<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
------------------ TO
------------------
COMMISSION FILE NUMBER 0-21681
------------------------
TRANSCRYPT INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 47-0801192
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
<TABLE>
<S> <C>
4800 NW FIRST STREET, LINCOLN, NEBRASKA 68521
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (402) 474-4800
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
As of April 15, 1997, 9,283,078 shares of the Registrant's Common Stock
were outstanding.
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<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $14,025,895 $ 0
Accounts receivable, net...................................... 5,970,533 4,215,403
Inventory, net................................................ 2,855,133 2,261,381
Prepaid expenses and other current assets..................... 217,495 71,196
Deferred tax assets........................................... 293,924 196,234
----------- -----------
Total current assets................................ 23,362,980 6,744,214
----------- -----------
Property, plant and equipment, at cost........................ 7,603,486 6,672,832
Less: accumulated depreciation................................ (1,922,599) (1,765,394)
----------- -----------
Net property, plant and equipment................... 5,680,887 4,907,438
----------- -----------
Deferred tax assets........................................... 1,723,190 1,723,190
Intangible assets, net........................................ 36,022 38,137
Deferred initial public offering costs........................ 0 568,049
----------- -----------
$30,803,079 $13,981,028
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft................................................ $ 0 $ 385,694
Revolving line of credit...................................... 0 1,022,000
Current portion of capitalized lease obligations.............. 11,037 13,803
Current portion of long-term debt............................. 0 581,959
Accounts payable.............................................. 869,487 1,174,364
Income taxes payable.......................................... 406,390 151,894
Accrued expenses.............................................. 1,190,092 946,406
----------- -----------
Total current liabilities........................... 2,477,006 4,276,120
----------- -----------
Capitalized lease obligations, net of current portion......... 0 1,296
Long-term debt, net of current portion........................ 2,850,000 1,838,646
Revolving line of credit...................................... 0 792,070
----------- -----------
5,327,006 6,908,132
----------- -----------
Stockholders' equity:
Common stock.................................................. 92,831 67,831
Additional paid in capital.................................... 27,379,139 9,683,381
Retained deficit.............................................. (1,995,897) (2,678,316)
----------- -----------
25,476,073 7,072,896
----------- -----------
$30,803,079 $13,981,028
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE> 3
TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues........................................................ $4,728,403 $2,580,215
Cost of sales................................................... 1,632,127 911,138
---------- ----------
Gross profit.................................................... 3,096,276 1,669,077
Operating expenses:
Research and development...................................... 633,219 436,056
Sales and marketing........................................... 1,086,117 430,750
General and administrative.................................... 478,306 349,499
Amortization of intangible assets............................. 0 276,445
---------- ----------
Total operating expenses.............................. 2,197,642 1,492,750
---------- ----------
Income from operations.......................................... 898,634 176,327
Net interest income (expense)................................... 76,388 18,612
---------- ----------
Income before income taxes...................................... 975,022 157,715
Provision for income taxes...................................... 292,507 0
---------- ----------
Net income............................................ $ 682,515 $ 157,715
========= =========
Income before pro forma income taxes............................ $ 975,022 $ 157,715
Pro forma provision for income taxes............................ 292,507 37,930
---------- ----------
Pro forma net income............................................ $ 682,515 $ 119,785
========= =========
Pro forma net income per share.................................. $0.07 $0.02
========= =========
Shares used to compute net income per share..................... 9,177,989 6,968,712
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE> 4
TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net cash provided by (used in) operating activities........... $(1,557,827) $ 981,253
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets.................................... (855,161) (206,804)
Payments under noncompete agreement......................... 0 (85,000)
----------- -----------
Net cash used in investing activities............... (855,161) (291,804)
----------- -----------
Cash flows from financing activities:
Issuance of industrial development revenue bonds............ 2,850,000 0
Payment of industrial development revenue bonds............. (850,000) 0
Debt issuance costs of industrial development revenue (75,493) 0
bonds....................................................
Borrowings on lines of credit............................... 308,725 0
Payments on term loans, lines of credit and capitalized (3,697,462) (100,800)
leases...................................................
Bank overdraft.............................................. (385,694) 0
Proceeds from IPO, net...................................... 18,288,807 0
----------- -----------
Net cash provided by (used in) financing 16,438,883 (100,800)
activities........................................
----------- -----------
Net increase in cash and cash equivalents..................... 14,025,895 588,649
Cash and cash equivalents, beginning of period................ 0 291,712
----------- -----------
Cash and cash equivalents, end of period...................... $14,025,895 $ 880,361
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 5
TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. GENERAL
The consolidated condensed financial statements as of March 31, 1997 and
for the three months then ended are unaudited and reflect all normal and
recurring accruals and adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial position, operating results
and cash flows for the interim periods. The consolidated condensed financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto, together with management's discussion and analysis
of financial condition and results of operations, contained in the Form 10-K for
the year ended December 31, 1996 of Transcrypt International, Inc. (the
"Company"). The results of operations and cash flows for the three months ended
March 31, 1997 are not necessarily indicative of the results for the entire
fiscal year ending December 31, 1997.
Where appropriate, items within the consolidated condensed financial
statements have been reclassified from the previous periods to conform to the
current year's presentation.
2. ORGANIZATION AND CONSOLIDATION
Transcrypt International, Ltd. (the "Predecessor") was a limited
partnership formed in 1991 composed of the general partner, Transcrypt
International, Inc. (a Nebraska corporation) and various limited partners.
Effective June 30, 1996, the assets and liabilities of the partnership were
merged tax-free into a Delaware corporation, Transcrypt International, Inc. Each
respective partnership unit was converted pro rata into common shares of the
Company.
The consolidated condensed financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in the consolidation.
3. PRO FORMA PROVISION FOR INCOME TAXES
The pro forma provision for income taxes reflects the provision for income
taxes as if the Company had been taxed as a C Corporation under the Internal
Revenue Code for the three months ended March 31, 1996.
4. NET INCOME PER SHARE
Net income per share attributable to common stockholders has been computed
using the weighted average number of common stock and common stock equivalent
shares outstanding for the three months ended March 31, 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997
------------------
<S> <C>
Common stock outstanding.................................... 8,699,744
Common stock equivalents -- stock options................... 478,245
---------
9,177,989
=========
</TABLE>
Pro forma net income per share is computed on the basis of the weighted
average number of partnership interest units outstanding for the three months
ended March 31, 1996, converted into common shares on a one-to-one ratio,
including common stock equivalents.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1996
------------------
<S> <C>
Common stock outstanding.................................... 6,783,078
Common stock equivalents -- stock options................... 185,634
---------
6,968,712
=========
</TABLE>
4
<PAGE> 6
TRANSCRYPT INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, options to purchase common stock granted with exercise prices below the
assumed initial public offering price per share during the 12 months preceding
the date of the initial filing of the Registration Statement are included in the
calculation of common equivalent shares, using the treasury stock method, as if
they were outstanding for all periods presented.
5. INITIAL PUBLIC OFFERING
On January 22, 1997, the Company completed an initial public offering of
2,900,000 shares of common stock at a price of $8.00 per share. Of the 2,900,000
shares offered, 2,500,000 shares were sold by the Company and 400,000 were sold
by certain of the Company's stockholders. The Company's net proceeds from the
offering, after underwriting commissions and expenses, were approximately
$17,700,000.
A portion of the Company's net proceeds from the offering was used to
retire certain term and installment notes payable and the revolving lines of
credit, as described in Notes 7 and 8. The remaining net proceeds are being used
for general working capital purposes and to support the Company's growth and
business strategy.
6. INVENTORY
The following is a summary of inventory at March 31, 1997 and December 31,
1996:
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Raw materials and supplies, net............... $1,739,282 $ 1,316,932
Work in progress.............................. 291,523 715,032
Finished goods................................ 824,328 229,417
---------- ----------
$2,855,133 $ 2,261,381
========== ==========
</TABLE>
7. REVOLVING LINES OF CREDIT
The Company has a working capital revolving line of credit not to exceed
$3,000,000, calculated using a specified borrowing base of eligible inventories
and accounts receivable. In addition, the Company has a second revolving capital
line of credit not to exceed $1,000,000, calculated using a specified borrowing
base of certain eligible fixed assets. At December 31, 1996, the Company had
$1,022,000 outstanding on the working capital line of credit and $792,070
outstanding on the capital line of credit. On January 27, 1997, these revolving
lines of credit were repaid in full using a portion of the net proceeds from the
initial public offering.
7. LONG-TERM DEBT
On January 27, 1997, two term notes payable (totaling $626,791 at December
31, 1996) and an installment note payable (totaling $359,017 at December 31,
1996) were repaid using a portion of the net proceeds from the initial public
offering.
On March 25, 1997, industrial development revenue bonds payable (totaling
$850,000 at December 31, 1996) and a construction note payable (totaling
$584,797 at December 31, 1996) were repaid through the issuance of new
industrial revenue bonds totaling $2,850,000. The new industrial revenue bonds
are due in annual principal payments of $140,000, plus interest at a variable
rate (3.5% at March 31, 1997) starting March 1, 1998 through March 1, 2007,
increasing to annual principal payments, plus interest at a variable rate, of
$145,000 due March 1, 2008 through March 1, 2016, with the remaining principal
and accrued interest due March 1, 2017. At March 31, 1997, the remaining net
proceeds of $1,054,252 (net of debt offering costs) were held in escrow for the
Company pending the completion of the construction project and related purchase
of certain fixed assets by the Company.
5
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth certain Consolidated Statements of Income
information as a percentage of revenues during the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------
1997 1996
-------------------- --------------------
<S> <C> <C> <C> <C>
Revenues........................................... $4,728,403 100.0% $2,580,215 100.0%
Cost of sales...................................... 1,632,127 34.5% 911,138 35.3%
---------- ----- ---------- -----
Gross profit....................................... 3,096,276 65.5% 1,669,077 64.7%
Operating expenses:
Research and development......................... 633,219 13.4% 436,056 16.9%
Sales and marketing.............................. 1,086,117 23.0% 430,750 16.7%
General and administrative....................... 478,306 10.1% 349,499 13.5%
Amortization of intangible assets................ 0 0.0% 276,445 10.7%
---------- ----- ---------- -----
Total operating expenses................. 2,197,642 46.5% 1,492,750 57.9%
---------- ----- ---------- -----
Income from operations............................. 898,643 19.0% 176,327 6.8%
Net interest income (expense)...................... 76,388 1.6% (18,612) (0.7%)
---------- ----- ---------- -----
Income before income taxes......................... 975,022 20.6% 157,715 6.1%
Provision for income taxes......................... 292,507 6.2% 0 0.0%
---------- ----- ---------- -----
Net income......................................... $ 682,515 14.4% $ 157,715 6.1%
========== ===== ========== =====
Income before pro forma income taxes............... $ 975,022 20.6% $ 157,715 6.1%
Pro forma provision for income taxes............... 292,507 6.2% 37,930 1.5%
---------- ----- ---------- -----
Pro forma net income............................... $ 682,515 14.4% $ 119,785 4.6%
========== ===== ========== =====
</TABLE>
The following discussion is intended to provide a better understanding of
the significant changes in trends relating to the Company's financial condition
and results of operations. Management's Discussion and Analysis should be read
in conjunction with the accompanying Consolidated Financial Statements and Notes
thereto.
Discussions of certain matters contained in this Quarterly Report on Form
10-Q may constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and as such, may involve risks and
uncertainties. These forward-looking statements relate to, among other things,
expectations of the business environment in which the Company operates,
projections of future performance, both in domestic and international markets,
perceived opportunities in the market, and statements regarding the Company's
mission and vision. The Company's actual results, performance and achievements
may differ materially from the results, performance and achievements expressed
or implied in such forward-looking statements and from historical results. Among
the factors that could cause such a difference include the following: business
conditions and the general economy, development of the markets for the Company's
products, including the domestic digital land mobile radio market, availability
of third-party compatible products, and other competitive factors. For an
additional discussion of some of the factors that might cause such a difference,
see "ITEM 1. BUSINESS -- Summary of Business Considerations and Certain Factors
that may Affect Future Results of Operations and/or Stock Price" contained in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
REVENUES
The Company recognizes revenues upon shipment of products to its customers.
Revenues increased 83.3% to $4.7 million during the first quarter of 1997 from
$2.6 million during the first quarter of 1996. This increase was attributable
primarily to revenues in the first quarter of 1997 associated with several large
sales contracts and the completion in the first quarter of the remaining minimum
shipments of socket scrambler modules to Motorola called for under an agreement
with the Company. Sales of the Company's core security products for the land
mobile radio ("LMR") and cellular telephone markets continued to grow in the
first
6
<PAGE> 8
quarter of 1997, particularly in international markets, while sales of the
Company's recently introduced digital LMRs were not significant in the first
quarter of 1997.
In August 1995, the Company entered into a three-year supply agreement with
Motorola to provide socket scrambler modules at fixed prices for domestic
markets. Such agreement provided for minimum purchases by Motorola of $3.7
million of socket scrambler modules during the 18-month period beginning on
April 1, 1996 (of which $2.1 million had been purchased as of December 31,
1996). In the first quarter of 1997, this agreement was amended such that
Motorola agreed to complete its minimum purchase commitment by purchasing $1.0
million of socket scrambler modules which are exportable into certain
international markets. Although Motorola has no further minimum purchase
requirement under the agreement, the Company believes that the opportunity to
sell exportable products into foreign markets through Motorola will allow the
Company to expand the markets in which it serves in Latin American and Asia.
International sales as a percentage of revenues were approximately 69.8%
and 37.1% during the first quarters of 1997 and 1996, respectively . The Company
believes that the proportion of international sales in the first quarter of 1997
was unusually high, reflecting sales of items for export to several large
customers, including Motorola. The Company anticipates that international sales
will continue to represent a significant portion of revenues in the future,
although domestic sales may increase as a percentage of revenues in the future
due to the Company's increased marketing emphasis on domestic sales, including
the expanded marketing domestically of the Company's digital radio products in
1997.
The Company historically has experienced, and in the future expects to
continue to experience, substantial variability in its revenues and
profitability from quarter to quarter. The level of revenues in a particular
quarter vary primarily based upon the timing of large purchase orders, due
principally to the seasonal nature of governmental budgeting processes and the
needs of competing budgetary concerns of its customers during the year. Other
factors which affect the level of revenues in a particular quarter include the
timing of the introduction of new products, general economic conditions, the
timing and mix of product sales and specific economic conditions in the
information security and wireless communications industries. The Company
believes that its quarterly results are likely to vary for the foreseeable
future.
GROSS PROFIT
Cost of sales includes materials, labor, depreciation and overhead costs
associated with the production of the Company's products, as well as shipping,
royalty and warranty product costs. Gross profit increased to $3.1 million in
the first quarter of 1997 from $1.7 million in the first quarter of 1996. In
addition, gross margin remained relatively constant, increasing to 65.5% in the
first quarter of 1997 from 64.7% in the first quarter of 1996. Although
shipments of the Company's stand-alone LMR and cellular telephone products
continued in the first quarter of 1997, which generally have lower gross margins
than add-on modules and other products, overall margins remained relatively
strong since the Company's core add-on products continued to account for a
significant portion of sales during the quarter. To the extent that sales of
stand-alone products increase in the future relative to add-on products, gross
margins are likely to decline.
RESEARCH AND DEVELOPMENT
Research and development expenses consist primarily of the costs associated
with research and development personnel, materials and the depreciation of
research and development equipment and facilities. Research and development
expenses increased to $633,000 in the first quarter of 1997 from $436,000 in the
first quarter of 1996. This increase was due primarily to expenses related to
the continuing development of the Company's APCO 25 digital LMRs and telephony
products, and expanded development efforts related to the Company's proposed
data security products. Research and development expenses as a percentage of
revenues decreased to 13.4% in the first quarter of 1997 from 16.9% in the first
quarter of 1996, due to greater revenues in the first quarter of 1997. The
Company anticipates that it will continue to devote increased overall resources
to research and development during 1997 relative to 1996.
7
<PAGE> 9
SALES AND MARKETING
Sales and marketing expenses consist primarily of salaries and related
costs of sales personnel, including sales commissions and travel expenses, and
costs of advertising, public relations, bad debt provisions and trade show
participation. Sales and marketing expenses increased to $1.1 million in the
first quarter of 1997 from $431,000 in the first quarter of 1996, primarily due
to the addition of direct sales personnel and associated expenses and additional
bad debt provisions for accounts receivable reserves of $440,000 in the first
quarter of 1997. The additional bad debt provisions related to an overall
increase in the Company's accounts receivables to $6.7 million at March 31, 1997
from $4.6 million at December 31, 1996. Sales and marketing expenses increased
as a percentage of revenues to 23.0% in the first quarter of 1997 from 16.7% in
the first quarter of 1996, due to the large increase in expenditures in the
first quarter of 1997. The Company expects to continue its increased commitment
to sales and marketing during 1997 through the addition of direct sales and
marketing personnel, primarily to support the introduction of new products,
including digital LMRs.
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of salaries and other
expenses associated with the Company's management, accounting, finance and
administrative functions. General and administrative expenses increased to
$478,000 in the first quarter of 1997 from $350,000 in the first quarter of
1996. This increase was attributable primarily to the addition of several
administrative employees and costs associated with becoming a publicly-held
company in the first quarter of 1997. The Company expects to continue to incur
additional general and administrative expenses in 1997 due to costs associated
with being a publicly-held company and upgrades to the Company's management
information systems. General and administrative expenses as a percentage of
revenues decreased to 10.1% in the first quarter of 1997 from 13.5% in the first
quarter of 1996, due to the increase in revenues in the first quarter of 1997.
AMORTIZATION OF INTANGIBLE ASSETS
Intangible assets consisted primarily of the costs associated with the
acquisition of the Company's business in December 1991. The Company amortized
these intangible assets on a straight-line basis over a 60-month period, which
resulted in an amortization expense of $276,000 in the first quarter of 1996.
These intangible assets were fully amortized as of November 30, 1996, and thus
no such amortization expense was incurred in the first quarter of 1997.
NET INTEREST INCOME (EXPENSE)
Net interest income (expense) consists of interest income earned on cash
and investable funds, net of interest expense related to amounts payable on the
Company's term and installment loans and bank lines of credit. Net interest
income was $76,000 in the first quarter of 1997 and net interest expense was
($18,000) in the first quarter of 1996.
PROVISION FOR INCOME TAXES
Prior to June 1996, the Company was organized as a partnership, and
therefore was not subject to income taxation except to the extent that its
earnings were attributed to its partners. The Company converted from a
partnership to a "C" corporation effective June 30, 1996. Pro forma net income
and pro forma net income per share calculations reflect a pro forma provision
for income taxes as if the Company had been taxed as a "C" corporation in the
first quarter of 1996.
The Company has benefited and continues to benefit from state tax credits
arising from a 1993 agreement with the State of Nebraska, which results in
annual state income tax credits through 1999. In addition, the Company utilizes
its foreign sales corporation subsidiary located in Guam to exempt from income
taxation a portion of the Company's foreign sales income.
8
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations and met its capital requirements
primarily through cash flow generated from operations, short-term borrowings,
long-term debt and an initial public offering completed on January 22, 1997. The
Company's operating activities used cash of $1.6 million in the first quarter of
1997 and generated cash of $981,000 in the first quarter of 1996. Cash used in
operating activities in the first quarter of 1997 consisted primarily of an
increase in accounts receivable and inventory and a decrease in accounts payable
offset in part by net income plus depreciation and an increase in accrued
expenses. Cash provided by operating activities in the first quarter of 1996
consisted primarily of net income plus depreciation and amortization and a
decrease in accounts receivable, offset in part by a decrease in accrued
expenses.
The deferred tax assets totaling $2.0 million (which resulted primarily
from the stock option related special compensation expense of $5.4 million
incurred in September 1996) were 6.5% and 7.9% of total assets and stockholders'
equity, respectively, at March 31, 1997. Based on the current level of taxable
income, management believes that it is more likely than not that future taxable
income will be sufficient to fully utilize all deferred tax assets recorded.
Cash used for investing activities, attributable primarily to capital
expenditures, totaled $855,000 and $292,000 in the first quarter of 1997 and
1996, respectively. Capital expenditures consisted primarily of computer and
networking equipment, office furniture and manufacturing equipment for both
quarters and expenses related to the construction at the Company's Lincoln
facility in the first quarter of 1997. In August 1996, the Company began
construction of a 21,000 square foot expansion of its existing Lincoln facility
at an estimated final cost of $1.0 million, primarily to accommodate additional
manufacturing capacity. The expansion is expected to be completed in the second
quarter of 1997. As of March 31, 1997, the Company had no additional firm
commitments for capital expenditures, but the Company still expects to purchase
additional computer equipment and replace its current management information
system in 1997.
Financing activities, which have consisted primarily of borrowings under
and payments on an industrial development revenue bond issue ("IDR"), term and
installment notes payable, a construction loan and bank lines of credit and
proceeds received from the Company's initial public offering completed on
January 22, 1997 totaled $16.4 million and $(111,000) during the first quarters
of 1997 and 1996, respectively.
The Company's two term notes were secured by substantially all of the
Company's assets, with interest payable at the bank's regional money market rate
plus 0.5%. The installment note was secured specifically by equipment with
interest at the bank's national prime rate plus 0.5%. The bank lines of credit
provide for working capital and capital advances not to exceed $4.0 million,
with specific advances calculated based upon a percentage of eligible
inventories, accounts receivable and fixed assets. Interest is payable monthly
at the bank's money market rate and is collateralized by substantially all of
the Company's assets. The Company paid off all of the outstanding balances on
the two term notes, the installment note and the bank lines of credit on January
27, 1997.
At March 31, 1997, the Company had outstanding a construction loan to fund
the expansion of its existing Lincoln facility, with an outstanding principal
balance of $585,000. Interest on this loan was payable monthly at the bank's
national money market rate plus 0.5% with the principal balance maturing in
August 1997.
The IDR outstanding at December 31, 1996 totaled $850,000 in principal
amount, bore a fixed interest rate of 6.25%, was non-amortizing and was
scheduled to mature in January 2004. On March 25, 1997, the existing IDR of
$850,000 and the construction note payable of $892,000 were repaid through the
issuance of a new IDR totaling $2,850,000. The new IDR is due in annual
principal payments of $140,000 plus interest at a variable rate (3.5% at March
31, 1997) beginning March 1, 1998 through March 1, 2007, increasing to annual
principal payments plus interest at a variable rate of $145,000 due March 1,
2008 through March 1, 2016, with the remaining principal and accrued interest
due on March 1, 2017. At March 31, 1997, the remaining net proceeds of $1.1
million (net of debt offering costs and the aforementioned repayments) were held
in escrow for the Company pending the completion of the Company's construction
project and related purchases of certain fixed assets.
9
<PAGE> 11
The Company currently intends to retain earnings, if any, to support its
growth strategy and does not anticipate paying cash dividends in the foreseeable
future.
The Company believes that cash generated from operations and the net
proceeds of $17.7 million from the sale of Common Stock in the offering
completed on January 22, 1997, together with the Company's cash, cash
equivalents and lines of credit, will be sufficient to meet its anticipated cash
needs for working capital, capital expenditures and business expansion plans
through at least 1997.
10
<PAGE> 12
PART II. OTHER INFORMATION
ITEMS 1 - 5.
Inapplicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
The following exhibits are being filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------
<S> <C>
10.10.1* Second Amendment, dated March 31, 1997, to Private Label/Supplier Agreement for
Analog Scrambling Modules between Motorola, Inc. and the Company dated as of August
8, 1995.
10.27.1 Fifth Amendment, dated as of March 1, 1997, to Amended and Restated Loan Agreement,
dated as of May 18, 1994, by and between Norwest Bank Nebraska, N.A., and the
Company.
10.31 Nebraska Investment Finance Authority $2,850,000 Variable Rate Demand Industrial
Development Revenue Bond (Transcrypt International, Inc. Project), Series 1997,
dated as of March 25, 1997.
10.32 Trust Indenture, dated as of March 1, 1997, for $2,850,000 Variable Rate Demand
Industrial Development Revenue Bond (Transcrypt International, Inc. Project),
Series 1997, between Nebraska Investment Finance Authority as Issuer and Norwest
Bank Nebraska, N.A. as Trustee.
10.33 Loan Agreement, dated as of March 1, 1997, for $2,850,000 Variable Rate Demand
Industrial Development Revenue Bond (Transcrypt International, Inc. Project),
Series 1997, between Nebraska Investment Finance Authority as Issuer and the
Company.
27 Financial Data Schedule
</TABLE>
- ---------------
* Confidential treatment has been requested as to a portion of this exhibit.
(B) REPORTS ON FORM 8-K
The registrant filed no reports on Form 8-K during the quarter ended March
31, 1997.
11
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
TRANSCRYPT INTERNATIONAL, INC.
By: /s/ RANDAL P. HANSEN
------------------------------------
Randal P. Hansen
Chief Financial Officer
(Principal financial or accounting
officer and duly authorized
signatory)
Date: April 18, 1997
12
<PAGE> 1
All sections marked with two asterisks ("**") reflect portions which have been
redacted. The unredacted exhibit has been filed separately with the Securities
and Exchange Commission as part of a request for confidential treatment.
SECOND AMENDMENT
TO SUPPLY AGREEMENT BETWEEN
TRANSCRYPT INTERNATIONAL AND MOTOROLA, INC.
THIS AMENDMENT ("Second Amendment") dated the date the last signature
herein, between TRANSCRYPT INTERNATIONAL ("Transcrypt") and MOTOROLA, INC., by
and through it's Radio Products Americas Group ("Motorola").
WHEREAS, on August 8, 1995 Transcrypt and Motorola entered into an
agreement (the "Agreement"); and
WHEREAS, Transcrypt agreed to design and manufacture certain products
("Modules"), and Motorola agreed to purchase such Modules; and
WHEREAS, on Oct. 9, 1996 Transcrypt and Motorola amended the Agreement (the
"First Amendment"); and
WHEREAS, Transcrypt agreed to provide certain software to Motorola which
software would permit the end-user and/or technician to program the Modules to
operate according to design specifications; and
WHEREAS, both parties desire to amend the Agreement in certain respects for
a second time.
NOW THEREFORE, in consideration of the mutual obligations contained herein,
the parties hereby agree as follows:
1. Except as set forth herein, all capitalized terms not defined herein
shall have the meanings given to them in the Agreement and First Amendment.
2. Motorola shall purchase from Transcrypt those products, in such
quantities and at such prices as identified on Schedule 1, attached hereto and
made a part hereof ("Product"). Upon the execution of this Second Amendment,
Motorola shall issue to Transcrypt a purchase order for said Product.
3. During the remainder to the Term of the Agreement, Motorola shall have
the right to exchange any one Product with another Product, provided the same
quantity of Products are exchanged.
4. Transcrypt agrees that upon the receipt of said purchase order,
Motorola has fulfilled its entire purchase obligation under the Agreement,
including the minimum purchase obligation as provided for in Paragraph 34 of
the Agreement, and that Motorola is under no further obligation, either express
or implied, to purchase any additional Modules or Product from Transcrypt under
said Agreement.
5. Nothing contained in the Agreement and the First or Second Amendment
shall be deemed to create any express or implied obligation on either party to
renew or extend the Agreement or to create any right to continue this
Agreement on the same terms and conditions contained herein.
6. Nothing herein contained shall in any way alter, waive, annul, vary or
affect any terms, conditions or provisions of the Agreement or First Amendment
except as specifically provided herein, it being the intent of the parties
hereto that all of the terms, conditions and provisions of the Agreement and
First Amendment shall continue in full force and effect, except as hereby
amended.
1
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed by their proper and duly authorized officers as
of the day and year first above written.
MOTOROLA, INC., by and through it's TRANSCRYPT INTERNATIONAL
RADIO PRODUCTS AMERICAS GROUP
/s/ Chip Saunders /s/ Jeffery L. Fuller
- ----------------------------------- -----------------------------
Signature Signature
Chip Saunders JEFFERY L. FULLER
- ----------------------------------- -----------------------------
Name Name
Corp. VP & Div GM President and C.O.O.
- ----------------------------------- -----------------------------
Title Title
3/31/97
- ----------------------------------- ------------------------------
Date Date
2
<PAGE> 3
TRANSCRYPT SECOND AMENDMENT
SCHEDULE 1
<TABLE>
<CAPTION>
RADIO MODEL UNITS COST/UNIT PART # DESCRIPTION
- ----------- ----- --------- ------ -----------
<S> <C> <C> <C> <C>
GP350 ** $** M020-416
GP300 ** $** SC20-410 NON-KEYPAD
GP300 ** $** M093-410 KEYPAD
VISAR ** $** M096-410
HT1000 ** $** M020416
GM300 ** $** SC20-410 NON-KEYPAD
GM300 ** $** SC20-410 KEYPAD
MTX838 ** $** M094-410-M1
GP900 ** $** M094-410-M1
TOTAL **
</TABLE>
<PAGE> 1
EXHIBIT 10.27.1
FIFTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
This Fifth Amendment to Amended and Restated Loan Agreement ("Fifth
Amendment") is made and entered into as of this 1st day of March, 1997, by and
between TRANSCRYPT INTERNATIONAL, INC., a Delaware Corporation, formerly known
as Transcrypt International, Ltd., a Nebraska Limited Partnership, which has its
principal place of business in Lincoln, Nebraska ("Borrower") and NORWEST BANK
NEBRASKA, NATIONAL ASSOCIATION, a national banking association, organized and
existing under the laws of the United States of America, and which has its
principal place of business in Omaha, Nebraska ("Bank").
RECITALS:
A. Borrower and Bank previously entered into an Amended and Restated Loan
Agreement dated May 18, 1994 (the "Restated Loan Agreement"), a First
Amendment to Amended and Restated Loan Agreement dated June 1, 1995
(the "First Amendment"), a Second Amendment to Amended and Restated
Loan Agreement dated April 10, 1996 (the "Second Amendment"), a Third
Amendment to Amended and Restated Loan Agreement dated October 22, 1996
(the "Third Amendment"), and a Fourth Amendment to Amended and Restated
Loan Agreement dated November 19, 1996, which mutually describe the
terms and conditions of certain loans made by Bank to Borrower and
hereafter are referred to collectively as the "Loan Agreement".
B. At the request of Borrower, the Nebraska Investment Finance Authority
("Issuer") is issuing its Variable Rate Demand Industrial Development
Revenue Bonds Series 1997 (Transcrypt International, Inc. Project) (the
"Bonds") in the principal amount of $2,850,000.00 pursuant to an
Indenture of Trust dated as of March 1, 1997 (the "Indenture"), between
the Issuer and Norwest Bank Nebraska, National Association, Omaha, as
trustee (the "Trustee").
C. Borrower and the Issuer have executed a Loan Agreement dated as of
March 1, 1997 (the "Bond Loan Agreement"), under which Borrower has
agreed to use proceeds of the Bonds to acquire certain real estate and
construct certain facilities and to refund prior bonds, as more
particularly described in the Bond Loan Agreement (the "Project").
D. In order to induce purchase of the Bonds, Borrower has requested that
the Bank obtain the issuance by Norwest Bank Minnesota, National
Association (the "Minnesota Bank") of an irrevocable letter of credit
(the "Letter of Credit") for the benefit of the Trustee to provide for
payment of principal and interest (up to a
<PAGE> 2
maximum of fifty (50) days interest at a maximum interest rate of ten
percent (10%) per annum on the Bonds, plus an amount not exceeding
$85,500.00 with respect to the payment of a premium not to exceed three
percent (3%) of the principal amount of the Bonds, with the requested
amount of the Letter of Credit on the date of issuance being
$2,974,542.00.
E. The Bank is willing to obtain issuance of the Letter of Credit upon the
terms and subject to the conditions set forth in the Reimbursement
Agreement between Borrower and the Bank dated as of March 1, 1997 (the
"Reimbursement Agreement").
F. The issuance of the Bonds pursuant to the Indenture and the execution
of the documents related to same violate or may violate one or more
provisions of the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements, terms and conditions hereinafter set forth, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and Bank agree as follows:
1. Bank hereby consents to the issuance of the Bonds pursuant to
the Indenture and the execution of Bond Loan Agreement, the Reimbursement
Agreement, and all other documents and transactions relating to same.
2. Any breach of or default under the terms of the Reimbursement
Agreement or the Bond Loan Agreement shall constitute an Event of Default under
the Loan Agreement.
3. All other terms and conditions set forth in the Loan Agreement
shall remain in full force and effect, except as modified or supplemented by
this Fifth Amendment.
Dated the day and year first above written.
TRANSCRYPT INTERNATIONAL, INC. NORWEST BANK NEBRASKA,
NATIONAL ASSOCIATION
By: _________________________________ By: ___________________________
Its: ________________________________ Its:___________________________
-2-
<PAGE> 1
EXHIBIT 10.31
NOTICE: THIS BOND MAY BE TENDERED FOR PURCHASE ON AN OPTIONAL TENDER DATE UPON
TERMS AND CONDITIONS HEREIN DESCRIBED AT A PRICE EQUAL TO 100% OF THE PRINCIPAL
AMOUNT HEREOF PLUS ACCRUED INTEREST HEREON. THIS BOND IS REQUIRED TO BE TENDERED
FOR PURCHASE ON A MANDATORY TENDER DATE UPON TERMS AND CONDITIONS HEREIN
DESCRIBED AT A PRICE EQUAL TO 100% OF THE PRINCIPAL AMOUNT HEREOF PLUS ACCRUED
INTEREST HEREON. FROM AND AFTER AN OPTIONAL TENDER DATE ON WHICH THIS BOND MAY
BE TENDERED AND FROM AND AFTER A MANDATORY TENDER DATE ON WHICH THIS BOND IS
DEEMED TO HAVE BEEN TENDERED INTEREST SHALL CEASE TO ACCRUE ON THIS BOND, THIS
BOND SHALL NO LONGER BE DEEMED OUTSTANDING, AND THE HOLDER OF THIS BOND SHALL
THEREAFTER LOOK ONLY TO FUNDS HELD IN THE BOND PURCHASE FUND FOR PAYMENT OF THE
PURCHASE PRICE OF THIS BOND.
UNITED STATES OF AMERICA
STATE OF NEBRASKA
NEBRASKA INVESTMENT FINANCE AUTHORITY
No. R-1 $2,850,000.00
VARIABLE RATE DEMAND
INDUSTRIAL DEVELOPMENT REVENUE BOND,
SERIES 1997
(TRANSCRYPT INTERNATIONAL, INC. PROJECT)
THE ISSUER HAS NO TAXING POWER. THIS BOND SHALL NOT CONSTITUTE
A DEBT, LIABILITY OR GENERAL OBLIGATION OF THE STATE OR ANY POLITICAL
SUBDIVISION THEREOF; AND NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF
SHALL BE LIABLE THEREFOR. NEITHER THE FAITH, REVENUES, CREDIT NOR TAXING POWER
OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF SHALL BE PLEDGED TO THE
PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THIS BOND. THIS
BOND IS A SPECIAL LIMITED OBLIGATION OF THE ISSUER, PAYABLE SOLELY OUT OF THE
TRUST ESTATE PLEDGED THEREFOR PURSUANT TO THE INDENTURE, WHICH IS THE SOLE ASSET
OF THE ISSUER PLEDGED THEREFOR.
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE APPLICABLE "BLUE SKY" OR OTHER SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, IN
WHOLE OR IN PART, EXCEPT IN COMPLIANCE WITH ALL APPLICABLE STATE AND FEDERAL
LAWS AND EITHER UNDER EFFECTIVE FEDERAL AND STATE REGISTRATION STATEMENTS OR
PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATIONS. UNDER THE TERMS OF THE
INDENTURE, ONLY BANKS, SAVINGS AND LOAN ASSOCIATIONS, FINANCIAL
<PAGE> 2
INSTITUTIONS, INVESTMENT COMPANIES, MUTUAL FUNDS, CORPORATIONS, PENSION AND
PROFIT-SHARING ACCOUNTS, BUSINESS PARTNERSHIPS OR TRUSTS, EACH OF WHOM IS AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A) OF REGULATION D OF THE
SECURITIES AND EXCHANGE COMMISSION, AND DELIVERS AN INVESTOR LETTER TO THE
ISSUER AND TO THE TRUSTEE SUBSTANTIALLY IN THE FORM ATTACHED TO THE INDENTURE AS
EXHIBIT B-1 OR B-2, AS APPLICABLE, MAY INVEST, OR ACQUIRE A BENEFICIAL INTEREST,
IN THIS BOND AND ONLY THROUGH A REGISTERED BROKER-DEALER.
