Exhibit 10.34
AMENDMENT NUMBER FIVE TO THE GENERAL CONDITIONS OF THE
CONTRACT FOR THE ESTABLISHMENT AND OPERATION OF MOTOR
VEHICLE INSPECTION/MAINTENANCE PROGRAM FOR THE
STATE OF MINNESOTA POLLUTION CONTROL AGENCY
This Amendment Number Five is made to the Contract entered into between the
State of Minnesota, acting through its Pollution Control Agency, hereafter
referred to as the "State," and Envirotest Technologies, Inc., doing business in
Minnesota as Envirotest Technologies, Inc., hereafter referred to as the
"Contractor." Additions are underlined; deletions are shown in over-strike type.
WHEREAS, the State and the Contractor entered into the Contract on July 18,
1990, for the design, construction, equipment, establishment, maintenance and
operation of public inspection stations for the motor vehicle inspection and
maintenance program for the Twin Cities Metropolitan Area, hereafter referred to
as the "I/M Program;"
WHEREAS, the Contract required the Contractor to construct and operate
eleven vehicle emission testing stations at locations throughout the Twin Cities
Metropolitan Area;
WHEREAS, the Contract has been amended four times, on June 17, 1991, May
15, 1992, September 30, 1993, and September 6, 1995, and as amended is in effect
today;
WHEREAS, the statute governing the I/M Program, Minn. Stat. Sections 116.60
- .65, was amended by the 1995 Minnesota Legislature in 1995 Minn. Laws ch. 204,
hereafter referred to as the "1995 Legislation";
WHEREAS, the 1995 Legislation exempts newer vehicles from vehicle emission
testing;
WHEREAS, the Contractor wishes to reduce some of the services required by
the Contract, increase the portion of the testing fee that it is paid and
undertake other revenue-producing activities at the vehicle emission testing
stations, in light of the reduced number of vehicles to be tested;
WHEREAS, the Contractor and State agree that the changes to the Contract
made in this amendment will not cause excessive wait times and public
inconvenience for citizens required to test their vehicles; and
WHEREAS, the Contractor and State agree that the additional compensation
given to the Contractor in this amendment shall not exceed the funds, minus
State administrative costs, appropriated from the Vehicle Emission Inspection
Account established in Minn. Stat. Section 116.65.
NOW THEREFORE, the State and Contractor agree to amend the July 18, 1990
Contract as follows:
1. Section I.23.d, Temporary Extensions and Annual Exemptions, Hotline,
of the General Conditions of the Contract, is amended to read as follows:
d. HOTLINE. The Contractor shall have a minimum of five (5)
full-time equivalent personnel providing hotline telephone service. One
full-time employee of the Contractor's Minnesota headquarters staff shall
supervise the hotline telephone service. The Contractor shall staff the hotline
for forty-five (45) hours per week from Monday through Friday, including
adequate coverage for peak periods of calling. The Contractor shall adequately
handle 1400 calls per day during the busiest days of the month, and 200 calls
per hour during the busiest hours of the month.
2. Section I of the General Conditions of the Contract is amended by
adding a paragraph number 25, Rulemaking, at the end of the Section to state:
As soon as reasonably practicable, the Minnesota Pollution Control Agency
(MPCA) staff will prepare and present to the MPCA Board a request to
initiate rulemaking on a proposed amendment to Minn. R. 7023.1105, subp.
2(A) that makes the inspection fee cover the initial inspection and one
reinspection. The MPCA staff will use their best
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efforts to encourage this rule amendment to be adopted by the MPCA Board.
The Contractor understands and agrees that whether such a rule proceeding
is initiated and whether such a rule amendment is adopted rest fully in the
discretion of the MPCA Board, and must be based upon the record of the rule
proceeding. For the purposes of this paragraph, the Commissioner is
considered a member of the MPCA Board, not the MPCA staff.
3. Section I of the General Conditions of the Contract is amended by
adding a paragraph number 26, Printing of Vehicle Inspection Reports, at the end
of the Section to state:
The State will print the Vehicle Instruction Report forms.
