Beneficial Owner,
directly or indirectly, of ten percent (10%)
or more of the voting power of the
outstanding shares of Voting Stock; or
(iii) is an assignee of or has
otherwise succeeded to any shares of the
Voting Stock which were at any time within
the two-year period immediately prior to the
date in question beneficially owned by any
<PAGE>
Related Person, if such assignment or
succession shall have occurred in the course
of a transaction or series of transactions
not involving a public offering within the
meaning of the Securities Act of 1933, as
amended.
A Related Person shall be deemed to have acquired a
share of the Corporation at the time when such Related Person
became the Beneficial Owner thereof. For the purposes of
determining whether a Person is the Beneficial Owner of ten
percent (10%) or more of the voting power of the then
outstanding Voting Stock, the outstanding Voting Stock shall be
deemed to include any Voting Stock that may be issuable to such
Person pursuant to a right to acquire such Voting Stock and
that is therefore deemed to be Beneficially Owned by such
Person pursuant to Section 4(e)(ii)(A). A Person who is a
Related Person at (i) the time any definitive agreement
relating to a Business Combination is entered into, (ii) the
record date for the determination of shareholders entitled to
notice of and to vote on a Business Combination, or (iii) the
time immediately prior to consummation of a Business
Combination shall be deemed a Related Person.
A Related Person shall not include any Person who
possesses more than ten percent (10%) of the voting power of
the outstanding shares of Voting Stock of the Corporation at
the time of filing these Restated Articles of Incorporation.
In addition, a Related Person shall not include the Board of
Directors of the corporation acting as a group.
(e) A Person shall be a "Beneficial Owner" of any
shares of Voting Stock:
(i) which such Person or any
of its Affiliates or Associates beneficially
owns, directly or indirectly; or
(ii) which such Person or any
of its Affiliates or Associates has (A) the
right to acquire (whether such right is
exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the
exercise of conversion rights exchange
rights, warrants or options, or otherwise, or
(B) the right to vote pursuant to any
agreement, arrangement or understanding; or
(iii) which are beneficially
owned, directly or indirectly, by any other
Person with which such Person or any of its
Affiliates or Associates has any agreement,
arrangement or understanding for the purpose
<PAGE>
of acquiring, holding, voting or disposing of
any shares of Voting Stock.
(f) An "Affiliate" of, or a person Affiliated
with, a specific Person, means a Person that directly,
or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, the Person specified.
(g) The term "Associate" used to indicate a
relationship with any Person, means (i) any corporation
or organization (other than this Corporation or a
majority-owned Subsidiary of this Corporation) of which
such Person is an officer or partner or is, directly or
indirectly, the Beneficial Owner of five percent (5%) or
more of any class of equity securities, (ii) any trust
or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity, (iii) any
relative or spouse of such Person, or any relative of
such spouse, who has the same home as such Person, or
(iv) any investment company registered under the
Investment Company Act of 1940, as amended, for which
such Person or any Affiliate of such Person serves as
investment advisor.
(h) "Subsidiary" means any corporation of which a
majority of any class of equity security is owned,
directly or indirectly, by the Corporation; provided,
however, that for the purposes of the definition of
Related Person set forth in paragraph (d) of this
Section 4, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the
Corporation.
(i) "Continuing Director" means any member of the
Board of Directors of the Corporation (the "Board") who
is not associated with the Related Person and was a
member of the Board prior to the time that the Related
Person became a Related Person, and any successor of a
Continuing Director who is not associated with the
Related Person and is recommended to succeed a
Continuing Director by not less than two-thirds of the
Continuing Directors then on the Board.
(j) "Independent Majority of Shareholders" shall
mean the holders of the outstanding shares of Voting
Stock representing a majority of all the votes entitled
to be cast by all shares of Voting Stock other than
shares Beneficially Owned or controlled, directly or
indirectly, by a Related Person.
<PAGE>
(k) "Voting Stock" shall mean all outstanding
shares of capital stock of the Corporation or another
corporation entitled to vote generally on the election
of Directors, and each reference to a proportion of
shares of Voting Stock shall refer to such proportion of
the votes entitled to be cast by such shares.
(l) "Substantial Part" means properties and assets
involved in any single transaction or a Series of
Related Transactions having an aggregate fair market
value of more than ten percent (10%) of the total
consolidated assets of the Person in question as
determined immediately prior to such transaction or
Series of Related Transactions.
Section 5. Director Determinations. A majority of the
Continuing Directors shall have the power to determine for the
purposes of this Article VIII, on the basis of information
known to them: (a) the number of shares of Voting Stock of
which any Person is the Beneficial Owner, (b) whether a Person
is an Affiliate or Associate of another, (c) whether a Person
has an agreement, arrangement or understanding with another as
to the matters referred to in the definition of "Beneficial
Owner," (d) whether the assets subject to any Business
Combination constitute a Substantial Part, (e) whether two or
more transactions constitute a Series of Related Transactions,
and (f) such other matters with respect to which a
determination is required under this Article VIII.
Section 6. Amendment of Article VIII or Certain Other
Provisions. Any amendment, change or repeal of this
Article VIII, Sections 1 or 6 of Article IX, Sections 2 or 10
of Article X, or any other amendment of these Restated Articles
of Incorporation which would have the effect of modifying or
permitting circumvention of this Article VIII or such other
provisions of these Restated Articles of Incorporation, shall
require the affirmative vote, at a meeting of shareholders of
the Corporation:
(a) Of at lease two-thirds (2/3) of the votes
entitled to be cast by the holders of the outstanding
shares of all classes of Voting Stock of the Corporation
considered for purposes of this Article VIII as a single
class; and
(b) Of an Independent Majority of Shareholders;
Provided, however, that this Section 6 shall not apply
to, and such vote shall not be required for, any such
amendment, change or repeal recommended to shareholders by the
favorable vote of not less than two-thirds (2/3) of the
Directors who then qualify as Continuing Directors with respect
to all Related Persons and any such amendment, change or repeal
<PAGE>
so recommended shall require only the vote, if any, required
under the applicable provisions of the Corporation Law.
Section 7. Fiduciary Obligations Unaffected. Nothing
in this Article VIII shall be construed to relieve any Related
Person from any fiduciary duty imposed by law.
Section 8. Article VIII Nonexclusive. The provisions
of this Article VIII are nonexclusive and are in addition to
any other provisions of law or these Restated Articles of
Incorporation or the Bylaws of the Corporation relating to
Business Combinations, Related Persons or similar matters.
ARTICLE IX
Directors
Section 1. Number. The Board of Directors at the time
of adoption of these Restated Articles of Incorporation is
composed of fifteen (15) members, and the number of Directors
shall be fixed by the Bylaws and may be changed from time to
time by amendment to the Bylaws. Whenever the Bylaws provide
that the number of Directors shall be nine (9) or more, the
Bylaws may also provide for staggering the terms of the members
of the Board of Directors by dividing the total number of
Directors into two (2) or three (3) groups (with each group
containing one-half (1/2) or one-third (1/3) of the total, as
near as may be) whose terms of office expire at different
times. Notwithstanding the first sentence of this Section 1,
any amendment to the Bylaws that would effect
(a) any increase in the number of Directors over
such number as then in effect,
(b) any reduction in the number of Directors from
nine (9) or more to fewer than nine (9), or
(c) any elimination or modification of the groups
or terms of office of the Directors as the Bylaws then
in effect may provide,
shall also be approved by the affirmative vote of a majority of
the entire number of Directors of the Corporation who then
qualify as Continuing Directors with respect to all Related
Persons (as such terms are defined for purposes of Article VIII
hereof).
Section 2. Election of Directors by Holders of Special
Shares. The holders of one (1) or more series of Special
Shares may be entitled to elect all or a specified number of
Directors, but only to the extent and subject to limitations as
may be set forth in the provisions of these Restated Articles
of Incorporation adopted by the Board of Directors pursuant to
<PAGE>
Section 3(a) of Article VI hereof describing the terms of the
series of Special Shares.
Section 3. Qualifications. Directors need not be
shareholders of the Corporation or residents of this or any
other state in the United States.
Section 4. Vacancies. Vacancies occurring in the
Board of Directors shall be filled in the manner provided in
the Bylaws or, if the Bylaws do not provide for the filling of
vacancies, in the manner provided by the Corporation Law. The
Bylaws may also provide that in certain circumstances specified
therein, vacancies occurring in the Board of Directors may be
filled by vote of the shareholders at a special meeting called
for that purpose or at the next annual meeting of shareholders.
Section 5. Liability of Directors. A Director's
responsibility to the Corporation shall be limited to
discharging his duties as a Director, including his duties as a
member of any committee of the Board of Directors upon which he
may serve, in good faith, with the care an ordinarily prudent
person in a like position would exercise under similar
circumstances, and in a manner the Director reasonably believes
to be in the best interests of the Corporation, all based on
the facts then known to the Director.
In discharging his duties, a Director is entitled to
rely on information, opinions, reports, or statements,
including financial statements and other financial data, if
prepared or presented by:
(a) One (1) or more officers or employees of the
Corporation whom the Director reasonably believes to be
reliable and competent in the matters presented;
(b) Legal counsel, public accountants, or other
persons as to matters the Director reasonably believes
are within such person's professional or expert
competence; or
(c) A committee of the Board of which the Director
is not a member if the Director reasonably believes the
Committee merits confidence;
but a Director is not acting in good faith if the Director has
knowledge concerning the matter in question that makes reliance
otherwise permitted by this Section 5 unwarranted. A Director
may, in considering the best interests of the Corporation,
consider the effects of any action on shareholders, employees,
suppliers and customers of the Corporation, and communities in
which offices or other facilities of the corporation are
located, and any other factors the Director considers
pertinent.
<PAGE>
A Director is not liable for any action taken as a
Director, or any failure to take any action, unless (a) the
Director has breached or failed to perform the duties of the
Director's office in compliance with this Section 5, and
(b) the breach or failure to perform constitutes willful
misconduct or recklessness.
Section 6. Nonmonetary Factors in Acquisition
Proposals. In connection with the exercise of its judgement in
determining what is in the best interests of the Corporation
and its Stockholders when evaluating a proposal by another
person or persons to acquire some material part or all of the
business or properties of the Corporation (whether by merger,
consolidation, purchase of assets, stock reclassification or
recapitalization, spinoff, liquidation or otherwise) or to
acquire some material part or all of the stock of the
Corporation (whether by a tender or exchange offer or some
other means), the Board of Directors of the Corporation shall,
in addition to considering the adequacy of the consideration to
be paid in connection with any such transaction, consider all
of the following factors and any other factors that it deems
relevant: (a) the social and economic effects of the
transaction on the Corporation and its subsidiaries and their
employees, customers, creditors and communities in which the
Corporation and its subsidiaries operate or are located;
(b) the business and financial condition and earnings prospects
of the acquiring person or persons, including, but not limited
to, debt service and other existing or likely financial
obligations of the acquiring person or persons and their
affiliates and associates, and the possible effect of such
conditions upon the Corporation and its subsidiaries and the
communities in which the Corporation and its subsidiaries
operate or are located; and (c) the competence, experience, and
integrity of the acquiring person or persons and its or their
management and affiliates and associates.
ARTICLE X
Provisions for Regulation of Business and
Conduct of Affairs of Corporation
Section 1. Meetings of Shareholders. Meetings of the
Shareholders of the Corporation shall be held at such place,
either within or without the State of Indiana, as may be stated
in or fixed in accordance with the Bylaws of the Corporation
and specified in the respective notices or waivers of notice of
any such meetings.
Section 2. Special Meetings of Shareholders. Special
meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by the Corporation Law, may be
called at any time by the Board of Directors or the person or
persons authorized to do so by the Bylaws and shall be called
<PAGE>
by the Board of Directors if the Secretary of the Corporation
receives one (1) or more written, dated and signed demands for
a special meeting, describing in reasonable detail the purpose
or purposes for which it is to be held, from the holders of
shares representing at least twenty-five percent (25%) of all
the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting. If the Secretary
receives one (1) or more proper written demands for a special
meeting of shareholders, the Board of Directors may set a
record date for determining shareholders entitled to make such
demand.
Section 3. Meetings of Directors. Meetings of the
Board of Directors of the Corporation shall be held at such
place, either within or without the State of Indiana, as may be
authorized by the Bylaws and specified in the respective
notices or waivers of notice of any such meetings or otherwise
specified by the Board of Directors. Unless the Bylaws provide
otherwise (a) regular meetings of the Board of Directors may be
held without notice of the date, time, place, or purpose of the
meeting and (b) the notice for a special meeting need not
describe the purpose or purposes of the special meeting.
Section 4. Action Without Meeting. Any action
required or permitted to be taken at any meeting of the Board
of Directors or shareholders, or of any committee of such
Board, may be taken without a meeting, if the action is taken
by all members of the Board or all shareholders entitled to
vote on the action, or by all members of such committee, as the
case may be. The action must be evidenced by one (1) or more
written consents describing the action taken, signed by each
Director, or all the shareholders entitled to vote on the
action, or by each member of such committee, as the case may
be, and, in the case of action by the Board of Directors or a
committee thereof, included in the minutes or filed with the
corporate records reflecting the action taken or, in the case
of action by the shareholders, delivered to the Corporation for
inclusion in the minutes or filing with the corporate records.
Action taken under this Section 4 is effective when the last
director, shareholder or committee members, as the case may be,
signs the consent, unless the consent specifies a different
prior or subsequent effective date, in which case the action is
effective on or as of the specified date. Such consent shall
have the same effect as a unanimous vote of all members of the
Board, or all shareholders, or all members of the committee, as
the case may be, and may be described as such in any document.
Section 5. Bylaws. The Board of Directors shall have
the exclusive power to make, alter, amend or repeal, or to
waive provisions of, the Bylaws of the Corporation by the
affirmative vote of a majority of the entire number of
Directors at the time, except as expressly provided in
Section 1 of Article IX hereof and as provided by the
Corporation Law. All provisions for the regulation of the
<PAGE>
business and management of the affairs of the Corporation not
stated in these Restated Articles of Incorporation shall be
stated in the Bylaws. The Board of Directors may also adopt
Emergency Bylaws of the Corporation and shall have the
exclusive power (except as may otherwise be provided therein)
to make, alter, amend or repeal, or to waive provisions of, the
Emergency Bylaws by the affirmative vote of both (a) a majority
of the entire number of Directors at the time and (b) a
majority of the entire number of Directors who then qualify as
Continuing Directors with respect to all Related Persons (as
such terms are defined for purposes of Article VIII hereof).
Section 6. Interest of Directors.
(a) A conflict of interest transaction is a
transaction with the Corporation in which a Director of
the Corporation has a direct or indirect interest. A
conflict of interest transaction is not voidable by the
Corporation solely because of the Director's interest in
the transaction if any one (1) of the following is true:
(1) The material facts of the
transaction and the Director's interest were
disclosed or known to the Board of Directors
or a Committee of the Board of Directors and
the Board of Directors or committee
authorized, approved, or ratified the
transaction.
(2) The material facts of the
transaction and the Director's interest were
disclosed or known to the Board of Directors
or a Committee of the Board of Directors and
the Board of Directors or committee
authorized, approved, or ratified the
transaction.
(3) The transaction was fair to the
Corporation.
(b) For purposes of this Section 6, a Director of
the Corporation has an indirect interest in a
transaction if:
(1) another entity in which the Director
has a material financial interest or in which
the Director is a general partner is a party
to the transaction; or
(2) another entity of which the director
is a director, officer, or trustee is a party
to the transaction and the transaction is, or
is required to be, considered by the Board of
Directors of the Corporation.
<PAGE>
(c) For purposes of Section 6(a)(1), a conflict of
interest transaction is authorized, approved, or
ratified if it receives the affirmative vote of a
majority of the Directors on the Board of Directors (or
on the committee) who have no direct or indirect
interest in the transaction, but a transaction may not
be authorized, approved, or ratified under this section
by a single Director. If a majority of the Directors
who have no direct or indirect interest in the
transaction vote to authorize, approve, or ratify the
transaction, a quorum shall be deemed present for the
purpose of taking action under this Section 6. The
presence of, or a vote cast by, a Director with a direct
or indirect interest in the transaction does not affect
the validity of any action taken under Section 6(a)(1),
if the transaction is otherwise authorized, approved, or
ratified as provided in such subsection.
(d) For purposes of Section 6(a)(2), a conflict of
interest transaction is authorized, approved, or
ratified if it receives the affirmative vote of the
holders of shares representing a majority of the votes
entitled to be cast. Shares owned by or voted under the
control of a Director who has a direct or indirect
interest in the transaction, and shares owned by or
voted under the control of an entity described in
Section 6(b), may be counted in such a vote of
shareholders.
Section 7. Nonliability of Shareholders. Shareholders
of the Corporation are not personally liable for the acts or
debts of the Corporation, nor is private property of
shareholders subject to the payment of corporate debts.
Section 8. Indemnification of Officers Directors and
Other Eligible Persons.
(a) To the extent not inconsistent with applicable
law, every Eligible Person shall be indemnified by the
Corporation against all Liability and reasonable Expense
that may be incurred by him in connection with or
resulting from any Claim,
(i) if such Eligible Person
is Wholly Successful with respect the Claim,
or
(ii) if not Wholly Successful,
then if such Eligible Person is determined,
as provided in either Section 8(f) or 8(g),
to have acted in good faith, in what he
reasonably believed to be the best interests
of the Corporation or at least not opposed to
its best interests and, in addition, with
<PAGE>
respect to any criminal Claim is determined
to have had reasonable cause to believe that
his conduct was lawful or had no reasonable
cause to believe that his conduct was
unlawful.
The termination of any
Claim, by judgement, order, settlement
(whether with or without court approval), or
conviction or upon a plea of guilty or of
nolo contendere, or its equivalent, shall not
create a presumption that an Eligible Person
did not meet the standards of conduct set
forth in clause (ii) of this subsection (a).
The actions of an Eligible Person with
respect to an employee benefit plan subject
to the Employee Retirement Income Security
Act of 1974 shall be deemed to have been
taken in what the Eligible Person reasonably
believed to be the best interests of the
Corporation or at least not opposed to its
best interests if the Eligible Person
reasonably believed he was acting in
conformity with the requirements of such Act
or he reasonably believed his actions to be
in the interests of the participants in or
beneficiaries of the plan.
(b) The term "Claim" as used in this Section 8
shall include every pending, threatened or completed
claim, action, suit or proceeding and all appeals
thereof (whether brought by or in the right of the
Corporation or any other corporation or otherwise),
civil, criminal, administrative or investigative, formal
or informal, in which an Eligible Person may become
involved, as a party or otherwise: (i) by reason of his
being or having been an Eligible Person, or (ii) by
reason of any action taken or not taken by him in his
capacity as an Eligible Person, whether or not he
continued in such capacity at the time such Liability or
Expense shall have been incurred.
(c) The term "Eligible Person" as used in this
Section 8 shall mean every person (and the estate, heirs
and personal representatives of such person) who is or
was a Director, officer, employee or agent of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, agent or
fiduciary of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan
or other organization or entity, whether for profit or
not. An Eligible Person shall also be considered to
have been serving an employee benefit plan at the
request of the Corporation if his duties to the
<PAGE>
Corporation also imposed duties on, or otherwise
involved services by, him to the plan or to participants
in or beneficiaries of the plan.
(d) The terms "Liability" and "Expense" as used in
this Section 8 shall include, but shall not be limited
to, counsel fees and disbursements and amounts of
judgments, fines or penalties against (including excise
taxes assessed with respect to an employee benefit
plan), and amounts paid in settlement by or on behalf
of, an Eligible Person.
(e) The term "Wholly Successful" as used in this
Section 8 shall mean (i) termination of any claim
against the Eligible Person in question without any
finding of liability or guilt against him, (ii) approval
by a court, with knowledge of the indemnity herein
provided, of a settlement of any Claim, or (iii) the
expiration of a reasonable period of time after the
making or threatened making of any Claim without the
institution of the same, without any payment or promise
made to induce a settlement.
(f) Every Eligible Person claiming indemnification
hereunder (other than one who has been Wholly Successful
with respect to any claim) shall be entitled to
indemnification (i) if special independent legal
counsel, which may be regular counsel of the Corporation
or other disinterested person or persons, in either case
selected by the Board of Directors, whether or not a
disinterested quorum exists (such counsel or person or
persons being hereinafter called the "Referee"), shall
deliver to the Corporation a written finding that such
Eligible Person has met the standards of conduct set
forth in clause (ii) of Section 8(a), and (ii) if the
Board of Directors, acting upon such written finding, so
determines. The Board of Directors shall, if an
Eligible Person is found to be entitled to
indemnification pursuant to the preceding sentence, also
determine the reasonableness of the Eligible Person's
Expenses. The Eligible Person claiming indemnification
shall, if requested, appear before the Referee, answer
questions that the Referee deems relevant and shall be
given ample opportunity to present to the Referee
evidence upon which he relies for indemnification. The
Corporation shall, at the request of the Referee, make
available facts, opinions or other evidence in any way
relevant to the Referee's finding that are within the
possession or control of the Corporation.
(g) If an Eligible Person claiming indemnification
pursuant to Section 8(f) is found not to be entitled
thereto, or if the Board of Directors fails to select a
Referee under Section 8(f) within a reasonable amount of
<PAGE>
time following a written request of an Eligible Person
for the selection of a Referee, or if the Referee or the
Board of Directors fails to make a determination under
Section 8(f) within a reasonable amount of time
following the selection of a Referee, the Eligible
Person may apply for indemnification with respect to a
Claim to a court of competent jurisdiction, including a
court in which the Claim is pending against the Eligible
Person. On receipt of an application, the court, after
giving notice to the Corporation and giving the
Corporation ample opportunity to present to the court
any information or evidence relating to the claim for
indemnification that the Corporation deems appropriate,
may order indemnification if it determines that the
Eligible Person is entitled to indemnification with
respect to the Claim because such Eligible Person met
the standards of conduct set forth in clause (ii) of
Section 8(a). If the court determines that the Eligible
Person is entitled to indemnification, the court shall
also determine the reasonableness of the Eligible
Person's Expenses.
(h) The rights of indemnification provided in this
Section 8 shall be in addition to any rights to which
any Eligible Person may otherwise be entitled.
Irrespective of the provisions of this Section 8, the
Board of Directors may, at any time and from time to
time, (i) approve indemnification of any Eligible Person
to the full extent permitted by the provisions of
applicable law at the time in effect, whether on account
of past or future transactions, and (ii) authorize the
Corporation to purchase and maintain insurance on behalf
of any Eligible Person against any Liability asserted
against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the
Corporation would have the power to indemnify him
against such liability.
(i) Expenses incurred by an Eligible Person with
respect to any Claim, may be advanced by the Corporation
(by action of the Board of Directors, whether or not a
disinterested quorum exists) prior to the final
disposition thereof upon receipt of any undertaking by
or on behalf of the recipient to repay such amount
unless he is determined to be entitled to
indemnification.
(j) The provisions of this Section 8 shall be
deemed to be a contract between the Corporation and each
Eligible Person, and an Eligible Person's rights
hereunder shall not be diminished or otherwise adversely
affected by any repeal, amendment or modification of
this Section 8 that occurs subsequent to such person
becoming an Eligible Person.
<PAGE>
(k) The provisions of this Section 8 shall be
applicable to Claims made or commenced after the
adoption hereof, whether arising from acts or omissions
to act occurring before or after the adoption hereof.
Section 9. Amendment or Repeal. Except as otherwise
expressly provided for in these Restated Articles of
Incorporation, the Corporation shall be deemed, for all
purposes, to have reserved the right to amend, alter, change or
repeal any provision contained in these Restated Articles of
Incorporation to the extent and in the manner now or hereafter
permitted or prescribed by statute, and all rights herein
conferred upon shareholders are granted subject to such
reservation.
Section 10. Removal of Directors. Any or all of the
members of the Board of Directors may be removed, for good
cause, at a meeting of the shareholders called expressly for
that purpose, by the affirmative vote of the holders of
outstanding shares representing at least sixty-six and two-
thirds percent (66-2/3%) of all the votes then entitled to be
cast at an election of Directors. Directors may not be removed
in the absence of good cause.
Amended January 26, 1988
<PAGE>
INDENTURE OF TRUST
CITY OF INDIANAPOLIS, INDIANA
AND
INDIANAPOLIS WATER COMPANY
TO
National City Bank, Indiana,
As Trustee
DATED AS OF APRIL 1, 1993
$11,600,000 City of Indianapolis, Indiana Economic Development
Water Facilities Refunding Revenue Bonds, Series 1993
(Indianapolis Water Company Project)
<PAGE>
Table of Contents
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I Definitions and Exhibits . . . . . . . . . . 4
Section 101. Terms Defined. . . . . . . . . . . . . . 4
Section 102. Rules of Interpretation. . . . . . . . . 7
Section 103. Exhibits. . . . . . . . . . . . . . . . . 8
ARTICLE II The Bonds . . . . . . . . . . . . . . . . . . 8
Section 201. Terms of Bonds. . . . . . . . . . . . . . 8
Section 202. Issuance of Bonds; Denominations. . . . . 8
Section 203. Payments on Bonds. . . . . . . . . . . . 9
Section 204. Execution; Limited Obligation. . . . . . 9
Section 205. Authentication. . . . . . . . . . . . . . 10
Section 206. Delivery of Bonds. . . . . . . . . . . . 10
Section 207. Mutilated, Lost, Stolen or Destroyed
Bonds. . . . . . . . . . . . . . . . . . 11
Section 208. Registration and Exchange of Bonds;
Persons Treated as Owners. . . . . . . . 11
Section 209. Form of Bonds. . . . . . . . . . . . . . 12
ARTICLE III Application of Bond Proceeds; Redemption
Fund . . . . . . . . . . . . . . . . . . . . 12
Section 301. Deposit of Funds. . . . . . . . . . . . . 12
Section 302. Redemption Fund. . . . . . . . . . . . . 12
ARTICLE IV Revenues and Funds . . . . . . . . . . . . . 13
Section 401. Source of Payment of Bonds. . . . . . . . 13
Section 402. Creation of Bond Fund. . . . . . . . . . 13
Section 403. Payments into Bond Fund. . . . . . . . . 13
Section 404. Use of Moneys in Bond Fund. . . . . . . . 13
Section 405. Investment of Funds. . . . . . . . . . . 14
Section 406. Rebate Fund. . . . . . . . . . . . . . . 14
Section 407. Rebate Deposits. . . . . . . . . . . . . 15
Section 408. Rebate Disbursements. . . . . . . . . . . 15
Section 409. Trust Funds. . . . . . .. . . . . . . . 15
Section 410. Nonpresentment of Bonds. . . . . . . . . 16
ARTICLE V Redemption of Bonds Before Maturity . . . . . 16
Section 501. Determination of Taxability Redemption. . 16
Section 502. Extraordinary Event Redemption. . . . . . 16
Section 503. Notice of Redemption. . . . . . . . . . . 17
Section 504. Cancellation. . . . . . . . . . . . . . . 19
<PAGE>
ARTICLE VI General Covenants . . . . . . . . . . . . . . 19
Section 601. Payment of Principal, Premium, if any,
and Interest. . . . . . . . . . . . . . 19
Section 602. Performance of Covenants. . . . . . . . . 19
Section 603. Ownership; Instruments of Further
Assurance. . . . . . . . . . . . . . . . 19
Section 604. Rights under Loan Agreement and First
Mortgage Bonds. . . . . . . . . . . . . 20
Section 605. Designation of Additional Paying Agents. 20
Section 606. Recordation; Application of Uniform
Commercial Code. . . . . . . . . . . . . 20
Section 607. List of Bondholders. . . . . . . . . . . 21
ARTICLE VII Possession and Use of the Project . . . . . . 21
Section 701. Subordination to Rights of Company. . . . 21
ARTICLE VIII Remedies . . . . . . . . . . . . . . . . . . 21
Section 801. Events of Default. . . . . . . . . . . . 21
Section 802. Acceleration Rights. . . . . . . . . . . 22
Section 803. Other Remedies; Rights of Bondholders. . 22
Section 804. Right of Bondholders to Direct
Proceedings. . . . . . . . . . . . . . . 23
Section 805. Appointment of Receivers. . . . . . . . . 23
Section 806. Application of Moneys. . . . . . . . . . 23
Section 807. Remedies Vested in Trustee. . . . . . . . 25
Section 808. Rights and Remedies of Bondholders. . . . 25
Section 809. Termination of Proceedings. . . . . . . . 26
Section 810. Waivers of Events of Default. . . . . . . 26
Section 811. Cooperation of Municipality. . . . . . . 26
ARTICLE IX The Trustee . . . . . . . . . . . . . . . . . 26
Section 901. Acceptance of Trusts. . . . . . . . . . . 26
Section 902. Certain Rights of Trustee. . . . . . . . 26
Section 903. Fees, Charges and Expenses of Trustee and
Paying Agent. . . . . . . . . . . . . . 28
Section 904. Notice to Bondholders if Default Occurs. 29
Section 905. Intervention by Trustee. . . . . . . . . 29
Section 906. Successor Trustee. . . . . . . . . . . . 29
Section 907. Resignation by Trustee. . . . . . . . . . 29
Section 908. Removal of Trustee. . . . . . . . . . . . 30
Section 909. Appointment of Successor Trustee by
Bondholders; Temporary Trustee. . . . . 30
Section 910. Concerning Any Successor Trustees. . . . 30
Section 911. Trustee Protected in Relying upon
Resolution, etc. . . . . . . . . . . . . 31
Section 912. Successor Trustee as Trustee of Funds,
Paying Agent and Bond Registrar. . . . . 31
<PAGE>
ARTICLE X Supplemental Indentures . . . . . . . . . . . 31
Section 1001. Supplemental Indentures Not Requiring
Consent of Bondholders. . . . . . . . . 33
Section 1002. Supplemental Indentures Requiring
Consent of Bondholders. . . . . . . . . 32
ARTICLE XI Amendments to the Loan Agreement . . . . . . 32
Section 1101. Amendments, etc., to Loan Agreement, the
Twenty-First Supplemental Indenture, the
First Mortgage Indenture or the Guaranty
Not Requiring Consent of Bondholders . 32
Section 1102. Amendments, etc., to Loan Agreement, the
Twenty-First Supplemental Indenture, the
First Mortgage Indenture or the Guaranty
Requiring Consent of Bondholders. . . . 32
Section 1103. No Amendment May Alter First Mortgage
Bonds. . . . . . . . . . . . . . . . . 33
ARTICLE XII Miscellaneous . . . . . . . . . . . . . . . . 33
Section 1201. Satisfaction and Discharge. . . . . . . 33
Section 1202. Application of Trust Money. . . . . . . 34
Section 1203. Consents, etc., of Bondholders. . . . . 34
Section 1204. Parties Interested Herein. . . . . . . . 35
Section 1205. Severability. . . . . . . . . . . . . . 35
Section 1206. Notices. . . . . . . . . . . . . . . . . 35
Section 1207. Trustee as Paying Agent and Registrar. . 35
Section 1208. Counterparts. . . . . . . . . . . . . . 35
Section 1209. Applicable Law. . . . . . . . . . . . . 36
Section 1210. Holidays. . . . . . . . . . . . . . . . 36
Section 1211. Captions and Table of Contents. . . . . 36
Exhibit A: Form of Bond, form of Trustee's Certificate of
Authentication and form of Assignment.
Exhibit B: Description of the Project.
<PAGE>
INDENTURE OF TRUST
This INDENTURE OF TRUST has been executed as of
April 1, 1993, by and among the CITY OF INDIANAPOLIS, INDIANA
(the "Municipality"), INDIANAPOLIS WATER COMPANY, an Indiana
corporation (the "Company"), and National City Bank, Indiana, a
national banking association authorized to accept trusts of
this character with its principal office located in
Indianapolis, Indiana, as Trustee (the "Trustee").
RECITALS
1. Definitions of certain of the terms used in these
Recitals are set out in Article I hereof and Article I of the
Loan Agreement.
2. IC 36-7-11.9 and IC 36-7-12 authorize
municipalities in the State of Indiana to issue revenue bonds
to finance the cost of providing economic development
facilities and also authorize the municipalities to issue
revenue bonds to refund such bonds.
3. In 1974, the Company initiated a program of
expansion of its Indianapolis water distribution facilities. A
portion of those facilities, now known as the Thomas W. Moses
Treatment Plant and described on Exhibit B attached hereto (the
"Project"), were financed through the City of Indianapolis,
Indiana 6-1/4% Economic Development Water Facilities Revenue
Bonds, 1974 Series (Indianapolis Water Company Project) (the
"1974 Bonds").
4. To finance a portion of the costs of the Project,
the Company borrowed from the Municipality funds derived from
the sale of the 1974 Bonds, and the Company, as evidence of its
obligation to repay the funds, issued and delivered to the
Municipality its First Mortgage Bonds, Economic Development
Series A.
5. The Company has determined that the 1974 Bonds can
be refinanced at a net savings to the Company and has further
determined that such refinancing will result in other benefits
to the Company.
6. Pursuant to IC 5-1-5, IC 36-7-11.9 and IC 36-7-12,
the Municipality is authorized and empowered to issue revenue
bonds to refund and refinance revenue bonds previously issued
by it. The Municipality is obtaining funds to loan to the
Company to assist with the refunding and refinancing of the
1974 Bonds through the sale of its $11,600,000 aggregate
principal amount of City of Indianapolis, Indiana Economic
<PAGE>
Development Water Facilities Refunding Revenue Bonds, Series
1993 (Indianapolis Water Company Project).
7. Under the Loan Agreement and pursuant to this
Indenture, the Municipality will issue $11,600,000 of its
Economic Development Water Facilities Refunding Revenue Bonds,
Series 1993 (Indianapolis Water Company Project), will sell the
Bonds to the Purchaser and will lend the proceeds from the sale
of the Bonds to the Company. The Bonds will be payable solely
out of the revenues and other amounts derived from the First
Mortgage Bonds (as hereinafter defined) and under the Loan
Agreement, and pursuant to the Guaranty Agreement under which
the principal of, premium, if any, and interest on the Bonds
will be guaranteed by IWC Resources Corporation, an Indiana
corporation (the "Guarantor"). The Bonds shall not in any
respect be a general obligation of, an indebtedness of, or
constitute a charge against the general credit of the
Municipality, the State of Indiana or any political subdivision
thereof.
8. To evidence its obligation to repay the Loan, the
Company will deliver the First Mortgage Bonds to the
Municipality.
9. This Indenture provides for the issuance of the
Bonds, the assignment by the Municipality of the First Mortgage
Bonds and its rights under the Loan Agreement (except the right
to receive payment for its expenses, the right to receive
indemnities, the right to receive notices and its rights
relating to any amendments to the Loan Agreement) to the
Trustee.
10. The Bonds and the Trustee's Certificate of
Authentication for the Bonds will be substantially in the form
set forth in Exhibit A hereto.
11. All things necessary to make the Bonds, when
authenticated by the Trustee and issued as provided in this
Indenture, the valid, binding and legal obligations of the
Municipality according to the import thereof, and to constitute
this Indenture a valid assignment and pledge of the properties
and amounts assigned and pledged to the payment of the
principal of and premium, if any, and interest on the Bonds and
a valid assignment and pledge of the rights of the Municipality
under the Loan Agreement (except the right to receive payment
for its expenses, the right to receive indemnities, the right
to receive notices and its rights relating to any amendments to
the Loan Agreement) and the First Mortgage Bonds have been done
and performed, and the creation, execution and delivery of this
Indenture and the creation, execution and issuance of the
Bonds, subject to the terms hereof, have in all respects been
duly authorized.
<PAGE>
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSES THAT:
GRANTING CLAUSES
In order to secure the payment of the principal of and
premium, if any, and interest on the Bonds and in order to
secure the performance and observance of all the covenants and
conditions in this Indenture and in the Bonds, and in order to
declare the terms and conditions upon which the Bonds are
issued, authenticated, delivered, secured and accepted by all
persons who shall from time to time be or become holders
thereof, and for and in consideration of the premises, the
Loan, the mutual covenants of the parties, the acceptance by
the Trustee of the trust hereby created, and the purchase and
acceptance of the Bonds by the holders, the Municipality and
the Company have executed and delivered this Indenture and by
this Indenture assign and pledge and grant a security interest
in the following to the Trustee, its successors and assigns
forever:
First Granting Clause
All of the right, title and interest of the
Municipality in, to and under the First Mortgage Bonds and the
Loan Agreement (except the right to receive payment for its
expenses, the right to receive indemnities, the right to
receive notices and its rights relating to any amendments to
the Loan Agreement), including all sums payable with respect to
the indebtedness evidenced by the First Mortgage Bonds and the
Loan Agreement, and all proceeds thereof; provided that the
assignment made by this clause shall not impair or diminish any
obligation of the Municipality under the Loan Agreement.
Second Granting Clause
All moneys and securities from time to time held by the
Trustee under the terms of this Indenture, including without
limitation the Guaranty, the moneys held in trust funds, and
any and all other property pledged, assigned or transferred to
the Trustee at any time for additional security by the
Municipality or the Company or with their written consent, and
all proceeds thereof, excepting, however, moneys deposited in
the Rebate Fund pursuant to Section 406 hereof. The Trustee is
authorized to receive the additional property at any time and
to hold and apply that property under this Indenture.
TO HAVE AND TO HOLD FOREVER IN TRUST, NEVERTHELESS,
upon the terms of this Indenture, to secure the payment of the
principal of and premium, if any, and interest on the Bonds,
and to secure the observance and performance of all the terms
of this Indenture, and for the benefit and security of the
holders of the Bonds, without preference, priority or
distinction as to lien or otherwise, except as provided in this
<PAGE>
Indenture, of any one Bond over any other Bond or as among
principal, premium and interest.
The terms and conditions upon which the Bonds are to be
issued, authenticated, delivered, secured and accepted by all
persons who shall from time to time be or become the holders
thereof, and the trusts and conditions upon which the pledged
property, rights, interests, moneys and revenues are to be held
and disbursed, are as follows:
ARTICLE I
Definitions and Exhibits
Section 101. Terms Defined. As used in this
Agreement, the following terms shall have the following
meanings unless the context otherwise requires.
"Bond" or "Bonds" means one or more of the City of
Indianapolis, Indiana Economic Development Water Facilities
Refunding Revenue Bonds, Series 1993 (Indianapolis Water
Company Project) to be issued under this Indenture in the
aggregate principal amount of $11,600,000.
"Bond Fund" means the Fund created and established
under Section 402 of this Indenture.
"Bondholder" or "Holder" or "Owner" or "Owner of the
Bonds" means the registered owner of any Bond.
"Bond Register" means the registration books of the
Municipality kept by the Trustee to evidence the registration
and transfer of the Bonds.
"Business Day" means each Monday through Friday on
which the national banks located in Indianapolis, Indiana are
open for the transaction of normal banking business.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" means Indianapolis Water Company, an Indiana
corporation.
"Determination of Taxability" means the occurrence of
any of the following:
(a) the filing by the Company of its certificate with
the Trustee indicating to the satisfaction of the Trustee
that an Event of Taxability has occurred;
(b) notification to the Trustee that an authorized
officer or official of the Internal Revenue Service has
<PAGE>
issued a statutory notice of deficiency or document of
substantially similar import to the effect that an Event of
Taxability has occurred; or
(c) notification to the Trustee from any Bondholder or
former Bondholder to the effect that the Internal Revenue
Service has assessed as includable in the gross income of
such Bondholder or former Bondholder interest on a Bond due
to the occurrence of an Event of Taxability;
provided, however, that in respect of clauses (b) and (c)
above, a Determination of Taxability shall not be deemed to
have occurred unless and until the Company has been notified of
the allegation that an Event of Taxability and a Determination
of Taxability have occurred and either (i) the Company fails to
commence a contest of such allegation in good faith and by
appropriate legal proceedings within 90 days following such
notification, or (ii) the Company does commence such contest
within such time, but thereafter fails to pursue it diligently,
in good faith and by appropriate legal proceedings to a final
order or judgment by a court or administrative body of
competent jurisdiction, or (iii) such contest results in a
final order or judgment of a court or administrative body of
competent jurisdiction to the effect that an Event of
Taxability has occurred and the time for any appeal of such
order or judgment has expired.
"Event of Default" means those events of default
specified in Section 801.
"Event of Taxability" means any event, condition or
circumstance which has the effect or result that interest on a
Bond is not excludable for federal income tax purposes from the
gross income of a Bondholder or a former Bondholder under
Section 103 of the Code, other than for a period during which
the Bondholder or a former Bondholder is or was a "substantial
user" of the Project or a "related person" for purposes of
Section 147(a) of the Code, and the regulations thereunder. An
Event of Taxability does not include any event, condition or
circumstance which results in the interest on a Bond being a
preference item subject to an alternate minimum tax, or in any
other tax consequences that do not involve the inclusion for
federal income tax purposes of interest on the Bonds in the
income of Bondholders generally but instead depend upon a
Bondholder's particular tax status.
"First Mortgage Bonds" means the First Mortgage Bonds
issued under the Twenty-Second Supplemental Indenture to the
Company's First Mortgage Indenture and designated Indianapolis
Water Company First Mortgage Bonds, Economic Development
Series E.
"First Mortgage Indenture" means the First Mortgage
Indenture dated as of July 1, 1936 between the Company and
<PAGE>
Fidelity Bank, National Association (formerly the
Fidelity-Philadelphia Trust Company), Philadelphia,
Pennsylvania, as trustee, as heretofore amended and
supplemented by twenty-one supplemental indentures and as to be
amended and as to be supplemented by the Twenty-Second
Supplemental Indenture.
"First Mortgage Indenture Trustee" means the trustee
serving as such under the First Mortgage Indenture.
"Guarantor" means IWC Resources Corporation, the
guarantor under the Guaranty.
"Guaranty" means the Guaranty Agreement dated as of
April 1, 1993, under which IWC Resources Corporation guarantees
the payment of the principal of, premium, if any, and interest
on the Bonds.
"Loan Agreement" means the Loan Agreement dated as of
the date of this Indenture between the Company and the
Municipality and all amendments and supplements thereto.
"Majority" means, when used with reference to the
Owners or Holders of Bonds outstanding, in excess of fifty
percent (50%) of the principal amount of the Bonds outstanding.
"1974 Bonds" means the 6-1/4% City of Indianapolis,
Indiana Economic Development Revenue Bonds, 1974 Series
(Indianapolis Water Company Project).
"Municipality" means the City of Indianapolis, Indiana.
"Officer's Certificate" means a certificate of the
Municipality signed by the Mayor or Clerk or by any other
person designated by resolution of the Municipality to act for
either of those officers, either generally or with respect to
the execution of any particular document or other specific
matter, a certified copy of which resolution shall be filed
with the Trustee.
"Outstanding" or "Bonds outstanding" or "outstanding
Bonds" means all Bonds which have been duly authenticated and
delivered by the Trustee under this Indenture, except:
(a) Bonds cancelled after purchase or because of
payment at or redemption prior to maturity;
(b) Bonds for the payment or redemption of which funds
or securities shall have been deposited with the Trustee
(whether upon or prior to the maturity or redemption date of
those Bonds) and with respect to which all actions required
to be taken at the time of such deposit as set forth in
Section 1201 have been taken including, without limitation,
the requirement that if those Bonds are to be redeemed prior
<PAGE>
to the maturity thereof, notice of the redemption shall have
been given or arrangements satisfactory to the Trustee shall
have been made for notice, or waiver of notice satisfactory
in form to the Trustee shall have been filed with the
Trustee; and
(c) Bonds in lieu of which others have been
authenticated under Section 207 and Section 208.
"Person" means natural persons, firms, associations,
corporations and public bodies.
"Project" means the facilities described in Exhibit B
hereto.
"Purchaser" means Smith Barney, Harris Upham & Co.
Incorporated.
"Qualified Investments" means investments authorized
under Section 3.3 of the Loan Agreement.
"Rebate Fund" means the Fund created and established
under Section 406 of this Indenture.
"Record Date" means with respect to an interest payment
date, the fifteenth (15th) day of the calendar month
immediately preceding such interest payment date (whether or
not a Business Day).
"Redemption Fund" means the Fund created and
established under Section 302 of this Indenture.
"Trust Estate" means the property, rights, moneys,
securities and other amounts conveyed to the Trustee pursuant
to the Granting Clauses hereof.
"Trustee" means National City Bank, Indiana, and any
successor trustee or co-trustee.
"Twenty-Second Supplemental Indenture" means the
supplemental indenture dated as of April 1, 1993, between the
Company and the First Mortgage Indenture Trustee, under which
the First Mortgage Bonds are to be issued.
"Written Request" with reference to the Municipality
means a request in writing signed by the Mayor or Clerk or any
other officer or officers of the Municipality satisfactory to
the Trustee.
Section 102. Rules of Interpretation. For all
purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE>
(1) The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole including exhibits and not to any particular Article,
Section or other subdivision.
(2) The terms defined in this Article include the
plural, as well as the singular.
(3) All accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles.
(4) Any terms not defined herein but defined in the
Loan Agreement shall have the same meaning herein as in the
Loan Agreement.
Section 103. Exhibits. The following Exhibits are a
part of this Agreement:
Exhibit A: Form of Bond, form of Trustee's Certificate
of Authentication and form of Assignment.
Exhibit B: Description of the Project.
ARTICLE II
The Bonds
Section 201. Terms of Bonds. No Bonds may be issued
under this Indenture except in accordance with this Article.
The total aggregate principal amount of Bonds shall not exceed
$11,600,000 (other than Bonds issued pursuant to Section 207).
Section 202. Issuance of Bonds; Denominations. Each
of the Bonds shall be designated "City of Indianapolis, Indiana
Economic Development Water Facilities Refunding Revenue Bond,
Series 1993 (Indianapolis Water Company Project)."
The Bonds shall be issuable as fully registered bonds
without coupons in the denominations of $5,000 or any integral
multiple thereof and shall be lettered and numbered R-1 upward.
Each Bond initially issued hereunder shall be dated the date of
issuance thereof and shall bear interest from the date of
issuance.
Bonds issued in exchange for Bonds surrendered for
transfer or exchange or in place of mutilated, lost, stolen or
destroyed Bonds will bear interest from the last date to which
interest has been paid in full on the Bonds being transferred,
exchanged or replaced or, if no interest has been paid, from
the date of their initial issuance.
<PAGE>
Interest on the Bonds shall be paid to the persons who
were the Owners of such Bonds as of the close of business on
the Record Date next preceding such interest payment date at
the registered addresses of such Owners as they shall appear on
the registration books maintained by the Trustee
notwithstanding the cancellation of any such Bonds upon any
exchange or transfer thereof subsequent to the Record Date and
prior to such interest payment date. Payment of interest to
all Bondholders shall be by check drawn on the principal office
of the Trustee and mailed on the due date thereof by first
class United States mail to such Bondholder, or, at the written
election of the registered owner of $1,000,000 or more in
aggregate principal amount of Bonds delivered to the Trustee at
least one Business Day prior to the Record Date for which such
election will be effective, by wire transfer to the registered
owner or by deposit into the account of the registered owner if
such account is maintained by the Trustee.
The interest on the Bonds shall be payable on each
May 1, and November 1 commencing on November 1, 1993. The
Bonds shall mature on May 1, 2001 and shall bear interest from
the date of their initial issuance until paid in full at the
per annum rate of 5.20%, computed on the basis of a year of 360
days (consisting of 12 months of 30 days each). To the extent
permitted by law, overdue interest on the Bonds shall also bear
interest at such rate until paid in full.
Section 203. Payments on Bonds. The principal of and
premium, if any, and interest on the Bonds shall be payable in
any coin or currency of the United States of America which, at
the date of payment thereof, is legal tender for the payment of
public and private debts. Principal of and premium, if any,
and interest on the Bonds shall be payable at the principal
office of the Trustee, in the City of Indianapolis, Indiana, or
of any alternate paying agent named in the Bonds or
subsequently appointed. Payment of the interest on the Bonds
on any payment date shall be made to the person appearing on
the Bond registration books of the Trustee as the registered
Owner and shall be paid by check or draft mailed to the
registered Owner on the due date at the address on such
registration books without any presentation of the Bonds.
Payment of the principal of and premium, if any, on any Bond
shall be made upon presentation and surrender of the Bond as
the same shall become due and payable.
Section 204. Execution; Limited Obligation. The Bonds
shall be executed on behalf of the Municipality with the manual
or facsimile signature of its Mayor and attested with the
manual or facsimile signature of its Clerk and shall have
impressed or printed thereon the corporate seal of the
Municipality. In case any officer whose signature appears on
the Bonds shall cease to hold that office before the delivery
of the Bonds, the signature shall nevertheless be valid and
sufficient for all purposes, the same as if the officer had
<PAGE>
remained in office until delivery. The Bonds, and interest
thereon, shall be limited obligations of the Municipality
payable by it solely from the payments to be made under the
Loan Agreement and on the First Mortgage Bonds (except to the
extent paid out of moneys attributable to the proceeds of the
Bonds or the income from the temporary investment thereof) and
shall be a valid claim of the Holder of the Bonds only against
the moneys held by the Trustee. In addition, payment of the
Bonds shall be guaranteed by the Guarantor under the Guaranty.
The payments to be made under the Loan Agreement and on the
First Mortgage Bonds which are assigned for the payment of the
Bonds shall be used for no other purpose than to pay the
principal of and premium, if any, and interest on the Bonds,
except as may be otherwise expressly authorized in this
Indenture. The Bonds shall not in any respect be a general
obligation of, an indebtedness of, or constitute a charge
against the general credit of the Municipality, the State of
Indiana, or any political subdivision thereof, and they shall
not be payable in any manner from funds raised by taxation.
Section 205. Authentication. No Bond shall be valid
or obligatory for any purpose or entitled to any benefit under
this Indenture unless the certificate of authentication on the
Bond has been executed by the Trustee, and the executed
certificate of the Trustee on the Bond shall be conclusive
evidence that the Bond has been authenticated and delivered
under this Indenture. The Trustee's certificate of
authentication on any Bond shall be deemed to have been
executed by it if signed by an authorized representative of the
Trustee, but it shall not be necessary that the same
representative sign the certificate of authentication on all of
the Bonds.
Section 206. Delivery of Bonds. Upon the execution
and delivery of this Indenture, the Municipality shall execute
and deliver to the Trustee the Bonds in the aggregate principal
amount of $11,600,000 and the Trustee shall authenticate the
Bonds and deliver them to the Municipality or to such other
person or persons as directed by the Municipality as provided
in this Section 206.
Prior to the delivery by the Trustee of the Bonds,
there shall be filed with the Trustee:
1. A copy, certified by the Clerk of the
Municipality, of the Ordinance adopted by the Municipality
authorizing the execution and delivery of the Loan Agreement
and this Indenture and the issuance of the Bonds.
2. Original executed counterparts of the Loan
Agreement, this Indenture, the Twenty-Second Supplemental
Indenture and the Guaranty.
<PAGE>
3. The First Mortgage Bonds as required by the Loan
Agreement, executed by the Company and assigned by the
Municipality to the Trustee for and on behalf of the
Municipality.
4. A Written Request of the Municipality to the
Trustee requesting the Trustee to authenticate and deliver the
Bonds to the person or persons therein identified upon payment
to the Trustee, but for the account of the Municipality, of a
sum specified in such request and authorization.
5. An opinion of bond counsel to the effect that the
Bonds are valid and binding limited obligations of the
Municipality and that the interest thereon is excludable from
the gross income of the recipients thereof for federal income
tax purposes under Section 103 of the Code, except when the
Bonds are held by a "substantial user" of the Project or a
"related person."
6. Such documents, instruments and other materials
requested by the Trustee for the purpose of evidencing the
discharge, termination and release of all obligations and
liabilities of the Company created by or relating to the 1974
Bonds.
7. Such other items as shall be required by bond
counsel employed in connection with the issuance of the Bonds.
The proceeds of the Bonds shall be paid to the Trustee
and deposited as provided in Section 301 hereof.
Section 207. Mutilated, Lost, Stolen or Destroyed
Bonds. If any Bond is mutilated, lost, stolen or destroyed,
the Municipality may execute and the Trustee may authenticate a
new Bond for the same original principal amount provided that,
in the case of a mutilated Bond, such mutilated Bond shall
first be surrendered to the Trustee, and in the case of a lost,
stolen or destroyed Bond, there shall be first furnished to the
Trustee evidence of the loss, theft or destruction satisfactory
to the Trustee, together with indemnity satisfactory to the
Trustee. In the event a mutilated, lost, stolen or destroyed
Bond shall have matured, instead of issuing a duplicate Bond
the Trustee may pay the same without surrender thereof. The
Municipality and the Trustee may charge the Holder or Owner of
the Bond with their reasonable fees and expenses in this
connection.
Section 208. Registration and Exchange of Bonds;
Persons Treated as Owners. The Municipality shall cause books
for the registration and for the transfer of the Bonds to be
kept by the Trustee, which is hereby appointed the Bond
registrar of the Municipality. Upon surrender for transfer of
any Bond at the principal office of the Trustee, endorsed for
transfer or accompanied by an assignment executed by the
<PAGE>
registered Owner or his authorized attorney, the Trustee shall
authenticate and deliver in the name of the transferee a new
fully registered Bond or Bonds for the same original principal
amount, which fully registered Bond or Bonds shall have been
executed by the Municipality.
Bonds may be exchanged at the principal office of the
Trustee for the same original principal amount of Bonds of
other authorized denominations. The Municipality shall execute
and the Trustee shall authenticate and deliver new Bonds which
the Bondholder making the change is entitled to receive,
bearing numbers not then outstanding.
The Trustee shall not be required to transfer or
exchange any Bond during any period beginning on a Record Date
and ending on the interest payment date with respect to such
Record Date or to transfer or exchange any Bond after the first
mailing of notice calling such Bond or a portion thereof for
redemption, nor any Bond during the fifteen-day period next
preceding the giving of such notice of redemption.
As to any Bond, the person in whose name the Bond is
registered shall be deemed the absolute Owner for all purposes,
and payment of either principal of or interest or premium on
the Bond shall be made only to or upon the written order of the
registered Owner or his legal representative.
In each case the Bondholder requesting registration,
exchange or transfer shall pay any resulting tax or other
governmental charge.
Section 209. Form of Bonds. The Bonds shall be
substantially in the form set forth in Exhibit A hereto with
any appropriate notations, omissions and insertions permitted
or required by this Indenture or deemed necessary by the
Trustee.
ARTICLE III
Application of Bond Proceeds;
Redemption Fund
Section 301. Deposit of Funds. Pursuant to
Section 3.1 of the Loan Agreement, the Municipality shall
deposit with the Trustee all proceeds from the sale of Bonds
and the Trustee shall deposit all such proceeds into the
Redemption Fund created under Section 302 hereof.
Section 302. Redemption Fund. The Municipality shall
establish with the Trustee a separate account to be designated
as the "Indianapolis Water Company, Series 1993 (Indianapolis)
Redemption Fund." Moneys on deposit in the Redemption Fund
shall be paid out by the Trustee as provided in Section 3.2 of
<PAGE>
the Loan Agreement solely for the purpose of discharging,
retiring and redeeming the 1974 Bonds and terminating all
obligations and liabilities of the Company created by or
relating to the 1974 Bonds; provided, however, that any moneys
remaining in the Redemption Fund after such discharge,
retirement, redemption and termination shall be promptly
released and distributed to the Company. Moneys on deposit in
the Redemption Fund may be invested only in Qualified
Investments in accordance with Section 3.3 of the Loan
Agreement and the income or loss shall be credited or charged
to the Redemption Fund.
ARTICLE IV
Revenues and Funds
Section 401. Source of Payment of Bonds. The Bonds
and all payments to be made by the Municipality hereunder are
not general obligations of the Municipality, but are limited
obligations payable by it solely out of the revenues and other
amounts derived from the First Mortgage Bonds and under the
Loan Agreement. In addition, the Bonds shall be guaranteed by
the Guarantor under the Guaranty.
Section 402. Creation of Bond Fund. There is created
with the Trustee a trust fund to be designated as the
"Indianapolis Water Company, Series 1993 (Indianapolis) Bond
Fund." Amounts deposited into the Bond Fund shall be used to
pay the principal of and premium, if any, and interest on the
Bonds and as otherwise authorized in this Indenture.
Section 403. Payments into Bond Fund. There shall be
deposited into the Bond Fund all payments received pursuant to
the First Mortgage Bonds and all other moneys received by the
Trustee under the Loan Agreement or the Guaranty which are
required or directed to be paid into the Bond Fund.
Section 404. Use of Moneys in Bond Fund. Except as
provided in Section 1201 hereof, moneys in the Bond Fund shall
be used solely for the payment of the principal of and premium,
if any, and interest on the Bonds, for the redemption of all or
a portion of the Bonds prior to maturity, for the purchase of
Bonds or portions thereof for the purpose of cancellation, for
any fees and expenses of the Trustee and any paying agent and
for any fees and expenses of the Municipality caused by any
default of the Company under the Loan Agreement. Whenever the
amount in the Bond Fund is sufficient to redeem all of the
Bonds then unpaid and to pay the premium, if any, and interest
to accrue thereon prior to redemption, the Trustee shall, at
the request of the Company, take the necessary steps to redeem
the Bonds on the earliest possible redemption date for which
the required redemption notice may be given. However, any
moneys in the Bond Fund may be used to redeem a part of the
<PAGE>
Bonds outstanding so long as the Company is not in default with
respect to any payments under the Loan Agreement or the First
Mortgage Bonds, but only to the extent those moneys are in
excess of the amount still required for payment of the portion
of the Bonds previously called for redemption, the premium
thereon, if any, and interest, and any past due interest and
principal.
Section 405. Investment of Funds. Moneys in the Bond
Fund may be invested in Qualified Investments as provided for
in Section 3.3 of the Loan Agreement. Any such investments
shall be held by or under control of the Trustee and shall be
deemed at all times a part of the Bond Fund, and the interest
accruing thereon and any profit realized therefrom shall be
credited to such fund, and any loss resulting from such
investments shall be charged to such fund. The Trustee shall
sell and reduce to cash funds a sufficient portion of
investments under the provisions of this Section 405 whenever
the cash balance in the Bond Fund is insufficient to pay the
principal of and premium, if any, and interest on the Bonds as
and when payable.
The Company and the Municipality covenant to each other
and to and for the benefit of the Holders of the Bonds that no
use will be made of the proceeds from the issue and sale of the
Bonds which would cause the Bonds to be classified as arbitrage
bonds within the meaning of Section 103(b)(2) and Section 148
of the Code. The parties reserve the right, however, to make
any investment of proceeds permitted by the laws of the State
of Indiana, if Section 148 or regulations thereunder are
repealed or relaxed or are held void by final judgment of a
court of competent jurisdiction, so long as the investment
would not result in making the interest on the Bonds subject to
federal income taxation. In making investments, the parties
may rely on an opinion of counsel of recognized competence in
such matters. The Trustee may make any and all investments
permitted by this Section 405 through its own bond department.
Section 406. Rebate Fund. The Trustee shall establish
and maintain, so long as any Bonds are outstanding, a separate
segregated fund to be known as the "Rebate Fund" and said
Rebate Fund shall have established therein a Rebate Principal
Account and a Rebate Income Account. The Trustee shall make
information regarding the Bonds and investments hereunder
available to the Company and shall make deposits and
disbursements from the Rebate Fund in accordance with the
provisions of Sections 407 and 408 hereof. The Trustee shall
invest, as directed in writing by the Company, the moneys in
the Rebate Fund in Qualified Investments and shall deposit
income from such investment immediately upon receipt thereof in
the Rebate Income Account. Anything in this Indenture to the
contrary notwithstanding, the immediately preceding sentence of
this Indenture and Section 407 and 408 hereof may be superseded
or amended by new investment instructions delivered by the
<PAGE>
Company or the Municipality and accompanied by an opinion of
Bond Counsel addressed to the Trustee in writing to the effect
that the use of the new investment instructions will not cause
the interest on the Bonds to become includable in the gross
income of the Holders thereof for federal income tax purposes
under Section 103 of the Code.
The Rebate Fund shall not be pledged as security for
the payment of the principal of, premium, if any, and interest
payable on the Bonds and all funds deposited to the Rebate Fund
shall remain in the Rebate Fund until either (a) the money is
disbursed to the United States pursuant to Section 408 hereof
or (b) a determination is made by the Company and notice
thereof given by the Company to the Trustee in writing that
such funds are not owed to the United States under Rebate
Requirements of Section 148 of the Code.
Section 407. Rebate Deposits. If a deposit to the
Rebate Principal Account is required as a result of the
obligations of the Company pursuant to Section 3.4 of the Loan
Agreement, the Trustee shall upon receipt of written directions
from the Company accept such payment for the benefit of the
Company. If amounts in excess of that required to be rebated
to the United States accumulate in the Rebate Fund, the Trustee
shall upon written direction from the Company transfer such
amount to the Company. Records of the determinations required
by this Indenture and relating to the Rebate Fund and the
investment instructions must be retained by the Trustee until
six (6) years after the Bonds are no longer outstanding.
Section 408. Rebate Disbursements. Not later than
thirty (30) days after April 28, 1998, and every five (5) years
thereafter, the Company shall determine and advise the Trustee
as to the amount required to be on deposit in the Rebate
Principal Account and the Trustee, at the written direction of
the Company, shall pay to the United States at least ninety
percent (90%) of the amount required to be on deposit in the
Rebate Principal Account on such payment date and one hundred
percent (100%) of the amount on deposit in the Rebate Income
Account as of such payment date. Not later than thirty (30)
days after the final retirement of the Bonds, the Trustee, at
the written direction of the Company, shall pay to the United
States one hundred percent (100%) of the balance remaining in
the Rebate Principal Account and the Rebate Income Account.
Each payment shall be accompanied by a copy provided by the
Company of the Form 8038 originally filed with respect to the
Bonds and a statement of the Company summarizing the
determination of the amount to be paid to the United States.
Section 409. Trust Funds. All moneys and securities
received by the Trustee under the provisions of this Indenture
shall be trust funds and shall not be subject to lien or
attachment of any creditor of the Municipality or of the
Company.
<PAGE>
Section 410. Nonpresentment of Bonds. In the event
any Bond shall not be presented for payment when the principal
thereon becomes due, either at maturity, or at the date fixed
for redemption thereof, or otherwise, if funds sufficient to
pay such Bond shall have been made available to the Trustee for
the benefit of the Holder thereof, all liability of the
Municipality to the Owner thereof for the payment of such Bond
shall forthwith cease, determine and be completely discharged,
and thereupon it shall be the duty of the Trustee to hold such
funds for five years, without liability for interest thereon,
for the benefit of the Holder of such Bond, who shall
thereafter be restricted exclusively to such funds, for any
claim of whatever nature on his part under this Indenture or
on, or with respect to, such Bond. Any moneys so deposited
with and held by the Trustee not so applied to the payment of
Bonds within five years after the date on which the same shall
become due, shall be repaid by the Trustee to the Company and
thereafter Bondholders shall be entitled to look only to the
Company for payment, and then only to the extent of the amount
so repaid, and the Company shall not be liable for any interest
thereon and shall not be regarded as a trustee of such money.
Nor shall the Company be liable for any portion of such money
that it delivers to the State of Indiana pursuant to IC 32-9.
ARTICLE V
Redemption of Bonds Before Maturity
Section 501. Determination of Taxability Redemption.
The Bonds are subject to mandatory redemption in whole (or in
part as provided below) on the earliest practicable date
(selected by the Trustee) within one hundred and eighty (180)
days following a Determination of Taxability. The redemption
price shall be 100% of the principal amount thereof plus
accrued interest to the redemption date. Fewer than all the
Bonds may be redeemed if redemption of fewer than all would
result in the interest payable on the Bonds remaining
outstanding being not includable in the gross income for
federal income tax purposes of any owner other than a
"substantial user" or "related person." If fewer than all
Bonds are redeemed, the Trustee will select the Bonds to be
redeemed by lot or by such other random means as the Trustee
shall determine in its discretion.
Section 502. Extraordinary Event Redemption. The
Bonds shall be redeemed, in whole but not in part, at any time
at a redemption price of 100% of the principal amount so
redeemed, plus accrued interest to the redemption date, and
without redemption premium, if within one year after the
occurrence of any of the following events, the Company shall
elect to prepay the First Mortgage Bonds:
<PAGE>
(a) All or substantially all of the Project shall have
been damaged or destroyed to such extent that, in the
opinion of the Company expressed in a Company's certificate
filed with the Trustee following such damage or destruction,
(i) it is not practicable or desirable to rebuild, repair or
restore the Project within a period of six consecutive
months following such damage or destruction, or (ii) the
Company is or will be thereby prevented from carrying out
its normal operations at the Project for a period of at
least six consecutive months; or
(b) Any court or administrative body of competent
jurisdiction shall enter a judgment, order or decree
requiring the Company to cease all or substantially all of
its operations at the Project to such extent that, in the
opinion of the Company expressed in a Company's certificate
filed with the Trustee, the Company is or will be thereby
prevented from carrying on its normal operations for a
period of at least six consecutive months.
The Bonds shall also be redeemed at a redemption price
of 100% of the principal amount so redeemed, plus accrued
interest to the redemption date, and without redemption
premium, in the event of and subject to the notice provisions
of Section 503 hereof, immediately upon the redemption of First
Mortgage Bonds by reason of an event described in Article III,
Section 2 of the Twenty-Second Supplemental Indenture, relating
to eminent domain.
Section 503. Notice of Redemption.
(a) Notice of the call for redemption identifying the
Bonds to be redeemed (and, in the case of partial redemption of
any Bonds, the respective principal amounts thereof to be
redeemed), the redemption date and the redemption price shall
be given to Bondholders by mailing the redemption notice by
registered or certified mail at least thirty days but no more
than sixty days prior to the date fixed for redemption to the
registered Owner of each Bond to be redeemed in whole or in
part at the address shown on the registration books; provided,
however, that failure to give notice by mailing, or any defect
therein, with respect to any Bond shall not affect the validity
of any proceedings for the redemption of any other Bonds or
portions thereof. Reference is hereby made to Section 5.5 of
the Loan Agreement, which provision sets forth the obligations
of the Company with respect to notice to the Trustee of the
Company's exercise of its rights to prepay the First Mortgage
Bonds. On and after the redemption date specified in the
notice, the Bonds that were called for redemption shall not
bear interest, shall no longer be protected by this Indenture
and shall not be deemed to be outstanding, and the Holders
thereof shall have the right only to receive the redemption
price plus accrued interest to the date fixed for redemption;
<PAGE>
provided, however, that all actions required by Section 1201 of
this Indenture have been taken.
(b) In addition to the redemption notice required
above, if there is more than one Bondholder of all the Bonds,
further notice (the "Additional Notice") shall be given by the
Trustee as set out below. No defect in the Additional Notice
or any failure to give all or any portion of the Additional
Notice shall in any manner defeat the effectiveness of a call
for redemption if notice is given as prescribed in
paragraph (a) above.
(1) Each Additional Notice of redemption shall contain
the information required in paragraph (a) above for an
official notice of redemption plus (i) the CUSIP numbers of
all Bonds being redeemed; (ii) the date of the Bonds as
originally issued: (iii) the rate of interest borne by each
Bond being redeemed; (iv) the maturity date of each Bond
being redeemed; and (v) any other descriptive information
needed to identify accurately the Bonds being redeemed.
(2) Each Additional Notice shall be published one time
in a financial newspaper or journal which regularly carries
notices of redemption of other obligations similar to the
Bonds (e.g., The Bond Buyer) such publication to be made at
least 30 days prior to the date fixed for redemption.
(3) Upon the payment of the redemption price of the
Bonds being redeemed, each check or other transfer of funds
issued for such purpose shall bear the CUSIP number
identifying, by issue and maturity, the Bonds being redeemed
with the proceeds of such check or other transfer.
(4) Each Additional Notice of redemption shall be sent
at least 35 days before the redemption date by registered or
certified mail or overnight delivery service to the Paying
Agents, if any, to all registered securities depositories
then in the business of holding substantial amounts of
obligations similar to the Bonds (such depositories now
being Depository Trust Company of New York, New York,
Midwest Securities Trust Company of Chicago, Illinois,
Pacific Securities Depository Trust Company of San
Francisco, California and Philadelphia Depository Trust
Company of Philadelphia, Pennsylvania), to Standard and
Poor's Corporation, Moody's Investors Service, Inc. and to
one or more national information services that disseminate
notices of redemption of obligations such as the Bonds.
(5) In addition, the Trustee shall at all reasonable
times make available to any interested party complete
information as to which Bonds have been redeemed or called
for redemption.
<PAGE>
Section 504. Cancellation. All Bonds that have been
redeemed shall be cancelled by the Trustee and disposed of by
the Trustee. A cancelled Bond shall not be reissued and a
counterpart of the certificate evidencing its disposition shall
be furnished by the Trustee to the Municipality and the
Company.
ARTICLE VI
General Covenants
Section 601. Payment of Principal, Premium, if any,
and Interest. The Municipality shall promptly pay, but solely
from payments under the Loan Agreement and on the First
Mortgage Bonds and from funds otherwise available therefor in
the Bond Fund the principal of and premium, if any, and
interest on every Bond at the place, on the dates and in the
manner provided herein and in the Bonds. The Bonds do not
represent or constitute a debt of the Municipality within the
meaning of the provisions of the Constitution or Statutes of
the State of Indiana or a pledge of or charge against the
credit of the Municipality or grant to the Owners or Holders
thereof any right to have the Municipality levy taxes or
appropriate any funds for the payment of the principal thereof
or interest thereon.
Section 602. Performance of Covenants. The
Municipality will perform its obligations under this Indenture,
the Bonds and the proceedings of its governing body pertaining
to the Bonds. The Municipality represents that it is
authorized under the Constitution and laws of the State of
Indiana to issue the Bonds, to execute this Indenture and to
assign all its right and title and interest in and to the First
Mortgage Bonds and the Loan Agreement under this Indenture;
that all action on its part for the issuance of the Bonds and
the execution and delivery of this Indenture has been taken,
and that the Bonds in the hands of the Holders and Owners
thereof are and will be valid and binding obligations of the
Municipality.
The Company covenants that it will faithfully perform
at all times all covenants, undertakings, stipulations and
provisions which it has expressly undertaken to perform in this
Indenture.
Section 603. Ownership; Instruments of Further
Assurance. The Municipality represents that it lawfully owns
the First Mortgage Bonds and that the pledge and assignment
thereof and the assignment of its interests in the Loan
Agreement to the Trustee hereby made are valid and lawful. The
Municipality covenants that it will defend the title to the
First Mortgage Bonds and its interest in the Loan Agreement
assigned to the Trustee, for the benefit of the Holders and
<PAGE>
Owners of the Bonds against the claims and demands of all
persons whomsoever.
The Municipality covenants that it will do, execute,
acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, such indentures supplemental hereto
and such further acts, instruments and transfers as the Trustee
may reasonably require for the better assuring, transferring,
pledging, assigning and confirming unto the Trustee the First
Mortgage Bonds, the Loan Agreement and all payments thereon and
thereunder pledged hereby to the payment of the principal of
and premium, if any, and interest on the Bonds. The
Municipality covenants that, except as provided herein and in
the Loan Agreement, it will not sell, convey, mortgage,
encumber or otherwise dispose of any part of the revenues and
receipts payable under the First Mortgage Bonds and the Loan
Agreement or its rights under the Loan Agreement.
The Company represents, warrants and covenants that it
will have good and marketable title to the Project, subject to
the lien of the First Mortgage Indenture and the liens and
encumbrances permitted thereby. The Company covenants that it
will do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered, such indentures
supplemental hereto and such further acts, instruments and
transfers as the Trustee may reasonably require for the better
assuring, transferring, pledging, assigning and confirming unto
the Trustee the property described herein and assigned or
pledged hereby and the rights assigned hereby.
Section 604. Rights under Loan Agreement and First
Mortgage Bonds. The Municipality agrees that the Trustee in
its name or in the name of the Municipality may enforce all
rights, remedies and privileges granted to the Municipality and
all obligations of the Company under and pursuant to the Loan
Agreement and the First Mortgage Bonds for and on behalf of the
Bondholders, whether or not the Municipality is in default
hereunder.
Section 605. Designation of Additional Paying Agents.
The Municipality will cause the necessary arrangements to be
made through the Trustee for the designation of alternate
paying agents, if any, and for the payment of the Bonds.
Section 606. Recordation; Application of Uniform
Commercial Code. The Municipality, the Company and the Trustee
shall cause this Indenture and all supplements hereto as well
as such other security instruments, financing statements and
all supplements thereto and other instruments or documents as
may be reasonably required from time to time to be kept,
recorded and filed in such manner and in such places as may be
required by law in order to preserve fully and protect the
security of the Owners of the Bonds and the rights of the
Trustee hereunder, and to perfect the lien of, and the security
<PAGE>
interest created by, this Indenture. This Indenture is a
security agreement in support of any financing statement which
may be executed and filed with respect to the Trust Estate, or
any part thereof, and should an Event of Default occur, the
Trustee may assert any or all of the remedies accorded a
secured party under the Uniform Commercial Code of Indiana.
The Company covenants and agrees to execute and to furnish to
the Trustee such financing statements and continuations thereof
as the Trustee may reasonably deem necessary or appropriate.
Section 607. List of Bondholders. The Trustee as bond
registrar will keep on file at the principal office of the
Trustee a list of names and addresses of the Holders of all
Bonds. At reasonable times and under reasonable regulations
established by the Trustee, said list may be inspected and
copied by the Company, by the Purchaser or by Holders (or a
designated representative thereof) of 10% or more in principal
amount of Bonds then outstanding, such ownership and the
authority of any such designated representative to be evidenced
to the reasonable satisfaction of the Trustee.
ARTICLE VII
Possession and Use of the Project
Section 701. Subordination to Rights of Company. This
Indenture and the rights and privileges hereunder of the
Trustee and the Holders of the Bonds are specifically made
subject and subordinate to the rights and privileges of the
Company set forth in the Loan Agreement. So long as not
otherwise provided in this Indenture, the Company shall be
suffered and permitted to possess, use and enjoy the Project
and appurtenances so as to carry out its obligations under the
Loan Agreement.
ARTICLE VIII
Remedies
Section 801. Events of Default. If any of the
following events occurs, it is hereby declared an "Event of
Default":
(a) default in the due and punctual payment and for a
period of five (5) days thereafter of any interest on any
Bonds; or
(b) default in the due and punctual payment of the
principal of or redemption premium, if any, on any Bond,
whether at stated maturity thereof, or at the date for
redemption thereof, or otherwise; or
<PAGE>
(c) any Event of Default as defined in Section 6.1 of
the Loan Agreement shall have occurred; or
(d) failure by the Municipality or the Company to
perform any other obligations under the Bonds or in this
Indenture continuing for sixty (60) days after written notice
specifying the failure given to the Municipality and the
Company by the Trustee, which shall give such notice at the
written request of the Holders of not less than ten percent
(10%) in aggregate principal amount of the Bonds then
outstanding; provided, however, that with respect to this
clause (d) and with respect to Section 6.1(d) of the Loan
Agreement if failure of performance shall be such that it
cannot be corrected within such period, it shall not constitute
an Event of Default if: (i) such failure of performance, in the
reasonable opinion of the Trustee, is correctable without
material adverse effect on the Bonds; (ii) corrective action
is instituted by or on behalf of the Municipality or the
Company within such period and is diligently pursued until such
failure of performance is corrected; and (iii) in the
reasonable opinion of the Trustee, correction of such failure
of performance has not taken an unreasonable amount of time.
The Trustee may request (and may rely upon) from the Company or
the Municipality a certificate to the effect that the Company
or the Municipality has instituted corrective action and will
diligently pursue such action and believes that its failure of
performance can be corrected through such action; or
(e) an Event of Default as defined in Section 4.1 of
the Guaranty shall have occurred; or
(f) acceleration for any reason of the maturity of any
bonds issued by the Company under the First Mortgage Indenture.
Section 802. Acceleration Rights. Upon the happening
of any Event of Default specified in Section 801 herein, the
Trustee may, and shall upon the written request of the Holders
of not less than twenty-five percent (25%) in aggregate
principal amount of the Bonds then outstanding, by notice in
writing delivered to the Municipality and the First Mortgage
Indenture Trustee, declare the entire principal amount of the
Bonds then outstanding and the interest accrued thereon,
immediately due and payable, whereupon that portion of the
principal of the Bonds thereby coming due and the interest
thereon accrued to the date of payment shall, without further
action, become and be immediately due and payable, anything in
this Indenture or in the Bonds to the contrary notwithstanding.
Section 803. Other Remedies; Rights of Bondholders.
Upon the occurrence of an Event of Default, the Trustee may
pursue any available remedy by suit at law or in equity to
enforce the payment of the principal of and premium, if any,
and interest on the Bonds then outstanding, to enforce this
<PAGE>
Indenture or to enforce its rights under the First Mortgage
Indenture.
If an Event of Default shall have occurred, and if
requested so to do by the Holders of not less than twenty-five
percent (25%) in aggregate principal amount of the Bonds then
outstanding and indemnified as provided in Section 902(i)
hereof, the Trustee must exercise such one or more of the
rights and powers conferred by this Section 803 as the Trustee,
being advised by counsel, shall deem most expedient in the
interests of the Bondholders.
No remedy given under this Indenture to the Trustee or
to the Bondholders is intended to be exclusive of any other
remedy. Each remedy shall be cumulative and shall be in
addition to any other remedy given hereunder or existing at law
or in equity or by statute.
No delay or omission to exercise any right or power
accruing upon any Event of Default shall impair the right or
power or shall be construed to be a waiver of any Event of
Default; and every right and power may be exercised from time
to time and as often as may be deemed expedient.
No waiver of any Event of Default, whether by the
Trustee or by the Bondholders, shall extend to or shall affect
any subsequent Event of Default or shall impair any rights or
remedies relating to that Event of Default.
Section 804. Right of Bondholders to Direct
Proceedings. The Holders of a majority in aggregate principal
amount of the Bonds then outstanding shall have the right, at
any time, by an instrument or instruments in writing executed
and delivered to the Trustee, to direct the time, the method
and place of conducting all proceedings to be taken in
connection with the enforcement of this Indenture, or for the
appointment of a receiver or any other proceedings hereunder;
provided, that such direction shall be in accordance with the
provisions of law and of this Indenture and that the Trustee is
indemnified as provided in Section 902(i) of this Indenture.
Section 805. Appointment of Receivers. Upon the
occurrence of an Event of Default, and upon the filing of a
suit or other commencement of judicial proceedings to enforce
the rights of the Trustee and of the Bondholders under this
Indenture, the Trustee shall be entitled, to the extent
permitted by law, to the appointment of a receiver or receivers
of the Trust Estate and of the revenues, earnings, income,
products and profits thereof, pending such proceedings, with
such powers as the court making such appointment shall confer.
Section 806. Application of Moneys. All moneys
received by the Trustee pursuant to any right given or action
taken under the provisions of this Article VIII shall, after
<PAGE>
payment of the costs and expenses of the proceedings resulting
in the collection of such moneys and of the expenses,
liabilities and advances and fees incurred or made by the
Trustee and the sums required to be paid by the Company
pursuant to this Indenture, the Bonds, the Loan Agreement or
the First Mortgage Bonds (other than payment of principal,
premium and interest on the Bonds or the First Mortgage Bonds),
be deposited into the Bond Fund and applied as follows without
preference, priority or distinction as between any Bond and any
other Bond:
(a) Unless the principal of all the Bonds shall have
become or shall have been declared due and payable, all moneys
shall be applied:
First--To the payment of all installments of interest
then due on the Bonds, in the order of the maturity of the
installments of such interest and, if the amount available is
not sufficient to pay in full any particular installment, then
to the payment ratably, according to the amounts due on that
installment, to the persons entitled thereto, without any
discrimination or privilege; and
Second--To the payment of the unpaid principal of and
premium, if any, on the Bonds which shall have become due
(other than portions of the Bonds called for redemption for the
payment of which moneys are held pursuant to the provisions of
this Indenture), in the order of their due dates, with interest
from the respective dates upon which they become due and, if
the amount available is not sufficient to pay in full any
particular installment, then to the payment ratably, according
to the amounts due on that installment, to the persons entitled
thereto, without any discrimination or privilege.
(b) If the principal of all the Bonds shall have
become due or shall have been declared due and payable, all
moneys shall be applied to the payment of the principal of and
premium, if any, and interest then due and unpaid on the Bonds
(other than portions of the Bonds called for redemption for the
payment of which moneys are held pursuant to the provisions of
this Indenture), without preference or priority, ratably,
according to the amounts due respectively for principal,
premium and interest, to the persons entitled thereto, without
any discrimination or privilege.
(c) If the principal of all the Bonds shall have been
declared due and payable, and if such declaration shall
thereafter have been rescinded, then, subject to the provisions
of subsection (b) of this Section 806 in the event that the
principal of the Bonds shall later become due or be declared
due and payable, the money shall be applied in accordance with
subsection (a) of this Section 806.
<PAGE>
Moneys shall be applied under this Section 806 at the
times that the Trustee shall determine, having regard for the
amount of moneys available for application and the likelihood
of additional moneys becoming available for application in the
future. The Trustee shall fix the date (which shall be an
interest payment date unless it shall deem another date more
suitable) upon which application is to be made and on that date
interest on the amounts of principal to be paid shall cease to
accrue. The Trustee shall give such notice as it may deem
appropriate of the deposit with it of any such moneys and of
the fixing of any such date, and shall not be required to make
payment to the Holder of any Bond until the Bond shall be
presented to the Trustee for appropriate endorsement or for
cancellation if fully paid.
Section 807. Remedies Vested in Trustee. All rights
of action (including the right to file proofs of claim) under
this Indenture or under any of the Bonds may be enforced by the
Trustee without the possession of any of the Bonds or the
production thereof in any trial or other proceedings relating
thereto and any such suit or proceeding instituted by the
Trustee shall be brought in its name as Trustee without the
necessity of joining as plaintiffs or defendants the Holders of
the Bonds and any recovery of judgment shall, subject to the
provisions of Section 806 hereof, be for the equal benefit of
the Holders of the Bonds.
Section 808. Rights and Remedies of Bondholders. No
Holder of any Bond may institute any suit, action or proceeding
in equity or at law for the enforcement of this Indenture or
for the execution of any trust thereof or for the appointment
of a receiver or any other remedy hereunder, unless (a) a
default has occurred of which the Trustee has been notified as
provided in subsection (g) of Section 902 hereof, or of which
by that subsection it is deemed to have notice, (b) that
default shall have become an Event of Default and the Holders
of not less than twenty-five percent (25%) in aggregate
principal amount of the Bonds then outstanding shall have made
written request to the Trustee and shall have offered
reasonable opportunity either to proceed to exercise the powers
hereinbefore granted or to institute such action, suit or
proceedings in its own name, (c) they have offered to the
Trustee indemnity as provided in Section 902(i) hereof, and
(d) the Trustee shall thereafter fail or refuse to exercise its
powers, or to institute such action, suit or proceeding. The
notification, request and offer of indemnity are, at the option
of the Trustee, conditions precedent to the execution of the
powers and trusts of this Indenture, and to any action or cause
of action for the enforcement of this Indenture, or for the
appointment of a receiver or for any other remedy hereunder.
No one or more Holders of the Bonds shall have any right in any
manner whatsoever to affect, disturb or prejudice the lien of
this Indenture by their action or to enforce any right
hereunder except in the manner herein provided, and all
<PAGE>
proceedings at law or in equity shall be instituted, had and
maintained in the manner herein provided and for the equal
benefit of the Holders of all Bonds then outstanding.
Section 809. Termination of Proceedings. If the
Trustee shall have proceeded to enforce any right under this
Indenture and the proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined
adversely, then the Municipality, the Company, the Trustee and
the Bondholders shall be restored to their former positions and
rights hereunder.