Interest Maturity Date of Original
Rate Date Issue CUSIP
- --------------- --------------- ------------------ -----------------------
Variable March 1, 2017 March 25, 1997 639669 CB 4
REGISTERED
HOLDER:
PRINCIPAL
AMOUNT:
KNOW ALL PERSONS BY THESE PRESENTS that the Nebraska
Investment Finance Authority, a body politic and corporate, not a state agency
but an independent instrumentality exercising essential public functions (the
"Issuer"), for value received, promises to pay to the registered holder named
above, or registered assigns, but only from the Bond Fund (as defined in the
Indenture described below), and upon presentation and surrender hereof at the
principal corporate trust office of the Trustee named below, the principal sum
specified above, on the maturity date specified above, or, if this Bond is
prepayable as stated below, on a prior date on which it shall have been duly
called for redemption, and to pay interest on said principal sum to the Record
Date Holder hereof, as defined below, solely from the Bond Fund, until the
principal sum is paid or discharged, at the rates and on the dates provided
herein, computed during the Variable Rate Period (hereinafter defined) on the
basis of the actual number of days elapsed in a year of 365 or 366 days, as
applicable, and during the Fixed Rate Period (hereinafter defined) on the basis
of a 360-day year of twelve 30-day months.
2
<PAGE> 3
THIS BOND SHALL BE PURCHASED ON THE DEMAND OF THE HOLDER AT
THE TIMES AND UPON THE TERMS AND CONDITIONS AS HEREINAFTER DESCRIBED.
This Bond shall bear interest from the date of original issue,
or from the most recent Interest Payment Date (hereinafter defined) to which
interest has been paid or provided for. The "Record Date Holder" is the person
in whose name this Bond is registered in the Bond Register maintained by the
Trustee named below or its successor in trust (the "Registered Holder" or
"Holder" hereof) either (i) with respect to each Variable Rate Interest Payment
Date (hereinafter defined) on the calendar day next preceding such Variable Rate
Interest Payment Date (hereinafter defined) and (ii) with respect to each Fixed
Rate Interest Payment Date (hereinafter defined) on the fifteenth day of the
calendar month next preceding such Fixed Rate Interest Payment Date, in each
case whether or not such day is a Business Day. Interest shall be payable by
check or draft mailed to the Registered Holder at his or her address as it
appears on the Bond Register on the Record Date, except as otherwise provided in
the Indenture.
The principal of and interest and premium, if any, on this
Bond are payable in lawful money of the United States of America. Upon notice to
the Trustee accompanied by proper wire instructions, any Holder of the Bonds in
an aggregate amount equal to or greater than $500,000 may elect to be paid the
interest on such Bonds payable on any Interest Payment Date by Federal Reserve
wire transfer in immediately available funds, less any applicable wire
transaction cost, to any bank in the United States specified by such Holder.
Interest not timely paid or duly provided for will be paid by
check mailed to the person in whose name this Bond is registered on the Bond
Register at the close of business on a date (the "Special Record Date") fixed by
the Trustee, notice of which is to be mailed to all Bondholders.
This Bond is one of an issue in the aggregate principal amount
of $2,850,000 (the "Bonds"), all of like nominal date of original issue and
tenor, except as to serial number and amount, issued in accordance with an
Indenture of Trust, dated as of March 1, 1997 (the "Indenture"), duly executed
and delivered by the Issuer to Norwest Bank Nebraska, National Association, in
Omaha, Nebraska (the "Trustee"), setting forth the terms upon which the
3
<PAGE> 4
Bonds are issued. The Bonds are equally and ratably secured by and entitled to
the protection of the Indenture. The Bonds are issued by the Issuer for the
purpose of refunding bonds of the Issuer and financing a project within the
meaning of Section 58-201 et seq., Reissue Revised Statutes of Nebraska (1993),
as amended (the "Act"), consisting of the construction of an addition to and
acquisition and installation of manufacturing equipment in the existing
manufacturing facility (the "Project") owned by Transcrypt International, Inc.,
a Delaware corporation (the "Company") and located in Lincoln, Nebraska by
making a loan (the "Loan") of the proceeds of the Bonds to the Company. The
Company has agreed under the Loan Agreement dated as of March 1, 1997, by and
between the Issuer and the Company (the "Loan Agreement") to repay the Loan,
together with interest thereon, in amounts and at times sufficient to pay the
principal of, premium, if any, and interest on the Bonds as the same shall
become due and payable (the "Basic Payments"). Pursuant to the Indenture, the
Issuer has assigned and pledged to the Trustee, for the equal and ratable
benefit of the Holders of the Bonds, the Basic Payments due under the Loan
Agreement and other amounts as set forth in the Loan Agreement, but not
including the Reserved Rights.
Payment of the Bonds is further secured by an irrevocable
letter of credit (such Letter of Credit or any alternate Letter of Credit
delivered in accordance with the Loan Agreement and Indenture are hereafter
collectively referred to as the "Letter of Credit") issued by Norwest Bank
Minnesota, National Association (together with the issuer of any Alternate
Letter of Credit delivered in accordance with the Loan Agreement are hereafter
collectively referred to as the "Bank") in favor of the Trustee, obligating the
Bank to pay to the Trustee during the periods described therein, upon request
and in accordance with the terms thereof and of the Loan Agreement and the
Indenture, the amounts described therein for the purpose of making certain
payments on or with respect to the Bonds. The Company and Norwest Bank Nebraska,
National Association (the "Reimbursement Bank") have entered into a Letter of
Credit and Reimbursement Agreement dated as of March 1, 1997 (together with any
reimbursement agreement relating to any alternate Letter of Credit, the
"Reimbursement Agreement") providing for repayment of the amounts drawn under
the Letter of Credit and other provisions relating to the Company and the
Project. Reference is hereby made to the Loan Agreement, Reimbursement
Agreement, Letter of Credit and Indenture, including all indentures supplemental
thereto, for a description of the property encumbered and assigned, the
provisions, among others,
4
<PAGE> 5
with respect to the nature and extent of the security, the rights of the Issuer,
and the rights, duties and obligations of the Company, the Trustee, the Bank,
the Reimbursement Bank and the Holders of the Bonds and the terms upon which the
Bonds are issued and secured.
The term "Business Day" shall mean a day other than a
Saturday, Sunday, legal holiday or other date on which banking institutions in
Minneapolis, Minnesota or Omaha, Nebraska are authorized or required by law to
close. If the date for making any payment or the last date for performance of
any act or the exercising of any right, as provided in this Bond, is not a
Business Day, such payment may be made or act performed or right exercised on
the next succeeding Business Day.
The Company has caused to be delivered to the Trustee the
Letter of Credit, which expires on April 1, 2007, or if April 1, 2007 is not a
Business Day, the first Business Day thereafter. The Trustee is entitled under
the Letter of Credit to draw up to (a) an amount sufficient (i) to pay 103
percent of the principal of the Bonds or (ii) to enable the Trustee to pay the
purchase price of the Bonds delivered to it for purchase and not remarketed,
plus (b) an amount equal to fifty (50) days' accrued interest on the Outstanding
Bonds assuming an interest rate of 10%. During the Letter of Credit Period (as
defined in the Indenture), upon the expiration of the Letter of Credit, the
Company is required to provide another letter of credit having terms
substantially similar to the Letter of Credit.
Interest on the Bonds shall be payable on the first day of
each month, commencing on April 1, 1997, during the Variable Rate Period, and on
the Conversion Date or the date of payment in full of this Bond if no Conversion
Date shall occur (each a "Variable Rate Interest Payment Date"), and, on March 1
or September 1 next succeeding the Conversion Date, and on each March 1 and
September 1 thereafter (each a "Fixed Rate Interest Payment Date") until payment
in full of this Bond.
Prior to the Conversion Date (as defined below), this Bond
shall bear interest at the Variable Rate as defined in the Indenture (the
"Variable Rate"); provided that in no event shall the Variable Rate exceed ten
percent (10.00%) per annum.
On and after the Conversion Date this Bond shall bear interest
at the Fixed Rate (as defined in the Indenture). The
5
<PAGE> 6
interest rate on this Bond shall be converted to the Fixed Rate, on a one-time
basis at the option of the Company upon the conditions set forth in the
Indenture and below.
The Company may, with the written consent of the Reimbursement
Bank, exercise the option to convert the interest rate on the Bonds from a
Variable Rate to a Fixed Rate by written notice to the Trustee, the Issuer and
the Remarketing Agent, as defined in the Indenture, stating (A) its election to
convert the interest rate on this Bond to the Fixed Rate, (B) the date on which
such conversion shall occur (the "Conversion Date"), which shall be a Business
Day not less than 60 nor more than 90 days from the date the Company gives such
notice, and (C) the date on which the Fixed Rate shall be announced, which shall
be not less than ten (10) days prior to the Conversion Date (the "Computation
Date"), and by delivering to the Trustee, the Issuer and the Remarketing Agent,
with such notice, an opinion of Bond Counsel (as such term is defined in the
Indenture) stating that such conversion to the Fixed Rate is authorized and
permitted by the Act and the Indenture and will not cause the interest on the
Bonds to become includable in gross income for federal income tax purposes. In
such case, the Fixed Rate shall be the interest rate on this Bond announced by
the Remarketing Agent on the Computation Date, shall be effective on and after
the Conversion Date and shall be equal to the interest rate at which the
Remarketing Agent has received on the Computation Date commitments to purchase
all of the Bonds on the Conversion Date at par.
If the Company has exercised its option to convert the Bonds
to the Fixed Rate and on the Computation Date the Remarketing Agent has not
received commitments to purchase all of the Bonds on the Conversion Date at par,
the conversion of the Bonds to the Fixed Rate shall be canceled and the Bonds
shall continue to bear interest after the Conversion Date at the Variable Rate
as if such option had not been exercised. The Trustee shall promptly give notice
of any such cancellation to the Bondholders. No such cancellation shall affect
the right of the Company thereafter to exercise its option to convert the Bonds
to the Fixed Rate.
Prior to the Conversion Date, the Holder of this Bond may
require the Trustee to purchase this Bond (in whole but not in part), on any
Business Day during the Variable Rate Period, at a purchase price equal to the
principal amount thereof plus accrued interest thereon from the most recent
Variable Rate Interest Payment Date, upon:
6
<PAGE> 7
a) giving to the Trustee and the Remarketing Agent notice by
facsimile, telex or other means of written or printed instantaneous
communication delivered to the Trustee at its principal corporate trust
office and the Remarketing Agent at its principal office (the "Optional
Tender Notice") stating: (1) the principal amount of this Bond and the
name of the holder hereof, and (2) the date on which this Bond is to be
purchased (the "Optional Tender Date"), which date shall be a Business
Day on or after the seventh calendar day next succeeding the date of
the giving of the Optional Tender Notice; and
b) delivery of this Bond (with an appropriate instrument of
transfer executed in blank) to the Trustee by 12:00 o'clock Noon,
Nebraska time, on the Business Day prior to the Optional Tender Date.
On the Optional Tender Date the Trustee shall purchase this
Bond from the Holder hereof using only funds available under the Indenture at a
purchase price equal to the principal amount hereof plus accrued interest
thereon.
A Mandatory Tender Date shall occur on any Conversion Date or
a date on which the Bonds are called for mandatory tender, in lieu of mandatory
redemption, as hereinafter described, or on the date on which an Alternate
Letter of Credit shall take effect. Subject to the provisions of (ii) below, the
Holder hereof shall be required to tender this Bond to the Trustee on or before
12:00 o'clock Noon, Nebraska time on the Business Day prior to the Mandatory
Tender Date, for purchase on the Mandatory Tender Date at a purchase price equal
to the principal amount hereof plus accrued interest thereon, all as more fully
provided herein and in the Indenture.
(i) Notice of a Mandatory Tender Date (a "Mandatory
Tender Notice") shall be given by the Trustee, by first class mail, to the
Holder of this Bond at its address appearing on the registration books for the
Bonds maintained by the Trustee, not less than thirty days prior to the
Conversion Date, or seven days prior to the date on which an Alternate Letter of
Credit shall take effect. Such Mandatory Tender Notice shall specify the
Conversion Date, or the date on which an Alternate Letter of Credit shall take
effect, as the case may be, and state (a) the reason for the mandatory tender,
(b) that all Bonds shall be purchased on the Conversion Date at a purchase price
equal to the principal amount
7
<PAGE> 8
thereof plus accrued interest thereon, (c) that all Bonds must be tendered for
purchase at or before 12:00 o'clock Noon, Nebraska time on the Business Day
prior to the Mandatory Tender Date, together with an appropriate instrument of
transfer executed in blank and (d) any such Bond which is not tendered but for
which there has been irrevocably deposited in the Letter of Credit Account in
the Bond Purchase Fund (as such term is defined in the Indenture) with the
Trustee an amount sufficient to pay the purchase price thereof (an "Untendered
Bond") shall be deemed to have been tendered and shall not be entitled to
receive interest on such Bond on and after the relevant Mandatory Tender Date.
(ii) This Bond shall be tendered to the Trustee for
purchase at or before 12:00 o'clock Noon, Nebraska time on the Business Day
prior to the Mandatory Tender Date, by delivering this Bond to the Trustee
together with an appropriate instrument of transfer duly executed in blank and
on the Mandatory Tender Date, the Trustee shall purchase this Bond or cause this
Bond to be purchased at a purchase price equal to the principal amount hereof
plus accrued interest thereon from the most recent Variable Rate Interest
Payment Date.
(iii) If this Bond is not tendered on or before any
Mandatory Tender Date, then this Bond shall be deemed to have been tendered and
the Holder hereof shall not be entitled to receive interest on this Bond for any
period beginning on or after the Mandatory Tender Date and upon surrender of
this Bond to the Trustee, the Holder of this Bond shall be paid only an amount
equal to the purchase price of this Bond due on the Mandatory Tender Date.
On or after September 1, 1997, the Bonds are subject to
redemption in whole or in part on any Interest Payment Date, at the option of
the Company and with the consent of the Reimbursement Bank, upon 30 days prior
notice, at a redemption price equal to the principal amount of the Bonds to be
redeemed plus accrued interest thereon to the redemption date, without premium.
During the Letter of Credit Period, as defined in the
Indenture, the Bonds are subject to mandatory redemption in whole at a
redemption price equal to the principal amount, without any premium, plus
accrued interest to the Redemption Date on the date established pursuant to the
Indenture, in the event that the Company fails to provide the Trustee at least
35 days prior to the expiration of a Letter of Credit either an extension of the
8
<PAGE> 9
existing Letter of Credit by the Bank or an Alternate Letter of Credit; provided
that in lieu of redemption of the Bonds, the Company may require the Bonds be
tendered or purchased on the Redemption Date if certain conditions set forth in
the Indenture are satisfied.
This Bond is subject to mandatory redemption in whole on the
first Business Day for which notice of redemption can properly be given as
provided herein upon the occurrence of a Determination of Taxability (as such
term is defined in the Indenture) at a redemption price equal to 103 percent of
the principal amount of this Bond, but without any other premium or obligation
to the Holder, plus accrued interest thereon to the redemption date.
All Bonds are subject to mandatory prepayment and redemption
by lot at par and accrued interest without premium on each of the following
dates and in the following principal amounts (unless and to the extent a credit
against any such amount is applied as provided in the Indenture):
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
3/1/98 $140,000
3/1/99 140,000
3/1/00 140,000
3/1/01 140,000
3/1/02 140,000
3/1/03 140,000
3/1/04 140,000
3/1/05 140,000
3/1/06 140,000
3/1/07 140,000
3/1/08 145,000
3/1/09 145,000
3/1/10 145,000
3/1/11 145,000
3/1/12 145,000
3/1/13 145,000
3/1/14 145,000
3/1/15 145,000
3/1/16 145,000
3/1/17* 145,000
</TABLE>
- --------------
9
<PAGE> 10
*Final Maturity
Pursuant to Section 4.9 of the Indenture, the Reimbursement
Bank or its designee may purchase Bonds which have been called for redemption or
acceleration due to the Company's failure to provide an Alternate Letter of
Credit, upon a Determination of Taxability or upon certain Events of Default.
In the case of any partial redemption of the Bonds, the
particular Bonds to be redeemed shall be selected by the Trustee in such manner
as the Trustee shall deem fair and equitable and the Bonds shall be redeemed in
the principal amounts specified in the Indenture. Upon the partial redemption of
any Bond, the Holder thereof is not required to surrender such Bond to the
Trustee for payment of the redemption price (including accrued interest thereon
on the date fixed for redemption) of the portion thereof called for redemption
and the Holder shall note (and there shall be deemed to have been noted) on the
Bond the principal amount so redeemed; provided that failure to note such
prepayment hereon shall not affect the validity of such redemption.
Notice of redemption shall, if required by law, be published
at least once before the redemption date in a daily or weekly financial journal
or newspaper of general circulation in New York, New York, and shall be mailed
first class mail at least thirty (30) days prior to the date fixed for
redemption to each Registered Holder of a Bond to be redeemed. All Bonds so
called for redemption, provided funds for their redemption have been duly
deposited, will cease to bear interest on the specified redemption date and
(except for the purpose of payment) shall no longer be protected by the
Indenture and shall not be deemed Outstanding under the Indenture, and shall
thereafter be payable solely from the funds provided for payment.
In addition to the foregoing, if under certain circumstances
an Event of Default, as defined in the Indenture, shall occur, the principal of
all the Bonds and all interest accrued thereon may, without prior notice to the
Bondholders, be declared due and payable in the manner and with the effect
provided in the Loan Agreement and Indenture.
This Bond and the series of which it forms a part are issued
pursuant to and in full compliance with the Constitution and laws of the State
of Nebraska, particularly the Act, and pursuant to a resolution adopted and
approved by the Issuer, which
10
<PAGE> 11
resolution authorized the Project and the execution and delivery of the
Indenture, and the issuance of the Bonds as special, limited obligations payable
solely from revenues derived from the Loan Agreement, including Letter of Credit
proceeds, except that under certain circumstances the Bonds may be payable from
Bond proceeds. The Basic Payments under the Loan Agreement are scheduled to be
sufficient to pay the principal of, premium, if any, and interest on the Bonds
as the same become due and payable and are to be paid to the Trustee for the
account of the Issuer and credited to the Bond Fund as a special trust fund
account created by the Issuer and have been and are hereby pledged for that
purpose. THE BONDS, INCLUDING PRINCIPAL, PREMIUM AND ANY OTHER PAYMENTS HOWEVER
DESIGNATED, AND THE INTEREST DUE THEREON DO NOT AND SHALL NEVER CONSTITUTE A
GENERAL INDEBTEDNESS OF THE ISSUER WITHIN THE MEANING OF ANY STATE
CONSTITUTIONAL OR STATUTORY PROVISION AND DO NOT AND SHALL NOT CONSTITUTE OR
GIVE RISE TO A PECUNIARY LIABILITY OR MORAL OBLIGATION OF THE ISSUER, THE STATE
OF NEBRASKA OR ANY OF ITS POLITICAL SUBDIVISIONS, OR A CHARGE AGAINST ITS
GENERAL CREDIT, OR TO THE EXTENT PERMITTED BY LAW, ANY PECUNIARY LIABILITY OF
ANY OFFICER, EMPLOYEE OR AGENT OF THE ISSUER. THE ISSUER HAS NO TAXING POWERS.
The provisions of this paragraph are controlling notwithstanding anything herein
to the contrary.
The Holder of this Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any Event of Default under the
Indenture, or to institute, appear in or defend any suit or other proceedings
with respect thereto, except as provided in the Indenture. Modifications or
alterations of the Indenture, or of any indenture supplemental thereto, may be
made only to the extent and in the circumstances permitted by the Indenture.
With the consent of the Issuer, the Company, the Reimbursement
Bank and the Trustee, as appropriate, and to the extent permitted by and as
provided in the Indenture, the terms and provisions of the Indenture, the Loan
Agreement and the Letter of Credit, or of any instrument supplemental thereto,
may be modified or altered by the consent of the Holders of at least 51% in
aggregate principal amount of the Bonds then Outstanding thereunder.
The Indenture also contains provisions permitting Holders of a
majority in aggregate principal amount of the Bonds at the time Outstanding, on
behalf of all the Holders of all the Bonds and
11
<PAGE> 12
with the consent of the Reimbursement Bank, to waive compliance by the Issuer
with certain provisions of the Indenture and certain defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Bond shall be conclusive and binding upon such Holder and on all future
Holders of this Bond and of any Bond issued in lieu hereof whether or not
notation of such consent or waiver is made upon this Bond.
The Bonds are issued as fully registered Bonds without coupons
in the denomination of $100,000 or any greater amount in multiples of $5,000
except for one Bond which following redemptions may be in an amount less than
$100,000. The Bonds are interchangeable for one or more Bonds in Authorized
Denominations, aggregate principal amount, interest rate and maturity date, upon
surrender thereof by the Holder at the principal office of the Trustee, in the
manner and subject to the limitations provided in the Indenture. The Issuer, the
Trustee and any additional paying agents may deem and treat the Holder hereof as
the absolute owner hereof (whether or not this Bond shall be overdue) for the
purpose of receiving payment of or on account of principal hereof and interest
(except as otherwise hereinabove provided with respect to the Record Date) due
hereon and for all other purposes, and the Issuer, the Trustee and any
additional paying agents shall not be affected by any notice to the contrary.
Subject to the limitations provided in the Indenture, this
Bond is only transferable by the Holder hereof upon surrender of this Bond for
transfer at the principal corporate trust office of the Trustee, duly endorsed
or accompanied by a written instrument or instruments of transfer in the form
printed on this Bond or in another form satisfactory to the Trustee and executed
and with guaranty of signature by the Holder hereof or his attorney duly
authorized in writing, containing written instructions as to the details of the
transfer of the Bond. Thereupon the Issuer shall execute (if necessary) and the
Trustee shall authenticate and deliver, in exchange for this Bond, one or more
new Bonds in the name of the transferee (but not registered in blank or to
"bearer" or a similar designation), of an Authorized Denomination, in aggregate
principal amount equal to the principal amount of this Bond, of the same
maturity, and bearing interest at the same rate.
Notwithstanding anything herein to the contrary, in no event
shall this Bond be transferred to or registered in the name of any transferee
(except the Trustee, the Reimbursement Bank, the Remarketing Agent or the
Company) who is not an institutional
12
<PAGE> 13
accredited investor who has (A) executed an Investor Letter in the form attached
to this Indenture as Exhibit B-1 or (B), in the event such transferee is to be
issued a Bond (i) which is in a principal amount representing less than
one-third of the Bonds Outstanding, or (ii) at such time the Letter of Credit
then securing this Bond is not issued by a Bank, the senior debt obligations of
which carry a Rating Category of at least AA, or (iii) at such time the Letter
of Credit is not then in full force and effect or has been improperly
dishonored, executed an Investor Letter in the form attached to this Indenture
as Exhibit B-2.
No service charge shall be made to the Holder for any
registration, transfer or exchange hereinbefore referred to, but the Trustee may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in connection with any transfer or exchange of Bonds,
other than exchanges expressly provided in the Indenture to be made without
charge to Bondholders.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,
conditions and things required to exist, to happen and to be performed precedent
to and in the execution and delivery of the Indenture and the issuance of this
Bond do exist, have happened and have been performed in due time, form and
manner, as required by law, and that the issuance of this Bond and the series of
which it forms a part, together with all other obligations of the Issuer, does
not exceed or violate any constitutional or statutory limitation.
This Bond shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture unless the
Certificate of Authentication hereon shall have been executed by the Trustee.
IN WITNESS WHEREOF, the Nebraska Investment Finance Authority,
by its governing body, has caused this Bond to be executed in its name by the
manual or facsimile signatures of its Chairperson and its Executive Director and
by the manual signature of the Trustee acting as authenticating agent, and has
caused this Bond to be sealed with a facsimile of its official seal printed
hereon.
13
<PAGE> 14
NEBRASKA INVESTMENT FINANCE
AUTHORITY
TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described
in the within mentioned Indenture.
Norwest Bank Nebraska, National Association,
Trustee
By______________________________ Date:______________________
Responsible Agent
14
<PAGE> 15
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and
transfers unto ________________________________________________
_________________________________ the within Bond and does hereby irrevocably
constitute and appoint __________________ ______________ attorney to transfer
the Bond on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated: _______________________ ___________________________
Notice: The assignor's signature to this assignment must
correspond with the name as it appears upon the face
of the within Bond in every particular, without
alteration or any change whatever.
Signature Guaranteed:
_______________________
Signature(s) must be guaranteed by a national bank or trust company or by a
brokerage firm having a membership in one of the major stock exchanges.
The Trustee will not effect transfer of this Bond unless the
information concerning the transferee requested below is provided.
Name and Address: ________________________________________
________________________________________
________________________________________
(Include information for all joint owners
if the Bond is held by joint account)
Insert social security or
other identifying number of
Transferee
___________________________
___________________________
15
<PAGE> 1
EXHIBIT 10.32
NEBRASKA INVESTMENT FINANCE AUTHORITY
ISSUER
AND
NORWEST BANK NEBRASKA, NATIONAL ASSOCIATION
TRUSTEE
INDENTURE OF TRUST
Dated as of March 1, 1997
$2,850,000 VARIABLE RATE DEMAND
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1997
(TRANSCRYPT INTERNATIONAL, INC. PROJECT)
<PAGE> 2
TABLE OF CONTENTS
Page
----
PARTIES..................................................................... 1
RECITALS.................................................................... 2
GRANTING CLAUSES............................................................ 3
ARTICLE I DEFINITIONS, EXHIBITS AND GENERAL PROVISIONS............. 4
Section 1.1 Definitions........................................ 4
Section 1.2 Rules of Interpretation............................ 15
ARTICLE II THE BONDS................................................ 17
Section 2.1 Authorized Amount and Form of Bonds................ 17
Section 2.1A Form of Fixed Rate Bond............................ 31
Section 2.2 Initial Issue...................................... 41
Section 2.3 Variable Rate...................................... 42
Section 2.4 Fixed Rate......................................... 43
Section 2.5 Execution.......................................... 44
Section 2.6 Authentication..................................... 44
Section 2.7 Delivery of Initial Issue.......................... 44
Section 2.8 Mutilated, Lost, Stolen, Destroyed or
Untendered Bonds................................... 45
Section 2.9 Ownership of Bonds................................. 45
Section 2.10 Preparation of Definitive Bonds;
Temporary Bonds.............................. 46
Section 2.11 Registration, Transfer and Exchange of
Bonds.............................................. 46
Section 2.12 Interest Rights Preserved.......................... 48
Section 2.13 Cancellation of Bonds.............................. 48
ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY...................... 49
Section 3.1 Redemption......................................... 49
Section 3.2 Partial Redemption of Bonds........................ 50
Section 3.3 Procedure for Redemption........................... 51
Section 3.4 Payment of Bonds Upon Redemption................... 51
Section 3.5 No Partial Redemption After Default................ 52
Section 3.6 Cancellation....................................... 52
ARTICLE IV PURCHASE AND REMARKETING OF BONDS........................ 53
Section 4.1 Purchase of Bonds at Option of Holder.............. 53
Section 4.2 Mandatory Tender of Bonds.......................... 54
Section 4.3 Duties of Trustee.................................. 54
i
<PAGE> 3
Section 4.4 Remarketing of Bonds............................... 55
Section 4.5 Purchase of Tendered Bonds......................... 56
Section 4.6 Delivery of Bonds.................................. 56
Section 4.7 Purchase Not to Constitute a Redemption............ 57
Section 4.8 Untendered Bonds................................... 57
Section 4.9 Purchase of Bonds in Lieu of Certain
Redemptions and Acceleration....................... 57
ARTICLE V GENERAL COVENANTS........................................ 60
Section 5.1 Payment of Principal, Premium and
Interest........................................... 60
Section 5.2 Performance of and Authority for
Covenants.......................................... 60
Section 5.3 Instruments of Further Assurance................... 60
Section 5.4 Recording and Filing............................... 60
Section 5.5 Books and Records.................................. 61
Section 5.6 Bondholders' Access to Bond Register............... 61
Section 5.7 Rights Under Loan Agreement........................ 61
ARTICLE VI FUNDS AND ACCOUNTS....................................... 62
Section 6.1 "Trust Moneys" Defined............................. 62
Section 6.2 Construction Fund.................................. 62
Section 6.3 Variable Rate Demand Industrial Develop
ment Revenue Bond Fund (Transcrypt
International, Inc. Project)....................... 63
Section 6.4 Bond Purchase Fund................................. 66
Section 6.5 Deposit of Funds with Paying Agent................. 69
ARTICLE VII LETTER OF CREDIT......................................... 71
Section 7.1 Delivery of Letter of Credit....................... 71
Section 7.2 Draws under the Letter of Credit................... 71
Section 7.3 Disposition of Moneys Drawn Under Letter
of Credit.......................................... 72
Section 7.4 Alternate Letter of Credit......................... 72
Section 7.5 Reinstatement of Letter of Credit Upon
Drawing Under Section 7.2.......................... 73
Section 7.6 Pledge of Funds to Reimbursement Bank.............. 74
Section 7.7 Grant of Subordinate Security Interest
to Reimbursement Bank.............................. 74
ARTICLE VIII INVESTMENTS.............................................. 75
Section 8.1 Investments by Trustee............................. 75
Section 8.2 Return on Investments.............................. 75
Section 8.3 Computation of Balances in Fund.................... 77
ii
<PAGE> 4
Section 8.4 Rebate to United States............................ 77
ARTICLE IX DISCHARGE OF LIEN........................................ 78
Section 9.1 Discharge of Lien and Security Interests
.................................................. 78
Section 9.2 Discharge of the Indenture......................... 78
Section 9.3 Tax Call........................................... 79
Section 9.4 Completion of Project.............................. 79
ARTICLE X DEFAULT PROVISIONS AND REMEDIES.......................... 80
Section 10.1 Events of Default.................................. 80
Section 10.2 Acceleration....................................... 80
Section 10.3 Remedies........................................... 81
Section 10.4 Direction of Proceedings by Bondholders............ 82
Section 10.5 Waiver of Stay or Extension Laws................... 82
Section 10.6 Priority of Payment and Application of
Moneys............................................. 82
Section 10.7 Remedies Vested in Trustee......................... 84
Section 10.8 Rights and Remedies of Holders..................... 84
Section 10.9 Termination of Proceedings......................... 85
Section 10.10 Waiver of an Event of Default...................... 85
ARTICLE XI THE TRUSTEE.............................................. 86
Section 11.1 Acceptance of the Trustee.......................... 86
Section 11.2 Trustee's Fees, Charges and Expenses............... 88
Section 11.3 Notice to Holders of Default....................... 88
Section 11.4 Intervention by Trustee............................ 89
Section 11.5 Successor Trustee.................................. 89
Section 11.6 Resignation by Trustee............................. 89
Section 11.7 Removal of Trustee................................. 89
Section 11.8 Appointment of Successor Trustee................... 90
Section 11.9 Acceptance by Successor Trustees................... 90
Section 11.10 Right of Trustee to Pay Taxes and Other
Charges............................................ 91
Section 11.11 Trustees Protected in Relying Upon
Resolutions........................................ 91
Section 11.12 Successor Trustee as Custodian of Bond
Fund and Paying Agent.............................. 91
Section 11.13 Co-Trustee......................................... 91
Section 11.14 Obligation of Trustee as to Reporting.............. 94
Section 11.15 Successor Paying Agent............................. 94
Section 11.16 Confirmation of the Trustee........................ 94
Section 11.17 Remarketing Agent.................................. 95
iii
<PAGE> 5
Section 11.18 Qualifications of Remarketing Agent;
Resignation; Removal............................... 96
ARTICLE XII SUPPLEMENTAL INDENTURES.................................. 97
Section 12.1 Supplemental Indentures Not Requiring
Consent of Bondholders............................. 97
Section 12.2 Supplemental Indentures Requiring
Consent of Holders................................. 97
Section 12.3 Rights of Trustee.................................. 99
Section 12.4 Consent of Reimbursement Bank...................... 99
ARTICLE XIII AMENDMENTS TO LOAN AGREEMENT.............................100
Section 13.1 Amendments Not Requiring Bondholder
Consent............................................100
Section 13.2 Amendments Requiring Bondholder Consent............100
Section 13.3 Consent of Reimbursement Bank......................101
ARTICLE XIV MISCELLANEOUS PROVISIONS.................................102
Section 14.1 Consent of Holders.................................102
Section 14.2 Rights Under Indenture.............................102
Section 14.3 Meetings of Bondholders............................102
Section 14.4 Severability.......................................105
Section 14.5 Notices............................................106
Section 14.6 Required Approvals; Rights of
Reimbursement Bank...........................107
Section 14.7 Counterparts.......................................107
Section 14.8 Limitation of Liability of Issuer and
its Officers, Employees and Agents.................107
Section 14.9 Amounts Remaining in Funds.........................108
SIGNATURES............................................................102, 103
EXHIBIT A Legal Description of Project Premises..........................A-1
EXHIBIT B-1 Form of Investor Letter........................................B-1
EXHIBIT B-2 Form of Investor Letter........................................B-2
iv
<PAGE> 6
INDENTURE OF TRUST
THIS INDENTURE OF TRUST (the "Indenture") dated as of March 1, 1997,
by and between the Nebraska Investment Finance Authority, a body politic and
corporate, not a state agency but an independent instrumentality exercising
essential public functions (the "Issuer"), and Norwest Bank Nebraska, National
Association, a national banking association, authorized to accept and execute
trusts of the character herein set out, with its principal office in Omaha,
Nebraska (the "Trustee"):
WITNESSETH
WHEREAS:
1. The Issuer is authorized by Sections 58-201 et seq., Reissue
Revised Statutes of Nebraska, as amended (the "Act"), to issue industrial
development revenue bonds to finance in whole or in part the cost of a "Project"
(as hereinafter defined) for the public purposes expressed in the Act; and
2. The Issuer and Transcrypt International, Inc., a Delaware
corporation (the "Company") have made the necessary arrangements for the
construction and equipping of an addition to the Company's existing
manufacturing facility located in Lincoln, Lancaster County, Nebraska (the
"Project") and to refinance the Issuer's Industrial Development Revenue Bonds
(Transcrypt International, Ltd., Project), Series 1994, issued to finance
acquisition, construction and equipping of a manufacturing facility for Company,
and the Issuer has entered into a Loan Agreement with the Company (as
hereinafter defined) which specifies the terms and conditions of said
construction and equipping and provides for the Issuer to finance the Project by
making a loan (the "Loan") to the Company to be funded through the issuance of
$2,850,000 Variable Rate Demand Industrial Development Revenue Bonds, Series
1997 (Transcrypt International, Inc. Project) (the "Bonds"), of the Issuer; and
3. Under the terms of the Loan Agreement, the Company has agreed to
repay the Bonds, and to secure the payment of the Bonds, Norwest Bank Minnesota,
National Association (the "Bank") has agreed to issue its Irrevocable Letter of
Credit (the "Original Letter of Credit") to the Trustee pursuant to a Letter of
Credit and Reimbursement Agreement of even date herewith (the "Reimbursement
Agreement") between the Company and Trustee (in its
<PAGE> 7
capacity under the Reimbursement Agreement, the "Reimbursement Bank"); and
4. As security for the payment of the Bonds, the Issuer has agreed
to assign and pledge to the Trustee, among other things, all right, title and
interest of the Issuer in and to the Loan Agreement (except certain rights
reserved to the Issuer under the terms of this Indenture), including the Basic
Payments (as hereinafter defined); and
5. Pursuant to the Reimbursement Agreement the Company has agreed to
reimburse the Reimbursement Bank for draws under the Letter of Credit; and
6. All things necessary to make the Bonds, when authenticated by the
Trustee and issued as in this Indenture provided, valid, binding and legal
limited obligations of the Issuer according to the import thereof, and to
constitute this Indenture a valid contract for the security of the Bonds, have
been done and performed; and the creation, execution and delivery of this
Indenture, and the creation, execution and issuance of said Bonds, subject to
the terms hereof, have in all respects been duly authorized;
NOW THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS INDENTURE
WITNESSETH:
The Issuer, in consideration of the premises and the acceptance by
the Trustee of the trusts hereby created and of the purchase and acceptance of
the Bonds by the Holders (as herein defined) thereof, in order to secure the
payment of the principal of and interest and premium, if any, on the Bonds
according to their tenor and effect and the performance and observance by the
Issuer of all the covenants expressed or implied herein and in the Bonds, does
hereby grant, mortgage, grant a security interest in, assign, transfer in trust,
and pledge to the Trustee, and to its successors in trust, and to them and their
assigns forever, the following:
FIRST
All rights, title, interest and privileges of the Issuer in, to and
under the Loan Agreement, including, but not limited to, all sums which the
Issuer is entitled to receive from the Company pursuant to the Loan Agreement
and in particular the Basic Payments
2
<PAGE> 8
(but excluding the Reserved Rights of the Issuer) and all other sums (including
Bond proceeds) which are required to be deposited in the trust accounts in
accordance with Article VI hereof.
