<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
----------------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
ENVIROTEST SYSTEMS CORP.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-21454 06-0914220
-------- ------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
ENVIROTEST TECHNOLOGIES, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 33-57384-01, 33-75406-01 36-2680300
-------- ----------- ----------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
246 SOBRANTE WAY
SUNNYVALE, CALIFORNIA 94086
---------------------------
(Address of principal executive offices, including zip code, of registrants)
(408) 481-3900
--------------
(Registrants' telephone number, including area code)
INDICATE BY CHECK MARK WHETHER THE REGISTRANTS (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANTS WERE REQUIRED TO FILE SUCH REPORTS), AND (2) HAVE BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
----- -----
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Class of Common Stock Outstanding at July 31, 1996
--------------------- ----------------------------
CLASS A COMMON STOCK, $0.01 PAR VALUE 13,204,396 SHARES
CLASS B COMMON STOCK, $0.01 PAR VALUE 1,389,749 SHARES
CLASS C COMMON STOCK, $0.01 PAR VALUE 2,026,111 SHARES
1
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ENVIROTEST SYSTEMS CORP.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets:
June 30, 1996 and September 30, 1995 3
Condensed Consolidated Statements of Operations:
three and nine months ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows:
nine months ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 5. OTHER 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 16
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
ENVIROTEST SYSTEMS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
----------- -------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $29,845 $17,079
Short-term investments 1,347
Current portion of settlement due from Commonwealth
of Pennsylvania 40,000 -
Contract receivables, net of allowance for doubtful accounts
of $429 and $354, respectively 9,100 8,208
Prepaid and other current assets 8,313 3,580
Deferred income taxes - 1,376
----------- -------------
Total current assets 87,258 31,590
Restricted cash 25,599 31,497
Property, plant and equipment, net of accumulated
depreciation of $36,260 and $24,739, respectively 189,145 173,507
Settlement due from Commonwealth of Pennsylvania 95,000 -
Assets under capital lease, net 46,356 27,138
Assets held for sale, net 22,549 5,209
Assets subject to settlement - 149,629
Intangible assets, net of accumulated amortization of $18,116
and $15,522, respectively 15,609 17,752
Deferred debt acquisition costs, net of accumulated amortization
of $5,100 and $3,378, respectively 12,894 13,412
Deferred charges, net of accumulated amortization of $6,462
and $3,217, respectively 1,749 3,178
Deferred income taxes - 4,100
Other assets 754 261
----------- -------------
Total assets $496,913 $457,273
----------- -------------
----------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,078 $12,742
Accrued interest 9,231 1,499
Current portion of long-term debt 3,649 -
Current portion of capital lease and long-term debt obligation 4,220 1,485
Other current liabilities 27,473 14,094
----------- -------------
Total current liabilities 47,651 29,820
Senior long-term debt, net of discount of $853
and $989, respectively 199,147 199,011
Senior subordinated debt 125,000 125,000
Long-term debt 39,179 -
Capital lease and long-term debt obligation 59,795 62,895
Other long-term liabilities 5,142 2,502
----------- -------------
Total liabilities 475,914 419,228
Commitments and contingencies
Stockholders' equity:
Common stock 166 162
Additional paid-in capital 60,172 60,028
Retained deficit (33,601) (16,446)
Other stockholders' equity (5,738) (5,699)
----------- -------------
Total stockholders' equity 20,999 38,045
----------- -------------
Total liabilities and stockholders' equity $496,913 $457,273
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of the condensed financial
statements.
<PAGE>
ENVIROTEST SYSTEMS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Nine
Months Ended Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Contract revenues $32,556 $29,066 $90,764 $75,960
Costs of services 25,140 20,933 75,244 51,049
--------- --------- --------- ---------
Gross profit 7,416 8,133 15,520 24,911
Selling, general and administrative expenses 5,172 7,458 15,621 18,745
Consolidation expense - - 1,850 -
Amortization expense 872 1,032 2,756 2,985
Gain on Pennsylvania settlement - - (15,307) -
--------- --------- --------- ---------
Income (loss) from operations 1,372 (357) 10,600 3,181
Other expense (income):
Interest expense 10,182 4,193 28,574 14,005
Other 4 (10) 12 67
Interest income (2,477) (605) (6,312) (3,866)
Minority interest - 15 - 275
--------- --------- --------- ---------
Income (loss) before income taxes (6,337) (3,950) (11,674) (7,300)
Income tax expense (benefit) (1,541) 5,490 (2,843)
--------- --------- --------- ---------
Net income (loss) $(6,337) $(2,409) $(17,164) $(4,457)
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings (loss) per common and common
equivalent share $(0.38) $(0.15) $(1.04) $(0.28)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average common shares and
common equivalent shares 16,620 16,134 16,530 16,026
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings (loss) per common share - assuming
full dilution $(0.38) $(0.15) $(1.04) $(0.28)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average common shares and common
equivalent shares 16,620 16,134 16,530 16,026
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE>
ENVIROTEST SYSTEMS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities $ 19,066 $ (3,189)
--------- ---------
Cash flows from investing activities:
Maturity of short-term investments 1,347 21,799
Payment for purchase of Systems Control, Inc.,
net of cash acquired (1,056) -
Proceeds from sale of property, plant and equipment 1,696 1,221
Purchases of property, plant, equipment and assets
under capital lease (42,845) (177,542)
Purchases of intangible assets - (250)
--------- ---------
Net cash used in investing activities (40,858) (154,772)
Cash flows from financing activities:
Proceeds from borrowings of long-term debt 31,345 -
Proceeds from capital lease and long-term debt
obligations - 64,380
Proceeds deposited in restricted accounts - (56,574)
Repayment of long-term debt (1,637) -
Decrease in restricted cash 5,898 -
Repayment of obligations under capital lease (365) (4,751)
Capitalization of loan fees (855) (2,629)
Other 148 50
--------- ---------
Net cash provided by (used in) financing activities 34,534 476
Effect of exchange rate on cash 24 71
--------- ---------
Net increase (decrease) in cash and cash equivalents 12,766 (157,414)
Cash and cash equivalents, beginning of period 17,079 180,215
--------- ---------
Cash and cash equivalents, end of period $ 29,845 $ 22,801
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE>
ENVIROTEST SYSTEMS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included.
The accompanying condensed consolidated financial statements should be
read in conjunction with the Company's audited consolidated financial statements
and related footnotes included in the Company's Annual Report on Form 10-K for
the year ended September 30, 1995, filed with the Securities and Exchange
Commission.
Operating results for the interim periods shown in this report are not
necessarily indicative of the results to be expected for the full fiscal year.
2. DEFERRED CHARGES
The Company incurs significant expenses associated with bringing new
emissions testing programs into operation, including staff recruiting and
training, public information and similar pre-operating costs. These expenses
are deferred and amortized over a twelve month period beginning with the
commencement of the emissions program. At June 30, 1996, the Company had
incurred and deferred approximately $1.7 million, net of accumulated
amortization, of such expenses relating to the Indiana, Ohio and Wisconsin
emissions programs. The Company expects that its results of operations during
any fiscal period that includes the commencement of a program will be adversely
impacted by this accelerated amortization.
3. PENNSYLVANIA SETTLEMENT
The Company, the Commonwealth of Pennsylvania and the Pennsylvania
Department of Transportation entered into a General Release and Settlement
Agreement, dated December 15, 1995 (the "Settlement Agreement"), settling the
claims of the Company under its contract dated November 1993 to implement and
operate the Pennsylvania vehicle emissions testing program which was suspended
by action of the Pennsylvania General Assembly.
The Settlement Agreement requires the Commonwealth to pay the Company
$145 million in four installments with interest at the rate of 6.0% accruing
from December 15, 1995. The first installment of $25,000,000 was paid on
December 29, 1995 and the second installment of $40,000,000 plus $4,223,000 in
accrued interest was paid on July 31, 1996. The last two installments of
$40,000,000, plus interest, are due on July 31, 1997 and 1998. In addition, the
Commonwealth is obligated to pay the Company (in July 1998) 50% of the amount by
which the net proceeds from the sale of the assets (as defined by the Settlement
Agreement) are less than
6
<PAGE>
$55 million up to a maximum of $15 million plus interest at 6% from December 15,
1995. Should the net proceeds from the sale of the real estate and other
program related assets exceed $55 million, the Company is obligated to pay the
Commonwealth 75% of the amount by which the net proceeds exceed $55 million.
4. LONG-TERM DEBT
On December 29, 1995, the Company's wholly owned subsidiary,
Envirotest Wisconsin, Inc., issued $17,000,000 principal amount of notes (the
"Notes"). The Notes bear interest at the rate of 7.53% per annum with monthly
payments, including interest, beginning at approximately $230,000 and increasing
to approximately $340,000 with maturity on November 30, 2002. The Notes are
collateralized by all assets utilized in the Wisconsin program.
In January 1996, the Company acquired Systems Control, Inc., a
Washington corporation (SCI-WA), the operator of the centralized emissions
testing program in the State of Washington. (See Note 5 below.) At the time of
the acquisition, SCI-WA had debt outstanding under its credit agreement. As of
June 30, 1996, the outstanding balance is $12.1 million and bears interest at
various rates with an effective rate of 8.64% at June 30 and is collateralized
by all real property of the vehicle emissions program in the State of
Washington. This agreement requires monthly payments of $243,450 (adjusted
annually for changes in interest rates) with a balloon payment at maturity on
December 31, 1999 of $4.5 million. This credit agreement requires a cash
collateral amount of $0.6 million as of June 30, 1996 and through maturity and
requires certain covenants related to tangible net worth, capital ratio, cash
flow ratio and distributions of SCI-WA be maintained.
In June 1996, the Company issued $14.3 million principal amount of
notes for the Indiana program. The notes bear interest at the rate of 7.82 %
per annum with quarterly payments, including interest of approximately $550,000
and mature in 2006. Interest will be paid beginning September 1996 with
principal payments beginning June 1997. The notes are collateralized by all
assets utilized in the Indiana program.
5. BUSINESS ACQUISITION
In January 1996, the Company purchased from Systems Control, Inc.
("SCI") the stock of SCI-WA, a Washington company and operator of the State of
Washington centralized emissions testing program, all intellectual property of
SCI and an option to purchase the stock or assets of SCI's Indiana subsidiary.
The option was exercised in June 1996, and the Company acquired the contract
with the State of Indiana to operate its centralized vehicle emissions testing
contract and the related assets. The results of operations of SCI have been
consolidated as of the respective dates of acquisition.
7
<PAGE>
The purchase cost of $4.7 million (including $1.5 million paid for the
assets of SCI's Indiana subsidiary) has been allocated as follows:
(millions)
Current assets $ 2.5
Fixed assets 17.0
Intellectual property 0.6
Other noncurrent assets 0.4
Current liabilities (2.5)
Long term debt (11.3)
Other noncurrent liabilities (2.0)
---------
Total $ 4.7
---------
---------
6. CONSOLIDATION EXPENSE
The Company recorded a consolidation expense in March 1996 of $1.9
million representing the costs associated with the closure of the Phoenix
corporate headquarters and other restructuring costs. In addition, the Company
recorded an expense of $1.5 million (included with selling, general and
administrative expense) representing the estimated cost of relocating employees
to the new corporate headquarters in Sunnyvale, California.
7. INCOME TAXES
The deferred tax asset of $16.4 million has been fully reserved as of
June 30, 1996. For the three month period ended June 30, 1996, the Company
increased the valuation allowance from $14.2 million to $16.4 million. The
amount of the deferred tax asset considered realizable, however, could change in
the near term if estimates of future taxable income are revised.
8. LEGAL PROCEEDINGS
The State of Connecticut has made certain claims stating that the
Company owes the State $2.4 million plus accruing amounts for certain cost
savings in the start up of the enhanced testing program in Connecticut. The
Company cannot predict the outcome of this complaint. However, the Company
believes that it has sufficient defense against these claims. (See Part II.,
Item 1 - Legal Proceedings for further discussion.)
8
<PAGE>
ENVIROTEST SYSTEMS CORP.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company conducts its current operations directly and through its
principal wholly owned subsidiaries, Envirotest Technologies, Inc. ("ETI"),
Envirotest Wisconsin, Inc. and Systems Control, Inc., a Washington corporation.
The Company's British Columbia, Canada operations are conducted through a
British Columbia partnership, Ebco-Hamilton Partners ("EHP") which is wholly
owned by the Company (through its subsidiaries).
RESULTS OF OPERATIONS
Contract revenues increased to $32.6 million in fiscal third quarter
1996 from $29.1 million in fiscal third quarter 1995, an increase of $3.5
million or 12.0%. For the nine months ended June 30, 1996, contract revenues
were $90.8 million, an increase of $14.8 million, or 19.5%, over contract
revenues of $76.0 million for the corresponding period in fiscal 1995. The
increase in contract revenues in fiscal third quarter 1996 as compared to fiscal
third quarter 1995 is primarily due to additional revenues of approximately $4.4
million generated from new contracts with the State of Ohio and revenues of
approximately $2.4 million from the Washington State program acquired on January
30, 1996. These increases were offset primarily by a decrease in revenues in
the British Columbia program of approximately $1.5 million due to an employee
strike during the period, a decrease in revenues in the Illinois program of
approximately $0.3 million attributable to the reduced test fee under the
January 1996 contract extension, a decrease in revenues of approximately $0.7
million due to the previously disclosed reduction in the Minnesota program test
volume.
The increase in contract revenues for the nine months ended June 30,
1996 resulted from additional revenues of approximately $22.6 million generated
from new or extended contracts with the states of Connecticut, Ohio and Colorado
and the acquisition of the Washington state program. These increases were
offset primarily by the decreases in revenues in the British Columbia, Illinois
and Minnesota programs discussed above and a decrease in revenues of the
Maryland program of $1.6 million which ceased operations as of December 31,
1994.
Gross profit decreased to $7.4 million in fiscal third quarter 1996
from $8.1 million in fiscal third quarter 1995, a decrease of $0.7 million, or
8.6%. As a percentage of contract revenues, gross profit decreased to 22.7% in
fiscal third quarter 1996 from 27.8% in fiscal third quarter 1995, an absolute
decrease of 5.1%. The decrease in gross profit resulted from the employee
strike in the British Columbia program, higher than anticipated costs associated
with the Wisconsin and Ohio programs, decreased revenue in the Minnesota program
discussed above and costs incurred on a remote sensing program without
associated revenues.
For the nine months ended June 30, 1996, gross profit decreased to
$15.5 million from $24.9 million for the corresponding period in fiscal 1995, a
decrease of $9.4 million or 37.8%. As a percentage of contract revenues, gross
profit decreased to 17.1 % from 32.8 % in the
9
<PAGE>
corresponding period in fiscal 1995, an absolute decrease of 15.7 %. The
decrease in gross profit resulted from the factors discussed above and the
absence of contributions from the Maryland program.
Selling, general and administrative ("SG&A") expenses decreased to
$5.2 million in fiscal third quarter 1996 from $7.5 million in fiscal third
quarter 1995, a decrease of $2.3 million or 30.7%. As a percentage of
contract revenues, SG&A expenses decreased to 16.0% in fiscal third quarter
1996 from 25.7% in fiscal third quarter 1995, an absolute decrease of 9.7%.
The decrease in SG&A expenses is primarily due to decreased marketing expenses
and the absence of costs associated with seeking a resolution of the
Pennsylvania contractual issues which were incurred during fiscal 1995. In
addition, the decrease in SG&A as a percentage of contract revenues is due to
the increase in contract revenues discussed above.
For the nine months ended June 30, 1996, SG&A decreased to $15.6
million from $18.7 million for the corresponding period in fiscal 1995, a
decrease of $3.1 million or 16.6%. As a percentage of contract revenues, SG&A
expenses decreased to 17.2% for the nine months ended June 30, 1996 from 24.6%
for the corresponding period in 1995, an absolute decrease of 7.4%. These
decreases were primarily due to a reduction in marketing expenses and absence of
costs associated with resolution of Pennsylvania contractual issues, offset by
relocation costs of $1.5 million representing the estimated cost of
consolidating the corporate headquarters to Sunnyvale, California.
Consolidation expense was $1.9 million for the nine month period ended
June 30, 1996, primarily representing the costs associated with the closing of
the Phoenix corporate headquarters.
Amortization expense decreased to $0.9 million in fiscal third quarter
1996 from $1.0 million in fiscal third quarter 1995, a decrease of $0.1
million. For the nine months ended June 30, 1996, amortization expense
decreased to $2.8 million from $3.0 million for the corresponding period in
fiscal 1995.
Gain on Pennsylvania settlement for the nine months ended June 30,
1996 was $15.3 million.
There was income from operations of $1.4 million in fiscal third
quarter 1996 compared to loss of $(0.4) million in fiscal third quarter 1995.
For the nine months ended June 30, 1996, income from operations increased to
$10.6 million from $3.2 million in the corresponding period of the prior year.
For the nine months ended June 30, 1996, income from operations as a percentage
of contract revenues increased to 11.7% compared to 4.2% in the corresponding
period of the prior year, an absolute increase of 7.5%. The increase is due to
the gain on Pennsylvania settlement, the decrease in selling, general and
administrative expenses, offset by the reduction in the gross profit and
consolidation expense, as discussed above.
Interest expense increased to $10.2 million in fiscal third quarter
1996 from $4.2 million in fiscal third quarter 1995, an increase of $6.0
million. For the nine months ended June 30, 1996, interest expense increased to
$28.6 million from $14.0 million in the corresponding period of the prior year.
The increase in fiscal third quarter 1996 as compared to fiscal third quarter
1995 is primarily due to a $4.3 million decrease in capitalized interest as
programs under implementation became operational, interest expense on the
capital lease and long-term debt
10
<PAGE>
issued in June 1995 to finance the Company's emissions testing network in Ohio,
interest expense on the long-term debt issued in December 1995 to finance the
Company's emissions testing network in Wisconsin and the interest expense on
additional long-term debt assumed in January 1996 as part of the purchase of the
Washington State subsidiary of Systems Control, Inc.
The increase in interest expense for the nine months ended June 30,
1996 is primarily attributable to a $10.6 million decrease in capitalized
interest and interest expense incurred for the Ohio and Wisconsin programs and
the purchase of the Washington State subsidiary of Systems Control, Inc.
discussed above.
Interest income increased to $2.5 million in fiscal third quarter 1996
from $0.6 million in fiscal third quarter of 1995, an increase of $1.9 million.
For the nine months ended June 30, 1996, interest income increased to $6.3
million compared to $3.9 million in the corresponding period of the prior year.
These increases were primarily attributable to the interest income on the funds
due from the Pennsylvania settlement, partially offset by decreased cash and
cash equivalent and short-term investments balances as funds are spent on
construction and equipment for new emissions testing facilities.
There was no income tax benefit on the pretax loss in fiscal third
quarter 1996 compared to an income tax benefit of $1.5 million in fiscal third
quarter 1995 as the Company made an additional valuation allowance of $2.2
million. Income tax expense was $5.5 million for the nine months ended June 30,
1996, compared to income tax benefit of $2.8 million for the corresponding
period of the prior year. The benefit was lower than the combined federal and
state effective tax rate of approximately 39% as a result of recording a
valuation of $9.8 million to fully reserve the deferred tax asset.
Net loss was $(6.3) million in fiscal third quarter 1996 compared to
$(2.4 ) million in fiscal third quarter 1995, an increase of $3.9 million. For
the nine months ended June 30, 1996, net loss was $(17.2) million compared to
$(4.5) million for the corresponding period in fiscal 1995.
LIQUIDITY, CAPITAL RESOURCES AND COMMITMENTS
Cash and cash equivalents, short-term investments and restricted cash
increased to $55.4 million at June 30, 1996 from $49.9 million at September 30,
1995. The increase of $5.5 million was primarily a result of the $25.3 million
received from the Commonwealth of Pennsylvania, the proceeds of $17 million from
the bonds issued by the Company's wholly owned subsidiary, Envirotest Wisconsin,
Inc. in December, 1995 and proceeds of $14.3 million from the bonds issued by
the Company in June 1996 for the Indiana program; partially offset by the
expenditure of $41.3 million for property, plant and equipment primarily
relating to the Ohio and Wisconsin programs, cash used in operating activities
of approximately $6.3 million, and the purchase of the Washington State
subsidiary of Systems Control, Inc. (including the assets of SCI's Indiana
subsidiary) for $4.7 million. On July 31, 1996, the Company received an
additional payment of $44.2 million from the Commonwealth of Pennsylvania under
the terms of the Settlement Agreement.
The Company's primary uses of cash are the funding of the Company's
capital expenditure requirements, payments on capital and operating leases,
interest payments and other working capital needs. The Company's capital and
operating leases currently require minimum
11
<PAGE>
lease payments of approximately $12.3 million in 1996, increasing to
approximately $14.8 million through 1999 and decreasing thereafter as certain
leases are scheduled to expire.
The Company's capital expenditures include maintenance capital
expenditures for existing facilities, and development and construction
expenditures for new emissions facilities. The Company's development and
construction capital expenditures are dependent on the number of contracts it is
awarded, and are only incurred after the contract has been signed. After
signing a contract, the Company may incur significant development and
construction expenditures, which the Company expects to finance with existing
cash resources, internally generated funds, additional borrowings and
alternative financing sources, including leasing alternatives. It generally
takes one to two years after a contract has been signed for a program to begin
operations and generate revenues, depending on the size of the program.
The Company believes that its existing cash resources, additional
proceeds from the Settlement with the Commonwealth of Pennsylvania, cash
generated from operations and alternative financing sources, including leasing
alternatives, will be sufficient to complete implementation of the Indiana
program and to meet its liquidity requirements for the foreseeable future.
Statement of Financial Accounting Standards No. 123 - Accounting for
Stock-Based Compensation will be effective for the first quarter of the
Company's 1997 fiscal year. This statement introduces a fair-value based method
of accounting for stock-based compensation. It encourages, but does not
require, companies to recognize compensation expense for grants of stock, stock
options and other equity instruments to employees based on the new fair-value
accounting rules. Companies that choose not to adopt the new fair-value
accounting rules will be required to disclose pro forma net income and earnings
per share under the new method. Management has not yet determined which method
it will adopt.
12
<PAGE>
ENVIROTEST SYSTEMS CORP.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Proponents of a proposed public initiative ("Proposed Initiative") to
substantially change the enhanced emissions program in Colorado completed
certain of the required procedures to have the Proposed Initiative placed on the
November 1996 ballot. On June 24, 1996, the Colorado Supreme Court blocked the
Proposed Initiative. The Supreme Court reviewed the action taken by the
initiative title setting board in fixing the title, ballot title and submissions
clause, and summary ("Titles and Summary") for the Proposed Initiative. The
Court held that the Titles and Summary did not fairly express the intent and
meaning of the Proposed Initiative, and further held that the fiscal impact
statement was inaccurate. The Supreme Court reversed the action of the board
and remanded the Titles and Summary to the initiative title setting board.
However, Colorado's statutory deadlines for the submission of proposed
initiatives precluded the proponents from placing the proposed initiative on the
November 1996 ballot.
The Company's new contract with the State of Connecticut began January
1, 1995 with enhanced testing scheduled to begin on April 3, 1995. Just prior
to the startup of enhanced testing the State decided to continue the old testing
procedure and phase in the enhanced testing. Additionally, the Company was
unable to build two facilities, one due to the State's inability to provide the
land the contract required and the other due to the inability to obtain zoning.
The State claimed that it was entitled to be paid for the cost savings to the
Company for not having performed the enhanced test and not having built the
facilities. The Company claimed additional costs incurred when the State
unilaterally changed the test. After unsuccessful settlement negotiations, the
Commissioner of Department of Motor Vehicles rendered a decision on February
9, 1996 that the Company owed the State $2.4 million plus other non
quantified amounts for 1995 and additional accruing amounts until the
enhanced test was performed and the facilities built. In accordance with the
contract and to protect its rights, the Company appealed the Commissioner's
decision to binding arbitration at the American Arbitration Association. On
May 1, 1996, prior to the appointment of the arbitrators, the State filed a
complaint in the Superior Court at Hartford to enjoin the arbitration from
going forward claiming that the American Arbitration Association had no power
to administer hearings in this matter. The State has taken no further action
on this matter and no hearing date with regard to the State's complaint has
been scheduled.
On June 24, 1996, Rita Karsai, a former employee in a one test lane
pilot program opened by the Company, filed a complaint in the Sacramento
County Superior Court, case number 96ASO3489, against the Company and three
of its present or former staff employees alleging sexual harassment and
related causes of action. The complaint seeks compensatory and punitive
damages in the total amount of $11 million. The matter has not progressed
sufficiently for the Company to express an opinion respecting the outcome of
this matter.
13
<PAGE>
ITEM 5. OTHER
As previously reported, the Company's employees in its British Columbia
program are represented by a labor union under a collective bargaining agreement
that expired on August 31, 1995. Negotiations on a new collective agreement
ended in February 1996 when the employees began a strike. On July 26, 1996, the
program resumed operations after the employees voted to submit the unresolved
issues to binding arbitration and to return to work. The decision by the panel
of arbitrators was issued on August 12, 1996. The Company believes that the
arbitrators' decision represents a fair resolution of the issues to both
sides. The Company will now begin negotiations with Province officials to
obtain compensation under the terms of its contract for the losses
experienced by the Company during the period of the strike.
14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(4.6) Third Supplemental Indenture dated as of January 30, 1996,
by and among Envirotest Systems Corp., Envirotest
Technologies, Inc., Remote Sensing Technologies, Inc.,
Envirotest Partners, Envirotest Acquisition Co., Systems
Control, Inc., as guarantors, and First Trust National
Association, as trustee, governing the 9 5/8% Senior
Subordinated Notes due 2003 of Envirotest Systems Corp.
(4.7) Second Supplemental Indenture dated as of January 30,
1996, by and among Envirotest Systems Corp., Envirotest
Technologies, Inc., Remote Sensing Technologies, Inc.,
Envirotest Partners, Envirotest Acquisition Co., Systems
Control, Inc., as guarantors, and First Trust National
Association, as trustee, governing the 9 1/8% Senior Notes
due 2001 of Envirotest Systems Corp.
(4.8) Trust Indenture between Indiana Development Finance
Authority and Old National Trust Company, dated June 1,
1996.
(10.106) Agreement between Indiana Department of Environmental
Management and Envirotest Systems Corp. dated June 26, 1996.
(10.107) Loan Agreement between Envirotest Systems Corp. and Indiana
Development Finance Authority, dated June 1, 1996.
(11) Statement of Computation of Per Share Earnings.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1996.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused their report to be signed on their behalf by
the undersigned thereunto duly authorized.
ENVIROTEST SYSTEMS CORP.
------------------------
(Registrant)
ENVIROTEST TECHNOLOGIES, INC.
-----------------------------
(Registrant)
Date: August 12, 1996 /s/F. Robert Miller
----------------------------------------
F. Robert Miller
President and Chief Executive Officer
Date: August 12, 1996 /s/Raj Modi
----------------------------------------
Raj Modi
Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary
(Principal Financial Officer)
16
<PAGE>
ENVIROTEST SYSTEMS CORP.
EXHIBIT INDEX
EXHIBIT
NUMBER: PAGE NO.
- ------- -------
(4.6) Third Supplemental Indenture dated as of January 30, 1996,
by and among Envirotest Systems Corp., Envirotest
Technologies, Inc., Remote Sensing Technologies, Inc.,
Envirotest Partners, Envirotest Acquisition Co., Systems
Control, Inc., as guarantors, and First Trust National
Association, as trustee, governing the 9 5/8% Senior
Subordinated Notes due 2003 of Envirotest Systems Corp.
(4.7) Second Supplemental Indenture dated as of January 30, 1996,
by and among Envirotest Systems Corp., Envirotest
Technologies, Inc., Remote Sensing Technologies, Inc.,
Envirotest Partners, Envirotest Acquisition Co., Systems
Control, Inc., as guarantors, and First Trust National
Association, as trustee, governing the 9 1/8% Senior Notes
due 2001 of Envirotest Systems Corp.
(4.8) Trust Indenture between Indiana Development Finance
Authority and Old National Trust Company, dated June 1,
1996.
(10.106) Agreement between Indiana Department of Environmental
Management and Envirotest Systems Corp. dated June 26, 1996.
(10.107) Loan Agreement between Envirotest Systems Corp. and Indiana
Development Finance Authority, dated June 1, 1996.
(11) Statement of Computation of Per Share Earnings.
(27) Financial Data Schedule.
17
<PAGE>
- --------------------------------------------------------------------------------
Envirotest Systems Corp.
and
the Guarantors named herein
and
First Trust National Association,
Trustee
------------------
THIRD SUPPLEMENTAL INDENTURE
Dated as of January 30, 1996
------------------
$125,000,000
9-5/8% Senior Subordinated Notes
due 2003
- --------------------------------------------------------------------------------
<PAGE>
THIRD SUPPLEMENTAL INDENTURE dated as of January 30, 1996, among ENVIROTEST
SYSTEMS CORP., a Delaware corporation (the "Company"), ENVIROTEST TECHNOLOGIES,
INC., a Delaware corporation (the "Initial Guarantor"), REMOTE SENSING
TECHNOLOGIES, INC., a Delaware corporation ("RST"), ENVIROTEST PARTNERS, a
Pennsylvania partnership (f/k/a Envirotest/Synterra Partners) ("Envirotest
Partners"), ENVIROTEST ACQUISITION CO., a Delaware corporation ("Envirotest
Acquisition"), and SYSTEMS CONTROL, INC., a Washington corporation ("Systems
Control"), and FIRST TRUST NATIONAL ASSOCIATION, a National Association, as
Trustee.
RECITALS
WHEREAS, the Company, the Initial Guarantor and the Trustee entered into an
Indenture, dated as of April 1, 1993 (the "Original Indenture"), pursuant to
which the Company issued $125,000,000 in principal amount of 9-5/8% Senior
Subordinated Notes due 2003 (the "Securities") (capitalized terms used herein
without definition shall have the respective meanings ascribed to them in the
Indenture); and
WHEREAS, the Company, the Initial Guarantor and the Trustee amended the
Original Indenture by entering into a First Supplemental Indenture dated as of
March 16, 1994 in accordance with Section 9.02 of the Original Indenture; and
WHEREAS, the Company, the Initial Guarantor, RST, Envirotest Partners and
the Trustee amended the Original Indenture, as amended, by entering into a
Second Supplemental Indenture dated as of May 28, 1994 in accordance with
Section 9.01 of the Original Indenture (as so supplemented by the First
Supplemental Indenture and the Second Supplemental Indenture, the "Indenture");
and
WHEREAS, on January 22, 1996, the Company formed and capitalized Envirotest
Acquisition as a wholly owned subsidiary; and
WHEREAS, on January 30, 1996, Envirotest Acquisition acquired Systems
Control; and
WHEREAS, Section 9.01 of the Indenture provides that the Company, the
Initial Guarantor and the Trustee may amend or supplement the Indenture without
the consent of any Holders in order to, among other things, add additional
Guarantors pursuant to Section 13.03 of the Indenture; and
WHEREAS, the Company, the Initial Guarantor, the Trustee, Envirotest
Partners, RST, Envirotest Acquisition and Systems Control desire to amend the
Indenture without the consent of any Holders to add each of Envirotest
Acquisition and Systems Control as a Guarantor in accordance with Section 13.03
of the Indenture;
<PAGE>
NOW, THEREFORE, to comply with the provisions of the Indenture and in
consideration of the above premises, the Company, the Initial Guarantor,
Envirotest Partners, RST, Envirotest Acquisition, Systems Control and the
Trustee covenant and agree for the benefit of each other and for the equal and
proportionate benefit of the respective Holders of the Securities as follows:
ARTICLE 1
Section 1.01. This Third Supplemental Indenture is supplemental to the
Indenture and does and shall be deemed to form a part of, and shall be construed
in connection with and as part of, the Indenture for any and all purposes,
including but not limited to discharge of the Indenture as provided in Article 8
of the Indenture.
Section 1.02. Envirotest Acquisition hereby expressly assumes the
obligations of a Guarantor under the Indenture from and after January 30, 1996,
and Systems Control hereby expressly assumes the obligations of a Guarantor
under the Indenture from and after January 30, 1996.
Section 1.03. This Third Supplemental Indenture shall become effective
immediately upon its execution and delivery by each of the Company, the Initial
Guarantor, Envirotest Partners, RST, Envirotest Acquisition, Systems Control and
the Trustee, it being understood that the obligations undertaken in Section 1.02
hereof shall become effective as of the dates indicated in such Section 1.02.
ARTICLE 2
Section 2.01. Except as specifically modified herein, the Indenture and
the Securities are in all respects ratified and confirmed and shall remain in
full force and effect in accordance with their terms.
Section 2.02. Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Third Supplemental Indenture. This
Third Supplemental Indenture is executed and accepted by the Trustee subject to
all the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made
applicable to the Trustee with respect hereto.
Section 2.03. The laws of the State of New York shall govern this Third
Supplemental Indenture without regard to principles of conflicts of law. The
Trustee, the Company, the
-2-
<PAGE>
Initial Guarantor, Envirotest Partners, RST, Envirotest Acquisition and Systems
Control agree to submit to the jurisdiction of the courts of the State of New
York in any action or proceeding arising out of or relating to this Third
Supplemental Indenture.
Section 2.04. The parties may sign any number of copies of this Third
Supplemental Indenture. Each signed copy shall be an original, but all of such
executed copies together shall represent the same agreement.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed, all as of the date first written above.
COMPANY
ENVIROTEST SYSTEMS CORP.
By: /s/ Raj Modi
-------------------------------------
Name: Raj Modi
Title: Vice President
INITIAL GUARANTOR
ENVIROTEST TECHNOLOGIES, INC.
By: /s/ Raj Modi
-------------------------------------
Name: Raj Modi
Title: Vice President
ENVIROTEST PARTNERS
By: ENVIROTEST SYSTEMS CORP.,
its general partner
By: /s/ Raj Modi
-------------------------------------
Name: Raj Modi
Title: Vice President
-3-
<PAGE>
REMOTE SENSING TECHNOLOGIES, INC.
By: /s/ C. Michael Alston
-------------------------------------
Name: C. Michael Alston
Title: Vice President
ENVIROTEST ACQUISITION CO.
By: /s/ C. Michael Alston
-------------------------------------
Name: C. Michael Alston
Title: Secretary
SYSTEMS CONTROL, INC.
By: /s/ C. Michael Alston
-------------------------------------
Name: C. Michal Alston
Title:
TRUSTEE
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: /s/ Richard Prokosch
-------------------------------------
Name: Richard Prokosch
Title: Trust Officer
e:\rk\enviro\indentur\supp3.958
-4-
<PAGE>
- --------------------------------------------------------------------------------
Envirotest Systems Corp.
and
the Guarantors named herein
and
First Trust National Association,
Trustee
--------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of January 30, 1996
--------------------
$200,000,000
9-1/8% Senior Notes
due 2001
- --------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE dated as of January 30, 1996, among
ENVIROTEST SYSTEMS CORP., a Delaware corporation (the "Company"), ENVIROTEST
TECHNOLOGIES, INC., a Delaware corporation (the "Initial Guarantor"), REMOTE
SENSING TECHNOLOGIES, INC., a Delaware corporation ("RST"), ENVIROTEST PARTNERS,
a Pennsylvania partnership (f/k/a Envirotest/Synterra Partners) ("Envirotest
Partners"), ENVIROTEST ACQUISITION CO., a Delaware corporation ("Envirotest
Acquisition"), and SYSTEMS CONTROL, INC., a Washington corporation ("Systems
Control"), and FIRST TRUST NATIONAL ASSOCIATION, a National Association, as
Trustee.
RECITALS
WHEREAS, the Company, the Initial Guarantor and the Trustee entered into an
Indenture, dated as of March 15, 1994 (the "Original Indenture"), pursuant to
which the Company issued $200,000,000 in principal amount of 9-1/8% Senior Notes
due 2001 (the "Securities") (capitalized terms used herein without definition
shall have the respective meanings ascribed to them in the Indenture); and
WHEREAS, the Company, the Initial Guarantor, RST, Envirotest Partners and
the Trustee amended the Original Indenture, as amended, by entering into a First
Supplemental Indenture dated as of May 28, 1994 in accordance with Section 9.01
of the Original Indenture (as so supplemented by the First Supplemental
Indenture, the "Indenture"); and
WHEREAS, on January 22, 1996, the Company formed and capitalized Envirotest
Acquisition as a wholly owned subsidiary; and
WHEREAS, on January 30, 1996, Envirotest Acquisition acquired Systems
Control; and
WHEREAS, Section 9.01 of the Indenture provides that the Company, the
Initial Guarantor and the Trustee may amend or supplement the Indenture without
the consent of any Holders in order to, among other things, add additional
Guarantors pursuant to Section 12.03 of the Indenture; and
WHEREAS, the Company, the Initial Guarantor, the Trustee, Envirotest
Partners, RST, Envirotest Acquisition and Systems Control desire to amend the
Indenture without the consent of any Holders to add each of Envirotest
Acquisition and Systems Control as a Guarantor in accordance with Section 12.03
of the Indenture;
NOW, THEREFORE, to comply with the provisions of the Indenture and in
consideration of the above premises, the Company, the Initial Guarantor,
Envirotest Partners, RST, Envirotest Acquisition, Systems Control and the
Trustee covenant and agree for the benefit of each other and for the equal and
<PAGE>
proportionate benefit of the respective Holders of the Securities as follows:
ARTICLE 1
Section 1.01. This Second Supplemental Indenture is supplemental to the
Indenture and does and shall be deemed to form a part of, and shall be construed
in connection with and as part of, the Indenture for any and all purposes,
including but not limited to discharge of the Indenture as provided in Article 8
of the Indenture.
Section 1.02. Envirotest Acquisition hereby expressly assumes the
obligations of a Guarantor under the Indenture from and after Janury 30, 1996,
and Systems Control hereby expressly assumes the obligations of a Guarantor
under the Indenture from and after January 30, 1996.
Section 1.03. This Second Supplemental Indenture shall become effective
immediately upon its execution and delivery by each of the Company, the Initial
Guarantor, Envirotest Partners, RST, Envirotest Acquisition, Systems Control and
the Trustee, it being understood that the obligations undertaken in Section 1.02
hereof shall become effective as of the dates indicated in such Section 1.02.
ARTICLE 2
Section 2.01. Except as specifically modified herein, the Indenture and
the Securities are in all respects ratified and confirmed and shall remain in
full force and effect in accordance with their terms.
Section 2.02. Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Second Supplemental Indenture. This
Second Supplemental Indenture is executed and accepted by the Trustee subject to
all the terms and conditions set forth in the Indenture with the same force and
effect as if those terms and conditions were repeated at length herein and made
applicable to the Trustee with respect hereto.
Section 2.03. The laws of the State of New York shall govern this Second
Supplemental Indenture without regard to principles of conflicts of law. The
Trustee, the Company, the Initial Guarantor, Envirotest Partners, RST,
Envirotest Acquisition and Systems Control agree to submit to the jurisdiction
of the courts of the State of New York in any action
-2-
<PAGE>
or proceeding arising out of or relating to this Second Supplemental Indenture.
Section 2.04. The parties may sign any number of copies of this Second
Supplemental Indenture. Each signed copy shall be an original, but all of such
executed copies together shall represent the same agreement.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed, all as of the date first written above.
COMPANY
ENVIROTEST SYSTEMS CORP.
By: /s/ Raj Modi
-------------------------------------
Name: Raj Modi
Title: Vice President
INITIAL GUARANTOR
ENVIROTEST TECHNOLOGIES, INC.
By: /s/ Raj Modi
-------------------------------------
Name: Raj Modi
Title: Vice President
ENVIROTEST PARTNERS
By: ENVIROTEST SYSTEMS CORP.,
its general partner
By: /s/ Raj Modi
-------------------------------------
Name: Raj Modi
Title: Vice President
-3-
<PAGE>
REMOTE SENSING TECHNOLOGIES, INC.
By: /s/ C. Michael Alston
-------------------------------------
Name: C. Michael Alston
Title: Vice President
ENVIROTEST ACQUISITION CO.
By: /s/ C. Michael Alston
-------------------------------------
Name: C. Michael Alston
Title: Secretary
SYSTEMS CONTROL, INC.
By: /s/ C. Michael Alston
-------------------------------------
Name: C. Michael Alston
Title:
TRUSTEE
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: /s/ Richard Prokosch
-------------------------------------
Name: Richard Prokosch
Title: Trust Officer
-4-
<PAGE>
TRUST INDENTURE
BETWEEN
INDIANA DEVELOPMENT FINANCE AUTHORITY
AND
OLD NATIONAL TRUST COMPANY
As Trustee
TAXABLE ECONOMIC DEVELOPMENT REVENUE BONDS, SERIES 1996
(ENVIROTEST SYSTEMS CORP. PROJECT)
Dated as of June 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . .13
Section 1.1. Terms Defined . . . . . . . . . . . . . . . . . . . . . .13
Section 1.2. Rules of Interpretation . . . . . . . . . . . . . . . . .15
Section 1.3. Exhibit . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE II. THE BONDS . . . . . . . . . . . . . . . . . . . . . . . .17
Section 2.1. Authorized Amount of Series 1996 Bonds. . . . . . . . . .17
Section 2.2. Issuance of Series 1996 Bonds . . . . . . . . . . . . . .17
Section 2.3. Payment on Bonds. . . . . . . . . . . . . . . . . . . . .18
Section 2.4. Execution; Limited Obligation . . . . . . . . . . . . . .18
Section 2.5. Authentication. . . . . . . . . . . . . . . . . . . . . .18
Section 2.6. Form of Bonds . . . . . . . . . . . . . . . . . . . . . .19
Section 2.7. Delivery of Series 1996 Bonds . . . . . . . . . . . . . .19
Section 2.8. Reserved. . . . . . . . . . . . . . . . . . . . . . . . .19
Section 2.9. Mutilated, Lost, Stolen, or Destroyed Bonds . . . . . . .19
Section 2.10. Registration and Exchange of Bonds; Persons
Treated as Owners . . . . . . . . . . . . . . . . . . . .20
ARTICLE III. APPLICATION OF SERIES 1996 BOND PROCEEDS. . . . . . . . . . .22
Section 3.1. Deposit of Funds. . . . . . . . . . . . . . . . . . . . .22
ARTICLE IV. REVENUE AND FUNDS. . . . . . . . . . . . . . . . . . . . . . .23
Section 4.1. Source of Payment of Bonds. . . . . . . . . . . . . . . .23
Section 4.2. Revenue Fund. . . . . . . . . . . . . . . . . . . . . . .23
Section 4.3. Bond Fund . . . . . . . . . . . . . . . . . . . . . . . .24
Section 4.4. Construction Fund . . . . . . . . . . . . . . . . . . . .24
Section 4.5. Creation of Debt Service Reserve Fund . . . . . . . . . .26
Section 4.6. Creation and Operation of Guaranty Account. . . . . . . .28
Section 4.7. Trust Funds . . . . . . . . . . . . . . . . . . . . . . .28
Section 4.8. Investment. . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE V. REDEMPTION OF SERIES 1996 BONDS BEFORE MATURITY . . . . . . . .30
Section 5.1. Optional Redemption of Series 1996 Bonds. . . . . . . . .30
Section 5.2. Mandatory Redemption of Series 1996 Bonds . . . . . . . .30
Section 5.3. Notice of Redemption. . . . . . . . . . . . . . . . . . .30
i
<PAGE>
Section 5.4. Cancellation. . . . . . . . . . . . . . . . . . . . . . .30
Section 5.5. Redemption Payments . . . . . . . . . . . . . . . . . . .30
Section 5.6. Partial Redemption of Bonds . . . . . . . . . . . . . . .31
ARTICLE VI. GENERAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . .32
Section 6.1. Payment of Principal and Interest . . . . . . . . . . . .32
Section 6.2. Performance of Covenants. . . . . . . . . . . . . . . . .32
Section 6.3. Ownership; Instruments of Further Assurance . . . . . . .32
Section 6.4. Recordation of Indenture, Loan Agreement and Security
Instruments . . . . . . . . . . . . . . . . . . . . . . .33
Section 6.5. Inspection of Books . . . . . . . . . . . . . . . . . . .33
Section 6.6. List of Bondholders . . . . . . . . . . . . . . . . . . .33
Section 6.7. Rights Under Loan Agreement . . . . . . . . . . . . . . .33
Section 6.8. Investment of Funds . . . . . . . . . . . . . . . . . . .33
Section 6.9. Non-presentment of Bonds. . . . . . . . . . . . . . . . .34
Section 6.10. Direction of Bondholders. . . . . . . . . . . . . . . . .34
ARTICLE VII. DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . .35
Section 7.1. Events of Defaults. . . . . . . . . . . . . . . . . . . .35
Section 7.2. Acceleration. . . . . . . . . . . . . . . . . . . . . . .36
Section 7.3. Remedies; Rights of Bondholders . . . . . . . . . . . . .36
Section 7.4. Right of Bondholders or the Issuer to
Direct Proceedings. . . . . . . . . . . . . . . . . . . .37
Section 7.5. Application of Moneys . . . . . . . . . . . . . . . . . .37
Section 7.6. Remedies Vested In Trustee. . . . . . . . . . . . . . . .38
Section 7.7. Rights and Remedies of Bondholders. . . . . . . . . . . .39
Section 7.8. Termination of Proceedings. . . . . . . . . . . . . . . .39
Section 7.9. Waivers of Events of Default. . . . . . . . . . . . . . .39
Section 7.10. Company's Right of Possession and Use of Mortgaged
Property. . . . . . . . . . . . . . . . . . . . . . . . .40
Section 7.11. Waiver of Redemption; Effect of Sale of Mortgaged
Property. . . . . . . . . . . . . . . . . . . . . . . . .40
Section 7.12. Cooperation of Issuer . . . . . . . . . . . . . . . . . .40
ARTICLE VIII. THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 8.1. Acceptance of the Trusts. . . . . . . . . . . . . . . . .41
Section 8.2. Fees, Charges and Expenses of Trustee . . . . . . . . . .43
Section 8.3. Notice to Bondholders if Default Occurs . . . . . . . . .43
Section 8.4. Intervention by Trustee . . . . . . . . . . . . . . . . .43
Section 8.5. Successor Trustee . . . . . . . . . . . . . . . . . . . .44
Section 8.6. Resignation by the Trustee. . . . . . . . . . . . . . . .44
Section 8.7. Removal of the Trustee. . . . . . . . . . . . . . . . . .44
ii
<PAGE>
Section 8.8. Appointment of Successor Trustee by the Bondholders;
Temporary Trustee . . . . . . . . . . . . . . . . . . . .44
Section 8.9. Concerning Any Successor Trustees . . . . . . . . . . . .45
Section 8.10. Trustee Protected in Relying Upon Resolutions, etc. . . .45
Section 8.11. Successor Trustee as Trustee of Funds, Paying
Agent and Bond Registrar. . . . . . . . . . . . . . . . .45
ARTICLE IX. SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . .46
Section 9.1. Supplemental Indentures Not Requiring Consent of
Bondholders . . . . . . . . . . . . . . . . . . . . . . .46
Section 9.2. Supplemental Indentures Requiring Consent of
Bondholders . . . . . . . . . . . . . . . . . . . . . . .46
ARTICLE X. AMENDMENTS TO THE LOAN AGREEMENT. . . . . . . . . . . . .48
Section 10.1. Amendments, etc., to Loan Agreement Not
Requiring Consent of Bondholders. . . . . . . . . . . . .48
Section 10.2. Amendments, etc., to Loan Agreement Requiring
Consent of Bondholders. . . . . . . . . . . . . . . . . .48
Section 10.3. No Amendment May Alter Notes. . . . . . . . . . . . . . .48
ARTICLE XI. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . .49
Section 11.1. Satisfaction and Discharge. . . . . . . . . . . . . . . .49
Section 11.2. Application of Trust Money. . . . . . . . . . . . . . . .49
Section 11.3. Consents, etc., of Bondholders. . . . . . . . . . . . . .50
Section 11.4. Limitation of Rights. . . . . . . . . . . . . . . . . . .50
Section 11.5. Severability. . . . . . . . . . . . . . . . . . . . . . .51
Section 11.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . .51
Section 11.7. Trustee as Paying Agent and Registrar . . . . . . . . . .51
Section 11.8. Counterparts. . . . . . . . . . . . . . . . . . . . . . .52
Section 11.9. Applicable Law. . . . . . . . . . . . . . . . . . . . . .52
Section 11.10. Immunity of Officers and Directors. . . . . . . . . . . .52
Section 11.11. Holidays. . . . . . . . . . . . . . . . . . . . . . . . .52
EXHIBIT A THE INDUSTRIAL DEVELOPMENT FACILITIES . . . . . . . . . .57
EXHIBIT B FORM OF AMENDMENT . . . . . . . . . . . . . . . . . . . .59
iii
<PAGE>
TRUST INDENTURE
THIS TRUST INDENTURE dated as of the first day of June, 1996, by and
between the INDIANA DEVELOPMENT FINANCE AUTHORITY (the "Issuer"), a body
corporate and politic organized under the laws of the State of Indiana, and OLD
NATIONAL TRUST COMPANY, a chartered corporate trust company duly organized,
existing and authorized to accept and execute trusts of the character herein set
out under the laws of the United States of America, with its principal office in
Evansville, Indiana, as Trustee (the "Trustee");
WITNESSETH:
WHEREAS, the Indiana Code, Title 4, Article 4, Chapters 10.9 and 11 (the
"Act"), has been enacted by the General Assembly of Indiana; and
WHEREAS, the Act declares that the financing of industrial development
projects constitutes a public purpose; and
WHEREAS, the Act provides that the Issuer is authorized to issue bonds and
loan the proceeds thereof for the purpose of financing the costs of acquisition,
construction, or installation of industrial development projects, including
land, machinery, equipment, or any combination thereof, for the public purpose
of promoting opportunities for gainful employment and business opportunities
which will be of public benefit to the health, safety, morals, and general
welfare of the State of Indiana and its citizens; and
WHEREAS, the Act provides that such bonds may be secured by a trust
indenture between the Issuer and a corporate trustee; and
WHEREAS, the Issuer intends to issue its Taxable Economic Development
Revenue Bonds, Series 1996 (Envirotest Systems Corp. Project) in the aggregate
principal amount of $14,345,000 (the "Series 1996 Bonds") pursuant to this Trust
Indenture in order to obtain funds to lend to Envirotest Systems Corp., a
Delaware corporation (the "Company"), pursuant to the Loan Agreement, Mortgage,
Security Agreement and Financing Statement dated as of June 1, 1996 (the "Loan
Agreement" or the "Mortgage") between the Issuer and the Company; and
WHEREAS, the Loan Agreement provides for the repayment by the Company of
the loan of the proceeds of the Series 1996 Bonds and further provides (i) for
the Company's repayment obligation to be evidenced by the First Mortgage Note,
Series 1996 (the "Series 1996 Note") in substantially the form attached thereto
as "Exhibit B," and (ii) for such loan and the Series 1996 Note to be secured by
the lien and security interest therein provided for; and
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WHEREAS, pursuant to this Indenture, the Issuer will endorse the Series
1996 Note without recourse and assign certain of its rights under the Loan
Agreement as security for the Series 1996 Bonds on a PARI PASSU basis which are
payable from and secured exclusively by a pledge of the Trust Estate (as defined
herein); and
WHEREAS, the execution and delivery of this Trust Indenture (hereinafter
sometimes referred to as the "Indenture"), and the issuance of the Series 1996
Bonds hereunder have been in all respects duly and validly authorized by
resolutions duly passed and approved by the Issuer; and
WHEREAS, the Series 1996 Bonds and the Trustee's certificate of
authentication to be endorsed thereon are all to be in substantially the
following forms and Trustee's certificate of authentication are also to be in
substantially the following forms with necessary and appropriate variations,
omissions and insertions as permitted or required by this Indenture, to-wit:
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<PAGE>
(Form of Series 1996 Bond)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY (AS DEFINED
HEREIN) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) IN AN AMOUNT EQUAL TO
$100,000 OR MORE, TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D), (E) OR (F),
A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE
OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE.
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<PAGE>
UNITED STATES OF AMERICA
STATE OF INDIANA
INDIANA DEVELOPMENT FINANCE AUTHORITY
TAXABLE ECONOMIC DEVELOPMENT REVENUE BOND, SERIES 1996
(ENVIROTEST SYSTEMS CORP. PROJECT)
Principal Amount: $14,345,000
Issue Date: June 27, 1996
Maturity Date: June 1, 2006
Registered Owner: The Sumitomo Bank, Limited, Acting Through Its Chicago Branch
CUSIP: 454909 CN 0
The Indiana Development Finance Authority (the "Issuer"), a body corporate
and politic organized under the laws of the State of Indiana, for value
received, hereby promises to pay in lawful money of the United States of America
to the Registered Owner listed above, but from the payments on the Note
hereinafter referred to pledged and assigned for the payment hereof and funds in
the Debt Service Reserve Fund (as defined in the Indenture hereinafter defined),
the Principal Amount set forth above in quarterly installments as set forth
below, unless this Series 1996 Bond shall have previously been called for
redemption and payment of the redemption price made or provided for or unless
payments shall be accelerated as provided in the Indenture, and to pay interest
on the unpaid principal amount hereof in like money, but solely from said
payments, at a fixed rate of 7.82% per annum, which rate will be in effect to
the final maturity of this Series 1996 Bond. Interest shall be calculated on the
basis of a 360-day year consisting of twelve (12) thirty-day months.
The Series 1996 Bonds shall bear interest from the Issue Date and interest
shall be payable on a quarterly basis on each March 1, June 1, September 1 and
December 1, commencing September 1, 1996. Principal on the Series 1996 Bonds
shall be payable on each March 1, June 1, September 1 and December 1 of each
year in accordance with the following schedule:
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Year Amount Year Amount
- ---- ------ ---- ------
June 1, 1997 $270,000 March 1, 2002 $385,000
September 1, 1997 275,000 June 1, 2002 395,000
December 1, 1997 280,000 September 1, 2002 400,000
March 1, 1998 285,000 December 1, 2002 410,000
June 1, 1998 290,000 March 1, 2003 420,000
September 1, 1998 295,000 June 1, 2003 425,000
December 1, 1998 300,000 September 1, 2003 435,000
March 1, 1999 305,000 December 1, 2003 445,000
June 1, 1999 315,000 March 1, 2004 450,000
September 1, 1999 320,000 June 1, 2004 460,000
December 1, 1999 325,000 September 1, 2004 470,000
March 1, 2000 330,000 December 1, 2004 480,000
June 1, 2000 340,000 March 1, 2005 490,000
September 1, 2000 345,000 June 1, 2005 495,000
December 1, 2000 350,000 September 1, 2005 505,000
March 1, 2001 360,000 December 1, 2005 515,000
June 1, 2001 365,000 March 1, 2006 525,000
September 1, 2001 370,000 June 1, 2006 540,000
December 1, 2001 380,000
The final payment of this Series 1996 Bond is payable at the office of Old
National Trust Company, as Trustee, in the City of Evansville, Indiana, or at
the principal office of any successor trustee or paying agent. All other
payments hereon will be made by the Trustee by check mailed one business day
prior to each payment date to the Registered Owner hereof at the address shown
on the registration books of the Trustee as maintained by the Trustee, as
registrar; provided, however, that for so long as the Original Purchaser owns
all of the Series 1996 Bonds, payments of principal of and interest on the
Series 1996 Bonds shall be made by wire transfer of immediately available funds
on each payment date to the account and pursuant to wire transfer instructions
provided by the Original Purchaser to the Trustee in writing.
This Series 1996 Bond is one of the Issuer's Taxable Economic Development
Revenue Bonds, Series 1996 (Envirotest Systems Corp. Project) (hereinbefore and
hereinafter the "Series 1996 Bonds") which are being issued under the
hereinafter described Indenture in the aggregate principal amount of
$14,345,000. The Series 1996 Bonds are being issued for the purpose of providing
funds to finance industrial development projects of Envirotest Systems Corp., a
Delaware corporation (the "Company"), by lending such funds to the Company
pursuant to the Loan Agreement, Mortgage, Security Agreement and Financing
Statement dated as of June 1, 1996 (the "Loan Agreement" or the "Mortgage")
between the Company and the Issuer which prescribes the terms and conditions
under which the Company shall repay such loan and pursuant to which the Company
will execute and deliver to the Issuer its First Mortgage Note, Series 1996 (the
"Series 1996 Note") in a principal amount equal to the principal amount of such
Series 1996 Bonds in order to evidence such loan. The Loan Agreement creates a
Lien on and a
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security interest in the Mortgaged Property, as therein defined, as security for
the Series 1996 Note.
The Series 1996 Bonds are issued under and entitled to the security of a
Trust Indenture dated as of June 1, 1996 (hereinafter referred to as the
"Indenture") duly executed and delivered by the Issuer to Old National Trust
Company, Evansville, Indiana, as Trustee (the term "Trustee" where used herein
referring to said Trustee or its successors), pursuant to which Indenture the
Series 1996 Note and all rights of the Issuer under the Mortgage, except the
rights to payment for expenses, indemnity rights and certain other rights and
interests described therein, are pledged and assigned by the Issuer to the
Trustee as security for the Series 1996 Bonds.
