LETTER OF TRANSMITTAL 101 W. Ohio St Suite 2000, Indianapolis IN 46204 Phone (317) 454 8190 FAX (317) 454 8191 To: Indiana Finance Authority Date: 08/15/2016 Proj. Name: I-69 Section 5 Proj. No: Attn: Public Finance Director of the State of Indiana From: Gary Vandegriff / Jose Maria Ojeda Developer Response to 08-12-2016 Notice of Developer's Failure to Perform Schedule, Substantial Subject: Completion DELIVERY METHOD Mail Email Ebuilder WE ARE SENDING YOU: Attached Under Separate Cover Via The following items: Prints Plans Shop Drawings Specifications Copy of Letter Documents COPIES DATE NO. DESCRIPTION 1 08/15/2016 1 1 08/12/2016 2 I69-IFA-114-Developer Response to 08-12-2016 Notice of Developer's Failure to Perform Schedule, Substantial Completion 2016_08_12_Notice of Developer's Failure to Perform Substantial Completion 1 08/12/2016 3 2016_08_12_Notice of Developer's Failure to Perform Schedule THESE ARE TRANSMITTED AS CHECKED BELOW: For Approval As Requested Submittal to IFA For Your Use For Review & Comment For your information REMARKS: COPY TO: SIGNED: If enclosures are not as noted, Please notify us at once. 101 W. Ohio St Suite 2000, Indianapolis IN 46204 Phone (317) 454 8190 FAX (317) 454 8191 Letter Letter # : Your Ref: Date : Response Expected : To : Indiana Finance Authority One North Capitol, Suite 900 Indianapolis, In 46204 ATTN : Public Finance Director of the State of Indiana Indiana Finance Authority One North Capitol Avenue, Suite 900 Indianapolis, Indiana 46204 From From : Developer Response to 08-12-2016 Notice of Developer's Failure to Perform Schedule, Substantial Completion 2016_08_12_Notice of Developer's Failure to Perform Substantial Completion, 2016_08_12_Notice of Developer's Failure to Perform Schedule 08/15/2016 YES I-69 Development Partners 101 W. Ohio St Suite 2000, Indianapolis IN 46204 Gary Vandegriff / Jose Maria Ojeda Authorized Representatives With copies to: Indiana Finance Authority Attention: General Counsel One North Capital Avenue, Suite 900 Indianapolis, Indiana 46204 Re: Developer Response to 08-12-2016 Notice of Developer's Failure to Perform Schedule, Substantial Completion Dear Public Finance Director of the State of Indiana, Reference is made to the Public-Private Agreement dated as of April 8, 2014 (as amended, the “PPA”) between the Indiana Finance Authority (“IFA”) and I-69 Development Partners LLC (“Developer”). Reference is also made to that certain DesignBuild Contract dated as of April 8, 2014 (as amended, the "DB Contract") by and between Isolux Corsan, LLC ("DesignBuild Contractor") and I-69 Development Partners LLC ("Developer"). Initially capitalized terms not otherwise defined herein shall have the meanings set forth in the PPA. This is Developer’s initial response to two of your August 12, 2016 Notices of Failure: one relating to completing the design and construction services so as to achieve Substantial Completion by October 31, 2016 and the other related to performing the same work in conformance with the Project Schedule. We have forwarded your letter to Design-Build Contractor for its response. As a preliminary and general matter, we note that IFA served Developer with three purported failure notices at approximately 5:00 p.m. on Friday, August 12, 2016. As you know, Developer’s new management team is set to have meetings with IFA on Monday, August 15, 2016. Given the positive nature of the parties’ discussions and efforts as it relates to the team transition and overall project status, we view the manner and timing of these purported notices of failures as violating IFA’s implied obligation of good faith and fair dealing. This conduct is going to have to change immediately if we expect to complete the Construction Work in a timely fashion. Developer’s team will raise this in Monday’s meetings. If enclosures are not as noted, Please notify us at once. 1 101 W. Ohio St Suite 2000, Indianapolis IN 46204 Phone (317) 454 8190 FAX (317) 454 8191 With respect to the specific failure notice, IFA is operating under an astonishing misunderstanding of the PPA. The Baseline Substantial Completion Date and the Substantial Completion Date are two completely separate concepts. The former is a tool for calculating certain payments to Developer and the latter is the actual date of Substantial Completion. Section 20.3.1.3(a) of the PPA states that “IFA shall not have the right to terminate this Agreement solely due to Developer’s failure to achieve Substantial Completion by the Baseline Substantial Completion Date,” so we do not understand the purpose of your notice. Moreover, Section 19.1.1.3 states that “Developer shall be in breach under this Agreement upon the occurrence of any one or more of