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HomeMy WebLinkAboutCredit Enhancement Agreement for Michigan Road Sewage Works Revenue Bonds of 1990 1�,cto tj).0).k1 (.15. r 12-1 CREDIT ENHANCEMENT AGREEMENT FOR MICHIGAN ROAD SEWAGE WORKS REVENUE BONDS OF 1990 ISSUED BY: CLAY TOWNSHIP REGIONAL WATER DISTRICT CREDIT ENHANCEMENT AGREEMENT THIS AGREEMENT, made and entered into by and between the CLAY TOWNSHIP REGIONAL WASTE DISTRICT, a political subdivision and municipal corporation organized and existing under the laws of the State of Indiana and BRENWICK DEVELOPMENT CO. , INC. ( "Brenwick" ) , MAYFLOWER TRANSIT, INC. ( "Mayflower" ) , BRIDLEBOURNE DEVELOPMENT COMPANY ( "Bridlebourne" ) , R.P. WURSTER IRREVOCABLE TRUST NO. 1 ( "Wurster" ) , REGENCY REALTY CO. ( "Regency" ) , GARRISON ENTERPRISES ( "Garrison" ) , SHADY BROOK DEVELOPMENT CO. ( "Shady Brook" ) , NORTHWEST ASSOCIATES ( "Northwest" ) , 421 DEVELOPMENT CO. ( "421" ) , PEARSON FORD, INC. ( "Pearson Ford" ) , C & C REALTY CO. ( "C&C" ) PETER P. HAWRYLUK ( "Hawryluk" ) , THOMAS HARRIS ( "Harris" ) , ONE TEN ELEVEN ( "One Ten Eleven" ) , JOSEPH C. RIPBERGER ( "Ripberger" ) , JERRY R. JONES ( "Jones" ) , MORRIS L. McREYNOLDS ( "McReynolds" ) , STOOPS FREIGHTLINER, INC. ( "Stoops" ) , and each of the other and additional individuals , firms and entities whose names appear on the attached Schedule A. WITNESSETH THAT: WHEREAS, the District is organized for the purpose of designing, constructing, maintaining, and operating sanitary Credit Enhancement Agreement Page 2 sewer facilities to collect, convey and dispose of wastewater from residences, businesses , industries and institutions located within the boundaries of the District; and WHEREAS, the individuals , firms and entities executing this Agreement as Guarantors and Subscribers (herein referred to as "Guarantors" ) have requested (together with others ) that the District provide sanitary sewage disposal services to a certain geographic area commonly known as the "Michigan Road Corridor" , being generally that property located along and east and west of Michigan Road in southwestern Clay Township, Hamilton County, Indiana and Southeastern Eagle Township, Boone County, Indiana; and WHEREAS, the District in anticipation of providing such service, adopted its "Wastewater Collection and Treatment Development Plan" (the "Development Plan" ) dated May, 1988 following public hearings called for the purpose of securing opinions , comments and suggestions regarding sanitary sewer needs in the "Michigan Road Service Area" (as defined in Section 1 . 1 hereof) ; and WHEREAS , such Development Plan was supplemented by the adoption and approval of a "Master Sewer Plan" for the Boone County Service Area, dated March 13 , 1989 following further public hearings conducted by the District; and WHEREAS , the costs incurred by the District with respect to the "Development Plan" , dated May, 1988 , were paid by the Credit Enhancement Agreement Page 3 District from the proceeds of advances made to the District under certain non-recourse loan agreements (collectively, "Loan Agreement No. 1" ) whereby the District borrowed the aggregate sum of $30 , 000 to pay the costs incurred by the District in connection with the negotiation and execution of the Loan Agreement and the development of a plan to provide sanitary sewer service within the Hamilton County portion of the Michigan Road Service Area; and WHEREAS, the costs incurred by the District with respect to the "Master Sewer Plan" , dated March 13 , 1989 , were paid by the District from the proceeds of advances made to the District under certain non-recourse loan agreements (collectively, "Loan Agreement No. 2" ) whereby the District borrowed the aggregate sum of $56 ,000 to pay the costs incurred by the District in connection with the negotiation and execution of the Loan Agreement and the development of detailed plans to provide sanitary sewer service within the Boone County portion of the Michigan Road Service Area; and WHEREAS, following approval of the Development Plan and Master Sewer Plan, the District authorized Samuel L. Moore & Associates , Inc. to prepare detailed plans and specifications for the sanitary sewers and wastewater treatment facilities needed to initially serve the Michigan Road Service Area; and WHEREAS, the costs incurred by the District with respect to the preparation of detailed plans and specifications were paid by Ctedit Enhancement Agreement Page 4 the District from the proceeds of advances made to the District under certain non-recourse loan agreements (collectively, "Loan Agreement No. 3" ) whereby the District borrowed the aggregate sum of $250 ,000 to pay for substantially all of the engineering and legal expenses necessary to carry the Project forward to a point where the District could receive construction bids for the Improvements . WHEREAS , the District desires to provide sanitary sewage disposal service within the Michigan Road Service Area in accordance with the approved plans but does not have funds available to implement such plans unless owners and developers of real estate within the Michigan Road Service Area provide approximately one-half (1/2) of the funds , and provide credit enhancement to enable the District to issue and sell revenue bonds to obtain the balance of the funds , required to implement such plans; and WHEREAS , all owners and developers of real estate within the Michigan Road Service Area have been given notice and the opportunity to provide a pro rata portion of such funds and such credit enhancement; and WHEREAS , the Guarantors constitute all of the owners and developers who have agreed on a timely basis to provide the funds and credit enhancement necessary to permit the District to proceed to construct and install the Improvements in accordance with detailed plans and specifications as described in Article I Credit Enhancement Agreement Page 5 hereof in order . that sewage service can be made initially available on a reasonable basis within the Michigan Road Service Area; and WHEREAS, the District is willing to proceed with the construction and installation of such facilities upon the terms and conditions hereinafter set forth; and WHEREAS, the funds borrowed under Loan Agreement No. 1 , Loan Agreement No. 2, and Loan Agreement No. 3 , together with interest as stated therein are to be repaid from the proceeds of the sale of the Bonds (as defined in Section 4 . 1 hereof) to be issued and sold in accordance with Article V of this Agreement; and NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree that: Article I . The Project. 1 . 1 In order to make sewage disposal service initially • available within the Michigan Road Service Area, being that area shown on Map No. 1 attached as Exhibit "A" to this Agreement, the District shall: (a) construct and install a 0 . 350 MGD wastewater treatment facility consisting of an oxidation ditch, two clarifiers , a sludge return structure, a sludge holding tank, sludge drying beds, a control building, chemical feed facilities , and ultraviolet disinfection system and miscellaneous piping, all in accordance with detailed plans Credit Enhancement Agreement Page 6 and specifications certified July 12 , 1989 , by the District' s consulting engineering, Samuel L. Moore & Associates, Inc. (b) construct and install sanitary sewers and related improvements consisting of 23 ,963 lineal feet of 8 , 10 , 12 and 18 inch collection sewers , 6 ,201 lineal feet of 24 inch effluent sewer, 7 ,253 lineal feet of 8 and 14 inch force main, and two lift stations , all in accordance with detailed plans and specifications certified July 12 , 1989 , by the District' s consulting engineer, Samuel L. Moore & Associates , Inc. 1 . 2 The design, construction and installation of the facilities described in paragraph 1 .1 are hereafter referred to as the "Project" and the sewage facilities to be installed are hereafter referred to as the "Improvements" . 1 . 3 The parties recognize the mutual benefits to be derived from the prompt completion of construction of the Improvements . Accordingly, the District shall use its best efforts to commence construction on or before March 13 , 1990 , and to complete the construction and installation within 12 months from commencement of work . The District shall not be obligated, however, to allow any property owner or developer to connect to or otherwise utilize the sewer system constructed if the Board reasonably determines that such connection or use would create an adverse impact on the construction, installation and/or testing of such sewer system. Credit Enhancement Agreement Page 7 Article II . Project Costs . 2 . 