The Issuer and the Trustee may deem and treat the Registered Owner hereof
as the absolute owner hereof for the purpose of receiving payment of or on
account of principal hereof and premium, if any, hereon and interest due hereon
and for all other purposes and neither the Issuer nor the Trustee nor any paying
agent shall be affected by any notice to the contrary.
The Series 1996 Bonds are subject to optional redemption at any time prior
to their stated maturity date at the option of the Issuer, upon the direction of
the Company, in whole or in part, in multiples of $200,000 and integral
multiples of $5,000 in excess thereof at the redemption price of 100% of the
principal amount to be redeemed, plus a premium equal to the Breakage Amount as
defined in the Indenture, plus accrued interest thereon to the redemption date.
The Series 1996 Bonds are subject to mandatory redemption, in whole or in
part, at any time proceeds become available from excess Construction Fund
moneys, the sale proceeds of Mortgaged Property in certain circumstances and
the proceeds of title insurance, damage and condemnation awards in certain
circumstances, and further shall be redeemed in whole at any time but not
later than one year after the termination of the IDEM Contract (as defined in
the Indenture) as a result of the breach thereof by the Company, in multiples
of $200,000 and integral multiples of $5,000 in excess thereof, at the
redemption price of 100% of the principal amount to be redeemed, plus a
premium equal to the Breakage Amount as defined in the Indenture, plus
accrued interest thereon to the date of redemption.
In the event of partial redemption of the Series 1996 Bonds, the serial
maturities of the Series 1996 Bonds shall be redeemed on a prorata basis based
on the ratio which the Outstanding principal amount of each serial maturity
bears to the aggregate principal amount Outstanding on the Series 1996 Bonds on
the date set for redemption.
In the event any of the Bonds are called for redemption as aforesaid,
notice thereof identifying the Bonds to be redeemed will be given by mailing a
copy of the redemption notice by first class mail not less than thirty (30) days
nor more than sixty (60) days prior to the date fixed for redemption to the
Registered Owner of the Bonds to be redeemed at the address shown on the
registration books; provided, however, that failure to give such notice by
mailing, or any
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<PAGE>
defect therein with respect to any registered Bond, shall not affect the
validity of any proceedings for the redemption of other Bonds.
All Bonds so called for redemption will cease to bear interest on the
specified redemption date, provided funds for their redemption are on deposit at
the place of payment at that time, and shall no longer be protected by the
Indenture and shall not be deemed to be outstanding under the provisions of the
Indenture.
THIS BOND DOES NOT REPRESENT OR CONSTITUTE A DEBT OF THE ISSUER, THE STATE
OF INDIANA OR ANY POLITICAL SUBDIVISION OR TAXING AUTHORITY THEREOF. NEITHER
THE FAITH AND CREDIT NOR THE TAXING POWER, IF ANY, OF THE ISSUER, THE STATE OF
INDIANA OR ANY POLITICAL SUBDIVISION OR TAXING AUTHORITY THEREOF IS PLEDGED TO
THE PAYMENT OF PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THIS BOND. THE
HOLDERS OR OWNERS OF THIS BOND HAVE NO RIGHT TO HAVE TAXES LEVIED BY THE ISSUER,
THE STATE OF INDIANA OR ANY POLITICAL SUBDIVISION OR TAXING AUTHORITY THEREOF
FOR THE PAYMENT OF THE PRINCIPAL OF OR PREMIUM (IF ANY) OR INTEREST ON THIS
BOND. THE ISSUER HAS NO TAXING POWER. PRINCIPAL OF AND PREMIUM (IF ANY) AND
INTEREST ON THIS BOND ARE PAYABLE SOLELY FROM THE REVENUES PLEDGED PURSUANT TO
THE INDENTURE (AS HEREINAFTER DEFINED).
The Bonds are special limited obligations of the Issuer payable from the
payments to be made on the Notes and from amounts in the Debt Service Reserve
Fund. This Bond and the other Bonds, both as to principal, premium, if any, and
interest, do not constitute a debt, liability or loan of the credit of the State
of Indiana ("State") or any political subdivision or taxing authority thereof
under the constitution or statutes of the State or a pledge of the faith and
credit or the taxing power of the State or any political subdivision or taxing
authority thereof. The issuance of the Bonds under the provisions of the Act
does not, directly, indirectly or contingently, obligate the State or any
political subdivision or taxing authority thereof to levy any form of taxation
for the payment thereof or to make any appropriation for their payment and such
Bonds do not now and shall never constitute a debt of the Issuer, the State or
any political subdivision or taxing authority thereof within the meaning of the
constitution or the statutes of the State and do not now and shall never
constitute a charge against the credit of the State or any political subdivision
or taxing authority thereof or a charge against the taxing power of the State or
any political subdivision or taxing authority thereof. The Issuer has no taxing
power. Neither the State nor any agent, attorney, member, director, officer or
employee of the State or of the Issuer shall in any event be liable for the
payment of the principal of, premium, if any, or interest on the Bonds or for
the performance of any pledge, mortgage, obligation or agreement of any kind
whatsoever which may be undertaken by the Issuer. No breach by the Issuer of any
such pledge, mortgage, obligation or agreement may impose any liability,
pecuniary or otherwise, upon the State or any agent, employee, attorney,
director, officer or member of the State or of the Issuer, or any charge upon
their general credit or upon the taxing power of the State.
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<PAGE>
This Bond shall not constitute the personal obligation, either jointly or
severally, of the of the Issuer or of any agent, attorney, director, officer,
employee or official of the Issuer.
The holder of this Series 1996 Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any event of default under the
Indenture, or to institute, appear in or defend any suit or other proceedings
with respect thereto, except as provided in the Indenture. In certain events, on
the conditions, in the manner and with the effect set forth in the Indenture,
the principal of all the Bonds issued under the Indenture and then outstanding
may become or may be declared due and payable before the stated maturity
thereof, together with interest accrued thereon. Modifications or alterations of
the Indenture, or of any supplements thereto, may be made to the extent and in
the circumstances permitted by the Indenture.
It is hereby certified that all conditions, acts and things required to
exist, happen and be performed under the laws of the State of Indiana and under
the Indenture precedent to and in the issuance of this Series 1996 Bond, exist,
have happened and have been performed, and that the issuance, authentication and
delivery of this Series 1996 Bond have been duly authorized by the Issuer.
This Series 1996 Bond shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been duly executed by the
Trustee.
IN WITNESS WHEREOF, the Indiana Development Finance Authority has caused
this Series 1996 Bond to be executed in its name and on its behalf by the manual
or facsimile signature of its Vice Chairman and its corporate seal to be
hereunto affixed manually or by facsimile and attested to by the manual or
facsimile signature of its Executive Director, all as of June 1, 1996.
INDIANA DEVELOPMENT FINANCE
AUTHORITY
By
---------------------------------
Vice Chairman
(Seal)
Attest:
- -----------------------
Executive Director
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(Form of Trustee's Certificate of Authentication)
This Series 1996 Bond is one of the Series 1996 Bonds described in the
withIn mentioned Trust Indenture.
OLD NATIONAL TRUST COMPANY, as
Trustee
By
---------------------------------
Authorized Officer
Date of Authentication and
Delivery:
-----------------------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
___________________________________ (Please Print or Typewrite Name and Address)
the within Series 1996 Bond and all rights, title and interest thereon, and
hereby irrevocably constitutes and appoints ________________ attorney to
transfer the within Series 1996 Bond on the books kept for registration thereof,
with full power of substitution in the premises.
-----------------------------------
Dated:
----------------------------
SIGNATURE GUARANTEED:
- ---------------------------------- -----------------------------------
NOTICE: Signature(s) must be guaranteed NOTICE: The signature to this
by an eligible guarantor institution assignment must correspond with the
participating in a Securities Transfer name of the registered owner as it
Association recognized signature appears upon the face of the within
guarantee program. Series 1996 Bond in every
particular, without alteration or
enlargement or any change whatever.
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<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF TRAN MIN ACT -- _______________________Custodian__________________
(Cust) (Minor)
under Uniform Transfers to Minors Act
------------------------------------------
(State)
TEN COM -- as tenants in common
JT TEN -- as joint tenants with right
of survivorship and not as
tenants in common
Additional abbreviations may also be
used though not in the above list.
(End of Bond Form)
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<PAGE>
NOW, THEREFORE, THIS INDENTURE WITNESSTH: That in order to secure the
payment of the principal of and interest and premium, if any, on the Bonds to be
issued under this Indenture according to their tenor, purport and effect, and in
order to secure the performance and observance of all the covenants and
conditions herein and in said Bonds contained, 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 mutual covenants herein
contained, of the acceptance by the Trustee of the trust hereby created, and of
the purchase and acceptance of the Bonds by the holders or obligees thereof, the
Issuer has executed and delivered this Indenture, and by these presents does
hereby convey, grant, assign, pledge and grant a security interest in, unto the
Trustee, its successor or successors and its or their assigns forever, with
power of sale, all and singular, the property, real and personal hereinafter
described (the "Trust Estate"):
GRANTING CLAUSE
DIVISION I
The Series 1996 Note, which has been endorsed by the Issuer to the order of
the Trustee and pledged by the Issuer to the Trustee, and all sums payable in
respect of the indebtedness evidenced thereby;
DIVISION II
All right, title and interest of the Issuer in and to the Loan Agreement
(except the rights reserved to the Issuer and referred to in Section 3.1
thereof) and the Mortgaged Property referred to therein, which Mortgage will be
recorded and filed concurrently with the recording and filing of this Indenture
in the office of the Recorders of Lee County, Porter County, Floyd County and
Clark County, Indiana, as appropriate upon the acquisition of each Project Site;
DIVISION III
All moneys and securities from time to time held by Trustee under the terms
of the Loan Agreement or this Indenture (except moneys or Qualified Investments
deposited with Trustee pursuant to Section 11.1 hereof) and any and all other
real or personal property of every name and nature from time to time hereafter
by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned, or
transferred as and for additional security hereunder by Issuer, Company or by
anyone on their behalf, or with their written consent to Trustee which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof;
SUBJECT, HOWEVER, to Permitted Encumbrances, as defined in the Mortgage;
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TO HAVE AND TO HOLD the same unto the Trustee, and its successor or
successors and its or their assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, to
secure the payment of the Bonds to be issued hereunder, and premium, if any,
payable upon redemption or prepayment thereof, and the interest payable thereon,
and to secure also the observance and performance of all the terms, provisions,
covenants and conditions of this Indenture, and for the benefit and security of
all and singular the holders of all Bonds issued hereunder, and it is hereby
mutually covenanted and agreed that 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 moneys and revenues are to be held
and disbursed, are as follows:
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ARTICLE I.
DEFINITIONS
Section 1.1. TERMS DEFINED. In addition to the words and terms elsewhere
defined in this Indenture, the following words and terms as used in this
Indenture shall have the following meanings unless the context or use indicates
another or different meaning or intent:
"Bonds" means the Series 1996 Bonds issued under this Indenture and any
replacements thereof pursuant to this Indenture.
"Bond Fund" means the Bond Fund established pursuant to Section 4.3 hereof.
"Bond Placement Agreement" means the Bond Placement Agreement dated June
27, 1996, among the Issuer, the Company, Charles Eden & Company and the Original
Purchaser.
"Breakage Amount" means if amounts are transferred to the Redemption
Account in order to redeem any principal amount of the Series 1996 Bonds before
their scheduled due date (whether as the result of an acceleration, voluntary
prepayment, mandatory prepayment or otherwise) and to effect a prepayment of a
portion of the Series 1996 Note, the amount equal to the actual cost to the
Original Purchaser to break any interest rate swap agreement then in place with
respect to the Bonds.
"Company" means Envirotest Systems Corp., a corporation duly organized and
validly existing under the laws of the State of Delaware and in good standing in
the State of Indiana, or any successors thereto permitted under Section 3.5 of
the Loan Agreement.
"Construction Fund" means the Construction Fund established pursuant to
Section 4.4 hereof.
"Event of Default" means those events of default specified in and defined
by Section 7.1 hereof.
"Debt Service Requirement" means for a specified period:
(i) amounts needed to pay scheduled payments of principal of the Bonds
during such period pursuant to the Indenture;
(ii) amounts needed to pay interest on the Bonds payable during such
period;
(iii) to the extent not duplicative of (i) or (ii) above, amounts
needed to be paid during such period to restore the amounts on deposit in Debt
Service Reserve Fund to the Fully Funded level; and
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<PAGE>
(iv) amounts needed to pay the Trustee fees and expenses during such
period.
"Debt Service Reserve Fund" means the Debt Service Reserve Fund established
pursuant to Section 4.5 hereof.
"Fully Funded" means with respect to the Debt Service Reserve Fund
$2,119,651.98, the amount equal to the maximum annual debt service on the
Outstanding Bonds.
"Gross Revenues" means the amounts paid by IDEM pursuant to the IDEM
Contract.
"Guaranty Account" means the Guaranty Account established in Section 4.6
hereof.
"Guaranty Fund" means the Industrial Development Project Guaranty Fund
created pursuant to I.C. 4-4-11-16(a).
"IDEM" means the Indiana Department of Environmental Management.
"IDEM Contract" means the contract for contractor services for
implementation, operation, and assistance in administration of a centralized
vehicle emissions testing program, between the Company and IDEM, including
without limitation all amendments and modifications thereto and all change
orders and waivers issued thereunder.
"Indenture" means this instrument as originally executed or as it may be
amended or supplemented from time to time pursuant to Article IX.
"Interest Payment Dates" means March 1, June 1, September 1 and December 1
of each year that the Bonds are Outstanding and interest and/or principal
payments are due thereon.
"Issuer" means the Indiana Development Finance Authority, and its
successors.
"Loan" means the loan by the Issuer to the Company of the proceeds received
from the sale of the Series 1996 Bonds and evidenced by the Series 1996 Note.
"Loan Payments" means the amounts required to be paid by the Company in
repayment of the Loan or otherwise pursuant to the provisions of the Series 1996
Note and Article III of the Loan Agreement.
"Mortgage" or "Loan Agreement" means the Loan Agreement, Mortgage, Security
Agreement and Financing Statement, dated as of June 1, 1996, between the Company
and the Issuer and all amendments and supplements thereto.
"Opinion of Counsel" shall mean an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Company and who shall be
satisfactory to the Trustee in its reasonable discretion.
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<PAGE>
"Original Purchaser" means The Sumitomo Bank, Limited, acting through its
Chicago branch, the original purchaser of the Series 1996 Bonds.
"Outstanding" or "Bonds Outstanding" means all Bonds which have been duly
authenticated, and delivered by the Trustee under this Indenture, except:
(a) Bonds cancelled after purchase in the open market or because of
payment at or redemption prior to maturity;
(b) Bonds for the redemption of which cash or investments (but only
to the extent that the full faith and credit of the United States of
America are pledged to the timely payment thereof) shall have been
theretofore deposited with the Trustee (whether upon or prior to the
maturity or redemption date of any such Bonds); provided that if such Bonds
are to be redeemed prior to the maturity thereof, notice of such redemption
shall have been given or arrangements satisfactory to the Trustee shall
have been made therefor, or waiver of such 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 2.9.
"Requisite Bondholders" means the holders of 66 2/3 % in aggregate
principal amount of Bonds Outstanding.
"Series 1996 Bonds" means the Indiana Development Finance Authority Taxable
Economic Development Revenue Bonds, Series 1996 (Envirotest Systems Corp.
Project) in the aggregate principal amount of $14,345,000.
"Series 1996 Note" shall have the meaning assigned in the Loan Agreement.
"State" means the State of Indiana.
"Trustee" means Old National Trust Company, Evansville, Indiana, the party
of the second part hereto, and any successor trustee or co-trustee.
Section 1.2. RULES OF INTERPRETATION. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) "This Indenture" means this instrument as originally executed and
as it may from time to time be supplemented or amended pursuant to the
applicable provisions hereof.
(2) All references in this instrument to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this instrument as originally executed. The words
"herein," "hereof" and "hereunder" and
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<PAGE>
other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
(3) The terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular and the
singular as well as the plural.
(4) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as consistently applied.
(5) Any terms not defined herein but defined in the Loan Agreement
shall have the same meaning herein.
(6) The terms defined elsewhere in this Indenture shall have the
meanings therein prescribed for them.
Section 1.3. EXHIBIT. The following Exhibit is attached to and by
reference made a part of this Indenture:
Exhibit A: Description of the property being mortgaged.
Exhibit B: Form of Amendment to Indenture.
(End of Article I)
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ARTICLE II.
THE BONDS
Section 2.1. AUTHORIZED AMOUNT OF SERIES 1996 BONDS. No Bonds may be
issued under the provisions of this Indenture except in accordance with this
Article. The principal amount of the Series 1996 Bonds (other than Bonds issued
in substitution therefor pursuant to Section 2.9 hereof) that may be issued is
hereby expressly limited to $14,345,000.
Section 2.2. ISSUANCE OF SERIES 1996 BONDS. The Series 1996 Bonds shall
be designated "Taxable Economic Development Revenue Bonds, Series 1996
(Envirotest Systems Corp. Project)." The Series 1996 Bonds shall be originally
issuable as fully registered Bonds without coupons in the denomination of
$100,000 and $5,000 increments in excess thereof and shall be lettered and
numbered R-1 and upward. Payments to all Bondholders shall be by check or draft
drawn on the main office of the Trustee and mailed to such Bondholder one
business day prior to each Interest Payment Date; provided, however, that for so
long as the Original Purchaser owns all of the Series 1996 Bonds, payments of
principal of, premium, if any, and interest on the Series 1996 Bonds shall be
made by wire transfer of immediately available funds on each Interest Payment
Date to the account and pursuant to wire transfer instructions provided by the
Original Purchaser to the Trustee in writing. The Series 1996 Bonds shall be
dated the date of delivery thereof. The Series 1996 Bonds shall bear interest at
the rate of 7.82 % per annum from the date of delivery thereof to the final
maturity of the Series 1996 Bonds. Interest shall be computed on the basis of a
360 day year consisting of twelve 30-day months.
The Series 1996 Bonds shall bear interest from the date of issuance thereof
and shall be payable on a quarterly basis on each March 1, June 1, September 1
and December 1, commencing September 1, 1996 until paid in full. Principal on
the Series 1996 Bonds shall be payable on a quarterly basis on March 1, June 1,
September 1 and December 1 of each year in accordance with the following
schedule:
Year Amount Year Amount
- ---- ------ ---- ------
June 1, 1997 $270,000 March 1, 2002 $385,000
September 1, 1997 275,000 June 1, 2002 395,000
December 1, 1997 280,000 September 1, 2002 400,000
March 1, 1998 285,000 December 1, 2002 410,000
June 1, 1998 290,000 March 1, 2003 420,000
September 1, 1998 295,000 June 1, 2003 425,000
December 1, 1998 300,000 September 1, 2003 435,000
March 1, 1999 305,000 December 1, 2003 445,000
June 1, 1999 315,000 March 1, 2004 450,000
September 1, 1999 320,000 June 1, 2004 460,000
December 1, 1999 325,000 September 1, 2004 470,000
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March 1, 2000 330,000 December 1, 2004 480,000
June 1, 2000 340,000 March 1, 2005 490,000
September 1, 2000 345,000 June 1, 2005 495,000
December 1, 2000 350,000 September 1, 2005 505,000
March 1, 2001 360,000 December 1, 2005 515,000
June 1, 2001 365,000 March 1, 2006 525,000
September 1, 2001 370,000 June 1, 2006 540,000
December 1, 2001 380,000
Section 2.3. PAYMENT ON BONDS. The principal of, 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 respective dates of payment thereof, is legal
tender for the payment of public and private debts. The final payments on the
Series 1996 Bonds shall be payable at the principal corporate trust office of
the Trustee. All other payments on the Series 1996 Bonds shall be made to
the person appearing on the Bond registration books of the Trustee as the
registered owner of the Series 1996 Bonds by check or draft mailed to the
Registered Owner thereof as shown on the registration books of the Trustee.
Section 2.4. EXECUTION; LIMITED OBLIGATION. The Bonds shall be executed
on behalf of the Issuer with the manual or facsimile signature of its Chairman
or Vice Chairman and attested with the manual or the facsimile signature of its
Executive Director and shall have impressed or printed thereon the corporate
seal of the Issuer. Such facsimiles shall have the same force and effect as if
such officer had manually signed each of said Bonds. In case any officer whose
signature or facsimile signature appears on the Bonds shall cease to be such
officer before the delivery of such Bonds, such signature or such facsimile
shall, nevertheless, be valid and sufficient for all purposes, the same as if he
had remained in office until delivery.
The Bonds, together with premium, if any, and interest thereon, shall be
limited obligations of the Issuer payable from the payments to be made on the
Notes (except to the extent paid out of moneys attributable to the Bond proceeds
or the income from the temporary investment thereof and under certain
circumstances proceeds from insurance and condemnation awards) and from amounts
in the Debt Service Reserve Fund and shall be a valid claim of the respective
holders thereof only against the moneys held by the Trustee and the payments to
be made on the Note which are hereby pledged and assigned for the equal and
ratable payment of the Bonds and shall be used for no other purpose than to pay
the principal of, premium, if any, and interest on the Bonds, except as may be
otherwise expressly authorized in this Indenture.
Section 2.5. AUTHENTICATION. No Bond shall be valid or obligatory for
any purpose or entitled to any security or benefit under this Indenture unless
and until the certificate of authentication on such Bond substantially in the
form hereinabove set forth shall have been duly executed by the Trustee, and
such executed certificate of the Trustee upon any such Bond shall be conclusive
evidence that such 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
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by it if signed by an authorized officer of the Trustee, but it shall not be
necessary that the same officer sign the certificate of authentication on all of
the Bonds issued hereunder.
Section 2.6. FORM OF BONDS. The Bonds issued under this Indenture shall
be substantially in the form hereinabove set forth with such appropriate
variations, omissions and insertions as are permitted or required by this
Indenture or deemed necessary by the Trustee.
Section 2.7. DELIVERY OF SERIES 1996 BONDS. Upon the execution and
delivery of this Indenture, the Issuer shall execute and deliver to the Trustee
the Series 1996 Bonds in the aggregate principal amount of $14,345,000. The
Trustee shall authenticate such Bonds and deliver them to the purchasers thereof
upon receipt of:
(1) A copy, duly certified by the Executive Director of the Issuer,
of the resolution adopted and approved by the Issuer authorizing the
execution and delivery of the Loan Agreement, the Bond Placement Agreement
and this Indenture and the issuance of the Series 1996 Bonds.
(2) An executed counterpart of the Loan Agreement and this Indenture.
(3) The Series 1996 Note in the same principal amount as the
principal amount of the Series 1996 Bonds duly executed by the Company and
endorsed by the Issuer to the order of the Trustee.
(4) A written request of the Issuer to the Trustee requesting the
Trustee to authenticate and deliver the Series 1996 Bonds in the principal
amount of $14,345,000, to the purchasers thereof.
(5) Such other documents as shall be required by the Issuer or
Original Purchaser.
(6) The Company's deposit to the Debt Service Reserve Fund in an
amount, when added to the $1,059,825.99 deposit from the Series 1996 Bond
proceeds, is sufficient to cause the Debt Service Reserve Fund to be Fully
Funded.
The proceeds of the Series 1996 Bonds shall be paid over to the Trustee and
deposited to the credit of various Funds and Accounts as hereinafter provided
under Section 3. 1 hereof.
Section 2.8. RESERVED.
Section 2.9. MUTILATED LOST, STOLEN, OR DESTROYED BONDS. In the event
any Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and the
Trustee may authenticate a new Bond of like date, maturity and denomination as
that mutilated, lost, stolen or destroyed; provided that, in the case of any
mutilated Bond, such mutilated Bond shall first be surrendered to the Issuer,
and in the case of any lost, stolen or destroyed Bond, there shall be first
furnished
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to the Issuer and the Trustee evidence of such loss, theft or destruction
satisfactory to the Issuer and the Trustee, together with indemnity satisfactory
to them.
In the event any such Bond shall have matured, instead of issuing a
duplicate Bond the Issuer may pay the same without surrender thereof; provided,
however, that in the case of a lost, stolen or destroyed Bond, there shall be
first furnished to the Issuer and the Trustee evidence of such loss, theft or
destruction satisfactory to the Issuer and the Trustee, together with indemnity
satisfactory to them. The Issuer and the Trustee may charge the holder or owner
of such Bond with their reasonable fees and expenses in this connection. Any
Bond issued pursuant to this Section 2.9 shall be deemed part of the original
series of the Bonds in respect of which it was issued and an original additional
contractual obligation of the Issuer.
Section 2.10. REGISTRATION AND EXCHANGE OF BONDS: PERSONS TREATED AS
OWNERS. The Issuer shall cause books for the registration and for the transfer
of the Bonds as provided in this Indenture to be kept by the Trustee which is
hereby constituted and appointed the registrar of the Issuer. Upon surrender for
transfer of any fully registered Bond at the principal office of the Trustee,
duly endorsed by, or accompanied by a written instrument or instruments of
transfer in form satisfactory to the Trustee and duly executed by the registered
owner or his attorney duly authorized in writing, the Issuer shall execute and
the Trustee shall authenticate and deliver in the name of the transferee or
transferees a new fully registered Bond or Bonds of the same series and the same
maturity for a like aggregate principal amount. The execution by the Issuer of
any fully registered Bond without coupons of any denomination shall constitute
full and due authorization of such denomination, and the Trustee shall thereby
be authorized to authenticate and deliver such registered Bond. The Trustee
shall not be required to transfer or exchange any fully registered Bond during
the period between the Record Date and any Interest Payment Date of such Bond,
nor to transfer or exchange any Bond after the publication of or mailing of
notice calling such Bond for redemption has been made, nor during a period of
fifteen (15) days next preceding publication of a notice of redemption of any
Bonds.
As to any fully registered Bond without coupons, the person in whose name
the same shall be registered shall be deemed and regarded as the absolute owner
thereof for all purposes, and payment of principal, premium, if any, or interest
thereon, shall be made only to or upon the order of the registered owner thereof
or his legal representative, but such registration may be changed as hereinabove
provided. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Bond to the extent of the sum or sums so paid.
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NOTWITHSTANDING THE FOREGOING, THE SERIES 1996 BONDS ARE CONSIDERED
RESTRICTED SECURITIES IN THE HANDS OF THE ORIGINAL PURCHASER THEREOF AND MAY NOT
BE SOLD TO ANOTHER PURCHASER UNLESS THE SERIES 1996 BONDS ARE REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION, OR UNLESS THEY ARE SOLD PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, OR AS OTHERWISE
PROVIDED ON THE FACE OF THE SERIES 1996 BOND FORM.
(End of Article II)
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ARTICLE III.
APPLICATION OF SERIES 1996 BOND PROCEEDS
Section 3.1. DEPOSIT OF FUNDS. The Issuer shall deposit with the Trustee
the proceeds from the sale of the Series 1996 Bonds as follows:
(i) into the Debt Service Reserve Fund, $1,059,825.99;
(ii) into the Bond Fund, $718,664.38 as capitalized interest for the
payment of interest through the March 1, 1997 interest payment on the Series
1996 Bonds; and
(iii) into the Construction Fund, the remainder of the net proceeds of
the Series 1996 Bonds.
(End of Article III)
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ARTICLE IV.
REVENUE AND FUNDS
Section 4.1. SOURCE OF PAYMENT OF BONDS. The Bonds herein authorized and
all payments to be made by the Issuer hereunder are not general obligations of
the Issuer but are limited obligations payable from the payments on the Notes as
provided herein and from amounts in the Debt Service Reserve Fund. No covenant
or agreement contained in the Bonds or the Indenture shall be deemed to be a
covenant or agreement of any member, director, officer, attorney, agent or
employee of the Issuer in his or her individual capacity, and neither the
members nor any director, officer, attorney, agent or employee of the Issuer
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance of the Bonds.
Section 4.2. REVENUE FUND. The Trustee shall establish and maintain, so
long as any of the Bonds are outstanding, a separate fund to be known as the
"Revenue Fund."
(a) There shall be deposited in the Revenue Fund all Gross Revenues
received by the Trustee and (i) all amounts paid to the Trustee under the
Loan Agreement (other than prepayments required to redeem Bonds pursuant to
Article V hereof, which shall be deposited in the Redemption Account of the
Bond Fund), (ii) all other amounts required to be so deposited pursuant to
the terms hereof including investment earnings to the extent provided in
Section 6.8 hereof and, (iii) such other moneys as are delivered to the
Trustee by or on behalf of the Issuer or the Company with written
directions for deposit of such money in the Revenue Fund.
(b) Money on deposit in the Revenue Fund shall be disbursed on or
before the first (1st) day of each month in the following order of
priority:
(i) to the Bond Fund, an amount equal to the sum of (i) one third
( 1/3) of the interest due on the Bonds on the next Interest Payment
Date, and (ii) one third ( 1/3) of the principal amount due on the
Bonds on the next Interest Payment Date;
(ii) to the Bond Fund, amounts equal to the sum of any amounts
not previously paid pursuant to (i) above within any three (3) month
period prior to an Interest Payment Date;
(iii) to the Debt Service Reserve Fund, an amount, if any,
necessary to increase the balance therein to the Fully Funded amount;
(iv) to the reimbursement of the Issuer of any amounts owed to
the Issuer under the Loan Agreement; and
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(v) any balance remaining after the preceding transfers shall be
returned to the Company.
Section 4.3. BOND FUND. The Trustee shall establish and maintain, so
long as any of the Bonds are outstanding, a separate fund to be known as the
"Bond Fund" as well as a "Redemption Account" within the Bond Fund.
(a) The Trustee shall deposit in the Bond Fund when and as received;
(i) all accrued interest, if any, on the sale and delivery of such
Bonds;
(ii) all amounts transferred from the Revenue Fund pursuant to Section
4.2 hereof;
(iii) all amounts transferred from the Debt Service Reserve Fund
pursuant to Section 4.5 hereof;
(iv) any additional security to be deposited in the Bond Fund or any
other amounts received by the Trustee that are subject to the lien and
pledge of the Indenture; and
(v) all amounts that are to be applied to the redemption of all or
part of the Bonds pursuant to Sections 3.18, 3.22, 3.23, 3.24, 4.1 and 4.4
of the Loan Agreement into the Redemption Account of the Bond Fund
established for the deposit of funds which are segregated for the purpose
of redeeming Bonds.
(b) All amounts deposited in the Redemption Account of the Bond Fund for
the redemption of the Bonds shall be applied to the redemption of such Bonds
pursuant to Article V hereof. The other amounts on deposit in the Bond Fund
shall be used by the Trustee on each Interest Payment Date in the following
priority:
(i) for the payment of the principal of and interest on the Bonds
then due; and
(ii) for deposit in the Debt Service Reserve Fund to increase the
balance therein to the Fully Funded amount.
(c) If on any Interest Payment Date, the amount on deposit in the Bond
Fund is insufficient to make the payments described in (b)(i) above, the Trustee
shall make up any such deficit by transferring amounts from the Debt Service
Reserve Fund (but solely to make up a shortfall in (b)(i) above).
Section 4.4. CONSTRUCTION FUND. The Issuer shall establish with the
Trustee a separate fund to be known as the "Construction Fund" to the credit of
which deposits are to he made as required by the provisions of Section 3.1
hereof.
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(a) Except as set forth in subparagraph (c) of this Section 4.4,
moneys on deposit in the Construction Fund shall be paid out from time to
time by the Trustee upon the written request of an authorized officer of
the Company in order to pay, or as reimbursement to the Company for
payments made, for the Costs of Construction of the Project, or for the
costs of issuing the Series 1996 Bonds upon receipt by the Trustee of the
following:
(i) The written request:
(1) certifying that the costs of an aggregate amount set forth
in such written request have been made or incurred and were necessary
for the acquiring, constructing or equipping of the Project and were
made or incurred in accordance with the construction contracts, plans
and specifications, or purchase contracts therefor then in effect or
that the amounts set forth in such written request are for allowable
costs of issuance of the Bonds;
(2) certifying that the amount paid or to be paid, as set forth
in such written request, is reasonable and represents a part of the
amount payable for the costs of issuance of the Bonds or the Costs of
Construction of the Project; and that such payment was not paid in
advance of the time, if any, fixed for payment and was made in
accordance with the terms of any contracts applicable thereto and in
accordance with usual and customary practice under existing
conditions;
(3) certifying that no part of the said costs was included in
any written request previously filed with the Trustee under the
provisions hereof;
(4) accompanied by copies of invoices paid and/or to be paid for
the Costs of Construction with copies of checks used for any
previously made payment;
(5) representing those matters required to be represented
pursuant to Section 6.1 of the Loan Agreement and accompanied by those
documents required to be delivered by Section 6.2 of the Loan
Agreement.
(ii) Except in the case of a disbursement for payment of the costs of
issuing the Bonds, the costs of the acquisition of Equipment, the Company
shall provide (i) evidence that the title insurance policy on the Mortgaged
Property provided pursuant to Section 3.18 of the Loan Agreement has been
endorsed to include such disbursement and does not contain any mechanics
lien or materialmen's exceptions; (ii) a payment and performance bond in a
form reasonably acceptable to the Original Purchaser from a mutually
acceptable insurer with respect to the construction of the Project; and
(iii) so long as the Bonds are owned by the Original Purchaser, approval of
such written request referred to above by the Original Purchaser. In the
case of a disbursement for payment of the costs of acquisition of the
Equipment, the Company shall provide evidence
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satisfactory to the Issuer and to Original Purchaser that the Equipment,
when acquired, will be free and clear of all liens, security interests and
encumbrances other than Permitted Encumbrances and that the security
interest granted in the Mortgage will constitute a first priority security
interest on the Equipment.
(b) COMPLETION CERTIFICATE. The Company shall deliver to the Issuer, the
Original Purchaser and the Trustee within ninety (90) days after the completion
of the Project, a completion certificate of its authorized Company
representative:
(1) stating that the Project has been accepted by IDEM; and
(2) stating that he or she has made such investigation of such
sources of information as are deemed to be necessary, including pertinent
records of the Company, and is of the opinion that the Project has been
fully paid for and that no claim or claims exist against the Issuer or the
Company or against the properties of either out of which a lien based on
furnishing labor or material for the Project exists or might ripen;
provided, however, there may be excepted from the foregoing statement any
claim or claims or liens constituting Permitted Encumbrances.
In the event such certificate shall state that there is a claim or claims
in controversy which create or might ripen into a lien, there shall be filed
with the Issuer and the Trustee a certificate of the Company when and as such
claim or claims shall have been fully paid or otherwise satisfied or released.
(c) DISPOSITION OF CONSTRUCTION FUND MONEYS AFTER COMPLETION. If, after
payment by the Trustee of all written requests theretofore tendered to the
Trustee under the provisions of subparagraph (a) of this Section 4.4 and after
receipt by the Trustee of the completion certificate mentioned in subparagraph
(b)of this Section 4.4 pertaining to the Project, there shall remain any balance
of moneys in the Construction Fund, the Trustee shall transfer all moneys then
in the Construction Fund (except moneys reserved to pay any disputed claims
described in the completion certificates required to be delivered pursuant to
Section 4.4(b) hereof) to the Redemption Account of the Bond Fund.
Section 4.5. CREATION OF DEBT SERVICE RESERVE FUND. The Issuer shall
establish with the Trustee a separate fund to be known as the Debt Service
Reserve Fund.
The Trustee and the Company shall deposit in the Debt Service Reserve Fund
all moneys required to be deposited therein pursuant to Sections 2.6 and 3.1
hereof. In addition to the money transferred to the Debt Service Reserve Fund
pursuant to Article III hereof, there shall be deposited in the Debt Service
Reserve Fund (i) money transferred from the Revenue Fund pursuant to Section 4.2
hereof, and (ii) any other moneys received by the Trustee with directions to
deposit the same in the Revenue Fund, including those monies appropriated by the
State and designated for deposit to the Debt Service Reserve Fund in amounts
necessary to cause the Debt Service Reserve Fund to be Fully Funded.
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The Trustee shall transfer funds held in the Debt Service Reserve Fund to
the Bond Fund for the timely payment of interest on and principal of the Bonds,
in the event that moneys in the Bond Fund are insufficient to pay the then due
amount of principal of and interest on the Bonds. So long as an IDEM Termination
Event (as defined in the Loan Agreement) has not occurred, draws on the Debt
Service Reserve Fund shall be deemed to have come first from the Company portion
of the Debt Service Reserve Fund.
If the Debt Service Reserve Fund is not Fully Funded, the Trustee shall
retain all investment earnings on amounts in the Debt Service Reserve Fund in
the Debt Service Reserve Fund until it is Fully Funded. On the fifth Business
Day prior to each Interest Payment Date, the Trustee shall value the moneys and
investments in the Debt Service Reserve Fund in a manner consistent with Section
6.8 hereof and shall provide the Company and the Issuer with written notice of
the results of the valuation. If such notice indicates that there will exist a
deficiency in the Debt Service Reserve Fund on such Interest Payment Date, the
Trustee shall transfer money from the Revenue Fund to the Debt Service Reserve
Fund, and if sufficient money is not available to restore the deficiency from
amounts in the Revenue Fund, the Company shall make a deposit into the Debt
Service Reserve Fund no later than the Business Day immediately prior to the
Interest Payment Date so that the Debt Service Reserve Fund will again be Fully
Funded on the Interest Payment Date. If such deficiency can not be restored from
the above sources, the Trustee shall notify the Issuer and request that such
deficiency be restored by operation of Section 4.6 hereof. While the Debt
Service Reserve Fund is Fully Funded, cash or Qualified Investments in excess of
the amount needed for the Debt Service Reserve Fund to be Fully Funded shall
first be applied to the Company's obligation under Section 3.30 of the Loan
Agreement and thereafter transferred from the Debt Service Reserve Fund to the
Bond Fund to be used as a credit on the Company's Loan Payments.
If the State has appropriated moneys designated for deposit to the Debt
Service Reserve Fund or if the Issuer has replenished the Debt Service Reserve
Fund with a transfer of moneys from the Guaranty Account or from any other
source, any moneys remaining in the Debt Service Reserve Fund after the final
payment of the Series 1996 Bonds shall be transferred to the Issuer to be
applied to amounts owed by the Company under the Loan Agreement. After the State
and the Issuer have been reimbursed in full of all amounts owing under Section
3.30 of the Loan Agreement, with interest, if there are sufficient moneys held
under this Indenture (including moneys held in the Debt Service Reserve Fund) to
discharge the Bonds as provided in Article XI, the Trustee shall draw on the
Debt Service Reserve Fund and immediately apply such funds to the repayment of
the Bonds at maturity and any remaining amounts in the Debt Service Reserve Fund
shall then be returned to the Company.
Notwithstanding the foregoing and anything to the contrary herein, to the
extent that there are moneys in the Debt Service Reserve Fund which have been
deposited from Company funds and the Company has exercised its option to
transfer and convey the Mortgaged Property to the Issuer upon termination of the
IDEM Contract as set forth in Section 10.8 of the Loan Agreement, the Trustee
shall transfer to the Company such Company funds on deposit in the Debt Service
Reserve Fund.
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Section 4.6. CREATION AND OPERATION OF GUARANTY ACCOUNT. The Issuer
shall create and maintain as a separate deposit account in the custody of the
Issuer to be designated "Indiana Development Finance Authority -- Envirotest
Systems Corp. Guaranty Account."
In the event that the Debt Service Reserve Fund is not Fully Funded at any
time as a result of a transfer from the Debt Service Reserve Fund to the Bond
Fund for the payment of debt service on the Bonds, and the Company has not
replenished the Debt Service Reserve Fund the Trustee shall immediately notify
the Issuer of the amount necessary to be deposited so that the Debt Service
Reserve Fund will be Fully Funded. Pursuant to terms of that certain Letter of
Agreement from the Indiana Department of Environmental Management dated June 27,
1996 to the Issuer, the Issuer shall seek an appropriation from the Indiana
General Assembly for the Guaranty Fund; and any such amounts appropriated to the
Guaranty Fund as a result of such request, to the extent needed to cause the
Debt Service Reserve Fund to be Fully Funded, shall be transferred to the
Guaranty Account for deposit to the Debt Service Reserve Fund. Notwithstanding
the foregoing sentence, the Issuer, in its sole discretion, may transfer any
legally available moneys from the Guaranty Fund to the Guaranty Account for
deposit to the Debt Service Reserve Fund or transfer any other legally available
moneys of the Issuer to the Guaranty Account for deposit to the Debt Service
Reserve Fund, and in the event that such transfers by the Issuer result in the
Debt Service Reserve Fund being Fully Funded, or in the event that any other
moneys from any source are deposited to the Debt Service Reserve Fund so that it
becomes Fully Funded, the Issuer shall no longer be required to seek an
appropriation from the Indiana General Assembly as set forth above with respect
to such deficiency in the Debt Service Reserve Fund.
There is no assurance given by the Issuer that the Issuer will transfer
moneys in the Guaranty Fund to the Guaranty Account for deposit to the Debt
Service Reserve Fund or deposit other available moneys to the Debt Service
Reserve Fund or that the Indiana General Assembly will appropriate monies to the
Guaranty Fund for transfer to the Guaranty Account for deposit into the Debt
Service Reserve Fund or for deposit directly into the Debt Service Reserve Fund
so that the Debt Service Reserve Fund will be Fully Funded. The Issuer is not
obligated to make a transfer from the Guaranty Fund or from any other available
moneys of the Issuer to the Debt Service Reserve Fund, except to the extent the
State has appropriated moneys for such specific purpose. Also, the Indiana
General Assembly is not obligated to make any appropriation of monies to the
Guaranty Fund, the Guaranty Account or the Debt Service Reserve Fund.
Section 4.7. TRUST FUNDS. All moneys and securities received by the
Trustee under the provisions of this Indenture shall be trust funds under the
terms hereof and shall not be subject to lien or attachment of any creditor of
the Issuer or of the Company other than as set forth in this Indenture. Such
moneys shall be held in trust and applied in accordance with the provisions of
this Indenture.
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Section 4.8. INVESTMENT. Moneys on deposit in the Funds and Accounts
established in this Article IV hereof shall be invested as provided in Section
6.8 hereof.
(End of Article IV)
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ARTICLE V.
REDEMPTION OF SERIES 1996 BONDS BEFORE MATURE
Section 5.1. OPTIONAL REDEMPTION OF SERIES 1996 BONDS. The Series 1996
Bonds are redeemable at the option of the Issuer, upon receipt of written
direction from the Company, at any time in whole or in part, if there shall have
been deposited with the Trustee in the Redemption Account of the Bond Fund
sufficient funds to redeem such Series 1996 Bonds, at 100% of the principal
amount thereof, plus a premium equal to the Breakage Amount, plus unpaid and
accrued interest to the redemption date.
Section 5.2. MANDATORY REDEMPTION OF SERIES 1996 BONDS. The Series 1996
Bonds shall be redeemed, in whole or in part, at any time, with the proceeds
deposited in the Redemption Account from sources described in Sections 3.18,
3.22, 3.23, 3.24, 4.1 and 4.4 of the Loan Agreement, and shall be redeemed, in
whole, at any time, but not later than one year after the termination of the
IDEM Contract, as a result of the breach thereof by the Company, at 100% of the
principal amount thereof, plus a premium equal to the Breakage Amount, plus
unpaid and accrued interest to the date of redemption.
Section 5.3. NOTICE OF REDEMPTION. In the case of redemption of the
Series 1996 Bonds pursuant to Section 5.1 and Section 5.2 hereof, notice of the
call for any such redemption identifying the Bonds, or portions of fully
registered Bonds, to be redeemed shall be given by mailing a copy of the
redemption notice by first class mail not less than thirty (30) days nor more
than sixty (60) days prior to the date fixed for redemption to the Registered
Owner of each Bond to be redeemed at the address shown on the registration
books. Such notice of redemption shall specify the CUSIP number, if any, and, in
the event of a partial redemption the Bond numbers and called amounts of each
Bond, the redemption date, redemption price, interest rate, maturity date and
the name and address of the Trustee; provided, however, that failure to give
such notice by mailing, or any defect therein, with respect to any such
registered Bond shall not affect the validity of any proceedings for the
redemption of other Bonds.
On and after the redemption date specified in the aforesaid notice, such
Bonds, or portions thereof, thus called shall not bear interest, shall no longer
be protected by this Indenture and shall not be deemed to be outstanding under
the provisions of this Indenture, and the holders thereof shall have the right
only to receive the redemption price thereof plus unpaid and accrued interest
thereon to the date fixed for redemption.
Section 5.4. CANCELLATION. All Bonds which have been redeemed in whole
shall be cancelled and cremated or otherwise destroyed by the Trustee and shall
not be reissued and a counterpart of the certificate of cremation or other
destruction evidencing such cremation or other destruction shall be furnished by
the Trustee to the Issuer and the Company.
Section 5.5. REDEMPTION PAYMENTS. Prior to the date fixed for
redemption, funds shall be deposited with Trustee in the Redemption Account of
the Bond Fund to pay, if the Trustee
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is hereby authorized and directed to apply such funds to the payment of the
Series 1996 Bonds or portions thereof called for redemption, together with the
premium, if any, and accrued interest thereon to the redemption date. Upon the
giving of notice and the deposit of funds for redemption, interest on the Bonds
thus called shall no longer accrue after the date fixed for redemption. No
payment shall be made by Trustee upon any Series 1996 Bond until such Series
1996 Bond shall have been delivered for payment or cancellation or Trustee shall
have received the items required by Section 2.9 hereof with respect to any
mutilated, lost, stolen or destroyed Series 1996 Bond.
Section 5.6. PARTIAL REDEMPTION OF BONDS. If less than all of the Bonds
at the time Outstanding are to be called for redemption, the serial maturities
of the Bonds shall be redeemed on a prorata basis based on the ratio which the
Outstanding principal amount of each serial maturity bears to the aggregate
principal amount of the principal Outstanding on the Bonds on the date set for
redemption. If less than all of the Bonds within a maturity are to be redeemed,
the Trustee shall select by lot (meaning also random selection by computer) in
such manner as the Trustee, in its discretion, may determine, the Bonds or
portions of Bonds within such maturity that shall be redeemed. The Trustee
shall call for redemption in accordance with the foregoing provisions as many
Bonds or portions thereof as will, as nearly as practicable, exhaust the moneys
available therefor. Particular Bonds or portions thereof shall be redeemed only
in multiples of $200,000 or integral multiples of $5,000 in excess thereof.
If less than the entire principal amount of any registered Bond then
Outstanding is called for redemption, then upon notice of redemption given as
provided in Section 5.3 hereof, the Owner of such registered Bond shall
forthwith surrender such Bond to the Trustee in exchange for (a) payment of the
redemption price of, plus accrued interest on the principal amount called for
redemption and (b) a new Bond or Bonds of like series in an aggregate principal
amount equal to the unredeemed balance of the principal amount of such
registered Bond, which shall be issued without charge therefor.
(End of Article V)
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ARTICLE VI.
GENERAL COVENANTS
Section 6.1. PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants
that it will promptly pay the principal of, premium, if any, and interest on
every Bond issued under this Indenture at the place, on the dates and in the
manner provided herein and in said Bonds according to the true intent and
meaning thereof. The Bonds are special limited obligations of the Issuer and the
principal of, interest and premium, if any, on the Bonds are payable solely from
the payments to be made on the Notes which payments are hereby specifically
pledged and assigned to the payment thereof in the manner and to the extent
herein specified, and nothing in the Bonds or in this Indenture should be
considered as pledging any other funds or assets of the Issuer. The Bonds do
not represent or constitute a debt of the Issuer, the State or any political
subdivision or taxing authority thereof within the meaning of the provisions of
the constitution or statutes of the State of Indiana or a pledge of the full
faith and credit of the Issuer or grant to the owners or holders thereof of any
right to have the Issuer, the State or any political subdivision or taxing
authority thereof levy taxes or appropriate any funds for payment of the
principal thereof or interest thereon. The Issuer has no taxing power. No
covenant or agreement contained in she Bonds or the Indenture shall be deemed to
be a covenant or agreement of any member, director, officer, agent, attorney or
employee of the Issuer in his or her individual capacity, and neither the Issuer
nor any member, director, officer, agent, attorney or employee of the Issuer
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance of the Bonds.
Section 6.2. PERFORMANCE OF COVENANTS. The Issuer covenants that it will
faithfully perform at all times any and all covenants, undertakings,
stipulations and provisions contained in this Indenture, in any and every Bond
executed, authenticated and delivered hereunder and in all proceedings of its
members pertaining thereto. The Issuer represents that it is duly authorized
under the constitution and laws of the State of Indiana to issue the Bonds
authorized hereby and to execute this Indenture, and to pledge and assign the
Series 1996 Note and assign the Loan Agreement in the manner and to the extent
herein set forth; that all action on its part for the issuance of the Bonds and
the execution and delivery of this Indenture has been duly and effectively
taken, and that the Bonds in the hands of the holders and owners thereof are and
will be valid and enforceable obligations of the Issuer according to the import
thereof.
Section 6.3. OWNERSHIP: INSTRUMENTS OF FURTHER ASSURANCE. The Issuer
represents that at the time of the pledge and assignment thereof it will
lawfully own the Series 1996 Note and that such pledge and assignment and the
assignment of the Loan Agreement to the Trustee hereby made will be valid and
lawful. The Issuer covenants that it will defend the title to the Series 1996
Note and its interest in the Loan Agreement to the Trustee, for the benefit of
the holders and owners of the Bonds against the claims and demands of all
persons whomsoever. The Issuer 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,
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transferring, mortgaging, conveying, pledging, assigning and confirming unto the
Trustee, the Series 1996 Note, the Loan Agreement and all payments thereon and
thereunder pledged hereby to the payment of the principal of, premium, if any,
and interest on the Bonds.
Section 6.4. RECORDATION OF INDENTURE, LOAN AGREEMENT AND SECURITY
INSTRUMENTS. The Company shall cause this Indenture, the Loan Agreement and all
supplements thereto as well as such other security instruments, financing
statements and all supplements thereto and other instruments as may be 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 fully preserve and protect the lien
hereof and the security of the holders and owners of the Bonds and the rights of
the Trustee hereunder.
Section 6.5. INSPECTION OF BOOKS. The Issuer covenants and agrees that
all books and documents in its possession relating to the Project and the
revenues derived from the Project shall at all times be open to inspection by
such accountants or other agents as the Trustee may from time to time designate.
Section 6.6. LIST OF BONDHOLDERS. The Trustee 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 or by holders
and/or owners (or a designated representative thereof) of 25% or more in
principal amount of Bonds then outstanding, such ownership and the authority of
any such designated representative to be evidenced to the satisfaction of the
Trustee.
Section 6.7. RIGHTS UNDER LOAN AGREEMENT. The Issuer agrees that the
Trustee in its name or in the name of the Issuer may enforce all rights of the
Issuer and all obligations of the Company under and pursuant to the Loan
Agreement (except the rights reserved to the Issuer under Section 3.1 thereof)
for and on behalf of the Issuer and/or Bondholders, provided that, the Trustee
shall not take any steps toward the enforcement of any such rights and remedies
unless an Event of Default under Section 7.1 hereof has occurred and remains
uncured.
Section 6.8. INVESTMENT OF FUNDS. Except as hereinafter provided, moneys
in the Revenue Fund, the Bond Fund, the Construction Fund and the Debt Service
Reserve Fund shall be invested and reinvested by the Trustee in Qualified
Investments at the oral or written direction of the Company, but if oral,
confirmed promptly in writing. If the Issuer or the State has made a deposit or
an appropriation to the Debt Service Reserve Fund, the Company shall obtain the
prior written consent of the Issuer with respect to the investment of such
moneys. Investments of moneys in the Bond Fund shall mature or be redeemable
without penalty at the option of the Trustee at the times and in the amounts
necessary to provide moneys to pay interest on and the principal of the Bonds as
they become due and payable. Each investment of moneys in the Revenue Fund,
Construction Fund, the Bond Fund and the Debt Service Reserve Fund shall mature
or be redeemable without penalty at such time as may be necessary to make
payments when necessary from such fund.
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The Trustee may sell investments held in the Revenue Fund, Construction
Fund, Debt Service Reserve Fund and Bond Fund and reinvest the proceeds
therefrom in Qualified Investments maturing or redeemable as aforesaid. Any of
those investments may be purchased from or sold to the Trustee or any bank,
trust company or savings and loan association affiliated with any of the
foregoing. The Trustee shall sell or redeem investments credited to the Bond
Fund to produce sufficient moneys applicable hereunder to and at the times
required for the purposes of paying debt service on the Bonds, and shall do so
without necessity for any order on behalf of the Issuer and without restriction
by reason of any order. An investment made from moneys credited to the Bond
Fund, the Construction Fund or the Debt Service Reserve Fund shall constitute
part of that respective fund, and each respective fund shall be credited with
all proceeds of sale and income from investment of moneys credited thereto. For
purposes of this Indenture, those investments shall be valued at face amount or
market value, whichever is less.
Section 6.9. NON-PRESENTMENT OF BONDS. In the event any Bond shall not
be presented for payment when the principal thereof becomes due, either at
maturity, or at the date fixed for redemption thereof, or otherwise, if funds
sufficient to pay any such Bond shall have been made available to Trustee for
the benefit of the holder or holders thereof, all liability of Issuer to the
holder thereof for the payment of such Bond shall forthwith cease, determine and
be completely discharged, and thereupon it shall be the duty of Trustee to hold
such funds for five (5) 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 and not so applied to
the payment of Bonds within five (5) years after the date on which the same
shall have become due shall be repaid by Trustee to Company and thereafter
Bondholders shall be entitled to look only to Company for payment, and then only
to the extent of the amount so repaid, and Company shall not be liable for any
interest thereon and shall not be regarded as a trustee of such money.
Section 6.10. DIRECTION OF BONDHOLDERS. Whenever any action, direction or
consent is required of the Trustee, the Trustee shall consult with the holders
of the Bonds and shall take such action, give such direction or give such
consent as shall be directed by the Requisite Bondholders.
(End of Article VI)
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ARTICLE VIII.
DEFAULTS AND REMEDIES
Section 7.1. EVENTS OF DEFAULT. Each of the following events is hereby
declared an "Event of Default," that is to say, if:
(a) payment of any amount payable on the Bonds shall not be made when
the same is due and payable; or
(b) any event of default as defined in Section 7. 1 of the Loan
Agreement shall occur and be continuing and the Issuer has notified the
Trustee that the Issuer desires that such event of default be treated as an
Event of Default hereunder; provided, however, that the Issuer shall be
deemed to have given the Trustee such notification if any of the following
shall have occurred and are continuing:
(i) the failure of the Issuer or any other State authority, body
corporate and politic of the State of Indiana, to make payment on any
outstanding indebtedness excluding limited liability conduit
indebtedness, but including any unfulfilled appropriations pursuant to
moral obligation requests; or
(ii) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer in an
involuntary case under any applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assigned, custodian, trustee, sequestrator (or other
similar official) of the Issuer or for any substantial part of its
property, or ordering the windup or liquidation of its affairs; or the
filing and pendency for thirty days without dismissal of a petition
initiating an involuntary case under any other bankruptcy, insolvency
or similar law; or
(iii) the commencement by the Issuer of any voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, whether consent by it to an entry to an order for
relief in an involuntary case and under any such law or to the
appointment of or the taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Issuer or of any substantial part of its property, or the
making of it by any general assignment for the benefit of creditors,
or the failure of the Issuer generally to pay its debts as such debts
become due, or the taking of corporate action by the Issuer in
furtherance of any of the foregoing; or
(iv) the termination of the existence of the Issuer without the
assignment and assumption of the obligations of the Issuer under this
Indenture, the Loan Agreement and the Bond Placement Agreement
(collectively, the "Issuer Documents") to a validly organized and
legally existing successor entity
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possessing such rights, powers and privileges as are necessary for it
to perform its obligations under the Issuer Documents; or
(v) the failure of any material provisions of the Issuer
Documents to be valid and binding on the Issuer; or
(vi) the repeal or amendment of, or non-compliance with, the
legislation creating the Issuer which has the effect of impairing the
contract of the Issuer with respect to the Bonds; or
(c) the Issuer shall default in the due and punctual performance of
any other of the covenants, conditions, agreements and provisions contained
in the Bonds or in this Indenture or any agreement supplemental hereof on
the part of the Issuer to be performed, and such default shall continue for
thirty (30) days after written notice specifying such default and requiring
the same to be remedied shall have been given to the Issuer and the Company
by the Trustee, which may give such notice in its discretion and shall give
such notice at the written request of the holders of all of the Bonds then
outstanding hereunder.
Section 7.2. ACCELERATION. Subject to Section 7.3(a) hereof, upon the
happening of any Event of Default specified in Section 7.1 and the continuance
of the same for the period, if any, specified in said Section, the Trustee, by
notice in writing delivered to the Issuer and the Company, shall declare the
entire unpaid principal amount of the Bonds then outstanding, and the interest
accrued thereon, to be immediately due and payable.
Section 7.3. REMEDIES; RIGHTS OF BONDHOLDERS. Subject to the provisions
of Section 6.7 hereof:
(a) If an Event of Default occurs, the Trustee may pursue any
available remedy by suit at law or in equity to enforce the payment of the
principal of, premium, if any, and interest on the Bonds then Outstanding,
to enforce any obligations of the Issuer hereunder and/or to enforce the
obligations, of the Company under the Loan Agreement and the Series 1996
Note.