4. Section I of the General Conditions of the Contract is amended by
adding a paragraph number 27, One Day Temporary Registrations, at the end of the
Section to state:
The Contractor shall administer the one day temporary registration process
as follows:
a. At the vehicle emission testing station, the station manager or
lead lane inspector shall handle requests for one day temporary
registrations. The Contractor's staff at the Contractor's headquarters
office shall also handle requests for one day temporary registrations.
b. When a person requests a one day temporary registration, the
Contractor must ask for the vehicle's license number and carefully review
the SISM records to verify that the vehicle has not already been tested. If
the vehicle owner qualifies for a temporary extension, the Contractor must
grant one. The one day temporary registration is an additional option for
vehicle owners, but does not replace the temporary extension.
c. If the vehicle owner does not qualify for a temporary extension
and if the vehicle's registration has expired, or will expire shortly, the
Contractor must offer the vehicle owner a one day temporary registration.
The vehicle owner may receive a one day temporary registration even if the
vehicle owner has not complied with a previous temporary extension.
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d. The Contractor shall not require an application for a one day
temporary registration. The one day temporary registration must be on a
form approved in writing by the State and clearly state that it does not
allow the vehicle owner to purchase vehicle license tabs.
e. The Contractor may issue a one day temporary registration only to
the registered owner of the vehicle, unless the registered owner is not
available. If the registered owner is not available, the Contractor may
issue a one day temporary registration to a person who is a spouse, parent
or adult child of, or who holds a power of attorney for, the registered
owner.
f. The contractor must issue one day temporary registrations using a
procedure approved in writing by the State. The currently approved
procedure is attached to this Amendment Five as Attachment G of the General
Conditions, and it is incorporated by reference herein and made an integral
and enforceable part of this Contract.
g. Any changes to the procedure or form must be approved in writing
by the State prior to the Contractor implementing them.
5. Section I of the General Conditions of the Contract is amended by
adding a paragraph number 28, Other Revenue-Producing Activities, at the end of
the Section to state:
The Contractor may use some or all of the vehicle emission testing
stations for the sale and delivery of goods and services or other
revenue-producing activities if the Contractor requests and obtains the
prior written approval of the State for each kind of sale, service, or
other revenue-producing activity. Any Contractor's request under this
paragraph must be in writing, and must contain the Contractor's analysis of
the effect of the activity on the length of the queue, wait times,
throughput and customer service at the station(s) where the activity will
occur, and on the Contractor's ability to carry out all other obligations
under this Contract. The State's approval shall not be unreasonably
withheld. The State may, however, reject or modify any proposed sale,
service, or other revenue-producing activity if it finds the proposal
likely to significantly adversely affect the length of
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the queue, wait times, throughput, customer service or the Contractor's
ability to carry out all other obligations under this Contract, at any
individual testing station or on the testing network as a whole, to
constitute a conflict of interest under Section VI.E. or to be
inappropriate in light of public expectations of a government service
facility. The State shall review a request under this paragraph and provide
the Contractor with its written approval, approval conditional on
modification, or rejection within forty-five (45) days of the State's
receipt of the request. Any sale, service or other revenue-producing
activity carried out by the Contractor under this paragraph is at the
Contractor's own risk, and capital costs and other expenditures related
thereto are not eligible for compensation under Section IX.C.
The State may terminate, upon sixty (60) days prior written notice,
the Contractor's approval to carry out a sale, service or other
revenue-producing activity at any time the State finds that the Contractor
is not carrying out the activity in compliance with the State's approval or
approval conditioned on modification; that the activity causes or
contributes to a violation of the contract on the length of the queue, wait
times, throughput, customer service or of any of the Contractor's other
obligations under this Contract, at any individual testing station or on
the testing network as a whole; or that the activity constitutes a conflict
of interest under Section VI.E or is inappropriate in light of public
expectations of a government service facility. The State agrees to not
unreasonably terminate an approved activity and to meet informally with the
Contractor to discuss the State's concerns about an activity before the
State sends its written notice terminating approval of an activity.
In the event that the Contractor makes a request of or claim against
the State for any additional compensation, including a request under
Section IX.C., the Contractor shall submit within thirty (30) days of the
State's written request, a report to the State on all activities conducted
under the previous paragraphs, including: the Contractor's revenues,
capital costs and other expenditures and profits on each activity, the
Contractor's evaluation of the impact of each activity on the length of the
queue, wait times, throughput,
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and customer service, and the Contractor's ability to carry out all other
obligations under this Contract.