1 The costs of the Project and Improvements ( "Project Costs" ) shall consist of: (a) the amounts paid or incurred by the District to Samuel L. Moore & Associates , Inc. , Campbell Kyle Proffitt, and H.J. Umbaugh & Associates for services and advancements rendered in connection with the negotiations leading to the execution of the Loan Agreements referenced in the recitals hereto, the negotiations leading to the execution of this Agreement, the development of the Development Plan and Master Sewer Plan, including preparing and obtaining regulatory approval of the construction and installation of the Improvements necessary in order to initially provide sewage disposal service to the Michigan Road Service Area, and the services rendered in connection with completing the financing of the Project, (b) the amounts paid or incurred by the District to Samuel L. Moore & Associates for services rendered and advancements made in connection with the design of the Improvements to be installed within the Michigan Road 4 Service Area, the preparation of the plans and specifications for said Improvements , and the supervision and inspection of the installation of said Improvements . (c) the actual costs incurred by the District in installing the Improvements including amounts paid to Credit Enhancement Agreement Page 8 contractors and subcontractors selected by the District to install said Improvements and the amounts paid by the District to obtain easements in or fee simple title to real estate within which or on which said Improvements will be installed, including all legal and related costs for condemnation proceedings brought on behalf of the District, (d) the actual costs incurred by the District in connection with the issuance and sale of the Bonds , including, without limitation, the fees charged by Ice Miller Donadio & Ryan for services rendered and advancements made as bond counsel, (e) the actual costs incurred by the District in connection with the adoption of resolutions and ordinances required for the District to provide sewage disposal service to the Michigan Road Service Area in accordance with this Agreement, including without limitation, the costs incurred in connection with the preparation of a User Rate Study, ( f) the capitalized interest which, for purposes of this Agreement, shall be $90 , 000 and will be deposited with the Trustee (defined in Section 6 . 1 ) , together with and in addition to the Debt Service Reserve deposit described in (g) below. (g) the amount needed to initially fund the Debt Service Reserve Account as described in Section 6 . 1 hereof, (h) the actual amounts charged the Guarantors by the District to the law firm of BOSE MCKINNEY & EVANS and PARVIN Credit Enhancement Agreement Page 9 PRICE, Esquire, for their services rendered and advancements made on behalf of the Guarantors in connection with the negotiations leading to and the preparation of this Agreement and the issuance and sale of the Bonds, provided, however, that the amount of such costs included in the Project Costs shall not exceed the sum of $50 ,000 . 00 (including amounts paid from the proceeds of the Loan Agreements ) in the case of Bose McKinney & Evans and $25 ,000 . 00 (including amounts paid from the proceeds of the Loan Agreements ) in the case of Parvin Price, Esquire, and 2 . 2 The Project Costs shall consist of only those amounts , as listed in Section 2 . 1 , reasonably and necessarily incurred in order initially to render sewage disposal service within the Michigan Road Service Area. 2 . 3 The estimated Project Costs are shown on Exhibit "B" to this Agreement. Article III . Source of Funds for the Project Costs . 3 . 1 It is anticipated that the actual Project Costs will not exceed $5 . 2 million and that such Project Costs shall be paid 4 by the District solely from the proceeds from the issuance and sale of the Bonds and the Guarantor Availability Fees ( as defined in Section 7 . 2 hereof) paid by each Guarantor to the District in accordance with Section 5 . 1 of this Agreement. 3 . 2 It is expressly understood and agreed that the Project contemplated by this Agreement is to be financed and operated Credit Enhancement Agreement Page 10 without using, pledging or committing revenues, loan proceeds or any other funds received by the District for purposes of constructing or operating any sewage collection system that does not utilize any portion of the Improvements . It is expressly understood and agreed that the Bonds shall be payable solely from the pledged revenues generated from persons utilizing the Project and the Guarantor' s LOC' s . (as defined in Section 5 . 1 hereof) . Article IV. Michigan Road Revenue Bonds . 4 . 1 In order to obtain funds to pay the portion of the Project Costs not covered by the Guarantor Availability Fees paid in accordance with Section 5 .1 of this Agreement, the District shall issue and sell Michigan Road Sewage Works Revenue Bonds of 1990 (the "Bonds" ) in accordance with I .C. 13-3-2 . 4 . 2 Unless otherwise agreed to by the Guarantors , the principal amount of the Bonds shall be $2 . 65 Million and shall be sold in accordance with terms set forth in the District' s Official Bond Sale Notice which is attached hereto and marked as 4 Exhibit "C" . The parties acknowledge and agree, however, that as security for the repayment of the Bonds that the Letter of Credit referenced in such Notice shall include the several Guarantor LOC' s in the aggregate principal amount of the Bonds and that the District is authorized to make such modifications in the terms of the Bond Sale to eliminate the need to supply a Master Letter of Credit to the Trustee. Credit Enhancement Agreement Page 11 4 . 3 It is expressly understood and agreed that the Bonds shall contain a statement on their face that the District is obligated to pay the interest and principal thereon solely from (a) Availability Fees (as defined in Section 7 .2) , except Phase II Availability Fees (as defined in Section 6 .6 ) to the extent required to be used as contemplated by Section 6 . 10 to pay certain reimbursements to the Phase II Guarantors, (b) Interceptor Charges (as defined in Section 7 . 3 ) , except Phase II Interceptor Charges (as defined in Section 6 . 6 ) to the extent required to be used as contemplated by Section 6 . 10 to pay certain reimbursements to the Phase II Guarantors and except Interceptor Charges collected by the District in respect of real estate located in any Future Service Area that have been appropriated for specific sewer extension projects , and (c) Net Revenues as defined in the Bond Ordinance to be adopted by the District under the terms and provisions of Article VI hereof. As used herein, "Future Service Area" shall mean any area connected to or using the Improvements located outside the Phase I and 0 Phase II service areas depicted on Exhibit A attached hereto. ARTICLE V. Credit Enhancement. 5 . 1 Each Guarantor has agreed to pay and, prior to execution of this Agreement, has paid his Guarantor Availability Fee to the District, and such funds shall be deposited in a Michigan Road Project Account to be held and administered by the Credit Enhancement Agreement Page 12 District. The amount of the Guarantor Availability Fee for each Guarantor is set forth opposite the Guarantor' s name in Schedule A to this Agreement. In addition, in order to make the Bonds marketable, each Phase I Guarantor ( including Baptist Homes ) shall and does hereby agree to take all appropriate and necessary action to provide to the District prior to the issuance and sale of said Bonds an irrevocable standby letter of credit, in form and substance acceptable to the District and issued by an entity acceptable to the District and the Trustee, payable to the Trustee under the Bond Ordinance securing the Bonds (as hereinafter provided for and defined in Article VI) , in the initial maximum sum equal to the Maximum Guarantee shown on Schedule A for such Guarantor (each such letter of credit and each letter of credit issued in replacement of any such letter of credit in accordance with the Bond Ordinance herein referred to as a "Guarantor LOC" ) , which maximum sum shall be subject to 'reduction as provided in Section 6 . 9 . For purposes of chis Agreement, the sample form of Guarantor LOC attached hereto as Exhibit E, will be acceptable to the District. 5 . 