SECOND
The earnings derived from the investment of any of the foregoing
sums as provided herein; and
THIRD
All Letter of Credit proceeds and any and all other property of
every name and nature which may from time to time hereafter by delivery or by
writing of any kind be subjected to the lien hereof by the Issuer or by anyone
in its behalf or with its written consent, and the Trustee is hereby authorized
to receive any and all such property at any and all times and to hold and apply
the same as additional security hereunder subject to the terms hereof.
TO HAVE AND TO HOLD all the same (herein called the "Trust Estate")
with all privileges and appurtenances hereby granted and assigned, or agreed or
intended so to be, to the Trustee and its successors in trust and to them and
their assigns forever;
SUBJECT TO the rights of the Company under the Loan Agreement;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth
for the equal and proportionate benefit, security and protection of all Holders
from time to time of the Bonds issued under and secured by this Indenture,
without privilege, priority or distinction as to lien or otherwise of any of the
Bonds over any of the others except as otherwise provided herein;
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns,
shall well and truly pay, or cause to be paid, or provide fully for payment as
herein provided of the principal of the Bonds and the interest due or to become
due thereon (together with premium, if any), at the time and in the manner set
forth in the Bonds according to the true intent and meaning thereof, and shall
make the payments into the Bond Fund as required under Article VI or shall
provide, as permitted hereby, for the payment thereof by depositing with the
Trustee sums sufficient for payment of the
3
<PAGE> 9
entire amount due or to become due thereon as herein provided and additional
amounts as set forth in Article IX, and shall well and truly keep, perform and
observe all the covenants and conditions pursuant to the terms of this Indenture
to be kept, performed and observed by it, and shall pay to the Trustee all sums
of money due or to become due to it in accordance with the terms and provisions
hereof, then this Indenture and the rights hereby granted shall cease, terminate
and be void except as otherwise provided herein; otherwise, this Indenture shall
be and remain in full force and effect.
UNDER THE PROVISIONS OF THE ACT the Bonds may not be payable from or
be a charge upon any funds of the Issuer other than the revenue pledged to the
payment thereof nor shall the Issuer be subject to any pecuniary liability
thereon and no Holder or Holders of the Bonds shall ever have the right to
compel the Issuer to pay any Bonds or the interest and premium, if any, thereon,
or to enforce payment thereof against any property of the Issuer, except as
above provided; the Bonds shall not constitute a charge, lien or encumbrance,
legal or equitable, upon any property of the Issuer, except as above provided;
and no Bond shall constitute a debt of the Issuer within the meaning of any
constitutional or statutory limitation, but nothing in the Act impairs the
rights of Holders of Bonds issued under this Indenture to enforce the covenants
made for the security thereof as provided in this Indenture and in the Act, and
by authority of the Act the Issuer and the Trustee mutually covenant and agree,
to the extent specifically provided herein, for the equal and proportionate
benefit of all Holders of the Bonds, as follows:
4
<PAGE> 10
ARTICLE I
DEFINITIONS, EXHIBITS AND GENERAL PROVISIONS
Section 1.1 Definitions.
In this Indenture the following terms have the following meanings
unless the context hereof clearly requires otherwise, and any other terms
defined in the Loan Agreement shall have the same meanings when used herein as
assigned them in the Loan Agreement unless the context or use thereof indicates
another or different meaning or intent:
Act: Sections 58-201 et seq., Reissue Revised Statutes of Nebraska (1993),
as amended;
Act of Bankruptcy: any of the following events:
(i) The Company shall (a) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or the
like of the Company or of all or a substantial part of its property, (b)
commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter
in effect), or (c) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts;
(ii) A proceeding or case shall be commenced, without the application or
consent of the Company, in any court of competent jurisdiction, seeking (a) the
liquidation, reorganization, dissolution, winding-up, or the composition or
adjustment of debts, of the Company, (b) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Company or of all or any substantial
part of the assets of the Company, or (c) similar relief in respect of the
Company under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts;
(iii) The Issuer shall (a) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or the
like of the Issuer or of all or a substantial part of its property, (b) commence
a voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), or (c) file a petition seeking to take advantage of any
5
<PAGE> 11
other law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts; or
(iv) A proceeding or case shall be commenced, without the application or
consent of the Issuer, in any court of competent jurisdiction, seeking (a) the
liquidation, reorganization, dissolution, winding-up, or the composition or
adjustment of debts, of the Issuer, (b) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Issuer or of all or any substantial
part of the assets of the Issuer, or (c) similar relief in respect of the Issuer
under any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts;
Additional Charges: the payments required by Section 4.4 of the Loan
Agreement;
Adjustment Date: Wednesday of each week or the next Business Day
thereafter if such day is not a Business Day;
Adjustment Period: the period beginning on the next day following an
Adjustment Date and ending on the next succeeding Adjustment Date;
Alternate Letter of Credit: any Letter of Credit delivered to the Trustee
in accordance with Section 4.8(2) of the Loan Agreement and Section 7.4 hereof;
Authorized Denominations: $100,000 or any greater amount in $5,000
multiples;
Available Moneys: shall mean (i) moneys held by the Trustee in the
Construction Fund or Bond Fund for a period of at least 92 consecutive days,
during which period no Act of Bankruptcy shall have occurred, or (ii) proceeds
of a drawing under the Letter of Credit;
Bank: Norwest Bank Minnesota, National Association (the issuer of the
Original Letter of Credit), its successors or assigns, including any other
entity which may, from time to time, be the issuer of the Letter of Credit then
in effect, as provided herein;
Bank Insolvency: a decree or order of a court or agency or supervisory
authority, having jurisdiction in the premises for the
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<PAGE> 12
appointment of a conservator or receiver or liquidator of any insolvency,
readjustment of debt , marshalling of assets and liabilities or similar
proceeding, or for the winding-up or liquidation of its affairs has been entered
against the Bank or the Bank has consented to the appointment of a conservator
or receiver or liquidator in any such proceedings of or relating to the Bank or
relating to all or substantially all of its property;
Base Rate: the rate of interest publicly announced from time to time by
Bank, or its successor, as its base or prime rate of interest, which rate shall
change when and as such base rate changes;
Basic Payments or Loan Payments: the payments required by Sections 4.2 and
4.3 of the Loan Agreement;
Bond Closing: the date on which there is delivery by the Issuer of, and
payment for, the Bonds;
Bond Counsel: the firm of Rembolt Ludtke & Berger, Lincoln, Nebraska, or
any other nationally recognized bond counsel experienced in tax exempt private
activity bond financing selected by the Trustee and acceptable to the Issuer and
the Company and, during the Letter of Credit Period, the Reimbursement Bank;
Bond Fund: the fund so designated in Section 6.3 from which the principal
of and interest on the Bonds are payable and within which shall be established a
General Account and a Letter of Credit Account;
Bond Purchase Fund: the fund so designated in Section 6.4 and within which
there shall be established a Remarketing Account and a Letter of Credit Account;
Bond Register: the register maintained by the Trustee pursuant to Section
2.11;
Bondholder or Holder: the person in whose name a Bond is registered in the
Bond Register;
Bonds: the $2,850,000 Variable Rate Demand Industrial Development Revenue
Bonds, Series 1997 (Transcrypt International, Inc. Project) to be issued
pursuant hereto;
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Bond Year: each twelve (12) month period commencing March 1, and ending on
the last day of the following February, provided that the first Bond Year shall
commence on Bond Closing and end on the last day of February, 1998;
Business Day: any day other than a Saturday, Sunday, legal holiday or a
day on which banking institutions in Minneapolis, Minnesota or Omaha, Nebraska
are authorized or required by law to close;
Code or Internal Revenue Code: the Internal Revenue Code of 1986, as
amended, and all applicable Treasury Regulations;
Company: Transcrypt International, Inc., a Delaware corporation, its
successors and assigns, and any surviving, resulting or transferee corporation
or other entity which may assume its obligations under, and pursuant to the
terms of, the Loan Agreement;
Company Bonds: any Bond or Bonds purchased by the Trustee for the account
of the Company pursuant to Section 4.1 and 4.2 and held by the Trustee as the
agent of the Reimbursement Bank, pursuant to the Reimbursement Agreement;
Completion Date: the date established under Section 3.6 of the Loan
Agreement;
Computation Date: has the meaning assigned to it in Section 2.4;
Condemnation: the word "Condemnation" or phrase "eminent domain" as used
herein shall include the taking or requisition by governmental authority or by a
person, firm or corporation acting under governmental authority and a conveyance
made under threat of Condemnation, provided such conveyance is made with the
approval of the Reimbursement Bank, and "Condemnation award" shall mean payment
for property condemned or conveyed under threat of Condemnation;
Construction Fund: the fund so designated in Section 6.2, from which fund
Project Costs are reimbursed;
Conversion Date: the date as of which the interest rate on the Bonds
converts from a Variable Rate to a Fixed Rate as such date is established
pursuant to Section 2.4;
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Date of Taxability: the date as of which the interest on the Bonds is
deemed includable in gross income for federal income tax purposes under a
Determination of Taxability;
Defaulted Interest: shall have the meaning stated in Section 2.2 hereof;
Determination of Taxability: a determination that the interest income on
any Bond is includable in gross income for federal income tax purposes under
Section 103 of the Code for any reason, other than during any period the Bonds
are held by a "substantial user" of the Project or a "related person," as
defined in Section 147(a) of the Code, which determination shall be deemed to
have been made upon the occurrence of the first to occur of the following:
(i) the date on which the Company determines that the interest
income on any of the Bonds is includable in gross income for federal
income tax purposes; or
(ii) the date on which any change in law or final Treasury
Regulation becomes effective or on which the Internal Revenue Service has
issued any private ruling, technical advice or any other written
communication to the effect that the interest income on any of the Bonds
is includable in gross income for federal income tax purposes; or
(iii) the date on which the Company shall receive notice from the
Trustee in writing that the Trustee has been advised by any Holder of any
Bond that the Internal Revenue Service has issued a notice which asserts
that the interest on such Bond is includable in gross income for federal
income tax purposes;
(iv) the date on which the Company issues a statement to the effect
that it has exceeded or intends to exceed the maximum capital expenditure
permitted under Section 144(a)(4) of the Code; or
(v) the date of which any Holder receives notice that the Company or
the Trustee has taken any action inconsistent with, or has failed to act
consistently with, the tax-exempt status of the Bonds;
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<PAGE> 15
provided that no Determination of Taxability shall be deemed to have occurred as
a result of a determination by the Company pursuant to clause (i) above unless
such determination is supported by a written opinion of counsel in form
satisfactory to the Trustee that the interest income on the Bonds is includable
in gross income for federal income tax purposes;
Discharge Date: the date on which all Outstanding Bonds are discharged
under Article IX;
Event of Default: any of the events set forth in Section 10.1;
Facility: the Company's manufacturing facility located on Lot 1, Highlands
Coalition 2nd Addition, in Lincoln, Lancaster County, Nebraska and all related
improvements and equipment;
Federal Bankruptcy Code: the United States Bankruptcy Reform Act of 1978,
as amended, or any similar or succeeding federal bankruptcy law;
Fixed Letter of Credit Rate: the Fixed Letter of Credit Rate established
in accordance with Section 2.4;
Fixed Letter of Credit Rate Period: the period from and including the
Conversion Date upon which the interest rate on the Bonds converts from the
Variable Rate to the Fixed Letter of Credit Rate, to and including payment in
full of the Bonds;
Fixed Rate: the Fixed Letter of Credit Rate or the Fixed Non-Letter of
Credit Rate;
Fixed Rate Interest Payment Date: the first March 1 or September 1 next
succeeding the Conversion Date, and each March 1 and September 1 thereafter
until payment in full of the Bonds, and any Redemption Date;
Fixed Rate Period: the period from and including the Conversion Date to
and including payment in full of the Bonds;
Fund: any fund described in Article VI hereof;
Government Obligations: shall mean direct general obligations of, or
obligations the prompt payment of the principal of and the
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<PAGE> 16
interest is unconditionally guaranteed by, the United States of America;
Holder or Bondholder: the person in whose name a Bond is registered in the
Bond Register;
Indenture: this Indenture of Trust by and between the Issuer and the
Trustee, as the same may from time to time be amended or supplemented as herein
provided;
Independent Accountant: a certified public accountant or firm of certified
public accountants registered and qualified to practice as such under the laws
of the State of Minnesota or Nebraska, and not regularly employed by the Issuer
or the Company, except to perform independent reviews of the books and records
of either or both of them or other similar periodic reviews;
Independent Counsel: any attorney duly admitted to practice law before the
highest court of any state, who may be counsel to the Company or the Issuer but
who may not be an officer or a full time employee of the Company or the Issuer;
Interest Payment Date: each Fixed Rate Interest Payment Date and each
Variable Rate Interest Payment Date;
Internal Revenue Code or Code: the Internal Revenue Code of 1986, as
amended, and all applicable Treasury Regulations;
Issuer: the Nebraska Investment Finance Authority, a body politic and
corporate, not a state agency but an independent instrumentality exercising
essential public functions, its successors and assigns;
Letter of Credit: the Original Letter of Credit or, upon delivery of any
Alternate Letter of Credit to the Trustee in accordance with Section 7.4 hereof
and Section 4.8(2) of the Loan Agreement, such Alternate Letter of Credit;
Letter of Credit Period: the period commencing on the Bond Closing through
the Variable Rate Period and the immediately succeeding Fixed Letter of Credit
Rate Period, if any;
Loan: the loan of Bond proceeds by the Issuer to the Company described in
Section 4.1 of the Loan Agreement;
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Loan Payments or Basic Payments: the payments required by Sections 4.2 and
4.3 of the Loan Agreement;
Loan Agreement: the Loan Agreement of even date herewith by and between
the Issuer and the Company, as the same may from time to time be amended or
supplemented as provided therein and in this Indenture;
Mandatory Redemption Payments: the payments which are required to be made
under Section 3.1(4) to redeem the Bonds in accordance with the Mandatory
Redemption Schedule after appropriate credits, if any, have been made;
Mandatory Redemption Schedule: the mandatory redemption schedule for the
Bonds set forth in Section 3.1(4);
Mandatory Tender Date: shall have the meaning assigned to it in Section
4.2 hereof;
Mandatory Tender Notice: has the meaning assigned to it in Section 4.2(2);
Maturity Date or Maturity: any date on which principal of or interest or
premium, if any, on the Bonds is due, whether at maturity, on a scheduled
interest payment date, or upon redemption or acceleration, or otherwise;
Moody's: Moody's Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, its successors and assigns,
and, if such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a municipal securities rating agency, "Moody's" shall
be deemed to refer to any other nationally recognized municipal securities
rating agency designated by the Issuer (other than Standard & Poor's
Corporation);
Notice by Mail: notice of any action or condition by mail shall mean a
written notice meeting the requirements of this Indenture mailed by first-class
mail, postage prepaid, to the Holders of specified Bonds at the addresses shown
in the Bond Register;
Optional Tender Date: any date on which a Bond is to be purchased pursuant
to Section 4.1;
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Optional Tender Notice: the meaning assigned to it in Section 4.1(1)(A);
Original Letter of Credit: the Irrevocable Letter of Credit issued by
Norwest Bank Minnesota, National Association, to the Trustee on the Bond Closing
contemporaneously with the original issuance of the Bonds;
Original Purchaser: the original purchaser of the Bonds from the Issuer
who executes an Investor Letter in the form attached as Exhibit B-1;
Outstanding Bonds: as of the date of determination, all Bonds theretofore
issued and delivered under this Indenture except:
(A) Bonds theretofore canceled by the Trustee or Paying Agent or
delivered to the Trustee or Paying Agent canceled or for cancellation;
(B) Bonds for which payment or redemption moneys or securities (as
provided in Article IX) shall have been theretofore deposited with the Trustee
or Paying Agent in trust for the Holders of such Bonds; provided, however, that
if such Bonds are to be redeemed, notice of such redemption shall have been duly
given pursuant to this Indenture or irrevocable action shall have been taken to
call such Bonds for redemption at a stated redemption date; and
(C) Bonds in exchange for or in lieu of which other Bonds shall have
been issued and delivered pursuant to this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Bonds have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Bonds owned by
the Company shall be disregarded and deemed not to be Outstanding Bonds, except
that in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, or waiver, only
Bonds which the Trustee knows to be Bonds owned by the Company shall be
disregarded;
Paying Agent: the Trustee or any other entity designated pursuant to this
Indenture as the agent of the Issuer and the
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Trustee to receive and disburse the principal of and premium, if any, and
interest on the Bonds;
Permitted Investments:
(A) Direct general obligations of the United States of America;
(B) Obligations the payment of the principal of and interest on
which is unconditionally guaranteed by the United States of America;
(C) Shares of an investment company registered under the Federal
Investment Company Act of 1940, whose shares are registered under the Federal
Securities Act of 1933, and whose only investments are obligations described in
clauses (A) or (B) above;
(D) Any general obligation of the State of Nebraska or any of its
political subdivisions, provided that securities described in clauses (A) or (B)
above have been irrevocably deposited in escrow to effect discharge of the
general obligations in the same manner and subject to the same conditions
required to effect discharge of the Bonds under Article IX;
(E) Certificates of deposit with fixed maturities, time deposits,
repurchase agreements or any other direct obligation with or of either the Bank
or any other national or state bank or federally chartered savings and loan
association whose senior debt obligations are rated A or better by a Rating
Agency or any other bank if the debt obligations for which such bank's letters
of credit are the primary basis are rated A or better by a Rating Agency which
initially rated the Bonds; and
(F) Prior to the Conversion Date, any other investments permitted by
the Reimbursement Bank;
Person: shall mean any natural person, corporation, joint venture,
cooperative, partnership, trust or unincorporated organization, government or
governmental body or agency, political subdivision or other legal entity, as in
the context may be appropriate.
Placement Agent: Norwest Bank Minnesota, National Association;
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Prior Bonds: Issuer's $850,000 Industrial Development Revenue Bonds
(Transcrypt International, Ltd., Project), Series 1994.
Project: any and all (i) fixtures or tangible personal property now or
hereafter attached or affixed to the Project Premises and acquired from the
proceeds of the Bonds or Prior Bonds, as the case may be, (ii) other tangible
personal property now or hereafter located within or used in connection with the
Project Premises or the Facility and acquired, in whole or part, from proceeds
of the Bonds or Prior Bonds, as the case may be, and (iii) any additions to,
replacements of and substitutions for any of the foregoing which may be
permitted or required by the Reimbursement Bank;
Project Premises: the real estate described on Exhibit A attached hereto;
Rating Agency: Standard & Poor's or Moody's;
Rating Category: one of the generic rating categories of a Rating Agency,
without regard to any refinement or gradation of such Rating Category by a
numerical or other modifier;
Rebate Amounts: the amount determined pursuant to Section 7.7(20) of the
Loan Agreement to be rebated to the United States;
Rebate Expert: Bond Counsel, or any other Person experienced in matters
relating to compliance with the rebate requirements in Section 148(f) of the
Code;
Record Date: means (i) with respect to each Variable Rate Interest Payment
Date, the calendar day next preceding such Variable Rate Interest Payment Date,
whether or not such date is a Business Day, and (ii) with respect to each Fixed
Rate Interest Payment Date, the 15th day of the calendar month next preceding
such Fixed Rate Interest Payment Date, whether or not such day is a Business
Day;
Redemption Date: when used with respect to any Bond to be redeemed shall
mean the date on which it is to be redeemed pursuant hereto;
Redemption Price: when used with respect to any Bond to be redeemed shall
mean the price at which it is to be redeemed pursuant hereto;
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Regular Interest Payments: all interest payments on the Bonds, other than
Special Interest Payments;
Reimbursement Agreement: the Letter of Credit and Reimbursement Agreement
of even date herewith, by and between the Company and the Reimbursement Bank,
and any amendments and supplements thereto and any comparable agreement relating
to any Alternate Letter of Credit;
Reimbursement Bank: Norwest Bank Nebraska, National Association, its
successors and assigns;
Related Documents: the Loan Agreement, the Remarketing Agreement, the
Reimbursement Agreement, the Deed of Trust, the Placement Agreement, the
Placement Memorandum and the Letter of Credit;
Remarketing Agent: Norwest Bank Minnesota, National Association, or any
successor Remarketing Agent appointed and serving in such capacity pursuant to
this Indenture;
Remarketing Agreement: the Remarketing Agreement, dated as of March 1,
1997, between the Company and the Remarketing Agent as the same may be amended
from time to time, and if a successor Remarketing Agent is appointed in
accordance with the Indenture, "Remarketing Agreement" shall mean such other
similar agreement between the Company and such successor Remarketing Agent;
Representative: the Chairperson, Vice Chairperson or Executive Director of
the Issuer or an officer of the Company, or any other person at any time
designated to act on behalf of the Issuer or the Company, as the case may be, as
evidenced by a written certificate furnished to the other party and the Trustee
containing the specimen signature of such person and signed for the Issuer by
its Executive Director or for the Company by an officer thereof;
Reserved Rights: those certain rights of the Issuer under the Loan
Agreement to indemnification and to payment or reimbursement of fees and
expenses of the Issuer and other payments to be made to the Issuer (including,
but not limited to, payments to be made pursuant to Sections 4.4, 7.4, 9.5, 10.8
and 10.11 of the Loan Agreement), including fees and expenses of counsel,
assumption fees and indemnity payments, its right to enforce notice and
reporting requirements and restrictions on transfer of ownership, its right
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to inspect and audit the books, records and premises of the Company and of the
Project, its right to collect attorneys' fees and related expenses, its right to
enforce the Company's covenant to comply with applicable federal tax law and
State law (including the Act and the rules of the Issuer), and its right to
receive notices under the Loan Agreement.
Responsible Agent: any person duly authorized and designated by the
Trustee to act on its behalf in carrying out the applicable duties and powers of
the Trustee as set forth in this Indenture; (any action required by the Trustee
under this Indenture may be taken by a Responsible Agent);
Restricted Obligations: obligations which are issued by the United States
Treasury and any other Permitted Investments, an investment in which will not
cause the Bonds to be federally guaranteed obligations within the meaning of
Section 149(b) of the Code;
Special Interest Payments: all payments of (or with respect to) interest
on the Bonds made upon the acceleration of the Bonds pursuant to Section 10.2;
Special Record Date: the date fixed by the Trustee pursuant to Section 2.2
hereof relating to the payment of any Defaulted Interest;
Standard & Poor's: Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies, Inc., its successors and their assigns, and if such
corporation shall be dissolved or liquidated or shall no longer perform the
functions of a municipal securities rating agency, "Standard & Poor's" shall be
deemed to refer to any other nationally recognized municipal securities rating
agency designated by the Issuer (other than Moody's);
Stated Maturity: when used with respect to any Bond or any installment of
interest thereon shall mean the date specified in such Bond as the fixed date on
which principal of such Bond or such installment of interest is due and payable;
Tender Date: shall mean each Optional Tender Date and the Mandatory Tender
Date;
Termination Date: the date on which a Letter of Credit expires in
accordance with its terms;
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Treasury Regulations: all proposed, temporary or permanent federal income
tax regulations then in effect and applicable;
Trust Estate: the Trust Estate as defined and set forth in the Granting
Clauses hereof;
Trustee: Norwest Bank Nebraska, National Association, Omaha, Nebraska and
any co-trustee or successor trustee appointed, qualified and then acting as such
under the provisions of this Indenture;
Unpaid Bonds: all Outstanding Bonds and any other Bonds which have neither
matured nor been redeemed or purchased and canceled under this Indenture;
Untendered Bond: shall have the meaning set forth in Section 4.8;
Variable Rate: the Variable Rate established from time to time in
accordance with Section 2.3;
Variable Rate Interest Payment Date: (i) the first Business Day of each
month commencing April 1, 1997, and (ii) the Conversion Date and (iii) the date
of payment in full of the Bonds; and
Variable Rate Period: the period from Bond Closing until the Conversion
Date, during which period the Bonds bear interest at the Variable Rate.
Section 1.2 Rules of Interpretation.
(1) This Indenture shall be interpreted in accordance with and governed by
the laws of the State of Nebraska.
(2) The words "herein" and "hereof" and "hereunder" and words of similar
import, without reference to any particular section or subdivision, refer to
this Indenture as a whole rather than to any particular section or subdivision
of this Indenture.
(3) References in this Indenture to any particular article, section or
subdivision hereof are to the designated article, section or subdivision of this
Indenture as originally executed.
(4) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted
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<PAGE> 24
accounting principles; and all computations provided for herein shall be made in
accordance with generally accepted accounting principles consistently applied
and applied on the same basis as in prior years.
(5) The Table of Contents and titles of articles and sections herein are
for convenience only and are not a part of this Indenture.
(6) Unless the context hereof clearly requires otherwise, the singular
shall include the plural and vice versa and the masculine shall include the
feminine and vice versa.
(7) Articles, sections, subsections and clauses mentioned by number only
are those so numbered which are contained in this Indenture.
(8) For purposes of this Indenture and the Loan Agreement, a petition in
bankruptcy shall be deemed dismissed only if either (a) the petition is
dismissed by order of a court of competent jurisdiction and no further appeal
rights exist from such order or (b) the Company notifies the Trustee that such a
dismissal has occurred.
(9) Any opinion of counsel called for herein shall be a written opinion of
such counsel.
(10) References to the Bonds as "tax-exempt" or to the "tax-exempt status
of the Bonds" are to the exclusion of interest from gross income pursuant to
Section 103(a) of the Code, except during any period that the Bonds are held by
a Substantial User or Related Person, irrespective of such forms of taxation as
the alternative minimum tax or branch profits tax on foreign corporations, as is
consistent with the approach taken in Section 59(i) of the Code.
(11) References in this Indenture to the Bank, Reimbursement Bank, Letter
of Credit, Alternate Letter of Credit, and Reimbursement Agreement shall be of
no force and effect during any period that no Letter of Credit secures repayment
of the Bonds.
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ARTICLE II
THE BONDS
Section 2.1 Authorized Amount and Form of Bonds.
Bonds secured by this Indenture shall be issued in fully registered
form without coupons and in substantially the form set forth herein with such
appropriate variations, omissions and insertions as are permitted or required by
this Indenture, and in accordance with the further provisions of this Article
II. The total principal amount of the Bonds that may be outstanding hereunder is
expressly limited to $2,850,000, unless duplicate Bonds are issued as provided
in Section 2.7. Additionally, at the request of the Trustee the following
notation may appear at an appropriate location on the Bonds to facilitate
registration of the Bonds:
"The following abbreviations, when used in the inscription on the
face of this Bond, shall be construed as though they were written out in
full:
TEN COM - as tenants in common
TEN ENT - as tenants by entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UTMA - ________ as custodian for ________ under the
(cust) (minor)
__________ Uniform Transfers to Minors Act.
(state)
Additional abbreviations may also be used though not in the above list."
The Bonds, together with the Trustee's Certificate of Authentication, the form
of Assignment and the registration information thereon, shall be in
substantially the following form; provided that on or after the Conversion Date,
Bonds authenticated and delivered hereunder shall be in the form set forth in
Section 2.1A hereof.
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NOTICE: THIS BOND MAY BE TENDERED FOR PURCHASE ON AN OPTIONAL TENDER DATE UPON
TERMS AND CONDITIONS HEREIN DESCRIBED AT A PRICE EQUAL TO 100% OF THE PRINCIPAL
AMOUNT HEREOF PLUS ACCRUED INTEREST HEREON. THIS BOND IS REQUIRED TO BE TENDERED
FOR PURCHASE ON A MANDATORY TENDER DATE UPON TERMS AND CONDITIONS HEREIN
DESCRIBED AT A PRICE EQUAL TO 100% OF THE PRINCIPAL AMOUNT HEREOF PLUS ACCRUED
INTEREST HEREON. FROM AND AFTER AN OPTIONAL TENDER DATE ON WHICH THIS BOND MAY
BE TENDERED AND FROM AND AFTER A MANDATORY TENDER DATE ON WHICH THIS BOND IS
DEEMED TO HAVE BEEN TENDERED INTEREST SHALL CEASE TO ACCRUE ON THIS BOND, THIS
BOND SHALL NO LONGER BE DEEMED OUTSTANDING, AND THE HOLDER OF THIS BOND SHALL
THEREAFTER LOOK ONLY TO FUNDS HELD IN THE BOND PURCHASE FUND FOR PAYMENT OF THE
PURCHASE PRICE OF THIS BOND.
UNITED STATES OF AMERICA
STATE OF NEBRASKA
NEBRASKA INVESTMENT FINANCE AUTHORITY
No. $_________
VARIABLE RATE DEMAND
INDUSTRIAL DEVELOPMENT REVENUE BOND,
SERIES 1997
(TRANSCRYPT INTERNATIONAL, INC. PROJECT)
THE ISSUER HAS NO TAXING POWER. THIS BOND SHALL NOT CONSTITUTE A
DEBT, LIABILITY OR GENERAL OBLIGATION OF THE STATE OR ANY POLITICAL SUBDIVISION
THEREOF; AND NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE
LIABLE THEREFOR. NEITHER THE FAITH, REVENUES, CREDIT NOR TAXING POWER OF THE
STATE OR ANY POLITICAL SUBDIVISION THEREOF SHALL BE PLEDGED TO THE PAYMENT OF
THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THIS BOND. THIS BOND IS A
SPECIAL LIMITED OBLIGATION OF THE ISSUER, PAYABLE SOLELY OUT OF THE TRUST ESTATE
PLEDGED THEREFOR PURSUANT TO THE INDENTURE, WHICH IS THE SOLE ASSET OF THE
ISSUER PLEDGED THEREFOR.
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE APPLICABLE "BLUE SKY" OR OTHER SECURITIES LAWS OF ANY STATE,
AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, IN WHOLE OR
IN PART, EXCEPT IN COMPLIANCE WITH ALL APPLICABLE STATE AND FEDERAL LAWS AND
EITHER UNDER EFFECTIVE FEDERAL AND STATE REGISTRATION STATEMENTS OR
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<PAGE> 27
PURSUANT TO EXEMPTIONS FROM SUCH REGISTRATIONS. UNDER THE TERMS OF THE
INDENTURE, ONLY BANKS, SAVINGS AND LOAN ASSOCIATIONS, FINANCIAL INSTITUTIONS,
INVESTMENT COMPANIES, MUTUAL FUNDS, CORPORATIONS, PENSION AND PROFIT-SHARING
ACCOUNTS, BUSINESS PARTNERSHIPS OR TRUSTS, EACH OF WHOM IS AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(A) OF REGULATION D OF THE SECURITIES
AND EXCHANGE COMMISSION, AND DELIVERS AN INVESTOR LETTER TO THE ISSUER AND TO
THE TRUSTEE SUBSTANTIALLY IN THE FORM ATTACHED TO THE INDENTURE AS EXHIBIT B-1
OR B-2, AS APPLICABLE, MAY INVEST, OR ACQUIRE A BENEFICIAL INTEREST, IN THIS
BOND AND ONLY THROUGH A REGISTERED BROKER-DEALER.
Interest Maturity Date of Original
Rate Date Issue CUSIP
- ------------------- -------------------- ---------------------- -----------
Variable March 1, 2017 March __, 1997
REGISTERED
HOLDER:
PRINCIPAL
AMOUNT:
KNOW ALL PERSONS BY THESE PRESENTS that the Nebraska Investment
Finance Authority, a body politic and corporate, not a state agency but an
independent instrumentality exercising essential public functions (the
"Issuer"), for value received, promises to pay to the registered holder named
above, or registered assigns, but only from the Bond Fund (as defined in the
Indenture described below), and upon presentation and surrender hereof at the
principal corporate trust office of the Trustee named below, the principal sum
specified above, on the maturity date specified above, or, if this Bond is
prepayable as stated below, on a prior date on which it shall have been duly
called for redemption, and to pay interest on said principal sum to the Record
Date Holder hereof, as defined below, solely from the Bond Fund, until the
principal sum is paid or discharged, at the rates and on the dates provided
herein, computed during the Variable Rate Period (hereinafter defined) on the
basis of the actual number of days elapsed in a year of 365 or 366 days, as
applicable, and during the Fixed Rate Period (hereinafter defined) on the basis
of a 360-day year of twelve 30-day months.
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THIS BOND SHALL BE PURCHASED ON THE DEMAND OF THE HOLDER AT THE
TIMES AND UPON THE TERMS AND CONDITIONS AS HEREINAFTER DESCRIBED.
This Bond shall bear interest from the date of original issue, or
from the most recent Interest Payment Date (hereinafter defined) to which
interest has been paid or provided for. The "Record Date Holder" is the person
in whose name this Bond is registered in the Bond Register maintained by the
Trustee named below or its successor in trust (the "Registered Holder" or
"Holder" hereof) either (i) with respect to each Variable Rate Interest Payment
Date (hereinafter defined) on the calendar day next preceding such Variable Rate
Interest Payment Date (hereinafter defined) and (ii) with respect to each Fixed
Rate Interest Payment Date (hereinafter defined) on the fifteenth day of the
calendar month next preceding such Fixed Rate Interest Payment Date, in each
case whether or not such day is a Business Day. Interest shall be payable by
check or draft mailed to the Registered Holder at his or her address as it
appears on the Bond Register on the Record Date, except as otherwise provided in
the Indenture.
The principal of and interest and premium, if any, on this Bond are
payable in lawful money of the United States of America. Upon notice to the
Trustee accompanied by proper wire instructions, any Holder of the Bonds in an
aggregate amount equal to or greater than $500,000 may elect to be paid the
interest on such Bonds payable on any Interest Payment Date by Federal Reserve
wire transfer in immediately available funds, less any applicable wire
transaction cost, to any bank in the United States specified by such Holder.
Interest not timely paid or duly provided for will be paid by check
mailed to the person in whose name this Bond is registered on the Bond Register
at the close of business on a date (the "Special Record Date") fixed by the
Trustee, notice of which is to be mailed to all Bondholders.