6. Section I of the General Conditions of the Contract is amended by
adding a paragraph number 29, Lane Deactivation, at the end of the Section to
state:
The Contractor may deactivate specific lanes at some or all of the
vehicle emission testing stations if the Contractor requests and obtains
the prior written approval of the State for each lane deactivated. Any
Contractor's request for lane deactivation must not be made before the
Contractor has submitted the report required by Section I.31. Amendment
Four Report, must be in writing, and must contain the Contractor's analysis
of the effect of deactivating each lane on the length of the queue, wait
times, throughput and customer service at the station(s) where lanes would
be deactivated, and the Contractor's ability to carry out all other
obligations under this Contract. The State's approval shall not be
unreasonably withheld. The State may, however, reject or modify any
proposed lane deactivation if it finds that the lane deactivation is likely
to significantly adversely affect the length of the queue, wait times,
throughput, customer service, or the Contractor's ability to carry out all
other obligations under this Contract, at any individual testing station or
on the testing network as a whole. The State shall review a request under
this paragraph and provide the Contractor with its written approval,
approval conditioned on modification, or rejection within forty-five (45)
days of the State's receipt of the request.
If the State determines that an approved lane deactivation causes or
contributes to a violation of the contract requirements on the length of
the queue, wait times throughput, customer service, or of any of the
Contractor's other obligations under this Contract, at any individual
testing station or on the testing network as a whole, the State may
terminate, upon sixty (60) days prior written notice, the Contractor's
approval to deactivate a lane. The State agrees to not unreasonably
terminate an approved lane deactivation and to meet informally with the
Contractor to discuss the State's concerns about lane deactivation before
the State sends its written notice terminating approval of the lane
deactivation.
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7. Section I of the General Conditions of the Contract is amended by
adding a paragraph number 30, Minnesota Headquarters Staff, at the end of the
Section to state:
The Contractor may decrease the staff in its Minnesota headquarters office
(headquarters office) required under this Contract, provided that any reduction
does not significantly adversely affect customer service, the Contractor's
ability to provide appropriate headquarters office support for operations at the
vehicle emission testing stations, and the Contractor's ability to carry out all
other obligations under this Contract. The Contractor shall notify the State in
writing of the reduction no later than the time the Contractor announces the
changes to its headquarters office staff. The Contractor's notification shall
include an organization chart of the headquarters office staff that shows the
functions of managerial personnel.
8. Section I of the General Conditions of the Contract is amended by
adding a paragraph number 31, Amendment Four Report, at the end of the Section
to state:
By January 20, 1996, the Contractor shall provide the State with the
Contractor's analysis of the effect of the changes authorized in Amendment Four
on the length of the queue, wait times, throughput and customer service and the
Contractor's ability to carry out all other obligations under this Contract, at
each testing station and on the network as a whole. The State shall review this
report and provide the Contractor with its written approval, approval
conditioned on modification, or rejection within forty-five (45) days of the
State's receipt of the report.
9. Section I of the General Conditions of the Contract is amended by
adding a paragraph number 32, Organization of Minnesota Operations, at the end
of the Section to state:
By November 15, 1995, Contractor shall submit to the State an updated
organization chart of its Minnesota headquarters and testing station staff that
shows the organizational structure and number of staff assigned to each function
over the testing network. The proposed organization or staffing levels must not
significantly adversely
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affect the Contractor's ability to provide appropriate headquarters office
support for operations at the vehicle emission testing stations. Contractor's
ability to properly supervise and conduct operations at the vehicle emission
testing stations, or the Contractor's ability to carry out all other obligations
under this Contract, at any individual testing station or on the testing network
as a whole.