2 Each. Guarantor hereby guarantees , severally and not jointly, the payment of a portion of the principal of the Bonds outstanding from time to time equal to the maximum sum then payable under the Guarantor LOC furnished by such Guarantor, provided that (i) such guarantee shall not be enforceable against such Guarantor until the Trustee shall have submitted a draft to Credit Enhancement Agreement Page 13 the bank issuing the Guarantor LOC of such Guarantor and such draft shall not have been paid in full, (ii) the amount of such Guarantor' s guarantee shall be reduced by the amount paid to the Trustee pursuant to a draw on the Guarantor LOC of such Guarantor, and (iii) upon payment in full of the maximum sum payable under the Guarantor LOC of the Guarantor, the guarantee liability of such Guarantor shall be deemed satisfied in full. The obligation of each Guarantor to furnish his Guarantor LOC to the Trustee as partial security for payment of the Bonds shall be several and not joint. Article VI . Bond Ordinance; Special Accounts . 6 . 1 In connection with the issuance and sale of the Bonds , the District shall execute and adopt a bond ordinance (the "Bond Ordinance" ) , to be administered by Ameritrust National Bank, Central Indiana, as trustee (the "Trustee" ) . Under the terms of the Bond Ordinance the District will pledge as security for the payment of the Bonds : (a) All cash and securities now or hereafter held in the Michigan Road Project Account, the Revenue Fund, Operating Account, Sinking Fund, the Interceptor Fund (except funds held in the Interceptor Fund which have been appropriated for specific sewer extension projects in Future Service Areas as allowed or authorized herein and in the Bond Ordinance) , and the investment earnings thereon and all Credit Enhancement Agreement Page 14 proceeds thereof (except to the extent transferred or disbursed from such funds and accounts from time to time in accordance with the Bond Ordinance) ; (b) All revenues derived by the District, or at any time received, held by or deposited with the District or the Trustee, from any and all of the following described sources of revenue: (1 ) proceeds from the sale of the Bonds; (2) all Availability Fees and Interceptor Charges (except Interceptor Charges appropriated for specific sewer extension projections in Future Service Areas as allowed or authorized herein and in the Bond Ordinance) ; ( 3 ) all draws, advances , payments or other proceeds from the Guarantor' s LOC' s; (4 ) all Net Revenues; and ( 5 ) all proceeds of any and all of the foregoing; and (c) Any monies hereinafter pledged to the Trustee as security to the extent of that pledge. 6 .2 The District agrees to establish and maintain the following funds and accounts for purposes of administering and accounting for the Guarantor Availability Fees , other Availability Fees , Interceptor Charges, Connection Fees , Bond Proceeds , Net Revenues and other funds collected or held by the 4 District: (a) Michigan Road Revenue Fund (the "Revenue Fund" ) into which there shall be deposited upon receipt, all income and revenues derived from users of all or any portion of the Credit Enhancement Agreement Page 15 sewage works, except Guarantor Availability Fees initially deposited either in the Project Account or Interceptor Fund . This fund shall be maintained separate and apart from all other bank accounts of the District. All monies deposited in the Revenue Fund may be invested in accordance with I .C. 5-13 , except as otherwise required to be distributed in accordance with this Agreement and the Bond Ordinance. (b) Michigan Road Project Account to be funded and administered in accordance with Section 6 . 3 hereof. (c) Michigan Road Operating Account to be funded and administered in accordance with Section 6 .4 hereof. (d ) Michigan Road Bond Sinking Fund to be administered by the Trustee in accordance with Section 6 . 5 hereof. (e) Michigan Road Interceptor Fund to be funded and administered in accordance with Section 6 . 6 hereof. 6 . 3 Michigan Road Project Account. The proceeds of the Bonds and the Guarantor Availability Fees in an amount equal to but not greater than $2,550 ,000, less the capitalized interest deposited in the Bond and Interest Account of the Sinking Fund and funds to be deposited in the Debt Service Reserve Account of the Sinking Fund (as defined in Section 6 . 5 ) , shall be deposited in the Michigan Road Project Account to be maintained by the District and kept separate and apart from all other funds of the District and may be invested only in Qualified Investments (as defined in the Bond Ordinance) as permitted by law. The proceeds Credit Enhancement Agreement Page 16 in the Michigan Road Project Account shall be expended only to pay the costs of the Project, repayments to Guarantors owing under any Loan Agreement and the incidental expenses incurred in connection therewith. In the event any funds remain in the Michigan Road Project Account following the payment of all of the Project Costs and repayment of all such loan advances (with interest thereon) , said funds shall be applied by the District in accordance with I.C. 5-1-13 , as amended from time to time, to pay the cost of constructing the Phase II improvements described herein or deposited in the Bond and Interest Account of the Sinking Fund to the extent that such funds remaining in the Michigan Road Project Account are not needed for construction of • Phase II improvements . Interest earnings during construction to the extent not needed to pay engineering and construction costs to complete the Project shall be transferred to the Bond and Interest Account of the Sinking Fund . 6 . 4 Michigan Road Operating Account. The Michigan Road Operating Account (the "Operating Account" ) shall be established to receive all revenues from the Revenue Fund except Availability Fees and Interceptor Charges . The monies credited to the Operating Account shall be used for the payment of reasonable and proper operation, repair and maintenance expenses of the Project as more fully set forth in Section 7 (B) of the Bond Ordinance. On or before April 1 of each year, any balance in the Operating Account in excess of one-fifth ( 1/5 ) of the estimated expenses of Credit Enhancement Agreement Page 17 operation, repair and maintenance including costs for necessary replacements and improvements to be incurred for the then current calendar year shall be paid to the Trustee and transferred to the Sinking Fund and used for the payment of principal of or interest on the Bonds . The Operating Account shall be maintained by the District and kept separate and apart from all other funds of the District. In addition to the April 1 payment of the excess balance in the Operating Account as provided for herein, the District shall be required to remit such excess funds to the Trustee at any time pursuant to Section 6 . 7 hereof, to the extent necessary to insure that there are adequate funds in the Debt Service Reserve Account of the Sinking Fund . 6 . 5 Michigan Road Bond Sinking Fund . The Bond Ordinance shall create a Michigan Road Bond Sinking Fund (the "Sinking Fund" ) to be maintained and administered by the Trustee. The Sinking Fund shall consist of two separate accounts , the "Bond and Interest Account" and the "Debt Service Reserve Account. " In addition to the revenues transferred from the Operating Account to the Sinking Fund as provided in Section 6 .4 , the District agrees to pay over to the Trustee from the Revenue Fund in a timely manner the Availability Fees and the Interceptor Charges (except ( i) Interceptor Charges collected by the District in respect of real property located in any Future Service Area ( ii) Phase II Guarantor Interceptor Charges (as defined in Section 6 . 10) , appropriated for the Phase II Sewer Project and `Credit Enhancement Agreement Page 18 (iii ) Phase II Availability Fees and Phase II Interceptor Charges (each, as defined in Section 6 . 6 ) required to make the reimbursements described in Section 6 . 10) , and the Trustee shall credit such amounts to the Bond and Interest Account or Debt Service Account of the Sinking Fund as specified in the Bond Ordinance. On each February 1 while the Bonds are outstanding, the amount remaining in the Bond and Interest Account of the Sinking Fund after payment of scheduled debt service on the Bonds , replenishing the Debt Service Reserve Account and fees of the Trustee and fiscal agent, due on or before such date, shall be used to redeem Bonds in accordance with Section 3 (B) of the . Bond Ordinance. 6 . 6 Michigan Road Interceptor Fund . There shall be created the Michigan Road Interceptor Fund into which there shall be deposited ( i) any Guarantor Availability Fees which are available on the date of delivery of the Bonds in excess of $2,550,000; (ii) all Interceptor Charges collected from any Future Service Area; ( iii) all Phase II Guarantor Interceptor Charges , and (iv) until reimbursements to the Phase II Guarantors contemplated by Section 6 . 