(b) Upon the occurrence of an Event of Default, and if directed so to
do by the Requisite Bondholders or the Issuer pursuant to Section 7.4
hereof and indemnified as provided in Section 8.1 hereof, the Trustee shall
be obliged to exercise such one or more of the rights and powers conferred
by this Article as the Trustee, being advised by counsel, shall deem most
expedient in the interests of the Bondholders and the Issuer.
(c) No remedy by the terms of this Indenture conferred upon or
reserved to the Trustee (or to the Bondholders) is intended to be exclusive
of any other remedy, but each and every such remedy shall be cumulative and
shall be in addition to any other
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remedy given to the Trustee or to the Bondholders hereunder or now or
hereafter existing at law or in equity or by statute.
(d) No delay or omission to exercise any right or power accruing upon
the occurrence of any Event of Default shall impair any such right or power
or shall be construed to be a waiver of any Event of Default or
acquiescence therein, and every such right and power may be exercised from
time to time as may be deemed expedient.
(e) No waiver of any Event of Default hereunder, 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
consequent thereon.
Section 7.4. RIGHT OF BONDHOLDERS OR THE ISSUER TO DIRECT PROCEEDINGS.
Anything in this Indenture to the contrary notwithstanding, the holders of all
Bonds then outstanding, or the Issuer, if no Bonds are Outstanding, shall have
the right, at any time an Event of Default has occurred and remains unremedied,
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 the terms and conditions of
this Indenture, or for the appointment of a receiver or any other proceedings
hereunder; provided, that such direction shall not be otherwise than in
accordance with the provisions of law and of this Indenture, and provided that
if any Bonds are Outstanding the Trustee is obligated to pursue its remedies
under the provisions of Section 7.2 hereof before any other remedies are sought.
Section 7.5. APPLICATION OF MONEYS. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
shall, after payment of the costs and expenses of the proceedings resulting in
the collection of such moneys and of the expenses, liabilities and advances
incurred or made by the Trustee, be deposited in the Bond Fund and all moneys in
the Bond Fund shall be applied as follows:
(a) Unless the principal of all the Bonds shall have become or shall have
been declared due and payable, all such moneys shall be applied:
FIRST: To the payment to the persons entitled thereto 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
shall not be sufficient to pay in full any particular installment, then to
the payment ratably, according to the amounts due on such installment, to
the persons entitled thereto, without any discriminations or privilege; and
SECOND: To the payment to the persons entitled thereto of the unpaid
principal of and premium, if any, on the Bonds which shall have become due
(other than 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 on such Bonds from the respective dates upon which
they become due, and if the amount available shall not be sufficient to pay
in full Bonds due on any particular date, together with such
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interest, then to the payment ratably, according to the amount of principal
due on such date, to the persons entitled thereto without any
discrimination or privilege.
THIRD: To replenish the Debt Service Reserve Fund if not Fully
Funded; and
FOURTH: To reimburse the Issuer for deposits or transfers made by it
to the Debt Service Reserve Fund or other amounts owing pursuant to Section
3.30 of the Loan Agreement.
(b) If the principal of all the Bonds shall have become due or shall have
been declared due and payable, all such moneys shall be applied to the payment
of the principal and interest then due and unpaid upon the Bonds, without
preference or priority of principal over interest or of interest over any other
installment of interest, according to the amounts due respectively for principal
and interest, to the persons entitled thereto without any discrimination or
privilege and thereafter to reimburse the Issuer for deposits or transfers made
to the Debt Service Reserve Fund or other amounts owing pursuant to Section 3.30
of the Loan Agreement.
(c) If the principal of all the Bonds shall have been declared due and
payable, and if such declaration shall thereafter have been rescinded and
annulled under the provisions of this Article then, subject to the provisions of
subsection (b) of this Section in the event that the principal of all the Bonds
shall later become due or be declared due and payable, the moneys shall be
applied in accordance with the provisions of subsection (a) of this Section; and
Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied at such times, and from time to time, as
the Trustee shall determine, having due regard to the amount of such moneys
available for application and the likelihood of additional moneys becoming
available for such application in the future. Whenever the Trustee shall apply
such funds, it shall fix the date (which shall be an Interest Payment Date
unless it shall deem another date more suitable) upon which such application is
to be made and upon such date interest on the amounts of principal to be paid on
such dates 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 such Bond shall be presented to the Trustee for appropriate
endorsement or for cancellation if fully paid.
Section 7.6. REMEDIES VESTED IN TRUSTEE. All rights of action (including
the right to file proof of claims) under this Indenture, the Loan Agreement, the
Notes 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 Issuer or any holders of the Bonds, and any
recovery of judgment shall, subject to the provisions of Section 7.5 hereof, be
for the equal benefit of the holders of the Outstanding Bonds.
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Section 7.7. RIGHTS AND REMEDIES OF BONDHOLDERS. No holder of any Bond
shall have any right to 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 default has occurred of which the Trustee has been notified as provided
in subsection (g) of Section 8. l, or of which by said subsection it is deemed
to have notice, nor unless also such default shall have become an Event of
Default and the holders of all 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 proceeding in its own name, nor unless also they have offered to the
Trustee indemnity as provided in Section 8.1, nor unless the Trustee shall
thereafter fail or refuse to exercise the powers hereinbefore granted, or to
institute such action, suit or proceeding in its, his, or their own name or
names. Such notification, request and offer of indemnity are hereby declared in
every case at the option of the Trustee to be 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; it being understood and intended
that 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 its,
his or their action or to enforce any right hereunder except in the manner
herein provided, and that all 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. Nothing in this Indenture
contained shall, however, affect or impair the right of any Bondholder to
enforce the covenants of the Issuer to pay the principal of and interest on each
of the Bonds issued hereunder to the respective holders thereof at the time,
place, from the source and in the manner in said Bonds expressed.
Section 7.8. TERMINATION OF PROCEEDINGS. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a
receiver, or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Issuer, the Company, the Bondholders and the Trustee shall
be restored to their former positions and rights hereunder with respect to the
Mortgaged Property, and all rights, remedies and powers of the Trustee shall
continue as if no such proceedings had been taken.
Section 7.9. WAIVERS OF EVENTS OF DEFAULT. The Trustee may in its
discretion waive any Event of Default hereunder and its consequences and rescind
any declaration of maturity of principal of and interest on the Bonds, and shall
do so upon the written request of the holders of (1) all the Bonds then
Outstanding in respect of which default in the payment of principal and/or
premium, if any, and/or interest exists, or (2) all Bonds then Outstanding in
the case of any other default; provided, however, that there shall not be waived
(a) any Event of Default in the payment of the principal of any outstanding
Bonds at the date of maturity specified therein, or (b) any default in the
payment when due of the interest on any such Bonds unless prior to such waiver
or rescission, arrears of interest, with interest (to the extent permitted by
law) at the rate borne by the Bonds in respect of which such default shall have
occurred on overdue installments of interest or all arrears of payments of
principal and premium, if any,
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when due, as the case may be, and all expenses of the Trustee in connection with
such default shall have been paid or provided for, and in case of any such
waiver or rescission, or in case any proceeding taken by the Trustee on account
of any such default shall have been discontinued or abandoned or determined
adversely, then and in every such case the Issuer, 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. No waiver of an event of
default under Section 7.1(b) or failure to notify the Trustee that the Issuer
desires to treat such event of default as an Event of Default shall constitute a
waiver of the corresponding event of default under the Loan Agreement.
Section 7.10. COMPANY'S RIGHT OF POSSESSION AND USE OF MORTGAGED PROPERTY.
So long as the Company is in full compliance with the terms and provisions of
the Mortgage, the Company shall be suffered and permitted to possess, use and
enjoy the properties and appurtenances constituting the Mortgaged Property.
Section 7.11. WAIVER OF REDEMPTION; EFFECT OF SALE OF MORTGAGED PROPERTY.
The Issuer and the Company, to the extent permitted by law, shall not claim any
rights under any stay, valuation, exemption or extension law, and hereby waives
any right of redemption which it may have in respect of the Mortgaged Property.
Upon the institution of any foreclosure proceedings or upon any sale of the
Mortgaged Property, or any acceleration of the maturity of the Notes, the
principal of all Bonds then Outstanding hereunder, if not previously due and
payable, shall become immediately due and payable.
Section 7.12. COOPERATION OF ISSUER. Upon the occurrence of an Event of
Default hereunder, the Issuer shall cooperate with the Trustee and use its best
efforts to protect the Bondholders, including, without limitation, consenting to
the sale of the Mortgaged Property for the benefit of the Bondholders if such
sale is otherwise permitted under the Loan Agreement.
(End of Article VII)
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ARTICLE VIII.
THE TRUSTEE
Section 8.1. ACCEPTANCE OF THE TRUSTS. The Trustee hereby accepts the
trusts imposed upon it by this Indenture, and agrees to perform said trusts as a
corporate trustee ordinarily would perform said trusts under a corporate
indenture, but no implied covenants or obligations shall be read into this
Indenture against the Trustee.
(a) The Trustee may execute any of the trusts or powers hereof and perform
any of its duties by or through attorneys, agents, receivers or employees but
shall be answerable for the conduct of the same in accordance with the standard
specified above, and shall be entitled to advice of counsel concerning all
matters of trusts hereof and the duties hereunder, and may in all cases pay such
reasonable compensation to all such attorneys, agents, receivers and employees
as may reasonably be employed in connection with the trusts hereof. The Trustee
may act upon the opinion or advice of any attorney (who may be the attorney or
attorneys for the Issuer or the Company). The Trustee shall not be responsible
for any loss or damage resulting from any action or non-action in good faith in
reliance upon such opinion or advice.
(b) The Trustee shall not be responsible for any recital herein, or in the
Bonds (except in respect to the certificate of the Trustee endorsed on the
Bonds), or for insuring the property herein conveyed or collecting any insurance
moneys, or for the validity of the execution by the Issuer of this Indenture or
of any supplements thereto or instruments of further assurance, or for the
sufficiency of the security for the Bonds issued hereunder or intended to be
secured hereby, or for the value or title of the property herein conveyed or
otherwise as to the maintenance of the security hereof; and the Trustee shall
not be bound to ascertain or inquire as to the performance or observance of any
covenants, conditions or agreements on the part of the Issuer or on the part of
the Company under the Loan Agreement; but the Trustee may require of the Issuer
or the Company full information and advice as to the performance of the
covenants, conditions and agreements aforesaid as to the condition of the
property herein conveyed. The Trustee shall have no obligation to perform any of
the duties of the Issuer 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
authenticated or delivered hereunder. The Trustee may become the owner of Bonds
secured hereby 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
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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 non-existence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate signed on behalf of the Issuer or
the Company by its duly authorized officers as sufficient evidence of the facts
therein contained and prior to the occurrence of a default of which the Trustee
has been notified as provided in subsection (g) of this Section, or of which
said subsection it is deemed to have notice, shall also be at liberty to accept
a similar 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 a certificate of the Issuer or the Company to
the effect that an ordinance or resolution in the form therein set forth has
been adopted by the Issuer or the Company as conclusive evidence that such
ordinance or resolution has been duly 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 negligence or willful misconduct; provided,
however, that the provisions of this subsection shall not affect the duties of
the Trustee hereunder, including the provisions of Article VII hereof.
(g) The Trustee shall not be required to take notice or be deemed to have
notice of any Event of Default hereunder (other than payment of the principal of
and interest on the Bonds) unless the Trustee shall be specifically notified in
writing of such default by the Issuer or by the holders of at least twenty-five
percent (25%) in aggregate principal amount of all Bonds then Outstanding 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, and in the absence of such notice so
delivered, the Trustee may conclusively assume there is no default except as
aforesaid.
(h) The Trustee shall not be personally liable for any debts contracted or
for damages to persons or to personal property injured or damaged, or for
salaries or nonfulfillment of contracts during any period in which it may be in
possession of or managing the Mortgaged Property.
(i) At any and all reasonable times and upon reasonable prior written
notice, the Trustee, and its duly authorized agents, attorneys, experts,
engineers, accountants and representatives, shall have the right fully to
inspect any and all of the Mortgaged Property and the Bonds, and to take such
memoranda from and in regard thereto as may be desired.
(j) 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.
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(k) Notwithstanding anything elsewhere in this Indenture contained, the
Trustee shall have the right, but shall not be required, to 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 by the terms hereof required as
a condition of such action by the Trustee, deemed desirable for the
authentication of any Bonds, the withdrawal of any cash, or the taking of any
other action by the Trustee.
(l) Before taking any action under this Section 8. 1 the Trustee may
require that a satisfactory indemnity bond be furnished for the reimbursement of
all expenses to which it may be put and to protect it against all liability,
except liability which is adjudicated to have resulted from its negligence or
willful misconduct in connection with any action so taken.
(m) All moneys received by the Trustee or any paying agent shall, until
used or applied or invested as herein provided, 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. Neither the Trustee nor any paying
agent shall be under any liability for interest on any moneys received hereunder
except such as may be agreed upon.
(n) If any Event of Default under this Indenture shall have occurred and
be continuing, the Trustee shall exercise such of 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.
Section 8.2. FEES, CHARGES AND EXPENSES OF TRUSTEE. The Trustee shall be
entitled to payment and/or reimbursement for reasonable fees for its services
rendered hereunder and all advances, counsel fees and other expenses reasonably
and necessarily made or incurred by the Trustee in connection with such
services. The Trustee shall be entitled to payment and reimbursement for the
reasonable fees and charges of the Trustee as paying agent and bond registrar
for the Bonds but only as hereinabove provided. Upon an Event of Default, but
only upon an Event of Default, the Trustee shall have a right of payment prior
to payment on account of interest or principal of, or premium, if any, on any
Bond for the foregoing advances, fees, costs and expenses incurred.
Section 8.3. NOTICE TO BONDHOLDERS IF DEFAULT OCCURS. If an Event of
Default occurs of which the Trustee is by subsection (g) of Section 8.1 hereof
required to take notice or if notice of an Event of Default be given as in said
subsection (g) provided, then the Trustee shall give written notice thereof by
registered or certified mail to the last known holders of all Bonds then
Outstanding shown by the list of Bondholders required by the terms of this
Indenture to be kept at the office of the Trustee.
Section 8.4. INTERVENTION BY TRUSTEE. In any judicial proceeding to
which the Issuer is a party and which in the opinion of the Trustee and its
counsel has a substantial bearing on the interests of holders of the Bonds, the
Trustee may intervene on behalf of Bondholders and,
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subject to the provisions of Section 8.1(1), shall do so if requested in writing
by the owners 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 are subject to the approval of a court of competent
jurisdiction.
Section 8.5. 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, ipso facto, shall be and become successor
Trustee hereunder and vested with all of the title to the whole property or
trust estate and all the trusts, powers, discretions, immunities, privileges and
all other matters as was its predecessor, without the execution or filing of any
instrument or any further act, deed or conveyance on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 8.6. RESIGNATION BY THE TRUSTEE. The Trustee and any successor
Trustee may at any time resign from the trusts hereby created by giving thirty
days' written notice to the Issuer and the Company and by registered or
certified mail to each registered owner of Bonds then outstanding and to each
holder of Bonds as shown by the list of Bondholders required by this Indenture
to be kept at the office of the Trustee, and such resignation shall take effect
at the end of such thirty (30) days, or upon the earlier appointment of a
successor Trustee by the Bondholders or by the Issuer. Such notice to the
Issuer and the Company may be served personally or sent by registered or
certified mail.
Section 8.7. REMOVAL OF THE TRUSTEE. The Trustee may be removed at any
time by an instrument or concurrent instruments in writing delivered to the
Trustee and to the Issuer and signed by all the Bondholders. For so long as no
Event of Default has occurred and remains unremedied, the Trustee may be removed
by the Issuer upon not less than 30 days written notice to the Trustee.
Section 8.8. APPOINTMENT OF SUCCESSOR TRUSTEE BY THE BONDHOLDERS;
TEMPORARY TRUSTEE. In case the Trustee hereunder 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 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 Bonds then outstanding, by an instrument or concurrent instruments in
writing signed by such owners, or by their attorneys-in-fact, duly authorized;
provided, nevertheless, that in case of such vacancy, the Issuer, by an
instrument executed by one of its duly authorized officers, may appoint a
temporary Trustee to fill such vacancy until a successor Trustee shall be
appointed by the Bondholders in the manner above provided; and any such
temporary Trustee so appointed by the Issuer shall immediately and without
further act be superseded by the Trustee so appointed by such Bondholders.
Notwithstanding the foregoing, for so long as no Event of Default has occurred
and remains unremedied, the Issuer shall appoint the successor trustee. Every
such Trustee appointed pursuant to the provisions of this Section shall be a
trust company
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or bank, having a reported capital and surplus of not less than Ten Million
Dollars ($10,000,000) if there be such an institution willing, qualified and
able to accept the trust upon reasonable or customary terms.
Section 8.9. CONCERNING ANY SUCCESSOR TRUSTEES. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Issuer and the Company an instrument in writing accepting such
appointment hereunder, and thereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessor; but such
predecessor shall, nevertheless, on the written request of the Issuer, or of its
successor, execute and deliver an instrument transferring to such successor
Trustee all the estates, properties, rights, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it as Trustee hereunder to its successor. Should
any instrument in writing from the Issuer be required by any successor Trustee
for more fully and certainly vesting in such successor the estate, 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, acknowledged
and delivered by the Issuer. 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
and/or recorded by the successor Trustee in each recording office, if any, where
the Indenture shall have been filed and/or recorded.
Section 8.10. TRUSTEE PROTECTED IN RELYING UPON RESOLUTIONS, ETC. Subject
to the conditions contained herein, the resolutions, ordinances, 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 hereunder.
Section 8.11. 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,
premium, if any, and interest on the Bonds, and the successor Trustee shall
become such Trustee, Bond Registrar and paying agent.
(End of Article VIII)
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ARTICLE IX.
SUPPLEMENTAL INDENTURES
Section 9.1. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF
BONDHOLDERS. The Issuer 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, as shall not be inconsistent with the terms and provisions
hereof, for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission in this Indenture;
(b) To grant to or confer upon the Trustee for the benefit of the
Bondholders any additional rights, remedies, powers or authority that may
lawfully be granted to or conferred upon the Bondholders or the Trustee or any
of them;
(c) To subject to this Indenture additional revenues, properties or
collateral; provided, that any amendments to this Indenture for the purpose of
subjecting to the lien hereof any new Project Sites shall be in the form of
EXHIBIT B hereto; or
(d) To make any other change in this Indenture which, in the judgment of
the Trustee, is not to the prejudice of the Trustee, the Company or the holders
of the Bonds; or
(e) To modify, amend or supplement the Indenture in such manner as
required to permit the qualification thereof under the Trust Indenture Act of
1939, as amended, or any similar Federal statute hereafter in effect, and, if
they so determine, to add to the Indenture such other terms, conditions and
provisions as may be required by said Trust Indenture Act of 1939, as amended,
or similar Federal Statute.
Section 9.2. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS.
Exclusive of supplemental indentures covered by Section 9.1 hereof, and subject
to the terms and provisions contained in this Section, and not otherwise, the
Requisite Bondholders shall have the right, from time to time, anything
contained in this Indenture to the contrary notwithstanding, to consent to and
approve the execution by the Issuer and the Trustee of such other indenture or
indentures supplemental hereto as shall be deemed necessary and desirable by the
Issuer for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this
Indenture or in any supplemental indenture; provided however, that nothing in
this section contained shall permit or be construed as permitting (except as
otherwise permitted in this Indenture) (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 Bonds, without the consent of the holder of such Bond, or (b)
a reduction in the amount or extension of the time of any payment required by
any sinking fund applicable to any Bonds without the consent of the holders of
all the Bonds which would be affected by the action to be taken, or (c) the
creation of any lien prior to or, on a parity with the lien of this Indenture
without the consent of the holders of
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all the Bonds at the time Outstanding, or (d) a reduction in the aforesaid
aggregate principal amount of Bonds the holders of which are required to consent
to any such supplemental indenture, without the consent of the holders of all
the Bonds at the time Outstanding which would be affected by the action to be
taken, or (e) a modification of the rights, duties or immunities of the Trustee,
without the written consent of the Trustee, or a privilege or priority of any
Bond over any other Bonds, or (g) deprive the holders of any Series 1996 Bonds
then Outstanding of the lien thereby created, or (h) any amendments or changes
to Section 4.6 hereof.
Anything herein to the contrary notwithstanding, a supplemental indenture
under this Article which affects any rights of the Company shall not become
effective unless and until the Company shall have consented in writing to the
execution and delivery of such supplemental indenture. In this regard, the
Trustee shall cause notice of the proposed execution and delivery of any such
supplemental indenture together with a copy of the proposed supplemental
indenture to be mailed by certified or registered mall to the Company at least
fifteen (15) days prior to the proposed date of execution and delivery of any
such supplemental indenture.
(End of Article IX)
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ARTICLE X.
AMENDMENTS TO THE LOAN AGREEMENT
Section 10.1. AMENDMENTS, ETC., TO LOAN AGREEMENT NOT REQUIRING CONSENT OF
BONDHOLDERS. The Issuer and the Trustee, with the consent of the Company and
without the consent of or notice to the Bondholders, may consent to any
amendment, change or modification of the Loan Agreement as may be required (i)
by the provisions of the Loan Agreement and this Indenture, including
particularly amendments to the Loan Agreement relating to the subjecting of
additional property to the lien of the Loan Agreement or (ii) for the purpose of
curing any ambiguity or formal defect or omission in the Loan Agreement, or
(iii) in connection with any other change therein which, in the judgment of the
Trustee, is not to the prejudice of the Trustee or the holders of the Bonds.
Section 10.2. AMENDMENTS, ETC., TO LOAN AGREEMENT REQUIRING CONSENT OF
BONDHOLDERS. Except for the amendments, changes or modifications as provided in
Section 10.1 hereof, neither the Issuer nor the Trustee shall consent to any
other amendment, change or modification of the Loan Agreement without the
written approval or consent of the Requisite Bondholders given and procured as
required in Section 9.2; provided, however, that nothing in this section
contained shall permit or be construed as permitting the types of changes listed
in Section 9.2 hereof.
Section 10.3. NO AMENDMENT MAY ALTER NOTES. Under no circumstances shall
any amendment to the Loan Agreement alter the Notes or the payments of principal
and interest thereon, without the consent of the holders of all the Bonds at the
time Outstanding.
(End of Article X)
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ARTICLE XI.
MISCELLANEOUS
Section 11.1. SATISFACTION AND DISCHARGE. All rights and obligations of
the Issuer and the Company under the Loan Agreement, the Notes and this
Indenture shall terminate, and such instruments shall cease to be of further
effect, and the Trustee shall cancel the Notes and deliver them to the Company,
shall execute and deliver all appropriate instruments evidencing and
acknowledging the satisfaction of the Loan Agreement and satisfaction and
release 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) when
(a) all fees and expenses of the Trustee and any paying agent shall
have been paid;
(b) the Issuer shall have performed all of its covenants and promises
in this Indenture; and
(c) the Company shall have performed all of its covenants and
promises in the Loan Agreement (including without limitation its
obligations under Section 3.30 thereof), the Notes, and this Indenture; and
(d) all Bonds theretofore authenticated and delivered (i) have become
due and payable, or (ii) are to be retired or called for redemption under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee at the expense of the Company, or (iii) have been
delivered to the Trustee cancelled or for cancellation; and, in the case of
(i) and (ii) above, there shall have been deposited with the Trustee either
cash in an amount which shall be sufficient, or investments in Governmental
Obligations, the principal of and the interest on which when due will
provide moneys which, together with any other 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 due on the
Bonds on and prior to the redemption date or maturity date thereof, as the
case may be.
Section 11.2. APPLICATION OF TRUST MONEY. All money or investments
deposited with or held by the Trustee pursuant to Section 11.1 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 for whose payment such money has been deposited
with the Trustee; but such money or obligations need not be segregated from
other funds except to the extent required by law.
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Section 11.3. 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 of
similar tenor and may be executed by such Bondholders in person or by agent
appointed in writing. Provided, however, that wherever this Indenture or the
Loan Agreement requires that any such consent or other action be taken by the
holders of a specified percentage, fraction or majority of the Bonds
Outstanding, any such Bonds held by or for the account of the following persons
shall not be deemed to be Outstanding hereunder for the purpose of determining
whether such requirement has been met: the Issuer, any of its members, the
Company, or the directors, trustees, officers or members of the Company. For all
other purposes, Bonds held by or for the account of such person shall be deemed
to be Outstanding hereunder. Proof of the execution of any such consent,
request, direction, approval, objection or other instrument or of the writing
appointing any such 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, namely:
(a) 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, or by affidavit of any witness to such execution.
(b) The fact of the holding by any person of Bonds transferable by
delivery and the amounts and numbers of such Bonds, and the date of the
holding of the same, may be proved by a certificate executed by any trust
company, bank or bankers, wherever situated, stating that at the date
thereof the party named therein did exhibit to an officer of such trust
company or bank or to such banker, as the property of such party, the Bonds
therein mentioned if such certificate shall be deemed by the Trustee to be
satisfactory. The Trustee may, in its discretion, require evidence that
such Bonds have been deposited with a bank, bankers or trust company,
before taking any action based on such ownership. In lieu of the foregoing,
the Trustee may accept other proofs of the foregoing as it shall deem
appropriate.
For all purposes of this Indenture and of the proceedings for the
enforcement hereof, such person shall be deemed to continue to be the holder of
such Bond until the Trustee shall have received notice in writing to the
contrary.
Section 11.4. LIMITATION OF RIGHTS. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from
this Indenture, or the Bonds is intended or shall be construed to give to any
person other than the parties hereto, and the Company, and the holders of the
Bonds, any legal or equitable right, remedy or claim under or in respect to this
Indenture or any covenants, conditions and provisions herein contained, this
Indenture and all of the covenants, conditions and provisions hereof being
intended to be and
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being for the sole and exclusive benefit of the parties hereto and the Company
and the holders of the Bonds as herein provided.
Section 11.5. 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 contained, shall not affect the remaining portions of this
Indenture, or any part thereof.
Section 11.6. NOTICES. All notices, demands, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered or certified mail, postage prepaid, with proper
address as indicated below. The Issuer, the Company, and the Trustee may, by
written notice given by each to the others, designate any address or addresses
to which notices, demands, certificates or other communications to them shall be
sent when required as contemplated by this Indenture. Until otherwise provided
by the respective parties, all notices, demands, certificates and communications
to each of them shall be addressed as follows:
To the Company: Envirotest Systems Corp.
Attention:
246 Sobrante Way
Sunnyvale, California 94086
To the Issuer: Indiana Development Finance Authority
Attention: Executive Director
One North Capitol, Suite 320
Indianapolis, Indiana 46204
To the Trustee: Old National Trust Company
420 Main Street
P.O. Box 207
Evansville, Indiana 47702
Section 11.7. TRUSTEE AS PAYING AGENT AND REGISTRAR. The Trustee is
hereby designated and agrees to act as paying agent and bond registrar for and
in respect to the Bonds.
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Section 11.8. COUNTERPARTS. This Indenture may be simultaneously executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
Section 11.9. APPLICABLE LAW. This Indenture shall be governed
exclusively by the applicable laws of the State of Indiana.
Section 11.10. IMMUNITY OF OFFICERS AND DIRECTORS. No recourse shall be
had for the payment of the principal of or premium, if any, or interest on any
of the Bonds or for any claim based thereon or upon any obligation, covenant or
agreement in this Indenture contained against any past, present or future
director, member, officer, attorney, agent or employee of the Issuer, or any
incorporator, member, director, officer, attorney, agent or employee or trustee
of any successor corporation, as such, either directly or through the Issuer or
any successor corporation, under any rule of law or equity, statute or
constitution or by the enforcement of any assessment or penalty or otherwise,
and all such liability of any such incorporator, members, directors, officers,
attorneys, agents, employees or trustees as such is hereby expressly waived and
released as a condition of and consideration for the execution of this Indenture
and issuance of such Bonds.
Section 11.11. HOLIDAYS. If any date for the payment of principal of or
interest on the Bonds is not a Business Day then such payment shall be due on
the first Business Day thereafter.
(End of Article XI)
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IN WITNESS WHEREOF, the Indiana Development Finance Authority, has caused
these presents to be signed in its name and behalf by its Vice Chairman and its
corporate seal to be hereunto affixed and attested by the Executive Director,
and to evidence its acceptance of the trusts hereby created, Old National Trust
Company has caused these presents to be signed in its name and behalf by, its
official seal to be hereunto affixed, and the same to be attested by, its duly
authorized officers, all as of the day and year first above written.
INDIANA DEVELOPMENT FINANCE
AUThORITY, INDIANA
By
--------------------------------------
William H. King, Vice Chairman
Attest:
- -----------------------------------
Amy L. Stewart, Executive Director
SEAL
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OLD NATIONAL TRUST COMPANY, as Trustee
By
--------------------------------------
(Written Signature)
By
--------------------------------------
(Printed Signature)
Attest:
- ----------------------------------
(Written Signature)
- ----------------------------------
(Printed Signature)
SEAL
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STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this ______ day of _______, 1996, before me a notary public in and for
said county and state, personally appeared William H. King, to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say: That he is the Vice Chairman of Indiana Development Finance Authority (the
"Issuer"), the corporate body described in and which executed the foregoing
instrument; that he knows the seal of said Issuer; that the seal affixed to said
instrument is the seal of said Issuer; that said instrument was signed and
sealed on behalf of said Issuer, and the said Amy L. Stewart, Executive Director
of the Issuer acknowledged the execution of said instrument to be the voluntary
act and deed of said Issuer by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of _________________, 1996.
-----------------------------------
(Written Signature)
-----------------------------------
(Printed Signature)
Notary Public
My commission expires: My County of Residence is:
- --------------------------- -----------------------------------
(Seal)
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STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this ______ day of __________________, 1996, before me a notary public
in and for said county and state, personally appeared
____________________________________, to me personally known and known to me to
be the same person who executed the within and foregoing instrument, who being
by me duly sworn, did depose, acknowledge and say: That ____________ is the
____________________________________________ of Old National Trust Company, the
chartered corporate trust company described in and which executed the foregoing
instrument; that ____________ knows the seal of said association; that the seal
affixed to said instrument is the seal of said association; that said instrument
was signed and sealed on behalf of the said association; and the said
____________________, the _________________________ of Old National Trust
Company acknowledged the execution of said instrument to be the voluntary act
and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of _____________________, 1996.
-----------------------------------
(Written Signature)
-----------------------------------
(Printed Signature)
Notary Public
My commission expires: My County of Residence is:
- --------------------------- -----------------------------------
(Seal)
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EXHIBIT A
THE INDUSTRIAL DEVELOPMENT FACILITIES
DESCRIPTION OF PROJECT
Centralized inspection/maintenance program facilities located on five sites
in Lake County, Indiana, one site in Porter County, Indiana, one site in Clark
County, Indiana, and one site in Floyd County, Indiana, and all machinery,
equipment and fixtures for the inspection and measurement of motor vehicle
emissions necessary for such operation.
EQUIPMENT
All machinery, equipment, fixtures and tangible personal property at any
time used or intended to be used in connection with the performance of the IDEM
Contract, including generally but not limited to the following:
(a) Dynamometers
(b) Vehicles
(c) Emissions Testing and Analysis Equipment
(d) Personal Computers and Printers
(e) TV Monitors
(f) Miscellaneous Computer Equipment
(g) Office Equipment
(h) Furniture
(i) Shop Equipment and Tools
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PROJECT SITES
The Project Sites shall consist of eight parcels of land, of which five
(which includes one leasehold) are to be located in Lake County, Indiana, one in
Porter County, Indiana, one in Clarke County, Indiana, and one in Floyd County,
Indiana, with specific metes and bounds legal descriptions for each to be added
hereto as acquired by the Company.
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EXHIBIT B
FORM OF AMENDMENT
AMENDMENT NO. ____- TO TRUST INDENTURE
THIS AMENDMENT NO. ___ TO TRUST INDENTURE, dated as of this ___ day of _________
199__ is made by and between INDIANA DEVELOPMENT FINANCE AUTHORITY, a body
corporate and politic, duly organized and validly existing under the laws of the
State of Indiana (hereinafter referred to as "Issuer"), and OLD NATIONAL TRUST
COMPANY, a chartered corporate trust company (hereinafter referred to as
"Trustee").
WITNESSETH THAT:
WITNESSETH, ENVIROTEST SYSTEMS CORP. (the "Company") has executed and
delivered in favor of the Issuer that certain Loan Agreement, Mortgage, Security
Agreement and Financing Statement, dated as of June 1, 1996, thereby securing,
in part, a certain First Mortgage Note, Series 1996, made by Company in favor of
and payable to Issuer, in the aggregate principal amount of $14,345,000.00
(hereinafter referred to as the "Loan Agreement"); and
WHEREAS, by the terms of a Trust Indenture, dated as of June 1, 1996, the
Issuer has agreed to assign its interests in the Mortgaged Property (as defined
in the Loan Agreement), which Mortgaged Property includes the Project Sites, to
the Trustee for the benefit of the owners of the Series 1996 Bonds (the
"Indenture") which Indenture [is attached hereto as EXHIBIT A and incorporated
herein by this reference] or [was recorded as an EXHIBIT A to Instrument No.
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___________ recorded on ____________, 199__ in the office of the Recorder of
________________ County, Indiana]; and
WHEREAS, pursuant to Section 6.1 of the Loan Agreement, as interests in the
Project Sites are acquired by Company with the proceeds of the Series 1996
Bonds, the Company is required to subject such acquired Project Sites to the
lien of the Loan Agreement; and
WHEREAS, the Issuer is required by the Loan Agreement to assign its
interests in the Project Sites to the Trustee as the Project Sites are acquired
pursuant to the Indenture and any amendments thereto; and
WHEREAS, the Company, contemporaneously herewith, has acquired a Project
Site situated in ________ County, Indiana, such Project Site being more
particularly described on EXHIBIT B attached hereto and incorporated herein by
this reference and has subjected such Project Sites to the lien of the Loan
Agreement pursuant to an Amendment to the Loan Agreement, and the Issuer now
desires to assign its interests in the lien of the Loan Agreement to the Trustee
pursuant to the Indenture and this Amendment thereto.
NOW, THEREFORE, in consideration of the foregoing premises, and the sum of
Ten Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Issuer hereby assigns, to the
Trustee all of its right, title and interest in and to the Project Site
described on EXHIBIT B attached hereto and in all supplements and additions
thereto, as more particularly described in the Granting Clauses of the
Indenture; subject, however, to Permitted Encumbrances.
The Issuer intends that its interests in the lien of the Loan Agreement be
assigned pursuant to the Indenture, as supplemented by this Amendment No. ____,
and such lien in favor
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of the Trustee shall attach to and encumber the Project Site situated in
________ County, Indiana and more particularly described on EXHIBIT B attached
hereto as if the same were originally described on EXHIBIT A attached to the
Indenture.
All terms used herein which begin with the initial letter capitalized shall
have the same meanings herein as assigned to them in the Indenture.
Except as modified herein, all terms and conditions of the Indenture, [as
previously supplemented by Amendment Nos. __, __, and __ thereto,] except as
modified herein, shall remain in full force and effect.
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IN WITNESS WHEREOF, the Issuer has caused this Amendment No. ___ to be duly
executed and attested by its duly authorized officers as of the day, month and
year first above written.
INDIANA DEVELOPMENT FINANCE AUTHORITY
By:
-------------------------------------
(signature)
Its:
-------------------------------------
(printed name and title)
(SEAL)
ATTEST:
By:
----------------------------
(signature)
Its:
----------------------------
(printed name and title)
OLD NATIONAL TRUST COMPANY
By:
-------------------------------------
(signature)
Its:
-------------------------------------
(printed name and title)
(SEAL)
ATTEST:
By:
----------------------------
(signature)
Its:
----------------------------
(printed name and title)
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STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this _____ day of ____________, 199__, before me, a Notary Public in and
for said County and State, personally appeared _______________________, the
____________ ______________, of Old National Trust Company, to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say: That he is the __________________ of Old National Trust Company, the
corporation described in and which executed the foregoing instrument; and that
said instrument was signed and sealed on behalf of the said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of ____________________, 199___.
----------------------------------------
(Written Signature)
----------------------------------------
(Printed Signature)
Notary Public
My commission expires: My County of Residence is:
- ------------------------- -----------------------------------
(Seal)
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STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this _______ day of _______, 199__, before me, a Notary Public in and
for said County and State, personally appeared __________________, to me
personally known and known to me to be the same person who executed the within
and foregoing instrument, who, being by me duly sworn, did depose, acknowledge
and say: That he is the ________________ of Indiana Development Finance
Authority (the "Issuer"), the body corporate and politic described in and which
executed the foregoing instrument; that he knows the seal of said Issuer; that
the seal affixed to said instrument is the seal of said Issuer; that said
instrument was signed and sealed on behalf of said Issuer; and the said
_______________, ______________ of the Issuer, acknowledged the execution of
said instrument to be the voluntary act and deed of said Issuer by it
voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of _________________, 199___.
----------------------------------------
(Written Signature)
----------------------------------------
(Printed Signature)
Notary Public
My commission expires: My County of Residence is:
- ------------------------- -----------------------------------
(Seal)
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CONTRACT
FOR Contractor services for implementation, operation, and assistance in
administration of a centralized inspection/ maintenance (I/M) program in Lake,
Porter, Clark and Floyd Counties.
FOR Indiana Department of Environmental Management.
This contract LS between Systems Control Indiana Corp., a wholly owned
subsidiary of Systems Control, Inc., both corporations organized under the
General Corporation Law of the State of Delaware, as amended to date
(hereinafter referred to as the "Contractor"), and the Indiana Department of
Environmental Management, acting by and through the Indiana Department of
Administration, for and on the behalf of the State of Indiana (hereinafter
referred to as the "State").
WHEREAS, the State desires to implement, operate, and administer a centralized
I/M program in Lake, Porter, Clark and Floyd Counties;
WHEREAS, the State desires to contract for certain of the services necessary for
tie implementation, operation, and assistance in administration of a centralized
I/M program in Lake, Porter, Clark and Floyd Counties;
WHEREAS, the State published a Request for Proposals (RFP), No. A305-2038, to
invite offerors to make a proposal for implementation, operation, and assistance
in the administration of a centralized I/M program in Lake, Porter, Clark and
Floyd Counties;
WHEREAS, the Contractor has posted the required bonds and been recommended based
on its proposal as the vendor to provide the services necessary for the
implementation, operation, and administration of a centralized I/M program in
Lake, Porter, Clark, and Floyd Counties;
WHEREAS, the Contractor has the expertise and is willing to provide the services
necessary for the implementation, operation, and administration of a centralized
I/M program in Lake, Porter, Clark and Floyd Counties;
NOW, THEREFORE, the above named parties enter into this contract upon the
following terms and conditions:
The State of Indiana Request For Proposals RFP #A305-2038, dated December 14,
1993, (the "Request") incorporated by reference and appended hereto as
Exhibit A, the Response By The Contractor To Request dated March 9, 1994,
(the "Response") incorporated by reference and appended hereto as Exhibit B,
and the terms and conditions provided herein constitute the entire agreement
between the parties with respect to the subject matter. All prior
agreements, representations, statement, negotiations, and
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undertaking are superseded hereby. This contract does not include agreement
between the parties for procurement of capital equipment, facilities or land
for use by the State or for the design of the centralized I/M program for
Lake, Porter, Clark and Floyd Counties.
Any inconsistency or ambiguity in this contract shall be resolved by giving
precedence in the following order: 1) the terms and conditions provided herein;
2) exhibits prepared by the State; 3) exhibits prepared by the Contractor; 4)
any other exhibits attached to this agreement.
The provisions of this contract are severable, and the invalidity of any
provision shall not affect the validity of any other provision.
DEFINITIONS. As used in this contract:
1. "enhanced I/M program" means any program which meets the enhanced I/M
program requirements provided in 40 CFR Part 51, as amended.
2. "facility" means a motor vehicle testing location, either mobile or
stationary, operated by the Contractor.
3. "facility down-time" means any period of time, including all time
required to diagnose and correct equipment failures, during which a single
facility is not capable of performing the total intended functions as required
in this contract, but not to include time required of the Contractor at any
single facility of two hours or less to conduct calibration and maintenance
procedures.
4. "IM240" means the transient dynamometer schedule provided in 40 CFR
Part 51, specifically Sections 51.357 and 51.358, as amended, and described in
the Environmental Protection Agency (EPA) document dated April 1, 1994, entitled
"High-Tech I/M Test Procedures, Emission Standard, Quality Control Requirement,
and Equipment Specifications".
5. "Initial test" means the first test a vehicle acquires in a two year
testing period.
6. "Program" means the enhanced I/M program, support systems and any
other service provided by the Contractor under this agreement.
I. DUTIES OF CONTRACTOR.
The Contractor agrees to provide a motor vehicle inspection and Maintenance
program in Lake, Porter, Clark and Floyd Counties that meets all applicable
federal requirements and ail applicable requirements of 326 IAC 13-1.1. If
state regulations are amended subsequent to the signing of this contract so as
to materially change the nature and/or cost of the services to be provided by
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the Contractor, the parties' agree to amend this contract, subject to the
availability of funds for such increased cost.
The Contractor shall provide the following specific services relative to
this contract:
A. FACILITIES AND SITE REQUIREMENTS
1. GEOGRAPHIC LOCATION. The Contractor shall provide the
services required under this contract at the following geographic locations:
1. Hammond - Lake County
3411 Sheffield Avenue
2. Griffith - Lake County
Southeast corner of Colfax and Main Street
3. Crown Point - Lake County
Center Industrial Park
4. Portage - Porter County
Southeast corner of Wilshire Road
and Highway 6
5. Valparaiso - Porter County
Corner of Silhavy Road and Chicago Street
6. New Albany - Floyd County
Corner of Reas Lee and Industrial Park East
7. Silver Creek - Clark County Silver Creek Industrial Park,
Lot #8
or such other location as the parties may mutually agree m accordance with the
site selection criteria set forth in the RFP.
2. DESIGN COMPLIANCE. The Contractor shall comply with the
design data, documentation and other requirements developed under separate
agreement and provided to the Contractor by the State and determined applicable
to the facility, equipment, computer software and computer system at each
centralized I/M program location in Lake, Porter, Clark and Floyd Counties.
3. PROHIBITION AGAINST FRUSTRATION OF LOCAL BUSINESS.
Contractor operation of each test site shall not result in lines of vehicles
awaiting testing which materially and adversely interfere with the operation of
businesses located in the vicinity of the test site.
4. WAIT TIMES. The Contractor shall operate each facility so
that testing on a vehicle will begin within thirty (30) minutes from the time
the vehicle is presented in line for testing. Such thirty (30) minute
requirement shall not
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apply to the operation of any of the inspection facilites during either the
first three or the last three testing days of each month. On the first three
and the last three testing days of each month the Contractor shall operate
each facility so that testing on a vehicle will begin within sixty (60)
minutes from the time the vehicle is presented in line for testing.
5. INSPECTION TIMES. The Contractor shall open and staff spare
lanes as needed to reduce the queue to less than four vehicles whenever there
are more than four vehicles queued for any one lane.
6. QUEUING AREA. The length of the queuing lanes on each
inspection site shall be at least long enough to accommodate the waiting times
specified in 4. herein above. The minimum lane length per queuing lane shall be
150 linear feet.
7. DISABLED VEHICLE AREA. The Contractor shall provide parking
space for at least two disabled vehicles (vehicles that have become inoperable
at the inspection facility) at each inspection facility. The disabled parking
spaces shall be convenient to the inspection lanes, and the location shall be
consistent with the manner in which disabled vehicles will be removed from the
inspection lanes.
8. PARKING. The Contractor shall provide parking at each
inspection facility for each on duty Contractor employee, plus one parking space
per inspection lane for visitors. In addition to the employee and visitor
parking spaces described above herein, each inspection site shall provide
parking for the handicapped in accordance with state and federal law.
The Contractor shall not block inspection lanes or adversely
affect vehicle ingress and egress from the inspection facility by its placement
of parking spaces. The entrances and exits to the visitor parking areas shall
be clearly marked and accessible from public streets and from inspection lanes.
9. LANDSCAPING. The Contractor shall ensure that at least 10%
of the area at the inspection site be vegetated soil and conform with local
planning and zoning regulations, including any requirements for buffering.
Lawns and/or shrubbery shall be properly maintained by the Contractor.
10. PAVING AND MARKING. All surfaces upon which vehicles will
move shall be properly paved and maintained by the Contractor. Lane and
directional markings, and pedestrian walkways shall be painted and properly
maintained by the Contractor. All painted markings shall be properly maintained
by the Contractor based upon evaluation by the State. All markings used by the
Contractor shall be consistent with those used on public roadways. The
Contractor shall keep all surfaces clean at all times and shall remove snow from
all driving surfaces at an inspection facility when accumulation exceeds one
inch on any
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part of such driving surfaces. Pedestrian walkways on and around test/waiver
centers shall be kept clear of snow and ice at all times regardless of depth.
Paved areas and walkways shall have drains designed to prevent standing
water. Contractor shall use signs and other devices to warn persons of
hazards including but not limited to ice and water, as is prudent or required
by law.
11. PUBLIC AREAS. Public waiting areas shall be provided at all
inspection facilities when test procedures require occupants to get out of a
vehicle. Such public areas shall be easily accessible to handicapped persons.
Such public areas shall be placed so that crossing adjacent test lanes is not
required. The area should be enclosed and situated in such a way that customers
may observe their vehicle at all times during testing/appeals procedures. The
area shall be safe and reasonably comfortable. Noise from inspection facility
operations shall not exceed 80 decibels inside the waiting area The public areas
shall be furnished in an appropriate manner and shall provide the positioning of
such furnishings to scale in the design presented to the State for approval.
The public waiting area shall be a posted and Contractor enforced non-smoking
area.
12. INSPECTION PERSONNEL ATTIRE. The Contractor shall require
that all Contractor inspection personnel directly involved with vehicle
inspection wear uniforms which meet State and federal law and are approved by
the State. The State approval of the uniforms is not a substitute for meeting
any applicable State and federal requirements including but not limited to OSHA
health and safety requirements. Compliance with such requirements is the sole
responsibility of the Contractor.
13. CONSUMER VEHICLE DAMAGE. The Contractor shall be
responsible for all vehicle damage during inspections caused by the act or
omission of persons within the control of the Contractor, including but not
limited to an employee, agent, partner. associate or representative.
B. PROGRAM SCHEDULE. The State shall notify all motorists when they
are due for testing. Motorists with vehicle identification numbers (VINs)
ending in "000" through "495" or containing only "alpha" characters shall be
tested by the Contractor during even calendar years. Motorists with VINs ending
in "496" through "999" shall be tested by the Contractor during odd calendar
years. No vehicle shall be issued more than one initial inspection. However,
all vehicles shall be tested by Contractor once during every two (2) year
period.
C. ZONING. The Contractor shall maintain the proper zoning and
permits for the operation of each vehicle inspection facility from the
appropriate authorities and shall keep on file with the State an up-to-date
photocopy of such documentation.
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D. INSPECTION FACILITY REQUIREMENTS.
1. GENERAL. The Contractor shall provide facilities at each
site location and shall maintain the uniform design identifiable to the general
public. The Contractor shall conform such facilities to any and all applicable
local zoning laws ordinances. building codes. etc.
2. WAIVER INSPECTION AREA. The Contractor shall provide at
each site a non-smoking sheltered area for waiver inspections.
3. SAFETY AND FIRE REQUIREMENTS. The Contractor shall ensure
that the facilities comply with all state and local safety and fire codes,
ordinances and regulations and with all Occupational Safety and Health
Administration ("OSHA") Requirements.
4. VENTILATION. The Contractor shall ensure that each test
facility shall provide adequate ventilation to the vehicle testing and other
areas so that OSHA exposure limits are not exceeded. The ventilation system must
remove smoke/fumes from the lanes quickly without causing severe drafts. A
carbon monoxide (CO) detector must be placed at each vehicle testing area
adjacent to each emission testing position and five (5) to six (6) feet above
the floor.
5. VEHICLE SIZE. The Contractor shall provide facilities which
accommodate and test vehicles registered at a Gross Vehicle Weight (GVW) up to
10,000 pounds and that at least one lane at each multilane facility accommodate
and test large dimension vehicles such as pickups with campers and trucks.
6. SPACE FOR STATE PERSONNEL AND EQUIPMENT. The Contractor
shall ensure that a number of 190 square feet of space for storage of the
State's QA/OC equipment and office work space for State personnel are provided
at each inspection facility. A parking space shall be reserved for use by a
state vehicle. The State at its own risk shall be allowed by the Contractor to
park one vehicle within the waiver bay of each facility at night and during the
weekends. The State shall have access to such parked vehicles at all times.
7. COMFORT STATION. The Contract shall ensure that comfort
stations are kept clean and sanitary at all times and include for use by all
persons on site a handicapped accessible lavatory and toilet.
8. IDENTIFICATION AND DIRECTIONAL SIGNS. The Contractor shall
coordinate with the appropriate governmental entities the placement and setting
in place identification and direction signs to direct motorists to an inspection
facility from the nearest highway or arterial.
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9. WAIT TIME SIGNS. The Contractor shall provide at each
inspection facility a prominently displayed sign notifying motorists of the
average waiting time to expect for an emissions inspection at that facility.
10. HANDICAPPED ACCESSIBILITY. The Contractor shall ensure that
each facility provides access to the handicapped as required by the Americans
with Disabilities Act and other federal, state, and local laws, rules, codes,
etc. and signage sufficient for a hearing impaired person or a person with
limited English language skills to complete the inspection process.
E. TEST PROCEDURES. The Contractor shall develop and maintain
written up-to-date procedures for conducting an IM240 transient test in
accordance with the IM240 test procedures described in both the EPA document
"High-Tech I/M Test Procedures, Emissions Standards, Quality Control
Requirements, and Equipment Specification" (dated April 1994), and EPA 40 CFR
Part 51 Sections 51.357 and 51.358 as may be amended (hereinafter together
referred to as the "EPA Test Procedure") which is incorporated herein by
reference.
1. ON-BOARD DIAGNOSTICS PROCEDURES. The Contractor shall test
all vehicles subject to on-board diagnostics inspections in accordance with EPA
rules as may be promulgated.
2. DATA COLLECTION/CALCULATIONS. The Contractor shall collect
and store data in accordance with IM240 test process data collection methods
described in the EPA Test Procedures.
3. ON-ROAD TESTING. The Contractor shall perform on-road
testing to evaluate the emission performance of 0.5 percent of the subject
fleet. Measurement of on-road emissions is not required in every season or
every vehicle and can be through the use of remote sensing devices or road side
pullovers. The Contractor shall file with the State in final form no later than
the Commencement Date of this contract the State approved plan for an on-road
testing program. The Contractor shall also submit to the State for review and
approval any proposed or actual modifications to the such on-road testing plan,
including performance parameters and processes.
4. EQUIPMENT SPECIFICATION. The Contractor shall incorporate
testing equipment pursuant to the IM240 equipment specifications described in
the EPA Test Procedures which shall accommodate LDTs and LDVs 2-wheel drive and
full-time 4-wheel drive vehicles up to 10,000 pounds curb weight.
5. PROGRAM QUALITY ASSURANCE/QUALITY CONTROL (QA/OC). An
ongoing QA/QC program shall be implemented by the Contractor to discover,
correct and prevent fraud, waste, and abuse. Also, the Contractor must
determine whether procedures
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are being followed, are adequate, whether equipment is measuring accurately,
and whether other problems might exist which would impede program
performance. The Contractor shall have on file on the Commencement Date of
this contract a State approved QA/QC Plan. The Contractor must submit to the
State for review and approval any modification to the QA/QC Plan made
subsequent to the Commencement Date of this contract. The audits on the
measurements systems apparatus conducted by the Contractor must reflect the
same conditions that are present when the measurement system is calibrated
and when the measurement system is generated. Such an audit plan must be
approved by the State.
F. INSPECTION SYSTEM REQUIREMENTS. The Contractor shall provide and
install equipment in each inspection facility to implement the required
inspection system (hereinafter called the 'System). The System shall implement
and provide for transient IM240 testing.
1. INSPECTION SYSTEM. The Contractor shall provide an
integrated computer-based inspection system in which the operator in the
inspection lane is prompted for input data and testing instruction, in which the
equipment is interrogated for test data, and in which the computer returns a
pass/fall/void decision (with test results or void decision with reasons for
void) based on the input and test data. The System shall accept on-line
registration information and other data from the Indiana Bureau of Motor
Vehicles regarding registrant compliance or non-compliance with minimal costs.
Data collected from each inspection facility shall be transmitted by the System
in a real-time, on-line manner to a central database located at the Contractor's
headquarters office located in Lake or Porter County. All hardware and software
on the System shall be of sufficient capacity to maintain all necessary vehicle
ownership data, test data, and program enforcement data on-line of both the
current calendar year and the previous calendar year. The Contractor shall
ensure that the central data base for the State is available through a
dedicated/lease telecommunication line. The Contractor shall provide all
necessary authorizations for access to and usage of software by State personnel.
The parties agree that no software is being developed for the State pursuant to
this contract. The Contractor shall install and maintain a communications
network providing State personnel with on-line access to the central data base.
The Contractor shall install and provide operating software and support for a
direct communications link for the State office personal computers. The
Contractor shall ensure that data base structure and query capabilities shall
utilize current relational techniques and user friendly ad hoc reporting
functionality. The Contractor shall be responsible for design, acquisition,
implementation operation, and maintenance of the system in each test facility
and central data base.
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The System shall also meet the following criteria:
a. The System shall perform and store the results of all
routine functional checks required to be performed on the Test equipment as
described in EPA Test Procedures.
b. The System shall provide a data collection function for
at least the data necessary to prepare the reports specified in Section 6(C) of
the Request. In addition, the System shall possess the capability to maintain
and store vehicle registration information, as updated by the State.
c. The System shall generate add store inspection data
reinspection data, and waiver and vehicle repair data. The Contractor shall
upload data from each inspection facility to the central data base at least
daily. The Contractor shall capture and in real time back up all transactions
between computers in the program network and a host computer such that the
database can be restored and no inspection transaction lost. In addition, a
backup copy of the central database shall be both transferred to and maintained
by the Contractor at an off site repository on a no less than weekly basis.
d. The System shall allow the State to access the database
and be capable of allowing both the Contractor and the State to generate reports
from the relational database during normal business hours.
e. The System shall allow the State to access all data in
the host system. An access code system shall prevent unauthorized access and
viewing of the data.
f. The System shall allow each lane of each test facility
to have an appropriate data input station or the equivalent for the inspector
and a printer to generate inspection reports or certificates.
g. The System shall allow the data input station to limit-
check input data, and notify the inspector of out of limit conditions.
h. The System shall be supported by application software
with all necessary programs to allow the System to correctly perform all
specified functions. The State shall have rights to all System program source
code and reports generated in event of the replacement of the Contractor,
termination of the contract, or other continuation of the program by the State.
i. All application software supporting the System written
by the Contractor shall achieve the following basic goals in order of
importance:
i. Reliable
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ii. Maintainable
iii. User-friendly
iv. Efficient
j. Any modifications by the Contractor to the application
software supporting the System shall be made to the source code and must be
properly documented.
k. The application software supporting the System shall
enable the Contractor to control all devices. The software shall function in
any size I/M inspection facility configuration.
The Contractor shall submit to the State all the
documentation listed below herein and any other documentation requested by the
State on the computer system used by the Contractor under this agreement. The
Contractor shall update such documentation on file with the State in a timely
fashion.
i. A functional description of the features and
capabilities of the application software;
ii. A functional description, including flow charts
or schematics, of how the application software will relate to the network of
computer systems and program equipment (analyzers, etc.);
iii. A description of the methodology and rationale
used to develop and maintain all software as well as any data flow diagrams and
entity relationships models; and operation of the System.
The System shall be operational on and after the
Commencement Date (See Section III, TERM) of this contract.
The Contractor shall provide to the State on the
Commencement Date of this contract both a source code escrow agreement and the
terms and conditions of all software licenses, such agreement, terms and
conditions shall be mutually agreeable to both parties.
The Contractor shall maintain a copy of The Source Media
Documentation in an escrow account and shall establish an Escrow Agreement as
soon as possible after the effective date of the contract
i. SOURCE MEDIA DOCUMENTATION. The term "Source
Media Documentation" means the following:
(a) a complete copy in machine-readable form of
the Source Code and Executable Code of the Licensed Program(s);
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(b) a complete copy of any existing Design
Documentation; and
(c) complete instructions for compiling and
linking every part of the Source Code into Executable Code, for purposes of
enabling verification of the completeness of the Source Code as provided below.
Such instructions shall include precise identification of all compilers, library
packages, and linkers used to generate Executable Code.
ii. ESCROW FEES. All fees and expenses charged by
the Escrow Agent will be borne by Contractor.
iii. RELEASE EVENTS FOR SOURCE MEDIA DOCUMENTATION.
The Source Media Documentation may be released from escrow to the State,
temporarily or permanently, solely upon the occurrence during the Contract
period of one or more C the following "Escrow Release Events" defined below:
(a) permanently, if Contractor becomes insolvent
or admits insolvency or admits a general inability to pay its debts as they
become due; (b) permanently, if Contractor files a petition for protection under
the Bankruptcy Code of the United States, or an involuntary petition in
bankruptcy is filed against Contractor and is not dismissed within sixty (60)
days thereafter;
(c) temporarily, if Contractor proves unable or
otherwise fails to cure a breach of the Contract, for a period of time that
would allow the State or its designed to make a reasonable attempt to cure such
breach.