This Bond is one of an issue in the aggregate principal amount of
$2,850,000 (the "Bonds"), all of like nominal date of original issue and tenor,
except as to serial number and amount, issued in accordance with an Indenture of
Trust, dated as of March 1, 1997 (the "Indenture"), duly executed and delivered
by the Issuer to Norwest Bank Nebraska, National Association, in Omaha, Nebraska
(the "Trustee"), setting forth the terms upon which the
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<PAGE> 29
Bonds are issued. The Bonds are equally and ratably secured by and entitled to
the protection of the Indenture. The Bonds are issued by the Issuer for the
purpose of refunding bonds of the Issuer and financing a project within the
meaning of Section 58-201 et seq., Reissue Revised Statutes of Nebraska (1993),
as amended (the "Act"), consisting of the construction of an addition to and
acquisition and installation of manufacturing equipment in the existing
manufacturing facility (the "Project") owned by Transcrypt International, Inc.,
a Delaware corporation (the "Company") and located in Lincoln, Nebraska by
making a loan (the "Loan") of the proceeds of the Bonds to the Company. The
Company has agreed under the Loan Agreement dated as of March 1, 1997, by and
between the Issuer and the Company (the "Loan Agreement") to repay the Loan,
together with interest thereon, in amounts and at times sufficient to pay the
principal of, premium, if any, and interest on the Bonds as the same shall
become due and payable (the "Basic Payments"). Pursuant to the Indenture, the
Issuer has assigned and pledged to the Trustee, for the equal and ratable
benefit of the Holders of the Bonds, the Basic Payments due under the Loan
Agreement and other amounts as set forth in the Loan Agreement, but not
including the Reserved Rights.
Payment of the Bonds is further secured by an irrevocable letter of
credit (such Letter of Credit or any alternate Letter of Credit delivered in
accordance with the Loan Agreement and Indenture are hereafter collectively
referred to as the "Letter of Credit") issued by Norwest Bank Minnesota,
National Association (together with the issuer of any Alternate Letter of Credit
delivered in accordance with the Loan Agreement are hereafter collectively
referred to as the "Bank") in favor of the Trustee, obligating the Bank to pay
to the Trustee during the periods described therein, upon request and in
accordance with the terms thereof and of the Loan Agreement and the Indenture,
the amounts described therein for the purpose of making certain payments on or
with respect to the Bonds. The Company and Norwest Bank Nebraska, National
Association (the "Reimbursement Bank") have entered into a Letter of Credit and
Reimbursement Agreement dated as of March 1, 1997 (together with any
reimbursement agreement relating to any alternate Letter of Credit, the
"Reimbursement Agreement") providing for repayment of the amounts drawn under
the Letter of Credit and other provisions relating to the Company and the
Project. Reference is hereby made to the Loan Agreement, Reimbursement
Agreement, Letter of Credit and Indenture, including all indentures supplemental
thereto, for a description of the property encumbered and assigned, the
provisions, among others,
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<PAGE> 30
with respect to the nature and extent of the security, the rights of the Issuer,
and the rights, duties and obligations of the Company, the Trustee, the Bank,
the Reimbursement Bank and the Holders of the Bonds and the terms upon which the
Bonds are issued and secured.
The term "Business Day" shall mean a day other than a Saturday,
Sunday, legal holiday or other date on which banking institutions in
Minneapolis, Minnesota or Omaha, Nebraska are authorized or required by law to
close. If the date for making any payment or the last date for performance of
any act or the exercising of any right, as provided in this Bond, is not a
Business Day, such payment may be made or act performed or right exercised on
the next succeeding Business Day.
The Company has caused to be delivered to the Trustee the Letter of
Credit, which expires on April 1, 2007, or if April 1, 2007 is not a Business
Day, the first Business Day thereafter. The Trustee is entitled under the Letter
of Credit to draw up to (a) an amount sufficient (i) to pay 103 percent of the
principal of the Bonds or (ii) to enable the Trustee to pay the purchase price
of the Bonds delivered to it for purchase and not remarketed, plus (b) an amount
equal to fifty (50) days' accrued interest on the Outstanding Bonds assuming an
interest rate of 10%. During the Letter of Credit Period (as defined in the
Indenture), upon the expiration of the Letter of Credit, the Company is required
to provide another letter of credit having terms substantially similar to the
Letter of Credit.
Interest on the Bonds shall be payable on the first day of each
month, commencing on April 1, 1997, during the Variable Rate Period, and on the
Conversion Date or the date of payment in full of this Bond if no Conversion
Date shall occur (each a "Variable Rate Interest Payment Date"), and, on March 1
or September 1 next succeeding the Conversion Date, and on each March 1 and
September 1 thereafter (each a "Fixed Rate Interest Payment Date") until payment
in full of this Bond.
Prior to the Conversion Date (as defined below), this Bond shall
bear interest at the Variable Rate as defined in the Indenture (the "Variable
Rate"); provided that in no event shall the Variable Rate exceed ten percent
(10.00%) per annum.
On and after the Conversion Date this Bond shall bear interest at
the Fixed Rate (as defined in the Indenture). The
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<PAGE> 31
interest rate on this Bond shall be converted to the Fixed Rate, on a one-time
basis at the option of the Company upon the conditions set forth in the
Indenture and below.
The Company may, with the written consent of the Reimbursement Bank,
exercise the option to convert the interest rate on the Bonds from a Variable
Rate to a Fixed Rate by written notice to the Trustee, the Issuer and the
Remarketing Agent, as defined in the Indenture, stating (A) its election to
convert the interest rate on this Bond to the Fixed Rate, (B) the date on which
such conversion shall occur (the "Conversion Date"), which shall be a Business
Day not less than 60 nor more than 90 days from the date the Company gives such
notice, and (C) the date on which the Fixed Rate shall be announced, which shall
be not less than ten (10) days prior to the Conversion Date (the "Computation
Date"), and by delivering to the Trustee, the Issuer and the Remarketing Agent,
with such notice, an opinion of Bond Counsel (as such term is defined in the
Indenture) stating that such conversion to the Fixed Rate is authorized and
permitted by the Act and the Indenture and will not cause the interest on the
Bonds to become includable in gross income for federal income tax purposes. In
such case, the Fixed Rate shall be the interest rate on this Bond announced by
the Remarketing Agent on the Computation Date, shall be effective on and after
the Conversion Date and shall be equal to the interest rate at which the
Remarketing Agent has received on the Computation Date commitments to purchase
all of the Bonds on the Conversion Date at par.
If the Company has exercised its option to convert the Bonds to the
Fixed Rate and on the Computation Date the Remarketing Agent has not received
commitments to purchase all of the Bonds on the Conversion Date at par, the
conversion of the Bonds to the Fixed Rate shall be canceled and the Bonds shall
continue to bear interest after the Conversion Date at the Variable Rate as if
such option had not been exercised. The Trustee shall promptly give notice of
any such cancellation to the Bondholders. No such cancellation shall affect the
right of the Company thereafter to exercise its option to convert the Bonds to
the Fixed Rate.
Prior to the Conversion Date, the Holder of this Bond may require
the Trustee to purchase this Bond (in whole but not in part), on any Business
Day during the Variable Rate Period, at a purchase price equal to the principal
amount thereof plus accrued interest thereon from the most recent Variable Rate
Interest Payment Date, upon:
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<PAGE> 32
(a) giving to the Trustee and the Remarketing Agent notice by
facsimile, telex or other means of written or printed instantaneous
communication delivered to the Trustee at its principal corporate trust
office and the Remarketing Agent at its principal office (the "Optional
Tender Notice") stating: (1) the principal amount of this Bond and the
name of the holder hereof, and (2) the date on which this Bond is to be
purchased (the "Optional Tender Date"), which date shall be a Business Day
on or after the seventh calendar day next succeeding the date of the
giving of the Optional Tender Notice; and
(b) delivery of this Bond (with an appropriate instrument of
transfer executed in blank) to the Trustee by 12:00 o'clock Noon, Nebraska
time, on the Business Day prior to the Optional Tender Date.
On the Optional Tender Date the Trustee shall purchase this Bond
from the Holder hereof using only funds available under the Indenture at a
purchase price equal to the principal amount hereof plus accrued interest
thereon.
A Mandatory Tender Date shall occur on any Conversion Date or a date
on which the Bonds are called for mandatory tender, in lieu of mandatory
redemption, as hereinafter described, or on the date on which an Alternate
Letter of Credit shall take effect. Subject to the provisions of (ii) below, the
Holder hereof shall be required to tender this Bond to the Trustee on or before
12:00 o'clock Noon, Nebraska time on the Business Day prior to the Mandatory
Tender Date, for purchase on the Mandatory Tender Date at a purchase price equal
to the principal amount hereof plus accrued interest thereon, all as more fully
provided herein and in the Indenture.
(i) Notice of a Mandatory Tender Date (a "Mandatory Tender
Notice") shall be given by the Trustee, by first class mail, to the Holder of
this Bond at its address appearing on the registration books for the Bonds
maintained by the Trustee, not less than thirty days prior to the Conversion
Date, or seven days prior to the date on which an Alternate Letter of Credit
shall take effect. Such Mandatory Tender Notice shall specify the Conversion
Date, or the date on which an Alternate Letter of Credit shall take effect, as
the case may be, and state (a) the reason for the mandatory tender, (b) that all
Bonds shall be purchased on the Conversion Date at a purchase price equal to the
principal amount
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<PAGE> 33
thereof plus accrued interest thereon, (c) that all Bonds must be tendered for
purchase at or before 12:00 o'clock Noon, Nebraska time on the Business Day
prior to the Mandatory Tender Date, together with an appropriate instrument of
transfer executed in blank and (d) any such Bond which is not tendered but for
which there has been irrevocably deposited in the Letter of Credit Account in
the Bond Purchase Fund (as such term is defined in the Indenture) with the
Trustee an amount sufficient to pay the purchase price thereof (an "Untendered
Bond") shall be deemed to have been tendered and shall not be entitled to
receive interest on such Bond on and after the relevant Mandatory Tender Date.
(ii) This Bond shall be tendered to the Trustee for purchase at
or before 12:00 o'clock Noon, Nebraska time on the Business Day prior to the
Mandatory Tender Date, by delivering this Bond to the Trustee together with an
appropriate instrument of transfer duly executed in blank and on the Mandatory
Tender Date, the Trustee shall purchase this Bond or cause this Bond to be
purchased at a purchase price equal to the principal amount hereof plus accrued
interest thereon from the most recent Variable Rate Interest Payment Date.
(iii) If this Bond is not tendered on or before any Mandatory
Tender Date, then this Bond shall be deemed to have been tendered and the Holder
hereof shall not be entitled to receive interest on this Bond for any period
beginning on or after the Mandatory Tender Date and upon surrender of this Bond
to the Trustee, the Holder of this Bond shall be paid only an amount equal to
the purchase price of this Bond due on the Mandatory Tender Date.
On or after September 1, 1997, the Bonds are subject to redemption
in whole or in part on any Interest Payment Date, at the option of the Company
and with the consent of the Reimbursement Bank, upon 30 days prior notice, at a
redemption price equal to the principal amount of the Bonds to be redeemed plus
accrued interest thereon to the redemption date, without premium.
During the Letter of Credit Period, as defined in the Indenture, the
Bonds are subject to mandatory redemption in whole at a redemption price equal
to the principal amount, without any premium, plus accrued interest to the
Redemption Date on the date established pursuant to the Indenture, in the event
that the Company fails to provide the Trustee at least 35 days prior to the
expiration of a Letter of Credit either an extension of the
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<PAGE> 34
existing Letter of Credit by the Bank or an Alternate Letter of Credit; provided
that in lieu of redemption of the Bonds, the Company may require the Bonds be
tendered or purchased on the Redemption Date if certain conditions set forth in
the Indenture are satisfied.
This Bond is subject to mandatory redemption in whole on the first
Business Day for which notice of redemption can properly be given as provided
herein upon the occurrence of a Determination of Taxability (as such term is
defined in the Indenture) at a redemption price equal to 103 percent of the
principal amount of this Bond, but without any other premium or obligation to
the Holder, plus accrued interest thereon to the redemption date.
All Bonds are subject to mandatory prepayment and redemption by lot
at par and accrued interest without premium on each of the following dates and
in the following principal amounts (unless and to the extent a credit against
any such amount is applied as provided in the Indenture):
Date Amount
---- ------
3/1/98 $140,000
3/1/99 140,000
3/1/00 140,000
3/1/01 140,000
3/1/02 140,000
3/1/03 140,000
3/1/04 140,000
3/1/05 140,000
3/1/06 140,000
3/1/07 140,000
3/1/08 145,000
3/1/09 145,000
3/1/10 145,000
3/1/11 145,000
3/1/12 145,000
3/1/13 145,000
3/1/14 145,000
3/1/15 145,000
3/1/16 145,000
3/1/17* 145,000
- --------------
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*Final Maturity
Pursuant to Section 4.9 of the Indenture, the Reimbursement Bank or
its designee may purchase Bonds which have been called for redemption or
acceleration due to the Company's failure to provide an Alternate Letter of
Credit, upon a Determination of Taxability or upon certain Events of Default.
In the case of any partial redemption of the Bonds, the particular
Bonds to be redeemed shall be selected by the Trustee in such manner as the
Trustee shall deem fair and equitable and the Bonds shall be redeemed in the
principal amounts specified in the Indenture. Upon the partial redemption of any
Bond, the Holder thereof is not required to surrender such Bond to the Trustee
for payment of the redemption price (including accrued interest thereon on the
date fixed for redemption) of the portion thereof called for redemption and the
Holder shall note (and there shall be deemed to have been noted) on the Bond the
principal amount so redeemed; provided that failure to note such prepayment
hereon shall not affect the validity of such redemption.
Notice of redemption shall, if required by law, be published at
least once before the redemption date in a daily or weekly financial journal or
newspaper of general circulation in New York, New York, and shall be mailed
first class mail at least thirty (30) days prior to the date fixed for
redemption to each Registered Holder of a Bond to be redeemed. All Bonds so
called for redemption, provided funds for their redemption have been duly
deposited, will cease to bear interest on the specified redemption date and
(except for the purpose of payment) shall no longer be protected by the
Indenture and shall not be deemed Outstanding under the Indenture, and shall
thereafter be payable solely from the funds provided for payment.
In addition to the foregoing, if under certain circumstances an
Event of Default, as defined in the Indenture, shall occur, the principal of all
the Bonds and all interest accrued thereon may, without prior notice to the
Bondholders, be declared due and payable in the manner and with the effect
provided in the Loan Agreement and Indenture.
This Bond and the series of which it forms a part are issued
pursuant to and in full compliance with the Constitution and laws of the State
of Nebraska, particularly the Act, and pursuant to a resolution adopted and
approved by the Issuer, which
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<PAGE> 36
resolution authorized the Project and the execution and delivery of the
Indenture, and the issuance of the Bonds as special, limited obligations payable
solely from revenues derived from the Loan Agreement, including Letter of Credit
proceeds, except that under certain circumstances the Bonds may be payable from
Bond proceeds. The Basic Payments under the Loan Agreement are scheduled to be
sufficient to pay the principal of, premium, if any, and interest on the Bonds
as the same become due and payable and are to be paid to the Trustee for the
account of the Issuer and credited to the Bond Fund as a special trust fund
account created by the Issuer and have been and are hereby pledged for that
purpose. THE BONDS, INCLUDING PRINCIPAL, PREMIUM AND ANY OTHER PAYMENTS HOWEVER
DESIGNATED, AND THE INTEREST DUE THEREON DO NOT AND SHALL NEVER CONSTITUTE A
GENERAL INDEBTEDNESS OF THE ISSUER WITHIN THE MEANING OF ANY STATE
CONSTITUTIONAL OR STATUTORY PROVISION AND DO NOT AND SHALL NOT CONSTITUTE OR
GIVE RISE TO A PECUNIARY LIABILITY OR MORAL OBLIGATION OF THE ISSUER, THE STATE
OF NEBRASKA OR ANY OF ITS POLITICAL SUBDIVISIONS, OR A CHARGE AGAINST ITS
GENERAL CREDIT, OR TO THE EXTENT PERMITTED BY LAW, ANY PECUNIARY LIABILITY OF
ANY OFFICER, EMPLOYEE OR AGENT OF THE ISSUER. THE ISSUER HAS NO TAXING POWERS.
The provisions of this paragraph are controlling notwithstanding anything herein
to the contrary.
The Holder of this Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any Event of Default under the
Indenture, or to institute, appear in or defend any suit or other proceedings
with respect thereto, except as provided in the Indenture. Modifications or
alterations of the Indenture, or of any indenture supplemental thereto, may be
made only to the extent and in the circumstances permitted by the Indenture.
With the consent of the Issuer, the Company, the Reimbursement Bank
and the Trustee, as appropriate, and to the extent permitted by and as provided
in the Indenture, the terms and provisions of the Indenture, the Loan Agreement
and the Letter of Credit, or of any instrument supplemental thereto, may be
modified or altered by the consent of the Holders of at least 51% in aggregate
principal amount of the Bonds then Outstanding thereunder.
The Indenture also contains provisions permitting Holders of a
majority in aggregate principal amount of the Bonds at the time Outstanding, on
behalf of all the Holders of all the Bonds and
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<PAGE> 37
with the consent of the Reimbursement Bank, to waive compliance by the Issuer
with certain provisions of the Indenture and certain defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Bond shall be conclusive and binding upon such Holder and on all future
Holders of this Bond and of any Bond issued in lieu hereof whether or not
notation of such consent or waiver is made upon this Bond.
The Bonds are issued as fully registered Bonds without coupons in
the denomination of $100,000 or any greater amount in multiples of $5,000 except
for one Bond which following redemptions may be in an amount less than $100,000.
The Bonds are interchangeable for one or more Bonds in Authorized Denominations,
aggregate principal amount, interest rate and maturity date, upon surrender
thereof by the Holder at the principal office of the Trustee, in the manner and
subject to the limitations provided in the Indenture. The Issuer, the Trustee
and any additional paying agents may deem and treat the Holder hereof as the
absolute owner hereof (whether or not this Bond shall be overdue) for the
purpose of receiving payment of or on account of principal hereof and interest
(except as otherwise hereinabove provided with respect to the Record Date) due
hereon and for all other purposes, and the Issuer, the Trustee and any
additional paying agents shall not be affected by any notice to the contrary.
Subject to the limitations provided in the Indenture, this Bond is
only transferable by the Holder hereof upon surrender of this Bond for transfer
at the principal corporate trust office of the Trustee, duly endorsed or
accompanied by a written instrument or instruments of transfer in the form
printed on this Bond or in another form satisfactory to the Trustee and executed
and with guaranty of signature by the Holder hereof or his attorney duly
authorized in writing, containing written instructions as to the details of the
transfer of the Bond. Thereupon the Issuer shall execute (if necessary) and the
Trustee shall authenticate and deliver, in exchange for this Bond, one or more
new Bonds in the name of the transferee (but not registered in blank or to
"bearer" or a similar designation), of an Authorized Denomination, in aggregate
principal amount equal to the principal amount of this Bond, of the same
maturity, and bearing interest at the same rate.
Notwithstanding anything herein to the contrary, in no event shall
this Bond be transferred to or registered in the name of any transferee (except
the Trustee, the Reimbursement Bank, the Remarketing Agent or the Company) who
is not an institutional
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<PAGE> 38
accredited investor who has (A) executed an Investor Letter in the form attached
to this Indenture as Exhibit B-1 or (B), in the event such transferee is to be
issued a Bond (i) which is in a principal amount representing less than
one-third of the Bonds Outstanding, or (ii) at such time the Letter of Credit
then securing the Bonds is not issued by a Bank, the senior debt obligations of
which carry a Rating Category of at least AA, or (iii) at such time the Letter
of Credit is not then in full force and effect or has been improperly
dishonored, executed an Investor Letter in the form attached to this Indenture
as Exhibit B-2.
No service charge shall be made to the Holder for any registration,
transfer or exchange hereinbefore referred to, but the Trustee may require
payment of a sum sufficient to cover any tax, fee or other governmental charge
that may be imposed in connection with any transfer or exchange of Bonds, other
than exchanges expressly provided in the Indenture to be made without charge to
Bondholders.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,
conditions and things required to exist, to happen and to be performed precedent
to and in the execution and delivery of the Indenture and the issuance of this
Bond do exist, have happened and have been performed in due time, form and
manner, as required by law, and that the issuance of this Bond and the series of
which it forms a part, together with all other obligations of the Issuer, does
not exceed or violate any constitutional or statutory limitation.
This Bond shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture unless the
Certificate of Authentication hereon shall have been executed by the Trustee.
IN WITNESS WHEREOF, the Nebraska Investment Finance Authority, by
its governing body, has caused this Bond to be executed in its name by the
manual or facsimile signatures of its Chairperson and its Executive Director and
by the manual signature of the Trustee acting as authenticating agent, and has
caused this Bond to be sealed with a facsimile of its official seal printed
hereon.
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<PAGE> 39
Date of Authentication: NEBRASKA INVESTMENT FINANCE
AUTHORITY
_______________________ __________________________
Chairperson
[Facsimile Seal] __________________________
Executive Director
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This Bond is one of the
Bonds described in the
within mentioned Indenture.
Norwest Bank Nebraska, National Association,
Trustee
By______________________________ Date:______________________
Responsible Agent
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<PAGE> 40
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and
transfers unto ________________________________________________
_________________________________ the within Bond and does hereby irrevocably
constitute and appoint __________________ ______________ attorney to transfer
the Bond on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated: _______________________ ___________________________
Notice: The assignor's signature to this assignment must correspond
with the name as it appears upon the face of the within Bond
in every particular, without alteration or any change
whatever.
Signature Guaranteed:
_______________________
Signature(s) must be guaranteed by a national bank or trust company or by a
brokerage firm having a membership in one of the major stock exchanges.
The Trustee will not effect transfer of this Bond unless the information
concerning the transferee requested below is provided.
Name and Address: ________________________________________
________________________________________
________________________________________
(Include information for all joint owners
if the Bond is held by joint account)
Insert social security or
other identifying number of
Transferee
___________________________
___________________________
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<PAGE> 41
Section 2.1A Form of Fixed Rate Bond.
From and after the Conversion Date, the Bonds shall be in the
following form:
UNITED STATES OF AMERICA
STATE OF NEBRASKA
NEBRASKA INVESTMENT FINANCE AUTHORITY
No. $_________
VARIABLE RATE DEMAND
INDUSTRIAL DEVELOPMENT REVENUE BOND,
SERIES 1997
(TRANSCRYPT INTERNATIONAL, INC. PROJECT)
THE ISSUER HAS NO TAXING POWER. THIS BOND SHALL NOT CONSTITUTE A
DEBT, LIABILITY OR GENERAL OBLIGATION OF THE STATE OR ANY POLITICAL SUBDIVISION
THEREOF; AND NEITHER THE STATE NOR ANY POLITICAL SUBDIVISION THEREOF SHALL BE
LIABLE THEREFOR. NEITHER THE FAITH, REVENUES, CREDIT NOR TAXING POWER OF THE
STATE OR ANY POLITICAL SUBDIVISION THEREOF SHALL BE PLEDGED TO THE PAYMENT OF
THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THIS BOND. THIS BOND IS A
SPECIAL LIMITED OBLIGATION OF THE ISSUER, PAYABLE SOLELY OUT OF THE TRUST ESTATE
PLEDGED THEREFOR PURSUANT TO THE INDENTURE, WHICH IS THE SOLE ASSET OF THE
ISSUER PLEDGED THEREFOR.
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE APPLICABLE "BLUE SKY" OR OTHER SECURITIES LAWS OF ANY STATE,
AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, IN WHOLE OR
IN PART, EXCEPT IN COMPLIANCE WITH ALL APPLICABLE STATE AND FEDERAL LAWS AND
EITHER UNDER EFFECTIVE FEDERAL AND STATE REGISTRATION STATEMENTS OR PURSUANT TO
EXEMPTIONS FROM SUCH REGISTRATIONS. UNDER THE TERMS OF THE INDENTURE, ONLY
BANKS, SAVINGS AND LOAN ASSOCIATIONS, FINANCIAL INSTITUTIONS, INVESTMENT
COMPANIES, MUTUAL FUNDS, CORPORATIONS, PENSION AND PROFIT-SHARING ACCOUNTS,
BUSINESS PARTNERSHIPS OR TRUSTS, EACH OF WHOM IS AN "ACCREDITED INVESTOR" WITHIN
THE MEANING OF RULE 501(A) OF REGULATION D OF THE SECURITIES AND EXCHANGE
COMMISSION, AND DELIVERS AN INVESTOR LETTER TO THE ISSUER AND TO THE TRUSTEE
SUBSTANTIALLY IN THE FORM ATTACHED TO THE INDENTURE AS EXHIBIT B-1 OR B-2, AS
APPLICABLE, MAY INVEST, OR ACQUIRE A
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<PAGE> 42
BENEFICIAL INTEREST, IN THIS BOND AND ONLY THROUGH A REGISTERED
BROKER-DEALER.
37
<PAGE> 43
Interest Maturity Date of Original
Rate Date Issue CUSIP
- ------------------- ---------------------- --------------------- -----------
_____% March 1, 2017 March __, 1997
REGISTERED
HOLDER:
PRINCIPAL
AMOUNT:
KNOW ALL PERSONS BY THESE PRESENTS that the Nebraska Investment
Finance Authority, a body politic and corporate, not a state agency but an
independent instrumentality exercising essential public functions (the
"Issuer"), for value received, promises to pay to the registered holder named
above, or registered assigns, but only from the Bond Fund (as defined in the
Indenture described below), and upon presentation and surrender hereof at the
principal corporate trust office of the Trustee named below, the principal sum
specified above, on the maturity date specified above, or, if this Bond is
prepayable as stated below, on a prior date on which it shall have been duly
called for redemption, and to pay interest on said principal sum to the Record
Date Holder hereof, as defined below, solely from the Bond Fund, until the
principal sum is paid or discharged, at the rate specified above on the basis of
a 360-day year of twelve 30-day months.
This Bond shall bear interest from the date of original issue, or
from the most recent Interest Payment Date (hereinafter defined) to which
interest has been paid or provided for. The "Record Date Holder" is the person
in whose name this Bond is registered in the Bond Register maintained by the
Trustee named below or its successor in trust (the "Registered Holder" or
"Holder" hereof) on the fifteenth day of the calendar month next preceding a
Fixed Rate Interest Payment Date (as hereinafter defined), in each case whether
or not such day is a Business Day. Interest shall be payable by check or draft
mailed to the Registered Holder at his or her address as it appears on the Bond
Register on the Record Date, except as otherwise provided in the Indenture.
The principal of and interest and premium, if any, on this Bond are
payable in lawful money of the United States of
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<PAGE> 44
America. Upon notice to the Trustee accompanied by proper wire instructions, any
Holder of the Bonds in an aggregate amount equal to or greater than $500,000 may
elect to be paid the interest on such Bonds payable on any Interest Payment Date
by Federal Reserve wire transfer in immediately available funds, less any
applicable wire transaction cost, to any bank in the United States specified by
such Holder.
Interest not timely paid or duly provided for will be paid by check
mailed to the person in whose name this Bond is registered on the Bond Register
at the close of business on a date (the "Special Record Date") fixed by the
Trustee, notice of which is to be mailed to all Bondholders.
This Bond is one of an issue in the aggregate principal amount of
$2,850,000 (the "Bonds"), all of like nominal date of original issue and tenor,
except as to serial number and amount, issued in accordance with an Indenture of
Trust, dated as of March 1, 1997 (the "Indenture"), duly executed and delivered
by the Issuer to Norwest Bank Nebraska, National Association, in Omaha, Nebraska
(the "Trustee"), setting forth the terms upon which the Bonds are issued. The
Bonds are equally and ratably secured by and entitled to the protection of the
Indenture. The Bonds are issued by the Issuer for the purpose of refunding bonds
of the Issuer and financing a project within the meaning of Section 58-201 et
seq., Reissue Revised Statutes of Nebraska (1993), as amended (the "Act"),
consisting of the construction of an addition to and acquisition and
installation of manufacturing equipment in the existing manufacturing facility
(the "Project") owned by Transcrypt International, Inc., a Nebraska corporation
(the "Company") and located in Lincoln, Nebraska by making a loan (the "Loan")
of the proceeds of the Bonds to the Company. The Company has agreed under the
Loan Agreement dated as of March 1, 1997, by and between the Issuer and the
Company (the "Loan Agreement") to repay the Loan, together with interest
thereon, in amounts and at times sufficient to pay the principal of, premium, if
any, and interest on the Bonds as the same shall become due and payable (the
"Basic Payments"). Pursuant to the Indenture, the Issuer has assigned and
pledged to the Trustee, for the equal and ratable benefit of the Holders of the
Bonds, the Basic Payments due under the Loan Agreement and other amounts as set
forth in the Loan Agreement, but not including the Reserved Rights.
Payment of the Bonds is further secured by an irrevocable letter of
credit (such Letter of Credit or any alternate Letter of
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<PAGE> 45
Credit delivered in accordance with the Loan Agreement and Indenture are
hereafter collectively referred to as the "Letter of Credit") issued by
______________________________________________ (together with the issuer of any
Alternate Letter of Credit delivered in accordance with the Loan Agreement are
hereafter collectively referred to as the "Bank") in favor of the Trustee,
obligating the Bank to pay to the Trustee during the periods described therein,
upon request and in accordance with the terms thereof and of the Loan Agreement
and the Indenture, the amounts described therein for the purpose of making
certain payments on or with respect to the Bonds. The Company and Norwest Bank
Nebraska, National Association (the "Reimbursement Bank") have entered into a
Letter of Credit and Reimbursement Agreement dated as of _______, _____
(together with any reimbursement agreement relating to any alternate Letter of
Credit, the "Reimbursement Agreement") providing for repayment of the amounts
drawn under the Letter of Credit and other provisions relating to the Company
and the Project. Reference is hereby made to the Loan Agreement, Reimbursement
Agreement, Letter of Credit and Indenture, including all indentures supplemental
thereto, for a description of the property encumbered and assigned, the
provisions, among others, with respect to the nature and extent of the security,
the rights of the Issuer, and the rights, duties and obligations of the Company,
the Trustee, the Bank, the Reimbursement Bank and the Holders of the Bonds and
the terms upon which the Bonds are issued and secured.
The term "Business Day" shall mean a day other than a Saturday,
Sunday, legal holiday or other date on which banking institutions in
Minneapolis, Minnesota or Omaha, Nebraska are authorized or required by law to
close. If the date for making any payment or the last date for performance of
any act or the exercising of any right, as provided in this Bond, is not a
Business Day, such payment may be made or act performed or right exercised on
the next succeeding Business Day.
The Company has caused to be delivered to the Trustee the Letter of
Credit, which expires on __________, _____ or if _______, _____ is not a
Business Day, the first Business Day thereafter. The Trustee is entitled under
the Letter of Credit to draw up to (a) an amount sufficient to pay 103 percent
of the principal of the Bonds, plus (b) an amount equal to two hundred fifteen
(215) days' accrued interest on the Outstanding Bonds. During the Letter of
Credit Period (as defined in the Indenture), upon the expiration of the Letter
of Credit, the Company is required to provide another
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<PAGE> 46
letter of credit having terms substantially similar to the Letter of Credit.
Interest on the Bonds shall be payable on March 1 or September 1
next succeeding the Conversion Date, and on each March 1 and September 1
thereafter (each a "Fixed Rate Interest Payment Date") until payment in full of
this Bond.
On or after September 1, 1997, the Bonds are subject to redemption
in whole or in part on any Interest Payment Date, at the option of the Company
and with the consent of the Reimbursement Bank, upon 30 days prior notice, at a
redemption price equal to the principal amount of the Bonds to be redeemed plus
accrued interest thereon to the redemption date, without premium.
During the Letter of Credit Period, as defined in the Indenture, the
Bonds are subject to mandatory redemption in whole at a redemption price equal
to the principal amount, without any premium, plus accrued interest to the
Redemption Date on the date established pursuant to the Indenture, in the event
that the Company fails to provide the Trustee at least 35 days prior to the
expiration of a Letter of Credit either an extension of the existing Letter of
Credit by the Bank or an Alternate Letter of Credit; provided that in lieu of
redemption of the Bonds, the Company may require the Bonds be tendered or
purchased on the Redemption Date if certain conditions set forth in the
Indenture are satisfied.
This Bond is subject to mandatory redemption in whole on the first
Business Day for which notice of redemption can properly be given as provided
herein upon the occurrence of a Determination of Taxability (as such term is
defined in the Indenture) at a redemption price equal to 103 percent of the
principal amount of this Bond, but without any other premium or obligation to
the Holder, plus accrued interest thereon to the redemption date.
All Bonds are subject to mandatory prepayment and redemption by lot
at par and accrued interest without premium on each of the following dates and
in the following principal amounts (unless and to the extent a credit against
any such amount is applied as provided in the Indenture):
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<PAGE> 47
Date Amount
---- ------
3/1/98 $140,000
3/1/99 140,000
3/1/00 140,000
3/1/01 140,000
3/1/02 140,000
3/1/03 140,000
3/1/04 140,000
3/1/05 140,000
3/1/06 140,000
3/1/07 140,000
3/1/08 145,000
3/1/09 145,000
3/1/10 145,000
3/1/11 145,000
3/1/12 145,000
3/1/13 145,000
3/1/14 145,000
3/1/15 145,000
3/1/16 145,000
3/1/17* 145,000
- --------------
*Final Maturity
Pursuant to Section 4.9 of the Indenture, the Reimbursement Bank or
its designee may purchase Bonds which have been called for redemption or
acceleration due to the Company's failure to provide an Alternate Letter of
Credit, upon a Determination of Taxability or upon certain Events of Default.
In the case of any partial redemption of the Bonds, the particular
Bonds to be redeemed shall be selected by the Trustee in such manner as the
Trustee shall deem fair and equitable and the Bonds shall be redeemed in the
principal amounts specified in the Indenture. Upon the partial redemption of any
Bond, the Holder thereof is not required to surrender such Bond to the Trustee
for payment of the redemption price (including accrued interest thereon on the
date fixed for redemption) of the portion thereof called for redemption and the
Holder shall note (and there shall be noted) on the Bond the principal amount so
redeemed; provided that failure to note such prepayment hereon shall not affect
the validity of such redemption.
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<PAGE> 48
Notice of redemption shall, if required by law, be published at
least once before the redemption date in a daily or weekly financial journal or
newspaper of general circulation in New York, New York, and shall be mailed
first class mail at least thirty (30) days prior to the date fixed for
redemption to each Registered Holder of a Bond to be redeemed. All Bonds so
called for redemption, provided funds for their redemption have been duly
deposited, will cease to bear interest on the specified redemption date and
(except for the purpose of payment) shall no longer be protected by the
Indenture and shall not be deemed Outstanding under the Indenture, and shall
thereafter be payable solely from the funds provided for payment.
In addition to the foregoing, if under certain circumstances an
Event of Default, as defined in the Indenture, shall occur, the principal of all
the Bonds and all interest accrued thereon may, without prior notice to the
Bondholders, be declared due and payable in the manner and with the effect
provided in the Loan Agreement and Indenture.
This Bond and the series of which it forms a part are issued
pursuant to and in full compliance with the Constitution and laws of the State
of Nebraska, particularly the Act, and pursuant to a resolution adopted and
approved by the Issuer, which resolution authorized the Project and the
execution and delivery of the Indenture, and the issuance of the Bonds as
special, limited obligations payable solely from revenues derived from the Loan
Agreement, including Letter of Credit proceeds, except that under certain
circumstances the Bonds may be payable from Bond proceeds. The Basic Payments
under the Loan Agreement are scheduled to be sufficient to pay the principal of,
premium, if any, and interest on the Bonds as the same become due and payable
and are to be paid to the Trustee for the account of the Issuer and credited to
the Bond Fund as a special trust fund account created by the Issuer and have
been and are hereby pledged for that purpose. THE BONDS, INCLUDING PRINCIPAL,
PREMIUM AND ANY OTHER PAYMENTS HOWEVER DESIGNATED, AND THE INTEREST DUE THEREON
DO NOT AND SHALL NEVER CONSTITUTE A GENERAL INDEBTEDNESS OF THE ISSUER WITHIN
THE MEANING OF ANY STATE CONSTITUTIONAL OR STATUTORY PROVISION AND DO NOT AND
SHALL NOT CONSTITUTE OR GIVE RISE TO A PECUNIARY LIABILITY OR MORAL OBLIGATION
OF THE ISSUER, THE STATE OF NEBRASKA OR ANY OF ITS POLITICAL SUBDIVISIONS, OR A
CHARGE AGAINST ITS GENERAL CREDIT, OR TO THE EXTENT PERMITTED BY LAW, ANY
PECUNIARY LIABILITY OF ANY OFFICER, EMPLOYEE OR AGENT OF THE ISSUER. THE ISSUER
HAS NO TAXING
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<PAGE> 49
POWERS. The provisions of this paragraph are controlling notwithstanding
anything herein to the contrary.