the following events or conditions . . . Developer fails to achieve (a) Substantial Completion by the Long Stop Date, or (b) Final Acceptance by the Final Acceptance Deadline . . .” The Long Stop Date is October 31, 2017. Still further, Section 21.4.2 states that: [i]f Developer fails to achieve Substantial Completion by the Baseline Substantial Completion Date, then the Collateral Agent shall have until the Long Stop Date, as the same may be extended pursuant to this Agreement, to achieve or cause Developer to achieve Substantial Completion. If Substantial Completion is not achieved by such date, then it shall constitute a material Developer Default and IFA may proceed to terminate this Agreement without further Notice to, or opportunity to cure by, the Lender. Based on these provisions, IFA cannot attempt to combine Article 5 with Section 19.1.1.12 as a basis for a purported notice of failure or Developer Default. This would render the quoted sections entirely meaningless and deprive the Lender of its rights. We presume IFA is not attempting to violate the Lender’s rights. Next, Relief Events are a defense to a Developer Default under Sections 15.11.2 and 15.11.3 of the PPA, and IFA is obligated to pay additional compensation to Developer for its losses due to certain missed payments caused by Relief Events under Section 15.2. The fact that IFA has improperly rejected Relief Events cannot be bootstrapped into an argument that Developer is not entitled to rely on them as a defense. This would render the PPA completely meaningless. Certain Relief Events are, and will be, in the Dispute Resolution process, and Developer reserves all rights in this regard. Next, IFA has been reviewing Project Schedules with a June, 2017 Substantial Completion Date since November of 2015 without raising a purported “notice of failure” related to the Baseline Substantial Completion Date. We thought this was because IFA understood the PPA, but apparently that is not the case. We ask that IFA clarify its position after reviewing this letter, and we reserve the right to raise waiver as a defense to any continued effort to misconstrue the PPA consistent with your August 12, 2016 letter. Finally in this regard, the PPA does not contain terms related to remedial plans for the Project Schedule, and IFA elected to delegate this responsibility to the Developer who, in turn, has rights to use remedial plans under the DB Contract. This was part of the global set of terms approved by IFA in the initial transaction. As a result, the Developer is not in Default relating to the Baseline Substantial Completion Date or the Project Schedule. On the contrary, Developer is taking proactive steps under the DB Contract to ensure that Design-Build Contractor complies with the remedial plan pursuant to the DB Contract (not the PPA). We would appreciate IFA’s cooperation within this framework, and we do not understand IFA’s desire to send misguided “notice of failure” letters which distract from the appropriate focus and context. As for the alleged violation of Section 19.1.1.9 of the PPA relating to the Project Schedule submittal, Developer denies that it provided any false, misleading or inaccurate information. And based on the foregoing, we remain confused regarding what IFA is hoping to accomplish by sending this “notice of failure.” Developer is dealing with the schedule performance issues under the DB Contract. Also, as noted in Patrick Miller’s August 10, 2016 e-mail to Rebecca Seamands, IFA’s review of the If enclosures are not as noted, Please notify us at once. 2 101 W. Ohio St Suite 2000, Indianapolis IN 46204 Phone (317) 454 8190 FAX (317) 454 8191 Project Schedules has been unacceptably slow. Many times IFA provides comments on one month’s schedule only days or less before the next month’s schedule is due to come out. Developer and the Design-Build Contractor cannot be expected to capture feedback on a schedule with a day or less to review the feedback. We have, nevertheless, requested that Design-Build Contractor respond to IFA’s notice. Based on the foregoing, IFA should withdraw its notice of failure letters related to Substantial Completion and the Project Schedule. We are pleading with IFA to make an effort to understand the PPA and work with the Developer to finish the Construction Work. Developer hereby reserves all of its rights and remedies under the PPA Documents, at law, in equity or otherwise. Yours faithfully, Gary Vandegriff I-69 Development Partners Encl: 2016_08_12_Notice of Developer's Failure to Perform Substantial Completion 2016_08_12_Notice of Developer's Failure to Perform Schedule cc: General Counsel If enclosures are not as noted, Please notify us at once. 3