(d) permanently, if this contract is terminated
in accordance with the provisions herein and the State itself or through another
Contractor intends to continue to operate the Program.
iv. RELEASE EVENT PROCEDURES. If the State or its
designed desires to obtain the Source Media Documentation from the Escrow Agent
upon the occurrence of a Release Event, then:
(a) The State shall comply with the procedures
set forth in the Escrow Agreement to document the occurrence of the Release
Event;
(b) The State shall maintain all materials and
information comprising the Source Media Documentation in strict confidence and
shall use and/or disclose such materials and information only in accordance with
this Agreement.
(c) If the release is a temporary one, then the
State shall promptly return all released materials
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to Contractor when the circumstances leading to the release are no longer in
effect.
l. The System shall allow for access and viewing of
inspection facility operational data (downtime, throughput, wait time, etc.) for
each lane at each inspection facility.
m. Prior to Acceptance Testing, the Contractor shall
submit to the State a description of how State personnel may access the central
database. The Contractor must keep such description current so that the State
always has access to the central data base. A schedule of all microcomputers,
communications equipment, peripheral hardware, operating systems software, and
report generation products shall be identified by the Contractor and an
explanation of how they function shall be filed by the Contractor with the
State. The Contractor shall keep such schedule and explanation filed with the
State current. The State shall have access to all inspection data report
generating software, data analysis and reports derived from inspection data that
are contained in the database. The State will coordinate its access to the
central database with the Contractor such that State inquiries do not adversely
impact test operations.
n. The Contractor shall supply to the State all
communication hardware and software leased telecommunications lines and other
pertinent equipment necessary to communicate with the Contractor's database at
9600 baud or greater. Two microcomputers with sufficient capacity and
resources, complete with all necessary reporting, analysis, and operating system
software shall be provided to the State by the Contractor. The Contractor shall
provide servicing during normal working hours between 8:00 a.m. to 5:00 p.m. on
all communications equipment within 4 normal working hours of a State request.
o. The Contractor to ensure the continuity of testing
shall provide the State with a contingency plan for data collection, processing
and report generation in the event of a loss during operating hours of telephone
service, computer systems breakdown, or electrical power failure.
p. System Security:
i. The Contractor shall utilize a multi-level access
code and security system which allows normal testing by the Contractor's staff,
control by the inspection facility manager, and access for changes by the
Contractor and State personnel.
ii. The security system shall consist of a password
system having different levels of access to database and functions.
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q. Parameters:
The Contractor shall ensure that the System error checks all
analyzer inputs and notify the operator and the Contractor's headquarters of all
out-of-limit conditions. In addition, the Contractor shall insure that the
System prepares and transmits to the State a report on a weekly basis detailing
location, date, time, reason for out-of-limit condition, corrective action
taken, and name of the supervisor responsible for corrective action.
r. Real Time Linkage:
Each test lane at each inspection facility in the inspection
network shall utilize a realtime data link to the host computer to prevent
unauthorized multiple initial tests on the same vehicle in a test cycle and to
insure test record accuracy.
2. EQUIPMENT REQUIREMENTS. The Contractor is responsible for
providing all equipment necessary for the operation of the test facilities
centers and for the performance of services required under this contract. All
such equipment will comply with the design data, documentation and other
requirements developed under separate agreement and determined applicable by the
State. The Contractor is responsible for determining the degree of interference
control required at each facility to ensure the proper operation of any other
equipment at the center or neighboring premises and to protect both from
degradation by interference signals which may be present The inspection stations
shall be equipped to conduct enhanced I/M procedures in accordance with 326 IAC
13-I.l and 40 CFR Part 51, as may be amended, unless the State notifies the
Contractor otherwise in accordance with this paragraph. If the State notifies
the Contractor that the inspection stations in Clark and FIoyd Counties shall be
equipped with equipment to conduct basic I/M or basic "plus" I/M procedures
rather than enhanced I/M the parties agree to amend the Consideration agreed to
in Section II. of this Contract accordingly. If the State so notifies the
Contractor prior to December 15, 1994, the State shall have no liability for any
damages the Contractor may incur relative to purchases of equipment. If the
State notifies the Contractor after December 15, 1994, the parties agree to
address any damages incurred by the Contractor when they amend the Consideration
for this Contract.
All equipment used to provide the services required under this contract must
meet the following requirements:
a. All equipment provided shall be designed and constructed in
compliance with applicable OSHA regulations in effect on the commencement date
of this contract or the date the equipment is selected whichever is later. In
addition, all such equipment shall meet the following criteria:
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i. All equipment shall be of the type described in EPA
Test Procedures.
ii. All equipment shall allow easy access to all components
contained within enclosures. Slide-out or hinged mountings with quick
disconnect connectors and handles for extraction shall be employed where
enclosures would otherwise prevent access to equipment
iii. Mechanical and electrical interchange ability shall
exist between like assemblies, components and their replacement parts.
iv. No equipment used in the performance of services under
the contract shall use batteries or generators unless otherwise specified.
Battery backup may be used to maintain computer functions (memory, time keeping,
etc.) and emergency generators to maintain electrical power may be used in the
event of an electrical power disruption.
v. Electronic enclosures shall provide dust-protective
housing of sheltered equipment. Ventilating air flow shall be filtered.
vi. The Contractor shall meet the requirements of all
applicable electrical codes both local and other.
vii. Performance of equipment shall be protected from
degradation by interference signals which may he present at the facility.
viii. Exposed cables used in the inspection lanes shall be
designed of material resistant to gasoline, gasohol (10% mixture), oil, water,
and engine exhaust. The cables shall be of heavy construction to withstand
normal use well as abuse, yet still be easily serviced. Bundled cables shall be
protected from abrasion and fraying or dislocation of individual conductors.
b. SITE STORAGE. The Contractor shall provide storage areas at
each test facility which must include wall mount components necessary to safely
secure four (4) one hundred fifty (150) cubic feet compressed gas cylinders in
upright position at room temperature.
c. SPARE PARTS INVENTORY. The Contractor shall maintain
sufficient inventory of or agreement with third party for guaranteed same day
delivery of spare parts to ensure continuous non-stop operation of all equipment
during normal hours of inspection.
3. VEHICLE TEST STANDARDS. The Contractor shall use the emission
standards set by the State or the EPA Test Procedures as the vehicle test
standard and shall allow for two
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sets of changes in the numerical levels of such emission standards per year
at no cost to the State. If so directed by the State, the Contractor shall
provide that certificates of compliance be issued to vehicles that fail only
the NOx portion of the test.
a. RETEST STANDARDS. The Contractor shall use the emission
test standards and all portions of the emission test i.e. exhaust, purge,
integrity for all vehicles and retest vehicles, regardless of the reason of
initial failure.
b. FAST PASS STANDARDS. The Contractor shall perform fast
pass/fail routines in accordance with EPA approved procedure and pursuant to a
plan approved by the State. The Contractor understands and accepts that
approval by the State of the fast pass/fail routines plan submitted by the
Contractor is contingent upon the submission of the plan by the State to EPA and
EPA approval of such plan.
c. ON-BOARD DIAGNOSTICS STANDARDS. The Contractor shall fail
test vehicles exceeding the EPA standards for on-board diagnostics.
d. PREVENTATIVE MAINTENANCE PROCEDURES. The Contractor shall
establish and maintain routine preventative maintenance procedures to ensure the
reliability of the System during the term of this contract.
4. PERSONNEL REQUIREMENTS. The Contractor shall be responsible
for the hiring and training of all personnel for each inspection facility and
for all other personnel performing the Contractor's duties under the Contract
The Contractor shall not subcontract the actual operation of any significant
aspect of the operation o the Emission Testing Program ("ETP"). The Contractor
and its employees shall be barred from engaging (either directly or indirectly)
in motor vehicle repair or service motor vehicle parts sales or motor vehicle
sales or leasing. The Contractor shall have each employee so employed sign an
appropriately worded agreement that such employee shall not engage in any
fashion (direct or indirect) in motor vehicle repair or service, motor vehicle
parts sales, or motor vehicle sales or leasing. The Contractor shall develop an
employee handbook that shall set forth standards of conduct for its employees
and disciplinary measures for failure to comply with those standards and shall
provide a copy to the State by the Commencement Date of this contract.
a. PERSONNEL OUALIFICATIONS. The Contractor shall staff
facilities with personnel meeting qualifications consistent with the scope of
work required to perform the inspections, with the related System maintenance
activities, and with all other duties of the Contractor under the contract.
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b. TRAINING. The Contractor shall adequately train all
contractor personnel to perform their required duties. Curricula shall include,
but are not limited to, the following:
ETP Orientation
State Policies
Vehicle Emissions and Standards
Inspection and Facility Operations Procedures Customer Service
Complaint Handling
The Contractor shall use only inspectors holding a valid appropriate
two year Indiana license to conduct ETP inspections. To be licensed by the
State, an inspector shall be required to pass an examination developed by the
State in conjunction with the Contractor which shall include both written and
practicular sections. Such examination shall be administered by the Contractor
every two years for existing staff. The examination shall be provided as often
as necessary for the Contractor to maintain an adequate number of licensed
inspectors to perform its duties under the Contract.
In addition, each calendar year, beginning the second calendar year
under this contract, the Contractor shall provide without charge
update/educational sessions open to any and all interested State staffs
presenting relevant information and providing appropriate instruction on all
aspects, including computer software and hardware, of the motor vehicle emission
inspection program. The Contractor shall schedule such training as requested by
the State but in no calendar year shall such update/educational sessions total
more than forty (40) hours of Contractor presentation time. Such sessions are
not a substitute for other reporting responsibilities placed on the Contractor
by this contract.
5. OPERATING REQUIREMENTS.
a. HOURS OF OPERATION. With the exception of State
holidays, the Contractor shall initially operate all of the inspection
facilities a number of fifty-four (54) hours per week as provided in the
schedule below herein:
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SCHEDULE OF MINIMUM OPERATING HOURS
WEEKDAYS MINIMUM OPERATING HOURS
-------- -----------------------
Monday 8 a.m. to 7 p.m.
Tuesday 8 a.m. to 5 p.m.
Wednesday 8 a.m. to 7 p.m.
Thursday 8 a.m. to 5 p.m.
Friday 8 a.m. to 5 p.m.
Saturday 8 a.m. to 1 p.m.
Sunday Closed
The parties shall monitor the appropriateness of the schedule of minimum
operating hours and shall modify it as appropriate for each individual
inspection facility to effectively meet the needs of the vehicle registrants of
that area. Any modification of the schedule for any individual inspection
facility shall be mutually agreed to in writing by the parties. In no instance
shall the operating schedule for an inspection facility be for less than the
minimum fifty-four (54) hours per week. The parties may, however, modify such
fifty-four (54) hours per week requirement through the proper execution of a
written amendment to this contract. The Contractor shall post the agreed to
operating hours at each inspection facility in a manner clearly visible to the
public. The State shall provide the Contractor with a list of State holidays on
which all inspections facilities shall be closed. The Contractor shall post
with its operating hours such list of State holidays on which the inspection
facility will be closed.
b. INSPECTION FACILITY MAINTENANCE. The Contractor shall
ensure that the inspection facilities are kept clean, well maintained and safe.
The Contractor shall perform maintenance, including but not limited to,
painting, cleaning, and any repairs necessary to keep the inspection facilities
and equipment in like-new condition, reasonable wear and tear excepted.
c. RIGHT OF ENTRY. The State or its designees, but not
including direct competitors of the Contractor, shall have the right to enter
and inspect any inspection facilities during normal business hours with or
without the Contractor present. The right to enter and inspect shall include
the inspection and review of all physical facilities, equipment, materials,
records, computer files and other items on site whether pertaining to the ETP or
not. The Contractor given five days notice by the State shall provide the State
or its designee access to inspect any of the facilities during non-business
hours.
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d. MOTORIST NOTIFICATION. The State shall ensure that
notification to each motorist is provided by including a notice in the
registration packet mailed to the motorist by the Indiana Bureau of Motor
Vehicles.
e. CUSTOMER COMPLAINTS. The Contractor shall be responsible
for handling customer complaints. The Contractor shall address all complaints
in a courteous manner and make every reasonable effort to resolve all complaints
in a timely manner. The Contractor shall provide the State on a weekly basis
with a complete written list of all customer complaints received by the
Contractor and the status of their resolution.
f. TEST DISPUTES. The Contractor shall be responsible for the
initial handling of all test disputes. The Contractor shall address all
disputes in a courteous manner and the Contractor shall make every effort
reasonable' to resolve the dispute in a timely manner. Disputes which the
Contractor cannot resolve shall be referred to the State. The Contractor shall
provide the State with a weekly written listing of the status of all test
disputes.
g. CUSTOMER VEHICLE DAMAGE. The Contractor shall be
responsible for any vehicle damage during an inspection caused by an act or
emission of any of the Contractor's employees, agents, or representatives.
h. OPERATIONS MANUAL. The Contractor shall file on the
Commencement Date of this contract and maintain with the State a file of copy of
the then current standard operating procedures and policies manual which shall
have been approved by the State. The manual shall describe the procedures used
in the performance of all test operations including, but not limited to, data
processing, complaint handling, computer programs and procedures issuance of
certificates and notices, quality assurance activities, and maintenance.
The State can request revisions be made and any changes made by
the Contractor to the manuals shall be approved by the State prior to their
implementation. The Contractor shall supply updated versions of
policy/procedures manuals to the State as they become available, or upon request
by the State. The Contractor shall not use an operation procedure or apply an
operation policy to the program if the procedure or policy is not approved in
writing by the State in advance.
i. FORMS. The Contractor shall file on the Commencement Date of
this contract any and all State approved forms for the recording of test
results, repair cost data, complaints, and the issuance of compliance, extension
and waiver certificates. The Contractor will revise such forms at the
reasonable request of the State. Forms may be printed or issued by computer and
may serve multiple purpose but must be approved by the State in advance of use
by the Contractor.
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j. Upon request by the State, the Contractor will perform up to
one thousand (1,000) inspections per year on vehicles that are part of a vehicle
scrappage or "cash for clunkers" program.
6. REPORTS.
a. The Contractor shall maintain a master copy of all data so
that the State or its designees have easy access to the information. The
Contractor is responsible for ensuring that the number of tests and retests by
station/lane/tester/time and the corresponding test data, all repair costs,
fleet tests, and audit data shall be in the central computer system at the time
of testing. The Contractor shall submit all reports to the State in hard copy
format and shall also make such information available to the State in an
electronically compatible format
b. The Contractor must secure the approval of the State to make
any changes which may affect the ease of access to data or the nature of the
data collected or used by the Program. The Contractor shall maintain data
confidential at all times including names and mailing lists which shall not be
made available by the Contractor to any third party without prior written
approval by the State.
c. The State and the Contractor shall jointly develop report
forms.
d. The Contractor shall provide the operator of each vehicle
with a computer generated vehicle inspection report upon completion of each
inspection. Vehicle inspection report data provided the motorist shall be
simultaneously transmitted by the Contractor to the State computer facilities
involved.
e. The Contractor shall provide the following weekly reports
(for each station by day). A weekly report shall be furnished to the State no
later than 5:00 p.m. the Wednesday following the week of the report
i. A weekly report on the number and percentage of
vehicles model year and make:
- Failing the emissions test initially.
- Failing the evaporative system integrity
test.
- Failing the evaporative system purge
test.
- Failing visual equipment testing
procedures.
- Passing the first retest for tailpipe
emissions.
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- Initially failed vehicles passing the second or
subsequent retest for tailpipe emissions.
- Initially failed vehicle passing the visual equipment
test on the first or subsequent retest by component.
- Initially failed vehicle passing the evaporative system
integrity test.
- Initially failed vehicle passing the evaporative
system purge test on the first or subsequent
retest.
- Initially failed vehicles receiving a waiver.
- Vehicles with no known final outcome (regardless of
reason).
ii. A weekly report on the initial test volume by model
year and test station.
iii. A weekly report on initial test failure rate by the
model year and test station.
iv. A weekly report on the average increase or decrease in
vehicle emissions levels after repairs by model year, vehicle type and test
type.
v. A weekly report on the number of certificates of
compliance and certificates of waiver awarded.
vi. A weekly report on quality control and assurance
activities as outlined in the Quality Assurance Plan.
vii. A weekly report on the number of vehicles tested by
model year and vehicle type.
viii. A weekly report on the number of paid tests.
xi. A weekly report on general program problems.
f. The Contractor shall provide the following monthly reports.
Monthly reports shall be submitted to the State no later than seven (7) days
following the month of-the report. monthly reports shall include a summary of
all weekly information plus the following:
i. Repair cost data by pollutant and by hired vs. self-
repairs for both passed and failed retests;
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ii. Repair cost data by pressure tests and by hired vs.
self-repairs for both passed and failed retests;
iii. Repair cost data by purge test and by hired vs. self-
repairs for both passed and failed tests;
iv. Repair cost data by visual equipment test and by hired
vs. self-repairs for both passed and failed tests;
v. The following information related to consumer
protection:
- Disputes;
- Complaints; and
- Excessive repair cost data.
vi. Test center incidents, accidents, etc.
g. The Contractor shall provide the following annual reports.
Annual reports shall be submitted to the State no later than January 31 of the
following year. Annual reports shall include a summary of all monthly
information plus the following:
i. Total pass/fail by model year and by vehicle type.
ii. Total exemptions by model year and by vehicle type.
iii. Repair cost by model year by vehicle type for hired and
self-repair:
- Median cost of hired or self-repair;
- Mean cost of hired or self-repair.
h. Special Reports. The Contractor shall provide reasonable
special reports as requested by the State in a timely manner. These reports may
consist of, but are not limited to, the following:
i. Ownership data based on VIN number information; and
ii. Test data based on make, model year, VIN character
information, knowledge or any combination of these.
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7. PROGRAM AUDIT. The Contractor shall make available, upon
reasonable notice by the State, financial, managerial, and technical data for
audit by the State at any time during normal business hours.
a. MANAGERIAL. The Contractor shall provide operational
procedure data for the entire ETP for State managerial audits. Managerial
audits will be conducted by the State at least annually.
b. TECHNICAL. The Contractor shall provide data to assist the
State in performing in-station performance audits and station-specific
operational audits.
c. PERFORMANCE. Performance audits will include immediate
access to the analyzer calibration data and operating verification of data
handling equipment. The Contractor shall cooperate with the department to
perform overt performance audits. The Contractor shall permit the creation and
maintenance of covert records in its on-line inspection database.
d. OPERATIONAL. Operational audits include areas like
courtesy, cleanliness, complaints and data and money handling.
8. PROGRAM CERTIFICATION AND ACCEPTANCE. The Contractor shall
demonstrate to the State's satisfaction that the Program has been established
and will operate in accordance with all of the Contract requirements. The
Contractor may request acceptance testing and certification by the State of
various segments at different times or the entire program operating at one time.
The State shall respond as rapidly as possible to conduct the acceptance
testing, evaluation and certification. The State shall certify this acceptance
in writing.
Prior to the Commencement Date of the Contract, the Contractor
shall have submitted to the State an Acceptance Test Procedure ("ATP") which
shall have been approved by the State. The ATP shall include the provisions for
a voluntary test program to keep facilities fully operational and shall have
demonstrated the readiness of each inspection facility in the presence of the
State's employees or authorized representatives and in accordance with the
approved ATP:
i. GAS ANALYZERS. The minimum ATP for gas analyzers shall
demonstrate that all specifications for gas analyzers and all QA/QC requirements
applicable to gas analyzers found in the EPA Test Procedures as may be amended
have been met and shall include, but not be limited to:
- Electronic zero/span demonstration
- Drift lockout demonstration
- Gas span check demonstration
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- Demonstration of accuracy tolerance
- Resolution demonstration
- Response time demonstration
- Drift demonstration
- Calibration demonstration
- Interference demonstration
- Demonstration of low restriction indicator
- Warm up time demonstration
- Leak check, demonstration
- Hang up check demonstration
- Barometric pressure compensation demonstration
ii. DYNAMOMETERS. The minimum ATP for dynamometers shall
demonstrate that all specification for dynamometers in the EPA Test Procedures
as may be amended have been met and shall include, but not be limited to:
- Roll speed demonstration
- True dynamometer horsepower demonstration
- Speed-horsepower relationship demonstration
- Short-term horsepower stability demonstration
- Roll brake interlock demonstration
- Wheel lift interlock demonstration
- Roll brake demonstration
- Repeatability demonstration
iii. Network Operation. The minimum ATP shall include a
demonstration of network inspection times and reporting, utilizing a random
selection of vehicles (from voluntary inspections or vehicles otherwise made
available by the Contractor) at maximum lane capacity. All lanes with a single
inspection station shall be operated simultaneously. This will require that
each lane be queued to maximum capacity and that a
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minimum of six repetitive inspections be conducted in each lane to maintain
maximum report printer utilization. The inspections shall be conducted in a
normal manner by the Contractor, and the State shall verify the inspection
times and evaluate the printed inspection reports to determine whether the
network performed all the specified functions satisfactorily. The remainder
of the inspection network shall have a simulated load placed on it during
this procedure.
iv. VISUAL INSPECTION. The minimum ATP shall include visual
inspection of each facility by the State's employees or authorized
representative and shall include the following:
- An accounting of all specified facility equipment,
software, documentation, wiring and plumbing diagrams, and operations and
maintenance manuals.
- A visual inspection of equipment installation
workmanship.
- A visual inspection of the facility and site for
workmanship.
9. WAIVER CERTIFICATION. The Contractor shall provide a
program for the issuance of a Certificate of Waiver in lieu of a Certification
of Compliance for vehicles which cannot achieve passing results after repair
attempts if specific criteria are met. The Contractor must document that a
minimum expenditure on parts and labor appropriate to the cause of the emissions
inspection failure was made by the motorist to demonstrate reasonable repair
attempts. Such minimum expenditure shall be at least $450.00 for model year
1981 and newer vehicles and $75 for model year vehicles 1976-1980, in Lake and
Porter Counties. In Clark and Floyd Counties the minimum expenditure shall be
$200 for model year 1981 and newer vehicles and $75 for model years 1976-1980.
The State shall adjust the $450.00 minimum expenditure in Lake and Porter
Counties in January of each year by the percentage, if any, by which the
Consumer Price Index (CPI) for the preceding calendar year differs from the CPI
for 1989. All expenditures must be documented by the Contractor and appropriate
to the cause of the emissions test failure. The Contractor reinspection test
results must also document the reasons the vehicle will not pass or improve
short of major engine repairs. Such a vehicle owner/operator will be instructed
to present the vehicle and all related paperwork to the Waiver Surveillance
Investigator on the staff of the Contractor. Waiver criteria are subject to
change by the State as are State operating policy. Changes in such waiver
criteria and operating policy will be coordinated with the Contractor.
10. RECALL COMPLIANCE. The Contractor shall be responsible for
notifying vehicle owners of emissions recalls in accords with EPA rules and/or
guidance to be promulgated. The Contractor shall keep records to identify
vehicles subject to
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recall and shall fail the vehicle at inspection if the vehicle is subject to
a recall but recall repairs have not been performed.
11. PUBLIC INFORMATION PROGRAM. The Contractor shall provide a
public information program in accordance with The Technical Proposal, Public
Information Plan - Section 12, contained in the RFP and incorporated by
reference and appended hereto. Public Information activities shall be conducted
by the Contractor, subject the approval of the State for each activity. The
Contractor shall provide a detailed annual plan and budget for public
information activities for each year of the contra The Contractor shall submit a
detailed plan and budget to the State for its approval on April 1 for each State
biennial budget period.
The State shall have full authority to approve or disapprove the plan
and all aspects of the public information program. If disapproved by the State,
the Contractor shall revise the plan and submit it for approval within thirty
(30) days. The cost for the public information program shall be included within
and covered the inspection fee, excluding the repair technician hotline.
The public information program of the Contractor shall include the
following activities:
a. Develop and implement an innovative and aggressive public
information program to ensure that the public is aware of the ETP and its
objective before it begins and to keep the public informed as the ETP
progresses.
b. Offer technical assistance and provide a hotline service to
assist repair technicians with specific repair problems, answer technical
questions that aria in the repair process, and answer questions related to the
local requirements or state and federal law with regard to emission control
device tampering, engine switching similar issues. The Contractor may charge
each repair technician using such hotline a reasonable fee to cover the costs of
such hotline services. The State shall not reimburse the Contractor for
providing such required hotline services. Monitor the performance of individual
motor vehicle repair facilities and provide to each owner/operator at the time
of initial failure a summary of the performance of local repair facilities that
have repaired vehicles for retest. Develop and implement a program to provide
information and training to garage mechanics and fleet operators.
c. Develop and implement a program to respond to inquiries and
complaints regarding the ETP as a part of the public information program. This
shall include a telephone answering system or "hot-line" to be used by the
public for (but not limited to) general information, inquiries on inspection
facility operating hours, queuing times and complaints. The Contractor shall
follow up on all contacts by the public; except that the State shall be
responsible for referrals made by the
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Contractor to the State. Referrals to the State shall be
inquiries/complaints that are under dispute between the Contractor and the
public for which no resolution could be attained.
d. Develop and distribute general information brochures on the
ETP to the public in the program area. Brochures shall include discussions of
potential fuel savings, tampering, fuel switching and vehicle warranties.
Pamphlets prepared jointly by the Contractor and the State describing the ETP
shall be printed at the Contractor's expense and distributed at the test centers
for the information and convenience of the public. Additional copies for
distribution at locations other than the test centers shall be paid for by the
State.
e. Arrange and participate in public information efforts with
appropriate personnel from the State, other federal, state, and local agencies,
and interested groups and individuals. If requested by the State, the Contractor
shall attend local public meetings to assist the State in making presentations
and answering questions concerning the ETP as part of the Contractor's public
information effort.
f. Develop and distribute information to the motoring public on
a voluntary inspection program (a get-acquainted inspection phase) to be
conducted during mock testing period of facilities prior to the date of the
network startrip.
g. Work with the Indiana Vocational Technical College (Ivy
Tech) public relations personnel in order to provide a smooth transition of the
I/M inspection program during the period where Ivy Tech's involvement is phased
out and the Contractor becomes involved. The Contractor will involve Ivy Tech
in the public education campaign to effectively communicate ETP changes to all
segments of the public. During the last six months of the current program,
motorists will be provided by the Contractor itself and through Ivy Tech a
notice about the new program, including a map indicating new station locations
and a description of the ways the new and old programs are different or the
same. Ivy Tech inspectors will be trained by the Contractor to refer motorists
to such notice and alert them that it explains upcoming ETP changes.
h. The Contractor shall submit an annual cost report to the
State for activities undertaken for each annual public information plan at the
end of each State fiscal year.
G. FAILURE OF PERFORMANCE.
The State prescribes the following forfeitures and/or assessments of
amounts otherwise payable under this Contract (see Section II, CONSIDERATION.)
for certain identifiable failures of the contractor to meet the terms of the
Contract:
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1. DISREGARDING AN OFFICIAL WRITTEN ORDER. The Contractor or
its employees shall forfeit $500 which would otherwise be payable to the
Contractor under Section II, CONSIDERATION., for each failure to comply with a
legitimate written order relative to the enforcement of this contract of an
authorized official of the Indiana Department of Environmental Management.
2. QUEUING PROBLEMS. The Contractor shall forfeit $200 which
would otherwise be payable to the Contractor under Section II, CONSIDERATION.,
for each hour a test lane queuing violates the requirements set out in page 22
and 23 of the RFP. Such an hour begins at the time of the first violation.
3. FAILURE TO SUBMIT REPORTS AND NOTIFICATIONS. The Contractor
shall forfeit $100 which would otherwise be payable to the Contractor under
Section II, CONSIDERATION., for each day the Contractor fails to submit any
reports or notifications required by the Contract on the dates or times
specified.
4. TEMPORARY SUSPENSION. The State shall retain the right to
suspend temporarily without an administrative hearing the operation of any
station or inspection lane upon discovery of an equipment failure that affects
emission reduction benefits or I/M credits. Any suspension by the State may be
reinstated provided the failing equipment is adequately repaired and passes a
state-conducted quality assurance ("QA") check. The State-conducted QA check
would include but is not limited to the requirements set forth in this contract
and shall be carried out as expeditiously as possible upon notification by the
Contractor that repairs have been completed.
5. IMPROPER CALIBRATION OF INSTRUMENTS. For each emission
inspection in an affected block of inspections performed by the Contractor with
instruments that are determined by a gas analyzer span check to be out of
calibration, the Contractor shall forfeit 50% of the per initial test amount for
the initial test associated with the particular emission inspection involved
(see Section II CONSIDERATION). An "affected block of inspections" as used in
this contract means the number of inspections performed between the last gas
analyzer span check showing proper calibration and the span check showing
improper calibration. The Contractor shall maintain in the vehicle inspection
system gas analyzer span check data and emission inspection data so that the
number of inspections in an affected block of inspections is easily determined
by the parties to this contract
6. FAILURE TO CALIBRATE DAILY. The Contractor shall calibrate
the instruments for each test lane each morning before such test lane opens for
emission inspection. A written record shall be kept by the Contractor of each
morning's calibration by test lane. The Contractor shall be assessed
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damages of $250 per day for each test lane for which the instniments were not
calibrated.
7. IMPROPER INSPECTION PROCEDURES. Should the State determine
the Contractor to be performing emission inspections outside of the State
approved test procedures, the State shall promptly provide the Contractor
written notification and the bases for such a determination. After such
notification, the Contractor shall forfeit the initial test amount for all
emission inspections any part of which is performed outside of the State
approved test procedures. The State shall reinspect the process at issue as
soon as the Contractor notifies the State that the process complies with State
approved test procedures but in no instance later than five (5) operating days
from the date of notice by the State of such non-compliance.
8. Should total per initial test amounts forfeited under this
paragraph (FAILURE OF PERFORMANCE), by the Contractor exceed $100,000 for any
consecutive twelve (12) month period such occurrence may be regarded as a
material breach of contract.
9. If a specific action or failure to act would subject the
Contractor to forfeiture of fees or assessment of damages under more than one
paragraph of Section G, the State shall withhold fees or assess damages only
pursuant to the paragraph in which the damages are greatest.
H. FAILURE TO MEET PROGRAM COMMENCEMENT DATE.
In the event any test lane is not fully operational and the
approved acceptance test procedures are not completed on the Commencement Date
as may be amended (See Section Ill, TERM.) the State is entitled to damages from
the Contractor without exception, as follows:
1. SINGLE TEST CENTER. If one or more test lanes at only one
test center is not fully operational during the first 30 scheduled test days
subsequent to the Commencement Date (See Section ffl, TERM.) the contractor
shall forfeit a per initial test amount which would otherwise be payable to the
Contractor under Section II, CONSIDERATION., as provided below herein: (1)
$200.00 per scheduled test day for one lane at a specific test center; or (2)
$250.00 per lane per scheduled test day for two lanes or one-half of total lanes
at a test center whichever is greater, at the same center; or (3) $500.00 per
lane per scheduled test day if over half but not all lanes at a specific test
center are not fully operational or one lane at the optional central waiver
center is not fully operational; or (4) $2,500.00 per scheduled test day if all
lanes at a test center or optional central waiver center are not fully
operational.
2. MORE THAN ONE TEST CENTER. If one or more test lanes at
more than one test center is not fully operational during the first 30 scheduled
test days subsequent to the
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Commencement Date (See Section Ill, TERM.) the Contractor shall forfeit per
initial test amount which would otherwise be payable to the Contractor under
Section II, CONSIDERATION., as follows:
a. For one lane at each of any two or more test centers -
$400.00 per scheduled test day per lane not operational;
b. For two lanes at each of any two or more test centers -
$500.00 per scheduled test day per lane not operational; and
c. For three lanes at each of any two or more test centers
- - $1,000.00 per scheduled test day per lane not operational.
3. SUBSEQUENT TO FIRST THIRTY DAYS. For failure of test lanes to be
fully operations subsequent to the first 30 scheduled test days, the damages
specified under this Section shall be doubled or the Contract may be declared in
default and terminated in accordance with the provisions of this contract.
The Contractor shall provide daily status reports to the State
until all lanes and centers are accepted and operational that address in detail
the problems causing failure to operate any and all test lanes and/or centers,
solutions or actions taken to resolve problems and updates as to when each lane
will be available for acceptance testing by the State.
4. Should the total amounts forfeited under this Paragraph, H.
FAILURE TO MEET PROGRAM COMMENCEMENT DATE., by the Contractor exceed $100,000,
such occurrence may be regarded as a material breach of contract
I. DELAY IN PERFORMANCE.
In each case where the Contractor submits a plan, design, report or other item
to the State of approval, the State shall use its best efforts to issue approval
or disapproval as expeditiously as possible within fifteen (15) days of receipt.
The parties shall, to the extent possible, identify in advance any items for
which State approval is iikely to require more than fifteen (15) days.
If delay on the part of the State in approval of a proposed change to a test
procedure will result in unavoidable damage to persons or property, the
Contractor shall promptly and fully notify the State of the particulars of such
situation and may institute the proposed change and the State shall not assess
penalties pursuant to Section G herein.
II. CONSIDERATION. The Contractor in payment for all services provided under
this agreement shall be paid by the State $21.78 per initial test provided,
however, that total remuneration under this contract shall not exceed $6,011,500
for the 1995-1996 State fiscal year and $6,074,000 for the 1996-1997 State
fiscal year.
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The parties agree that total remuneration for the 1997-1998, 1998-1999,
1999-2000, 200(2001, 2001-2002, 2002-2003, 2003-2004, 2004-2005 State fiscal
periods shall be determined after the respective State biennium budget has
been approved by the State General Assembly. The parties agree that all
requests for state appropriations for I/M program funding be prospective
taking into consideration both current and proposed State and federal
regulation and law and including all pertinent available historical
information. In addition, the parties agree that such total remuneration for
each of the subsequent State fiscal periods shall be amended into this
contract or otherwise be without effect
III. TERM. This contract shall be for a period of ten (10) years. It shall
commence on July 1, 1995, (the "Commencement Date") and terminate on June 30,
2005 (the "Termination Date"). The parties agree that the TERM of this agreement
may be modified by amendment as provided by State law.
IV. INDEPENDENT CONTRACTOR
Both parties hereto, in the performance of this contract, shall be acting
in an individual capacity and not as agents, employs partners, joint ventures or
associates of one another. The employees or agents of one party shall not be
deemed or construed to be the employees or agents of the other party for any
purposes whatsoever. Neither party shall assume any liability for any injury
(including death) to any persons, or any damage to any property arising out of
the acts or omissions of the agents, employees, or subcontractors of the other
party.
The Contractor shall be responsible for providing all necessary
unemployment and worker's compensation insurance for the employees of the
Contractor and personal injury (liability) and property damage insurance for all
test sites and Headquarters offices. Upon request the Contractor shall provide
the State with Certificate of Insurance showing such insurance coverage, as
described above herein, in effect.
V. VERBAL ORDERS
The Contractor shall make no deliveries of goods or services on verbal
orders unless otherwise stated in the contract.
VI. WORK STANDARDS
The Contractor agrees to execute its respective responsibilities by
following and applying at all times the acceptable professional and technical
guidelines and standards. If the State becomes dissatisfied with the work
product or the working relationship with those individuals assigned to work on
this Contract, the State may request the replacement of any of all such
individuals.
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VII. CONTRACT CONFIDENTIALITY OF STATE INFORMATION
The Contractor understands and agrees that data, materials, and
information disclosed to Contractor may contain confidential and protected data,
therefore, the Contractor promises and assures that data, material, and
information gathered, based upon or disclosed to the Contractor for the purpose
of this contract shall not be disclosed to others or discussed with other
parties without the prior written consent of the State.
VIII. CONFIDENTIALITY OF DATA, PROPERTY RIGHTS IN PRODUCTS. AND COPVRIGHT
PROHIBITION
The Contractor further agrees that all information, data, finding,
recommendations, proposals, (excluding computer software programs) etc. by
whatever name described and by whatever form therein, secured, deyeloped,
written, or produced by the Contractor in furtherance of this Contract shall be
the property of the State and that the Contractor shall take such action as is
necessary under law to preserve such property rights in and out of the State
while such property is within the control and/or custody of the Contractor. By
this contract the Contractor specifically waives and/or releases to the State
any recogniiable property right in the Contractor to copyright or patent such
information, data, findings, recommendations, proposals, etc.
IX. OWNERSHIP OF DOCUMENTS AND MATERIALS
All documents, records, programs (excluding computer software
programs), data, film, tape, articles, memos, and other materials developed
under this contract shall be the property of the State of lndiana. Use of these
materials other than related to contract performance by the Contractor without
the written consent of the State is prohibited. During the performance of the
services, specified, herein, the Contractor shall be responsible for any loss or
damage to these materials developed for or supplied by the State and used to
develop or assist in the services provided herein, while they are in the
possession of the Contractor and any loss or damage thereto shall be restored at
the Contractor's expense. Full, immediate and unrestricted access to the work
product of the Contractor during the term of this contract shall be available to
the State.
X. PROGRESS REPORTS.
The Contractor shall submit progress reports to the State upon request
The report shall be oral, unless the State upon receipt of the oral report
should deem it necessary to have it in written forms. The progress report shall
serve the purpose of assuring the State that work is progressing in line with
the schedule, and the completion can be reasonably assured on the scheduled
date.
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XI. ACCESS TO RECORDS
The Contractor and its subcontractors shall maintain all hooks,
docurnents, papers, accounting records, and other evidence pertaining to the
cost incurred and shall rnake such materials available at their respective
offices at all reasonable times during the contract period and for three (3)
years from the date of final payment under the contract, for inspection by the
State or by any other authorized representative of the State Government and
copies thereof shall be fuuished at no cost to the State if requested.
XII. ASSIGNMENT
The Contractor shall not assign or subcontract the whole or any part
of this contract without the State's prior written consent, except that the
Contractor may assign its right to receive payments to such third parties as the
Contractor may desire without the prior written consent of the State, provided
that the Contractor gives written notice (including evidence of such assignment)
to the State thirty (30) days in advance of any payment so assigned.
XIII. INSOLVENCY
The State of Indiana may immediately cancel this contract without
liability to the Contractor in the event of any of the following or any other
comparable event: a) insolvency of the Contractor; b) filing of a voluntary
petition in baiikruptcy by the Contractor; c) filing of any involuntary petition
in barrcruptcy against the Contractor; d) appointment of a receiver or trustee
for the Contractor; or e) execution of an assignment for the benefit of
creditors by the Contractor, provided that such petition appointment or
assignment is not vacated or nullified within fifteen (15) days of such event.
XIV. SUCCESSORS AND ASSIGNEES
The Contractor binds its successors, executors, administrators, and
assignees to all covenants of this contract. Except as above set forth, the
Contractor shall not assign, sublet or transfer its interest in this contract
without the prior written consent of the State of Indiana.
XV. KEY PERSON(S)
The parties agree that there are no key persons under this contract.
XVI. CHANGES IN WORK
In the event the State requires a major change in scope, character, or
complexity of the work after the work has progressed, adjustments in
compensation to the Contractor shall be determined by the State in the exercise
of its honest and
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reasonable judgment and the Contractor shall not commence the additional work
or the change of the scope of the work until authorized in writing by the
State and no claim for additional compensation shall be made in the absence
of a prior written approval executed by all signatories hereto.
The State reserves the right at any time, by written order, and
without notice to the sureties or assignees, if any, to make changes within the
general scope of this contract in any one or more of the following:
1. Description of services to be performed.
2. Time of performance (i.e., hours of the day, days of the week,
etc.).
3. Place of performance of the services.
4. Drawings, designs, or specifications of supplies or service to be
provided.
5. Method of shipment or packing of supplies.
6. Method, timing, or location of inspection, testing or quality
control.
If any such changes cause an increase or decrease in the cost of, the
time required for, or performance of any part of the work under this contract,
the State shall make an equitable adjustment in the contract price, the delivery
schedule, or both, by the exercise of the State's honest and reasonable
judgment.
The Contractor may submit a request for an adjustment under this
paragraph 31 within thirty (30) days from the date of the receipt of the written
order. The Contractor shall submit such documentation in such form and detail
as the State may direct.
Failure to agree to any adjustment shall be a dispute under the
disputes clause. However, nothing in this paragraph shall excuse the Contractor
from proceeding with the performance of this contract.
XVII. FORCE MAJEURE; SUSPENSION AND TERMINATION
In the event that either party is unable to perform any of its
obligations under this contract or to enjoy any of its benefits because of (or
if failure to perform the services is caused by) natural disaster, actions or
decrees of governmental bodies or communication line failure not the fault of
the affected party (hereinafter referred to as a "Force Majeure Event"), the
party who has been so affected shall immediately give notice to the other party
and shall do everything reasonably possible to resume performance within a
practicable amount of time. Upon receipt of such notice, all obligations
affected by
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the Force Majeure Event under this contract shall be immediately suspended.
If the period of nonperformance exceeds practicable amount of time to resume
perforance, the party whose ability to perform has not been so affected may
by giving written notice teriinate this contract
XVIII. NONDISCRIMINATION
A. Pursuant to IC 22-9-1-10, Contractor and its subcontractors, if
any, shall not discriminate against any employee or applicant for employment, to
be employed in the performance of this contract, with respect to the hire,
tenure, terms, conditions or privileges of employment or any matter directly or
indirectly related to employment, because of race, color, religion, sex,
handicap, national origin, or ancestry. Breach of this covenant may be regarded
as a material breach of contract.
B. The Contractor and any agent of the Contractor, in the perfomance
of the work under this contract, shall comply with 42 U.S.C. 2000e, provided the
Contractor has fifteen or more employees for each woridng day in each of twenty
or more calendar weeks in the current or preceding calendar year. 42 U.S.C.
2000e states in part that it shall be unlawful for the Contractor to:
1. fail or refuse to hire or to discharge any individual, or
otherwise to discriminate against any individual with respect to compensation,
terms, conditions, or privileges of employment, because of such individual's
race, color, religion, sex, or national origin; or
2. to limit, segregate, or classify its employees or applicants
for employment in any way which would deprive or tend to deprive any individual
of employment opportunities or otherwise adversely affect any individual of
employment opportunities because of such individual's race, color, religion, sex
or national origin.
The Contractor shall comply with 42 U.S.C. 2000e, the terms of which are
incorporated by reference and made a part of this contract. Breach of this
covenant may be regarded as a material breach of the contract.
C. The Contractor agrees to comply with the regulations of the U.S.
Department of Transportation relative to non-discrimination in federally-
assisted programs of the U.S. Department of Transportation, Title 49, Code of
Federal Regulations, Part 21, effectuates 42 U.S.C. 2000e above, and is
incorporated by reference and made a part of this contract. Pursuant to 49 CFR
Part 21, the Contractor agrees as follows:
1. NONDISCRIMINATION: The Contractor, with regard to the work
performed by it after award and prior to completion of the contract work, will
not discriminate on the
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grounds of race, color, or national origin in the selection and retention of
subcontractors, including procurement of materials and leases of equipment.
The Contractor will not participate either directly or indirectly in the
discrimination prohibited by Section 21.5 or the regulations, including
employment practices when the contract covers a program set forth in Appendix
"A" of the regulations.
2. SOLICITATIONS FOR SUBCONTRACTS, INCLUDING PROCUREMENT OF
MATERIALS AND EQUIPMENT: In all solicitations either by competitive bidding or
negotiation made by the Contractor for work to be performed under a subcontract,
including procurement of materials or equipment, each potential subcontractor or
supplier shall be notified by the Contractor of the Contractor's obligations
under this contract and the regulations relative to non-discrimination.
3. INFORMATION AND REPORTS: The Contractor will provide all
information and reports required by the regulations, or directives issued
pursuant thereto, and will permit access to directives issued pursuant there to,
and will permit access to its books, records, accounts, and other sources of
information, and its facilities as may be determined by the State or the Federal
Highway Administration to be pertinent to ascertatn compliance with such
regulations or directives. Where any information required of a Contractor is in
the exclusive possession of another who fails or refuses to furnish this
information, the Contractor shall so certify to the State, or the Federal
Highway Administration as appropriate, and shall set forth what efforts it has
made to obtain the information.
4. SANCTIONS FOR NONCOMPLIANCE: In the event of the Contractor
noncompliance with the nondiscrimination provisions of this contract, the State
shall impose such contract sanctions as it or the Federal Highway Administration
may determine to be appropriate, including, but not limited to, suspension or
termination or refusal to grant or to continue federal financial assistance or
by any other means authorized by law.
5. INCORPORATION OF PROVISIONS: The Contractor will include
the provision of paragraph (1) through (5) in every subcontract including
procurements of materials and leases of equipment, unless exempt by the
regulations or directives issued pursuant thereto. The Contractor will take
such action with respect to any subcontract or procurement as the State or the
Federal Highway Administration may direct as a means of enforcing such
provisions including sanctions for noncompliance. In the event the Contractor
becomes involved in, or is threatened with, litigation with a subcontractor or
supplier as a result of such direction, the Contractor may request the State to
enter into such litigation to protect the interests of the State and, in
addition, the Contractor may request the United States to enter into such
litigation to protect the interests of the United States.
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XIX. MULTI-TERM FUNDING CANCELLATION CLAUSE
If the Director of the State Budget Agency rnakes a written
determination that funds are not appropriated or otherwise available to support
continuation of performance of this contract, the contract shall be cancelled.
A determination by the Budget Director that funds are not appropriated or
otherwise available to support continuation of performance shall be final and
conclusive. In addition, should the federal government withhold, move to
recoup, or cancel the grant of federal funds identified to support this contract
the contract shall be cancelled. Such federal funds identified as those to be
provided under the Congestion Mitigation Air Ouality federal grant program
commonly referred to as "CMAQ".
XX. PAYMENTS.
All payment obligations are subject to the encumbrance of monies and
shall be made in arrears in accordance with Indiana law and the State fiscal
policies and procedures and in this regard the Contractor agrees to execute such
state payment (invoice) forms not inconsistent herewith. Contractor may not
submit claim forms before the services have been performed.
XXI. TAXES
The State of Indiana is exempt from State, Federal, and local taxes.
The State shall not be responsible for any taxes levied on the Contractor as a
result of this contract
XXII. PENALTIES/INTEREST/ATTORNEY'S FEES
The State shall in good faith perform its required obligations
hereunder and does not agree to pay any penalties, liquidated damages, interest,
or attorney's fees, except as required by Indiana law, in part, lC 5-17-5-1, ET
seq., IC 34-2-22-1, ET SEQ. and IC 344-16-1.1 ET SEQ.
XXIII. COMPLIANCE WITH LAWS
The Contractor agrees to comply with all applicable Federal, State,
and local laws, rules, regulations, or ordinances, and all provisions required
thereby to be included herein, are hereby incorporated by reference. The
enactment of any State of Federal statute or the promulgation of regulations
thereunder after execution of this contract shall be reviewed by the Attorney
General and the Contractor to determine whether the provisions of the Contract
require formal amendment.
XXIV. TERMINATION BY STATE
The State may terminate this contract, in whole or in part, if the
State determines that such terminating is in its best interest. Termination
shall be effected by giving sixty (60) days prior written notice to the
Contractor. Notice shall
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be by United States mail return receipt requested. The sixty (60) day time
period shall begin to run upon receipt of the notice by the Contractor.
Should the State terminate the Contract, the Contractor shall be compensated
for services prior to the date of termination, but in no case shall the total
payment to the Contractor exceed the contract price due for the period up to
the date of termination. In addition, the Contractor retains its right to,
and may claim for property used or intended to be used in the performance of
services under this contract, equitable compensation for the reasonable costs
the Contractor is obligated to and does incur, subject to appropriations, and
including the costs under any financial arrangements or leases in regard to
such property, the costs for nonreturnable supplies in the possession of the
Contract, severance costs, demobilization costs, and other appropriate costs,
provided the Contractor maintains sufficient documentation to evidence such
costs and takes all reasonable measures to mitigate the amount of such costs.
The State shall have the right to audit the Contractor and the Contractor
shall provide the State access to the books and records of the Contractor so
that the State may verify costs incurred by the Contractor.
XXV. DEFAULT BY STATE
If the State, after sixty (60) days written notice, fails to correct
or cure any breach of this contract, then the Contractor may cancel and
terminate this agreement and collect monies due up to and including the date of
termination.
XXVI. GOVERNING LAWS
This contract shall be construed in accordance with and governed by
the laws of the State of Indiana, and suit, if any, must be brought in the State
of Indiana.
XXVII. INDEMNIFICATION
Contractor agrees to indemnify, defend, and hold harmless the State of
Indiana and its agents, officers, and employees from all claims and suites
including court costs, attorney fees, and other expenses caused by any act or
omission of the Contractor and/or its subcontractors if any. The State shall
not provide such indemnification to the Contractor.
XXVIII. SUBSTANTIAL PERFORMANCE
This contract shall be deemed to have been substantially performed
only when fully performed according to its terms and conditions and any
modification thereof.
XXIX. MAINTAINING A DRUG-FREE WORKPLACE.
A. Contractor hereby covenants and agrees to make a good faith effort
to provide and maintain during the term of this contract a drug-free workplace,
and that it shall give written
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notice to the contracting state agency and the Indiana Deparment of
Administration within ten (10) days after receiving actual notice that an
employee of Contractor has been convicted of a criminal drug violation
occurring in Contractor workplace.
B. In addition to the provisions of subparagraph A above, if the
total contract amount set forth in this contract is in excess of $25,000,
Contractor hereby further agrees that this contract is expressly subject to the
terms, conditions, and representations contained in the Drug-Free Workplace
Certification executed by Contractor in conjunction with this contract and which
is appended as an attachment hereto.
C. It is further expressly agreed that the failure of Contractor to
in good faith comply with the terms of subparagraph A above or falsifying or
otherwise violating the terms of the certification referenced in subparagraph B
above shall constitute a material breach of this contract, and shall entitle the
State to impose sanctions against the Contractor including, but not limited to,
suspension of contract payments termination of this contract, and/or debarment
of the Contractor from doing further business with the State for up to three (3)
years.
XXX. WAIVER OF RIGHTS
No right conferred on either party under this contract shall be deemed
waived and no breach of this contract excused unless such waiver or excuse
shall be in writing and signed by the party claimed to have waived such right.
XXXI. NON-COLLUSION AFFIDAVIT
The Contractor, by the signature of its duly authorized representative
to the Non-Collusion Affidavit, appended herein, swears, affirms, and gives
assurance that there has been no collusion between the Contractor and any State
employee, officer, or agent in the awarding of this contract and that the
Contractor has prior to the execution of said affidavit, caused an inquiry to be
made of all interested employees agents or representatives of tee Contractor.
XXXII. PERFORMANCE BOND
The Contractor must furnish a performance bond in the amount of
$1,000,000 (one million dollars) bond may be in the form of a cashier's check, a
certified check or a surety bond. If a surety bond is executed, the surety
company must be authorized to do business in the State of Indiana as approved by
the Insurance Department of the State of Indiana. The performance bond shall be
made payable to the Indiana Department of Administration, and shall be effective
for the duration of the contract. Notwithstanding any other provisions relating
to the term of the contract, the Contractor shall not begin performance of
services under this contract until the performance bond
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required by the contract is delivered by the Contractor to the State in the
correct amount.
XXXIII. DISPUTES
Should any disputes arise with respect to this contract, the
Contractor and the State agree to act immediately to resolve any such disputes.
Time is of the essence in the resolution of disputes. The Contractor agrees
that, the existence of a dispute notwithstanding it shall continue without delay
to carry out all its responsibilities under this contract which are not affected
by the dispute. Should the Contractor fail to continue without delay to perform
its responsibilities under this contract in the accomplishment of all non-
disputed work, any additional cost as incurred by the Contractor or the State as
a result of such failure to proceed shall be borne by the Contractor, and the
Contractor shall make no claim against the State of Indiana for such costs. If
the Contractor and the State cannot resolve a dispute within ten (10) working
days following notification in writing by either party of the existence of said
dispute, then the following procedure shall apply:
The parties agree to resolve such matters through submission of their
dispute to the Commissioner of the Indiana Department of Admiistration who shall
reduce his or her decision to writing and mail or otherwise furnish copy thereof
to the Contractor and the State within ten (10) working days after presentation
of such dispute for his decisions. His or her decision shall be final and
conclusive unless the Contractor mails or otherwise furnishes to the Commission
of Administration within ten (10) working days after receipt of the
Commissioner's decision, a written appeal. Within ten (10) working days of
receipt by the Cornmissioner, he or she may reconsider his or her decision. If
no reconsideration is provided within ten (10) working days, the Contractor may
submit the dispute to an Indiana court of competent jurisdiction.
The State may withhold payments on disputed items pending resolution
of dispute. The non-payment by the State to the Contractor of one or more
invoices not in dispute shall not constitute default. However, the Contractor
may bring suit to collect such monies without following the dispute procedure
contained herein.
XXXIV. DISADVANTAGED BUSINESS ENTERPRISE PROGRAM
A. General
1. Notice is hereby given to the Contractor or subcontractor that
failure to carry out the requirements set forth in 49 CFR Section 23.43(a) shall
constitute a breach of contract and, after notification, may result in
termmation of the contract or such remedy as the State deems appropflate.
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The referenced section requires the following policy and disadvantaged
business enterprise (DBE) obligation to be included in all subsequent contracts
between the Contractor and any subcontractor:
(a) It is the policy of the State that disadvantaged business
enterprises, as defined in 49 CFR Part 23, shall have the maximum opportunity to
participate in the performance of contracts financed in whole or in part with
federal funds under this contract. Consequently the DBE requirements of 49 CFR
Part 23 apply to this contract.
(b) The Contractor agrees to ensure that disadvantaged business
enterprises, as defined in 49 CFR Part 23, have the maximum opportunity to
participate in the performance of contracts and subcontracts financed in whole
or in part with federal funds provided under this contract. In this regard, the
Contractor shall take all necessary and reasonable steps, in accordance with 49
CFR Part 23, to ensure that disadvantaged business enterprises have the maximurn
opportunity to compete for and perform contracts. The Contractor shall not
discriminate on the basis of race, color, national origin, or sex tn the award
and performance of federally assisted contracts.
2. As part of the Contractor's equal opportunity affirmative
action program, it is required that the Contractor shall take positive
affirmative actions and put forth good faith efforts to solicit proposals or
bids from and to utilize disadvantaged business enterprise subcontractors,
vendors or suppliers.
B. Definitions
1. "Disadvantaged business enterprise" means a small business
concern:
(a) which is at least 51 percent owned by one or more
socially and economically disadvantaged individuals, or, in the case of any
publicly owned business at least 51 percent of the stock of which is owned by
one or more socially and economically disadvantaged individuals; and
(b) whose management and daily business operations are
controlled by one or more of the socially and economically disadvantaged
individuals who own it.
2. "Small business concern" means a small business as defined
pursuant to section 3 of the Srnall Business Act and reliant regulations
promulgated pursuant thereto, except that a small business concern shall not
include any concern or group of concerns controlled by the same socially and
economically disadvantaged individual or individuals which has annual average
gross receipts in excess of $25 million over the previous three fiscal years.
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3. "Socially and economically disadvantaged individuals" means
those individuals who are citizens of the United Stated (or lawfully admitted
permanent residents) and who are women, Black Americans, Hispanic Americans,
native Americans, Asian-Pacific Americans, or Asian-Indian American, and any
other minorities or individuals found to be disadvantaged by the Small Business
Administration pursuant to section 8 (a) of the Small Business Act.
4. "Certified disadvantaged business enterprise" means the
business has completed and filed with the State a request for certification, and
that the business had been reviewed and determined to comply with the guldelines
established in 49 CFR Part 23. A business which is determined to be eligible
will be certified as a disadvantaged business enterprise (DBE).
C. Subcontractors
1. If the Contractor intends to subcontract a portion of the
work, the Contractor is required to take affirmative actions to seek out and
consider DBEs as potential subcontractors prior to any subcontractuai
comLnitment.
2. The contracts made with potential DBE subcontractors and the
results thereof shall be documented and made available to the State and the
Federal Highway Admmistration (FHWA) when requested.
3. A request to sublet a portion of the work to a firm that is
not a DBE shall include Form DBE-2 and documentation evidencing contacts and the
results thereof made with potential DBEs for the specific work to be
subcontracted, in compliance with C.1 and C.2.
4. If a portion of the work under this contract is
subcontracted to a DBE firm, then upon completion of the project, a
Disadvantaged Business Enterprise Utilization Affidavit, Form DBE-3, shall be
completed by the Contractor and returned to the State. The contractor and the
subcontractor/lessor/supplier shall certify on the DBE-3 form that specific
amounts have been paid and received.
D. Affirmative Actions
The Contractor shall, as a minimum, develop an affirmative action
plan for a Disadvantaged Business Enterprise program which includes:
1. Appointment of a representative with authority to administer
the Contractor's Disadvantaged Business Enterprise Program.
2. Documentation of affirmative action methods and procedures
intended to be used in seeking out and considering certified DBEs as
subcontractors or suppliers.
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3. Maintenance of a list of certified DBEs to be contracted
prior to the selection of a potential subcontractor for the particular items,
within the capabilities of the DBEs. This list shall include but not be limited
to:
(a) the name of each subcontractor or supplier and a
notation as to their DBE certification status; and
(b) the potential type of work or services to be performed
by each subcontractor or supplier.