10 are paid or deemed paid in full, all Availability Fees collected from Phase II (the "Phase II Availability Fees" ) and all Interceptor Charges collected from Phase II (the "Phase II Interceptor Charges" ) . Said fund shall be first used for the purposes of initially constructing and installing the Initial Phase II Improvements as defined in Section 6 . 10, next used to the Credit Enhancement Agreement Page 19 extent required to pay reimbursements to the Phase II Guarantors as contemplated by Section 6 .10, in the Phase II Service Area and later for the purposes of constructing and installing local sewers or additional sewer facilities approved by the District. The District and the Guarantors agree that the funds initially placed in the Michigan Road Interceptor Fund up to the amount necessary to pay the cost of constructing and installing the Initial Phase II Improvements shall be regarded under this Agreement and the Bond Ordinance as appropriated for such purpose, and that until the reimbursements to the Phase II Guarantors contemplated by Section 6 . 10 are paid or deemed paid in full, the Phase II Availability Fees and Phase II Interceptor • Charges placed in the Michigan Road Interceptor Fund shall be regarded under this Agreement and the Bond Ordinance as appropriated to make such reimbursements . The District agrees to commence and complete construction and installation of the Phase II Sewer Project as soon as practicable after the Michigan Road Interceptor Fund contains monies sufficient to pay the cost thereof. Monies in the Interceptor Fund not appropriated for specific sewer extension projects shall be transferred to the Sinking Fund if necessary to prevent a default in the paymeht of principal and/or interest on the then outstanding Bonds or , if necessary, to eliminate any deficiencies in credits to or minimum balance in the Debt Service Reserve Account of the Sinking Fund . 6 .7 Sinking Fund . The funds in the Sinking Fund shall be used solely for the payment of the principal and interest on the Credit Enhancement Agreement Page 20 Bonds and, after all of said Bonds have been retired, for the reimbursements due the Guarantors under Article XI of this Agreement. As of the date sixty (60 ) days prior to the initial interest payment date and each succeeding interest payment date, the Trustee shall: (a) determine whether there are sufficient funds in the Debt Service Reserve Account to pay the interest coming due on the outstanding Bonds during the next two interest payment periods , and cover any shortfall in the Debt Service Reserve Account by transfer of funds, if available, from the Revenue Fund , Operating Account,? Bond and Interest Account, or' the Interceptor Fund (to the extent that such fund is holding unappropriated funds ) ; and (b) transfer any funds available in the Debt Service Reserve Account in excess of the amount necessary to pay the interest payments due on the then outstanding Bonds during the succeeding two interest payment periods to the Bond and Interest Account. In the event that immediately following the payment of interest due on the Bonds on an interest payment date, the funds remaining in the Debt Service Reserve Account shall be less than twice the interest payment due on the next interest payment date, the Trustee shall require the District to pay over to the Trustee in the following order of priority, ( i ) any Availability Fees and Interceptor Charges being held by the District which are to be currently transferred to the Trustee; ( ii) any unappropriated funds in the Michigan Road Interceptor Fund , ( iii ) the excess Net Revenues in the Operating Credit Enhancement Agreement Page 21 Account as determined in accordance with Section 6 . 4 , ( iv) the next available Availability Fees and unappropriated Interceptor Charges; and (v) the next available Net Revenues in the Operating Account to the extent necessary to insure that the funds remaining in the Debt Service Reserve Account shall be at least equal to the interest payments due on the next succeeding two interest payment dates . If there are not sufficient funds to transfer, the Trustee shall notify the Guarantors and the District, advising the Guarantors that unless 45 days prior to the next interest payment date, ( i) they agree with the District to the District taking any necessary or appropriate action satisfactory to the District to raise the funds necessary to meet the required balance in the Debt Service Reserve Account or ( ii ) the Guarantors make payments to the Trustee in an aggregate amount sufficient to reduce the principal amount of the Bonds outstanding to an amount such that the funds available in the Debt Service Reserve Account will cover the interest on the Bonds due on the next two interest payment dates, the Trustee shall, no later than thirty ( 30 ) days prior to the next interest payment date, submit pro rata drafts to the banks that have issued the then outstanding Guarantor LOC' s requesting aggregate payments thereunder in an amount equal to the then outstanding principal of the Bonds and , if permitted to do so at that time, redeem said Bonds in accordance with the redemption provisions of the Bond Ordinance. Credit Enhancement Agreement Page 22 6 . 8 Financial Disclosure. The Guarantors shall be entitled to examine the Trustee' s records pertaining to the Sinking Fund , and the District' s records pertaining to the Revenue Fund, Michigan Road Project Account, Operating Account, and the Michigan Road Interceptor Fund , during regular business hours at any time. The pledges of funds and revenues pursuant to the Bond Ordinance shall constitute security interests and, as such, shall be evidenced by the filing of appropriate financing statements in accordance with the Uniform Commercial Code as in effect in Indiana. 6 . 9 Guarantor LOCs . ( a) The maximum sum drawable under each Guarantor LOC shall be reduced if and to the extent necessary to make such maximum sum equal to, as of March 19 , 1991 and as of each March 19th thereafter, the product of (i) the Adjusted Principal Amount as of such date, times ( ii) a fraction having a numerator equal to the Guarantor Percentage specified on Schedule A for the Guarantor furnishing such Guarantor LOC and a denominator equal to the sum of the Guarantor Percentages of all Guarantors whose Guarantor LOCs have not had a draft thereunder submitted by the Trustee to the issuing bank prior to such date. As used herein, "Adjusted Principal Amount" shall mean as of a given date (i ) the principal amount of the Bonds outstanding as of such date, minus ( ii) the principal amount of the Bonds Credit Enhancement Agreement Page 23 guaranteed. by any letter or letters of credit that were not honored prior to such date when a draft was submitted by the Trustee and such principal amount was also not paid prior to such date directly by the Guarantor guaranteeing such principal amount of the Bonds . The maximum sum drawable under a Guarantor LOC shall in no event be subject to reduction after a draw is made for payment of the maximum sum then payable under such Guarantor LOC. Prior to the payment or deemed payment in full of the reimbursements to the Phase II Guarantors as contemplated by Section 6 . 10 , the maximum sums payable under the Guarantor LOC' s by the Phase II Guarantors as contemplated by such Section shall not be subject to reduction as provided in this Subsection, and the Guarantor Percentages of the Phase II Guarantors shall not be included in calculating the sum constituting the denominator of the fraction referenced in the first Clause ( ii) above. Following the date on which such reimbursement is made or deemed made in full to the Phase II Guarantors (the "Final Phase II Reimbursement Date" ) , the maximum sum payable under the outstanding Guarantor LOC' s furnished by the Phase II Guarantors shall be subject to reduction in accordance with this Subsection; provided that the Guarantor Percentage thereafter to be used for each Guarantor for purposes of this Subsection shall be calculated to equal at all times from and after the Final Phase II Reimbursement Credit Enhancement Agreement Page 24 Date the percentage derived by dividing the maximum sum payable under the Guarantor LOC of the Guarantor as of the Final Phase II Reimbursement Date by the aggregate total of the maximum sums payable under all outstanding Guarantor LOC' s furnished by the Guarantors as of the Final Phase II Reimbursement Date, and multiplying such quotient by one hundred percent ( 100% ) . (b) Unless otherwise agreed to by the District each initial Guarantor LOC shall be for a term of not less than two (2) years . Each successive term thereof shall be automatically renewed and extended without amendment or substitution for two ( 2 ) years from the expiration date of the then current term unless at least forty-five (45 ) days prior to the expiration date of the then current term, the Trustee receives by U.S . certified or registered mail, return receipt requested , written notice from the issuing bank that the term of the Guarantor LOC shall not bu so renewed and extended. If the Trustee timely receives such written notice from a bank issuing a Guarantor LOC and the Trustee shall not have received at least thirty ( 30 ) days prior to the then expiration date of such Guarantor LOC a substitute Guarantor LOC accompanied by the written approval thereof by the District and otherwise satisfactory to the Trustee, the Trustee shall timely submit a draft to the issuing bank of such Guarantor LOC requesting payment of an Credit Enhancement Agreement Page 25 amount equal to the then maximum sum payable thereunder. The Trustee shall transfer the amount paid on such draft to the Bond and Interest Account of the Sinking Fund. (c) In the event payment of the Bonds has been accelerated pursuant to Section 16 (B) (1 ) (c) of the Bond Ordinance upon the occurrence of an Event of Default (as defined in the Bond Ordinance) which did not arise by reason of a breach by the District of its representations , warranties or covenants under the Bond Ordinance, the Trustee shall be entitled to submit pro rata drafts to the Banks that have issued the then outstanding Guarantor LOCs requesting aggregate payments thereunder in an amount sufficient to pay in full the then unpaid principal of the Bonds, and the amounts paid on such drafts shall be promptly used to pay such unpaid principal of the Bonds . (d ) In the event that thirty ( 30 ) days prior to the maturity date of the Bonds the funds in the Sinking Fund, after accounting for interest to be paid, are insufficient to pay in full the principal of the Bonds, the Trustee shall, at least ten (10 ) days prior to the maturity date of the Bonds , submit pro rata drafts to the banks that have issued the then outstanding Guarantor LOCs requesting aggregate payments thereunder in an amount sufficient to pay in full the then unpaid principal of the Bonds , and the amounts paid on such drafts shall be promptly used to pay such unpaid principal of the Bonds . 'Credit Enhancement Agreement Page 26 6 . 10 Phase II Sewer Project. (a) Subject to the receipt by the District of sufficient funds from Guarantor Availability Fees, Phase II Guarantor Interceptor Charges , Interceptor Charges from any Future Service Area or any other source not inconsistent with or contrary to the terms of this Agreement (to be deposited in the Michigan Road Interceptor Fund ) , the District agrees to construct or cause to be constructed the initial Phase II sewer project consisting of those improvements described on Exhibit F attached hereto (the "Initial Phase II Improvements" ) . (b) Construction and installation of the Initial Phase II Improvements will be accomplished pursuant to the terms of a Sewer Service Agreement (the "Initial Phase II Agreement" ) , as permitted by Section 9 . 3 hereof, to be executed by the District and each Guarantor executing this Agreement as the owner of real estate located within Phase II (each, a "Phase II Guarantor" ) . At such time as provided in the Initial Phase II Agreement, each Phase II Guarantor shall, in lieu of initially providing a Guarantor LOC, pay to the District Interceptor Charges of $3 , 117 per acre designated on Schedule A for such Guarantor (the "Phase II Guarantor Interceptor Charges" ) which shall be transferred to the Michigan Road Interceptor Fund prior to construction of the Initial Phase II Improvements and shall be deemed Credit Enhancement Agreement Page 27 appropriated for such purpose in accordance with Section 6 . 6 . Notwithstanding the refund of all or any portion of the Phase II Guarantor Interceptor Charges, each Phase II Guarantor shall be deemed to have paid the Interceptor Charges in full regardless of any subsequent increase therein, but only with respect to the acreage designated for each on Schedule A. (c) The Initial Phase II Agreement shall, in addition to requiring payment of Phase II Guarantor Interceptor Charges, require that one or more of the Phase II Guarantors agree to deposit such additional funds as are needed to enable the District to complete the construction and installation of the Initial Phase II Improvements . Such additional payments shall likewise be deposited in the Michigan Road Interceptor Fund and shall be deemed appropriated for the Initial Phase II Improvements . (d) The Phase II Guarantors providing the additional funds needed (as set forth in Subsection (c) above) to complete the construction and installation of the Initial Phase II Improvements shall be entitled as provided in the Initial Phase II Agreement to reimbursement of such funds (on a prorata basis if more than one) from Phase II Availability Fees received by the District, Phase II Interceptor Charges received by the District and unappropriated Interceptor Charges from Future Service Areas paid to the District. Credit Enhancement Agreement Page 28 (e) From and after the reimbursement described in Subsection (d) above is paid in full, without interest, each Phase II Guarantor shall be entitled on a prorata basis as provided in the Initial Phase II Agreement to reimbursement of his or its Phase II Guarantor Interceptor Charges from Phase II Availability Fees , Phase II Interceptor Charges and unappropriated Interceptor Charges from any Future Service Area, subject, however, to the terms of the Initial Phase II Agreement which shall obligate each Phase II Guarantor prior to each reimbursement payment to provide the District and the Trustee with a Guarantor LOC in an amount as specified in such Agreement. ( f) After the reimbursements to the Phase II Guarantors are made or deemed made in full in accordance with the Initial Phase II Agreement, all Phase II Availability Fees and Phase II Interceptor Charges then remaining in the Michigan Road Interceptor Fund or thereafter collected by the District shall be paid to the Trustee in accordance with Section 6 . 5 . Article VII . Rates and Charges . 7 . 1 The District, by ordinance substantially in the form described in the notice attached hereto as Exhibit "G" (the "Rate Ordinance) , shall prescribe rates and charges to be paid by owners of property discharging sanitary sewage, industrial waste, water or other liquids into the Improvements or any extensions of Credit Enhancement Agreement Page 29 the Improvements authorized by the District such that the revenues (other than Availability Fees, Interceptor Charges and Connection Fees) received by the District from said customers under said rates and charges will, to the extent possible based on the best current revenue and cost data available from time to time, equal or exceed the District' s actual operating costs of serving said customer, including a reasonable allowance for replacement of the Improvements installed within the Michigan Road Service Area. Said ordinance shall provide that the user rates for any customer within the Michigan Road Service Area, who, at his or its expense, installs and maintains meters , volumetric measuring devices or any other adequate method of measurement approved by the District (which approval shall not be unreasonably withheld ) for determining the sewage discharge shall be based upon said measured sewage discharge rather than upon the water consumed by said Guarantor or upon any equivalent dwelling unit ( "EDU" ) analysis or calculation. It is agreed that the intial monthly rate per EDU shall be $35 . 00 . 7 . 2 The District, by ordinance, shall establish an availability fee ( "Availability Fee" ) which must be paid to the District prior to the owner, lessee or developer of any real estate, including the Guarantors , being permitted to connect to or receive sewer service through the Improvements or any extension of the Improvements authorized by the District. The Availability Fee shall be initially set at the rate of Three Credit Enhancement Agreement Page 30 Thousand Dollars ( $3 ,000) per acre. In determining the acreage to be served to which the per acre Availability Fee shall be applicable, the District will use the total acreage of the real estate to be served as shown on a certified survey of the proposed residential subdivision (or phase or section thereof) , apartment or condominium complex (or phase or section thereof) , or the site for the commercial, industrial, office or institutional building or the phase or section of any complex of buildings . The Availability Fee paid by each Guarantor prior to the execution of this Agreement in the amount shown on Schedule A attached (the "Guarantor Availability Fee" ) shall constitute payment in full by each Guarantor of the Availability Fee for the Guarantor' s acreage designated on Schedule A regardless of any subsequent increase in the Availability Fee. 7 . 