Section 810. Waivers of Events of Default. The
Trustee may in its discretion waive any Event of Default
(except to the extent that the Trustee is required by the
Bondholders pursuant to Section 803 hereof to exercise certain
rights or powers) and its consequences and rescind any
declaration of acceleration of maturity of principal of and
interest on the Bonds, and shall do so upon the written request
of the Holders of not less than a majority in aggregate
principal amount of the Bonds then outstanding; provided,
however, that there shall not be waived (a) any default in the
payment of the principal of or premium on any Bond or (b) any
default in the payment when due of the interest on any Bond
unless prior to such waiver or rescission, all arrears of
interest, principal and premium, and all fees and expenses of
the Trustee in connection with such default, shall have been
paid or provided for. In case of any such waiver or
rescission, the Municipality, the Company, the Trustee and the
Bondholders shall be restored to their former positions and
rights hereunder, respectively, but no such waiver or
rescission shall extend to any subsequent or other default, or
impair any right consequent thereon.
Section 811. Cooperation of Municipality. In the
event of a default hereunder, the Municipality shall cooperate
with the Trustee and use its best efforts to protect the
Bondholders.
ARTICLE IX
The Trustee
Section 901. Acceptance of Trusts. The Trustee
accepts the trusts imposed upon it by this Indenture. The
Trustee shall exercise the rights and powers vested in it by
this Indenture and shall use the same degree of care as a
prudent man would exercise or use in the circumstances in the
conduct of his own affairs.
<PAGE>
Section 902. Certain Rights of Trustee.
(a) The Trustee may perform any of its duties by or
through attorneys, agents, receivers or employees but shall not
be answerable for the conduct of the same if appointed in
accordance with the standard specified in Section 901 and shall
be entitled to advice of counsel concerning all matters
hereunder and may pay reasonable compensation to all attorneys
and agents as may reasonably be employed and shall be entitled
to reimbursement therefor from the Company. The Trustee may
act upon the opinion or advice of any attorney (who may be the
attorney or attorneys for the Municipality or the Company).
The Trustee shall not be responsible for any loss or damage
resulting from any action or nonaction in good faith in
reliance upon such opinion or advice.
(b) The Trustee shall not be responsible for any
recital in this Indenture, or in the Bonds (except the
certificate of the Trustee endorsed on the Bonds) or in any
related document (other than documents relating solely to and
executed only by the Trustee), or for the validity of the
execution by the Municipality of this Indenture or of any
supplements or instruments of further assurance, or for the
sufficiency of the security for the Bonds or as to the
maintenance of the security therefor except as provided in
Section 606 hereof; and the Trustee shall not be bound to make
any investigation as to the performance or observance of any
covenants, conditions or agreements on the part of the
Municipality or on the part of the Company under the Loan
Agreement. The Trustee shall have no obligation to perform any
of the duties of the Municipality under the Loan Agreement, and
the Trustee shall not be responsible or liable for any loss
suffered in connection with any investment of funds made by it
in accordance with the provisions of this Indenture.
(c) The Trustee shall not be accountable for the use
of any Bonds. The Trustee may be or become the Owner of Bonds
with the same rights which it would have if not Trustee.
(d) The Trustee shall be protected in acting upon any
notice, request, consent, certificate, order, affidavit,
letter, telegram or other paper or document believed to be
genuine and correct and to have been signed or sent by the
proper person or persons. Any action taken by the Trustee
pursuant to this Indenture upon the request or authority or
consent of any person who at the time of making such request or
giving such authority or consent is the Owner of any Bond,
shall be conclusive and binding upon all future Owners of the
same Bond and upon Bonds issued in exchange therefor or in
place thereof.
(e) As to the existence or nonexistence of any fact or
as to the sufficiency or validity of any instrument, paper or
proceeding, the Trustee shall be entitled to rely upon an
<PAGE>
Officer's Certificate of the Municipality. Prior to the
occurrence of a default of which the Trustee has been notified
or of which it is deemed to have notice, the Trustee may accept
an Officer's Certificate to the effect that any particular
dealing, transaction or action is necessary or expedient, but
may at its discretion secure such further evidence deemed
necessary or advisable, but shall in no case be bound to secure
the same. The Trustee may accept an Officer's Certificate of
the Municipality to the effect that an ordinance or resolution
has been adopted by the Municipality as conclusive evidence
that such ordinance or resolution has been adopted and is in
full force and effect.
(f) The permissive right of the Trustee to do things
enumerated in this Indenture shall not be construed as a duty
and the Trustee shall not be answerable for other than its
gross negligence or willful default.
(g) The Trustee shall not be required to take notice
or be deemed to have notice of any Event of Default (other than
nonpayment of the principal and interest on the Bonds) unless
the Trustee shall be specifically notified in writing of the
Event of Default by the Municipality, by the Holders of at
least twenty-five percent (25%) in aggregate principal amount
of all Bonds then outstanding or by the Company and all notices
or other instruments required by this Indenture to be delivered
to the Trustee must, in order to be effective, be delivered at
the principal corporate trust office of the Trustee.
(h) The Trustee may demand, in respect of the
authentication of any Bonds, the withdrawal of any cash, the
release of any property, or any action whatsoever within the
purview of this Indenture, any showings, certificates,
opinions, appraisals or other information, or corporate action
or evidence thereof, in addition to that required by the terms
hereof which the Trustee deems desirable.
(i) Before taking any action, the Trustee may require
that a satisfactory indemnity bond be furnished for the
reimbursement of all expenses which it may incur and to protect
it against all liability, except liability which is adjudicated
to have resulted from its gross negligence or willful default
in connection with any action so taken.
(j) All moneys received by the Trustee or any paying
agent shall be held in trust for the purposes for which they
were received but need not be segregated from other funds
except to the extent required by law.
(k) The Trustee shall not be required to give any bond
or surety in respect of the execution of the said trusts and
powers or otherwise in respect of the premises.
<PAGE>
Section 903. Fees, Charges and Expenses of Trustee and
Paying Agent. The Trustee and any paying agent shall be
entitled to prompt payment upon demand or reimbursement for
usual and customary fees for their services rendered hereunder
as set forth in fee schedules or similar documents effective
during the term of this Indenture and available from the
Trustee and all advances, counsel fees and other expenses
reasonably and necessarily made or incurred by them in
connection with such services. Upon an Event of Default, but
only upon an Event of Default, the Trustee and any paying agent
shall have a right of payment prior to payment on account of
interest or principal of or premium, if any, on the Bonds for
the foregoing advances, fees, costs and expenses incurred.
Section 904. Notice to Bondholders if Default Occurs.
If an Event of Default occurs of which the Trustee is required
to take notice or if notice of an Event of Default be given by
the Municipality, the Bondholders or the Company as provided in
Section 902(g) hereof, the Trustee shall give prompt written
notice thereof by first class United States mail, postage
prepaid, to the Owners of all Bonds then outstanding.
Section 905. Intervention by Trustee. In any judicial
proceeding to which the Municipality is a party and which in
the opinion of the Trustee and its counsel has a substantial
bearing on the interests of the Holders of the Bonds, the
Trustee may intervene on behalf of the Bondholders and, subject
to the provisions of Section 902(i) hereof, shall do so if
requested in writing by the Holders of at least twenty-five
percent (25%) in aggregate principal amount of all Bonds then
outstanding. The rights and obligations of the Trustee under
this Section 905 are subject to the approval of a court of
competent jurisdiction.
Section 906. Successor Trustee. Any corporation or
association into which the Trustee may be converted or merged,
or with which it may be consolidated, or to which it may sell
or transfer its corporate trust business and assets as a whole
or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation
or transfer to which it is a party shall become successor
Trustee hereunder, without the execution or filing of any
instrument or any further act, deed or conveyance on the part
of any of the parties hereto; provided, however, that if the
successor corporation is not a trust company or bank within the
State of Indiana that satisfies the requirements of Section 909
hereof, the Trustee shall resign from the trusts hereby created
prior to such sale, merger, consolidation or transfer.
Section 907. Resignation by Trustee. The Trustee and
any successor Trustee may at any time resign by giving thirty
days' written notice to the Municipality, the Company and by
registered or certified mail to the registered Owners of the
Bonds then outstanding, and the resignation shall take effect
<PAGE>
upon the appointment of a successor or temporary Trustee by the
Bondholders or by the Municipality as provided herein and such
successor or temporary Trustee's acceptance of such
appointment. The Trustee may petition a court of appropriate
jurisdiction to have a successor Trustee appointed.
Section 908. Removal of Trustee. The Trustee may be
removed at any time by an instrument or concurrent instruments
in writing delivered to the Trustee and to the Municipality and
signed by the Owners of a majority in aggregate principal
amount of all Bonds then outstanding. Any such removal shall
take effect upon the appointment of a successor or temporary
Trustee by the Bondholders or by the Municipality as provided
herein and such successor or temporary Trustee's acceptance of
such appointment.
Section 909. Appointment of Successor Trustee by
Bondholders; Temporary Trustee. In case the Trustee shall
resign or be removed, or be dissolved, or shall be in course of
dissolution or liquidation, or otherwise become incapable of
acting hereunder, or in case it shall be taken under the
control of any public officer or officers, or of a receiver
appointed by a court, a successor may be appointed by the
Owners of a majority in aggregate principal amount of all Bonds
then outstanding by an instrument or concurrent instruments in
writing; provided, nevertheless, that in case of such vacancy
the Municipality by an instrument executed by its Mayor and
attested by its Clerk under its seal may appoint a temporary
Trustee to fill the vacancy until a successor Trustee is
appointed by the Bondholders; and any temporary Trustee shall
immediately be superseded by the successor Trustee appointed by
the Bondholders. Every temporary or successor Trustee shall be
a trust company or bank in good standing within the State of
Indiana, duly authorized to exercise trust powers and subject
to examination by federal or state authority, and having a
reported capital and surplus of not less than $75,000,000. The
appointment of every temporary or successor Trustee shall be
subject to the prior approval of the Company, which approval
may not be unreasonably withheld. Notwithstanding any other
provision of this Indenture, no removal, resignation or
termination of the Trustee shall take effect until a successor
shall be appointed.
Section 910. Concerning Any Successor Trustees. Every
successor Trustee shall deliver to its predecessor, the
Municipality and the Company an instrument in writing accepting
its appointment, and thereupon such successor without any
further act, deed or conveyance, shall become fully vested with
all the properties, rights, powers, trusts, duties and
obligations of its predecessor; but the predecessor shall,
nevertheless, on the Written Request of the Municipality, or of
the successor Trustee, execute and deliver an instrument
transferring to the successor Trustee all the properties,
rights, powers and trusts of the predecessor; and every
<PAGE>
predecessor Trustee shall deliver all securities and moneys
held by it as Trustee to its successor. If any instrument in
writing from the Municipality is required by any successor
Trustee for more fully and certainly vesting in the successor
the rights, powers and duties hereby vested or intended to be
vested in the predecessor, any and all such instruments in
writing shall, on request, be executed and delivered by the
Municipality. The resignation of any Trustee and the
instrument or instruments removing any Trustee and appointing a
successor hereunder, together with all other instruments
provided for in this Article, shall be filed or recorded by the
successor Trustee in each recording office, if any, where the
Indenture has been filed or recorded.
Section 911. Trustee Protected in Relying upon
Resolution, etc. The resolutions, opinions, certificates and
other instruments provided for in this Indenture may be
accepted by the Trustee as conclusive evidence of the facts and
conclusions stated therein and shall be full warrant,
protection and authority to the Trustee for the release of
property and the withdrawal of cash.
Section 912. Successor Trustee as Trustee of Funds,
Paying Agent and Bond Registrar. In the event of a change in
the office of Trustee, the predecessor Trustee which has
resigned or been removed shall cease to be trustee of the funds
provided hereunder and bond registrar and paying agent for
principal of and premium, if any, and interest on the Bonds,
and the successor Trustee shall become such Trustee, bond
registrar and paying agent.
ARTICLE X
Supplemental Indentures
Section 1001. Supplemental Indentures Not Requiring
Consent of Bondholders. The Municipality, the Company and the
Trustee may without the consent of, or notice to, any of the
Bondholders enter into an indenture or indentures supplemental
to this Indenture, which is consistent with the terms hereof,
for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission
in this Indenture or in any supplemental indenture which is not
to the prejudice of the Trustee or the Holders of the Bonds;
(b) To grant to the Trustee any additional rights,
remedies, powers or authority that may lawfully be granted to
the Trustee;
(c) To subject to this Indenture additional
collateral;
<PAGE>
(d) To modify, amend or supplement this Indenture or
any indenture supplemental hereto in such manner as to permit
the qualification hereof and thereof under any federal statute
hereafter in effect or under any state Blue Sky Law, and in
connection therewith, if they so determine, to add to this
Indenture or any indenture supplemental hereto, such other
terms, conditions and provisions (which, in the judgment of the
Trustee, are not to the prejudice of the Holders of the Bonds)
as may be permitted or required by said federal statute or Blue
Sky Law; and
(e) To effect any other change which, in the judgment
of the Trustee, is not to the prejudice of the Trustee or the
Holders of the Bonds.
Section 1002. Supplemental Indentures Requiring
Consent of Bondholders. Exclusive of supplemental indentures
covered by Section 1001 hereof and subject to the terms of this
Section, the Holders of at least a majority in aggregate
principal amount of the Bonds then outstanding may consent to
the execution and delivery by the Municipality, the Company and
the Trustee of such other indenture or indentures supplemental
hereto for the purpose of modifying, altering, amending, adding
to or rescinding, in any particular, any of the terms of this
Indenture or any supplemental indenture; provided, however,
that the unanimous written consent of the Bondholders shall be
required for any amendment which would permit: (a) an
extension of the stated maturity or reduction in the principal
amount of, or reduction in the rate or extension of the time of
paying of interest on, or reduction of any premium payable on
the redemption of, any Bond, (b) a reduction in the aggregate
principal amount of Bonds the Holders of which are required to
consent to any such supplemental indenture, or (c) the material
modification of the rights, duties or immunities of the
Trustee.
ARTICLE XI
Amendments to the Loan Agreement
Section 1101. Amendments, etc., to Loan Agreement, the
Twenty-Second Supplemental Indenture, the First Mortgage
Indenture or the Guaranty Not Requiring Consent of Bondholders.
The Municipality and the Trustee with the consent of the
Company shall, without the consent of or notice to the
Bondholders, consent to any amendment, change or modification
of the Loan Agreement, the Twenty-Second Supplemental
Indenture, the First Mortgage Indenture or the Guaranty as may
be required (a) by the provisions of any such instrument and
this Indenture, (b) for the purpose of curing any ambiguity or
formal defect or omission or (c) in connection with any other
change which, in the judgment of the Trustee, is not to the
prejudice of the Trustee or the Holders of the Bonds.
<PAGE>
Section 1102. Amendments, etc., to Loan Agreement, the
Twenty-Second Supplemental Indenture, the First Mortgage
Indenture or the Guaranty Requiring Consent of Bondholders.
Except for the amendments, changes or modifications as provided
in Section 1101 hereof, neither the Municipality nor the
Trustee shall consent to any other amendment, change or
modification of the Loan Agreement, the Twenty-Second
Supplemental Indenture, the First Mortgage Indenture or the
Guaranty without the consent of the Holders of at least a
Majority in aggregate principal amount of the Bonds then
outstanding.
Section 1103. No Amendment May Alter First Mortgage
Bonds. Under no circumstances shall any amendment to the Loan
Agreement alter the provisions of the First Mortgage Bonds
relating to the payment of principal, premium, and interest
thereon, without the written consent of the Holders of all the
Bonds at the time outstanding.
ARTICLE XII
Miscellaneous
Section 1201. Satisfaction and Discharge. All rights
and obligations of the Municipality and the Company under the
Loan Agreement, the First Mortgage Bonds and this Indenture
shall terminate and those instruments shall cease to be of
further effect, and the Trustee shall cancel the First Mortgage
Bonds and deliver them to the Company, shall execute and
deliver all appropriate instruments evidencing the satisfaction
of this Indenture, and shall assign and deliver to the Company
any moneys and investments in all funds established hereunder
(except moneys or investments held by the Trustee for the
payment of principal of, interest on, or premium, if any, on
the Bonds and except for moneys held in the Rebate Fund which
shall be disbursed and applied only as provided in
Sections 406, 407, and 408) when
(a) all fees and expenses of the Trustee and any
paying agent shall have been paid or provided for;
(b) the Municipality and the Company shall have
performed all of their obligations under the Loan Agreement,
First Mortgage Bonds and this Indenture;
(c) there shall have been deposited with the Trustee
either moneys in an amount which shall be sufficient without
reinvestment, or direct noncallable obligations of the United
States of America the principal of and the interest on which
when due without reinvestment will provide moneys which,
together with the moneys, if any, deposited with the Trustee,
shall be sufficient, to pay when due the principal or
redemption price, if applicable, and interest due and to become
<PAGE>
due on the Bonds prior to the redemption date or maturity date
thereof, as the case may be; provided, that if any Bonds are to
be redeemed prior to the maturity thereof, notice of such
redemption shall have been duly given or arrangement
satisfactory to the Trustee shall have been made for notice, or
waiver of notices satisfactory in form to the Trustee shall
have been filed with the Trustee; and
(d) the Trustee shall have received an opinion of Bond
Counsel addressed to the Trustee to the effect that such
actions shall not cause the interest on the Bonds to become
includable under Section 103 of the Code in the gross income of
the Holders thereof for federal income tax purposes.
Section 1202. Application of Trust Money. All money
or direct obligations of the United States of America deposited
with or held by the Trustee pursuant to Section 1201 hereof
shall be held in trust for the Holders of the Bonds, and
applied by it, in accordance with the provisions of the Bonds
and this Indenture, to the payment, either directly or through
any paying agent, to the persons entitled thereto, of the
principal and premium, if any, and interest on the Bonds for
whose payment the money has been deposited with the Trustee.
Any income or interest earned by, or increment to, the
investments held under Section 1201 hereof shall to the extent
not required for the purposes of this Section 1202, be
transferred to the Bond Fund.
Section 1203. Consents, etc., of Bondholders. Any
consent, request, direction, approval, objection or other
instrument required by this Indenture to be executed by the
Bondholders may be in any number of concurrent writings and may
be executed by the Bondholders in person or by agent appointed
in writing. Proof of the execution of any such instrument or
of the writing appointing any agent and of the ownership of
Bonds, if made in the following manner, shall be sufficient for
any of the purposes of this Indenture, and shall be conclusive
in favor of the Trustee with regard to any action taken under
such request or other instrument. The fact and date of the
execution by any person of any such writing may be proved by
the certificate of any officer in any jurisdiction who by law
has power to take acknowledgments within such jurisdiction that
the person signing such writing acknowledged before him the
execution thereof, by affidavit of any witness to such
execution.
For all purposes of this Indenture and of the
proceedings for the enforcement hereof, any such person shall
be deemed to continue to be the Holder of such Bonds until the
Trustee shall have received notice in writing to the contrary.
In determining whether the holders of the required
principal amount of Bonds outstanding have taken any action
under this Indenture, Bonds owned by the Company or any person
<PAGE>
controlling, controlled by or under common control with the
Company shall be disregarded and deemed not to be outstanding.
In determining whether the Trustee shall be protected in
relying on any such action, only Bonds which the Trustee knows
to be so owned shall be disregarded. Any action, consent or
other instrument shall be irrevocable and shall bind any
subsequent owner of such Bond or any Bond delivered in
substitution therefor.
Section 1204. Parties Interested Herein. Nothing in
this Indenture expressed or implied is intended or shall be
construed to confer upon, or to give or grant to, any person or
entity, other than the Company, the Trustee, and the
Bondholders, any right, remedy, or claim under or by reason of
this Indenture or any covenant, condition or stipulation
hereof, and all covenants, stipulations, promises and
agreements in this Indenture contained by and on behalf of the
Company shall be for the sole and exclusive benefit of the
Company, the Trustee and the Bondholders.
Section 1205. Severability. If any provision of this
Indenture shall be held or deemed to be or shall, in fact, be
inoperative or unenforceable as applied in any particular case
in any jurisdiction or jurisdictions or in all jurisdictions,
or in all cases because it conflicts with any other provision
or provisions hereof or any constitution or statute or rule of
public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions
herein contained invalid, inoperative or unenforceable to any
extent whatever.
The invalidity of any one or more phrases, sentences,
clauses or Sections in this Indenture shall not affect the
remaining portions of this Indenture, or any part thereof.
Section 1206. Notices. All notices, certificates,
payments or other communications hereunder shall be
sufficiently given and shall be deemed given when delivered or
mailed by registered or certified mail, postage prepaid, or
overnight express mail addressed as follows: if to the
Municipality, at the City-County Building, Indianapolis,
Indiana, 46204, Attention of its Controller; if to the Company
or to the Guarantor, at 1220 Waterway Boulevard, Indianapolis,
Indiana, 46202, Attention of its Treasurer; if to the Trustee,
at 101 West Washington Street, Indianapolis, Indiana, 46255,
Attention of the Corporate Trust Department; if to the First
Mortgage Indenture Trustee, at Fidelity Bank, National
Association, Corporate Trust Department, 1700 Market Street,
Philadelphia, Pennsylvania, 19103; or to such other addresses
as may hereafter be furnished by notice.
<PAGE>
Section 1207. Trustee as Paying Agent and Registrar.
The Trustee is hereby designated and agrees to act as principal
paying agent and Bond Registrar for the Bonds.
Section 1208. Counterparts. This Indenture may be
executed in several counterparts, each of which shall be an
original.
Section 1209. Applicable Law. This Indenture shall be
governed by and construed in accordance with the applicable
laws of the State of Indiana.
Section 1210. Holidays. If any date for the payment
of principal of or premium or interest on the Bonds is not a
Business Day, then such payment shall be due on the first
Business Day thereafter and payment on such day shall be
considered timely hereunder.
Section 1211. Captions and Table of Contents. The
captions herein and the Table of Contents are inserted only as
a matter of convenience and do not in any way define, limit,
construe or describe the scope or intent of this Indenture or
any section thereof or in any other way affect this Indenture.
<PAGE>
IN WITNESS WHEREOF, INDIANAPOLIS WATER COMPANY, has
caused these presents to be signed in its name and behalf and
attested by its duly authorized officers and the City of
Indianapolis, Indiana, has caused these presents to be signed
in its name and behalf by its Mayor and its corporate seal to
be hereunto affixed and attested by its Clerk and, to evidence
its acceptance of the Trusts hereby created, National City
Bank, Indiana of Indianapolis, Indiana, has caused these
presents to be signed in its name and behalf by a duly
authorized Vice President and Trust Officer, its official seal
to be hereunto affixed, and the same to be attested by one of
its duly authorized officers, all as of the day and year first
above written.
INDIANAPOLIS WATER
COMPANY
By _________________
______
J. A. Rosenfeld
Senior Vice
President
and Treasurer
______________________________
Joseph W. Jordan, Secretary
THE CITY OF
INDIANAPOLIS
By _________________
______
(SEAL) Stephen
Goldsmith, Mayor
ATTEST:
______________________________
Beverly S. Rippy, Clerk
<PAGE>
NATIONAL CITY BANK,
INDIANA
(SEAL) By
_________________
__________
Faith Berning,
Vice President
ATTEST:
______________________________
T. Scott Fesler, Trust Officer
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, the undersigned, a Notary Public in and for the
State of Indiana, personally appeared J. A. Rosenfeld and
Joseph W. Jordan personally known to me to be the Treasurer and
Secretary of Indianapolis Water Company, who, after being first
duly sworn, acknowledged that they as such officers, being
authorized to do so, executed the foregoing Indenture of Trust
for and on behalf of said Corporation.
WITNESS MY HAND and Notarial Seal this _____ day of
_______________, 1993.
____________________
_____
Notary Public
____________________
__________
I am a resident of (Printed Name)
____________ County, Indiana
My Commission Expires:
______________________
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, the undersigned, a Notary Public in and for
the State of Indiana, personally appeared Stephen Goldsmith and
Beverly S. Rippy personally known to me to be the Mayor and
Clerk of the City of Indianapolis, who, after being first duly
sworn, acknowledged that they as such officers, being
authorized to do so, executed the foregoing Indenture of Trust
for and on behalf of said City.
WITNESS MY HAND and Notarial Seal this _____ day of
_______________, 1993.
____________________
_____
Notary Public
____________________
__________
I am a resident of (Printed Name)
____________ County, Indiana
My Commission Expires:
______________________
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, the undersigned, a Notary Public in and for
the State of Indiana, personally appeared Faith Berning and
T. Scott Fesler, personally known to me to be the Vice
President and Trust Officer of National City Bank, Indiana,
who, after being first duly sworn, acknowledged that as such
officers, being authorized to do so, executed the foregoing
Indenture of Trust for and on behalf of said Company.
WITNESS MY HAND and Notarial Seal this _____ day of
_______________, 1993.
____________________
_____
Notary Public
____________________
__________
I am a resident of (Printed Name)
____________ County, Indiana
My Commission Expires:
______________________
This instrument was prepared by Theodore J. Esping, Baker &
Daniels, 300 North Meridian Street, Suite 2700, Indianapolis,
Indiana 46204.
<PAGE>
INDIANAPOLIS WATER COMPANY
TO
FIDELITY BANK, NATIONAL ASSOCIATION
TWENTY-SECOND SUPPLEMENTAL INDENTURE
DATED AS OF APRIL 1, 1993
$11,600,000
FIRST MORTGAGE BONDS, ECONOMIC DEVELOPMENT SERIES E
<PAGE>
THIS TWENTY-SECOND SUPPLEMENTAL INDENTURE, made as of
the 1st day of April, 1993, between INDIANAPOLIS WATER COMPANY,
a corporation duly organized and existing under the laws of the
State of Indiana ("Company"), and FIDELITY BANK, NATIONAL
ASSOCIATION, a national banking association, duly organized and
existing under the laws of the United States of America
("Trustee"), WITNESSETH that:
WHEREAS, the Company has heretofore duly executed,
acknowledged and delivered to Fidelity-Philadelphia Trust
Company (a Pennsylvania corporation, later known as The
Fidelity Bank and as Fidelity Bank, National Association, to
which the Trustee above named is the successor by merger), as
trustee, a First Mortgage (hereinafter, as amended to the date
hereof, called the "Principal Indenture"), dated July 1, 1936,
and duly recorded on July 23, 1936, in the office of the
Recorder of Marion County, Indiana, in Mortgage Record 1154, at
page 232 and following, and in the office of the Recorder of
Hamilton County, Indiana, in Mortgage Record 90, at page 11 and
following, and in the office of the Recorder of Hancock County,
Indiana, in Mortgage Record 71, at page 74 and following, and
on July 1, 1968, in the office of the Recorder of Hendricks
County, Indiana, in Mortgage Record 182, at page 7 and
following, and on January 22, 1987, in the office of the
Recorder of Boone County, Indiana, in Mortgage Record 232, at
page 798 and following, and has also duly executed,
acknowledged and delivered 21 supplemental indentures thereto
dated and recorded or to be recorded as follows:
<TABLE>
<C> <C> <C> <C>
Supplemental
Indenture and Recording Recorder's Mortgage
Record
Date Date Office or
Instrument No.
First 11/14/45 Marion County Mtg.
Rec. 1363, p. 548
(Nov. 1, 1945) " Hamilton County Mtg.
Rec. 98, p. 485
" Hancock County Mtg.
Rec. 79, p. 579
07/11/68 Hendricks County Mtg.
Rec. 182, p. 301
Second 05/24/46 Marion County Mtg.
Rec. 1377, p. 479
(May 1, 1946) " Hamilton County Mtg.
Rec. 99, p. 340
" Hancock County Mtg.
Rec. 80, p. 459
07/11/68 Hendricks County Mtg.
Rec. 182, p. 317
<PAGE>
Third 05/04/55 Marion County Mtg.
Rec. 1785, p. 167
(May 1, 1955) " Hamilton County Mtg.
Rec. 116, p. 48
" Hancock County Mtg.
Rec. 94, p. 88
07/01/68 Hendricks County Mtg.
Rec. 182, p. 85
Fourth 10/01/57 Marion County Mtg.
Rec. 1909, p. 462
(Sept. 1, 1957) " Hamilton County Mtg.
Rec. 131, p. 1
" Hancock County Mtg.
Rec. 98, p. 414
07/01/68 Hendricks County Mtg.
Rec. 182, p. 103
09/22/87 Boone County Mtg.
Rec. 233, p. 1
Fifth 06/17/59 Marion County Mtg.
Rec. 1990, p. 340
(June 15, 1959) " Hamilton County Mtg.
Rec. 139, p. 489
" Hancock County Mtg.
Rec. 102, p. 169
07/01/68 Hendricks County Mtg.
Rec. 182, p. 136
01/22/87 Boone County Mtg.
Rec. 233, p. 68
Sixth 12/27/60 Marion County Mtg.
Rec. 2072, p. 465
(Dec. 15, 1960) " Hamilton County Mtg.
Rec. 147, p. 489
" Hancock County Mtg.
Rec. 105, p. 220
07/01/68 Hendricks County Mtg.
Rec. 182, p. 156
01/22/87 Boone County Mtg. Rec. 233, p. 109
Seventh 01/10/62 Marion County Mtg.
Rec. 2127, p. 213
(Dec. 15, 1961) " Hamilton County Mtg.
Rec. 153, p. 28
" Hancock County Mtg.
Rec. 107, p. 409
07/01/68 Hendricks County Mtg.
Rec. 182, p. 183
01/22/87 Boone County Mtg. Rec. 233, p. 166
<PAGE>
Eighth 06/30/65 Marion County
Instrument No. 65-30648
(June 25, 1965) " Hamilton County Mtg.
Rec. 184, p. 283
" Hancock County Mtg.
Rec. 117, p. 345
07/01/68 Hendricks County Mtg.
Rec. 182, p. 202
01/22/87 Boone County Mtg. Rec. 233, p. 203A
Ninth 08/10/67 Marion County
Instrument No. 67-37106
(Aug. 1, 1967) " Hamilton County Mtg.
Rec. 207, p. 41
" Hancock County Mtg.
Rec. 125, p. 249
07/01/68 Hendricks County Mtg.
Rec. 182, p. 211
01/22/87 Boone County Mtg. Rec. 233, p. 221
Tenth 08/20/71 Marion County
Instrument No. 71-43913
(Aug. 1, 1971) " Hamilton County Mtg.
Rec. 254, p. 203
" Hancock County
Instrument No. 71-3128
" Hendricks County Mtg.
Rec. 196, p. 258
Eleventh 12/08/71 Marion County
Instrument No. 71-68031
(Dec. 1, 1971) " Hamilton County Mtg.
Rec. 260, p. 109
12/09/71 Hancock County
Instrument No. 71-4768
12/08/71 Hendricks County Mtg.
Rec. 198, p. 275
01/22/87 Boone County Mtg. Rec. 233, p. 258
Twelfth 10/09/73 Marion County
Instrument No. 73-65209
(Sept. 1, 1973) " Hamilton County Mtg.
Rec. 290, p. 467
" Hancock County
Instrument No. 73-5232
" Hendricks County Mtg.
Rec. 212, p. 1
01/22/87 Boone County Mtg. Rec. 233, p. 295
<PAGE>
Thirteenth 04/19/74 Marion County
Instrument No. 74-22568
(May 1, 1974) " Hamilton County Mtg.
Rec. 296, p. 364
" Hancock County
Instrument No. 74-1599
" Hendricks County Mtg.
Rec. 215, p. 327
01/22/87 Boone County Mtg. Rec. 233, p. 355
Fourteenth 01/19/76 Marion County
Instrument No. 76-3100
(Jan. 15, 1976) 01/20/76 Hamilton County Mtg.
Rec. 318, p. 397
" Hancock County
Instrument No. 76-0234
" Hendricks County Mtg.
Rec. 230, p. 245
01/22/87 Boone County Mtg. Rec. 233, p. 355
Fifteenth 12/26/84 Marion County
Instrument No. 84-100402
(Dec. 15, 1984) " Hamilton County Mtg.
Rec. 469, p. 847
" Hancock County
Instrument No. 845685
" Hendricks County Mtg.
Rec. 336, p. 177
01/22/87 Boone County Mtg. Rec. 233, p. 507
Sixteenth 12/06/85 Marion County
Instrument No. 85-107269
(Nov. 1, 1985) " Hamilton County
Instrument No. 85-18775
" Hancock County
Instrument No. 856010
" Hendricks County Mtg.
Rec. 351, p. 4804
01/22/87 Boone County Mtg. Rec. 233, p. 532
Seventeenth 03/27/89 Marion County
Instrument No. 89-26632
(March 1, 1989) " Hamilton County
Instrument No. 89-5728
" Hancock County
Instrument No. 89-1589
" Hendricks County Mtg.
Rec. 417, p. 794
" Boone County Mtg.
Rec. 252, p. 404
<PAGE>
Eighteenth 03/27/89 Marion County
Instrument No. 89-26631
(March 1, 1989) " Hamilton County
Instrument No. 89-5729
" Hancock County
Instrument No. 89-1590
" Hendricks County Mtg.
Rec. 417, p. 817
" Boone County Mtg.
Rec. 252, p. 427
Nineteenth 06/14/89 Marion County
Instrument No. 89-0056055
(June 1, 1989) " Hamilton County
Instrument No. 89-12284
" Hancock County
Instrument No. 89-3454
" Hendricks County Mtg.
Rec. 422, p. 9749
" Boone County Mtg.
Rec. 254, p. 202
Twentieth 12/07/92 Marion
Instrument No. 92-162138
(Dec. 1, 1992) Hamilton
Instrument No. 92-48373
Hancock Instrument No. 92-12116
Hendricks Mtg. Rec. 524, p. 313
Boone Mtg. Rec. 296, p. 28
Twentieth-First 12/11/92 Marion County
Instrument No. 92-164510
(Dec. 1, 1992) 12/07/92 Hamilton County
Instrument No. 92-48374
12/07/92 Hancock County
Instrument No. 92-12117
12/07/92 Hendricks County Mtg.
Rec. 524, p. 337
12/11/92 Boone County Mtg. Rec. 296, p. 366
</TABLE>
and
WHEREAS, there are outstanding bonds of the Company on
the date hereof issued under the Ninth, Eleventh, Thirteenth,
Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth and
Twenty-First Supplemental Indentures, as follows:
<PAGE>
Principal
Supplemental
Amount
Indenture Series
Outstanding
Ninth 5 7/8% Series due 1997$ 6,775,000
Eleventh 8% Series due 20013,000,000
Thirteenth Economic Development Series A11,600,000
Sixteenth 12 7/8% Series due 20025,200,000
Seventeenth Economic Development Series B10,000,000
Eighteenth Economic Development Series C30,000,000
Nineteenth 9.83% Series due 2019 5,000,000
Twentieth 8.19% Series due 202210,000,000
Twenty-First Economic Development Series D 5,000,000
Total . . . . $ 86,575,000
and
WHEREAS, this Twenty-Second Supplemental Indenture
(hereinafter sometimes referred to as "this Supplemental
Indenture") is intended to be made a part of the Principal
Indenture as so supplemented as fully as if therein recited at
length; and
WHEREAS, by Section 1 of Article II of the Principal
Indenture it is provided that:
"Bonds may be issued hereunder from time to time in
one or more series without limitation as to the
aggregate principal amount of any or all series (but
subject to the restrictions and provisions contained in
this Indenture and any supplemental indenture), and may
be executed, authenticated and delivered originally
either as coupon bonds or as registered bonds without
coupons, as the Board of Directors of the Company shall
determine."
and
WHEREAS, by Section 4 of Article II it is provided
that:
"The coupon bonds and coupons of series other than
the first series, and the Trustee's certificate thereon,
shall be substantially in the forms hereinbefore
recited, with such modifications, omissions, or
additions permitted by or not inconsistent with the
provisions of this Indenture as may be determined by
'resolution' and embodied in an indenture or indentures
supplemental hereto. The bonds of each series shall be
distinguished from the bonds of each other series in
such manner as may be determined by such resolution.
<PAGE>
All bonds of the same series shall be identical in tenor
except as to the denominations thereof and except
variations appropriate for bonds in registered form
without coupons.
"The Bonds of each series other than the first
shall be dated and mature on such dates, shall bear
interest at such rate or rates, payable in such
installments and on such dates, shall be payable as to
principal and interest at such place or places, and in
such coin or currency (constituting legal tender) of the
United States, shall be of such denominations, shall
have such provisions for record dates for the payment of
interest, and shall have such tax free and tax refund
provisions, sinking, improvement, amortization or other
analogous fund requirements, redemption provisions,
conversion privileges, provisions for exchange, registry
and transfer, limitations upon the maximum amount
issuable, and/or such other terms and provisions
permitted by or not inconsistent with this Indenture,
all as may be determined by 'resolution' and expressed
in the bonds and/or in an indenture or indentures
supplemental hereto.
"The bonds and coupons of series other than the
first may have inscribed thereon such descriptive words,
numbers, marks of identification, designations, legends
and endorsements as may be required to comply with the
rules of any exchange or to conform to usage in respect
thereof, or as consistently with the provisions hereof,
may be determined by 'resolution.'
"Before any bonds of any series other than the
first, shall be authenticated and delivered by the
Trustee under this Indenture, the Company and the
Trustee shall execute and deliver and the Company shall
cause to be recorded an indenture supplemental hereto,
authorized by 'resolution,' creating or authorizing such
series."
and
WHEREAS, it is provided in Section 2 of Article IV of
the Principal Indenture that:
"From time to time the Trustee shall authenticate
and deliver to or upon the order of the Company,
additional bonds of the first series or any other duly
authorized series issuable hereunder to a principal
amount not in excess of 75% of the 'net amount of
permanent additions' made after July 1, 1936 to property
owned by the company."
and
<PAGE>
WHEREAS, it is provided in Section 1 of Article IV of
the Ninth Supplemental Indenture, Eleventh Supplemental
Indenture and the Sixteenth through Twentieth Supplemental
Indentures that, so long as any bonds of the respective series
therein defined are outstanding, the Company
". . . will not avail itself of any of the rights
granted to it under the Principal Indenture to use
permanent additions as a basis for the authentication
and delivery of bonds or for the discharge of any
sinking or improvement fund obligations of the Company
or for the withdrawal of cash from any such fund to an
extent in excess of seventy per cent (70%) of the amount
of such permanent additions instead and in lieu of the
seventy-five per cent (75%) provided and authorized
under the terms of the Principal Indenture."
and
WHEREAS, by Section 1 of Article XII of the Principal
Indenture it is provided, among other things, that:
"The Company, when authorized by 'resolution,' and
the Trustee without any action or consent by the holder
of any of the bonds from time to time and at any time,
may enter into an indenture or indentures supplemental
hereto and which thereafter shall form a part hereof the
same as if its or their terms were incorporated herein,
for any one or more of the following purposes:
* * *
"(b) To define the covenants and provisions
(permitted under or not inconsistent with this
Indenture) of or applicable to any bonds of any series
issued hereunder, other than the first series, as
determined from time to time by 'resolution';
"(c) To add to the limitations on the authorized
amount, date of maturity, method, conditions and
purposes of issue of any bonds issued or to be issued
hereunder, or of any series of bonds hereunder, further
limitations to be thereafter observed";
* * *
"(f) To make such provision in regard to matters or
questions arising under this Indenture as may be
necessary or desirable and not inconsistent with this
Indenture and/or to cure, correct or supplement any
defective provision contained herein or in any
supplemental indenture; and . . ."
and
<PAGE>
WHEREAS, the Company, subsequent to July 1, 1936, has
made net permanent additions to the property owned by it and is
entitled under the provisions of Section 2 of Article IV of the
Principal Indenture to require the Trustee to authenticate and
deliver to it additional bonds of the First Series or any other
duly authorized series issuable under the Principal Indenture
and secured by the lien thereof, all in accordance with the
terms and provisions of the Principal Indenture;
and
WHEREAS, the Company has by proper corporate action,
and in compliance with the provisions of Section 1 of
Article XII of the Principal Indenture, authorized the
execution of this Supplemental Indenture and determined to
create an additional series of bonds to be issued under and
secured by said Principal Indenture as supplemented, said
series of bonds to be known and designated as "Indianapolis
Water Company First Mortgage Bonds, Economic Development
Series E," sometimes hereinafter referred to as the "bonds of
this Series," in the principal amount of $11,600,000, to bear
interest at 5.20% per year, to be fully registered bonds
without coupons and dated in accordance with the provisions of
Section 5 of Article II of the Principal Indenture, and has
determined by proper corporate action, as provided for by
Section 2 of Article IV of the Principal Indenture, to request
the authentication and delivery to it by the Trustee of Eleven
Million Six Hundred Thousand Dollars ($11,600,000) principal
amount of bonds of this Series on the basis of net permanent
additions made by the Company subsequent to July 1, 1936, and
the Company desires to provide by this Supplemental Indenture
for the creation of the bonds of this Series and for issue of
said Eleven Million Six Hundred Thousand Dollars ($11,600,000)
of bonds of this Series;
and
WHEREAS, the Company has by proper corporate action and
in the exercise of its corporate powers under the laws of the
State of Indiana duly authorized the issue of said Eleven
Million Six Hundred Thousand Dollars ($11,600,000) principal
amount of bonds of this Series to be issued in accordance with
the terms and provisions of the Principal Indenture and of this
Supplemental Indenture, and to be secured by a first lien on
substantially all of its properties (other than securities) as
provided in the Principal Indenture and indentures supplemental
thereto, including this Supplemental Indenture, and has further
duly authorized the execution, delivery and recording of this
Supplemental Indenture to provide for the issue of the bonds of
this Series, and to prescribe the terms and provisions thereof,
insofar as said terms and provisions are not prescribed by the
Principal Indenture;
and
<PAGE>
WHEREAS, the form, terms and provisions of the bonds of
this Series and of the certificate of authentication of the
Trustee to be thereon endorsed shall be substantially in the
forms following, respectively (except that any portion of the
text of any such bond may appear on the reverse side thereof,
with an appropriate reference thereto on the face of such
bond):
[FORM OF BOND]
No. ____ Matures: May 1, 2001 $__________
INDIANAPOLIS WATER COMPANY
First Mortgage Bond, Economic Development Series E
Indianapolis Water Company, a corporation of the State
of Indiana ("Company"), for value received, hereby promises to
pay to National City Bank, Indiana, as trustee under an
Indenture of Trust dated as of April 1, 1993 ("City
Indenture"), executed and delivered by the City of
Indianapolis, Indiana ("City") and the Company to said National
City Bank, Indiana, as Trustee ("City Trustee"), or registered
assigns, on the 1st day of May, 2001 the sum of
_________________________ Dollars ($_______________), in
immediately available funds and to pay interest thereon in like
manner from the date of this bond until the principal hereof
shall become due and payable, at the rate of five and two-
tenths percent (5.20%) per year, computed on the basis of a
360-day year (consisting of 12 months of 30 days each), payable
semiannually in like funds on the first day of May and November
in each year, commencing November 1, 1993. Except as otherwise
provided in the next sentence, the principal of and premium, if
any, and interest on this Bond will be payable, in such coin or
currency of the United States as at the time of payment is
legal tender for the payment of public and private debts, at
the corporate trust office of the Trustee (hereinafter
defined). So long as there is no existing default in the
payment of interest on any bond of this series, payments of
interest on and partial prepayments of principal of this Bond
prior to its maturity will be made to the person or entity
("Person") in whose name this Bond is registered at the close
of business on the last day of the calendar month next
preceding the date on which such payment is due by check mailed
to such Person's address as it appears on the Company's books
for registration and registration of transfer, unless otherwise
agreed upon in writing by the Company and the registered holder
hereof.
This Bond is one of a duly authorized issue of first
mortgage bonds issuable in series, all issued and to be issued
under and equally secured by a first mortgage (hereinafter, as
amended, called the "Principal Indenture"), dated July 1, 1936,
duly executed and delivered by the Company to Fidelity-
<PAGE>
Philadelphia Trust Company (now Fidelity Bank, National
Association), as Trustee ("Trustee"), and twenty-two indentures
supplemental thereto, to which Principal Indenture and
supplemental indentures reference is hereby made for a
description of the property mortgaged and pledged ("mortgaged
property"), the nature and extent of the security, the rights
of the holders and registered owners of said bonds and of the
Trustee in respect of such security, and the terms and
conditions under which said bonds are secured. The Principal
Indenture and any indenture supplemental thereto may be
modified with the assent of the Company and of the holders and
registered owners of at least seventy-five percent (75%) in
principal amount of the bonds then outstanding and not owned or
controlled directly or indirectly by the Company or by anyone
directly or indirectly controlling the Company, subject to the
restrictions and provisions with respect thereto set forth in
the Principal Indenture and supplemental indentures. The
Principal Indenture also may be modified without the consent of
any bondholder when necessary to effect or maintain
qualification of the Principal Indenture under the Trust
Indenture Act of 1939 and for other purposes specified in the
Principal Indenture. Said bonds may be for various principal
sums and may be issued from time to time in one or more series
without limitation as to the aggregate principal amount of any
or all series, which series may mature on different dates, may
bear interest at different rates and may otherwise vary, as in
the Principal Indenture provided. The bonds of this series, of
which this is one, are known as "Indianapolis Water Company
First Mortgage Bonds, Economic Development Series E," and
hereinafter referred to as "bonds of this Series."
The bonds of this Series are issued under the twenty-
second supplemental indenture to the Principal Indenture
("Twenty-Second Supplemental Indenture") in order to evidence
and secure a loan made by the City of Indianapolis, Indiana
("City"), to the Company pursuant to a Loan Agreement dated as
of April 1, 1993. In order to fund such loan, the proceeds of
which will be used by the Company to redeem bonds of its
Economic Development Series A, the City has issued in the
principal amount of $11,600,000, its Economic Development Water
Facilities Refunding Revenue Bonds, Series 1993 (Indianapolis
Water Company Project) ("City Bonds") under and pursuant to the
City Indenture. The City Bonds are payable from payments made,
or caused to be made, by the Company of principal of, premium,
if any, and interest on the bonds of this Series. The
Company's Economic Development Series A bonds were issued to
secure $12,000,000 in principal amount of bonds issued by the
City in 1974. The proceeds of that City bond issue were lent
to the Company to enable it to construct its Eagle Creek
Purification and Pumping Station and related facilities (now
the Company's "Thomas W. Moses Treatment Plant"). That plant
and related facilities ("Project") were completed in 1976 and
are now in service.
<PAGE>
In the event that all or a substantial portion of
either the Project ("Project Taking") or the mortgaged property
("Total Taking") shall be purchased by any governmental body or
agency, or shall be taken by the exercise of the power of
eminent domain or of a right to purchase or otherwise acquire
the same vested in any governmental body or agency, the bonds
of this Series in the case of a Project Taking may be redeemed
by the Company in whole within one year after the receipt of
the proceeds received therefor and in the case of a Total
Taking shall be redeemed to the extent of the proceeds received
therefor ratably applicable to the bonds of this Series within
six months after the receipt of such funds. In the event of a
Total Taking, the bonds of this Series are also redeemable at
any time within one year after such purchase or taking, in
whole but not in part, at the option of the Company. All
redemptions described in this paragraph shall be made on not
less than thirty (30) days' notice, at their principal amount,
together with accrued interest in each case to the date of
redemption, all as more particularly set forth in the Twenty-
Second Supplemental Indenture. In certain other adverse
circumstances referred to in Section 3 of Article III of the
Twenty-Second Supplemental Indenture, the bonds of this Series
are redeemable in whole, but not in part, at the option of the
Company, in each case within one year of the event authorizing
the redemption and at 100% of their principal amount, together
with accrued interest to the date of redemption.
In the event that the Trustee and the Company are
notified that (a) an Event of Default under Section 801 of the
City Indenture has occurred and is continuing, (b) the City
Trustee has declared the principal of all City Bonds then
outstanding immediately due and payable under Section 802 of
the City Indenture, and (c) the City Trustee has not waived
such Event of Default or rescinded such declaration, then the
Company shall immediately redeem all of the bonds of this
Series then outstanding at a price equal to one hundred percent
(100%) of the principal amount thereof, together with accrued
interest thereon to the redemption date.
The bonds of this Series are also subject to mandatory
redemption in whole (or in part as described below) in the
event of a Determination of Taxability (as defined in the City
Indenture) with respect to the City Bonds. If there has been a
Determination of Taxability but fewer than all of the City
Bonds are required to be redeemed under Section 501 of the City
Indenture, then the bonds of this Series shall be subject to
mandatory redemption only to the extent necessary to provide a
sum sufficient to pay the principal and interest on the
principal of the City Bonds that are required to be redeemed.
Any such redemption of the bonds of this Series shall be on a
date selected by the Trustee and within one hundred eighty
(180) days of the Determination of Taxability (but in no event
later than the date selected by the City Trustee for redemption
of the City Bonds), and shall be redeemed at a price equal to
<PAGE>
one hundred percent (100%) of the principal amount thereof,
together with accrued interest thereon to the redemption date.
The principal hereof may also be declared or become due
on the conditions, in the manner and with the effect set forth
in the Principal Indenture upon the happening of an "Event of
Default," unless waived or cured, as in the Principal Indenture
provided.
This bond is nontransferable except to the City Trustee
and successor trustees thereto. To the extent that it is
transferable, it is transferable by the registered owner hereof
in person or by attorney duly authorized in writing, on books
of the Company to be kept for that purpose at the principal
office of the Trustee, in the City of Philadelphia,
Pennsylvania, and at the Company's principal office in the City
of Indianapolis, Indiana, upon surrender hereof for
cancellation at either of said offices and upon presentation of
a written instrument of transfer duly executed. Thereupon the
Company shall issue in the name of the transferee, and the
Trustee shall authenticate and deliver, a new registered bond
or bonds without coupons of this Series, in authorized
denominations, of equal aggregate principal amount. Any such
transfer shall be subject to the terms and conditions specified
in the Principal Indenture and the Twenty-Second Supplemental
Indenture.
The Company and the Trustee and any paying or transfer
agent may deem and treat the registered owner of this bond as
the absolute owner hereof for the purpose of receiving payment
of or an account of the principal hereof and the interest
hereon, and for all other purposes, and shall not be affected
by any notice to the contrary.
This bond shall not be valid or become obligatory for
any purpose unless it shall have been authenticated by the
certificate of the Trustee under the Principal Indenture
endorsed hereon.
IN WITNESS WHEREOF, Indianapolis Water Company has
caused this bond to be signed by its President or a Vice
President and by its Secretary or an Assistant Secretary, and
that bond to be dated.
Dated: INDIANAPOLIS WATER COMPANY
By_________________________________
President
_________________________
Secretary
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE]
This bond is one of the bonds of the series designated
therein, referred to in the within-mentioned Twenty-Second
Supplemental Indenture to the First Mortgage of Indianapolis
Water Company.
FIDELITY BANK, NATIONAL ASSOCIATION
By_________________________________
Authorized Officer
Date_______________________________
[FORM OF PREPAYMENT RECORD]
PREPAYMENT RECORD
Principal Amount of Bond $_______________
Date of Maturity: May 1, 2001
Prepayments on Principal
Balance Signature
of Authorized
Amount Date Outstanding Officer
and Title
and
WHEREAS, all acts and things necessary to make said
Eleven Million Six Hundred Thousand Dollars ($11,600,000)
principal amount of bonds of this Series, when executed by the
Company and authenticated by the Trustee and issued by the
Company as hereinafter and in the Principal Indenture provided,
valid, binding and legal obligations of the Company, and this
Supplemental Indenture a valid, binding and enforceable
supplement to the Principal Indenture, have been duly
performed, and the execution and delivery of this Supplemental
Indenture and the execution, delivery and issuance of said
principal amount of bonds of this Series have been in all
respects duly and lawfully authorized:
<PAGE>
Now, Therefore, This Supplemental Indenture Witnesseth:
That Indianapolis Water Company, in order to secure the payment
of the principal of and premium, if any, and interest on all
bonds issued under the Principal Indenture and all indentures
supplemental thereto, according to their tenor and effect, and
according to the terms of the Principal Indenture and of any
indenture supplemental thereto, and to secure the performance
of the covenants and obligations in said bonds and in the
Principal Indenture and any indenture supplemental thereto
respectively contained, and for the proper conveying and
confirming unto the Trustee, its successors in said trust and
its and their assigns forever, upon the trusts and for the
purposes expressed in the Principal Indenture and any indenture
supplemental thereto, all and singular the estates, property
and franchises of the Company, thereby mortgaged or intended so
to be, the Company, for and in consideration of the premises
and of the sum of One Dollar ($1.00) in hand paid by the
Trustee to the Company upon the execution and delivery of this
Supplemental Indenture, receipt whereof is hereby acknowledged,
and of other good and valuable considerations, has granted,
bargained, sold, conveyed, released, confirmed, pledged,
assigned, transferred, mortgaged, warranted and set over and
by these presents does grant, bargain, sell, convey, release,
confirm, pledge, assign, transfer, mortgage, warrant and set
over unto Fidelity Bank, National Association, as Trustee, and
to its successors in said trust and its and their assigns
forever in trust in accordance with the provisions of the
Principal Indenture and indentures supplemental thereto:
All and singular the premises, property, assets, rights
and franchises of the Company, whether now or hereafter owned,
constructed or acquired, of whatever character and wherever
situated made subject to the lien of the Principal Indenture
and any indenture supplemental thereto, including, without
limiting the generality of the foregoing, all real and personal
property of every kind and nature whatsoever, including
franchises and all rights of any kind (not expressly excluded
or excepted from the lien of the Principal Indenture and
indentures supplemental thereto), now owned by the Company and
acquired by the Company since the execution of the Twenty-First
Supplemental Indenture;
And This Supplemental Indenture Further Witnesseth
That: In order to provide for the authentication and delivery
by the Trustee to the Company of said $11,600,000 principal
amount of Indianapolis Water Company First Mortgage Bonds,
Economic Development Series E, in order to define the covenants
and provision of or applicable to the bonds of this Series, as
determined in compliance with the provisions of the Principal
Indenture, it is hereby covenanted and agreed by and between
the Company and the Trustee, as follows:
<PAGE>
ARTICLE I
Definitions
The terms defined in this Article I shall, for all
purposes of this Supplemental Indenture, have the following
meanings unless the context otherwise requires:
The term "City Bonds" means the $11,600,000 City of
Indianapolis, Indiana Economic Development Water Facilities
Refunding Revenue Bonds, Series 1993 (Indianapolis Water
Company Project) of the City of Indianapolis, Indiana,
authenticated and delivered under and pursuant to the City
Indenture.
The term "City Indenture" means the Indenture of Trust,
dated as of April 1, 1993, by and between the Company, the City
of Indianapolis, Indiana, and National City Bank, Indiana, as
Trustee, and any indenture supplemental thereto or amendatory
thereof, pursuant to which the City Bonds are issued and
secured.
The term "City Trustee" means the person, corporation
or banking association acting as trustee from time to time
under the City Indenture.
The term "Loan Agreement" means the Loan Agreement,
dated as of April 1, 1993, between the City of Indianapolis,
Indiana, a municipal corporation and political subdivision duly
organized and existing under the laws of the State of Indiana,
and the Company, and any and all modifications, alterations,
amendments and supplements thereto.
The term "Project" means the water facilities described
in Exhibit A to the Loan Agreement.
The term "Trustee" means the Trustee for the time being
whether the original or a successor, under the Principal
Indenture.
ARTICLE II
Description of Bonds of This Series
Bonds of this Series shall be designated "Indianapolis
Water Company First Mortgage Bonds, Economic Development
Series E." Said bonds shall be dated the date of their
authentication and shall bear interest from that date until the
principal thereof shall become due and payable, at a rate of
five and two-tenths (5.20%) per year, computed on the basis of
a 360-day year (consisting of 12 months of 30 days each),
payable semiannually on May 1 and November 1 of each year
commencing November 1, 1993. Principal and interest will be
<PAGE>
payable to the registered owner of the bonds, and at the
address thereof, appearing on the Company's books for
registration and registration of transfer, in immediately
available funds. Except as otherwise provided in the next
sentence, the principal of and premium, if any, and interest on
the bonds will be payable, in such coin or currency of the
United States as of this Series at the time of payment is legal
tender for the payment of public and private debts, at the
corporate trust office of the Trustee. So long as there is no
existing default in the payment of interest on any bond of this
Series, payments of interest on and partial prepayments of
principal of any bond of this Series prior to its maturity will
be made to the person or entity ("Person") in whose name said
bond (or a bond or bonds in exchange for which said bond was
issued) is registered at the close of business on the last day
of the calendar month next preceding the date on which such
payment is due by check mailed to such Person's address as it
appears on the Company's books for registration and
registration of transfer, unless otherwise agreed upon in
writing by the Company and the registered holder of the bond.
The bonds of this Series will mature on May 1, 2001.
The bonds of this Series shall be fully registered
bonds without coupons in the denominations of Five Thousand
Dollars ($5,000) each or any whole multiple thereof, to be
lettered "R" and bearing such numbers as the Company may
reasonably require to comply with the usual practice prevailing
in such cases. Said bonds will be nontransferable except to
the City Trustee and successors thereto, if any.
Each bond of this Series authenticated and delivered
upon any transfer, or in substitution for the whole or any part
of any bond or bonds of such series, shall carry all the rights
to interest accrued and unpaid and to accrue, which were
carried by the whole or such part of such bond or bonds.
In accordance with the provisions of Section 8 of
Article II of the Principal Indenture, the Company hereby
designates its principal office in the City of Indianapolis,
Indiana, as an office, in addition to that of the Trustee,
where books for the registration and registration of transfer
of bonds of this Series will be kept.
The aggregate principal amount of all bonds of this
Series which may at any time be certified, issued and
outstanding shall be limited to Eleven Million Six Hundred
Thousand Dollars ($11,600,000), and bonds of said series may be
executed, authenticated, delivered and issued hereunder from
time to time subject to the restrictions and provisions
contained in this Supplemental Indenture and in the Principal
Indenture.
<PAGE>
ARTICLE III
Redemption of the Bonds
SECTION 1. In the event that all or a substantial
portion of either the Project ("Project Taking") or the
mortgaged property ("Total Taking") shall be purchased by any
governmental body or agency, or shall be taken by the exercise
of the power of eminent domain or of a right to purchase or
otherwise acquire the same vested in any governmental body or
agency, bonds of this Series may or shall, as the case may be,
be redeemed as hereinafter set forth. In the case of a Project
Taking, bonds of this Series may be redeemed by the Company in
whole within one year after receipt of the proceeds received
therefor. In the case of a Total Taking, that portion of the
award or consideration for property so acquired by a
governmental authority which shall consist solely of cash
ratably applicable to bonds then outstanding of this Series
shall within six (6) months after the receipt thereof be used
for the redemption of bonds of this Series. In the event that
the consideration or award to the Company for property so
acquired by a governmental authority in the case of a Total
Taking includes property other than cash, that portion of such
property which is ratably applicable to bonds of this Series
shall within sixty (60) days after receipt thereof be sold for
cash and the proceeds of such sale or sales shall within six
(6) months after the receipt thereof be used for redemption of
bonds of this Series. In the event of a Total Taking, bonds of
this Series shall also be redeemable in whole, but not in part,
at the option of the Company, to be exercised within one year
after such purchase or taking, in each case at one hundred
percent (100%) of their principal amount, together with accrued
interest to the date of redemption.
SECTION 2. Upon the occurrence of any of the events
described in subparts (a) or (b) of Section 502 of the City
Indenture, the bonds of this Series shall be redeemable in
whole, but not in part, at the option of the Company at any
time within one year following the occurrence of any such event
or events at one hundred percent (100%) of their principal
amount, together with accrued interest to the date of
redemption.
SECTION 3. In the event that the Company and the
Trustee are notified by the City Trustee that (a) an Event of
Default has occurred and is continuing under Section 801 of the
City Indenture, (b) the City Trustee has declared the principal
of all City Bonds then outstanding immediately due and payable
pursuant to Section 802 of the City Indenture, and (c) such
Event of Default or declaration of acceleration of maturity and
principal of and interest on, the bonds of this Series has not
been waived or rescinded by the City Trustee, as provided in
Section 810 of the City Indenture, the Company shall
immediately redeem all of the bonds of this Series then
<PAGE>
outstanding, at a price equal to 100% of the principal amount
thereof, together with accrued interest thereon to the
redemption date.
SECTION 4. In the event that the Company is notified
by the City Trustee that there has occurred a Determination of
Taxability with respect to the City Bonds and, as a result
thereof, all the City Bonds are being redeemed as provided in
Section 501 of the City Indenture, the Company shall call for
redemption on a redemption date selected by it (but in no event
later than the date selected by the City Trustee for redemption
of the City Bonds) all of the bonds of this Series then
outstanding. If there has been a Determination of Taxability
but fewer than all of the City Bonds are required to be
redeemed under Section 501 of the City Indenture, then the
bonds of this Series shall be subject to mandatory redemption,
in accordance with the preceding sentence, only to the extent
necessary to provide a sum sufficient to pay the principal and
interest on the principal of the City Bonds that are required
to be redeemed. Any such redemption shall be at a price equal
to one hundred percent (100%) of the principal amount thereof,
together with interest thereon to the redemption date.
SECTION 5. In the event that the Company shall desire
to exercise its right, or is required by the provisions of this
Article III, to redeem and pay all or any part of the bonds of
this Series, payments in redemption of bonds of this Series
shall be made directly by the Company to the registered owners
of the bonds of this Series entitled thereto. Any such
redemption may be made without complying with the provisions,
terms and conditions of Article V of the Principal Indenture,
and without the giving of any prior notices except for the
notices required to be given by Article V of the Loan
Agreement.
SECTION 6. Bonds of this Series may be redeemed in
part, but the portion of any such bond so redeemed in part
shall be Five Thousand Dollars ($5,000) or an integral multiple
thereof. In case any bond of this Series shall be redeemed in
part only, payment of the redemption price of such portion of
the bond shall be made by the Company (or Trustee, as the case
may be) to the registered holder thereof, at its address
appearing on the books for registration and registration of
transfer of bonds of this Series without presentation or
surrender thereof, provided that there is on file with the
Company and Trustee (and not theretofore rescinded by written
notice from such registered holder to the Company and Trustee)
a written commitment from such registered holder to the effect
that (1) payments will be so made, and (2) such registered
holder will make notations on such bond or a paper attached
thereto of the portion thereof so redeemed. Prior to any
transfer by the registered holder of any bond of this Series,
the same shall have been surrendered to the Company or Trustee
for appropriate notation thereon of, or in exchange for a new
<PAGE>
bond or bonds for, the unredeemed balance of the principal
amount thereof. The Trustee shall not be under any duty to
determine that any of the notations mentioned herein have been
made or be liable in any manner with respect thereto.
ARTICLE IV
Particular Covenants of the Company
SECTION 1. So long as any bond of this Series remains
outstanding, the Company covenants that it will not exercise or
take advantage of any of the rights granted to it under
Section 5 or Section 8, Article VIII of the Principal Indenture
to request that the Trustee pay over cash to it to the extent
that such payment would be in conflict with the specific
directions hereinafter set forth. The Company covenants that
the application of any moneys deposited with or received by the
Trustee pursuant to the provisions of Section 8, Article VIII,
of the Principal Indenture shall be subject to the provisions
of Section 1, Article III, of this Supplemental Indenture in
the event of a Project Taking or Total Taking of the Company's
property. Nothing in this Section shall be construed to limit
the right of the Company to request the Trustee to apply cash
in accordance with the authority granted under Section 5,
Article VIII, of the Principal Indenture, other than with
respect to cash received in the case of a Project Taking and
that portion of cash held by the Trustee which is ratably
applicable to bonds of this Series then outstanding in the case
of a Total Taking.
SECTION 2. The Company covenants and agrees that it
will duly and punctually pay to the holder of any bond of this
Series issued under and secured by the Principal Indenture and
this Supplemental Indenture the principal of, premium, if any,
and interest on said bond at the dates and places and in the
manner mentioned in such bond.
SECTION 3. The Trustee shall not incur any liability
by reason of any default, failure or delay on the part of the
Company to observe or perform its covenants contained in this
Article IV.
ARTICLE V
Amendment of Principal Indenture
Article I, Section 13, of the Principal Indenture is
amended to read:
"Section 13. A demand, request, notice, certificate,
appointment, approval, consent, waiver, designation,
direction, nomination or other similar act of the
<PAGE>
Company, under any of the provisions hereof, shall mean
an instrument in writing signed by the President or a
Vice President of the Company, attested by its Secretary
or an Assistant Secretary, and delivered to the Trustee,
except as otherwise provided herein."
Article IV, Section 7, of the Principal Indenture is
amended by changing subparagraph (3) of the second paragraph
thereof to read:
"(3) Upon written or oral request by the President, a
Vice President, Treasurer, Assistant Treasurer or
Secretary of the Company, the Trustee shall invest such
cash, or any part thereof, in obligations of the United
States of America, any state of the United States or any
political subdivision thereof or an interest bearing
account made up of government securities and/or
securities of governmental agencies; provided, however,
that the Trustee may require that any such oral request
of the Company be followed up by a written confirmation,
signed by any of said officers. Any investments so made
may, at the option of the Company, be sold and the
proceeds applied in any manner provided in this
Section."
Article VII, Section 3, of the Principal Indenture is
amended by deleting the third paragraph thereof.
Article VII, Section 9, of the Principal Indenture is
amended by changing the fourth paragraph thereof to read:
"That it will furnish to the Trustee annually a
statement of the President, a Vice President, the
Treasurer or Secretary of the Company, or a certificate
or certificates of insurance, executed by the insurance
company or companies providing the insurance,
identifying the amount and character of the insurance in
force and the companies issuing policies of insurance on
said property, setting forth the character and amount of
each policy. In the case where an insurance reserve
fund has been established, such statement shall set
forth the amount of insurance for which the same is
substituted, and the amount of such fund with a detailed
statement of the case on deposit and investments held
therein. All resolutions authorizing the establishment
and maintenance of such insurance reserve fund shall be
furnished the Trustee. The Trustee shall be under no
duty with reference to such statements other than to
retain the same in its file for inspection only by
bondholders or their duly authorized representatives."
<PAGE>
ARTICLE VI
Principal Indenture Applicable
The bonds of this Series shall be issued under, subject
to and in compliance with the terms and provisions of the
Principal Indenture, as amended and supplemented, which are
applicable according to the true intent and meaning thereof to
all bonds of whatsoever series issued under the terms of said
Principal Indenture, except as expressly modified by the terms
of this Supplemental Indenture.
ARTICLE VII
Concerning the Trustee
The Trustee, for itself and its successors, accepts the
trusts of this Supplemental Indenture and agrees to execute
them, but only upon the following additional terms and
conditions to which the Company and the holders of all the
bonds issued under this Supplemental Indenture agree:
(a) The Trustee shall be under no obligation to
see to the recording, registry or filing of this
Supplemental Indenture.
(b) The recitals of facts and the covenants and
agreement contained in this Supplemental Indenture and
in said bonds of this Series shall be taken as made by
the Company alone and shall not be construed as made by
or as imposing any obligation or liability upon the
Trustee.
(c) The Trustee shall not be responsible for the
execution or validity hereof, or of the bonds of this
Series (except in respect of the certificates of
authentication of the Trustee endorsed on the bonds of
this Series), or for the sufficiency of the security as
provided herein, or in said Principal Indenture.
(d) All the terms and provisions of the Principal
Indenture defining and limiting the liability and
responsibility of the Trustee in the discharge of the
trusts thereof shall, in like manner, define and limit
its liability and responsibility in the performance of
the trusts under this Supplemental Indenture as if
expressly stated in this instrument.
<PAGE>
ARTICLE VIII
Miscellaneous
SECTION 1. All the covenants, stipulations, promises
and agreements in this Supplemental Indenture contained by or
on behalf of the Company shall bind and benefit its successors
and assigns, whether so expressed or not.
SECTION 2. For every purpose of this Supplemental
Indenture, including the execution, issue and use of any and
all of the bonds of this Series, the term "Company" includes
and means not only the party of the first part hereto, but also
any successor corporation.
SECTION 3. A bond of this Series shall no longer be
deemed to be "outstanding" hereunder for any purpose, except
for the purpose of entitling the holder thereof to receive
payment of the redemption price and accrued interest to the
date fixed for redemption, if the Company shall have completed
giving the required notice of redemption of such bond, or shall
have irrevocably authorized the Trustee to cause notice to be
given, and shall have segregated in its possession, or shall
have deposited with the Trustee, in trust, an amount in cash
sufficient to redeem all bonds of this Series called for
redemption, together with accrued interest to the date fixed
for redemption.
SECTION 4. Any moneys coming into the hands of the
Trustee hereunder, the application of which is not otherwise
specifically provided for by the terms and provisions of this
Supplemental Indenture, shall be applied by the Trustee in
accordance with the terms and provisions of the Principal
Indenture.
SECTION 5. This Supplemental Indenture may be executed
in any number of counterparts, each of which shall be taken to
be an original and all collectively but one instrument.
SECTION 6. The headings of the Articles of this
Supplemental Indenture are inserted for convenience of
reference only, and are not to be taken to be any part of this
Supplemental Indenture or to control or affect the meaning of
the same.
SECTION 7. In the event that an interest payment or
maturity date or a date fixed for redemption of any bond of
this Series shall be a Saturday, Sunday or a legal holiday or a
day on which banking institutions in the City of Indianapolis,
Indiana (or Philadelphia, Pennsylvania, if payment is being
made by the Trustee), are authorized by law to close, then
payment of interest or principal (and premium, if any) need not
be made on such date, but may be made on the next succeeding
business day not a Saturday, Sunday or a legal holiday or a day
<PAGE>
upon which banking institutions in the City of Indianapolis,
Indiana (or Philadelphia, Pennsylvania, if payment is being
made by the Trustee), are authorized by law to close, with the
same force and effect as if made on the date of maturity,
interest date, or the date fixed for redemption, and no
interest shall accrue for the period after such date.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be executed by their Presidents or
Vice Presidents, under and by the authority vested in them,
have hereto affixed their signatures, and their Secretaries or
Assistant Secretaries have duly attested the execution hereof,
as of the 1st day of April, 1993.
INDIANAPOLIS WATER COMPANY
By_________________________________
J. A. Rosenfeld
Senior Vice President and
Treasurer
____________________________
Secretary
FIDELITY BANK, NATIONAL ASSOCIATION
By_________________________________
_______________, Assistant
Vice President
ATTEST:
____________________________
Assistant Secretary
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
BE IT REMEMBERED that on this ___ day of ____________,
1993, before me the undersigned, a Notary Public in and for the
County and State aforesaid, duly commissioned and qualified,
personally appeared J. A. Rosenfeld and Joseph W. Jordan, of
Indianapolis Water Company, to me well known and personally
known to me to be, respectively, Senior Vice President and
Treasurer and Secretary of Indianapolis Water Company and to be
persons who executed the foregoing instrument for and on behalf
of said Indianapolis Water Company, and acknowledged the
execution of said instrument, and acknowledged that they
executed said instrument voluntarily as such officers of the
Company, respectively, as the act and deed of said Indianapolis
Water Company, for the uses and purposes therein set forth.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed by Notarial Seal the day and year aforesaid.
___________________________________
Notary Public
___________________________________
Printed Name
Residing in ____________ County,
Indiana
My Commission Expires:
_________________________
[SEAL]
COMMONWEALTH OF PENNSYLVANIA )
) SS:
COUNTY OF PHILADELPHIA )
BE IT REMEMBERED that on this ___ day of ____________,
1993, before me the undersigned, a Notary Public in and for the
County and State aforesaid, duly commissioned and qualified,
personally appeared _________________________, Assistant Vice
President, and ________________________, Assistant Secretary of
Fidelity Bank, National Association, to me well known and
personally known to me to be, respectively, Assistant Vice
President and Assistant Secretary of said Bank and to be
persons who executed the foregoing instrument for and on behalf
of said Bank, and acknowledged the execution of said
instrument, and acknowledged that they executed said instrument
voluntarily as such Assistant Vice President and Assistant
Secretary of said Bank, respectively, as the act and deed of
said Bank, for the uses and purposes therein set forth.
I certify that I am not a Director or Officer of
Fidelity Bank, National Association.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed by Notarial Seal the day and year aforesaid.
___________________________________
Notary Public
___________________________________
Printed Name
Residing in ____________ County,
Pennsylvania
My Commission Expires:
_________________________
[SEAL]
This instrument was prepared by Fred E. Schlegel, an attorney,
300 North Meridian Street, Suite 2700, Indianapolis, Indiana
46204-1782.
<PAGE>
RECORDING DATA
Received on ____________________, for recording at the
office of the Recorder of Marion County, Indiana, and recorded
in said office as Instrument No. ____________________.
Received on ____________________, for recording at the
office of the Recorder of Hamilton County, Indiana, and
recorded in said office as Instrument No. ____________________.
Received on ____________________, for recording at the
office of the Recorder of Hancock County, Indiana, and recorded
in said office as Instrument No. ____________________.
Received on ____________________, for recording at the
office of the Recorder of Hendricks County, Indiana, and
recorded in Hendricks County Mortgage Record ___, page ___.
Received on ____________________, for recording at the
office of the Recorder of Boone County, Indiana, and recorded
in Boone County Mortgage Record ___, page ___.
This page is for recordkeeping only. It was not a part
of the Twenty-Second Supplemental Indenture as executed or
recorded.
<PAGE>
Conformed Copy
IWC RESOURCES CORPORATION
NOTE AGREEMENT
Dated as of March 1, 1994
$14,000,000
6.31% Senior Notes
Due March 1, 2001
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS; INTERPRETATION . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . 1
SECTION 2. DESCRIPTION OF NOTES AND COMMITMENT . . . . . . . 12
2.1. Description of Notes . . . . . . . . . . . . . . . 12
2.2. Commitment, Closing Date . . . . . . . . . . . . . 12
SECTION 3. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . 13
3.1. Optional Prepayments . . . . . . . . . . . . . . . 13
3.2. Prepayment Upon Occurrence of Prepayment Event . . 13
3.3. Notice of Prepayments . . . . . . . . . . . . . . 14
3.4. Direct Payment . . . . . . . . . . . . . . . . . . 14
SECTION 4. REPRESENTATIONS . . . . . . . . . . . . . . . . . 14
4.1. Representations of the Company . . . . . . . . . . 14
4.2. Representations of the Purchaser . . . . . . . . . 15
SECTION 5. CLOSING CONDITIONS . . . . . . . . . . . . . . . 17
5.1. Closing Certificate . . . . . . . . . . . . . . . 17
5.2. Legal Opinions . . . . . . . . . . . . . . . . . . 17
5.3. Company's Existence and Authority . . . . . . . . 17
5.4. Legality of Investment . . . . . . . . . . . . . . 17
5.5. Private Placement Number Application . . . . . . . 17
5.6. Satisfactory Proceedings . . . . . . . . . . . . . 17
5.7. Waiver of Conditions . . . . . . . . . . . . . . . 18
SECTION 6. COMPANY COVENANTS . . . . . . . . . . . . . . . . 18
6.1. Corporate Existence, Etc. . . . . . . . . . . . . 18
6.2. Insurance . . . . . . . . . . . . . . . . . . . . 18
6.3. Taxes, Claims for Labor and Materials; Compliance
with Laws . . . . . . . . . . . . . . . . . . . . . 18
6.4. Maintenance, Etc. . . . . . . . . . . . . . . . . 19
6.5. Nature of Business . . . . . . . . . . . . . . . . 19
6.6. Fixed Charge Coverage. . . . . . . . . . . . . . . 19
6.7. Mergers and Consolidations . . . . . . . . . . . . 19
6.8. Sale of Assets . . . . . . . . . . . . . . . . . . 20
6.9. Adjusted Consolidated Net Worth. . . . . . . . . . 21
6.10. Repurchase of Notes. . . . . . . . . . . . . . . 21
6.11. Transactions with Affiliates . . . . . . . . . . 21
6.12. Reports and Rights of Inspection . . . . . . . . 21
6.13. Cost of this Financing. . . . . . . . . . . . . . 24
6.14. Rule 144A Information. . . . . . . . . . . . . . 25
SECTION 7. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . 25
7.1. Events of Default . . . . . . . . . . . . . . . . 25
7.2. Notice to Holders . . . . . . . . . . . . . . . . 26
7.3. Acceleration of Maturities . . . . . . . . . . . . 27
7.4. Rescission of Acceleration . . . . . . . . . . . . 27
<PAGE>
SECTION 8. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . 28
8.1. Consent Required . . . . . . . . . . . . . . . . . 28
8.2. Solicitation of Noteholders . . . . . . . . . . . 28
8.3. Effect of Amendment or Waiver . . . . . . . . . . 29
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 29
9.1. Note Register . . . . . . . . . . . . . . . . . . 29
9.2. Exchange of Notes . . . . . . . . . . . . . . . . 29
9.3. Loss, Theft, Etc. of Notes . . . . . . . . . . . . 29
9.4. Powers and Rights Not Waived; Remedies
Cumulative . . . . . . . . . . . . . . . . . . . . 30
9.5. Notices . . . . . . . . . . . . . . . . . . . . . 30
9.6. Successors and Assigns . . . . . . . . . . . . . . 31
9.7. Survival of Covenants and Representations . . . . 31
9.8. Copies To Regulatory Bodies . . . . . . . . . . . 31
9.9. Severability . . . . . . . . . . . . . . . . . . . 31
9.10. Substitution . . . . . . . . . . . . . . . . . . 31
9.11. Governing Law . . . . . . . . . . . . . . . . . . 32
9.12. Captions . . . . . . . . . . . . . . . . . . . . 32
9.13. Verification . . . . . . . . . . . . . . . . . . 32
Schedule 1 (Purchaser Information)
Exhibit A (Form of Note)
Exhibit B (Company Closing Certificate)
Exhibit C-1 (Form of Opinion of Special Counsel to
Purchaser)
Exhibit C-2 (Form of Opinion of Special Indiana Counsel
to the Purchaser)
Exhibit D (Form of Opinion of Counsel to the Company)
<PAGE>
NOTE AGREEMENT
$14,000,000 6.31% Senior Notes
Due March 1, 2001
Dated as of
March 1, 1994
To the Purchaser named in
Schedule I hereto which is
a signatory to this Agreement
Gentlemen:
The undersigned, IWC Resources Corporation, an Indiana
corporation (the "Company"), agrees with you as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
1.1. Definitions. Unless the context otherwise
requires, the terms set forth below shall have the meanings
assigned thereto, and the following definitions shall apply to
both the singular and plural forms of the defined terms:
"Adjusted Consolidated Net Worth" shall mean, as of the
date of any determination thereof, shareholders' equity, as shown
on a consolidated balance sheet of the Company, less Restricted
Investments that exceed ten percent (10%) of such amount of
shareholders' equity.
"Affiliate" shall mean any Person (a) which directly or
indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (b)
which beneficially owns or holds 5% or more of any class of the
Voting Stock of the Company or (c) 5% or more of the Voting Stock
(or in the case of a Person which is not a corporation, 5% or
more of the equity interest) of which is beneficially owned or
held by the Company or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or
otherwise.
"Business Day" shall mean any day other than a
Saturday, Sunday or other day on which banks in [Indianapolis,
Indiana] are authorized to close.
"Capitalized Lease" shall mean any lease, the
obligation for Rentals with respect to which is required to be
capitalized on a balance sheet of the lessee in accordance with
<PAGE>
generally accepted accounting principles.
"Capitalized Rentals" shall mean as of the date of any
determination the amount at which the aggregate Rentals due and
to become due under all Capitalized Leases under which the
Company or any Restricted Subsidiary is a lessee would be
reflected as a liability on a consolidated balance sheet of the
Company and its Restricted Subsidiaries.
"Consolidated Current Assets" and "Consolidated Current
Liabilities" shall mean such assets and liabilities of the
Company and its Restricted Subsidiaries on a consolidated basis
as shall be determined in accordance with generally accepted
accounting principles to constitute current assets and current
liabilities, respectively.
"Consolidated Net Income" for any period shall mean the
gross revenues of the Company and its Restricted Subsidiaries for
such period less all expenses and other proper charges (including
taxes on income), determined on a consolidated basis in
accordance with generally accepted accounting principles
consistently applied and after eliminating earnings or losses
attributable to outstanding Minority Interests, but excluding in
any event:
(a) any gains or losses on the sale or other
disposition of Investments or fixed or capital assets,
and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted
Subsidiary accrued prior to the date it became a
Restricted Subsidiary;
(d) net earnings and losses of any corporation
(other than a Restricted Subsidiary), substantially all
the assets of which have been acquired in any manner,
realized by such other corporation prior to the date of
such acquisition;
(e) net earnings and losses of any corporation
(other than a Restricted Subsidiary) with which the
Company or a Restricted Subsidiary shall have
consolidated or which shall have merged into or with
the Company or a Restricted Subsidiary prior to the
date of such consolidation or merger;
(f) net earnings of any business entity (other
than a Restricted Subsidiary) in which the Company or
any Restricted Subsidiary has an ownership interest;
<PAGE>
(g) any portion of the net earnings of any
Restricted Subsidiary which for any reason is
unavailable for payment of dividends to the Company or
any other Restricted Subsidiary;
(h) earnings resulting from any reappraisal,
revaluation or write-up of assets;
(i) any deferred or other credit representing any
excess of the equity in any Subsidiary at the date of
acquisition thereof over the amount invested in such
Subsidiary;
(j) any gain arising from the acquisition of any
Securities of the Company or any Restricted Subsidiary;
and
(k) any reversal of any contingency reserve,
except to the extent that provision for such
contingency reserve shall have been made from income
arising during such period.
"Consolidated Working Capital" shall mean the excess of
Consolidated Current Assets over Consolidated Current
Liabilities.
"Current Debt" of any Person shall mean as of the date
of any determination thereof (1) all Indebtedness for money
borrowed other than Funded Debt of such Person and (ii)
Guaranties by such Person of Current Debt of others.
"Default" shall mean any event or condition, the
occurrence of which would, with the lapse of time or the giving
of notice, or both, constitute an Event of Default as defined in
Section 7.1.
"Environmental Legal Requirement" shall mean any
applicable law, statute or ordinance relating to public health,
safety or the environment, including, without limitation, any
such applicable law, statute or ordinance relating to releases,
discharges or emissions to air, water, land or groundwater, to
the withdrawal or use of groundwater, to the use and handling of
polychlorinated biphenyls or asbestos, to the disposal,
treatment, storage or management of solid or hazardous wastes or
Hazardous Substances or crude oil, fractious petroleum, petroleum
derivatives or by-products or to exposure to toxic or hazardous
materials, to the handling, transportation, discharge or release
of gaseous or liquid Hazardous Substances and any regulation,
order, notice or demand issued pursuant to such law, statute or
ordinance, in each case applicable to the property of the Company
and its Subsidiaries or the operation, construction or
modification of any thereof, including without limitation the
following: the Clean Air Act, the Federal Water Pollution
Control Act, the Safe Drinking Water Act, the Toxic Substances
<PAGE>
Control Act, the Comprehensive Environmental Response
Compensation and Liability Act as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Dis-
posal Act, the Resource Conservation and Recovery Act as amended
by the Solid and Hazardous Waste Amendments of 1984, the
Occupational Safety and Health Act, the Emergency Planning and
Community Right-to-Know Act of 1986, the Solid Waste Disposal
Act, and any state statutes addressing similar matters, and any
state statute providing for financial responsibility for cleanup
or other actions with respect to the release or threatened
release of Hazardous Substances or crude oil, fractious
petroleum, petroleum derivatives or by-products and the rules or
regulations promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended and any successor statute of
similar import, together with the regulations thereunder, in each
case as in effect from time to time. References to sections of
ERISA shall be construed to also refer any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or
business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of trades
or businesses, as described in section 414(b) and 414(c),
respectively, of the Internal Revenue Code of 1986, as amended,
or Section 4001 of the ERISA.
"Event of Default" shall have the meaning set forth in
Section 7.1 hereof.
"Fixed Charges" for any period shall mean on a
consolidated basis the sum of (a) all Rentals (including all
Rentals on Capitalized Leases) payable during such period by the
Company and its Restricted Subsidiaries, and (b) all Interest
Charges on all Indebtedness (other than Capitalized Rentals) of
the Company and its Restricted Subsidiaries.
"Funded Debt" of any Person shall mean (a) all
Indebtedness for borrowed money or which has been incurred in
connection with the acquisition of assets in each case having a
final maturity of one or more than one year from the date of
origin thereof (or which is renewable or extendible at the option
of the obligor for a period or periods more than one year from
the date of origin), including all payments in respect thereof
that are required to be made within one year from the date of any
determination of Funded Debt, whether or not included in
Consolidated Current Liabilities, (b) all Capitalized Rentals,
and (c) all Guaranties of Funded Debt of others.