10. Section II.A., Consideration of the-General Conditions of the
Contract is amended to read as follows:
The State shall pay the Contractor, until November 1, 1995, for all
activities conducted pursuant to this contract, $7.07 for each fee bearing
inspection, each fee bearing reinspection and each fee bearing elective
inspection performed on or after the Extension/Exemption Startup Date and for
which the State has been paid by the citizen who obtained the inspection. On
and after November 1, 1995, and until June 30, 1996, the State shall pay the
Contractor, for all activities conducted pursuant to this contract, $8.00 for
each fee bearing inspection, each fee bearing reinspection, and each fee
bearing elective inspection performed by the Contractor and for which the
State has been paid by the citizen who obtained the inspection. After June
30, 1996, and until June 30, 1997, the State shall pay the Contractor, for all
activities conducted pursuant to this contract, $7.28 for each fee bearing
inspection, each fee bearing reinspection and each fee bearing elective
inspection performed by the Contractor and for which the State has been paid
by the citizen who obtained the inspection. After June 30, 1997 and until
June 30, 1998, the State shall pay the Contractor, for all activities
conducted pursuant to this contract, a To-Be-Determined Amount ("TBDA") for
each fee bearing inspection, each fee bearing reinspection and each fee
bearing elective inspection performed by the Contractor and for which the
State has been paid by the citizen who obtained the inspection. The State, on
the effective date of Amendment Five, estimates that the TBDA will be
approximately $7.00, but the exact amount of the TBDA shall be determined as
provided by the following sentence. The TBDA shall not exceed $8.00 and shall
be determined by the
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State after review of testing revenues and the vehicle emission inspection
account balance through June 30, 1997, and projected revenues and MPCA and
Department administrative costs through the end of all State and Contractor
activities under the I/M Program, so that the amount of revenues allocated for
the year beginning July 1, 1997 to the Contractor through the TBDA will assure
that all MPCA and Department administrative costs plus a contingency of $15,000
are allowed for in the vehicle emission inspection account. The TBDA shall be
determined by the State by August 15, 1997. These fees are, in the event of
termination of the I/M Program by legislation prior to June 30, 1998, subject to
adjustment as provided in the next paragraph, and are the Contractor's sole
compensation for all activities conducted pursuant to this contract, except as
may be provided in Section IX.C.
If the legislature terminates the I/M Program prior to June 30, 1998, and
the Contractor has received more than an average of $7.35, between July 1, 1995,
and the date testing ends, per fee bearing inspection, fee bearing reinspection
and fee bearing elective performed by the Contractor, and for which the State
has been paid by the citizen who obtained the inspection, then the amounts
specified in the preceding paragraph due the Contractor will be reduced by the
State, and as necessary reimbursed to the State by the Contractor (except as may
be provided in Section IX.C.) within sixty (60) days of the State's written
request, so that by the end of testing the Contractor will have been provided
with an average of $7.35 per fee bearing inspection, fee bearing reinspection
and fee bearing elective inspection performed by the Contractor, and for which
the State has been paid by the citizen who obtained the inspection, between July
1, 1995, and the date testing ends.
A fee-bearing inspection is the initial inspection and, if the vehicle
fails the initial inspection, the number of reinspections of a subject vehicle
during one annual registration period covered by the initial fee assessed
pursuant to Minn. Rules pt. 7023.1105, subp. 2(A). A fee bearing reinspection
is
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each subsequent reinspection of a subject vehicle during one annual registration
period for which an additional fee is assessed under Minn. Rules pt. 7023.1105,
subp. 2(A). A fee bearing elective inspection is any single inspection of a
subject or nonsubject vehicle approved in advance by the State and conducted
pursuant to Minn. Rules pt. 7023.1105, subp. 2(B). The State agrees that,
pursuant to Minn. Rules pt. 7023.1105, it will set the inspection fee at an
amount not less than the amounts specified in the first paragraph, and that if
its administrative costs exceed the difference between the inspection fee
collected from citizens and the amounts specified in the first paragraph due the
Contractor, the excess State administrative costs will not reduce the amount
paid to the Contractor under Section II.
The State shall not pay the Contractor for inspections conducted by the
Contractor for which the State has not been paid by the citizen who obtained the
inspection. The State shall not pay the Contractor for inspections conducted
before the network startup date.