3 The District, by Ordinance, shall establish an interceptor charge ( "Interceptor Charge" ) which must be paid to the District prior to the owner, lessee or developer of any real estate being permitted to connect to or receive sewer service through the Improvements or any extension of the Improvements authorized by the District. The Interceptor Charge shall be initially set at the rate of $3 , 117 per acre. In determining the acreage to be served to which the per acre Interceptor Charge shall be applicable, the District will use the total acreage of the real estate to be served as shown on a certified survey of the proposed residential subdivision (or phase or section Credit Enhancement Agreement Page 31 thereof) , apartment or condominium complex (or phase or such section thereof) , or the site for the commercial, industrial, office or institutional building or the phase or section of any complex of buildings . In consideration for providing his or its Guarantor LOC, each Guarantor (other than Phase II Guarantors paying Phase II Guarantor Interceptor Charges) shall be deemed to have paid the Interceptor Charge in full regardless of any subsequent increase therein, but only with respect to the acreage designated for each on Schedule A. 7 .4 The District, by Ordinance, shall establish a connection fee ( "Connection Fee" ) which must be paid to the District prior to the owner, lessee or developer of any real estate, including the Guarantors , being permitted to connect to or receive sewer service through the Improvements or any extension of the Improvements authorized by the District . The connection fee shall be initially set at the rate of $950 multiplied by the estimated EDU ' s being connected to the system. The estimated number of EDU' s being connected to the system shall be determined by the District based upon the proposed use of the real estate to be served as shown on final plat thereof as approved by the appropriate regulatory authorities , or if said real estate is unplatted, the type and number of units or premises to be placed on said real estate and provided sewer service by the District as certified by the owner, lessee or developer of said real estate to the District. Credit Enhancement Agreement Page 32 The estimated average daily flow in thousands of gallons per day for the real estate to be served by the District shall then be calculated using the number and type of units or premises to be located on the real estate and the applicable Equivalent User Contribution Multiplier set forth in the Rate Ordinance unless the data submitted to the District by the owner, lessee or developer of the real estate provides a more accurate estimation of the average daily flow. Where the estimated average daily flow is to be negotiated between the District and the owner, lessee or developer of the real estate, said negotiated amount shall be based upon data submitted by said owner, lessee or developer concerning actual sewage flow for similar premises . 7 . 5 The Availability Fee and Interceptor Charge per acre and the Connection Fee per EDU imposed by the District under the ordinance adopted pursuant to this Article shall not be less than the amounts shown in Exhibit "D" to this Agreement for the years indicated thereon. The District may impose additional charges for local sewers or off-site main extensions when appropriate and necessary to meet the anticipated needs of the District for additional facilities and treatment capacity to serve future customers . Availability Fees and Interceptor Charges for real estate to be served in the Michigan Road Service Area shall not be increased above those initially set until at least one year after the District commences to provide sewer service within the Michigan Road Service Area. The revenues received by the Credit Enhancement Agreement Page 33 District from the imposition of any additional charges above the Availability Fees, Interceptor Charges and Connection Fees set forth on Exhibit "D" may be retained by the District and used for appropriate purposes specified in ordinances adopting such charges so long as the funds in both the Bond and Interest Account and the Debt Service Reserve Account of the Sinking Fund are maintained at levels required by the Bond Ordinance. In the event that the District receives appropriate notice from the Trustee in accordance with the Bond Ordinance of insufficient monies in the Sinking Fund, the District shall pay over to the Trustee, to the extent possible, an amount from its own accounts and funds on hand which will increase the Sinking Fund to a level • required by the Bond Ordinance. 7 .6 No connection to the Improvements shall be allowed from the Michigan Road Service Area until a permit is obtained under the procedures established by Ordinance No. 6-9-86 and the Availability Fees, Interceptor Charges and Connection Fees all are paid to the District. If the real estate to be served is being developed as a residential subdivision or an apartment/ condominium complex, or a complex of commercial, industrial, office or institutional buildings (or combination thereof) , the Availability Fees and Interceptor Charges shall be paid to the District as of the date construction activities commence for each phase of the development. Connection fees shall be paid prior to such residence, apartment building/condominium building, or Credit Enhancement Agreement Page 34 commercial, industrial, office or institutional building being connected to and receiving service through the Improvements or any extension of the Improvements authorized and by the District. Single phase developments and individual homes shall also be bound by the provisions and procedures established by Ordinance 6-9-86 and all Availability Fees , Interceptor Charges and Connection Fees shall be paid to the District prior to connection to the Improvements or any extension of the Improvements authorized by the District. 7 .7 Notwithstanding anything to the contrary contained herein, it is expressly understood and agreed that the owners of single family residences located within the Michigan Road Service Area which were in existence prior to August 1 , 1988 shall be exempted from the obligation to pay the Interceptor Charges described herein. Article VIII . Use of Frcilities . 8 . 1 Owners of property within the Michigan Road Service Area discharging sanitary sewage, industrial waste, water or other liquids into the Improvements or any extensions of the Improvements authorized by the District, either directly or indirectly, shall, except as otherwise provided in this Agreement, be subject to the same requirements , prescribed in an Ordinance 7-13-87B, regulating the connection to and use of public and private sewers and drains, the installation and 'Credit Enhancement Agreement Page 35 connection of building sewers, and the discharge of waters and wastes into the sewer system of the District and providing penalties for violations thereof as are applicable to the owners of property within the District' s other service areas discharging sanitary sewage, industrial waste, water or other liquids into the District' s sewage collection system, either directly or indirectly. Article IX. Extensions to the Improvements . 9 . 1 The parties hereto agree that the installation of the • Improvements within the Michigan Road Service Area will not make sewer service immediately available to all of the real estate within the Michigan Road Service Area and that the Guarantors and other owners , lessees or developers of real estate within the Michigan Road Service Area will be required to install, at their own expense, sewer facilities, such as mains , lift stations , etc. , to be connected to the Improvements so as to extend sewer service availability to their real estate. 9 . 2 The construction and installation of sewer facilities by any Guarantors or any other owner, lessee or developer of real estate within the Michigan Road Service Area desiring to extend the Improvements in order to make sewer service available to his or its real estate shall be accomplished in a manner consistent with and in compliance with standards and procedures to be adopted by the District. In the event the Guarantor or other Credit Enhancement Agreement Page 36 owner, lessee or developer is unable to obtain easements to install the facilities necessary to extend the Improvements to his or its real estate, the District shall obtain, by purchase or condemnation, easements for those facilities to be installed which will, after installation, be conveyed to the District, provided the District is reimbursed for the amounts incurred by the District in obtaining said easements . 