"Guaranties" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing, or in effect guaranteeing, any Indebtedness,
dividend or other obligation of any other Person (the "primary
<PAGE>
obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (a) to
purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (b) to advance or supply
funds (1) for the purchase or payment of such Indebtedness or
obligation, (2) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
or (c) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or
obligation, or (d) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in
respect thereof. For the purposes of all computations made
under this Agreement, a Guaranty in respect of any Indebtedness
for borrowed money shall be deemed to be Indebtedness equal to
the principal amount of such Indebtedness for borrowed money
which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of such
obligation, liability or dividend.
"Hazardous Substance" shall mean any hazardous or toxic
material, substance or waste, pollutant or contaminant which is
regulated under any statute, law, ordinance, rule or regulation
of any local, state, regional or Federal authority having
jurisdiction over the property of the Company and its
Subsidiaries or its use, including but not limited to any
material, substance or waste which is: (a) defined as a hazardous
substance under Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. Secs. 1317) as amended; (b) regulated as a
hazardous waste under Section 1004 of the Federal Resource
Conservation and Recovery Act (42 U.S.C. Secs. 6901 et seq.) as
amended; (c) defined as a hazardous substance under Section 101
of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Secs. 9601 et seq.) as amended; or (d)
defined or regulated as a hazardous substance or hazardous waste
under any rules or regulations promulgated under any of the
foregoing statutes.
"Indebtedness" of any Person shall mean and include all
obligations of such Person which in accordance with generally
accepted accounting principles shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any
event shall include all (a) obligations of such Person for
borrowed money or which have been incurred in connection with the
acquisition of property or assets, (b) obligations secured by any
lien or other charge upon property or assets owned by such
Person, even though such Person has not assumed or become liable
for the payment of such obligations, (c) obligations created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
<PAGE>
notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the Event of
Default are limited to repossession or sale of property, (d)
Capitalized Rentals, and (e) Guaranties of obligations of others
of the character referred to in this definition; provided,
however, that Guaranties which are otherwise classified as
liabilities on a balance sheet of a Person shall not be included
in Indebtedness if such inclusion would result in such Guaranties
being counted twice.
"Interest Charges" for any period shall mean all
interest and all amortization of debt discount and expense on any
particular Indebtedness for which such calculations are being
made. Computations of Interest Charges on a pro forma basis for
Indebtedness having a variable interest rate shall be calculated
at the rate in effect on the date of any determination.
"Investments" shall mean all investments, in cash or by
delivery of property made, directly or indirectly in any Person,
whether by acquisition of shares of capital stock, indebtedness
or other obligations or Securities or by loan, advance, capital
contribution or otherwise; provided, however, that "Investments"
shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business.
"Long-Term Lease" shall mean any lease of real or
personal property (other than a Capitalized Lease) having an
original term, including any period for which the lease may be
renewed or extended at the option of the lessor, of more than
three years.
"Make Whole Amount" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the
Called Principal of such note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant
to Section 3.1 or 3.2 or that has become or is declared
to be immediately due and payable pursuant to Section
7.3, as the context require.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by
discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect
to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on
the same periodic basis as that on which interest on
the Notes is payable) equal to the Reinvestment Yield
<PAGE>
with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.5% over the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M.
(New York City time) on the second Business Day
preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page
678" on the Telerate Access Service (or such other
display as may replace Page 678 on Telerate Access
Service) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date, or
(ii) if such yields are not reported as of such time or
the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series
Yields reported, for the latest day for which such
yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of
such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b)
interpolating linearly between reported yields.
"Remaining Average Life" means, with respect to any
Called Principal, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (i)
such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such
Called Principal by (b) the number of years (calculated
to the nearest one-twelfth year) which will elapse
between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to
the Called Principal of any Note, all payments of such
Called Principal and interest thereon that would be due
after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were
made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest
payments are due to be made under the terms of the
Notes, then the amount of the next succeeding scheduled
interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required
to be paid on such Settlement Date pursuant to Section
<PAGE>
3.1, 3.2 or 7.3
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to Section 3.1 or
3.2 or which has become or is declared to be
immediately due and payable pursuant to Section 7.3, as
the context requires.
"Minority Interests" shall mean any shares of stock of
any class of a Restricted Subsidiary (other than directors'
qualifying shares as required by law) that are not owned by the
Company and/or one or more of its Restricted Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater,
and by valuing Minority Interests constituting common stock at
the book value of capital and surplus applicable thereto
adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method of
valuing Minority Interests in preferred stock.
"Multiemployer Plan" shall have the same meaning as in
ERISA.
"Net Income Available for Fixed Charges" for any period
shall mean the sum of (a) Consolidated Net Income during such
period plus (to the extent deducted in determining Consolidated
Net Income), (b) all provisions for any Federal, state or other
income taxes made by the Company and its Restricted Subsidiaries
during such period, and (e) Fixed Charges during such period.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof.
"Plan" means a "pension plan," as such term in defined
in ERISA, established or maintained by the Company or any ERISA
Affiliate or as to which the Company or any ERISA Affiliate
contributed or is a member or otherwise may have any liability.
"Prepayment Event" shall mean and include (i) any
Acquisition by any Person or any Persons acting together which
would constitute a "group" for purposes of Section 13(d) of the
Exchange Act (a "Group") of 20% or more of the total Voting Stock
of the Company, (ii) the acquisition by the Company for cash,
property or securities, in one transaction or a series of related
transactions within a 12-month period, of more than 30% of the
Voting Stock of the Company outstanding immediately prior to the
commencement of such acquisition, (iii) the payment of a dividend
or other distribution by the Company to its shareholders, in one
transaction or a series of related transactions within a 12-month
period, of cash, property or securities having an aggregate fair
market value at the time of distribution that is 30% or more of
<PAGE>
the fair market value of the Voting Stock of the Company
outstanding immediately prior to such distribution, or (iv) any
Acquisition by any Person or Group of the power to elect, appoint
or cause the election or appointment of at least a majority of
the members of the Board of Directors of the Company, through
beneficial ownership of the Voting Stock or otherwise. For the
purposes of this definition, "Acquisition" of the power or
properties and assets stated in the preceding sentence means the
earlier of (a) the actual possession thereof and (b) the
consummation of any transaction or series of related transactions
which, with the passage of time and if successful, would give
such Person or Persons actual possession thereof.
"Pro Forma Fixed Charges" for any period shall mean, as
of the date of any determination thereof, the maximum aggregate
amount of Fixed Charges which would have become payable by the
Company and its Restricted Subsidiaries in such period determined
on a pro forma basis giving effect as of the beginning of such
period to the Incurrence of any Funded Debt (including
Capitalized Rentals) and the concurrent retirement of outstanding
Funded Debt or Current Debt or termination of any Capitalized
Leases.
"Purchasers" shall have the meaning set forth in
Section 2.1 hereof.
"QPAM Exemption" means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
"Rentals" shall mean and include as of the date of any
determination thereof all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by
the Company or a Restricted Subsidiary, as lessee or sublessee
under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or a
Restricted Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges. Fixed rents under any so-called
"percentage leases" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues.
"Reportable Event" shall have the same meaning as in
ERISA.
"Restricted Investments" shall mean all Investments,
other than Investments described in the following clauses (a)
through (g):
(a) Investments by the Company and its Restricted
Subsidiaries in and to Wholly-owned Restricted Subsidiaries,
including any Investment in a corporation which, after
giving effect to such Investment, will become a Restricted
<PAGE>
Subsidiary; provided that Wholly-owned Restricted Subsidiary
(or corporation which will become a Wholly-owned Restricted
Subsidiary) has a primary line of business similar to one of
the Company's principal lines of business on the date of the
Agreement.
(b) Investments in commercial paper maturing in 270
days or less from the date of issuance which, at the time of
acquisition by the Company or any Restricted Subsidiary, is
accorded the highest rating by Standard & Poor's
Corporation, Moody's Investors Service, Inc. or another
nationally recognized credit rating agency of similar
standing;
(c) Investments in direct obligations of the United
States of America, or any agency or instrumentality of the
United States of America, the payment or guaranty of which
constitutes a full faith and credit obligation of the United
States of America, in either case maturing in twelve months
or less from the date of acquisition thereof;
(d) Investments in certificates of deposit maturing
within one year from the date of origin, issued by a bank or
trust company organized under the laws of the United States
or any state thereof, having capital, surplus and undivided
profits aggregating at least $100,000,000 and whose
long-term certificates of deposit are, at the time of
acquisition thereof by the Company or a Restricted
Subsidiary, rated in one of the two highest rating
categories by Standard & Poor's Corporation or by Moody's
Investors Service, Inc. or another nationally recognized
rating agency;
(e) loans or advances in the usual and ordinary course
of business to officers, directors and employees for
expenses (including moving expenses related to a transfer)
incidental to carrying on the business of the Company or any
Restricted Subsidiary;
(f) receivables arising from the sale of goods and
services in the ordinary course of business of the Company
and its Restricted Subsidiaries; and
(g) Investments in direct obligations of any state of
the United States, any subdivision or agency thereof or any
municipality therein which are rated by a nationally
recognized rating agency in one of the highest two rating
classifications and maturing within three years of the date
of acquisition thereof.
"Restricted Subsidiary" shall mean any Subsidiary (a)
which is organized under the laws of the United States or any
state thereof; (b) which conducts substantially all of its
business and has substantially all of its assets within the
<PAGE>
United States; and (c) of which more than 80% (by number of
votes) of the Voting Stock is owned by the Company and/or one or
more Restricted Subsidiaries.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Security" shall have the same meaning as in Section
2(1) of the Securities Act.
The term "subsidiary" shall mean, as to any particular
parent corporation, any corporation of which more than 50% (by
number of votes) of the Voting Stock shall be owned by such
parent corporation and/or one or more corporations which are
themselves Restricted Subsidiaries of such parent corporation.
The term "Subsidiary" shall mean a subsidiary of the Company.
"Total Assets" shall mean as of the date of any deter-
mination thereof the total amount of all assets of the Company
and its Restricted Subsidiaries (less depreciation, depletion and
other properly deductible valuation reserves), determined in
accordance with generally accepted accounting principles.
"Unrestricted Subsidiary" shall mean any Subsidiary
which is not a Restricted Subsidiary.
"Voting Stock" shall mean Securities of any class or
classes the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).
"Wholly-owned" when used in connection with any Subsid-
iary shall mean a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required as directors'
qualifying shares) and all Funded Debt or Current Debt shall be
owned by the Company and/or one or more of its Wholly-owned
Restricted Subsidiaries.
1.2. Accounting Principles. Where the character or
amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of
this Agreement, the same shall be done in accordance with
generally accepted accounting principles, to the extent
applicable, except where such principles are inconsistent with
the requirements of this Agreement.
1.3. Directly or Indirectly. Where any provision in
this Agreement refers to action to be taken by any Person, or
action which a Person is prohibited from taking, such provision
shall be applicable whether the action in question is taken
directly or indirectly by such Person.
<PAGE>
SECTION 2. DESCRIPTION OF NOTES AND COMMITMENT.
2.1. Description of Notes. The Company will authorize
the issue and sale of $14,000,000 aggregate principal amount of
its 6.31% Senior Notes due March 1, 2001 (the "Notes") to be
dated the date of issue, to bear interest from such date at the
rate of 6.31% per annum, payable semiannually on the first day of
each March and September in each year (commencing September 1,
1994) and at maturity and to bear interest on overdue principal
(including any overdue optional prepayment of principal) and
premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest at the rate of 7.31% per annum
after maturity, whether by acceleration or otherwise, until paid,
to be expressed to mature on March 1, 2001, and to be
substantially in the form attached hereto as Exhibit A. Interest
on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months. The Notes are not subject to prepayment or
redemption at the option of the Company prior to their expressed
maturity dates except on the terms and conditions and in the
amounts and with the premium, if any, set forth in Section 3 of
this Agreement. The term "Notes" as used herein shall include
each Note delivered pursuant to this Agreement and the separate
agreements with the purchasers named in Schedule I hereto. You
and the other purchasers named in Schedule I hereto are
hereinafter sometimes referred to as the "Purchasers." The terms
which are capitalized herein shall have the meanings set forth in
Section 1.1 hereof unless the context shall otherwise require.
2.2. Commitment, Closing Date. Subject to the terms
and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company agrees to issue and
sell to you, and you agree to purchase from the Company, the
Notes of the Company at a price of 100% of the principal amount
thereof set forth opposite your name in Schedule 1.
Delivery of the Notes will be made at the offices of
Bank One Indianapolis, 111 Monument Circle, 16th Floor,
Indianapolis, Indiana 46277, Attention: Trust Cage, against
payment therefor in Federal or other funds current and
immediately available to the Company's account at National City
Bank, Indianapolis, Indiana, for the account of IWC Resources
Corporation, Account No. 6090519, in the amount of the purchase
price at 10:00 A.M., Indianapolis time, on March 10, 1994 or such
later date (not later than May 1, 1994) as the Company shall
specify by not less than five Business Days' prior written notice
to you (the "Closing Date"). The Notes delivered to you on the
Closing Date will be delivered to you in the form of seven
registered Notes, each in the amount of Two Million Dollars
($2,000,000), registered in your name or in the name of such
nominee as you may specify and in substantially the form attached
hereto as Exhibit A, all as you may specify at any time prior to
the date fixed for delivery.
<PAGE>
SECTION 3. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the
extent and in the manner expressly provided in this Agreement.
3.1. Optional Prepayments. Upon compliance with
Section 3.3 and subject to the following limitations, the Company
shall have the right to prepay the outstanding Notes, in whole
but not in part, on any Optional Prepayment Date (defined in the
next sentence) by payment of the principal amount of the Notes
and accrued interest thereon to the date of such prepayment,
together with a premium equal to the Make Whole Amount,
determined three Business Days prior to the date of such
prepayment. "Optional Prepayment Date" means each March 1 and
September 1, commencing March 1, 1997 and ending September 1,
2000.
3.2. Prepayment Upon Occurrence of Prepayment Event.
In the event that any Prepayment Event shall occur or the Company
shall have knowledge of any proposed Prepayment Event, the
Company will give written notice (the "Company Notice") in the
manner provided in Section 9.5 of this Agreement of such fact to
the holders of the Notes. The Company Notice shall be delivered
promptly upon receipt of such knowledge by the Company and in any
event no later than three Business Days following the occurrence
of any Prepayment Event. The Company Notice shall (a) describe
the facts and circumstances of such Prepayment Event in
reasonable detail, (b) make reference to this Section 3.2 and the
right of the holders of the Notes to require payment on the terms
and conditions provided for in this Section 3.2, and (c) offer in
writing to prepay the outstanding Notes, together with accrued
interest to the date of prepayment and a premium equal to the
Make Whole Amount. Each holder of the Notes shall have the right
to accept such offer and require prepayment of the Notes held by
such holder by written notice to the Company (the "Noteholder
Notice") given in the manner provided in Section 9.5 of this
Agreement within 30 days following receipt of the Company Notice
specifying a date for payment (the "Prepayment Date") which
Prepayment Date shall be not later than three Business Days after
the date of the Noteholder Notice. The Company shall, on each
Prepayment Date, make prepayments with accrued interest and a
premium equal to Make Whole Amount on all Notes held by holders
who have accepted such offer of prepayment.
Without limiting the foregoing, notwithstanding any
failure on the part of the Company to give the Company Notice
herein required as a result of the occurrence of a Prepayment
Event, each holder of the Notes shall have the right to require
the Company to prepay such holder's Notes in full, together with
accrued interest thereon to the date of prepayment and a premium
equal to the Make Whole Amount at any time within ninety days
after such holder has actual knowledge of any such Prepayment
Event. The Company agrees to make such prepayment on the date
designated in the Noteholder's Notice delivered by such holder.
<PAGE>
3.3. Notice of Prepayments. The Company will give
notice of any prepayment of the Notes to be made pursuant to
Section 3.1 to each holder thereof not less than 30 days nor more
than 60 days before the date fixed for such optional prepayment
specifying (a) such date, (b) the principal amount of the
holder's Notes to be prepaid on such date, and (c) the estimated
premium (including the calculation in respect thereof), if any,
and accrued interest applicable to the prepayment. Such notice
of prepayment shall also certify all facts which are conditions
precedent to any such prepayment. Notice of prepayment having
been so given, the aggregate principal amount of the Notes
specified in such notice, together with the premium, if any, and
accrued interest thereon shall become due and payable on the
prepayment date. The Company will also give written notice to
each holder of the Notes, by telecopy or other same day written
communication, setting forth the computation and amount of any
premium payable in connection with such prepayment at least two
Business Days prior to the date of such prepayment.
3.4. Direct Payment. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note
owned by a Purchaser or its nominee or owned by any other
institutional holder who has given written notice to the Company
requesting that the provisions of this Section shall apply, the
Company will promptly and punctually pay when due the principal
thereof and premium, if any, and interest thereon, without any
presentment thereof directly to such Purchaser or such subsequent
institutional holder at the address of such Purchaser set forth
in Schedule I or at such other address as such Purchaser or such
subsequent institutional holder may from time to time designate
in writing to the Company or, if a bank account is designated for
the Purchaser on Schedule I hereto or in any written notice to
the Company from a Purchaser or any such subsequent institutional
holder, the Company will make such payments in immediately
available funds to such bank account, marked for attention as
indicated, or in such other manner or to such other account of
such Purchaser or such institutional holder in any bank in the
United States as such Purchaser or any such subsequent
institutional holder may from time to time direct in writing.
SECTION 4. REPRESENTATIONS.
4.1. Representations of the Company. The Company
represents and warrants that all representations set forth in the
form of certificate attached hereto as Exhibit B are true and
correct as of the date hereof and are incorporated herein by
reference with the same force and effect as though herein set
forth in full.
4.2. Representations of the Purchaser.
(a) You represent that you are purchasing the Notes
<PAGE>
for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension
or trust funds and not with a view to the distribution (as
such term is used in Section 2(ii) of the Securities Act)
thereof, provided that the disposition of your or their
property shall at all times be within your or their control.
You understand that the Notes have not been registered under
the Securities Act, and that the Company is not required to
register the Notes. Without limiting the foregoing, you
agree that for a period of three years commencing on the
date of original issuance of the Notes you will reoffer or
resell the Notes purchased under this Agreement (i) only (A)
to the Company, (B) pursuant to a transaction under and
meeting the requirements of Rule 144A, as amended from time
to time, promulgated under the Securities Act, (C) in an
offshore transaction (as defined in Rule 902 of Regulation S
under the Securities Act) to persons to whom offers and
sales of the Notes may be made without registration under
the Securities Act in reliance upon Regulation S thereunder,
or (D) in accordance with another available exemption from
the requirements of Section 5 of the Securities Act, and
(ii) in the case of resales pursuant to subclauses (B), (C)
or (D) of clause (i) above, after delivering to the Company
a completed and signed Assignment Form attached to the Note.
In the event of a resale described in subclause (B) of the
foregoing clause (i), you agree that you and any person
acting on your behalf will take reasonable steps to ensure
that any purchaser of any Note from you is aware that you
may be relying upon the exemption from the provisions of
Section 5 of the Securities Act provided by Rule 144A.
(b) You represent that at least one of the following
statements is an accurate representation as to each source
of funds to be used by you to pay the purchase price of the
Notes purchased by you hereunder:
(1) if you are an insurance company, no part of
such funds constitutes assets allocated to any separate
account maintained by you in which any employee benefit
plan (or its related trust) has any interest; or
(2) if you are an insurance company, to the
extent that any part of such funds constitutes assets
allocated to any separate account maintained by you,
(i) such separate account is a "pooled separate
account" within the meaning of Prohibited Transaction
Class Exemption 90-1, in which case you have disclosed
to the Company the names of each employee benefit plan
whose assets in such separate account exceed 10% of the
total assets or are expected to exceed 10% of the total
assets of such account as of the date of such purchase
(and for the purposes of this subdivision (2), all
employee benefit plans maintained by the same employer
or employee organization are deemed to be a single
<PAGE>
plan), or (ii) such separate account contains only the
assets of a specific employee benefit plan, complete
and accurate information as to the identity of which
you have delivered to the Company; or
(3) either (x) all of such funds constitute
assets of an "investment fund" (within the meaning of
Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the
meaning of Part V of the QPAM Exemption), no employee
benefit plan's assets which are included in such
investment fund, when combined with the assets of all
other employee benefit plans established or maintained
by the same employer or by an affiliate (within the
meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part
I(g) of the QPAM Exemption are satisfied and (i) the
identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in
such investment fund have been disclosed to the
Company, or (y) all of such funds constitute assets of
an "investment fund" (within the meaning of Part V of
the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the
meaning of Part V of the QPAM Exemption), the
conditions of Part I(g) of the QPAM Exemption are
satisfied and (i) the names of each employee benefit
plan whose assets are included in such investment fund,
(ii) the names of each employee benefit plan whose
assets are included in such investment fund and whose
assets, when combined with the assets of all other
employee benefit plans established or maintained by the
same employer or by an affiliate (within the meaning of
section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by
such QPAM, exceed 20% of the total client assets
managed by such QPAM and (iii) the identity of such
QPAM have each been disclosed to the Company; or
(4) if you are other than an insurance company,
all or a portion of such funds consists of funds which
do not constitute assets of any employee benefit plan
(other than a governmental plan exempt from the
coverage of ERISA) and the remaining portion, if any,
of such funds consists of funds which may be deemed to
constitute assets of one or more specific employee
benefit plans, complete and accurate information as to
the identity of each of which you have delivered to the
Company.
As used in this Section 4.2, the terms "employee benefit
plan," "governmental plan," "party in interest" and "separate
<PAGE>
account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
SECTION 5. CLOSING CONDITIONS.
Your obligation to purchase the Notes on the Closing
Date shall be subject to the performance by the Company of its
agreements hereunder which by the terms hereof are to be
performed at or prior to the time of delivery of the Notes and to
the following further conditions precedent:
5.1. Closing Certificate. Concurrently with the
delivery of Notes to you on the Closing Date, you shall have
received a certificate dated the Closing Date, signed by the
President or a Vice President of the Company substantially in the
form attached hereto as Exhibit B, the truth and accuracy of
which shall be a condition to your obligation to purchase the
Notes proposed to be sold to you.
5.2. Legal Opinions. Concurrently with the delivery
of Notes to you on the Closing Date, you shall have received
legal opinions from: (i) Sidley & Austin, who are acting as your
special counsel in this transaction, (ii) Baker & Daniels, who
are acting as your special Indiana counsel in this transaction,
and (iii) John Davis, Esq., Vice President and General Counsel of
the Company, each such opinion dated the Closing Date, each in
form and substance satisfactory to you, and each covering the
matters set forth in Exhibits C-1, C-2 and D, respectively,
hereto.
5.3. Company's Existence and Authority. On or prior
to the Closing Date, you shall have received, in form and
substance reasonably satisfactory to you and your special
counsel, such documents and evidence with respect to the Company
as you may reasonably request in order to establish the existence
and good standing of the Company and the authorization of the
transactions contemplated by this Agreement.
5.4. Legality of Investment. The Notes to be pur-
chased by you shall be a legal investment for you under the laws
of each jurisdiction to which you may be subject.
5.5. Private Placement Number Application. An
application for issuance of a private placement number for the
Notes shall have been made to Standard & Poor's Corporation.
5.6. Satisfactory Proceedings. All proceedings taken
in connection with the transactions contemplated by this
Agreement, and all documents necessary to the consummation
thereof, shall be satisfactory in form and substance to you, and
you shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in
connection with the consummation of said transactions.
<PAGE>
5.7. Waiver of Conditions. If on the Closing Date the
Company fails to tender to you the Notes to be issued to you on
such date or if the conditions specified in this Section 5 have
not been fulfilled, you may thereupon elect to be relieved of all
further obligations under this Agreement. Without limiting the
foregoing, if the conditions specified in this Section 5 have not
been fulfilled, you may waive compliance by the Company with any
such condition to such extent as you may in your sole discretion
determine. Nothing in this Section 5.7 shall operate to relieve
the Company of any of its obligations hereunder or to waive any
of your rights against the Company.
SECTION 6. COMPANY COVENANTS.
From and after the Closing Date and continuing so long
as any amount remains unpaid on any Note:
6.1. Corporate Existence, Etc. The Company will
preserve and keep in force and effect, and will cause each
Restricted Subsidiary to preserve and keep in force and effect,
its corporate existence and all licenses and permits necessary to
the proper conduct of its business, provided that the foregoing
shall not prevent any transaction permitted by Section 6.7.
6.2. Insurance. The Company will maintain, and will
cause each Restricted Subsidiary to maintain, to the extent
commercially available, insurance coverage by financially sound
and reputable insurers in such forms and amounts and against such
risks as are customary for corporations of established reputation
engaged in the same or a similar business and owning and
operating similar properties.
6.3. Taxes, Claims for Labor and Materials; Compliance
with Laws.
(a) The Company will promptly pay and discharge, and
will cause each Restricted Subsidiary promptly to pay and
discharge, all lawful taxes, assessments and governmental
charges or levies imposed upon the Company or such
Restricted Subsidiary, respectively, or upon or in respect
of all or any part of the property or business of the
Company or such Restricted Subsidiary, all trade accounts
payable in accordance with usual and customary business
terms, and all claims for work, labor or materials; provided
the Company or such Restricted Subsidiary shall not be
required to pay any such tax, assessment, charge, levy,
account payable or claim if (1) the validity, applicability
or amount thereof is being contested in good faith by
appropriate actions or proceedings which will prevent the
forfeiture or sale of any property of the Company or such
Restricted Subsidiary or any material interference with the
use thereof by the Company or such Restricted Subsidiary,
<PAGE>
and (2) the Company or such Restricted Subsidiary shall set
aside on its books, reserves deemed by it to be adequate
with respect thereto.
(b) The Company will promptly comply and will cause
each Restricted Subsidiary to comply with all laws,
ordinances or governmental rules and regulations to which it
is subject, including, without limitation, the Occupational
Safety and Health Act of 1970, as amended, ERISA and all
Environmental Legal Requirements, in each case where the
failure to so comply could have a material adverse effect on
the operations or financial condition of the Company or its
Restricted Subsidiaries.
6.4. Maintenance, Etc. The Company will maintain,
preserve and keep, and will cause each Restricted Subsidiary to
maintain, preserve and keep, its properties which are used or
useful in the conduct of its business (whether owned in fee or a
leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements,
renewals and additions so that at all times the efficiency
thereof shall be maintained.
6.5. Nature of Business. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a
result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the Company
and its Restricted Subsidiaries would be substantially changed
from the general nature of the business engaged in by the Company
and its Restricted Subsidiaries on the date of this Agreement.
6.6. Fixed Charge Coverage. The Company shall
maintain, as of the last date of each fiscal quarter of the
Company, a ratio of Net Income Available for Fixed Charges for
the four consecutive fiscal quarters ending on such date to Pro
Forma Fixed Charges for the four consecutive fiscal quarters
ending on such date of 2.0 to 1.0.
6.7. Mergers and Consolidations. The Company will
not, and will not permit any Restricted Subsidiary to,
consolidate with or be a party to a merger with any other
corporation or sell all of substantially all of its assets,
provided, however, that the Company may consolidate or merge with
any other corporation if (A) the surviving or continuing
corporation shall be a corporation organized under the laws of
the United States, any state thereof or the District of Columbia
and having substantially all of its assets in the United States,
(B) the surviving or continuing corporation, if not the Company,
shall assume, in an instrument executed and delivered to all the
holders of Notes in form and substance satisfactory to the holder
or holders of not less than 66-2/3% of the aggregate principal
amount of the Notes at the time outstanding (exclusive of any
Notes held by the Company, its Subsidiaries and their
Affiliates), the due and punctual payment of the principal, Make
<PAGE>
Whole Amount, if any, and interest on, the Notes and the due
observance and performance of each of the covenants and other
terms of this Agreement to be observed or performed by the
Company, and the Notes, following such assumption, rank at least
pari passu with all other outstanding senior indebtedness of the
surviving or continuing corporation, (C) if the Company is not
the continuing or surviving corporation, the Company shall have
delivered to the holders of the Notes then outstanding an opinion
of counsel, reasonably satisfactory in form and substance to the
holders of at least 66-2/3% of the principal amount of the Notes
then outstanding (exclusive of any Notes held by the Company, its
Subsidiaries and their Affiliates), that any such merger complies
with the terms hereof and the assumption is an enforceable
obligation of the surviving or continuing corporation, and (D) at
the time of such consolidation or merger and after giving effect
thereto no Default or Event of Default shall have occurred and be
continuing.
6.8. Sale of Assets. (a) The Company will not, and
will not permit any Restricted Subsidiary to sell, lease,
transfer or otherwise dispose of (collectively, a "Disposition")
any asset, other than in the ordinary course of business, in one
or a series of transactions to any Person, other than to the
Company or any Restricted Subsidiary, unless (i) during any
fiscal year, after giving effect to such Disposition, the
aggregate book value of all such assets sold, leased, transferred
or otherwise disposed of during such fiscal year shall not exceed
10% of the Total Assets of the Company and its Restricted
Subsidiaries as shown on the most recently available audited
annual financial statements of the Company and its Restricted
Subsidiaries, and (ii) after giving effect to such Disposition,
no Default or Event of Default shall exist.
(b) Notwithstanding the provisions of Section 6.8(a),
the Company and its Restricted Subsidiaries may sell, transfer or
otherwise dispose of assets if (i) the proceeds from the
Disposition are used to reduce Funded Debt of the Company or a
Restricted Subsidiary or are used to acquire other assets for the
Company or a Restricted Subsidiary and such other assets are to
be used in the operations of the Company or the Restricted
Subsidiary for which they are acquired, and (ii) the period
between the Disposition and the use of proceeds permitted by this
Section does not exceed 180 days. For purposes of the foregoing,
proceeds of a Disposition may be used for more than one purpose
permitted by this Section and all such uses shall be considered
in the aggregate. For purposes of subclause (ii), the Company
shall not be required to "trace" the receipt and application of
particular funds; however, unless Disposition proceeds are
segregated pending application for a permitted use, the Company
shall not be entitled to the benefit of the foregoing subclause
(ii) unless it maintains Consolidated Working Capital, at all
times between the date of Disposition and the date of the
permitted use of proceeds, of not less than the sum of (A) the
amount cash proceeds from the Disposition and (B) 50% of the
<PAGE>
Company's Consolidated Working Capital at the month-end next
preceding the Disposition.
6.9. Adjusted Consolidated Net Worth. The Company
will at all times keep and maintain Adjusted Consolidated Net
Worth at an amount not less than $65,000,000.
In valuing any Investments for the purpose of applying
the limitations set forth in this Section 6.9, such Investments
shall be taken at the original cost thereof, without allowance
for any subsequent write-offs or appreciation or depreciation
therein, but less any amount repaid or recovered on account of
capital or principal.
For purposes of this Section 6.9, at any time when a
corporation becomes a Restricted Subsidiary, all Investments of
such corporation at such time shall be deemed to have been made
by such corporation, as a Restricted Subsidiary, at such time.
6.10. Repurchase of Notes. Neither the Company
nor any Restricted Subsidiary or Affiliate, directly or
indirectly, may repurchase or make any offer to repurchase any
Notes unless the offer has been made to repurchase Notes, pro
rata, from all holders of the Notes at the same time and upon the
same terms. In case the Company repurchases or otherwise
acquires any Notes, such Notes shall immediately thereafter be
cancelled and no Notes shall be issued in substitution therefor.
Without limiting the foregoing, upon the purchase or other
acquisition of any Notes by the Company, any Restricted
Subsidiary or any Affiliate, such Notes shall no longer be
outstanding for purposes of any section of this Agreement
relating to the taking by the holders of the Notes of any actions
with respect hereto, including, without limitation, Section 7.3,
Section 7.4 and Section 8.1.
6.11. Transactions with Affiliates. The Company will
not, and will not permit any Restricted Subsidiary to, enter into
or be a party to any transaction or arrangement with any
Affiliate (including, without limitation, the purchase from, sale
to or exchange of property with, or the rendering of any service
by or for, any Affiliate), except in the ordinary course of and
pursuant to the reasonable requirements of the Company's or such
Restricted Subsidiary's business and upon fair and reasonable
terms no less favorable to the Company or such Restricted
Subsidiary than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate.
6.12. Reports and Rights of Inspection. The Company will
keep, and will cause each Restricted Subsidiary to keep, proper
books of record and account in which full and correct entries
will be made of all dealings or transactions of or in relation to
the business and affairs of the Company or such Restricted
Subsidiary, in accordance with generally accepted accounting
principles consistently maintained (except for changes disclosed
<PAGE>
in the financial statements furnished to you pursuant to this
Section 6.19 and concurred in by the independent public
accountants referred to in Section 6.19(b) hereof), and will
furnish to you so long as you are the holder of any Note and to
each other institutional holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(a) Quarterly Statements. As soon as available and in
any event within 60 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, copies
of:
(1) consolidated balance sheets of the Company
and its Restricted Subsidiaries as of the close of such
quarterly fiscal period, setting forth in comparative
form the consolidated figures for the corresponding
period of the preceding fiscal year,
(2) consolidated statements of income and retained
earnings of the Company and its Restricted Subsidiaries
for such quarterly fiscal period, setting forth in
comparative form the consolidated figures for the
corresponding period of the preceding fiscal year, and
(3) consolidated statements of cashflows of the
Company and its Restricted Subsidiaries for the portion
of the fiscal year ending with such quarter, setting
forth in comparative form the consolidated figures for
the corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and
correct, by an authorized financial officer of the Company;
(b) Annual Statements. As soon as available and in
any event within 120 days after the close of each fiscal
year of the Company, copies of:
(1) consolidated balance sheets of the Company and
its Restricted Subsidiaries as of the close of such
fiscal year, and
(2) consolidated statements of income and retained
earnings and cash flows of the Company and its
Restricted Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consoli-
dated figures for the preceding fiscal year, all in reason-
able detail and accompanied by a report thereon of a firm of
independent public accountants of recognized national
standing selected by the Company to the effect that the
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles and
present fairly, in all material respects, the consolidated
financial position of the Company and its Restricted
<PAGE>
Subsidiaries as of the end of the fiscal year being reported
on and the consolidated results of the operations and cash
flows for said year in conformity with generally accepted
accounting principles and that the examination of such
accountants in connection with such financial statements has
been conducted in accordance with generally accepted
auditing standards;
(c) Audit Reports. Promptly upon receipt thereof, one
copy of each interim or special audit made by independent
accountants of the books of the Company or any Restricted
Subsidiary;
(d) SEC and Other Reports. Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Company to
stockholders generally and of each regular or periodic
report, and any registration statement or prospectus filed
by the Company or any Subsidiary with any securities ex-
change or the Securities and Exchange Commission or any
successor agency, and copies of any orders in any proceed-
ings to which the Company or any of its Subsidiaries is a
party, issued by any governmental agency, Federal or state,
having jurisdiction over the Company or any of its
Subsidiaries;
(e) Officer's Certificates. Within the periods
provided in paragraphs (a) and (b) above, a certificate of
an authorized financial officer of the Company stating that
such officer has reviewed the provisions of this Agreement
and setting forth, to the best of such officer's knowledge:
(1) the information and computations (in sufficient detail)
required in order to establish whether the Company was in
compliance with the requirements of Section 6.6 and
Section 6.9, inclusive (and, if applicable, Section 6.8(b)),
at the end of the period covered by the financial statements
then being furnished, and (2) whether there existed as of
the date of such financial statements and whether there
exists on the date of the certificate or existed at any time
during the period covered by such financial statements any
Default or Event of Default and, if any such condition or
event exists on the date of the certificate, specifying the
nature and period of existence thereof and the action the
Company is taking and proposes to take with respect thereto;
and
(f) Requested Information. With reasonable
promptness, such other data and information as you or any
such institutional holder may reasonably request.
Without limiting the foregoing, the Company will permit you, so
long as you are the holder of any Note, and each institutional
holder of the then outstanding Notes (or such Persons as either
you or such holder may designate), to visit and inspect, under
<PAGE>
the Company's guidance, any of the properties of the Company or
any Restricted Subsidiary, to examine all their books of account,
records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers, employees, and
independent public accountants (and by this provision the Company
authorizes said accountants to discuss with you the finances and
affairs of the Company and its Restricted Subsidiaries) all at
such reasonable times and as often as may be reasonably
requested. The Company shall not be required to pay or reimburse
you or any such holder for expenses which you or any such holder
may incur in connection with any such visitation or inspection.
6.13. Cost of this Financing. Whether or not the
transactions contemplated by this Agreement shall be consummated:
(a) Payment of Fees and Expenses. The Company will
pay all costs and expenses of the Purchaser in connection
with this Agreement and the consummation of all transactions
contemplated hereby, and all costs and expenses of the
Purchaser and each other Noteholder relating to any future
amendment or supplement to this Agreement or any of the
Notes (or any proposal for such amendment or supplement)
whether or not consummated, or any waiver or consent with
respect thereto (or any proposal for such waiver or consent)
whether or not consummated, including but not limited to
reasonable out-of-pocket expenses, the cost of obtaining a
private placement number for the Notes, the cost of all
accounting services required hereby, all reasonable
attorneys' fees (not to exceed $15,000 for legal services
through the Closing Date), all stenographic or reproduction
expenses relating to such transactions, and the cost of
transmitting the Notes to the home office of the Purchaser
or to such other address as may be requested by the
Purchaser, and will pay the fees, expenses and disbursements
of all counsel referred to in Section 5.2 for their services
in connection therewith. The Company will not be required
to pay the costs and expenses of any prospective transferee
incurred in connection with such transferee's acquisition of
any Notes, other than the cost of registering such Notes on
the books of the Company and the cost of transmitting such
Notes to such transferee.
(b) Reimbursement. The Company will reimburse all
costs and expenses described in clause (a) of this Section
which shall have been paid by the Purchaser or any
Noteholder.
(c) Indemnification for Fees, etc. The Company will
pay and indemnify the Purchaser and every other Noteholder
against all liability and loss with respect to (i) all
claims for fees or commissions of brokers or finders with
respect to any transaction contemplated by this Agreement,
and (ii) all taxes, fees and other public charges payable in
<PAGE>
connection with the issuance of any of the Notes, or the
execution, delivery and enforcement of this Agreement or any
of the Notes, or any amendment or supplement to this
Agreement.
The obligations of the Company under this Section shall
survive the payment or transfer of the Notes.
6.14. Rule 144A Information. If the Company ceases to
be a reporting company under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Company will
furnish to each holder of Notes and any prospective purchaser
designated by any such holder all information described in Rule
144A under the Securities Act, including such financial or other
information as any holder of Notes or any Person designated by
such holder may reasonably determine is required to permit such
holder to comply with the requirements of Rule 144A in connection
with the resale of Notes, in any such case promptly after the
same is requested.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
7.1. Events of Default. Any one or more of the
following shall constitute an "Event of Default" as the term is
used herein:
(a) Default shall occur in the payment of interest on
any Note for more than ten days after the same shall have
become due; or
(b) Default shall occur for more than ten days in the
making of any payment of the principal of any Note or the
premium, if any, thereon at the expressed or any accelerated
maturity date or at any date fixed for prepayment; or
(c) Default shall be made in the payment of the
principal of or interest on any Funded Debt or Current Debt
(other than the Notes) of the Company or any Restricted
Subsidiary having an aggregate principal amount in excess of
$1,000,000 and such default shall continue beyond the period
of grace, if any, allowed with respect thereto; or
(d) Default shall occur in the observance or per-
formance of any covenant or agreement contained in this
Agreement which is not remedied within 30 days after the
earlier of (1) the date on which the Company first obtains
knowledge of such Default and (2) the date on which written
notice thereof is given to the Company by the holder of any
Note; provided, however, that if a default occurs with
respect to a covenant or agreement other than a covenant
contained in Sections 6.6 through 6.9, no Event of Default
shall occur at the end of the aforesaid 30-day period if the
Company is diligently pursuing a remedy and (A) the default
<PAGE>
cannot reasonably be expected to have a material adverse
effect on the operations or financial condition of the
Company and its Restricted Subsidiaries, considered as a
whole, and (B) the remedy is not within the control of the
Company (if the remedy is within the control of the Company,
the aforesaid 30-day period shall be deemed to be a 90-day
period, assuming the other requirements of this proviso are
met); or
(e) Any representation or warranty made by the Company
herein, or made by the Company in any statement or
certificate furnished by the Company in connection with the
consummation of the issuance and delivery of the Notes or
furnished by the Company pursuant hereto, is untrue in any
material respect as of the date of the issuance or making
thereof; or
(f) Final judgment or judgments for the payment of
money aggregating in excess of $1,000,000 is or are out-
standing against the Company or any Restricted Subsidiary or
against any property or assets of either and any one of such
judgments has remained unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of 30 days from
the date of its entry; or
(g) The Company or any Restricted Subsidiary becomes
insolvent or bankrupt, is generally not paying its debts as
they become due or makes an assignment for the benefit of
creditors, or the Company or any Restricted Subsidiary
applies for or consents to the appointment of a custodian,
trustee, liquidator, or receiver for the Company or such
Restricted Subsidiary or for the major part of the property
of either; or
(h) A custodian, trustee, liquidator, or receiver is
appointed for the Company or any Restricted Subsidiary or
for the major part of the property of either and is not
discharged within 30 days after such appointment; or
(i) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief
under any bankruptcy or similar law or laws for the relief
of debtors, are, instituted by or against the Company or any
Restricted Subsidiary and, if instituted against the Company
or any Restricted Subsidiary, are consented to or are not
dismissed within 30 days after such institution.
7.2. Notice to Holders. When any Event of Default
described in the foregoing Section 7.1 has occurred, or if the
holder of any Note or of any other evidence of Funded Debt or
Current Debt of the Company gives any notice or takes any other
action with respect to a claimed default, the Company agrees to
give notice within three Business Days of such event to all
holders of the Notes then outstanding.
<PAGE>
7.3. Acceleration of Maturities. When any Event of
Default described in paragraph (a) or (b) of Section 7.1 has
happened and is continuing, any holder of any Note may, and when
any Event of Default described in paragraphs (c) through (f),
inclusive, of said Section 7.1 has happened and is continuing,
the holder or holders of 25% or more of the principal amount of
Notes at the time outstanding may, by notice to the Company,
declare the entire principal and all interest accrued on all
Notes to be, and all Notes shall thereupon become, forthwith due
and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived.
When any Event of Default described in paragraph (g), (h) or (i)
of Section 7.1 has occurred, then all outstanding Notes shall
immediately become due and payable without presentment, demand or
notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will
forthwith pay to the holders of the Notes the entire principal
and interest accrued on the Notes and, to the extent permitted by
law, an amount as liquidated damages for the loss of the bargain
evidenced hereby (and not as a penalty) equal to the Make Whole
Amount, determined as of the date on which the Notes shall so
become due and payable. No course of dealing on the part of any
Noteholder nor any delay or failure on the part of any Noteholder
to exercise any right shall operate as a waiver of such right or
otherwise prejudice such holder's rights, powers and remedies.
The Company further agrees, to the extent permitted by law, to
pay to the holder or holders of the Notes all costs and expenses
incurred by them in the collection of any Notes upon any default
hereunder or thereon, including reasonable compensation to such
holder's or holders' attorneys for all services rendered in
connection therewith.
7.4. Rescission of Acceleration. The provisions of
Section 7.3 are subject to the condition that if the principal of
and accrued interest on all or any outstanding Notes have been
declared immediately due and payable by reason of the occurrence
of any Event of Default described in paragraphs (a) through (f),
inclusive, of Section 7.1, the holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annual such
declaration and the consequences thereof, provided that at the
time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this
Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement
(except any principal, interest or premium on the Notes
which has become due and payable solely by reason of such
declaration under Section 7.3) shall have been duly paid;
and
<PAGE>
(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to
Section 8.1;
and provided further, that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereto.
SECTION 8. AMENDMENTS, WAIVERS AND CONSENTS.
8.1. Consent Required. Any term, covenant, agreement
or condition of this Agreement may, with the consent of the
Company, be amended or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), if the Company shall have obtained the consent in
writing of the holders of at least 66-2/3% in aggregate principal
amount of outstanding Notes; provided that without the written
consent of the holders of all of the Notes then outstanding, no
such waiver, modification, alteration or amendment shall be
effective (a) which will change the time of payment of the
principal of or the interest on any Note or reduce the principal
amount thereof or change the rate of interest thereon, or (b)
which will change any of the provisions with respect to optional
prepayments, or (c) which will change the percentage of holders
of the Notes required to consent to any such amendment,
modification or waiver of any of the provisions of this Section 8
or Section 7.
8.2. Solicitation of Noteholders. The Company will
not solicit, request or negotiate for or with respect to any
proposed amendment, modification or waiver of any of the
provisions of this Agreement or the Notes unless each holder of
the Notes (irrespective of the amount of Notes then owned by it)
shall be informed thereof by the Company and shall be afforded
the opportunity of considering the same and shall be supplied by
the Company with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and
correct copies of any waiver effected pursuant to the provisions
of this Section 8.2 shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date on which
the same shall have been executed and delivered by the holder or
holders of the requisite percentage of outstanding Notes. The
Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of the Notes as
consideration for or as an Inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the
terms and provisions of this Agreement unless such remuneration
is concurrently paid, on the same terms, ratably to the holders
of all of the Notes then outstanding.
8.3. Effect of Amendment or Waiver. Any such
amendment or waiver shall apply equally to all of the holders of
<PAGE>
the Notes and shall be binding upon them, upon each future holder
of any Note and upon the Company, whether or not such Note shall
have been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent
thereon.
SECTION 9. MISCELLANEOUS.
9.1. Note Register. The Company shall cause to be
kept at its principal office a register for the registration and
transfer of the Notes (hereinafter called the "Note Register"),
and the Company will register or transfer or cause to be
registered or transferred, as hereinafter provided and under such
reasonable regulations as it may prescribe, any Note issued
pursuant to this Agreement.
At any time, and from time to time, the holder of any
Note which has been duly registered as hereinabove provided may
transfer such Note upon surrender thereof at the principal office
of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the holder of such Note
or its attorney duly authorized in writing.
The Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for
all purposes of this Agreement. Payment of or on account of the
principal, premium, if any, and interest on any Note shall be
made to or upon the written order of such holder.
9.2. Exchange of Notes. At any time and from time to
time, upon not less than ten days' notice to that effect given by
the holder of any Note initially delivered or of any Note
substituted therefor pursuant to Section 9.1, this Section 9.2 or
Section 9.3, and, upon surrender of such Note at its office, the
Company will deliver in exchange therefor, without expense to the
holder, except as set forth below, Notes for the same aggregate
principal amount as the then unpaid principal amount of the Note
so surrendered, in the denomination of $100,000 or any amount in
excess thereof as such holder shall specify, dated as of the date
to which interest has been paid on the Note so surrendered or, if
such surrender is prior to the payment of any interest thereon,
then dated as of the date of issue, registered in the name of
such Person or Persons as may be designated by such holder, and
otherwise of the same form and tenor as the Notes so surrendered
for exchange. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed
upon such exchange or transfer.
9.3. Loss, Theft, Etc. of Notes. Upon receipt of
evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Note, and in the case of any
such loss, theft or destruction upon delivery of a bond or
<PAGE>
indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of the Note, the Company will
make and deliver without expense to the holder thereof, a new
Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any subsequent institutional
holder is the owner of any such lost, stolen or destroyed Note,
then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and of its
ownership of the Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof
and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written
agreement of such owner to indemnify the Company.
9.4. Powers and Rights Not Waived; Remedies
Cumulative. No delay or failure on the part of the holder of any
Note in the exercise of any power or right shall operate as a
waiver thereof; nor shall any single or partial exercise of the
same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and remedies
of the holder of any Note are cumulative to and are not exclusive
of any rights or remedies any such holder would otherwise have,
and no waiver or consent, given or extended pursuant to Section 8
hereof, shall extend to or affect any obligation or right not
expressly waived or consented to.
9.5. Notices. All communications provided for here-
under shall be in writing and, if to you, delivered or mailed by
prepaid overnight air courier, or by facsimile communication, in
each case addressed to you at your address appearing on Schedule
I to this Agreement or such other address as you or the
subsequent holder of any Note initially issued to you may
designate to the Company in writing, and if to the Company,
delivered or mailed by prepaid overnight air courier, or by
facsimile communication, in each case to the Company at IWC
Resources Corporation; 1220 Waterway Boulevard, Indianapolis,
Indiana 46202, (telephone 317-263-6468, telecopier
317-263-6448), Attention: Executive Vice President, with a copy
to the attention of the General Counsel, or to such other address
as the Company may in writing designate to you or to a subsequent
holder of the Note initially issued to you, or by facsimile
communication; provided, however, that a notice sent by overnight
air courier shall only be effective if delivered at a street
address designated for such purpose in Schedule I in the case of
a Purchaser and as herein set forth in the case of the Company
and a notice sent by facsimile communication shall only be
effective if made by confirmed transmission at a telephone number
designated for such purpose in Schedule I in the case of a
Purchaser and as herein set forth in the case of the Company or,
in either case, as you or a subsequent holder of any Notes
initially issued to you may designate to the Company in writing
or at a telephone number herein set forth in the case of the
Company.
<PAGE>
9.6. Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall
inure to your benefit and to the benefit of your successors and
assigns, including each successive holder or holders of any
Notes.
9.7. Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company
herein and in any certificates delivered pursuant hereto, whether
or not in connection with the Closing Date, shall survive the
closing and the delivery of this Agreement and the Notes.
9.8. Copies To Regulatory Bodies. Each Noteholder
may, if such Noteholder, in its sole discretion exercised in good
faith, determines that it is appropriate or necessary, furnish
copies of any financial statements and other certificates,
reports or documents delivered to it pursuant to this Agreement
to any regulatory body (including, without limitation, the
National Association of Insurance Commissioners) or commission to
whose jurisdiction such Noteholder may be subject.
9.9. Severability. Should any part of this Agreement
for any reason be declared invalid or unenforceable, such
decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if
this Agreement had been executed with the invalid or
unenforceable portion thereof eliminated and it is hereby
declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without
including therein any such part, parts or portion which may, for
any reason, be hereafter declared invalid or unenforceable.
9.10. Substitution. The Purchaser shall have the
right to substitute any of its wholly-owned subsidiaries as
Purchaser hereunder, by notice delivered to the Company, which
notice shall be signed by both the Purchaser and such
wholly-owned subsidiary, shall contain such wholly-owned
subsidiary's agreement to be bound by this Agreement and shall
contain confirmation by such wholly-owned subsidiary of the
accuracy with respect to it of the representations set forth in
Section 4.2 (subject to any exception necessary to reflect the
intention, if any, of such wholly-owned subsidiary to transfer to
the Purchaser at a subsequent date all or any of the Notes to be
acquired by such wholly-owned subsidiary). The Company agrees
that upon receipt of such notice, all references to the Purchaser
hereunder (other than in this Section 9.10) shall be deemed to
refer to such wholly-owned subsidiary and that such wholly-owned
subsidiary shall have the right to transfer the Notes acquired by
it hereunder to the Purchaser subsequent to such purchase. In
the event that a wholly-owned subsidiary of the Purchaser is
substituted for the Purchaser in accordance with this
Section 9.10 and thereafter transfers its Notes or any portion
thereof to the Purchaser, upon receipt by the Company of notice
of such transfer, whenever the word Purchaser is used in this
<PAGE>
Agreement (other than in this Section 9.10) such word shall be
deemed to refer to such wholly-owned subsidiary only if it
retains any portion of the Notes, and shall be deemed to refer to
the Purchaser to the extent the Purchaser owns all or any portion
of the Notes, and the Purchaser and such wholly-owned subsidiary
(if it retains any Notes) shall each have all the rights which
the original purchaser of Notes has under this Agreement.
9.11. Governing Law. This Agreement and the Notes
issued and sold hereunder shall be governed by and construed in
accordance with Indiana law.
9.12. Captions. The descriptive headings of the
various Sections or parts of this Agreement are for convenience
only and shall not affect the meaning or construction of any of
the provisions hereof.
9.13. Verification. The Purchaser and each other
Noteholder shall be entitled to make such independent
examinations as such person may deem reasonable, and to receive
copies of all such instruments, certificates, opinions and other
evidence as it may reasonably request, with respect to the
transactions contemplated by this Agreement and the taking of all
corporate proceedings in connection therewith and for the purpose
of verifying the accuracy of any certification which is made or
required to be made pursuant to this Agreement.
<PAGE>
The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth, and
this Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all
together only one agreement.
IWC Resources Corporation
By /s/
James T. Morris
Chairman of the Board,
President and Chief
Executive Officer
Accepted and agreed to
as of March 1, 1994.
AMERICAN UNITED LIFE
INSURANCE COMPANY
By /s/
Kent R. Adams
Vice President
<PAGE>
Amount of
Names and Addresses of Purchasers; Notes to be
Payment Instructions Purchased
American United Life $14,000,000
Insurance Company (Seven (7)
One American Square Notes, each
P.O. Box 368 issued in the
Indianapolis, Indiana 46206-0368 amount of
Telephone 317-263-1877 $2,000,000)
Tax I.D. Number: 35-0145825
1. In the case of payments on the Notes:
By wire transfer of Federal or other immediately
available funds (identifying each payment as to
issuer, security and principal or interest) to:
Bank One Indianapolis
for the account of
American United Life Insurance Company
ABA #0740-0001-00
Account #32032-50
Trust Cage, 16th Floor
111 Monument Circle
Indianapolis, Indiana 46277
Attn: Securities Accounting
2. In the case of all communications:
Attention: Securities Department
American United Life Insurance Company
(Address and telephone above)
Telecopier: (317) 263-1225
SCHEDULE 1
(to Note Agreement)
<PAGE>
IWC RESOURCES CORPORATION
6.31% Senior Note Due March 1, 2001
No. R-
$
IWC Resources Corporation, an Indiana corporation (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on March 1, 2001
the principal amount of
DOLLARS ($ )
and to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) on the principal amount from time to time
remaining unpaid hereon at the rate of 6.31% per annum from the
date hereof until maturity, payable semiannually on the first day
of each March and September in each year commencing September 1,
1994, and at maturity. The Company agrees to pay interest on
overdue principal (including any overdue prepayment of principal)
and premium, if any, and (to the extent legally enforceable) on
any overdue installment of interest, at the rate of 7.31% per
annum after maturity, whether by acceleration or otherwise, until
paid. The amounts described in the preceding sentence shall be
payable semi-annually, as aforesaid (or at the option of the
registered holder hereof on demand). The principal interest and
premium, if any, in respect of this Note are payable at the
principal office of the Company in Indianapolis, Indiana, or at
such other place as the Company may designate by written notice
to the holder of this Note as provided in the Note Agreement
referred to below. If any amount of principal, premium, if any,
or interest on or in respect of this Note becomes due and payable
on any date which is not a Business Day, such amount shall be
payable on the next preceding Business Day. "Business Day" means
any day other than a Saturday, Sunday, statutory holiday or other
day on which banks in Indianapolis, Indiana are required by law
to close or are customarily closed.
This Note is one of the 6.31% Senior Notes due March 1,
2001 of the Company in the aggregate principal amount of
$14,000,000 issued or to be issued under and pursuant to the
terms and provisions of the Note Agreement, dated as of March 1,
1994 (the "Note Agreement"), entered into by the Company with the
original purchaser therein referred to and this Note and the
EXHIBIT A
(to Note Agreement)
<PAGE>
holder hereof are entitled equally and ratably with the holders
of all other Notes outstanding under the Note Agreement to all
the benefits and security provided for thereby or referred to
therein, to which Note Agreement reference is hereby made for the
statement thereof.
This Note and the other Notes outstanding under the
Note Agreement are subject to prepayment at the option of the
Company prior to their expressed maturity dates on March 1 and
September 1 of each year, commencing March 1, 1997, on the terms
and conditions and in the amounts and with the premium, if any,
set forth in the Note Agreement.
This Note is registered on the books of the Company and
is transferable only by surrender thereof at the principal office
of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of
this Note or its attorney duly authorized in writing. Payment of
or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the
registered holder.
If an Event of Default, as defined in the Note
Agreement, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the
manner, at the price and with the effect provided in the Note
Agreement.
This Note and said Note Agreement is governed by and
construed in accordance with the laws of Indiana.
IWC RESOURCES CORPORATION
By
<PAGE>
ASSIGNMENT FORM
To assign this Note fill in the form below:
The undersigned holder assigns and transfers this Note to
(INSERT ASSIGNEE'S SOCIAL SECURITY
OR TAX I.D. NUMBER)
(Print or type assignee's name, address and zip code)
and irrevocably appoints
agent
to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
In connection with any transfer of the Note occurring prior to
the date that is three years after the date of original issuance
of the Notes, the undersigned holder confirms that this Note is
being transferred:
CHECK ONE BOX BELOW
(1) [ ] to the Company or a Subsidiary of the Company; or
(2) [ ] to a "Qualified Institutional Buyer" (as defined
in Rule 144A under the Securities Act), which
person has been advised that the Note has been
sold or transferred to it in reliance upon Rule
144A; or
(3) [ ] in an "Offshore Transaction" (as defined in
Regulation S) to a transferee that is not, or that
the undersigned reasonably believes not to be, a
"U.S. Person" (as defined in Regulation S)
pursuant to and in accordance with the exemption
from registration provided by Regulation S
thereunder; or
(4) [ ] to an institutional investor and an "accredited
investor" (as defined in Regulation D under the
Securities Act of 1933, as amended (the
"Securities Act")) that is acquiring the Note for
<PAGE>
investment purposes and not for distribution; it
has such knowledge and experience in financial and
business matters as to be capable of evaluating
the merits and risks of its investment in the
Notes, and it and any accounts for which it is
acting are each able to bear the economic risk of
its investment; it is acquiring the Note purchased
by it for its own account or for one or more
accounts as to each of which it exercises sole
investment discretion. [If this box is checked,
the Company may request, and if so requested the
undersigned will furnish, such certificates and
other information as may reasonably be required to
confirm that any such transfer is exempt from the
registration requirements of the Securities Act];
or
(5) [ ] pursuant to another available exemption from the
registration requirements of the Securities Act of
1933, as amended, as described in the letter
attached hereto and addressed to the Company. [If
this box is checked, the Company may request, and
if so requested the undersigned will furnish, such
certificates and other information as may
reasonably be required to confirm that any such
transfer is exempt from the registration
requirements of the Securities Act.]
Unless one of the boxes is checked, if the proposed transfer is
to occur within three years of the date of the original issuance
of the Notes, the Company may refuse to register the Note in the
name of any person other than the registered Holder thereof;
Name of transferring holder:_____________________________________
(exactly as it appears on front of this Note)
By:_____________________ Printed Name:_________________
(Signature)
Title:_________________
Date:______________
<PAGE>
IWC RESOURCES CORPORATION
CLOSING CERTIFICATE
American United Life
Insurance Company
One American Square
P.O. Box 368
Indianapolis, Indiana 46206
Gentlemen:
This certificate is delivered to you in compliance with
the requirements of the Note Agreement, dated as of March 1, 1994
(the "Agreement"), entered into by the undersigned, IWC Resources
Corporation, an Indiana corporation (the "Company"), with you,
and as an inducement to and as part of the consideration for your
purchase on this date aggregating $14,000,000 principal amount of
the 6.31% Senior Notes due March 1, 2001 (the "Notes") of the
Company pursuant to the Agreement. The terms which are
capitalized herein shall have the same meanings as in the
Agreement.
The Company represents and warrants to you as follows:
1. Subsidiaries. Annex 1 attached hereto states the
name of each of the Company's Subsidiaries (including Restricted
Subsidiaries), the jurisdiction of incorporation and the
percentage of its Voting Stock owned by the Company and each
other Subsidiary. The Company, and each Subsidiary, has good and
marketable title to all of the shares it purports to own of the
stock of each Subsidiary, free and clear in each case of any
lien. All such shares have been duly issued and are fully paid
and non-assessable.
2. Corporate Organization and Authority. The Company,
and each Subsidiary,
(a) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its
properties and to carry-on its business as now conducted and
as presently proposed to be conducted; and
EXHIBIT B
(to Note Agreement)
<PAGE>
(c) is duly licensed or qualified and is in good
standing as a foreign corporation in each jurisdiction
wherein the nature of the business transacted by it or the
nature of the property owned or leased by it makes such
licensing or qualification necessary.
3. Business and Property. You have heretofore been
furnished with a copy of the Private Placement Memorandum dated
February 9, 1994 (the "Memorandum") prepared by Banc One Capital
Corporation which generally sets forth the business conducted and
proposed to be conducted by the Company and its Subsidiaries and
the principal properties of the Company and its Subsidiaries.
4. Financial Statements. (a) The consolidated
balance sheets of the Company and its Subsidiaries as of December
31 in each of the years 1987 to 1992, both inclusive, and the
statements of income and retained earnings and changes in
financial position or cash flows for the fiscal years ended on
said dates, each accompanied by a report thereon containing an
opinion unqualified as to scope limitations imposed by the
Company and otherwise without qualification except as therein
noted, by KPMG Peat Marwick, have been prepared in accordance
with generally accepted accounting principles consistently
applied except as therein noted, are correct and complete and
present fairly the financial position of the Company and its
Subsidiaries as of such dates and the results of their operations
and cash flows for such periods. The unaudited consolidated
balance sheet of the Company and its Subsidiaries as of September
30, 1993 and the unaudited statements of income and retained
earnings and cash flows for the three-month and nine-month
periods ended on said date prepared by the Company have been
prepared in accordance with generally accepted accounting
principles consistently applied, are correct and complete and
present fairly the financial position of the Company and its
Subsidiaries as of said date and the results of their operations
and changes in their financial position or cash flows for such
period subject to year-end audit and adjustments.
(b) Since September 30, 1993, there has been no
material adverse change in the condition, financial or otherwise,
of the Company and its Subsidiaries as shown on the consolidated
balance sheet as of such date, nor has there been a material
adverse change in the condition, financial or otherwise, of
Indianapolis Water Company as of such dates, except in each case
changes in the ordinary course of business.
5. Full Disclosure. The financial statements
referred to in paragraph 4 do not, nor does the Memorandum or any
other written statement furnished by the Company to you in
connection with the negotiation of the sale of the Notes, contain
any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not
misleading. There is no fact peculiar to the Company or its
Subsidiaries which the Company has not disclosed to you in
<PAGE>
writing which materially affects adversely nor, so far as the
Company can now foresee, will materially affect adversely the
properties, business, prospects, profits or condition (financial
or otherwise) of the Company and its Subsidiaries.
6. Pending Litigation. There are no proceedings
pending or, to the knowledge of the Company, threatened against
or affecting the Company or any Subsidiary in any court or before
any governmental authority or arbitration board or tribunal which
involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial
or otherwise) of the Company and its Subsidiaries.
7. Title to Properties. The Company, and each
Restricted Subsidiary, has good and marketable title in fee
simple (or its equivalent under applicable law) to all the real
property and has good title to all the other property it purports
to own, including that reflected in the most recent balance sheet
referred to in paragraph 4 except as sold or otherwise disposed
of in the ordinary course of business.
8. Patents and Trademarks. The Company, and each
Subsidiary, owns or possesses all the patents, trademarks, trade
names, service marks, copyrights, licenses and rights with
respect to the foregoing necessary for the present and planned
future conduct of its business, without any known conflict with
the rights of others.
9. Sale is Legal and Authorized. The sale of the
Notes and compliance by the Company with all of the provisions of
the Agreement and the Notes--
(a) are within the corporate powers of the Company;
(b) will not violate any provisions of any law or any
order of any court or governmental authority or agency and
will not conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default
under the Certificate of Incorporation or By-laws of the
Company or any indenture or other agreement or instrument to
which the Company is a party or by which it may be bound or
result in the imposition of any liens or encumbrances on any
property of the Company; and
(c) have been duly authorized by proper corporate
action on the part of the Company (no action by the
stockholders of the Company being required by law, by the
Certificate of Incorporation or By-laws of the Company or
otherwise), executed and delivered by the Company and the
Agreement; and the Notes constitute the legal, valid and
binding obligations of the Company enforceable in accordance
with their terms.
10. No Defaults. No Default or Event of Default as
<PAGE>
defined in the Agreement has occurred and is continuing. The
Company is not in default in the payment of any Funded Debt or
Current Debt and is not in default under any instrument or
instruments or agreements under and subject to which any Funded
Debt or Current Debt has been issued and no event has occurred
and is continuing under the provisions of any such instrument or
agreement which with the lapse of time or the giving of notice,
or both, would constitute an event of default thereunder.
11. Governmental Consent. No approval, consent or
withholding of objection on the part of any regulatory body,
state, Federal or local, is necessary in connection with the
execution and delivery by the Company of the Agreement or the
Notes or compliance by the Company with any of the provisions of
the Agreement or the Notes.
12. Taxes. All tax returns required to be filed by
the Company or any Subsidiary in any jurisdiction have, in fact,
been filed, and all taxes, assessments, fees and other
governmental charges upon the Company or any Subsidiary or upon
any of their respective properties, income or franchises, which
are shown to be due and payable in such returns have been paid.
The Company does not know of any proposed additional tax
assessment against it for which adequate provision has not been
made in its accounts, and no material controversy in respect of
additional Federal or state income taxes is pending or to the
knowledge to the Company threatened. The provisions for taxes on
the books of the Company and each Subsidiary are adequate for all
open years, and for its current fiscal period.
13. Use of Proceeds. The net proceeds from the sale
of the Notes will be used to repay existing debt and other
corporate purposes. None of the transactions contemplated in the
Agreements (including, without limitation thereof, the use of
proceeds from the issuance of the Notes) will violate or result
in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulation issued pursuant thereto,
including, without limitation, Regulations G, T and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. Neither the Company nor any Subsidiary owns or
intends to carry or purchase any "margin stock" within the
meaning of said Regulation G. None of the proceeds from the sale
of the Notes will be used to purchase, or refinance any
borrowing, the proceeds of which were used to purchase any
"security" within the meaning of the Securities Exchange Act of
1934, as amended.
14. Solvency. The Company is not entering into any of
the transactions contemplated hereby, nor does the Company intend
to make any transfer or incur any obligations hereunder, with
actual intent to hinder, delay or defraud either present or
future creditors. On the Closing Date, after giving effect to
the consummation of the transactions contemplated hereby and the
use of the proceeds of the issuance and sale of the Notes for the
<PAGE>
purposes described herein, (i) the Company expects the cash
available to the Company and the Subsidiaries on a consolidated
basis, after taking into account all other anticipated uses of
the cash of the Company, will be sufficient to satisfy all final
judgments for money damages which have been docketed against the
Company and the Subsidiaries or which may be rendered against the
Company and the Subsidiaries in any action in which the Company
is a defendant (taking into account the reasonably anticipated
maximum amount of any such judgment and the earliest time at
which such judgment might be entered); (ii) the sum of the
present fair saleable value of the assets of the Company and the
Subsidiaries on a consolidated basis will exceed the probable
liability of the Company and the Subsidiaries on their debts;
(iii) the Company and the Subsidiaries on a consolidated basis
will not have incurred or intended to incur, or believed that
they will have incurred, debts beyond their ability to pay such
debts as such debts mature (taking into account the timing and
amounts of cash to be received by the Company from any source,
and of amounts to be payable on or in respect of debts of the
Company and the Subsidiaries); and (iv) the Company and the
Subsidiaries on a consolidated basis will have sufficient capital
with which to conduct their present and proposed businesses and
the property of the Company and the Subsidiaries does not
constitute unreasonably small capital with which to conduct their
present or proposed businesses. For purposes of paragraph 15,
"debt" means any liability on a claim, and "claim" means (1) any
right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed (other than those being disputed in good
faith), undisputed, legal, equitable, secured or unsecured, or
(2) any right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured.
15. Private Offering. Neither the Company, directly
or indirectly, nor any agent on its behalf has offered or will
offer the Notes or any similar Security or has solicited or will
solicit an offer to acquire the Notes or any similar Security
from or has otherwise approached or negotiated or will approach
or negotiate in respect of the Notes or any similar Security with
any Person other than the Purchaser and not more than 16 other
institutional investors, each of whom was offered a portion of
the Notes at private sale for investment. Neither the Company,
directly or indirectly, nor any agent on its behalf has offered
or will offer the Notes or any similar Security or has solicited
or will solicit an offer to acquire the Notes or any similar
Security from any Person so as to bring the issuance and sale of
the Notes within the provisions of Section 5 of the Securities
Act of 1933, as amended.
16. ERISA. The consummation of the transactions
provided for in the Agreements and compliance by the Company with
<PAGE>
the provisions thereof and the Notes issued thereunder will not
involve any prohibited transaction within the meaning of ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended.
Each Plan complies in all material respects with all applicable
statutes and governmental rules and regulations, and (a) no
Reportable Event has occurred and is continuing with respect to
any Plan, (b) neither the Company nor any ERISA Affiliate has
withdrawn from any Plan or Multiemployer Plan or instituted steps
to do so, and (c) no steps have been instituted to terminate any
Plan. No condition exists or event or transaction has occurred
in connection with any Plan which could result in the occurrence
by the Company or any ERISA Affiliate of any material liability,
fine or penalty. No Plan maintained by the Company or any ERISA
Affiliate, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" as defined in Section 302 of
ERISA nor does the present value of all benefits vested under all
Plans exceed, as of the last annual valuation date, the value of
the assets of the Plans allocable to such vested benefits by an
amount greater than $5,000,000 in the aggregate. Neither the
Company nor any ERISA Affiliate has any contingent liability with
respect to any post-retirement "welfare benefit plan" (as such
term is defined in ERISA) except as has been disclosed to the
Purchasers.
17. Compliance with Law. (a) Except as provided in
subsection (b) below, neither the Company nor any Restricted
Subsidiary (i) is in violation of any law, ordinance, franchise,
governmental rule or regulation, including without limitation any
Environmental Legal Requirement to which it is subject; or (ii)
has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of its
property or to the conduct of its business, which violation or
failure to obtain could, in the case of clause (i) or (ii), have
a material adverse effect on the operations or financial
condition of the Company and its Restricted Subsidiaries, taken
as a whole, or impair the ability of the Company to perform its
obligations contained in the Agreements or the Notes. Neither
the Company nor any Restricted Subsidiary is in default with
respect to any order of any court or governmental authority or
arbitration board or tribunal.
<PAGE>
(b) The NPDES Permit issued to Indianapolis Water
Company has expired but Indianapolis Water Company is continuing
to conduct its operations in accordance with the expired NPDES
Permit and such circumstances are known to and permitted by the
Indiana Department of Environmental Management (IDEM) having
jurisdiction over the affected activities.
Dated:
IWC RESOURCES CORPORATION
By
Its
<PAGE>
SUBSIDIARIES OF THE COMPANY
1. RESTRICTED SUBSIDIARIES:
Percentage of Voting Stock
<TABLE>
<C> <C> <C>
Name of Jurisdiction of Owned by Company and
Subsidiary Incorporation each other Subsidiary
Indianapolis Water Company Indiana 100%
Harbour Water Corporation Indiana 100%
Zionsville Water Company Indiana 100%
Utility Data Corporation Indiana 100%
IWC Services, Inc. Indiana 100%
Waterway Holdings, Inc. Indiana 100%
</TABLE>
2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES): None
ANNEX 1
(to Closing Certificate)
<PAGE>
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Sidley & Austin, special counsel
to the Purchaser, called for by Section 5.2 of the Note
Agreement, shall be dated the Closing Date and addressed to the
Purchaser, shall be satisfactory in form and substance to the
Purchaser and shall be to the effect that:
(1) The Company is a corporation, duly incorporated,
legally existing and in good standing under the laws of the
State of Indiana, has corporate power to execute and deliver
the Note Agreement and the Notes; and
(2) The issuance, sale and delivery of the Notes under
the circumstances contemplated by the Note Agreement is an
exempt transaction under the Securities Act of 1933, as
amended, and does not under existing law require the
registration of the Notes under the Securities Act of 1933,
as amended, or the qualification of an indenture in respect
thereof under the Trust Indenture Act of 1939.
The opinion of Sidley & Austin shall also cover such
other matters relating to the sale of the Notes as the Purchaser
may reasonably request. In rendering the opinion set forth in
paragraph (1) above, Sidley & Austin may rely solely on the
Certificate of Incorporation of the Company certified by the
Secretary of the State of Indiana and the good standing
certificate for the Company in the State of Indiana. With
respect to matters of fact upon which such opinion is based,
Sidley & Austin may rely on appropriate certificates of public
officials and officers of the Company.
Exhibit C-1
(to Note Agreement)
<PAGE>
DESCRIPTION OF SPECIAL INDIANA
COUNSEL'S CLOSING OPINION
The closing opinion of Baker & Daniels, special Indiana
counsel to the Purchaser, called for by Section 5.2 of the Note
Agreement, shall be dated the Closing Date and addressed to the
Purchaser, shall be satisfactory in form and substance to the
Purchaser and shall be to the effect that:
(1) The Company is a corporation, duly incorporated,
legally existing and in good standing under the laws of the
State of Indiana, has corporate power to execute and deliver
the Note Agreement and the Notes; and
(2) The Note Agreement and the Notes have been duly
authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their respective
terms, except as enforceability thereof may be limited by
(i) bankruptcy, insolvency, fraudulent conveyance or similar
laws affecting the enforcement of creditors' rights
generally, and (ii) equitable principles of general
applicability (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
The opinion of Baker & Daniels shall cover such other
matters relating to Indiana law as the Purchaser may reasonably
request. With respect to matters of fact upon which such opinion
is based, Baker & Daniels may rely on appropriate certificates of
public officials and officers of the Company.
Exhibit C-2
(to Note Agreement)
<PAGE>
DESCRIPTION OF CLOSING OPINION OF COUNSEL
TO THE COMPANY
The closing opinion of John Davis, Esq., Vice President
and General Counsel of the Company, which is called for by
Section 5.2 of the Note Agreement, shall be dated the Closing
Date and addressed to the Purchaser, shall be satisfactory in
scope and form to the Purchaser and shall be to the effect that:
(1) The Company is a corporation, duly incorporated,
legally existing and in good standing under the laws of the
State of Indiana, has corporate power and authority and is
duly authorized to enter into and perform the Note Agreement
and to issue the Notes and incur the Indebtedness to be
evidenced thereby;
(2) The Company has full power and authority and is
duly authorized to conduct the activities in which it is now
engaged and is duly licensed or qualified and is in good
standing as a foreign corporation in each jurisdiction in
which the character of the properties owned or leased by it
or the nature of the business transacted by it makes such
licensing or qualification necessary;
(3) Each Subsidiary is a corporation duly organized,
legally existing and in good standing under the laws of its
jurisdiction of incorporation and is duly licensed or
qualified and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it
or the nature of the business transacted by it makes such
licensing or qualification necessary, and all of the issued
and outstanding shares of capital stock of each such
Subsidiary have been duly issued, are fully paid and
nonassessable and are owned by the Company or by one or more
Restricted Subsidiaries, or by the Company and one or more
Restricted Subsidiaries;
(4) The Note Agreement and the Notes have been duly
authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their respective
terms, except as enforceability thereof may be limited by
(i) bankruptcy, insolvency, fraudulent conveyance or similar
laws affecting the enforcement of creditors' rights
generally, and (ii) equitable principles of general
applicability (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
Exhibit D
(to Note Agreement)
<PAGE>
(5) No approval, consent or withholding of objection
on the part of, or filing, registration or qualification
with, any governmental body, Federal, state or local, is
necessary in connection with the lawful execution, delivery
and performance of the Note Agreements or the Notes;
(6) The issuance and sale of the Notes and the
execution, delivery and performance by the Company of the
Note Agreement do not conflict with or result in any breach
of any of the provisions of or constitute a default under or
result in the creation or imposition of any lien or
encumbrance upon any of the property of the Company pursuant
to the provisions of the Certificate of Incorporation or
By-laws of the Company or any agreement or other instrument
known to such counsel to which the Company is a party or by
which the Company may be bound;
(7) The issuance, sale and delivery of the Notes under
the circumstances contemplated by the Note Agreement is an
exempt transaction under the Securities Act of 1933, as
amended, and does not under existing law require the
registration of the Notes under the Securities Act of 1933,
as amended, or the qualification of an indenture in respect
thereof under the Trust Indenture Act of 1939;
(8) There is no action, suit or proceeding pending
against or, to our knowledge, after due inquiry, threatened
against or affecting the Company or any Subsidiary or any of
the business, assets or rights of the Company or any
Subsidiary by or before any court, governmental or
regulatory authority or arbitrator, which if adversely
determined (i) might question, either individually or
collectively, the validity of the Agreement or the Notes, or
any of the transactions contemplated thereby, (ii) might
result, either individually or collectively, in any material
and adverse change in the business, assets, operations or
condition, financial or otherwise, of the Company or any
Subsidiary, or (iii) might, individually or collectively,
impair the ability of the Company or any Subsidiary to
perform their respective obligations under the Agreement or
the Notes.
(9) The purchase and sale of the Notes, the
application of the proceeds of the sale of the Notes and the
consummation of the transactions contemplated by the
Agreement do not result in any violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or Regulations
G, T, U or X of the Board of Governors of the Federal
Reserve System (12 CFR Parts 207, 220, 221 and 224,
respectively).
(10) The interest rate provided for in the Notes is
not in excess of the maximum rate of interest which is
permitted by the usury laws of the state of Indiana.
<PAGE>
The opinion of John Davis, Esq. shall cover such other
matters relating to the sale of the Notes as the Purchaser may
reasonably request. With respect to matters of fact on which
such opinion is based, such counsel shall be entitled to rely on
appropriate certificates of public officials and officers of the
Company.
<PAGE>
LOAN AGREEMENT
INDIANAPOLIS WATER COMPANY
AND
CITY OF INDIANAPOLIS, INDIANA
DATED AS OF APRIL 1, 1993
The rights of the City of Indianapolis, Indiana, under this
Agreement (except the right to receive payment for its
expenses, the right to receive indemnities, the right to
receive notices and rights relating to any amendments to this
Agreement) have been assigned to National City Bank, Indiana,
as Trustee under an Indenture of Trust dated as of the date of
this Agreement, among Indianapolis Water Company, the City and
the Trustee.
Table of Contents
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I Definitions and Exhibits . . . . . . . . . . 2
Section 1.1. Terms Defined . . . . . . . . . . . . . 2
Section 1.2. Rules of Interpretation. . . . . . . . . 4
Section 1.3. Exhibits. . . . . . . . . . . . . . . . 4
ARTICLE II The Loan and The Project . . . . . . . . . 5
Section 2.1. Municipality's Representations,
Warranties and Covenants. . . . . . . . 5
Section 2.2. Company's Representations, Warranties and
Covenants. . . . . . . . . . . . . . . 5
ARTICLE III The Bonds, Use of Proceeds, The First
Mortgage Bonds . . . . . . . . . . . . . . 7
Section 3.1. Agreement to Issue Bonds. . . . . . . . 7
Section 3.2. Disbursements from Redemption Fund. . . 7
Section 3.3. Investment of Construction Fund and Bond
Fund Moneys. . . . . . . . . . . . . . 7
Section 3.4. Covenants with Respect to Arbitrage. . . 8
Section 3.5. Loan Payments and Other Amounts Payable. 8
Section 3.6. Obligation of Company Unconditional. . . 10
ARTICLE IV Particular Covenants of the Company . . . . 10
Section 4.1. Consent to Assignment to Trustee. . . . 10
Section 4.2. Payment of Expenses of Issuance of Bonds. 11
<PAGE>
Section 4.3. Company to Maintain its Existence;
Conditions Under Which Exceptions
Permitted. . . . . . . . . . . . . . . 11
Section 4.4. Further Assurances and Corrective
Instruments. . . . . . . . . . . . . . 11
Section 4.5. Covenants of Company with Respect to Use
of Bond Proceeds. . . . . . . . . . . . 11
Section 4.6. Indemnification of Municipality and
Trustee. . . . . . . . . . . . . . . . 12
ARTICLE V Prepayment of First Mortgage Bonds . . . . . . . 12
Section 5.1. Mandatory Prepayment of First Mortgage
Bonds in Event of Determination of
Taxability. . . . . . . . . . . . . . . 12
Section 5.2. Extraordinary Event Prepayment of First
Mortgage Bonds. . . . . . . . . . . . . 12
Section 5.3. Notice of Prepayment. . . . . . . . . . 13
ARTICLE VI Events of Default and Remedies . . . . . . 14
Section 6.1. Events of Default. . . . . . . . . . . . 14
Section 6.2. Remedies on Default. . . . . . . . . . . 15
Section 6.3. Application of Moneys. . . . . . . . . . 15
Section 6.4. Remedies Cumulative. . . . . . . . . . . 15
Section 6.5. Delay or Omission Not a Waiver. . . . . 15
Section 6.6. Remedies Subject to Provisions of Law. . 15
ARTICLE VII Amendments to this Agreement . . . . . . . 16
Section 7.1. Amendments to this Agreement. . . . . . 16
ARTICLE VIII Miscellaneous . . . . . . . . . . . . . . . 16
Section 8.1. Binding Effect. . . . . . . . . . . . . 16
Section 8.2. Severability. . . . . . . . . . . . . . 16
Section 8.3. Amounts Remaining in Bond Fund. . . . . 16
Section 8.4. Amendments, Changes and Modifications. 16
Section 8.5. Execution in Counterparts. . . . . . . 16
Section 8.6. Notices. . . . . . . . . . . . . . . . 16
Section 8.7. References to Bonds Ineffective After
Bonds are Paid. . . . . . . . . . . . 17
Section 8.8. Agreement for Benefit of Parties Hereto. 17
Section 8.9. Waiver. . . . . . . . . . . . . . . . . 17
Section 8.10. Captions and Table of Contents. . . . . 17
Section 8.11. Survival of Covenants, Representations
and Warranties. . . . . . . . . . . . 17
Section 8.12. Applicable Law. . . . . . . . . . . . . 17
Section 8.13. Holidays. . . . . . . . . . . . . . . . 17
<PAGE>
LOAN AGREEMENT
This LOAN AGREEMENT has been executed as of April 1, 1993,
by and between INDIANAPOLIS WATER COMPANY, an Indiana
corporation (the "Company"), and the CITY OF INDIANAPOLIS,
INDIANA (the "Municipality").
RECITALS
1. Definitions of certain of the terms used in these
Recitals are set out in Article I hereof and Article I of the
Indenture.
2. In 1974, the Company initiated a program of
expansion of its Indianapolis water distribution facilities. A
portion of those facilities, now known as the Thomas W. Moses
Treatment Plant and described in detail on Exhibit A attached
hereto (the "Project"), were financed through the City of
Indianapolis, Indiana 6-1/4% Economic Development Water
Facilities Revenue Bonds, 1974 Series (Indianapolis Water
Company Project) (the "1974 Bonds").
3. To finance a portion of the costs of the Project,
the Company borrowed from the Municipality funds derived from
the sale of the 1974 Bonds, and the Company, as evidence of its
obligation to repay the funds, issued and delivered to the
Municipality its First Mortgage Bonds, Economic Development
Series A.
4. The Company has determined that the 1974 Bonds
can be refinanced at a net savings to the Company and has
further determined that such refinancing will result in other
benefits to the Company.
5. Pursuant to IC 5-1-5, IC 36-7-11.9 and IC 36-7-
12, the Municipality is authorized and empowered to issue
revenue bonds to refund and refinance revenue bonds previously
issued by it. The Municipality is obtaining funds to loan to
the Company to assist with the refunding and refinancing of the
1974 Bonds through the sale of $11,600,000 aggregate principal
amount of City of Indianapolis, Indiana Economic Development
Water Facilities Refunding Revenue Bonds, Series 1993
(Indianapolis Water Company Project).