The Holder of this Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any Event of Default under the
Indenture, or to institute, appear in or defend any suit or other proceedings
with respect thereto, except as provided in the Indenture. Modifications or
alterations of the Indenture, or of any indenture supplemental thereto, may be
made only to the extent and in the circumstances permitted by the Indenture.
With the consent of the Issuer, the Company, the Reimbursement Bank
and the Trustee, as appropriate, and to the extent permitted by and as provided
in the Indenture, the terms and provisions of the Indenture, the Loan Agreement
and the Letter of Credit, or of any instrument supplemental thereto, may be
modified or altered by the consent of the Holders of at least 51% in aggregate
principal amount of the Bonds then Outstanding thereunder.
The Indenture also contains provisions permitting Holders of a
majority in aggregate principal amount of the Bonds at the time Outstanding, on
behalf of all the Holders of all the Bonds and with the consent of the
Reimbursement Bank, to waive compliance by the Issuer with certain provisions of
the Indenture and certain default under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Bond shall be conclusive and
binding upon such Holder and on all future Holders of this Bond and of any Bond
issued in lieu hereof whether or not notation of such consent or waiver is made
upon this Bond.
The Bonds are issued as fully registered Bonds without coupons in
the denomination of $100,000 or any greater amount in multiples of $5,000 except
for one Bond which following redemptions may be in an amount less than $100,000.
The Bonds are interchangeable for one or more Bonds in Authorized Denominations,
aggregate principal amount, interest rate and maturity date, upon surrender
thereof by the Holder at the principal office of the Trustee, in the manner and
subject to the limitations provided in the Indenture. The Issuer, the Trustee
and any additional paying agents may deem and treat the Holder hereof as the
absolute owner hereof (whether or not this Bond shall be overdue) for the
purpose of receiving payment of or on account of principal hereof and
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<PAGE> 50
interest (except as otherwise hereinabove provided with respect to the Record
Date) due hereon and for all other purposes, and the Issuer, the Trustee and any
additional paying agents shall not be affected by any notice to the contrary.
Subject to the limitations provided in the Indenture, this Bond is
only transferable by the Holder hereof upon surrender of this Bond for transfer
at the principal corporate trust office of the Trustee, duly endorsed or
accompanied by a written instrument or instruments of transfer in the form
printed on this Bond or in another form satisfactory to the Trustee and executed
and with guaranty of signature by the Holder hereof or his attorney duly
authorized in writing, containing written instructions as to the details of the
transfer of the Bond. Thereupon the Issuer shall execute (if necessary) and the
Trustee shall authenticate and deliver, in exchange for this Bond, one or more
new Bonds in the name of the transferee (but not registered in blank or to
"bearer" or a similar designation), of an Authorized Denomination, in aggregate
principal amount equal to the principal amount of this Bond, of the same
maturity, and bearing interest at the same rate.
Notwithstanding anything herein to the contrary, in no event shall
this Bond be transferred to or registered in the name of any transferee (except
the Trustee, the Reimbursement Bank, the Remarketing Agent or the Company) who
is not an institutional accredited investor who has (A) executed an Investor
Letter in the form attached to this Indenture as Exhibit B-1 or (B), in the
event such transferee is to be issued a Bond (i) which is in a principal amount
representing less than one-third of the Bonds Outstanding, or (ii) at such time
the Letter of Credit then securing the Bonds is not issued by a Bank, the senior
debt obligations of which carry a Rating Category of at least AA, or (iii) at
such time the Letter of Credit is not then in full force and effect or has been
improperly dishonored, executed an Investor Letter in the form attached to this
Indenture as Exhibit B-2.
No service charge shall be made to the Holder for any registration,
transfer or exchange hereinbefore referred to, but the Trustee may require
payment of a sum sufficient to cover any tax, fee or other governmental charge
that may be imposed in connection with any transfer or exchange of Bonds, other
than exchanges expressly provided in the Indenture to be made without charge to
Bondholders.
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<PAGE> 51
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,
conditions and things required to exist, to happen and to be performed precedent
to and in the execution and delivery of the Indenture and the issuance of this
Bond do exist, have happened and have been performed in due time, form and
manner, as required by law, and that the issuance of this Bond and the series of
which it forms a part, together with all other obligations of the Issuer, does
not exceed or violate any constitutional or statutory limitation.
This Bond shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture unless the
Certificate of Authentication hereon shall have been executed by the Trustee.
IN WITNESS WHEREOF, the Nebraska Investment Finance Authority, by
its governing body, has caused this Bond to be executed in its name by the
manual or facsimile signatures of its Chairperson and its Executive Director and
by the manual signature of the Trustee acting as authenticating agent, and has
caused this Bond to be sealed with a facsimile of its official seal printed
hereon.
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<PAGE> 52
Date of Authentication: NEBRASKA INVESTMENT FINANCE
AUTHORITY
_______________________ __________________________
Chairperson
[Facsimile Seal] __________________________
Executive Director
TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described
in the within mentioned Indenture.
Norwest Bank Nebraska, National Association,
Trustee
By______________________________ Date:______________________
Responsible Agent
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<PAGE> 53
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and
transfers unto ________________________________________________
_________________________________ the within Bond and does hereby irrevocably
constitute and appoint __________________ ______________ attorney to transfer
the Bond on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated: _______________________ ___________________________
Notice: The assignor's signature to this assignment must correspond
with the name as it appears upon the face of the within Bond
in every particular, without alteration or any change
whatever.
Signature Guaranteed:
_______________________
Signature(s) must be guaranteed by a national bank or trust company or by a
brokerage firm having a membership in one of the major stock exchanges.
The Trustee will not effect transfer of this Bond unless the information
concerning the transferee requested below is provided.
Name and Address: ________________________________________
________________________________________
________________________________________
(Include information for all joint owners
if the Bond is held by joint account)
Insert social security or
other identifying number of
Transferee
___________________________
___________________________
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<PAGE> 54
Section 2.2 Initial Issue.
The Bonds shall be initially issued to the Original Purchaser in the
form of a single Bond in the amount of $2,850,000, upon receipt from the
Original Purchaser of an Investor Letter substantially in the form attached
hereto as Exhibit B-1. The Bonds shall:
(1) be dated as of the date of original issue or their registration as
provided in Section 2.11;
(2) be issued and delivered to the Original Purchaser as fully registered
bonds without coupons, in the denomination of $100,000, or any amount greater
than $100,000 in $5,000 multiples and be numbered R-1 and upward;
(3) mature on March 1, 2017, and bear interest from their date of
issuance, until paid, (A) at the rates provided in Section 2.3 during the
Variable Rate Period computed on the basis of the actual number of days elapsed
in a year of 365 or 366 days, as applicable, and (B) at the Fixed Rate provided
in Section 2.4 during the Fixed Rate Period computed on the basis of a 360-day
year composed of twelve 30-day months;
(4) be payable in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts,
at the principal trust office of the Trustee acting as the Paying Agent, or a
duly appointed successor Paying Agent, except that interest on the Bonds will be
payable on each Interest Payment Date by check or draft mailed by the Trustee to
the Holders of such Bonds on the applicable Record Date (the "Record Date
Holders" as defined in the Bond) at the last addresses thereof as shown in the
Bond Register on the applicable Record Date, and principal of and any premium on
any Bonds shall be payable at the principal office of the Trustee; provided that
any interest on any Bond which is payable but which is not punctually paid or
duly provided ("Defaulted Interest") shall be payable, on a date selected by the
Trustee, to the Person in whose name such Bond is registered in the Bond
Register at the close of business on a Special Record Date selected by the
Trustee and which shall be at least ten (10) days but not more than thirty (30)
days before the date selected by the Trustee for payment of such Defaulted
Interest. The Trustee shall give Notice by Mail of the Special Record Date and
date for payment of Defaulted Interest at least ten days before the Special
Record Date;
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<PAGE> 55
(5) be subject to redemption upon the terms and conditions and at the
prices specified in Article III hereof;
(6) notwithstanding the foregoing, if the date for payment of the
principal of, premium, if any, or interest on the Bonds shall be a day which is
not a Business Day, then the date for such payment shall be the next succeeding
day which is a Business Day, and payment on such later date shall have the same
force and effect as if made on the nominal date of payment; and
(7) notwithstanding the foregoing, any Holder of at least $500,000
principal amount of any Bonds (or a lesser amount of such Bonds if such Bonds
constitute all the Bonds at the time Outstanding) may file with the Trustee an
instrument satisfactory to the Trustee requesting the interest payable by the
Trustee to such Holder be paid by transferring by wire transfer in immediately
available funds, on the day such payment is due, the amount to be distributed to
such Holder to a designated account maintained by such Holder at any other bank
in the United States. The Trustee shall pay all amounts payable by the Trustee
hereunder to such Holder by transfer directly to said designated bank in
accordance with the provisions of any such instrument, provided that if such
amount represents a payment of the principal of any Bond, such Bond shall have
been presented to the Trustee; further provided that a partial redemption of
principal may be so noted on the Bond by the Holder thereof without presenting
the Bond to the Trustee. All payments so made shall be valid and effectual to
satisfy and discharge the liability upon such Bonds.
Section 2.3 Variable Rate.
(1) From the date of initial issuance and delivery of the Bonds to the
Conversion Date, the Bonds shall bear interest at the Variable Rate.
(2) From the date of initial issuance and delivery of the Bonds to and
including March 26, 1997, the Bonds shall bear interest at the rate of three and
one-half percent (3.50%) per annum. Thereafter, for each Adjustment Period
ending prior to or on the Conversion Date, the Bonds shall bear interest at a
rate from time to time determined by the Remarketing Agent in the manner
described in this paragraph (2). On each Adjustment Date, the Remarketing Agent,
having due regard to prevailing financial market conditions shall determine the
interest rate on the Bonds as that rate which, if borne by the Bonds, would, in
its judgment, be the
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<PAGE> 56
interest rate which would result in the market value of the Bonds on such
Adjustment Date being 100% of the principal amount thereof, and the interest
rate so determined shall be effective for the Adjustment Period commencing on
the day following such Adjustment Date. In no event shall the interest rate
exceed ten percent (10.00%) per annum.
(3) In the event that for any reason the interest rate cannot be
established as provided in the preceding subsection (2), for any Adjustment
Period or is held invalid or unenforceable by a court of law, the interest rate
per annum for such Adjustment Period shall be the Variable Rate then in effect.
(4) If the Variable Rate shall change on the Adjustment Date, the
Remarketing Agent shall announce the Variable Rate so determined by facsimile
notice to the Company, the Trustee, the Issuer and the Bank.
(5) The computation of the Variable Rate by the Remarketing Agent shall be
conclusive and binding upon the Issuer, the Trustee, the Bank, the Company and
each Bondholder.
Section 2.4 Fixed Rate.
(1) On and after the Conversion Date the Bonds shall bear interest at the
Fixed Rate. At any time the Company shall have the option, with the written
consent of the Reimbursement Bank, to convert the interest rate on the Bonds to
the Fixed Rate on a one-time basis pursuant to this Section by giving written
notice to the Trustee, the Issuer, the Reimbursement Bank and the Remarketing
Agent stating (A) its election under this section to convert the interest rate
on the Bonds to the Fixed Rate, (B) the date on which such conversion shall
occur (the "Conversion Date"), which shall be a Business Day not less than 60
nor more than 90 days from the date the Company gives such notice, and (C) the
date on which the Fixed Rate shall be announced, which shall be not less than
ten days prior to the Conversion Date (the "Computation Date"), and by
delivering to the Trustee, the Issuer and the Remarketing Agent, together with
such notice, (i) an opinion of Bond Counsel stating that such conversion to the
Fixed Rate is authorized and permitted by the Act and this Indenture and will
not cause the interest on the Bonds to be includable in gross income of an owner
for purposes of federal income taxation, and (ii) the Alternate Letter of Credit
required under Section 7.4. In such case, the Fixed Rate shall be the interest
rate on the Bonds announced by the Remarketing Agent
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<PAGE> 57
on the Computation Date, shall be effective on and after the Conversion Date and
shall be equal to the interest rate on the Bonds at which the Remarketing Agent
has received commitments on the Computation Date to purchase all the Bonds on
the Conversion Date at par, which Fixed Rate shall be the Fixed Letter of Credit
Rate.
(2) Upon conversion to the Fixed Rate pursuant to this Section 2.4, the
Bonds shall be subject to purchase pursuant to Section 4.2 hereof on the
Conversion Date.
(3) If the Company has exercised its option to convert the Bonds to the
Fixed Rate and the Remarketing Agent has not on the relevant Computation Date
received commitments to purchase all of the Bonds on the relevant Conversion
Date at par, the Remarketing Agent shall notify the Issuer, the Company and the
Trustee of such fact on the Computation Date, the conversion of the Bonds to the
Fixed Rate on such Conversion Date shall be canceled and the Bonds shall
continue to bear interest after such Conversion Date at the Variable Rate as if
such option had not been exercised. The Trustee shall promptly give Notice by
Mail of any such cancellation to the Bondholders and the Trustee shall return to
the Company the Alternate Letter of Credit previously delivered to the Trustee
pursuant to this Section . No such cancellation shall affect the right of the
Company thereafter to exercise its option to convert the Bonds to the Fixed
Rate.
Section 2.5 Execution.
The Bonds shall be executed on behalf of the Issuer by the signature
of its Chairperson and Executive Director and be sealed with the seal of the
Issuer; provided, however, that the seal of the Issuer may be a printed
facsimile; provided further that both of such signatures may be printed
facsimiles. In the event of disability or resignation or other absence of either
such officer, the Bonds may be signed by the manual or facsimile signature of
that officer who may act in behalf of such absent or disabled officer. In case
either such officer whose signature or facsimile of whose signature shall appear
on the Bonds shall cease to be such officer before the delivery of the Bonds,
such signature or facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if he had remained in office until delivery.
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<PAGE> 58
Section 2.6 Authentication.
No Bond shall be valid or obligatory for any purpose or be entitled
to any security or benefit under this Indenture unless a Certificate of
Authentication on such Bond, substantially in the form hereinabove set forth,
shall have been duly executed manually by a Responsible Agent. Certificates of
Authentication on different Bonds need not be signed by the same person. The
Trustee shall authenticate the signatures of officers of the Issuer on each Bond
by execution of the Certificate of Authentication on the Bond; and the executed
Certificate of Authentication on each Bond shall be conclusive evidence that it
has been authenticated and delivered under this Indenture.
Section 2.7 Delivery of Initial Issue.
Upon the execution and delivery of this Indenture the Issuer shall
execute and deliver to the Trustee, and the Trustee shall authenticate, the
Bonds in the aggregate amount of $2,850,000 and the Trustee shall deliver the
Bonds to the Original Purchaser at such time or times as may be directed by the
Issuer after filing with the Trustee the following:
(1) original executed counterparts of the Loan Agreement, Remarketing
Agreement, Letter of Credit and this Indenture;
(2) a copy, duly certified by the Issuer's Executive Director, of the
resolution adopted and approved by the governing body of the Issuer, authorizing
the Project and the execution and delivery of this Indenture and the Loan
Agreement and the issuance of the Bonds;
(3) a request and authorization (which may be part of a certificate of the
Issuer) to the Trustee on behalf of the Issuer, signed by its Chairperson and
Executive Director to deliver the Bonds to the Original Purchaser therein
identified upon payment to the Trustee for the account of the Issuer of a
specified sum plus accrued interest;
(4) the opinion of the Company's attorney in the form required by Bond
Counsel, Issuer's counsel and counsel to the Reimbursement Bank;
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<PAGE> 59
(5) the opinion of counsel to the Bank in the form required by Bond
Counsel;
(6) the opinion of Bond Counsel approving the legality of the Bonds issued
pursuant to this Indenture; and
(7) such other documents or opinions as counsel to the Reimbursement Bank,
counsel to the Issuer or Bond Counsel may require.
Section 2.8 Mutilated, Lost, Stolen, Destroyed or Untendered Bonds.
(1) In case any Bond issued hereunder shall become mutilated or be
destroyed or lost, the Issuer shall, if not then prohibited by law, cause to be
executed, and the Trustee shall authenticate and deliver, a new Bond of like
series, amount, maturity date and tenor in exchange and substitution for and
upon cancellation of any such mutilated Bond, or in lieu of and in substitution
for any such Bond destroyed or lost, upon the Holder's paying the reasonable
expenses and charges of the Trustee and Issuer and, in the case of a Bond
destroyed or lost, the filing with the Trustee evidence satisfactory to the
Trustee that such Bond was destroyed or lost, and of the ownership thereof, and
furnishing the Issuer and the Trustee with indemnity satisfactory to them. If
the mutilated, destroyed or lost Bond has already matured or been called for
redemption in accordance with its terms, it shall not be necessary to issue a
new Bond prior to payment.
(2) In addition, the Issuer may execute and the Trustee may authenticate
and deliver Bonds of the same Stated Maturity, principal amount and tenor in
lieu of and in substitution for an Untendered Bond.
(3) In executing a new Bond and in furnishing the Trustee with the written
authorization to authenticate and deliver a new Bond as provided for in this
Section 2.8, the Issuer may rely conclusively on a representation of the Trustee
that the Trustee is satisfied with the adequacy of the evidence presented
concerning the mutilation, loss, theft or destruction of any Bond.
Section 2.9 Ownership of Bonds.
The Issuer, Trustee and Paying Agent may deem and treat the Holder
of any Bond, whether or not such Bond shall be overdue,
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<PAGE> 60
as the absolute owner of such Bond for the purpose of receiving payment thereof
and for all other purposes whatsoever, and the Issuer (or any agent thereof),
Trustee and Paying Agent shall not be affected by any notice to the contrary.
Section 2.10 Preparation of Definitive Bonds; Temporary Bonds.
The definitive Bonds may be printed; provided that with the consent
of the Holders, or while the Bonds are held by no more than three holders, they
may be delivered as typewritten bonds. Until the definitive Bonds are prepared,
the Issuer may execute, in the same manner as is provided in Section 2.5 (except
that manual signatures and a manual seal may be used), and deliver, in lieu of
definitive Bonds, but subject to the same provisions, limitations and conditions
as the definitive Bonds, except as to the denominations thereof, one or more
temporary Bonds (which shall be registered as to principal and interest),
substantially of the tenor of the definitive Bonds, in any denominations
authorized by the Issuer, and with such omissions, insertions and variations as
may be appropriate to temporary Bonds. The Issuer shall prepare and execute and,
upon the surrender of such temporary Bonds for exchange and the cancellation of
such surrendered temporary Bonds, deliver in exchange therefor, at the principal
corporate trust office of the Trustee, definitive Bonds of the same aggregate
principal amount as the temporary Bonds surrendered. Until so exchanged, the
temporary Bonds shall in all respects be entitled to the same benefits and
security as definitive Bonds issued pursuant to this Indenture. All temporary
Bonds surrendered in exchange for a definitive Bond or Bonds shall be forthwith
canceled by the Trustee in accordance with Section 2.13.
Section 2.11 Registration, Transfer and Exchange of Bonds.
(1) The Trustee is hereby appointed "Bond Registrar" for the purpose of
registering the Bonds and transfers of the Bonds as herein provided. The Trustee
shall maintain at the principal corporate trust office of the Trustee a Bond
Register in which, subject to such reasonable regulations as the Trustee may
prescribe, the Trustee shall provide for the registration of Bonds and the
registration of transfers of Bonds. The Bond Register shall contain a record of
every Bond at any time authenticated hereunder, together with the name and
address of the Holder thereof, the date of authentication, the date of transfer
or
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payment, and such other matters as are appropriate for the Bond Register in the
estimation of the Trustee.
(2) Upon surrender for transfer of any Bond at the principal corporate
trust office of the Trustee, the Issuer shall execute (if necessary), and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees (but not registered in blank or to "bearer" or a similar
designation), one or more new Bonds of any Authorized Denomination or Authorized
Denominations of a like aggregate principal amount, having the same stated
maturity and interest rate, as requested by the transferor.
(3) At the option of the Holder, Bonds may be exchanged for other Bonds of
the same series of any Authorized Denomination or Authorized Denominations of a
like aggregate principal amount and stated maturity, upon surrender of the Bonds
to be exchanged at the principal corporate trust office of the Trustee, and upon
payment, if the Issuer shall so require, of the taxes, if any, hereinafter
referred to. Whenever any Bonds are so surrendered for exchange, the Issuer
shall execute, and the Trustee shall authenticate and deliver, the Bonds which
the Holder making the exchange is entitled to receive.
(4) All Bonds surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee and thereafter disposed
of as required by Section 2.13.
(5) All Bonds delivered in exchange for or upon transfer of Bonds shall be
valid special obligations of the Issuer evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Bonds surrendered for such
exchange or transfer.
(6) Transfer of a Bond may be made on the Trustee's books by the
registered owner in person or by the registered owner's attorney duly authorized
in writing. Every Bond presented or surrendered for transfer or exchange shall
(if so required by the Issuer or the Trustee) be duly endorsed or be accompanied
by a written instrument or instruments of transfer, in the form printed on the
Bond or in another form satisfactory to the Trustee, duly executed and with
guaranty of signature of the Holder thereof or his attorney duly authorized in
writing and shall include written instructions as to the details of the transfer
of the Bond.
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(7) No service charge shall be made to the Holder for any registration,
transfer or exchange, but the Trustee and Issuer may require payment of a sum
sufficient to cover any tax, fee or other governmental charge that may be
imposed in connection with any transfer or exchange of Bonds, other than
exchanges expressly provided in this Indenture to be made without expense or
without charge to Bondholders.
(8) Subject to the provisions of subsection (9) below, the Trustee as Bond
Registrar shall comply with rules applicable to transfer agents registered with
the Securities and Exchange Commission as to the 72-hour "turnaround" standard
established for the transfer of registered corporate securities.
(9) The Trustee shall not be required (i) to transfer or exchange any Bond
during a period beginning at the opening of business 10 days before the day of
the first publication or the mailing (if there is no publication) of a notice of
redemption of Bonds under this Indenture and ending at the close of business on
the day of such publication or mailing, or (ii) to transfer or exchange any Bond
so selected for redemption in whole or in part; provided, however, that in no
event shall the provisions of this subsection (9) preclude or in any way impair
a Holder from exercising the rights set forth in Section 4.1.
(10) The Bond Registrar shall insert in each Bond the date of registration
which, for purposes of delivering the original Bonds to the Original Purchaser,
shall be Bond Closing, and which for all other events shall be the last Interest
Payment Date preceding the date of authentication to which interest on the Bond
has been paid or made available for payment, unless the date of authentication
is an Interest Payment Date to which interest has been paid or made available
for payment, in which case the Bond shall be dated as of the date of
authentication. Each Bond shall be so dated that neither gain nor loss in
interest shall result from any transfers, exchange or substitution provided for
herein.
(11) Notwithstanding anything herein to the contrary, in no event shall
any Bond be transferred to or registered in the name of any transferee (except
the Trustee, the Reimbursement Bank, the Remarketing Agent or the Company) who
is not an institutional accredited investor who has (A) executed an Investor
Letter in the form attached to this Indenture as Exhibit B-1 or (B), in the
event such transferee is to be issued a Bond (i) which is in a principal amount
representing less than one-third of the Bonds Outstanding,
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or (ii) at such time the Letter of Credit then securing the Bonds is not issued
by a Bank, the senior debt obligations of which carry a Rating Category of at
least AA, or (iii) at such time the Letter of Credit is not then in full force
and effect or has been improperly dishonored, executed an Investor Letter in the
form attached to this Indenture as Exhibit B-2.
Section 2.12 Interest Rights Preserved.
Each Bond delivered upon transfer of or in exchange for or in lieu
of any other Bond shall carry all the rights to interest accrued and unpaid, and
to accrue, which were carried by such other Bond.
Section 2.13 Cancellation of Bonds.
Whenever any Outstanding Bond shall be delivered to Trustee for
cancellation pursuant to this Indenture, upon payment of the principal amount
and interest represented thereby or for replacement pursuant to Section 2.8 or
transfer pursuant to Section 2.11, such Bond shall be canceled and destroyed by
Trustee and a certificate of destruction evidencing such destruction shall be
furnished by the Trustee to the Issuer.
Upon the Maturity of any Company Bond, or upon acceleration of the
Bonds upon the occurrence of an Event of Default described in clause (4) or (5)
of Section 10.1 hereof (whether or not an acceleration shall have occurred), the
Trustee shall cancel such Company Bond and not make any payments with respect
thereto from the Bond Fund for any principal or interest then due thereon. Upon
any such cancellation such Company Bond shall be deemed fully paid under this
Indenture and shall no longer be Outstanding and shall not be reissued and a
certificate evidencing such cancellation and destruction shall be furnished by
the Trustee to the Issuer, the Reimbursement Bank and the Company.
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ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
Section 3.1 Redemption.
(1) The Bonds are subject to redemption in whole or in part in principal
increments of $100,000 on any Interest Payment Date, commencing on September 1,
1997, at the option of the Company and with the prior written consent of the
Bank, upon at least 35 days prior notice to the Trustee and Issuer, or as
required by Section 6.2(2), at a redemption price equal to the principal amount
of the Bonds to be redeemed plus accrued interest thereon to the Redemption
Date, without premium.
(2) Following the occurrence of a Determination of Taxability all of the
Bonds shall be redeemed in whole on the first Business Day for which notice of
redemption can properly be given in accordance with Section 3.3 at a redemption
price equal to 103 percent of the principal amount of the Bonds to be redeemed
plus accrued interest thereon to the Redemption Date.
(3) In the event that during the Letter of Credit Period the Company has
failed to deliver an Alternate Letter of Credit to the Trustee at least 35 days
prior to the Termination Date pursuant to Section 7.4 hereof, all of the Bonds
shall be redeemed on such Termination Date (or the immediately preceding
Business Day, if such Date is not a Business Day) at a redemption price equal to
the principal amount of the Bonds to be redeemed plus interest accrued thereon
to the Redemption Date; provided that upon at least 35 days prior notice to the
Trustee and Issuer, the Company may direct that the Bonds be called for
mandatory tender on the redemption date in lieu of redemption on that date, all
in the manner herein provided for mandatory tender of the Bonds.
(4) All Bonds are subject to mandatory redemption by lot at par and
accrued interest without premium, on the following dates and in the following
amounts (unless and to the extent any credit against such amount is applied as
provided in this Indenture, or if less than such amount is then Outstanding, an
amount equal to the aggregate principal amount of the Bonds then Outstanding):
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Date Amount
---- ------
3/1/98 $140,000
3/1/99 140,000
3/1/00 140,000
3/1/01 140,000
3/1/02 140,000
3/1/03 140,000
3/1/04 140,000
3/1/05 140,000
3/1/06 140,000
3/1/07 140,000
3/1/08 145,000
3/1/09 145,000
3/1/10 145,000
3/1/11 145,000
3/1/12 145,000
3/1/13 145,000
3/1/14 145,000
3/1/15 145,000
3/1/16 145,000
3/1/17* 145,000
- --------------
*Final Maturity
(5) If Bonds are redeemed at the direction of the Company pursuant to
Section 3.1(1) hereof, the principal amount of the Bonds so optionally redeemed
may, at the option of the Company, be applied as a credit against the next
occurring Mandatory Redemption Payment with respect to Bonds otherwise to be
redeemed thereby, such credit to be equal to the principal amount of such Bonds
redeemed, provided that the Company shall have delivered to the Trustee not less
than sixty days prior to such Maturity Date written notice stating its election
to apply the principal amount of such Bonds as such a credit. In such case, the
Trustee shall reduce the principal amount of Bonds to be redeemed on the
Maturity Date specified in such Company Certificate by the principal amount of
Bonds so redeemed.
(6) Any credit given Mandatory Redemption Payments shall not affect any
subsequent Mandatory Redemption Payments, which shall remain payable as
otherwise provided herein, unless and until another credit is given in
accordance with the provisions hereof.
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Section 3.2 Partial Redemption of Bonds.
In the case of any partial redemption of Bonds pursuant to any
provision of this Indenture, the particular Bonds or portions thereof to be
redeemed shall be selected by the Trustee in such manner as the Trustee shall
deem fair and equitable and so that at no time shall more than one Bond be
outstanding in an amount less than $100,000. In the case of any partial
redemption of a Bond in a denomination greater than $100,000 then for all
purposes in connection with such redemption, the first $100,000 of face value of
such Bond shall be treated as though it were a separate Bond in the denomination
of $100,000 and each remaining $100,000 of face value of such Bond shall be
treated as though it were a separate Bond in the denomination of $100,000 and
such Bond shall be redeemed only in a principal amount sufficient to redeem one
or more of such separate Bonds in full. Any Bond which is to be redeemed only in
part may be surrendered to the Trustee (i) for payment of the Redemption Price
(including accrued interest thereon to the Redemption Date) of the portion
thereof called for redemption and (ii) for exchange for Bonds in any authorized
denomination or denominations in aggregate principal amount equal to the
unredeemed portion of such Bond, without charge therefor. Or, at the option of
the Holder, the Holder shall note (and there shall deemed to have been noted) on
the Bond upon payment of the Redemption Price, the principal amount so redeemed;
provided that failure to note such prepayment on such Bond shall not affect the
validity of such redemption. For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to the redemption of Bonds
shall relate, in the case of any Bond redeemed or to be redeemed only in part,
to the portion of the principal of such Bond which has been or is to be
redeemed.
Section 3.3 Procedure for Redemption.
In the event the Company shall give notice to the Trustee and Issuer
of any redemption of the Bonds, and the Reimbursement Bank shall have consented
in writing, the Trustee shall give notice, in the name of the Issuer, of the
redemption of such Bonds, which notice shall (1) specify the Bonds (or portions
thereof) to be redeemed, the Redemption Date, the redemption price and the place
or places where or, if a partial redemption the manner in which the amounts due
upon such redemption will be payable and (2) state that on the Redemption Date
the Bonds (or portions thereof) to be redeemed shall cease to bear interest.
Such notice may set forth any additional information relating to such
redemption. The
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Trustee shall give such Notice By Mail at least thirty (30) days prior to the
Redemption Date, to the Holders of the Bonds to be redeemed and, if required by
law, published notice of the redemption shall also be given at least once prior
to the Redemption Date in a daily or weekly financial journal or newspaper of
general circulation in New York, New York; provided, however, that failure duly
to give any such notice, or any defect therein, shall not affect the validity of
any proceedings for the redemption of any Bonds not affected by such failure or
defect.
Any Bonds and portions of Bonds which have been duly selected for
redemption and which are deemed to be paid in accordance with Article IX hereof
shall cease to bear interest on the specified redemption date.
Section 3.4 Payment of Bonds Upon Redemption.
The redemption price of Bonds or portions thereof called for
redemption in accordance with Section 3.3 shall be payable on the Redemption
Date upon presentation and surrender of such Bonds at the place or places of
payment except, in the case of redemption of a Bond in part during the Variable
Rate Period, in case of presentment or nonpresentment, such payment shall be by
wire transfer in accordance with instructions filed by the Holder with the
Trustee at least three (3) Business Days prior to such redemption. If, on the
Redemption Date, sufficient moneys (which in the case of a redemption during the
Letter of Credit Period shall consist solely of a drawing under the Letter of
Credit) shall have been deposited with the Trustee to effect such redemption in
accordance with this Indenture, then interest shall cease to accrue on all Bonds
or portions thereof so called for redemption.
Section 3.5 No Partial Redemption After Default.
Anything in this Indenture to the contrary notwithstanding, if
there shall have occurred and be continuing an Event of Default, there shall be
no redemption of less than all of the Bonds at the time Outstanding.
Section 3.6 Cancellation.
All Bonds which have been redeemed shall be canceled by the Trustee
as provided in Section 2.13 and shall not be reissued.
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ARTICLE IV
PURCHASE AND REMARKETING OF BONDS
Section 4.1 Purchase of Bonds at Option of Holder.
(1) During the Variable Rate Period, the Trustee, acting on behalf of the
Company and for the benefit of the Holders of the Bonds from time to time, shall
purchase any Bond (other than Company Bonds) from amounts in the Bond Purchase
Fund, for the account of the Company, or cause the Bond to be otherwise
purchased, upon notice from the Holder thereof, such purchase to occur on any
Business Day at a purchase price equal to the principal amount thereof plus
accrued interest thereon from the most recent Variable Rate Interest Payment
Date, but only upon:
(A) notice by the Holder communicated to the Remarketing Agent and
the Trustee by written or printed telex or other means of written or
printed instantaneous communication delivered to the Remarketing Agent at
its principal office and the Trustee at its principal corporate trust
office (the "Optional Tender Notice") stating (i) the principal amount of
such Bond, and (ii) the date on which such Bond shall be purchased
pursuant to this Section 4.1, which date shall be a Business Day on or
after the seventh calendar day next succeeding the date of the giving of
the Optional Tender Notice (the "Optional Tender Date"); and
(B) delivery of such Bond (with an appropriate instrument of
transfer executed in blank) to the Trustee by 12:00 o'clock Noon, Nebraska
time, on the Business Day prior to the date specified in such Optional
Tender Notice.
(2) Immediately upon receipt by the Trustee of an Optional Tender Notice
delivered to it in accordance with subsection (1) of this Section 4.1, the
Trustee shall give notice by telephone or facsimile, promptly confirmed in
writing, to the Company, the Reimbursement Bank and the Remarketing Agent
specifying the principal amount of Bonds to be purchased pursuant to said
Optional Tender Notice and the date for such purchase. On such Optional Tender
Date if such Bond has been properly delivered in a timely manner to the Trustee,
the Trustee, on behalf of the Company, shall purchase the Bonds identified in
such Optional Tender Notice from the Holder thereof for the account of the
Company, or cause such
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Bonds to be purchased upon compliance with Section 2.11(11) of this Indenture,
at a purchase price equal to the principal amount thereof to be purchased, plus
accrued interest thereon. In either case, funds for the payment of the purchase
price of such Bonds shall be drawn by the Trustee from the Bond Purchase Fund as
provided in Section 6.4.
Section 4.2 Mandatory Tender of Bonds.
(1) The Mandatory Tender Date shall be (a) the Conversion Date, (b) the
date on which the Bonds are called for mandatory tender, in lieu of mandatory
redemption, as provided under Section 3.1(3) and Section 4.9 and (c) the date on
which an Alternate Letter of Credit shall take effect. Subject to the provisions
of subsection (3) below, the Holder of each Bond shall tender such Bond to the
Trustee for purchase on the Mandatory Tender Date, all as more fully provided in
this Section 4.2.
(2) Notice of a Mandatory Tender Date (a "Mandatory Tender Notice") shall
be given by the Trustee, by first-class mail, postage prepaid, to the Issuer and
Holders of all Bonds at their addresses appearing on the registration books
maintained by the Trustee and to the Remarketing Agent, not less than 30 days
prior to the Conversion Date or seven days prior to any other Mandatory Tender
Date. Such Notice shall specify the Mandatory Tender Date and state (A) the
reason for the mandatory tender, (B) that all Bonds shall be purchased on the
Mandatory Tender Date at a purchase price equal to the principal amount thereof
plus accrued interest thereon and (C) that all Bonds must be tendered for
purchase at or before 12:00 o'clock Noon, Nebraska time, on the Business Day
prior to the Mandatory Tender Date together with an appropriate instrument of
transfer executed in blank and the Holder of any such Bond which is not so
tendered but for which there has been irrevocably deposited with the Trustee an
amount sufficient to pay the purchase price thereof (an "Untendered Bond") shall
be deemed to have been tendered and shall not be entitled to receive interest on
such Bond for any period beginning on or after the Mandatory Tender Date. A copy
of any Mandatory Tender Notice shall be delivered by the Trustee to the
Remarketing Agent.