9 . 3 Nothing in this Agreement shall be construed to prohibit or prevent the Guarantors , or any other owner, lessee or developer of real estate within the Michigan Road Service Area from entering into separate agreements with the District relating to the construction and installation of sewer facilities as contemplated under this Article. 9 .4 In the event the Guarantors collectively deposit more than $2 , 550 ,000 in Guarantor Availability Fees with the District, such excess shall be deposited in the District' s Interceptor Fund for purposes of constructing and installing the Initial Phase II Improvements . Article X. Easements . 10 . 1 Each Guarantor shall, if requested to do so by the District, grant to the District, without charge, a nonexclusive easement, in form and substance mutually satisfactory to the District and the Guarantor, granting to the District the right, privilege and authority to erect, construct, install, Credit Enhancement Agreement Page 37 reconstruct, renew, operate, gain access to, maintain, patrol, replace and repair portions of the Improvements upon the real estate owned by said Guarantor. Article XI . Reimbursements to Guarantors . 11 . 1 In partial consideration of the financial risk taken by the Guarantors in assuring that the District will have sufficient revenues to pay the principal and interest on the Bonds, each Guarantor shall be entitled, subject to the limitations set forth in Sections 11 . 2 through 11 . 4 , to: (a) Reimbursement of the actual costs charged the Guarantor by the issuer of his Guarantor LOC, (b) Reimbursement of any amounts drawn against his Guarantor LOC (or paid by the Guarantor pursuant to his guarantee under Section 5 . 2) , and (c) Reimbursement of 20% of the Guarantor Availability Fees paid by the Guarantor. The foregoing amounts to be reimbursed are herein referred to as "Reimbursable Expenses and Costs" . 11 . 2 No reimbursements to the Guarantors shall be made unless and until the Bonds have been retired in full . The obligation of the District to remit Availability Fees , Interceptor Charges collected in Phase I and Phase II of the Michigan Road Service Area, and all Net Revenues to the Trustee shall survive the retirement of Bonds and continue thereafter Credit Enhancement Agreement Page 38 until either (a) all reimbursements authorized by Section 11 . 1 have been made to the Guarantors by the Trustee in accordance with Section 11 .4, or ( 2) the Guarantors agree to the termination of the Bond Ordinance and enter into such supplemental agreements with the District deemed in the best mutual interest of the parties . Notwithstanding the foregoing, ( i) prior to the payment or deemed payment in full of the reimbursements to the Phase II Guarantors as contemplated by Section 20 of the Bond Ordinance, the Phase II Availability Fees and the Phase II Interceptor Charges shall be placed in the Michigan Road Interceptor Fund and used to make such reimbursements and (ii) after such reimbursements are made or deemed made in full, the Phase II Availability Fees and the Phase II Interceptor Charges shall then be paid monthly to the Trustee and deposited in the Michigan Road Guarantors ' Reimbursement Fund as defined in the Bond Ordinance. • 11 . 3 The District shall be required to maintain records showing the date of all payments made by the Guarantors which are eligible for reimbursement under Section 11 . 1 and shall provide copies of such records not less frequently than annually to the Trustee and the Guarantors . For purposes of this Section 11 . 3 , all Guarantor Availability Fees shall be deemed to have been paid on the date of the sale of the Bonds . Reimbursable Expenses and Costs shall be reimbursed under Section 11 . 1 on the basis that the first actually incurred shall be the first to be reimbursed . Reimbursement of amounts reimbursable under Section 11 . 1 and Credit Enhancement Agreement Page 39 actually incurred or considered under this Section 11 . 3 to have been incurred by Guarantors on the same date shall be made on a pro rata basis . 11 .4 Each Guarantor shall provide written notice to the District specifying all Reimbursable Costs and Expenses incurred by the Guarantor, accompanied by an appropriate claim voucher as prescribed by the State Board of Accounts . Guarantors shall not file claims for Reimbursable Expenses and Costs until at least thirty ( 30) days after the sale of the Bonds . Claims may thereafter be submitted at the convenience of the Guarantor, provided, however, that each Guarantor shall, at a minimum, submit a claim on or before each anniversary date of the sale of the Bonds for all Reimbursable Costs and Expenses incurred during said twelve month period for which prior claims were not filed with the District. Prior to taking action on claim submitted by a Guarantor, the Board shall have the right to request additional documentation in support of the claim. Approval of claims submitted by the Guarantors shall not be unreasonably withheld by the Board. In the event the Guarantor and the Board cannot resolve disputed claims , the Guarantor, at his or its option, may either ( i) submit such claim to a court of competent jurisdiction, or ( ii ) require the District to engage in binding arbitration pursuant to the rules of the American Arbitration Association. Credit Enhancement Agreement Page 40 Article XII . Indemnification. 12. 1 Subject to the District' s continuing compliance with the representation made in paragraph 13 . 1 (g) the Guarantors shall be liable for and indemnify, defend and hold harmless the District and its Trustees and officers, agents and employees, against claims , liabilities, damage or loss, including costs , expenses and reasonable attorneys ' fees, in connection with any action, suit or proceeding asserted by any person or persons other than the parties hereto, arising out of or based upon, or seeking to prevent, enjoin or invalidate, or otherwise challenging the existence, creation, consummation, enforcement or exercise of the rights inuring to the benefit of Guarantors under this Agreement. The District agrees that in the event that there is any legal action against ,the District, the Guarantors or both within the scope of this paragraph 12 . 1 , the Guarantors shall have the right to select legal counsel to defend the District or the Guarantors or both in such action. If only the District or its Trustees or officers are named as defendants in said action, the District shall immediately notify the Guarantor of the filing of the action. If a party to such action, the District shall not allow a judgment to be entered against the District or consent to any settlement of such action without the prior written consent of the Guarantors. The liability of each Guarantor for any amounts required to be paid by the Guarantors collectively under this paragraph 12. 1 , including the costs of defending any legal Credit Enhancement Agreement Page 41 action, shall be equal to the amounts paid or the costs incurred by the Guarantors collectively multiplied by the Adjusted Guarantor Percentage specified on Schedule A for such Guarantor. 12 .2 Indemnity by District. Excepting all matters covered by the Guarantor' s indemnity provided for Section 12. 1, the District shall indemnify, defend and hold harmless the Guarantors and their officers, directors, agents and employees, against all claims , liabilities, damage or loss , including costs, expenses and reasonable attorneys ' fees , in connection with any action, suit or proceeding asserted by any third parties arising out of or based upon this Agreement, or seeking to prevent, enjoin or invalidate, or otherwise challenging this Agreement or any action taken or omitted to be taken, or power or authority of the District in respect thereto. Article XIII . Representations of the District. 13 . 