6. Pursuant to an Indenture of Trust dated as of the
date of this Agreement, among the Company, the Municipality and
National City Bank, Indiana of Indianapolis, Indiana, as
Trustee, the Municipality will issue the Bonds and, as security
for the payment of the Bonds and the performance of the
obligations of the Municipality and the Company under the
Indenture and the First Mortgage Bonds, the Municipality will
assign the First Mortgage Bonds and its rights under this
<PAGE>
Agreement (except the right to receive payment for its
expenses, the right to receive indemnities, the right to
receive notices and rights relating to any amendments to this
Agreement) to the Trustee. In addition, the principal of,
premium, if any, and interest on the Bonds will be guaranteed
by IWC Resources Corporation, an Indiana Corporation, pursuant
to a Guaranty Agreement dated as of April 1, 1993. The Bonds
will be payable solely out of the revenues and other amounts
derived from the First Mortgage Bonds and under this Agreement
and shall not in any respect be a general obligation of, an
indebtedness of, or constitute a charge against the general
credit of the Municipality, the State of Indiana, or any
political subdivision thereof.
AGREEMENT
In consideration of the premises and the mutual
covenants contained herein, the Company and the Municipality
agree as follows:
ARTICLE I
Definitions and Exhibits
Section 1.1. Terms Defined. As used in this
Agreement, the following terms shall have the following
meanings unless the context otherwise requires:
"Act" means IC 36-7-11.9 and IC 36-7-12, as from time
to time amended.
"Agreement" means this Loan Agreement and any
amendment and supplement hereto.
"Agreement Term" means the period commencing on the
date of this Agreement and, subject to the provisions of this
Agreement, ending on such date as the Bonds have been fully
paid and retired or provision for such payment made as provided
in the Indenture.
"Authorized Company Representative" means a person
designated to act on behalf of the Company by written
certificate furnished to the Municipality and the Trustee
containing the specimen signature of the person and signed on
behalf of the Company by its President, any of its Vice-
Presidents, its Chief Financial Officer, its Secretary or any
of its Assistant Secretaries. The certificate may designate an
alternate or alternates. The Authorized Company Representative
may be an employee of the Company.
"Bonds" means the $11,600,000 aggregate principal
amount of the City of Indianapolis, Indiana Economic
<PAGE>
Development Water Facilities Refunding Revenue Bonds, Series
1993 (Indianapolis Water Company Project).
"Bond Fund" means the fund created in Section 402 of
the Indenture.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commission" means the Indianapolis Economic
Development Commission, a development commission created by the
Municipality pursuant to the Act.
"Company" means Indianapolis Water Company, an
Indiana corporation, and its successors and assigns.
"Counsel" means an attorney-at-law admitted to
practice in the highest court of any state (who may be counsel
to the Trustee, the Municipality or the Company).
"First Mortgage Bonds" means the First Mortgage Bonds
issued under the Twenty-Second Supplemental Indenture to the
Company's First Mortgage Indenture and designated Indianapolis
Water Company First Mortgage Bonds, Economic Development Series
E.
"First Mortgage Indenture" means the First Mortgage
Indenture dated as of July 1, 1936 between the Company and
Fidelity Bank, National Association (formerly the Fidelity-
Philadelphia Trust Company), Philadelphia, Pennsylvania, as
trustee, as heretofore amended and supplemented by twenty-one
supplemental indentures and as to be amended and as to be
supplemented by the Twenty-Second Supplemental Indenture.
"Guarantor" means IWC Resources Corporation, an
Indiana corporation.
"Guaranty" means the Guaranty Agreement dated as of
April 1, 1993 executed by the Guarantor under which the
Guarantor guarantees the principal of, premium, if any and
interest on the Bonds.
"Indenture" means the Indenture of Trust, dated as of
the date of this Agreement, among the Company, the Municipality
and National City Bank, Indiana, Indianapolis, Indiana, as
Trustee, relating to the Bonds, and any indenture supplemental
thereto.
"Loan" means the loan by the Municipality to the
Company of the proceeds from the sale of the Bonds.
"Majority" means, when used with reference to the
Owners or Holders of Bonds outstanding, in excess of (50%)
fifty percent of the principal amount of Bonds outstanding.
<PAGE>
"Municipality" means the City of Indianapolis,
Indiana, and any successor.
"1974 Bonds" means the 6-1/4% City of Indianapolis,
Indiana Economic Development Water Facilities Revenue Bonds,
1974 Series (Indianapolis Water Company Project).
"Project" means the facilities described in Exhibit A
hereto.
"Purchaser" means Smith Barney, Harris Upham & Co.
Incorporated.
"Redemption Fund" means the Fund created and
established under Section 302 of the Indenture.
"Trustee" means the trustee at the time serving under
the Indenture.
"Twenty-Second Supplemental Indenture" means the
Supplemental Indenture dated as of April 1, 1993, between the
Company and the First Mortgage Indenture Trustee, under which
the First Mortgage Bonds are to be issued.
Section 1.2. Rules of Interpretation. For all
purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) "This Agreement" means this instrument as
originally executed and as it may from time to time be
supplemented or amended.
(b) The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision.
(c) The terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular.
(d) All accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with
generally accepted accounting principles.
(e) Any terms not defined herein but defined in the
Indenture shall have the same meaning herein.
(f) The terms defined elsewhere in this Agreement
shall have the meanings therein prescribed for them.
<PAGE>
Section 1.3. Exhibits. The following Exhibits are a
part of this Agreement:
Exhibit A: Description of the Project.
Exhibit B: Form of Twenty-Second Supplemental
Indenture.
ARTICLE II
The Loan and The Project
Section 2.1. Municipality's Representations,
Warranties and Covenants.
(a) The Municipality represents and warrants that:
(i) The Municipality is a duly organized and
existing municipal corporation and political subdivision
of the State of Indiana, with full power and authority
under the Act to enter into the transactions contemplated
by this Agreement and to carry out its obligations
hereunder.
(ii) The Municipality has duly authorized the
issuance, execution and delivery of the Bonds and the
execution and delivery of this Agreement and the
Indenture.
(b) The Municipality covenants that:
(i) The Municipality shall not take any action to
interfere with any obligation it may have with respect to
the Bonds, the proceedings authorizing the Bonds or this
Agreement.
(ii) The Municipality shall provide funds from the
proceeds from the sale of the Bonds for the refinancing of
the entire outstanding principal amount of the 1974 Bonds,
and shall secure the payment of the Bonds by assigning
this Agreement (except the right to receive payment for
its expenses, the right to receive indemnities, the right
to receive notices and rights relating to any amendment of
this Agreement) and the First Mortgage Bonds to the
Trustee pursuant to the Indenture.
Section 2.2. Company's Representations, Warranties
and Covenants. The Company makes the following representations
and warranties (all as of the date on which this Agreement has
been executed) and in addition, makes the following covenants:
(a) It is a duly organized and existing corporation
<PAGE>
under the laws of the State of Indiana, has the power and
authority to own its properties and assets and to carry on its
business as now being conducted and as now contemplated, and
has full power and authority to issue the First Mortgage Bonds
and to execute and deliver this Agreement and the Indenture;
all actions necessary for the execution and delivery of the
First Mortgage Bonds, this Agreement and the Indenture have
been taken; and the First Mortgage Bonds will be a valid and
binding obligation of the Company.
(b) The execution, delivery and performance of this
Agreement, the Twenty-Second Supplemental Indenture, the First
Mortgage Bonds and the Indenture will not conflict with or
result in a breach of, or a default under, the Company's
Articles of Incorporation, By-Laws, or any material agreement
or instrument to which the Company is a party or by which it is
bound (excepting, however such agreements or instruments with
respect to which the Company has been required to and has
obtained waivers or consents) or result in the creation or
imposition of any lien, charge or encumbrance upon any of the
property or assets of the Company, except for the lien of the
Indenture and the First Mortgage Indenture.
(c) Each item of property that is a part of the
Project constitutes a component of a system whose purpose is
the collection, treatment, and distribution of water to the
general public for residential, commercial, agricultural and
industrial purposes and for fire protection.
(d) The "average maturity" of the Bonds (taking into
account their issue prices) does not exceed 120% of the
"average reasonably expected economic life" of the facilities
financed with the proceeds of the Bonds (taking into account
the respective cost of such facilities), all as determined in
accordance with the provisions of Section 147(b) of the Code.
(e) Neither the Project nor any component thereof
constitutes a facility the primary purpose of which is retail
food and beverage service, automobile sales or services, or the
provision of recreation or entertainment, any private or
commercial golf course, country club, massage parlor, tennis
club, skating facility (including roller skating, skateboard
and ice skating), racquet sports facility (including any
handball or racquetball court), hot tub facility, suntan
facility, racetrack, airplane, sky box or other private luxury
box, health club facility, facility used for gambling, or
facility used for the sale of alcoholic beverages.
(f) The Bonds are not and shall not be "federally
guaranteed" as defined in Section 149(b) of the Code.
(g) The Company is and will be the lawful owner of
the Project and has and will have good and marketable title to
the Project, subject to the lien of the First Mortgage
<PAGE>
Indenture.
(h) The execution, delivery and performance by the
Company of this Loan Agreement, the Twenty-Second Supplemental
Indenture and the First Mortgage Bonds do not require the
consent or approval of, the giving of notice of, the
registration with, or the taking of any other action in respect
of, any federal, state or other governmental authority or
agency, not previously obtained or performed.
(i) No litigation, arbitration proceedings or
governmental proceedings are pending or threatened against the
Company which would, if adversely determined, materially and
adversely affect the financial condition or continued
operations or properties of the Company and which the Company
believes, after consulting with its counsel, are reasonably
likely to be adversely determined.
(j) The Company believes that the interest on the
1974 Bonds is excludable from gross income for purposes of
federal income taxation and has received no information to the
contrary from the City, the Trustee, the holder of any 1974
Bond or the Internal Revenue Service.
(k) The Company will take no action (including
specifically but without limitation, any action described in
any agreement or certificate relating to tax matters and
delivered in connection with the Bonds) which would (and will
omit no action (including specifically but without limitation,
any action described in any agreement or certificate relating
to tax matters and delivered in connection with the Bonds)
reasonably within its power, the omission of which would) cause
the interest on the Bonds to become includable for Federal
income tax purposes in the gross income of any Bondholder,
other than a Bondholder who is a "substantial user" of the
Project or a "related person" within the meaning and for the
purpose of Section 147 of the Code.
ARTICLE III
The Bonds, Use of Proceeds, The First Mortgage Bonds
Section 3.1. Agreement to Issue Bonds. In order to
provide funds to make the Loan, the Municipality shall issue
the Bonds and sell them to the Purchaser and deposit the
proceeds with the Trustee into the Redemption Fund.
Section 3.2. Disbursements from Redemption Fund.
The Indenture authorizes the Trustee to make payments from the
Redemption Fund to the Trustee in its capacity as trustee with
respect to the 1974 Bonds and solely for the purpose of
discharging, redeeming and retiring the 1974 Bonds, provided,
however, that any moneys remaining in the Redemption Fund after
<PAGE>
such discharge, retirement, redemption and termination shall be
promptly released and distributed to the Company. Payment as
aforesaid shall be made upon receipt by the Trustee of all
materials and documents necessary to evidence to the
satisfaction of the Trustee that the funds being disbursed
hereunder are sufficient to discharge fully all obligations of
the Company created and existing in connection with the 1974
Bonds, together with all instruments and documents necessary to
evidence to the satisfaction of the Trustee the discharge of
all liens and encumbrances arising and existing by reason of
the 1974 Bonds.
Section 3.3. Investment of Redemption Fund and Bond
Fund Moneys. Any moneys held as part of the Bond Fund or the
Redemption Fund shall be invested by the Trustee at the written
direction of the Company in direct obligations of the United
States of America or in other obligations backed by the full
faith and credit of the United States of America.
Section 3.4. Covenants with Respect to Arbitrage.
The Company and the Municipality covenant to each other and to
and for the benefit of the holders of the Bonds that no use
will be made of the proceeds from the issue and sale of the
Bonds which, if such use could have been reasonably expected on
the date of issue of the Bonds, would have caused the Bonds to
be classified as arbitrage bonds within the meaning of
Section 103(b)(2) and Section 148 of the Code. As long as any
Bonds are outstanding, the Municipality and the Company shall
not violate the requirements of the Code relating to arbitrage
bonds, and any regulations thereunder including the requirement
of Section 148 of the Code relating to the rebate of certain
amounts to the United States government. The Company will
provide to the Trustee instructions relating to the permissible
investment of Bond proceeds and instructions and computations
(using investment information provided by the Trustee) relating
to the amount required to be rebated to the United States, all
in conformity with Section 148 of the Code. Subject to Section
3.3 hereof, the Company reserves the right, however, to make
any investment of proceeds permitted under the laws of the
State of Indiana, if the sections of the Code relating to
arbitrage bonds or the regulations thereunder are repealed or
relaxed or are held void by final judgment of a court of
competent jurisdiction, so long as the investment would not
result in making the interest on the Bonds includable in the
gross income of the holders thereof for purposes of Federal
income taxation. In making investments, the Company may rely
on an opinion of counsel of recognized competence in such
matters. The Trustee may make any and all such investments
through its own bond department.
<PAGE>
Section 3.5 Loan Payments and Other Amounts Payable.
The Company agrees to repay the loan from the Municipality as
follows:
(a) Concurrently with the sale of the Bonds, the
Company shall execute and deliver the First Mortgage Bonds to
the Municipality, pursuant to which the Company shall make
payments sufficient to pay when due (whether at maturity, upon
call for redemption, by acceleration or otherwise) the
principal of and premium, if any, and interest on the Bonds.
The First Mortgage Bonds shall be issued as fully registered
bonds registered in the name of the Trustee substantially in
the form set forth in the Twenty-Second Supplemental Indenture
that is attached hereto as Exhibit B. The First Mortgage Bonds
shall not to any extent be transferable or assignable except as
is required to effect the assignment to the Trustee or to
effect the assignment or pledge of the Trust Estate to any
successor trustee.
(b) The Company shall also pay promptly upon demand
when due (i) the reasonable and necessary fees and expenses of
the Trustee (including attorney's fees and any reasonable and
necessary fees and expenses in its capacity as Registrar) and
any paying agent for services in connection with the Bonds as
specified in Section 903 of the Indenture and (ii) the
reasonable and necessary fees and expenses of the Municipality,
including reasonable attorneys' fees, in connection with any
default of the Company under this Agreement, the First Mortgage
Bonds or the Indenture.
(c) If the Company fails to make any of the payments
required in this Section 3.5 or in the First Mortgage Bonds all
unpaid items or installments shall continue as an obligation of
the Company until fully paid.
(d) All payments under this Section 3.5 shall be
made by the Company directly to the Trustee in immediately
available funds and the Trustee shall deposit all such payments
into the Bond Fund, provided that payments under Section 3.5(b)
shall be made by the Company directly to the person entitled
thereto. The amount of any money in the Bond Fund which is
either proceeds from the sale of any Bonds or earnings on
investments made pursuant to the provisions of the Indenture
which has been set aside by the Trustee, at the request of the
Company, for payments of principal, whether at maturity or upon
redemption, of the Bonds shall be credited against the
obligation of the Company to pay the principal of the First
Mortgage Bonds. The amount of any money in the Bond Fund which
is either proceeds from the sale of any Bonds or earnings on
investments made pursuant to the provisions of the Indenture
which has been set aside by the Trustee for payments of
interest on the Bonds shall be credited against the obligation
of the Company to pay interest on the First Mortgage Bonds.
The principal amount of any Bonds purchased by the Company and
<PAGE>
delivered to the Trustee, or purchased by the Trustee and
cancelled, shall be credited against the obligation of the
Company to pay the principal of the First Mortgage Bonds.
(e) If on any principal or interest payment date for
the Bonds, whether by maturity, redemption, acceleration or
otherwise, the balance in the Bond Fund is insufficient to make
the required payments of principal of and premium, if any, and
interest on the Bonds on that date, the Company upon notice
shall pay forthwith any deficiency to the Trustee.
(f) The Company shall not be obligated to make any
further payments under this Section 3.5, and the Company's
liability to make payments under this Section 3.5 shall cease,
at any time that the entire principal of and premium, if any,
and interest on the Bonds shall have been fully paid in
accordance with their terms and the provisions of Section 1201
of the Indenture (including, without limitation, principal,
interest to maturity or earliest redemption date, as the case
may be, expenses of redemption, redemption premiums, and fees
and expenses of the Municipality, the Trustee and any paying
agent and any other costs and fees required to be paid by the
Company pursuant to this Agreement), or at any time that there
shall be in the Bond Fund an amount sufficient to pay or redeem
the Bonds in accordance with the provisions of Section 1201 of
the Indenture (including, without limitation, principal,
interest to maturity or earliest redemption date, as the case
may be, expenses of redemption and redemption premiums, and
fees and expenses of the Municipality, the Trustee and any
paying agent and any other costs and fees required to be paid
by the Company pursuant to this Agreement) and all other
requirements of Section 1201 of the Indenture have been
satisfied in full.
Section 3.6. Obligation of Company Unconditional.
The obligation of the Company to make the payments and to
perform and observe its other agreements pursuant to this
Agreement and the First Mortgage Bonds shall be absolute and
unconditional and shall not be subject to reduction or delay by
set-off, counterclaim, abatement or otherwise. Until such time
as the principal of and premium, if any, and interest on the
Bonds shall have been fully paid or provision for the payment
thereof shall have been made in accordance with Section 1201 of
the Indenture (including, without limitation, principal,
interest to maturity or earliest redemption date, as the case
may be, expenses of redemption, redemption premiums, and fees
and expenses of the Municipality, the Trustee and any paying
agent and any other costs and fees required to be paid by the
Company pursuant to this Agreement), and all other requirements
of Section 1201 of the Indenture have been satisfied in full,
the Company (a) shall not suspend or discontinue any payments
pursuant to this Agreement or the First Mortgage Bonds, (b)
shall perform and observe all its other agreements contained in
this Agreement and the First Mortgage Bonds, and (c) except as
<PAGE>
provided in Article V hereof, shall not terminate this
Agreement or the First Mortgage Bonds for any cause. Nothing
contained in this Agreement shall be construed to release the
Municipality from the performance of any of its obligations;
and in the event the Municipality shall fail to perform any
such agreement on its part, the Company or the Trustee may
institute such action against the Municipality as the Company
may deem necessary to compel performance, provided that no such
action shall (i) violate the agreements on the part of the
Company contained in the first sentence of this Section 3.6 or
(ii) diminish the amounts required to be paid by the Company
pursuant to Section 3.5 hereof.
ARTICLE IV
Particular Covenants of the Company
Section 4.1. Consent to Assignment to Trustee. The
Company acknowledges and consents to the assignment of the
First Mortgage Bonds and of the Municipality's rights hereunder
(except the right to receive payment for its expenses, the
right to receive indemnities, the right to receive notices and
rights relating to any amendments to this Agreement) to the
Trustee pursuant to the Indenture. Except as otherwise
provided herein, the Company shall pay to the Trustee all
amounts payable under this Agreement and the First Mortgage
Bonds, and the Company acknowledges that the Trustee may
enforce the rights, remedies and privileges granted to the
Municipality hereunder.
Section 4.2. Payment of Expenses of Issuance of
Bonds. In addition to its payment obligations under
Section 3.5 of this Agreement, the Company shall pay for all
the reasonable costs and shall be liable and pay for any
recording expenses, legal fees, printing expenses and other
fees and expenses reasonably incurred or to be incurred by or
on behalf of the Commission, the Municipality and the Trustee
in connection with or as an incident to the issuance and sale
of the Bonds or any amendment or supplement to this Agreement
or the Indenture.
Section 4.3. Company to Maintain its Existence;
Conditions Under Which Exceptions Permitted. The Company shall
during the term of this Agreement maintain its corporate
existence and will be duly qualified to transact business in
the State of Indiana and shall not voluntarily take, or omit to
take, any action that would cause the Company to be dissolved,
nor shall the Company sell, lease transfer or otherwise dispose
of all or substantially all of its assets or consolidate with
or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it; except that
the Company may consolidate with or merge into another
corporation incorporated and existing under the laws of the
<PAGE>
United States of America or one of the states of the United
States of America or permit one or more other corporations to
consolidate with or merge into it or sell or otherwise transfer
to another such other corporation all or substantially all of
its assets as an entirety and may thereafter dissolve,
provided, that immediately after such action there is no
default under the First Mortgage Indenture, this Agreement or
the Indenture, and further provided that if the Company is not
the surviving, resulting or transferee corporation (the
"Survivor"), the Survivor is (a) qualified to do business in
the State of Indiana and (b) shall expressly assume and agree
to perform all of the Company's obligations under this
Agreement, the First Mortgage Bonds and the Indenture.
Section 4.4. Further Assurances and Corrective
Instruments. The Municipality and the Company shall execute
and deliver, or cause to be executed and delivered, such
supplements hereto and further instruments as may reasonably be
required for carrying out the intention of or facilitating the
performance of this Agreement.
Section 4.5. Covenants of Company with Respect to
Use of Bond Proceeds. The Municipality is issuing the Bonds
pursuant to an exemption contained in the Code. It is the
intention of the parties that the interest on the Bonds remain
excludable from gross income for purposes of federal income
taxation and to that end the Company covenants with the
Municipality and with the Trustee for the benefit of the future
Holders of the Bonds, that it will never, insofar as it is
able, permit Bond proceeds to be expended or utilized in such a
manner as to cause the loss of the exclusion from gross income
for federal income tax purposes under Section 103 of the Code.
Section 4.6. Indemnification of Municipality and
Trustee. The Company shall indemnify and hold the Municipality
and the Trustee harmless against any claim, loss, liability or
expense incurred without gross negligence or bad faith or
willful misconduct on the part of the Municipality or the
Trustee arising out of or in connection with this Agreement,
the First Mortgage Indenture, the Indenture or the Project,
including reasonable attorneys' fees and the costs and expense
of defense against any such claim or liability.
ARTICLE V
Prepayment of First Mortgage Bonds
Section 5.1. Mandatory Prepayment of First Mortgage
Bonds in Event of Determination of Taxability. The Company
shall prepay the amounts due under this Agreement and the First
Mortgage Bonds in whole (or in part as provided below) prior to
the expiration of this Agreement and prior to the full payment
(or provision for full payment) of the Bonds on the earliest
<PAGE>
practicable date (selected by the Trustee) within one hundred
and eighty (180) days following a Determination of Taxability
(as defined in the Indenture). If there has been a
Determination of Taxability but fewer than all of the Bonds are
required to be redeemed under Section 501 of the Indenture,
then the Company shall prepay the amounts due under this
Agreement and First Mortgage Bonds only to the extent necessary
to provide a sum sufficient to pay the principal and interest
on the principal of the Bonds that are required to be redeemed.
In the event of an obligation to prepay under this
Section 5.1, the Company shall pay to the Trustee a sum
sufficient, together with other funds deposited into the Bond
Fund and available for the purpose, to pay the principal and
interest on the principal of the Bonds to be redeemed and all
reasonable and necessary fees and expenses of the Trustee and
any paying agent accrued and to accrue through the redemption
date.
Section 5.2. Extraordinary Event Prepayment of First
Mortgage Bonds. The Company may, at its option, prepay the
First Mortgage Bonds in whole but not in part, without
redemption premium, within one year following the occurrence of
any of the events specified in Section 502(a) or (b) of the
Indenture by paying the Trustee a sum sufficient, together with
other funds in the Bond Fund and available for that purpose, to
pay (a) the principal of and interest upon all of the Bonds
then outstanding, and (b) all reasonable and necessary fees and
expenses of the Trustee and the paying agent accrued and to
accrue through the redemption date.
In the case of a Project Taking (as defined in the
Twenty-Second Supplemental Indenture), the First Mortgage Bonds
may be redeemed in whole by the Company within one year after
receipt of the proceeds received therefor. In the case of a
Total Taking (as defined in the Twenty-Second Supplemental
Indenture), that portion of the award or consideration which
consists solely of cash shall be used to redeem first mortgage
bonds, including the First Mortgage Bonds, within six months
after the receipt thereof. In the event that the consideration
or award to the Company for property so acquired by a
governmental authority in the case of a Total Taking includes
property other than cash, that portion of such property which
is ratably applicable to the First Mortgage Bonds shall within
sixty days after receipt thereof be sold for cash and the
proceeds of such sale shall within six months after such Total
Taking be used for redemption of the First Mortgage Bonds. In
the event of a Total Taking, the First Mortgage Bonds may also
be redeemed in whole, but not in part, at the option of the
Company, to be exercised within one year after such purchase or
taking, at one hundred percent (100%) of the principal amount
thereof, together with accrued interest to the date of
redemption. In the event that less than all of the Bonds are
to be redeemed, the particular Bonds or portions thereof to be
<PAGE>
redeemed shall be selected by lot or by such other random means
as the Trustee shall determine in its discretion.
Section 5.3. Notice of Prepayment. To exercise
prepayment under Section 5.2, the Company shall give written
notice to the Trustee at least 60 days but not more than
90 days prior to a specified date of the prepayment. To prepay
under Section 5.1, to the extent the Company is required to
give notice, the Company shall give written notice to the
Trustee within 30 days after the event requiring the prepayment
specifying the date of the prepayment, which shall in no event
be later than the date set by the Trustee for redemption of the
Bonds in the Trustee's notice to the Holders of the Bonds given
under Section 503 of the Indenture. If the Company fails to
give timely notice of a prepayment with respect to a prepayment
under Section 5.2, the Trustee shall give written notice to the
Company specifying a date of prepayment not less than 15 days
nor more than 60 days from the date that notice is mailed.
ARTICLE VI
Events of Default and Remedies
Section 6.1. Events of Default. The occurrence and
continuance of any of the following events shall constitute an
"Event of Default" hereunder:
(a) Default in the due and punctual payment of any
installment of principal of or redemption premium, if any, on
the First Mortgage Bonds whether at stated maturity, upon
required prepayment, acceleration or otherwise;
(b) Default in the due and punctual payment and for
a period of five (5) days thereafter of any interest on the
First Mortgage Bonds;
(c) The dissolution or liquidation of the Company
unless such dissolution or liquidation is permitted by this
Agreement;
(d) Failure by the Company to observe and perform
any covenant, condition or agreement in this Agreement on its
part to be observed or performed other than those referred to
in Section 6.1(a), (b) or (c) for a period of sixty days after
written notice, specifying the failure and requesting that it
be remedied, given to the Company by the Trustee, unless the
Trustee agrees in writing to an extension of the time prior to
its expiration; provided, however, that with respect to this
clause (d), if such failure of performance shall be such that
it cannot be corrected within such period, it shall not
constitute an Event of Default if: (i) such failure of
performance, in the reasonable opinion of the Trustee, is
correctable without material adverse effect on the Bonds;
(ii) corrective action is instituted by or on behalf of the
<PAGE>
Company within such period and diligently pursued until such
failure of performance is corrected; and (iii) in the
reasonable opinion of the Trustee, correction of such failure
of performance has not taken an unreasonable amount of time.
The Trustee may request (and may rely upon) from the Company a
certificate to the effect that the Company has instituted
corrective action and will diligently pursue such action and
believes that its failure of performance can be corrected
through such action.
(e) A decree or order shall have been entered by a
court of competent jurisdiction constituting an order for
relief under the Bankruptcy Code or adjudging the Company
insolvent or approving as properly filed a petition seeking
reorganization of the Company under the Bankruptcy Code or any
other federal or state law relating to bankruptcy or insolvency
or appointing a receiver or decreeing or ordering the winding
up or liquidation of the affairs of the Company or the
sequestration of a substantial part of the property of the
Company, and any such decree or order shall remain in force
undischarged and unstayed for period of ninety days.
(f) The Company shall file a petition seeking relief
under the Bankruptcy Code or shall suffer the imposition of an
order thereunder or shall institute or consent to the
institution of bankruptcy or insolvency proceedings against it
or shall file a petition or answer or consent seeking
reorganization or relief (other than as a creditor) under the
Bankruptcy Code or any other federal or state law relating to
bankruptcy or insolvency or shall consent to the filing of any
such petition or shall consent to the appointment of a receiver
or shall make an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts generally
as they become due or shall fail to pay its debts generally as
they become due, or action shall be taken by the Company in
furtherance of any of the aforesaid purposes.
(g) An Event of Default as defined in Section 801 of
the Indenture shall have occurred.
(h) An Event of Default as defined in Section 4.1 of
the Guaranty shall have occurred.
Section 6.2. Remedies on Default. Whenever any
Event of Default referred to in Section 6.1 shall have happened
and be continuing, the Trustee may, and upon the written
request of the owners of not less than 25% of the aggregate
principal amount of the Bonds then outstanding shall, declare
the First Mortgage Bonds and all amounts payable thereunder,
whether by acceleration of maturity or otherwise, to be
immediately due and payable.
Section 6.3. Application of Moneys. All moneys
collected by the Trustee under Section 6.2 shall be applied as
<PAGE>
specified in the Indenture.
Section 6.4. Remedies Cumulative. No remedy granted
by this Agreement is intended to be exclusive of any other
remedy. All available remedies shall be cumulative.
Section 6.5. Delay or Omission Not a Waiver. No
delay or omission of the Trustee to exercise any right or power
accruing upon any Event of Default shall impair the right or
power, or shall be construed to be a waiver of the Event of
Default or an acquiescence therein. Every power and remedy may
be exercised as often as the Trustee deems expedient.
Section 6.6. Remedies Subject to Provisions of Law.
All rights, remedies and powers provided by this Article may be
exercised only to the extent that their exercise does not
violate any applicable provision of law. All the provisions of
this Article are intended to be subject to all applicable
mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render
this Agreement invalid or unenforceable under the provisions of
any applicable law.
ARTICLE VII
Amendments to this Agreement
Section 7.1. Amendments to this Agreement. This
Agreement may be amended in accordance with Article XI of the
Indenture.
ARTICLE VIII
Miscellaneous
Section 8.1. Binding Effect. This Agreement shall
inure to the benefit of and shall be binding upon the
Municipality, the Company and their respective successors and
assigns, subject to the limitations in Sections 4.3 and 8.4.
Section 8.2. Severability. In the event any
provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, that
holding shall not invalidate or render unenforceable any other
provisions hereof.
Section 8.3. Amounts Remaining in Bond Fund. Any
amounts remaining in the Bond Fund upon expiration or
termination of this Agreement in accordance with the Indenture
shall belong to and be paid to the Company by the Trustee.
Section 8.4. Amendments, Changes and Modifications.
<PAGE>
After the Bonds are issued and before they are paid in full (or
provision for payment in full is made), this Agreement may not
be amended, assigned or terminated without the written consent
of the Trustee.
Section 8.5. Execution in Counterparts. This
Agreement may be executed in several counterparts, each of
which shall be an original.
Section 8.6. Notices. All notices, certificates,
payments or other communications hereunder shall be
sufficiently given and shall be deemed given when delivered or
mailed by registered or certified mail, postage prepaid, or
overnight express mail addressed as follows: if to the
Municipality, at the City-County Building, Indianapolis,
Indiana, 46204, Attention of its Controller; if the Company or
to the Guarantor, at 1220 Waterway Boulevard, Indianapolis,
Indiana, 46202, Attention of its Treasurer; and if to the
Trustee, at 101 West Washington Street, Suite 655,
Indianapolis, Indiana 46255, Attention of the Corporate Trust
Department; or to such other addresses as may hereafter be
furnished by notice.
Section 8.7. References to Bonds Ineffective After
Bonds are Paid. Upon payment in full of the Bonds (or
provision for payment thereof having been made in accordance
with the provisions of the Indenture) and payment of all fees
and charges of the Municipality, Trustee and any paying agent,
all references in this Agreement to the Bonds and the Trustee
shall be ineffective and neither the Trustee nor the holders of
the Bonds shall thereafter have any rights hereunder, except
those that shall have theretofore vested.
Section 8.8. Agreement for Benefit of Parties
Hereto. Nothing in this Agreement, express or implied, is
intended to give to any person other than the parties hereto
and the holder of the First Mortgage Bonds, any right, remedy
or claim under or by reason of this Agreement.
Section 8.9. Waiver. No waiver of any of the
provisions of this Agreement shall be effective and binding
unless set forth in a written notice and no waiver of one
provision shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver or a waiver of such
provision in any other instance.
Section 8.10. Captions and Table of Contents. The
captions herein and the Table of Contents are inserted only as
a matter of convenience and do not in any way define, limit,
construe or describe the scope or intent of this Agreement or
any section thereof or in any other way affect this Agreement.
Section 8.11. Survival of Covenants, Representations
<PAGE>
and Warranties. All covenants, representations and warranties
made by the Company and the Municipality contained herein or in
any other document, certificate or instrument delivered in
connection with the sale of any of the Bonds shall be
continuing and shall survive delivery of the Bonds and the
other transactions contemplated by this Agreement and the
Indenture.
Section 8.12. Applicable Law. This Agreement shall
be governed by and construed in accordance with the laws of the
State of Indiana.
Section 8.13. Holidays. Where a date of payment on
the First Mortgage Bonds is not a Business Day, then payment
may be made on the first Business Day thereafter.
IN WITNESS WHEREOF, the Municipality and the Company
have caused this Agreement to be executed all as of the date
first above written.
CITY OF INDIANAPOLIS, INDIANA
(SEAL)
By:____________________________________
Stephen Goldsmith, Mayor
____________________________________
Beverly S. Rippy, Clerk
INDIANAPOLIS WATER COMPANY
By:__________________________________
J. A. Rosenfeld
Senior Vice President and Treasurer
___________________________________
Joseph W. Jordan, Secretary
<PAGE>
GUARANTY AGREEMENT
BETWEEN
IWC RESOURCES CORPORATION
AND
NATIONAL CITY BANK, INDIANA
AS TRUSTEE
DATED AS OF APRIL 1, 1993
<PAGE>
THIS GUARANTY AGREEMENT is entered into as of April 1,
1993 (the "Guaranty" or "Agreement"), by IWC Resources
Corporation, an Indiana corporation (the "Guarantor") in favor
of National City Bank, Indiana (the "Trustee"), as trustee
under the Indenture of Trust dated as of April 1, 1993, by and
among the City of Indianapolis, Indiana (the "Municipality"),
the Indianapolis Water Company (the "Company") and the Trustee
(the "Indenture").
RECITALS
1. The Municipality intends to issue its City of
Indianapolis, Indiana Economic Development Water Facilities
Refunding Revenue Bonds, Series 1993 (Indianapolis Water
Company Project) in an aggregate principal amount of
$11,600,000 (the "Bonds") pursuant to IC 5-1-5, IC 36-7-11.9
and IC 36-7-12 and under the Indenture.
2. The Bonds are being issued to assist the Company,
a subsidiary of the Guarantor, with the retirement, discharge
and termination of its obligations and liabilities under and in
connection with the 6-1/4% City of Indianapolis, Indiana
Economic Development Water Facilities Revenue Bonds, 1974
Series (Indianapolis Water Company Project). The Guarantor
desires that the Municipality enter into the Loan Agreement
dated as of April 1, 1993 (the "Loan Agreement"), between the
Municipality and the Company pursuant to which the proceeds
from the sale of the Bonds will be loaned to the Company for
the purposes described herein. The Guarantor is willing to
enter into and deliver this Guaranty in order to induce the
Municipality to issue the Bonds and as an inducement to
purchasers of the Bonds to purchase the Bonds.
3. Capitalized terms not specifically defined herein
but defined in the Indenture or in the Loan Agreement shall,
for purposes of this Agreement, have the meanings ascribed to
them in the Indenture or the Loan Agreement.
AGREEMENT
In consideration of the premises and mutual covenants
contained herein, the Guarantor agrees with the Trustee as
follows:
ARTICLE I
Section 1.1. Representations of the Guarantor. The
Guarantor represents and warrants to the Trustee for the
benefit of the holders of the Bonds that:
<PAGE>
(a) The Guarantor is a corporation duly organized and
validly existing under the laws of the State of Indiana.
(b) The Guarantor is licensed or qualified to do
business in each state in which the ownership of property or
the transaction of business by the Guarantor requires that
the Guarantor be licensed or qualified.
(c) The Guarantor has full right, power and authority
to enter into, execute and deliver this Agreement and to
perform its obligations hereunder.
(d) No authorization, approval, consent or license of
any governmental body or authority, not already obtained, is
required for the valid and lawful execution and delivery by
the Guarantor of this Agreement and the performance of the
obligations of the Guarantor hereunder.
(e) The execution and delivery by the Guarantor of
this Agreement and the performance by the Guarantor
hereunder will not conflict with or constitute a breach of
or default under the Guarantor's Articles of Incorporation
or Bylaws, or any material indenture, agreement or other
instrument to which the Guarantor or any of its subsidiaries
is a party or by which any of them or their properties are
bound or are subject.
(f) No event has occurred which, with the lapse of
time or the giving of notice or both, would give any
creditor of the Guarantor the right to accelerate the
maturity of any of the Guarantor's outstanding indebtedness
for money borrowed.
(g) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
public board or body, pending or, to the knowledge of the
Guarantor, threatened against the Guarantor (or, to the
knowledge of the Guarantor, any meritorious basis therefor)
wherein the Guarantor believes that an unfavorable decision
is reasonably likely, which would have a material adverse
effect on the financial condition of the Guarantor and its
consolidated subsidiaries taken as a whole, the operation by
the Guarantor of its properties, or the corporate existence
or powers of the Guarantor.
(h) The Guarantor is in compliance in all material
respects with all applicable Federal, state and local laws,
rules, regulations, orders and decrees relating to the
conduct of its business as currently conducted, and no
order, decree, judgment, fine or penalty has been issued,
assessed or threatened based upon any violation or alleged
violation of any of the foregoing that the Guarantor
believes could have a material adverse effect on the
financial condition of the Guarantor and its consolidated
<PAGE>
subsidiaries taken as a whole and Guarantor is not aware of
any meritorious basis for any such order,decree, judgment,
fine or penalty.
(i) Neither the Guarantor nor, to the knowledge of the
Guarantor, any other party thereto is in default in any
material respect under any lease, contract or agreement to
which the Guarantor or any of its consolidated subsidiaries
is a party and which default materially and adversely
affects the business, properties or financial condition of
the Guarantor and its consolidated subsidiaries taken as a
whole; and no event has occurred which, with the passage of
time or the giving of notice or both, would constitute a
material default by the Guarantor thereunder.
(j) Guarantor and its consolidated subsidiaries have
good and marketable title to all real and personal property
described in the financial statements of Guarantor included
or incorporated by reference in the Official Statement as
being owned by them, in each case free and clear of all
liens, encumbrances and defects except for the lien of the
First Mortgage Indenture dated as of July 1, 1936 between
the Company and Fidelity Bank, National Association on
property of the Company, and the liens and encumbrances
permitted thereby, and except such other liens and
encumbrances on such property owned by the Guarantor and its
consolidated subsidiaries as do not materially adversely
affect the value of such property and do not materially
interfere with the use made and proposed to be made of such
property; and the real properties held under lease by the
Guarantor or its consolidated subsidiaries are held under
valid, subsisting and enforceable leases with such
exceptions as are not material and do not materially
interfere with the conduct of the business of the Guarantor
and its consolidated subsidiaries.
(k) To the best knowledge of the Guarantor, the
Guarantor and its consolidated subsidiaries own or possess
or are licensed under all the patents, patent applications,
trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights,
licenses, inventions, trade secrets and rights necessary for
the present and planned future conduct of their business.
(l) To the best knowledge of the Guarantor, KPMG Peat
Marwick are independent public accountants as required by
the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission
thereunder.
(m) The financial statements included or incorporated
by reference in the Official Statement have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis except for the changes in
<PAGE>
accounting principles noted therein, if any, and fairly
present the consolidated financial position of the Guarantor
and its consolidated subsidiaries, the consolidated results
of its operations and its cash flows at the dates and for
the periods indicated.
(n) Except as set forth or contemplated in the
Official Statement, since December 31, 1992 (i) neither the
Guarantor nor any of its consolidated subsidiaries has
sustained any loss or interference with its business from
fire, explosion, flood or any labor dispute or court or
governmental action, order or decree and (ii) there has been
no change in the capital stock or increase in short-term
debt or long-term debt, of the Guarantor and its
consolidated subsidiaries or any adverse change, or any
development involving a prospective adverse change, in or
affecting the general affairs, management, properties,
financial position, preferred or common stockholders' equity
or results of operations of the Guarantor and its
consolidated subsidiaries taken as a whole, which in any
such case described in clause (i) or (ii) is material to the
Guarantor and its consolidated subsidiaries taken as a
whole.
(o) The Guarantor acknowledges that the execution and
delivery by it of this Guaranty Agreement is an essential
inducement to the Municipality to issue and sell the Bonds
and to the purchasers of the Bonds to purchase the Bonds and
that the issuance and sale of the Bonds and the loan of the
proceeds thereof to the Company will result in a material
financial benefit to the Guarantor.
(p) Guarantor has filed or caused to be filed all
federal, state and local tax returns for such periods that
returns have been required and has paid when due or reserved
for in such financial statements all such taxes, excepting
only those as are being contested in good faith.
(q) The Official Statement does not, as of its date,
contain any untrue statement of material fact or omit to
include any statement of material fact necessary in order to
make the statements therein not misleading.
(r) This Guaranty Agreement is the legal, valid and
binding agreement of the Guarantor enforceable in accordance
with its terms, subject to all laws relating to bankruptcy,
moratorium, receivership and creditors' rights generally and
further to general principles of equity.
<PAGE>
ARTICLE II
Covenants and Agreements
Section 2.1. Guaranty of Payment. The Guarantor
unconditionally guarantees to the Trustee for the benefit of
the holders of the Bonds:
(a) the full and prompt payment of the principal of
and premium, if any, on each Bond when and as the payment
shall become due, whether at maturity, by acceleration, call
for redemption or otherwise;
(b) the full and prompt payment of interest on each
Bond when and as the payment shall become due; and
(c) the full and prompt payment upon demand of any
charges and expenses of the Trustee and the Municipality
required to be paid under the Loan Agreement and the
Indenture.
All amounts collected by the Trustee under this Agreement shall
be deposited into the Bond Fund created under the Indenture.
Section 2.2. Obligations Absolute. The obligations of
the Guarantor shall be absolute and unconditional and shall
remain in full force and effect until the entire principal of
and premium, if any, and interest on the Bonds, and all charges
and expenses of the Trustee and the Municipality covered by
this Guaranty have been paid or provided for. The obligations
of the Guarantor shall not be affected by the happening of any
event, including without limitation any of the following,
whether or not with notice to, or the consent of, the
Guarantor:
(a) the compromise, settlement, release or termination
of any or all of the obligations of the Company, the
Municipality or the Trustee under this Guaranty, the Loan
Agreement, the First Mortgage Indenture or the Indenture;
(b) the failure to give notice to the Guarantor of the
occurrence of an event of default under this Guaranty, the
Loan Agreement, the First Mortgage Indenture or the
Indenture;
(c) the assignment of any interest of the Municipality
in the Loan Agreement;
(d) the waiver of the performance or the performance
by the Municipality, the Trustee, the Company or the
Guarantor of any of the obligations of any of them under the
Loan Agreement, the Indenture, the First Mortgage Indenture
or this Guaranty;
<PAGE>
(e) the extension of the time for payment of any
principal of or premium, if any, or interest on any Bond or
under this Guaranty or of the time for performance of any
other obligations under the Indenture, the Loan Agreement,
the First Mortgage Indenture or this Guaranty;
(f) the modification of any provision of the Loan
Agreement, the First Mortgage Indenture or the Indenture;
(g) the taking or the omission of any of the actions
referred to in the Loan Agreement, the First Mortgage
Indenture, the Indenture or in this Guaranty;
(h) any failure or delay on the part of the
Municipality or the Trustee to exercise any right of the
Municipality or the Trustee under this Guaranty, the Loan
Agreement, the First Mortgage Indenture, or the Indenture,
or any other act by the Municipality, the Trustee or any of
the holders of the Bonds;
(i) the liquidation, dissolution, sale or other
disposition of all or substantially all the assets of the
Company or the Guarantor, or, receivership, insolvency,
bankruptcy or other similar proceedings affecting the
Company, the Guarantor or the Municipality, or any contest
of the validity of this Guaranty, the Loan Agreement, the
First Mortgage Indenture, or the Indenture in any such
proceeding or the Guarantor's ownership of the Company;
(j) the failure of the Guarantor fully to perform any
of its obligations under this Guaranty.
Section 2.3. No Setoff, Etc.. No setoff, counterclaim
or reduction of an obligation, or any defense of any kind which
the Guarantor or the Company may have against the Municipality
or the Trustee shall be available to the Guarantor against the
Trustee or any holder of any Bond in any action to enforce this
Guaranty.
Section 2.4. Notice of Acceptance; Costs of
Enforcement. The Guarantor waives notice from the Trustee or
the holders of any of the Bonds of their acceptance and
reliance on this Guaranty. The Guarantor agrees to pay all
costs, expenses and fees, including all reasonable attorneys'
fees, which may be incurred by the Trustee in enforcing or
attempting to enforce this Guaranty following any default on
the part of the Guarantor, whether the enforcement is by suit
or otherwise.
Section 2.5. Guaranty for Benefit of Bondholders.
This Guaranty is entered into by the Guarantor for the benefit
of the Trustee and the holders of the Bonds and any successor
trustee or trustees under the Indenture, all of whom shall be
<PAGE>
entitled to enforce performance of this Guaranty to the same
extent as if they were parties to it.
ARTICLE III
Particular Covenants of the Guarantor
Section 3.1. Guarantor to Maintain its Existence;
Conditions Under Which Exceptions Permitted. The Guarantor
shall, during the term of this Agreement, maintain its
corporate existence and be and remain duly qualified to
transact business in the State of Indiana and shall not
voluntarily take, or omit to take, any action that would cause
the Guarantor to be dissolved, nor shall the Guarantor sell,
lease, transfer or otherwise dispose of all or substantially
all of its assets or consolidate with or merge into another
corporation or permit one or more other corporations to
consolidate with or merge into it; except that the Guarantor
may consolidate with or merge into another corporation
incorporated and existing under the laws of the United States
of America or one of the states of the United States of America
or permit one or more other such corporations to consolidate
with or merge into it or sell or otherwise transfer to another
such other corporation all or substantially all of its assets
as an entirety and may thereafter dissolve, provided, that
immediately after such action there is no default under this
Agreement and further provided that if the Guarantor is not the
surviving, resulting or transferee corporation (the
"Survivor"), the Survivor (a) is qualified to do business in
the State of Indiana and (b) shall concurrently with the
consummation thereof expressly assume in writing and agree to
perform all of the Guarantor's obligations under this Agreement
and deliver a copy of such written assumption and agreement to
the Trustee.
Section 3.2. Further Assurances and Corrective
Instruments. The Guarantor shall execute and deliver, or cause
to be executed and delivered, such supplements hereto and
further instruments as may reasonably be required for carrying
out the intention of or facilitating the performance of this
Agreement.
Section 3.3. Reports, Certificates and Other
Information. The Guarantor shall furnish to the Trustee and
the Purchaser (except for the materials referred to in
subsection (c)), during the term of this Agreement:
(a) Annual Statements. As soon as available and in
any event within one hundred twenty days after the close of
each fiscal year of the Guarantor ending after the date of
this Agreement, copies of the consolidated balance sheet of
the Guarantor, and consolidated statements of income and
retained earnings and statements of consolidated cash flows
<PAGE>
of the Guarantor for such fiscal year, each of which shall
be audited by the Guarantor's independent public accountants
and shall set forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and shall be
accompanied by a report thereon of such accountants that
such financial statements present fairly the consolidated
financial position, results of operations and cash flows of
the Guarantor and its subsidiaries as of the date of such
statements.
(b) Quarterly Statements. As soon as available, and
in any event within sixty days after the close of each
calendar quarter ending after the date of this Agreement
(except the last quarter of each fiscal year), copies of the
consolidated balance sheet of the Guarantor as of the end of
such quarter, and consolidated statements of income and
retained earnings and statements of consolidated cash flows
of the Guarantor for the portion of the fiscal year ended as
of the end of such quarter. All such statements may be
prepared internally and shall be accompanied by a
certificate of an appropriate officer of the Guarantor that
such financial statements have been prepared in material
conformity with generally accepted accounting principles
consistently applied (except for changes in which the
independent accountants for the Guarantor concur), and
present fairly the financial position of the Guarantor and
its subsidiaries as of the dates of such statements.
(c) No Default Certificate. Concurrently with
providing such financial statements, a certificate of the
President, a Vice President or the Treasurer of the
Guarantor that after reasonable investigation he has no
knowledge of the occurrence of any Event of Default under
this Agreement (or of any event that with the lapse of time
or the giving of notice would constitute an Event of
Default), or if such officer shall have obtained knowledge
of any such Event of Default or default, he shall disclose
the same in such certificate and the nature thereof.
(d) Proxy Statements, etc.. Concurrently with the
mailing of its proxy statement to its shareholders and any
Current Report on Form 8-K to the Securities and Exchange
Commission, a copy of such documents.
ARTICLE IV
Events of Default and Remedies Therefor
Section 4.1. Events of Default. The occurrence and
continuance of any of the following events shall constitute an
"Event of Default" under this Guaranty:
<PAGE>
(a) Default shall be made in the due and prompt
payment of the principal of, or premium on, the Bonds when
and as the payment shall become due and payable, whether at
maturity, by acceleration, call for redemption or otherwise;
(b) Default shall be made in the due and punctual
payment of any installment of interest on the Bonds, when
and as payment shall become due and payable and such default
shall continue for a period of five (5) days thereafter;
(c) Default shall be made in the performance or
observance of any other of the covenants, agreements, or
conditions contained in this Guaranty and the default shall
continue for a period of sixty (60) days after written
notice thereof to the Guarantor by the Trustee, provided,
however, that with respect to this clause (c), if such
failure of performance or observance shall be such that it
cannot be corrected within such period, it shall not
constitute an Event of Default if: (i) in the reasonable
opinion of the Trustee, such failure of performance or
observance is correctable without material adverse effect on
the Bonds, (ii) corrective action is instituted by or on
behalf of the Guarantor within such period and is diligently
pursued until such failure of performance or observance is
corrected, and (iii) in the reasonable opinion of the
Trustee, correction of such failure of performance has not
taken an unreasonable amount of time. The Trustee may
request (and may rely upon) from the Guarantor a certificate
to the effect that the Guarantor has instituted corrective
action and will diligently pursue such action and believes
that its failure of performance or observance can be
corrected through such action;
(d) A decree or order shall have been entered by a
court of competent jurisdiction constituting an order for
relief under the Bankruptcy Code or adjudging the Guarantor
insolvent or approving as properly filed a petition seeking
reorganization of the Guarantor under the Bankruptcy Code or
any other federal or state law relating to bankruptcy or
insolvency or appointing a receiver or decreeing or ordering
the winding up or liquidation of the affairs of the
Guarantor or the sequestration of a substantial part of the
property of the Guarantor, and any such decree or order
shall remain in force undischarged and unstayed for a period
of ninety days;
(e) The Guarantor shall file a petition seeking relief
under the Bankruptcy Code or shall suffer the imposition of
an order thereunder or shall institute or consent to the
institution of bankruptcy or insolvency proceedings against
it or shall file a petition or answer or consent seeking
reorganization or relief (other than as a creditor) under
the Bankruptcy Code or any other federal or state law
relating to bankruptcy or insolvency or shall consent to the
<PAGE>
filing of any such petition or shall consent to the
appointment of a receiver or shall make an assignment for
the benefit of creditors or shall admit in writing its
inability to pay its debts generally as they become due or
shall fail to pay its debts generally as they become due, or
action shall be taken by the Guarantor in furtherance of any
of the aforesaid purposes.
Section 4.2. Suits for Enforcement. In case any one
or more of the events of default specified in Section 4.1 shall
happen and be continuing, the Trustee may proceed to protect
and enforce its rights on behalf of holders of the Bonds either
by suit in equity or by action at law, or both, whether for the
specific performance of any covenant, condition or agreement
contained in this Guaranty or in aid of the exercise of any
power granted in this Guaranty or to enforce any other legal or
equitable right of the holders of the Bonds. Each default in
payment shall give rise to a separate cause of action, and
separate suits may be brought as each cause of action arises.
ARTICLE V
Miscellaneous
Section 5.1. Obligations Arise. The obligations of
the Guarantor under this Guaranty shall arise absolutely and
unconditionally when the Bonds shall have been issued, sold and
delivered by the Municipality and the proceeds paid to the
Trustee. This Guaranty shall bind the successors, assigns and
legal representatives of the Guarantor.
Section 5.2. Remedies Not Exclusive. No remedy given
to the Trustee in this Guaranty is intended to be exclusive of
any other available remedy or remedies. Every available remedy
shall be cumulative and shall be in addition to every other
remedy given under this Guaranty or now or hereafter existing
at law or in equity. No delay or omission to exercise any
right or power accruing upon any default shall impair any right
or power or shall be construed to be a waiver thereof, but any
right and power may be exercised from time to time and as often
as may be deemed expedient. In order to entitle the Trustee to
exercise any remedy, it shall not be necessary to give any
notice, other than a notice expressly required. In the event
any provision in this Guaranty should be breached by the
Guarantor and thereafter waived by the Trustee, the waiver
shall be limited to the particular breach and shall not be
deemed to waive any other breach.
Section 5.3. Amendments. No waiver, amendment,
release or modification of this Guaranty shall be established
by conduct, custom or course of dealing, but solely by an
instrument in writing executed by the Trustee. The Trustee
shall not consent to any amendment of this Guaranty, other than
<PAGE>
an amendment necessary to cure for the benefit of the holders
of the Bonds any ambiguity, formal defect or omission, without
notice and the written approval or consent of the holders of
not less than a majority in aggregate principal amount of the
Bonds at the time outstanding given.
Section 5.4. Entire Agreement. This Guaranty
constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof and may
be executed simultaneously in several counterparts, each of
which shall be deemed an original, and all of which together
shall constitute one and the same instrument.
Section 5.5. Notices. All notices, certificates,
payments or other communications shall be sufficiently given
and shall be deemed given when delivered or mailed by
registered or certified mail, postage prepaid, or by express
mail addressed as follows: if to the Trustee at National City
Bank, Indiana, Indianapolis, Indiana, and if to the Guarantor
at 1220 Waterway Boulevard, Indianapolis, Indiana 46202,
attention of its Treasurer.
Section 5.6. Invalidity. The invalidity or
unenforceability of any one or more phrases, sentences, clauses
or sections in this Guaranty, or the invalidity or
unenforceability of the Loan Agreement, Bonds, First Mortgage
Indenture, First Mortgage Bonds, or the Indenture, shall not
affect the validity or enforceability of the remaining portions
of this Guaranty, or any part thereof.
Section 5.7. Applicable Law. This Guaranty shall be
governed by and construed in accordance with the laws of the
State of Indiana.
IN WITNESS WHEREOF, the Guarantor has executed this
Guaranty as of April 1, 1993.
IWC RESOURCES CORPORATION
By:___________________________
J. A. Rosenfeld
Senior Vice President and
Treasurer
______________________________
Joseph W. Jordan, Secretary
<PAGE>
Accepted as of this 1st day of April, 1993 by National City
Bank, Indiana, as Trustee.
By:___________________________
Faith Berning,
Vice President
(SEAL)
ATTEST:
By:___________________________
<PAGE>
AGREEMENT FOR THE OPERATION AND MAINTENANCE
OF
THE CITY OF INDIANAPOLIS, INDIANA
ADVANCED WASTEWATER TREATMENT FACILITIES
<PAGE>
TABLE OF CONTENTS
Article Page
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . 2
Section 1.01. Agreement Year . . . . . . . . . . . . . . 2
Section 1.02. Annual Fee . . . . . . . . . . . . . . . . 2
Section 1.03. AWT Facilities . . . . . . . . . . . . . . 2
Section 1.04. Beginning Inventory . . . . . . . . . . . 2
Section 1.05. Capital Expenditures . . . . . . . . . . . 2
Section 1.06. Capital Improvements . . . . . . . . . . . 2
Section 1.07. Contractor's Proposal . . . . . . . . . . 2
Section 1.08. Contract Compliance Officer ("CCO") . . . 2
Section 1.09. Effective Date . . . . . . . . . . . . . . 3
Section 1.10. Equipment . . . . . . . . . . . . . . . . 3
Section 1.11. Event of Default . . . . . . . . . . . . . 3
Section 1.12. Extraordinary Event of Default . . . . . . 3
Section 1.13. For Cause . . . . . . . . . . . . . . . . 3
Section 1.14. NPDES Permit . . . . . . . . . . . . . . . 3
Section 1.15. Operation and Maintenance Costs . . . . . 4
Section 1.16. Partnership Agreement . . . . . . . . . . 4
Section 1.17. Permits . . . . . . . . . . . . . . . . . 4
Section 1.18. Repair and Replacement Fund . . . . . . . 4
Section 1.19. Termination Date . . . . . . . . . . . . . 4
Section 1.20. Unforeseen Circumstances . . . . . . . . . 4
Section 1.21. Vehicles . . . . . . . . . . . . . . . . . 5
ARTICLE II. EMPLOYMENT OF CONTRACTOR . . . . . . . . . . . 5
ARTICLE III. TERM OF AGREEMENT . . . . . . . . . . . . . . . 5
Section 3.01. Term . . . . . . . . . . . . . . . . . . . 5
Section 3.02. Termination by the City . . . . . . . . . 5
Section 3.03. Termination by the Contractor . . . . . . 6
Section 3.04. Termination for Failure of Funding . . . . 6
ARTICLE IV. REPRESENTATIONS OF CONTRACTOR, PARTNERS AND
PARENT COMPANIES . . . . . . . . . . . . . . . 6
Section 4.01. Partnership; Authorization; etc. . . . . . 6
Section 4.02. Litigation . . . . . . . . . . . . . . . . 7
Section 4.03. No Default . . . . . . . . . . . . . . . . 8
Section 4.04. Inspection and Review of AWT Facilities. . .8
Section 4.05. Accuracy of Contractor Representations . . 8
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF CITY . . . . 9
Section 5.01. Organization; Authorization; etc. . . . . 9
Section 5.02. Litigation. . . . . . . . . . . . . . . . 9
Section 5.03. No Default. . . . . . . . . . . . . . . 10
Section 5.04. Compliance with Law. . . . . . . . . . . 10
Section 5.05. Accuracy of City Representations. . . . 10
Section 5.06. AWT Facilities. . . . . . . . . . . . . 11
ARTICLE VI. COVENANTS OF THE CONTRACTOR; CITY CONSENTS AND
COOPERATION . . . . . . . . . . . . . . . . . 11
Section 6.01. Control of Partnership . . . . . . . . . 11
<PAGE>
Section 6.02. Assignment of Partnership Interests . . 11
Section 6.03. No Amendments to Partnership Agreement . 11
Section 6.04. Restrictions on Subcontracting . . . . . 11
Section 6.05. Compliance with Law . . . . . . . . . . 12
Section 6.06. Environmental Compliance . . . . . . . . 12
Section 6.07. Delivery of Reports; Cooperation with
City . . . . . . . . . . . . . . . . . . 13
Section 6.08. Meetings with CCO . . . . . . . . . . . 13
Section 6.09. Transition . . . . . . . . . . . . . . . 13
Section 6.10. Adequate Staffing . . . . . . . . . . . 13
Section 6.11. Odor Control . . . . . . . . . . . . . . 14
Section 6.12. Predictive, Preventive, Corrective and
Routine Maintenance . . . . . . . . . . 14
Section 6.13. Training of AWT Employees . . . . . . . 14
Section 6.14. Safety and Protection . . . . . . . . . 15
Section 6.15. Community Relations and Training Center 15
Section 6.16. Process and Operational Changes . . . . 15
Section 6.17. Minority and Women-Owned Business
Participation . . . . . . . . . . . . . 16
Section 6.18. Dechlorination . . . . . . . . . . . . . 16
Section 6.19. Partners to Pursue Wastewater
Privatization Opportunities . . . . . . 16
Section 6.20. Wet Weather Operating Plan . . . . . . . 16
ARTICLE VII. MAINTENANCE AND OPERATIONS . . . . . . . . . 16
Section 7.01. Operation of the AWT Facilities . . . . 17
Section 7.02. Maintenance of the AWT Facilities . . . 21
Section 7.03. Repair and Replacement Fund . . . . . . 22
Section 7.04. Capital Expenditures . . . . . . . . . . 24
Section 7.05. Inventory . . . . . . . . . . . . . . . 24
Section 7.06. Vehicles . . . . . . . . . . . . . . . . 25
Section 7.07. Reporting Requirements . . . . . . . . . 25
ARTICLE VIII. COMPENSATION . . . . . . . . . . . . . . . . 25
Section 8.01. Annual Fee . . . . . . . . . . . . . . . 25
Section 8.02. Utility Savings . . . . . . . . . . . . 26
Section 8.03. Adjustment for Hydraulic and Organic
Loadings . . . . . . . . . . . . . . . . 26
Section 8.04. Accounting System and Financial Data . . 26
Section 8.05. Capital Improvement Plan . . . . . . . . 26
Section 8.06. Regulatory Adjustments . . . . . . . . . 27
Section 8.07. Additional Services . . . . . . . . . . 27
ARTICLE IX. PERSONNEL . . . . . . . . . . . . . . . . . . 28
Section 9.01. Contractor to Interview AWT Employees . 28
Section 9.02. Comparable Employment . . . . . . . . . 28
Section 9.03. Personnel Changes by Contractor . . . . 28
Section 9.04. Worker Assistance Program . . . . . . . 29
Section 9.05. Nondiscrimination in Employment . . . . 29
Section 9.06. No Restriction on Employment . . . . . . 29
Section 9.07. City not Employer . . . . . . . . . . . 29
ARTICLE X. DEFAULTS AND REMEDIES . . . . . . . . . . . . 30
Section 10.01. Event of Default . . . . . . . . . . . . 30
<PAGE>
Section 10.02. Notice and Cure . . . . . . . . . . . . 30
Section 10.03. Remedies . . . . . . . . . . . . . . . . 31
Section 10.04. Extraordinary Event of Default . . . . . 31
ARTICLE XI. LIMITATIONS . . . . . . . . . . . . . . . . . 32
Section 11.01. Possession of AWT Facilities . . . . . . 32
Section 11.02. Access to the AWT Facilities . . . . . . 32
Section 11.03. Control . . . . . . . . . . . . . . . . 32
ARTICLE XII. DISPUTE RESOLUTION . . . . . . . . . . . . . 32
ARTICLE XIII. EXPANSION AND MODIFICATION . . . . . . . . . 33
Section 13.01. Purpose . . . . . . . . . . . . . . . . 33
Section 13.02. Notice and Negotiation . . . . . . . . . 33
Section 13.03. Absence of Agreement . . . . . . . . . . 33
ARTICLE XIV. INSURANCE . . . . . . . . . . . . . . . . . . 33
Section 14.01. Contractor to Provide Insurance . . . . 33
Section 14.02. Special Conditions . . . . . . . . . . . 34
ARTICLE XV. INDEMNIFICATION . . . . . . . . . . . . . . . 34
Section 15.01. Contractor to Indemnify City . . . . . . 34
Section 15.02. City to Indemnify Contractor . . . . . . 35
Section 15.03. Fines and Penalties . . . . . . . . . . 35
Section 15.04. Co-Negligence . . . . . . . . . . . . . 35
Section 15.05. Demand for Indemnification . . . . . . . 35
Section 15.06. Survival of Obligations . . . . . . . . 36
ARTICLE XVI. MISCELLANEOUS . . . . . . . . . . . . . . . . 36
Section 16.01. Entire Agreement and Amendment . . . . . 36
Section 16.02. Waiver . . . . . . . . . . . . . . . . . 37
Section 16.03. City's Ability to Waive Certain
Provisions . . . . . . . . . . . . . . . 37
Section 16.04. Remedies . . . . . . . . . . . . . . . . 37
Section 16.05. Controlling Law . . . . . . . . . . . . 37
Section 16.06. Notices . . . . . . . . . . . . . . . . 37
Section 16.07. Binding Nature of Agreement; No
Assignment . . . . . . . . . . . . . . . 39
Section 16.08. Nature of Relationship . . . . . . . . . 40
Section 16.09. Execution in Counterparts . . . . . . . 40
Section 16.10. Provisions Separable . . . . . . . . . . 40
Section 16.11. Section and Paragraph Headings . . . . . 40
Section 16.12. Gender . . . . . . . . . . . . . . . . . 40
Section 16.13. Sections . . . . . . . . . . . . . . . . 40
Section 16.14. Number of Days . . . . . . . . . . . . . 40
Section 16.15. Consents . . . . . . . . . . . . . . . . 41
<PAGE>
THIS AGREEMENT FOR THE OPERATION AND MAINTENANCE OF THE
CITY OF INDIANAPOLIS, INDIANA, ADVANCED WASTEWATER TREATMENT
FACILITIES ("Agreement"), dated as of December 20, 1993, and
executed by (i) the City of Indianapolis ("City"), acting by
and through the Department of Public Works of the City of
Indianapolis ("Department"), (ii) White River Environmental
Partnership, an Indiana general partnership having its
principal place of business in Indianapolis, Indiana
("Contractor"), (iii) LAH White River Corporation, JMM White
River Corporation and IWC Services, Inc. (collectively,
"Partners"), and (iv) IWC Resources Corporation, GWC
Operational Services, Inc., JMM Operational Services, Inc.,
Lyonnaise American Holdings, Inc., Lyonnaise des Eaux-Dumez,
GWC Corporation ("GWC") and Montgomery Watson Americas, Inc.
(collectively, "Parent Companies"),
WITNESSETH
PREAMBLE
WHEREAS, the City owns and is responsible for the
operation and maintenance of the Belmont and Southport Advanced
Wastewater Treatment Facilities (collectively, "AWT
Facilities," as described in Appendix "A" hereto); and
WHEREAS, the City desires to have the AWT Facilities
maintained and operated in the most efficient manner possible,
while complying with all Federal, State and local laws, rules
and regulations; and
WHEREAS, the efficient operation and maintenance of the
AWT Facilities require unique and specialized professional
skills together with experience in new technologies and
engineering expertise; and
WHEREAS, the City desires to maintain ownership of the
AWT Facilities and to contract for operation and maintenance of
the AWT Facilities with a private contracting firm which has
the specialized professional skills and experience to operate
the AWT Facilities in the most efficient manner possible; and
WHEREAS, the Contractor responded to the Request for
Proposal issued by the City for operation and maintenance of
the AWT Facilities; and
WHEREAS, the Contractor has available to it experienced
professionals in the business of supplying operation,
maintenance and management services for facilities such as the
AWT Facilities; and
WHEREAS, the City and the Contractor wish to enter into
this Agreement setting forth their respective rights, duties,
privileges and responsibilities,
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises
and commitments hereinafter described, the City and the
Contractor AGREE as follows:
ARTICLE I. DEFINITIONS
Section 1.01. Agreement Year. The period commencing
with the Effective Date and ending at 12:00 midnight on the
anniversary date of the Effective Date and, for each successive
Agreement Year thereafter, the period commencing on
12:00 midnight on the anniversary date of the Effective Date
and ending on 12:00 midnight of the next succeeding anniversary
date of the Effective Date.
Section 1.02. Annual Fee. The fee as described in
Article VIII of this Agreement.
Section 1.03. AWT Facilities. The City of
Indianapolis Advanced Wastewater Treatment Facilities,
consisting of the Belmont Plant and the Southport Plant, and
any additions to and interconnection between the two plants or
replacements thereof (including Capital Improvements), owned by
the City and operated and maintained by the Contractor, all as
further described in Appendix A to this Agreement.
Section 1.04. Beginning Inventory. The spare parts,
tools, materials and supplies at the AWT Facilities on the
Effective Date, which are intended to be used by the Contractor
and are identified in Appendix C to this Agreement.
Section 1.05. Capital Expenditures. The cost of new
Capital Improvements and major repairs and replacements,
including material and contract labor, for the AWT Facilities,
the individual cost of which exceeds $25,000.
Section 1.06. Capital Improvements. The improvements
to the AWT Facilities made pursuant to the City's Capital
Improvement Plan, including all Equipment and components
thereof, and major repairs and replacements to the AWT
Facilities resulting from Capital Expenditures.
Section 1.07. Contractor's Proposal. The Proposal for
Contract Operations and Maintenance of the Advanced Wastewater
Treatment Facilities submitted by the Contractor to the City,
August 26, 1993, as supplemented and amended by letters from
the Contractor to Joseph E. DeGroff, on the City's behalf,
dated November 5 and November 9, 1993.
Section 1.08. Contract Compliance Officer ("CCO").
The person selected by the City to act as the liaison between
the City and the Contractor for purposes of this Agreement.
<PAGE>
Section 1.09. Effective Date. The date on which the
Contractor takes responsibility for the day-to-day operation
and maintenance of the AWT Facilities, which date shall be
January 30, 1994, unless mutually agreed otherwise by the City
and the Contractor.
Section 1.10. Equipment. All Vehicles, machinery,
structures, components, parts, and materials contained within
the AWT Facilities which are utilized in the operation and
maintenance of the AWT Facilities.
Section 1.11. Event of Default. The occurrences
described in Article X hereof which constitute an Event of
Default under this Agreement.
Section 1.12. Extraordinary Event of Default. The
operation and maintenance, or lack thereof, of the AWT
Facilities by the Contractor in such a manner as to create a
situation which poses a potential for a real and serious threat
to the health and public welfare of the City and its citizens,
or which would seriously jeopardize the operational capacity or
integrity of the AWT Facilities.
Section 1.13. For Cause. An act by the Contractor,
not caused by Unforeseen Circumstances, giving the City the
right to terminate the Agreement pursuant to Section 3.02,
including (i) an uncured Event of Default by the Contractor;
(ii) an uncured violation by the Contractor of any Permits,
law, rule or regulation in connection with the operation of the
AWT Facilities or uncured failure to comply with an order of
any court or administrative agency; or (iii) any willful act or
omission which would constitute a crime under applicable law.
Section 1.14. NPDES Permit. Any permit issued to the
City of Indianapolis, in accordance with Section 402 and
related provisions of the Clean Water Act, as amended by
Pub.L. 92-500, Pub.L. 95-217, Pub.L. 95-576, Pub.L. 96-483 and
Pub.L. 97-117 (33 U.S.C. 1251 et seq.), and Public Law 100,
Acts of 1972, as amended (Indiana Code 13-7, et seq.), and
implementing regulations, to authorize the discharges from the
AWT Facilities, which is in effect at any time during the term
of this Agreement, including any revision or modification to
such a permit or any superseding permit which is issued and
becomes effective during the term of this Agreement. As of the
Effective Date, "NPDES Permit" means, with respect to the
Belmont plant, NPDES Permit No. IN 0023183, issued by the
Indiana Department of Environmental Management (IDEM) to the
City on or about September 30, 1985, and, with respect to the
Southport plant, NPDES Permit No. IN 0031950, issued by the
IDEM to the City on or about September 30, 1985.
Section 1.15. Operation and Maintenance Costs. All
direct costs and expenses of operation and maintenance of the
AWT Facilities, including, but not limited to, utility costs,
<PAGE>
energy costs, chemicals, direct labor, salaries and wages,
employee benefits, direct overhead, repair and maintenance of
Equipment, parts, materials and supplies, grounds, roads,
gates, fences, laboratory operation and related expenses, taxes
(excluding federal income and state tax of the Contractor),
invoice and collection expenses, legal, accounting and other
professional fees, insurance and bonding, licenses and permits,
costs of processing, transportation and disposal of all sludge
within the Belmont Plant and all other costs not described
above associated with the operation and maintenance of the AWT
Facilities.
Section 1.16. Partnership Agreement. The Partnership
Agreement, dated as of August 20, 1993, by and among LAH White
River Corporation, an Indiana corporation, JMM White River
Corporation, an Indiana corporation, and IWC Services, Inc., an
Indiana corporation.
Section 1.17. Permits. All regulatory permits and
licenses to which the AWT Facilities and their operation are
subject, as listed in Appendix D hereto, including, without
limitation, the City's NPDES Permits.
Section 1.18. Repair and Replacement Fund. The funds
established by the City pursuant to this Agreement to provide
for the costs of major repairs and maintenance, exclusive of
Capital Expenditures, and other non-repetitive, non-routine
activities required for the operational continuity of the AWT
Facilities, continued compliance with local, state and federal
ordinances, laws and regulations, and safety or continued
performance generally due to failure, or to avert the failure,
of the AWT Facilities or some component or integral part
thereof. The Repair and Replacement Fund shall not include
those activities set forth in the schedule referenced in
Section 6.12 and shall not be used to cover any direct or
indirect labor costs of the Contractor, except as agreed upon
in advance by the City and Contractor.
Section 1.19. Termination Date. The date on which
this Agreement terminates and is no longer in force or effect,
which date shall be five years from the Effective Date unless
earlier terminated as provided herein.
Section 1.20. Unforeseen Circumstances. Any event or
condition which has an effect on the rights or obligations of
the parties under this Agreement, or upon the AWT Facilities,
including their operation and maintenance, which is beyond the
reasonable control of the party relying thereon as
justification for a delay in, or non-performance of, action
required under this Agreement, including but not limited to
(i) an act of God, landslide, lightning, earthquake, tornado,
fire, explosion, flood (beyond the limits set forth in the
NPDES Permit), acts of a public enemy, war, blockade, sabotage,
insurrection, riot or civil disturbance; (ii) preliminary or
<PAGE>
final order of any local, state or federal court,
administrative agency or governmental body of competent
jurisdiction; (iii) any change in law, regulation, rule,
requirement, interpretation or statute adopted, promulgated,
issued or otherwise specifically modified or changed by any
local, state or federal governmental body; (iv) labor disputes,
strikes, work slowdowns or work stoppages provided that the
Contractor undertakes its best efforts to resolve such matters
through any lawful means; (v) an increase in the hydraulic
and/or organic loading to be treated beyond the capacity of the
AWT Facilities as such capacity is described in Appendix B; and
(vi) loss of, or inability to obtain, service from a utility
necessary to the operation and maintenance of the AWT
Facilities.
Section 1.21. Vehicles. All cars, trucks, vans or
other modes of transportation used in connection with operation
of the AWT Facilities for transporting people or things or used
for other necessary functions in the operation or maintenance
of the AWT Facilities.
ARTICLE II. EMPLOYMENT OF CONTRACTOR
The City hereby contracts with the Contractor for the
professional services and for the compensation hereinafter
described, which services the Contractor hereby agrees to
render in accordance with the terms of this Agreement,
including the attached appendices.
ARTICLE III. TERM OF AGREEMENT
Section 3.01. Term. The term of this Agreement
("Term") shall commence on the Effective Date and expire on the
fifth anniversary of the Effective Date, unless extended or
sooner terminated in accordance with the provisions hereof.
Section 3.02. Termination by the City. The City shall
have the option, exercisable at any time, to terminate this
Agreement For Cause, by giving written notice ninety (90) days
prior to the date of said termination to the Contractor. In
addition, any time following the third anniversary of the
Effective Date, the City shall have the option to terminate
this Agreement without cause by giving notice ninety (90) days
prior to the date of said termination to the Contractor.
Notwithstanding this Section 3.02, the City shall have
at all times the right to terminate this Agreement as a result
of an Extraordinary Event of Default pursuant to Section 10.04
hereof.
Section 3.03. Termination by the Contractor. The
Contractor shall have the right to terminate this Agreement
<PAGE>
only after an Event of Default by the City, pursuant to
Article X hereof, which remains uncured. In the event of an
uncured Event of Default by the City, the Contractor, subject
to the provisions of Article XII, may terminate this Agreement
by giving notice to the City of its election at least one
hundred and eighty (180) days prior to the date of termination.
Section 3.04. Termination for Failure of Funding. If
sufficient funds for the City's performance of this Agreement
are not appropriated, the City will have the right to terminate
this Agreement by giving written notice documenting the lack of
funding, in which case, unless otherwise agreed to by the
parties, this Agreement will terminate and become null and void
effective the date of such notice. The City agrees that it
will make its best efforts to obtain sufficient funds for
performance of this Agreement, including, but not limited to,
including in its budget for each fiscal period during the term
hereof a request for sufficient funds to meet its obligations
hereunder in full. In the event that the City terminates this
Agreement as provided in this Section, the Contractor shall be
reimbursed by the City for its costs or liabilities incurred in
connection with its performance of this Agreement prior to its
receipt of said notice. The Contractor shall also be
reimbursed by the City for its direct costs in transitioning
the AWT Facilities back to the City upon proper documentation
of the same to the City. The remedies provided for in this
paragraph are not intended to be exclusive and shall not be in
lieu of any other remedy available to the Contractor, the
Partners or the Parent Companies.
ARTICLE IV. REPRESENTATIONS OF CONTRACTOR,
PARTNERS AND PARENT COMPANIES
The Contractor, Partners and Parent Companies each
represent to the City as follows as respects their own
situation:
Section 4.01. Partnership; Authorization; etc.
(a) The Contractor is a general partnership duly
formed and existing under the laws of the State of
Indiana, is duly authorized to conduct its business in
the State of Indiana and all other states where its
activities require such authorization, and has the power
to enter into this Agreement and any other related
documents to which the Contractor is a party.
(b) The execution and delivery of this Agreement
was duly authorized by all necessary partnership or
corporate action of the Contractor, the Partners and the
Parent Companies. The Contractor, the Partners and the
Parent Companies each has full power and authority to
execute and deliver this Agreement and to perform its
<PAGE>
respective obligations under this Agreement. This
Agreement is a legal, valid and binding obligation of
the Contractor, the Partners and the Parent Companies,
enforceable against the Contractor, the Partners and the
Parent Companies in accordance with its terms.
(c) The execution and delivery of this Agreement
and other related documents to which the Contractor, the
Partners and the Parent Companies are a party, the
consummation of the transactions contemplated thereby,
and the fulfillment of the terms and conditions thereof
do not and will not conflict with or result in a breach
of any of the terms or conditions of the Partnership
Agreement, articles of incorporation, by-laws, any
restriction or any agreement or instrument to which the
Contractor, the Partners and the Parent Companies are
now a party or by which they are bound or to which any
property of the Contractor, the Partners and the Parent
Companies are subject, and do not and will not
constitute a default under any of the foregoing, or, to
the best of the knowledge of the Contractor, the
Partners and the Parent Companies, cause any of them to
be in violation of any order, decree, statute, rule or
regulation of any court or any state or federal
regulatory body having jurisdiction over the Contractor,
the partners and the Parent Companies or their
properties, and do not and will not result in the
creation or imposition of any lien, charge or
encumbrance of any nature upon any of the property or
assets of the Contractor, the Partners and the Parent
Companies contrary to the terms of any instrument or
agreement to which any of them are a party or by which
they are bound.
Section 4.02. Litigation.
(a) Except for actions, suits, claims,
investigations and proceedings identified in
Schedule 4.02 attached to this Agreement, (i) there are
no actions, suits, claims, investigations or proceedings
pending or threatened against the Contractor, the
Partners or the Parent Companies in any court or before
any governmental, regulatory or administrative agency,
instrumentality or authority, arbitration board or
tribunal that relate to their operation and maintenance
of wastewater treatment facilities in North America or
would materially affect their entry into, or performance
of, this Agreement and (ii) the Contractor, the Partners
and the Parent Companies are not charged by any
governmental agency, instrumentality or authority with a
material violation of, or threatened by any governmental
agency, instrumentality or authority with a charge of a
violation of, any federal, state, county or municipal
law or regulation in a manner that relates to their
<PAGE>
operation and maintenance of wastewater treatment
facilities in North America or would materially affect
their entry into, or performance of, this Agreement.
(b) The Contractor, the Partners and the Parent
Companies are not subject to any judgment, order,
injunction or other judicial or administrative mandate
of any court, arbitrator or governmental, regulatory or
administrative agency, instrumentality or authority that
would materially affect their entry into, or performance
of, this Agreement.
Section 4.03. No Default. Except as otherwise
disclosed in Schedule 4.03 attached to this Agreement, the
Contractor, the Partners or the Parent Companies is not in
default under, and no condition exists that with notice or
lapse of time or both would constitute a default under, (i) any
mortgage, loan agreement, lease, lease purchase, indenture or
evidence of indebtedness for borrowed money to which the
Contractor, the Partners or the Parent Companies is a party or
by which any material amount of the assets of the Contractor,
the Partners or the Parent Companies is bound that would
materially affect their entry into, or performance of, this
Agreement or (ii) any judgment, order, injunction, or other
judicial or administrative mandate of any court, arbitrator or
governmental agency or instrumentality, which default or
potential default could reasonably be expected to have a
material adverse effect on the Contractor, the Partners or the
Parent Companies .
The Contractor, Partners and Parent Companies jointly
and severally represent that:
Section 4.04. Inspection and Review of the AWT
Facilities. The Contractor has had the opportunity to review
and inspect the AWT Facilities, to review and inspect Permits
and permit applications regarding the AWT Facilities, to review
and inspect other documentation regarding the operation and
maintenance of the AWT Facilities, and has been afforded the
opportunity to meet with and ask questions of and receive
answers from representatives of the City connected with the AWT
Facilities. The Contractor's Proposal was based upon those
reviews and inspections and the City's information so provided.
Section 4.05. Accuracy of Contractor Representations.
The representations made by the Contractor in its Statement of
Qualifications ("SOQ"), its Proposal and in all other
information and documentation submitted to the City were true
and accurate as of the date they were made and are true and
accurate as of the date of this Agreement. The representations
made by the Contractor in its SOQ and its Proposal did not
contain any material misrepresentations or omissions of any
material facts as of the date they were made and the
representations made therein and the representations made
<PAGE>
herein do not contain any material misrepresentations or
omissions of any material facts as of the date of this
Agreement.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF CITY
The City represents and warrants to the Contractor,
Partners and Parent Companies that:
Section 5.01. Organization; Authorization; etc.
(a) The City is a municipal corporation duly organized and
existing under the laws of the State of Indiana and is duly
authorized and empowered to enter into and perform this
Agreement and to execute all documents related thereto.
(b) The execution and delivery of this Agreement was
duly authorized by all necessary governmental action, none of
which action has been rescinded or otherwise modified. This
Agreement is a legal, valid and binding obligation of the City,
enforceable against the City in accordance with its terms.
(c) The execution and delivery of this Agreement and
any other related document to which the City is a party, the
consummation of the transactions contemplated herein, and the
fulfillment of the terms and conditions hereof do not and will
not (i) conflict with or result in a breach of any of the terms
or conditions of any restriction, agreement or instrument to
which the City is a party or by which it is bound, or
(ii) constitute a default under any of the foregoing, or, to
the best of the knowledge of the City, cause it to be in
violation of any order, decree, statute, rule or regulation of
any court or state or federal regulatory body having
jurisdiction over the City or its properties.
Section 5.02. Litigation. (a) Except for actions,
suits, claims, investigations and proceedings disclosed in
Schedule 5.02 attached to this Agreement, (i) there are no
actions, suits, claims, investigations or proceedings pending
or threatened against the City in any court or before any
governmental, regulatory or administrative agency,
instrumentality or authority, arbitration board or other
tribunal that would materially affect the City's entering into,
or performance of, this Agreement and (ii) the City is not
charged by any governmental agency, instrumentality or
authority with a material violation of, or threatened by any
governmental agency, instrumentality or authority with a charge
of a violation of, any federal, state, county or municipal law
or regulation that would materially affect the City's entering
into, or performance of, this Agreement.
(b) The City is not subject to any judgment, order,
injunction or other judicial or administrative mandate of any
court, arbitrator or governmental, regulatory or administrative
<PAGE>
agency, instrumentality or authority that would materially
affect the City's entering into, or performance of, this
Agreement.
Section 5.03. No Default. Except as otherwise
disclosed in Schedule 5.03 attached to this Agreement, the City
is not in default under, and no condition exists that with
notice or lapse of time or both would constitute a default
under, (i) any mortgage, loan agreement, lease, lease purchase,
indenture or evidence of indebtedness for borrowed money to
which the City is a party or by which any material amount of
the assets of the City is bound that would materially affect
the City's entering into, or performance of, this Agreement, or
(ii) any judgment, order, injunction, rule, regulation or other
judicial or administrative mandate of any court, arbitrator or
governmental agency or instrumentality, which default or
potential default could reasonably be expected to have a
material adverse effect on the City's entering into, or
performance of, this Agreement.