E. Records and Reports
1. The Contractor shall keep such records as are necessary to
determine compliance with this contract. The records kept by the Contractor
shall show, as a minimum:
(a) the number of disadvantaged and non-minority subcontractors
and suppliers and type and dollar value of work, materials or services being
performed on or incorporated in this project;
(b) the progress and efforts made in seeking out disadvantaged
contractor organizations and individual disadvantaged contractors for work on
this project;
(c) documentation of all correspondence, contacts, telephone
calls, etc., to obtain the services of DBEs on this contract.
2. The Contractor shall submit reports, as required by the
State, of those contracts and other business agreements executed with DBEs with
respect to the records referred to in paragraph E.1.
3. All such records must be maintained for a period of three
years following acceptance of final payment and shall be available for
inspection by the State and the Federal Highway Administration.
F. Leases and Rentals
The Contractor shall notify the State when purchase or rental of
equipment are made with disadvantaged businesses. The information submitted
shall include the name of the business, the dollar amount of the transaction,
and the type of purchases made or type of equipment rented.
G. DBE Program
Unless otherwse specified in this contract, the DBE program developed
by the State and approved by the Federal Highway Administration applies to this.
42
<PAGE>
XXXV. POLLUTION CONTROL REQUIREMENTS
If this contract is for $100,000 or more, the Contractor:
A. stipulates that any facility to be utilized in performance under
or to benefit from this contract, is not listed on the Environmental Protection
Agency (EPA) List of Violating Facilities issued pursuant to the requirements of
the Clean
Air Act, as amended, and the Federal Water Pollution Control Act, as amended;
B. agrees to comply with all of the requirements of section 114 of
the Clean Air Act and section 308 of the Federal Water Pollution Control Act,
and all regulations and guidelines issued thereunder and
C. stipulates that, as a condition of federal-aid pursuant to this
contract, it shall notify the State and Federal Highway Administration of the
receipt of any advice indicating that a facility to be utilized in performance
under or to benefit from this contract is under consideration to be listed on
the EPA Listing of Violating Facilities.
XXXVI. CERTIFICATION FOR FEDERAL-AID CONTRACTS
The Contractor certifies, by signing and submitting this contract, to
the best of its knowledge and belief, that the Contractor has complied with
Section 1352, Title 31, U.S. Code, and specifically, that:
A. No federal appropriated funds have been paid or will be paid, by
or on behalf of the undersigned, to any person for influencing or attempting to
influence an officer or employee of any federal agency, a member of Congress, an
officer or employee of Congress, or an employee of a member of Congress in
connection with the awarding of any federal contract, the making of any federal
grant, the making of any federal loan, the entering into of any cooperative
agreement, and the extension, continuation, renewal, amendment, or modification
of any federal contract, grand loan, or cooperative agreement.
B. If any funds other than federal appropriated funds have been paid
or will be paid to any person for influencing or attempting to influence an
officer or employee of any Federal agency, a member of Congress, an officer or
employee of Congress, or an employee of a member of Congress in connection with
this federal contract, grant, loan, or cooperative agreement the undersigned
shall complete and submit Standard Form-LLL "Disclosure Form to Report
Lobbying," in accordance with its instructions. This form is available through
the State.
This certification is a material representation of fact upon which
reliance was placed when this transaction was made or
43
<PAGE>
entered into. This certification is a prerequisite for making or entering
into this transaction imposed 31 U.S.C. sec. 1352.
The Contractor also agrees by signing this contract that it shall
require that the language of this certification be included in all lower tier
subcontracts, which exceed $100,000, and that all such subrecipients shall
certify and disclose accordingly. Any person who fails to sign or file this
required certification shall be subject to a civil penalty of not less than
$10,000 and not more than $100,000 for each failure.
XXXVII. NON-COLLUSION AFFIDAVIT
The Contractor shall execute a proper Non-Collusion Affidavit (Indiana
Form 4391) which is incorporated by reference and appended hereto.
The parties having read and understanding the foregoing terms of the
contract and amendments do by their respective signature dated below hereby
agree to the terms thereof:
FOR THE CONTRACTOR
By: /s/ F. Robert Miller Attested by: /s/ Ann Marie Alfrey
--------------------------- ---------------------------
Printed Name: F. Robert Miller Printed Name: Ann Marie Alfrey
---------------- --------------------------
Title: President Title: Notary Public
----------------------- ---------------------------------
Date: November 21, 1994 Date: 11/21/94
------------------------ ---------------------------------
FOR THE STATE OF INDIANA:
Approved: Approved:
/s/ Kathy Prosser /s/
- -------------------------------- -----------------------------
Kathy Prosser, Commissioner Rebecca Schenk, Deputy
Indiana Department of Indiana Department of
Environmental Management Environmental Management
Date: 12/7/94 Date: 12-2-94
------------------------- -----------------------
Approved:
/s/
- ---------------------------------
William Shrewsberry, Commissioner
44
<PAGE>
Indiana Department of Administration
Date: December 8, 1994
-------------------------------
Approved as to form and legality: Approved:
/s/ /s/
- -------------------------------- -----------------------------
Pamela Carter Director, State Budget
Attorney General of Indiana Agency
Date: 12/15/94 Date: 12/15/94
------------------------- -----------------------
45
<PAGE>
CERTIFICATE OF CONTRACTOR
I hereby certify that I am the President and duly authorized representative
of the firm of Systems Control, Inc., whose address is 246 Sobrante Way,
Sunnyvale, CA 94086, and that neither I nor the above firm I here represent
has:
(a) employed or retained for a commission, percentage, brokerage,
contingent fee, or other consideration, any firm or person (other than
a bona fide employee working solely for me or the above consultant) to
solicit or secure this contract,
(b) agreed, as an express or implied condition for obtaining this
contract, to employ or retain the services of any firm or person in
connection with carrying out the contract, or
(c) paid, or agreed to pay, to any firm, organization or person (other
than a bona fide employee working solely for me or the above
consultant) any fee, contribution, donation, or consideration of any
kind for, or in connection with, procuring or carrying out the
contract;
except as herein expressly stated (if any): None
----------------------
I further certify that no employee officer or agent or partner or any
member of their immediate families of this firm is employed or retained
either full or part-time, in any manner by the Indiana Department of
Environmental Management or the Indiana Department of Transportation;
except as herein expressly stated (if any);
None
-----------------------------------------
I acknowledge that this certificate is to be furnished to the Indiana
Department of Environmental Management which may provide a copy to the Indiana
Department of Transportation and/or the Federal Highway Administration -
Department of Transportation in connection with this contract involving
participation of Federal-aid highway funds, and is subject to applicable State
and Federal laws, both criminal and civil.
11/21/94 /s/ F. Robert Miller
- -------------------------- ----------------------------------
(Date) (Signature)
46
<PAGE>
CERTIFICATE OF INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT
I hereby certify that I am the Commissioner or Deputy Commissioner of the
Indiana Department of Environmental Management, and the above consulting firm or
its representative has not been required, directly or indirectly as an express
or implied condition in connection with obtaining or carryhg out this contract
to:
(a) employ or retain, or agree to employ or retain, any firm or person, or
(b) pay, or agree to pay, to any firm, person, or organization, any fee,
contribution, donation, or consideration of any kind
except as herein expressly stated (if any): NONE
I acknowledge that this certificate is to be furnished to the Indiana
Department of Transportation and/or the Federal Highway Administration,
Department of Transportation, in connection with this contract involving
participation of federal-aid highway funds, and is subject to applicable state
and federal laws, both criminal and civil.
12/7/94 /s/
- -------------------------- ----------------------------------
(Date) (Signature)
47
<PAGE>
DEBARMENT CERTIFICATION
This certification applies to the Contractor or any person associated
therewith in the capacity of owner, partner, director, officer, principai
investor, project director, manager, auditory, or any position involving the
administration of Federal funds.
INSTRUCTIONS FOR CERTIFICATION
1. By signing and submitting this Contract, the prospective primary participant
is providing the certification set out below.
2. The inability of a person to provide the certification required below will
not necessarily result in denial of participation in this covered transaction.
The prospective participant shall submit an explanation of why it cannot provide
the certification set out below. The certification or explanation will be
considered in connection with the department or agency's determination whether
to enter into this transaction. However, failure of the prospective primary
participant to furnish a certification or an explanation shall disqualify such
person from participation in this transaction.
3. The certification in this clause is a material representation of fact upon
which reliance was placed when the department or agency determined to enter into
this transaction. If it is later determined that the prospective primary
participant knowingly rendered an erroneous certification, in addition to other
remedies available to the Federal Government, the department or agency may
terminate this transaction for cause or default.
4. The prospective primary participant shall provide immediate written notice to
the department or agency to whom this Contract is submitted if at any time the
prospective primary participant learns that its certification was erroneous when
submitted or has become erroneous by reason of changed circumstances.
5. The terms "covered transaction," "debarred," "suspended," "ineligible,"
"lower tier covered transaction," "participant," "person," "primary covered
transaction," "principal," "proposal," and "voluntarily excluded," as used in
this clause, have the meanings set out in the Definitions and Coverage sections
of the rules implementing Executive Order 12549. You may contact the department
or agency to which this Contract is being submitted for assistance in obtaining
a copy of those regulations.
6. The prospective primary participant agrees by submitting this Contract that
should the proposed covered transaction be entered into, it shall not knowingly
enter into any lower tier covered transaction with a person who is debarred,
suspended, declared ineligible, or voluntarily excluded from participation in
this covered transaction unless authorized by the department or agency entering
into this transaction.
7. The prospective prinary participant further agrees by submitting this
Contract that it will include the clause titled "Certification Regarding
Debarment, Suspension, Ineligibility and Voluntary Exclusion-Lower Tier Covered
Transaction," provided by the department or agency entering into this covered
transaction
48
<PAGE>
without moification in all lower tier covered transactions and in all
solicitations for lower tier covered transactions.
8. A participant in a covered transaction may rely upon a certification of
prospective participant in a lower tier covered transaction that it is not
debarred, suspended, ineligible or voluntarily excluded from the covered
transaction unless it knows that the certification is erroneous. A participant
may decide the method and frequency by which it determines the eligibility of
its principals. Each participant may, but is not required to, check the
Nonprocurement List.
9. Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render in good faith the
certification required by this clause. The knowledge and information of a
participant is not required to exceed that which is normally possessed by a
prudent person in the ordinary course of business dealings.
a. Except for transactions authorized under paragraph 6 of these
instructions, if a participant in a covered transaction knowingly enters into a
lower tier covered transaction with a person who is suspended, debarred,
ineligible, or voluntarily excluded from participation in this transaction, in
addition to other remedies available to the Federal Government, the department
or agency may terminate this transaction for cause or default.
CERTIFICATION REGARDING DEBARMENT SUSPENSION AND OTHER RESPONSIBILITY MATTERS --
PRIMARY COVERED TRANSACTIONS
(1) The prospective primary participant certifies to the best of its
knowledge and belief, that it and its principals:
(a) Are not presently debarred, suspended, proposed for debarment,
declared ineligible or voluntarily excluded from covered transactions by any
Federal department or agency;
(b) Have not within a three-year period preceding this Contract been
convicted of or had a civil judgement rendered against them for cornmission of
fraud or a crirninal offense in connection with obtaining, attempting to obtain
or performing a public (Federal, State or local) transaction or contract under a
public transaction; violation of Federal or State antitrust statutes or
commission of embezzlement, theft, forgery, bribery, falsification or
destruction of records, making false statements, or receiving stolen property;
(c) Are not presently indicted for or otherwise criminally or civilly
charged by a governmental entity (Federal, State or local) with commission of
any of the offenses enumerated in paragraph (1)(b) of this certification; and
(d) Have not within a three-year period preceding this Contract had one or
more public transactions (Federal, State or local) terminated for cause or
default.
49
<PAGE>
(2) Where the prospective primary participant is unable to certity to any
of the statements in this certification such prospective participant shall
attach an explanation to this proposal.
By /s/ F. Robert Miller
---------------------------------
(SIGNATURE) (TITLE)
F. Robert Miller
------------------------------------
(PRINTED OR TYPED)
Before me, a Notary Public in and for said County and State personally
appeared F. Robert Miller, who swore to and acknowledged the truth of the
statements in the foregoing Certification on this 21st day of November, 1994
By /s/ Ann Marie Alfrey
---------------------------------
(SIGNATURE) (NOTARY PUBLIC)
My Commission Expires 4/24/98
------------------
Santa Clara
- ----------------------- -----------------------------
(COUNTY OF RESIDENT) (PRINTED OR TYPED)
50
<PAGE>
APPENDIX I
NON-COLLUSION AFFIDAVIT
51
<PAGE>
APPENDIX II
SAMPLE DRUG-FREE WORKPLACE CERTIFICATION
52
<PAGE>
STATE OF INDIANA
DRUG-FREE WORKPLACE CERTIFICATION
Pursuant to Executive Order No. 90-5, April 12, 1998, issued by Governor
Evan Bayh, the Indiana Department of Administration requires the inclusion of
this certification in all contracts with and grants from the State of Indiana in
excess of $25,000. No award of a contract or grant shall be made, and no
contract, purchase order or agreement, the total amount of which exceeds
$25,000, shall be valid unless and until this certification has been fully
executed by the Contractor or Grantee and attached to the contract or agreement
as part of the contract documents. False certification or violation of the
certification may result in sanctions including, but not limited to, suspension
of contract payments, termination of the contract or agreement and/or debarment
of contracting opportunites with the State for up to three (3) years.
The Contractor/Grantee certifies and agrees that it will provide a drug-
free workplace by:
(a) Publishing and providing to all of its employess a statement notifying
employees that the unlawful manufacture, distribution, dispensing, possession or
use of a controlled substance is prohibited in the Contractor's workplace and
specifying the actions that will be taken against employees for violations of
such prohibition; and
(b) Establishing a drug-free awareness program to inform employees about
(1) the dangers of drug abuse in the workplace; (2) the Contrator's policy of
maintaining a drug-free workplace; (3) any available drug counseling,
rehabilitation, and employee assistance programs and (4) the penalties that may
be imposed upon an employee for drug abuse violations occurring in the
workplace;
(c) Notifying all employees in the statement required by subparagraph (a)
above that as a condition of continued employment the employee will (1) abide by
the terms of the statement; and (2) notify the employer of any criminal drug
statute conviction for a violation occurring in the workplace no later than five
(5) days after such conviction;
(d) Notifying in writing the contracting State Agency and the Indiana
Department of Administation within ten (10) days after receiving notice from an
employee under subdivision (c)(2) above, or otherwise receiving actual notice of
such conviction;
(e) Within thirty (30) days after receiving notice under subdivision
(c)(2) above of a conviction, imposing the following sanctions of remedial
measures on any employee who is convicted of drug abuse violations occurring in
the workplace: (1) take appropriate personnel action against the employee, up
to and including termination; or (2) require such emplouee to satisfactorily
participate in a drug abuse assistance or
53
<PAGE>
rehabilitation program approved for such purposes by a Federal, State or local
health, law enforcement, or other appropriate agency; and
(f) Making a good faith effort to maintain a drug-free workplace through
the implementation of subparagraph (a) through (e) above.
THE UNDERSIGNED AFFIRMS, UNDER PENALTIES OF PERJURY, THAT HE OR SHE IS
AUTHORIZED TO EXECUTE THIS CERTIFCATION ON BEHALF OF THE DESIGNATED
ORGANIZATION.
Systems Control, Inc.
- -------------------------------------- --------------------------------------
Printed Name of Organization Contract/Grant ID Number
/s/ F. Robert Miller
- -------------------------------------- --------------------------------------
Signature of Authorized Representative Date
F. R. Miller, President
- --------------------------------------
Printed Name and Title
54
<PAGE>
EXHIBIT C
NON-COLLUSION AFFIDAVIT
<PAGE>
STATE OF CALIFORNIA )
) SS:
COUNTY OF SANTA CLARA )
The undersigned, being duly sworn on oath says, that he is the contractlng
party, or that he is the representative, agent, member, officer of the
contractlng party, that he has not, nor has any other member, employee,
representative, agent or officer of the firm, company corporation or partnership
represented by him, directly or indirectly, entered into or offered to enter
into any combination, collusion or agree ment to receive or pay, and that he has
not received or paid, any sum of money or other consideration for the execution
of the annexed contract other than that which appears upon the face of the
contract.
Signature /s/ F. R. Miller
Printed Name
Title
Company
Before me, a Notary Public in and for said County and State personally
appeared, F. R. Miller who acknowledged the truth of the statements in the
foregoing affidavit on this 29 day of November, 1994.
Notary Signature /s/
County of Residence
Commission Expiration Date
Notary's Name (Print or Type)
<PAGE>
February 28, 1995
F. Robert Miller
Systems Control
246 Sobrante Way
Sunnyvale, CA 94086
Dear Mr. Miller:
Re: Inspection/Maintenance
Program
The purpose of this letter is to address certain issues related to
preparation by both Systerns Control (SC) and the State of Indiana for
commencement of an updated motor vehicle Inspection/Maintenance (I/M) program in
Lake, Porter, Clark and Floyd Counties.
As you know, a contract between SC and Indiana wherein SC will provide I/M
services for ten years has been signed by both parties. As you have been
discussing with staff of the Indiana Department of Environmental Management
(IDEM), there are certain tasks that need to be done between now and the
commencement date to ensure that facilities are available and properly equipped
to carry out the I/M program according to the requirements of that executed
agreement These tasks have been described in detail in the enclosed "Checklist
and Schedule of Coordinated Activities" ("Checklist"). Enclosure A. In order
to assure successful commencement of the I/M program, by this letter, both
parties agree to perform the tasks in the manner described in the Checklist
within the time frames provided therein.
I trust that this letter, the Checklist, and the recent amendment to the
Contract resolve outstanding issues such that SC will move forward with
necessary steps to prepare for commencement of the I/M program as required by
our executed contract. If you are in agreement with this letter and the
Checklist, please acknowledge with your signature and return to Janet McCabe of
the Office of Air Management. I am sending two originals so that you may retain
one for your files.
<PAGE>
We are very pleased to have been able to resolve these issues and look
forward to working with you to begin actual implementation of Indiana's I/M
program. If you have any questions about this letter, please contact me or
Janet McCabe (317-233-5694).
Sincerely,
/s/ Timothy J. Method
Timothy J. Method
Deputy Commissioner
F. Robert Miller
Systems Control
Date
TM:jgm
Enclosure
cc: Gary Auerbach
Jeff Modisett
<PAGE>
Checklist and Schedule of Coordinated
Activities
For purposes of this Checklist and Schedule of Coordinated Activities (the
"Checklist") System Control will be referred to as the "Contractor" and the
Department of Environmental Management will be referred to as the "State".
A. ZONING. The Contractor shall obtain the proper zoning and permits
for the operation of each vehicle inspection facility from the
appropriate authorities, and shall proyide the State with a photocopy
of such documentation
B. ON-ROAD TESTING. The Contractor shall submit no later than September
30, 1995, a plan for on-road testIng, including performance parameters
and the processes, to the State for review and approval. Such plan
shall allow for the performance of on-road testing to evaluate the
emission performance of 05 percent of the subject fleet. Measurement
of on-road emissions is not required in every season or for every
vehicle and can be accomplished through the use of remote sensing
devices or road side pullovers.
C. PROGRAM QUALITY ASSURANCE/QUALITY CONTROL ("QA/QC"). The Contractor
shall submit for the review and approval of the State a QA/QC program
plan four (4) months prior to October 1, 1995, which shall provide
for:
1. the discovery, correction and prevention of fraud, waste and
abuse;
2. the determination, both initially and ongoing, that
procedures set out for the I/M program are followed and
adequate;
3. the determination, both initially and ongoing, that the
equipment is properly calibrated and is measuring
accurately; and
4. the determination, both initially and ongoing, of whether
there are other problems which exist and impede program
performance.
The quality assurance audits conducted by the Contractor on the vehicle
Emission Measurement Equipment must reflect the same conditions that are
present when the equipment is calibrated and when the equipment performs
vehicle emission testing. An audit plan shall be submitted four (4) months
prior to October 1, 1995, for State approval.
1
<PAGE>
Checklist and Schedule of Coordinated Activities
February 25, 1995
page X of 17
D. COMPUTER SYSTEMS. Five (5) months prior to the October 1, 1995,
the Contractor shall provide to the State the documentation
listed below herein and any other documentation requested by the
State on the computer system to be used by the Contractor for the
1/M program.
1. a functional description of the features and capabilities of
the application software;
2. a functional description, including flow charts or
schematics, of how the application software will relate to
the network of computer systems and program equipment,
analyzers, etc.;
3. a description of the methodology and rationale used to
develop and maintain all software as well as any data flow
diagrams and entity relationships models; and
Two (2) months prior to October 1,1995, the Contractor shall provide
to the State the following:
1. a procedure on the operation of the System;
2. procedures on how State personnel may access the I/M program
central data base with all microcomputers communications
equipment, peripheral hardware, operating systems software,
and report generation products identified by the Contractor
and an explanation of how they function provided the State.
E. SOURCE CODE ESCROW AGREEMENT DOCUMENTATION. The Contractor shall
provide to the State a final draft of all source code escrow
agreements and of all software licenses terms and conditions. Such
documents to be mutually agreeable to both parties before being set
forth in final form.
F. SYSTEM ACCEPTANCE TESTING. Four (4) months prior to October 1, 1995,
the Contractor shall submit to the State an Acceptance Test Procedure
("ATP") for review and approval. The purpose of the ATP shall be to
demonstrate to the State's satisfaction that the I/M program has been
established and will operate in accordance with all of the Contract
requirements. The Contractor may request acceptance testing and
2
<PAGE>
Checklist and Schedule of Coordinated Activities
February 25, 1995
page X of 17
certification by the State of various segments at different times or
the entire program operating at one time. The State shall respond as
rapidly as possible to conduct the acceptance testing, evaluation and
certification. The State shall certify this acceptance in writing.
The ATP shall include provisions for a voluntary test program to keep
facilities fully operational and shall demonstrate the readmess of
each inspection facility in the presence of the State's employees or
authorized representatives in accordance with the approved ATP:
i. GAS ANALYZERS. The minimum ATP for gas analyzers shall
demonstrate that all specifications for gas analyzers and all QA/QC requirements
applicable to gas analyzers found in the EPA Test Procedures as may be amended
have been met and shall include, but not be limited to:
- Electronic zero/span demonstration
- Drift lockout demonstration
- Gas span check demonstration
- Demonstration of accuracy tolerance
- Resolution demonstration
- Response time demonstration
- Drift demonstration
- Calibration demonstration
- Interference demonstration
- Demonstration of low restriction of indicator
- Warm up time demonstration
- Leak check demonstration
- Hang up check demonstration
- Barometric pressure compensation demonstration
3
<PAGE>
Checklist and Schedule of Coordinated Activities
February 25, 1995
page X of 17
ii. DYNAMOMETERS. The minimum ATP for dynamometers shall demonstrate
that all specification for dynarnometers in the EPA Test Procedures as may be
amended have been met and shall include, but not be limited to:
- Roll speed demonstration
- True dynamometer horsepower demonstration
- Speed-horsepower relationship demonstration
- Short-term horsepower stability demonstration
- Roll brake interlock demonstration
- Wheel lift interlock demonstration
- Roll brake demonstration
- Repeatability demonstration
iii. NETWORK OPERATION. The minimum ATP shall include a
demonstration of network inspection times and reporting, utilizing a random
selection of vehicles (from voluntary inspections or vehicles otherwise made
available by the Contractor) at maximum lane capacity. All lanes at a single
inspection station shall be operated simultaneously. This will require that
each lane be queued to maximum capacity and that a minimum of six repetitive
inspections be conducted in each lane to maintain maximum report printer
utilization. The inspections shall be conducted in a normal manner by the
Contractor, and the State shall verify the inspection times and evaluate the
printed inspection reports to determine whether the network performed all the
specified functions satisfactorily. The remainder of the inspection network
shall have a simulated load placed on it during this procedure.
iv. VISUAL INSPECTION. The minimum ATP shall include visual
inspection of each facility by the State's employees or authorized
representative and shall include the following:
- An accounting of all specified facility equipment, software,
documentation, wiring and plumbing diagrams, and operations and mamtenance
manuals.
- A visual inspection of equipment installation workmanship.
- A visual inspection of the facility and site for workmanship.
4
<PAGE>
Checklist and Schedule of Coordinated Activities
February 25, 1995
page X of 17
G. MOTORIST NOTIFICATION. The Contractor shall provide to the State for
review and approval the plan for notifying motorists of their testing
date. The plan shall be submitted four (4) months prior to October 1,
1995, for State approval.
H. OPERATIONS MANUAL. The Contractor shall provide to the State a
standard operation procedures and policies manual specific to the I/M
program describing all the procedures to be used in the performance of
all test operations including, but not limited to, data processing,
complaint handling, fast pass/fail plan, computer programs and
procedures, issuance of certificates and notices, quality assurance
activities, and maintenance. Such procedures and policies shall be
presented to the State for approval, (3) months prior to October 1,
1995. The State reserves the right to have the Contractor revise such
procedures and policies to conform with State comment.
I. FORMS. The Contractor shall establish forms for the recording of test
results, repair cost data, complaints, and the issuance of compliance,
extension and waiver certificates. The State may request revisions be
made to such forms. Forms may be printed or issued by computer and
may serve multiple purposes but in all cases a form to be used in the
I/M program by the Contractor must have State approval. The initial
forms shall be provided to the State for approval five (5) months
prior to October 1, 1995.
J. PUBLIC INFORMATION PROGRAM. The Contractor shall provide to the State
for review and approval six (6) months prior to October 1, 1995, its
proposed Public Information Program, in accordance with The Technical
Proposal, Public information Plan. The program shall include a
detailed annual plan and budget for public information activities. If
the state disapproves the program, the Contractor shall submit revised
program within thirty (30) days of disapproval that addresses the
State comments.
K. FACILITIES AND SITE REQUIREMENTS. The Contractor shall provide the
required services for the facilities at following geographic
locations:
1. Hammond - Lake County
3411 Sheffield Avenue
5
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Checklist and Schedule of Coordinated Activities
February 25, 1995
page X of 17
2. Griffith - Lake County
Southeast corner of Colfax and Main Street
3. Crown Point - Lake County
Center Industrial Park
4. Portage - Porter County
Southeast corner of Wilshire Road and
Highway 6
5. Valparaiso - Porter County
Corner of Silhavy Road and Chicago Street
6. New Albany - Floyd County
Corner of Reas lane and Industrial Park East
7. Jeffersonville - Clark County
Southeast Corner of Research Drive and Industrial Parkway,
Jefferson Industrial Park, Lot #17
or such other locations as the parties may mutually agree in accordance
with the site section criteria set forth in the Request For Proposal
("RFP") and the contract for services.
The Contractor shall submit building and equipment design documentation for
written approval by the State pursuant to a schedule agreed to in writing
by the parties. A draft schedule shall be provided by the Contractor
within two (2) weeks of the coverletter accompanying this checklist (such
coverletter hereinafter being referred to as the "Coverletter"). Both
parties agree that the building and design documentation shall be presented
to the State for written approval and that the State shall, if appropriate,
approve such building and design documentation prior to finalizing site
selection. Furthermore, both parties agree that no construction shall
begin until the State has provided written approval to the Contractor of
both the building and equipment design documentation and site.
1. SITE ACQUISITION PLAN. The Contractor shall submit the final
sites to the State for written approval within one (1) month of
the Coverletter indicating how each site satisfies the site
selection criteria required in Section 3 of the RFP.
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2. FACILITIES AND DESIGN DATA. Before beginning construction on any
site, the Contractor shall submit detailed plans and
specifications to the State for written approval within one month
of the date of the Coverletter and the State shall, if
appropriate, approve such plans and specifications.
3. EQUIPMENT DESIGN DATA. Prior to beginning equipment
installation, the Contractor shall provide equipment design
documentation within one month of the date of the coverietter to
the State consisting of plans and specifications that include but
are not limited to fabrication drawings, layouts, and similar
classes of drawings. Equipment lists, catalog data sheets,
performance curves, diagrams, and similar descriptive material
shall also be provided to the State. Materials and equipment
lists provided by the Contractor to the State shall give, for
each item thereon, the name and location of the supplier or
manufacturer, trade name, catalog reference, size, finish, and
all other pertinent data. Design documentation provided by the
Contractor to the State shall include, but is not limited to, the
following:
a. Master block diagrams of the complete system. These
drawings shall contain sufficient information to serve as
the assembly drawings for the system.
b. Equipment layout for a facility that is representative of
the inspection network showing the precise location of each
major item of equipment and the utilities required for each.
c. Master assembly party lists, with assembly breakdown showing
major subassemblies and equipment items and major component
within such subassemblies by narne and part number.
d. Computer hardware manuals (principles of operation,
reference manuals and the like), and software reference
manuals for the computer related equipment
e. Interface control drawings.
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f. System cabling drawings, wiring lists, and terminal
connector drawings; and procedures. All details shall be
final and shall cover all phases of insulation such as pit
requirements, air supply, electrical requirements, water
supply and disposal, and complete installation procedures.
g. Installation drawings and procedures. All details shall be
final and shall cover all phases of installation such as pit
requirements, air supply, electrical requirements water
supply and disposal, and complete installation procedures.
h. Pneumatic and electrical schematics of the system and all
major subassemblles and items of equipment
4. APPLICATION SOFTWARE FUNCTIONAL DESIGN DOCUMENTATION. The
Contractor shall submit to the State for written approval
application software functional design documentation on a
schedule agreeable to the Contractor and the State prior to
installation of the software. A draft schedule shall be provided
by the contractor within one (1) month of the date of the
Coverletter. The application software design documentation shall
be developed using the computer program design and implementation
plan submitted by the Contractor to the State with the proposal.
The application software shall meet the Inspection System
Requirements provided by the State.
5. FINAL SYSTEM DOCUMENTATION. System documentation
supplied by the Contractor to the State shall include at least
the following items:
a. One copy of the final "as-built" building and site plans for
each facility, correct in every detail.
b. One set of maintenance and operation manuals for all
equipment.
c. One set of hardware and software Users' Manuals.
d. Complete wiring, plumbing and interconnection diagrams for
all equipment in each facility.
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e. Information necessary for maintenance at the component
replacement level.
L. INSPECTION SITES AND FACILITIES.
1. INSPECTION SITES. Inspection stations constructed and/or
operated by the Contractor shall be both located in the city
and the county, and provide at least the number of equipped
lanes indicated in the table below herein, or such other
locations as the parties may mutually agree in accordance
with the site section criteria set forth in the RFP.
CITY AND COUNTY OF EACH AT EACH CITY INSPECTION STATION LOCATION
INSPECTION STATION LOCATION NUMBER OF INSPECTION LANES
Hammond - Lake County 2
3411 Sheffield Avenue
Griffith - Lake County 5
Southeast corner of Colfax and Main Street
Crop Point - Lake County 3
Center Industrial Park
Portage - Porter County 3
Southeast corner of Wilshire Road and
Highway 6
Valparaiso - Porter County 3
Corner of Silhavy Road and Chicago Street
New Albany - Floyd County 2
Corner of Reas Lane and Industrial Park East
Jeffersonville - Clark County 3
Southeast Corner of Research Drive and
Industrial Parkway
Jeffersonville Industrial Park -
Total 21
2. INSPECTION SITE REQUIREMENTS. The required inspection sites
shall meet the following criteria:
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a. DISTANCE AND LOCATION. The Contractor shall ensure
that the network of inspection facilities shall be
properly serviced by highway/arterials and shall be
located so that 80 percent of all motorists subject to
the I/M program reside within 5 miles of a facility,
and that 95 percent reside within 12 miles.
An inspection facility shall not be located within 1/2
miles of a school, park, hospital, or residential area.
The ingress and egress of vehicles from the facilities
shall not impede traffic flow. The Contractor shall
not put forth for written State approval a test site
location which would result in lines of vehicles
awaiting testing to spill out onto any street, road or
public thorough fare. The design and operation of each
test site shall ensure that lines of vehicles awaiting
testing will not block area business premises or
frustrate area business functions. Additionally, no
inspection facilities shall be presented to the State
or established either within 1/2 mile of any criteria
pollutant monitor in a metropolitan area or at a
location that would cause a violation of the National
Ambient Air Ouality Standards for ambient air quality
criterion pollutants as determined by an air quality
impact analysis. The Hammond Site shall be exempt from
the criteria pollutant monitoring distance for PM-10.
b. LAND AND BUILDING REQUIREMENTS. The Contractor shall
ensure that each inspection site developed shall be
large enough to permit expansion of the testing
facility by at least one additional lane and that each
inspection facility is built to accommodate one more
test lane than the number of equipped test lanes
provided for in subsection L.1. The State shall not
approve site locations or building designs that do not
meet this requirement.
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c. WAIT TIMES. The Contractor shall design each facility
to ensure that testing on a vehicle will begin no later
than thirty (30) minutes from the time such vehicle
presented itself in the line for testing, except that
no such time requirement shall apply on the first three
testing days of each month or the last three testing
days of each month. On the first three and the last
three testing days of each month the Contractor shall
operate each facility so that testing on a vehicle will
begin within sixty (60) minutes from the time the
vehicle is presented in line for testing.
d. INSPECTION LANES. The Contractor shall ensure that the
number of inspection lanes at each facility shall be
sufficient to accommodate the waiting times specified
in d. hereinabove. Also, during test site operation,
whenever there are more than four vehicles queued for
any one lane the Contractor shall open and staff spare
lanes as needed to reduce the queue to less than four
vehides.
e. QUEUING AREA. The length of the queuing lanes on each
inspection site shall be at least long enough to
accommodate the waiting times specified in d.
hereinabove. The minimum lane length per queuing lane
shall be 150 linear feet
f. DISABLED VEHICLE AREA. The Contractor shall provide
parking space for at least two disabled vehicles
(vehicles that have become inoperable at the inspection
facility) at each inspection facility. The disabled
paring spaces shall be convenient to the inspection
lanes, and the location shall be consistent with the
manner in which disabled vehicles will be removed from
the inspection lanes.
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g. PARKING. The Contractor shall provide parking at each
inspection facility for each on duty Contractor
employee, plus one parking space per inspection lane
for visitors. In addition to the employee and visitor
parking spaces described above herein, each inspection
site shall provide parking for the handicapped in
accordance with state and federal law.
The Contractor shall design each facility site so that
the parking spaces shall not block inspection lanes or
adversely affect vehicle ingress and egress from the
inspection facility. The entrances and exits to the
visitor parking areas shall be clearly marked and
accessible from public streets and from inspection
lanes.
h. LANDSCAPING. The Contractor shall ensure that at least
10% of the area at the inspection site be vegetated
soil and conform with local plaining and zoning
regulations, including any requirements for buffering.
Lawns and/or shrubbery shall be properly maintained by
the Contractor.
i. PAVING AND MARKING. All surfaces upon which vehicles
will move shall be properly paved and maintained by the
Contractor. Lane and directional markings, and
pedestrian walkways shall be painted and properly
maintained by the Contractor. All painted markings
shall be properly maintained by the Contractor based
upon evaluation by the State. All markings used by the
Contractor consistent with those used on public
roadways. The Contractor shall keep all surfaces clean
at all times and shall remove snow from all driving
surfaces at an inspection facility when accumulation
exceeds one inch on any part of such driving surfaces.
Pedestrian walkways on and around test/waiver centers
shall be kept clear
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of snow and ice at all times regardless of depth.
Paved areas and ways shall have drains designed to
prevent standing water. Contractor shall use signs and
other devices to warn persons of hazards including but
not limited to, ice or water, as is prudent or required
by law.
j. PUBLIC AREAS. Public waiting areas shall be provided
at all inspection facilities when test procedures
require occupants to get out of a vehicle. Such public
areas shall be easily accessible to handicapped
persons. Such public areas shall be placed so that
crossing adjacent test lanes is not required. The area
should be enclosed and situated in such a way that
customers may observe their vehicle at all times during
testing/appeals procedures. The area shall be safe and
reasonably comfortable. Noise from inspection facility
operations shall not exceed 80 decibels inside the
waiting area.
k. INSPECTION PERSONNEL ATTIRE. The Contractor shall
require that all Contractor inspection personnel
directly involved with vehicle inspection wear uniforms
which meet State and federal law and are approved by
the State. The State approval of the uniforms is not a
substitute for meeting any applicable State and federal
requirements, etc., including but not limited to OSHA
health and safety requirements. Compliance with such
requirements is the sole responsibility of the
Contractor.
l. CONSUMER VEHICLE DAMAGE. The Contractor shall be
responsible for all vehicle darnage during inspections
caused by the act or omission of persons within the
control of the Contractor, including but not limited to
an employee, agent, partner, associate, or
representative.
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m. INSPECTION FACILITY REQUIREMENTS. The Contractor shall
construct the inspection facilities in accordance with plans
and specifications approved by the State. The State shall
not unreasonably withhold approval of such plans.
1. ARCHITECTURAL DESIGN. The Contractor shall ensure that
all facilities are of metal construction, uniform
design identifiable to the general public, designed to
accommodate the climate in Indiana, substantial
construction and attractive appearance. A final
architectural design for each site shall be presented
by the Contractor and its architect, if any, to the
State, before construction commences for review and
written State approval, if appropriate. The Contractor
shall be responsible for ensuring that location and
construction of each building conforms to any and an
applicable local zoning laws, ordinances, building
codes, etc.
2. WAIVER INSPECTION AREA. The Contractor shall provide
at each site a nonsmoking sheltered area for waiver
inspections.
3. SAFETY AND FIRE REQUIREMENTS. The Contractor shall
ensure that the facilities comply with all state and
local safety and fire codes, ordinances and regulations
and with all Occupational Safety and Health
Administration ("OSHA") Requirements.
4. VENTILATION. The Contractor shall ensure that each
test facility shall provide adequate ventilation to the
vehicle testing and other areas so that OSHA exposure
limits are not exceeded. The ventilation system shall
be designed to remove smoke/fumes from the lanes
quickly without causing severe drafts. The design shall
provide for the
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placement of a carbon monoxide (CO) detector at each
vehicle testing area adjacent to each emission testing
position and five (5) to six (6) feet above the floor.
5. VEHICLE SIZE. The contractor shall ensure that each
facility accommodate and test vehicles registered at a
Gross Vehicle Weight (GVW) up to 10,000 pounds and that
at least one lane at each multilane facility
accommodate and test large dimension vehicles such as
pickups with campers and trucks.
6. SPACE FOR STATE PERSONNEL AND EQUIPMENT. The Contractor
shall ensure that a minimum of 190 square feet of space
for storage of the State's Quality Assurance/Quality
Control (QA/QC) equipment and office work space for
State personnel are provided in the design for each
inspection facility. A parking space shall be reserved
for use by a state vehicle. The State at its risk
shall be allowed by the Contractor to park one vehicle
within the waiver bay of each facility at night and
during the weekends. The State shall have access to
such parked vehicles at all times.
7. COMFORT STATION. The Contract shall ensure that
comfort stations are kept clean and sanitary at all
times and include for use by all persons on site a
handicapped accessible lavatory and toilet
8. IDENTIFICATION AND DIRECTIONAL SIGNS. The Contractor
shall coordinate with the appropriate governmental
entities the placement and setting in place
identification and direction signs to direct motorists
to an inspection facility from the nearest highway or
arterial.
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9. WAIT TIME SIGNS. The Contractor shall provide at each
inspection facility a prominently displayed sign
notifying motorists of the average waiting time to
expect for an emissions inspection at facility from the
nearest highway or arterial.
10. HANDICAPPED ACCESSIBLLITY. The Contractor shall ensure
that each facility provides access to the handicapped
as required by the American with Disabilities Act and
other federal, state, and local laws, rules, codes,
etc. and signage sufficient for a hearing impaired
person or a person with limited English language skills
to complete the inspection process.
N. OTHER REPORTING AND INFORMATIONAL REQUIREMENTS.
1. PROGRESS REPORTS. The Contractor shall submit detailed
progress reports monthly during the design and
construction of facilities begiring one (1) month from
the date of the Coverletter. These progress reports
shall include: 1) a summary of the Contractor's
activities for the previous month (including estimated
percent of project competition); 2) any actual or
anticipated delays and how these delays may affect
schedule completion; 3) problems or difference of
interpretation; 4) the resolution of any past problems
or recommended solutions to past problems; and 5)
activities planned for the next month.
The progress reports shall contain cross-reference(s)
to earlier reports in order to reduce the volume and
complexity of each report. At the conclusion of the
implementation period, the Contractor shall submit a
summary report and table of contents for all the
previous progress reports.
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2. PRE-CONSTRUCTION REQUIREMENTS. The Contractor shall
submit detailed schedules for each aspect of the design
and construction of the facility network to meet the
program start work, materials, and equipment may be
rejected by the State notwithstanding their prior
inspection or lack of inspection by the State. All
work, materials, or equipment shall conform to the
specifications and drawings the Contractor provides the
State.
O. EXPEDITIOUS REVIEW BY THE PARTIES. In each case where the
Contractor submits a plan, design, report or other item to
the State for approval, the State shall use its best efforts
to issue approval or disapproval as expeditiously as
possible within fifteen (15) days of receipt. The parties
shall, to the extent possible, identify in advance any items
for which State approval is likely to require more than
fifteen (15) days. The Contractor shall identify those
items that affect the critical path of the project
P. COMPLIANCE WITH THE NATIONAL ENVIRONMENTAL POLICY ACT
(NEPA). The Contractor shall comply with NEPA. If the site
acquisition plan presented by the Contractor is found by the
state to include a site assessed by the State not in
compliance with NEPA, the State will not approve the site
acquisition plan until such deficiency is resolved by the
Contractor.
Q. The Contractor shall submit to the State for review and
approval for (4) months prior to October 1, 1995, an
employee handbook that shall set forth standards of conduct
for its employees and disciplinary measures for failure to
comply with those standards.
R. The Contractor and the State by mutual written agreement may
modify this checklist.
Neither the Coverletter nor this Checklist modifies, amends or impacts the
parties responsibilities and duties as set out in the contract for services
between the Contractor and the State. Such documents exist only to assist both
parties in the preparations for the performance of the responsibilities set out
in the contract for services.
17
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[EXECUTIVE DOCUMENT SUMMARY FORM]
(Amendment changing location and term of the Contract.)
EDS continuation
have the right to seek recovery from the State of those reasonable and necessary
costs and obligations, as set forth in this Article incurred by the Contractor
in preparation for the performance of the contractual services required under
this contract, subject to appropriations, documentation and mitigation.
<PAGE>
FIRST AMENDMENT TO CONTRACT
This Amendment to Contract shall alter the Contract between Systems Control
Indiana Corp., a wholly owned subsidiary of Systems Control, Inc., both
corporations under the General Corporation law of the State of Delaware, as
amended to date (hereinafter referred to as the "Contractor"), and the Indiana
Department of Environmental Management, acting by and through the Indiana
Department of Administration, for and on the behalf of the State of Indiana
(hereinafter referred to as the "State");
WITNESSETH:
WHEREAS, the Contractor and the State executed and delivered a Contract dated as
of December 15, 1994 (the "Contract") for services in connection with the
implementation, operation and assistance in administration of a centralized
inspection/maintenance (I/M) in Lake, Porter, Clark and Floyd Counties (the "I/M
Program") such services to begin July l, 1995;
WHEREAS, in anticipation of the commencement of services under the Contract, the
Contractor has advised the State that the Contractor intends to purchase land,
construct test facilities and engage in various other implementation activities
reasonable and necessary for the commencement of services under the Contract;
WHEREAS, the Contractor and the State desire to amend the Contract to change the
testing site location for Clark County;
WHEREAS, the Contractor and the State desire to amend the Contract to change the
date services are to begin;
WHEREAS, the Contractor has requested and the State has agreed to provide
additional assurances to the Contractor concerning the right of the Contractor
to make claims and to seek recovery of such costs and expenses in the event of a
termination of the I/M Program prior to the Commencement Date of the Contract;
WHEREAS, the Contractor and the State desire to amend the Contract to confirm
their mutual agreements and understandings with respect to the foregoing;
NOW, THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do agree as follows:
1. The Contract including exhibits and attachments thereto are incorporated by
reference, appended hereto and subject to: the approval of the signatures
hereto, the appropriation and availability of funds, compliance with Indiana
law, and the Amendment made hereinbelow.
Page 1 of 3
<PAGE>
2. Except as otherwise set forth herein, capitalized terms contained herein
shall have the meaning ascribed to such terms in the Contract.
3. Contract Article I. Duties of Contractor, Section A. Facilities and Site
Requirements, Subsection 1. Geographic Location shall be amended by changing:
Silver Creek - Clark County
Silver Creek Industrial Park, Lot #8
to read:
Jeffersonville - Clark County
Southeast Corner of Research Drive and Industrial Parkway,
Jeffersonville Industrial Park, Lot #17
4. Contract Article III. Term shall be amended by changing:
July 1, 1995
to read:
October 1, 1995
and by changing:
June 30, 2005
to read:
September 30, 2005
5. Contract Article XXIV. Termination by State shall be amended by adding
thereto the following paragraph:
Notwithstanding any provision to the contrary contained in this
Contract, in the event of a termination or suspension of the I/M
Program prior to the Commencement Date of the Contract, the
Contractor's rights to make claims hereunder shall be applicable and
Contractor shall have the right to seek recovery from the State of
those reasonable and necessary costs and obligations, as set forth in
this Article incurred by the Contractor in preparation for the
performance of the contractual services required under this Contract,
subject to appropriations, documentation and mitigation.
6. Except as herein amended, the Contract as originally executed shall remain
in full force and effect.
The parties having read and understanding the foregoing terms of the Amendment
do by their respective signatures dated below hereby agree to the terms thereof:
Page 2 of 3
<PAGE>
FOR THE CONTRACTOR:
By: /s/ F. Robert Miller Attested By: /s/ Ann Marie Alfrey
------------------------- ---------------------
Printed Name: F. Robert Miller Printed Name: Ann Marie Alfrey
----------------- --------------------
Title: President Title: Notary
------------------------ ---------------------------
Date: 4/3/95 Date: 4/3/95
------------------------- ----------------------------
FOR THE STATE OF INDIANA:
Approved: Approved:
/s/ /s/
- -------------------------- ------------------------------
Rebecca Schenk William Shrewsberry
Deputy Comissioner Commissioner
Indiana Department of Indiana Department of
Environmental Management Administration
Date: April 13, 1995 Date: April 19, 1995
--------------------- -------------------------------
Approved: Approved as to form
and legality:
/s/ /s/
- -------------------------- ------------------------------
Jean Blackwell Pamela Carter
Director of the State Attorney General of
Budget Agency Indiana
Date: 4/23/95 Date: 5/3/95
--------------------- -------------------------------
Page 3 of 3
<PAGE>
STATE OF CALIFORNIA )
COUNTY OF SANTA CLARA) SS:
)
The undersigned, being duly sworn on oath says, that he is the contracting
party, or that he is the representative, agent, member, or officer of the
contracting party, that he has not, nor has any other member, employee,
representative, agent or officer of the firm, company, corporation or
partnership represented by him, directly or indirectly, entered into or offered
to enter into any combination, collusion or agreement to receive or pay and that
he has not received or paid, any sum of money or other consideration for the
execution of the annexed contract other than that which appears upon the face of
the contract.
Signature /s/ F. Robert Miller
Printed Name F. Robert Miller
Title President
Company Systems Control, Inc.
Before me, a Notary Public in and for said County and State personally appeared.
F. Robert Miller, who acknowledged the truth of the statements in the
foregoing affidavit on this 3 day of April, 1995.
Notary Signature Ann Marie Alfrey
County of Residence Santa Clara
Commission Expiration Date 4/24/98
Notary's Name (Print or Type) Ann Marie Alfrey
<PAGE>
ASSIGNMENT AND NOVATION AGREEMENT
Systems Control Indiana Corp. ("SC-IN"), a wholly owned subsidiary of
Systems Control, Inc. ("SC"), both corporations duly organized and existing
under the General Corporation Law of the State of Delaware, as amended to date,
with principal offices in Menlo Park, California (SC-IN is hereinafter referred
to as the "Transferor"); Envirotest Systems Corp., a corporation duly organized
and existing under the General Corporation Law of the State of Delaware, with
its principal office in Sunnyvale, California (hereinafter referred to as the
"Transferee"); and the Indiana Department of Environmental Management
(hereinafter referred to as "the State") enter into this Agreement as of
June 7, 1996.
A. THE PARTIES AGREE TO THE FOLLOWING FACTS:
1. The State has entered into a contract with the Transferor,
namely: the contract dated as of December 15, 1994 (the "contract") for
services in connection with the implementation, operation and assistance in
administration of a centralized inspection/maintenance (I/M) program in Lake,
Porter, Clark and Floyd counties (the "I/M program"). The term "the contract,"
as used in this Agreement, means the above contract, as amended by the First
Amendment, dated May 5, 1995.
2. By agreement dated February 23, 1996, SC transferred to SC-IN any
and all rights which SC may have in the contract or any other assets relating to
the performance thereof by SC-IN and SC-IN assumed all of the obligations and
liabilities of SC hereunder and in connection with the performance of the
contract which agreement is attached hereto as Exhibit A and which is hereby
consented to by the State by its execution of this Novation Agreement and by
virtue thereof the parties hereto acknowledge and agree that SC is not a party
to the contract and is not in any way liable or responsible for the performance
thereof by contract, indemnification or otherwise.
3. As of the date hereof, the Transferor and the Transferee have
entered into an Asset Purchase Agreement (the "Purchase Agreement") pursuant to
which the Transferee will purchase substantially all of the assets of the
Transferor.
4. As of the date hereof, the Indiana Development Finance Authority
(the "IDFA") and the Transferee are in negotiations regarding the terms and
conditions of the issuance of up to $15,000,000 of bonds (the "Bonds") for the
purpose of making a loan to the Transferee (the "Loan") to provide financing for
the acquisition, construction, and equipping of the facilities needed for the
I/M Program.
5. Upon the IDFA Closing (as hereinafter defined), the Transferee
will be in a position to fully perform all of the Transferors' obligations under
the contract.
<PAGE>
6. It is consistent with the State's interest to recognize the
Transferee as the successor party to the contract.
7. Upon the IDFA Closing, all corporate proceedings necessary in
connection with the consummation of the transactions set forth in the Purchase
Agreement will have been duly and validly taken.
B. IN CONSIDERATION OF THESE FACTS, THE PARTIES AGREE, THAT EFFECTIVE
UPON THE ISSUANCE, SALE AND DELIVERY OF THE BONDS BY IDFA AND THE
LOANING OF THE PROCEEDS THEREOF TO THE TRANSFEREE (THE "IDFA
CLOSING"), THAT BY THIS AGREEMENT AS OF THE DATE OF THE IDFA CLOSING,
1. The Transferor transfers and assigns to the Transferee all of its
right, title and interest under the contract and the Transferee hereby accepts
such transfer and assignment and the Transferor wives any claims and rights
against the State that it now has or may have in the future in connection with
the contract and transfers any such claims and rights to the Transferee. The
parties hereto acknowledge and agree that this Agreement shall constitute a
novation of the contract.
2. The Transferee agrees to be bound by and to perform the contract
in accordance with the conditions contained in the contract. The Transferee
also assumes all obligations and liabilities of the Transferor under the
contract as if the Transferee were the original party to the contract.
3. The Transferee ratifies all previous actions taken by the
Transferor with respect to the contract, with the same force and ef fect as if
the actions had been taken by the Transferee.
4. The State recognizes the Transferee as the Transferor's successor
in interest in and to the Contract. The Transferee by this Agreement is
entitled to all claims, rights, titles and interests of the Transferor in and to
the contract as if the Transferee were the original party to the contract.
Following the effective date of this Agreement, the term "contractor" or
"vendor" as used in the contract, shall refer solely to the Transferee.
5. This Agreement shall constitute a waiver of any rights of the
State against the Transferor and SC for claims arising out of or in respect to
the contract.
6. No payments or reimbursements have been made by the State to the
Transferor prior to the date hereof. All other previous actions taken by the
State under the contract shall be considered to have discharged those parts of
the State's obligations under the Contract. All payments and reimbursements
made by the State after the date of this Agreement in the name of or to the
Transferor shall have the same force and effect as if
2
<PAGE>
made to the Transferee, and shall constitute complete discharge of the
State's obligations under the contract, to the extent of the amounts paid or
reimbursed.
7. The Transferor and the Transferee agree that the State is not
obligated to pay or reimburse either of them for, or otherwise give any related
increases, directly or indirectly arising out of or resulting from the transfer
of this Agreement, other than those that the State in the absence of this
transfer or Agreement would have been obligated to pay or reimburse under the
terms of the Contract.
8. The State agrees that all liabilities and the performance of all
obligations assumed under this Novation Agreement or which may be undertaken in
the future under the contract shall solely be liabilities and obligations of the
Transferee and neither SC nor SC-IN shall have any further liability or
Obligation to the State subsequent to the date hereof.
9. The contract shall remain in full force and effect, except as
modified by this Agreement. Each party has executed this Agreement as of the
day and year first above written.
10. The parties hereby acknowledge and agree that in the event the
IDFA closing fails to occur for any reason or for no reason (including the
failure of the Board of Directors of the Transferee to approve the Loan and the
obligations of the Transferee under the contract) on or prior to June 30, 1996,
this Agreement shall be void ab initio and each of the parties shall be restored
to their former positions immediately prior to the execution and delivery of
this Agreement and the Transferee shall have no liability to any party with
respect to the contract.
3
<PAGE>
AGREEMENT SIGNATURES
Transferor: Systems Control Indiana Corp.
By: /s/
-------------------------------
Title: President
-----------------------------
I, Pam Swain, certify that I am the Secretary of Systems Control Indiana
Corp., a Delaware corporation; that Linda Flores who signs this Agreement for
this corporation was then President of this corporation; and that this
Agreement was duly signed for and on behalf of this corporation by authority
of its governing body and within the scope of its corporate powers. Witness
my hand this 14 day of June, 1996.
By: /s/
---------------------------------
Transferee: Envirotest Systems Group
By: /s/
---------------------------------
Title: CFO
------------------------------
I, C. Michael Alston, certify that I am the Secretary of Envirotest
Systems Corp., a Delaware corporation; that F. Robert Miller was then
President, who signs this Agreement for this corporation was then President
of this corporation; and that this Agreement wa duly signed for and on behalf
of this corporation by authority of its governing body and within the scope
of its corporate powers. Witness my hand this 14 day of June, 1996.
By: /s/
-----------------------------
State of Indiana:
/s/ 6/26/96
- -------------------------------- ----------------------------
Kathy Prosser, Commissioner Date
Department of Environmental
Management
/s/ 6/26/96
- -------------------------------- ----------------------------
William Shrewsberry, Commissioner Date
Department of Administration
/s/ 6/27/96
- -------------------------------- ----------------------------
Katherine L. Davis, Director Date
State Budget Agency
/s/ 6/27/96
- -------------------------------- ----------------------------
Pamela Carter, Attorney General Date
Office of the Attorney General
4
<PAGE>
SECOND AMENDMENT TO CONTRACT
This Second Amendment to Contract shall alter the Contract between
Envirotest Systems Corp., a corporation duly organized and existing under the
General Corporation Law of the State of Delaware, with its principal office in
Sunnyvale, California (hereinafter referred to as "ESC" or the "Contractor"),
and the Indiana Department of Environmental Management, acting by and through
the Indiana Department of Administration, for and on the behalf of the State of
Indiana (hereinatter referred to as the "State");
This Second Amendment to Contract is contingent upon:
(1) the proper execution of an Asset Purchase Agreement between ESC and
Systems Control Indiana Corp. ("SC-IN"), a wholly owned subsidiary of
Systems Control, Inc. ("SC"), both corporations organized and existing
under the General Corporation Law of the State of Delaware, transferrihg
substantially all of the assets of SC-IN to ESC;
(2) the proper execution of an Assignment and Novation agreement by SC-IN,
ESC and the State regarding the Contract dated December 15, 1994 between
SC-IN and the State for Inspection/Maintenance (I/M) program services; and
(3) the delivery to the State of an acceptable copy of the properly
executed agreements described hereinabove in (l) and (2), and the agreement
dated February 23, 1996, between SC and SC-IN which transferred any and all
rights SC may have had in the Contract dated December 15, 1994 between SC-
IN and the State (referenced in (2) hereinabove) to SC-IN;
WITNESSETH:
WHEREAS, the Contractor and the State executed and delivered a Contract
dated as of December 15, 1994 (the "Contract") for services in connection with
the implementation, operation and assistance in administration of a centralized
inspection/maintenance (I/M) in Lake, Porter, Clark, and Floyd Counties (the
"I/M Program") such services to have commenced July l, 1995;
WHEREAS, the Contractor and the State executed and delivered a First
Amendment to Contract dated as of May 3, 1995 (the "First Amendment");
WHEREAS, in the process of securing financing support for these activities
the Contractor has experienced various unavoidable delays in beginning such
services;
WHEREAS, the Contractor and the State desire to amend the Contract to
change the commencment date upon which testing services are to begin;
1
<PAGE>
WHEREAS, the Contractor and the State desire to amend the Contract to
change the per initial test fee;
WHEREAS, the State has agreed to waive any penalties or damages resulting
from or relating to the delays in the performance of services by the Contractor
through the date hercof;
WHEREAS, the Contractor and the State desire to amend the Contract to
change certain of the testing site locations for Lake, Porter, Clark and Floyd,
Counties;
WHEREAS, the Contractor and the State desire to make additional amendments
to the Contract as set forth herein;
WHEREAS, the Contractor and the State desire to amend the Contract to
confirm their mutual agreement and understandings with respect to the foregoing;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. The Contract, including exhibits and attachments thereto, and the
First Amendment are incorporated herein by reference and as modified hereby
shall constitute the agreement of the parties hereto, subject to: the approval
of the signatories hereto, the appropriation and availability of funds,
compliance with Indiana Law, and the Amendment made herein below.