(3) All Bonds shall be tendered (or deemed to be tendered as the case may
be) to the Trustee for purchase at or before 12:00 o'clock Noon, Nebraska time
on the Business Day prior to the Mandatory Tender Date, by delivering such Bonds
to the Trustee together with an appropriate instrument of transfer duly executed
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in blank. On the Mandatory Tender Date the Trustee acting on behalf of the
Company and for the benefit of the Holders of the Bonds from time to time shall
purchase or cause to be purchased all Bonds at a purchase price equal to the
principal amount thereof plus accrued interest thereon. Funds for the payment of
the purchase price of such Bonds shall be drawn by the Trustee from the Bond
Purchase Fund as provided in Section 6.4.
Section 4.3 Duties of Trustee.
The Trustee agrees, and will cause each of its agents to agree, that
it will:
(1) hold all Bonds delivered to it pursuant to Section 4.1 or 4.2
hereunder in trust solely for the benefit of the respective Bondholders which
shall have so tendered such Bonds for purchase until the payment of the purchase
price with respect to such Bonds; and
(2) hold all moneys delivered to it hereunder for the purchase of such
Bonds in trust solely for the benefit of the Holders which shall have so
tendered such Bonds for purchase until such moneys shall have been delivered to
or for the account of such Bondholders.
Section 4.4 Remarketing of Bonds.
(1) Upon receipt of a notice from the Trustee pursuant to Section 4.1(2)
or 4.2(2), the Remarketing Agent shall offer for sale and use its best efforts
to sell the Bonds with respect to which such notice has been received in a
private placement in accordance with Section 2.11(11) of this Indenture to
sophisticated investors, knowledgeable in making investments similar in nature
and character to the Bonds, who agree to purchase such Bonds for investment
purposes only and without a view to re-sell or distribute the Bonds and to
execute an Investor Letter in the form attached as Exhibit B-1 or B-2, as
applicable, on the Optional Tender Date or Mandatory Tender Date, as the case
may be, at a purchase price of par plus accrued interest, provided that the
Remarketing Agent shall not sell the Bonds to the Company or the Issuer.
(2) Not later than 2:00 p.m., Nebraska time, on the second Business Day
prior to the Optional Tender Date or Mandatory Tender Date, the Remarketing
Agent shall give notice (the "Remarketing Notice"), by telephone, telex or
telecopier, promptly confirmed in
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writing, to the Company, the Reimbursement Bank, the Issuer and the Trustee
specifying the total principal amount and denominations of the Bonds, if any,
sold for settlement on such Optional Tender Date or Mandatory Tender Date, as
the case may be, and the name, address and taxpayer identification number of the
purchaser. At the time of delivery of Bonds to or upon the order of the
Remarketing Agent as hereinafter provided, the Remarketing Agent shall deliver
to the principal office of the Trustee, in immediately available funds (or upon
direction by the Remarketing Agent, the Trustee shall charge the account of the
Remarketing Agent, upon receipt of an authorized debit advice), an amount equal
to the purchase price of the total principal amount of Bonds so specified in the
Remarketing Notice, plus accrued interest, if any. If in the Remarketing Notice,
the Remarketing Agent shall have specified the name(s) in which each remarketed
Bond is to be registered together with the purchaser's address and taxpayer
identification number of the purchaser, and the denomination in which each
remarketed Bond is to be issued, delivery of such Bonds, properly executed on
behalf of the Issuer and authenticated by the Trustee, registered in the name(s)
and issued in the denomination(s) so specified, shall be made to the Remarketing
Agent by 12:00 Noon, Nebraska time on the Optional Tender Date or Mandatory
Tender Date, as the case may be, against payment by the Remarketing Agent as
aforesaid.
(3) Prior to 10:00 A.M., Nebraska time, on any Mandatory Tender Date or
Optional Tender Date, the Remarketing Agent shall transfer to the Trustee, in
immediately available funds, the amount of proceeds of remarketed Bonds received
by the Remarketing Agent prior to such Mandatory Tender Date or Optional Tender
Date.
Section 4.5 Purchase of Tendered Bonds.
Prior to 12:00 Noon, Nebraska time on any Optional Tender Date or
Mandatory Tender Date, the Trustee shall pay, but only from funds in the Bond
Purchase Fund, the purchase price for all Bonds properly tendered (or deemed
tendered pursuant to Section 4.8) for purchase pursuant to Section 4.1 or 4.2
hereof, in each case at a purchase price equal to 100% of the principal amount
thereof plus accrued interest to the Optional Tender Date or Mandatory Tender
Date. Funds for the payment of such purchase price shall be derived from the
following sources in the following order:
first, from funds drawn on the Bank under the Letter of Credit;
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second, from funds paid by the Remarketing Agent for the purchase of
Bonds as described in Section 4.4 hereof; and
third, from funds provided by or on behalf of the Company pursuant
to its obligation under Section 4.3 of the Agreement to pay the purchase price
of Bonds tendered, or deemed tendered, for purchase, and from such other funds
as may be available in the Bond Purchase Fund for the purpose.
The Remarketing Agent shall immediately deliver to the Trustee any
amounts on hand with the Remarketing Agent not theretofore delivered to the
Trustee after the payment of the purchase price of the Bonds to be purchased on
any Optional Tender Date or Mandatory Tender Date (other than any amounts held
by the Remarketing Agent with respect to any Untendered Bond).
Section 4.6 Delivery of Bonds.
Bonds purchased pursuant to Section 4.1 or 4.2 shall be delivered as
follows:
(1) Bonds purchased by the Trustee from the Letter of Credit proceeds (for
which the Reimbursement Bank has not been reimbursed with proceeds received from
the Remarketing Agent pursuant to Section 4.4(3)) shall be delivered to and held
by the Trustee in accordance with the Reimbursement Agreement. Bonds held by the
Trustee as provided in this clause (1) shall be registered in the name of the
Company or as otherwise provided in the Reimbursement Agreement; provided that
the Bonds shall not be delivered to subsequent purchasers until the Trustee has
received written notice from the Bank that the Letter of Credit has been
reinstated and provisions for transfer in Article II of this Indenture have been
satisfied;
(2) Bonds purchased by the Trustee with moneys derived from remarketing
proceeds shall be delivered by the Trustee as directed by the Remarketing Agent
upon satisfaction of the requirements of Article II of this Indenture; and
(3) Bonds purchased by the Trustee with moneys described in clause (iii)
of Section 6.4(3)(B) hereof shall be delivered to and canceled by the Trustee in
accordance with Section 2.13.
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Section 4.7 Purchase Not to Constitute a Redemption.
The Issuer and the Trustee recognize and acknowledge that, in
carrying out their responsibilities under this Article IV, the Trustee and the
Remarketing Agent shall be acting solely for the benefit of the Holders from
time to time of the Bonds and the Company, except to the extent that the Trustee
is acting as the Reimbursement Bank's agent to perfect the Reimbursement Bank's
security interest in Company Bonds. No delivery of Bonds to the Trustee or
purchase of Bonds under this Article shall constitute a redemption of the Bonds
or an extinguishment of the debt evidenced thereby, other than a purchase by the
Trustee referred to in clause (3) of Section 4.6.
Section 4.8 Untendered Bonds.
Any Bond which is not tendered on or prior to the Optional Tender
Date or Mandatory Tender Date with respect to such Bond (an "Untendered Bond"),
as to which there has been irrevocably deposited with the Trustee an amount
sufficient to pay the purchase price thereof shall be "deemed tendered" for
purposes of this Indenture and shall cease to accrue interest on such Optional
Tender Date or Mandatory Tender Date, as the case may be, and the Holder thereof
shall not be entitled to any payment other than the purchase price for such
Untendered Bond, and shall no longer be entitled to the benefits of this
Indenture, except for payment of the purchase price therefor from moneys held by
the Trustee for such purpose upon presentment of such Bond to the Trustee. In
lieu of and in substitution for such Untendered Bonds, Bonds shall be issued in
accordance with Section 2.8 hereof.
Section 4.9 Purchase of Bonds in Lieu of Certain Redemptions and
Acceleration.
(1) If the Bonds have been called for redemption pursuant to Sections
3.1(2) or (3) hereof or upon acceleration of the Bonds as a result of an Event
of Default under Section 10.1(4) hereof or 9.1(2) of the Loan Agreement, the
Bonds may be purchased, in lieu of redemption or acceleration, in whole but not
in part by the Reimbursement Bank or an affiliate thereof acceptable to Issuer
(the "Purchaser"); if (a) notice to that effect is given to the Trustee, and if
the Bonds are then rated, to S&P or Moody's, by the Purchaser not later than
3:00 p.m. New York City time, on the Business Day preceding the date scheduled
for redemption or acceleration, which notice shall state the identity of the
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Purchaser, and (b) the conditions set forth in clause (2) below are satisfied.
(2) To the extent the Purchaser has deposited in a separate trust account
designated by the Trustee for such purpose moneys which such Purchaser certifies
to the satisfaction of Holders are not in any way provided by or derived from
the Company in an amount equal to or greater than the aggregate principal amount
of Bonds called for redemption pursuant to Section 3.1(2) or (3) hereof, or upon
acceleration of the Bonds as a result of an Event of Default under Section
10.1(4) or (5) hereof, plus accrued interest thereon to the date scheduled for
redemption or acceleration, not later than 11:00 a.m. Nebraska time, on the
Business Day preceding the date scheduled for redemption or acceleration, then
any Bonds presented to the Trustee on or before the close of business on the
date scheduled for redemption or acceleration shall be purchased, and not
redeemed or accelerated, with moneys so deposited in such account at a purchase
price for each Bond equal to the principal amount thereof, plus accrued interest
thereon to the date scheduled for redemption or acceleration. Any Bond to be
purchased in lieu of such redemption or acceleration that is not presented to
the Trustee on or before the date scheduled for redemption or acceleration shall
become an Untendered Bond and shall be deemed to have been purchased on such
date.
(3) The purchase price of any Untendered Bond described in clause (2)
above shall be paid by the Trustee when it is surrendered for payment at the
principal corporate trust office of the Trustee. On the date scheduled for
redemption pursuant to Sections 3.1(2) or (3) hereof or acceleration pursuant to
Section 10.2 hereof, the Trustee shall authenticate (and the Issuer shall
execute, if necessary) a replacement Bond for such Untendered Bond. The Holder
of such Untendered Bond shall not be entitled to receive any further interest
thereon and shall have no further rights under this Indenture except to receive
such purchase price so deposited with the Trustee, without interest thereon,
upon such surrender.
(4) Promptly after any date scheduled for redemption pursuant to Sections
3.l(2) or (3) hereof or acceleration pursuant to Section 10.2 hereof, the
Trustee shall give Notice by Mail to each Holder of an Untendered Bond deemed to
be purchased on such date, which notice shall state that interest on such
Untendered Bond ceased to accrue on such date and that moneys representing the
purchase price of such Untendered Bond are available against surrender thereof
as aforesaid.
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(5) Moneys deposited by the Purchaser in the separate trust account
described in clause (2) above shall be invested, at the direction of the Bank,
in Permitted Investments maturing as to principal and interest at such time and
in such amounts as is sufficient to make timely payment of the purchase price of
Bonds to be purchased under the provisions of this Section 4.9 (which, in the
case of Untendered Bonds, shall be the next Business Day). Any earnings from the
investment of such moneys shall be retained by the Trustee to the extent
necessary to assure the amount so held in trust is sufficient to pay the
purchase price of Bonds to be purchased under the provisions of this Section 4.9
and to the extent not necessary for such purpose shall be paid to the
Reimbursement Bank.
(6) All Bonds purchased as herein provided shall be registered by the
Trustee for transfer and redelivery to such person or persons as shall be
designated by the Purchaser upon satisfaction of the provisions of transfer of
Bonds pursuant to Article II of this Indenture.
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ARTICLE V
GENERAL COVENANTS
Section 5.1 Payment of Principal, Premium and Interest.
Solely from the moneys derived from the Loan Agreement (other than
to the extent payable from proceeds of the Bonds, temporary investments or
Letter of Credit proceeds and other than amounts due to the Issuer in connection
with its Reserved Rights), the Issuer will duly and punctually pay the principal
of, premium, if any, and interest on the Bonds in accordance with the terms of
the Bonds and this Indenture. Moneys derived from the Loan Agreement include all
moneys derived from the Granting Clauses set forth herein, including, but not
limited to, Basic Payments under the Loan Agreement, and trust funds deposited
in the funds and accounts established under Article VI herein to the extent and
in the manner provided in said Article. Nothing in the Bonds or in this
Indenture shall be considered as assigning or pledging funds or assets of the
Issuer other than those covered by the Granting Clauses set forth herein.
Section 5.2 Performance of and Authority for Covenants.
The Issuer covenants that it is duly authorized under the Act to
issue the Bonds authorized hereby, to execute this Indenture, to loan the Bond
proceeds to the Company and to assign and pledge the payments from the Loan
Agreement in the manner and to the extent herein set forth; that all action on
its part for the issuance of the Bonds and the execution and delivery of this
Indenture has been duly and effectively taken.
Section 5.3 Instruments of Further Assurance.
The Issuer covenants that it has not made, done, executed or
suffered, and will not make, do, execute or suffer, any act or thing whereby its
interest in the Loan Agreement or any part thereof is now or at any time
hereafter impaired, changed or encumbered in any manner whatsoever, except as
may be expressly permitted herein; and that it will do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered, such
instruments supplemental hereto and such further acts,
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instruments and transfers as the Trustee may reasonably require for the better
assuring, transferring, pledging, assigning and confirming unto the Trustee all
and singular the sums assigned and pledged hereby to the payment of the
principal of and interest on the Bonds.
Section 5.4 Recording and Filing.
The Trustee covenants that, except for filings to be completed on
the date of issuance of the Bonds, solely from available Additional Charges paid
by the Company it will cause this Indenture, all supplements thereto and all
related financing statements, to be kept, recorded and filed in such manner and
in such places as may be required by law in order to preserve and protect fully
the security of the Holders of the Bonds and the rights of the Trustee hereunder
and under any other instruments aforesaid.
Section 5.5 Books and Records.
The Trustee covenants that so long as any Outstanding Bonds issued
hereunder and secured by this Indenture shall be unpaid, the Trustee will keep
proper books or records and accounts, in which full, true and correct entries
will be made of all its financial dealings or transactions in relation to the
Project and the payments derived from the Loan Agreement and this Indenture. At
reasonable times and under reasonable regulations established by the Trustee,
such books shall be open to the inspection of the Issuer and of Holders and such
accountants or other agencies as the Trustee may from time to time designate. At
Issuer's request, Trustee shall provide to Issuer the principal amount of Bonds
Outstanding and the amount of accrued interest then outstanding, interest rates
on the Bonds, including a record of adjustments in the rates, Fund balances and
annual (or more frequent) reports regarding all Funds, including investment
reports.
Section 5.6 Bondholders' Access to Bond Register.
At reasonable times and under reasonable regulations established by
the Trustee, the Bond Register or a copy thereof may be inspected and copied by
the Issuer or by Holders (or a designated representative thereof) of ten percent
(10%) or more in principal amount of the then Outstanding Bonds, such authority
of any such designated representative to be evidenced to the satisfaction of the
Trustee. Except as otherwise may be provided
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by law, the Bond Register shall not be deemed a public record and shall not be
made available for inspection by the public, unless and until notice to the
contrary is given to the Trustee by the Issuer.
Section 5.7 Rights Under Loan Agreement.
The Loan Agreement sets forth covenants and obligations of the
Issuer and the Company, and reference is hereby made to the same for a detailed
statement of said covenants and obligations. The Issuer agrees to cooperate in
the enforcement of all covenants and obligations of the Company under the Loan
Agreement and agrees that the Trustee in its name or in the name of the Issuer
may enforce all rights of the Issuer and all obligations of the Company under
and pursuant to the Loan Agreement and on behalf of the Holders, whether or not
the Issuer has undertaken to enforce such rights and obligations.
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ARTICLE VI
FUNDS AND ACCOUNTS
Section 6.1 "Trust Moneys" Defined.
All moneys received by the Trustee:
(1) as elsewhere herein provided to be held and applied under this Article
VI, or required to be paid to the Trustee and whose disposition is not elsewhere
herein otherwise specifically provided for, including, but not limited to the
investment income of all Trust Funds held by the Trustee under this Indenture;
or
(2) as proceeds from the sale of the Bonds; or
(3) as Basic Payments, or as otherwise payable under the Agreement;
(all such moneys being herein sometimes called "Trust Moneys") shall be held by
the Trustee as a part of the Trust Estate, and, upon the exercise by the Trustee
of any remedy specified in Article X hereof, such Trust Moneys shall be applied
in accordance with Section 10.6 hereof, except to the extent that the Trustee is
holding in trust moneys or Government Obligations, as the case may be, for the
payment of any specified Bonds which are no longer deemed to be Outstanding
under the provisions of Article IX hereof, which moneys or Government
Obligations shall be applied only as provided in said Article IX. Prior to the
exercise of any such remedy, all or any part of the Trust Moneys shall be held,
invested, withdrawn, paid or applied by the Trustee, from time to time, as
provided in this Article VI, Article VII and Article VIII hereof.
Section 6.2 Construction Fund.
(1) There is hereby created a Construction Fund (Transcrypt International,
Inc. Project). All proceeds of the Bonds shall be deposited in the Construction
Fund held by the Trustee and shall be disbursed by the Trustee to or for the
account of the Company from the Construction Fund in accordance with the
applicable provisions of Article III of the Loan Agreement and the applicable
provision of the Reimbursement Agreement.
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(2) All earnings on amounts in the Construction Fund shall remain in the
Construction Fund. Any sums in the Construction Fund in excess of any amount
required to pay all Project Costs shall be transferred to the Bond Fund at the
time or times and in the manner provided in Article III of the Loan Agreement
and used to reimburse the Reimbursement Bank for a draw under the Letter of
Credit to redeem Bonds in accordance with Section 3.1(1).
(3) For federal arbitrage purposes, any sums in the Construction Fund
shall be invested at a yield not materially higher than the yield on the Bonds
if and to the extent (a) a temporary period is not available therefor, and (b)
such sums, together with sums in any other Fund not entitled to a temporary
period or not treated as a reasonably required reserve or replacement fund
exceed a minor portion equal to $100,000.
Section 6.3 Variable Rate Demand Industrial Development Revenue
Bond Fund (Transcrypt International, Inc. Project).
(1) There is hereby created the Bond Fund (Transcrypt International, Inc.
Project), also referred to herein as the Bond Fund.
(A) There is hereby established two trust accounts within the Bond
Fund, the General Account and the Letter of Credit Account.
(i) There shall be credited to the General Account in the Bond Fund,
as and when received:
(a) any sums in the Construction Fund transferred to the Bond
Fund as provided in Section 6.2(2);
(b) each payment received by the Trustee under and pursuant to
any of the provisions of this Indenture or the Loan Agreement which
is required to be paid into the Bond Fund, or which is accompanied
by directions that such payments are to be credited to the Bond
Fund; and
(c) all income derived from the investment of amounts
described in clause (a) and (b), as realized.
(ii) There shall be credited to the Letter of Credit Account in the
Bond Fund, all moneys drawn by the Trustee
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under the Letter of Credit pursuant to Sections 7.2(1) and (3) hereof, and
all income derived from the investment of such moneys.
(B) The Trustee shall disburse, from time to time, sufficient moneys
from the Bond Fund as specified below to pay the principal of, and the interest
on, the Bonds as the same become due and payable.
(C) Funds for the payment of the principal of, premium, if any, and
interest on the Bonds shall be derived from the following sources:
(i) Funds for the payment of the principal of the Bonds, at Maturity
(but not upon any purchase pursuant to Article IV) shall be disbursed by
the Trustee from the Bond Fund in the order of priority indicated below:
(a) upon (x) any Redemption Date or (y) the Stated Maturity of
the Bonds, amounts in the Letter of Credit Account in the Bond Fund
which represent amounts drawn by the Trustee under the Letter of
Credit for the payment of principal pursuant to Section 7.2(1)
hereof;
(b) upon the occurrence of an Event of Default and
acceleration of payment of the Bonds, amounts in the Letter of
Credit Account in the Bond Fund which represent amounts drawn by the
Trustee under the Letter of Credit for the payment of principal
pursuant to Section 7.2(3) hereof;
(c) Available Moneys in the General Account in the Bond Fund;
(d) Available Moneys in the Construction Fund;
(e) amounts in the General Account in the Bond Fund which
represent payments received by the Trustee directly from the Company
and amounts derived from the investment of such amounts;
(f) all other amounts in the General Account in the Bond Fund
which were received by the Trustee under and pursuant to the Loan
Agreement or from any other source and were accompanied by
directions by the Company that
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such moneys are to be paid into the Bond Fund, and amounts derived
from the investment of such amounts; and
(g) all other amounts in the Construction Fund.
(ii) Funds for the payment of interest on the Bonds shall be derived
from the following sources in the order of priority indicated below and in
each case applied to interest on the Bonds other than Company Bonds (which
shall be canceled in accordance with Section 2.13 hereof):
(a) with respect to interest due upon (x) any Redemption Date
or (y) the Stated Maturity of the Bonds, amounts in the Letter of
Credit Account in the Bond Fund which represent amounts drawn by the
Trustee under the Letter of Credit for the payment of interest
pursuant to Section 7.2(1) hereof;
(b) with respect to interest due upon the occurrence of an
Event of Default and acceleration of payment of the Bonds, amounts
in the Letter of Credit Account in the Bond Fund which represent
amounts drawn by the Trustee under the Letter of Credit for the
payment of interest pursuant to Section 7.2(3) hereof;
(c) Available Moneys in the General Account in the Bond Fund;
(d) Available Moneys in the Construction Fund;
(e) amounts in the General Account in the Bond Fund which
represent payments received by the Trustee directly from the Company
and amounts derived from the investment of such amounts;
(f) all other amounts in the General Account in the Bond Fund
which were received by the Trustee under and pursuant to the
Agreement or from any other source and were accompanied by
directions of the Company that such moneys are to be credited to the
Bond Fund, and amounts derived from the investment of such amounts;
and
(g) all other monies in the Construction Fund.
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(D) Upon the occurrence of an Event of Default described in clause
(4) or (5) of Section 10.1 hereof and a drawing by the Trustee under the Letter
of Credit pursuant to the provisions of Section 7.2(3) hereof as a result
thereof, the Trustee shall immediately pay to the Bondholders, in payment of the
principal of and interest on the Bonds, an amount equal to the principal of and
interest on the Bonds due upon the acceleration of the Bonds on such date,
regardless whether such acceleration shall actually have occurred, provided that
such payments shall be made with respect to Bonds other than Company Bonds
(which shall be canceled in accordance with Section 2.13 hereof) and to the
extent of such payment, the obligations of the Issuer under this Indenture and
the Bonds shall be deemed to have been satisfied.
(E) If the Reimbursement Bank has not received a Basic Payment
directly from the Company pursuant to Section 4.2(3) of the Loan Agreement, the
Trustee shall withdraw, from time to time, moneys from the General Account in
the Bond Fund, to the extent not necessary to pay principal of and interest on
the Bonds, to repay the Reimbursement Bank for draws paid under the Letter of
Credit pursuant to Section 7.2(1), (2), (3) or (4) hereof. Repayments to the
Reimbursement Bank shall be made on the day the draw is paid under the Letter of
Credit to the extent that moneys are available.
(F) If any Bond shall not be presented for payment at Maturity,
provided moneys sufficient to pay such Bond shall have been made available to
the Trustee and are held in the Bond Fund for the benefit of the Holder thereof,
all liability of the Issuer to the Holder thereof for the payment of such Bond
shall forthwith cease, determine and be completely discharged, and thereupon it
shall be the duty of the Trustee to hold such moneys, in the Bond Fund, without
liability for interest thereon, for the benefit of the Holder of such Bond, who
shall thereafter be restricted exclusively to such moneys for any claim of
whatever nature on his part hereunder or on, or with respect to, such Bond.
(2) Any moneys remaining in the Bond Fund after payment in full of all
Bonds, and payment of the fees, charges and expenses of the Trustee, the Paying
Agent, the Issuer and any Co-Paying Agent which have accrued and which will
accrue and all other items required to be paid hereunder upon the receipt of a
written request from the Reimbursement Bank, shall be paid to the Reimbursement
Bank, but only to the extent of amounts due or becoming due under the
Reimbursement Agreement; any balance remaining after payment of the
Reimbursement Bank shall be disbursed pursuant to Article IX
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hereof. If such amounts are insufficient to pay the full amount due and owing to
the Reimbursement Bank under the Reimbursement Agreement, the Trustee shall,
with the consent of the Issuer, assign and convey to the Reimbursement Bank, by
instruments, deeds or other documents satisfactory to the Reimbursement Bank,
all of the Trustee's right, title and interest in and to the Trust Estate,
including all rights in and to the Agreement. The Issuer hereby agrees that,
upon any assignment or conveyance to the Reimbursement Bank, it shall have no
further right to or interest in the Trust Estate, provided nothing herein shall
affect the Reserved Rights of the Issuer.
(3) All payments to the Reimbursement Bank under the terms of this
Indenture shall be made by wire transfer of immediately available funds to the
Reimbursement Bank's office in Omaha, Nebraska by the close of business on the
day payment is due.
(4) Any funds transferred from the Construction Fund to the Bond Fund as
provided in Section 6.2(2) (and interest earned thereon) shall be used by the
Trustee at the direction of the Company within ninety (90) days of such transfer
(i) to redeem the largest number of Bonds callable, without premium or penalty,
under the terms of this Indenture in accordance with Section 3.1(1), or (ii) to
pay that portion of the annual principal due on the Bonds in an amount that
bears the same ratio to the annual principal due that the total of such funds
bear to the face amount of the Bonds; and such funds transferred to the Bond
Fund shall not be invested by the Trustee to produce a yield greater than the
yield on the Bonds, as required by Internal Revenue Service Revenue Procedure
79-5, Revenue Procedure 81-22 and 26 CFR 601.201 (and any subsequent amendments,
modifications or replacements thereof); provided that, if the Trustee receives
an opinion of Bond Counsel that such actions will not cause interest on the
Bonds to be included in gross income for purposes of federal income taxation,
the funds may be invested at a yield greater than the yield on the Bonds or the
balance may be applied to meet current debt service requirements and accordingly
become a part of the balance in the Bond Fund which may be credited against
current installments of Basic Payments as provided in the Loan Agreement.
Section 6.4 Bond Purchase Fund.
(1) There is hereby created a Bond Purchase Fund (Transcrypt
International, Inc. Project) which shall be used to pay the purchase price of
Bonds to be purchased pursuant to Section 4.1 or
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4.2. There shall be established as trust accounts within the Bond Purchase Fund
a Remarketing Account and a Letter of Credit Account.
(2) Payments Into the Bond Purchase Fund.
(A) There shall be paid into the Remarketing Account in the Bond
Purchase Fund, as and when received the proceeds of the remarketing of
Bonds by the Remarketing Agent pursuant to Section 4.4 (which proceeds
(together with any investments thereof and the income therefrom and
proceeds thereof) shall at all times be traceable by the Trustee to their
source and shall not be derived directly or indirectly from the Company).
(B) There shall be paid into the Remarketing Account in the Bond
Purchase Fund, as and when received all other moneys received by the
Trustee under and pursuant to any of the provisions of this Indenture or
the Agreement or otherwise which are required or accompanied by directions
that such moneys are to be credited to the Remarketing Account in the Bond
Purchase Fund.
(C) There shall be paid into the Letter of Credit Account in the
Bond Purchase Fund, as and when received, all moneys drawn by the Trustee
under the Letter of Credit pursuant to Section 7.2(2) hereof.
(3) Use of Moneys in the Bond Purchase Fund.
(A) Except as provided in subsection (5) hereof and this subsection
(3), money in the Bond Purchase Fund shall be used solely for the payment
of the purchase price of Bonds to be purchased pursuant to Section 4.1 or
4.2.
(B) On each Optional Tender Date and Mandatory Tender Date, the
Trustee shall disburse from the Remarketing Account and the Letter of
Credit Account in the Bond Purchase Fund sufficient moneys to pay the
purchase price of all Bonds to be purchased on such date pursuant to
Section 4.1 or 4.2, such disbursement to be made from the particular
accounts and in the order of priority hereafter established in this
Section and in each case applied first to Bonds other than Company Bonds
(until the purchase price for Bonds which are not Company Bonds shall have
been paid in full) and second, in the case of purchase under Section 4.2
hereof, to Company Bonds:
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(i) amounts in the Letter of Credit Account in the Bond
Purchase Fund which represent moneys drawn under the Letter of
Credit;
(ii) amounts in the Remarketing Account in the Bond Purchase
Fund which represent proceeds of the remarketing of such Bonds
pursuant to Section 4.4 hereof (other than proceeds derived directly
or indirectly from the Company), and amounts derived from the
investment of such amounts; and
(iii) amounts in the Remarketing Account in the Bond Purchase
Fund which have been received by the Trustee under and pursuant to
any of the provisions of this Indenture or the Agreement or
otherwise and which were accompanied by directions from the Company
that such moneys be credited to the Remarketing Account in the Bond
Purchase Fund to be used to redeem purchased Bonds, and any
remarketing proceeds (other than proceeds derived directly or
indirectly from the Company) and amounts derived from the investment
of such amounts.
(4) Money to be Held in Trust. All moneys paid over to the Trustee for the
account of the Bond Purchase Fund (to be held in the Remarketing Account or the
Letter of Credit Account therein) under any provision hereof shall be held
(subject to the provisions of subsection (5)) in trust by the Trustee for the
benefit of the Holders of the Bonds or the Reimbursement Bank, as each is
entitled to be paid therefrom.
(5) Payments to the Company and the Bank from the Bond Purchase Fund.
(A) Except as provided in subsection (B) below, any moneys held by
the Trustee in the Letter of Credit Account or described in Sections
6.4(B)(3)(i) or (ii) hereof shall be retained by the Trustee exclusively
for the benefit of Holders of Bonds not yet presented for payment of the
purchase price thereof until paid to such Holders; and such Holders shall
look only to such moneys for the payment of the purchase price of such
Bonds.
(B) If, on or after any Optional Tender Date or Mandatory Tender
Date, and after the Trustee has made provision for the payment of all
Bonds to be purchased
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pursuant to Sections 4.1 or 4.2 hereof on such date, there remains any
balance (other than moneys held by the Trustee for the purchase of
Untendered Bonds) in either the Letter of Credit Account or Remarketing
Account of the Bond Purchase Fund, the Trustee shall, prior to the close
of business on such Optional Tender Date or Mandatory Tender Date, or at
anytime thereafter upon receipt authorize the payment by federal funds,
wire transfer or other immediately available funds, of such balance to the
Reimbursement Bank, but only to the extent of amounts certified by the
Reimbursement Bank to be due under the Reimbursement Agreement.
(C) Any moneys remaining in the Bond Purchase Fund after payment in
full of the Bonds, shall be paid to the Reimbursement Bank forthwith
following payment in full and termination, but only to the extent of
amounts due under the Reimbursement Agreement; any balance remaining after
payment to the Reimbursement Bank shall be disbursed pursuant to Article
IX hereof.
Section 6.5 Deposit of Funds with Paying Agent.
(1) The Trustee shall transfer and remit sums from the Bond Fund to the
Paying Agent in advance of each Interest Payment Date, Maturity Date and
Redemption Date, from the balance then on hand in the Bond Fund, sufficient to
pay all principal, interest and premiums, if any, then due on Bonds. The Paying
Agent shall hold in trust for the Holders of such Bonds all sums so transferred
to it until paid to such Holders or otherwise disposed of as herein provided.
(2) Interest on each Bond including accrued interest to the date of
deposit and interest, to the extent permitted by law, on overdue installments of
interest at the rate borne by such Bond, (a) shall cease on the Maturity Date
and Redemption Date as herein provided, provided that funds sufficient for the
payment thereof with accrued interest and any premium have been deposited with
the Paying Agent on or before the Maturity Date or Redemption Date, as the case
may be, and in the case of redemption, that the requirements of Article III
have been complied with, or (b) shall cease on any date on which such deposit
has been made, and the Holder shall have no further rights with respect to the
Bonds or under this Indenture except to receive the payment so deposited.
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(3) If any Bond is not presented for payment when due and funds sufficient
to pay such Bond shall have been paid to the Trustee (or other Paying Agent, if
any): (i) all liability of the Issuer for payment of such Bond shall forthwith
cease, (ii) such Bond shall forthwith cease to be entitled to any lien, benefit
or security under this Indenture, and the Holder of such Bond shall forthwith
have no rights in respect thereof except to receive payment thereof, and (iii)
the Trustee (or other Paying Agent, if any) shall hold such funds, without
liability for interest thereon, for the benefit of the Holder of such Bond. In
the event the Bond shall not be presented for payment when the principal thereof
becomes due, either at maturity or at the date fixed for redemption thereof or
otherwise, if amounts sufficient to pay the Bond shall have been deposited with
the Trustee for the benefit of the Holder thereof and shall have remained
unclaimed for two years after such principal has become due and payable, such
amounts shall be paid to the Treasurer of the State of Nebraska in accordance
with Revised Statutes of Nebraska Sections 69-1301 to 69-1329 (1993), as
amended, and all liability of the Issuer and the Trustee to the Holder thereof
for the payment of the Bond shall forthwith cease, determine and be completely
discharged; provided, however, that the Trustee, before being required to make
any such payment to the Treasurer of the State of Nebraska, may cause to be
published once in a financial newspaper or journal of general circulation in the
State and in New York, New York, notice that such moneys remain unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such moneys then
remaining will be paid to the Treasurer of the State of Nebraska. The cost of
such publication shall be paid from the unclaimed amounts so held by the
Trustee. The obligation of the Trustee under this Section to pay any such
amounts to the Treasurer of the State of Nebraska shall be subject to any
provisions of law applicable to the Trustee or to such amounts providing other
requirements for disposition of unclaimed property.
(4) If there is any Paying Agent who is not the Trustee, the Trustee will
cause such Paying Agent to execute and deliver to it an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section 6.5, that such Paying Agent will:
(A) hold all sums held by it for the payment of principal of
(and premium, if any) or interest on Bonds in trust for the benefit of the
Holders of such Bonds until such
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sums shall be paid to such Holders or otherwise disposed of as
herein provided; and
(B) at any time during the continuance of any default in the
making of any such payment of principal (and premium, if any) or interest,
upon the written request of the Trustee forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Trustee, acting as Paying Agent, shall also be bound by the terms of the
foregoing requirements.
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ARTICLE VII
LETTER OF CREDIT
Section 7.1 Delivery of Letter of Credit.
Contemporaneously with the original issuance and delivery of the
Bonds, the Bank will deliver the Original Letter of Credit to the Trustee for
the account of the Company. The Letter of Credit shall be held by the Trustee in
trust in order to provide for certain payments of the principal and purchase
price of and the interest and premium, if any, on the Bonds, and the Trustee
hereby accepts the Original Letter of Credit and agrees to accept any Alternate
Letter of Credit and agrees to perform its obligations with respect thereto in
accordance with the express terms and conditions of this Indenture, the Loan
Agreement and the Letter of Credit.
Section 7.2 Draws under the Letter of Credit.
The Trustee agrees to draw moneys under the Letter of Credit in
accordance with its terms to provide moneys sufficient for the payment in full
of the principal of and interest and premium, if any, on the Bonds when due,
whether at maturity or by acceleration and the payment in full of the purchase
price of all Bonds to be purchased pursuant to Section 4.1 or 4.2 hereof on any
date. In furtherance thereof the Trustee shall draw moneys under the Letter of
Credit in the following circumstances and only in the following circumstances:
(1) On or before 11:00 A.M., Nebraska time, on the Business Day
immediately preceding any payment referred to in this subsection (1) is required
to be made under this Indenture, the Trustee shall, without making any prior
demand or claim upon the Company, make a drawing under and in accordance with
the Letter of Credit so as to receive moneys thereunder on the date any payment
referred to in this subsection (1) is required to be made under the Indenture,
in an amount which will be sufficient for the payment in full of (i) accrued
interest on the Bonds on such Interest Payment Date (ii) the principal of the
Bonds upon the Stated Maturity of the Bonds (other than Company Bonds), and
(iii) the principal of and accrued interest and premium, if any, on the Bonds
upon the redemption of such Bonds pursuant to Section 3.1(1), (2), (3) or (4)
hereof.