Section 5.04. Compliance with Law. Except as
otherwise disclosed in Schedule 5.04 attached to this
Agreement, the City is, to its knowledge, now, and at the
Effective Date shall be, in compliance with the terms of all
applicable laws, regulations, Permits, orders, judgments,
administrative orders, regulations and guidelines adopted or
entered by governmental authority having jurisdiction to do so
in connection with its operation and maintenance of the AWT
Facilities. The City has properly prepared and timely filed
prior to the Effective Date, all permit applications required
by any applicable law, rule or regulation. Except as otherwise
disclosed in a schedule attached to this Agreement, there are
no outstanding complaints, orders, citations, notices or orders
of violation or non-compliance issued to the City relating to
the operation, maintenance, or condition of the AWT Facilities.
The City shall be responsible for any fines, penalties or other
costs connected with a violation of any such law, regulation,
guideline, permit, judgment or order in effect or in existence
on the Effective Date.
Section 5.05. Accuracy of City Representations. The
facts and representations stated and made by the City in its
Request for Proposal and in the information and data provided
by the City in connection with that Request for Proposal and
all other information and documentation submitted to the
Contractor by the City were true and accurate as of the date
they were made or submitted and are true and accurate as of the
date of this Agreement. In the event that the performance of
any service under this Agreement by the Contractor shall
require the Contractor to use, consider, or evaluate any
designs, specifications, contract documents, reports, studies
or other services provided to the City or Contractor by another
architect, engineer or consultant, the Contractor shall take
reasonable steps to verify the technical accuracy of such
<PAGE>
documents. The representations made by the City did not
contain any material misrepresentations or omissions of any
material facts as of the date they were made, and the
representations made therein and the representations made
herein do not contain any material misrepresentations or
omissions of any material fact as of the date of this
Agreement.
Section 5.06. AWT Facilities. Except as identified in
Schedule 5.06 attached to this Agreement, the AWT Facilities
are now, and at the Effective Date will be, in good working
order and condition. Prior to the Effective Date, the City
shall use its best efforts to maintain the AWT Facilities in
good repair and operating condition, including, but not by way
of limitation, making any necessary or advisable major repairs
or Capital Improvements to said Facilities.
ARTICLE VI. COVENANTS OF THE CONTRACTOR; CITY
CONSENTS AND COOPERATION
The following covenants and conditions shall apply
during the Term:
Section 6.01. Control of Partnership. As of the
Effective Date, IWC Services, Inc. is a general partner of the
partnership with an initial percentage share of partnership
capital of 52%. IWC Services, Inc. shall remain a general
partner of the partnership and maintain a percentage share of
partnership capital in accordance with the Partnership
Agreement. In addition, IWC Services, Inc. shall be the
Managing Partner of the Contractor.
Section 6.02. Assignment of Partnership Interests.
The Contractor shall not admit new partners, nor shall the
Partners assign any of their interest in the partnership to
another entity without the prior written consent of the City.
Section 6.03. No Amendments to Partnership Agreement.
The Contractor has provided a copy of the Partnership Agreement
to the City. The Partners shall not amend, modify, rescind,
revoke, or otherwise alter their Partnership Agreement without
the written consent of the City.
Section 6.04. Restrictions on Subcontracting. The
Contractor shall not subcontract any of its management
responsibilities with regard to operation and maintenance of
the AWT Facilities without the prior written consent of the
City. The City's consent to any subcontract arrangement shall
not act as a release or waiver of (i) the Contractor's,
Partner's or Parent Companies' liabilities under this
Agreement, or (ii) the provisions of Section 6.02 hereof.
<PAGE>
Section 6.05. Compliance with Law. The Contractor
shall comply with all laws, regulations, guidelines, orders,
judgments, decrees or other executive, legislative, judicial or
administrative mandates adopted or entered by governmental
authority having jurisdiction to do so in connection with the
operation and maintenance of the AWT Facilities. The City
shall cooperate with, and assist, the Contractor in gathering
all reports, forms, statements and other documentation required
by local, state and federal authorities. Such information
shall be provided to the Contractor in a timely manner so as to
allow the Contractor adequate time to prepare and submit any
necessary documentation within required deadlines.
Section 6.06. Environmental Compliance.
(a) In addition to the general compliance with laws
as set forth in Section 6.05, the Contractor shall
comply with the terms of all applicable environmental
laws, regulations, Permits, orders, judgments,
administrative orders and regulations in connection with
the operation and maintenance of the AWT Facilities.
(b) The Contractor shall be responsible for the
preparation, on behalf of the City, of any and all
permit applications related to Process Changes, as
defined in Section 6.16. Such applications shall be
forwarded to the CCO for review and filing by the City.
Other permit applications, such as those for routine
permit renewal, shall be prepared and filed by the
City. The Contractor, however, shall advise the City on
the need for such other applications and shall assist
the City in the preparation of such applications as
necessary to assure that information to be submitted is
representative of, and accurately describes, the
operations of the AWT Facilities. As an "Additional
Service," the City may request consultation with the
Contractor for its professional opinions and assistance
in evaluating other technical issues relating to a
permit application.
(c) The Contractor shall implement appropriate
operating processes, environmental and monitoring
reports, and shall file such reports with the CCO. The
Contractor shall maintain the current laboratory
analysis program and present sampling program in
accordance with the Standard Methods for Water and
Wastewater Analysis Procedures or in accordance with the
other testing requirements of the water quality and
NPDES waste discharge permit in effect at the Effective
Date. The Contractor shall familiarize itself with the
monitoring reports required to be made by the City as
specified in the City's NPDES permits and furnish to the
CCO copies of all completed reports filed in accord with
that permit. The Contractor shall in a timely manner
<PAGE>
prepare and file any wastewater treatment plant
monitoring reports that are required by any governmental
agency having jurisdiction, and shall provide copies to
the City.
(d) Notwithstanding any other provisions of this
Agreement, the City shall have the sole responsibility
for enforcement of its ordinances, including, among
others, its ordinances for industrial pretreatment.
Section 6.07. Delivery of Reports; Cooperation with
City. The Contractor shall deliver to the CCO at its cost
reports required to be delivered pursuant to this Agreement,
together with additional reports reasonably requested by the
CCO. In addition, the Contractor shall cooperate and assist
the City in gathering of the information and documentation
necessary to complete reports, forms, statements, and other
documentation required by local, State and federal authorities.
Such information shall be provided to the City in a timely
manner to allow the City adequate time to prepare and submit
any necessary documentation within required deadlines.
Section 6.08. Meetings with CCO. The City shall
designate one or more persons to act as the CCO for purposes of
this Agreement. The Contractor shall meet on a regular basis
with, and upon the reasonable request of, the CCO.
Section 6.09. Transition. The Contractor and the City
shall take all necessary steps to ensure a smooth transition on
the Effective Date. At least thirty (30) days prior to the
Effective Date, the Contractor shall provide the City with a
written transition plan. The transition plan should include
such elements as (i) an orientation process for employees,
(ii) career planning workshops for employees,
(iii) interviewing prospective employees, and (iv) collective
bargaining with the current union. Upon receipt of notice of
termination from the City, the Contractor shall also provide,
in good faith, all transition services reasonably necessary to
transfer operation and maintenance responsibility back to the
City or to a third party.
Section 6.10. Adequate Staffing. The Contractor shall
employ and retain an adequate staff in order to operate and
maintain the AWT Facilities within design specifications and
with performance levels at a level at or above the performance
levels achieved on a continuous basis when the AWT Facilities
were operated and maintained by the City.
Section 6.11. Odor Control. The Contractor shall use
its best efforts to contain and control odors emitted from the
AWT Facilities. The City acknowledges, however, that its
efforts to date to control odors have been, and are currently,
concentrating on off-site effects and that commencing on the
Effective Date there is a need to increase attention to the
<PAGE>
problem of on-site odor control. The City agrees that Capital
Expenditure will be required to address this problem, and the
Contractor and the City mutually commit to address odor control
as soon as possible.
Section 6.12. Predictive, Preventive, Corrective and
Routine Maintenance. The Contractor shall implement its
Maintenance Management Program (as defined in the Contractor's
Proposal which is incorporated herein by reference) covering
predictive, preventive, corrective and routine maintenance.
Predictive maintenance tasks shall include vibration analyses,
transfer oil and equipment lubrication testing, motor winding
testing and thermographic profiles. The preventive maintenance
program shall use manufacturer's recommendations as provided by
the City and/or the experience of the Contractor's maintenance
staff with similar equipment to schedule necessary care. The
Contractor's routine maintenance program shall include
landscaping, groundskeeping, painting, building maintenance,
road upkeep and other such routine maintenance activities at
the AWT Facilities. Within one hundred eighty (180) days of
the Effective Date, the Contractor shall submit to the City for
its agreement a proposed schedule of predictive, preventive,
corrective and routine maintenance, which schedule shall
thereafter be updated from time to time as agreed upon by the
City and the Contractor.
The City shall maintain all existing warranties,
guarantees, contracts, easements and licenses ("operating
documents") that have been granted to the City as the owner or
lessor of the AWT Facilities and Equipment and supply to the
Contractor all other existing operating documents. The City
shall make available to the Contractor such operating
documents, as well as treatment facility, collection system
drawings, calculations, maintenance manuals, operational
records, logs, reports, submittals, effluent test records,
repair records, cost records, audits and general correspondence
which may be in the City's possession or that of its agents,
related to the design, condition or operation of the AWT
Facilities. The Contractor shall take no action which would
invalidate or void the operating documents.
Section 6.13. Training of AWT Employees. The
Contractor shall implement a training program for the employees
of the AWT Facilities. A written outline of such training
program shall be provided to the CCO after the Contractor has
completed its individual employee career program and within one
hundred and eighty (180) days after the Effective Date.
Section 6.14. Safety and Protection. The Contractor
shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection
with the operation and maintenance of the AWT Facilities. The
Contractor shall take reasonable and prudent precautions for
the safety of, and to prevent injury, or loss, to all employees
<PAGE>
of the Contractor and other persons at the AWT Facilities. The
Contractor's safety program shall comply with all applicable
local, state and federal guidelines, rules, regulations and
laws. The Contractor shall designate a responsible
representative on site at the AWT Facilities whose duty shall
be the prevention of accidents.
Section 6.15. Community Relations and Training Center.
The Contractor shall take an active role in the community of
Indianapolis and institute programs for the education of the
citizens thereof with respect to the operation of the AWT
Facilities. As a part of this commitment, the Contractor shall
create and locate a National Training Center in Indianapolis
and shall cause LAH to commit One Million Dollars ($1,000,000)
to be invested during the Term for cooperative studies on
advanced wastewater and environmental topics. The Contractor
shall contribute at least five percent (5%) of its pre-tax
profits on an annual basis to civic or other community
organizations to further support economic development
initiatives, such initiatives to be mutually agreed upon by the
City and Contractor.
Section 6.16. Process and Operational Changes.
Process and operational changes may be made during the course
of this Agreement. "Process Changes" are adjustments to major
components of the AWT Facilities, such as land application of
sludge and use of chlorination. No Process Change will be made
without the prior written consent of the City. "Operational
Changes" are adjustments in routine operating procedures.
Operational Changes will be made as a matter of routine
practice by the Contractor and will not require the prior
approval of the City. However, the Contractor will inform the
City of such Operational Changes in its monthly reports to the
CCO.
The Contractor shall be responsible for all risks
associated with any Process Change proposed and implemented by
it and/or any Operational Changes implemented as a part of the
operation and maintenance of the AWT Facilities, including,
without limitation, the risk of obtaining and complying with
all applicable Permits. As a part of any proposal effecting a
Process Change, other than a change identified in the
Contractor's Proposal, the Contractor shall propose a
prospective reduction in the Annual Fee (in the form of a sum
certain agreed to by the City), in order to permit the City to
share a portion of any anticipated cost savings associated with
the proposed change. The Contractor agrees to use its best
efforts to propose and implement as soon as reasonably possible
a beneficial sludge reuse or other land application program
("Sludge Program"). The City shall be entitled to all cost
savings resulting from the Sludge Program.
Section 6.17. Minority and Women-Owned Business
Participation. The Contractor shall use its best efforts to
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utilize Indianapolis-based minority-owned and women-owned
businesses in connection with the operation and maintenance
services to be provided under this Agreement in an amount equal
to at least twelve percent (12%) (10% MBE, 2% WBE) of the
purchases/contracts available for placement on an annual basis,
with an overall goal of eighteen percent (18%) (15% MBE,
3% WBE).
Section 6.18. Dechlorination. Without limiting the
applicability of Section 8.06(b), if at any time, any local,
state or federal administrative agency, court, or any
governmental body of competent jurisdiction, by any order,
decree, judgment, ruling, permit or ordinance, requires
dechlorination with respect to the AWT Facilities, the
Contractor shall be solely responsible for all costs and
expenses necessary to take the required action.
Section 6.19. Partners to Pursue Wastewater
Privatization Opportunities. Consistent with the terms of the
Partnership Agreement, the Partners and Parent Companies shall
use their best efforts to pursue, in their discretion, other
major projects related to operation and maintenance
privatization that may arise in the states of Indiana, Ohio,
Kentucky, Illinois and Michigan. As part of these efforts, the
Partners and the Parent Companies shall pursue such
opportunities through the Contractor or an affiliate thereof.
The headquarters of the Contractor shall be established and
remain in Marion County, Indiana, during the Term.
Section 6.20. Wet Weather Operating Plan. Within one
hundred eighty (180) days after the Effective Date, the
Contractor will develop a Wet Weather Operating Plan ("WWOP")
and submit it to the City for approval. The WWOP will be
designed to eliminate or greatly reduce the bypass of raw
sewage except for conditions exceeding plant hydraulic
capacity. The WWOP shall include monitoring the by-pass
structure level and installation of additional flow metering
devices within the AWT Facilities.
ARTICLE VII. MAINTENANCE AND OPERATIONS
Except as otherwise provided in this Agreement, the
Contractor shall perform all services necessary for the proper
and effective operation and maintenance of the AWT Facilities
in a manner at least as effective as the manner in which the
AWT Facilities were being operated and maintained by the City
on a consistent basis prior to the Effective Date, including,
but not limited to, those services set forth in Sections 7.01
and 7.02. The Contractor shall operate and maintain the AWT
Facilities in a cost-effective and professional manner in
accordance with generally accepted practices for wastewater
treatment, such that, except where prevented from doing so
because of Unforeseen Circumstances, wastewater effluent
discharged from the AWT Facilities and other operational
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characteristics meet the existing and present requirements of
governmental regulatory agencies, including those specified in
the NPDES Permit and within the limits of the operating
capability of the AWT Facilities; provided that (i) at all
times, the AWT Facilities influent shall not contain levels of
biologically toxic substances that cause process interference
or pass through, thereby preventing such requirements from
being met, (ii) the AWT Facilities shall not be rendered
inoperable for any reason beyond the reasonable control of the
Contractor, and (iii) the design capacity of the AWT
Facilities, as described in Appendix A, are not exceeded.
At such times as the capabilities and limits of the AWT
Facilities are exceeded, the Contractor shall take reasonable
steps to either prevent effluent violations or keep the number
and duration of violations to a minimum.
Section 7.01. Operation of the AWT Facilities.
During the Term, the Contractor shall operate the AWT
Facilities on a continuous 24-hours per day, 7 days per week
basis, in compliance with all Permits and all Federal, State
and local laws, rules and regulations. Any Process Change
and/or Operational Change implemented by the Contractor as an
intended cost-saving measure shall be done at the Contractor's
own risk. Operation of the AWT Facilities shall include, but
not be limited to, the following:
(a) The Contractor shall provide or obtain (i) all
personnel and associated wages, salaries, and benefits,
(ii) all chemicals and fuel, (iii) all necessary
inventory to operate and maintain properly the AWT
Facilities at the level required by this Agreement,
(iv) all necessary utilities, and (v) any other services
necessary to operate the AWT Facilities in accordance
with all Permits and applicable laws, regulations and
statutes. The Contractor shall be responsible for the
payment of any fines or penalties arising from the
negligent acts or omissions or willful misconduct of the
Contractor or its agents.
(b) The Contractor shall provide all personnel,
materials, and services necessary to support the
operation and maintenance of the AWT Facilities in the
manner required by this Agreement including, but not
limited to, the following functions: operations,
engineering, laboratory testing, training, computer
control system operation and maintenance,
administration, public relations (in consultation with
the City), purchasing, regulatory compliance and
reporting, transportation, janitorial, security,
residuals management, and general building and grounds
maintenance at the AWT Facilities.
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(c) On the Effective Date, the Contractor shall
commence implementation of the City's existing
Industrial Pretreatment Program ("IPP"), in compliance
with the NPDES Permit and applicable law. Any additions
or modifications to the IPP required by federal or state
law and/or recommended by the Contractor, to be approved
in writing by the City, shall be incorporated into this
Agreement by reference. The IPP shall include, without
limitation, the following: (i) Industrial Survey and
Classification to identify and categorize all commercial
and industrial users of the collection system, (ii) a
review of the City's Industrial Discharge Ordinance to
provide recommended changes and assist the City in
implementing the changes, (iii) implementation of an
Industrial Inspection Program pursuant to which all
existing, significant industrial users shall be
inspected at least once per year and all pertinent
information shall be maintained on record, (iv) the
establishment of an ongoing Industrial Discharge Sample
Collection and Flow Monitoring Program pursuant to which
all industrial users shall be sampled at least once a
year, significant industrial users at least twice per
year, and federal categorical users at least four times
per year, (v) laboratory sample analysis pursuant to
which all industrial users shall be sampled and analyzed
at least once per year to establish uncontrollable
source contributions of metals and the removal
efficiencies of the AWT Facilities, (vi) implementation
of a Small Quantity Generator Program pursuant to which
all potential threats of discharge to the sewer shall be
addressed in writing, (vii) program administration
whereby the Contractor shall perform, on behalf of the
City, all permitting activities in connection with the
Program and modify the City's computer software program
to support the Program activities, (viii) implement the
City's existing Enforcement Response Plan pursuant to
which a detailed plan outlining responsible parties,
enforcement options and/or actions and time frames for
administering those actions shall be prepared in
accordance with the federal EPA guidelines (the City
shall retain all responsibility and authority to
initiate and to prosecute any enforcement action), and
(ix) continue liaison activities to ensure open lines of
communication between all parties through periodic
meetings and to act as the liaison between the City,
regulatory agencies, industrial users and the public.
(d) The Contractor shall transport and handle, in
accordance with applicable law, sludge, grit,
screenings, and other wastes and residues generated by
the AWT Facilities. In reliance upon an IDEM waste
classification dated February 22, 1993 and the IDEM
Special Waste Disposal Approval dated February 10, 1993,
the City warrants that the incinerator ash and sludge
<PAGE>
from the AWT Facilities is not a "hazardous waste,"
"hazardous substance," or "hazardous material," as such
terms are defined in or pursuant to the federal
Resources Conservation Recovery Act (RCRA), 42 U.S.C.
6901 et seq. and Indiana Code 13-7-8.5 or other
applicable law, it being understood that the parties do
not anticipate such wastes and residues ever becoming so
classified under the scope of this Agreement.
(e) The Contractor recognizes the concern of the
City regarding the appearance of the grounds, buildings
and structures and agrees to maintain the cleanliness
and appearance of the AWT Facilities in a professional
manner. The Contractor shall be responsible for
maintenance of the lawn, tree and plant trimming and
miscellaneous maintenance work at the AWT Facilities.
(f) The Contractor shall actively pursue
improvements in effectiveness, efficiency, and the cost
of operations and maintenance of the AWT Facilities and
at least annually or upon written request by the CCO,
evaluate all Equipment and notify the CCO of specific
Capital Expenditure needs.
(g) The Contractor shall maintain a professional,
positive and responsive working relationship with the
CCO and other representatives of the City, regulatory
authorities, suppliers of materials, utilities, and
services, and the public.
(h) The Contractor shall review and update, where
appropriate, the City's Emergency Preparedness Plan for
interaction and coordination with the appropriate
agencies of the City. The Contractor shall use its best
efforts to deal with emergencies and to maintain or
restore normal operations. In the event of an
emergency, the Contractor shall make every reasonable
effort to contact the CCO to authorize any needed
emergency major repairs or Capital Expenditures. Should
the CCO not be available to authorize such needed
emergency expenditures, the Contractor may proceed
without the City's authorization. The Contractor shall
provide the CCO a written report detailing those actions
within twenty-four (24) hours of such occurrence. The
City shall be liable for the cost of all such emergency
measures, provided such situation was not due to the
fault or negligence of the Contractor.
(i) The Contractor shall prepare, in a timely
manner, NPDES discharge monitoring reports and any other
oral or written report(s) required pursuant to all
Permits and submit them to the CCO for transmittal to
the appropriate agencies.
<PAGE>
(j) The Contractor shall provide twenty-four (24)
hour per day security of the Southport treatment plant,
and the Contractor and the City shall agree prior to the
Effective Date about responsibility for security at the
Belmont treatment plant. The CCO shall have
twenty-four (24) hour per day access to the AWT
Facilities. Visits may be made at any reasonable time
by any of the City's representatives as designated by
the CCO. All such visitors, however, shall comply with
the Contractor's operating and safety procedures. The
CCO shall not have the right to direct or control the
activities of the Contractor or its employees.
(k) At least two (2) days prior to the Effective
Date, the Contractor, accompanied by the CCO, shall
conduct and complete a comprehensive inspection of the
AWT Facilities for the purpose of documenting
operational and maintenance requirements of the AWT
Facilities. The inspection shall include a color video
tape record of all areas to be operated and maintained
by the Contractor. The video tape shall include an
audio commentary by the Contractor and the CCO made
during the taping. Two complete copies of the video
tape shall be supplied to the CCO. The Contractor shall
also prepare a written inspection report which shall set
forth the condition of all buildings and Equipment which
comprise the AWT Facilities. The inspection report
shall be provided to the CCO for its review and comment
prior to the Effective Date. Additionally, during the
first ninety (90) days of the Term, the Contractor will
conduct a predictive maintenance survey of all
equipment, which survey will be used to supplement
and/or modify the initial inspection report.
(l) The Contractor shall pay all Operation and
Maintenance Costs at its expense in a timely manner
except for those which it is disputing.
(m) The Contractor shall implement improvements to
the Environmental Monitoring and Process Support
Laboratory (EMPSL) including without limitation
(i) reorganization of the EMPSL to increase the
efficiency and productivity, (ii) increase process
control laboratory output through a quality
assurance/quality control program, (iii) minimize manual
data handling, and (iv) improve the laboratory budgeting
process.
(n) The Contractor shall identify and recommend
for City approval revenue enhancement projects during
the term of this Agreement, including any IPP
initiatives pursuant to 7.01(c), which efforts the City
shall support and encourage. As a part of such
recommendation, the Contractor shall propose what
<PAGE>
portion of the additional revenues that the Contractor
will receive as an economic incentive (which shall be
within the guidelines of the Rev. Proc. 93-19) for the
Contractor to propose and capture such additional
revenues for the City. The City shall respond promptly
to all such proposals. In no event shall any such
additional payments to the Contractor during any
Agreement Year exceed the amount of the Annual Fee for
that year.
Section 7.02. Maintenance of the AWT Facilities.
During the Term, the Contractor shall have full responsibility
for the maintenance of the AWT Facilities, except as provided
otherwise herein. The Contractor shall be responsible for
performing routine maintenance, predictive maintenance,
preventive maintenance and corrective maintenance (except as
specifically provided herein) of the AWT Facilities, all in a
manner at least as effective as the manner in which the AWT
Facilities were maintained by the City on a consistent basis
prior to the Effective Date. Such maintenance shall include,
but not be limited to, the following:
(a) The Contractor shall provide all personnel,
materials, and services necessary to maintain the AWT
Facilities' structures, Vehicles, Equipment, mechanical,
electrical, HVAC, instrumentation, communication and
computer systems adequately to insure efficiency,
long-term reliability and conservation of capital
investment. The Contractor shall implement its
maintenance management program in order to provide
prudent maintenance in accordance with industry
standards, equipment manufacturers' instructions, and
existing operating and maintenance manuals (taking into
account the specific maintenance requirements of each
piece of Equipment) so that at the Termination Date the
AWT Facilities are returned to the City in the same or
better condition than at the Effective Date, normal wear
and tear excepted. The City and Contractor, as the case
may be, shall make provisions for enforcing existing
Equipment warranties and guarantees, and for maintaining
all warranties on new Equipment purchased after the
Effective Date. The Contractor shall employ routine,
predictive, preventive and corrective maintenance
programs. Within ninety (90) days of the Effective
Date, the Contractor shall complete a full review of the
AWT Facilities' maintenance management program and make
appropriate recommendations to the CCO regarding the
adequacy of such system. Changes and/or enhancements to
the existing maintenance management program may include
corrective and/or Capital Improvements, as mutually
agreed by City and Contractor.
(b) The Contractor shall maintain detailed records
and reports of maintenance work performed and shall make
<PAGE>
such reports available to the CCO. The reports shall
identify all maintenance activities and orders pending
or completed since the most recent report.
(c) The Contractor shall prepare and submit to the
City for review and approval an annual budget of Capital
Expenditures and items that should be paid out of the
Repair and Replacement Fund, not later than sixty (60)
days prior to each anniversary of the Effective Date.
(d) The Contractor shall continuously and, as
appropriate, (i) review and inspect the AWT Facilities
to determine the necessity of any major repair and
maintenance activities that should be payable from the
Repair and Replacement Fund and prepare written
recommendations to the City related to all such
activities, and (ii) comply with the provisions of
Sections 7.03 and 7.04.
(e) The Contractor shall maintain any portion of
the AWT Facilities that are on stand-by mode in a manner
consistent with the preservation of the assets and shall
protect the City from any grant repayment obligations
which may arise if any part of the AWT Facilities are
not properly placed and maintained in the stand-by mode
by the Contractor.
Section 7.03. Repair and Replacement Fund. The City
shall provide a Repair and Replacement Fund to provide for the
necessary funding for major repair and maintenance and other
non-repetitive and non-routine maintenance activities required
for the continued operation of the AWT Facilities. The Repair
and Replacement Fund shall not cover regular and routine
preventive and predictive maintenance items (including oils and
lubricants, light bulbs, and other such items) that are to be
undertaken by the Contractor at its expense. The Repair and
Replacement Fund for each Agreement Year shall be in the amount
of One Million Five Hundred Thousand Dollars ($1,500,000). No
funds shall be disbursed from the Repair and Replacement Fund
without the prior written consent of the City. At no time will
the City threaten the successful operation and maintenance of
the AWT Facilities by withholding funds for projects which may
endanger the AWT Facilities effluent or the safety of equipment
and/or employees.
The Contractor on a monthly basis shall submit to the
City a report on expenses which should be reimbursed out of the
Repair and Replacement Fund and, at its option, may request the
City to pay such expenses directly from the Repair and
Replacement Fund.
The Contractor shall notify the CCO when actual
expenditures from the Repair and Replacement Fund are equal to
eighty percent (80%) of the Repair and Replacement Fund for any
<PAGE>
Agreement Year. To the extent that the Contractor determines
that it is necessary to make Repair and Replacement
expenditures in excess of amounts in the Repair and Replacement
Fund for any Agreement Year, the Contractor shall submit a
written proposal to the CCO, which proposal shall be approved
by the City and the Contractor prior to making such
expenditure.
Any Repair and Replacement Fund moneys which remain
unspent as of the end of any Agreement Year shall be retained
by the City. Any Repair and Replacement costs incurred by the
Contractor for an Agreement Year exceeding the amounts in the
Repair and Replacement Fund and not earlier reimbursed by the
City shall be paid by the City to the Contractor no later than
sixty (60) days after the end of that Agreement Year, with
interest from the date of payment by the Contractor until
payment by the City, computed at an annual rate equal to the
Prime Rate of National City Bank, Indiana in effect at the time
such expenditures were made ("Prime Rate").
During the Term, the Contractor shall recommend and
perform activities to be paid for from the Repair and
Replacement Fund as follows:
(a) As provided in Section 7.02 above, the
Contractor shall determine the necessity for performing
any major repair or maintenance activities payable from
the Repair and Replacement Fund.
(b) The Contractor shall prepare written
recommendations for all major repair and maintenance
activities to be paid from the Repair and Replacement
Fund that the Contractor determines may be required to
keep the AWT Facilities in a state of good operating and
repair and order, which recommendations shall include
the approximate cost of completing such activities.
(c) The City, within fifteen (15) days of the
receipt of such written recommendations, shall either
approve or deny the Contractor's recommendation in
writing; provided, that if the City fails to notify the
Contractor, in writing, within such fifteen (15) day
period of its decision, such recommendation shall be
deemed approved.
(d) In the event that the City shall approve the
Contractor's recommendation, and in the event the cost
of the major repair or maintenance activity, plus the
total aggregate cost of all such activities previously
incurred during any Agreement Year, does not exceed the
total amount in the Repair and Replacement Fund, the
Contractor shall proceed with the recommended work, and
it shall be paid for from such Fund.
<PAGE>
(e) In the event the City shall approve the
Contractor's recommendation, but the cost of the major
repair or maintenance activity, plus the total aggregate
cost of all such activities previously made during the
current Agreement Year, exceeds the total amount then in
the Repair and Replacement Fund, the Contractor shall
proceed with the work; provided, that expenses incurred
shall be treated as a service provided by the
Contractor, at the direction of the City, which shall be
deemed to be Additional Services pursuant to
Section 8.07 and shall be reimbursed by the City, plus
interest from the date of payment by the Contractor to
the date of payment by the City at an annual rate equal
to the Prime Rate.
(f) In the event that the City does not approve a
major repair or maintenance item recommended by the
Contractor, the City shall indemnify and hold the
Contractor harmless from any damages or liability
suffered by the Contractor as a result of the City's
denial.
Section 7.04. Capital Expenditures. In accordance
with Section 7.02(c) hereof, the Contractor shall submit a
budget and justification for each Capital Expenditure it
believes should be performed for a given Agreement Year. The
City, in its discretion, shall determine whether to accept the
Contractor's proposal for the Capital Expenditure. At the
City's option, the City may add any such Capital Expenditures
proposed by the Contractor to the list of Capital Improvements
pursuant to the Construction Management Agreement. If the City
does not approve a Capital Expenditure recommended by the
Contractor, the City shall indemnify and hold the Contractor
harmless from any damages or liability suffered by the
Contractor as a result of the City's denial.
Section 7.05. Inventory. On or prior to the Effective
Date, the Contractor shall complete a schedule of Beginning
Inventory (which shall be valued at cost) which it intends to
use, said schedule to Appendix C hereto. All other inventory
may be disposed of by the City at its option. During the Term,
the Contractor shall utilize the Beginning Inventory in the
operation and maintenance of the AWT Facilities, and the City
shall be entitled to a credit towards the Annual Fee equal to
the inventory used by the Contractor at the value set forth in
the Beginning Inventory or as otherwise agreed upon by the City
and the Contractor. On the Termination Date, the Contractor
shall turn over to the City any remaining Beginning Inventory.
Section 7.06. Vehicles. The City shall provide the
Contractor with the Vehicles needed by the Contractor for its
services under this Agreement. A list of Vehicles will be
attached in Appendix E. The Contractor guarantees that proper
maintenance of the Vehicles shall be conducted as specified by
<PAGE>
Vehicle maintenance documentation or as otherwise agreed upon
by the City and the Contractor. New Vehicle purchases will be
mutually agreed upon by the City and Contractor annually.
Section 7.07. Reporting Requirements. In connection
with its operation and maintenance responsibilities and
activities:
(a) The Contractor shall provide to the City
monthly reports of plant operating parameters,
laboratory analysis, maintenance plans and activities,
treatment results, Equipment and parts inventories,
manpower utilization and other relevant information.
These reports shall be in a form developed jointly by
the CCO and the Contractor.
(b) The Contractor shall meet with the CCO at
least monthly to review such operations and reports.
The Contractor shall also conduct an annual inspection
with the CCO and any other representatives of the City
to evaluate the condition of the AWT Facilities.
(c) The Contractor shall also provide the CCO with
quarterly reports on the status of minority and
women-owned business participation.
ARTICLE VIII. COMPENSATION
Section 8.01. Annual Fee. For the aforedescribed
services, the City shall pay the Contractor an Annual Fee
during the Term as follows:
Agreement Years Annual Fee
Year 1 $15,155,400
Year 2 $14,650,000
Year 3 $14,600,000
Year 4 $14,000,000
Year 5 $13,831,075
The Annual Fee for each Agreement Year after Year 1 shall be
adjusted based upon the Consumer Price Index, all Urban
Consumers, U.S. City Annual Index, published by the
U.S. Department of Labor, Bureau of Labor Statistics or some
other agreeable index if the C.P.I. is discontinued ("Index"),
as follows: For each Agreement Year, the Index for the
fourth (4th) month preceding the commencement of such Agreement
Year shall be divided by the Index for the same month most
recently preceding the Effective Date. The Annual Fee for such
Agreement Year set out above will be multiplied by the
resulting quotient, and the resulting product shall then be the
adjusted Annual Fee for such Agreement Year. One twelfth
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(1/12) of the Annual Fee for each Agreement Year shall be due
and payable on or before the fifth (5th) day of each month of
the Agreement Year in which services are provided.
Section 8.02. Utility Savings. The City and the
Contractor shall use the first Agreement Year to establish a
"Utility Baseline" for the consumption and cost of utilities in
the operation and maintenance of the AWT Facilities. Should
the Contractor reduce utility costs below the Utility Baseline,
the City shall have the right to request a prospective
reduction in the Annual Fee (in the form of a sum certain) in
an amount equal to at least one-half of the projected reduction
in utility costs.
Section 8.03. Adjustment for Hydraulic and Organic
Loadings. The City and the Contractor will establish prior to
the Effective Date a base line for hydraulic and organic
loadings of influent at the AWT Facilities, based on historic
data ("Average Loading Baseline"). At the end of each
Agreement Year, the City and the Contractor shall determine the
actual level of hydraulic and organic loadings ("Actual
Loading") for that Agreement Year. If such Actual Loading for
the Agreement Year is either greater than or less than the
Average Loading Baseline by more than ten percent (10%), the
City and the Contractor shall use their best efforts to agree
upon a prospective adjustment of the Annual Fee.
Section 8.04. Accounting System and Financial Data.
The Contractor agrees to maintain its accounting system and
financial data so as to allow the inspection thereof by the CCO
and other City representatives during normal business hours.
Section 8.05. Capital Improvement Plan. The
Contractor shall participate in the development and
implementation of the City's Capital Improvement Plan with
respect to the AWT Facilities and shall act in the capacity of
program manager for such Capital Improvements, pursuant to the
terms of the program management agreement to be executed by the
Contractor and the City on or about the Effective Date.
For the first year of this Agreement, the Contractor
shall act as program manager for those Capital Improvements set
forth in the program management agreement. For subsequent
years, any further Capital Improvements shall be jointly
identified by the City and the Contractor as a part of the
budget for Capital Expenditures established pursuant to
Section 7.04 hereof, and will be governed by the program
management agreement. For each Agreement Year, compensation to
the Contractor for acting as program manager shall be in an
amount equal to three percent (3%) of the applicable
construction costs of AWT projects for the first Two Million
Dollars ($2,000,000) of Capital Improvements, and six percent
(6%) of the applicable construction costs of such projects
<PAGE>
thereafter. Any contractors, engineers or architects shall be
selected or approved by the City.
Section 8.06. Regulatory Adjustments. The Annual Fee
may also be adjusted as a result of changes in federal or state
legislation or regulations, pursuant to this section.
(a) Should the Operation and Maintenance Costs
increase solely as a direct result of legislative or
regulatory changes (including revisions in the
requirements or limitations of the NPDES Permit) which
occur and become effective during the Term, the Annual
Fee shall be increased by an amount equal to the actual
costs necessary to comply appropriately with such
legislative or regulatory changes, as determined by
agreement of the parties hereto.
(b) Notwithstanding (a) above, should (i) the
Contractor alter the method of operation pursuant to
this Agreement or otherwise with the agreement of the
City and (ii) the Operation and Maintenance Costs
increase as a direct result of legislative or regulatory
changes which occur and become effective during the
Term, the Annual Fee shall be increased only by an
amount equal to the increase in the Operation and
Maintenance Costs which would have been incurred by the
City had the method of operation of the AWT Facilities
not been altered.
Section 8.07. Additional Services. The Contractor may
perform Additional Services at the AWT Facilities which are not
within the original scope of this Agreement, as agreed upon, in
writing, by the Contractor and the City ("Additional
Services"). The City may also request that the Contractor
perform other Additional Services. Such Additional Services,
if agreed to by the Contractor, shall be described in an
additional services form (ASA), invoiced by the Contractor and
paid for by the City on a monthly basis. Such payments shall
be in addition to the regular monthly compensation amount of
the Annual Fee paid to the Contractor. In the event of an
Unforeseen Circumstance described in Section 1.20(i), the
Contractor and the City recognize that such a circumstance may
call for services beyond the scope of the Contractor's
anticipated services under this Agreement. In such a
circumstance, the parties shall cooperate with each other and,
with the City's consent, address the situation, and the costs
incurred by the Contractor arising from the event shall be paid
by the City as payment for Additional Services provided.
Should payment for the Additional Services require approval by
the Board of Public Works, the City shall promptly seek such
approval.
<PAGE>
ARTICLE IX. PERSONNEL
Section 9.01. Contractor to Interview AWT Employees.
On or before the Effective Date, the Contractor shall complete
its interviewing of all employees of the AWT Facilities who are
interested in and apply for a position with the Contractor.
The Contractor shall use its best efforts to employ all
interested and qualified employees of the AWT Facilities as its
employees at the AWT Facilities, consistent with its intent to
have an initial staffing level of 206 employees. In addition
to the employees hired by the Contractor to work at the AWT
Facilities, the Contractor shall offer employment to existing
AWT employees in order to fill thirty (30) positions with
entities owned by the Partners or affiliated companies. The
Contractor shall have the right to require substance abuse
tests of all persons to whom it offers a position of employment
and the right to reject for employment any person not passing
or declining to take such a test.
Section 9.02. Comparable Employment. The Contractor
shall provide current City AWT Facilities employees with a
total package of compensation and benefits equivalent to or
better than compensation and benefits provided by the City.
The Contractor acknowledges that it has agreed to bargain with
the employees' collective bargaining representatives to
determine the specific terms and conditions of employment to
which bargaining unit employees will be subject. The
Contractor shall provide the City with wages and benefits
specifics at least ten (10) days prior to the Effective Date of
this Agreement, subject to ratification of the collective
bargaining agreement with the union. All employees shall
receive year for year credit for years employed by the City for
purposes of eligibility and vesting in the Contractor's benefit
programs. All pre-existing conditions of employees and
dependents currently covered by the City's health insurance
program shall be covered on and after the Effective Date under
the Contractor's health insurance program.
Section 9.03. Personnel Changes by Contractor. If at
any time subsequent to the Effective Date of this Agreement the
Contractor makes a determination to reduce the number of
employees at the AWT Facilities, the Contractor shall use its
best efforts to place displaced employees in comparable
capacities at other facilities operated by the Contractor, the
Partners or the Parent Companies. The City will attempt to
place any employees displaced by the Contractor in other
employment opportunities with the City for a period of one year
following the employee's displacement.
Section 9.04. Worker Assistance Program. The
Contractor shall pay Three Hundred Thousand Dollars ($300,000)
to support a displaced worker assistance program ("Worker
Assistance Program") which will be designed and administered by
the Contractor to assist displaced workers with the process of
employment change ("Fund"). The Fund will be used to support a
<PAGE>
number of initiatives including, without limitation,
specialized training programs, assistance with job search
skills, an outplacement allowance and career and outplacement
counseling programs, consistent with the terms of the Schedule
of Outplacement Services, which is attached hereto and
incorporated by reference as Appendix F. The Contractor shall
report at least monthly to the City on the operation of the
Worker Assistance Plan and the use of the Fund. Any moneys
remaining in the Fund at the end of the first Agreement Year
shall be credited to the Annual Fee for the second Agreement
Year.
Section 9.05. Nondiscrimination in Employment. The
Contractor and any subcontractor shall not discriminate against
any employee or applicant for employment to be employed in the
performance of this Agreement, with respect to hire, tenure,
terms, conditions or privileges of employment, or any other
matter directly or indirectly related to employment, because of
race, religion, color, age, sex, handicap, national origin,
ancestry, disabled veteran status or Vietnam-era veteran
status. Breach of this provision may be regarded as a material
breach of the Agreement.
Section 9.06. No Restriction on Employment. At or
prior to the Termination Date, the Contractor shall not place
any restriction upon the ability of the employees at the AWT
Facilities to become employees of the City, or employees of any
contractor which may in the future operate and maintain the AWT
Facilities.
Section 9.07. City not Employer. Nothing in this
Article shall be construed to place the City in the
relationship of the Employer of, or to grant the City the
rights to direct or control either employees of the Contractor
or displaced employees. The City shall, however, make
appropriate payment, at its expense, of all accrued but unused
City employee vacation time, personal leave, and perfect
attendance time. In addition, the City shall pay all non-
exempt AWT City employees for accrued but unused compensatory
time as of the Effective Date. The Contractor agrees to pay
AWT City employees for accrued but unused sick leave up to one
hundred forty-four (144) hours per employee and to pay exempt
City AWT employees for accrued but unused compensatory time,
and the City agrees to reimburse the Contractor for these
amounts actually paid upon receipt of documentation verifying
such payments.
ARTICLE X. DEFAULTS AND REMEDIES
Section 10.01. Event of Default. The occurrence of
any of the following shall constitute an "Event of Default" for
purposes of this Agreement:
<PAGE>
(a) The institution against the Contractor of
bankruptcy, insolvency, reorganization, arrangement,
debt adjustment, liquidation or receivership proceedings
in which it is alleged that the Contractor is insolvent
or unable to meet its debts as they mature;
(b) The failure by the City to pay any fee, charge
or other monetary payment to the Contractor within
forty-five (45) days of the day upon which such fee,
charge or monetary payment becomes payable;
(c) The failure by the Contractor (i) to perform
the operation and maintenance of the AWT Facilities in
the manner set forth by this Agreement, except in the
event of Unforeseen Circumstances, or (ii) to maintain
adequate and experienced personnel necessary to ensure
that the operation and maintenance standards set forth
in this Agreement are satisfied;
(d) The failure by the Contractor to allow
representatives of the City onto the premises of the AWT
Facilities or to inspect the records of the Contractor
as they relate to the AWT Facilities; or
(e) The breach of any other representation,
covenant, warranty or obligation by a party to this
Agreement, except in the event of Unforeseen
Circumstances.
Section 10.02. Notice and Cure. The non-defaulting
party shall give written notice to the party in default of any
Event of Default. With respect to an Event of Default under
Section 10.01(b), the City shall have ten (10) days from the
date of receipt of such notice to take action to cure the
default. For Events of Default under Sections 10.01(a), (c),
(d) and (e), the party in default shall have thirty (30) days
from the date of receipt of such notice to take action to cure
the default ("First Cure Period"). If such default is not
cured at the expiration of such cure periods, and the
defaulting party is diligently pursuing a cure the cure period
shall be extended for an additional sixty (60) day period
("Second Cure Period"). If such default has not been cured at
the expiration of the Second Cure Period or if the defaulting
party is not diligently pursuing a cure at the end of the First
Cure Period, the party not in default may exercise any of the
remedies set forth in Section 10.03 of this Agreement.
Provided, however, that any cure period will be extended in the
event that the Event of Default is related to the need for
regulatory action (which has not been obtained) and the proper
documentation requesting such action has been filed with the
appropriate regulatory agencies.
Section 10.03. Remedies. Subject to the provisions of
Section 10.04, the following remedies against a party in
<PAGE>
default which does not cure its default as set forth in
Section 10.02 of this Agreement shall be available to the
non-defaulting party:
(a) If the party in default is the Contractor, the
City may (i) withhold payment of the compensation
payable to Contractor pursuant to Article VIII, without
such non-payment constituting an Event of Default, until
such time as the default is cured; or (ii) terminate
this Agreement.
(b) If the party in default is the City, the
Contractor may terminate this Agreement.
(c) The party in default shall reimburse the
non-defaulting party and be responsible for all the
expenses incurred as a result of the default, including
consequential and incidental damages and expenses and
reasonable charges of attorneys, engineers, architects
and other professionals.
The foregoing remedies shall be in addition to, and not in lieu
or limitation of, all remedies available at law or in equity to
the non-defaulting Party.
Section 10.04. Extraordinary Event of Default. If the
Contractor commits an Extraordinary Event of Default, the City
shall have the right, upon written notice to the Contractor as
to the specific circumstances of the asserted Extraordinary
Event of Default, to enter upon the premises of the AWT
Facilities, terminate the Agreement and assume responsibility
for the maintenance and operation of the AWT Facilities. The
City shall have the right to utilize such personnel of the
Contractor as is necessary for the continued operation and
maintenance of the AWT Facilities and shall reimburse the
Contractor for the reasonable cost thereof. In the event of an
Extraordinary Event of Default, the Contractor shall refund to
the City any unearned compensation that may have been paid by
the City. In addition, the Contractor shall pay any and all
costs and expenses, including reasonable attorneys' fees and
any other professional fees, incurred by the City resulting
from the Contractor's Extraordinary Event of Default.
The foregoing remedies shall be in addition to, and not
in limitation of, all remedies available at law or in equity to
the City.
ARTICLE XI. LIMITATIONS
Section 11.01. Possession of AWT Facilities. The
Contractor shall be entitled to possession of the AWT
Facilities during the term of this Agreement.
<PAGE>
Section 11.02. Access to the AWT Facilities. The
Contractor shall allow the City access to all of the AWT
Facilities at all times. The City shall have the right to
conduct a performance audit and evaluation of the Contractor at
such times as the City deems necessary and at the City's
expense. The Contractor agrees to cooperate with any such
audit. The City may employ consultants, at its expense, to
assist the City in the Audit.
Section 11.03. Control. The City shall have no right
to control or direct the Contractor or its employees in its
operation of the AWT Facilities, so long as an Event of Default
has not occurred.
ARTICLE XII. DISPUTE RESOLUTION
The parties will attempt in good faith to resolve any
and all controversies or claims arising out of or relating to
this Agreement promptly by negotiation.
The disputing party shall give the other party written
notice of the dispute. Within twenty days after receipt of
said notice, the receiving party shall submit to the other a
written response. The notice and response shall include (a) a
statement of each party's position and a summary of the
evidence and arguments supporting its position, and (b) the
name and title of the executive who will represent that party.
The executives shall meet at a mutually acceptable time and
place within thirty (30) days of the date of the disputing
party's notice and thereafter as often as they reasonably deem
necessary to exchange relevant information and to attempt to
resolve the dispute.
If the matter has not been resolved within sixty (60)
days of the disputing party's notice, or if the party receiving
said notice will not meet within thirty (30) days, either party
may initiate mediation of the controversy or claim in
accordance with Rule 2 of the Indiana Rules of Alternative
Dispute Resolution, as adopted by the Supreme Court of the
State of Indiana.
Notwithstanding the provisions of this Article , a
party may seek a preliminary injunction or other preliminary
judicial relief if in its good faith judgment such action is
necessary to avoid irreparable harm. Further, the enforcement
of the provisions of Article X, Section 10.04 of this Agreement
shall not be subject to the dispute resolution requirements of
this Article XII.
<PAGE>
ARTICLE XIII. EXPANSION AND MODIFICATION
Section 13.01. Purpose. Inasmuch as increased sewage
treatment capacity may become necessary during the life of this
Agreement or changes in technology and/or revised
environmental, ecological or sanitary legislation or
regulations may require modification of the AWT Facilities or
its manner of operation, it is the intention of the parties
hereto to provide a mechanism, if permitted by law, whereby
such needs may be accomplished under the terms of this
Agreement.
Section 13.02. Notice and Negotiation. The parties
hereto agree to keep each other informed as to circumstances
and information indicating a need for expansion or modification
of the AWT Facilities. Either party may give notice at any
time that it desires to commence negotiations for amendment of
this Agreement to provide for expansion or modification of the
AWT Facilities and for the payment of additional compensation
in consideration of the increased duties of the Contractor.
Upon receipt of the notice, the parties will attempt to resolve
all such matters in good faith. If the City is not in a
position, either financially or legally, to agree to any
proposed amendment of this Agreement, a disclosure of such
inability shall be a good faith response on the part of the
City.
Section 13.03. Absence of Agreement. In the event the
parties cannot agree upon an amendment to this Agreement, the
Contractor and the City shall continue to comply with their
respective duties pursuant to this Agreement unless terminated.
ARTICLE XIV. INSURANCE
Section 14.01. Contractor to Provide Insurance. The
Contractor shall maintain, at its expense, during the Term, the
following insurance to the extent that such insurance is
commercially available:
(a) Comprehensive General Liability with limits of
$1,000,000 Per Occurrence and $3,000,000 Annual
Aggregate covering the following:
(i) Blanket contractual
insurance to cover indemnification clauses
contained in this Agreement.
(ii) Property Damage.
(iii) Personal Injury.
<PAGE>
(iv) Independent Contractor
and Contractors
Protective.
(v) Collapse, Explosion or
Underground.
(b) Commercial Automobile Insurance covering all
Vehicles.
(c) Excess Liability Insurance with a minimum
$10,000,000 limit.
Section 14.02. Special Conditions. The following
conditions shall apply to all insurance obtained by the
Contractor:
(a) The City shall be named as an additional
insured on all policies.
(b) The City shall be provided with a certificate
or, at its request, a certified copy of all policies
referred to in this Article XIV within thirty (30) days
of the inception date of each such policy.
(c) The City shall be given sixty (60) days prior
notice of cancellation or non-renewal.
(d) All insurance companies and coverages must be
acceptable and approved in writing by the City.
ARTICLE XV. INDEMNIFICATION
Section 15.01. Contractor to Indemnify City. The
Contractor, the Partners and the Parent Companies shall jointly
and severally defend, protect, indemnify and hold harmless, the
City from all liability, including for attorney's fees, subject
to Section 15.04 hereof, for all claims, actions, charges,
costs, investigations and damages of any nature whatsoever
("claims"), which arise from the negligent acts or omissions or
willful misconduct of the Contractor or its agents in
connection with the performance of this Agreement (and
severally as respects a party's execution of this Agreement),
including but not limited to claims relating to (a) personal
injury or damage to or loss of use or loss of any personal or
real property caused by or arising out of the negligent act of
the Contractor, its employees, or agents; (b) the Contractor's
failure to provide the standard of care, skill and diligence
required under this Agreement in the performance of its duties
under this Agreement; (c) any breach of representation,
covenant or warranty of the Contractor, Partners or Parent
Companies as the case may be, set forth in this Agreement; and
(d) any violation by the Contractor or its agents of any
<PAGE>
federal, state or local law, ordinance, rule, regulation, or
Permit.
Section 15.02. City to Indemnify Contractor. To the
fullest extent permitted by law, the City agrees to defend,
protect, indemnify and hold harmless the Contractor, the
Partners, the Parent Companies and their respective employees
and agents from all claims, actions, charges or demands for any
damages, liabilities, losses, costs and expenses as may arise
from or are due to the negligent acts or omissions of the City,
its agents or employees.
Section 15.03. Fines and Penalties. The Contractor
shall be liable for fines and/or civil or criminal penalties
imposed by any local, state or federal regulatory agency for
violation of any Permits, or any law or statute, which fines or
civil penalties are a result of the Contractor's negligence or
willful failure to operate and maintain the AWT Facilities in
accordance with the terms of this Agreement. The City hereby
agrees to assist the Contractor, to the extent warranted, in
defending or contesting any such fines or civil or criminal
penalties in any administrative or court proceeding prior to
the payment of such fine or civil or criminal penalty by the
Contractor. The Contractor shall be responsible for the cost
of contesting such fine or civil or criminal penalty.
Section 15.04. Co-Negligence. In the event that both
the Contractor and the City are negligent, and the negligence
of both is the proximate cause of such claim for damage for
personal injury or property damage, then in that event each
party will be responsible for the portion of the liability or
damages resulting in consequence equal to such party's
comparative share of the total negligence. The indemnity
required by this Article shall not be limited by reason of the
enumeration of any insurance coverage required herein.
Section 15.05. Demand for Indemnification. If any
action is brought against a party to this Agreement entitled to
indemnification pursuant to this Article XV (an "indemnified
party") in respect of which indemnity may be sought against the
party granting indemnification (an "indemnifying party")
pursuant to this Article XV, such indemnified party shall
promptly notify such indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party of any such action shall not release the
indemnifying party from any liability it may have to such
indemnified party, unless the indemnifying party is prejudiced
thereby, in which case the latter is released to the extent of
the prejudice. In case any such action is brought against an
indemnified party and it notifies an indemnifying party of the
commencement thereof, the indemnifying party against which a
claim is to be made will be entitled to participate therein at
its own expense and, to the extent that it may wish, to assume
at its own expense the defense thereof, with counsel reasonably
<PAGE>
satisfactory to such indemnified party; provided however, that
(i) if the defendants in any such action include both the
indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded, based upon
advice of counsel, that there may be legal defenses available
to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, the
indemnified party shall have the right to select separate
counsel to assume such legal defenses and otherwise to
participate in the defense of such action on behalf of such
indemnified party or parties; and (ii) in any event, the
indemnified party shall be entitled to have counsel chosen by
such indemnified party participate in, but not conduct, the
defense. Upon receipt of notice from the indemnifying party to
such indemnified party of its election to assume the defense of
such action and approval by the indemnified party of counsel,
the indemnifying party will not be liable to such indemnified
party under this Article XV for any legal or other expenses
subsequently incurred by such indemnified party in connection
with the defense thereof unless (x) the indemnified party shall
have employed such counsel in connection with the assumption of
legal defenses in accordance with proviso (i) to the next
preceding sentence (it being understood, however that the
indemnifying party shall not be liable for the expenses of more
than one separate counsel); (y) the indemnifying party shall
not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action; or
(z) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the
indemnifying party. An indemnifying party shall not be liable
for any settlement of any action or proceeding effected without
its written consent.
Section 15.06. Survival of Obligations. The
obligations set forth under this Article XV shall survive the
expiration or termination of this Agreement.
ARTICLE XVI. MISCELLANEOUS
Section 16.01. Entire Agreement and Amendment. This
Agreement (and the Appendices hereto) contain the entire
understanding between the parties hereto with respect to the
subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements and
conditions, expressed or implied, oral or written, except as
herein contained. The express terms hereof control and
supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof. This Agreement (and
the Appendices hereto) may not be modified or amended other
than by an agreement in writing signed by all of the parties
hereto, except that amendment of the provisions of Article VIII
shall require the consent of only the Contractor and the City.
<PAGE>
Any such amendment, however, shall not affect the liability of
the Partners and Parent Companies hereunder.
Section 16.02. Waiver. Neither the failure nor any
delay on the part of any party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or
privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect
to any other occurrence. No waiver shall be effective unless
it is in writing and is signed by the party asserted to have
granted such waiver.
Section 16.03. City's Ability to Waive Certain
Provisions. If, based upon the advice of nationally recognized
bond counsel, the City reasonably concludes that any provision
of this Agreement has the potential for causing the AWT
Facilities to be treated as used in a private business use
under Section 141(b) of the Internal Revenue Code of 1986, as
amended, and other applicable authority (including IRS Rev.
Proc. 93-13), the City may, at its option , either (i) waive
such provision(s) and the Agreement shall be deemed to have
been amended to delete such provision or (ii) request the
Contractor to negotiate in good faith to amend such
provision(s) to reduce or eliminate such risk while preserving
the original intent of the parties to the extent practical. If
such waiver changes the scope of the services to be provided
under this Agreement, the City and the Contractor shall agree
to make an adjustment to the Annual Fee.
Section 16.04. Remedies. In the event of breach of
any provisions of this Agreement, the non-breaching party shall
be entitled to reasonable attorneys' fees incurred for the
enforcement of said provisions, in addition to damages for the
breach thereof the remedies provided in this Agreement shall be
cumulative and no one shall be construed as exclusive of any
other or of any remedy provided by law and failure of any party
to exercise any remedy at any time shall not operate as a
waiver of the right of such party to exercise any remedy for
the same or subsequent default at any time thereafter.
Section 16.05. Controlling Law. This Agreement and
all questions relating to its validity, interpretation,
performance and enforcement shall be governed by the laws and
decisions of the courts of the State of Indiana,
notwithstanding any Indiana or other conflict-of-law provision
or court decision to the contrary.
Section 16.06. Notices. All notices, requests,
demands and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have
been received when delivered or on the third business day
<PAGE>
following the mailing, by registered or certified mail, postage
prepaid, return receipt requested, thereof addressed as set
forth below:
TO THE CITY:
Michael B. Stayton, Director
Department of Public Works
City of Indianapolis
Suite 2460, City-County Building
200 East Washington Street
Indianapolis, Indiana 46204
With copies to:
AWT Contract Compliance Officer
City of Indianapolis
Department of Public Works
2700 South Belmont Avenue
Indianapolis, Indiana 46221; and
Sue A. Beesley
Corporation Counsel
200 East Washington Street
City-County Building
Suite 1601
Indianapolis, IN 46204
TO THE CONTRACTOR:
Mr. James T. Morris
Managing Partner
White River Environmental Partnership
P.O. Box 1220
Indianapolis, Indiana 46202
Mr. David Sherman
Project Manager
White River Environmental Partnership
2700 South Belmont Avenue
Indianapolis, Indiana 46221
<PAGE>
With copies to:
Ron Ballard, President
JMM Operational Services, Inc.
Suite 1100
1700 Broadway
Denver, Colorado 80209
Patrick R. Cairo, Vice President
Lyonnaise American Holding, Inc.
2004 Renaissance Blvd.
King of Prussia, PA. 19406
Any notices pertaining to Article X shall also be sent to :
Ron Dungan, Executive Vice President
GWC Corp.
2004 Renaissance Blvd.
King of Prussia, PA 19406
Murli Tolaney, President
Montgomery Watson
300 North Lake Ave
Suite 1200
Pasadena, CA 91101
Jacques Petry, President
International Water Div.
Lyonnaise des Eaux-Dumez
72, Avenue de la Liberte
92022 NANTERRE CEDEX
France
Any Party hereto may change the address to which notices are to
be sent by giving notice of such change of address in
conformity with this Section.
Section 16.07. Binding Nature of Agreement; No
Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their successors and
assigns, except that no Party may assign or transfer its rights
or obligations under this Agreement without the prior written
consent of the other Party hereto. The parties acknowledge
that it is contemplated that after the execution of this
Agreement, GWC will be merged into United Water Resources
("UWR") and, upon consummation of that merger, UWR will assume
GWC's responsibilities hereunder.
Section 16.08. Nature of Relationship. The
relationship which the parties intend to create under this
<PAGE>
Agreement is that of principal and independent contractor.
Nothing herein is intended to, or shall be construed to, create
the relationship of partners, of joint venturers or of
employment between the City and the Contractor. The City shall
not have the right to direct or control the activities or
practices of the Contractor except as expressly provided in
this Agreement.
Section 16.09. Execution in Counterparts. This
Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original as against any Party
whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts
thereof, individually or taken together, shall bear the
signatures of all of the Parties reflected hereon as the
signatories.
Section 16.10. Provisions Separable. The provisions
of this Agreement and of each section or other subdivision
hereof are independent of and separable from each other, and no
provision shall be affected or rendered invalid or
unenforceable by virtue of the fact that for any reason any
other or others of them may be invalid or unenforceable in
whole or in part unless the Agreement is rendered totally
unenforceable thereby.
Section 16.11. Section and Paragraph Headings. The
section and paragraph headings in this Agreement are for
convenience of reference only; they form no part of this
Agreement and shall not affect its interpretation.
Section 16.12. Gender. Words used herein, regardless
of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and
any other gender, whether masculine, feminine or neuter, which
the context may require.
Section 16.13. Sections. This Agreement is divided
into sections, numbered in whole arabic numbers, each of which
is subdivided into subdivision numbered with the whole arabic
designation of the section in which it is located, followed by
a decimal point and an arabic numeral designating the
subdivision. Both the sections and the subdivisions are
referred to as "Sections." In construing this Agreement, the
word Section should be given the meaning which its context
suggests and doubts should be resolved in favor of the broader
designation.
Section 16.14. Number of Days. Except as expressly
stated to the contrary elsewhere herein, in computing the
number of days, for purposes of this Agreement, all days shall
be counted, including Saturdays, Sundays and legal holidays;
provided, however, that if the final day of any time period
<PAGE>
falls on a Saturday, Sunday or holiday, then the final day
shall be deemed to be the next day which is not a Saturday,
Sunday or legal holiday.
Section 16.15. Consents. Unless otherwise specified,
the Director of the Department of Public Works or his or her
designee in writing (who may be the CCO) shall have full power
and authority to agree, consent and approve on the City's
behalf for all purposes of this Agreement, subject to any
required approvals by the Board of Public Works. Whenever the
consent or approval of a party is required by this Agreement,
it shall not be unreasonably withheld.
[The remainder of the page is intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this
Agreement on this ____ day of December, 1993.
BOARD OF PUBLIC WORKS APPROVED WHITE RIVER ENVIRONMENTAL
AND AUTHORIZED DIRECTOR TO PARTNERSHIP
EXECUTE AGREEMENT.
CITY OF INDIANAPOLIS By:___________________________
DEPARTMENT OF PUBLIC WORKS Managing Partner
By: _________________________
Michael B. Stayton
Director of Public Works
Department
ATTEST:
______________________________
Board Secretary
APPROVED AS TO LEGAL FORM:
SUE A. BEESLEY, CORPORATION COUNSEL
______________________________
APPROVED:
______________________________
James H. Steele, Jr.
Controller
<PAGE>
The following Parties are executing this Agreement only to the
extent of their representations, covenants and entitlements
contained herein.
"THE PARTNERS"
IWC SERVICES, INC. JMM WHITE RIVER
CORPORATION
By: _________________________ By: _________________________
President President
LAH WHITE RIVER CORPORATION
By: _________________________
President
<PAGE>
"THE PARENT COMPANIES"
IWC RESOURCES CORPORATION LYONNAISE AMERICAN
HOLDINGS, INC.
By: _________________________ By: _________________________
President President
LYONNAISE DES EAUX DUMEZ GWC CORPORATION
By: _________________________ By: _________________________
President President
JMM OPERATIONAL SERVICES, INC. GWC OPERATIONAL SERVICES, INC.
By: _________________________ By: _________________________
President President
MONTGOMERY WATSON AMERICAS,
INC.
By: _________________________
President
<PAGE>
APPENDIX A
DESCRIPTION OF AWT FACILITIES
<PAGE>
The Belmont Advanced Wastewater Treatment Facility (the
"Belmont Facility") is located at 2700 South Belmont Avenue.
The property and facilities to be operated and maintained are
as shown in the diagram shown on the previous page. The
Belmont Facility is bounded on the north by West Raymond
Street, on the east by Harding Street down to the White River,
on the east and south by the White River, and on the west by
Eagle Creek. The Contractor will maintain all roadways
including those atop the levee.
The following areas are completely excluded from any
responsibility of the Contractor:
1. Resource Recovery Facilities (#18)
2. Two Indianapolis Fire Department Storage Buildings (#13
and #19)
3. Animal Control Center (#15)
4. Abandoned Cars Building (#16) and associated fenced
storage area
5. CEMD Maintenance Garage, both the old and new buildings
and associated fenced storage areas and the gas and car
wash facility (#13 and #25)
6. Sludge Lagoons ("II")
7. Ash Lagoons ("JJ")
8. The area west of Belmont Avenue south of Raymond Street
up to the perimeter fence (the private business area
and the citizen's transfer station area
The following areas will be utilized exclusively by City of
Indianapolis work forces:
1. Air Pollution Control Division Offices (#2)
2. Construction Engineering Offices (#3)
3. Inspection Division Offices (#4)
4. Training Center (#6)
5. Flood Control Building (Solid Waste Offices) (#8)
6. Solids Waste Division Garage (#14)
The following areas will have shared occupancy between the
Contractor and the City of Indianapolis work forces:
1. Administrative and Laboratory Building (#1)
<PAGE>
The Southport Advanced Wastewater Treatment Facilities (the
"Southport Facility") is located at 3800 West Southport Road.
The Southport Facility to be operated and maintained by the
Contractor is displayed on the diagram above.
The Southport Facility is bounded on all four sides by
fencing as shown on the diagram. Additionally, the green space
outside the fence on the south and up to Southport Road and all
roadways shall be maintained up to a distance of approximately
one mile from the White River eastward to the east fence line.
Two areas are excluded from the Contractor's responsibility
for maintenance. The six sludge lagoons designated by the
letters "BB" are to remain for rehabilitation and use by the
City of Indianapolis and will be maintained by the City. The
area east of the gravel road which runs north and south located
just east of the levee which protects the east side of the
Southport Facility north and east of the area designated as a
"Parking Lot" to the north fence, the east fence and the south
fence will be utilized and/or maintained by the City of
Indianapolis or its designee. All roadways will be maintained
by the Contractor.
<PAGE>
APPENDIX B
AWT FACILITIES CAPACITY
BELMONT DESIGN CRITERIA
Hydraulic and Organic Loading
1. Hydraulic Loading
a. Primary Peak Design Flow 300 MGD
b. Primary Average Design Flow 150 MGD
c. Secondary Average Design Flow 125 MGD
d. Tertiary Average Design Flow 125 MGD
2. Oganic Loading
a. BOD Average 255,200 lb/day
b. NH3-N Average 15,900 lb/day
SOUTHPORT DESIGN CRITERIA
Hydraulic and Organic Loading
1. Hydraulic Loading
a. Peak Flow 150 MGD
b. Average Design Flow 125 MGD
2. Organic Loading
a. BOD Average 207,500 lb/day
b. NH3-N Average 18,200 lb/day
<PAGE>
APPENDIX C
BEGINNING INVENTORY
<PAGE>
APPENDIX D
PERMIT LISTING
<PAGE>
APPENDIX E
LIST OF VEHICLES
<PAGE>
APPENDIX F
SCHEDULE OF OUTPLACEMENT SERVICES
The Outplacement Services Program (the "Program") applies to
City employees who are employed by the Wastewater Treatment
Division of the Department of Public Works who are separated
from employment with the City of Indianapolis because they:
1. Did not receive an employment offer from the
Contractor, and
2. Were not placed in another comparable City position.
The description of benefits for eligible employees for the
Program is as follows:
Outplacement Allowance. The outplacement company will
distribute the outplacement allowance on a weekly basis to
eligible individuals, beginning the week following the
Effective Date. The allowance is based upon the individual's
current hourly rate of pay and length of service with the City
as of the Effective Date.
LENGTH OF SERVICE: OUTPLACEMENT
ALLOWANCE
0-5 Years 160 hours pay
6 Years 200 hours pay
7 Years 240 hours pay
8 Years 280 hours pay
9 Years 320 hours pay
10 Years 360 hours pay
11 Years 400 hours pay
12 Years 440 hours pay
13 Years 480 hours pay
14 Years 520 hours pay
15 Years 560 hours pay
16+ Years 640 hours pay
Education Credit. Eligible individuals will receive a tuition
credit, up to a maximum of $2,000. The credit may be used at
any accredited college, university or vocational institution.
The credit will be paid directly to the institution or
reimbursement to the individual upon proof of successful
passing of course. Subsequent credit draw down depends on
proof of successful completion of prior course(s). The
education credit is available through July, 1996.
Outplacement Workshops. These workshops are designed to equip
participants with the knowledge and skills necessary to
evaluate their career goals and to effectively identify and
pursue appropriate job opportunities.
<PAGE>
Individual Counseling. Experienced counselors will help
participants deal with the emotional aspects of job loss and
career transition and will offer individual coaching and advice
in such topics as resume preparation, job leads and
interviewing style.
Interests and Aptitude Testing. Testing will be provided to
assist participants in determining career goals.
Job Lead Assistance. Counselors will be available to support
tailoring an individual's skills and abilities to available
positions.
Clerical Services. Assistance will be provided in typing
resumes and letters.
Information Resource Materials. The outplacement service will
make information available such as computerized job network,
newspapers, periodicals and directories, as well as information
on unemployment compensation, COBRA, PERF, job training
programs, and other public resources.
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this
Agreement on this 20th day of December, 1993.
BOARD OF PUBLIC WORKS APPROVED WHITE RIVER ENVIRONMENTAL
AND AUTHORIZED DIRECTOR TO PARTNERSHIP
EXECUTE AGREEMENT.
CITY OF INDIANAPOLIS By: /s/ James T. Morris
DEPARTMENT OF PUBLIC WORKS Managing Partner
By: /s/ Michael B. Stayton
Michael B. Stayton
Director of Public Works
Department
ATTEST:
/s/ Lisa Hansen
Board Secretary
APPROVED AS TO LEGAL FORM:
SUE A. BEESLEY, CORPORATION COUNSEL
/s/ Sue A. Beesley
APPROVED:
/s/ James H. Steele, Jr.
James H. Steele, Jr.
Controller
<PAGE>
The following Parties are executing this Agreement only to the
extent of their representations, covenants and entitlements
contained herein.
"THE PARTNERS"
IWC SERVICES, INC. JMM WHITE RIVER
CORPORATION
By: /s/ Alan R. Kimbell By: /s/ Ronald J. Ballard
President President
LAH WHITE RIVER CORPORATION
By: /s/ Patrick R. Cairo
Vice President
<PAGE>
"THE PARENT COMPANIES"
IWC RESOURCES CORPORATION LYONNAISE AMERICAN
HOLDINGS, INC.
By: /s/ James T. Morris By: /s/ G. De Panafieu
President Vice President
LYONNAISE DES EAUX DUMEZ GWC CORPORATION
By: /s/ G. De Panafieu By: /s/ Ronald S. Dungan
Vice Chairman Executive Vice President
JMM OPERATIONAL SERVICES, INC. GWC OPERATIONAL SERVICES, INC.
By: /s/ Ronald J. Ballard By: /s/ Ronald S. Dungan
President President
MONTGOMERY WATSON AMERICAS,
INC.
By: /s/ Murli Tolaney
President
<PAGE>
EXHIBITS TO THE AGREEMENT FOR THE OPERATION AND MAINTENANCE
OF THE CITY OF INDIANAPOLIS ADVANCED WASTEWATER TREATMENT
PLANTS
APPENDIX A . . . . . . . DESCRIPTION OF THE AWT FACILITIES
APPENDIX B . . . . . . . CAPACITY OF THE AWT FACILITIES
APPENDIX C* . . . . . . . BEGINNING INVENTORY
APPENDIX D* . . . . . . . LIST OF PERMITS
APPENDIX E* . . . . . . . LIST OF VEHICLES
APPENDIX F . . . . . . . SCHEDULE OF OUTPLACEMENT SERVICES
CONTRACTOR SCHEDULES
Schedule 4.02* . . . . . Litigation
Schedule 4.03* . . . . . No Default
CITY SCHEDULES
Schedule 5.02 . . . . . . Litigation
Schedule 5.03 . . . . . . No Default
Schedule 5.04 . . . . . . Compliance with Laws
Schedule 5.06 . . . . . . Components of AWT Facilities not
in good working order
______________________________
*To be delivered to and accepted by the respective parties
prior to the Effective Date.
<PAGE>
SCHEDULE 4.02
While the consent degree hereinafter described does not
directly involve the Contractor or any Partner or Parent
Company, Jacksonville Suburban Utilities Corporation ("JSUC"),
a subsidiary of General Waterworks Corporation, which, in turn,
is a subsidiary of GWC Corporation, a Parent Company, is an
operating utility engaged in rendering water utility and
wastewater treatment services in Jacksonville, Florida, and is
subject to a consent decree, dated November 10, 1992, issued by
the United States District Court for the Middle District of
Florida. This consent decree was the result of a citizen's
lawsuit initiated by the National Resources Defense Council
("NRDC"). EPA elected not to participate in this action, and
no penalties were assessed by the consent decree. However,
pursuant to the consent decree, JSUC agreed to undertake a
focused treatability study to determine the cause of occasional
toxicity in the effluent of its wastewater treatment facility
and in a one-year monitoring period ending July 1, 1994, JSUC
is subject to penalties in stipulated amounts in the event of
discharges above or below limitations contained in its NPDES
permit. JSUC is also required to distribute two pamphlets to
its customers to educate them on the impact on the operation of
the sewage treatment plant of the disposal of household toxics
and hazardous wastes. As part of the consent decree, JSUC
agreed to pay NRDC's legal fees in the amount of $10,000 and
$4,000 to the Stewards of the St. John's River, an
environmental interest group.
<PAGE>
SCHEDULE 4.03
(NONE)
<PAGE>
SCHEDULE 5.02
Actions, suits, claims, investigations and proceedings
required to be disclosed pursuant to Section 5.02 of the
Agreement:
1. On December 17, 1993, the American Federation of
State, County, and Municipal Employees, AFL-CIO, Indiana
Council 62 and the American Federation of State, County, and
Municipal Employees Local 725 (collectively, the "Union") filed
a Verified Complaint for Preliminary and Permanent Injunction
in the Marion Superior Court Civil Division, Room 5 seeking
(i) that a preliminary and permanent injunction be issued
enjoining the City from awarding and entering into the
Agreement with the Contractor or any other private contractor
unless and until the City complies with Article X of the
collective bargaining agreement by providing the Union with the
proper notice, training and opportunity to bid on the work, or
alternatively, until the City and the Union exhaust their
contractual arbitration procedure; (ii) that a preliminary and
permanent injunction be issued requiring the City to rescind
the award of the Agreement to the Contractor and to reopen the
bidding for the purpose of permitting the Union the notice,
training and opportunity to bid on the work in accordance with
Article X of the collective bargaining agreement; and
(iii) that a preliminary and permanent injunction be issued
enjoining the City from taking any adverse action against the
employees as a result of the drug testing being conducted by
the Contractor.
Other than as described above, there are no actions,
suits, claims, investigations or proceedings pending or
threatened against the City in any court or before any
governmental, regulatory or administrative agency,
instrumentality or authority, arbitration board or other
tribunal that would materially affect the City's entering into,
or performance of the Agreement.
2. The City is not charged by any governmental
agency, instrumentality or authority with a material violation
of, or threatened by any governmental agency, instrumentality
or authority with a charge of a violation of, any federal,
state, county or municipal law or regulation that would
materially affect the City's entering into, or performance of,
the Agreement.
<PAGE>
SCHEDULE 5.03
Defaults required to be disclosed pursuant to
Section 5.03 of the Agreement:
1. The City is not in default under, and no condition
exists that with notice or lapse of time or both would
constitute a default under any mortgage, loan agreement, lease,
lease purchase, indenture or evidence of indebtedness for
borrowed money to which the City is a party or by which any
material amount of the assets of the City is bound that would
materially affect the City's entering into, or performance of,
the Agreement.
2. The City in not in default under, and no condition
exists that with notice or lapse of time or both would
constitute a default under any judgment, order, injunction,
rule, regulation or other judicial or administrative mandate of
any court, arbitrator or governmental agency or
instrumentality, which default or potential default could
reasonably be expected to have a material adverse effect on the
City's entering into, or performance of, the Agreement.
<PAGE>
SCHEDULE 5.04
Pursuant to Section 5.04 of the Agreement, the
following are instances where the City is not in full
compliance with the terms of all applicable laws, regulations,
Permits, orders, judgments, administrative orders, regulations
and guidelines adopted or entered by governmental authorities
having jurisdiction to do so in connection with the operation
and maintenance of the AWT Facilities:
1. OSHA Process Safety Management. The City has not
yet begun a hazards analysis and no program is currently in
place.
2. RCRA Contingency Plans. Our current plans do not
yet sufficiently cover the items as required in 40 CFR Part 265
Subparts C and D.
3. Emergency Action Plan for Highly Hazardous
Chemicals. 29 CFR 1910.119 requires an emergency action plan
which is not yet completed.
4. Spill Prevention Control and Countermeasures Plan.
40 CFR Part 112 requires facilities that store oil in a single
container with a capacity of less than 660 gallons to have such
a plan. The City does not currently have a complete plan.
5. Hazard Communication Plan. Needs to be updated.
6. Hazard Communication Training. Needs to be
conducted.
7. Lock-out Tag Training. Needs to be updated.
8. Formal Respirator Program. Program and training
are needed.
9. We are in compliance with IDEM's Solid Waste Rule,
but have asked for administrative relief based on applicability
of NPDES Permit, NPDES Storm Permit, Air Permit and 503 Permit.
10. Confined Space Entry Permit Program. Has not been
fully implemented.
Note: AWT has never in the past been responsible for
developing and conducting compliance or training programs which
dealt with OSHA and RCRA regulations. In the last two to three
months, AWT has decided to move forward to develop these
programs. Items 1,2,3,4,5, and 8 listed above are all started
and are near completion.
<PAGE>
Pursuant to Section 5.04, the City also discloses the
following information with regard to current environmental
liabilities and/or complaints:
1. The City has received a Notice of Violation for
alleged air violations. This may result in a fine and VOC
limits in the new permit.
2. There is evidence of groundwater contamination due
to leaking underground storage tanks. The tanks were removed
in the mid 1980's. The groundwater is contaminated with BTEX
and other organics. The tanks were located north of the
existing maintenance/incinerator.
3. NPDES Permit Excursions. The AWT has had the
following minor excursions in the past two years:
a. March 1992--Belmont-NH3N
b. April 1992--Belmont-NH3N
c. April 1992--Southport-fecals
d. May 1992--Southport-fecals
e. July 1992--Southport-raw wet weather bypass
f. September 1992--Belmont-PE bypass
g. November 1992--Southport-wet weather bypass
and suspended solids
h. March 1993--Belmont-amenable cyanide
i. June 1993--Belmont-fecals
j. July 1993--Belmont-fecals
k. August 1993--Belmont-chlorine residual
l. September 1993--Southport-no record of DO
(probe malfunction)
4. The AWT Facilities have received the following
number of complaints regarding odor over the past two years:
a. 1992 Belmont--0 complaints
b. 1992 Southport--0 complaints
c. 1993 Belmont--1 complaints
d. 1993 Southport--0 complaints
There may have been additional calls received by the Plants.
The console logs were not reviewed.
<PAGE>
SCHEDULE 5.06
Pursuant to Section 5.06 of the Agreement, the
following components of the AWT Facilities would not be
considered to be in good working order and condition:
BELMONT FACILITY
1. Oxygen Nitrification System.
a. Waste Pumps 3 - Not functional and no plans to
repair.
b. Mixer, Train #1 Stage #8 - Needs new bearing.
Projected to be repaired by January 1, 1994.
2. Dissolved Air Flotation. Tank Numbers 5,6,7,8,9 and
10 - Waiting for new annual contract to purchase parts.
3. Belt Filter Presses.
a. Presses Number 1,2,3 in the South Building.
b. Presses Number 6 and 7 in the North Building.
Number 6 should be repaired by end of 1993 and the
parts are on order for Number 7.
c. Three Moyno Pumps.
4. Incineration. Incinerator Number 8.
5. Odor Control Systems. All systems in Solids Processing
Area--need new chemical feed pumps and piping.
6. Bio Roughing.
a. LEL's and Controllers - waiting on repair parts.
b. Traveling Water Screen Number 1 - probably will be
abandoned or will become a capital improvement
project under the Agreement.
SOUTHPORT FACILITY
1. Bio Roughing.
a. Traveling Water Screens will be abandoned or
replaced as a capital improvement project.
2. Oxygen Nitrification System.
a. Intermediate Pump Station is operable, but out of
service.
<PAGE>
WHITE RIVER ENVIRONMENTAL PARTNERSHIP
PARTNERSHIP AGREEMENT
This Agreement, made and entered into as of August 20,
1993, by and among LAH White River Corporation, an Indiana
corporation ("LAH"), JMM White River Corporation, an Indiana
corporation ("JMM") and IWC Services, Inc., an Indiana
corporation ("IWCS") (hereafter sometimes individually referred
to as a "Partner" and sometimes collectively referred to as
"Partners").
WITNESSETH:
WHEREAS, the Partners hereto desire to form a general
partnership (hereinafter referred to as the "Partnership"),
under the laws of the State of Indiana upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual
covenants hereinafter contained, and intending to be legally
bound hereby, it is agreed by and among the Partners as
follows:
Article I
BASIC STRUCTURE
Sec. 1.1 Formation
The parties hereby form a general partnership pursuant
to the laws of the State of Indiana.
Sec. 1.2 Name
The business of the Partnership shall be conducted
under the name of White River Environmental Partnership.
Sec. 1.3 Place of Business
The principal office and place of business of the
Partnership shall be located at 1220 Waterway Boulevard,
Indianapolis, Indiana 46202, or such other place as the
Managing Partner may from time to time designate.
Sec. 1.4 Term
The Partnership shall commence on August 20, 1993, and
shall terminate on December 31, 2023, unless sooner terminated
in one of the following manners:
(a) By unanimous agreement of the Partners, or
<PAGE>
(b) By the completion of the purpose intended (as
evidenced by action of the Management Committee under
Sec. 3.6 hereof), or
(c) Pursuant to this agreement, or
(d) By applicable Indiana law, or
(e) By bankruptcy, withdrawal, reorganization, or
expulsion of all of the then Partners.
Sec. 1.5 Purpose
(a) The primary purpose of the Partnership shall
be to submit a proposal (the "Proposal") and to carry
out a service contract (the "Service Contract") with the
City of Indianapolis (the "City") for the operations of
wastewater treatment facilities.
(b) A secondary purpose of the Partnership shall
be to conduct and carry out any and all other lawful
business authorized by the Management Committee under
Sec. 3.6 or Sec. 3.7 hereof.
Sec. 1.6 Investment Representative of Partners
Each Partner represents and warrants that he is
acquiring his interest in the Partnership for his own account,
for investment, and not with a view to the sale or distribution
thereof in violation of the Securities Act of 1933, as amended,
Indiana securities regulation law or other applicable law.
Article II
FINANCIAL ARRANGEMENTS
Sec. 2.1 Definition of Capital
For purposes of this document "capital" shall be
defined as property owned by the Partnership other than
property of a kind which may be includable in the inventory of
the Partnership or which is held for sale to customers of the
Partnership in its ordinary course of business.
Sec. 2.2 Capital Accounts
Notwithstanding anything herein to the contrary, the
Partnership intends to maintain capital accounts in accordance
with the regulations under Internal Revenue Code
Section 704(b).
An individual capital account shall be maintained by
each partner. Contributions to the capital of the Partnership
by a Partner shall be credited to its individual capital
<PAGE>
account. In the event a Partner's capital account contains
capital (as defined above), the gain on such property and the
losses, deductions, amortization depreciation associated with
such property shall be added to or subtracted from the
Partner's capital account (using the initial capital account as
a base).
Sec. 2.3 Allocation of Profits and Losses
All profits of the Partnership shall be deemed to be
income of the Partners according to their respective Percentage
Share of Capital. All losses of the Partnership shall be
deducted from the Partners' capital accounts according to their
respective Percentage Share of Capital. Undistributed profits
shall be added to the relevant Partners' capital accounts.
Amounts distributed in excess of current profits shall be
deducted from the relevant Partners' capital accounts.
Upon dissolution, any Partner having a negative capital
account balance shall be required to make up such balance.
Sec. 2.4 Capital; Pre-formation Qualified Expenses
The amount of the basic capital of the Partnership
shall be fixed from time to time by the Management Committee
under Sec. 3.6 hereof.
The Partnership, as authorized by the Management
Committee under Sec. 3.7 hereof, shall select the legal,
financial and technical advisers/consultants deemed necessary
to assist in the preparation of the Proposal. The relevant
out-of-pocket fees and costs of such advisors ("external
expenses") will be borne in proportion to their Percentage
Share of Capital.
The non-out-of-pocket expenses directly incurred by a
Partner for preparation of the Proposal and for negotiation of
the Service Contract ("internal expenses") will be recorded by
such party. As soon as possible, a budget will be agreed by
the Partners for external and internal expenses.
If the Partnership is awarded the Service Contract, all
such external and internal expenses (including such expenses
incurred prior to the formation of the Partnership) will be
considered as part of the contributions of the Partners to
their respective capital accounts of the Partnership. In the
event the Partnership is not awarded the Service Contract, all
mutually agreed expenses incurred by each Partner shall be
totaled and, as promptly as practical, proportionate
reimbursement shall be made so that each Partner's share of the
aggregate is the same as such Partner's Percentage Share of
Capital.