1 The District represents and covenants that: (a) The District is a duly organized and validly existing Regional Waste District with full power and authority under I .C. 13-3-2-1 , et. seq. to consummate the transactions contemplated herein; (b) The consummation of the transactions contemplated herein and the performance of this Agreement will not, to best of the District' s knowledge and belief, result in any breach of, or constitute any default under, the District ' s Credit Enhancement Agreement Page 42 charter or. other constituent instruments, any law, regulation or order of a governmental body or court having jurisdiction, any bank loan, credit agreement or either instrument to which the District is a party or by which it may be bound or affected; (c) The Board, prior to adopting any resolution or ordinance or approving or authorizing any forms or documents (such as , but not limited to, the bond documents ) required pursuant to this Agreement, shall allow the Guarantors a reasonable period of time to review the proposed resolutions, ordinances , forms, other documents, and permit the Guarantors to submit written or oral comments thereon and, after receipt of said comments will comply with such reasonable comments and recommendations . (d ) Until the Bonds are fully retired, and all amounts payable to Guarantors under Article XI of this Agreement have been repaid, in full, the District will take no action that would impair the security for repayment thereof under the Bond Ordinance imposed upon those revenues and other funds pledged thereunder in accordance with the terms of the Articles VI and VII hereof; nor will the District issue any bonds, notes or other instruments of indebtedness secured by the revenues from the Michigan Road Service Area. So long as the obligation to reimburse the Phase II Guarantors as contemplated by Section 6 . 10 remains , ' Credit Enhancement Agreement Page 43 outstanding, the District will not issue any bonds , notes or other instruments of indebtedness secured by the Phase II Availability Fees or Phase II Interceptor Charges . (e) Except as otherwise provided for herein or unless the Guarantors agree otherwise, prior to the Guarantors receiving all reimbursements due them under Article XI of this Agreement, the District will not use any Availability Fees, Interceptor Charges or Net Revenues collected by the District for any purpose other than payments to the Trustee for the payment of the principal and interest on the Bonds and the reimbursement of the Guarantors in accordance with Article XI of this Agreement. ( f) Unless mandated by a statute enacted subsequent to the execution of this ,Agreement or a decision of a court of competent jurisdiction, the District will not take any action ( including, but not limited to, repealing, amending or modifying the Bond Ordinance or adopting a new ordinance) which will adversely affect the rights or interests of the Guarantors, their assignees or successors-in-interest under this Agreement; and (g) The District shall take all appropriate and reasonable steps to ensure that it will be able to meet the sewage disposal needs of persons or entities within the Credit Enhancement Agreement Page 44 entire service area of the District as those needs develop, including, but not limited to, taking such steps as are necessary to obtain additional sewage treatment capacity in advance of the actual need for such capacity so that the District will be in a position to provide sewage disposal service when needed to any person or entity within the Michigan Road Service Area. 13 . 2 The representations and covenants made by the District in paragraph 13 . 1 shall survive the execution of this Agreement. Article XIV. Notices . 14 . 1 All notices required or permitted to be given hereunder . shall be in writing and delivered either in person or by certified or registered first-class prepaid mail, return receipt requested, to such party designated to receive such notice. For purposes hereof, all notices to the District shall be sent to "Clay Township Regional Waste District, 10755 N. College Avenue, P.O. Box 40638 , Indianapolis , Indiana 46240-0638 . " 14 . 2 Each Guarantor shall supply the Trustee and the District with a certification of proper name and mailing address for purposes of this Article within fifteen (15 ) days hereof and prior to the sale of the Bonds . 14 . 3 Any notice given in accordance with Section 14 . 1 shall be deemed to have been duly given or delivered on the date the same is personally delivered to the recipient or received by the recipient as evidenced by the return receipt. Credit Enhancement Agreement Page 45 Article XV. Limitation Upon Liability. 15 . 1 Neither this Agreement, nor any of the acts of the parties hereunder, shall be deemed to create a joint venture, partnership or other arrangement by which one party might be deemed to be the agent of or vicariously liable for the acts of any other party, and each other party hereby agrees to indemnify and hold harmless any other party from any loss, damage, or liability of any such other party arising vicariously because of the acts of the party. Article XVI . Representative of the Guarantors . 16 . 1 The Guarantors hereby appoint Philip A. Nicely as to Hamilton County real estate and L. Parvin Price as to Boone County real estate to act as the representative of the Guarantors and confer upon said representatives the power and authority to deliver on their behalf any documents , materials and notices required to be furnished or provided to the District under this agreement. The Guarantors agree that documents, materials and notices delivered by said representative on behalf of the Guarantors shall be binding on all Guarantors and that the District shall be entitled to rely upon said documents , materials and notices signed by said representative as if said documents , materials and notices were signed by all of the Guarantors . 16 . 2 In the event the Guarantors elect a new representative to act on their behalf under this Agreement, they shall provide written notice thereof to the District. 'Credit Enhancement Agreement Page 46 Article XVII . Schedule of Real Estate. 17 .1 Each Guarantor shall provide to the District, within 90 days after the date of the sale of the Bonds, a schedule of all real estate within the Michigan Road Service Area owned or controlled by the Guarantor or its affiliates on the date of the sale of the Bonds. In the event a Guarantor has subscribed for and paid Guarantor Availability Fees for real estate not presently owned or controlled by such Guarantor or its affiliates , such Guarantor shall be entitled, upon acquiring such real estate, to the benefits under this Agreement in respect of such real estate, provided such Guarantor must register all such after acquired real estate within the Michigan Road Service Area within thirty ( 30 ) days of acquisition to avail itself of such benefits in respect of such real estate. In the event a Guarantor now or hereafter owns more real estate than the Guarantor has subscribed for and paid Guarantor Availability Fees , such Guarantor shall be entitled, upon notice to the District, to reallocate the benefits hereunder among such real estate. Article XIII . Action by Guarantors . 18 . 1 In taking any action under this Agreement requiring the approval, consent, authorization or agreement of the Guarantors , each Guarantor shall have the number of votes (whole and fractional) as corresponds to the percentage points (whole Credit Enhancement Agreement Page 47 and fractional) set forth opposite said Guarantor' s name in Schedule A attached as his or its adjusted Guarantor percentage. The Guarantors shall be deemed to have given their approval, consent, authorization or agreement to the proposed action if Guarantors having more than 50.00 votes cast their votes in favor of the proposed action. Article XIX. Miscellaneous . 19 . 1 This Agreement shall at all times be construed and interpreted to be consistent with the rights, powers and duties of the District under the laws of the State of Indiana and the applicable rules and regulations of the United States Environmental Protection Agency. 19 .2 This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors , personal representatives and assigns (to the extent not inconsistent herewith) . 19 . 3 This Agreement shall be governed by the laws of the State of Indiana. 19 .4 No amendment or modification of this Agreement shall be effective unless contained in a written document executed by all of the parties hereto (or their successors , personal representatives or assigns ) . 19 . 5 Failure of any party hereto to insist upon strict performance of the provisions of this Agreement shall not be construed as a waiver of any subsequent default or breach of the same or similar nature. . - Credit Enhancement Agreement Page 48 19 . 6 The parties hereto agree that in the event any provision of this Agreement is declared unlawful or unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall remain in full force and effect. 19 .7 This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument . IN WITNESS WHEREOF, the parties have executed this Agreement as of the Pit day of NIcp�� , 1990 . CLAY TOWNSHIP REGIONAL WASTE DISTRICT B Y: A az,� Presi ent f Board Of Trustee BY :7'5544e" Secretary of Board of Trustees