2. Except as otherwise set forth herein, capitalized terms contained
herein shall have the meanings ascribed to such terms in the Contract.
3. Article I, DUTIES OF CONTRACTOR, Section A, FACILITIES AND SITE
REQUIREMENTS, Subsection 4, WAIT TIMES shall be amended by changmg:
The Contractor shall operate each facility so that testing on a
vehicle will begin within thirty (30) minutes from the time the
vehicle is presented in line for testing. Such thirty (30) minute
requirement shall not apply to the operation of any of the inspection
facilities during either the first three or the last three testing
days of each month. On the first three and last three testing days of
each month the Contractor shall operate each facility so that testing
on a vehicle will begin within sixty (60) minutes from the time the
vehicle is presented in ime tor testing.
to read:
2
<PAGE>
The Contractor shall operate the facilities so that the average
customer wait time per day per test station shall be no longer
than thirty (30) minutes to begin testing, except that during
either the first three or the last three testing days in each
calendar month, such wait time shall be no longer than sixty (60)
minutes.
4. Article 1, DUTIES OF CONTRACTOR, Section A. FACILITIES AND SITE
REQUIREMENTS, Sub-section 1. GEOGRAPHIC LOCATION shall be amended by deleting
the following locations:
Hammond - Lake County
3411 Sheffield Avenue
Griffith - Lake County
Southeast corner of Colfax and Main Street
Crown Point - Lake County
Center Industrial Park
Portage - Porter County
Southeast corner of Wilshire Road and Highway 6
Valparaiso - Porter County
Corner of Silhavy Road and Chicago Street
New Albany - Floyd County
Corner of Reas Lane and Industrial Park East
Jeffersonville - Clark County
Southeast Corner of Research Drive and Industrial
Parkway
Jeffersonvilie Industrial Park, Lot #17
and by adding the following locations:
Hammond - Lake County
1231 Gostlin Street
Griffith - Lake County
232 Ivanhoe Court South
All of the Lots 18 and 19 and portion of Lot 17 in Gatlin's
addition, Phase I
Crown Point - Lake County
755 North Industrial Boulevard
Lot 4, Center Industrial Park
Hobart - Lake County
325 Sullivan Street
3
<PAGE>
Valparaiso - Porter County
2505 Beech Street
All of Lot 4 and portion of Lot 3 in Silhavy Commercial Park
New Albany - Floyd County
4109 Reas Lane
Jeffersonville - Clark County
1502 Research Drive
Lot 17, Jeffersonville Industrial Park
5. Article I, DUTIES OF CONTRACTOR, Section B, PROGRAM SCHEDULE shall be
amended by inserting the following at the beginning of the section:
Vehicle testing shall commence in Lake and Porter Counties on the
Commencement Date of this Contract. Vehicle testing shall
commence in Clark and Floyd Counties on July 1,1997 or such later
date as the parties may agree. Two months prior to the
commencement of testing in Clark and Floyd Counties, the
Contractor agrees that the test sites shall be open for voluntary
testing and visitation by the public, on a schedule to be
mutually agreed upon by the parties. Construction of test sites
in Clark and Floyd Counties shall begin after the Commencement
Date of this Contract on a date mutually agreed upon by the
parties. No later than April 1, 1997, the parties agree to
develop an operational plan to establish the specific testing
protocol for Clark and Floyd Counties which is mutually agreeable
to the Contractor and the State and which does not increase the
cost or delay the construction or implementation of the I/M
Program by the Contractor. The Contractor and the State agree to
amend this Contract within a reasonable time after April 1, 1997
as necessary or appropriate to reflect any change in the test fee
and the arnounts determined in accordance with Exhibit A in
respect of such fiscal year to be paid to the Contractor as a
result of modifications to the test procedure, if any, to be
employed in the Clark and Floyd County sites.
6. Article I, DUTIES OF CONTRACTOR, Section (3, FAILURE OF PERFORMANCE
amended by changing:
The Contractor shall forfeit $200 which would otherwise be
payable to the Contractor under Section II, CONSIDERATION, for
each hour a test lane queuing violates the requirements set out
in page 22 and 23 of the RFP. Such an hour begins at time of
testing.
4
<PAGE>
to read:
The Contractor shall forfeit $200 which would otherwise be
payable to the Contractor under Section ll, CONSIDERATION, for
each hour queuing violates the requirements set forth on page
21 of the RFP; provided, however that no such penalties will
be imposed so long as the Contractor has implemented or is in
the process of implementing the corrective actions set forth
on page 22 of the RFP. Should the Contractor fail to
implement reasonable corrective actions in accordance with
page 22 of the RFP with the result that the average customer
wait time does not meet the standard set forth in Article I,
Section A, Subsection 4, WAIT TIMES, such occurrence may be
regarded as a material breach of contract.
7. Article II, CONSIDERATION, shall be amended by changing:
The Contractor in payment for all services provided under this
agreement shall be paid by the State $21.78 per initial test
provided, however, that total remuneration under this contract
shall not exceed $6,011,500 for the 1995-1996 State fiscal year
and $6,074,000 for the 1996-1997 State fiscal year. The parties
agree that total remuneration for the 1997-1998, 1998-1999, 1999-
2000, 2001-2002, 2002-2003, 2003-2004, 2004-2005 State fiscal
periods shall be determined after the respective State biennium
budget has been approved by the State General Assembly. The
parties agree that all requests for state appropriations for IIM
program funding be prospective taking into consideration both
current and proposed State and federal regulation and law and
including all pertinent available historical information. In
addition, the parties agree that such total remuneration for each
of the subsequent State fiscal periods shall be amended into this
contract or otherwise be without effect.
to read:
The Contractor in payment for all services provided under this
agreement shall be paid by the State the amount per initial test
set forth in the attached Exhibit "A"; provided, however, that
total remuneration under this Contract shall not exceed
$2,672,512 in the State's fiscal year 1996-1997. The parties
agree that total remuneration for the subsequent state fiscal
years shall be subject to appropriations and determined after the
5
<PAGE>
respective State biennium budget has been approved by the State
General Assembly. The parties agree that such total remuneration
for each of the subsequent State fiscal years shall be amended
into this contract or otherwise be without effect and shall be
determined based upon and shall not exceed the initial test fee
multiplied by the expected number of vehicles to be tested during
each such year of the I/M program as set forth in the attached
Exhibit "A."
and by adding thereto the following paragraph:
The Contractor shall submit invoices to the State on a monthly
basis. The State shall make payment on each invoice within
thirty (30) days of its receipt of that invoiee.
8. Article III, TERM shall be amended by changing:
October 1,1995
to read:
January l, 1997
and by changing:
September 30, 2005
to read:
December 31, 2006
9. Article XVI CHANGES IN WORK shall be amended by changing:
6. Method, timing, or location of inspection, testing or
quality control
to read:
6. Method, time or location of inspection, testing or quality
control or the number of vehicles subject to tne requirements number of
inspections to be performed during any year of the term of this Contract.
and by adding thereto the following paragraph, to be inserted before the last
paragraph:
6
<PAGE>
A. If, as a result of
(i) partial suspension of the I/M program by the State,
(ii) failure by the State to enforce the laws and regulations of the
State applicable to the I/M program that is the subject of this
Contract, or (iii) a change or change in interpretation of state law,
state rule, or directive to motorists,
the number of vehicles to be tested during any calendar month by the
Contractor is reduced by more than 3% from the number that would have
been tested during that calendar month but for the State taking action
pursuant to (i), (ii), or (iii) above (hereafter referred to as a
"Reduction Event"), the parties agree to negotiate in good faith a
revision to this Contract to reflect the revised Scope of Work and an
equitable adjustment to the compensation payable to the Contractor set
forih in Exhibit A ("the Compensation Schedule").
B. In the event that the Reduction Event occurs prior to a mutually
satisfactory revision of the Compensation Schedule, the parties shall
within sixty (60) days (the "interim period") of the Reduction Event,
establish and agree upon a revision to the amount payable to the Contractor
on the Compensation Schedule. During the interim period, the State shall
pay the Contractor amounts determined in aecordance with Exhibit B.
Such payments shall commence with the first payment due by the State
following the first day of the Reduction Event.
C. If the parties do not agree within the interim period to an amendment
to the Contract and equitable adjustment to the Compensation Schedule, the
parties shall follow the provisions set forth in Article XXXIII, DISPUTES,
and the State shall continue to pay the Contractor monthly in accordance
with Exhibit B until resolution of the dispute regarding the amendment to
this Contract or termination of the Contract.
D. If the parties agree during the interim period or after following the
procedures under Article XXIII, DISPUTES, to an amendment to the Contract
and equitable adjustment to the Compensation Schedule, the parties will
review the amounts paid during the interim and Dispute Resolution periods
and make any adjustments retroactively to assure that payments made are
consistent with the revised Compensation Schedule. Such equitable
adjustment shall be determined in the same manner as the compensation
originally negotiated by the parties less actual and reasonable mitigation
of the Contractor's costs as a result of the revised Scope of Work.
7
<PAGE>
E. If the reduction in the aggregate number of vehicles to be tested by
the Contractor over the remaining term of this Contract exceeds 50%, and
the parties have not been able to agree upon a mutually acceptable
amendment to the Scope of Work and the Compensation Schedule within the
interim period as provided in this Article, then the obligations of the
Contractor under this Contract, at the option of the Contractor, may be
terminated in full, subject to any past adjustments due to the State
accrued before the reduction. Upon expiration of the interim period
described in the preceding sentence, if the parties have not agreed upon a
Revised Scope of Work and Compensation Schedule, the Contractor may deliver
to the State a Notice of Termination and the provisions of Article XXV,
DEFAULT BY STATE, and Article XXXIII, DISPUTES, do not apply. Upon such
termination, the Contractor shall retain all of its rights to seek
compensation as set forth in this Contract.
10. Article XXIV. TERMINATION BY STATE shall be amended by changing:
The State may terminate this Contract, in whole or in part, if the
State determines that such terminating is in its best interest.
to read:
The State may only terminate this Contract if:
(1) funds are not appropriated or otherwise available to support
continuation of performance of all or a part of this Contract
("Nonappropriation"). The State agrees to make best efforts to
secure sufficient funding for this Contract; or
(2) the Contractor is in material breach of its obligations under
this Contract and all applicable dispute resolution periods have
expired or been terminated ("Breach").
and by changing:
In addition, the Contractor retains its right to, and may claim
for property used or intended to be used in the performance of
services under this contract, equitable compensation for the
reasonable costs the Contractor is obligated to and does incur,
subject to appropriations, and including the costs under any
financial arrangements or leases in regard to such property, the
costs for nonreturnable supplies in the possession of the
Contract, severance costs demobilization costs, and other
appropriate costs,
8
<PAGE>
provided the Contractor maintains sufficient documentation to
evidence such costs and takes all reasonable measures to
mitigate the amount of such costs.
to read:
In the event of termination as a result of Nonappropriation, the
Contractor retains its right to, and may claim compensation for,
without limitation except as set out below in this paragraph,
reasonable and necessary costs incurred and to be incurred as a
result of such termination, including property used or intended
to be used in the performance of services under this contract,
equitable compensation for the reasonable costs the Contractor is
obligated to and does incur, subject to appropriations, and
including the costs under any financial arrangements (including
any bonds issued by the Indiana Development Finance Authority for
the benefit of the Contractor) or leases in regard to such
property, the costs for nonreturnable supplies in the possession
of the Contractor, severance costs, demobilization costs, and
other appropriate costs including overhead and general and
administrative costs, such costs not to include lost profit, lost
opportunity costs, or return on the Contractor's investment,
provided the Contractor maintains sufficient documentation to
evidence such costs and takes all reasonable measures to
rnitigate the amount of such costs. The Contractor agrees that
its claim for compensation, if any, equitable or otherwise, for
the costs of financial arrangements under the Contractor's Loan
Agreement, Mortgage, Security Agreement and Financing Statement
(the "Loan Agreement"), dated as of June l, 1996, with the
Indiana Development Finance Authority, shall not include: (1) if
the Contractor exercises the option granted to it under Section
10.8 of the Loan Agreement, the amount of the indebtedness and
obligations of the Contractor under the Loan Agreement as to
which the Contractor is released from liability, or (2) if the
Contractor does not exercise the option granted to it under
Section 10.8 of the Loan Agreement, an amount equal to the
liquidation of all assets and properties which secure the
Contractor's indebtedness and obligations under the Loan
Agreement.
and by adding thereto the following paragraphs:
In the event that such termination occurs as a result of the
Contractor's material breach of this
9
<PAGE>
Contract as set forth in this Contract, the State shall have
the option (the "Option") to acquire all of the assets (the
"Total Assets") employed by the Contractor in the performance
of its services under this Contract at the Purchase Price
determined in accordance herewith. At the election of the
State, the State may elect such Option as to all of the Assets
used by the Contractor or only those Assets employed in Floyd
and Clark Counties (the "South Assets") or in Lake and Porter
Counties (the "North Assets"). The written notice of
termination required by this Article XXIV shall specify
whether the State intends to exercise the Option and whether
the exercise of the Option applies to the North Assets, the
South Assets, or the Total Assets. Upon exercise of the Option
and compliance with the terms and conditions hereof, the
Contractor and the State shall execute and deliver such
documents as may be reasonably required to consummate the
transactions contemplated by the Option and the exercise
thereof. Unless exercised in accordance herewith, the Option
shall terminate and expire without further action.
In the event the State does not exercise the Option as to the
Total Assets, the Contractor shall retain such Assets or portion
thereof free and clear of the Option contained herein.
For purposes hereof, the following definitions shall apply:
"Assets" shall mean land, improvements thereon, buildings,
machinery and equipment, and other property used or intended to
be used by the Contractor in the performance of services under
the Contract and including but not limited to supplies and tools
and spare and replacement parts.
"Purchase Price" shall mean the sum of the Falr Market Value of
the land included in the Assets and the net book value (after
depreciation and a reasonable allowance for obsolescence) of all
other Assets which net book value shall be determined in
accordance with generally accepted accounting principles
consistently applied; provided, however, that the State shall
have the right to audit the books and records of the Contractor
with respect to the determination of the Purchase Price.
10
<PAGE>
"Fair Market Value" shall mean an amount determined by mutual
agreement of the State and the Contractor and in the absence of
such mutual agreement an amount determined by a panel of three
appraisers qualified and experienced in the appraisal of similar
properties, one of which shall be appointed by the State, one by
the Contractor and the third by the other two so appointed. The
determination of the appraisers shall be final and binding and
may be enforced in accordance with applicable law.
11. Article XXV DEFAULT BY STATE shall be amended by changing:
If the State, after sixty (60) days written notice, fails to correct or
cure any breach of this Contract, then the Contractor may cancel and
terminate this agreement and collect monies due up to and including the
date of termination.
to read:
If the State, after sixty (60) days written notice, fails to correct or
cure any breach of this Contract, then the Contractor may cancel and
terminate this Contract. Any such termination shall be subject to the
provisions of Article XXIV and shall not oecur until the parties have
followed the dispute resolution provisions of Article XXXIII.
And by adding thereto the following:
CANCELLATION OR SUSPENSION OF I/M PROGRAM
1. If the State cancels the I/M program permanently but has not terminated
the Contract, the parties shall negotiate a settlement of the Contract in
accordance with the provisions of the first paragraph of this Article.
During the period of settlement discussions, the State shall pay monthly to
the Contractor an amount sufficient to cover the Contractor's actual
expenses reasonably necessary to maintain the availability of the program
assets, including all costs and expenses required to be incurred by the
Contractor for performance of its obligations under the Loan Agreement
during the period of settlement discussions. Such costs shall not include
ongoing personnel or other operating expenses relative to providing test
services.
2. If the State suspends the I/M program in full for a specified period of
time, the State shall pay the Contractor a monthly amount until the I/M
program is resumed. Such monthly amount shall be sufficient to cover the
Contractor'S
11
<PAGE>
expenses reasonably necessary to maintain the availability of
the program assets, including all costs and expenses required to be
incurred by the contractor for performance of its obligations under the
Loan Agreement during the period the suspension, and costs reasonable and
necessary for the Contractor to ensure that the Contractor can resume
testing upon notification by the State at the end of the suspension period,
including but not limited to costs for leases and nonretumable supplies or
other goods, employee costs not related to ongoing operation of the I/M
program, applicable overhead costs, other contractor expenditures,
settlements with subcontractorS and legal fees, and employee relocation
costs.
3. If the State suspends the I/M program in full for an undetermined
amount of time, the State shall pay the Contractor a monthly amount
determined as in paragraph 2 above until either:
(i) the I/M program restarts in accordance with the Contract,
(ii) the I/M program restarts pursuant to a revised mutually
acceptable Scope of Work and Compensation Schedule, or
(iii) it is terminated by either party after the expiration of six (6)
months from the date of the suspension.
4. Failure by the State to pay the amounts specified in paragraphs 1
through 3, whichever is applicable, shall constitute breach and default by
the State hereunder notwithstanding anything to the contrary in Article
XXXIII, DISPUTES.
5. The provisions of paragraphs l through 3 and 6 shall not apply if the
State has delivered to the Contractor a Notice of Termination in accordance
with this Article prior to or simultaneous with the occurrence of the
cancellation or suspension.
6. Payments under paragraphs l through 3 shall commence with the first
payment due by the State following the day of the cancellation, if vehicle
testing has begun under this Contract or on the first day of the month
following the scheduled start of testing under this Contract, if vehicle
testing has not begun.
12. Article XXXIII DISPUTES shall be amended by changing the following:
The parties agree to resolve such matters through submission of their
dispute to the Commissioner of the Indiana Department of Administration,
who shall reduce his or her decision to writing and mail or otherwise
furnish copy thereof to the Contractor and the State within ten (10)
12
<PAGE>
working days after presentation of such dispute for his decision.
to read:
If the parties cannot resolve the dispute, within twenty (20) working days
following notification in writing of the existence of the dispute to the
other party, the parties shall submit their dispute to the Commissioner of
the Indiana Department of Administration, who shall reduce his or her
decision to writing and mail or otherwise furnish copies thereof to the
Contractor and the State within ten (10) working days after presentation of
such dispute for his or her decision.
and by changing the following:
The State may withhold payments on disputed items pending resolution of the
dispute.
to read:
With the exception of stipulated penalties established in Article I.G,
FAILURE OF PERFORMANCE of this Contract, the State will not withhold
payment on disputed items until the Commissioner has issued his or her
final decision.
and by changing the following:
The non-payment by the State to the Contractor of one or more mvoices not
in dispute shall not constitute default.
to read:
The non-payment by the State to the Contractor of any amounts relative to
items in dispute shall not constitute default.
13. Except as herein amended, the Contract as originally executed and
amended by the First Amendment to Contract shall remain in full force and
effect.
13
<PAGE>
The parties having read and understanding the foregoing terms of the Amendments
do by their respective signatures dated below hereby agree to the terms hereof:
FOR THE CONTRACTOR
APPROVED
By: /s/ F. Robert Miller Attested by: /s/ C. Michael Alston
--------------------------- ---------------------
Printed Name: F. R. Miller Printed Name: C. Michael Alston
----------------- --------------------
Title: CEO Title: Vice President
------------------------ ---------------------------
Date: 6/24/96 Date: 6/24/96
------------------------- ----------------------------
FOR THE STATE OF INDIANA
APPROVED
/s/ Date: 6/26/96
- -------------------------------- ------------------------------
Kathy Prosser, Commissioner
Department of Environmental Management
APPROVED
/s/ James E. McClung Jr. for Date: 6/26/96
- -------------------------------- ------------------------------
William Shrewsberry, Commissioner
Indiana Department of Administration
APPROVED
/s/ Date: 6/27/96
- -------------------------------- ------------------------------
Katherine L. Davis Direct
Indiana State Budget Agency
APPPOVED FOR FORM AND LEGALITY
/s/ Date: 6/27/96
- -------------------------------- ------------------------------
Pamela Carter, Attorney General
State of Indiana
14
<PAGE>
Exhibit "A"
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Corresponding Initial Test Number of
Contract Year State Fiscal Year Contract Period Test Fee Expected
Vehicles
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1/1/97-12/31/97 7/1/96-6/30/97 1/1/97-6/30/97 $ 22.34 119,629
- ----------------------------------------------------------------------------------------------------
1/1/98-12/31/98 7/1/97-6/30/99 7/1/97-12/31/97 $ 22.34 119,958
1/1/98-6/30/98 $ 22.34 155,399
- ----------------------------------------------------------------------------------------------------
1/1/99-12/31/99 7/1/98-6/30/99 7/1/98-12/31/98 $ 22.34 121,294
1/1/99-6/30/99 $ 22.34 158,894
- ----------------------------------------------------------------------------------------------------
1/1/00-12/31/99 7/1/99-6/30/00 7/1/99-12/31/99 $ 22.34 122,461
1/1/00-6/30/00 $ 22.34 157,979
- ----------------------------------------------------------------------------------------------------
1/1/00-12/31/00 7/1/00-6/30/01 7/1/00-12/31/00 $ 22.34 123,309
1/1/01-6/30/01 $ 22.34 159,089
- ----------------------------------------------------------------------------------------------------
1/1/01-12/3/01 7/1/01-6/30/02 7/1/01-12/31/01 $ 22.34 124,175
1/1/02-6/30/02 $ 22.34 160,115
- ----------------------------------------------------------------------------------------------------
1/1/02-12/31/02 7/1/02-6/30/03 7/1/02-12/31/02 $ 22.34 124,976
1/1/03-6/30/03 $ 22.34 161,021
- ----------------------------------------------------------------------------------------------------
1/1/03-12/31/03 7/1/03-6/30/04 7/1/03-12/31/03 $ 22.34 125,683
1/1/04-6/30/04 $ 22.34 161,021
- ----------------------------------------------------------------------------------------------------
1/1/04-12/31/04 7/1/04-6/30/05 7/1/04-12/31/04 $ 22.34 125,683
1/1/05-6/30/05 $ 22.34 161,021
- ----------------------------------------------------------------------------------------------------
1/1/05-12/31/05 7/1/05-6/30/06 7/1/05-12/31/05 $ 22.34 125,683
1/1/06-6/30/06 $ 22.34 161,021
- ----------------------------------------------------------------------------------------------------
1/1/06-12/31/06 7/1/06-6/30/07 7/1/06-12/31/06 $ 22.34 125,683
- ----------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Exhibit "B"
Pertaining to Article XVI, CHANGES IN WORK
Inspection Interim Periond
Volume Inspection
Reduction Price Reduction
(%) ($)
3 - 10 0
11 - 20 .04
21 - 30 .12
31 - 40 .24
41 - 50 .40
<PAGE>
STATE OF INDIANA
COUNTY OF MARION
The undersigned, being duly sworn on oath says, that he is the
contracting party, or that he is the representative, agent, member, or
officer of the contracting party, that he has not, nor has any other member,
employee, representative, agent or officer of the firm, company, corporation
or partnership represented by him, directly or indirectly, entered into or
offered to enter into any combination, collusion or agreement to receive or
pay. and that he has not received or paid, any sum of money or other
consideration for the execution of the annexed contract other than that which
appears upon the face of the contract.
Signature /s/ C. Michael Alston
Printed Name C. Michael Alston
Title Vice President
Company Envirotest Systems Corp.
Before me, a Notary Public in and for said County and State personally
appeared, C. Michael Alston who acknowledged the truth of the statements in
the foregoing affidavit on this 26th day of June 1996
Notary Signature /s/ Kimberly Sue Gillman
County of Residence Marion
Commission Expiration Date October 14, 1997
Notary's Name (Print or Type) Kimberly Sue Gillman
<PAGE>
Loan Agreement,
MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT
BETWEEN
ENVIROTEST SYSTEMS CORP.
Mortgagor
AND
INDIANA DEVELOPMENT FINANCE AUTHORITY
Mortgagee
FIRST MORTGAGE NOTE, SERIES 1996
Dated as of June 1, 1996
Certain of the rights of the Issuer hereunder have been assigned to Old
National Trust Company, as Trustee under a Trust Indenture dated as of the date
hereof, from the Issuer.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND EXHIBITS . . . . . . . . . . . . . . . . . . 5
Section 1.1. Terms Defined . . . . . . . . . . . . . . . . . . . . . 5
Section 1.2. Rules of Interpretation. . . . . . . . . . . . . . . . . 11
Section 1.3. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II. REPRESENTATIONS; LOAN OF SERIES 1996 BOND PROCEEDS . . . . . 13
Section 2.1. Representations by Issuer. . . . . . . . . . . . . . . . 13
Section 2.2. Representations by Company . . . . . . . . . . . . . . . 13
Section 2.3. Loan of Series 1996 Bonds Proceeds by Issuer . . . . . . 15
ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY . . . . . . . . . . . . . 16
Section 3.1. Consent to Assignments to Trustee. . . . . . . . . . . . 16
Section 3.2. The Loan; Loan Payments . . . . . . . . . . . . . . . . 16
Section 3.3. Maintenance of Lien; Recording . . . . . . . . . . . . . 18
Section 3.4. Further Assurances; After-acquired Property. . . . . . . 19
Section 3.5. Corporate Existence . . . . . . . . . . . . . . . . . . 19
Section 3.6. Financial Reporting . . . . . . . . . . . . . . . . . . 20
Section 3.7. Taxes, Charges and Assessments . . . . . . . . . . . . . 21
Section 3.8. Liens . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.9. Compliance with Orders, Ordinances, Etc. . . . . . . . . 22
Section 3.10. Permitted Contests; Waiver by Requisite Bondholders. . 22
Section 3.11. Repairs, Maintenance and Alterations . . . . . . . . . . 23
Section 3.12. Company Duties Under Indenture . . . . . . . . . . . . . 23
Section 3.13. Insurance . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.14. Trustee's Right to Perform Company's Covenants; Advances 24
Section 3.15. Indemnity . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.16. Issuance of Substitute Notes . . . . . . . . . . . . . . 26
Section 3.17. Payment of Expenses of Issuance of Series 1996 Bonds . . 26
Section 3.18. Mortgagee Title Insurance Policy . . . . . . . . . . . . 26
Section 3.19. Funding of Indenture Funds; Investments . . . . . . . . 27
Section 3.20. Other Amounts Payable by the Company . . . . . . . . . . 27
Section 3.21. Leased Mortgage Property . . . . . . . . . . . . . . . . 27
Section 3.22. Completion of Project . . . . . . . . . . . . . . . . . 28
Section 3.23. Sale, Substitution, or Lease of Mortgaged Property . . . 29
Section 3.24. Substitution and Removal of Equipment . . . . . . . . . 30
Section 3.25. Right of Access to the Mortgaged Property . . . . . . . 31
Section 3.26. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . 31
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Section 3.27. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.28. Security Agreement . . . . . . . . . . . . . . . . . . . 31
Section 3.29. Balance in the Debt Service Reserve Fund . . . . . . . . 33
Section 3.30. Reimbursement of Issuer . . . . . . . . . . . . . . . . 34
Section 3.31. Maintenance of Licenses and Permits . . . . . . . . . . 34
Section 3.32. Notices of Disputes, Defaults and Other Matters . . . . 34
Section 3.33. Hazardous Substances . . . . . . . . . . . . . . . . . . 35
Section 3.34. Amendments to IDEM Contract . . . . . . . . . . . . . . 36
ARTICLE IV. DAMAGE, CONDEMNATION, AND LOSS OF TITLE. . . . . . . . . . . . 37
Section 4.1. Damage . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.2. Other Provisions with Respect to Net Proceeds. . . . . . 38
Section 4.3. Insufficiency of Net Proceeds. . . . . . . . . . . . . . 38
Section 4.4. Excess Net Proceeds. . . . . . . . . . . . . . . . . . . 38
ARTICLE V. PREPAYMENT OF SERIES 1996 NOTE . . . . . . . . . . . . . . . . 39
Section 5.1. Optional Prepayment. . . . . . . . . . . . . . . . . . . 39
Section 5.2. Mandatory Prepayment . . . . . . . . . . . . . . . . . . 39
Section 5.3. Notice of Prepayment . . . . . . . . . . . . . . . . . . 40
ARTICLE VI. ACQUISITION OF PROJECT SITES AND EQUIPMENT . . . . . . . . . . 41
Section 6.1. Acquisition of Project Sites and Equipment . . . . . . . 41
Section 6.2. Amendments to Loan Agreement . . . . . . . . . . . . . . 41
ARTICLE VII. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . . . 42
Section 7.1. Events of Default. . . . . . . . . . . . . . . . . . . . 42
Section 7.2. Foreclosure and Sale of Mortgaged Property . . . . . . . 44
Section 7.3. Sale a Bar . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.4. Receipt Sufficient Discharge for Purchaser . . . . . . . 45
Section 7.5. Sale to Accelerate Notes . . . . . . . . . . . . . . . . 45
Section 7.6. Application of Proceeds of Sale . . . . . . . . . . . . 45
Section 7.7. Payment of Defaulted Amounts on Demand of Trustee . . . 46
Section 7.8. Trustee May Enforce Demand . . . . . . . . . . . . . . . 46
Section 7.9. Trustee Entitled to Appointment of Receiver. . . . . . . 47
Section 7.10. Remedies Cumulative. . . . . . . . . . . . . . . . . . . 47
Section 7.11. Delay or Omission Not a Waiver . . . . . . . . . . . . . 48
Section 7.12. Waiver of Extension, Appraisement or Stay Laws . . . . . 48
Section 7.13. Remedies Subject to Provisions of Law. . . . . . . . . . 48
Section 7.14. Remedies Under Uniform Commercial Code . . . . . . . . . 48
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ARTICLE VIII. IMMUNITY . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.1. Immunity . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.2. Liability of Issuer. . . . . . . . . . . . . . . . . . . 49
ARTICLE IX. SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT. . . . . . . 50
Section 9.1. Supplements and Amendments to this Loan Agreement. . . . 50
ARTICLE X. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . 51
Section 10.1. Loan Agreement for Benefit of Parties Hereto . . . . . . 51
Section 10.2. Severability . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.3. Limitation on Interest . . . . . . . . . . . . . . . . . 51
Section 10.4. Addresses for Notice and Demands . . . . . . . . . . . . 51
Section 10.5. Successors and Assigns . . . . . . . . . . . . . . . . . 52
Section 10.6. Counterparts . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.7. Governing Law . . . . . . . . . . . . . . . . . . . . . 52
Section 10.8. Company's Option Upon IDEM Termination Event . . . . . . 52
Section 10.9. Issuer Procedures . . . . . . . . . . . . . . . . . . . 56
EXHIBIT A THE INDUSTRIAL DEVELOPMENT FACILITIES. . . . . . . . . . . . . . . 61
EXHIBIT B FIRST MORTGAGE NOTE, SERIES 1996 . . . . . . . . . . . . . . . . . 63
EXHIBIT C FORM OF AMENDMENT TO Loan Agreement. . . . . . . . . . . . . . . . 67
EXHIBIT D FORM OF AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . 72
SCHEDULE I DESCRIPTION OF PENDING OR ThREATENED LITIGATION
AGAINST COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . 78
SCHEDULE II PERMITTED ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . 79
iii
<PAGE>
Loan Agreement, MORTGAGE, SECURITY AGREEMENT
AND FINANCING STATEMENT
This is a Loan Agreement, MORTGAGE, SECURITY AGREEMENT AND FINANCING
STATEMENT, dated as of June 1, 1996 (herein referred to sometimes as "this Loan
Agreement" or "this Mortgage") between ENVIROTEST SYSTEMS CORP., a corporation
duly organized and validly existing under the laws of the State of Delaware (the
"Company"), and the INDIANA DEVELOPMENT FINANCE AUTHORITY (the "Issuer"), a body
corporate and politic duly organized and validly existing under the laws of the
State of Indiana.
PRELIMINARY STATEMENT
The Indiana Code, Title 4, Article 4, Chapters 10.9 and 11 (collectively
the "Act"), has been enacted by the Indiana General Assembly.
The Act provides that the Issuer is authorized to issue bonds and loan the
proceeds thereof for the purpose of financing the costs of acquisition,
construction, or installation of industrial development projects, including
land, machinery, equipment, or any combination thereof, for the public purpose
of promoting opportunities for gainful employment and business opportunities
which will be of public benefit to the health, safety, morals, and general
welfare of the State of Indiana and its citizens.
The Issuer intends to issue its Taxable Economic Development Revenue Bonds,
Series 1996 (Envirotest Systems Corp. Project) in the aggregate principal amount
of $14,345,000 (the "Series 1996 Bonds") pursuant to the Trust Indenture dated
as of June l, 1996 (the "Indenture") between the Issuer and Old National Trust
Company, as Trustee (the "Trustee"), and intends to lend the proceeds of the
Series 1996 Bonds pursuant to the provisions of this Loan Agreement to the
Company to finance an industrial development project (as deemed in the Act).
This Loan Agreement provides for the repayment by the Company of the loan
of the proceeds of the Series 1996 Bonds and further provides (i) for the
Company's repayment obligation to be evidenced by the Company's First Mortgage
Note, Series 1996 (the "Series 1996 Note") in substantially the form attached
hereto as "Exhibit B," and (ii) for such loan and the Series 1996 Note to be
secured by the mortgage and security interest herein provided.
Pursuant to the Indenture, the Issuer will pledge and assign the Series
1996 Note and assign certain of its rights under this Loan Agreement as security
for the Series 1996 Bonds. The Series 1996 Bonds issued under the Indenture
will be payable out of (i) the payments to be made by the Company on the Series
1996 Note and any other Notes issued hereunder or (ii) Bond proceeds and other
proceeds required to be deposited in the Redemption Account as deemed in the
Indenture.
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GRANTING CLAUSES
In consideration of the premises, the loan of the proceeds of the Series
1996 Bonds to be made by the Issuer, the acceptance of the Series 1996 Note by
the Issuer, and of other good and valuable consideration, the receipt whereof is
hereby acknowledged, and in order to secure the payment of the principal of,
premium, if any, and interest payable on the Series 1996 Note and any notes
issued in substitution therefor (herein collectively referred to as the "Notes")
and the performance of all the covenants of the Company contained herein, the
Company has executed and delivered this Loan Agreement and by these presents
does assign, grant, mortgage and warrant and grant a security interest in, to
the Issuer and its successors and assigns forever, all the Company's right,
title and interest in, to and under any and all of the following described
property whether now owned or existing or hereafter acquired or arising (herein
called the "Mortgaged Property"):
DIVISION I
The right, title and interest in the land described in Exhibit A hereto and
in all supplements and additions hereto, together with the entire interest
(whether now owned or hereafter acquired) in and to said land and the entire
interest of the Company in and to all buildings, structures, improvements and
appurtenances now standing, or at any time hereafter constructed or placed, upon
such land, including all right, title and interest of the Company, if any, in
and to all building material, building equipment and fixtures permanently
affixed to the real estate of every kind and nature whatsoever on said land or
in any building, structure or improvement now or hereafter standing on said
land, including without limiting the generality of the foregoing engines, pumps,
dynamos, generators, furnaces, heating equipment, fans, air conditioning
equipment, ventilating equipment, refrigerating equipment, cleaning equipment,
power equipment, incinerators, plumbing, machinery, appliances, apparatus,
devices, hot water heaters, water softeners, electrical fixtures, gas fixtures,
light fixtures, windows, doors, storm doors, overhead doors, storm windows,
screen doors, screen windows, loading docks and wells, platforms, awnings,
television and radio masts and antennae, mail boxes, door openers and controls,
sprinklers, alarm systems, flooring, suspended ceilings, grills, and
landscaping, built-in equipment, shelves, lofts, outdoor lighting, fences,
gates, weather vanes, septic tanks and systems, elevators, if any, and the
reversion or reversions, remainder or remainders, in and to said land, and
together with the entire interest of the Company in and to all and singular the
tenements, hereditament, easements, rights-of-way, rights, privileges and
appurtenances to said land, belonging or in any wise appealing thereto,
including without limitation the entire right, title and interest of the Company
in, to and under any streets, ways, alleys, gores or strips of land adjoining
said land, and all claims or demands whatsoever of the Company either in law or
in equity, in possession or expectancy of, in and to said land, it being the
intention of the parties hereto that, so far as may be permitted by law, all
property of the character hereinabove described, which is now owned or is
hereafter acquired by the Company and is permanently affixed or attached to said
land, shall be and remain or become and constitute a portion of said land and
the security covered by and subject to the lien of this Mortgage, and, subject
to the
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<PAGE>
terms and conditions of this Mortgage, together with all rents, income,
revenues, issues and profits thereof;
DIVISION II
All machinery, equipment, fixtures and tangible personal property of the
Company fitted on Exhibit A hereto and in all supplements and additions hereto,
and any substitutions and replacements therefor (herein called the "Equipment");
all proceeds from any sale, exchange, transfer or other disposition thereof and
proceeds of insurance and tort claims, and all books, records, manuals, and
other documents related to the operation and maintenance thereof;
DIVISION III
All right, title, and interest of the Company in, to, and under the IDEM
Contract, including without limitation all amounts paid or payable to the
Company thereunder, and under all other contracts, non-exclusive software
license agreements, other license agreements, leases, and other agreements that
are necessary for, or used or useful in connection with, the operation or
maintenance of the Project;
DIVISION IV
Any and all other property of every kind and nature from time to time
hereafter, by delivery or by writing of any kind, conveyed, pledged, assigned or
transferred as and for additional security hereunder by the Company or by anyone
on its behalf to the Issuer or the Trustee, including without limitation, funds
of the Company held by the Trustee as security for the Bonds;
DIVISION V
All awards, payments, and proceeds as a result of conversion, damage,
destruction or loss of any of the foregoing, including all insurance,
condemnation and tort claims and other claims and obligations dischargeable in
cash;
DIVISION VI
All moneys and securities from time to time held by the Issuer or the
Trustee under the terms of this Mortgage or the Indenture.
SUBJECT, HOWEVER, to Permitted Encumbrances, as deemed in Article I hereof;
TO HAVE AND TO HOLD all and singular, the Mortgaged Property, whether now
owned or hereafter acquired, unto the Issuer, its successors and assigns
forever; provided, however, that this Mortgage is executed upon the express
condition that if the Company shall pay or cause to be paid all indebtedness
secured hereby and shall keep, perform and observe all
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<PAGE>
and singular the covenants and promises expressed in the Notes and this
Mortgage to be kept, performed and observed by the Company, then this
Mortgage and the rights hereby granted shall cease, determine and be void;
otherwise to remain in full force and effect.
The Company hereby acknowledges and agrees that the indebtedness and
obligations secured by the Mortgage include, and that the Mortgage is given to
secure, advances that may be made to the Company and obligations that may be
incurred by the Company in addition and subsequent to any advances that are made
or are outstanding on the date of this Mortgage ("future advances"), and that
this Mortgage shall secure all future advances of every nature and kind,
PROVIDED HOWEVER, that the aggregate principal amount of the indebtedness and
obligations secured by this Mortgage in all events shall not exceed $28,000,000,
such maximum amount being stated herein pursuant to and in accordance with
Indiana Code Section 32-8-11-9 and not being a commitment by the Issuer to make
future advances in that amount.
The Company and the Issuer hereby further covenant and agree as follows:
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<PAGE>
ARTICLE I.
DEFINITIONS AND EXHIBITS
Section 1.1. TERMS DEFINED. As used in this Mortgage, the following
terms shall have the following meanings unless the context clearly otherwise
requires:
"Act" means collectively Indiana Code 4A-10.9 and 11, and any successor
provisions of the Indiana Code or successor codes.
"Bond Counsel" means a nationally recognized firm of municipal bond
attorneys acceptable to the Issuer.
"Bondholder" or "owner of a Bond" or any similar term means the owner of a
Series 1996 Bond.
"Bonds" or "Bond" means the Series 1996 Bonds or any replacement thereof.
"Bond Fund" means the Bond Fund established by Section 4.3 of the
Indenture.
"Bond Placement Agreement" means the Bond Placement Agreement dated June
27, 1996 among the Issuer, Charles Eden & Company, the Company and the Original
Purchaser.
"Breakage Amount" means if amounts are transferred to the Redemption
Account in order to redeem any principal amount of the Series 1996 Bonds before
their scheduled due date (whether as the result of an acceleration, voluntary
prepayment, mandatory prepayment, or otherwise) and to effect a prepayment of a
portion of the Series 1996 Note, the amount equal to the actual cost to the
Original Purchaser to break any interest rate swap agreement then in place with
respect to the Bonds.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Company" means Envirotest Systems Corp., a corporation duly organized and
validly existing under the laws of the State of Delaware and in good standing in
the State of Indiana, or any successors thereto permitted under Section 3.5
hereof.
"Completion Date" means the date of completion of the Project as
established pursuant to the provisions of Section 3.2 hereof.
"Costs of Construction" with respect to the Project shall be deemed to
include the following, to the extent such items represent the costs of
acquisition, construction, or installation of an industrial development project,
as defined and set forth in the Act:
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(i) obligations of Issuer or of Company incurred for labor and
materials (including obligations payable to Company) in connection with the
acquisition, construction, installation, transportation and equipping of
the Project;
(ii) the cost of contract bonds and of insurance of all kinds that may
be required or necessary during the course of acquisition, construction,
and equipping of the Project;
(iii) all costs and expenses of site preparation, engineering
services, consulting architect fees, including the costs incurred for test
borings, surveys, estimates, plans and specifications and preliminary
investigation therefor, and for supervising construction, as well as for
the performance of all other duties required by or consequent upon the
proper construction of the Project;
(iv) all costs and expenses incurred in connection with the issuance
of the Bonds for the purpose of providing funds for construction of the
Project, including without limitation compensation and expenses of Trustee,
underwriting and legal expenses of Trustee, underwriting and placement
fees, Bond Counsel fees, Issuer Counsel fees, Company Counsel fees, counsel
fees and administrative fees (including a front-end fee of $72,175 and
documentation fee of $7,234) of the Original Purchaser in connection with
issuance of the Bonds, costs of printing and engraving, recording and
filing fees;
(v) all costs and expenses required to be paid, under the terms of
any contract or contracts, for the acquisition, construction, installation,
transportation or equipping of the Project, including the Project Sites;
and
(vi) any sums required to reimburse Issuer or Company for advances
made by either of them for any of the above items or for any other costs
incurred and for work done by either of them which are properly chargeable
to the Project, including construction period interest costs.
"Counsel" means an attorney duly admitted to practice law before the
highest court of any state and, without limitation, may include legal counsel
for either the Issuer or the Company.
"Default Rate" means the Prime Rate plus 2.00% per annum.
"Equipment" shall have the meaning ascribed thereto in Division II of the
Granting Clauses hereof.
"Fully Funded" means with respect to the Debt Service Reserve Fund created
under Section 4.5 of the Indenture $2,119,651.98, the amount equal to the
maximum annual debt service on the Outstanding Bonds.
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<PAGE>
"Governmental Obligations" shall mean, for purposes of the definition of
"Qualified Investments" contained herein, direct obligations of the United
States of America or obligations for which the full faith and credit of the
United States is pledged to provide for the payment of principal and interest,
maturing not more than 90 days from the date of such investment; and shall mean
for purposes of Section 11.1 of the Indenture, any of the following securities,
if and to the extent the same are non-callable and not prepayable: direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America, including
obligations issued or held in book-entry form on the books of the Department of
the Treasury of the United States of America and including a receipt,
certificate or any other evidence of an ownership interest in an aforementioned
obligation, or in specified portions thereof (which may consist of specified
portions of interest thereon).
"Gross Revenues" means amounts paid by IDEM pursuant to the IDEM Contract.
"Hazardous Substance" means any substance identified in Section 101(14) of
CERCLA, any petroleum or petroleum product, including crude oil or any
extraction thereof, and polychlorinated biphenyl ("PCB") capacitors or
transformers contaIning PCB.
"IDEM" means the Indiana Department of Environmental Management.
"IDBM Contract" means the contract for contractor services for
implementation, operation, and assistance in administration of a centralized
vehicle emissions testing program, between the Company and IDEM, including
without limitation all amendments and modifications thereto and all change
orders and waivers issued thereunder.
"IDEM Termination Event" means a termination under the IDEM Contract (i) as
a result of the event specified in Article XXIV (l) of the IDEM Contract or (ii)
pursuant to Article XXV of the IDEM Contract in accordance with the provisions
of such Article, or (iii) pursuant to Article XVI (6)(E) of the IDEM Contract in
accordance with the provisions of such Article.
"Indenture" means the Trust Indenture dated as of June l, 1996, between the
Issuer and the Trustee and all amendments and supplements thereto.
"Interest Payment Date(s) means each March l, June l, September l and
December l of each year that the Bonds are Outstanding and interest and/or
principal payments are due thereon.
"Issuer" means the Indiana Development Finance Authority or any successor
thereto or assign thereof.
"Loan" means the loan by the Issuer to the Company of the proceeds received
from the sale of the Series 1996 Bonds and evidenced by the Series 1996 Note.
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"Loan Payments" means the amounts required to be paid by the Company in
repayment of the Loan or otherwise pursuant to the provisions of the Series 1996
Note and Article III of this Loan Agreement.
"Mortgaged Property" means the property described in the Granting Clauses
hereof plus any additional property which shall have been subjected to the lien
hereof pursuant to the provisions of Article VI hereof.
"Net Proceeds," when used with respect to any insurance or condemnation
award, means the gross proceeds from the insurance or condemnation award
remaining after payment of all expenses (including attorneys' fees and any
extraordinary expenses of the Company, the Trustee or the Issuer) incurred in
the collection of such gross proceeds.
"1934 Act" means the Securities Exchange Act of 1934.
"Note" or "Notes" means the Series 1996 Note and any Notes issued in
exchange therefor pursuant to Section 3.16 hereof.
"Opinion of Counsel" shall mean an opinion in writing signed by Counsel who
may be an employee of or Counsel to the Company and who shall be satisfactory to
the Trustee in its reasonable discretion.
"Original Purchaser" means The Sumitomo Bank, Limited, acting through its
Chicago Branch, the original purchaser of the Series 1996 Bonds.
"Outstanding," with reference to Bonds, means all Bonds theretofore issued
and not yet paid and discharged under the terms of the Indenture; with reference
to Notes, means all Notes theretofore issued and not yet paid or discharged
under the terms of this Loan Agreement; and with reference to any other
indebtedness or obligation secured by the Mortgage means that such indebtedness
or obligation has been incurred but not yet paid or discharged.
"Permitted Encumbrances" means, as of any particular time, (i) any
exception to title shown in Exhibit A hereto, (ii) liens for ad valorem taxes
and special assessments or installments thereof not then delinquent, (iii) this
Mortgage, and the Indenture, (iv) utility, access and other easements and rights
of-way, mineral rights, restrictions and exceptions that will not materially
interfere with or impair the operations being conducted on the real estate
included in the Mortgaged Property, (v) such casements, rights-of-way, zoning
and building laws, ordinances or regulations and similar restrictions as do not
materially impair the value of the Mortgaged Property affected thereby or its
usefulness for the purpose for which it was acquired or is held by the Company,
(vi) liens arising in connection with workmen's compensation, unemployment
insurance, social security, taxes, assessments, statutory obligations, or other
similar liens and charges arising in the ordinary course of the Company's
operations or required by law as a condition precedent to the transaction of the
business of the Company or the exercise of any privileges or licenses of the
Company; provided, however, that no amount secured by any lien
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or charge described in this item (vi) shall be overdue unless, if overdue,
such lien and the amount it secures are being contested in good faith by the
Company, and the Company has established appropriate reserves in connection
therewith, and if the amount involved exceeds $500,000 the Company has
reserved sufficient amounts with the Trustee to satisfy all such liens, (vii)
mechanics' liens of record arising from the construction of the Project,
provided such liens are being contested by the Company in good faith and
provided further that the Company shall have reserved sufficient amounts with
the Trustee to satisfy all such liens; (viii) the rights of the lessors, if
any, of any of the Project Sites; and (ix) any encumbrance approved by the
Original Purchaser.
"Prime Rate" means a variable per annum rate of interest equal at all times
to the rate of interest established by The Sumitomo Bank, Limited as its "Prime
Rate", such rate to change contemporaneously with each change in such
established rate, provided that it is understood that the Prime Rate shall not
necessarily be representative of the rate of interest actually charged by The
Sumitomo Bank, Limited on any loan or class of loans.
"Project" means the industrial development project described in Exhibit A
hereto and made a part hereof.
"Project Sites" means the real estate, singly or collectively, as the case
may be, as described in the Project description in Exhibit A, on which the
Project is located.
"Public Debt Instruments" means (a) that certain Indenture dated as of
March 15, 1994 among the Company, the Guarantors identified therein, and First
Trust National Association, (b)that certain Indenture dated as of April l, 1993
among the Company, the Guarantors identified therein and First Trust National
Association, and (c) any and all replacements (whether direct or indirect),
deferrals, renewals, extensions, refinancings, refundings and additional public
debt issued by the Company.
"Qualified Investments" means:
(i) Government Obligations;
(ii) bonds, debentures, notes, participation certificates or other
evidences of indebtedness issued, or the principal of and interest on which
are unconditionally guaranteed, by, the Federal National Mortgage
Association, the Bank for Cooperatives, the Federal Intermediate Credit
Bank, the Federal Home Loan Bank System, the Federal Land Banks, the
Government National Mortgage Association or any other agency or
instrumentality of or corporation wholly owned by the United States of
America when such obligations are backed by the full faith and credit of
the United States;
(iii) obligations of any state of the United States of America or
any political subdivision thereof, which at the time of investment are
rated "A1" or higher by Moody's and "A+" or higher by S&P; or which are
rated by Moody's "VMIG-1" or
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better and by S&P "A-1" or better with respect to commercial paper, or
"MIG 1" and "SP-1," respectively, with respect to municipal notes;
(iv) certificates of deposit maturing in one year or less from the
date of purchase issued by, bankers' acceptances, and deposit accounts of,
and time deposits with, commercial banks of recognized standing having a
rating of "A" or better from Moody's and S&P chartered in the United States
of America or Canada with capital, surplus and undivided profits
aggregating in excess of $250,000,000;
(v) demand or fully insured time deposits, insured by the Federal
Deposit Insurance Corporation, used in the ordinary course of the Company's
business with commercial banks;
(vi) repurchase agreements with any bank, trust company or national
banking association insured by the Federal Deposit Insurance Corporation,
including, but not limited to, the indenture trustee under the Public Debt
Instruments or any of its affiliates provided that at the time of
investment such bank, trust company or national banking association is
rated "A1" or better by Moody's and "A+" or better by S&P, or with any
government bond dealer recognized as a primary dealer by the Federal
Reserve Bank of New York, which agreements are fully and continuously
secured by a valid and perfected first priority security interest in
obligations described in paragraph (i) or (ii) of this definition;
(vii) commercial paper of any corporation, including banking or
financial institutions, including, but not limited to, the indenture
trustee under the Public Debt Instruments or any of its affiliates, the
corporate debt of which, at the time of investment, is rated "A1" or better
by Moody's and "A+" or better by S&P, and maturing not more than 270 days
from the date of creation thereof;
(viii) guaranteed investment contracts or similar funding
agreements issued by insurance companies, the corporate debt of which, at
the time of investment, is rated "A1" or better by Moody's and "A+" or
better by S&P;
(ix) shares or interests in taxable government money market portfolios
restricted to obligations with maturities of one year or less issued by, or
the payment of principal and interest with respect to which is guaranteed
by, the United States of America, and which, at the time of investment, are
rated "Aa" or better by Moody's and "AA" or better by S&P;
(x) interest in any money market portfolio exempt from federal income
taxation and haying assets in excess of one billion dollars
($1,000,000,000); PROVIDED THAT, at the time of investment, such portfolio
is rated "A1" or better by Moody's and "A+" or better by S&P;
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(xi) shares of money market funds that invest solely in investments in
(i) through (viii) above; and
(xiii) any investments with the Original Purchaser or its
affiliates or any investments approved by the Original Purchaser.
"Redemption Account" means the Redemption Account within the Bond Fund
established by Section 4.3 of the Indenture.
"Release" has the meaning given to such term in Section 101(22) of CERCLA.
"Series 1996 Bonds" means the Indiana Development Finance Authority Taxable
Economic Development Revenue Bonds, Series 1996 (Envirotest Systems Corp.
Project) in the aggregate principal amount of $14,345,000.
"Series 1996 Note" means the Company's First Mortgage Note, Series 1996 in
the principal amount of $14,345,000 in substantially the form attached hereto as
Exhibit B which will be issued and delivered by the Company to the Issuer to
evidence the loan of the proceeds of the Series 1996 Bonds and any Note issued
in exchange therefor.
"State" means the State of Indiana.
"Trustee" means the trustee and/or cc-trustee at the time serving as such
under the Indenture.
Section 1.2. RULES OF INTERPRETATION. For all purposes of this Loan
Agreement, except as otherwise expressly provided, or unless the context
otherwise requires:
(a) "This Loan Agreement" or "this Mortgage" means this instrument as
originally executed and as it may from time to time be supplemented or
amended pursuant to the applicable provisions hereof.
(b) All references in this instrument to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this instrument as originally executed. The
words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Loan 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 and the
singular as well as the plural.
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(d) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as consistently applied.
(e) Any terms not defined herein but defined in the Indenture shall
have the same meaning herein.
(f) The terms defined elsewhere in this Loan Agreement shall have the
meanings therein prescribed for them.
Section 1.3. EXHIBITS. The following Exhibits are attached to and by
reference made a part of this Loan Agreement.
Exhibit A. Description of the Mortgaged Property and Project.
Exhibit B. Form of Series 1996 Note.
Exhibit C. Form of Amendment to Loan Agreement.
Exhibit D. Form of Amendment to Indenture.
(End of Article I)
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ARTICLE II.
REPRESENTATIONS; LOAN OF SERIES 1996 BOND PROCEEDS
Section 2.1. REPRESENTATIONS BY ISSUER. Issuer represents and warrants
that:
(a) Issuer is a body corporate and politic of the State of Indiana. Under
the provisions of the Act, and based upon representations made and information
provided by the Company, Issuer is authorized to enter into the transactions
contemplated by this Loan Agreement and to carry out its obligations hereunder.
Issuer has been duly authorized to execute and deliver this Loan Agreement.
Issuer agrees that it will do or cause to be done all things within its power
necessary to preserve and keep in full force and effect its existence.
(b) Issuer agrees to provide funds from the issuance of the Series 1996
Bonds to loan to the Company for the financing of the Project, subject to the
consideration of the Series 1996 Note and the Company granting a mortgage and
security interest on the Mortgaged Property to the Issuer, all for the benefit
of the holders of the Bonds and the Issuer, in order to promote employment
creation and create opportunities for gainful employment and business
opportunities, and to secure the Bonds by pledging certain of its rights and its
interest in this Loan Agreement and the Series 1996 Note to the Trustee.
(c) The Issuer represents that the Series 1996 Note will be assigned to
the Trustee pursuant to the Indenture, and that no further assignment is
contemplated by the Issuer, since the Issuer recognizes that the Series 1996
Note has not been registered under the Securities Act of 1933.
Section 2.2. REPRESENTATIONS BY COMPANY. Company represents and warrants
that:
(a) Company is a corporation duly organized and validly existing under the
laws of the State of Delaware, and is duly qualified to transact business as a
foreign corporation under the laws of the State of Indiana, is not in violation
of any provision of its Articles of Incorporation or by-laws, has not received
notice and has no reasonable grounds to believe that it is in violation of any
laws in any manner material to its ability to perform its obligations under this
Loan Agreement and the Series 1996 Note, has power to enter into and to perform
its obligations under this Loan Agreement and the Series 1996 Note and has duly
authorized the execution and delivery of this Loan Agreement and the Series 1996
Note by appropriate action.
(b) The Company intends to operate or cause the Project to be operated as
an auto emission testing facility under the IDEM Contract until the expiration
or earlier termination of this Loan Agreement as provided herein.
(c) Neither the execution and delivery of this Loan Agreement, the
consummation of the transactions contemplated hereby and thereby including
execution and delivery of the Series 1996 Note nor the fulfillment of or
compliance with the terms and conditions of this Loan
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Agreement, will contravene any law or any governmental rule, regulation or
order presently binding on the Company or conflicts with or results in a
breach of the terms, conditions or provisions of any corporate restriction or
any agreement or instrument to which Company is now a party or by which it is
bound, or constitutes a default under any of the foregoing, or results in the
creation or imposition of any liens, charges, or encumbrances whatsoever upon
any of the property or assets of Company under the terms of any instrument or
agreement, except as contemplated herein.
(d) The Company represents and warrants that it is now or as of the date
of acquisition thereof will be lawfully seized and possessed and is now or as of
the date of acquisition thereof will be the lawful owner of the Mortgaged
Property, including either a fee simple interest in or a land lease interest in
the Project Sites, free and clear of all liens, security interests, charges or
encumbrances whatever except Permitted Encumbrances, and that the Company will
have full power and lawful authority to mortgage and grant a security interest
in the Company's rights in the Mortgaged Property to the Issuer; and that the
Company will have either good and marketable fee title or lease interest in and
to the Project Sites at the time of acquisition thereof, subject only to
Permitted Encumbrances and will preserve, warrant and defend the same unto the
Issuer against the claims of all persons and parties. This Mortgage and all
amendments thereto will constitute a direct and valid First lien on such
Mortgaged Property, subject only to Permitted Encumbrances. The Mortgaged
Property will constitute the only assets and property, tangible and intangible,
necessary for the performance of the IDBM Contract.