<PAGE>
Expenses incurred by a Partner in connection with the
negotiation of this Partnership Agreement or the O&M Agreement
will not qualify for reimbursement or as an equity contribution
as provided above.
Sec. 2.5 Additional Capital Contributions
Following the fixing of the basic capital of the
Partnership, initially and upon each increase, each Partner
shall contribute to the capital of this Partnership an amount
according to his then Percentage Share of Capital when due, as
specified by the Management Committee under Sec. 3.6 hereof, or
otherwise as called for by the Managing Partner by not less
than seven days' prior written notice.
Sec. 2.6 Rights of the Partners Upon Default of a Partner
Any Partner refusing for more than 30 days following
notice under Sec. 2.5 to contribute according to his then
Percentage Share of Capital the amounts called for by the
Managing Partner under Sec. 2.5 hereof or in accordance with
the due date specified by the Management Committee under
Sec. 3.6 hereof, as the case may be, shall lose a share of its
Percentage Share of Capital of the Partnership equal to 150% of
the ratable percent of the contribution called for as such
amount shall then represent the percentage of the total capital
of the Partnership, following the contributions made in
response to such call by the other Partners. The calculation
of the Partnership's and Partner's capital shall be based upon
the initial capital contributions of the Partners adjusted for
any Partner's additional capital contribution or withdrawal at
the value of such contribution or withdrawal when made as well
as cumulative credited earnings and losses.
Sec. 2.7 Percentage Share of Capital
The Percentage Share of Capital of each Partner shall
be (unless otherwise modified by the terms of this agreement)
as follows:
INITIAL PERCENTAGE
NAMES SHARE OF CAPITAL
IWCS 52
JMM 43
LAH 5
Sec. 2.8 Partners' Share of the Profits and Losses
Subject to the Regulations under Internal Revenue Code
sections 704(b) and (c), the Partners shall share in the
profits and losses of the Partnership according to their then
Percentage Share of Capital.
<PAGE>
Sec. 2.9 Allocation Upon Buy-Out or Shift in Interest
Nothing in this agreement to the contrary withstanding,
upon a sale of a Partner's interest or upon the withdrawal of a
Partner from this Partnership or upon a shift in Partnership
interests by inter-Partner transfers the operating profits and
losses of this Partnership for the fiscal year to date shall be
allocated as follows:
Said Partner's then Percentage Share of Capital shall be
multiplied times the actual total amount of each item of
Partnership gain or loss, as defined in Section 702 of
the Internal Revenue Code (as amended or supplemented),
at the closing of the books on the date of sale or
withdrawal.
Sec. 2.10 Adjustments
Nothing herein set forth to the contrary,
(a) each Partner's capital account shall be
increased by:
(i) the amount of money
contributed by the Partner to the
Partnership,
(ii) the fair market value of
property contributed by the Partner to the
Partnership (net of liabilities secured by
such contributed property that the
Partnership is considered to assume or take
subject to), and
(iii) allocation to the Partner
of Partnership income and gain (or items
thereof), including income and gain exempt
from tax and income and income and gain, but
excluding income and gain described in
paragraph (b) below; and
(b) shall be decreased by:
(i) the amount of money
distributed to the Partner by the
Partnership,
(ii) the fair market value of
property distributed to the Partner by the
Partnership (net of liabilities secured by
such distributed property that such Partner
is considered to assume or take subject to
under Internal Revenue Code Section 752),
<PAGE>
(iii) allocations to the
Partner of expenditures of the Partnership
described in Internal Revenue Code
Section 705(a)(2)(B), and
(iv) allocations of
Partnership loss and deduction (or item
thereof), excluding items described in
(iii) above and loss or deduction described
in paragraphs (c)(i) or (ii) below; and is
otherwise adjusted in accordance with the
additional rules set forth in this paragraph.
(c)(i) Allocations to reflect
reevaluations. If Partnership property is
properly reflected in the capital accounts of
the Partners and on the books of the
Partnership at a book value that differs from
the adjusted tax basis of such property, then
the capital accounts of the Partners shall be
adjusted solely for allocations of the book
items to such Partners and the Partners'
shares of the corresponding tax items shall
not be independently reflected by further
adjustments to the Partners' capital
accounts.
(ii) Credits. Allocations of
tax credits and tax credit recapture shall
not be reflected by adjustments to the
Partners' capital accounts (except to the
extent that adjustments to the adjusted tax
basis of Partnership Internal Revenue Code
Section 38 property in respect of tax credits
and tax credit recapture give rise to capital
account adjustments).
Sec. 2.11 Interest
No interest shall be paid on any capital account or
contribution to the capital of the Partnership.
Sec. 2.12 Return of Capital Contributions
No Partner shall have the right to demand the return of
his capital contributions except as herein provided.
Sec. 2.13 Rights of Priority
Except as herein provided, the individual Partners
shall have no right to any priority over each other as to the
return of capital contributions except as herein provided.
<PAGE>
Sec. 2.14 Distributions
Distributions to the Partners of net operating profits
of the Partnership, as hereinafter defined, shall be made at
such times as the Management Committee shall decide under
Sec. 3.6 hereof. Such distributions shall be made to all
Partners simultaneously.
For the purpose of this Section, net operating profit
for any accounting period shall mean the gross receipts of the
Partnership for such period, less the sum of all cash expenses
of operation of the Partnership, and such sums as may be
necessary to establish a reserve for operating expenses.
In the event the Management Committee shall determine
under Sec. 3.6 hereof that the capital of the Partnership
previously contributed by the Partners is no longer all
required by the Partnership, a distribution in return of
capital may be authorized by the Management Committee under
Sec. 3.6 hereof.
Sec. 2.15 O&M Agreement
Immediately prior to the presentation of the Proposal,
the Partnership will enter into an Operations and Maintenance
Agreement ("O&M Agreement") with JMM and JMM White River O&M
Partnership (the "O&M Partnership"). Under the O&M Agreement
the O&M Partnership will agree to carry out the terms of the
Service Contract with the City.
Under the O&M Agreement, the O&M Partnership will
provide all employees to perform the Service Contract, contract
for power, chemicals and other necessary materials and supplies
and other expert consulting services as needed, and make other
necessary purchases from third parties to perform the Service
Contract, all of which costs shall be reimbursed by the
Partnership under the terms of the O&M Agreement.
A management fee will be paid to JMM under the O&M
Agreement in order to remunerate it for its operations/
maintenance and technology know-how, management expertise and
corporate image.
The management fee will be 10% of annual GAAP pre-tax
earnings of the Partnership (before deducting the management
fee) as set forth in the Partnership's annual financial
statements, as more specifically defined in the O&M Agreement.
Sec. 2.16 Annual Budget and Financial Plan
An annual budget and financial plan for each financial
year of the partnership (and any change thereto) shall be
prepared by the General Manager and be presented to the
Management Committee for approval under Sec. 3.7 hereof. In
<PAGE>
the event an annual budget and financial plan is approved under
Sec. 3.7 but not unanimously, such annual budget and financial
plan together with any modifications proposed thereto by any
director shall be resubmitted for discussion and reapproval at
the next meeting of the Management Committee. If the annual
budget and financial plan, as previously approved or as
modified, is approved at such subsequent meeting of the
Management Committee under Sec. 3.7 hereof without the
favorable vote of all the members, then the approved budget and
financial plan shall nevertheless be binding on all parties
hereto.
Article III
MANAGEMENT
Sec. 3.1 Managing Partner
The Managing Partner shall be IWCS.
Sec. 3.2 Management of the Partnership
The Managing Partner, acting through the Senior
Manager, shall manage the day-to-day operations of the
Partnership, all pursuant to the powers allocated to the
Managing Partner herein and subject to the Management Committee
of the Partnership.
Sec. 3.3 Restrictions on Rights and Powers of Partners
No Partner without the consent of all the other
Partners shall:
(a) Do any act in contravention of this agreement.
(b) Do any act which would make it impossible to
carry on the ordinary business of the Partnership.
(c) Confess judgement against the Partnership.
(d) Possess Partnership property, or assign his
interest or rights in specific Partnership property, for
other than a Partnership purpose.
Sec. 3.4 Management Committee
The business and affairs of the Partnership shall be
managed by a six-member Management Committee. Each general
partner shall be entitled to nominate and elect members of the
Management Committee as follows:
IWCS - 3 Members
JMM - 2 Members
LAH - 1 Members
<PAGE>
In the event of a tie vote by the full Management
Committee the Senior Manager shall be entitled at his election
to break the tie by casting an additional vote (the "casting
vote"), provided that the casting vote shall not be available
for the matters described in Sec. 3.6 and 3.7 hereof.
Sec. 3.5 Managers
The Management Committee shall elect managers to carry
on the day-to-day business of the Partnership. The managers
will include the following:
(a) The Senior Manager shall be a member of the
Management Committee of the Partnership as nominated by
IWCS.
(b) The General Manager shall be selected from
persons nominated by JMM.
(c) The Chief Financial Officer (in charge of
treasury, accounting and audit functions for the
Partnership) shall be a person selected by majority vote
of the Management Committee.
(d) Such other managers as may be appropriate in
the discretion of the Management Committee.
Sec. 3.6 Actions which require Super Majority Vote
The following actions must receive an affirmative vote
from at least one member of the Management Committee who has
been nominated by each of the three Partners (a "super majority
vote"):
(a) Amend this agreement.
(b) Approve pricing of the proposal.
(c) Approve form and structure of the Proposal.
(d) Fix amount of basic capital of the
Partnership, and any changes thereof.
(e) Authorize signature by the Partnership of the
Service Contract, and any amendments thereto.
(f) Approval of the O&M Agreement.
(g) Admission of a new Partner.
(h) Liquidation of the Partnership.
(i) Distributions to the Partners.
<PAGE>
(j) Settling of claims against the Partnership of
$100,000 or more.
Sec. 3.7 Actions which require Two-thirds Vote
The following actions must receive an affirmative vote
from at least two-thirds (four members) of the full Management
Committee:
(a) Approval of the annual budget and financial
plan of the Partnership, including overrun tolerances.
(b) Approval of the annual budget of the O&M
Partnership under the O&M Agreement.
(c) Election and compensation of the managers of
the Partnership, including incentive compensation and
plans to provide benefits to employees, if any, of the
Partnership.
(d) Selection of auditors for the Partnership.
(e) Selection of legal counsel for the Partnership
for matters involving the Partnership, the Proposal, the
Service Contract or the O&M Agreement.
(f) Financing transactions, including borrowings
of funds and pledging of Partnership assets, aggregating
$500,000 or more.
(g) Settling of claims between $25,000 and
$100,000.
(h) Establishment of authorization levels for
expenditures.
Sec. 3.8 Other Actions of the Management Committee
All actions of the Management Committee not specified
in Sec. 3.6 or Sec. 3.7 hereof shall be taken by a majority
vote of the members acting on the matter, provided that at
least four members shall be required for a quorum.
Sec. 3.9 Actions by the Managing Partner
The Managing Partner, acting through the Senior
Manager, shall have the authority to take the following
actions:
(a) Making calls for capital authorized under
Sec. 3.6(d) hereof.
<PAGE>
(b) Short-term borrowing of funds for working
capital purposes and other routine treasury functions to
carry out day-to-day operations of the Partnership.
(c) Approval for overruns and other amendments to
the budget and financial plan for the Partnership and
the budget of the O&M Partnership under the O&M
Agreement, subject to maximum tolerance levels fixed by
the Management Committee under Sec. 3.7 hereof.
(d) Distribution of incentive compensation to
managers of the Partnership in accordance with plans, if
any, approved by the Management Committee under Sec. 3.7
hereof.
(e) Designation of tax matters partner to sign tax
returns and handle tax audits, if required.
(f) Generally to do any act or thing and execute
all instruments necessary, incidental or convenient to
the proper administration of the Partnership, other than
actions described in Sec. 3.6 and Sec. 3.7 hereof.
Sec. 3.10 Meetings of the Management Committee
Regular meetings of the Management Committee shall be
held on the schedule as fixed from time to time by the
Management Committee. Special meetings of the Management
Committee may be called by the Senior Manager, the General
Manager or any member on not less than three days' notice,
which notice shall specify the purpose of the special meeting.
Meetings of the Management Committee may be held by conference
telephone or by teleconferencing. The Management Committee may
amplify and amend the provisions of this Sec. 3.10 by action
taken under Sec. 3.6 hereof.
Sec. 3.11 Liability
Each Partner shall be liable for his or her
professional mistakes and errors in judgement to the extent
that liability is finally imposed against this Partnership or
any of its Partners by any court of competent jurisdiction or
pursuant to a binding arbitration process which the Partnership
either is or becomes subject to, in favor of a third party
provided that such liability shall only be imposed when such
Partner was not acting:
(i) in accordance with clear
professional standards; and
(ii) in accordance with the
standards of this Partnership.
<PAGE>
Sec. 3.12 Indemnification of Partnership Managers
The managers of the Partnership, when acting in their
respective capacities as such, shall be entitled to indemnity
from the Partnership for any act performed by them within the
scope of the authority conferred on them by this agreement,
except for acts of malfeasance or negligence or for damages
arising from any misrepresentations.
Article IV
RIGHT TO ASSIGN PARTNERSHIP INTEREST
Sec. 4.1 Partner's Right of Assignment
Except as herein provided, a Partnership interest shall
not be assigned.
Sec. 4.2 Transfers
Except as herein specifically provided, the Partners
shall not sell, assign, pledge or otherwise shift, transfer or
encumber in any manner or by any means whatever, all or any
part of the interests of the Partnership now owned or hereafter
acquired by them without having first obtained the consent of
and offered it to the other Partner(s) and to the Partnership
in accordance with the terms and conditions of this agreement.
Except as herein specifically provided, consent to transfer may
be refused for cause or for no cause, in the discretion of the
Partnership and of each Partner.
Sec. 4.3 Right of First Refusal
In the event that any Partner is in receipt of a bona
fide offer (from an offeror as to which consent required under
Sec. 4.2 hereof has not been refused) to purchase his interest,
and shall desire in good faith to sell, assign, transfer or
otherwise dispose of his interest in accordance with the terms
of such offer, he shall serve notice to such effect upon the
other Partners and Partnership by registered or certified mail,
return receipt requested, and said notice shall indicate the
name and address of the person offering to purchase the same
and the price and terms of payment upon which said sale is
proposed. Said notice shall also consist of an offer to sell
such interest to the other Partners and to the Partnership upon
the same payment terms as the proposed sale. In such event the
Partnership shall have the first right to purchase such
interest on the same terms and conditions as set forth in the
offer and, in the event the Partnership itself does not desire
to make such purchase, then the other Partners shall have the
next right to purchase such interest. If more than one Partner
desires to purchase such interest it shall be allocated among
such Partners on the basis of their respective Percentage
Shares of Capital. If the Partnership or one or more Partners
<PAGE>
desire to make such purchase, the selling Partner must sell its
interest to such purchaser or purchasers. If neither the
Partnership nor another Partner notifies the selling Partner of
its desire to purchase such interest within 60 days following
receipt of notice of the selling Partner's desire to sell such
interest, then the selling Partner following such 60-day period
shall have the right to sell its interest to the person making
such offer on the terms of such offer within the following
60 days, after which the provisions of this Article shall again
prohibit any sale or assignment of a Partnership interest.
Sec. 4.4 Buy/Sell Agreement
For purposes of this Sec. 4.4, JMM and LAH shall be
considered one Partner. Under the circumstances described in
Sec. 7.12, one Partner may give notice in writing to the other
Partner, fixing a price per unit of Partnership interest and
giving the other Partner the option either to buy all, but not
less than all, of the units of interest of the offeror at such
price or to sell all, but not less than all, of its respective
units of interest to the offeror at such price. The notice may
be provided only in accordance with Sec. 7.12. The Partner
receiving such notice shall reply thereto in writing within
thirty (30) days, shall state its election either to buy or
sell and shall fix the closing date for such purchase and sale
which shall be not less than thirty (30) days nor more than
sixty (60) days after the date of such reply. If a Partner
fails to reply within such thirty (30) day period, then the
original offeror may, within fifteen (15) days after the
expiration of such thirty (30) day period, give notice in
writing to the other party selecting which course of action he
elects to follow, i.e., to buy at the specified price or to
sell at the specified price, and fixing the closing date for
the purchase and sale which shall be not less than thirty (30)
days nor more than sixty (60) days after the date of such
notice.
For purposes of this Sec. 4.4, a unit equals one (1)
percent of the Percentage Share of Capital in the Partnership.
Sec. 4.5 Substitution of Additional Partners
Notwithstanding anything herein to the contrary the
assignee (including, but without limitation, any transferee or
purchaser) of the whole or any part of the Partnership interest
shall not be substituted as a Partner without prior written
consent of the Management Committee under Sec. 3.6 hereof. In
no event shall such consent be given unless assignee, as a
condition precedent to such consent, has:
(a) Accepted and assumed in a form satisfactory to
the Managing Partner all terms and provisions of this
agreement;
<PAGE>
(b) And if the assignee is a corporation, provided
a certified copy of a resolution of its Management
Committee in form satisfactory to the Managing Partner
as to the matters described in (a) above;
(c) Executed such other documents or instruments
as may be required in order to effectuate its admission
as a Partner; provided an opinion of counsel in form and
substance satisfactory to counsel for the Partnership,
that neither the offering nor the assignment of the
Partnership interest violates any provision of any
federal or state securities law; and executed a
statement that he is acquiring his interest in the
Partnership for his own account for investment, and not
with a view to sale or distribution thereof;
(d) Executed such other documents or instruments
as the Managing Partner may reasonably require to order
to effectuate the admission of such assignee as a
Partner.
Sec. 4.6 Dissolution, Withdrawal, etc. of a Partner
The dissolution, withdrawal, assignment for the benefit
of creditors, adjudication of bankruptcy or legal incapacity of
a Partner shall not dissolve or terminate the Partnership.
Furthermore, any Partnership interest assigned for the benefit
of creditors or upon or due to the bankruptcy of a Partner
shall automatically become a non-voting interest and as soon as
practical shall be mandatorily converted into a non-voting
limited partnership interest, and in such event each Partner
hereby authorizes the Partnership and its managers to make such
filings and take such other actions as may be necessary to
convert the Partnership into a limited partnership under
Indiana law for such purpose.
Sec. 4.7 Inter-group Transfers
Notwithstanding the restrictions set forth in Sec. 4.2
hereof, the Partners shall be permitted to transfer part or all
of their Partnership interests to affiliated companies such as,
IWC Resources Corporation, Lyonnaise des Eaux--Dumez, GWC
Corporation and Montgomery Watson Americas, Inc. and their
wholly-owned subsidiaries, following 30 days' notice to the
Partnership, and provided that there shall not result from any
such inter-group transfer an impairment of a financial
commitment of another Partner then in place in respect of the
Partnership.
<PAGE>
Article V
LIQUIDATION OF PARTNERSHIP AND OF PARTNER'S INTEREST
Sec. 5.1 Dissolution
In the event that the Partnership shall hereafter be
dissolved for any reason whatsoever, a full and general account
of its assets, liabilities and transactions shall at once be
taken. Such assets may be sold and turned into cash as soon as
possible and all debts paid and any amounts due the Partnership
collected. Any assets distributed in kind shall be valued at
their fair market value. The proceeds thereof shall thereupon
be applied as follows:
(a) To discharge the debts and liabilities of the
Partnership and the expenses of liquidation.
(b) To pay each Partner its proportionate share of
any remaining positive capital account to the extent of
such capital account.
(c) To divide the surplus, if any, among the
Partners in proportion to each Partner's then Percentage
Share of Capital.
Article VI
MISCELLANEOUS--SUBSTANTIVE PROVISIONS
Sec. 6.1 Year, Books, Statements
The Partnership's fiscal year shall commence on
January 1st of each year and shall end on December 31st of each
year. Full and accurate books of account shall be kept at such
place as the Managing Partner may from time to time designate
showing the condition of the business and finances of the
Partnership; and each Partner shall have access to such books
of account and shall be entitled to examine them at any time
during ordinary business hours. At the end of each year, the
Managing Partner shall cause the Partnership's accountants to
prepare a balance sheet setting forth the financial position of
the Partnership as of the end of that year and a statement of
operations (income and expenses) for that year. A copy of the
balance sheet and statement of operations shall be delivered to
each Partner as soon as is available.
The Managing Partner shall also cause a monthly
statement of income, cash flow, source and use of funds, and
summary balance sheet to be submitted to the Partners promptly
after the end of each month.
The Partnership books shall be kept on the basis and in
accordance with generally accepted accounting principles
("GAAP").
<PAGE>
Sec. 6.2 Partnership's Agents
Pursuant to the Partnership's day to day activity, and
subject to Sec. 3.7(d) and (e) hereof, the Managing Partner
shall have the power to employ investment counsel, brokers,
accountants, attorneys and any other agents to act in the
Partnership's behalf, generally to do any act or thing and
execute all instruments necessary, incidental or convenient to
the proper administration of the Partnership property;
otherwise said employment shall only be made if agreed to by
all the Partners.
Sec. 6.3 Checks
All checks or demands for money and notes of the
Partnership shall be signed by the Managing Partner or such
other person or persons as the Managing Partner may from time
to time designate.
Sec. 6.4 Conflicts of Interest; Confidential Information;
Exclusivity
Partners may engage in or possess interest in other
business ventures of every kind and description for their own
accounts. Neither the Partnership nor any of the Partners
shall have any rights by virtue of this agreement in such
independent business ventures or to the income or profits
derived therefrom.
However, each Partner hereto agrees that any
proprietary or non-public information received by it from
another Partner in connection with the preparation and
submittal of the Proposal, the carrying out of the Service
Contract or in regard to the Partnership will be treated as
confidential. No Partner shall disclose, without the prior
written consent of the other Parties, any information provided
to it as set forth above, in any manner whatsoever, in whole or
in part, to any third party or use such information in any
manner whatsoever other than for the purpose of pursuing such
Service Contract on behalf of the Partnership. Any information
provided by JMM with regard to the operation of a Service
Contract or to the technical aspect of providing sewage
services under such a contract shall be solely for the use of
the Partnership with regard to the Service Contract and may not
be used for the purpose of preparing a proposal for any similar
service contract without the written permission of JMM.
The Partners agree to act and coordinate their efforts
with each other on an exclusive basis with respect to the
possible submittal of the Proposal. Therefore, during the term
of the Partnership neither JMM, IWCS nor LAH nor any
representative thereof will hold discussions regarding the
Proposal or the Service Contract with third parties.
<PAGE>
Sec. 6.5 Use of Name
The name of White River Environmental Partnership shall
belong to and may be used by the Partnership and shall not be
sold or disposed of so long as the Partnership shall continue
in existence.
In the event of the withdrawal of any of the Partners
during the term of the Partnership, the withdrawing Partner
shall have no interest in the firm name and shall have no right
to receive any payment therefor.
Upon dissolution of the Partnership or the termination
thereof, the Partnership name shall become the property of
IWCS.
Article VII
MISCELLANEOUS
Sec. 7.1 Execution in Counterpart
This Partnership Agreement may be executed in any
number of counterparts, each of which shall be taken to be an
original. Valid execution shall be deemed to have occurred
when a Partnership signature page is executed by the Partner in
question and countersigned by the Managing Partner.
Sec. 7.2 Notices
All notices to be given as set forth herein shall be in
writing and sent by telefacsimile or delivered to the ether
Party at its address specified below or at such other address
designated by such Party in the future.
To IWCS: IWC Services, Inc.
1220 Waterway Boulevard
P.O. Box 1220
Indianapolis, IN 46206
Attention: Alan Kimbell
(317) 236-8680
(317) 163-6448 (Fax)
To JMM: JMM White River Corporation
c/o JMM Operational Services, Inc.
1700 Broadway, Suite 1100
Denver, CO 80290
Attention: Ronald J. Ballard
(303) 860-0810
(303) 860-7096 (Fax)
<PAGE>
To LAH: LAH White River Corporation
c/o Lyonnaise American Holding, Inc.
72, Avenue de la Liberte
92022 Nanterre, France
Attention: Jacques F. Petry
33.1.46.95.51.54
33.1.46.95.51.80 (Fax)
Sec. 7.3 Modifications
No modification of this agreement shall be valid unless
such modification is in writing, approved under Sec. 3.6 and
signed by the parties hereto.
Sec. 7.4 Titles and Subtitles
Titles of the paragraphs and subparagraphs are placed
herein for convenient reference only and shall not to any
extent have the effect of modifying, amending or changing the
express terms and provisions of this Partnership agreement.
Sec. 7.5 Words and Gender or Number
As used herein, unless the context clearly indicates
the contrary, the singular number shall include the plural, the
plural the singular and the use of any gender shall be
applicable to all genders.
Sec. 7.6 Severability
In the event any parts of this agreement are found to
be void, the remaining provisions of this agreement shall
nevertheless be binding with the same effect as though the void
parts were deleted.
Sec. 7.7 Effective Date
This agreement shall be effective only upon execution
by all of the proposed Partners.
Sec. 7.8 Execution
This agreement may be executed by each of the Partners
on a separate signature page.
Sec. 7.9 Waiver
No waiver of any provision of this agreement shall be
valid unless in writing and signed by the person or party
against whom charged.
<PAGE>
Sec. 7.10 Applicable Law
This agreement shall be subject to and governed by the
laws of the State of Indiana.
Sec. 7.11 Agreement Binding
This agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and
assigns.
Sec. 7.12 Dispute Resolution
Any dispute among the Partners shall initially be
subject to good faith consultation and negotiation in an
attempt to resolve the matter by mutual agreement. If the
dispute remains unresolved, the parties shall have the ultimate
recourse of the buy/sell agreement provided in Sec. 4.4 hereof
on a two-party basis, with IWCS being considered one party and
JMM and LAH being collectively considered the other party.
Prior to initiating the provisions of Sec. 4.4 hereof,
alternative dispute resolution measures may be initiated at the
election of any party to the dispute.
SIGNATURE PAGE
In witness whereof the undersigned, a Partner of the
White River Environmental Partnership, does hereby, as of the
day and year below written, execute said agreement by executing
this signature page.
Witnesses Partner
/s/ David Sherman IWC Services, Inc.
Date Signed: 8/20/93 By: /s/ Alan R. Kimbell
Title: President
Witnesses Partner
/s/ David Sherman JMM White River
Corporation
Date Signed: 8/20/93 By: /s/ Ronald J.
Ballard
Title: President
<PAGE>
Witnesses Partner
/s/ David Sherman LAH White River Corporation
Date Signed: 8/20/93 By: /s/ Patrick R. Cairo
Title: Director
<PAGE>
PLAN AND AGREEMENT OF MERGER
Among
IWC RESOURCES CORPORATION
RESOURCES ACQUISITION CORP.
S. M. & P. CONDUIT CO., INC.
and its shareholders
June 14, 1993
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time of the Merger . . . . . . . . . . . 2
1.3 Articles of Incorporation, By-Laws, Directors and
Officers . . . . . . . . . . . . . . . . . . . . . 2
1.4 Conversion of Shares . . . . . . . . . . . . . . . 3
1.5 Non-Compete Agreements . . . . . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS . . . . 3
2.1 Corporate Existence of Company, Etc . . . . . . . 3
2.2 Capitalization . . . . . . . . . . . . . . . . . 4
2.3 Title to Shares . . . . . . . . . . . . . . . . . 4
2.4 Capacity of the Shareholders . . . . . . . . . . 5
2.5 Consents and Approvals . . . . . . . . . . . . . 5
2.6 No Conflicts . . . . . . . . . . . . . . . . . . 5
2.7 Subsidiaries . . . . . . . . . . . . . . . . . . 5
2.8 Financial Statements . . . . . . . . . . . . . . 5
2.9 Liabilities . . . . . . . . . . . . . . . . . . . 6
2.10 Absence of Certain Changes or Events . . . . . . 6
2.11 Title to Properties . . . . . . . . . . . . . . . 7
2.12 Trademarks, Etc . . . . . . . . . . . . . . . . . 7
2.13 Insurance . . . . . . . . . . . . . . . . . . . . 8
2.14 Company Contracts . . . . . . . . . . . . . . . . 8
2.15 Litigation . . . . . . . . . . . . . . . . . . . 11
2.16 Taxes . . . . . . . . . . . . . . . . . . . . . . 11
2.17 Compliance with Laws . . . . . . . . . . . . . . 12
2.18 Employee Benefits and Agreements . . . . . . . . 12
2.19 [omitted] . . . . . . . . . . . . . . . . . . . . 13
2.20 Licenses and Permits . . . . . . . . . . . . . . 14
2.21 Business Relations . . . . . . . . . . . . . . . 14
2.22 Interest in Competitors, Suppliers, Customers,
Etc . . . . . . . . . . . . . . . . . . . . . . . 14
2.23 Accounts Receivable . . . . . . . . . . . . . . . 14
2.24 Employee Relations . . . . . . . . . . . . . . . 15
2.25 Environmental Matters . . . . . . . . . . . . . . 15
2.26 No Brokers . . . . . . . . . . . . . . . . . . . 16
2.27 Vehicles . . . . . . . . . . . . . . . . . . . . 16
2.28 Non-Disposition of Resources Shares . . . . . . . 16
2.29 Non-Redemption of Company Stock . . . . . . . . . 16
2.30 No Spin-Off . . . . . . . . . . . . . . . . . . . 16
2.31 [omitted] . . . . . . . . . . . . . . . . . . . . 17
2.32 Distributions by the Company . . . . . . . . . . 17
<PAGE>
2.33 Liabilities of the Company . . . . . . . . . . . 17
2.34 Bankruptcy . . . . . . . . . . . . . . . . . . . 17
2.35 Insolvency . . . . . . . . . . . . . . . . . . . 17
2.36 Company's Assets . . . . . . . . . . . . . . . . 17
2.37 S Election . . . . . . . . . . . . . . . . . . . 17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RESOURCES . . . . . . 18
3.1 Organization . . . . . . . . . . . . . . . . . . . 18
3.2 Corporate Power and Authority, Etc . . . . . . . . 18
3.3 No Conflicts . . . . . . . . . . . . . . . . . . . 18
3.4 Consents . . . . . . . . . . . . . . . . . . . . . 18
3.5 Resources' SEC Reports . . . . . . . . . . . . . . 18
3.6 No Brokers . . . . . . . . . . . . . . . . . . . . 19
3.7 Articles of Incorporation and By-Laws . . . . . . 19
ARTICLE IV
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS . . . . . 19
4.1 Conduct of Business . . . . . . . . . . . . . . . 19
4.2 Undertakings . . . . . . . . . . . . . . . . . . 21
4.3 Access . . . . . . . . . . . . . . . . . . . . . 21
4.4 Confidentiality . . . . . . . . . . . . . . . . . 21
4.5 Exclusivity . . . . . . . . . . . . . . . . . . . 22
4.6 Shareholder Debt . . . . . . . . . . . . . . . . 22
4.7 Investment Covenants . . . . . . . . . . . . . . 22
4.8 Legend on Resources Shares . . . . . . . . . . . 23
4.9 Shareholder Approval of Merger . . . . . . . . . 23
4.10 Non-Compete Agreements . . . . . . . . . . . . . 23
4.11 Final "S Corporation" Income Tax Returns . . . . 23
ARTICLE V
COVENANTS OF RESOURCES . . . . . . . . . . . . . . . . 23
5.1 Undertakings . . . . . . . . . . . . . . . . . . . 23
5.2 Confidentiality . . . . . . . . . . . . . . . . . 24
5.3 Tax Covenants . . . . . . . . . . . . . . . . . . 24
5.4 Non-Compete Agreement . . . . . . . . . . . . . . 25
5.5 Repayment of Shareholder Debt . . . . . . . . . . 25
5.6 Rule 144 . . . . . . . . . . . . . . . . . . . . . 25
5.7 Access to Records . . . . . . . . . . . . . . . . 26
5.8 Release of Claims . . . . . . . . . . . . . . . . 26
5.9 Personal Guarantees . . . . . . . . . . . . . . . 26
5.10 Amendment Creating Preferred Stock . . . . . . . 26
5.11 Certain Post-Closing Matters . . . . . . . . . . 27
ARTICLE VI
CONDITIONS TO RESOURCES' AND NEWCO'S OBLIGATIONS . . . 27
<PAGE>
6.1 Representations, Warranties, and Covenants of
Shareholders and Company . . . . . . . . . . . . . 27
6.2 Further Action . . . . . . . . . . . . . . . . . . 28
6.3 No Governmental or Other Proceeding . . . . . . . 28
6.4 Opinion of Shareholders' Counsel . . . . . . . . . 28
6.5 Employment Agreement . . . . . . . . . . . . . . . 28
6.6 Non-Compete Agreements . . . . . . . . . . . . . . 28
6.7 No Material Adverse Change . . . . . . . . . . . . 28
6.8 Escrow . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
CONDITIONS TO SHAREHOLDERS' OBLIGATIONS . . . . . . . . 29
7.1 Representations, Warranties, and Covenants of
Resources . . . . . . . . . . . . . . . . . . . . 29
7.2 Further Action . . . . . . . . . . . . . . . . . . 29
7.3 No Governmental or Other Proceeding . . . . . . . 29
7.4 Opinion of Resources' Counsel . . . . . . . . . . 29
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . 30
8.1 Survival . . . . . . . . . . . . . . . . . . . . . 30
8.2 Indemnification . . . . . . . . . . . . . . . . . 30
8.3 Certain Tax Matters . . . . . . . . . . . . . . . 30
8.4 Notice of Claims . . . . . . . . . . . . . . . . . 31
8.5 Defense . . . . . . . . . . . . . . . . . . . . . 31
8.6 Limitations on Indemnity Obligations . . . . . . . 31
ARTICLE IX
TERMINATION PRIOR TO CLOSING . . . . . . . . . . . . . 32
9.1 Termination of Agreement . . . . . . . . . . . . . 32
9.2 Termination of Obligations . . . . . . . . . . . . 32
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 32
10.1 Entire Agreement . . . . . . . . . . . . . . . . 32
10.2 Successor and Assigns . . . . . . . . . . . . . 33
10.3 Counterparts . . . . . . . . . . . . . . . . . . 33
10.4 Headings . . . . . . . . . . . . . . . . . . . . 33
10.5 No Waiver . . . . . . . . . . . . . . . . . . . 33
10.6 Expenses . . . . . . . . . . . . . . . . . . . . 33
10.7 Notices . . . . . . . . . . . . . . . . . . . . 33
10.8 Further Assurances . . . . . . . . . . . . . . . 35
10.9 Governing Law . . . . . . . . . . . . . . . . . 35
10.10 Consent to Jurisdiction . . . . . . . . . . . . 35
10.11 Specific Performance . . . . . . . . . . . . . . 35
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT I Merger Agreement
EXHIBIT II Non-Compete Agreement
EXHIBIT III Opinion of Counsel for Shareholders
EXHIBIT IV Baker Employment Agreement
EXHIBIT V Escrow Agreement
EXHIBIT VI Opinion of Counsel for Resources
EXHIBIT VII Series B Convertible Redeemable Preferred Stock
SCHEDULE 2.1 Corporate Existence of Company, Etc.
SCHEDULE 2.2 Capitalization
SCHEDULE 2.5 Consents and Approvals
SCHEDULE 2.6 No Conflicts
SCHEDULE 2.7 Subsidiaries
SCHEDULE 2.9 Liabilities
SCHEDULE 2.10 Absence of Certain Changes or Events
SCHEDULE 2.11 Title to Properties
SCHEDULE 2.12 Trademarks, Etc.
SCHEDULE 2.13 Insurance
SCHEDULE 2.14 Company Contracts
SCHEDULE 2.15 Litigation
SCHEDULE 2.16 Taxes
SCHEDULE 2.17 Compliance with Laws
SCHEDULE 2.18 Employee Benefits and Agreements
SCHEDULE 2.20 Licenses and Permits
SCHEDULE 2.21 Business Relations
SCHEDULE 2.22 Interest in Competitors, Suppliers,
Customers,
Etc.
SCHEDULE 2.24 Employee Relations
SCHEDULE 2.25 Environmental Matters
SCHEDULE 2.27 Vehicles
SCHEDULE 3.4 Consents
<PAGE>
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (this "Agreement"),
made and entered into as of this ____ day of June, 1993, by and
among IWC Resources Corporation, an Indiana corporation
("Resources"), Resources Acquisition Corp., an Indiana
corporation and a wholly owned subsidiary of Resources
("NewCo"), S. M. & P. Conduit Co., Inc., an Indiana corporation
(the "Company"), and Diana L. Sosbey, Patrick J. Baker and
Daniel S. Baker (individually a "Shareholder" and collectively
the "Shareholders");
WITNESSETH:
WHEREAS, the Boards of Directors of Resources and the
Company deem it advisable and in the best interests of their
respective corporations that the Company be acquired by
Resources pursuant to the merger of the Company with and into
NewCo (the "Merger"); and
WHEREAS, the Boards of Directors of Resources, NewCo
and the Company, by resolutions duly adopted, have approved
this Agreement providing for the Merger, and the Boards of
Directors of the Company and NewCo have recommended the Merger
Agreement (as defined herein) and the Merger for approval by
their respective shareholders in accordance with the terms of
this Agreement and Indiana law; and
WHEREAS, Resources, NewCo, the Company and the
Shareholders of the Company desire to make certain
representations, warranties, covenants and agreements in
connection with the transactions contemplated by this Agreement
and to prescribe various conditions precedent to such
transactions;
NOW, THEREFORE, in consideration of the premises and
the mutual representations, warranties, covenants and
agreements herein set forth, the parties to this Agreement have
agreed, and hereby agree subject to the terms and conditions
hereinafter set forth, as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
(a) At the Effective Time of the Merger (as
defined in Section 1.2) in accordance with the
provisions of Indiana law and the terms of this
Agreement, the Company shall be merged with and into
NewCo, with NewCo surviving such Merger as the surviving
<PAGE>
corporation, all as more fully provided for in the
Merger Agreement which is attached hereto as Exhibit I
and incorporated herein by reference. NewCo, subsequent
to the Effective Time of the Merger, is sometimes
referred to herein as the "Surviving Corporation."
(b) The occurrence of the transactions
contemplated by Section 1.1(a) is herein called the
"Closing," and the date thereof is herein sometimes
called the "Closing Date."
1.2 Effective Time of the Merger. The Merger shall
not become effective until, and, subject to the terms and
conditions of this Agreement, shall become effective when, the
following actions shall have in all respects been completed:
(a) the Merger Agreement shall have been approved
by the shareholders of each of the Company and NewCo in
accordance with the requirements of Indiana law; and
(b) appropriate articles of merger shall have been
filed and become effective in accordance with the
requirements of Indiana law.
The date and time when the Merger shall become effective as
aforesaid is herein referred to as the "Effective Time of the
Merger."
1.3 Articles of Incorporation, By-Laws, Directors and
Officers.
(a) The Articles of Incorporation of NewCo, as in
effect immediately prior to the Effective Time of the
Merger, but as amended to change the name of NewCo to "S
M & P Conduit Co., Inc.," shall be the Articles of
Incorporation of the Surviving Corporation from and
after the Effective Time of the Merger until amended in
accordance with Indiana law.
(b) The By-Laws of NewCo, as in effect immediately
prior to the Effective Time of the Merger, but as
amended to reflect the change of name of NewCo shall be
the By-Laws of the Surviving Corporation from and after
the Effective Time of the Merger until amended or
repealed in accordance with Indiana law.
(c) Following the Effective Time of the Merger,
the officers of NewCo shall be restructured to consist
of James T. Morris, Chairman of the Board, Daniel S.
Baker, President, J. A. Rosenfeld, Executive Vice
President and Treasurer, and John Davis, Secretary, each
to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation.
<PAGE>
(d) Following the Effective Time of the Merger,
the Board of Directors of NewCo shall be restructured to
consist of James T. Morris, Kenneth N. Griffin, Alan R.
Kimbell, Joseph R. Broyles, J. A. Rosenfeld, and
Daniel S. Baker, and each shall hold such office until
his successor shall have been duly elected and qualified
in accordance with the By-Laws and Articles of
Incorporation of the Surviving Corporation.
1.4 Conversion of Shares. At the Effective Time of
the Merger, the Shares (as defined in Section 2.2) shall be
converted on the basis and in the manner specified in the
Merger Agreement.
1.5 Non-Compete Agreements. At the Closing, the
Shareholders shall each enter into Non-Compete Agreements with
Resources in the form attached as Exhibit II. As consideration
for his or her Non-Compete Agreement, Resources shall pay each
Shareholder the following amount in cash at Closing:
Shareholder Amount
Diana L. Sosby $1,000,000
Patrick J. Baker $1,000,000
Daniel S. Baker $1,000,000
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders, jointly and severally, hereby
represent and warrant to Resources and NewCo as follows:
2.1 Corporate Existence of Company, Etc.
(a) The Company is a corporation duly organized
and validly existing under the laws of the State of
Indiana, and has all requisite power and authority to
own or lease and operate its properties and to carry on
its business as presently conducted. The Company is
duly qualified as a foreign corporation, and is in good
standing, in the jurisdictions set forth on
Schedule 2.1, and in each other jurisdiction where the
conduct of its business or the character of its
properties owned or held under lease require it to be so
qualified.
(b) The Company has all requisite corporate power
and authority to enter into and perform all of its
obligations under this Agreement. The execution and
delivery of this Agreement by the Company and the
consummation by the Company of the transactions
contemplated hereby have been duly authorized by all
<PAGE>
necessary corporate action on the part of the Company,
subject only, with respect to the Merger, to the
approval of the holders of the Shares. This Agreement
has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of
the Company subject to the effects of bankruptcy,
insolvency, reorganization, receivership, moratorium and
other similar laws affecting the rights and remedies of
creditors generally and the effects of general
principles of equity, whether applied by a court of law
or equity (the "Limitations").
2.2 Capitalization. The authorized capital stock of
the Company consists of 1,000 shares of common stock ("Common
Stock"), of which 100 shares are issued and outstanding. All
of the outstanding shares of Common Stock (referred to
collectively herein as the "Shares") are owned of record and
beneficially by the Shareholders in the amounts set forth on
Schedule 2.2. All outstanding Shares have been duly authorized
and validly issued, are fully paid and nonassessable and were
not issued in violation of any preemptive rights. Except as
set forth below, there is outstanding no security, option,
warrant, right, call, subscription, agreement, commitment or
understanding of any nature whatsoever, real or contingent,
that directly or indirectly (i) calls for the issuance, sale,
pledge or other disposition of any Common Stock or of any other
capital stock of the Company or any securities convertible
into, or other rights to acquire, any such Common Stock or
other capital stock of the Company or (ii) obligates the
Company or the Shareholders to grant, offer or enter into any
of the foregoing or (iii) relates to the voting or control of
such Common Stock, capital stock, securities or rights. The
Company may be a party to one or more subscription agreements
relating to the Shares now held by the Shareholders, but none
of such agreements could obligate the Company to issue
additional Common Stock in the future. The Company's Articles
of Incorporation and Bylaws contain provisions defining the
voting rights of the Common Stock. No person has any right to
require the Company to register any of its securities under the
Securities Act of 1933, as amended (the "Securities Act").
2.3 Title to Shares. Each of the Shareholders has
legal and valid title to that number of the Shares set forth
opposite his name in Schedule 2.2, free and clear of all liens,
security interests, adverse claims or other encumbrances of any
character whatsoever ("Encumbrances").
2.4 Capacity of the Shareholders. Each Shareholder
has full legal capacity and authority to enter into this
Agreement; and this Agreement has been duly executed and
delivered on behalf of each Shareholder and constitutes the
valid and binding obligation of such Shareholder, enforceable
against such Shareholder in accordance with its terms except
for the Limitations.
<PAGE>
2.5 Consents and Approvals. Except as set forth on
Schedule 2.5, no consent, approval or authorization of,
exemption by, or filing with, any governmental or regulatory
authority, or any third party, is required in connection with
the execution, delivery and performance by the Company and the
Shareholders of this Agreement and the consummation by the
Company and the Shareholders of the transactions contemplated
hereby, excluding, however, consents, approvals,
authorizations, exemptions and filings, if any, which Resources
or NewCo are required to obtain or make.
2.6 No Conflicts. Except as set forth on
Schedule 2.6, the execution, delivery and performance of this
Agreement by the Company and the Shareholders and the
consummation by the Company and the Shareholders of the
transactions contemplated hereby will not conflict with, or
constitute or result in a breach, default or violation of (with
or without the giving of notice or the passage of time) any of
the terms, provisions or conditions of, (i) the Articles of
Incorporation or By-Laws of the Company; (ii) any law,
ordinance, regulation or rule applicable to any Shareholder or
the Company; (iii) any order, judgment, injunction, or other
decree by which any Shareholder or the Company, or any of their
respective assets or properties is bound; or (iv) any written
or oral contract, agreement, or commitment to which any
Shareholder or the Company is a party or by which they or any
of their respective assets or properties is bound; nor will
such execution, delivery and performance result in the creation
of any Encumbrance upon any properties, assets or rights of the
Company.
2.7 Subsidiaries. Except as set forth on
Schedule 2.7, the Company does not own any equity ownership
interest, directly or indirectly, in any person, corporation or
other entity. There are no entities in which the Company owns
at least 50% of the outstanding common stock.
2.8 Financial Statements.
(a) A copy of the balance sheets of the Company as
of December 31, 1991 and December 31, 1992, and the
statements of income and retained earnings and cash
flows of the Company for the two years ended
December 31, 1992, including the notes thereto
(collectively the "Financial Statements"), have been
supplied to Resources. The balance sheet of the Company
as at December 31, 1992 fairly presents the financial
position of the Company as at such date and has been
prepared in accordance with generally accepted
accounting principles consistently applied. Except as
may be noted therein, the statements of income and
retained earnings and cash flows for the years ended
December 31, 1991 and 1992 fairly present the results of
operations, shareholders' equity and cash flows of the
<PAGE>
Company in all material respects for the periods then
ended and have been prepared on a basis consistent with
each other. The shareholders' equity of the Company as
at December 31, 1992, and determined in accordance with
generally accepted accounting principles, was not less
than $2,915,889.
(b) The Company has delivered to Resources copies
of its monthly financial statements for the months of
January, February, March and April of 1993 (the "Monthly
Financial Statements"). The Monthly Financial
Statements were prepared by the Company in a manner
consistent with the monthly financial statements for the
same months of the prior year, except for salary
accruals to the Shareholders as noted in Section
2.10(g)(ii) below.
2.9 Liabilities. Except as set forth on
Schedule 2.9, as of December 31, 1992, and except for
liabilities, if any, under service contracts or similar
agreements not material to the Company, the Company had no
debts, obligations or liabilities of whatever kind or nature,
either direct or indirect, absolute or contingent, matured or
unmatured, and regardless of whether they are of a type
required by generally accepted accounting principles to be
included in the Financial Statements, except debts, obligations
and liabilities that are fully reflected in, or reserved
against on, the 1992 Financial Statements. Since December 31,
1992, except as set forth on Schedule 2.9, the Company has
incurred no liabilities except in the ordinary course of
business.
2.10 Absence of Certain Changes or Events. Except as
set forth on Schedule 2.10 or except as otherwise specifically
contemplated by this Agreement, since December 31, 1992, there
has not been (a) any damage, destruction or casualty loss to
the physical properties of the Company (whether covered by
insurance or not) in excess of $50,000 in the aggregate;
(b) any material adverse change in the business, operations or
financial condition of the Company; (c) any entry into any
transaction, commitment or agreement (including without
limitation any borrowing or capital expenditure) other than in
the ordinary course of business; (d) any redemption or other
acquisition by the Company of the Company's capital stock or
any declaration, setting aside or payment of any dividend or
other distribution in cash, stock or property with respect to
the Company's capital stock; (e) any material increase in the
rate or terms of compensation payable or to become payable by
the Company to its directors, officers or employees or any
increase in the rate or terms of any bonus, pension, insurance
or other employee benefit plan, payment or arrangement made to,
for or with any such directors, officers or employees; (f) any
acceleration of sales (i.e., the issuance of services billings
at an accelerated rate outside of the ordinary course of
<PAGE>
business), or reduction of aggregate administrative, marketing,
advertising and promotional expenses other than in the ordinary
course of business; (g) any sale, transfer or other disposition
of any asset of the Company to any party, including any
Shareholder, except for (i) payment of third-party obligations
incurred in the ordinary course of business in accordance with
the Company's regular payment practices, (ii) compensation to
employees and officers and directors in the ordinary course of
business, provided, however, that the rate of compensation paid
to the Shareholders since December 31, 1992 has not exceeded an
aggregate for all Shareholders of $550,000 on an annualized
basis, (iii) sales or transfers for a fair consideration, and
(iv) abandonment or disposal of assets deemed of little or no
value; (h) any termination or waiver of any material rights of
value to the business of the Company; or (i) any failure by the
Company to pay their accounts payable or other obligations in
the ordinary course of business consistent with past practice,
other than items disputed by the Company in good faith. The
compensation paid to Shareholders of the Company from
January 1, 1990 to the present is as set forth in the letter to
Resources of even date herewith.
2.11 Title to Properties. Except as set forth on
Schedule 2.11, the Company has good and marketable title to all
of the assets and properties which it purports to own and which
are reflected on the 1992 Financial Statements, free and clear
of all Encumbrances, except for (a) liens for current taxes not
yet due and payable or for taxes the validity of which is being
contested in good faith by appropriate proceedings,
(b) Encumbrances and defects which individually or in the
aggregate do not materially affect the business, operations or
financial condition of the Company, and (c) assets and
properties disposed of in the ordinary course of business since
December 31, 1992.
2.12 Trademarks, Etc. Except as set forth on
Schedule 2.12, and except for the right to use the name SM&P
Conduit Co., Inc., there are no trademarks, trade names,
service marks, copyrights, or applications therefor which are
material to the conduct of the business, operations or
financial condition of the Company. The Shareholders are aware
of no person that has challenged the Company's use of the name
SM&P Conduit Co., Inc. or that uses or claims the right to use
such name or any confusingly similar name. The Shareholders
and/or the Company have previously caused to be incorporated
one or more corporations having a name similar to S. M. & P.
Conduit Co., Inc. (the "New Corporations"). Schedule 2.12 sets
forth a complete listing of the New Corporations and a copy of
the Articles of Incorporation and all other charter or
organizational documents related to the New Corporations. None
of the New Corporations has completed its organization, issued
any shares of its capital stock, conducted any business, or
incurred any liabilities. As soon as practicable after the
Closing, the Shareholders shall cause each of the New
<PAGE>
Corporations to dissolve or to change their names to a name not
confusingly similar to S. M. & P. Conduit Co., Inc., to assign
to the Surviving Corporation all rights to use of the name
S. M. & P. Conduit Co., Inc., and all derivations thereof, and
to take such further actions as to the New Corporations as
Resources may reasonably request to secure for the Surviving
Corporation the benefits intended by this Agreement. Except
for conflicts, if any, related to the Company's use of the name
S. M. & P. Conduit Co., Inc. (it being understood that the
Shareholders currently have no knowledge of any such
conflicts), the conduct of the business of the Company as now
conducted does not conflict with any valid patents, trademarks,
trade names, service marks or copyrights of others.
2.13 Insurance. Schedule 2.13 lists all insurance
policies with respect to the properties, assets, operations and
business of the Company with respect to which the Company has
paid a premium within the last 13 months. The insurance
policies listed on Schedule 2.13 and all other insurance
policies with respect to the properties, assets, operations and
business of the Company are hereinafter referred to as the
"Insurance Policies". All Insurance Policies listed on
Schedule 2.13 (except as otherwise noted on Schedule 2.13) are
in full force and effect. Except as set forth on
Schedule 2.13, there are no pending claims against the insurers
under the Insurance Policies by the Company. There are no
unsettled claims as to which the insurers have denied liability
and with respect to which there is a reasonable likelihood of a
settlement or determination adverse to the Company. There are
no circumstances existing which would enable the insurers to
avoid liability under the Insurance Policies in accordance with
their terms. Except as set forth on Schedule 2.13, (i) to the
knowledge of the Shareholders there exist no material claims
under the Insurance Policies that have not been properly filed
by the Company, and (ii) no insurance company has refused to
renew any material insurance policy of the Company during the
past 18 months.
2.14 Company Contracts. Schedule 2.14 lists the
following (to the extent any of the following exist and
excluding any item that has been fully performed or otherwise
is no longer binding upon the Company) (such agreements,
commitments, and written summaries of oral agreements being
sometimes collectively referred to herein as the "Company
Contracts") all of which have been made available to Resources
for its review:
(a) All leases of real property to which the
Company is a party (whether as lessor or lessee);
(b) All leases of vehicles, machinery or equipment
to which the Company is a party (whether as lessor or
lessee), with the annual rental, the termination date,
<PAGE>
and the conditions of assignment and renewal being given
with respect to each lease;
(c) All rights and all licenses, leases, and other
agreements relating to rights in other tangible personal
property to which the Company is a party, involving the
payment by or to it of more than $25,000 in the
aggregate with respect to any one agreement.
(d) All policies of insurance and fidelity or
surety bonds in force with respect to the directors,
officers, properties, assets, liabilities, or operations
of the Company in each case with a notation as to the
status of premiums paid thereon;
(e) All agreements of the Company for the
borrowing or lending of money;
(f) All agreements granting any person a lien,
security interest, or mortgage on any property or asset
of the Company, including any factoring agreement or
agreement for the assignment of receivables or
inventory;
(g) All agreements of the Company guaranteeing,
indemnifying, or otherwise becoming liable for the
obligations or liabilities of another other than the
endorsement of negotiable instruments in the ordinary
course of business;
(h) All agreements of the Company with any
manufacturer or supplier, including agreements with
respect to discounts or allowances or extended payment
terms;
(i) All agreements of the Company with any
distributor, dealer, sales agent, or representative;
(j) All agreements which restrict the Company from
doing any kind of business or from doing business in any
jurisdiction or from competing with any person;
(k) All agreements of the Company for the purchase
of goods, materials, supplies, machinery, capital assets
or services in excess of $25,000;
(l) All collective bargaining agreements and
employee pension, health and welfare and retirement
benefit plans of the Company which are currently in
effect;
(m) All bonus, deferred compensation, profit
sharing, pension, retirement, stock option, stock
purchase, hospitalization, insurance, medical, dental,
<PAGE>
or other plans, arrangements, or practices of the
Company providing employee or executive benefits;
(n) All shareholders' agreements, proxies, voting
trusts, or powers of attorney to act on behalf of the
Company or in connection with its properties or business
affairs other than such powers to so act as normally
pertain to corporate officers;
(o) All agreements relating to the sale of assets
of the Company not yet fully performed;
(p) All joint venture or partnership agreements of
the Company with any other person;
(q) All agreements of the Company for the
construction or modification of any building or
structure or for the incurrence of any other capital
expenditure;
(r) All advertising agreements of the Company;
(s) All agreements of the Company giving any party
the right to renegotiate or require a reduction in price
or the repayment of any amount previously paid;
(t) All agreements with utilities for the location
of underground lines or conduits;
(u) All other agreements and commitments
(including employment and consulting agreements) to
which the Company is a party, by which it is or may be
bound, or from which it does or may derive benefit, and
a description of the terms thereof, with the termination
date and conditions of assignment and renewal being
given in each case, except any contract or commitment
(A) involving the payment by or to the Company of less
than $25,000 in the aggregate as to such contract or
commitment, or, (B) terminable by the Company without
liability or expense on 60 days' notice or less, or
(C) for the purchase or sale of merchandise or services
entered into in the ordinary course of business, which
will be performed by the Company in less than three
months and which will not have any material adverse
effect on the properties and business of the Company, or
(D) covered by any other paragraph of this Section 2.14;
(v) The name and current rate of compensation of
(A) each director and officer of the Company and
(B) each other employee of or consultant to the Company
is as set forth in the letter to Resources of even date
herewith;
<PAGE>
(w) The name of each retired employee, officer, or
director, if any, of the Company who is receiving or is
entitled to receive any payments not covered by any
employee benefit plan and his or her age, sex and
current benefits; and
(x) The name of each bank in which the Company has
an account or safe deposit box and the names of all
persons authorized to draw thereon or to have access
thereto.
Except as set forth on Schedule 2.14, each of the
Company Contracts is valid, binding, and enforceable in
accordance with its terms for the periods (if any) stated
therein, except for the effect of the Limitations; the Company
has fulfilled or has taken all actions necessary to enable it
to fulfill when due all of its material obligations under the
Company Contracts which are material, and there is not, under
any of the foregoing, any existing default or event of default
or any event which, with or without the giving of notice or the
passage of time, would constitute a material default under any
of the Company Contracts which are material. Notwithstanding
the foregoing, the Shareholders make no representation or
warranty as to the absence of any limitation on enforceability,
or any default or potential default that may arise as a result
of any violation by the Company of any representation or
commitment by it relating to the ownership of the Company. To
the knowledge of the Shareholders, there are no laws,
regulations, rules or decrees currently in effect or currently
proposed to be in effect which adversely affect or might
adversely affect the Company's rights under any of the Company
Contracts in a material manner.
2.15 Litigation. Except as set forth on
Schedule 2.15, there is not now pending any action, proceeding
or investigation in any court or before any governmental or
regulatory authority of which the Shareholders have knowledge
nor, to the knowledge of the Shareholders, is any such action,
proceeding or investigation threatened in writing or orally
(a) against the Company or against any Shareholder, in
connection with the conduct of the businesses of the Company,
(b) which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby, or
(c) would render Resources or NewCo unable to exercise control
over the assets of the Company. The actions or proceedings
described in clauses (a), (b), and (c) are collectively
referred to as "Litigation." Except as set forth on
Schedule 2.15, the Company is not subject to any outstanding
order, writ, judgment or decree. Schedule 2.15 contains a list
that includes all Litigation.
2.16 Taxes. Except as set forth on Schedule 2.16,
(a) all federal, state, local and foreign income, franchise,
excise, payroll, sales, use and property tax ("Taxes") returns
<PAGE>
required to be filed with respect to the Company and any
employee benefit plan listed on Schedule 2.18 have been filed
in a timely manner (taking into account all extensions of due
dates); (b) such returns reflect accurately all liability for
Taxes of the Company for the periods covered thereby; (c) all
Taxes payable by or due from the Company relating to all
periods ending on or before December 31, 1992 have been paid or
accrued on the Financial Statements; (d) no election under
Section 341(f) or Section 338(g) of the Internal Revenue Code
of 1986 (the "Code") has been, or prior to the Closing Date
will be, filed by or on behalf of the Company; (e) the Company
has not executed any presently effective waiver or extension of
any statute of limitations against assessment and collection of
Taxes with respect to the Company; and (f) the proper amounts
have been withheld by the Company from employees with respect
to all cash compensation paid to employees for all periods in
compliance in all material respects with the tax and other
withholding provisions of all applicable laws. Except as set
forth on Schedule 2.16, or as reflected in the Financial
Statements, no deficiencies for any Taxes have been asserted in
writing or assessed against the Company which remain unpaid.
2.17 Compliance with Laws. Except as set forth on
Schedule 2.17, the Company has complied in all material
respects with all laws, statutes, rules, regulations,
judgments, decrees and orders applicable to its business, and
which are material.
2.18 Employee Benefits and Agreements.
(a) Schedule 2.18 contains a list of (i) all
employment contracts between the Company and each
officer or employee thereof (excluding any contract that
has been fully performed and oral agreements of
employment terminable at will without payment of
severance or other benefits except as are available to
employees generally), (ii) all collective bargaining
agreements between the Company and employee
representatives, and (iii) all bonus, incentive, stock
option, stock purchase, phantom stock, stock
appreciation rights, performance shares, and similar
plans either currently maintained by the Company or, if
terminated, under which employees or former employees
have rights that are outstanding, and all awards and
agreements under any of such plans pursuant to which any
employees or former employees hold outstanding rights.
(b) Schedule 2.18 contains a list of each employee
pension benefit plan (within the meaning of section 3(2)
of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) that is subject to the provisions
of section 401 of the Code which the Company currently
maintains or to which the Company contributes or is
required to contribute on behalf of its employees or has
<PAGE>
any other obligation. The Company does not maintain or
contribute to or have any other obligation under any
defined benefit plan. With respect to each of such
plans, the most recent summary plan descriptions, the
most recently filed Form 5500 for each of such plans
have been provided to Resources. None of such plans is
a multiemployer plan as defined in section 414(f) of the
Code, or section 4001(a)(3) of ERISA, nor is any such
plan a plan with respect to which more than one employer
makes contributions within the meaning of sections 4063
and 4064 of ERISA. With respect to each plan described
above in this Section 2.18(b), except as set forth on
Schedule 2.18: (i) the plan is qualified under
section 401 of the Code and the trust maintained
pursuant thereto is exempt from federal income taxation
under section 501 of the Code, and nothing has occurred
to cause the loss of such qualification or exemption,
(ii) all contributions required by the Code to be made
to the plan for the plan year most recently ended and
for all prior plan years have been made timely in
accordance with the Code and ERISA, and the Company does
not have a minimum funding waiver outstanding with
respect to such plan, (iii) the administrators or
sponsors of the plan have complied in all material
respects with applicable ERISA and Code requirements,
including requirements as to the filing of reports,
returns, documents, and notices with the Secretary of
Labor and the Secretary of the Treasury, or the
furnishing of such documents to participants or
beneficiaries of such plan, and (iv) the Company has in
all material respects discharged all duties it has to
the plan under sections 404 and 405 of ERISA, and to the
knowledge of Shareholders, no party whom the Company is
obligated to indemnify for a breach of those provisions
has committed any such breach.
(c) Schedule 2.18 contains a list of each of the
following that is currently maintained by the Company or
pursuant to which it has any obligation: any unfunded
deferred compensation, supplemental death, disability,
medical reimbursement, employee welfare benefit plan
(within the meaning of section 3(1) of ERISA) and, to
the extent not included in Section 2.18(b) above, each
employee pension benefit plan maintained by the Company.
With respect to each such plan that is funded or
required by its express terms to be funded through
insurance, all premiums due and payable with respect to
such insurance have been paid. With respect to each of
such plans, the most recent summary plan descriptions,
the most recently filed Form 5500 for each of such plans
have been provided to Resources.
(d) Schedule 2.18 lists (i) all governmental or
court required plans, including, but not limited to,
<PAGE>
affirmative action plans, with respect to the Company,
and (ii) all governmental or court ordered audits for
compliance with applicable law that would require the
continuation of any such plan or the implementation of
any such plan that has not been put into effect on the
date of this Agreement.
2.19 [omitted]
2.20 Licenses and Permits. The Company has all
material governmental licenses and permits and other
governmental authorizations and approvals required for the
conduct of its businesses as presently conducted ("Material
Permits"). Schedule 2.20 is a list of all Material Permits.
2.21 Business Relations. Except as set forth on
Schedule 2.21, the Company is not required to provide any
bonding or other financial security arrangements in connection
with any transactions with any of its customers or suppliers.
Except as set forth on Schedule 2.21, neither the Shareholders,
nor to the Shareholder's knowledge (without making any inquiry)
any employee of the Company, has received any information
suggesting that any customer or supplier of the Company has any
present intention of ceasing to do business with the Company
after the consummation of the transactions contemplated hereby.
For purposes of this Section 2.21, it shall be presumed that
the Shareholders had no knowledge of a customer's or supplier's
intent to cease business with the Company if such customer or
supplier remains a customer or supplier of the Company at
substantially the same level as the relationship existing prior
to Closing for a period of two (2) years after Closing. The
fact that any customer or supplier shall cease to do business
with the Company within two (2) years after the Closing shall
not create any presumption that the Shareholders had any
knowledge of such customer's or supplier's intent to cease
doing business with the Company.
2.22 Interest in Competitors, Suppliers, Customers,
Etc. Except as set forth on Schedule 2.22, neither any of the
Shareholders nor any officer or director of the Company or any
affiliate of any such officer or director has any ownership
interest in (i) any competitor, supplier or customer of the
Company accounting for one percent (1%) or more of the
Company's purchases or sales in the most recently ended fiscal
year or (ii) any property used in the operation of the business
of the Company, excluding however in the case of (i) or (ii)
ownership of less than 1% of any publicly held corporation.
2.23 Accounts Receivable. All accounts receivable
(including those reduced to promissory notes) reflected on the
Financial Statements represent sales actually made or services
actually rendered in the ordinary course of business; all
accounts receivable (including those reduced to promissory
notes) of the Company as of the Closing Date will represent
<PAGE>
sales actually made or services actually rendered or funds
advanced in the ordinary course of business on or prior to the
Closing Date. All accounts receivable shown on the
December 31, 1992 balance sheet of the Company included in the
Financial Statements not collected in full at the Closing Date
will be collected in full within 30 days thereafter. The
amount, if any, of such accounts receivable remaining
uncollected upon the expiration of such 30-day period (the "Bad
Debts") shall not be subject to a claim by Resources or the
Surviving Corporation under Article VIII, but shall instead be
applied as a deduction to the payment referred to in Section
5.11(b) hereof in the manner set forth in such Section 5.11(b).
2.24 Employee Relations. No union organizational
campaign with respect to the Company is in process or, to the
knowledge of the Shareholders, threatened. The Company has not
incurred any general work stoppages, general labor disputes, or
union strikes in the past three (3) years, nor have any been
threatened. Schedule 2.24 sets forth a summary of all material
grievances asserted in writing that are (i) currently pending
or (ii) settled since June 1, 1992.
2.25 Environmental Matters.
(a) Except as set forth on Schedule 2.25, the
Company has obtained all material permits, licenses, and
other authorizations which are required with respect to
the operation of the businesses of the Company under
federal, state, and local laws relating to pollution or
protection of the environment, including laws relating
to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, chemicals, or
industrial, toxic, or hazardous substances or wastes
into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial toxic or
hazardous substances or wastes ("Environmental Laws").
(b) Except as set forth on Schedule 2.25, the
Company is in compliance in all material respects with
the terms and conditions of the required permits,
licenses, and authorizations and with all other
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and
timetables contained in the Environmental Laws or
contained in any regulation, or code, or any judgment,
decree, order or injunction, promulgated, issued, or
entered by or against the Company or with respect to any
of its properties thereunder and the Company has not
received any notice or demand letter with respect
thereto.
<PAGE>
(c) Except as set forth on Schedule 2.25, there is
not pending any action, suit, investigation, or other
proceeding or, to the knowledge of Shareholders,
threatened against the Company relating to the
Environmental Laws or any regulation, code, plan,
judgment, decree, order, injunction, notice, or demand
letter promulgated, issued, or entered by or against the
Company thereunder.
(d) Except as set forth on Schedule 2.25, no
event, condition, activity, practice, ownership or lease
of real property or other action or inaction of the
Company has or is reasonably likely to: (i) prevent
compliance by the Company with the Environmental Laws or
with any regulation, code, judgment, decree, order or
injunction promulgated, issued, or entered by or against
the Company thereunder in any manner which could have a
material adverse effect on the business, assets,
financial condition, or results of operations of the
Company; (ii) give rise to any material liability of the
Company, including without limitation, liability under
the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorizations Act of 1986, or similar
state or local laws; or (iii) result in any material
claim, action, proceeding, or notice of violation based
on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge,
release, or threatened release into the environment of
any pollutant, contaminant, chemical, or industrial,
toxic, or hazardous substance or waste.
2.26 No Brokers. Neither the Company nor any
Shareholder has engaged or employed any broker or finder in
connection with the transactions contemplated by this
Agreement.
2.27 Vehicles. Schedule 2.27 sets forth a list of all
vehicles currently owned or leased by the Company.
2.28 Non-Disposition of Resources Shares. There is no
plan or intention by the Shareholders to sell, exchange, or
otherwise dispose of (except testamentary transfer) any of the
common or preferred stock of Resources received in the Merger
(the "Resources Shares"); the Shareholders are acquiring the
Resources Shares for investment and not with a view toward
distribution; and the Shareholders will not sell, exchange or
otherwise dispose of (except testamentary transfer) any of the
Resources Shares, whether received in the Merger or by
testamentary transfer from another Shareholder, for at least a
two-year period following the Merger, except with the prior
written consent of Resources.
<PAGE>
2.29 Non-Redemption of Company Stock. There has been
no redemption by the Company of Common Stock prior to and in
contemplation of the Merger.
2.30 No Spin-Off. There has been no spin-off of any
portion of the Company's business or any sale, exchange or
other disposition of any of the Company's assets in
contemplation of the Merger.
2.31 [omitted].
2.32 Distributions by the Company. There have been no
distributions by the Company to any of the Shareholders in
contemplation of the Merger other than normal and ordinary
dividend distributions, if any.
2.33 Liabilities of the Company. The liabilities of
the Company to be assumed by NewCo (including the Shareholder
Debt, as defined in Section 4.6 hereof) and the liabilities to
which Company assets are subject are valid debts of the
Company.
2.34 Bankruptcy. The Company is not under the
jurisdiction of a court in a Chapter 11 Bankruptcy Proceeding
or similar case.
2.35 Insolvency. The fair market value of the assets
of the Company to be transferred to NewCo exceeds the sum of
all of the liabilities of the Company to be assumed by NewCo
plus the amount of all liabilities to which the transferred
assets are subject as of the effective date of the Merger.
2.36 Company's Assets. NewCo will acquire at least 90
percent of the fair market value of the net assets and at least
70 percent of the fair market value of the gross assets held by
the Company immediately before the Merger. For this purpose,
Company assets used to pay expenses incurred by the Company,
if any, in connection with the transactions contemplated by
this Agreement are included as assets held by the Company
immediately before the Merger and not acquired by NewCo. No
redemptions or dividend distributions to Shareholders have been
made by the Company in contemplation of the Merger.
2.37 S Election. The Company is and will be an "S
Corporation" within the meaning of section 1361(a) of the Code
for the period from January 1, 1993, through the day
immediately preceding the Closing Date (the "Short Year").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RESOURCES
Resources hereby represents and warrants to the
Shareholders as follows:
<PAGE>
3.1 Organization. Resources and NewCo are each
corporations duly organized and validly existing under the laws
of the State of Indiana, and each has all requisite corporate
power and authority to carry on its business as it is now being
conducted and to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby.
3.2 Corporate Power and Authority, Etc. The
execution, delivery and performance by Resources and NewCo of
this Agreement and the consummation by them of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Resources and NewCo. This
Agreement has been duly and validly executed and delivered by
Resources and NewCo and constitutes the valid and binding
obligation of each. The Resources Shares to be delivered to
the Shareholders at the Closing will be duly authorized,
validly issued and fully paid and nonassessable, and free and
clear of all Encumbrances except for (i) those created by the
Shareholders, (ii) those created pursuant to this Agreement and
the agreements contemplated hereby and (iii) those imposed by
securities or similar laws.
3.3 No Conflicts. The execution, delivery and
performance by Resources and NewCo of this Agreement and the
consummation by Resources and NewCo of the transactions
contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (i) violate any provision
of law, statute, rule or regulation applicable to Resources or
NewCo, (ii) violate any order, judgment injunction or decree by
which Resources or NewCo or any of their respective assets or
properties is bound or (iii) conflict with, or result in a
breach or default under, any term or condition of the
respective Articles of Incorporation or By-Laws of Resources or
NewCo or any agreement, contract or commitment or other
instrument to which Resources or NewCo or any of its
subsidiaries is a party or by which any of them may be bound;
except for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impede the
consummation of the transactions contemplated hereby.
3.4 Consents. Except as set forth on Schedule 3.4, no
consent, approval or authorization of, exemption by, or filing
with, any governmental or regulatory authority, or any third
party, is required in connection with the execution, delivery
and performance by Resources or NewCo of this Agreement or the
consummation by Resources or NewCo of the transactions
contemplated hereby, excluding, however, consents, approvals,
authorizations, exemptions and filings, if any, which the
Company or the Shareholders are required to obtain or make.
3.5 Resources' SEC Reports. Resources has delivered
to the Shareholders (i) Resources' Annual Report on Form 10-K
for the year ended December 31, 1992, and (ii) Resources'
Quarterly Report on Form 10-Q for the period ended March 31,
<PAGE>
1993, each in the form (including exhibits) filed with the
Securities and Exchange Commission (collectively, "Resources'
SEC Reports"). As of their respective dates, except as
otherwise heretofore disclosed to the Shareholders in writing,
Resources' SEC Reports did not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into Resources' SEC
Reports (including the related notes and schedules) fairly
presented the consolidated financial position of Resources and
its subsidiaries as of its date and each of the consolidated
statements of income, of shareholders' equity and of cash flows
included in or incorporated by reference into Resources' SEC
Reports (including any related notes and schedules) fairly
presented the results of operations, shareholders' equity and
cash flows, of Resources and its subsidiaries for the periods
set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments) in each case
in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may
be noted therein. Resources has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve (12) months and has been
subject to such filing requirements for the past ninety (90)
days.
3.6 No Brokers. Neither Resources nor NewCo has
engaged or employed any broker or finder in connection with the
transactions contemplated by this Agreement.
3.7 Articles of Incorporation and By-Laws. Resources
has previously furnished the Shareholders with true and
complete copies of Resources Restated Articles of Incorporation
and By-Laws as in effect on the date hereof.
ARTICLE IV
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
The Shareholders, jointly and severally, and the
Company hereby covenant to and agree with Resources as follows:
4.1 Conduct of Business. Except as may be otherwise
specifically contemplated by this Agreement or except as
Resources may otherwise consent to in writing between the date
hereof and the Closing Date:
(a) The Shareholders will cause the Company to and
the Company will (i) operate its businesses only in the
ordinary course; (ii) use its best efforts to preserve
its business organization intact; (iii) maintain its
<PAGE>
properties, machinery and equipment in as good a state
of operating condition and repair as they were in on the
date of this Agreement, except for maintenance required
by reason of fire, flood or other acts of God (except
that any insurance proceeds paid by reason of any such
casualty after the date hereof shall be applied towards
such maintenance); (iv) continue all of the Insurance
Policies (or comparable insurance) in full force and
effect; (v) use its best efforts to keep available until
the Closing Date the services of its present officers
and key employees; (vi) pay its accounts payable and all
other obligations in the ordinary course of business;
and (vii) use its best efforts to preserve its
relationships with its lenders, suppliers, customers,
licensors and licensees and others having material
business dealings with it such that the business will
not be impaired; and
(b) The Shareholders will cause the Company not to
and the Company will not (i) make any change in its
Articles of Incorporation or By-Laws; (ii) make any
change in its issued or outstanding capital stock, or
issue any warrant, option or other right to purchase
shares of its capital stock or any security convertible
into shares of its capital stock, or redeem, purchase or
otherwise acquire any shares of its capital stock, or
declare any dividends or make any other distribution in
respect of its capital stock; (iii) voluntarily incur or
assume, whether directly or by way of guarantee or
otherwise, any material obligation or liability, except
obligations and liabilities incurred in the ordinary
course of business; (iv) mortgage, pledge or encumber
any material part of its properties or assets, tangible
or intangible; (v) sell or transfer any material part of
its assets, property or rights, or cancel any material
claims against others; (vi) amend or terminate any
Company Contract or any Material Permit to which it is a
party, except in the ordinary course of business
pursuant to the terms of such agreement; (vii) make any
material change in any plan set forth on Schedule 2.18,
except as required by law and except for changes made in
the ordinary course of business in accordance with the
Company's customary practices (including normal
increases in compensation and benefits to persons other
than the Shareholders consistent with past practice
after normal periodic performance reviews); (viii) make
any changes in the accounting methods, principles or
practices employed by it, except as required by
generally accepted accounting principles; (ix) make any
capital expenditure or enter into any commitment
therefor; (x) incur any debt or make any borrowings, or
enter into any commitment therefor; or (xi) enter into
any other agreement, course of action or transaction
<PAGE>
material to the Company except in the ordinary course of
business.
4.2 Undertakings. The Shareholders and the Company
will use their reasonable efforts, and will cooperate with
Resources to secure any necessary consents, approvals,
authorizations and exemptions from governmental agencies and
other third parties, and to obtain the satisfaction of the
conditions specified in Articles VI and VII, as shall be
required in order to enable the parties to effect the
transactions contemplated hereby in accordance with the terms
and conditions hereof.
4.3 Access. The Shareholders and the Company shall
(i) provide Resources with such information as Resources may
from time to time reasonably request with respect to the
Company and the transactions contemplated by this Agreement,
(ii) provide Resources and its officers, accountants, counsel
and other authorized representatives reasonable access during
regular business hours and upon reasonable notice to the
properties, books, and records of the Company, or as Resources
may otherwise from time to time reasonably request, and
(iii) permit Resources to make such inspections thereof as
Resources may reasonably request.
4.4 Confidentiality.
(a) Unless and until the Closing is consummated,
the Shareholders and the Company, as the case may be
(the "Recipient"), will keep confidential any
information which has been furnished to it by or on
behalf of Resources (the "Provider"), in connection with
the transactions contemplated by this Agreement
("Confidential Information"), and shall use the
Confidential Information solely in connection with the
transactions contemplated by this Agreement. If this
Agreement is terminated, the Recipient will return all
Confidential Information to the Provider and either
destroy any writings prepared by or on behalf of the
Recipient based on Confidential Information or deliver
such writings to the Provider. Confidential Information
does not include information which (i) is or becomes
(but only when it becomes) generally available to the
public other than as a result of disclosure in violation
of this Section 4.4, or (ii) is or becomes (but only
when it becomes) available to the Recipient on a
non-confidential basis from a source other than the
Provider, or any of its agents or advisors or employees,
provided that such source is not bound by a
confidentiality agreement with the Provider in respect
thereof.
(b) The Recipient may disclose Confidential
Information to any of its directors, officers,
<PAGE>
employees, agents, and advisors. In any event, the
Recipient will be responsible for damages incurred by
the Provider arising from any breach of this Section 4.4
by any person or entity to whom Confidential Information
shall have been furnished. The Recipient may disclose
Confidential Information if required by legal process or
by operation of applicable law (but only to the extent
so required and only after reasonable written notice to
Provider, unless the giving of such notice would violate
applicable law).
4.5 Exclusivity. Resources shall have the exclusive
right through the close of business on July 31, 1993 (or such
later date as the term of this Agreement may be extended by the
parties hereto in writing), to consummate the transactions
contemplated herein, and during such exclusive period, neither
the Shareholders, the Company nor any of their authorized
representatives will solicit or accept any other offer to
purchase any of the capital stock or all or any significant
part of the assets of the Company or any similar transaction
nor hold discussions or negotiations with, or provide any
information to, any other individual or corporation,
partnership or other entity concerning such purchase (other
than such discussions which are in furtherance of the
transactions contemplated herein).
4.6 Shareholder Debt. Immediately after the
Effective Time of the Merger, the Surviving Corporation shall
repay certain indebtedness of the Company to the Shareholders
up to an amount, which when combined with all other
indebtedness of the Company paid to the Shareholders since
December 31, 1992, does not exceed the aggregate sum of
$1,304,766 plus unpaid interest (the "Shareholder Debt"). All
other indebtedness of the Company to the Shareholders in excess
thereof, if any (including any represented by notes payable to
Shareholders), will be deemed to have been a contribution to
the capital of the Company immediately prior to the Effective
Time of the Merger. On the Closing Date, all indebtedness of
the Shareholders to the Company will be paid in full, either by
delivery to NewCo of a check therefor or by offset against any
payments due Shareholders at Closing.
4.7 Investment Covenants. Each Shareholder
acknowledges and agrees that the Resources Shares being
acquired have not been registered under the Securities Act or
any state securities laws; such Resources Shares are being
acquired for investment and not with a view to any
distribution; such Resources Shares may be sold only upon
compliance with the registration requirements of the Securities
Act and applicable state securities laws or, in the case of
Resources' Common Shares, after satisfying a two-year holding
period, in compliance with the limitations of Rule 144
promulgated under the Securities Act; and such Shareholder has
been provided with or has had access to such information
<PAGE>
regarding Resources as such Shareholder deemed necessary or
appropriate to make an informed investment decision regarding
the Resources Shares.
4.8 Legend on Resources Shares. The Shareholders
acknowledge and agree that each certificate representing the
Resources Shares shall be stamped or otherwise imprinted on its
face with a legend in the following form:
"The Shares represented by this certificate have
not been registered under the Securities Act of 1933, as
amended. The Shares have been acquired for investment
and may not be sold, transferred or otherwise disposed
of except in compliance with such Act."
4.9 Shareholder Approval of Merger. The Shareholders
shall cause the Company promptly to call a meeting of the
Shareholders to approve the Merger Agreement and the Merger
contemplated by this Agreement and the Shareholders agree to
vote in favor of such Merger Agreement and Merger and not to
exercise any dissenters' rights in connection with the Merger.
4.10 Non-Compete Agreements. At the Closing, each of
the Shareholders shall execute and deliver to Resources a Non-
Compete Agreement in the form attached as Exhibit II.
4.11 Final "S Corporation" Income Tax Returns. The
Shareholders shall cause to be prepared and shall file in a
timely manner (taking into account any extensions of due dates)
the Company's federal and state income tax returns for the
Short Year and shall promptly thereafter furnish to Resources a
copy of each Shareholder's related Form K-1 Shareholder's Share
of Income, Credits, Deductions, Etc. (each, a "Form K-1").
ARTICLE V
COVENANTS OF RESOURCES
Resources hereby covenants and agrees with the Company
and the Shareholders as follows:
5.1 Undertakings. Resources will use its reasonable
efforts and will cooperate with the Company and the
Shareholders to secure any necessary consents, approvals,
authorizations and exemptions from governmental agencies and
other third parties and to obtain the satisfaction of the
conditions specified in Articles VI and VII, as shall be
required in order to enable the parties to effect the
transactions contemplated hereby in accordance with the terms
and conditions hereof.
<PAGE>
5.2 Confidentiality.
(a) Unless and until the Closing is consummated,
Resources (the "Recipient"), will keep confidential any
information which has been furnished to it by or on
behalf of the Shareholders or the Company, as the case
may be (the "Provider"), in connection with the
transactions contemplated by this Agreement
("Confidential Information"), and shall use the
Confidential Information solely in connection with the
transactions contemplated by this Agreement. If this
Agreement is terminated, the Recipient will return all
Confidential Information to the Provider and either
destroy any writings prepared by or on behalf of the
Recipient based on Confidential Information or deliver
such writings to the Provider. Confidential Information
does not include information which (i) is or becomes
(but only when it becomes) generally available to the
public other than as a result of disclosure in violation
of this Section 5.2, or (ii) is or becomes (but only
when it becomes) available to the Recipient on a
non-confidential basis from a source other than the
Provider, or any of its agents or advisors or employees,
provided that such source is not bound by a
confidentiality agreement with the Provider in respect
thereof.
(b) The Recipient may disclose Confidential
Information to any of its directors, officers,
employees, agents, and advisors. In any event, the
Recipient will be responsible for damages incurred by
the Provider arising from any breach of this Section 5.2
by any person or entity to whom Confidential Information
shall have been furnished. The Recipient may disclose
Confidential Information if required by legal process or
by operation of applicable law (but only to the extent
so required and only after reasonable written notice to
the Provider, unless the giving of such notice would
violate applicable law).
5.3 Tax Covenants.
(a) Prior to the Merger, Resources shall own all
of the outstanding capital stock of NewCo.
(b) NewCo has no plan or intention to issue
additional shares of its stock following the Merger that
would result in Resources owning (i) less than eighty
percent (80%) of the total combined voting power of all
classes of NewCo stock entitled to vote or (ii) less
than eighty percent (80%) of the total number of shares
of all other classes of NewCo stock.
<PAGE>
(c) Resources has no plan or intention to redeem
or otherwise reacquire any of its voting common stock to
be issued in the Merger.
(d) Resources has no plan or intention to redeem
or otherwise reacquire any of its preferred stock to be
issued in the Merger prior to July 13, 1998.
(e) Resources has no plan or intention to
liquidate NewCo, to merge NewCo with and into another
corporation, to sell or otherwise dispose of its NewCo
stock, or to cause NewCo to sell or otherwise dispose of
any assets of the Company acquired in the Merger, except
for dispositions made in the ordinary course of business
or a transfer by NewCo of part or all of the assets
acquired in the Merger to a corporation controlled by
NewCo. For this purpose, NewCo would be in control of
another corporation if NewCo owns stock possessing at
least eighty percent (80%) of the total combined voting
power of all classes of stock entitled to vote and at
least eighty percent (80%) of the total number of shares
of all other classes of stock of that corporation.