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(2) On or before 11:00 A.M., Nebraska time, on the Business Day any
payment referred to in this subsection (2) is required to be made under this
Indenture or on any prior Business Day, the Trustee shall, without making any
prior demand or claim upon the Company, make a drawing under and in accordance
with the Letter of Credit so as to receive moneys thereunder in an amount which
will be sufficient for the payment in full of the purchase price (including
accrued interest) of all Bonds to be purchased pursuant to Section 4.1 or 4.2
hereof (which Sections do not include Company Bonds) on any date.
(3) At any time on or after the date of declaration of acceleration, the
Trustee shall, without making any prior demand or claim upon the Company, make a
drawing under and in accordance with the Letter of Credit so as to receive
moneys thereunder in an amount which will be sufficient for the payment in full
of the principal of and interest due on the Bonds on such date of acceleration
payment.
(4) On or before 11:00 A.M., Nebraska time, on the Business Day
immediately preceding the Discharge Date, the Trustee shall, without making any
prior demand or claim upon the Company, make a drawing under and in accordance
with the Letter of Credit so as to receive moneys thereunder in an amount which
will be sufficient for the payment in full of the principal of and interest due
on the Bonds on the Discharge Date. The Trustee shall immediately transfer funds
received from a draw under the Letter of Credit to the Paying Agent.
(5) The Trustee shall give the Company and the Issuer prompt telegraphic
or telephonic notice of each drawing under the Letter of Credit with a copy to
the Company and the Issuer. The Trustee shall immediately transfer funds
received from a draw under the Letter of Credit to the Paying Agent.
Section 7.3 Disposition of Moneys Drawn Under Letter of Credit.
All amounts drawn by the Trustee under the Letter of Credit shall be
applied, as follows:
(1) Amounts drawn under the Letter of Credit pursuant to Section
7.2(1) hereof shall be deposited in the Letter of Credit Account in the Bond
Fund and applied as provided in Section 6.3 hereof.
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(2) Amounts drawn under the Letter of Credit pursuant to Section
7.2(2) hereof shall be deposited in the Bond Purchase Fund and applied as
provided in Section 6.4 hereof.
(3) Amounts drawn under the Letter of Credit pursuant to Section
7.2(3) hereof shall be deposited in the Letter of Credit Account in the Bond
Fund and applied as provided in Section 6.3 hereof.
(4) Amounts drawn under the Letter of Credit pursuant to Section
7.2(4) hereof shall be deposited in a special escrow account and applied as
provided in Section 7.2(4) hereof.
Section 7.4 Alternate Letter of Credit.
(1) At all times during the Letter of Credit Period, the Company is
required to maintain the Letter of Credit with the Trustee at all times. At
least 35 days prior to any Termination Date there must be delivered to the
Trustee (who shall provide such information to the Remarketing Agent, Issuer and
the Holders) (i) an Alternate Letter of Credit pursuant to Section 4.8 of the
Loan Agreement, (ii) if the Letter of Credit is not an extension or renewal of
the Original Letter of Credit, an opinion of Counsel for the Bank which is the
issuer of the Alternate Letter of Credit to the effect that the Alternate Letter
of Credit has been duly authorized, executed and delivered by the issuer thereof
and is a valid and binding obligation of the issuer thereof and that payments of
principal and interest on the Bonds with proceeds of a draw under the Alternate
Letter of Credit will not constitute a voidable preference under 11 U.S.C,
Section 547 of the Federal Bankruptcy Code, and (iii) in case of any Alternate
Letter of Credit which is not an extension or renewal of the Original Letter of
Credit, either (a) written evidence from Moody's, if the Bonds are then rated by
Moody's, and Standard & Poor's, if the Bonds are then rated by Standard &
Poor's, in each case to the effect that (i) such Rating Agency has reviewed the
proposed Alternate Letter of Credit and (ii) stating that its rating on the
Bonds after the substitution of the proposed Alternate Letter of Credit for the
Letter of Credit will not be lower than the rating given to the Bonds on the
basis of the Letter of Credit being replaced or, (b) if the Bonds are not rated,
evidence satisfactory to the Trustee and the Remarketing Agent that the senior
debt of the issuer of the Alternate Letter of Credit or debt issues rated solely
on the basis of letters of credit issued by the issuer of the Alternate Letter
of Credit are rated by a Rating Agency in the same or a better
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category as the senior debt or debt issues rated solely on the basis of letters
of credit issued by the issuer of the then effective Letter of Credit.
(2) Upon delivery of such items, the Trustee shall accept such
Alternate Letter of Credit and upon the date the Trustee is permitted to draw
under such Alternate Letter of Credit promptly surrender the previously held
Letter of Credit to the issuer thereof for cancellation; provided that if such
Alternate Letter of Credit is an extension or renewal of the Original Letter of
Credit, then the Trustee shall not be required to so surrender the Letter of
Credit. Upon failure to deliver such items as set forth in this Section 7.4, the
Bonds shall be subject to mandatory redemption in whole as provided in Section
3.1(3) (or purchase as provided in Section 4.9) and shall be paid from a draw
under the Letter of Credit as provided in Section 7.2.
Section 7.5 Reinstatement of Letter of Credit Upon Drawing Under
Section 7.2.
Upon any drawing under the Letter of Credit under Section 7.2(2)
hereof to pay the purchase price of Bonds to be purchased pursuant to Section
4.1 or 4.2 hereof, the Trustee shall promptly take the actions necessary to
reinstate the amount that may be drawn under the Letter of Credit with respect
to principal of the Bonds to 103 percent of the then Outstanding principal
amount of the Bonds, plus interest thereon at 10% for 50 days during a Variable
Rate Period or at the rate on the Bonds for 215 days during a Fixed Rate Period.
Section 7.6 Pledge of Funds to Reimbursement Bank.
Pursuant to the Reimbursement Agreement, the Company has pledged to
Reimbursement Bank, and granted the Reimbursement Bank a security interest in,
all of the Company's right, title and interest in and to all moneys and
investments on deposit in the Funds. In connection therewith, the Trustee agrees
to act as an agent for the Reimbursement Bank for the sole purpose of perfecting
the Reimbursement Bank's security interest in all such moneys and investments;
provided, however, that the Reimbursement Bank's security interest shall in all
events be subject and subordinate to the lien granted to, and the security
interest held by, Trustee with respect to such moneys and investments for the
benefit of the Holders.
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Section 7.7 Grant of Subordinate Security Interest to Reimbursement
Bank.
The Issuer hereby grants to the Reimbursement Bank a security
interest in and lien upon all funds and accounts held in the Bond Fund and
Construction Fund. In connection therewith, the Trustee agrees to act as an
agent for the Reimbursement Bank for the sole purpose of perfecting the
Reimbursement Bank's security interest in all such moneys and investments;
provided however, that the Reimbursement Bank's security interest is and shall
at all times be subordinate to the lien granted to, and the interest held by,
the Trustee with respect to such moneys and investments for the benefit of the
Holders of the Bonds to secure the payment of the principal of, premium, if any,
and interest on the Bonds; and provided further, however, that the grant of this
security interest by the Issuer to the Reimbursement Bank shall in no event be
construed as imposing on the Issuer any obligation to make any payment to the
Reimbursement Bank or perform any acts for the benefit of the Reimbursement
Bank.
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ARTICLE VIII
INVESTMENTS
Section 8.1 Investments by Trustee.
(1) Except during the continuance of an Event of Default, and subject to
the provisions of Section 8.2, moneys held for the credit of the Funds and
Accounts established by Article V shall be held by the Trustee as required by
law and shall at the written request of the Representative of the Company, to
the extent practicable and permitted by the Act, be invested as received and
reinvested by the Trustee in Permitted Investments (including investments in
securities authorized by the Act, through a common trust fund or similar fund
maintained by a bank exclusively for the collective investment and reinvestment
of moneys contributed thereto by the bank in its capacity as trustee,
certificates of deposit, and repurchase agreements); provided that Letter of
Credit proceeds may only be invested in Government Obligations maturing at the
earlier of 30 days from the date of purchase or when needed by the Trustee to
make payments under the Indenture. The type, amount and maturity of such
investments shall be as specified by the Representative of the Company; provided
that sums in the Bond Fund may in any event only be invested in securities which
mature or are subject to redemption or repurchase at the option of the Trustee
on or prior to the date or dates on which the Trustee anticipates that cash
funds will be required.
(2) The Trustee shall sell and reduce to cash funds a sufficient portion
of investments under the provisions of this Section whenever the cash balance in
the fund for which the investment was made is insufficient for its current
requirements. Securities so purchased as an investment of money shall be held by
the Trustee, shall be registered in the name of the Trustee if registration is
required, and shall be deemed at all times a part of the applicable Fund, and
the interest accruing thereon and any profit realized from such investments
shall be credited to the Fund from which the investment was made, subject to any
transfer to another Fund as herein provided. Any loss resulting from such
investment shall be charged to the Fund from which the investment was made.
(3) The Trustee may purchase from or sell to itself, or through any
affiliated company, as principal or agent, securities
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herein authorized so long as such purchase or sale is at fair market value.
Section 8.2 Return on Investments.
(1) In directing investments pursuant to Section 8.3 of the Loan
Agreement, the Company will not instruct the Trustee to use the proceeds of the
Bonds or other sums pledged to the payment of the Bonds, directly or indirectly,
to acquire any securities or obligations the acquisition of which would cause
any of the Bonds to be an "arbitrage bond" as defined in Section 148 of the
Code, and for this purpose the Trustee, in order to restrict yield on
investments, may invest in SLGS (and accordingly is hereby authorized to act as
agent of the Issuer for such purpose) as directed by the Company in writing. The
Trustee shall be fully protected in relying on an opinion of Bond Counsel with
respect to whether the acquisition of any securities or obligations would have
the effect prohibited by this Section .
(2) The Bonds are subject to the limitation on investment in nonpurpose
obligations imposed by Section 148(d)(3) of the Code and Section
1.148-2(f)(2)(iv) of the Treasury Regulations (or any successor regulations). At
no time during any Bond Year may the amounts in the Bond Fund which are (i) not
entitled to a temporary period provided in 148(c) of the Code or the Treasury
Regulations and (ii) in excess of one hundred fifty percent (150%) of the debt
service on the Bonds for any Bond Year (which amount shall be promptly and
appropriately reduced as the amount of outstanding obligations of the Bonds is
reduced) be invested in nonpurpose obligations with a yield higher than the
yield on the Bonds, and the Trustee may assume that investments directed by the
Company do not violate such requirements. If the yield on non-purpose
investments must be restricted, the yield on the Bonds shall be determined as
provided in Section 1.148-4 of the Treasury Regulations (or any successor
regulations) and the yield on the non-purpose investments shall be determined as
provided in Section 1.148-5 of the Treasury Regulations. The Trustee shall
acquire nonpurpose investments at their fair market value, provided that, in the
case of any investment in United States Treasury obligations unless otherwise
directed by the Company, the Trustee shall purchase such obligations directly
from the United States Treasury, if such obligations are reasonably available to
the Trustee for purchase, or, if such obligations are not so available, the
Trustee
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shall purchase such obligations for the best price available in an arm's-length
transaction, determined in accordance with the Trustee's customary procedure.
(3) No moneys in any Fund or Account shall be invested in investments
which cause the Bonds to be "federally guaranteed" within the meaning of Section
149(b) of the Code. If at any time the moneys in all Funds and Accounts relating
to the Bonds exceed, within the meaning of Section 149(a) of the Code, (i)
amounts invested for an initial temporary period until the moneys are needed for
the purpose for which the Bonds were issued, (ii) investments of a bona fide
debt service fund, and (iii) investments of a reserve which meet the requirement
of Section 148(d) of the Code, then moneys in excess of such amounts shall be
invested at the direction of the Company pursuant to Section 8.3 of the Loan
Agreement in (A) bonds issued by the United States Treasury, (B) other
investments permitted under regulations, or (C) obligations which are (a) not
issued by, or guaranteed by, or insured by, the United States or any agency or
instrumentality thereof or (b) not federally insured deposits or accounts, all
within the meaning of Section 149(b) of the Code. The Trustee shall not take any
action or do anything the effect of which shall be to cause the Bonds to be
"federally guaranteed" within the meaning of Section 149(b) of the Code.
(4) The provisions of this Section 8.2 shall survive so long as the
Trustee holds any amounts under the Indenture.
Section 8.3 Computation of Balances in Fund.
In computing the assets of any Fund established hereunder, investments and
accrued but unpaid interest thereon shall be deemed a part thereof, and such
investments shall be valued at the lesser of its purchase price (plus or minus
premium or discount, as the case may be, amortized on a straight-line basis) or
its par value, or at the redemption price thereof, if then redeemable at the
option of the Holder.
Section 8.4 Rebate to United States.
The Bonds are subject to the rebate to the United States of earnings
in excess of the yield on the Bonds imposed by Section
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148 of the Code and Section 1.148-3 of the Treasury Regulations. The Trustee
shall enforce the obligations of the Company with respect to rebate pursuant to
Section 7.7(20) of the Loan Agreement, but shall have no obligation to calculate
the amount of, or make, any required rebate as provided in Section 7.7(20) of
the Loan Agreement.
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ARTICLE IX
DISCHARGE OF LIEN
Section 9.1 Discharge of Lien and Security Interests.
(1) If during the Fixed Rate Period the Issuer shall pay or cause to
be paid in full the principal of and the interest on the Bonds with Available
Moneys from the proceeds of a draw on the Letter of Credit or other Available
Moneys, and has made arrangements satisfactory to the Trustee for the giving of
notice of redemption, if any, with consent of the Issuer and the Bank, then the
lien hereof, these presents and the Trust Estate and the security interests
shall cease, determine and be void.
(2) Upon the lien hereof, these presents and the Trust Estate and
the security interests ceasing, determining and being void as provided in the
preceding paragraph, the Trustee shall, upon receipt of evidence satisfactory to
it that all conditions precedent to the satisfaction and discharge of this
Indenture have been complied with, (a) cancel and discharge this Indenture and
the security interests, (b) cancel and return the Letter of Credit to the Bank,
(c) execute and deliver to the Issuer such instruments in writing as shall be
required to cancel and discharge this Indenture and the security interests, and
(d) apply any moneys and investments held in the Bond Fund and the Bond Purchase
Fund in accordance with Sections 6.3 and 6.4 hereof, respectively. All moneys
then held in the Bond Fund for the purpose of paying Bonds which have not yet
been presented for payment and all moneys then held in the Bond Purchase Fund
for the purpose of paying the purchase price of Bonds which have not yet been
presented for purchase shall be held thereafter in trust solely for the Holders
of such Bonds pending the payment thereof to such Holders.
Section 9.2 Discharge of the Indenture.
Notwithstanding the fact that the lien of this Indenture upon the
Trust Estate may have been discharged and canceled in accordance with Section
9.1 hereof, this Indenture and the rights granted and duties imposed hereby, to
the extent not inconsistent with the fact that the lien upon the Trust Estate
may have been discharged and canceled, shall nevertheless continue and subsist
until the principal of and the interest on, all of the Bonds and all other
amounts payable by the Company under the Loan Agreement
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shall have actually been paid in full and the Trustee shall have applied in
accordance with Section 6.3 and 6.4, all funds theretofore held by the Trustee
for payment of any Bonds not theretofore presented for payment or purchase, as
the case may be, which funds shall be held in trust solely for the Holders of
such Bonds pending their application in accordance herewith.
Section 9.3 Tax Call.
Notwithstanding any provisions herein to the contrary, if (1) the
Bonds have been discharged under Section 9.1 hereof, (2) any principal thereof
has not become due and payable, and (3) the Company is required to provide for
the prepayment of the Unpaid Bonds under Section 7.8 of the Loan Agreement if a
Determination of Taxability should occur, the Trustee shall undertake to prepay
the Bonds due under Section 3.1(2) hereof, and this obligation of the Trustee
shall survive release and discharge of this Indenture.
Section 9.4 Completion of Project.
If (1) provision should be made under this Article IX for discharge of the
Bonds prior to completion of the Project, (2) the Project has not been
abandoned, (3) proceeds of the Bonds (including interest thereon) not applied
towards payment of the Bonds or reimbursement of the Reimbursement Bank remain
in the Construction Fund, and (4) provision is not otherwise made for
disposition of such Bond proceeds in a separate agreement to which the Issuer is
a party, then the Trustee shall continue to administer the Construction Fund for
purposes of applying such proceeds towards payment of Project Costs as provided
in this Indenture until such Bond proceeds are exhausted or the Project is
completed, whereupon any surplus Bond proceeds in the Construction Fund shall be
remitted to the Company.
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ARTICLE X
DEFAULT PROVISIONS AND REMEDIES
Section 10.1 Events of Default.
Each of the following events is hereby defined as, and declared to
be and to constitute, an "Event of Default" hereunder:
(1) default in the due and punctual payment of any interest on any Bond;
or
(2) default in the due and punctual payment of the principal of any Bond
at its Maturity; or
(3) default in the due and punctual payment of the purchase price of Bonds
required to be purchased pursuant to Section 4.1 when payment of such amount has
become due and payable; or
(4) receipt by the Trustee of a written notice from the Reimbursement Bank
of an event of default under the Reimbursement Agreement and a written demand by
the Reimbursement Bank for acceleration of the Bonds; or
(5) receipt by the Trustee, following a draw under the Letter of Credit to
pay interest on the Outstanding Bonds, of a written notice from the Bank that
the amount available to be drawn under the Letter of Credit with respect to
interest will not be reinstated in full; or
(6) the date on which the Bank notifies the Trustee or the date that the
Trustee otherwise ascertains that a Bank Insolvency has occurred.
Section 10.2 Acceleration.
(1) Upon the occurrence of any Event of Default (other than as described
in Section 10.1(4) hereof) described in Section 10.1 hereof, the Trustee shall,
by notice in writing delivered to the Issuer, the Company, the Reimbursement
Bank and Holders of Bonds Outstanding, declare the principal of and any interest
accrued on all Bonds immediately due and payable, whereupon the same shall
become immediately due and payable anything herein or in the Bonds to the
contrary notwithstanding.
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(2) Upon the occurrence and continuance of an Event of Default referred to
in subsection (4) of Section 10.1 hereof, the Trustee shall, at the direction of
the Reimbursement Bank, either (A) declare the principal of the Bonds and the
interest accrued thereon to be payable, whereupon the same shall become
immediately due and payable anything herein or in the Bonds to the contrary
notwithstanding or (B) call for the purchase of all Bonds as provided in Section
4.9. Upon an acceleration under clause (A), the Bonds and the interest thereon
shall forthwith be paid in accordance with this Indenture.
(3) Upon any declaration of acceleration, or occurrence resulting in
acceleration, under this Section 10.2, the Trustee shall immediately declare the
Basic Payments required to be made by the Company under the Loan Agreement to be
immediately due and payable in accordance with Section 9.2 of the Loan Agreement
and, if the Letter of Credit is in effect, shall draw on the Letter of Credit in
accordance with Section 7.2(3) hereof.
(4) Upon any acceleration required under this Section 10.2, interest shall
cease to accrue on the Bonds as of the date of declaration of such acceleration.
Section 10.3 Remedies.
(1) Subject to the provisions of Section 10.2, upon the occurrence of an
Event of Default and acceleration of the Bonds, the Trustee may proceed to
pursue any available remedy by suit at law or in equity to enforce all rights of
the Bondholders, including without limitation the right to the payment of the
principal or premium, if any, and interest on the then Outstanding Bonds. Upon
the occurrence of an Event of Default under the Loan Agreement, the Trustee may
also enforce any and all rights of the Issuer thereunder. The Issuer may also
exercise any of its Reserved Rights provided in the Loan Agreement.
(2) If any Event of Default shall have occurred (other than an Event of
Default described in subsection (4) or (5) of Section 10.1), and if it shall
have been requested so to do by the Holders of seventy-five percent (75%) in
aggregate principal amount of the then Outstanding Bonds, and if it shall have
received an indemnity bond as provided in Section 11.1 hereof, the Trustee shall
be obliged to exercise such rights and powers conferred on the Trustee by this
Section and Section 10.2 as the Trustee (being advised by Independent Counsel),
shall deem most expedient in the interests of
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the Bondholders; provided, however, that the Trustee shall have the right to
decline to comply with any such request if the Trustee shall be advised by
Independent Counsel that the action so requested may not lawfully be taken or if
the Trustee in good faith shall determine that such action would be unjustly
prejudicial to the Bondholders not parties to such request.
(3) No remedy by the terms of this Indenture conferred upon or reserved to
the Trustee (or to the Bondholders) is intended to be exclusive of any other
remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy (i) given to the Trustee or to the Holders
hereunder or (ii) now or hereafter existing at law or in equity or by statute.
(4) No delay or omission to exercise any right or power accruing upon any
Event of Default shall impair any such right or power or shall be construed to
be a waiver of any such Event of Default, or acquiescence therein; and every
such right and power may be exercised from time to time and as often as may be
deemed expedient.
(5) No waiver of any Event of Default hereunder, whether by the Trustee or
by the Holders, shall extend to or shall affect any subsequent Event of Default
or impair any rights or remedies consequent thereon.
Section 10.4 Direction of Proceedings by Bondholders.
The Holders of seventy-five percent (75%) in aggregate principal
amount of the then Outstanding Bonds shall have the right, at any time, by an
instrument or instruments in writing executed and delivered to the Trustee, to
direct the method and place of conducting all proceedings to be taken in
connection with the enforcement of the terms and conditions of this Indenture
and the Loan Agreement or for the appointment of a receiver or any other
proceedings hereunder; provided, that such direction shall not be otherwise than
in accordance with the provisions of law and of this Indenture.
Section 10.5 Waiver of Stay or Extension Laws.
Upon the occurrence of an Event of Default, to the extent that such
rights may then lawfully be waived, neither the Issuer nor anyone claiming
through it or under it shall or will set up, claim, or seek to take advantage of
any appraisement, valuation,
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stay, extension or redemption laws now or hereafter in force, in order to
prevent or hinder the enforcement of this Indenture, but the Issuer, for itself
and all who may claim through or under it, hereby waives to the extent that it
lawfully may do so the benefit of all such laws and all right of appraisement
and redemption to which it may be entitled under the laws of the State of
Nebraska.
Section 10.6 Priority of Payment and Application of Moneys.
All moneys drawn by the Trustee under the Letter of Credit in connection
with any Event of Default shall be deposited in the Letter of Credit Account in
the Bond Fund and all other moneys received by the Trustee pursuant to any right
given or action taken under the provisions of this Article shall be deposited in
the General Account in the Bond Fund, all such moneys shall be applied, subject
to the provisions of Article VI, as follows:
(1) Unless the principal of all the Bonds shall have become or shall have
been declared due and payable, all such moneys shall be applied:
FIRST: To the payment of the Persons entitled thereto of all
installments of interest then due on the Bonds, in the order of the maturity of
the installments of such interest and, if the amount available shall not be
sufficient to pay in full any particular installment, then to the payment
ratably, according to the amounts due on such installment, to the Persons
entitled thereto, without any discrimination or privilege;
SECOND: To the payment to the Persons entitled thereto of the unpaid
principal of any of the Bonds which shall have become due in the order of their
due dates with interest on such Bonds at the rate last borne by the Bonds from
the respective dates upon which they became due and, if the amount available
shall not be sufficient to pay in full the unpaid principal on Bonds due on any
particular due date, then to the payment ratably, according to the amount of
principal and premium, if any, due on such date, to the persons entitled
thereto, without any discrimination or privilege;
THIRD: To reimburse the Reimbursement Bank (to the extent not
reimbursed by the Company) for drawings under the Letter of Credit and for all
other amounts owing to the Reimbursement Bank under the Reimbursement Agreement
or any related documents and to pay all amounts due or payable to Issuer or
Trustee;
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FOURTH: To pay all amounts due or payable to Issuer or Trustee; and
FIFTH: To the payment of principal of and interest on Company Bonds
in the same order of priority as specified in the preceding two clauses.
(2) If the principal of all Bonds shall have become due or shall have been
declared due and payable, all such moneys shall be applied to the payment of the
principal and interest then due and unpaid upon the Bonds (other than Company
Bonds) without preference or priority of principal or any redemption premium
over interest or of interest over principal or any redemption premium, or of any
installment of interest over any other installment of interest, or of any Bond
over any other Bond, ratably, according to the amounts due respectively for
principal and interest, to the persons entitled thereto, without any
discrimination or privilege.
(3) If the principal of all the Bonds shall have been declared due and
payable, and if such declaration shall thereafter have been rescinded and
annulled under the provisions of this Article, then, subject to the provisions
of paragraph (2) of this Section in the event that the principal of all the
Bonds shall later become due or be declared due and payable, the moneys shall be
applied in accordance with the provisions of paragraph (1) of this Section .
Whenever moneys are to be applied by the Trustee pursuant to the
provisions of this Section , such moneys shall be applied by it at such times,
and from time to time, as the Trustee shall determine, having due regard to the
amount of such moneys available for application and the likelihood of additional
moneys becoming available for such application in the future. Whenever the
Trustee shall apply such funds, it shall (i) fix the date upon which such
application is to be made and upon such date interest on the amounts of
principal to be paid on such dates shall cease to accrue and (ii) on or before
such date set aside the moneys necessary to effect such application; provided
that if the Bonds are secured by a Letter of Credit interest shall cease to
accrue on the Bonds as of the date of declaration of acceleration. The Trustee
shall give to the Bondholders Notice by Mail of the deposit with it of any such
moneys and of the fixing of any such date. Neither the Trustee nor any Paying
Agent shall be required to make payment to the Holder of any Bond until such
Bond shall be presented to the
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Trustee for appropriate endorsement or for cancellation if fully paid.
Whenever all Bonds and interest thereon have been paid under the
provisions of this Section 10.6, and all expenses and charges of the Trustee and
the Issuer have been paid, any balance remaining shall be paid to the person
entitled to receive the same pursuant to Section 14.9.
Section 10.7 Remedies Vested in Trustee.
All rights of action (including the right to file proof of claims)
under this Indenture or under any of the Bonds may be enforced by the Trustee
without the possession of any of the Bonds or the production thereof in any
trial or other proceedings relating thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its name as Trustee without the
necessity of joining as plaintiffs or defendants any Holders of the Bonds, and
any recovery or judgment shall be for the equal benefit of the Holders of the
Outstanding Bonds to the extent and in the manner provided herein. The Issuer
and the Trustee hereby agree, without in any way limiting the effect and scope
thereof, that the pledge and assignment hereunder to the Trustee of all rights
included within the Trust Estate shall constitute an agency appointment coupled
with an interest on the part of the Trustee which, for all purposes of this
Indenture, shall be irrevocable and shall survive and continue in full force and
effect notwithstanding the bankruptcy or insolvency of the Issuer or its default
hereunder or on the Bonds.
Section 10.8 Rights and Remedies of Holders.
No Holder of any Bond shall have any right to institute any suit,
action or proceeding in equity or at law for the enforcement of this Indenture,
the Loan Agreement and the Letter of Credit or for the execution of any trust
hereof or any remedy hereunder or thereunder or for the appointment of a
receiver, unless: (i) a default thereunder shall have become an Event of Default
and the Holders of seventy-five percent (75%) in aggregate principal amount of
the Bonds then Outstanding shall have made written request to the Trustee and
shall have offered it reasonable opportunity either to proceed to exercise the
powers hereunder granted or to institute such action, suit or proceeding in its
own name; (ii) such Holders shall have offered to indemnify the Trustee as
provided in Section 11.1; and (iii) the Trustee shall thereafter
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fail or refuse to exercise within a reasonable period of time the remedies
hereunder granted, or to institute such action, suit or proceeding in its own
name. Such notification, request and offer of indemnity are hereby declared in
every such case at the option of the Trustee to be conditions precedent to the
execution of the powers and trusts of this Indenture, and to any action or cause
of action for the enforcement of this Indenture, the Loan Agreement or the
Letter of Credit, or for the appointment of a receiver or for any other remedy
hereunder; it being understood and intended that no one or more Holders of the
Bonds shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture, by its, his or their action or to enforce
any right thereunder except in the manner herein provided, and that all
proceedings at law or in equity shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of the Holders of all Bonds
then Outstanding; provided, however, that nothing herein shall be construed to
preclude any Bondholder from enforcing, or impair the right of any Bondholder to
enforce, the payment by the Trustee of principal of, and interest and premium,
if any, on any Bond of such Bondholder at or after its date of maturity, if and
to the extent that such payment is required to be made to such Bondholder by the
Trustee from available funds in accordance with the terms hereof.
Section 10.9 Termination of Proceedings.
In case the Trustee shall have proceeded to enforce any right under
this Indenture, the Loan Agreement or the Letter of Credit, by the appointment
of a receiver, by entry and possession or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every such case the Issuer and
the Trustee shall be restored to their former positions and rights hereunder
with respect to the property herein conveyed, and all rights, remedies and
powers of the Trustee shall continue as if no such proceedings had been taken.
Section 10.10 Waiver of an Event of Default.
The Trustee may waive any Event of Default (other than the Event of
Default described in subsections (4) and (5) of Section 10.1) and its
consequences and shall do so upon written request of the Holders of a majority
in aggregate principal amount of all the Bonds then Outstanding. The Events of
Default set forth in subsections 10.1(4) and (5) of Section 10.1 may not be
waived.
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No such waiver or rescission shall extend to any subsequent or other Events of
Default, or impair any right consequent thereon. Notwithstanding the foregoing,
in no event shall the Trustee waive an Event of Default described in Section
10.1(1), (2), (3) or (6) without the prior written consent of all Holders.
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ARTICLE XI
THE TRUSTEE
Section 11.1 Acceptance of the Trustee.
The Trustee, prior to the occurrence of an Event of Default,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture; and no implied covenants or obligations should be read
into this Indenture against the Trustee. In case an Event of Default has
occurred, the Trustee agrees to perform such trusts as an ordinarily prudent
trustee under a corporate indenture, but in any such event, only upon and
subject to the following express terms and conditions:
(1) The Trustee may execute any of the trusts or powers hereof and perform
any of its duties by or through attorneys, agents, receivers, or employees, but
shall be answerable for the conduct of the same in accordance with the standard
specified above, and shall be entitled to advice of counsel concerning all
matters of trusts hereof and duties hereunder, and may in all cases pay such
reasonable compensation to any attorney, agent, receiver or employee retained or
employed by it in connection herewith. The Trustee may act upon the written
opinion or written advice of Bond Counsel or counsel acceptable to the
Bondholders, surveyor, engineer or accountant selected by it in the exercise of
reasonable care or, if selected or retained by the Issuer, approved by the
Trustee in the exercise of such care, provided that the only legal advice or
opinion that the Trustee may rely upon for purposes of securing advice or an
opinion relating to the tax exempt status of the Bonds is given by Bond Counsel.
The Trustee shall not be responsible for any loss or damage resulting from any
action or nonaction in good faith in reliance upon such opinion or advice.
(2) The Trustee shall not be responsible for any recital herein, or in the
Bonds (except with respect to the certificate of the Trustee endorsed on the
Bonds) or for the investment of moneys as herein provided or for the validity of
the execution by the Issuer of this Indenture, or of any supplemental indentures
or instruments of further assurance, or for the sufficiency of any security for
the Bonds issued hereunder or intended to be secured hereby, or for the value of
title of the property herein conveyed, if any, or otherwise as to the
maintenance of the security hereof; except as otherwise provided in Section 5.4
and except that in the
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event the Trustee enters into possession of a part or all of the property
conveyed pursuant to any provisions of this Indenture, it shall use due
diligence in preserving such property. The Trustee may, but shall be under no
duty to, require of the Company full information and advice as to the
performance of the covenants, conditions and agreements in the Loan Agreement as
to the condition of the Project and the performance of all other obligations
thereunder and shall use its best efforts to advise the Issuer and the Company
of any impending Event of Default known to the Trustee.
(3) The Trustee shall not be accountable for the use or application by the
Company of any of the Bonds or the proceeds thereof (except as herein expressly
provided) or for the use or application of any money paid over by the Trustee in
accordance with the provisions of this Indenture or for the use and application
of money received by any Paying Agent. The Trustee may become the owner of Bonds
secured hereby with the same rights it would have if not Trustee.
(4) The Trustee shall be protected in acting upon any written notice,
order, requisition, request, consent, certificate, opinion (including an opinion
of Independent Counsel or Bond Counsel), affidavit, letter, telegram or other
paper or document reasonably believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons. Any action taken by
the Trustee pursuant to this Indenture upon the request or authority or consent
of any person who at the time of making such request or giving such authority or
consent is the Holder of any Bond, shall be conclusive and binding upon all
future Holders of the same Bond and upon Bonds issued in exchange therefor, upon
transfer thereof, or in place thereof.
(5) As to the existence or non-existence of any fact or as to the
sufficiency or authenticity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate of the Issuer signed by its
Executive Director under the seal of the Issuer as sufficient evidence of the
facts stated therein as the same appear from the books and records under the
Executive Director's custody or control or are otherwise known to him. The
Trustee may accept a certificate of the Executive Director of the Issuer under
the seal of the Issuer to the effect that a motion or resolution in the form
therein set forth has been adopted by the governing body of the Issuer as
conclusive evidence that such motion or resolution has been duly adopted, and is
in full force and effect, and may accept such motion or resolution as
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sufficient evidence of the facts stated therein and the necessity or expediency
of any particular dealing, transaction or action authorized or approved thereby,
but may at its discretion, secure such further evidence deemed necessary or
advisable, but shall in no case be bound to secure the same.
(6) The Trustee shall not be answerable except for its negligence or
willful misconduct.
(7) The Trustee shall not be personally liable for any debts contracted or
for damages to persons or to personal property injured or damaged, or for
salaries or nonfulfillment of contracts during any period in which it may be in
possession of or managing the real and tangible personal property as in this
Indenture provided.
(8) At any and all reasonable times, the Trustee, and its duly authorized
agents, attorneys, experts, engineers, accountants and representatives, shall
have the right fully to inspect any and all of the property comprising the
Project, including all books, papers and records of the Company pertaining to
the Project and the Bonds, and to take such memoranda from and with regard
thereto as may be desired.
(9) The Trustee shall not be required to give any bond or surety with
respect to the execution of said trusts and powers or otherwise in respect to
the premises.
(10) Notwithstanding anything elsewhere in this Indenture contained, the
Trustee shall have the right, but shall not be required, to demand, with respect
to the authentication of any Bonds, the withdrawal of any cash, the release of
any property or any action whatsoever within the purview of this Indenture, any
showings, certificates, opinions (including opinions of Independent Counsel),
appraisals or other information, or corporate action or evidence thereof, in
addition to that by the terms hereof required as a condition of such action by
the Trustee, deemed desirable for the purpose of establishing the right of the
Issuer to the authentication of any Bonds, the withdrawal of any cash, the
release of any property, or the taking of any other action by the Trustee.
(11) Before taking any action under this Indenture other than by reason of
an Event of Default under Section 10.1(4) or (5) or acceleration of the Bonds
caused by an Event of Default under
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Section 10.1(4) or (5), the Trustee may require that it be furnished an
indemnity bond satisfactory to it for the reimbursement of all expenses to which
it may be put and to protect it against all liability except liability which is
adjudicated to have resulted from the negligence or willful default of the
Trustee, by reason of any action so taken by the Trustee.
Section 11.2 Trustee's Fees, Charges and Expenses.