(e) The execution, delivery and performance by the Company of this Loan
Agreement and the Series 1996 Note do not require the consent or approval of,
the giving of notice to, 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, other than as required hereby.
(f) Assuming the due authorization, execution and delivery thereof by the
other parties thereto, this Loan Agreement and the Series 1996 Note have been
duly executed and delivered by the Company and constitute the legal, valid and
binding agreements of the Company, enforceable against the Company in accordance
with their respective terms, except as may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors' rights in general.
The enforceability of the Company's obligations under said documents is subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(g) There are no actions, suits or proceedings pending, or to the
knowledge of the Company, threatened, before any court, administrative agency or
arbitrator which, individually or in the aggregate, might result in any material
adverse change in the financial condition of the Company and its subsidiaries
taken as a whole or might impair the ability of the Company to perform its
obligations under this Loan Agreement or the Series 1996 Note, except as
described in Schedule I attached hereto.
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(h) No event has occurred and is continuing which with the lapse of time
or the giving of notice or both would constitute an Event of Default under this
Loan Agreement or the Series 1996 Note.
(i) At the time of acquisition of its interest in the Project Sites, the
Company will represent that to its knowledge, after due inquiry: (i) no person
or entity has used, generated, treated or stored Hazardous Substances on any of
the Project Sites except in accordance with all applicable laws, except for such
use, generation, treatment or storage of Hazardous Substances that will not
reasonably require additional investigation and/or remediation of any individual
Project Site, (ii) no Release or discharge of any Hazardous Substance in, on,
into or beneath the surface of any Project Site or any property adjacent to any
Project Site has occurred, except for such Releases or discharges of Hazardous
Substances that will not reasonably require additional investigation and/or
remediation of any individual Project Site, (iii) no person or entity has
received any notification that it is a potentially responsible party under
Section 107 of CERCLA, or any analogous state or local law providing for the
investigation and remediation of releases of Hazardous Substances, as a result
of the alleged release or disposal of Hazardous Substances on any Project Site,
and (iv) there is no and upon completion of construction of the Project there
will be no urea formaldehyde insulation, asbestos, or underground storage tank
on any Project Site, except to the extent that the existence of such listed
substances, products or equipment is (a) in accordance with all applicable laws
and (b) not reasonably likely to have a material adverse affect on the
liquidation value of the Project Site, and if such representations can not be
given to the satisfaction of the Original Purchaser, the Trustee and the Issuer,
the Company shall not acquire its interest in such land parcels.
Section 2.3. LOAN OF SERIES 1996 BONDS PROCEEDS BY ISSUER. Concurrently
with the execution and delivery hereof, the Issuer is issuing the Series 1996
Bonds and is lending the proceeds from the sale thereof to the Company by making
the deposits and payments specified in Section 3. 1 of the Indenture. Such loan
is being evidenced by the execution and delivery by the Company of the Series
1996 Note substantially in the form attached hereto as Exhibit B.
(End of Article II)
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ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY
Section 3.1. CONSENT TO ASSIGNMENTS TO TRUSTEE. The Company acknowledges
and consents to the pledges and assignments of the Series 1996 Note and the
assignment of the Issuer's rights hereunder to the Trustee pursuant to the
Indenture and agrees that the Trustee may enforce the rights, remedies and
privileges granted to the Issuer hereunder other than the rights of the Issuer
under Sections 3.15, 3.17, 3.30 and 3.33(e) hereof and to execute and deliver
supplements and amendments to this Loan Agreement pursuant to Section 9. l
hereof, except that the Trustee may enforce the rights of the Issuer under the
Sections cited above to the extent provided in the Indenture.
Section 3.2. THE LOAN; LOAN PAYMENTS.
The Issuer hereby agrees to loan the proceeds of the Bonds to the Company,
and the Company agrees to accept such loan in accordance with, and subject to,
the provisions of this Loan Agreement.
Subject to the provisions of Section 10.8 hereof, the Company agrees to
make the following Loan Payments:
(1) on or before the last day of each month, commencing March
31, 1997, until such time as the principal of, and the premium, if
any, and interest on the Bonds shall have been paid in full, or
provisions made for such full payment in accordance with the
provisions of the Indenture, to the Trustee for deposit in the Bond
Fund, a sum equal to one third (1/3) of the aggregate amount of
interest payable by the Issuer on the then Outstanding Bonds on the
next succeeding Interest Payment Date; and
(2) on or before the last day of each month, commencing March
31, 1997, to the Trustee for deposit in the Bond Fund, a sum equal to
one third (1/3) of the aggregate amount of principal payable, whether
by redemption or otherwise, by the Issuer on the then Outstanding
Bonds on the next succeeding Interest Payment Date; and
(3) on or before the last day of each month any amounts
necessary to bring current the monthly installments due and payable
during any three (3) month period between Interest Payment Dates; and
(4) all amounts required to assure that such Debt Service
Reserve Fund is Fully Funded as and when required by Section 3.29
hereof and Section 4.5 of the Indenture; and
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(5) all amounts advanced by the Issuer or the Trustee under
authority of this Loan Agreement or the Indenture which the Company is
obligated to repay; and
(6) all amounts required to fund any Breakage Amount or any
other premium due upon redemption of the Bonds; and
(7) all fees and other costs, including without limitation fees
and expenses of counsel to the Trustee, Trustee fees and expenses,
including those payable to the Trustee for services or indemnity under
the Indenture and the fees and other costs, including counsel fees,
incurred for services of any building institution designated as an
additional paying agent.
The monthly Loan Payments payable by the Company under this Loan Agreement
are expected to equal in the aggregate an amount which, with other funds in the
Bond Fund then available for the payment of principal and interest on the Bonds,
shall be sufficient to provide for the payment in full of the interest on, and
principal of the Bonds as they become due and payable on each Interest Payment
Date. The Company shall be entitled to a credit on the last monthly payment due
immediately preceding an Interest Payment Date in the amount of any investment
earnings deposited to the Bond Fund since the Interest Payment Date immediately
preceding. If for any reason the amount deposited in the Bond Fund as
capitalized interest pursuant to Section 3.1 of the Indenture is insufficient to
make the interest payments due on the Bonds on September 1, 1996, December
1,1996 and March l, 1997, the Company shall pay on the last day before each such
Interest Payment Date an amount, which when added to the amount then on deposit
in the Bond Fund, will be sufficient to make the interest payment due on the
Bonds on such Interest Payment Dates.
The Company shall pay, or cause to be paid, the Loan Payments without any
further notice thereof except as may be specifically required by this Section
3.2.
The Company covenants and agrees with and for the express benefit of the
Issuer, the Trustee and the owners of the Bonds that all payments pursuant
hereto and to the Notes and shall be made by the Company on or before the date
the same become due, and the Company shall perform all of its other obligations,
covenants and agreements hereunder (subject to the provisions of Section 10.8
hereof), without notice or demand (except as provided herein), and without
abatement, deduction, reduction, diminution, waiver, abrogation, set-off,
counterclaim, recoupment, defense or other modification or any right of
termination or cancellation arising from any circumstance whatsoever, whether
now existing or hereafter arising, and regardless of any act of God,
contingency, event or cause whatsoever, and irrespective (without limitation) of
whether the Company's Mortgaged Property or any part thereof is defective or
nonexistent, or whether the Company's revenues are sufficient to make such
payments, and notwithstanding any damage to, or loss, theft or destruction of,
the Mortgaged Property or any part thereof, expiration of this Mortgage, any
failure of consideration or frustration of purpose, the taking by eminent domain
or otherwise of title to or of the right of temporary use of, all or any part of
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the Mortgaged Property, legal curtailment of the Company's use thereof, or
whether with or without the approval of the Issuer, any change in the tax or
other laws of the United States of America, the State of Indiana, or any
political subdivision of either thereof, any change in the Issuer's legal
organization or status, or any default of the Issuer hereunder, and regardless
of the invalidity of any portion of this Mortgage; and the Company hereby waives
the provisions of any statute or other law now or hereafter in effect impairing
or conflicting with any of its obligations, covenants or agreements under this
Mortgage or which releases or purports to release the Company therefrom. Nothing
in this Mortgage shall be construed as a waiver by the Company of any rights or
claims the Company may have against the Issuer under this Mortgage or otherwise,
but any recovery upon such rights and claims shall be had from the Issuer
separately, it being the intent of this Mortgage that the Company shall be
unconditionally and absolutely obligated without right of set-off or abatement,
to perform fully all of its obligations, agreements and covenants under this
Mortgage for the benefit of the holders of the Bonds.
It is understood and agreed that all payments made by Company pursuant to
Section 3.2 hereof and the Notes are pledged to Trustee pursuant to the granting
clauses of the Indenture. Company assents to such pledge, and hereby agrees
that, as to Trustee, its obligation to make such payments shall be absolute and
shall not be subject to any defense or any right of set-off, counterclaim or
recoupment arising out of any breach by Issuer or Trustee of any obligation to
Company, whether hereunder or otherwise, or out of any indebtedness or liability
at any time owing to Company by Issuer. Issuer hereby directs Company and
Company hereby agrees to pay to Trustee at its principal office all said amounts
payable by Company pursuant to Section 3.2 hereof and the Notes.
It is understood and agreed that Company shall be obligated to continue to
pay the amounts specified herein and in the Notes whether or not the Project is
damaged, destroyed or taken in condemnation and that there shall be no abatement
of any such payments and other charges by reason thereof.
As security for payment of the Loan Payments, the Company agrees to cause
IDEM to directly transfer the Gross Revenues of the Project to the Trustee for
deposit in the Revenue Fund. The Gross Revenues and any additional amounts paid
by the Company, if necessary, shall be used by the Trustee to pay, throughout
the term of the Loan, the Loan Payments, in such lawful money of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
All transfers of Gross Revenues shall be made to the Trustee at the
designated office of the Trustee in Evansville, Indiana, or at such other
location as shall be designated in writing by the Trustee to the Company and
IDEM.
Section 3.3. MAINTENANCE OF LIEN; RECORDING. The Company will, at its
expense, take all necessary action to maintain and preserve the lien and
security interest of this Mortgage as valid and perfected first liens and
security interests, subject only to Permitted Encumbrances, so long as any Note,
or other indebtedness or obligation secured hereby is outstanding. The
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Company will, forthwith after the execution and delivery of this Mortgage and
thereafter from time to time, cause this Mortgage and any financing
statements in respect thereof to be filed, registered and recorded in such
manner and in such places as may be required by law in order to publish
notice of, perfect, maintain the priority of, and fully to protect the lien
and security interest hereof upon, and the title of the Company to, the
Mortgaged Property; and from time to time will perform or cause to be
performed any other act as provided by law and will execute or cause to be
executed any and all continuation statements and further instruments that may
be requested by the Issuer, the Original Purchaser or Trustee for such
publication, perfection, maintenance of priority, and protection. The Company
will pay or cause to be paid all filing, registration and recording fees
incident to such filing, registration and recording, and all expenses
incident to the preparation, execution and acknowledgment of such instruments
of further assurance, and all federal or state fees and other similar fees,
duties, imposts, assessments and charges arising out of or in connection with
the execution and delivery of this Mortgage and such instruments of further
assurance.
Section 3.4. FURTHER ASSURANCES; AFTER-ACQUIRED PROPERTY. (a) The Company
will do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, conveyances,
mortgages, assignments, transfers and assurances as the Issuer, the Original
Purchaser or Trustee reasonably may require for the better assuring, conveying,
mortgaging, assigning and confirming unto the Issuer and the Trustee all and
singular the Mortgaged Property as now or hereafter constituted, within ten (10)
days of any request of the Issuer, Trustee or Original Purchaser.
(b) Without the need for any request by the Issuer, the Original Purchaser
or the Trustee, all right, title and interest of the Company in and to all
improvements, betterment, renewals, substitutions and replacements of, the
Mortgaged Property or any part thereof, hereafter constructed or acquired by the
Company, and all additions and accessions thereto and proceeds thereof
immediately upon such construction or acquisition, without any further
mortgaging, conveyance or assignment, shall become and be part of the Mortgaged
Property and shall be subject to the lien and security interest of this Mortgage
and Parity Instruments as fully and completely and with the same effect as
though now owned by the Company, but at any and all times the Company will
execute and deliver to the Issuer and the Original Purchaser any and all such
further assurances, mortgages, conveyances or assignments therefor and other
instruments with respect thereto as the Issuer or the Original Purchaser may
reasonably require for the purpose of expressly and specifically subjecting the
same to the lien and security interest of this Mortgage.
Section 3.5. CORPORATE EXISTENCE. (a) So long as debt is outstanding
under the Public Debt Instruments, not later than thirty (30) days prior to the
effective date thereof, the Company will give written notice to the Issuer, the
Trustee and each Bondholder of any change or proposed change in its corporate
existence, including without limitation dissolution, merger, consolidation, or
reorganization.
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(b) When debt is no longer outstanding under the Public Debt
Instruments, not later than thirty (30) days prior to the effective date
thereof, the Company will give written notice to the Issuer, the Trustee
and each Bondholder of any change or proposed change in its corporate
existence, will not dissolve or otherwise dispose of all or substantially
all of its assets, and will not consolidate with or merge into another
corporation, or permit one or more other corporations to consolidate or
merge with it; provided, that the Company may, without violating the
agreement contained in this Section, consolidate or merge with another
corporation, permit one or more other corporations to consolidate or merge
into it, or transfer to another corporation organized under the laws of one
of the states of the United States all or substantially all of its assets
as an entirety and thereafter dissolve provided (i) the surviving,
resulting or transferee corporation, as the case may be, is organized under
the laws of one of the states of the United States, and remains or becomes
qualified to do business in the State, (ii) such corporation assumes in
writing all of the obligations of the Company herein, including the
obligations of the Company under this Section, and (iii) such corporation
shall have a rating the same as or higher than the Company's rating on its
public debt as rated on the date of delivery of the Series 1996 Note and if
the Company's public debt is not rated after such merger or consolidation,
such corporation shall have a net worth equal to or higher than the net
worth of the Company on the date of delivery of the Series 1996 Note.
Section 3.6. FINANCIAL REPORTING. (a) The Company agrees to keep at all
times books and records and accounts in which full, true and correct entries
will be made of all dealings or transactions in relation to the business and
affairs of the Company in accordance with generally accepted accounting
principles consistently applied.
(b) The Company shall furnish to the Trustee and to the Bondholders:
(i) for as long as any of the Public Debt Instruments are in
effect, copies of all information filed with the Securities and
Exchange Commission as well as all compliance certificates, reports
and information required to be delivered to the trustees under the
Public Debt Instruments, as and when the same are provided to such
trustees; and
(ii) at such time as the Company is no longer a reporting company
under the 1934 Act, at all times not covered by (i) above, (A) within
45 days after the end of each fiscal quarter of each calendar year of
the Company, unaudited quarterly financial statements of the Company,
attested to by the chief financial officer of the Company; and (B)
within 120 days after the close of each fiscal year, a copy of the
annual Financial statements and annual consolidating statements of the
Company, audited by an independent certified public accountant
selected by the Company which shall be a nationally recognized Big Six
accounting firm or otherwise reasonably acceptable to the Trustee and
the
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Original Purchaser and accompanied by an opinion of such accountants
unqualified as to scope; and
(iii) at such time as the Company is no longer a reporting
company under the 1934 Act, an authorized officer the Company shall
certify annually that he has obtained no knowledge of the occurrence
of any material adverse change in the financial condition of the
Company.
In addition, the Company shall furnish such additional information as the
Issuer, the Trustee or the Original Purchaser may reasonably request concerning
the Company, insofar as such information may be provided without violation of
the provisions of the 1934 Act, in order to enable the Issuer, the Trustee or
the Original Purchaser to determine whether the covenants, terms and provisions
of this Loan Agreement have been complied with by the Company and for that
purpose all pertinent financial books, documents and vouchers relating to its
business affairs and properties shall at all times upon reasonable prior notice
during regular business hours be open to the inspection of such persons or their
accountants or other agents (who may make copies of all or any part thereof) as
shall from time to time be designated by the Issuer, the Trustee or the Original
Purchaser. The party making any such request shall bear the expenses incurred in
connection with honoring the request.
Without limiting the foregoing, the Company will permit the Issuer, the
Trustee and the Original Purchaser (or such persons as the Original Purchaser
may designate) to visit and inspect, at the expense of the Issuer, the Trustee
or the Original Purchaser, any of the properties of the Company and to discuss
the affairs, fiances and accounts of the Company with its officers and
independent accountants, in so far as such information may be provided without
violation of the provisions of the 1934 Act, all upon reasonable prior notice
and at such reasonable times during normal business hours and as often as the
Trustee or the Original Purchaser may reasonably desire. Access to and
inspections of the Project and Project Sites during the period of construction
of the Project shall be governed solely by Section 3.25 of this Loan Agreement.
Section 3.7. TAXES, CHARGES AND ASSESSMENTS. The Company covenants and
agrees, subject to the provisions of Section 3.10 hereof, to pay when the same
shall become due or payable:
(a) all taxes and charges on account of the ownership, use, occupancy
or operation of the Mortgaged Property, including but not limited to all
sales, use, occupancy, real and personal property taxes, all permit and
inspection fees, occupation and license fees and all water, gas, electric
light, power or other utility charges assessed or charged on or against
such Mortgaged Property or on account of the Company's use or occupancy
thereof or the activities conducted thereon or therein; and
(b) all taxes, assessments and impositions, general and special,
ordinary and extraordinary, of every name and kind, which shall be taxed,
levied, imposed or assessed upon all or any part of such Mortgaged
Property, or the interest of the Company therein.
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If under applicable law any such tax, charge, fee, rate, imposition or
assessment may at the option of the taxpayer be paid in installments, the
Company may exercise such option.
Nothing contained herein shall be deemed to constitute an admission by the
Company that the Company is liable for any tax, charge, fee, rate, imposition or
assessment.
Section 3.8. LIENS. Subject to the provisions of Section 3.10 hereof, the
Company will not allow to exist and will not create or permit to be created or
exist and will, at its cost and expense, promptly discharge all liens, security
interests, encroachments, encumbrances and charges on the Mortgaged Property or
any part thereof that are not Permitted Encumbrances.
Section 3.9. COMPLIANCE WITH ORDERS, ORDINANCES, ETC. Subject to the
provisions of Section 3.10 hereof, the Company will, at its sole cost and
expense, comply with all present and future laws, ordinances, orders, decrees,
rules, regulations and requirements of every duly constituted governmental
authority, commission and court and the officers thereof of which it has notice,
and the failure to comply with which would materially and adversely affect the
Mortgaged Property or the use, occupancy or condition thereof.
Section 3.10. PERMITTED CONTESTS; WAIVER BY REQUISITE BONDHOLDERS. The
Company shall not be required to pay any tax, charge, fee, rate, imposition or
assessment required to be paid under Section 3.7 hereof, nor to remove any lien,
security interest, encroachment, encumbrance or charge required to be removed
under Section 3.8 hereof, nor to comply with any law, ordinance, order, decree,
rule, regulation or requirement referred to in Section 3.9 hereof, so long as
the Company shall in good faith and at its cost and expense, and after providing
the Issuer and the Original Purchaser with written notice, contest the amount or
validity thereof, or take other appropriate action with respect thereto, in an
appropriate manner or by appropriate proceedings, which shall operate during the
pendency thereof to prevent (a) the collection of or other realization upon the
tax, charge, assessment, lien, security interest or encumbrance so contested and
(b) the sale, forfeiture or loss of the Mortgaged Property or any part thereof
to satisfy the same; and provided that no such contest or action shall subject
the Issuer or the Trustee to any liability unless the Company properly
indemnifies the Issuer or the Trustee, as the case may be. While any such
matters are pending, the Company shall have the right to pay, remove or cause to
be discharged or marked exempt the tax, charge, assessment, lien, security
interest or encumbrance being contested. Each such contest shall be promptly
prosecuted to final conclusion or settlement, and the Company will pay, and save
the Issuer and the Trustee harmless against, all losses, judgments, decrees and
costs (including attorneys' fees and expenses in connection therewith) and will,
promptly after the final determination or settlement of such contest or action,
pay and discharge the amounts which shall be levied, assessed or imposed or
determined to be payable thereon, together with all penalties, fines, interests,
costs and expenses thereon or in connection therewith. During the pendency of
each such contest, the Company shall maintain appropriate reserves for any
contested liability, which reserves will be maintained with the Trustee as
required in order for such liens to be considered Permitted Encumbrances.
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Section 3. 11. REPAIRS, MAINTENANCE AND ALTERATIONS. The Company will at
its own cost and expense keep the Mortgaged Property in good repair and order,
reasonable wear and tear excepted, and in as reasonably safe condition as its
operation will permit and will make all necessary repairs thereto, interior and
exterior, structural and non-structural, ordinary as well as extraordinary and
foreseen as well as unforeseen, and all necessary replacements or renewals.
The Company shall have the right from time to time at its own cost and
expense to make additions, alterations and changes, whether structural or non-
structural (hereinafter collectively referred to as "alterations") in or to the
Mortgaged Property; provided, however, that any additions, alterations and
changes shall not diminish the value of the Mortgaged Property in any material
respect, except such changes or modifications as required by IDEM or the
provisions of the IDEM Contract.
Section 3.12. COMPANY DUTIES UNDER INDENTURE. The Company agrees to
perform all obligations under the Indenture to be performed by the Company and
to comply with all provisions of the Indenture applicable to the Company.
Section 3.13. INSURANCE. The Company shall maintain the following
insurance at its sole cost and expense:
(a) Insurance against loss and/or damage to the Mortgaged Property
under a policy or policies covering such risks as are ordinarily insured
against by similar companies, but in any event including fire, lightning,
windstorm, hail, explosion, riot, riot attending a strike, civil commotion,
damage from aircraft, smoke and uniform standard extended coverage and
vandalism and malicious mischief endorsements, limited only as may be
provided in the standard form of such endorsements at the time in use in
the State of Indiana. Such insurance shall be in such amount as shall be
approved by the Requisite Bondholders. No policy of insurance shall be so
written that the proceeds thereof will produce less than the minimum
coverage required by the preceding sentence, by reason of co-insurance
provisions or otherwise, without the prior consent thereto in writing by
the Requisite Bondholders.
(b) Comprehensive general public liability insurance for injuries to
persons and/or property, in limits not less than, and with deductibles not
greater than, that approved by the Requisite Bondholders.
(c) Workmen's compensation insurance respecting all employees of the
Company in such amount as is customarily carried by like organizations
engaged in like activities of comparable size and liability exposure;
provided that the Company may be self-insured with respect to all or any
part of its liabilit0y for workmen's compensation.
(d) Business interruption insurance with a minimum coverage amount of
$1,000,000 and for a period at least equal to the shortest of (i) the time
required to
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resume normal business operations, (ii) the time reasonably necessary
to repair, rebuild or replace the damaged property or (iii) six months.
(e) Professional liability or malpractice insurance in limits not
less than that which is customarily carried by like organizations engaged
in like activities of comparable size and liability exposure.
Each policy of insurance shall (i) be issued by one or more recognized,
financially sound and responsible insurance companies qualified or authorized
under the laws of the State of Indiana to assume the risks covered by such
policy, (ii) name the Trustee, the Company, and the Issuer as assureds, as their
respective interests may appear, and (iii) provide that such policy shall not be
cancelled without at least 30 days prior written notice to each assured named
therein. With respect to the insurance required by subsection (a) above, the
policy or policies shall provide that whenever the Net Proceeds resulting from a
claim exceed $100,000, such Net Proceeds shall be payable to the Trustee, and if
such Net Proceeds are equal to or less than $100,000, such Net Proceeds shall be
payable directly to the Company. As to the insurance required by subsections
(b) through (e) above, the Net Proceeds shall be payable to or for the benefit
of the Company.
Upon the delivery of this Loan Agreement and thereafter not less than 10
days prior to the expiration dates of any policies, certificates, binders, or
other evidence of insurance satisfactory to the Trustee given by the respective
insurers of such policies shall be delivered by the Company to the Trustee. If
requested in writing by the Trustee, the Company shall furnish the Trustee with
the schedule of premium payment dates and receipted bills or other evidence
satisfactory to the Trustee of the payment when due of all premiums for all
policies of insurance at any time required to be maintained hereunder. Upon
reasonable prior written notice the Company will permit the Trustee to visit the
offices of the Company and inspect the Company's insurance records including all
policies of insurance maintained pursuant to this Section and to make copies of
all or any part thereof.
Any of the foregoing insurance maintained by the Company pursuant hereto
may be evidenced by one or more blanket insurance policies covering the
Mortgaged Property and other property or assets of the Company.
Section 3.14. TRUSTEE'S RIGHT TO PERFORM COMPANY'S COVENANTS; ADVANCES.
In the event the Company shall fail to (i) perform any covenant contained in
Section 3.7 hereof, (ii) remove any lien, security interest, encumbrance or
charge pursuant to Section 3.8 hereof, (iii) maintain the Mortgaged Property in
repair pursuant to Section 3. 11 hereof, (iv) procure the insurance required by
Section 3. 11 or 3. 13 hereof, or (v) fail to make any other payment or perform
any other act required to be performed hereunder, then and in each such case
(unless the same is being contested or other appropriate action is being taken
with respect thereto pursuant to Section 3. 10 hereof) the Trustee, upon not
less than 5 days prior written notice to the Company, may (but shall not be
obligated to) remedy such default for the account of the Company and make
advances for that purpose. No such performance or advance shall operate to
release the
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Company from any such default, and any sums so advanced by the
Trustee shall be due and payable by the Company on demand and shall bear
interest at the Default Rate from the date of the advance until repaid.
Section 3.15. INDEMNITY. Subject to the provisions of the second to last
paragraph of this Section, the Company will pay, and protect, indemnify and save
the State, the Issuer (including members, directors, officers, agents, attorneys
and employees thereof), the Bondholders and the Trustee harmless from and
against, all liabilities, losses, damages, costs, expenses (including attorneys'
fees and expenses of the Issuer and the Trustee), causes of actions, suits,
claims, demands and judgments of any nature arising from or relating to:
(a) The acceptance or administration of the Indenture or the trusts
thereunder or the performance of the Issuer's duties thereunder, except
with respect to liability from such Trustees' negligence or willful
misconduct in connection with such action taken;
(b) Any injury to or death of any person or damage to property in or
upon the Project or resulting from or connected in any way to the
financing, construction, maintenance, operation, use, non-use, condition or
occupancy of the Project or a part thereof;
(c) Violation of any agreement or condition of this Loan Agreement or
the Indenture, except by the Issuer or the Trustee;
(d) Violation of any contract, agreement or restriction by the
Company relating to the Project or a part thereof;
(e) Violation of any law, ordinance or regulation arising out of the
ownership, occupancy or use of the Project or a part thereof;
(f) Undertaking the Project or the failure to undertake the Project;
(g) Any act, failure to act, or misrepresentation by the Company, or
any of the Company's agents, contractors, servants, employees or licensees;
(h) Any act, omitted act, or misrepresentation by the Issuer, other
than a failure to seek an appropriation from the Indiana General Assembly
as required by Section 4.6 of the Indenture, in connection with or in the
performance of any obligation related to the issuance, sale, or delivery of
(or failure to issue, sell or deliver) the Bonds under this Loan Agreement
or the Indenture, or any other agreement executed by or on behalf of the
Issuer (provided that nothing in this clause should be construed to
indemnify or release the Issuer from any liability which it would otherwise
have had arising from the intentional misrepresentation or wilful
misconduct on the part of the Issuer other than as contemplated in this
Loan Agreement); and
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(i) The authorization, issuance, sale, trading, redemption, or
servicing of the Bonds and the provision of any information or
certification furnished by the Company in connection therewith, concerning
the Bonds, the Project or the Company.
The foregoing indemnification shall survive the termination of this Loan
Agreement and the payment or satisfaction of the indebtedness and obligations
secured hereby except as provided in Section 10.8 hereof.
Notwithstanding the foregoing, the obligation to indemnify, defend and hold
harmless the State, acting by and through IDEM, for liability arising from the
performance of the IDEM Contract, shall be limited to such liability caused by
any act or omission of the Company and/or its subcontractors under the IDA
Contract, if any.
The foregoing shall not be construed to prohibit the Company from pursuing
its remedies against either the Issuer or the Trustee for damages to the Company
resulting from personal injury or property damage caused by the intentional
misrepresentation or willful misconduct of either the Issuer or the Trustee or
the negligence or willful misconduct of the Trustee or breach of the Indenture
by the Trustee.
Section 3.16. ISSUANCE OF SUBSTITUTE NOTES. Upon the surrender of any
Note or upon the receipt of a written notice of loss, theft, destruction or
mutilation of any Note, the Company will execute and deliver to the holder
thereof a new Note dated the date of the Note being surrendered or the original
date of the Note in the case of any lost, stolen, destroyed or mutilated Note,
but with appropriate notations thereon to reflect payments of principal and
interest thereon; provided, however, that there shall never be outstanding at
any one time more than one Note of any one series. Prior to execution and
delivery of any such replacement Note the Company shall be indemnified to its
reasonable satisfaction by the person seeking such replacement Note.
Section 3.17. PAYMENT OF EXPENSES OF ISSUANCE OF SERIES 1996 BONDS. The
Company agrees to be liable for and pay for any recording expenses, trustee's
acceptance fees, commitment fees, escrow and title insurance costs, legal fees,
printing expenses and other fees and expenses incurred or to be incurred by or
on behalf of the Issuer and the Trustee in connection with or as an incident to
the issuance and sale of the Series 1996 Bonds and the subsequent administration
of this Loan Agreement. To the extent the foregoing are Costs of Construction,
such costs, fees and expenses shall be paid with the proceeds of the Series 1996
Bonds pursuant to the Indenture.
Section 3.18. MORTGAGEE TITLE INSURANCE POLICY. Concurrently with the
acquisition of each Project Site the Company will deliver to the Issuer, Trustee
and Original Purchaser an ALTA policy or policies of mortgagee title insurance
in a form acceptable to the Issuer, Trustee and Original Purchaser in the
aggregate amount equal to the purchase price of the land, building improvements
and fixtures constituting the Project, issued by a title insurance company
satisfactory to the Issuer, the Trustee and the Original Purchaser, insuring
that the Trustee has
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a first mortgage lien on the Mortgaged Property, subject only to Permitted
Encumbrances, if any. Any Net Proceeds received from such policy or policies
shall be deposited in the Redemption Account for the redemption of Bonds in
order to effect a prepayment of a portion of the Note as provided in Section
5.2 hereof.
Section 3.19. FUNDING OF INDENTURE FUNDS; INVESTMENTS. The Issuer shall
deposit with the Trustee all proceeds from the sale of the Series 1996 Bonds in
the manner specified in Article ffl of the Indenture, and the Trustee shall
deposit such proceeds in the manner specified in such Article. Further, the
Company shall deposit with the Trustee an amount sufficient, when added to the
amount already deposited in the Debt Service Fund, to cause the Debt Service
Reserve Fund to be Fully Funded.
The Trustee is hereby authorized, upon the direction of the Company, to
trade with itself in the purchase and sale of securities for such investments.
The Trustee shall not be liable or responsible for any loss resulting from any
such investment. All such investments shall be held by or under the control of
the Trustee and any income resulting therefrom shall be applied in the manner
specified in the Indenture.
Section 3.20. OTHER AMOUNTS PAYABLE BY THE COMPANY. The Company agrees to
pay directly to the Trustee from time to time as long as there are Bonds
Outstanding an amount equal to the fees and expenses of the Trustee for the
services of the Trustee, as trustee, and as bond registrar and paying agent and
for the necessary extraordinary services rendered by it and extraordinary
expenses incurred by it under the Indenture, as and when the same become due.
Notwithstanding anything in this Section 3.20 to the contrary, the Company may,
without creating an event of default as herein deemed, contest in good faith the
necessity for any such services, fees, charges or expenses of the Trustee.
Section 3.21. LEASED MORTGAGED PROPERTY.
(a) The Company will pay or cause to be paid all rents, additional
rents, taxes, assessments, water rates, sewer rates, and other charges
mentioned in and made payable by the Company under the terms of any lease
or other agreement pursuant to which the Company is the lessee of any
Project Site or Equipment (a "Lease"), when and as often as the same shall
become due and payable.
(b) The Company: (i) will at all times promptly and faithfully keep
and perform, or cause to be kept and performed, all the covenants and
conditions contained in each Lease to be kept and performed by the Company
and will in all respects conform to and comply with the material terms,
covenants and conditions of each Lease; (ii) will do all things necessary
to preserve and to keep unimpaired its rights and estate under each Lease;
and (iii) will not do or permit anything to be done, the doing of which, or
refrain from doing anything, the omissions of which, will be grounds for
declaring a forfeiture or termination, in whole or in part, of any Lease.
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(c) The Company will not modify, extend, change, amend or in any way
alter the terms of any Lease of any Project Site or terminate, cancel or
surrender any such Lease, or waive, excuse, condone or in any way release
or discharge the lessor thereunder of or from any of the lessor's interest,
obligations, covenants, conditions and agreements by such lessor to be done
and performed.
(d) The Company will (i) promptly notify the Trustee in writing of
the receipt by the Company of any notice from the lessor under any lease
notice or claiming any default by the Company in the performance or
observance of any of the terms, covenants, or conditions on the part of the
Company under such Lease; and (ii) promptly notify the Trustee in writing
of the receipt by the Company of any notice from the lessor of any Lease to
the Company of any notice from such lessor of termination of such Lose.
Section 3.22. COMPLETION OF PROJECT.
(a) Company agrees that:
(i) It will make, execute, acknowledge and deliver any
contracts, orders, receipts, writings and instructions with any other
persons, fins or corporations and in general do all things which may
be requisite or proper, all for completing the Project.
(ii) It will construct the Project in accordance with the final
plans and specifications approved by IDEM, will substantially complete
construction of the Lake/Porter portion of the Project by July l, 1997
and the Clark/Floyd portion of the Project by August 1,1997, and will
comply in all material respects with all restrictions, conditions,
ordinances, codes, regulations, and laws of all governmental
authorities and agencies having jurisdiction over or an interest in
the Project or any portion thereof.
(iii) It will, upon completion of the Project, furnish to the
Trustee (i) final lien waivers from all contractors or suppliers who
have furnished material or labor for the Project; (ii) a final
endorsement to the mortgagee title insurance policy or policies
required by Section 3.18 hereof, reflecting completion of the Project.
In the event the moneys in the Construction Fund should not be sufficient
to pay in full the costs to be paid therefrom, the Company agrees, for the
benefit of the Issuer and the Bondholders and in order to fulfill the purposes
of the Act, to complete the Project and to pay that portion of the costs
therefor as may be in excess of the moneys available therefor in such
[MISSING ORIGINAL PAGE 29]
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(ii) Notwithstanding the foregoing, but subject to receipt of prior
written consent from the Issuer and the Original Purchaser, the Company may
sell all or any portion of any Project Site that is no longer needed to
perform its obligations under the IDEM Contract at such Project Site. All
proceeds received by the Company (net of reasonable selling expenses
actually incurred by the Company, not exceeding five percent (5%) of such
proceeds) as a result of any such action shall be paid to the Trustee for
deposit to the Redemption Account for redemption of Bonds in order to
effect prepayment of a portion of the Note in accordance with Section 5.2
hereof. If the Company purchases or otherwise acquires an alternative
Project Site to replace an existing Project Site, the alternative Project
Site shall become Mortgaged Property. Following the execution, delivery
and recording by the Company of such documents as may be necessary to
subject such alternative Project Site to the lien of this Mortgage, subject
only to Permitted Encumbrances, the Company may, subject to receipt of
prior written consent from the Issuer and the Original Purchaser, sell the
replaced Project Site, and all proceeds received upon such sale shall be
applied as follows: (1) an amount equal to the excess of such proceeds over
the price paid by the Company to acquire the alternative Project Site shall
be paid to the Trustee for deposit to the Redemption Account for redemption
of Bonds in order to effect prepayment of a portion of the Note in
accordance with Section 5.2, and (2) the remainder shall be released to the
Company. Upon paying over the proceeds of sale in accordance with this
clause (ii), the lien of this Mortgage against the Project Site so sold
shall be released. No release effected under the provisions of this Section
3.23 shall, except to the extent provided in Section 5.4 hereof, entitle
the Company to any abatement or diminution of the payments to be made
hereunder.
Section 3.24. SUBSTITUTION AND REMOVAL OF EQUIPMENT. Except as provided
in this Section and Section 3.23 hereof, Equipment comprising part of the
Mortgaged Property shall remain in or near the buildings comprising the
Mortgaged Property and on the site thereof. The Company may from time to time
substitute Equipment in the Mortgaged Property if the Equipment so substituted
shall be of equivalent utility to that replaced, and if such substitution is
made in accordance with the terms of the IDEM Contract. Such substituted
Equipment shall become a part of the Mortgaged Property and be included under
the terms of the Mortgage, and the replaced Equipment shall become the property
of the Company free and clear of any claims of the Issuer, the Trustee or the
Bondholders therein or thereto, upon payment to the Trustee, for deposit to the
Redemption Account for the redemption of Bonds in order to effect the prepayment
of a portion of the Note in accordance with Section 5.2, of (1) if the replaced
Equipment is sold by the Company, the amount by which the proceeds of such sale
(net of reasonable selling expenses actually incurred by the Company) exceed the
purchase price paid by the Company for the substituted Equipment, or (2) if the
Equipment is not sold by the Company, the amount by which the fair market value
of the replaced Equipment exceeds the purchase price paid by the Company for the
substituted Equipment. Any such substituted Equipment with an aggregate fair
market value in excess of $100,000 shall be identified in writing by the Company
to the Trustee, and the Original Purchaser and shall require the consent of the
Original Purchaser.
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The Trustee, at the request of the Company, shall release from the lien of
the Mortgage any Equipment comprising part of the Mortgaged Property without
substitution therefor so long as such property is no longer used by or useful to
the Company in the performance of its obligations under the IDEM Contract
(whether by reason of changed techniques, obsolescence, depreciation or
otherwise), provided that the Company shall pay to the Trustee for deposit in
the Redemption Account (i) if such Equipment is sold, all proceeds from the sale
of such Equipment (net of reasonable selling expenses actually incurred by the
Company) or (ii) if such Equipment is not sold the fair market value, if any, of
the Equipment and such amount shall be used for redemption of the Bonds in order
to effect prepayment of a portion of the Notes as provided in Section 5.2
hereof. Upon such payment, the Equipment shall be free and clear of any claims
of the Issuer, the Trustee or the Bondholders. This provision shall not entitle
the Company to any abatement or diminution of the payments payable hereunder.
The Issuer and Company agree to execute and deliver such documents (if any)
as the Issuer or Company or Trustee may reasonably request in connection with
any action taken by the Issuer or Company under this Section.
Section 3.25. RIGHT OF ACCESS TO THE MORTGAGED PROPERTY. The Company
shall allow the Original Purchaser and its agents at all reasonable times during
development and construction of the Project, entry and free access to the
Project, and to inspect all work done, labor performed and materials furnished
on or about the Project. Without limiting the generality of the foregoing,
Purchaser shall have the right to have materials and work tested at the
Company's expense by third parties selected by the Original Purchaser if
reasonably deemed necessary by the Original Purchaser. Company agrees that any
inspection by the Original Purchaser of the improvements is for the purpose of
protecting the security of the Original Purchaser. No such inspection shall be a
representation by the Original Purchaser that there has been strict compliance
by the general contractor or any subcontractor with the approved plans and
specifications or that the construction is free from faulty materials or
workmanship, nor shall any inspection by the Original Purchaser constitute
approval of any certification given to the Original Purchaser or relieve any
person making such certification from responsibility therefor.
Section 3.26. RESERVED.
Section 3.27. RESERVED.
Section 3.28. SECURITY AGREEMENT. (a) With respect to those items
referenced in the Granting Clauses in which a security interest may be created
under Article 9 of the Uniform Commercial Code, as adopted and in effect in the
State (herein sometimes referred to as the "Collateral"), this Loan Agreement is
hereby made and declared to be a security agreement encumbering each and every
item of such property comprising a part of the Collateral, in compliance with
the provisions of the Uniform Commercial Code as adopted and in effect in the
State. The Company hereby authorizes the Issuer, and the Trustee as the assignee
of the Issuer, to execute and file, without necessity for the execution thereof
by the Company, any financing statements, continuation statements, or other
instruments or documents that the Issuer or the
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Trustee may deem necessary or desirable to perfect and maintain the lien of
this security agreement upon the Collateral and all parts thereof. The
Company and Issuer agree that the filing of any such financing statement(s)
in the records normally having to do with personal property shall not in any
way affect the agreement of the parties hereto that all Equipment used in
connection with the production of income from the Mortgaged Property or
adapted for use therein or which is described or reflected in this Loan
Agreement is, and at all times and for all purposes and in all proceedings,
both legal and equitable, shall be regarded as part of the real estate
conveyed hereby regardless of whether any such item is physically attached to
the improvements or that serial numbers are used for the better
identification of certain items capable of being thus identified in an
exhibit hereto, or as any such item is referred to or reflected in any such
financing statement(s) so filed at any time.
(b) The mention in any such financing statement(s) of the rights in
and to (i) the proceeds of any insurance policy, (ii) any award in
condemnation or eminent domain proceedings for a taking or for loss of
value, or (iii) Company's interest as landlord in any present or future
lease or sublease or rights to income growing out of the use and/or
occupancy of the Mortgaged Property, whether pursuant to a tenant lease of
space or otherwise, shall not in any way alter any of the rights of the
Issuer as determined by this Loan Agreement or affect the priority of the
Issuer's security interest granted hereby or by any other recorded
document, it being understood and agreed that such mention in such
financing statement(s) is solely for the protection of the Issuer in the
event any court shall at any time hold with respect to the foregoing
clauses (i) to (iii) of this Section 3.28(b) that notice of the Issuer's
priority of interest, to be effective against a particular class of
persons, must be filed in the Uniform Commercial Code records.
(c) The security interest granted herein shall attach as soon as the
Company obtains any interest in any of the Collateral and before the
Collateral becomes fixtures or before the Collateral is installed or
affixed to any other collateral for the benefit of Issuer, to secure the
indebtedness evidenced by the Company's Notes and all other indebtedness
and obligations secured by this Loan Agreement, and all other sums and
charges which may become due hereunder or thereunder. The security interest
granted to the Issuer shall cover cash and non-cash proceeds of the
Collateral, but nothing contained herein shall be construed as authorizing,
either expressly or by implication, the sale or other disposition of the
Collateral by the Company except on the terms and conditions set forth in
this Loan Agreement.
(d) In the event of a default hereunder, the Issuer (or the Trustee
as the assignee of the Issuer), pursuant to said Uniform Commercial Code
shall have the option of proceeding as to both real and personal property
in accordance with its rights and remedies in respect of the real property,
in which event the default and remedy provisions of the Uniform Commercial
Code shall not apply. The parties agree that, in the event an election is
made to proceed with respect to the Collateral separately from the real
property, the requirement of the Uniform Commercial Code as to reasonable
notice of any proposed sale or disposition of the Collateral shall be met
if such notice is
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mailed to the Company at the address for notice set forth
herein at least five (5) days prior to the time of such sale or
disposition.
(e) All replacements, substitutions and additions, and accessions to
the Collateral shall become and be immediately subject to the security
interest of this Loan Agreement and shall be covered thereby. Company
warrants and represents that all Collateral now is, and that all
replacements thereof, substitutions therefor or additions and accessions
thereto will be, free and clear of liens, encumbrances or security
interests of others, except for Permitted Encumbrances.
(f) Company warrants that (i) its name, identity, and principal place
of business are as referred to in Article X hereof; (ii) it has been using
or operating under said name and identity without change for a continuous
period of more than four (4) months prior to the date hereof; and (iii) the
location of all tangible Collateral will be the real estate constituting
the Project Sites to be acquired with the proceeds the Series 1996 Bonds.
Company covenants and agrees that it will furnish the Issuer and Trustee
with notice of any change in the matters addressed by clauses (i) or (iii)
of this Section 3.28(f) at least thirty (30) days prior to the effective
date of any such change, and Company will promptly execute any financing
statement(s) or other instrument(s) deemed necessary by the Issuer or
Trustee to prevent any filed financing statement from becoming misleading
or losing its perfected status.
(g) Some of the items comprising the Collateral are goods that are or
are to become, fixtures related to the real estate described on Exhibit A
attached hereto and it is intended that, as to those goods, this Loan
Agreement shall be effective as a financing statement filed as a fixture
filing from the date of its filing for record in the real estate records of
the county in which the real estate is located. The information in this
Section 3.28(g) is provided in order that this Loan Agreement shall comply
with the requirements of the Uniform Commercial Code as enacted in the
State of Indiana, for mortgage instruments to be filed as financing
statements. The Company is the "Debtor" and its name is as set forth in the
definition thereof contained herein. The "Secured Party" is the Issuer with
the Trustee being its assignee, and their respective names are as set forth
in the definitions thereof contained herein. The mailing address of the
Company, location of the chief executive offices of the Company and mailing
address of the Trustee and Issuer from which information concerning the
security interest granted herein may be obtained is set forth in Article X
hereof. A statement indicating the types or describing the items
comprising the Collateral is set forth hereinabove.
Section 3.29. BALANCE IN THE DEBT SERVICE RESERVE FUND. Except when the
Company's obligations under this Loan Agreement have been released pursuant to
Section 10.8 hereof, at any time that the Debt Service Reserve Fund is less than
Fully Funded and the Company has received notice of such deficiency from the
Trustee pursuant to Section 4.5 or 4.6 of the Indenture, the Company immediately
shall deposit moneys with the Trustee for deposit in the Debt Service Reserve
Fund as required under the Indenture so that it is Fully Funded.
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Section 3.30. REIMBURSEMENT OF ISSUER. Upon demand, the Company shall
deposit money with the Trustee to reimburse the Issuer for (a) any deposits made
to the Debt Service Reserve Fund by the Issuer or the State, from whatever
source, in order to maintain the Debt Service Reserve Fund as Fully Funded,
except when the Company's obligations under this Loan Agreement have been
released pursuant to Section 10.8 hereof; and (b)all costs and expenses
(including attorneys' fees and expenses and court costs) incurred by the Issuer
or the State to enforce the obligations of the Company under this Loan
Agreement. In addition, the Company shall pay interest at the Default Rate on
the amounts owed under the preceding sentence from the date of demand until such
amounts are paid to the Issuer.
Section 3.31. MAINTENANCE OF LICENSES AND PERMITS. The Company shall
maintain all material licenses, permits and all related or other material
agreements necessary for the Company to operate the Project and perform the IDEM
Contract. The Company will at all times comply with any and all governmental
authority that may at any time have jurisdiction or power to regulate, license,
or grant permits in respect of the facilities or activities of the Company,
whether such regulations, rules, or requirements presently exist, or are
modified, promulgated, or implemented after the date hereof, if the failure to
comply might have or result in a material, adverse impact on the Company's
ability to perform its obligations under the IDBM Contract or this Loan
Agreement.
Section 3.32. NOTICES OF DISPUTES, DEFAULTS AND OTHER MATTERS. The
Company shall promptly give written notice to the Issuer and the Original
Purchaser of:
(a) Except when the Company is a reporting company under the 1934
Act, any citation, order to show cause, or other legal process or order
that could have a material adverse effect on the Company, directing the
Company to become a party to or to appear at any proceeding or hearing by
or before any governmental authority that has granted to the Company a
material license, contract, certificate of compliance or permit, and
include with such notice a copy of any such citation, order to show cause,
or other legal process or order;
(b) Any (i) refusal or failure of any governmental authority to renew
or extend any material license or governmental approval necessary to
perform the IDEM Contract; or (ii) proposed or actual revocation,
termination, or modification (whether favorable or adverse) thereof; or
(iii) dispute or other action with respect thereto; or (iv) denial or
threatened denial or revocation or modification by any governmental
authority of any material license or governmental approval necessary to
perform the IDEM Contract; or (v) notice from any governmental authority of
the imposition of any material fumes or penalties or forfeitures with
respect to the IDEM Contract; or (vi) threat or notice with respect to any
of the foregoing or with respect to any proceeding or hearing that might
result in any of the foregoing;
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(c) Any dispute concerning, or any threatened nonrenewal or
modification of any material contract, license agreement, lease, or other
agreement that is part of the Mortgaged Property to which the Company is a
party;
(d) Any actions, proceedings, or claims of which the Company may have
notice, that may be commenced or asserted against the Company in which the
amount involved is (i) $500,000 or more, and is not fully covered by
insurance, which arise from the Company's performance of its obligations
under the IDEM Contract, or (ii) if not solely a claim for monetary
damages, could, if adversely determined, have a material adverse effect on
the Company or its ability to perform the IDEM Contract;
(e) The occurrence of any default or event of default; or
(f) Any notice of material breach or termination received by the
Company from IDEM under the IDEM Contract.
Section 3.33. HAZARDOUS SUBSTANCES. The Company covenants and agrees that:
(a) Company shall not permit the Mortgaged Property or any portion
thereof to be a site for the storage, use, generation, manufacture,
disposal, or transportation of Hazardous Substances, except as necessary
for the construction and operation of the Project in substantial compliance
with all applicable laws governing Hazardous Substances and in the ordinary
course of the Company's performance of the IDEM Contract.
(b) Company shall not permit any Hazardous Substances to be disposed
of off the Mortgaged Property other than in properly licensed disposal
sites.
(c) Company, at its sole expense, will keep and maintain the
Mortgaged Property and each portion thereof in substantial compliance with
and shall not cause or permit the Mortgaged Property or any portion thereof
to be in violation in any material respect of any laws governing Hazardous
Substances.
(d) Company will, within five (5) Business Days, advise the Issuer
and the Original Purchaser in writing of any Release of Hazardous
Substances where there is a reasonable possibility that such Release could
result in remediation and other expenditures in excess of $50,000 and of
any claim regarding Hazardous Substances.
(e) Company agrees to indemnify and hold harmless the Issuer, the
Trustee, and the Original Purchaser from and against any and all claims,
demands, damages, losses, liens, liabilities, penalties, fines, lawsuits,
and other proceedings and costs and expenses (including reasonable
attorneys' fees), arising directly or indirectly from or out of, or in any
way connected to (i) the accuracy or accuracy of the representations made
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pursuant to Section 2.2(i) or any breach by the Company of its covenants in
this Section 3.33, (ii) any Release of Hazardous Substances and any
activities on the Mortgaged Property during the Company's ownership,
possession or control of the Mortgaged Property which directly or
indirectly results in the Mortgaged Property or any other property being
contaminated with Hazardous Substances, (iii) the discovery of Hazardous
Substances on the Mortgaged Property that were released, discharged or
disposed of during or prior to the Company's ownership, possession, or
control of the Mortgaged Property, (iv) the cleanup of Hazardous Substances
that were released, stored, discharged or disposed of during or prior to
the Company's ownership, possession, or control of the Mortgaged Property,
from the Mortgaged Property; and (v) the discovery of Hazardous Substances
and/or the cleanup of the Hazardous Substances from adjacent or other
property that has become contaminated as a result of any activity on the
Mortgaged Property during or prior to the Company's ownership, possession,
or control of the Mortgaged Property; provided, that the Company shall have
no obligation to indemnify or hold harmless the Issuer, the Trustee or the
Original Purchaser to the extent that any liability covered by this
subsection arises from the storage, use, generation, handling, management,
transportation, release or disposal of Hazardous Substances by the Issuer,
the Trustee or the Original Purchaser, respectively. The indemnification
provided in this subsection shall survive the termination of this Loan
Agreement and the satisfaction of the indebtedness and obligations secured
hereby.
Section 3.34. AMENDMENTS TO IDEM CONTRACT. For so long as the Bonds are
Outstanding, the Company shall not amend, supplement, terminate (except for an
IDEM Termination Event) or otherwise modify the IDEM Contract in any manner that
would reduce the aggregate amount payable to the Company thereunder, or consent
to any such action without the prior written consent of the Original Purchaser,
which consent shall not be unreasonably withheld.
(End of Article III)
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ARTICLE IV.
DAMAGE, CONDEMNATION, AND LOSS OF TITLE
Section 4.1. DAMAGE. The Company agrees to notify the Trustee immediately
(a) of any damage to the Mortgaged Property resulting from fire or other
casualty if such damage causes the Company to be unable to perform its
obligations under the IDEM Contract for a period in excess of thirty (30) days,
or (b) upon obtaining knowledge of the institution of any proceedings for the
condemnation or taking of the Mortgaged Property or any portion thereof for
public or quasi-public use if such condemnation causes the Company to be unable
to perform its obligations under the IDEM Contract for a period in excess of
thirty (30) days.
In the event the Company is obligated to rebuild or replace the Project in
order to perform its obligations under the terms of the IDEM Contract and an
event of default does not exist hereunder, the Company will forthwith use the
Net Proceeds of any insurance or condemnation award to repair, reconstruct,
restore or replace such Mortgaged Property in order to so perform such
obligations.
If the Company is obligated to rebuild or replace the Project in order to
perform its obligations under the terms of the IDEM Contract and an event of
default exists hereunder, the Net Proceeds of any insurance or condemnation
award received by the Company shall be transferred promptly by the Company to
the Trustee and all Net Proceeds shall, at the direction of the Original
Purchaser, either be used to repair, reconstruct, restore or replace such
Mortgaged Property or be deposited in the Redemption Account of the Bond Fund
for the redemption of Bonds in order to effect the prepayment of a portion of
the Note pursuant to Section 5.2 hereof.
If the Company is not obligated to repair, reconstruct, restore or replace
such Mortgaged Property in order to perform its obligations under the IDEM
Contract, the Net Proceeds of any insurance or condemnation award shall be
transferred promptly to the Trustee, and the Trustee shall deposit all Net
Proceeds into the Redemption Account of the Bond Fund for redemption of the
Bonds in order to effect the prepayment of a portion of the Note pursuant to
Section 5.2 hereof.
So long as an event of default does not exist hereunder and the Project is
to be repaired, reconstructed, restored or replaced, any Net Proceeds received
by the Trustee pursuant to Section 3.13 or Section 4.2 hereof shall be released
from time to time by the Trustee to the Company upon the receipt of the written
request of an authorized officer of the Company specifying the expenditures made
or the indebtedness incurred in connection with such repair, reconstruction,
restoration or replacement and stating that such Net Proceeds, together with any
other moneys legally available for such purposes, will be sufficient to complete
such repair, reconstruction, restoration or replacement. In such event, the
Company shall complete the repair, reconstruction, restoration or replacement of
such Mortgaged Property, whether or not
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the Net Proceeds of insurance or
condemnation award received for such purposes are sufficient to pay for the
same.
The Company shall deliver to the Issuer, the Original Purchaser (so long as
the Original Purchaser is the only holder of the Series 1996 Bonds) and the
Trustee, within ninety (90) days after the completion of the repair,
reconstruction, restoration, or replacement of the Project, a restoration
certificate of its authorized Company representative stating that (i) the
Project has been repaired, reconstructed, restored, or replaced, and (ii) he or
she has made such investigation of such sources of information as are deemed to
be necessary, including pertinent records of the Company, and is of the opinion
that the repair, reconstruction, restoration, or replacement of the Project has
been fully paid for and that no claim or claims exist against the Issuer or the
Company or against the properties of either out of which a lien based on
furnishing labor or material for such repair, reconstruction, restoration, or
replacement of the Project, exists or might ripen; provided, however, there may
be excepted from the foregoing statement any claim or claims or liens
constituting Permitted Encumbrances. In the event such restoration certificate
shall state that there is a claim or claims in controversy which create or might
ripen into a lien, there shall be filed with the Issuer and the Trustee a
certificate of the Company when and as such claim or claims shall have been
fully paid or otherwise satisfied or released.
Section 4.2. OTHER PROVISIONS WITH RESPECT TO NET PROCEEDS. The Company
shall cause the Net Proceeds of any insurance or condemnation award in excess of
$100,000, or the entire amount thereof if an event of default exists hereunder,
to be paid to the Trustee to be deposited in a special trust account of the
Construction Fund and shall be invested or reinvested in Qualified Investments
subject to the Company's right to receive the same pursuant to Section 4.1
hereof.
Section 4.3. INSUFFICIENCY OF NET PROCEEDS. If the Company is obligated
to use such Net Proceeds for any repair, reconstruction, restoration, or
replacement of the Project pursuant to Section 4. 1 hereof, and such Net
Proceeds are insufficient to pay in full the cost of any repair, reconstruction,
restoration, or replacement referred to in Section 4. 1 hereof, Company will
nonetheless complete the work and will pay any cost in excess of the amount of
the Net Proceeds held by the Trustee.
Section 4.4. EXCESS NET PROCEEDS. After completion of the repair,
reconstruction, restoration, or replacement of the Project and delivery by the
Company of the restoration certificate pursuant to Section 4. 1 hereof, the
Trustee shall transfer all moneys then in the special trust account of the
Construction Fund to the Redemption Account for the redemption of Series 1996
Bonds in order to effect a prepayment of the Series 1996 Note pursuant to
Section 5.2 hereof.