(f) Following the Merger, Resources presently
intends that NewCo will continue the historic business
of the Company or use a significant portion of the
Company's historic assets in a business.
(g) There is no intercorporate debt existing
between Resources and the Company or between NewCo and
the Company that was issued, acquired, settled or will
be settled at a discount.
(h) Neither Resources nor NewCo are investment
companies within the meaning of Sec. 368(a)(2)(F)(iii) and
(iv) of the Code.
5.4 Non-Compete Agreement. At the Closing, Resources
shall execute and deliver the Non-Compete Agreements in the
form attached as Exhibit II and pay to the Shareholders the
consideration provided for in Section 1.5 above.
5.5 Repayment of Shareholder Debt. At the Closing,
NewCo shall have sufficient funds to permit the Surviving
Corporation to repay the Shareholder Debt.
5.6 Rule 144. Resource agrees that for a period of
five (5) years following the Closing (or for such shorter
period as the Shareholders hold any Resources Shares acquired
in the Merger) that it will use its reasonable efforts to
timely file any reports and other filings required to be filed
by it under the Securities Act and the Securities Exchange Act
of 1934, as amended, and the rules and regulations adopted by
the Securities and Exchange Commission (the "SEC") thereunder
<PAGE>
(or if Resources is not required to file such reports and
filings, it will upon the request of any Shareholder make
publicly available other information so long as it is necessary
to permit sales under Rule 144 under the Securities Act) and it
will take such further actions as a Shareholder may reasonably
request, all to the extent required from time to time to enable
a Shareholder to sell within the limitations of the exemptions
provided by (i) Rule 144 under Securities Act as such rule may
be amended from time to time, or (ii) any similar rule or
regulation thereafter adopted by the SEC. Resources shall have
no liability for breach of this Section 5.6 provided that the
Shareholders are not denied the practical benefits of Rule 144
(or any similar rule) for a period in excess of six (6)
consecutive months and that, during such period, Resources is
using its reasonable efforts to comply with this Section 5.6.
5.7 Access to Records. Following the Closing,
Resources shall permit the Shareholders reasonable access to
such records of the Company relating to the operations of the
Company prior to the Closing as the Shareholders may reasonably
request for purposes of responding to tax audits, litigation or
similar situations where the Shareholders have a reasonable
need for access to such records. The Shareholders will take
reasonable steps to protect the confidentiality of records of
the Company made available to them.
5.8 Release of Claims. At the Closing, Resources
shall cause the Surviving Corporation to release the
Shareholders from any liability they may have to the Surviving
Corporation on account of any acts or omissions of the
Shareholders prior to the Closing; provided, however, that such
release shall not release the Shareholders from any liability
they may have for breach of this Agreement or any agreement
contemplated hereby, or from any obligation they may have to
indemnify Resources or the Surviving Corporation pursuant to
the terms of this Agreement or any agreement contemplated
hereby.
5.9 Personal Guarantees. Resources shall use its
reasonable efforts to cause the Shareholders to be released
from any obligations they may have pursuant to personal
guarantees of indebtedness of the Company, and shall indemnify
and hold harmless the Shareholders from and against any
liability pursuant to such personal guarantees, provided that
such indebtedness is fully reflected in the Financial
Statements or otherwise disclosed in writing to Resources prior
to the Closing Date.
5.10 Amendment Creating Preferred Stock. Prior to the
Closing Date, Resources shall amend its Restated Articles of
Incorporation to create the Series B Convertible Redeemable
Preferred Stock containing terms substantially identical to
those attached as Exhibit VII.
<PAGE>
5.11 Certain Post-Closing Matters. Resources agrees
that:
(a) Promptly after the expiration of the 30-day
period referred to in Section 2.23 hereof, it shall
cause the Surviving Corporation to assign to the
Shareholders all of the Surviving Corporation's rights
in and to the Bad Debts, if any, and shall cease all
collection efforts with respect thereto.
(b) Within 10 business days after the Shareholders
shall have delivered to Resources copies of the Forms K-
1 pursuant to Section 4.11 hereof, it shall cause the
Surviving Corporation to pay to each Shareholder an
amount equal to (i) five percent (5%) of the excess of
the items of income over the items of loss and deduction
reflected on that Shareholder's Form K-1 for the
Company's Short Year, minus (ii) one-third (1/3) the
aggregate amount of the Bad Debts, if any (net of one-
third (1/3) of any amount of the Bad Debts collected by
the Surviving Corporation without any efforts on its
part after the date of the assignment referred to in (a)
above and prior to the date of the payment provided for
herein).
ARTICLE VI
CONDITIONS TO RESOURCES' AND NEWCO'S OBLIGATIONS
The obligations of Resources and NewCo to consummate
the transactions contemplated hereby shall be subject to the
satisfaction on or prior to the Closing Date of all of the
following conditions, except such conditions as Resources and
NewCo may waive:
6.1 Representations, Warranties, and Covenants of
Shareholders and Company. The Shareholders and the Company
shall have complied in all material respects with all of their
agreements and covenants contained herein required to be
complied with at or prior to the Closing Date, and all the
representations and warranties of the Shareholders contained
herein shall be true on and as of the Closing Date with the
same effect as though made on and as of the Closing Date.
Resources shall have received a certificate executed by each of
the Shareholders, and dated as of the Closing Date, certifying
as to the fulfillment of the conditions set forth in this
Section 6.1, if such be the case or specifying which conditions
have not been satisfied.
6.2 Further Action. All action (including
notifications and filings) that shall be required to be taken
by the Shareholders or the Company in order to consummate the
transactions contemplated hereby shall have been taken and all
<PAGE>
consents, approvals, authorizations and exemptions from third
parties that shall be required by the Shareholders or the
Company in order to enable the Shareholders and the Company to
consummate the transactions contemplated hereby shall have been
duly obtained, and, as of the Closing Date, the transactions
contemplated hereby shall not violate any applicable law or
governmental regulation which is material.
6.3 No Governmental or Other Proceeding. No order of
any court or governmental or regulatory authority or body which
restrains or prohibits the transactions contemplated hereby
shall be in effect on the Closing Date and no suit or
investigation by any government agency to enjoin the
transactions contemplated hereby or seek damages or other
relief as a result thereof shall be pending or threatened as of
the Closing Date.
6.4 Opinion of Shareholders' Counsel. Resources shall
have received an opinion of the Shareholders' counsel, dated
the Closing Date, in substantially the form attached as
Exhibit III.
6.5 Employment Agreement. Daniel S. Baker shall have
executed an Employment Agreement in the form attached hereto as
Exhibit IV.
6.6 Non-Compete Agreements. Each of the Shareholders
shall have executed a Non-Compete Agreement in the form
attached hereto as Exhibit II.
6.7 No Material Adverse Change. Since December 31,
1992, there shall have been no material adverse change in the
business, prospects, properties, assets, or financial condition
of the Company, other than those specifically permitted or
contemplated by this Agreement or disclosed in this Agreement
or the Schedules hereto.
6.8 Escrow. The Shareholders, Resources and National
City Bank, Indiana, as escrow agent (the "Escrow Agent") shall
have entered into an Escrow Agreement in the form of Exhibit V
attached hereto, pursuant to which each of the Shareholders
shall deposit with the Escrow Agent 59,498 of the Common Shares
and 5,018 of the Preferred Stock of Resources issued to such
Shareholder in the Merger, to secure the indemnification
obligations of the Shareholders under Article VIII of this
Agreement and the obligations of the Shareholders under the
Non-Compete Agreements referred to in Section 6.6.
<PAGE>
ARTICLE VII
CONDITIONS TO SHAREHOLDERS' OBLIGATIONS
The obligations of the Company and the Shareholders to
consummate the transactions contemplated hereby shall be
subject to the satisfaction on or prior to the Closing Date of
all of the following conditions, except such conditions as the
Company and the Shareholders may waive:
7.1 Representations, Warranties, and Covenants of
Resources. Resources shall have complied in all material
respects with all of its agreements and covenants contained
herein required to be complied with at or prior to the Closing
Date, and all of the representations and warranties of
Resources contained herein shall be true in all material
respects on and as of the Closing Date with the same effect as
though made on and as of the Closing Date. The Shareholders
shall have received a certificate of Resources, dated as of the
Closing Date and signed by the chief financial officer of
Resources, certifying as to the fulfillment of the conditions
set forth in this Section 7.1, if such be the case, or
specifying which conditions have not been satisfied.
7.2 Further Action. All action (including
notifications and filings) that shall be required to be taken
by Resources in order to consummate the transactions
contemplated hereby shall have been taken and all consents,
approvals, authorizations and exemptions from third parties
that shall be requested in order to enable Resources to
consummate the transactions contemplated hereby shall have been
duly obtained, and, as of the Closing Date, the transactions
contemplated hereby shall not violate any applicable law or
governmental regulation.
7.3 No Governmental or Other Proceeding. No order of
any court or governmental or regulatory authority or body which
restrains or prohibits the transactions contemplated hereby
shall be in effect on the Closing Date and no suit or
investigation by any government agency to enjoin the
transactions contemplated hereby or seek damages or other
relief as a result thereof shall be pending or threatened in
writing as of the Closing Date.
7.4 Opinion of Resources' Counsel. The Shareholders
shall have received an opinion of counsel to Resources, dated
the Closing Date, substantially in the form attached as
Exhibit VI.
<PAGE>
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1 Survival. The representations, warranties and
covenants contained herein, or in any instrument or certificate
delivered pursuant hereto, shall survive Closing for a period
of thirty-six (36) months, except that (a) the covenant of
Resources contained in Section 5.6 shall survive for a period
of five (5) years and (b) all representations, warranties and
covenants contained herein, or in any instrument or certificate
delivered pursuant hereto with respect to Taxes and those
contained in Sections 2.3, 2.25 and 3.2 shall survive for the
applicable statute of limitations period. A claim for
indemnification by a party against the other under Section 8.2,
or any other claim of any nature under or pursuant to any other
provision of this Agreement, or in any instrument or
certificate delivered pursuant hereto, must be asserted in
writing and in accordance with Section 8.4 prior to the
expiration of the applicable time period referenced above. If
written notice of a claim is given in accordance with
Section 8.4 prior to the expiration of the applicable time
period referenced above, then the representation, warranty or
covenant applicable to such claim shall survive until, but only
for purposes of, resolution of such claim, provided that no
suit or action connected with or relating to this Agreement or
the transactions contemplated herein, and no defense,
counterclaim or set-off based upon any alleged breach of this
Agreement, may be first instituted or made more than six (6)
months after expiration of the applicable time period
referenced above.
8.2 Indemnification. Subject to the provisions of
Section 8.1, from and after the Closing, the Shareholders,
jointly and severally, on the one hand, and Resources and the
Surviving Corporation, on the other hand, shall indemnify and
hold harmless the other (the party seeking indemnification or
asserting a claim being referred to as the "Indemnified Party")
from and against any and all claims, losses, liabilities and
damages, including, without limitation, amounts paid in
settlement, interest, penalties, reasonable costs of
investigation and reasonable fees and disbursements of counsel,
accountants and experts, arising out of or resulting from the
inaccuracy of any representation or warranty, or the breach of
any covenant or agreement, contained herein or in any
instrument or certificate delivered pursuant hereto, by the
party against whom indemnification or relief is sought (the
"Indemnifying Party").
8.3 Certain Tax Matters. In the event of any claim
for indemnification relating to Taxes attributable to the
period January 1, 1993 to the Closing Date, the Shareholders'
obligation to indemnify Resources shall be limited to any
interest, penalty, cost of investigation or defense or similar
<PAGE>
expense, and shall not extend to the amount that the Company
would have paid had the tax been paid when due.
8.4 Notice of Claims. The Indemnified Party shall
notify the Indemnifying Party in writing of any claim,
specifying in reasonable detail the basis of such claim, the
facts pertaining thereto and, if known, the amount, or an
estimate of the amount, of the liability arising therefrom. No
party shall have any liability hereunder and the other party
may not assert as a defense, counterclaim or set-off any claim
unless the notice required by this Section is given within six
(6) months after discovery of the grounds for the claim. The
Indemnified Party shall provide to the Indemnifying Party as
promptly as practicable thereafter all information and
documentation necessary to support and verify the claim
asserted and the Indemnifying Party shall be given reasonable
access to all books and records in the possession or control of
the Indemnified Party or any of its affiliates which the
Indemnifying Party reasonably determines to be related to such
claim.
8.5 Defense. If the facts giving rise to a right to
indemnification arise out of the claim of any third party, or
if there is any claim against a third party, the Indemnifying
Party may assume the defense or the prosecution thereof,
including the employment of counsel, at its cost and expense.
The Indemnified Party shall have the right to employ counsel
separate from counsel employed by the Indemnifying Party in any
such action and to participate therein, but the fees and
expenses of such counsel employed by the Indemnified Party
shall be at its expense. The Indemnifying Party shall not be
liable for any settlement of any such claim effected without
its prior written consent which consent shall not be
unreasonably withheld. Whether or not the Indemnifying Party
does choose to so defend or prosecute such claim, all the
parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and
testimony, and attend at such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably
requested in connection therewith. The Indemnifying Party
shall be subrogated to all rights and remedies of the
Indemnified Party to the extent of any indemnifications
provided hereunder.
8.6 Limitations on Indemnity Obligations. Except for
indemnification or claims relating to Taxes, the Shareholders
shall have no obligation to indemnify Resources pursuant to
Section 8.2 for any claims for indemnification or to respond in
damages for any other claim under or pursuant to any provision
of this Agreement or any instrument or certificate delivered
pursuant hereto, however denominated, except to the extent that
the aggregate dollar amount of all unpaid claims exceeds
$100,000, it being understood that the Shareholders shall not
be liable for the first $100,000 of claims.
<PAGE>
8.7 Special Agreement Regarding Schedules. The
parties to this Agreement have reviewed the Schedules hereto
and the effect that disclosures in the Schedules would
otherwise have upon the representations and warranties
contained in Article II and the indemnification obligations of
the Shareholders pursuant to Article VIII. Subject to the
limitations of Sections 8.1, 8.4, 8.5 and 8.6, the parties have
agreed that the risk of loss associated with certain potential
liabilities or other adverse consequences identified on the
Schedules ("Potential Liabilities") should be borne by the
Shareholders, and the disclosure of such Potential Liabilities
in the Schedules should not serve to limit the representations
and warranties of the Shareholders or their indemnification
obligations to Resources (it being understood that
Sections 8.1, 8.4, 8.5 and 8.6 would nonetheless apply to any
claim for indemnification on account of any Potential
Liabilities). Accordingly, notwithstanding any other provision
of this Agreement to the contrary, the parties agree that for
purposes of the representations and warranties contained in
Article II and the indemnification obligations of the
Shareholders contained in Article VIII, the following shall
apply:
(a) The representation and warranty contained in
Section 2.1 shall be applied as if Schedule 2.1 did not
identify the fact that the Company is not yet qualified
to do business in the states of Kansas and Oklahoma.
(b) The representations and warranties contained
in Sections 2.9, 2.15, 2.16, 2.17, and 2.25 shall be
applied as if the corresponding Schedules disclosed
nothing, except that in the case of Schedules 2.9, 2.15
and 2.17, Resources shall not be entitled to
indemnification against any loss arising from the
matters listed on such Schedule to the extent that (and
only to the extent that) such loss is covered by
insurance.
(c) The representation and warranty contained in
Section 2.13 shall apply as if Schedule 2.13 disclosed
nothing other than the identity of the insurance
policies maintained by the Company and item 10.
(d) The representation and warranty contained in
Section 2.14 shall apply as if Schedule 2.14 identified
nothing other than the existence of contracts or
agreements of the Company and the items referred to in
Schedule 2.5.
(e) The representation and warranty contained in
Section 2.18 shall apply as if Schedule 2.18 did not
disclose the failure to file outstanding tax returns.
<PAGE>
(f) The representation and warranty contained in
Section 2.24 shall apply as if Schedule 2.24 disclosed
nothing except (i) union attempts to organize, and
(ii) that for purposes of Section 2.24 a "grievance"
shall mean a complaint filed by employees pursuant to
federal and/or state law, including EEOC charges,
unemployment compensation claims, workers compensation
claims, claims of unfair labor practices and similar
matters.
The disclosure of any matter on any Schedule shall
relate solely to the representation and warranty to which the
Schedule relates, and shall not qualify or otherwise affect any
other representation or warranty (it is understood, however,
that any Schedule may refer to or incorporate information by
reference from another Schedule, in which case the appropriate
information from the cross-referenced Schedule shall be deemed
to be a part of the first Schedule).
ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) By the mutual written consent of Resources and
the Shareholders;
(b) By Resources or the Shareholders in writing if
the Closing shall not have occurred on or before
July 31, 1993, or such other date to which the Agreement
has been extended by agreement of the parties; or
(c) By either the Shareholders or Resources,
against the other, if the other shall (i) fail to
perform in any material respect its agreements contained
herein required to be performed prior to the Closing
Date, or (ii) materially breach any of its
representations, warranties, covenants or agreements
contained herein, which failure or breach is not cured
within five (5) days after the party seeking to
terminate has notified the other party in writing of its
intent to terminate this Agreement pursuant to this
clause.
9.2 Termination of Obligations. Termination of this
Agreement pursuant to this Article IX shall terminate all
obligations of the parties hereunder, except for the
obligations under Sections 4.4, 5.2 and 10.6; provided,
however, that termination pursuant to clause (b) or (c) of
Section 9.1 shall not relieve the defaulting or breaching party
<PAGE>
from any liability to the other party hereto resulting from its
willful breach of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. This Agreement (including the
Schedules and Exhibits hereto) constitutes the sole
understanding of the parties with respect to the subject matter
hereof. This agreement supersedes and replaces any and all
prior agreements, understandings and representations, written
and oral, if any, including without limitation the contents of
that certain "Confidential Business Memorandum" for Company.
No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same
shall be in writing and duly executed by the parties hereto.
10.2 Successor and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and he binding
upon the respective successor of the parties hereto; provided,
however, that this Agreement may not be assigned by any party
without the prior written consent of the other party hereto.
If this Agreement is assigned with such consent, the terms and
conditions hereof shall be binding upon and shall inure to the
benefit of the parties hereto and their respective assigns;
provided, however, that no assignment of this Agreement or any
of the rights or obligations hereof shall relieve any party of
its obligations under this Agreement.
10.3 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes
be deemed to be an original and all of which shall constitute
the same instrument.
10.4 Headings. The headings of the Sections and
paragraphs of this Agreement are inserted for convenience only
and shall not be deemed to constitute part of this Agreement or
to affect the construction hereof.
10.5 No Waiver. No action taken pursuant to this
Agreement, including any investigation by or on behalf of any
party hereto, will be deemed to constitute a waiver by the
party taking any action of compliance with any representation,
warranty or agreement contained herein. The waiver by any
party hereto of any condition or of a breach of any other
provision of this Agreement will not operate or be construed as
a waiver of any other condition or subsequent breach. The
waiver by any party of any of the conditions precedent to its
obligations under the Agreement will not preclude it from
seeking redress for breach of this Agreement other than with
respect to the condition so waived.
<PAGE>
10.6 Expenses. The Shareholders and Resources shall
each pay all costs and expenses incurred by them or it or on
their or its behalf in connection with this Agreement and the
transactions contemplated hereby, including, without limiting
the generality of the foregoing, fees and expenses of its own
financial consultants, accountants and counsel. All expenses
incurred by the Company shall be reimbursed by the
Shareholders.
10.7 Notices. Any notice, request, instruction or
other document (each, a "notice") to be given hereunder by any
party hereto to any other party hereto shall be in writing and
delivered personally or sent by registered or certified mail,
postage prepaid:
If to Company to:
S. M. & P. Conduit Co., Inc.
518 Herriman Ct.
Noblesville, Indiana 46060
If to the Shareholders to:
Diana L. Sosbey
8596 Twin Point Circle
Indianapolis, Indiana 46236
Patrick J. Baker
1913 West 116th Street
Carmel, Indiana 46032
Daniel S. Baker
7285 Waterview Pt.
Noblesville, Indiana 46060
with a copy to:
Curtis Miller, C.P.A.
Katz, Sapper & Miller
Suite 800
11711 North Meridian Street
Carmel, Indiana 46032
and with a copy to:
Marvin Mitchell, Esq.
Mitchell, Hurst, Jacobs & Dick
152 East Washington Street
Indianapolis, Indiana 46204-3615
<PAGE>
If to Resources to:
IWC Resources Corporation
1200 Waterway Boulevard
Indianapolis, Indiana 46202
Attention: J.A. Rosenfeld
with a copy to:
Baker & Daniels
300 North Meridian Street
Suite 2700
Indianapolis, Indiana 46204
Attention: Randy D. Loser, Esq.
10.8 Further Assurances. From and after the Closing
Date, each party, at the request of the other party and at the
requesting party's expense, will each take all such action and
deliver all such documents as shall be reasonably necessary or
appropriate to consummate the transactions contemplated by this
Agreement and to permit the parties to enjoy the benefits
contemplated by this Agreement.
10.9 Governing Law. The validity, performance and
enforcement of this Agreement and any agreement entered into
pursuant hereto, unless expressly provided to the contrary,
will be governed by the laws of Indiana, without giving effect
to the principles of conflicts of law thereof.
10.10 Consent to Jurisdiction. Each of Resources and
the Shareholders consents and submits to jurisdiction and venue
in any court setting in Marion County, Indiana, for all
purposes of this Agreement and any ancillary document to which
it is a party, including, without limitation, any action or
proceeding instituted for the enforcement of any right, remedy,
obligation or liability arising under or by reason hereof and
thereof.
10.11 Specific Performance. Resources on the one
hand, and the Shareholders and the Company, on the other hand,
acknowledge that the other will be irreparably harmed and that
there will be no adequate remedy at law in the event of a
violation by it of any of its covenants or agreements which are
contained in this Agreement. It is accordingly agreed that, in
addition to any other remedies which may be available upon the
breach of such covenants and agreements, the Shareholders or
Resources, as the case may be, shall have the right to obtain
injunctive relief to restrain any breach or threatened breach
of, or otherwise to obtain specific performance of, the other's
covenants or agreements contained in this Agreement.
<PAGE>
IN WITNESS WHEREOF each of the parties hereto has
caused this Agreement to be duly executed on its behalf as of
the date first above written.
S. M. & P. CONDUIT CO., INC.
By /s/Diana L. Sosbey
Name: Diana L. Sosbey
Title: President
IWC RESOURCES CORPORATION
By /s/J.A. Rosenfeld
Name: J.A. Rosenfeld
Title: Senior Vice President
RESOURCES ACQUISITION CORP.
By /s/J.A. Rosenfeld
Name: J.A. Rosenfeld
Title: President
DIANA L. SOSBEY
/s/Diana L. Sosbey
PATRICK J. BAKER
/s/Patrick J. Baker
DANIEL S. BAKER
/s/Daniel S. Baker
<PAGE>
EXHIBIT I
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Merger Agreement") is made
as of June __, 1993 by and among IWC Resources Corporation, an
Indiana corporation ("Resources"), Resources Acquisition Corp.,
an Indiana corporation and wholly owned subsidiary of Resources
("NewCo"), and S. M. & P. Conduit Co., Inc., an Indiana
corporation (the "Company").
WHEREAS, Resources, NewCo, the Company and the common
shareholders of the Company have entered into a Plan and
Agreement of Merger (the "Agreement") relating to the merger of
the Company with and into NewCo (the "Merger"); and
WHEREAS, Resources, NewCo and the Company desire to set
forth the terms and conditions of the Merger;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements contained herein, the parties
hereto agree as follows:
ARTICLE I
1.01 Constituent Corporations and Surviving
Corporation. NewCo and the Company shall be the constituent
corporations to the Merger. At the Effective Time of the
Merger (as hereinafter defined), the Company shall be merged
with and into NewCo, which shall be the surviving corporation
of the Merger (the "Surviving Corporation"). At the Effective
Time of the Merger, the identity and separate existence of the
Company shall cease and all of the rights, privileges, powers,
franchises, properties and assets of the Company shall be
vested in NewCo in accordance with the provisions of the
Indiana Business Corporation Law. At the Effective Time of the
Merger, the name of the Surviving Corporation shall be changed
to S M & P Conduit Co., Inc.
1.02 Effective Time. The date and time when the
Merger becomes effective are herein referred to as the
"Effective Time of the Merger." The Effective Time of the
Merger shall be at the time stated in the Articles of Merger to
be filed with the Secretary of State of Indiana with respect to
the Merger.
ARTICLE II
2.01 Articles of Incorporation. The Articles of
Incorporation of NewCo as in effect immediately prior to the
<PAGE>
Effective Time of the Merger, but as amended in the manner set
forth in Section 4.01 below, shall thereafter be the Articles
of Incorporation of the Surviving Corporation until amended in
accordance with Indiana law.
2.02 By-Laws. The By-Laws of NewCo, as in effect
immediately prior to the Effective Time of the Merger, but as
amended to reflect the change of name of NewCo, shall be the
By-Laws of the Surviving Corporation, until amended or
repealed.
2.03 Officers. The officers of NewCo at the Effective
Time of the Merger shall be the officers of the Surviving
Corporation from and after the Effective Time of the Merger,
each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation.
2.04 Directors. The directors of NewCo at the
Effective Time of the Merger shall be the directors of the
Surviving Corporation from and after the Effective Time of the
Merger, each to serve until his successor shall have been duly
elected and qualified in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation.
ARTICLE III
3.01 Conversion of Company Common Stock. At the
Effective Time of the Merger, each of the issued and
outstanding whole shares of common stock of the Company (the
"Company Common Stock"), by virtue of the Merger and without
any action on the part of the holder thereof, automatically
shall be converted into and become the right to receive from
the Surviving Corporation (a) 3,569.90 Common Shares of
Resources (the "Resources Common Stock"), (b) 516.12 shares of
Series B Convertible Redeemable Preferred Stock of Resources
(the "Resources Preferred Stock") and (c) Ninety-Five Thousand
Dollars ($95,000) in cash. No fractional shares of Resources
Common Stock or Resources Preferred Stock shall be issued, and
the number of shares of Resources Common Stock and Resources
Preferred Stock issued to each former holder of Company Common
Stock shall be rounded to the nearest whole share. Any
fractional shares of Company Common Stock outstanding shall be
converted into the right to receive a proportionate portion of
the consideration provided above for a whole share, such
calculation to be made to the nearest ten-thousandths (.0000)
of a share of Company Common Stock.
3.02 Shares Held in Company Treasury. At the
Effective Time of the Merger, all shares of common and
preferred stock of the Company held in the treasury of the
Company, if any, shall be cancelled, without any payment or
other distribution in respect thereof.
<PAGE>
3.03 No Conversion of NewCo Stock. None of the issued
and outstanding shares of NewCo's capital stock shall be
converted or otherwise affected by the Merger and at and after
the Effective Time of the Merger, all of such shares shall
remain issued and outstanding shares of capital stock of the
Surviving Corporation.
ARTICLE IV
4.01 Amendment to Articles of Incorporation of
Surviving Corporation. At the Effective Time of the Merger,
the Articles of Incorporation of the Surviving Corporation
shall be amended by amending Article I to read in its entirety
as follows:
"ARTICLE I
Name
The name of the Corporation is S M & P Conduit Co.,
Inc."
ARTICLE V
5.01 Counterparts. This Merger Agreement may be
executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together shall
constitute one agreement.
5.02 Governing Law. This Merger Agreement shall be
governed in all respects, including, but not limited to,
validity, interpretation, effect and performance, by the
internal laws of the State of Indiana without regard to the
principles of conflicts of law thereof.
5.03 Section Headings. The section headings in this
Merger Agreement have been inserted for convenience of
reference only and shall not affect the meaning or
interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have duly
executed this Merger Agreement, as of the date first written
above.
IWC RESOURCES CORPORATION
By ________________________________
Printed:_________________________
Title:___________________________
RESOURCES ACQUISITION CORP.
By ________________________________
Printed:_________________________
Title:___________________________
S. M. & P. CONDUIT CO., INC.
By ________________________________
Printed:_________________________
Title:___________________________
<PAGE>
EXHIBIT II
NON-COMPETE AGREEMENT
THIS NON-COMPETE AGREEMENT ("Agreement") is made as of
the ____ day of June, 1993, by and between
______________________ ("Shareholder") and IWC Resources
Corporation, an Indiana corporation ("Resources").
Recitals
A. Shareholder is now a shareholder of S. M. & P.
Conduit Co., Inc., an Indiana corporation (the "Company").
B. Resources has agreed to acquire the Company
pursuant to the terms of a Plan and Agreement of Merger among
Resources, Resources Acquisition Corp., the Company and the
shareholders of the Company, including the Shareholder (the
"Agreement").
C. Shareholder possesses valuable information
regarding the business of the Company, and could threaten the
value of Resources' investment in the Company if Shareholder
were to disclose such information or to compete with the
Company. In order to induce Resources to enter into and
perform the Agreement, and in consideration of Resources'
obligations under the Agreement, Shareholder desires to agree
not to compete with Company.
Agreement
In consideration of the matters stated in the Recitals
and the covenants contained in this Agreement, the parties
agree as follows:
1. Restrictive Covenants. Shareholder hereby agrees
as follows:
(a) Shareholder will not, for five (5) years from
the date hereof, directly or indirectly:
(i) engage, whether as an individual or
sole proprietor or as owner, partner,
shareholder (except of one percent (1%) or
less of any class of outstanding securities
listed on any national securities exchange or
actively traded in an over-the-counter
market), officer, director, manager, agent,
consultant, formal or informal advisor, or by
<PAGE>
or through the lending of any form of
assistance, in the underground facility
locating business within the States of
Illinois, Indiana, Missouri, Ohio, Texas,
Wisconsin, Arkansas, Kentucky, Kansas,
Oklahoma and Michigan (the "Restricted
Territory"); or
(ii) solicit, take away or endeavor to
take away from the Company any sales of
underground facility locating services to any
customer of the Company within the Restricted
Territory; or
(iii) solicit, take away, hire, employ
or endeavor to employ any person who is then
or was at any time during the prior six (6)
months an employee of Company; or
(iv) lend money, guarantee loans, make
gifts of money or other property, or otherwise
lend financial or other assistance in any form
to any person, firm, association, partnership,
venture, corporation or other business entity
who is engaged or will within the period
prescribed above engage in any of the
activities prohibited by the foregoing
paragraphs (i), (ii) and (iii) of this
paragraph 1(a).
(b) All data and information which Resources
reasonably regards as confidential that Shareholder has
obtained regarding the business conducted by the Company,
including customer lists, information relating to the
requirements of customers and all other information
regarding the affairs of the Company (in each case only to
the extent Resources reasonably regards the same as
confidential), shall be held in confidence by Shareholder
and, without Resources' prior written consent (which shall
not unreasonably be withheld), Shareholder shall not divulge
any of such information to anyone except the Company or its
representatives or as required by law.
(c) Shareholder acknowledges that any violation by him
of any provision of this paragraph 1 will cause irreparable
harm to Resources, that damages for such harm will be
incapable of precise measurement and that, as a result,
Resources will not have an adequate remedy at law to redress
the harm caused by such violations. Therefore, in the event
of Shareholder's violation of any provisions of this
paragraph 1, Shareholder agrees that, in addition to its
other remedies, Resources shall be entitled to injunctive
relief, including but not limited to temporary restraining
orders and/or preliminary or permanent injunctions to
<PAGE>
restrain or enjoin any violation of this paragraph 1 by
Shareholder. Shareholder agrees to and hereby does submit
to jurisdiction before any state or federal court of record
in Marion County, Indiana, or in the state and county in
which such violation may occur, at Resources' election, for
that purpose, and Shareholder hereby waives any right to
raise the questions of jurisdiction and venue in any action
that Resources may bring in any such court against
Shareholder.
(d) In addition to any other relief to which it
shall be entitled, Resources shall be entitled to
recover from Shareholder the costs and reasonable
attorney's fees incurred by Resources in (i) the
successful enforcement of this paragraph 1 and
(ii) obtaining relief from Shareholder's violation of
any restriction contained in this paragraph 1.
(e) In addition to its other remedies, Resources
shall be entitled to satisfy any amounts due it as a
result of breach of this Agreement pursuant to the terms
of the Escrow Agreement dated the date hereof by and
among Resources, Shareholder, National City Bank,
Indiana as escrow agent and certain other parties.
2. Severability. Should any clause, portion or
paragraph of this Agreement be unenforceable or invalid for any
reason, such unenforceability or invalidity shall not affect
the enforceability or validity of the remainder of this
Agreement. Should any particular covenant or restriction,
including but not limited to the covenants and restrictions of
paragraph 1, be held to be unreasonable or unenforceable for
any reason, including without limitation the time period,
geographical area and scope of activity covered by such
covenant, then such covenant or restriction shall be given
effect and enforced to whatever extent would be reasonable and
enforceable.
3. Binding on Successors and Assigns. The terms and
conditions hereof shall inure to the benefit of and be binding
upon the successors and assigns of Resources and the heirs,
executors and personal representatives of Shareholder.
4. Governing Law. This Agreement and the performance
by the parties under this Agreement shall be construed in
accordance with the internal laws of Indiana, and any action or
proceeding that may be brought, arising out of, in connection
with or by reason of this Agreement shall be governed by the
internal laws of Indiana to the exclusion of the law of any
other forum, and regardless of the jurisdiction in which the
action or proceeding may be instituted or pending.
5. Entire Agreement, Modifications. The foregoing
terms and conditions of this Agreement constitute the entire
<PAGE>
agreement by and between Resources and Shareholder relating to
the subject matter hereof. No amendment to or modification of
this Agreement shall be effective unless the amendment or
modification is in writing and signed by Shareholder and
Resources.
6. Notices. Any notice required or permitted under
this Agreement shall be delivered by hand or mailed by
registered or certified mail, postage prepaid, addressed:
If to Resources: IWC Resources Corporation
1220 Waterway Boulevard
Indianapolis, Indiana 46202
Attention: J.A. Rosenfeld
If to Shareholder: ______________________________
______________________________
______________________________
7. Captions. The captions herein are for convenience
and identification purposes only, are not integral parts of
this Agreement and are not to be considered in the
interpretation of any part of this Agreement.
8. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
[The following paragraph shall be included in the Non-
Compete Agreement of Daniel S. Baker:
9. Employment Acknowledged. Resources acknowledges
that Shareholder will be an employee of the Surviving
Corporation (as defined in the Agreement) as provided in that
certain Employment Agreement between the Surviving Corporation
and Shareholder of even date herewith. Resources agrees that
Shareholder's activities in the proper discharge of his duties
as an employee of the Surviving Corporation shall not
constitute a breach of the Agreement.]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
"Shareholder"
___________________________________
IWC RESOURCES CORPORATION
By ________________________________
Name:
Title:
<PAGE>
EXHIBIT III
[Form of Opinion of Counsel for Shareholders]
_________ __, 1993
IWC Resources Corporation
Resources Acquisition Corp.
1220 Waterway Boulevard
Indianapolis, Indiana 46222
Gentlemen:
We have acted as counsel to S. M. & P. Conduit Co.,
Inc., an Indiana corporation (the "Company"), and its
shareholders, Diana L. Sosbey, Patrick J. Baker and Daniel S.
Baker (the "Shareholders"), in connection with the preparation
of the Plan and Agreement of Merger (the "Agreement"), dated
_________ __, 1993 by and among IWC Resources Corporation
("Resources"), Resources Acquisition Corp. ("NewCo"), the
Company and the Shareholders, including the Merger Agreement
attached thereto pursuant to which the Company will be merged
with and into NewCo (the "Merger"), the Non-Compete Agreements
dated the date hereof by and between Resources and each of the
Shareholders, the Employment Agreement dated the date hereof by
and between the Company and Daniel S. Baker, and the Escrow
Agreement dated the date hereof by and among _________________
as escrow agent, Resources and the Shareholders. The
Agreement, the Merger Agreement, the Employment Agreement and
the Escrow Agreement are referred to herein collectively as the
"Transaction Documents." This Opinion Letter is being given
pursuant to Section 6.4 of the Agreement and, except as
otherwise indicated, capitalized terms used herein are defined
as set forth in the Agreement.
In connection with this Opinion Letter, we have
examined signed copies of the Transaction Documents, a
certified copy of certain resolutions adopted by the Board of
Directors and Shareholders of the Company dated ________ __,
1993, and a certified copy of the Company's Articles of
Incorporation and By-Laws, as amended.
We have considered such matters of law and fact, and
have relied upon such certificates and other information
furnished to us and upon the representations of the
Shareholders contained in the Agreement as we have deemed
appropriate as a basis for our opinions set forth below.
<PAGE>
This Opinion Letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord,
and this Opinion Letter should be read in conjunction
therewith. The law covered by the opinions expressed herein is
limited to the Federal law of the United States and the law of
the State of Indiana. [Incorporation of the Opinion Accord is
optional.]
Based upon the foregoing, and subject to the
qualifications and exceptions set forth below, we are of the
opinion that:
1. The Company is
incorporated and existing under the laws of the State of
Indiana and has all requisite power and authority to own or
lease and operate its properties and to carry on its business
as presently conducted.
2. The Company has the
requisite corporate power and authority to enter into the
Transaction Documents to which it is a party and to perform its
respective obligations under such Transaction Documents.
3. Each of the Transaction
Documents to which the Company is a party has been approved by
all necessary action on the part of the Board of Directors of
the Company and the Shareholders, has been duly executed and
delivered to Resources and is enforceable against the Company
and/or the Shareholders as the case may be, except that no
opinion is expressed herein as to the enforceability of
Sections 6 or 10 of the Employment Agreement.
4. The execution and
delivery by the Company and the Shareholders of, and the
performance of their respective obligations under, the
Transaction Documents do not violate the Articles of
Incorporation or By-Laws of the Company.
5. The authorized capital
stock of the Company consists of 1,000 shares of common stock
("Common Stock") of which 100 shares are issued and
outstanding. All of the outstanding shares of Common Stock
(referred to collectively herein as the "Shares") are owned of
record and beneficially by the Shareholders in the amounts set
forth on Schedule 2.2 to the Agreement. All outstanding Shares
have been duly authorized and validly issued, are fully paid
and nonassessable and were not issued in violation of any
preemptive rights. To the best of our knowledge after due
inquiry [the scope of which may be expressed in this opinion],
there is outstanding no security, option, warrant, right, call,
<PAGE>
subscription, agreement, commitment or understanding of any
nature whatsoever, real or contingent, that directly or
indirectly (i) calls for the issuance, sale, pledge or other
disposition of any Shares or of any other capital stock of the
Company or any securities convertible into, or other rights to
acquire, any such Shares or other capital stock of the Company
or (ii) obligates the Company or the Shareholders to grant,
offer or enter into any of the foregoing or (iii) relates to
the voting or control of such shares, capital stock, securities
or rights. No person has any right to require the Company to
register any of its securities under the Securities Act of
1933, as amended.
The General Qualifications (as defined in the Accord)
apply to each of the opinions set forth herein.
Based and relying upon a review of our litigation files
and certificates of the Shareholders and an officer of the
Company, we hereby confirm to you that there is no action,
proceeding or investigation in any court or before any
governmental or regulatory authority pending or threatened in
writing or orally (i) against the Company or against any
Shareholder, in connection with the conduct of the businesses
of the Company, except as set forth on Schedule 2.15 of the
Agreement, (ii) which seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated by
the Transaction Documents, or (iii) would render Resources or
NewCo unable to exercise control over the assets of the
Company.
This Opinion Letter may be relied upon by you only in
connection with the transactions contemplated by the
Transaction Documents, including the Merger, and may not be
used or relied upon by any other person for any purpose
whatsoever, without in each instance our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT IV
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the ____day of ________,
1993, by and between S M & P Conduit Co., Inc., an Indiana
corporation ("Corporation") and wholly owned subsidiary of IWC
Resources Corporation, and Daniel S. Baker, a resident of
Indiana ("Employee").
Recitals
A. Employee has extensive
business experience valuable to the Corporation, and desires to
provide services to the Corporation upon the terms and
conditions set forth in this Agreement.
B. The Corporation wishes to
employ Employee upon the terms and conditions set forth in this
Agreement; and
C. The Corporation currently
engages in, or has plans to engage in, businesses providing
underground facility locating services and related businesses,
with respect to which the Corporation has developed and expects
to develop certain Confidential Information (as defined herein)
which the Corporation desires and intends to protect.
NOW, THEREFORE, in consideration of the premises, the
mutual promises and agreements contained herein, and other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
Agreement
1. President and Chief
Operating Officer. The Corporation hereby employs Employee as
President and Chief Operating Officer for the Corporation, and
Employee hereby agrees to serve the Corporation in such
capacities, upon the terms and conditions hereinafter set
forth.
2. Term. The term of
Employee's employment under this Agreement shall be for an
initial term of approximately five and one-half years
commencing as of the date of this Agreement and ending on
December 31, 1998 (the "Initial Term"). This Agreement shall
automatically renew for successive one (1) year periods after
the Initial Term, but may be terminated at the end of the
Initial Term or any renewal term by either the Corporation or
Employee with prior written notice by the terminating party
<PAGE>
delivered to the other at least ninety (90) days before the end
of the Initial Term or any renewal term as the case may be.
3. Compensation. Employee
shall be compensated on an annual salary plus annual bonus
basis.
(a) The salary for the first
year of the Initial Term shall be $200,000 and shall be paid
in equal installments for the same periods and on the same
dates that the Corporation uses for its other employees.
(b) For the second and each
succeeding year of the Initial Term and of any renewal term
(and for the partial year at the end of the Initial Term),
Employee's annual salary will be determined by the Board of
Directors, but shall not be less than an annual rate of
$200,000.
(c) Employee shall be
entitled to receive an annual bonus beginning with the
calendar year 1993 based upon the EBIT (as defined below) of
the Corporation for such year in accordance with the
following Schedule:
EBIT Bonus
up to $4,000,000 none
next 2,000,000 5.0% of EBIT in excess
of $4,000,000
next 1,000,000 7.5% of EBIT in excess
of $6,000,000
next 500,000 10.0% of EBIT in excess
of $7,000,000
next 500,000 15.0% of EBIT in excess
of $7,500,000
over 8,000,000 at the discretion of the
Board
(d) For purposes of this
Agreement, the term "EBIT" shall mean the earnings of the
Corporation before (i) interest and taxes, (ii) amortization
of amounts paid pursuant to the non-compete agreements with
Diana L. Sosbey, Patrick J. Baker and Daniel S. Baker and
(iii) payment of premiums on insurance on the life of
Employee for each fiscal year, all as determined by the
Corporation in accordance with its usual accounting
procedures. Each annual bonus shall be payable within
thirty (30) days following completion of year-end financial
statements for the Corporation.
(e) After the termination of
this Agreement, the Corporation shall not be liable to
Employee for any further salary hereunder; provided, that
<PAGE>
Employee shall be paid (i) any amounts earned hereunder
through the date of termination, and (ii) a pro rata portion
of the bonus, if any, payable pursuant to subparagraph (c)
based upon the number of full months Employee is employed by
the Corporation during the fiscal year in which termination
occurs.
(f) In the event of any merger, consolidation,
reorganization, spin-off or similar transaction involving
the Corporation, the Corporation and Employee shall
negotiate in good faith to determine what adjustments, if
any, are appropriate in the method of calculating the annual
bonus. In the event the Corporation and Employee are unable
to agree upon the appropriate adjustment, the question shall
be submitted to arbitration in accordance with the
commercial rules of the American Arbitration Association and
judgment upon the award may be entered by any court of
competent jurisdiction.
4. Benefits.
(a) Employee shall be
entitled to participate in all life, health or
hospitalization insurance programs, or any other benefit
plan or program, upon the terms and conditions of such
programs, which the Corporation may from time to time
provide or make available to other executives of the
Corporation generally. Employee shall also be eligible to
participate in the IWC Resources Corporation Restricted
Stock Plan.
(b) Employee shall be
reimbursed for any reasonable out-of-pocket expenses and
travel expenses incurred by him in connection with the
performance of the Corporation's business, in accordance
with reasonable policies that may be established by the
Board of Directors from time to time applicable to
reimbursement of expenses. The Corporation shall provide
Employee with the use of a suitable automobile for business
purposes.
(c) Employee shall be
entitled to an annual vacation of up to six (6) weeks per
year. Vacation may be taken at such time or times as
Employee shall select, subject to the condition that it
shall be taken at a time when his absence will not impair
the Corporation's normal business functions. In no event
shall Employee take more than two weeks vacation in any 30-
day period without the prior consent of the Corporation.
Unused vacation shall lapse at the end of each anniversary
year, unless Employee is unable to use such vacation time
because of requirements of the Corporation, in which event
the Corporation shall permit the vacation to accumulate and
to be taken in a succeeding year or years or shall reimburse
<PAGE>
Employee for such unused vacation days at his then
applicable salary.
(d) The right of Employee to
indemnification for liability incurred as a result of his
service as an officer or director of the Corporation
pursuant to the Articles of Incorporation or By-Laws of the
Corporation shall not be materially less than the
indemnification rights available to officers and directors
of IWC Resources Corporation pursuant to its Articles of
Incorporation and By-Laws.
(e) Corporation shall provide Employee with office
space and secretarial or similar support reasonably
satisfactory to Employee.
5. Title, Services and
Duties.
(a) Employee is hereby
employed to perform the services of President and Chief
Operating Officer and discharge the duties necessary and
appropriate thereto. The Corporation shall cause Employee
to be appointed President and Chief Operating Officer and a
Director.
(b) E m p l o y e e ' s
responsibilities shall include those matters typically
performed by a chief operating officer, including
responsibility for the day-to-day operations of the
Corporation, and such other executive level duties as may be
assigned to him from time to time by the Board of Directors.
(c) Employee accepts the
employment specified above and, during such employment,
shall devote his full business time, attention, energy and
skill to the business of the Corporation. This shall not
preclude Employee from serving as a Director of any other
corporation which does not compete with the Corporation or
from investing his assets in such form or manner as will not
require his services in the operation of the affairs of the
companies in which such investments are made or from
devoting reasonable time to the affairs of charitable or
civic organizations.
(d) Employee shall not be
required to relocate outside of the Indianapolis and
Noblesville metropolitan areas without his consent.
6. Covenant Not To Compete
And Not To Disclose Confidential Information. Employee hereby
acknowledges that by virtue of his position as President and
Chief Operating Officer, and his employment hereunder, he will
have advantageous familiarity with and knowledge about the
<PAGE>
Corporation's Confidential Information (as defined below).
Therefore, Employee agrees as follows:
(a) During Employee's
employment by the Corporation and for a period of two (2)
years thereafter, regardless of the reason or method of
termination, Employee will not
(i) engage (either
directly or indirectly, as shareholder, partner,
officer, director, consultant, employee or otherwise)
in a business competitive with that of the Corporation
within any geographical territory within which the
Corporation has done business during the last twelve
(12) months of his employment;
(ii) solicit, take away,
hire, employ or endeavor to employ any of the employees
of the Corporation or any persons who were employees of
the Corporation within the six (6) months prior to
termination of Employee's employment; or
(iii) lend money,
guarantee loans, make gifts of money or other property,
or otherwise lend financial or other assistance in any
form to any person, firm, association, partnership,
venture, corporation or other business entity who is
engaged or will within the above period engage in any
of the activities prohibited by the foregoing
paragraphs (i) and (ii) of this paragraph.
For purposes of this
Agreement, a "business competitive with that of the
Corporation" shall mean any business related to underground
facility locating services and any other business engaged in
by the Corporation within the twelve (12) months immediately
preceding termination of Employee's employment.
(b) Employee agrees that
information obtained by him regarding the sources of supply,
processes, and "know-how," merchandising methods, trade
information, trade secrets, inventions, customer lists,
confidential information relating to customers and customer
requirements and all other confidential information
regarding the affairs of the Corporation which comes to his
attention by reason of his employment, including records of
the foregoing ("Confidential Information") will be received
by him in confidence, and agrees not to divulge any of such
information to anyone except in the performance of his
duties to the Corporation or as required by law. Employee
agrees that all such records and copies of records shall be
the property of the Corporation and agrees to keep such
documents subject to the Corporation's custody and control,
and to surrender to the Corporation such of those documents
<PAGE>
as are still in his possession at the termination of his
employment. Employee further agrees to return to the
Corporation at the Corporation's main office any and all
sales catalogs, brochures, samples, sample cases, machinery,
equipment and other sales aids, promptly upon termination of
his employment.
(c) Employee acknowledges
that any violation of any provision of this paragraph 6 by
him will cause irreparable damage to the Corporation, that
such damages will be incapable of precise measurement and
that, as a result, the Corporation will not have an adequate
remedy at law to redress the harm which such violations will
cause. Therefore, in the event of any violation of any
provision of this paragraph 6 by Employee, Employee agrees
that the Corporation shall be entitled to injunctive relief
including, but not limited to, temporary and/or permanent
restraining orders to restrain any violation of this
paragraph 6 by Employee. Employee agrees to and hereby does
submit to jurisdiction before any state or federal court of
record in Marion County, Indiana, and Employee hereby waives
any right to raise the questions of jurisdiction and venue
in any action that may be brought in any such court by the
Corporation against Employee alleging a violation of this
paragraph 6.
(d) The obligations of
Employee under this paragraph 6 shall be in addition to
and not in lieu of the obligations of Employee under
that certain Non-Compete Agreement between Employee and
IWC Resources Corporation of even date herewith.
7. Key-Man Insurance. The
Corporation shall be entitled, at its option and for its
benefit, to carry insurance on the life of Employee under such
policies, with such insurers, and in such amounts as the
Corporation may determine. The Corporation shall own the
policy and shall have the sole right to designate the
beneficiary thereof, including naming itself. Employee shall
cooperate with the Corporation in all reasonable respects
necessary to cause the issuance of such policy, including
without limitation, submission to such physical examinations
and accurate completion of applications as the insurer selected
by the Corporation may require. If Employee so requests, upon
termination of Employee's employment with the Corporation, the
Corporation will cooperate with Employee to permit transfer to
Employee at Employee's sole cost of any policies of insurance
on the life of Employee owned by the Corporation.
8. Termination. In addition
to the provisions of paragraph 2, the Corporation may terminate
this Agreement as follows:
<PAGE>
(a) Immediately for fraud,
dishonesty, gross misconduct or similar conduct;
(b) Upon 60 days written
notice for cause, provided that such notice specifies in
reasonable detail the failure(s) of Employee, and Employee
does not correct such failures to the reasonable
satisfaction of the Board of Directors of the Corporation
within such 60 days period. For purposes of this Agreement,
"cause" shall exist if Employee shall fail to perform in any
material respect his obligations under this Agreement;
(b) Upon ten (10) days'
notice following Employee's being disabled in such a manner
that materially affects Employee's ability to perform
hereunder for a period of ninety (90) out of any one hundred
(100) consecutive days;
(c) Immediately upon
Employee's death;
(d) Upon mutual agreement by
the Corporation and Employee;
(e) Immediately for material
breach by Employee of the covenants in paragraph 6 hereof;
and
(f) In accordance with the
provisions of paragraph 2.
9. Severance Benefits. Upon
termination, except as provided in paragraph 3(e) or as may be
required by applicable law or regulations then in effect, the
Corporation shall have no obligation to pay Employee any salary
or benefits under this Agreement.
10. Severability. In case
any one or more of the provisions contained herein shall, for
any reason, be held to be invalid, illegal or unenforceable in
any respect (including, without limitation, the geographical
and temporal restrictions contained in paragraph 6 hereof),
such provisions shall be modified or deleted in such a manner
so as to make this Agreement as modified legal and enforceable
to the fullest extent permitted under applicable law.
11. Parties Bound. All
provisions of this Agreement shall inure to the benefit of and
be binding upon the parties hereto, their heirs, personal
representatives, successors and assigns.
12. Effect and Modification.
This Agreement comprises the entire agreement between the
parties with respect to the subject matter hereof and
<PAGE>
supersedes all earlier agreements relating to the subject
matter hereof. No statement or promise, except as herein set
forth, has been made with respect to the subject matter of this
Agreement. The headings of the individual paragraphs herein
are for convenience only and shall not be deemed to be a
substantive part of this Agreement. No modification or
amendment hereof shall be effective unless in writing and
signed by Employee and an officer of the Corporation (other
than Employee).
13. Non-Waiver. The
Corporation's or Employee's failure or refusal to enforce all
or any part of, or the Corporation's or Employee's waiver of
any breach of this Agreement, shall not be a waiver of the
Corporation's or Employee's continuing or subsequent rights
under this Agreement, nor shall such failure or refusal or
waiver have any effect upon the subsequent enforceability of
this Agreement.
14. Assignability. This
Agreement may be assigned by the Corporation to any of its
affiliates without the consent of Employee. This Agreement may
not be assigned by Employee, whether by operation of law or
otherwise, in whole or in part, without the prior written
consent of the Corporation.
15. Counterparts. This
Agreement may be executed in one or more counterparts, each of
which shall constitute one and the same Agreement.
16. Governing Law. This
Agreement shall be governed by the internal laws of the State
of Indiana.
17. Notice. Any notice,
request, instruction or other document to be given hereunder to
any party shall be in writing and delivered by hand, telegram,
registered or certified United States mail, return receipt
requested, or other form of receipted delivery, with all
expenses of delivery prepaid, as follows:
If to Employee: Daniel S. Baker
549 Lion's Creek Drive
Noblesville, Indiana
46060
With a copy to: Marvin Mitchell, Esq.
Mitchell, Hurst Jacobs &
Dick
152 East Washington
Street
Indianapolis, Indiana
46204
<PAGE>
If to the Corporation: S M & P Conduit Co., Inc.
1220 Waterway Boulevard
Indianapolis, Indiana
46202
Attention: Chairman
With a copy to: Randy D. Loser, Esq.
Baker & Daniels
Suite 2700
300 North Meridian Street
Indianapolis, Indiana
46204
and to such other addresses or to such other parties as either
the Corporation or Employee may designate by giving notice to
the other.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
"Employee"
_________________________________
Daniel S. Baker
"Corporation"
S M & P CONDUIT CO., INC.
B y
______________________________
Name:
Title:
<PAGE>
EXHIBIT V
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement") is entered
into as of the ____ day of June, 1993, by and among IWC
Resources Corporation, an Indiana corporation ("Resources"),
Diana L. Sosbey, Patrick J. Baker and Daniel S. Baker
(individually a "Shareholder" and collectively the
"Shareholders") and National City Bank, Indiana, a national
banking association with offices in Indianapolis, Indiana (the
"Escrow Agent").
W I T N E S S E T H:
WHEREAS, Resources, Resources Acquisition Corp.
("NewCo") and the Shareholders are parties to a certain Plan
and Agreement of Merger dated as of the date hereof
("Agreement"), pursuant to which S. M. & P. Conduit Co., Inc.,
an Indiana corporation, all of the capital stock of which is
owned by the Shareholders, is being merged with and into NewCo
(the "Merger"); and
WHEREAS, pursuant to the Agreement, the Shareholders
have agreed to place certain of the Common Shares ("Common
Shares") and of the Series B Convertible Redeemable Preferred
Stock ("Preferred Stock") of Resources to be received by them
in the Merger in escrow to provide Resources with recourse in
the event of any claims by Resources for indemnification under
the Agreement or for breach of any of the Non-Compete
Agreements to be entered into between Resources and the
Shareholders (the "Non-Compete Agreements"); and
WHEREAS, the Escrow Agent has agreed to act as the
escrowee of such arrangement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
1. Resources and the
Shareholders do hereby appoint and designate Escrow Agent as
the escrow agent for the purposes herein set forth and the
Escrow Agent hereby accepts such appointment and designation.
2. Each Shareholder hereby
delivers to Escrow Agent a certificate or certificates
representing that number of shares of Common Shares and a
certificate or certificates representing that number of shares
of Preferred Stock set forth on Schedule 1 attached hereto,
accompanied by a stock power or powers duly executed in blank,
in proper form for transfer (such shares of Common Shares and
Preferred Stock being herein referred to collectively as the
<PAGE>
"Escrowed Stock"). The Escrow Agent hereby acknowledges
receipt of the Escrowed Stock and agrees to hold the Escrowed
Stock in accordance with the terms of this Escrow Agreement for
the benefit of Resources and the Shareholders.
<PAGE>
3. Resources and each of the
Shareholders hereby authorize the Escrow Agent to hold the
Escrowed Stock in its possession and distribute from time to
time the Escrowed Stock only as follows:
(a) For purposes of this
Escrow Agreement, the "Fair Market Value" of each share
of Escrowed Stock shall be deemed to be $23.25;
provided, that in the event that Resources shall at any
time declare or pay any dividend on its Common Shares
payable in shares of Common Shares, or effect a
subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification
or otherwise than by payment of a dividend in shares of
Common Shares) into a greater or lesser number of shares
of Common Shares, then in each such case the Fair Market
Value of each share of Escrowed Stock shall be adjusted
by multiplying $23.25 by a fraction, the numerator of
which is the number of shares of Common Shares that were
outstanding immediately prior to such event and the
denominator of which is the number of shares of Common
Shares that are outstanding immediately after such
event.
(b) In the event
Resources from time to time makes a claim for
indemnification under the Agreement or for breach of the
Non-Compete Agreements, Resources shall notify the
Shareholders in writing of the aggregate dollar amount
of such claim and Resources shall have the right to have
delivered to it all or such portion of the Escrowed
Stock having a Fair Market Value equal to the aggregate
dollar amount of such claim (rounded to the nearest
whole share). Such notice shall be sent registered or
certified mail, return receipt requested, with a copy
sent to the Escrow Agent, and shall specify a date not
earlier than ten business days from the date of such
notice when the Escrow Agent shall distribute shares of
Escrowed Stock to Resources (or, in the case of shares
of Escrowed Stock that are Common Shares, to the
transfer agent for the Common Shares for transfer to
Resources), unless the Escrow Agent receives prior to
such date a written notice from any one of the
Shareholders stating that Resources is not entitled to
such distribution. To the extent a claim relates to
breach of the Non-Compete Agreement of a particular
Shareholder, only the Escrowed Stock deposited by that
Shareholder shall be delivered and only that Shareholder
may give a written notice that Resources is not entitled
to a distribution. In all other cases, the shares of
the Escrowed Stock to be delivered to Resources shall be
selected pro rata from the Escrowed Stock deposited by
all Shareholders, based upon the relative proportions of
the Escrowed Stock set forth on Schedule 1 hereto. In
<PAGE>
the event all shares owned by a particular Shareholder
have been delivered to Resources, shares of Escrowed
Stock shall be selected thereafter in proportion to the
remaining stock deposited by the other Shareholders, it
being understood that the indemnification obligations of
the Shareholders are joint and several.
(c) Any Escrowed Stock
not claimed by Resources shall be delivered to the
Shareholders on June __, 1996, unless prior to such date
Resources has notified the Escrow Agent of a claim for
indemnification or breach of a Non-Compete Agreement and
such claim has not yet been settled. In the event the
unsettled claim is for an amount less than the Fair
Market Value of the Escrowed Stock remaining, the Escrow
Agent shall retain an amount of Escrowed Stock having a
Fair Market Value equal to the amount of the unsettled
claim and shall deliver the remaining Escrowed Stock, if
any, to the Shareholders.
(d) If the Escrow Agent
shall have received actual notice from Resources or the
Shareholders to withhold the delivery of any Escrowed
Stock, then the Escrow Agent shall not make any delivery
until either (i) Resources and the Shareholders shall
have notified the Escrow Agent in writing that the
controversy with respect thereto has been settled by an
agreement between Resources and the Shareholders or
(ii) the Escrow Agent shall have received a copy of a
final determination of a court of appropriate
jurisdiction as to the disposition of the Escrowed
Stock.
(e) The Shareholders shall be entitled to receive
dividends on and to exercise all voting rights with
respect to the shares of Escrowed Stock during the time
they are subject to this Agreement, to exercise rights
of conversion with respect to the Preferred Stock (in
which case the Common Shares received upon conversion
shall be held in escrow pursuant to this Agreement) and
to exercise all other ownership rights with respect to
the Escrowed Stock, provided, however, that the
Shareholders shall have no right to sell, transfer,
pledge or otherwise encumber the Escrowed Stock, or take
any other action with respect to the Escrowed Stock that
would deny Resources the practical benefits of this
Agreement.
(f) The Shareholders shall be entitled to substitute
for all or part of the Escrowed Stock cash in the amount
of the Fair Market Value per share of Escrowed Stock, in
which case such cash shall be held in escrow pursuant to
this Agreement and the appropriate number of shares of
Escrowed Stock released to the Shareholders. The Escrow
<PAGE>
Agent shall invest such cash in certificates of deposit,
government securities, money market accounts or similar
investments as directed by the Shareholders, who shall
also be entitled to determine the length of maturity
thereof which shall not exceed three (3) years. In the
event Resources is entitled to any distribution, and
unless Resources directs otherwise, the Escrow Agent
shall immediately liquidate such investments as are
necessary to provide funds to make such distribution,
and neither the Escrow Agent nor Resources shall have
any liability to the Shareholders for any early
withdrawal penalty or other loss incurred as a result of
liquidating such investments. The Shareholders shall be
entitled to payment quarterly of all investment
earnings.
4. Upon delivery of all of
the Escrowed Stock (and all cash substituted therefor) in
accordance with the provisions of Section 3 of this Escrow
Agreement the escrow hereby created shall be terminated. Prior
to such delivery, the escrow may be terminated by delivery to
the Escrow Agent of written instructions to such effect
(including instructions as to delivery of the Escrowed Stock)
executed by Resources and the Shareholders.
5. The Escrow Agent shall be
entitled to its usual and customary fees for acting as such and
to reimbursement for its reasonable expenses and disbursements
in connection therewith, including reasonable attorneys' fees,
all of which shall be paid one-half by Resources and one-half
by the Shareholders, jointly and severally; provided, that any
additional fees and expenses of the Escrow Agent incurred as a
result of a Shareholder's investment directions pursuant to
Section 3(f) above shall be charged separately to, and paid by,
such Shareholder.
6. The Escrow Agent shall be
entitled to rely upon, and shall incur no liability for acting,
or omitting to take action, in accordance with, any written
instructions provided for in this Escrow Agreement or any other
written instructions executed by both Resources and the
Shareholders delivered to the Escrow Agent, and shall have no
obligation to satisfy itself as to the truth of any matter
asserted therein. The Escrow Agent may treat as authorized any
instrument or other writing believed by it in good faith to be
genuine and to be signed or presented by the proper person.
The Escrow Agent shall have no liability for the performance of
its duties hereunder, except in the event of its own gross
negligence or willful misconduct. The Escrow Agent may choose
and consult with legal counsel with respect to any matter
relating to the carrying out of this Escrow Agreement. The
Shareholders and Resources agree to jointly indemnify the
Escrow Agent for any cost and expense it may incur in the
proper performance of its duties under this Escrow Agreement.
<PAGE>
7. The Escrow Agent or any
successor to it hereafter appointed may at any time resign by
giving notice in writing to Resources and the Shareholders and
shall be discharged of its duties hereunder upon the
appointment (and the acceptance thereof) of the successor
Escrow Agent as hereinafter provided. In the event of any such
resignation, Resources may appoint a successor Escrow Agent
which shall be a bank or trust company organized under the laws
of the United States of America, or the State of Indiana with
unimpaired capital and surplus in excess of Fifty Million
Dollars ($50,000,000) and with an office located in
Indianapolis, Indiana. Any such successor Escrow Agent shall
deliver to Resources and the Shareholders a written instrument
accepting such appointment hereunder and thereupon it shall
succeed to all rights and duties of the Escrow Agent hereunder,
and shall be entitled to receive the Escrowed Stock (and any
cash substituted therefor). A successor Escrow Agent may, with
the approval of Resources and the Shareholders, accept the
account rendered and the property delivered to it by a
predecessor Escrow Agent as a full and complete discharge to
the predecessor Escrow Agent without incurring any liability or
responsibility for so doing.
8. A l l n o t i c e s ,
certificates, consents, requests, demands and other
communications required or permitted under this Escrow
Agreement shall be in writing and shall be deemed to have been
properly given if delivered by hand, sent by express mail or
other overnight courier service, or mailed, certified or
registered mail with postage prepaid:
If to Shareholders to:
Diana L. Sosbey
8596 Twin Point Circle
Indianapolis, Indiana 46236
Patrick J. Baker
1913 West 116th Street
Carmel, Indiana 46032
Daniel S. Baker
549 Lion's Creek Drive
Noblesville, Indiana 46060
with a copy to:
Marvin Mitchell, Esq.
Mitchell, Hurst Jacobs & Dick
152 East Washington Street
Indianapolis, Indiana 46204
<PAGE>
If to Resources to:
IWC Resources Corporation
1220 Waterway Boulevard
Indianapolis, Indiana 46202
Attention: J.A. Rosenfeld
with a copy to:
Baker & Daniels
300 North Meridian Street
Suite 2700
Indianapolis, Indiana 46204
Attention: Randy D. Loser, Esq.
If to Escrow Agent to:
National City Bank, Indiana
101 West Washington Street
Indianapolis, Indiana 46255
Attention: Peggy Pfau
or to such other person or address as the party to whom the
communication is to be given shall have notified the other
party in accordance with this Section 8. Any express mail or
other overnight courier service communication shall be deemed
to have been given on the first "business day" (such term
excluding, for purposes of this Escrow Agreement, Saturdays,
Sundays and legal holidays) after the day of sending. Any
mailed communication (other than express mail) shall be deemed
to have been given on the third business day after mailing.
9. This Escrow Agreement
shall be governed by and construed in accordance with the laws
of the State of Indiana.
10. This Escrow Agreement may
be executed in several counterparts, each of which shall be
deemed an original and which together shall constitute one and
the same instrument.
11. This Escrow Agreement
shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, successors and assigns.
12. This Escrow Agreement
constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior agreements
and understandings. No amendment, supplement, modification or
waiver of the terms of this Escrow Agreement shall be binding
unless expressed in writing and executed on behalf of the party
to be charged therewith.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly
executed this Escrow Agreement as of the date first above
written.
IWC RESOURCES CORPORATION
B y
________________________________
J. A. Rosenfeld
Senior Vice
President
and Treasurer
___________________________________
Diana L. Sosbey
___________________________________
Patrick J. Baker
___________________________________
Daniel S. Baker
NATIONAL CITY BANK,
INDIANA
B y
________________________________
Name:
Title:
<PAGE>
EXHIBIT VI
[Form of Opinion of Counsel of Resources]
_________ __, 1993
Diana L. Sosbey
Patrick J. Baker
Daniel S. Baker
Re: Merger of S. M. & P.
Conduit Co., Inc.
With and Into Resources
Acquisition Corp.
Lady and Gentlemen:
We have acted as counsel to IWC Resources Corporation,
an Indiana corporation ("Resources"), in connection with the
preparation of the Plan and Agreement of Merger (the
"Agreement"), dated as of June 14, 1993 by and among Resources,
Resources Acquisition Corp. ("NewCo"), S. M. & P. Conduit Co.,
Inc. (the "Company") and you as the shareholders of the Company
(the "Shareholders"), including the Merger Agreement attached
thereto pursuant to which the Company will be merged with and
into NewCo (the "Merger"), the Non-Compete Agreements dated the
date hereof by and between Resources and each of the
Shareholders, the Employment Agreement dated the date hereof by
and between Resources and Daniel S. Baker, and the Escrow
Agreement dated the date hereof by and among National City
Bank, Indiana, as escrow agent, Resources and the Shareholders.
The Agreement, the Merger Agreement, the Non-Compete
Agreements, the Employment Agreement and the Escrow Agreement
are referred to herein collectively as the "Transaction
Documents." This Opinion Letter is being given pursuant to
Section 7.4 of the Agreement.
In connection with this Opinion Letter, we have
examined signed copies of the Transaction Documents, certified
copies of certain resolutions adopted by the Boards of
Directors of Resources and NewCo and by the sole shareholder of
NewCo, and a certified copy of the Articles of Incorporation
and By-Laws, each as amended, of Resources and NewCo.
<PAGE>
We have considered such matters of law and fact, and
have relied upon such certificates and other information
furnished to us and upon the representations of Resources
contained in the Agreement as we have deemed appropriate as a
basis for our opinions set forth below.
This Opinion Letter is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord,
and this Opinion Letter should be read in conjunction
therewith. The law covered by the opinions expressed herein is
limited to the Federal law of the United States and the law of
the State of Indiana.
Based upon the foregoing, and subject to the
qualifications and exceptions set forth below, we are of the
opinion that:
1. Each of Resources and
NewCo is incorporated and existing under the laws of the State
of Indiana.
2. Each of Resources and
NewCo has the requisite corporate power and authority to enter
into each Transaction Document to which it is a party and to
perform its obligations under each such Transaction Document.
3. Each Transaction Document
to which Resources or NewCo, as the case may be, is a party has
been approved by all necessary action on the part of the Board
of Directors of Resources or by the Board of Directors and
shareholders of NewCo, as the case may be, and is enforceable
against Resources or NewCo, as the case may be.
4. The Resources Common
Shares and the shares of Series B Convertible Redeemable
Preferred Stock to be issued pursuant to the Merger Agreement
have been duly authorized and, when issued and delivered to the
Shareholders pursuant to the Merger Agreement, will be validly
issued, fully paid and nonassessable.
5. The execution and
delivery by Resources or NewCo, as the case may be, of each
Transaction Document to which it is a party, and the
performance by Resources or NewCo, as the case may be, of its
obligations under each such Transaction Document, do not
violate the Articles of Incorporation or By-Laws, each as
amended, of Resources or NewCo, as the case may be.
The General Qualifications (as defined in the Accord)
apply to each of the opinions set forth herein.
<PAGE>
This Opinion Letter may be relied upon by you only in
connection with the transactions contemplated by the
Transaction Documents, including the Merger, and may not be
used or relied upon by any other person for any purpose
whatsoever, without in each instance our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT VII
FORM OF AMENDMENT
TO
ARTICLES OF INCORPORATION
CREATING
SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
IWC RESOURCES CORPORATION
The Articles of Incorporation of IWC Resources
Corporation are hereby amended by the addition of a new
Section 5 to Article VI of the Articles of Incorporation, said
Section 5 to read in its entirety as follows:
"Section 5. Terms of Series B Convertible Redeemable
Preferred Stock.
I. Designation and Amount
The Corporation shall have a series of Special Shares
which shall be designated as "Series B Convertible Preferred
Stock" (the "Series B Preferred Stock") and the number of
shares constituting the Series B Preferred Stock shall be
60,000. Such number of shares may be increased or decreased by
amendment to these Articles of Incorporation without
shareholder approval; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number
less than the number of shares then outstanding plus the number
of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation
convertible into Series B Preferred Stock.
II. Dividends and Distributions
(A) Subject to the rights of
the holders of any shares of any series of Special Shares
(or any similar stock) ranking prior and superior to the
Series B Preferred Stock and the Common Shares with respect
to dividends, the holders of shares of Series B Preferred
Stock shall be entitled to participate with the holders of
the Common Shares in the receipt of dividends and
distributions and to receive, when, as and if declared by
the Board of Directors out of funds legally available for
the purpose, dividends equal to the per share amount of each
<PAGE>
cash dividend, and the per share amount (payable in kind) of
each non-cash dividend or other distribution, other than a
dividend payable in shares of Common Shares or a subdivision
of the outstanding shares of Common Shares (by
reclassification or otherwise), declared on the Common
Shares. In the event the Corporation shall at any time
declare or pay any dividend on the Common Shares payable in
shares of Common Shares, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Shares (by reclassification or otherwise than by
payment of a dividend in shares of Common Shares) into a
greater or lesser number of shares of Common Shares, then in
each such case the amount to which holders of shares of
Series B Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
the number of shares of Common Shares that were outstanding
immediately prior to such event.
(B) The Corporation shall
declare a dividend or distribution on the Series B Preferred
Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on
the Common Shares (other than a dividend payable in shares
of Common Shares). The Board of Directors may fix a record
date for the determination of holders of shares of Series B
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the
payment thereof.
III. Voting Rights
The holders of shares of Series B Preferred Stock shall
have the following voting rights:
(A) Each share of Series B
Preferred Stock shall entitle the holder thereof to
one (1) vote on all matters submitted to a vote of the
shareholders of the Corporation. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Shares payable in shares of Common Shares, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification or
otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the number of votes per share
to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
<PAGE>
the number of shares of Common Shares that were outstanding
immediately prior to such event.
(B) Except as otherwise
provided herein, by the provisions creating any other series
of Special Shares or any similar stock, or by law, the
holders of shares of Series B Preferred Stock and the
holders of shares of Common Shares and any other capital
stock of the Corporation having general voting rights shall
vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(C) Except as set forth
herein, or as otherwise provided by law, holders of Series B
Preferred Stock shall have no voting rights.
IV. Conversion
(A) General. Any holder of
outstanding Series B Preferred Stock may, at any time,
convert all but not less than all of said shares owned by
said holder into Common Shares, at the Conversion Rate (as
such term is defined below) as then in effect.
(B) Conversion Rate and
Adjustments. The initial Conversion Rate shall be one (1)
Common Share for each share of Series B Preferred Stock (the
"Conversion Rate"). In the event the Corporation shall at
any time declare or pay any dividend on the Common Shares
payable in shares of Common Shares, or effect a subdivision
or combination or consolidation of the outstanding shares of
Common Shares (by reclassification or otherwise than by
payment of a dividend in shares of Common Shares) into a
greater or lesser number of shares of Common Shares, then in
each such case the amount to which holders of shares of
Series B Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
the number of shares of Common Shares that were outstanding
immediately prior to such event.
V. Redemption
(A) Mandatory Redemption. On
_________________ (the "Redemption Date") the Corporation
shall redeem all of the shares of Series B Preferred Stock
then outstanding out of funds legally available therefor at
a redemption price equal to $23.25 per share, subject to
adjustment as set forth below (as adjusted, the "Redemption
Price"), together with an amount equal to unpaid dividends
thereon to the date of redemption. In the event of any
change in the Series B Preferred Stock by reason of stock
<PAGE>
dividends, split-ups, mergers, recapitalizations,
combinations, exchanges of shares or the like, the
Redemption Price shall be appropriately adjusted.
(B) Notice of Redemption. At
least thirty (30) days prior to the Redemption Date, the
Corporation shall notify the holders of the Series B
Preferred Stock of the procedures to be followed in
connection with the redemption; provided, however, that the
failure to give such notice (the "Redemption Notice") shall
not affect any of the Corporation's rights hereunder or the
validity of such redemption. The Redemption Notice shall be
sent to the holders of the Series B Preferred Stock at their
addresses as they appear on the records of the Corporation.
The holders of the Series B Preferred Stock may continue to
exercise the right of conversion provided in Article IV
hereof until the Redemption Date notwithstanding the
Corporation's giving of the Redemption Notice.
(C) Procedures for
Redemption. If, on or prior to the Redemption Date, all
funds necessary for such redemption shall have been set
aside by the Corporation, separate and apart from its other
funds, in trust with a bank or trust company for the account
of the holders of the shares so to be redeemed (so as to be
and continue to be available therefor), then on and after
the Redemption Date, notwithstanding that any certificate
for shares of the Series B Preferred Stock so called for
redemption shall not have been surrendered for cancellation,
all shares of the Series B Preferred Stock shall be deemed
to be no longer outstanding, and all rights with respect to
such shares of the Series B Preferred Stock shall forthwith
cease and terminate, except the right of the holders thereof
to receive out of the funds so set aside in trust the amount
payable on redemption thereof without interest thereon.
In case the holders of shares of the Series B Preferred
Stock which shall have been redeemed shall not within one
year (or any longer period if required by law) after the
Redemption Date claim any amount so deposited in trust for
the redemption of such shares, such bank or trust company
shall, upon demand and if permitted by applicable law, pay
over to the Corporation any such unclaimed amount so
deposited with it, and shall thereupon be relieved of all
responsibility in respect thereof, and thereafter the
holders of such shares shall, subject to applicable escheat
laws, look only to the Corporation for payment of the
Redemption Price thereof without interest thereon.
(D) Status After Redemption.
Shares of Series B Preferred Stock redeemed, purchased or
otherwise acquired for value by the Corporation shall, after
such acquisition, have the status of authorized and unissued
shares of Special Shares of the Corporation and may be
<PAGE>
reissued by the Corporation at any time as shares of any
class or series of Special Shares other than as shares of
Series B Preferred Stock.
VI. Liquidation, Dissolution or Winding Up
Upon any liquidation, dissolution or winding up of the
Corporation, the holders of shares of Series B Preferred Stock
shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to the aggregate amount to be distributed per share to
holders of shares of Common Shares. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Shares payable in shares of Common Shares, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification or
otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the aggregate amount of which
holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such amount by a fraction the numerator of which is
the number of shares of Common Shares outstanding immediately
after such event and the denominator of which is the number of
shares of Common Shares that were outstanding immediately prior
to such event.
VII. Consolidation, Merger, etc.
In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in
which the shares of Common Shares are exchanged for or changed
into other stock or securities, cash and/or any other property,
then in any such case each share of Series B Preferred Stock
shall at the same time be similarly exchanged or changed into
an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Shares is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Shares payable in shares of Common Shares, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Shares (by reclassification or
otherwise than by payment of a dividend in shares of Common
Shares) into a greater or lesser number of shares of Common
Shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series B Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Shares outstanding
immediately after such event and the denominator of which is
the number of shares of Common Shares that were outstanding
immediately prior to such event.
<PAGE>
VIII. Rank
The Series B Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's
Special Shares.
IX. Amendment
The Articles of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or
change the powers, preference or special rights of the Series B
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least a majority of the
outstanding shares of Series B Preferred Stock, voting together
as a single series."
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT by and between IWC Resources Corporation , an
Indiana corporation (the "Company"), and James T.
Morris (the "Executive"), dated as of the 31st day of
December , 19 93 .
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and
its shareholders to assure that the Company will have the
continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as
defined in Section 2) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control, and to
encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending
Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of
the Executive will be satisfied and which are competitive with
those of other corporations. Therefore, in order to accomplish
these objectives, the Board has caused the Company to enter
into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" shall mean the first date during
the Change of Control Period (as defined in Section 1(b)) on
which a Change of Control occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs
and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect
the Change of Control or (ii) otherwise arose in connection
with or anticipation of the Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the
date immediately prior to the date of such termination of
employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third
anniversary of such date; provided, however, that commencing on
the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal
Date"), the Change of Control Period shall be automatically
extended so as to terminate three years from such Renewal Date,
<PAGE>
unless at least 60 days prior to the Renewal Date the Company
shall give notice to the Executive that the Change of Control
Period shall not be so extended.
2. Change of Control.
For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (ii)
the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company (excluding an acquisition
by virtue of the exercise of a conversion privilege), (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company or (iv) any acquisition by any corporation pursuant to
a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) of
this Section 2 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i)
more than 60% of, respectively, the then outstanding shares of
common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting
<PAGE>
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation in substantially the same proportions, as their
ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or such corporation resulting
from such reorganization, merger or consolidation and any
Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, 20% or more of the Outstanding Company Common Stock
and Outstanding Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (iii) at least
a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time
of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition, (A)
more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the
Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly
or indirectly, 20% or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 20% or more of,
<PAGE>
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company.
3. Employment Period.
The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ
of the Company, in accordance with the terms and provisions of
this Agreement, for the period commencing on the Effective Date
and ending on the third anniversary of such date (the
"Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, titles,
and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all
material respects with the most significant of those held,
exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the
location where the Executive was employed immediately
preceding the Effective Date or any office which is the
headquarters of the Company and is less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive
is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive's reasonable
best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall
not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C)
manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company
in accordance with this Agreement. It is expressly
<PAGE>
understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall
not hereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment period, the
Executive shall receive an annual base salary ("Annual
Base Salary"), which shall be paid in equal installments
on a monthly basis, at least equal to twelve times the
highest monthly base salary paid or payable to the
Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding
the month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be
reviewed at least annually and shall be increased at any
time and from time to time as shall be substantially
consistent with increases in base salary generally awarded
in the ordinary course of business to other peer
executives of the Company and its affiliated companies.
Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased. As used in this Agreement,
the term "affiliated companies" shall include any company
controlled by, controlling or under common control with
the Company.
(ii) Annual Bonus. In addition to Annual Base
Salary, the Executive shall be awarded, for each fiscal
year ending during the Employment Period, an annual bonus
(the "Annual Bonus") in cash at least equal to the average
annualized (for any fiscal year consisting of less than
twelve full months or with respect to which the Executive
has been employed by the Company for less than twelve full
months) bonus paid or payable, including by reason of any
deferral, to the Executive by the Company and its
affiliated companies in respect of the three fiscal years
immediately preceding the fiscal year in which the
Effective Date occurs (the "Recent Average Bonus"). Each
such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless
the Executive shall elect to defer the receipt of such
Annual Bonus.
(iii) Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be
<PAGE>
entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs
applicable generally to other peer executives of the
Company and its affiliated companies, but in no event
shall such plans, practices, policies and programs provide
the Executive with incentive opportunities (measured with
respect to both regular and special incentive
opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of
those provided by the Company and its affiliated companies
for the Executive under such plans, practices, policies
and programs as in effect at any time during the 90-day
period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives
of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as
the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to
the extent applicable generally to other peer executives
of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs
provide the Executive with benefits which are less
favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for
the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses
incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the
Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and
its affiliated companies.
(vi) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits in
<PAGE>
accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during
the 90-day period immediately preceding the Effective
Date, or if more favorable to the Executive, as in effect
generally at any time therafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and
its affiliated companies at any time during the 90-day
period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at
any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance
with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment
shall terminate automatically upon the Executive's death during
the Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in
accordance with Section 12(b) of its intention to terminate the
Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the
Executive from the Executive's duties with the Company on a
full-time basis for 180 consecutive business days as a result
of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or
the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
<PAGE>
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For
purposes of this Agreement, "Cause" shall mean (i) a material
breach by the Executive of the Executive's obligations under
Section 4(a) (other than as a result of incapacity due to
physical or mental illness) which is demonstrably willful and
deliberate on the Executive's part, which is committed in bad
faith or without reasonable belief that such breach is in the
best interests of the Company and which is not remedied in a
reasonable period of time after receipt of written notice from
the Company specifying such breach or (ii) the conviction of
the Executive of a felony involving moral turpitude.
(c) Good Reason; Window Period. The Executive's
employment may be terminated (i) during the Employment Period
by the Executive for Good Reason or (ii) during the Window
Period by the Executive without any reason. For purposes of
this Agreement, the "Window Period" shall mean the 30-day
period immediately following the first anniversary of the
Effective Date. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirement), authority, duties or responsibilities as
contemplated by Section 4(a) or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, unsubstantial and inadvertent action
not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by
the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section (4)b, other than an isolated,
insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be
based at any office or location other than that described
in Section 4(a)(i)(B);
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c), provided that such successor has
received at least ten days' prior written notice from the
Company or the Executive of the requirements of Section
11(c).
<PAGE>
For purposes of this Section 5(c), any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive without any reason
during the Window Period or for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b). For purposes of this
Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable sets forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date of such
notice. The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company hereunder
or preclude the Executive or the Company from asserting such
fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for
Cause, or by the Executive during the Window Period or for Good
Reason, the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the company other than
for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such
termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. Obligations of the Company Upon Termination.