The total obligation of the State for all compensation and reimbursements
to Contractor shall not exceed the funds appropriated to the I/M Program in the
vehicle emission inspection account. Minn. Stat. Section 116.65, subd. 1
establishes a vehicle emission inspection account which consists of the revenues
listed in Minn. Stat. Section 116.65, subd. 2, including the proceeds of the
vehicle inspection fee. Minn. Stat. Section 116.65 provides that the vehicle
emission inspection account is appropriated to the Agency by the legislature,
and may be used only to pay the Contractor for vehicles inspected and MPCA and
Department administrative costs for the I/M Program. The Contractor understands
and agrees, however, that the vehicle emission inspection account will not
contain substantial funds until the commencement of vehicle inspection and the
collection of fees from motorists for vehicle inspection, and that the vehicle
emission inspection account will be regularly depleted after that point to pay
the Contractor for vehicles inspected and to pay State administrative costs to
conduct the I/M Program. Contractor also understands and
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agrees that, in the unlikely event that the legislature ceases to appropriate
funds for the I/M Program, the legislature may not authorize sufficient funds to
pay the Contractor's costs.
11. Section VII. E., Performance Bond, of the General Conditions of the
Contract is amended to read as follows:
The Contractor has filed with the State's Authorized Agent a performance
bond on the forms included in Attachment B to these General Conditions, which is
attached, incorporated by reference herein, and made an integral and enforceable
part of this contract, in the amount of $1,000,000 as security for the faithful
performance of the contract. The Contractor shall provide a performance bond or
a series of performance bonds that shall remain in full force and effect, under
the same terms and conditions as Attachment B, during the entire term of this
contract, except that after the effective date of Amendment Five, the amount of
the performance bond may be reduced to $100,000. The surety furnishing the
performance bond shall be licensed to conduct business in the State of
Minnesota. The initial performance bond shall be for a four (4) year term, and
the Contractor shall renew the bond, on the same terms and conditions, for an
additional four (4) year term commencing the day after expiration of the initial
performance bond, and submit the performance bond to the MPCA for approval at
least sixty (60) days prior to expiration of the initial performance bond. The
Contractor's obligation to deliver a renewed performance bond shall not be an
obligation secured by the initial performance bond.
The attorney-in-fact who executes the performance bond on behalf of the
surety must attach a notarized copy of its power of attorney as evidence of its
authority to bind the surety on the date of execution of the performance bond.
12. The parties further agree as a term of this Amendment Five that:
Contractor has alleged that the 1995 Legislation constitutes a breach of
this Contract. The State denies that there has been any breach of this Contract
by the State as
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a consequence of changes required by the 1995 Legislation. In consideration for
the State's entering into this Amendment Five, the Contractor waives any and all
claims or causes of action, in law or equity, it may have against the State
resulting from the 1995 Legislation. This waiver shall not be effective if the
legislature terminates the I/M Program before June 30, 1998 or if the
legislature makes changes to the I/M Program the result of which is a further
reduction in vehicles subject to fee bearing inspections between the effective
date of this Amendment Five and June 30, 1998. Contractor's waiver does not
prevent the Contractor from requesting additional appropriations from the
legislature.
13. This Amendment Five is effective when it is signed by the Commissioner
of Administration.
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14. All other terms and conditions of the Contract remain in full force
and effect, except as specifically amended above.
ENVIROTEST TECHNOLOGIES, INC. MINNESOTA POLLUTION CONTROL AGENCY
By: /s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxxx
------------------------------- -------------------------------
Name (Print): Xxxxxxxx X. Xxxxxx Xxxxxx Xxxxxxx
--------------------- Manager, Administrative Services
Title: Vice President Division
----------------------------
Date: Oct. 25, 1995 Date: Oct. 25, 1995
----------------------------- -----------------------------
By: /s/ X. Xxxxxxx Xxxxxx AS TO FORM AND EXECUTION BY
------------------------------- THE ATTORNEY GENERAL
Name (print): X. Xxxxxxx Xxxxxx
--------------------- By: /s/ Xxx X. Xxxx
Title: Vice President -------------------------------
---------------------------- Xxx X. Xxxx
Date: Oct. 25, 1995 Assistant Attorney General
----------------------------- Date: Oct. 30, 1995
-----------------------------
COMMISSIONER OF ADMINISTRATION
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
Contract Administrator
Date: Oct. 31, 1995
-----------------------------
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