(End of Article IV)
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ARTICLE V.
PREPAYMENT OF SERIES 1996 NOTE
Section 5.1. OPTIONAL PREPAYMENT.
(a) Except as described in this Article V, the Series 1996 Note is not
subject to optional prepayment by the Company.
(b) The Series 1996 Note may be prepaid at the option of the Company in
whole or in part at any time at 100% of the principal amount thereof, plus a
premium equal to the Breakage Amount, plus accrued interest to the date of
prepayment.
In order to exercise such option to prepay the Series 1996 Note in whole or
in part, the Company must cause funds to be deposited with the Trustee to pay
the principal of, Breakage Amount, if any, and accrued interest to the
prepayment date on Series 1996 Bonds in the same principal amount as the
principal amount of the Series 1996 Note to be prepaid.
In order to exercise such option to prepay the Note in whole, the Company
must deposit with the Trustee sufficient funds to pay the principal amount
thereof; plus a premium equal to the Breakage Amount and accrued interest on all
outstanding Series 1996 Bonds to the prepayment date.
Section 5.2. MANDATORY PREPAYMENT.
(a) Except as described in this Article V, the Series 1996 Note is not
subject to mandatory prepayment by the Company.
(b) The Series 1996 Note shall be prepaid in the amount of any proceeds
available from the sources described in Sections 3.18, 3.22, 3.23, 3.24, 4.1 and
4.4 hereof at any time at 100% of the principal amount thereof, plus a premium
equal to the Breakage Amount, plus accrued interest to the date of prepayment;
PROVIDED, HOWEVER, that if such deposits are not sufficient to redeem the
minimum denomination of a Bond set forth in Section 5.6 of the Indenture, such
amounts shall be retained in the Redemption Account until sufficient funds are
available.
(c) The Series 1996 Note shall be prepaid not later than one year after
the termination of the IDRM Contract as a result of the breach thereof by the
Company at 100% of the principal amount thereof, plus a premium equal to the
Breakage Amount, plus accrued interest to the date of prepayment.
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In the event of a mandatory prepayment described in Section 5.2(b) or (c), the
Company must deposit with the Trustee sufficient funds to pay the principal of,
Breakage Amount, if any, and any other premium required to be paid in connection
with such redemption, and unpaid and accrued interest to the prepayment date on
Series 1996 Bonds in the same principal amount as the principal amount of the
Series 1996 Note to be prepaid.
Section 5.3. NOTICE OF PREPAYMENT. The Company shall give the Trustee
not less than thirty (30) days prior written notice of any prepayment of the
Series 1996 Note pursuant to Section 5.1 or 5.2 hereof, which notice shall
designate the date of prepayment and the amount thereof, and direct the
redemption of Series 1996 Bonds in the same principal amount as the principal
amount of the Series 1996 Note to be prepaid.
(End of Article V)
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ARTICLE VI.
ACQUISITION OF PROJECT SITES AND EQUIPMENT
Section 6.1. ACQUISITION OF PROJECT SITES AND EQUIPMENT. As Project Sites
and Equipment are acquired with the proceeds of the Series 1996 Bonds, the
Company shall represent and certify in the written requests for disbursements to
the Trustee that (a) the facts and representations set forth in Sections 2.2(d),
2.2(h) and 2.2(i) hereof are true and accurate as of such date of requisition
with respect to such Project Site and that the mortgagee title/policy
requirements of Section 3. 18 hereof are being simultaneously complied with and
(b) the facts and representations set forth in Section 2.2(d) and 2.2(h) hereof
are true and accurate as of such date of requisition with respect to such
Equipment.
Section 6.2. AMENDMENTS TO LOAN AGREEMENT. As a condition to the
disbursement by the Trustee as described in Section 6. 1 above, the Company
shall execute and deliver to the Issuer and the Trustee, for the benefit of the
Issuer and the Trustee, amendment(s) to this Loan Agreement and the Indenture,
thereby subjecting the lien of this Mortgage to the additional Project Sites so
acquired. Such amendment(s) shall be in the form attached hereto as EXHIBITS C
and D and incorporated herein by this reference (individually an "Amendment" and
collectively the "Amendments"). After the execution and delivery thereof, and
subject to the conditions set forth herein, such Amendment or Amendments shall
be recorded in the office of the Recorder of each County where such newly
acquired Project Site(s) is situated.
(End of Article VI)
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ARTICLE VII.
EVENTS OF DEFAULT AND REMEDIES THEREFOR
Section 7.1. EVENTS OF DEFAULT. (a) The occurrence and continuance of any
of the following events shall constitute an "event of default" hereunder:
(i) failure of the Company to pay any installment of interest or
principal, or any premiums on the Note, or any amount payable under Section
3.30, when the same shall become due and payable, whether at maturity or
upon any date fixed for prepayment or by acceleration or otherwise
(including, without limitation, any failure by the Company to effect any
mandatory prepayment under Section 5.2 hereof), and the continuance of the
same for five (5) days: PROVIDED THAT such failure to pay shall not
constitute an event of default hereunder if it occurs and is continuing
only during the period of the sixty (60) days following the exercise by the
Company of its option under Section 10.8 hereof; or
(ii) failure of the Company to perform any other covenant, condition
or provision hereof, and to remedy such default within 30 days after notice
thereof from the Trustee to the Company, unless the Requisite Bondholders
shall have consented thereto; or
(iii) the occurrence of any default by the Company under either of
the Company's Public Debt Instruments which results in the acceleration of
the Company's debt thereunder; or
(iv) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Company in an involuntary
case under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Company
or for any substantial part of its property, or ordering the windup or
liquidation of its affairs; or the filing and pendency for sixty (60) days
without dismissal of a petition initiating an involuntary case under any
other bankruptcy, insolvency or similar law; or
(v) the commencement by the Company of any voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, whether consent by it to an entry to an order for relief in an
involuntary case and under any such law or to the appointment of or the
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or of any
substantial part of its property, or the making of it by any general
assignment for the benefit of creditors, or the failure of the Company
generally to pay its debts as such debts become due, or the taking of
corporate action by the Company in furtherance of any of the foregoing; or
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(vi) any representation, warranty, statement, financial statement or
certificate, made or delivered by the Company to the Issuer, the Trustee,
or the Original Purchaser is not true and correct in any material respect
as of the date when made or reaffirmed; or
(vii) at any time that there are no securities outstanding under
the Public Debt Instruments, the Company permits any uninsured judgment or
monetary penalty rendered against it in any judicial or administrative
proceeding in an amount in excess of $1,500,000 to remain unsatisfied for a
period in excess of 45 days unless such judgment or penalty is being
contested in good faith by appropriate proceedings and unless an
appropriate reserve has been established with respect thereto; or
(viii) at any time that there are no securities outstanding under
the Public Debt Instruments, a payment default, aggregating at least
$500,000 at any one tune, which extends beyond any stated period of grace
applicable thereto, including any extension thereof, under any debt of the
Company or any of its subsidiaries with an aggregate principal amount in
excess of $7,500,000, whether now existing or hereafter created, or failure
to pay such debt for borrowed money at its stated maturity, or any other
default that has resulted in the acceleration of debt for borrowed money of
the Company or any of its subsidiaries with an aggregate principal amount
in excess of $7,500,000; or
(b) During the occurrence and continuance of any event of default
hereunder, the Trustee, as assignee of the Issuer pursuant to the Indenture, on
behalf of any unpaid Bondholders and the Issuer shall have the rights and
remedies set forth in this Article vI', in addition to any other remedies herein
or by law provided. It is agreed that the holders of all of the Bonds
outstanding at any time may direct the Trustee, and the Trustee shall abide by
such direction, with regard to the remedy or remedies to be pursued hereunder or
under the Indenture with respect to an event of default hereunder.
(c) Upon the occurrence of an event of default described in Section 7. l
hereof:
(i) ACCELERATION. The Trustee may, and shall if directed by Requisite
Bondholders, by written notice to the Company, declare the principal of the
Notes and all other obligations of the Company hereunder (if not then due and
payable), and the interest accrued thereon to be due and payable immediately,
and upon any such declaration the same shall become and be immediately due and
payable, anything in the Notes or in this Loan Agreement contained to the
contrary notwithstanding.
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(ii) TRUSTEE MAY ENTER AND TAKE POSSESSION. OPERATE AND APPLY INCOME. The
Trustee, personally or by its agents or attorneys, may to the extent permitted
by law enter into and upon all or any part of the Mortgaged Property and each
and every part thereof, and may exclude the Company, its agents and servants
wholly therefrom; and having and holding the same, may use, operate, manage and
control the Mortgaged Property for any lawful purpose, and upon every such
entry, the Trustee, at the expense of the Company either by purchase, repairs or
construction, may from time to time maintain and restore the Mortgaged Property
whereof it shall become possessed as aforesaid, and may insure and reinsure the
same as may seem to it to be judicious; and likewise, from time to time at the
expense of the Company, the Trustee may make all necessary or proper repairs,
renewals, and replacements, and alterations, additions, betterment and
improvements thereto and thereon as to it may seem judicious; and the Trustee
shall be entitled to collect and receive all earnings, revenues, rents, issues,
profits and income of the same and every part thereof; and alter deducting the
expenses of operations, maintenance, repairs, renewals, replacements,
alterations, additions, betterment and improvements and all payments which may
be made for taxes, assessments, insurance and prior or other proper charges upon
the Mortgaged Property or any part thereof, as well as all advances by the
Trustee and compensation for the services of the Trustee and for all counsel and
agents and clerks and other employees by its property engaged and employed, the
Trustee shall apply the moneys arising as aforesaid as provided in Section 7.6
hereof.
(iii) RIGHT TO BRING SUIT, ETC. The Trustee, with or without entry,
personally or by attorney, may in its discretion, proceed to protect and enforce
its rights by a suit or suits in equity or at law, whether for damages or for
the specific performance of any covenant or agreement contained in the Notes,
this Loan Agreement or in aid of the execution of any power herein granted, or
for any foreclosure hereunder, or for the enforcement of any other appropriate
legal or equitable remedy, as the Trustee shall deem most effectual to protect
and enforce any of its rights or duties hereunder; provided, however that all
costs incurred by the Trustee and the Issuer under this Article shall be paid to
the Issuer and the Trustee by the Company on demand.
Section 7.2. FORECLOSURE AND SALE OF MORTGAGED PROPERTY. During
occurrence and continuance of an event of default the Trustee may, with or
without entry, personally or by attorney, sell, to the extent permitted by law,
to the highest bidder all or any part of the Mortgaged Property and all right,
title, interest, claim and demand therein, and the right of redemption thereof,
in one lot as an entirety, or in separate lots, as the Trustee may elect, and in
one sale or in any number of separate sales held at one time or any number of
times, which such sale shall be made at public auction at such place in the
county in which the Mortgaged Property to be sold is situated and at such time
and upon such terms as may be fixed by the Trustee and briefly specified in the
notice of such sale or sales. Any sale by the Trustee may nevertheless, at its
option, be made at such other place or places, and in such other manner, as may
now or hereafter be authorized by law. In the event of any sale of the Mortgaged
Property, the principal of the Notes and all other obligations of the Company
hereunder, if not previously
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due, immediately thereupon shall become due and payable, anything in the
Notes or this Mortgage to the contrary notwithstanding. The parties expressly
agree that notice sent to the Company five (5) days before any such sale
shall be reasonable notice.
Section 7.3. SALE A BAR. Any sale or sales pursuant to Section 7.2 hereof
shall operate to divest all estate, right, title, interest, claim or demand
whatsoever, whether at law or in equity, of the Company, in and to the premises,
property, privileges and rights so sold, and shall be a perpetual bar both at
law and in equity against the Company, its successors and assigns, and against
any and all persons claiming or who may claim the same, or any part thereof,
from, through or under the Company, its successors or assigns.
Section 7.4. RECEIPT SUFFICIENT DISCHARGE FOR PURCHASER. The receipt of
the Trustee or of the court officer conducting any such sale for the purchase
money paid at any such sale shall be a sufficient discharge therefor to any
purchaser of the property, or any part thereof, sold as aforesaid; and no such
purchaser or his representatives, grantees or assigns, after paying such
purchase money and receiving such a receipt, shall be bound to see to the
application of such purchase money upon or for the purpose of this Loan
Agreement, or shall be answerable in any manner whatsoever for any loss,
misapplication or non-application of any such purchase money or any part
thereof, nor shall any such purchaser be bound to inquire as to the necessity or
expediency of any such sale.
Section 7.5. SALE TO ACCELERATE NOTES. In the event of any sale pursuant
to Section 7.2 hereof, the principal of the Notes and all other obligations of
the Company hereunder, if not previously due, immediately thereupon shall become
due and payable, anything in the Notes or this Loan Agreement to the contrary
notwithstanding.
Section 7.6. APPLICATION OF PROCEEDS OF SALE. The purchase money proceeds
or avails of any such sale, together with any other sums which then may be held
by the Trustee under this Loan Agreement as part of the Mortgaged Property or
the proceeds thereof allocable to the Series 1996 Note, whether under the
provisions of this Article or otherwise, shall be paid to the Trustee, who shall
apply such funds as follows:
FIRST: To the payment of the costs and expenses of such sale,
including reasonable compensation to the Issuer, the Trustee, its or
their agents, attorneys and counsel, and the expenses of any judicial
proceedings wherein the same may be made, and of all expenses,
liabilities and advances made or incurred by the Issuer or the Trustee
as permitted by this Loan Agreement, together with interest on all
advances made by the Trustee, and to the payment of all taxes,
assessments or liens prior to the lien of this Loan Agreement, except
any taxes, assessments, liens, or other charges, subject to which the
property shall have been sold.
SECOND: To the payment of the whole amount then due, owing and
unpaid upon the Notes for principal, interest and premium, if any; and
in case such proceeds shall be insufficient to pay in full the whole
amount so due, owing or unpaid upon the
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Notes, then ratably according to the aggregate of such principal and the
accrued and unpaid interest and premium, if any, without preference or
priority as between principal, interest or premium; such application to
be made upon presentation of the Notes and the notation thereon of the
payment, if partially paid, or the surrender and cancellation thereof,
if fully paid.
THIRD: To payment and satisfaction of the obligations of the
Company under Section 3.30.
FOURTH: To the payment of any other sums required to be paid by
the Company pursuant to any provisions of this Loan Agreement or of the
Notes.
FIFTH: To the payment of the surplus, if any, to the Company or
its successors or assigns, upon the written request of the Company or to
whomsoever may be lawfully entitled to receive the same upon its written
request, or as any court of competent jurisdiction may direct.
Section 7.7. PAYMENT OF DEFAULTED AMOUNTS ON DEMAND OF TRUSTEE. In case
the Company shall:
(i) fail to pay any installment of interest on the Notes when and
as the same shall become due and payable, as therein and herein expressed;
or
(ii) fail to pay the principal of the Notes, when and as the same
shall become due and payable, whether at maturity or upon designation for
prepayment or by declaration, or upon a sale as in Section 7.5 hereof
provided, or otherwise; or
(iii) fail to pay amounts owed to the Issuer under Section 3.30;
then upon written demand of the Trustee the Company will pay to the Trustee the
whole amount which then shall have become due and payable on the Notes for
interest or principal or both, as the case may be, the whole amount then due
under Section 3.30, including interest as provided therein, and in addition
thereto such further amount as shall be sufficient to cover the cost and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses or liabilities incurred by the
Trustee hereunder. The exercise by the Trustee under this Section 7.7 shall not
prevent acceleration of the Notes under Section 7.1.
Section 7.8. TRUSTEE MAY ENFORCE DEMAND. In case the Company shall have
failed to pay such principal and interest and other amounts upon demand, the
Trustee, in its own name, may constitute such actions or proceedings at law or
in equity for the collection of the amounts so due and unpaid, and may prosecute
any such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Company and collect the
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moneys adjudged or decreed to be payable out of the property of the Company
wherever situated, in the manner provided by law.
The Trustee shall, if permitted by law, be entitled to recover judgment as
aforesaid either before or after or during the pendency of any proceedings for
the enforcement of the lien of this Mortgage; and the right of the Trustee, to
recover such judgment shall not be affected by any entry or sale hereunder or by
the exercise of any other right, power or remedy for the enforcement of the
provisions of this Mortgage or the foreclosure of the lien hereof; and in case
of a sale of the Mortgaged Property and of the application of the proceeds of
sale, as in Section 7.6 provided, to the payment of the debt hereby secured, the
Trustee shall be entitled to enforce payment and to receive all amounts then
remaining due and unpaid upon the Notes then outstanding, and shall be entitled
to recover judgment for any portion of the debt remaining unpaid, with interest.
No recovery of any judgment by the Trustee, and no levy of an execution
under any judgment upon the Mortgaged Property or upon any other property, shall
affect the lien of this Mortgage upon the Mortgaged Property or any part
thereof, or any lien, rights, powers or remedies of the Trustee hereunder, but
such lien, rights, powers or remedies of the Trustee shall continue unimpaired
as before.
Any moneys thus collected by the Trustee under this Section shall be
applied by the Trustee as provided in Section 7.6 hereof.
Section 7.9. TRUSTEE ENTITLED TO APPOINTMENT OF RECEIVER. The Company
further covenants that upon the happening of any event of default and thereafter
during the continuance of such event of default unless the same shall have been
waived as hereinbefore provided, the Trustee shall be entitled as a matter of
right if it shall so elect, (i) forthwith and without declaring the principal of
the Notes to be due and payable, or (ii) after declaring the same to be due and
payable, or (iii) upon the filing of an action to foreclose this Mortgage or to
enforce the specific performance hereof or in aid thereof or upon the
commencement of any other judicial proceeding to enforce any right of the
Trustee to the appointment of a receiver or receivers of the Mortgaged Property
and of all the earnings, revenues, rents, issues, profits and income thereof,
with such powers as the court making such appointment shall confer, which may
comprise any or all of the powers which the Trustee is authorized to exercise by
the provisions of Section 7. 1(c)(iii). The Company, if requested so to do by
the Trustee will consent to the appointment of any such receiver as aforesaid.
Section 7.10. REMEDIES CUMULATIVE. Except as provided in Section 7.6
hereof, no remedy herein conferred upon or reserved to the Trustee is intended
to be exclusive of any other remedy or remedies, and each and every such remedy
shall be cumulative, and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.
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Section 7.11. 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 any such right or power, or shall be construed to be a waiver of any such
event of default or an acquiescence therein; and every power and remedy given by
this Loan Agreement to the Trustee may be exercised from time to time and as
often as may be deemed expedient by the Trustee.
Section 7.12. WAIVER OF EXTENSION, APPRAISEMENT OR STAY LAWS. To the
extent permitted by law, the Company will not during the continuance of any
event of default hereunder insist upon, or plead, or in any manner whatever
claim or take any benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
and terms of performance of this Loan Agreement; nor claim, take or insist upon
any benefit or advantage of any law now or thereafter in force providing for the
valuation or appraisement of the Mortgaged Property, or any part thereof, prior
to any sale or sales thereof which may be made pursuant to any provisions herein
contained, or pursuant to the decree, judgment or order of any court of
competent jurisdiction; nor after any such sale or sales, claim or exercise any
right under any statute heretofore or hereafter enacted by the United States of
America or by any state or territory, or otherwise, to redeem the property so
sold or any part thereof; and the Company hereby expressly waives all benefits
or advantage of any such law or laws and covenants not to hinder, delay or
impede the execution of any power herein granted or delegated to the Trustee,
but to suffer and permit the execution of every power as though no such law or
laws had been made or enacted.
Section 7.13. REMEDIES SUBJECT TO PROVISIONS OF LAW. All rights, remedies
and powers provided by this Article may be exercised only to the extent that the
exercise thereof does not violate any applicable provision of law in the
premises, and all the provisions of this Article are intended to be subject to
all applicable mandatory provisions of law which may be controlling in the
premises and to be limited to the extent necessary so that they will not render
this Mortgage invalid or unenforceable under the provisions of any applicable
law.
Section 7.14. REMEDIES UNDER UNIFORM COMMERCIAL CODE. In addition to any
other remedies provided for hereby or by law the Trustee shall have the rights
of a secured party and the Company shall have the rights of a debtor under the
Uniform Commercial Code of Indiana, codified at Indiana Code 26-1 (or any
successor code or statute) with respect to the Collateral upon the occurrence
and continuance of an event of default hereunder, as deemed in Section 7.1
hereof.
(End of Article VII)
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ARTICLE VIII.
IMMUNITY
Section 8.1. IMMUNITY. (a) No covenant or agreement contained in the
Bonds, the Loan Agreement or the Indenture shall be deemed to be a covenant or
agreement of any member, director, officer, agent, attorney or employee of the
Issuer, in his or her individual capacity; neither the members, directors,
officers, agents, attorneys, or employees of the Issuer executing the Bonds
shall be liable personally on the Bonds or be subject to any personal liability
or accountability by reason of the issuance of the Bonds (or failure to issue
such Bonds); and no recourse shall be had for the payment of the principal of,
redemption premium, if any, and interest on any of the Bonds or for any claim
based thereon or upon any obligation, covenant, or agreement contained in the
Bonds, the Indenture, or this Loan Agreement (or any other agreement entered
into by the Issuer with respect thereto) against any past, present, or future
member, director, officer, agent, attorney, or employee of the Issuer (or of any
successor thereto), as such, either directly or through the Issuer or any
successor thereto, under any rule of law or equity, statute or constitution, or
by the enforcement of any assessment or penalty or otherwise, and all such
liability of any such member, director, officer, agent, attorney, or employee,
as such, is hereby expressly waived and released as a condition of and in
consideration for the execution of the Indenture and this Loan Agreement (and
any other agreement entered into by the Issuer with respect thereto) and the
issuance of the Bonds.
(b) No recourse shall be had for the payment of the principal or
prepayment price of, or interest on the Series 1996 Note, or for any claim based
thereon or on this Agreement, against any officer, director or stockholder,
past, present or future, of Company as such, either directly or through Company,
under any constitutional provision, statute or rule of law, or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise.
Section 8.2. LIABILITY OF ISSUER. Any and all obligations of the Issuer
under the Bonds, the Indenture, and this Loan Agreement are special, limited
obligations of the Issuer, payable solely out of the revenues and income derived
under this Loan Agreement and as otherwise provided in the Indenture and this
Loan Agreement. The obligations of the Issuer hereunder shall not be deemed to
constitute an indebtedness or an obligation of the Issuer, the State, or any
political subdivision or taxing authority thereof within the purview of any
constitutional or statutory limitation or provision, a pledge of the faith and
credit or a charge against the general taxing powers, if any, of the Issuer, the
State, or any political subdivision or taxing authority thereof. The Issuer has
no taxing authority.
(End of Article VIII)
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ARTICLE IX.
SUPPLEMENTS AND AMENDMENTS TO THIS Loan Agreement
Section 9.1. SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT. Subject
to the provisions of Article X of the Indenture, the Company and the Issuer may
from time to time enter into such supplements and amendments to this Loan
Agreement as to them may seem necessary or desirable to effectuate the purposes
or intent hereof; provided, however, that for so long as the Original Purchaser
is the sole Bondholder, no amendments or supplements may be made to the Loan
Agreement without the prior written consent of the Original Purchaser.
(End of Article IX)
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ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.1. LOAN AGREEMENT FOR BENEFIT OF PARTIES HERETO. Nothing in
this Loan Agreement, express or implied, is intended or shall be construed to
confer upon, or to give to, any person other than the parties hereto, their
successors and assigns, and the holder of the Notes, any right, remedy or claim
under or by reason of this Loan Agreement or any covenant, condition or
stipulation hereof; and the covenants, stipulations and agreements in this Loan
Agreement contained are and shall be for the sole and exclusive benefit of the
parties hereto, their successors and assigns, the Trustee and the holder of the
Notes.
Section 10.2. SEVERABILITY. In case any one or more of the provisions
contained in this Loan Agreement or in the Notes shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.
Section 10.3. LIMITATION ON INTEREST. No provisions of this Loan
Agreement or of the Notes shall require the payment or permit the collection of
interest in excess of the maximum amount permitted by law. If any excess of
interest in such respect is herein or in the Notes provided for, or shall be
adjudicated to be so provided for herein or in the Notes, neither the Company
nor its successors or assigns shall be obligated to pay such interest in excess
of the maximum amount permitted by law, and the right to demand the payment of
any such excess shall be and hereby is waived, and this provision shall control
any provisions of this Loan Agreement and the Notes inconsistent with this
provision.
Section 10.4. ADDRESSES FOR NOTICE AND DEMANDS. All notices, demands,
certificates or other communications hereunder shall be sufficiently given and
shall be deemed given when mailed by registered or certified mail, postage
prepaid, with proper address as indicated below. The Issuer, the Company, and
the Trustee may, by written notice given by each to the others, designate any
address or addresses to which notices, demands, certificates or other
communications to them shall be sent when required as contemplated by this
Mortgage. Until otherwise provided by the respective parties, all notices,
demands, certificates and communications to each of them shall be addressed as
follows:
To the Issuer: Indiana Development Finance Authority
Attn: Executive Director
One North Capitol, Suite 320
Indianapolis, Indiana 46204
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<PAGE>
To the Company: Envirotest Systems Corp.
Attention: Chief Financial Officer
246 Sobrante Way
Sunnyvale, California 94086
To the Trustee: Old National Trust Company
420 Main Street
P.O. Box 207
Evansville, Indiana 47702
Attention: Corporate Trust Department
Section 10.5. SUCCESSORS AND ASSIGNS. Whenever in this Loan Agreement any
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included and all the covenants, promises and
agreements in this Loon Agreement contained by or on behalf of the Company, or
by or on behalf of the Issuer, shall bind and inure to the benefit of the
respective successors and assigns, whether so expressed or not. Provided,
however, the Company may not assign its rights or obligations under this Loan
Agreement without the consent of the Issuer and the Bondholders, which may be
withheld in their absolute discretion.
Section 10.6. COUNTERPARTS. This Loan Agreement is being executed in any
number of counterparts, each of which is an original and all of which are
identical. Each counterpart of this Loan Agreement is to be deemed an original
hereof and all counterparts collectively are to be deemed but one instrument.
Section 10.7. GOVERNING LAW. It is the intention of the parties hereto
that this Loan Agreement and the rights and obligations of the parties hereunder
and the Notes and the rights and obligations of the parties thereunder, shall be
governed by and construed and enforced in accordance with, the laws of Indiana.
Section 10.8. COMPANY'S OPTION UPON IDEM TERMINATION EVENT. (a) Subject
to satisfaction of the conditions set forth in (b) below, upon the occurrence of
an IDEM Termination Event, the Company shall have an option to transfer and
convey to the Issuer all of its right, title and interest in the Mortgaged
Property in accordance with (c) below, in full satisfaction of its obligations
hereunder as set forth in (d) below. The option granted in the foregoing
sentence shall be exercisable only by giving written notice of such exercise to
the Issuer, the Trustee and the Original Purchaser (if still a Bondholder),
which written notice shall be given (i) not later than fifteen (15) days after
the occurrence of the IDEM Termination Event, if termination occurs pursuant to
Articles XXV or XVI (6)(E) of the IDEM Contract, or (ii) not later than sixty
(60) days after the occurrence of the IDEM Termination Event, if termination
occurs pursuant to Article XXIV(1) of the IDEM Contract.
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<PAGE>
(b) The obligation of the Issuer to consummate the transaction
contemplated by subparagraph (c) below and to release the Company from liability
as provided in subparagraph (d) below shall be subject to full performance by
the Company of the provisions of (c) below and satisfaction of all of the
following conditions:
(i) at the time the IDEM Termination Event occurs, at the time
option is exercised, and at the time of Closing (as deemed below):
(A) there shall be securities outstanding under the Public Debt
Instruments, and the outstanding principal balance of the Note shall
be in excess of $7,500,000; (B) no event of default under Section 7.
1(i) shall have occurred and be continuing;
(ii) at the time of Closing (as deemed below): (A) the Company
shall have fully performed all of its obligations under Sections 3.11,
3.13, 3.15, 3.17, 3.21 and 3.33(e), to the extent performance of such
obligations has become due prior to Closing, and (B) any failure by
the Company to perform its obligations under Sections 3.7, 3.8, 3.9,
3.23 or 3.33(a), (b), and (c), shall have been remedied in the manner
and at the times provided in subsection (b)(iv) below;
(iii) at the time the IDEM Termination Event occurs, the
Company shall not have been notified by IDEM in writing that IDEM is
terminating the IDEM Contract as a result of a breach by the Company
of its obligations under the IDEM Contract; and,
(iv) not later than sixty (60) days after the Company exercises
the option granted herein, the Company shall have provided to the
Issuer such evidence as the Issuer reasonably may require that the
Company has fully performed its obligations under Sections 3.7, 3.8,
3.9, 3.23 and 3.33 (a), (b) and (c). Any default under such Sections
shall be remedied by the Company prior to the time of Closing. In the
event the default cannot be remedied by the payment of cash by the
Company, the Company shall be permitted to remedy such default by
either transferring the portion of the Mortgaged Property with the
unremedied default to the Issuer together with an amount equal to the
diminution in fair market value of such portion of the Mortgaged
Property caused by such default or, at the option of the Issuer, such
Mortgaged Property shall be retained by the Company (free of all liens
created under this Loan Agreement) and the Company shall pay to the
Issuer the fair market value of such property (determined as if such
default had not occurred). At the Closing, the Issuer shall reimburse
the Company for reasonable expenses incurred by the Company in
providing evidence of its performance of its obligations under the
Sections cited above in this subsection (b)(iv), provided that (l) all
costs of such remedies shall be borne by the Company and (2) if the
Closing does not occur as a result of the Company's failure to satisfy
the conditions set forth in this subsection (b) or failure to perform
as contemplated by subsection (c), all such expenses shall be borne by
the Company. Notwithstanding the foregoing, if such conditions are not
satisfied within such 60 day period, the Company may continue to
attempt to satisfy such conditions for an additional 120 days so long
as the Company (1) pays any past due payments on the Note, and
(2) continues to make current payments on the Note as they
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come due, and (3) otherwise complies with the Sections of this Loan
Agreement listed above in this subsection (b)(iv), and (4) continues
to maintain and insure the Mortgaged Property pursuant to Sections
3.11 and 3.13 hereof. The fair market value of the applicable portion
of the Mortgaged Property, or the amount of any diminution in such
fair market value, thereof, as the case may be, shall be determined,
as of the date of the appraisal, by an MAI appraiser with experience
in valuing such types of property reasonably satisfactory to the
Company and the Issuer. All appraisal costs shall be borne by the
Company.
(c) Within fifteen (15) days after the date the conditions set forth in
subsection (b) above have been satisfied, at a closing (the "Closing") to be
held on a date and at a time that is convenient to each of the parties, at the
offices of the Issuer in Indianapolis, Indiana, the Company shall execute,
acknowledge and deliver to the Issuer each of the following, all in form and
substance acceptable to the Issuer, the Trustee and the Original Purchaser (if
still a bondholder):
(i) general warranty deeds (together with appropriate vendors
affidavits) by which the Company shall convey to the Issuer marketable
fee simple title (or assignment of leasehold interest) to the Project
Sites, subject only to Permitted Encumbrances (provided that those
described in clauses (vi) and (vii) of the definition thereof shall be
either discharged or to the extent not dischargeable such encumbrances
shall be insured over pursuant to an owner's policy of title insurance
from an insurance company reasonably satisfactory to the Issuer with
the costs of such policy to be borne by the Company); and
(ii) bills of sale and assignments by which the Company shall
transfer, assign and convey to the Issuer good and merchantable title
(or assignment of leasehold interest) to the Company's interest in all
other of the Mortgaged Property, subject only to Permitted
Encumbrances (provided that those described in clauses (vi) and (vii)
of the definition thereof shall be either discharged or insured in the
manner set forth in (c)(i) above); and
(iii) a transferable, royalty-free, non-exclusive license for
the use of all Equipment-related software in connection with the
performance of the remaining term of the IDEM Contract; and
(iv) such evidence as the Issuer may require that the actions
contemplated by this Section 10.8 have been duly authorized by all
necessary corporate action on the part of the Company; and
(iv) an opinion (in the form of the ABA Third Party Opinion
Accord) of counsel to the Company to the effect that all documents
executed by the Company and delivered to the Trustee at the Closing
have been duly authorized, executed and delivered and are enforceable
against the Company in accordance with their respective terms, and
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that the execution, delivery and performance thereof does not conflict
with or constitute a breach of or default under the Company's
organizational documents, or any agreement, instrument, document,
order, judgment or decree to which it is a party or by which it or its
properties are bound; and
(vi) an indemnification agreement, by which the Company shall
agree to indemnify, defend and hold harmless the Issuer, the Trustee
and the Original Purchaser and their respective members, directors,
officers, agents, attorneys, employees, successors and assigns from
and against any loss, cost, damage, liability, expense (including
attorney's fees), claim, demand or cause of action (including any and
all environmental claims, personal injury and property damage claims)
that (l) arises out of or relates to the operation of the Project or
the operation or ownership of the Mortgaged Property at any time prior
to the Closing, or (2) is incurred as a result of any
misrepresentation or inaccuracy in any document, instrument,
agreement, affidavit, report or certificate executed and/or delivered
by the Company in connection with the transaction contemplated by this
Section 10.8; provided, however, that the foregoing shall not be
deemed to require the Company to indemnify, defend and hold harmless
the Issuer, the Trustee and the Original Purchaser, and their
respective members, directors, officers, agents, attorneys, employees,
successors and assigns from and against any loss, cost, damage,
liability, expense (including attorney's fees), claim, demand, or
cause of action that arises as a consequence of the IDEM Termination
Event itself (other than those items indemnified above) or the
nonpayment of the Bonds.
(d) Upon full performance by the Company of the provisions of (c) above,
the Note, duly cancelled, shall be delivered to the Company and all liability of
the Company to the State, the Issuer, the Trustee and the Original Purchaser
(excluding its liabilities under Section 3.15 and 3.33(e) to the extent such
liability relates to events that occurred prior to the Closing, and under the
indemnification agreement identified in subparagraph (c)(vi) above) hereunder,
under the Indenture, and under the Bond Placement Agreement shall cease and
determine. If the Trustee is then holding reserves established by the Company
pursuant to clauses (vi) or (vii) of the definition of Permitted Encumbrances,
such reserves together with the Company's portion of the Debt Service Reserve
Fund shall be released to the Company.
(e) Any moneys owed to the Company for services rendered under the IDEM
Contract prior to Closing or any claims for compensation or equitable
adjustments the Company has against the State pursuant to the IDEM Contract, at
the time of Closing, shall remain the property of the Company (free and clear of
the lien of this Mortgage) notwithstanding any transfer of the IDEM Contract to
the Issuer or the Trustee pursuant to the provisions hereof and the Indenture.
Section 10.9. ISSUER PROCEDURES. The Issuer agrees that whenever a
consent, waiver or an approval contemplated by the terms hereof is required, the
Issuer may take such action through its Executive Director and other officers,
in consultation with Issuer's counsel if deemed necessary and appropriate by the
Executive Director and such officers. Notwithstanding the
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above provision, the Executive Director and such officers shall not be
precluded from seeking official action by the full membership of the Issuer
with regard to any such consent, waiver or approval.
(End of Article x)
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<PAGE>
IN WITNESS WHEREOF, the Issuer and the Company have caused this Loan
Agreement to be executed in their respective names, and the Issuer and the
Company have caused their corporate seals to be hereunto affixed and attested by
their duly authorized officers, all as of the date First above written.
ENVIROTEST SYSTEMS CORP.
By
--------------------------------------
Name
------------------------------------
Title
-----------------------------------
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INDIANA DEVELOPMENT FINANCE AUTHORITY
By
------------------------------------
William H. King, Vice Chairman
(SEAL)
Attest:
- ----------------------------------
Amy L. Stewart, Executive Director
This instrument prepared by Bruce A. Polizotto, Ice Miller Donadio & Ryan, One
American Square, Box 82001, Indianapolis, Indiana 46282.
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<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this 27th day of June, 1996, before me, a notary public in and for said
county and state, personally appeared F. Robert Miller, the President and Chief
Executive Officer of Envirotest Systems Corp., to me personally known and known
to me to be the same person who executed the within and foregoing instrument,
who, being by me duly sworn, did depose, acknowledge and say: That he is the
President and Chief Executive Officer of Envirotest Systems Corp., the
corporation described in and which executed the foregoing instrument; and that
said instrument was signed and sealed on behalf of the said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 27th
day of June, 1996.
---------------------------------------
(Written Signature)
---------------------------------------
(Printed Signature)
Notary Public
My commission expires: My county of residence:
2/2/99 Hamilton
- ----------------------------------- ---------------------------------------
(Seal)
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<PAGE>
STATE OF INDIANA )
)
) SS:
COUNTY OF MARION )
On this _______ day of ________, 1996, before me, a notary public in and
for said county and state, personally appeared William H. King, to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say: That he is the Vice Chairman of Indiana Development Finance Authority (the
"Issuer"), the body corporate and politic described in and which executed the
foregoing instrument; that he knows the seal of said Issuer; that the seal
affixed to said instrument is the seal of said Issuer; that said instrument was
signed and sealed on behalf of said Issuer; and the said Amy L. Stewart,
Executive Director of the Issuer, acknowledged the execution of said instrument
to be the voluntary act and deed of said Issuer by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of ______, 1996.
---------------------------------------
(Written Signature)
---------------------------------------
(Printed Signature)
Notary Public
My commission expires: My county of residence:
- ---------------------------------- ---------------------------------------
(Seal)
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<PAGE>
EXHIBIT A
THE INDUSTRIAL DEVELOPMENT FACILITIES
DESCRIPTION OF PROJECT
Centralized inspection/maintenance program facilities located on five sites
in Lake County, Indiana, one site in Porter County, Indiana, one site in Clark
County, Indiana, and one site in Floyd County, Indiana, and all machinery,
equipment and fixtures for the inspection and measurement of motor vehicle
emissions necessary for such operation.
EQUIPMENT
All machinery, equipment, Fixtures and tangible personal property at any
time used or intended to be used in connection with the performance of the IDEM
Contract, including generally but not limited to the following:
(a) Dynamometers
(b) Vehicles
(c) Emissions Testing and Analysis Equipment
(d) Personal Computers and Printers
(e) TV Monitors
(f) Miscellaneous Computer Equipment
(g) Office Equipment
(h) Furniture
(i) Shop Equipment and Tools
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PROJECT SITES
The Project Sites shall consist of eight parcels of land, of which five
(which includes one leasehold) are to be located in Lake County, Indiana, one in
Porter County, Indiana, one in Clark County, Indiana, and one in Floyd County,
Indiana, with specific metes and bounds legal descriptions for each to be added
hereto as acquired by the Company.
PERMITTED ENCUMBRANCES
See Schedule II
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EXHIBIT B
ENVIROTEST SYSTEMS CORP.
FIRST MORTGAGE NOTE, SERIES 1996
FOR VALUE RECEIVED, the undersigned, Envirotest Systems Corp. ("Company"),
a corporation organized and existing under the laws of the State of Delaware and
in good standing under the laws of the State of Indiana, hereby promises to pay
to the order of the Indiana Development Finance Authority ("Issuer"), in
immediately available funds, the principal sum of $14,345,000 and interest
thereon, during the term of the Loan Agreement, Mortgage, Security Agreement and
Financing Statement (the "Loan Agreement") dated as of June l, 1996 between
Issuer and Company, commencing on March 31, 1997, and thereafter on a monthly
basis in arrears on the last day of each month, a sum which will equal 1/3rd of
the principal which will be due on the Series 1996 Bonds on each March 1, June
1, September l and December 1 of each year and a sum which will equal 1/3rd of
the interest which will become due on the Series 1996 Bonds on each March l,
June 1, September 1 and December l of each year (as hereinafter deemed), all
subject to the credits described in the Loan Agreement and to the presence of
other available money for such installment in the Bond Fund under the Trust
Indenture (the "Indenture") dated as of June l, 1996 between the Issuer and Old
National Trust Company, as Trustee (the "Trustee"). The Company's payment
obligations hereunder are subject to release therefrom pursuant to the
provisions of Section 10.8 of the Loan Agreement.
Payments of both principal and interest are to be endorsed to the Trustee,
and are to be made by the Trustee for the account of the Issuer pursuant to such
endorsement by monthly depositing such amounts in the Bond Fund from the Revenue
Fund. Such endorsement is to be made as security for the payment of the bonds
designated "Indiana Development Finance Authority Taxable Economic Development
Revenue Bonds, Series 1996 (Envirotest Systems Corp. Project)" (the "Series 1996
Bonds").
This Note is issued pursuant to and secured by the Loan Agreement, and is
entitled to the benefits, and is subject to the conditions thereof. The
obligations of Company to make the payments required hereunder shall be absolute
and unconditional without any defense or right of set-off, counterclaim or
recoupment by reason of any default by Issuer under the Loan Agreement or under
any other agreement between Company and Issuer or out of any indebtedness or
liability at any time owing to the Company by the Issuer or for any other
reason. Reference is hereby made to the Loan Agreement for a description of the
property thereby mortgaged, the nature and extent of the security for such Notes
and the rights of the holder thereof, the Company and the Issuer in respect
thereof, and the provisions for amending the Loan Agreement, to all of which the
holder hereof, by its acceptance hereof, assents.
-62-
<PAGE>
The principal of this Note is subject to prepayment prior to maturity in
the manner stated in the Loan Agreement.
In certain events the principal amount of this Note and a premium amount
determined as set forth in the Loan Agreement and the interest accrued thereon
to the date of prepayment may be prepaid at the option of the Company or shall
be required to be prepaid as provided in the Loan Agreement. In certain events
and in the manner set forth in the Loan Agreement, the Company shall be
obligated to pay additional amounts, including the Breakage Amount or any other
premium required to be paid upon the redemption of any portion of the Series
1996 Bonds.
No recourse shall be had for the payment of the principal or prepayment
price of, or interest on this Note, or for any claim based hereon or on the Loan
Agreement, against any officer, director or stockholder, past, present or
future, of Company as such, either directly or through Company, under any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise.
The Company hereby unconditionally waives diligence, presentment, protest,
notice of dishonor and notice of default of the payment of any amount at any
time payable to the Issuer under or in connection with this Note. All amounts
payable hereunder are payable with reasonable attorneys fees and costs of
collection and without relief from valuation and appraise the laws.
In any case where the date of payment hereunder shall be a Saturday, Sunday
or a legal holiday or a day on which banking institutions are authorized by law
to close, then such payment shall be made on the next succeeding business day
with the same force and effect as if made on the date of payment hereunder.
All terms used in this Note which are deemed in the Loan Agreement shall
have the assigned to them in the Loan Agreement.
-63-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
and attested by its duly authorized officers on this ____ day of June, 1996.
ENVIROTEST SYSTEMS CORP.
By
----------------------------------
(SEAL)
Attest:
- ----------------------------------
-64-
<PAGE>
ENDORSEMENT
Pay, without recourse, to Old National Trust Company, as Trustee under the
Trust Indenture dated as of June 1, 1996, from the undersigned.
INDIANA DEVELOPMENT FINANCE
AUTHORITY
By
----------------------------------
William H. King, Vice Chairman
(SEAL)
Attest:
- ----------------------------------
Amy L. Stewart, Executive Director
-65-
<PAGE>
EXHIBIT C
FORM OF AMENDMENT TO Loan Agreement
AMENDMENT NO. --- TO LOAN AGREEMENT MORTGAGE.
SECURITY AGREEMENT AND FINANCING STATEMENT
THIS AMENDMENT NO. ___TO Loan Agreement, MORTGAGE, SECURITY AGREEMENT AND
FINANCING AGREEMENT, dated as of this ___ day of 199 , is made by and between
ENVIROTEST SYSTEMS CORP., a Delaware corporation (hereinafter referred to as
"Company") and INDIANA DEVELOPMENT FINANCE AUTHORITY, a body corporate and
politic, duly organized and validly existing under the laws of the State of
Indiana (hereinafter referred to as "Issuer").
WITNESSETH THAT:
WHEREAS, the Company has executed and delivered in favor of the Issuer that
certain Loan Agreement, Mortgage, Security Agreement and Financing Statement,
dated as of June 1, 1996, thereby securing, in part, a certain First Mortgage
Note, Series 1996, made by Company in favor of and payable to Issuer, in the
aggregate principal amount of $14,345,000.00 (hereinafter referred to as the
"Loan Agreement"), which Loan Agreement [is attached hereto as EXHIBIT A and
incorporated herein by this reference] or [was recorded as an EXHIBIT A to
Instrument No. __________ recorded on _____________ 199__ in the office of the
Recorder of _______________ County, Indiana]; and
WHEREAS, pursuant to Section 6.1 of the Loan Agreement, as interests in the
Project Sites are acquired by Company with the proceeds of the Series 1996
Bonds, the Company is required to subject such acquired Project Sites to the
lien of the Loan Agreement; and
-66-
<PAGE>
WHEREAS, the Company, contemporaneously herewith, has acquired a Project
Site situated in ________ County, Indiana, such Project Site being more
particularly described on EXHIBIT B attached hereto and incorporated herein by
this reference, and desires to subject such acquired Project Sites to the lien
of the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, and the sum of
Ten Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby mortgages and
warrants to the Issuer all of its right, title and interest in and to the
Project Site described on EXHIBIT B attached hereto and in all supplements and
additions thereto, as more particularly described in the Granting Clauses of the
Loan Agreement; subject, however, to Permitted Encumbrances.
The Company intends that the lien of the Loan Agreement, as supplemented by
this Amendment No. ____, shall attach to and encumber the Project Site situated
in ________ County, Indiana and more particularly described on EXHIBIT B
attached hereto as if the same were originally described on EXHIBIT A attached
to the Loan Agreement.
All terms used herein which begin with the initial letter capitalized shall
have the same meanings herein as assigned to them in the Loan Agreement.
Except as modified herein, all terms and conditions of the Loan Agreement,
[as previously supplemented by Amendment Nos. __, __, and __ thereto,] except as
modified herein, shall remain in full force and effect.
-67-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Amendment No. ___ to be
duly executed and attested by its duly authorized officers as of the day, month
and year first above written.
ENVIROTEST SYSTEMS CORP.
By:
---------------------------------
(signature)
Its:
--------------------------------
(printed name and title)
(SEAL)
ATTEST:
By:
---------------------------------
(signature)
Its:
--------------------------------
(printed name and title)
INDIANA DEVELOPMENT FINANCE
AUTHORITY
By:
---------------------------------
(signature)
Its:
--------------------------------
(printed name and title)
(SEAL)
ATTEST:
By:
---------------------------------
(signature)
Its:
--------------------------------
(printed name and title)
-68-
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this ______ day of _____________, 199__, before me, a Notary Public in
and for said County and State, personally appeared _______________________, the
____________ of Envirotest Systems Corp., to me personally known and known to me
to be the same person who executed the within and foregoing instrument, who,
being by me duly sworn, did depose, acknowledge and say: That he is the
_______________________ of Envirotest Systems Corp., the corporation described
in and which executed the foregoing instrument; and that said instrument was
signed and sealed on behalf of the said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of _____________________ 199 .
------------------------------------
(Written Signature)
------------------------------------
(Printed Signature)
Notary Public
My commission expires: My county of residence:
- ------------------------------------ ------------------------------------
(Seal)
-69-
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this _______ day of____________ 199___, before me, a Notary Public in
and for said County and State, personally appeared , to me personally known and
known to me to be the same person who executed the within and foregoing
instrument, who, being by me duly sworn, did depose, acknowledge and say: That
he is the _____________ of Indiana Development Finance Authority (the "Issuer"),
the body corporate and politic described in and which executed the foregoing
instrument; that he knows the seal of said Issuer; that the seal affixed to said
instrument is the seal of said Issuer; that said instrument was signed and
sealed on behalf of said Issuer; and the said ________________, ______________
of the Issuer, acknowledged the execution of said instrument to be the voluntary
act and deed of said Issuer by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of ____________________,199_____.
------------------------------------
(Written Signature)
------------------------------------
(Printed Signature)
Notary Public
My commission expires: My county of residence:
- ------------------------------------ -------------------------------------
(Seal)
This instrument was prepared by, and after recordation should be returned to,
Bruce A. Pollzotto, Attorney, Ice Miller Donadio & Ryan, One American Square,
Box 82001, Indianapolis, Indiana 46282-0002, telephone (317) 236-2295.
-70-
<PAGE>
EXHIBIT D
FORM OF AMENDMENT
AMENDMENT NO. --- TO TRUST INDENTURE
THIS AMENDMENT NO. ___TO TRUST INDENTURE, dated as of this __ day of
__________ 199_, is made by and between INDIANA DEVELOPMENT FINANCE AUTHORITY, a
body corporate and politic, duly organized and validly existing under the laws
of the State of Indiana (hereinafter referred to as "Issuer"), and OLD NATIONAL
TRUST COMPANY, a chartered corporate trust company (hereinafter referred to as
"Trustee").
WITNESSETH THAT:
WHEREAS, ENVIROTEST SYSTEMS CORP. (the "Company") has executed and
delivered in favor of the Issuer that certain Loan Agreement, Mortgage, Security
Agreement and Financing Statement, dated as of June 1, 1996, thereby securing,
in part, a certain First Mortgage Note, Series 1996, made by Company in favor of
and payable to Issuer, in the aggregate principal amount of $14,345,000.00
(hereinafter referred to as the "Loan Agreement"); and
WHEREAS, by the terms of a Trust Indenture, dated as of June 1, 1996, the
Issuer has agreed to assign its interests in the Mortgaged Property (as deemed
in the Loan Agreement), which Mortgaged Property includes the Project Sites, to
the Trustee for the benefit of the owners of the Series 1996 Bonds (the
"Indenture") which Indenture [is attached hereto as EXHIBIT A and incorporated
herein by this reference] or [was recorded as an EXHIBIT A to Instrument No.
__________ recorded on _____________ 199 in the office of the Recorder of
_______________ County, Indiana]; and
-71-
<PAGE>
WHEREAS, pursuant to Section 6. l of the Loan Agreement, as interests in
the Project Sites are acquired by Company with the proceeds of the Series 1996
Bonds, the Company is required to subject such acquired Project Sites to the
lien of the Loan Agreement; and
WHEREAS, the Issuer is required by the Loan Agreement to assign its
interests in the Project Sites to the Trustee as the Project Sites are acquired
pursuant to the Indenture and any amendments thereto; and
WHEREAS, the Company, contemporaneously herewith, has acquired a Project
Site situated in ________ County, Indiana, such Project Site being more
particularly described on EXHIBIT B attached hereto and incorporated herein by
this reference and has subjected such Project Sites to the lien of the Loan
Agreement pursuant to an Amendment to the Loan Agreement, and the Issuer now
desires to assign its interests in the lien of the Loan Agreement to the Trustee
pursuant to the Indenture and this Amendment thereto.
NOW, THEREFORE, in consideration of the foregoing premises, and the sum of
Ten Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Issuer hereby assigns, to the
Trustee all of its right, title and interest in and to the Project Site
described on EXHIBIT B attached hereto and in all supplements and additions
thereto, as more particularly described in the Granting Clauses of the
Indenture; subject, however, to Permitted Encumbrances.
The Issuer intends that its interests in the lien of the Loan Agreement be
assigned pursuant to the Indenture, as supplemented by this Amendment No. ____,
and such lien in favor of the Trustee shall attach to and encumber the Project
Site situated in ________ County, Indiana
-72-
<PAGE>
and more particularly described on EXHIBIT B attached hereto as if the same
were originally described on EXHIBIT A attached to the Indenture.
All terms used herein which begin with the initial letter capitalized shall
have the same meanings herein as assigned to them in the Indenture.
Except as modified herein, all terms and conditions of the Indenture, [as
previously supplemented by Amendment Nos. __, __, and __ thereto,] except as
modified herein, shall remain in full force and effect.
-73-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Amendment No. ___ to be duly
executed and attested by its duly authorized officers as of the day, month and
year first above written.
INDIANA DEVELOPMENT FINANCE
AUTHORITY
By:
---------------------------------
(signature)
Its:
--------------------------------
(printed name and title)
(SEAL)
ATTEST:
By:
----------------------------------
(signature)
Its:
--------------------------------
(printed name and title)
OLD NATIONAL TRUST COMPANY
By:
---------------------------------
(signature)
Its:
--------------------------------
(printed name and title)
(SEAL)
ATTEST:
By:
---------------------------------
(signature)
Its:
--------------------------------
(printed name and title)
-74-
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this ______ day of _______________, 199__ before me, a Notary Public in
and for said County and State, personally appeared ________________________, the
of Old National Trust Company, to me personally known and known to me to be the
same person who executed the within and foregoing instrument, who, being by me
duly sworn, did depose, acknowledge and say: That he is the
_______________________ of Old National Trust Company, the corporation described
in and which executed the foregoing instrument; and that said instrument was
signed and sealed on behalf of the said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of ____________________, 199___.
-----------------------------------
(Written Signature)
-----------------------------------
(Printed Signature)
Notary Public
My commission expires: My county of residence:
- ----------------------------------- -----------------------------------
(Seal)
-75-
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this _______ day of ___________________, 199__, before me, a Notary
Public in and for said County and State, personally appeared __________________,
to me personally known and known to me to be the same person who executed the
within and foregoing instrument, who, being by me duly sworn, did depose,
acknowledge and say: That he is the ___________ of Indiana Development Finance
Authority (the "Issuer"), the body corporate and politic described in and which
executed the foregoing instrument; that he knows the seal of said Issuer; that
the seal affixed to said instrument is the seal of said Issuer; that said
instrument was signed and sealed on behalf of said Issuer; and the said
_______________, _____________ of the Issuer, acknowledged the execution of said
instrument to be the voluntary act and deed of said Issuer by it voluntarily
executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
______ day of _________________, 199___.
-----------------------------------
(Written Signature)
-----------------------------------
(Printed Signature)
Notary Public
My commission expires: My county of residence:
- ----------------------------------- -----------------------------------
(Seal)
This instrument was prepared by, and after recordation should be returned to,
Bruce A. Polizotto, Attorney, Ice Miller Donadio & Ryan, One American Square,
Box 82001, Indianapolis, Indiana 46282-0002, telephone (317-236-2295.
-76-
<PAGE>
SCHEDULE I
DESCRIPTION OF PENDING OR THREATENED LITIGATION
AGAINST COMPANY
Pursuant to Section 2.2 (g) hereof, the Company is unaware of any
threatened actions, suits or proceedings which, individually or in the
aggregate, might result in a material adverse change in the financial condition
of the Company and its subsidiaries taken as a whole or might impair the ability
of the Company to perform its obligations under this Loan Agreement or the
Series 1996 Note.
-77-
<PAGE>
EXHIBIT 11
ENVIROTEST SYSTEMS CORP.
EXHIBIT 11 -STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Earnings (loss) per share are computed using the weighted average number of
shares outstanding plus incremental shares issuable upon exercise of outstanding
options and warrants using the treasury stock method.
<TABLE>
<CAPTION>
Three Nine
Months Ended Months Ended
June 30, June 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCOME (LOSS)
Net Income (loss) $ (6,337) $ (2,409) $ (17,164) $ (4,457)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE (b)
Weighted average number of shares outstanding 16,620 16,134 16,530 16,026
Net effect of dilutive stock options based on
the treasury method using the average
market price of common stock (a) 652 1,159 740 1,282
------------ ------------ ------------ ------------
Common stock and common stock equivalents 17,272 17,293 17,270 17,308
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings (loss) per common and common
equivalent share (b) $ (0.37) $ (0.14) $ (0.99) $ (0.26)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
EARNINGS (LOSS) PER COMMON SHARE -
ASSUMING FULL DILUTION (b)
Weighted average number of shares outstanding 16,620 16,134 16,530 16,026
Net effect of dilutive stock options based on
the treasury method using the end of
period market price of common, if
higher than average (a) 652 1,159 740 1,278
------------ ------------ ------------ ------------
Common stock and common stock equivalents 17,272 17,293 17,270 17,304
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings (loss) per common and common
equivalent share (b) $ (0.37) $ (0.14) $ (0.99) $ (0.26)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Notes:
(a) Common stock equivalents represent stock options and warrants.
(b) These calculations for the three and nine months ended June 30, 1996 are
submitted in accordance with Regulation S-K Item 601(b)(11) although it is
contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-
dilutive result.
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ENVIROTEST SYSTEMS CORP. FORM 10-Q DATED JUNE 30, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 29,845
<SECURITIES> 0
<RECEIVABLES> 49,100
<ALLOWANCES> 429
<INVENTORY> 0
<CURRENT-ASSETS> 87,258
<PP&E> 189,145
<DEPRECIATION> 36,260
<TOTAL-ASSETS> 496,913
<CURRENT-LIABILITIES> 47,651
<BONDS> 383,942
0
0
<COMMON> 166
<OTHER-SE> 20,833
<TOTAL-LIABILITY-AND-EQUITY> 496,913
<SALES> 90,764
<TOTAL-REVENUES> 90,764
<CGS> 75,244
<TOTAL-COSTS> 75,244
<OTHER-EXPENSES> 20,239
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,574
<INCOME-PRETAX> (11,674)
<INCOME-TAX> 5,490
<INCOME-CONTINUING> (17,164)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,164)
<EPS-PRIMARY> (1.04)
<EPS-DILUTED> (1.04)
</TABLE>