(a) Good Reason or during the Window Period; Other than
for Cause, Death or Disability. If, during the Employment
Period, the Company shall terminate the Executive's employment
other than for Cause or Disability or the Executive shall
terminate employment either for Good Reason or without any
reason during the Widow Period:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination
the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent
not theretofore paid, (2) the product of (x) the
Highest Annual Bonus and (y) a fraction, the
<PAGE>
numerator of which is the number of days in the
current fiscal year through the Date of Termination,
and the denominator of which is 365 and (3) any
compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall
be hereinafter referred to as the "Accrued
Obligations"); and
B. the amount (such amount shall be hereinafter
referred to as the "Severance Amount") equal to the
product of (1) two and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Highest
Annual Bonus [2(x+y)]; provided that such amount
shall be reduced by the present value (determined as
provided in Section 280G(d)(4) of the Internal
Revenue Code of 1986, as amended (the "Code")) of any
other amount of severance relating to salary or bonus
continuation to be received by the Executive upon
termination of employment of the Executive under any
severance plan, policy or arrangement of the Company;
and
C. a separate lump-sum supplemental retirement
benefit (the amount of such benefit shall be
hereinafter referred to as the "Supplemental
Retirement Amount") equal to the difference between
(1) the actuarial equivalent (utilizing for this
purpose the actuarial assumptions utilized with
respect to the Company's Retirement Plan (or any
other successor plan thereto) (the "Retirement Plan")
during the 90-day period immediately preceding the
Effective Date) of the benefit payable under the
Retirement Plan and any supplemental and/or excess
retirement plan of the Company and its affiliated
companies providing benefits for the Executive (the
"SERP") which the Executive would receive if the
Executive's employment continued at the compensation
level provided for in Sections 4(b)(i) and 4(b)(ii)
for the remainder of the Employment Period, assuming
for this purpose that all accrued benefits are fully
vested and that benefit accrual formulas are no less
advantageous to the Executive than those in effect
during the 90-day period immediately preceding the
Effective Date, and (2) the actuarial equivalent
(utilizing for this purpose the actuarial assumptions
utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective
Date) of the Executive's actual benefit (paid or
payable), if any, under the Retirement Plan and the
SERP; and
<PAGE>
(ii) for the remainder of the Employment Period, or
such longer period as any plan, program, practice or
policy may provide, the Company shall continue benefits to
the Executive and/or the Executive's family at least equal
to those which would have been provided to them in
accordance with the plans, programs, practices and
policies described in Section 4(b)(v) if the Executive's
employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of
the Company and its affiliated companies as in effect and
applicable generally to other peer executives and their
families during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if
the Executive becomes reemployed with another employer and
is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary
to those provided under such other plan during such
applicable period of eligibility (such continuation of
such benefits for the applicable period herein set forth
shall be hereinafter referred to as "Welfare Benefit
Continuation"). For purposes of determining eligibility
of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive
shall be considered to have remained employed until the
end of the Employment Period and to have retired on the
last day of such period; and
(iii) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive
and/or the Executive's family any other amounts or
benefits required to be paid or provided or which the
Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of
the Company and its affiliated companies as in effect and
applicable generally to other peer executives of the
Company and its affiliated companies and their families
(such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated
by reason of the Executive's death during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this
Agreement, other than for (i) payment of Accrued Obligations
(which shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within 30 days of the Date
of Termination) and the timely payment or provision of the
Welfare Benefit Continuation and Other Benefits (excluding, in
each case, Death Benefits (as defined below)) and (ii) payment
<PAGE>
to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the Date of Termination of
an amount equal to the greater of (A) the sum of the Severance
Amount and the Supplemental Retirement Amount and (B) the
present value (determined as provided in Section 280G(d)(4) of
the Code) any cash amount to be received by the Executive or
the Executive's family as a death benefit pursuant to the terms
of any plan, policy or arrangement of the Company and its
affiliated companies, but not including any proceeds of life
insurance covering the Executive to the extent paid for
directly or on a contributory basis by the Executive (which
shall be paid in any event as an Other Benefit) (the benefits
included in this clause (B) shall be hereinafter referred to as
the "Death Benefits").
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive, other than for (i)
payment of Accrued Obligations (which shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of
Termination) and the timely payment of provision of the Welfare
Benefit Continuation and Other Benefits (excluding, in each
case, Disability Benefits (as defined below)) and (ii) payment
to the Executive in a lump sum in cash within 30 days of the
Date of Termination of an amount equal to the greater of (A)
the sum of the Severance Amount and the Supplemental Retirement
Amount and (b) the present value (determined as provided in
Section 280G(d)(4) of the Code) of any cash amount to be
received by the Executive as a disability benefit pursuant to
the terms of any plan, policy or arrangement of the Company and
its affiliated companies, but not including any proceeds of
disability insurance covering the Executive to the extent paid
for directly or on a contributory basis by the Executive (which
shall be paid in any event as an Other Benefit) (the benefits
included in this clause (B) shall be hereinafter referred to as
the "Disability Benefits").
(d) Cause; Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation
to pay to the Executive Annual Base Salary through the Date of
Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment
during the Employment Period, excluding a termination either
for Good Reason or without any reason during the Widow Period,
this Agreement shall terminate without further obligations to
the Executive, other than for Accrued Obligations and the
timely payment for provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
<PAGE>
7. Non-exclusivity of Rights.
Except as provided in Sections 6(a)(ii), 6(b) and 6(c), nothing
in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice of program of or any
contract or agreement with the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified
by this Agreement.
8. Full Settlement; Resolution of Disputes.
(a) The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as provided in Section
6(a)(ii), such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay
promptly as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the
validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A)
of the Code.
(b) If there shall be any dispute between the Company and
the Executive (i) in the event of any termination of the
Executive's employment by the Company, whether such termination
was for Cause, or (ii) in the event of any termination of
employment by the Executive, whether Good Reason existed, then,
unless and until there is a final, nonappealable judgment by a
court of competent jurisdiction declaring that such termination
was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith, the
Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries,
<PAGE>
as the case may be, that the Company would be required to pay
or provide pursuant to Section 6(a) as though such termination
were by the Company without Cause, or by the Executive with
Good Reason; provided, however, that the Company shall not be
required to pay any disputed amount pursuant to this paragraph
except upon receipt of an undertaking by or on behalf of the
Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of
the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional
payments required under this Section 9)(a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
KPMG Peat Marwick (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from
the Executive that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control,
the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 9,
shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the
<PAGE>
Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder.
In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the
Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without
<PAGE>
limitation on the foregoing provisions of this Section 9(c),
the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo
any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay
the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such
claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that
any extension of the statute of limitations relating to payment
of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company's complying
with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect
to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be
paid.
10. Confidential Information.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which
shall have been obtained by the Executive during the
<PAGE>
Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination
of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or
as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it.
In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this
Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such
succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana, without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
<PAGE>
If to the Executive: 8191 N. Pennsylvania St.
Indianapolis, IN 46240
If to the Company: 1220 Waterway Blvd.
Indianapolis, IN 46202
Attention: Corporate Secretary and General
Counsel
or to such other address as either party shall have furnished
to the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law
or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right
the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v),
shall not be deemed to be a waiver of such provision or right
or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment
of the Executive by the Company is "at will" and, prior to the
Effective Date, may be terminated by either the Executive or
the Company at any time. Moreover, if prior to the Effective
Date, the Executive's employment with the Company terminates,
then the Executive shall have no further rights under this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
[Executive] [Company]
<PAGE>
By
<PAGE>
Document Summary:
Document: ~WRD0005
Author:
Addressee:
Operator:
Creation Date: 03/27/1994
Modification Date: 03/29/1994
Identification key words:
Comments:
Dear Shareholder:
Numerous positive developments in 1993 enhanced continued growth of IWC
Resources Corporation (Company).
In June, the Company acquired SM&P Conduit Co., Inc. (SM&P), an underground
utility locating company headquartered in Noblesville, Indiana. SM&P's steady
growth has expanded to 14 district offices, with over 500 employees in eight
states, predominantly in the Midwest and Southwest. SM&P made a significant
contribution to the Company's consolidated earnings in 1993. We are confident
SM&P's continued performance will add incremental earnings to the Company in
the future.
In May, Indianapolis Water Company (IWC) requested the approval of the Indiana
Utility Regulatory Commission for an $8.9 million (14%) increase in its water
utility rates, based in part on increased expenses connected with new
accounting rules regarding postretirement benefits other than pensions and
increases in other operating expenses, such as, property taxes and costs
imposed by government. IWC also requested approval to merge Zionsville Water
Corporation into IWC. This merger would recognize the fact that the two
utilities now operate as one. We anticipate a decision sometime this spring.
In January, Utility Data Corporation (UDC) finalized a new augmented agreement
with the city of Indianapolis to provide sewer billing and collection services
for its Department of Public Works. Besides creating an efficient customer
billing service by combining water and sewer charges, it saves Indianapolis
taxpayers in excess of $2.1 million annually. A revenue enhancement provision
of the contract also provided the Company incremental operating earnings of
just under $400,000 during 1993. UDC also negotiated an agreement with the
American Water Works Association to market water utility recordkeeping software
systems.
In December, Harbour Water Corporation (Harbour) executed a 10-year contract to
sell water to the town of Westfield, Indiana, north of Indianapolis. Westfield
continues operating its own water utility through a cost-efficient supply from
Harbour.
Also in December, the Company, through IWC Services, Inc., gained international
recognition as the majority partner of the White River Environmental
Partnership (Partnership). The Partnership contracted with the city of
Indianapolis to operate and manage its two Advanced Wastewater Treatment
plants. Our two partners in this endeavor are recognized worldwide as two of
the prominent players in water and wastewater services. The Partnership also
expects to pursue similar operations in the region surrounding Indiana.
These efforts contributed to the Indianapolis Business Journal recognizing the
Company as the recipient of its 1993 Corporate Enterprise Award.
IWC, our primary subsidiary, experienced a second consecutive year of uneven
weather patterns. Customer demands during the summer once again were reduced by
high precipitation levels, thus holding down both revenues and earnings.
A total of 58 miles of water main extensions were completed during the year.
Plans were initiated to restore 1.2 billion gallons of water supply storage in
Geist Reservoir through a sediment removal project. Construction began on an
addition to our General Office to enhance much-needed customer service areas,
as well as office and training space for employees. The addition will be
completed this spring.
The Company added prominent key individuals to its management team during
the year. They included: Daniel S. Baker as president of SM&P Conduit Co.,
Inc.; IWC welcomed John M. Davis as vice president, general counsel and
secretary. IWC promotions included Martha L. Wharton, a 28-year employee, vice
president of customer relations; and Jane Ryan, a 16-year employee, assistant
secretary.
Goals and objectives of the comprehensive strategic planning effort of 1992
gained momentum in 1993, and we plan to aggressively continue that program in
1994.
The dedicated service of the Company's employees continues prioritizing our
customers, shareholders, and community as their primary constituencies. We
honored their dedication with the second annual "Crystal Awards" banquet at the
Indiana Roof Ballroom. "The Best of the Best" theme recognized five outstanding
individuals in various categories, including "Employee of the Year" Sharon
Ronan, a 32-year employee.
You have our commitment to continue to work hard and efficiently for the growth
of the Company's "expanding world."
Sincerely,
James T. Morris, Chairman
February 1994
The Company's Business
The term "Company" in this report, unless otherwise indicated, refers to the
consolidated operations of IWC Resources Corporation and its subsidiaries.
IWC Resources Corporation (Resources) is a holding company. Resources owns and
operates seven subsidiaries, including three waterworks systems, which supply
water for residential, commercial, and industrial uses, and fire protection
service in Indianapolis, Indiana, and surrounding areas. The territory served
by the three utilities covers an area of approximately 185 square miles, which
includes areas in Marion, Hancock, Hamilton, Hendricks, and Boone counties.
At year's end, Resources' three water utilities were providing service to
224,142 customers.
In addition to the three water utilities, Resources has four other wholly owned
subsidiaries: IWC Services, Inc., Utility Data Corporation (UDC), Waterway
Holdings, Inc., and SM&P Conduit Co., Inc. (SM&P). IWC Services, Inc. provides
laboratory water testing services, principally for water utilities. UDC
provides billing, payment processing, and other data processing services for
various water and sewer utilities. The Company, principally through Waterway
Holdings, Inc., owns approximately 360 acres of real estate, primarily in the
Geist Reservoir area, that it expects to sell or develop in the future.
SM&P performs underground utility locating and marketing services in Indiana
and seven other states.
The White River Environmental Partnership (Partnership), of which the Company
through IWC Services, Inc. is the majority partner (52%), was formed during
1993. It subsequently was awarded a five-year contract to operate and maintain
the two Advanced Wastewater Treatment facilities for the city of Indianapolis.
In addition to saving Indianapolis taxpayers approximately $12 million in 1994,
and $65 million over the contract's five years, this endeavor will serve as an
international wastewater management model.
L&K Noe Pin-Point Boring, Inc. had been a 52% owned subsidiary until July 1993,
at which time it was liquidated into Resources and its operations terminated.
Resources continues to seek expansion and diversification of its operations
through the acquisition of other water utilities and other related businesses.
It is expected, however, that the water utilities will continue as one of the
principal sources of revenues for the Company in the foreseeable future. The
utility subsidiaries of the Company are subject to regulation by the Indiana
Utility Regulatory Commission (Commission), which has jurisdiction over rates,
standards of service, accounting procedures, issuance of securities, and
related matters. Rates charged by the Company's utilities for water service are
approved by the Commission. Utility operations also are subject to pollution
control and water quality control regulations, including those issued by the
Environmental Protection Agency, the Indiana Department of Environmental
Management, the Indiana Water Pollution Control Board, and the Indiana
Department of Natural Resources. There are no significant competitors operating
within the Company's utility service area, and it does not anticipate any
significant competition will develop within such area.
Comparative Highlights
1993 1992
(in thousands*)
We recorded revenues from our customers $ 82,321 $ 63,452
We incurred operating expenses 56,543 40,269
Leaving a balance as earnings from operations 25,778 23,183
We had other expense 7,074 5,873
Earnings before income taxes 18,704 17,310
We accrued income taxes 9,328 9,197
That left earnings for our shareholders 9,376 8,113
Cash dividends declared to
our common and convertible
preferred shareholders 9,290 8,894
Leaving retained in the business $ 86 $ (781)
Average number of common
and common equivalent
shares outstanding during year 6,658 6,379
Dividends declared per common share $ 1.40 $ 1.395
Net earnings per common and
common equivalent share 1.41 1.27
Book value per common and
common equivalent share 11.20 10.49
*All dollar amounts, except per share data, and average shares outstanding in
thousands.
INDIANAPOLIS WATER COMPANY
Indianapolis Water Company (IWC) is the principal subsidiary of Resources.
Indianapolis is a growing city, and IWC's service area continues to accommodate
that expansion. There were 58 miles of new water mains completed, and 5,047 new
customers added in 1993. A petition was filed with the Indiana Utility
Regulatory Commission requesting a 14% increase in rates to meet the increased
costs of conducting business. Hearings on that petition are complete. A
decision is expected by this spring.
HARBOUR WATER CORPORATION
Harbour Water Corporation, which serves an area north of Indianapolis,
continued its strong growth record. The utility now serves 2,309 customers, an
8% increase over last year. In addition, an agreement was reached with nearby
Westfield, Indiana, for sale of water to the town's water system. A new booster
station will be built and placed in service to meet this growth.
ZIONSVILLE WATER CORPORATION
This utility also continues to grow and now serves 2,233 customers compared to
2,157 in 1992. This system and that of Indianapolis have, indeed, grown
together. The Company has petitioned the Indiana Utility Regulatory Commission
to approve a merger of Zionsville Water into IWC.
SM&P CONDUIT CO., INC.
SM&P Conduit Co., Inc. (SM&P) provides underground facility locating services
for utility companies. Its service encompasses electric, telephone, gas, cable
television, water and sewer utilities. SM&P utilizes the latest equipment to
ensure accuracy in locating and to reduce damage to buried utility lines. SM&P
currently has 14 offices in eight states.
WATERWAY HOLDINGS, INC.
This subsidiary was formed to hold, lease, develop and dispose of real estate.
Land owned by Waterway Holdings, Inc. is located generally north and west of
Geist Reservoir in Hamilton County. Waterway Holdings, Inc. continues to
explore the possible sale or development of the remaining land.
UTILITY DATA CORPORATION
This subsidiary provides customer billing, customer relations, and data
processing services for the Company's water utilities, and the city of
Indianapolis sewer operations, and similar services for several other municipal
and private utilities in Indiana. Starting in 1993, the IWC water and the city
of Indianapolis sewer billings were combined on a single monthly billing
statement, with Utility Data Corporation (UDC) assuming the responsibility for
all aspects of billing, collections, and customer contact. During 1993, UDC
produced over 2,800,000 utility customer bills and processed over 2,530,000
utility customer payments.
IWC SERVICES, INC.
IWC Services, Inc. offers water-related services to contractors and other water
and wastewater utilities, using capacities within several sections of the core
business of the Company. The White River laboratory tests water samples
submitted from water providers all over Indiana. The Company's leak detection
equipment and vacuum excavator are used by contractors and utilities in central
Indiana.
WHITE RIVER ENVIRONMENTAL PARTNERSHIP
Through IWC Services, Inc., the Company serves as the majority partner of the
White River Environmental Partnership (Partnership). The Partnership was
awarded a five-year contract in 1993 to operate and manage the city of
Indianapolis' two Advanced Wastewater Treatment plants, commencing January 30,
1994. The Company's partners in this venture are considered world leaders in
water and wastewater treatment.
ENGINEERING AND TECHNICAL SERVICES
The Company completed the conversion of its Marion County distribution system
maps from manual drafting to a computer-drafted Geographical Information System
through its participation in the Indianapolis Mapping and Geographic
Infrastructure System (IMAGIS). Completion of the IMAGIS-IWC Distribution Map
System has also allowed the Company to initiate automated drafting of new
customer main extensions.
Design, Construction and Planning
Construction of an addition to the General Office commenced last fall, with
completion scheduled in spring 1994. After relocation of 44 employees to this
facility, the existing office building will be renovated, with the lobby
converted to a modern customer service facility. These projects will provide
enhanced customer service, and will alleviate crowding experienced in the
General Office.
The Harding Station groundwater facility in Perry Township was expanded with an
additional filter in 1993. The addition of another filter and second ground
storage tank are scheduled for 1994 as part of a two-year plan to expand the
plant capacity to six million gallons-a-day to serve the Company's southside
service area. Plans also are being developed for the installation of a
transmission main in or along Southport Road and west across White River, to
enable the Harding facility to provide additional water and emergency backup to
the southern part of the Ben Davis District and the airport area. The final
phase of the East Side feeder main to Edmondson Station will be completed this
year. Other reinforcing mains will be installed to alleviate low pressure in
the Bunker Hill area in southeast Marion County.
Over 70 miles of main extension design were completed. Company savings in
excess of $300,000 were successfully negotiated with the city and state on
street reconstruction projects. These entities altered their design or
construction instead of the Company relocating distribution facilities at its
expense.
Engineering and operating personnel meet routinely to identify the needs to
better serve the system's customer demands. Planning capability will be greatly
enhanced by the recent acquisition of a PC-based software system -- Watermax --
which will allow the Company to model the system as a whole and run "what if"
scenarios.
Land and Resource Management
The Aquifer Protection Plan for the south well field in southwest Marion County
was completed. This plan will guide the Company's development of its newest
major source-of-supply (40 to 50 million gallons-per- day), and result in a
land use plan to protect the aquifer system from potential contamination
sources.
In October, a permit application was filed with the U.S. Army Corps of
Engineers to conduct a sediment removal project in Geist Reservoir. Upon
receipt of the permit, the Company may proceed to regain 1.2 billion gallons of
water supply storage lost to sedimentation during the past 50 years.
OPERATIONS
Pumpage increased in 1993 compared to 1992. Daily pumpage averaged 117,500,000
gallons compared to 115,500,000 gallons last year. The maximum daily pumpage
during 1993 occurred on July 9 when 153,520,000 gallons were distributed.
Rainfall was more than adequate in 1993, and our sources of supply reflected
that fact. Geist and Morse reservoirs remained full throughout the year. In
July, and again in November, the streams were in flood stage. Eagle Creek
Reservoir reached a record high point on November 15 -- nearly five feet above
normal pool. No operating problems resulted from these floods, and stream
quality for the year was generally good.
Distribution system repairs increased by a proportion one would expect given
the growth of that system. The Company began using PVC pipe in 1993. This
material is less costly and provides several advantages, the most significant
of which is its immunity to corrosion.
Regulatory requirements demand increasing attention to alternative treatment
methods and laboratory testing. Work has begun on a pilot plant which will
allow economic evaluation of alternative unit processes in advance of their
required use on plant scale. The Company's laboratory continues to upgrade its
equipment and skills to provide assurance of product quality and compliance
with reporting requirements.
Customer Service
Much creativity, energy, and just plain hard work by many dedicated employees
achieved successful implementation of the contract to provide customer services
for the Indianapolis Department of Public Works (DPW).
Utility Data Corporation (UDC) entered into an agreement with the DPW on
November 20, 1992, with a start date of January 4, 1993. The Customer Relations
Division of the Customer Service Department was transferred to UDC and seven
new employees were hired. The division was restructured into three sections:
customer contact, customer accounts, and collections. Extended hours and
combined water/sewer billing have received overwhelming customer approval.
Additional customer services, such as budget billing and direct check debiting,
are being studied and may be instituted during 1994.
The Company added a net total of 5,292 customers to its system in 1993,
suggesting a continuing strong economy in the housing market throughout its
service area. There were 5,047 accounts added to the Indianapolis system, 169
to Harbour Water, and 76 to Zionsville Water, raising the net total of system
customers to 224,142 at year's end.
Considerable effort has gone into reducing the number of longtime estimated
bills. Customer meters are normally read every other month; however, readers
often find no one at home, overgrown yards and shrubbery, businesses locked up,
and keys that no longer work. At year's end, 39 customer meters had 10 or more
consecutive estimates.
In order to improve the reliability and convenience of obtaining readings in
flooded vaults, some of these meters are being replaced with newer technology
that allows them to be read without entering the vault.
Additionally, service employees now use gas detectors to check meter vaults for
harmful atmospheric conditions.
A new procedure to improve communication between the office dispatcher and
field employees is in place. As a result, field service personnel are able to
respond more quickly to customer requests. The procedure has also helped to
lower overtime costs through higher productivity.
<TABLE>
Utility Plant and Distribution of Customers, Mains, and Fire Hydrants
<CAPTION>
Utility Plant Customers (miles) Hydrants
1993 1992 1993 1992 1993 1992 1993 1992
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IWC $ 254,225 $ 247,573 219,600 214,553 2,748 2,694 24,114 23,647
Harbour 3,868 3,604 2,309 2,140 38 34 321 280
Zionsville 2,570 2,609 2,233 2,157 31 31 295 288
$ 260,663 $ 253,786 224,142 218,850 2,817 2,759 24,730 24,215
</TABLE>
FINANCIAL REVIEW
Consolidated net earnings were $9,376,000 for 1993 compared with $8,113,000 for
1992 based upon operating revenues of $82,321,000 in 1993 and $63,452,000 in
1992. Earnings available for common and common equivalent shareholders were
$1.41 per share for 1993 compared with $1.27 per share for 1992. During 1993,
the average number of common and common equivalent shares outstanding increased
279,000 shares over 1992 due primarily to the shares issued to acquire SM&P in
June 1993. Cash dividends declared on these shares totaled $1.40 per share in
1993 compared with $1.395 in 1992.
Details and a discussion of financial and operating results follow:
Operating Revenues
1993 1992
(in thousands)
Water Utilities:
Residential $ 41,513 $ 40,633
Commercial and Industrial 18,032 16,696
Public Fire Protection 945 2,157
Other 3,849 3,966
Total Water Utilities 64,339 63,452
Utility-Related Services 17,982 -
$ 82,321 $ 63,452
Utility Customers
1993 1992
Residential 204,867 200,926
Commercial and Industrial 16,262 14,990
Metered Public 196 173
Private Fire Lines 2,809 2,734
Flat Rate Public 8 27
224,142 218,850
Operating Expenses
1993 1992
(in thousands)
Operation and Administration:
Water utilities $ 31,633 $ 29,774
Utility-related services 12,453 -
Depreciation 6,556 5,316
Taxes other than Income Taxes 5,901 5,179
$ 56,543 $ 40,269
Results of Operations
In 1993, the Company began presenting the results of operations according to
its major segments: (1) water utilities and (2) utility-related services.
Accordingly, the results of operations of certain utility-related services
subsidiaries are presented in revenues and operating expenses in 1993, whereas
they were reported as earnings from non-utility subsidiaries in 1992. The
primary component of the utility-related services segment is SM&P which was
acquired in June 1993. The following discussion is applicable to the water
utilities segment operations only.
Operating revenues for the water utilities segment increased $887,000,
representing a 1.4% increase from 1992, primarily due to a slight increase in
total water consumption in 1993.
Operation and administration expenses for the water utilities segment increased
$1,859,000 representing a 6.2% increase over 1992.
Labor expense increased $841,000 (6.3%) mainly due to a general wage increase,
effective January 1, 1993. Chemical costs increased $66,000 (9.6%) due to
increased usage and higher chemical costs. The cost of outside services
increased $575,000 (19.1%) primarily due to an increase in consulting and other
services. Costs of the Company's pension and other benefit plans increased
$92,000 (6.1%) primarily due to the higher costs of benefits provided.
Depreciation increased $1,240,000 (23.3%) of which $799,000 is applicable to
the utility- related segment. The increase in water utility depreciation of
$441,000 represents an 8.3% increase over 1992, and is primarily due to
additional plant placed in service and an increase in the composite
depreciation rate from 1.76% to 1.9% effective June 10, 1992.
Human Resources
At its May meeting, the Executive Committee of the Indianapolis Water Company
(IWC) announced the promotion of Martha L. Wharton to vice president of
customer relations.
John M. Davis joined the Company June 30 as vice president, general counsel and
secretary.
At year's end, there were 904 full-time IWC Resources Corporation employees
compared with 395 in 1992. The acquisition of SM&P Conduit Co., Inc. added 499,
including President Daniel S. Baker.
Two employees were honored in 1993 for completing 40 years service to IWC.
Ronald L. Sponsel, a maintenance supervisor in the Distribution Department, was
recognized on June 1, and Marvin R. Tucker Jr., supervisor of Meter Reading,
was honored November 24.
The John N. Hurty Service Award, representing 25 years service in the water
utility field, was presented by the Indiana Department of Environmental
Management to 14 employees. This brought the total number of employees who have
been so honored to 330. The Company is extremely grateful for its employees'
continued loyalty and dedication.
The Thomas W. Moses Memorial Scholarship Program, which was initiated in 1986,
has now provided financial assistance to 61 children of employees seeking a
college education. It is noteworthy to report that 29 employees were reimbursed
for educational classes taken during 1993.
The second annual Crystal Awards, recognizing and rewarding employees who
provide superior service both inside and outside the Company, were presented on
October 15 at a festive dinner, titled "Best of the Best," at the Indiana Roof
Ballroom. From over 200 nominations made by fellow employees, the following
individuals were selected: Sharon Ronan, Crystal Award (for extraordinary
service, recognized as "Employee of the Year"); Danny Hammer, Sapphire Award
(for superior service in direct contact with customers); Linda Morgason, Ruby
Award (for outstanding service to fellow employees); Valerie Harley-Edwards,
Emerald Award (for superior service in a solitary work atmosphere); Anthony
Pippens, Amethyst Award (for outstanding volunteer service to the community).
The Company is an equal opportunity employer. All applicants and employees will
receive equal opportunities for hire, promotion, and other job opportunities
without regard to race, color, religion, national origin, sex, handicap, age,
or status as a disabled or Vietnam-era veteran. In addition, the Company
complies with all affirmative action requirements applicable to it and
maintains affirmative action programs for minorities, women, handicapped
persons, and disabled and Vietnam-era veterans.
IWC RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, 1993 and 1992
ASSETS
1993 1992
(in thousands)
Current assets:
Cash and cash equivalents $ 1,813 $ 605
Accounts receivable, less allowance
for doubtful accounts of $190 9,515 7,235
Materials and supplies, at average cost 1,722 1,297
Other current assets 871 1,559
Total current assets 13,921 10,696
Utility plant:
Utility plant in service 323,313 312,678
Less accumulated depreciation 70,406 65,213
Net plant in service 252,907 247,465
Construction work in progress 7,756 6,321
Utility plant, net 260,663 253,786
Construction funds held by Trustee 2,010 1,958
Other property 6,825 1,996
Goodwill, net of accumulated amortization 17,479 1,419
Deferred charges and other assets 11,545 5,257
$ 312,443 $ 275,112
LIABILITIES AND SHAREHOLDERS' EQUITY
1993 1992
(in thousands)
Current liabilities:
Notes payable to banks $ 21,779 $ 5,071
Current portion of long-term debt 1,200 1,400
Accounts payable and accrued expenses 14,380 11,287
Federal income taxes 392 -
Customer deposits 1,027 944
Total current liabilities 38,778 18,702
Long-term obligations:
Long-term debt, less current portion 85,375 86,275
Customer advances for construction 43,597 41,108
Total long-term obligations 128,972 127,383
Deferred income taxes 23,795 21,723
Unamortized investment tax credits 5,029 5,146
Contributions in aid of construction 28,081 26,991
Other credits 5,069 3,457
Preferred stock of subsidiary and
redeemable preferred stock 5,705 4,505
Total liabilities and other credits 235,429 207,907
Shareholders' equity:
Common stock 59,301 49,728
Retained earnings 17,912 17,826
77,213 67,554
Less unearned compensation 199 349
Total shareholders' equity 77,014 67,205
Commitments and contingencies
$ 312,443 $ 275,112
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
IWC RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended December 31, 1993, 1992, and 1991
<CAPTION>
Total
Common Stock Retained Unearned Shareholders'
Shares Amount Earnings Compensation Equity
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1990 5,277,329 $ 31,348 $ 16,898 $ - $ 48,246
Net earnings 9,017 9,017
Dividends - $1.38 per common share (7,308) (7,308)
Common stock issued:
Dividend Reinvestment Plan 49,804 853 853
Public offering 1,000,000 15,887 15,887
Balance at December 31, 1991 6,327,133 48,088 18,607 66,695
Net earnings 8,113 8,113
Dividends - $1.395 per common share (8,894) (8,894)
Common stock issued:
Dividend Reinvestment Plan 53,967 1,116 1,116
Restricted Stock Plan 26,491 524 (524) -
Compensation expense 175 175
Balance at December 31, 1992 6,407,591 49,728 17,826 (349) 67,205
Net earnings 9,376 9,376
Dividends - $1.40 per share:
Common stock (9,254) (9,254)
Redeemable preferred stock (36) (36)
Common stock issued:
Acquisition of subsidiary 356,991 8,300 8,300
Dividend Reinvestment Plan 55,646 1,236 1,236
Restricted Stock Plan 1,725 37 (37) -
Compensation expense 187 187
Balance at December 31, 1993 6,821,953 $ 59,301 $ 17,912 $ (199) $ 77,014
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
IWC RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
Years ended December 31, 1993, 1992 and 1991
<CAPTION>
1993 1992 1991
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Operating revenues:
Water utilities $ 64,339 $ 63,452 $ 59,930
Utility-related services 17,982 - -
82,321 63,452 59,930
Operating expenses:
Operation and administration:
Water utilities 31,633 29,774 29,504
Utility-related services 12,453 - -
Depreciation 6,556 5,316 4,424
Taxes other than income taxes 5,901 5,179 4,956
Total operating expenses 56,543 40,269 38,884
Operating earnings 25,778 23,183 21,046
Other income (expense):
Interest expense, net (7,295) (6,937) (6,849)
Interest income 208 337 390
Dividends on preferred stock of subsidiary (203) (203) (203)
Other, net 216 930 1,258
(7,074) (5,873) (5,404)
Earnings before income taxes and
cumulative effect of accounting change 18,704 17,310 15,642
Income taxes 9,328 9,197 7,905
Earnings before cumulative effect of
accounting change 9,376 8,113 7,737
Cumulative effect of accounting change,
net of income taxes - - 1,280
Net earnings $ 9,376 $ 8,113 $ 9,017
Per common and common equivalent share:
Earnings before cumulative effect
of accounting change $ 1.41 $ 1.27 $ 1.45
Cumulative effect of accounting change - - .24
Net earnings $ 1.41 $ 1.27 $ 1.69
Average number of common and
common equivalent shares outstanding 6,658 6,379 5,335
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
IWC RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1993, 1992 and 1991
<CAPTION>
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 9,376 $ 8,113 $ 9,017
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 7,808 5,877 4,835
Deferred income taxes
and investment tax credits 1,241 1,832 2,245
Gain on sales of other property (1,052) (855) (720)
Provision for bad debts 335 314 334
Dividends on preferred stock of subsidiary 203 203 203
Other, net 137 (380) (76)
Changes in operating assets and liabilities:
Accounts receivable 353 (591) (3,141)
Materials and supplies (425) 52 (67)
Other current assets 1,741 (585) 238
Accounts payable and accrued expenses 279 1,038 (97)
Federal income taxes 232 (836) 122
Customer deposits 83 20 55
Net cash provided
by operating activities 20,311 14,202 12,948
Cash flows from investing activities:
Acquisition of SM&P Conduit Co., Inc.,
net of cash acquired (12,482) - -
Additions to utility plant and other property (13,967) (15,751) (14,416)
Proceeds from sales of other property 1,517 1,078 806
Customer advances for construction 5,748 6,503 5,230
Refunds of customer advances for construction (2,242) (2,360) (2,896)
Other investing activities, net (963) (287) (184)
Net cash used by investing activities (22,389) (10,817) (11,460)
Cash flows from financing activities:
Proceeds from notes payable to banks 49,087 29,584 25,283
Payments of notes payable (36,312) (41,131) (18,623)
Proceeds from long-term debt 11,600 14,836 -
Payments of long-term debt (12,780) (15,953) (4,300)
Decrease (increase) in construction funds
held by Trustee (52) 335 3,410
Cash dividends (9,493) (9,097) (7,511)
Proceeds from issuance of common stock 1,236 1,116 16,740
Net cash provided (used)
by financing activities 3,286 (20,310) 14,999
Increase (decrease) in cash and cash equivalents 1,208 (16,925) 16,487
Cash and cash equivalents at beginning of year 605 17,530 1,043
Cash and cash equivalents at end of year $ 1,813 $ 605 $ 17,530
Supplemental disclosure of cash flow information-
Cash paid for:
Interest on long-term debt and notes payable
to banks, net of capitalized interest $ 7,104 $ 6,766 $ 6,673
Income taxes $ 7,488 $ 8,072 $ 6,355
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
IWC RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1993, 1992 and 1991
Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of IWC Resources
Corporation (Resources), and its wholly owned subsidiaries. The term "Company"
refers to the consolidated operations of Resources and its subsidiaries.
Through its water utility subsidiaries, the Company owns and operates
waterworks systems supplying water for residential, commercial and industrial
uses, and for fire protection in Indianapolis, Indiana, and the surrounding
area. These subsidiaries are regulated by the Indiana Utility Regulatory
Commission (Commission), and their accounting policies, which are substantially
consistent with generally accepted accounting principles, are governed by the
Commission. The Company also owns and operates businesses which are involved in
utility line locating, data processing and other utility- related services, and
real estate sales and development.
In November 1993, a subsidiary of the Company became majority partner in White
River Environmental Partnership (Partnership). In December 1993, the
Partnership was awarded a five-year contract by the city of Indianapolis to
manage and operate its two Advanced Wastewater Treatment plants commencing
January 30, 1994. At December 31, 1993, this Partnership was still in the
development stage and had no significant assets.
The Company's majority-owned subsidiary, which provided directional boring
services, was liquidated in 1993. The assets, liabilities and operations of
this subsidiary were not significant to the Company's consolidated financial
statements.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
Cash Equivalents
The Company considers all highly liquid debt instruments purchased with
maturities of three months or less to be cash equivalents.
Utility Plant
Utility plant is stated at cost which includes the cost of land, outside
contract work, labor and materials, interest and certain indirect costs
incurred during the construction period. Such indirect costs consist of
administration, general overhead, and other costs applicable to construction
projects.
When utility plant in service is retired, except for land and land rights, the
accumulated cost of the retired property plus cost of removal and less salvage
value is charged against accumulated depreciation. If land or land rights are
sold, the net gain or loss is included in earnings. Property not currently used
in utility operations is included in other property.
Depreciation of utility plant for financial statement purposes is computed at a
composite annual rate of 1.9% (1.76% prior to June 10, 1992) as approved by the
Commission.
Generally, maintenance and repairs and the cost of replacements of minor items
of property are charged to operation expense accounts as incurred.
Other Property
Other property is stated at cost less accumulated depreciation and includes
property not currently used in utility operations, real estate held for
development or resale, and property and equipment used in non-utility
businesses. Accumulated depreciation at December 31, 1993 and 1992 was
$1,209,000 and $609,000, respectively.
Goodwill
The Company recognizes the excess of cost over fair value of tangible and other
identifiable assets acquired in business acquisitions as goodwill which is
amortized by the straight-line method over 20 to 40 years. Amortization expense
was $319,000 in 1993 and $101,000 in 1992 and 1991. Accumulated amortization at
December 31, 1993 and 1992 was $886,000 and $567,000, respectively.
Income Taxes
For financial statement purposes, investment tax credits are deferred and
amortized ratably over the lives of the applicable assets as prescribed by the
Commission. For income tax purposes, the credits are deducted in the year in
which the constructed or acquired property is placed in service.
In February 1992, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income
Taxes." SFAS No. 109 requires a change from the deferred method of accounting
for income taxes to the asset and liability method. Under this method, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement amounts for assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates which apply to taxable income
in the years in which those temporary differences are expected to reverse.
Under SFAS No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the period the change is enacted.
Effective January 1, 1993, the Company adopted SFAS No. 109. The effect of this
change in accounting for income taxes is not material to the Company's
financial condition or results of operations. Accordingly, no cumulative effect
of accounting change has been presented.
Customer Advances and Contributions in Aid of Construction
In certain cases, customers advance funds for water main extensions. These
advances are included in customer advances for construction and are generally
refundable to the customer over a period of ten years. Advances not refunded
within ten years are permanently transferred to contributions in aid of
construction.
Revenues
Utility revenues are recognized based on water usage at rates approved by the
Commission. Service revenues are recognized as services are provided.
Pension Plans and Other Retirement Benefits
The Company has a noncontributory defined benefit pension plan which covers the
majority of its utility employees and certain other employees. Benefits are
based on, among other factors, an employee's services rendered to date and
average monthly earnings for the 36 consecutive calendar months that produce
the highest average. The Company's funding policy is to contribute annually at
least the minimum contribution required to comply with ERISA regulations.
The Company has an unfunded executive supplemental benefit plan which provides
additional retirement benefits to certain officers. Benefits are based on,
among other factors, an employee's age, services rendered to date, and benefits
received from the Company's noncontributory defined benefit pension plan.
The Company also sponsors a defined contribution plan covering substantially
all non-bargaining unit employees and an employee stock ownership plan covering
substantially all of its utility employees.
The Company provides postretirement life insurance and healthcare benefits to
certain of its employees. Prior to 1993, the Company accounted for such
benefits on a cash basis. Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 106 (SFAS No. 106) which
requires it to accrue currently, during the period of employment, the present
value of the estimated cost of such benefits. The effects of this change, which
are not material to the Company's financial condition or results of operations,
are discussed in the note entitled, Pension Plans and Other Retirement
Benefits.
Reclassifications
Certain amounts for 1992 and 1991 have been reclassified to conform with the
1993 presentation.
1991 Change in Accounting Method
In 1991, the Company's water subsidiaries changed their method of accounting to
accrue unbilled revenues. The cumulative effect of this change as of January 1,
1991, is separately reported in the consolidated statements of earnings.
Acquisition of SM&P Conduit Co., Inc.
On June 14, 1993, the Company acquired SM&P Conduit Co., Inc. (SM&P) in a
transaction accounted for as purchase. SM&P is engaged in the business of
providing a single source facility locating service for all utilities
including: gas, electric, telephone, cable television, water and sewer. The
Company also entered into not to compete agreements with SM&P shareholders at a
cost of $3,000,000. The cost of the acquisition and agreements not to compete
was paid by cash of $12,503,000 and the issuance of 356,991 shares of the
Company's common stock and 51,612 shares of the Company's Series B Redeemable
Preferred Stock. Goodwill of $16,379,000 is being amortized over 40 years, and
the cost of agreements not to compete is being amortized over their five-year
lives.
A summary of the SM&P assets acquired and liabilities assumed follows:
(in thousands)
Property and equipment $ 5,021
Accounts receivable 2,968
Other current assets 1,456
Short-term notes payable (3,933)
Accounts payable and accrued expenses (2,524)
Federal income taxes payable (364)
Net assets acquired $ 2,624
The consolidated financial statements include the results of SM&P's operations
beginning June 14, 1993. As this acquisition is not material to the
consolidated financial statements, pro forma operating results are not
presented.
Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of Financial
Accounting Standards (SFAS) No. 107, "Disclosures about Fair Value of Financial
Instruments." The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required to interpret market
data to develop the estimates of fair value. Accordingly, the estimates herein
are not necessarily indicative of the amounts the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methods may have a material effect on the estimated fair value
amount.
The carrying amounts of cash equivalents, construction funds held by Trustee
and notes payable to banks approximate fair value because of the short maturity
of those instruments.
The fair value of long-term debt at December 31, 1993, is estimated to be
$96,929,000. The fair value was determined by discounting future payments at
current interest rates for similar issues.
Utility Plant in Service
A summary of utility plant in service at December 31 follows:
1993 1992
(in thousands)
Land and land rights $ 9,818 $ 9,922
Structures and improvements 46,302 45,610
Pumping station equipment 14,562 14,079
Purification system 25,290 24,850
Transmission and distribution system 218,361 209,408
Other 8,980 8,809
$ 323,313 $ 312,678
Accounts Payable and Accrued Expenses
A summary of accounts payable and accrued expenses at December 31 follows:
1993 1992
(in thousands)
Accounts payable $ 2,132 $ 1,695
Accrued property taxes 4,629 4,181
Accrued interest on long-term debt 1,547 1,515
Accrued vacations 1,526 1,338
Other accrued expenses 4,546 2,558
$ 14,380 $ 11,287
Notes Payable to Banks and Long-term Debt
At December 31, 1993, the Company had lines of credit with banks aggregating
$22,200,000 which require a compensating cash balance of $100,000. At December
31, 1993, unused lines of credit aggregated $14,672,000. Interest on borrowings
under the lines of credit is variable (an average of 3.37% at December 31,
1993).
The Company also has short-term loans with banks amounting to $13,700,000 which
were used solely for the acquisition of SM&P. Interest on these loans is
variable (3.89% at December 31, 1993). The Company expects to refinance these
loans under a long-term agreement in March 1994.
The Company has a Controlled Disbursement Agreement with a bank which
authorizes the bank to transfer funds daily between the Company's checking and
note payable accounts. Outstanding checks drawn on this checking account are
reported as a component of notes payable to banks. At December 31, 1993 and
1992, such outstanding checks amounted to $551,000 and $396,000, respectively.
A summary of First Mortgage Bonds (secured by utility plant) outstanding at
December 31 follows:
1993 1992
(in thousands)
5-7/8% Series due 1997 $ 6,775 $ 6,775
5.20% Series due 2001 11,600 -
8% Series due 2001 3,000 3,000
12-7/8% Series due 2002 5,200 6,300
6-1/4% Series due 2004 - 11,600
7-7/8% Series due 2019 40,000 40,000
9.83% Series due 2019 5,000 5,000
6.10% Series due 2022 5,000 5,000
8.19% Series due 2022 10,000 10,000
86,575 87,675
Less current portion 1,200 1,400
$ 85,375 $ 86,275
Provisions of trust indentures related to the 5-7/8% Series Bonds and the 8%
Series Bonds require annual sinking or improvement fund payments amounting to
1/2% of the maximum aggregate amount outstanding. As permitted, this
requirement has been satisfied by substituting a portion of permanent additions
to utility plant. These bonds are redeemable at the option of the Company at
varying premium amounts at different periods prior to the respective dates of
maturity.
The 5.20% Series Bonds are due and payable in full May 1, 2001. In the event
the bonds lose their tax-exempt status, mandatory redemption of the bonds is
required.
The 12-7/8% Series Bonds mature at the rate of $2,000,000 on November 15 of
each of the years 1998 through 2002. Subject to certain restrictions, these
bonds are redeemable at the option of the Company at varying premium amounts at
different periods prior to the respective dates of maturity. In January 1992
and January 1993, the Company prepaid $3,700,000 and $1,100,000, respectively,
in principal amount of these bonds, due $960,000 in each of the years 1998
through 2002 at a premium of $378,000. In January 1994, the Company prepaid
$1,200,000 in principal amount of these bonds, due $240,000 in each of the
years 1998 through 2002 at a premium of $77,000.
The 6-1/4% Series Bonds required varying annual redemptions through maturity.
In March 1993, the Company gave required notice and in April 1993 prepaid the
remaining $11,600,000 principal balance from the proceeds of the newly issued
5.20% Series Bonds.
The 7-7/8% Series Bonds include issues of $10,000,000 and $30,000,000, both of
which are due and payable in full March 1, 2019. In the event the bonds lose
their tax exempt status, mandatory redemption of the bonds is required.
Optional redemptions by the Company are allowed on or after March 1, 1998, and
are generally subject to a premium.
The 9.83% Series Bonds are redeemable at the option of the Company, on or after
June 15, 2014, with final redemption by June 15, 2019. Early redemptions are
subject to a premium.
The 6.10% Series Bonds are due and payable in full December 1, 2022. In the
event the bonds lose their tax exempt status, mandatory redemption of the bonds
is required. Optional redemptions by the Company are allowed on or after
December 1, 1999, and are generally subject to a premium.
The 8.19% Series Bonds are due and payable in full December 1, 2022. Optional
redemptions by the Company are allowed at any time at the greater of par or the
present value of the bonds discounted at 1/2% over the applicable Treasury
rate.
Required principal payments on long-term debt for the five years following
December 31, 1993, exclusive of obligations which may be satisfied by permanent
additions to utility plant, amount to $6,775,000 in 1997 and $800,000 in 1998.
Interest expense is net of an allowance for funds used during construction
(AFUDC) which is an amount capitalized for construction projects as authorized
by the Commission. AFUDC amounts capitalized were $160,000, $122,000 and
$2,126,000 during 1993, 1992 and 1991, respectively.
Preferred Stock of Subsidiary
The preferred stock of subsidiary represents 45,049 shares of Indianapolis
Water Company (IWC) cumulative preferred stock of $100 par value per share. The
preferred stock is redeemable at the option of the subsidiary upon proper
notice at prices ranging from $100 to $105 per share plus accrued dividends (an
aggregate redemption value of $4,658,000).
Dividends on the preferred stock are payable at rates ranging from 4% to 5% per
annum.
Redeemable Preferred Stock
At December 31, 1993, 60,000 special shares of Series B Convertible Redeemable
Preferred Stock, no par value, have been authorized, of which 51,612 shares
have been issued and are outstanding. The preferred stock was issued in
connection with the acquisition of SM&P and is convertible by the holder at any
time, in whole, into shares of common stock at a conversion rate of one common
share for each share of preferred stock. Mandatory redemption of the preferred
stock is required on July 14, 1998, at $23.25 per share plus accrued dividends
(an aggregate redemption value of $1,200,000). Holders of preferred stock are
entitled to the same voting and dividend rights as common shareholders and such
shares are considered common share equivalents in the calculation of earnings
per share.
Common Stock
The Company's authorized capital stock consists of 10,000,000 common shares and
2,000,000 special shares with no par value. No special shares have been issued
other than the 60,000 shares designated as Series B Convertible Redeemable
Preferred Stock.
The Company has a Dividend Reinvestment and Stock Purchase Plan which allows
common shareholders the option of receiving their dividends in cash or common
stock and permits optional cash purchases of shares at current market values to
a maximum of $5,000 per quarter. At December 31, 1993, 36,406 shares of common
stock were reserved for issuance under the plan.
In April 1992, the Company adopted a Restricted Stock Plan under which 200,000
common shares have been reserved and may be awarded to officers and key
employees. Restricted stock plan participants are entitled to cash dividends
and voting rights on their awarded shares. Restrictions generally limit the
sale, transfer or pledge of shares during a three-year measurement period
following issuance of such shares. The number of shares awarded under the plan
may be adjusted at the end of the measurement period as determined by
provisions of the plan. Participants may vest in certain restricted shares upon
death, disability or retirement as described in the plan. In the event of a
change in control of the Company, all restrictions expire and participants may
receive additional shares as determined by provisions of the plan.
During 1992, the Company awarded 26,491 restricted shares with a market value
at date of award of $19.75 per share. Unearned compensation of $524,000 was
recorded as of January 1, 1992, the effective date of the award, based on the
market value of the shares, and is being amortized to expense over the
three-year measurement period. During 1993, the Company awarded an additional
1,725 restricted shares with a market value at date of award of $21.66 per
share. Unearned compensation of $37,000 was recorded as of July 1, 1993, the
effective date of the award, based on the market value of the shares, and is
being amortized to expense over the remainder of the three-year measurement
period. At December 31, 1993, 171,784 shares were reserved for future awards
under the plan.
In January 1988, the Company's board of directors adopted a Shareholder Rights
Plan pursuant to which a dividend distribution of one preferred share purchase
right for each outstanding share of common stock was made to shareholders of
record on February 18, 1988. Under the plan, each right will initially entitle
shareholders to purchase one one-hundredth of a share of a new series of
preferred stock of the Company at an exercise price of $45. The rights become
exercisable when a person or group acquires 20% or more of the Company's common
stock or commences a tender offer for 30% or more of the Company's common
stock. Upon the happenings of certain events, each right not owned by a 20%
shareholder or shareholder group will entitle its holder to purchase, at the
right's then current exercise price, shares of the Company's common stock
having a value of twice that price. The rights expire in February 1998.
Taxes
Components of taxes other than income taxes follow:
1993 1992 1991
(in thousands)
Property taxes $ 4,086 $ 4,076 $ 3,926
Other 1,815 1,103 1,030
$ 5,901 $ 5,179 $ 4,956
Components of income taxes follow:
1993 1992 1991
(in thousands)
Federal:
Currently payable $ 5,864 $ 5,349 $ 4,588
Deferred 1,236 1,723 1,667
Investment tax credits, net (117) (112) (98)
$ 6,983 $ 6,960 $ 6,157
State:
Currently payable $ 2,223 $ 2,016 $ 1,614
Deferred 122 221 134
2,345 2,237 1,748
$ 9,328 $ 9,197 $ 7,905
The differences between actual income taxes and expected federal income taxes
using statutory rates follow:
1993 1992 1991
(in thousands)
Expected federal income taxes $ 6,546 $ 5,885 $ 5,318
Taxable customer advances for construction 1,309 1,487 1,241
State income taxes,
net of federal income tax benefit 1,524 1,477 1,154
Other, net (51) 348 192
$ 9,328 $ 9,197 $ 7,905
The tax effects of temporary differences follow:
1993 1992 1991
(in thousands)
Depreciation $ 1,098 $ 1,217 $ 1,102
Customer advances for construction 46 21 (263)
Pension expense 110 (70) 151
Increase in deferred state income taxes 122 221 134
Unbilled utility revenues - - 561
Bond redemption premium (12) 467 -
Other, net (6) 88 116
$ 1,358 $ 1,944 $ 1,801
The tax effects of significant temporary differences represented by deferred
tax assets and deferred tax liabilities at December 31 follow:
1993 1992
(in thousands)
Deferred tax assets:
Customer advances for construction $ 2,393 $ 2,409
Accrued pension costs 1,013 871
Accrued vacations 574 495
Other 603 461
Total deferred tax assets 4,583 4,236
Deferred tax liabilities:
Utility plant, principally due to
differences in depreciation and
capitalized costs 27,363 24,832
Debt redemption premiums deducted
for tax 508 507
Other property bases greater for tax 271 321
Other 236 299
Total deferred tax liabilities 28,378 25,959
Net deferred tax liabilities $ 23,795 $ 21,723
The Company has established a regulatory asset of $714,000 to offset the
effects of the 1993 increase in Federal Corporate tax rates on its water
utilities' net deferred tax liabilities.
Customer advances for construction received after 1986 are includible in
taxable income when received and are deductible if subsequently refunded to
customers. Such advances continue to be excluded from financial statement
income. Effective September 8, 1993, the Commission granted IWC permission to
surcharge developers for income taxes on advances and reduce its water rates by
a corresponding amount. The surcharge for taxes on advances will be reported as
a component of operating revenues.
Investment tax credits amounted to $9,000, $9,000, and $23,000 for 1993, 1992
and 1991, respectively, and were recorded as additions to unamortized
investment tax credits.
Pension Plans and Other Retirement Benefits
The Company has two pension plans: (1) a noncontributory defined benefit
pension plan which covers the majority of its utility employees and certain
other employees, and (2) an executive supplemental benefit plan which provides
additional retirement benefits to certain officers.
The following tables set forth the plans' funded status and accrued pension
cost amounts recognized in the Company's consolidated financial statements at
December 31:
<TABLE>
<CAPTION>
Majority Plan Supplemental Plan
1993 1992 1993 1992
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Accumulated benefit obligation $ 7,221 $ 5,195 $ 1,845 $ 1,651
Vested benefit obligation $ 6,545 $ 4,678 $ 1,782 $ 1,624
Projected benefit obligation $ 13,215 $ 11,076 $ 2,298 $ 1,915
Plan assets at fair value, primarily listed
stocks and bank fixed income funds 10,818 10,110 - -
Projected benefit obligation
in excess of plan assets 2,397 966 2,298 1,915
Unrecognized net asset
(obligation) at transition 1,045 1,173 (67) (79)
Unrecognized loss (2,216) (1,099) (786) (519)
Additional minimum liability - - 400 334
Accrued pension cost $ 1,226 $ 1,040 $ 1,845 $ 1,651
</TABLE>
Net periodic pension costs for the years ended December 31 include the
following components:
<TABLE>
<CAPTION>
Majority Plan Supplemental Plan
1993 1992 1991 1993 1992 1991
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits
earned during year $ 769 $ 720 $ 685 $ 86 $ 96 $ 93
Interest cost on
projected benefit obligation 902 776 707 149 145 140
Return on plan assets (562) (603) (1,409) - - -
Net amortization and deferrals (393) (259) 750 45 43 85
Net periodic pension cost $ 716 $ 634 $ 733 $ 280 $ 284 $ 318
</TABLE>
The weighted-average discount rate and rate of increase in future compensation
levels used in determining the projected benefit obligation were 7-1/4% and
4-1/2%, respectively, for 1993, and 8% and 5%, respectively, for 1992 and 1991.
The expected long-term rate of return on assets was 8% for 1993 and 8-1/2% for
1992 and 1991.
Contributions to the Company's defined contributions plan and its employee
stock ownership plan amounted to $352,000, and $274,000 in 1993, $255,000 and
$250,000 in 1992, and $226,000 and $149,000 in 1991, respectively.
The Company provides postretirement life insurance and healthcare benefits
(OPRBs) to certain employees. The following table sets forth the Company's
accumulated postretirement benefit obligation at December 31, 1993:
(in thousands)
Accumulated post-retirement benefit obligation:
Active employees $ 11,623
Retired employees 6,012
17,635
Unrecognized transition obligation (15,694)
Unrecognized gain 81
Accrued postretirement benefit cost $ 2,022
The following table sets forth the Company's net periodic postretirement
benefit cost for the year ended December 31, 1993:
(in thousands)
Service cost-benefits earned during year $ 462
Interest cost on accumulated postretirement benefit obligation 1,322
Amortization of transition obligation 826
Net periodic postretirement benefit cost $ 2,610
The weighted-average discount rate used to measure the accumulated
postretirement benefit obligation was 7-1/4%. The Company used premium growth
rates to compute assumed healthcare cost trend rates. These rates ranged from
13% in 1993 to 5-1/4% in 2000 and thereafter. Had these healthcare cost trends
rates been higher by 1%, the net periodic postretirement benefit cost would
have been higher by $311,000 and the accumulated postretirement benefit
obligation would have been higher by $2,616,000. The Company does not fund
these postretirement benefits.
The Company is amortizing the cumulative obligation for employee services
rendered prior to adoption of SFAS No. 106 (the transition obligation) on a
delayed basis over a 20-year period. The adoption of SFAS No. 106 has increased
the Company's cost of OPRBs for financial statement purposes from approximately
$590,000 to approximately $2,610,000 annually.
In December 1992, the Commission authorized all Indiana utilities, including
the utility subsidiaries of the Company, to record as a regulatory asset the
excess of accrual basis costs over the cash basis costs which were used to
establish current rates. The Commission declared that the reasonable and
necessary level of such costs, including amortization of the transition
obligation, would be recoverable in future utility rates as determined through
each utility's next general rate case. The Company is in process of a general
rate case at December 31, 1993, and expects a decision in spring 1994.
During 1993, the Company recognized OPRB costs in excess of cash basis amounts
of $2,022,000 of which $2,016,000 has been offset by a regulatory asset which
is included in deferred charges and other assets.
Segment Information
The Company's operations include two business segments: regulated water
utilities and unregulated utility-related services. The water utilities segment
includes the operations of the Company's three water utility subsidiaries. The
utility-related services segment provides utility line locating services, data
processing and billing and payment processing, and other utility-related
services to both unaffiliated utilities and to the Company's water utilities.
Intersegment activity represents water sales to an affiliate and certain
operating cost allocations between affiliates.
Identifiable assets are those assets used exclusively in the operations of each
business segment. Corporate assets are principally comprised of cash and
certain property held for sale.
The following table shows operating revenues, operating earnings and other
summary financial information by segment as of and for the year ended December
31, 1993. For the years ended December 31, 1992 and 1991, the Company's
operations were primarily related to water utilities and, accordingly,
information by segment is not presented.
Utility-
Water Related Corporation
Utilities Services and Other Consolidated
(in thousands)
Operating revenues:
Unaffiliated $ 64,339 $ 17,982 $ - $ 82,321
Affiliated 242 4,025 (4,267) -
Total 64,581 22,007 (4,267) 82,321
Operating earnings 21,841 3,937 - 25,778
Depreciation 5,757 799 - 6,556
Identifiable assets 280,823 28,923 2,697 312,443
Capital expenditures 13,049 778 140 13,967
Commitments and Contingencies
Pursuant to the 1986 Amendments of the Safe Drinking Water Act, the United
States Environmental Protection Agency (EPA) continues to propose new drinking
water standards and requirements which, if promulgated, could be costly and
require substantial changes in current operations of the Company. The outcome
of EPA's proposals are uncertain at this time. Additionally, the Indiana
Department of Environmental Management issues permits for discharges from the
Company's treatment stations, the terms and limitations of which can, and may
well be, onerous and expensive.
On May 17, 1993, Indianapolis Water Company and Zionsville Water Corporation,
both wholly owned subsidiaries of the Company, filed a petition with the
Commission for approval of a merger of the two companies and a new schedule of
rates and charges applicable to their interconnected systems. The increase in
combined revenues sought by the companies is approximately $8.9 million, or
14%. This request for new rates includes the increased costs associated with
adoption of accrual accounting for postretirement benefits other than pensions.
On November 10, 1993, the Utility Consumer Counselor (UCC), representing
ratepayers, prefiled its testimony and exhibits in the case, the effect of
which, if adopted by the Commission, would result in a decrease in current
rates of approximately $4.6 million, or 7.2%.
On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 was signed
into law. One of the provisions of the Act was to increase the federal
corporate income tax rate from 34% to 35% retroactive to January 1, 1993. On
October 6, 1993, Indianapolis Water Company and Zionsville Water Corporation,
as part of their rate case, asked the Commission for approval to defer
approximately $968,000 of increased federal income tax obligations as a
regulatory asset and to amortize and recover such asset over a 20-year period,
commencing with the approval of new rates.
Hearings before the Commission were concluded in December 1993, and the Company
anticipates a final order in the second quarter of 1994.
In January 1994, the Company entered into agreement with four key executives.
The agreements provide that in the event of change of control of the Company,
each executive vests in a three-year employment contract at their then existing
level of compensation.
Quarterly Financial Data (Unaudited)
Quarters
First Second Third Fourth
(in thousands, except per share data)
1993
Operating revenues (a) $ 15,680 $ 18,501 $ 25,916 $ 22,224
Operating earnings (a) 4,208 6,473 8,878 6,219
Net earnings $ 954 $ 2,461 $ 3,427 $ 2,534
Net earnings per common and
common equivalent share: $ .15 $ .38 $ .51 $ .37
1992
Operating revenues $ 14,839 $ 16,338 $ 16,879 $ 15,396
Operating earnings 4,953 6,098 6,483 5,649
Net earnings $ 1,589 $ 2,059 $ 2,323 $ 2,142
Net earnings per common and
common equivalent share $ .25 $ .32 $ .37 $ .33
(a) Certain reclassifications have been made to conform with classifications
adopted for reporting of segment information beginning December 31, 1993. These
reclassifications did not have a material effect on the
quarterly results as originally reported.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
IWC Resources Corporation:
We have audited the accompanying consolidated balance sheets of IWC Resources
Corporation and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of earnings, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1993. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IWC Resources
Corporation and subsidiaries at December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1993, in conformity with generally accepted
accounting principles.
As discussed in the Notes to Consolidated Financial Statements, the Company
changed its method of revenue recognition in 1991 and, effective January 1,
1993, changed its method of accounting for income taxes and postretirement
benefits other than pensions.
KPMG Peat Marwick
Indianapolis, Indiana
January 26, 1994
<TABLE>
Selected Financial Data
The selected consolidated financial data presented below have been derived from
and should be read in conjunction with the Company's Consolidated Financial
Statements and related Notes thereto included elsewhere in this report.
Summary of Operations Data:
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Operating revenues $ 82,321 $ 63,452 $ 59,930 $ 53,630 $ 50,215
Operating earnings 25,778 23,183 21,046 19,529 17,502
Cumulative effect of accounting change - - 1,280 - -
Net earnings 9,376 8,113 9,017 5,833 5,365
Per common and common equivalent share:
Earnings before cumulative effect
of accounting change 1.41 1.27 1.45 1.11 1.03
Cumulative effect of accounting change - - .24 - -
Net earnings $ 1.41 $ 1.27 $ 1.69 $ 1.11 $ 1.03
Cash dividends per common share $ 1.40 $ 1.395 $ 1.38 $ 1.38 $ 1.38
Average number of common and
common equivalent shares outstanding 6,658 6,379 5,335 5,251 5,204
</TABLE>
<TABLE>
Summary of Balance Sheet Data:
<CAPTION>
December 31,
1993 1992 1991 1990 1989
(in thousands)
<S> <C> <C> <C> <C> <C>
Utility plant, net $ 260,663 $ 253,786 $ 243,573 $ 234,213 $ 206,633
Construction funds held by Trustee 2,010 1,958 2,293 5,703 25,277
Total assets 312,443 275,112 279,608 253,942 249,844
Capitalization:
Long-term debt
(excluding current portion) $ 85,375 $ 86,275 $ 72,675 $ 91,675 $ 91,875
Preferred stock of subsidiary
and redeemable preferred stock 5,705 4,505 4,505 4,505 4,505
Common shareholders' equity 77,014 67,205 66,695 48,246 48,656
Total capitalization $ 168,094 $ 157,985 $ 143,875 $ 144,426 $ 145,036
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The most significant changes in the consolidated financial condition and
results of operations of IWC Resources Corporation and subsidiaries (Company)
are attributable to the combined operations of its two segments: (1) water
utilities and (2) utility-related services. These segments are discussed more
fully in Notes to Consolidated Financial Statements, Segment Information.
The Company acquired SM&P Conduit Co., Inc., (SM&P) in June 1993, and beginning
in 1993, has grouped the Company's operations according to major segment. As a
result of this acquisition, many of the differences between results of
operations for 1993 and 1992 are due primarily to SM&P operations, which are
included in the utility-related services segment. The following discussion and
analysis will concentrate primarily on differences due to the results of
operations of the water utilities segment.
1993 Compared to 1992
Operating revenues increased $18,869,000 (29.7%) of which $17,982,000 is
applicable to the utility-related services segment. The increase in water
utilities segment revenues of $887,000 represents a 1.4% increase over 1992,
and is primarily due to a slight increase in total water consumption,
reflecting wet weather conditions experienced during the summer months of 1993
and a change in the mix of customers. Water consumption is affected by the
frequency and pattern of rainfall, temperatures, the level of economic
activity, and conservation efforts. For 1993, residential revenues increased
$880,000 (2.2%), commercial and industrial revenues increased $1,336,000
(8.0%), and public fire protection and other revenues decreased $1,329,000
(21.7%). The fluctuation in residential revenues and public fire protection and
other revenues is primarily due to billing metered customers rather than
municipalities for certain public fire protection charges after June 30, 1993.
Operation and administration expenses increased $14,312,000 (48.1%) of which
$12,453,000 is applicable to the utility-related services segment. The increase
in water utilities segment expenses of $1,859,000 which is discussed below
represents a 6.2% increase over 1992 and is primarily due to the effects of
inflation on the Company's costs. Labor costs increased $841,000 (6.3%) mainly
due to a general wage increase, effective January 1, 1993. Chemical costs
increased $66,000 (9.6%) primarily due to increased usage and higher chemical
costs. The cost of outside services increased $575,000 (19.1%) chiefly due to
an increase in consulting and other services. Costs of the Company's pension
and other benefit plans increased $92,000 (6.1%) primarily due to the higher
costs of benefits provided.
Depreciation increased $1,240,000 (23.3%) of which $799,000 is applicable to
the utility-related services segment. The increase in water utilities segment
depreciation of $441,000 represents a 8.3% increase over 1992, and is primarily
due to additional plant placed in service and an increase in the composite
depreciation rate from 1.76% to 1.9% effective June 10, 1992.
Taxes other than income taxes increased $722,000 (13.9%) which is net of a
$72,000 (1.4%) decrease in such expenses for the water utilities segment. The
decrease is primarily due to a reduction in property taxes following an appeal.
The increase in interest expense, net, of $358,000 (5.2%) is largely due to the
effects of an increase in short-term debt of $13,700,000 in connection with the
SM&P acquisition. Other, net, decreased $714,000 (76.8%) primarily due to
including earnings from certain non-utility subsidiaries in operating earnings
during 1993.
1992 Compared to 1991
Operating revenues increased $3,522,000 (5.9%), primarily due to the net
effects of an increase in Indianapolis Water Company's (IWC's) water rates,
effective November 6, 1991, an increase in IWC's rates to cover an approved
increase in its composite annual depreciation rate from 1.76% to 1.9%,
effective June 10, 1992, and a 6.7% decrease in total water consumption,
reflecting much wetter and cooler weather conditions experienced during the
summer months of 1992, compared with the very hot and dry summer months of
1991.
Operation and administration and maintenance expenses increased $270,000 (.9%)
primarily due to the effects of inflation on the Company's costs. Labor expense
increased $691,000 (5.5%) mainly due to a general wage increase, effective
January 1, 1992. Power costs decreased $215,000 (7.7%) largely due to decreased
pumpage in the summer months. Chemical costs decreased $247,000 (26.4%)
primarily due to decreased usage. The cost of outside services increased
$211,000 (7.5%) chiefly due to an increase in consulting and other services.
Regulatory expenses increased $124,000 (38.0%) principally due to increased
rate case expenses. Costs of the Company's pension and other benefit plans
increased $150,000 (11.0%) primarily due to the higher costs of benefits
provided.
Depreciation increased $892,000 (20.2%) primarily due to additional plant
placed in service and an increase in the composite depreciation rate from 1.76%
to 1.9% effective June 10, 1992.
Taxes other than income taxes increased $223,000 (4.5%) largely due to an
increase in property taxes resulting from additional assessed property,
including the Company's White River North Station, and higher property tax
rates. Income taxes increased $1,292,000 (16.3%) mainly due to higher pretax
earnings and an increase in taxable customer advances for construction.
The increase in interest expense, net, of $78,000 (1.1%) is primarily due to
the net effects of an increase in average short-term debt outstanding, a
reduction in average long-term debt outstanding and a reduction in capitalized
interest due to the completion of the Company's White River North Station in
1991. Earnings from non-utility subsidiaries decreased $563,000 (42.8%),
chiefly due to reduced gains from land sales.
Liquidity and Capital Resources
At the present time, the majority of the Company's business activities are
conducted through its water utilities. In June 1993, the Company acquired SM&P
which diversified the Company's operations. The Company may, in the future,
become involved in other water utilities and utility-related activities through
the acquisition or formation of additional subsidiaries. The source of capital
to finance these subsidiaries will be determined at the time they are
established or acquired. However, the Company does not intend to enter into any
business that would impair the Company's primary commitment to maintain and
develop its water utilities to meet the current and future needs of their
customers.
Cash Flows from Operating Activities
Cash flows from operating activities result primarily from net earnings
adjusted for non-cash items such as depreciation and deferred taxes and changes
in operating assets and liabilities. The seasonal nature of the Company's
business typically results in higher operating revenues in the second and third
quarters of the year than in the first and fourth quarters. Fluctuations in
accounts payable and accrued expenses result primarily from property taxes and
timing of payments, whereas federal income taxes vary with pretax earnings and
the level of taxable customer advances for construction received by the
Company.
Cash Flows from Investing Activities
Cash flows from investing activities fluctuate primarily as a result of
additions to utility plant and other property and the level of customer
advances for construction, net of refunds. In June 1993, the Company used the
proceeds from additional short-term borrowings of $13,700,000 to acquire the
net assets of SM&P.
The Company continues to experience significant growth in its distribution
system. Approximately 58 miles of new mains were placed in service in 1993
compared with approximately 86 miles during 1992. The Company received over
$5,700,000 in new customer advances for construction of new mains in 1993 and
over $6,500,000 in 1992. Such advances are subject to refund over a ten-year
period based on the addition of new customers to the constructed mains. The
Company refunded approximately $2,200,000 and $2,400,000 during 1993 and 1992,
respectively. The Company also added $18,988,000 (including $5,021,000 from the
acquisition of SM&P) to utility plant and other property during 1993 compared
to $15,751,000 during 1992.
Cash Flows from Financing Activities
Cash flows from financing activities consist primarily of the Company's
borrowings, dividend payments and sales of common stock. The Company utilizes
borrowings against its lines of credit with local banks for its short-term cash
needs.
In January 1992, the Company used net proceeds from the Company's stock
offering in December 1991 to prepay $3,700,000 in principal amount of its
12-7/8% Series Bonds, plus applicable redemption premiums of $298,000. In
January 1993, the Company prepaid an additional $1,100,000 in principal amount
of these bonds at a premium of $80,000. In December 1993, the Company gave
required notice to prepay in January 1994 an additional $1,200,000 in principal
amount of these bonds at a premium of $77,000. Funds used to prepay the amounts
in 1993 and 1994 were derived from proceeds of the sale of common shares
through the Company's Dividend Reinvestment and Stock Purchase Plan.
In April 1993, the Company issued $11,600,000 of First Mortgage Bonds to secure
a like amount of Economic Development Bonds issued by the city of Indianapolis.
Proceeds from this issue were used to prepay the remaining $11,600,000 of
6-1/4% Series Bonds, including the mandatory redemption of $300,000 due May 1,
1993.
The Company expects to refinance $13,700,000 of short-term notes payable to
banks under a long-term agreement in March 1994.
Approximately 99%, 110%, and 81% of net earnings applicable to common and
common equivalent shares were declared payable in cash dividends during 1993,
1992, and 1991, respectively. Long-term debt, as a percentage of total capital
and long-term debt, decreased to 52.6% at December 31, 1993, compared to 56.2%
at December 31, 1992, and 52.1% at December 31, 1991. The decrease in 1993 in
the "debt ratio" was primarily due to the combined effects of a payment of
$12,700,000 in long-term debt and issuance of new long-term debt of
$11,600,000, issuance of $8,300,000 in common stock for the acquisition of
SM&P, issuance of common stock through the Company's dividend reinvestment and
restricted stock plans of $1,273,000 and an increase in retained earnings of
$86,000.
During 1993, the Company increased its line of credit for working capital
purposes to $22,200,000; borrowings under the lines were $7,528,000 at December
31, 1993. The Company increased its short-term bank debt by $13,700,000 to
acquire SM&P and assumed $3,933,000 of SM&P's short-term debt.
Capital Expenditures
Capital expenditures for 1994 are budgeted at approximately $23,000,000 and
will be financed primarily from internally generated cash, customer advances
for construction, short-term bank borrowings and draws from construction funds
held by the trustee. Capital expenditures for the five-year period 1994 through
1998 are budgeted at approximately $125,000,000 with the major portion for new
mains and distribution and plant facilities. The Company anticipates that it
will be necessary during the five-year period 1994 through 1998 to secure
additional outside financing from both short-and long-term debt, in order to
finance planned capital expenditures and long-term debt maturities.
Projected capital expenditures do not include any construction projects that
IWC could be required to undertake to comply with legislative or regulatory
environmental or water quality requirements that may be imposed in the future.
If IWC is required to adopt new methods of water treatment, the costs involved
will be substantial. Capital costs are presently estimated at $37,000,000 for
ozonation and $90,000,000 for granular activated carbon (GAC). Additionally,
IWC is subject to regulatory requirements regarding discharges from its
treatment plants. The Company estimates that the cost to comply with possible
changes to existing regulatory requirements for discharges could aggregate
$30,000,000 for additional facilities and $1,000,000 in increased operating
costs. Such costs and expenses should be recoverable through water rates, but
only after appropriate regulatory action.
Environmental Matters
The Company's utility operations are subject to pollution control and water
quality control regulations, including those issued by the Environmental
Protection Agency (EPA), the Indiana Department of Environmental Management
(IDEM), the Indiana Water Pollution Control Board and the Indiana Department of
Natural Resources. Under the Federal Clean Water Act and Indiana's regulations,
the Company must obtain National Pollutant Discharge Elimination System (NPDES)
permits for discharges from its White River, Fall Creek, and the Thomas W.
Moses treatment stations. The Company's current NPDES permits were to expire
June 30, 1989, for White River and Fall Creek stations and December 31, 1990,
for Thomas W. Moses treatment station. Applications for renewal of the permits
have been filed with, but have not been acted upon, by IDEM (these permits
continue in effect pending review of the applications). The Company received an
NPDES permit for its White River North Station on April 1, 1991, and it has
complied with the reporting requirements for the initial 12-month period of the
permit. IDEM has authority to reopen this permit and it could propose in some
or all of these permits additional limitations that could be difficult and
expensive. Accordingly, the full impact of such restrictions cannot be assessed
with certainty at this time. The Company anticipates, however, that the capital
costs and expense of compliance with any such permits are likely to be
significant.
Under the federal Safe Drinking Water Act (SDWA), the Company is subject to
regulation by EPA of the quality of water it sells and treatment techniques it
uses to make the water potable. EPA promulgates nationally applicable maximum
containment levels (MCLs) for "contaminants" found in drinking water.
Management believes that the Company is currently in compliance with all MCLs
promulgated to date. EPA has continuing authority, however, to issue additional
regulations under the SDWA, and Congress amended the SDWA in July 1986 to
require EPA, within a three-year period, to promulgate MCLs for over 80
chemicals not then regulated. EPA has been unable to meet the three-year
deadline, but has promulgated MCLs for many of these chemicals and has proposed
additional MCLs.
Management of the Company believes that it will be able to comply with the
promulgated MCLs and those now proposed without any change in treatment
technique, but anticipates that in the future, because of EPA regulations, the
Company may have to change its method of treating drinking water to include
ozonation and/or GAC. In either case, the capital costs could be significant
(currently estimated at $37,000,000 for ozonation and $90,000,000 for GAC), as
would be the Company's increase in annual operating costs (currently estimated
at $1,600,000 for ozonation and $4,300,000 for GAC). Actual costs could exceed
these estimates. The Company would expect to recover such costs through its
water rates; however, such recovery may not necessarily be timely.
Under a 1991 law enacted by the Indiana Legislature, a water utility, including
the utility subsidiaries of the Company, may petition the Indiana Utility
Regulatory Commission (Commission) for prior approval of its plans and
estimated expenditures required to comply with provisions of, and regulations
under, the Federal Clean Water Act and SDWA. Upon obtaining such approval, the
utility may include, to the extent of its estimated costs as approved by the
Commission, such costs in its rate base for ratemaking purposes and recover its
costs of developing and implementing the approved plans if statutory standards
are met. The capital costs for such new systems, equipment or facilities or
modifications of existing facilities may be included in the utility's rate base
upon completion of construction of the project or any part thereof. While use
of this statute is voluntary on the part of a utility, if utilized it should
allow utilities a greater degree of confidence in recovering major costs
incurred to comply with environmentally related laws on a timely basis.
Rate Case
On May 17, 1993, Indianapolis Water Company and Zionsville Water Corporation,
both wholly owned subsidiaries of the Company, filed a petition with the
Commission for approval of a merger of the two companies and a new schedule of
rates and charges applicable to their interconnected systems. The increase in
combined revenues sought by the companies is approximately $8.9 million, or
14%. This request for new rates includes the increased costs associated with
adoption of accrual accounting for postretirement benefits other than pensions.
On November 10, 1993, the Utility Consumer Counselor, representing ratepayers,
prefiled its testimony and exhibits in the case, the effect of which, if
adopted by the Commission, would result in a decrease in current rates of
approximately $4.6 million, or 7.2%.
Trends, Inflation and Changing Prices
Under normal conditions and particularly during periods of inflation, water
utility revenues from increased water consumption will not keep pace with the
increase in operating costs. Therefore, periodic water rate and service charge
adjustments are necessary, with the frequency of such increases being partially
determined by the amount of inflation.
Results for any interim period are not indicative of results to be expected for
the year. Typically, the seasonal nature of the Company's business results in a
higher proportion of operating revenues being realized in the second and third
quarters of the year than the first and fourth quarters of the year.
SHAREHOLDER INFORMATION
Annual Meeting
The annual meeting of shareholders will be held at IWC Resources Corporation's
General Office, 1220 Waterway Boulevard, Indianapolis, Indiana, at 11:00 a.m.
(EST) on Thursday, April 21, 1994. Notice of the meeting, a proxy statement and
a form of proxy were mailed on or about March 11, 1994, to all shareholders of
record March 7, 1994.
Form 10-K and Financial Information
A copy of the Company's annual report on Form 10-K (including financial
statements, but without exhibits) filed with the Securities and Exchange
Commission is available without charge upon request. Requests should be
addressed to the Shareholder Relations Department, IWC Resources Corporation,
P. O. Box 1220, Indianapolis, Indiana 46206.
Dividend Reinvestment and Stock Purchase Plan
The Company offers its registered shareholders a convenient and economical way
to reinvest their dividends and make optional cash purchases of the Company's
common stock. There are no brokerage commissions or service fees charged on
purchase made through the Plan. A prospectus describing the Plan is available
upon request by writing or calling the Shareholder Relations Department, (317)
639-1501.
Shareholder Inquiries
Shareholders with questions concerning their accounts, dividend checks, or
stock certificates should contact the Company's stock transfer and dividend
disbursing agent as follows:
BANK ONE, INDIANAPOLIS, NA
BANK ONE CENTER/TOWER
111 Monument Circle, Suite 1611
Indianapolis, Indiana 46204
(800) 753-7107 or (317) 321-8110
Stock Statistics
The common stock of the Company is traded over-the-counter under the NASDAQ
National Market System symbol of IWCR.
The following table sets forth, on a per-share basis, the high and low sale
prices of the Company's common stock and dividends paid per share the last two
years.
Common Stock
Dividends
Declared
High Low Per Share (Cent)
1993
Fourth Quarter $ 24 $ 20-3/4 35
Third Quarter 24 21-1/2 35
Second Quarter 23-1/4 21 35
First Quarter 23-3/4 20-3/4 35
1992
Fourth Quarter 23 20-1/2 35
Third Quarter 23 20 35
Second Quarter 20-1/4 18 35
First Quarter 20-1/2 18-1/2 34-1/2
Distribution of Shareholders
December 31, 1993, of Record
Other
Indiana States Total
& Foreign
Countries
Holders 3,531 1,381 4,912
72% 28%
Shares 2,908,792 3,913,161 6,821,953
43% 57%
IWC RESOURCES CORPORATION
BOARD OF DIRECTORS
Joseph D. Barnette, Jr., Chairman and Chief Executive Officer
Banc One Indiana Corporation
Thomas W. Binford, Chairman
Binford, Miles, Rodgers and Associates Indianapolis
Joseph R. Broyles*, President and Chief Operating Officer
Indianapolis Water Company
Murvin S. Enders, Plant Manager
Toledo Machining Plant, Chrysler Corporation
Otto N. Frenzel III*, Chairman of the Board
National City Bank, Indiana
Indianapolis
Elizabeth Grube, Personal Investments, Indianapolis
John G. Johnson*, Retired President
Butler University, Indianapolis (Retired effective December 31, 1993)
J. B. King, Vice President and General Counsel
Eli Lilly and Company, Indianapolis
Robert B. McConnell*, Chairman of the Executive Committees
IWC Resources Corporation and Indianapolis Water Company
J. George Mikelsons, Chairman of the Board and Chief Executive Officer
Amtran, Inc., Indianapolis
Thomas M. Miller*, Chairman of the Board and Chief Executive Officer
NBD Indiana, Inc. and NBD Bank, N.A., Indianapolis
James T. Morris*, Chairman of the Board and Chief Executive Officer
IWC Resources Corporation and Indianapolis Water Company
Jack E. Reich*, Chairman of the Board Emeritus
American United Life Insurance Company, Indianapolis
Fred E. Schlegel, Partner
Baker & Daniels, Attorneys, Indianapolis
*Member of Executive Committee
IWC RESOURCES CORPORATION OFFICERS
James T. Morris,
Chairman of the Board, Chief Executive Officer and President
J. A. Rosenfeld, Executive Vice President (Effective February 25, 1994)
Kenneth N. Giffin, Senior Vice President -
Governmental Relations and Real Estate
John M. Davis, Vice President, General Counsel and Secretary
Alan R. Kimbell, Vice President - Marketing (Effective January 21, 1994)
James P. Lathrop, Controller
Jane G. Ryan, Assistant Secretary
INDIANAPOLIS WATER COMPANY OFFICERS
James T. Morris, Chairman of the Board and Chief Executive Officer
Joseph R. Broyles, President and Chief Operating Officer
Paul J. Doane, Executive Vice President
J. A. Rosenfeld, Executive Vice President (Effective February 25, 1994)
Kenneth N. Giffin, Senior Vice President - Governmental Relations
John M. Davis, Vice President, General Counsel and Secretary
Robert F. Miller, Vice President - Engineering (Effective January 21, 1994)
David S. Probst, Vice President - Business Development
Tim K. Bumgardner, Vice President - Operations
Ronald H. Carrell, Vice President - Customer Service
Martha L. Wharton, Vice President - Customer Relations
L. M. Williams, Vice President - Human Resources
James P. Lathrop, Assistant Treasurer
Jane G. Ryan, Assistant Secretary
Document Summary:
Document: 0805-21
Author:
Addressee:
Operator:
Creation Date: 03/30/1994
Modification Date: 03/30/1994
Identification key words:
Comments:
Exhibit 21
SUBSIDIARIES
IWC Resources Corporation has seven wholly owned subsidiaries,
each of which is incorporated under the laws of the State of
Indiana. These corporations are Indianapolis Water Company,
Harbour Water Corporation, Zionsville Water Corporation, Utility
Data Corporation, IWC Services, Inc., SM&P Conduit Co., Inc. and
Waterway Holdings, Inc.
Document Summary:
Document: 0805-23
Author:
Addressee:
Operator:
Creation Date: 03/30/1994
Modification Date: 03/30/1994
Identification key words:
Comments:
Exhibit 23
Consent of Independent Certified Public Accountants
The Board of Directors
IWC Resources Corporation:
We consent to incorporation by reference in the
Registration Statement No. 33-30221 on Form S-8 and Registration
Statement No. 33-6406 on Form S-3 (originally on Form S-16) of
IWC Resources Corporation of our reports dated January 26, 1994,
relating to the consolidated balance sheets of IWC Resources
Corporation and subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of earnings,
shareholders' equity and cash flows and related schedules for
each of the years in the three-year period ended December 31,
1993, which reports appear herein or in the 1993 Annual Report
to Shareholders and have been incorporated by reference in the
December 31, 1993 annual report on Form 10-K of IWC Resources
Corporation. Our reports refer to a change in method of revenue
recognition in 1991 and, effective January 1, 1993, a change in
accounting for income taxes and postretirement benefits other
than pensions.
KPMG PEAT MARWICK
Indianapolis, Indiana
March 23, 1994