The Trustee and any Paying Agent shall be entitled to payment and/or
reimbursement for reasonable fees for services rendered hereunder and all
advances, counsel fees and other expenses reasonably and necessarily made or
incurred by the Trustee in and about the execution of the trusts created by this
Indenture and in and about the exercise and performance of the powers and duties
of the Trustee hereunder and for the reasonable and necessary costs and expenses
incurred in defending any liability in the premises of any character whatsoever
(unless such liability is adjudicated to have resulted from the negligence or
willful default of the Trustee). In this regard the Company has agreed to be
obligated pursuant to Section 4.4 of the Loan Agreement for the payment of said
fees, advances, counsel fees, costs and expenses and reference is hereby made to
the Loan Agreement for the provisions so made; and the Issuer shall not be
liable for the payment of such sums.
Section 11.3 Notice to Holders of Default.
The Trustee shall give to the Bondholders written notice of all
Events of Default known to the Trustee, within sixty (60) days after the
occurrence of an Event of Default; provided that, except in the case of an Event
of Default in the payment of the principal of, interest or purchase price on any
of the Bonds, the Trustee shall be protected in withholding such notice if and
so long as the Board of Directors, the executive committee or a trust committee
of directors or chief executive officer of the Trustee in good faith determine
that the withholding of such notice is in the interest of the Holders.
Section 11.4 Intervention by Trustee.
In any judicial proceeding to which the Issuer is a party and which
in the opinion of the Trustee and its counsel, as set forth in writing, has a
material adverse effect on the interests of Holders of Bonds, the Trustee may
intervene on behalf of Holders
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and shall do so if requested in writing by the Holders of at least twenty-five
percent (25%) of the aggregate principal amount of Outstanding Bonds. The rights
and obligations of the Trustee under this Section are subject to the approval of
a court of competent jurisdiction in the premises.
Section 11.5 Successor Trustee.
Any corporation, association or agency into which the Trustee may be
converted or merged, or with which it may be consolidated, or to which it may
sell or transfer its trust business and assets as a whole or substantially as a
whole, or any corporation or association resulting from any such conversion,
sale, merger, consolidation or transfer to which it is a party, ipso facto,
shall be and become successor trustee and paying agent under this Indenture and
vested with all of the title to the Trust Estate, and all the trusts, powers,
discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 11.6 Resignation by Trustee.
The Trustee and any successor trustee may at any time resign from
the trusts hereby created by giving thirty (30) days written notice to the
Issuer and to the Company and by first class mail to each Holder of Bonds as
shown on the Bond Register; provided that such resignation shall only take
effect upon the appointment of a successor trustee by the Holders or by the
Issuer. Such notice to the Issuer and the Company may be served personally or
sent by registered mail.
Section 11.7 Removal of Trustee.
The Trustee may be removed at any time by an instrument or
concurrent instruments in writing delivered to the Trustee, to the Company and
to the Issuer, and signed by the Holders of a majority in aggregate principal
amount of then Outstanding Bonds or by the Issuer; provided that such removal
shall take effect upon the appointment of the successor trustee by the Holders
or by the Issuer.
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Section 11.8 Appointment of Successor Trustee.
In case the Trustee hereunder shall resign or be removed, or be
dissolved or shall be in course of dissolution or liquidation, or otherwise
become incapable of acting hereunder, or in case it shall be taken under the
control of any public officer or officers, or of a receiver appointed by a
court, a successor may be appointed by the Holders of a majority in aggregate
principal amount of the then Outstanding Bonds, by an instrument or concurrent
instruments in writing signed by such Holders, or by their attorney-in-fact,
duly authorized, but only with the prior written consent of the Issuer and the
Reimbursement Bank. Nevertheless, in case of such vacancy the Issuer by
resolution of its governing body may appoint a temporary trustee to fill such
vacancy until a successor trustee shall be appointed by the Holders in the
manner above provided; and any such temporary trustee so appointed by the Issuer
shall immediately and without further act be superseded by the Trustee so
appointed by such Holders. Every such Trustee appointed pursuant to the
provisions of this Section 11.8 shall be a trust company or bank having trust
powers and having a reported capital and surplus not less than $25,000,000, if
there be such an institution willing, qualified and able to accept the trust
upon reasonable or customary terms.
Section 11.9 Acceptance by Successor Trustees.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to its predecessor, to the Company, the Remarketing
Agent, the Reimbursement Bank, all Holders and the Issuer, an instrument in
writing accepting such appointment hereunder, and thereupon such successor,
without any further act, deed or conveyance shall become fully vested with all
the estates, properties, rights, powers, trusts, duties and obligations of its
predecessors as Trustee and Paying Agent; but such predecessor shall,
nevertheless, on the written request of the Issuer, or of its successor Trustee,
execute and deliver an instrument transferring to such successor Trustee all the
estates, properties, rights, powers and trusts of such predecessor hereunder,
and every predecessor Trustee shall deliver all securities and moneys held by it
as Trustee hereunder to its successor. Should any instrument in writing from the
Issuer reasonably be required by any successor Trustee for more fully and
certainly vesting in such successor the estates, rights, powers and duties
hereby vested or intended to be vested in the predecessor trustee, any and all
such instruments in writing shall, on request, be executed, acknowledged and
delivered
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by the Issuer. The resignation of any Trustee and the instrument or instruments
removing any Trustee and appointing a successor hereunder, together with all
other instruments provided for in this Article, shall be forthwith filed or
recorded or both by the successor Trustee in each recording office where the
Indenture shall have been filed or recorded or both.
Section 11.10 Right of Trustee to Pay Taxes and Other Charges.
If any tax, assessment or governmental or other charge upon any part
of the Trust Estate is not paid as required herein, the Trustee may pay such
tax, assessment or charge, without prejudice, however, to any rights of the
Trustee or the Bondholders hereunder arising in consequence of such failure; and
any amount at any time so paid under this Section, with interest thereon (to the
extent permitted by law) from the date of such payment until paid to the Trustee
in full at a rate per annum equal to the Base Rate, shall become so much
additional indebtedness secured hereby, and the same shall be given a preference
in payment over the principal of and the interest on, the Bonds and shall be
paid out of the revenues and receipts from the Trust Estate, if not otherwise
caused to be paid; provided, however, that payments of any such tax, assessment
or charge shall not have any such preference with respect to and shall not be
paid from (i) amounts drawn (or deemed to have been drawn) under the Letter of
Credit or held in the Letter of Credit Accounts in the Bond Fund or the Bond
Purchase Fund or (ii) any proceeds from the remarketing of the Bonds by the
Remarketing Agent pursuant to Section 4.4 hereof. The Trustee shall not be under
an obligation to make any such payment unless it shall have been requested to do
so by the Holders of at least 25% in principal amount of the Bonds then
Outstanding and shall have been provided with sufficient moneys for the purpose
of making such payment.
Section 11.11 Trustees Protected in Relying Upon Resolutions.
The resolutions, orders, requisitions, opinions, certificates and
other instruments provided for in this Indenture may be accepted by the Trustee
as conclusive evidence of the facts and conclusions stated therein and shall be
full warrant, protection and authority to the Trustee.
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Section 11.12 Successor Trustee as Custodian of Bond Fund and Paying
Agent.
In the event of a change in the office of Trustee, the predecessor
trustee which has resigned or been removed shall cease to be custodian of the
funds prescribed in Article V and shall cease to act as the Paying Agent for
principal and interest on the Bonds, and the successor trustee shall be and
become such custodian and Paying Agent.
Section 11.13 Co-Trustee.
At any time or times, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Trust Estate may at
the time be located, the Issuer and the Trustee shall have the power to appoint,
and, upon the request of the Trustee or of the Holders of at least fifty-one
percent (51%) in aggregate principal amount of the then Outstanding Bonds, the
Issuer shall for such purpose join with the Trustee in the execution, delivery
and performance of all instruments and agreements necessary or proper to appoint
one or more persons approved by the Trustee either to act as co-trustee or
co-trustees, jointly with the Trustee, of all or any part of the Trust Estate,
or to act as separate trustee or separate trustees of all or any part of the
Trust Estate, and to vest in such person or persons, in such capacity, such
right to the Trust Estate or any part thereof, and such rights, powers, duties,
trusts or obligations as the Issuer and the Trustee may consider necessary or
desirable subject to the remaining provisions of this Section 11.13.
If the Issuer shall not have joined in such appointment within
fifteen (15) days after the receipt by it of a request so to do, or in case an
Event of Default shall have occurred and be continuing, the Trustee alone shall
have power to make such appointment.
The Issuer shall execute, acknowledge and deliver all such
instruments as may reasonably be required by any such co-trustee or separate
trustee for more fully confirming such title, rights, powers, trusts, duties and
obligations to such co-trustee or separate trustee.
Every co-trustee or separate trustee shall, to the extent permitted
by law but to such extent only, be appointed subject to the following terms,
namely:
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(1) The Bonds shall be authenticated and delivered, and all rights,
powers, trusts, duties and obligations by this Indenture conferred upon the
Trustee in respect of the custody, control or management of moneys, papers,
securities and other personal property shall be exercised solely by the Trustee.
(2) All rights, powers, trusts, duties and obligations conferred or
imposed upon the trustees shall be conferred or imposed upon and exercised or
performed by the Trustee, or by the Trustee and such co-trustee or co-trustees
or separate trustee or separate trustees jointly, as shall be provided in the
instrument appointing such co-trustee or co-trustees or separate trustee or
separate trustees, except to the extent that, under the law of any jurisdiction
in which any particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such act
or acts shall be performed by such co-trustee or co-trustees or separate trustee
or separate trustees.
(3) Any request in writing by the Trustee to any co-trustee or separate
trustee to take or to refrain from taking any action hereunder shall be
sufficient warrant for the taking, or the refraining from taking, of such action
by such co-trustee or separate trustee.
(4) Any co-trustee or separate trustee may delegate to the Trustee the
exercise of any right, power, trust, duty or obligation, discretionary or
otherwise.
(5) The Trustee at any time, by an instrument in writing, with the
concurrence of the Issuer, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section 11.13, and, in case
of a continuing Event of Default the Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee without the
concurrence of the Issuer. Upon the request of the Trustee, the Issuer shall
join with the Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section 11.13.
(6) No trustee hereunder shall be personally liable by reason of any act
or omission of any other trustee hereunder.
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(7) Any demand, request, direction, appointment, removal, notice, consent,
waiver or other action in writing delivered to the Trustee shall be deemed to
have been delivered to each co-trustee or separate trustee.
(8) Any moneys, papers, securities or other items of personal property
received by any such co-trustee or separate trustee hereunder shall forthwith,
so far as may be permitted by law, be turned over to the Trustee.
Upon the acceptance in writing of such appointment by any such
co-trustee or separate trustee, it or he shall be vested with such interest in
and to the Trust Estate or any part thereof, and with such rights, powers,
duties or obligations, as shall be specified in the instrument of appointment
jointly with the Trustee (except insofar as local law makes it necessary for any
such co-trustee or separate trustee to act alone) subject to all the terms of
this Indenture. Every such acceptance shall be filed with the Trustee. Any
co-trustee or separate trustee may, at any time by an instrument in writing,
constitute the Trustee its or his attorney-in-fact and agent, with full power
and authority to do all acts and things and to exercise all discretion on its or
his behalf and in its or his name.
In case any co-trustee or separate trustee shall die, become
incapable of acting, resign or be removed, the title to the Trust Estate and all
rights, powers, trusts, duties and obligations of said co-trustee or separate
trustee shall, so far as permitted by law, vest in and be exercised by the
Trustee unless and until a successor co-trustee or separate trustee shall be
appointed in the manner herein provided.
Section 11.14 Obligation of Trustee as to Reporting.
The Trustee shall, at the request of the Company, cause to be filed
any reports lawfully required by any public agency to be filed under any
applicable security laws and any other reports lawfully required by any public
agency to be filed under the Act or any other applicable state law. For this
purpose the Trustee is entitled to require the Company to cause to be furnished
to the Trustee whatever information is necessary to comply with such reporting
requirements at the Company's sole expense.
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Section 11.15 Successor Paying Agent.
The provisions of Sections 11.5 through 11.9 with respect to
removal, resignation and appointment of a successor trustee shall be equally
applicable to resignation, removal and appointment of a successor to the Paying
Agent. The Trustee shall be eligible for appointment as successor to the Paying
Agent.
Section 11.16 Confirmation of the Trustee.
(1) At any time while Bonds remain Outstanding under this Indenture and in
any of the following circumstances, to the extent permitted by law, to-wit:
(A) The Trustee is in doubt as to whether or not the Indenture or
any Related Document or instrument requires Bondholders' consent or the consent
of the Company, any guarantor, or the Issuer in connection with any proposed
action;
(B) The Trustee has substantial doubt as to whether its consent to a
proposed action, although authorized, should in the particular circumstances be
given;
(C) The Trustee's consent is sought or deemed necessary in
connection with a proposed action which is not specifically dealt with or
contemplated by this Indenture or any other Related Document, or it is unclear
whether this Indenture or other Related Document is intended to deal with the
proposed action;
(D) There is a disagreement between any of the parties to the
Indenture or any other Related Document as to whether a proposed action may be
taken or is required to be taken;
(E) There appears to be a conflict, ambiguity or inconsistency
between or among the provisions of this Indenture and any other Related Document
other than as provided for in Sections 12.1 and 13.1 hereof;
(F) There is doubt as to whether or not a proposed action falls
within one of the provisions of Sections 12.1 and 13.1 hereof authorizing such
action without Bondholders' consent;
(G) Bondholders' consent is required by this Indenture or Related
Document but consent cannot be obtained because:
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(i) it is not possible to comply with requirements of this
Indenture or any other Related Document as to the notice to be given to
Bondholders with respect to the proposed matter requiring consent, or
(ii) if action is to be taken at a meeting of Bondholders, the
requisite number of Bondholders (the quorum) necessary to be present at a
meeting in order for a proposed action to be taken was not present at such
meeting or any adjourned meeting;
(H) The Trustee wishes to depart from the procedures set forth in
Section 14.3 for purposes of calling or conducting a meeting of the Bondholders;
or in any other eventuality in which it shall be necessary to determine a
question arising under or to construe this Indenture or any other Related
Document, the Trustee may, and upon request of the Issuer, the Company or the
Holders of 25% or more in principal amount of Outstanding Bonds shall petition a
court of competent jurisdiction to amend or supplement the Loan Agreement or
Indenture or any Related Document upon a proper showing of the necessity
therefor.
(2) In construing and interpreting this Indenture and any other Related
Document, the objective shall always be to ascertain and effectuate the
intention of the parties. So far as possible and appropriate, and to the extent
that it does not conflict with the provisions of the Indenture or the other
Related Documents, the principles of statutory construction shall be applied in
the interpretation and construction of this Indenture and other Related
Documents.
(3) The Trustee or successor Trustee shall not be answerable for actions
taken in compliance with any final order of the court. The Trustee or successor
Trustee shall not be entitled to require an indemnity bond pursuant to Section
11.1(11), prior to taking any action directed by final order of the court.
Section 11.17 Remarketing Agent.
Norwest Bank Minnesota, National Association, is hereby appointed
the Remarketing Agent. The Issuer shall, at the direction of the Company,
appoint any successor Remarketing Agent (acceptable to the Reimbursement Bank)
for the Bonds, subject to
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the conditions set forth in Section 11.18 hereof. Any successor Remarketing
Agent shall designate to the Issuer, the Trustee, the Reimbursement Bank and all
Holders its principal office for purposes hereof, which shall be the office of
such Remarketing Agent at which all notices and other communications in
connection herewith may be delivered to it, and signify its acceptance of the
duties and obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the Issuer, the Company, the Trustee and the
Reimbursement Bank under which such Remarketing Agent will agree particularly to
(i) use its best efforts to sell any Bond delivered to the Trustee for purchase
pursuant to Article IV and to assist the Company in selling such Bonds in a
private placement to sophisticated investors, knowledgeable in making
investments similar in the nature and character to the Bonds, who agree to
purchase the Bonds for investment purposes only and without a view to re-sell or
distribute the Bonds, (ii) notify the Trustee and Issuer by telephone, followed
up in writing, on each Adjustment Date of the new Variable Rate, and (iii) keep
books and records with respect to its activities hereunder available for
inspection by the Issuer, the Trustee, the Company and the Reimbursement Bank at
all reasonable times.
Section 11.18 Qualifications of Remarketing Agent; Resignation;
Removal.
The Remarketing Agent shall be an institution authorized by law to
perform all the duties imposed upon it by this Indenture and the Remarketing
Agreement. The Remarketing Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture in accordance with the
provisions of the Remarketing Agreement. The Remarketing Agent may be removed at
any time, at the direction of the Company, in accordance with the provisions of
the Remarketing Agreement. The Trustee shall give the Issuer, the Holders and
the Reimbursement Bank notice of the resignation or discharge of the Remarketing
Agent.
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ARTICLE XII
SUPPLEMENTAL INDENTURES
Section 12.1 Supplemental Indentures Not Requiring Consent of
Bondholders.
The Issuer and the Trustee may, from time to time and at any time,
without the consent of, or notice to, any of the Holders, and when so required
by this Indenture shall, enter into an indenture or indentures supplemental to
this Indenture as shall not be inconsistent with the terms and provisions hereof
(which supplemental indenture or indentures shall thereafter form a part
hereof), so as to thereby (1) cure any ambiguity or formal defect or omission in
this Indenture or in any supplemental indenture, (2) grant to or confer upon the
Trustee for the benefit of the Holders any additional rights, remedies, powers,
authority or security that may lawfully be granted to or conferred upon the
Holders or the Trustee, (3) more precisely identify the Trust Estate, or any
other property which may become a part of the Trust Estate, (4) subject to the
lien and pledge of this Indenture additional revenues, properties or collateral,
(5) evidence the appointment of a separate trustee or a co-trustee or the
succession of a new Trustee and/or Paying Agent hereunder, (6) modify, eliminate
and/or add to the provisions of this Indenture to such extent as shall be
necessary to prevent any interest on the Bonds from becoming taxable under the
Federal income tax laws or to effect the qualification of this Indenture under
the Trust Indenture Act of 1939, as then amended, or under any similar Federal
statute hereafter enacted, and to add to this Indenture such other provisions as
may be expressly permitted by said Trust Indenture Act of 1939, excluding
however the provisions referred to in Section 316(a)(2) of said Trust Indenture
Act of 1939, (7) make any other change which is required by any provision of
this Indenture or which is deemed by the Trustee necessary to reconcile the
Indenture with the Related Documents, or any amendments thereto, or (8) make any
other change which in the judgment of the Trustee is necessary or desirable and
will not materially prejudice any Holder of a Bond.
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Section 12.2 Supplemental Indentures Requiring Consent of Holders.
Exclusive of supplemental indentures covered by Section 12.1 hereof
and subject to the terms and provisions contained in this Section , and not
otherwise, the Trustee, upon receipt of an instrument evidencing the consent to
the below- mentioned supplemental indenture by the Holders of not less than
fifty-one percent (51%) of the aggregate principal amount of the then
Outstanding Bonds, shall join with the Issuer in the execution of such other
indenture or indentures supplemental hereto as shall be deemed necessary and
desirable for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this
Indenture or in any supplemental indenture; provided, however, that nothing
herein contained shall permit or be construed as permitting (1) an extension of
the maturity of the principal or of the interest on any Bond issued hereunder,
or (2) a reduction in the principal amount of any Bond or the rate of interest
thereon or any premium thereon, or (3) a privilege or priority of any Bond or
Bonds over any other Bond or Bonds except as may be otherwise expressly provided
herein, or (4) a reduction in the aggregate principal amount of the Bonds
required for consent to such supplemental indenture, or (5) modifying any of the
provisions of this Section without the consent of the Holders of one hundred
percent (100%) of the principal amount of all Bonds adversely affected thereby
("100% Bondholders' Consent"); and provided further that in no event may the
restrictions in this Indenture with respect to the transferability of Bonds be
amended without the prior written consent of the Issuer.
If at any time the Issuer shall request the Trustee to enter into
any such supplemental indenture for any of the purposes of this Section which
does not require 100% Bondholders' Consent, the Trustee shall, upon being
satisfactorily indemnified by the Company with respect to expenses, cause notice
of the proposed execution of such supplemental indenture to be mailed by first
class mail, postage prepaid, to the Holders of the Bonds at the addresses shown
on the Bond Register. Such notice shall briefly set forth the nature of the
proposed supplemental indenture and shall state that copies thereof are on file
at the principal office of the Trustee for inspection by all Bondholders. The
Trustee shall not, however, be subject to any liability to any Bondholder by
reason of its failure to mail such notice to any particular Bondholder if notice
was generally mailed to Bondholders, and any
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such failure shall not affect the validity of such supplemental indenture when
consented to and approved as provided in this Section . If the Holders of not
less than fifty-one percent (51%) in aggregate principal amount of the then
Outstanding Bonds at the time of the execution of any such supplemental
indenture shall have consented to and approved the execution thereof as herein
provided, no Holder of any Bond shall have any right to object to any of the
terms and provisions contained herein or the operation thereof, or in any manner
to question the propriety of the execution thereof, or to enjoin or restrain the
Trustee or the Issuer from executing the same or from taking any action pursuant
to the provisions thereof. Upon the execution of any such supplemental indenture
as in this Section permitted and provided, this Indenture shall be and is deemed
to be modified and amended in accordance herewith.
Anything herein to the contrary notwithstanding, a supplemental
indenture under this Article XII which adversely affects the right of the
Company under the Loan Agreement shall not become effective unless and until the
Company shall have consented (either in writing or by inaction as provided
below) to the execution and delivery of such supplemental indenture. In this
regard, the Trustee shall cause notice of the proposed execution and delivery of
any such supplemental indenture, together with a copy of the proposed
supplemental indenture, to be mailed by certified or registered mail to the
Company at least fifteen (15) days prior to the proposed date of execution and
delivery of any such supplemental indenture. The Company shall be deemed to have
consented to the execution and delivery of any such supplemental indenture if
the Trustee does not receive a letter signed by a Representative of the Company
of protest or objection thereto on or before 4:30 o'clock P.M., Nebraska time,
of the fifteenth day after the mailing of said notice and a copy of the proposed
supplemental indenture to the Company unless such fifteenth day falls on a
Sunday or legal holiday, in which event the letter of objection must be received
on the next succeeding Business Day.
Section 12.3 Rights of Trustee.
If, in the opinion of the Trustee, any supplemental indenture
provided for in this Article affects the rights, duties or immunities of the
Trustee under this Indenture or otherwise, the Trustee may, in its discretion,
decline to execute such supplemental indenture, except to the extent that this
may be required in the case of a supplemental indenture entered into under
Section 12.1. The Trustee shall be entitled to receive, and shall
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be fully protected in relying upon, an opinion of Independent Counsel as
conclusive evidence that any such supplemental indenture conforms to the
requirements of this Indenture.
Section 12.4 Consent of Reimbursement Bank.
Notwithstanding the foregoing, the Trustee shall not enter into any
supplemental indenture without first obtaining the prior written consent of the
Reimbursement Bank, unless the Letter of Credit is not in full force and effect
or if the Letter of Credit is dishonored after presentment of a draft and
submission of all documentation required under the Letter of Credit.
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ARTICLE XIII
AMENDMENTS TO LOAN AGREEMENT
Section 13.1 Amendments Not Requiring Bondholder Consent.
The Issuer and/or the Trustee may, without the consent of or notice
to the Bondholders, consent to any amendment, change or modification of the Loan
Agreement:
(1) which may be required or permitted without Bondholder consent by the
provisions of the Loan Agreement or this Indenture;
(2) for the purpose of curing any ambiguity or formal defect or omission;
(3) to reconcile the Loan Agreement with any amendment or supplement to
the Indenture; or
(4) to effect any other change to the Loan Agreement which, in the
judgment of the Trustee, will not materially prejudice any non-consenting Holder
of a Bond.
Section 13.2 Amendments Requiring Bondholder Consent.
Except for amendments, changes or modifications as provided in
Section 13.1, neither the Issuer nor the Trustee shall consent to any other
amendment, change or modification of the Loan Agreement, without the giving of
notice and the written approval or consent of the Holders of not less than
fifty-one percent (51%) in aggregate principal amount of the Bonds then
Outstanding given and procured as provided in this Section ; provided that in no
event shall such amendment, change or modification relieve the Company of the
obligation under the Loan Agreement to make when and as due any payments
required for the payment of principal, interest and any premium due or to become
due on the Bonds unless the consent of the Holders of all Bonds adversely
affected thereby is first secured. If at any time the Issuer and the Company
shall request the consent of the Trustee to any such proposed amendment, change
or modification of Loan Agreement, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause notice of such proposed amendment,
change or modification to be given in the same manner as provided in Section
12.2 hereof with respect to
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supplemental indentures. Such notice shall briefly set forth the nature of such
proposed amendment, change or modification and shall state that copies of the
instrument embodying the same are on file at the principal office of the Trustee
for inspection by all Holders. The Trustee shall not, however, be subject to any
liability to any Holder by reason of its failure to mail such notice to any
particular Bondholder if notice was generally mailed to Bondholders, and any
such failure shall not affect the validity of such amendment, change or
modification when consented to and approved as provided in this Section . If the
Holders of not less than fifty-one percent (51%) in aggregate principal amount
of the Bonds then Outstanding at the time of the execution of any such amendment
shall consent to the execution thereof as herein provided, no Holder of any Bond
shall have any right to object to any of the terms and provisions contained
therein, or the operation thereof, or in any manner to question the propriety of
the execution thereof, or to enjoin or restrain the Trustee or the Issuer from
executing the same or from taking any action pursuant to the provisions thereof.
Upon the execution of any such amendment, the Loan Agreement shall be deemed to
be modified and amended in accordance therewith. Nothing in this Section
contained shall permit or be construed as permitting any reduction in the
payments required to be made (i) by Sections 4.2 or 4.3 of the Loan Agreement or
(ii) the Letter of Credit, or permitting a reduction or change in the Stated
Maturities of the Bonds.
Section 13.3 Consent of Reimbursement Bank.
Notwithstanding the foregoing, the Trustee shall not enter into or
otherwise consent to any amendment of the Loan Agreement without first obtaining
the prior written consent of the Bank, unless the Letter of Credit is not in
full force and effect or if the Letter of Credit is dishonored after presentment
of a draft and submission of all documentation required under the Letter of
Credit.
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ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.1 Consent of Holders.
Any consent, request, direction, approval, objection or other
instrument required by this Indenture to be signed and executed by the Holders
may be in any number of concurrent writings of similar tenor and must be signed
or executed by such Holders in person or by agent appointed in writing. Proof of
the execution of any such consent, request, direction, approval, objection or
other instrument or of the writing appointing any such agent and of the
ownership of Bonds, if made in the following manner, shall be sufficient for any
of the purposes of this Indenture, and shall be conclusive in favor of the
Trustee with regard to any action taken by it under such request or other
instrument, namely:
(1) The fact and date of the execution by any person of any such writing
may be proved by the certificate of any officer in any jurisdiction who by law
has power to take acknowledgements within such jurisdiction that the person
signing such writing acknowledged before him the execution thereof, or by an
affidavit of any witness to such execution.
(2) The fact of the ownership by any person of Bonds and the amounts and
numbers of such Bonds, and the date of the holding of the same, may be proved
only by reference to the Bond Register.
Section 14.2 Rights Under Indenture.
With the exception of rights herein expressly conferred, nothing
expressed or mentioned in or to be implied from this Indenture or the Bonds is
intended or shall be construed to give any person or company other than the
parties hereto, and the Bondholders, any legal or equitable right, remedy, or
claim under or in respect to this Indenture or any covenants, conditions and
provisions herein contained; this Indenture and all of the covenants, conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and the Holders of the Bonds hereby secured as
herein provided.
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Section 14.3 Meetings of Bondholders.
(1) Unless the Bondholder is a single entity or controlled by a
single entity, a meeting of Bondholders may be called at any time and from time
to time pursuant to this Section to facilitate any of the following purposes:
(A) to give any notice to the Issuer, the Company or the
Trustee, or to give any directions to the Trustee, or to consent to
the waiving of any default under this Indenture, or to take any
other action authorized to be taken by the Bondholders under this
Indenture;
(B) to remove the Trustee or to appoint a successor trustee
pursuant to Sections 11.7 and 11.8 of this Indenture;
(C) to consent to the execution of a supplemental indenture
pursuant to Section 12.2 hereof, or to consent to the execution of
an amendment, change or modification of the Loan Agreement, or any
of them, pursuant to Section 13.2 hereof; or
(D) to take any other action authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount of
the Bonds under any other provision of this Indenture or under
applicable law.
(2) Meetings of Bondholders may be held at such place or places as
the Trustee or, in case of its failure to act, the Bondholders calling the
meeting, shall from time to time determine.
(3) Unless the Bondholder is a single entity or controlled by a
single entity, the Trustee may at any time call a meeting of Bondholders to be
held at such time and at such place as the Trustee shall determine. Notice of
every meeting of Bondholders setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be mailed by first class mail, postage prepaid, to the Holders of the
Bonds at the address shown on the Bond Register. Any failure of the Trustee to
mail such notice to a particular Bondholder, or any defect therein shall not,
however, in any way impair or affect the validity of any such meeting if notice
was generally mailed to Bondholders. In the event that the Holders of
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at least 10% in aggregate principal amount of the Outstanding Bonds shall have
requested the Trustee to call a meeting of the Bondholders by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have accomplished the mailing of notice of
such meeting within 20 days after receipt of such request, then such Bondholders
may determine the time and the place for such meeting and may call such meeting
to take any action authorized in paragraph (1) of this Section by giving notice
of such meeting in accordance with the provisions of this paragraph (3).
(4) To be entitled to vote at any meeting of Bondholders, a person
shall be a Holder of one or more Bonds Outstanding, or a person appointed by an
instrument in writing as proxy for a Bondholder by such Bondholder. The only
persons who shall be entitled to be present or to speak at any meeting of
Bondholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee, Company, Issuer, Reimbursement
Bank and their counsel.
(5) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Bondholders in regard to proof of the ownership of Bonds and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the ownership of Bonds shall be proved in the
manner specified in Section 14.1 of this Indenture and the appointment of any
proxy shall be proved in the manner specified in said Section or by having the
signature of the person executing the proxy witnessed or guaranteed by any bank,
banker or trust company authorized by said Section to certify to the ownership
of Bonds:
(A) The Trustee or, if the Bondholders have called the meeting, the
Bondholders shall, by an instrument in writing, appoint a temporary
chairperson of the meeting. A permanent chairperson and a permanent
secretary of the meeting shall be elected by vote of the Holders of a
majority of the Bonds represented at the meeting and entitled to vote.
(B) At any meeting such Bondholder or proxy shall be entitled to one
vote for each $5,000 of principal amount of
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Outstanding Bonds owned or represented by him or her; provided, however,
that no vote shall be cast or counted at any meeting in respect of any
Bond challenged as not Outstanding and ruled by the chairperson of the
meeting to be not Outstanding. The chairperson of the meeting shall have
no right to vote, except as a Bondholder or proxy.
(C) At any meeting of Bondholders, the presence of persons owning or
representing Bonds in an aggregate principal amount sufficient under the
appropriate provision of this Indenture to take action upon the business
for the transaction of which such meeting was called shall constitute a
quorum. Any meeting of Bondholders duly called pursuant to this Section
may be adjourned from time to time by vote of the Holders (or proxies for
the Holders) of a majority of the Bonds represented at the meeting and
entitled to vote, whether or not a quorum shall be present; and the
meeting may be held as so adjourned without further notice.
(6) The vote upon any resolution submitted to any meeting of
Bondholders shall be by written ballots on which shall be subscribed the
signatures of the Bondholders or of their proxies and the number or numbers of
the Bonds Outstanding held or represented by them. The permanent chairperson of
the meeting shall appoint two inspectors of votes who shall count all votes cast
at the meeting for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record, at least in triplicate, of the proceedings
of each meeting of Bondholders shall be prepared by the secretary of the
meeting. The original reports of the inspectors of votes on any vote by ballot
taken at such meeting, and affidavits by one or more persons having knowledge of
the facts setting forth a copy of the notice of the meeting and showing that
said notice was published or mailed as provided in this Section shall be
attached to such record. Each copy shall be signed and verified by the
affidavits of the permanent chairperson and secretary of the meeting and one
such copy shall be delivered to the Issuer, another to the Company and another
to the Trustee to be preserved by the Trustee, which copy shall have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
(7) At any time prior to the preparation of the record of the
meeting in accordance with the terms of this Section for
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delivery to the Trustee evidencing the taking of any action by the Holders of
the percentage in aggregate principal amount of the Bonds specified in this
Indenture in connection with such action, any Holder of a Bond the number of
which is included in the Bonds, the Holders of which have consented to such
action, may, by filing written notice with the Trustee at its principal
corporate trust office and upon proof of holding as provided in Section 14.1 of
this Indenture, revoke such consent so far as it concerns such Bond. Except as
aforesaid, any such consent given by the Holder of any Bond shall be conclusive
and binding upon such Holder and upon all future Holders and owners of such Bond
and of any Bond issued in exchange therefor, upon transfer thereof, or in lieu
thereof, irrespective of whether or not any notation in regard thereto is made
upon such Bond. Any action taken by the Holders of the percentage in aggregate
principal amount of the Bonds specified in this Indenture in connection with
such action shall be conclusively binding upon the Issuer, the Company, the
Trustee and the Holders of all the Bonds.
(8) Nothing in this Section 14.3 is intended to limit or prevent the
Trustee from taking any action permitted under Section 11.16 of this Indenture,
including but not limited to the Trustee's right to apply to a court of
competent jurisdiction for confirmation of appointment, or for instructions in
accordance with the provisions of Nebraska law.
Section 14.4 Severability.
If any provision of this Indenture shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any particular
case in any jurisdiction or jurisdictions or in all jurisdictions or in all
cases because it conflicts with any provisions of any constitution or statute or
rule of public policy, or for any other reason, such circumstances shall not
have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provisions herein contained invalid, inoperative or unenforceable to any extent
whatever.
The invalidity of any one or more phrases, sentences, clauses or
paragraphs in this Indenture contained shall not affect the remaining portions
of this Indenture or any part thereof.
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Section 14.5 Notices.
All notices, certificates or other communications hereunder shall be
in writing (except as otherwise expressly provided herein) and shall be
sufficiently given and shall be deemed given when mailed by first class mail,
postage prepaid, with proper address as indicated below. The Issuer, the
Company, the Bank, the Bondholders and the Trustee may, by written notice given
by each to the others, designate any address or addresses to which notices,
certificates or other communications to them shall be sent when required as
contemplated by this Indenture. Until otherwise provided by the respective
parties, all notices, certificates and communications to each of them shall be
addressed as follows:
To the Issuer: Nebraska Investment Finance Authority
200 Commerce Court
1230 O Street
Lincoln, Nebraska 68508
Attn: Chief Operating Officer
To the Company: Transcrypt International, Inc.
4800 Northwest First Street
Lincoln, Nebraska 68521
Attn: President
To the Trustee: Norwest Bank Nebraska, National
Association
1919 Douglas Street
P.O. Box 3959
Omaha, Nebraska 68103
Attn: Larry D. Loncke, Vice President
Investment Management and Trust
Phone: (402) 536-2264
FAX: (402) 536-2285
To the Bank: Norwest Bank Minnesota, National
Association
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
Attn: Corporation Law Division
Phone: (612) 667-2087
Fax: (612) 667-4399
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To the Reimbursement
Bank: Norwest Bank Nebraska, National
Association
1919 Douglas Street
P.O. Box 3408
Omaha, Nebraska 68103
Attn: Dee Ann Wenger
Assistant Vice President
Corporate Banking Division
Phone: (402) 536-2627
Fax: (402) 536-2251
To the Remarketing
Agent: Norwest Bank Minnesota, National
Association
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-0089
Attn: Structured Finance
Phone: (612) 667-3965
FAX: (612) 667-7266
Section 14.6 Required Approvals; Rights of
Reimbursement Bank.
Consents and approvals required by this Indenture to be obtained
from the Company, the Issuer or the Trustee shall be in writing and shall not be
unreasonably withheld or delayed. Notwithstanding any provisions herein to the
contrary, any consent or approval otherwise required by this Indenture to be
obtained from the Reimbursement Bank shall not be required, nor shall the
Trustee be obligated hereunder to comply with any request or direction of the
Reimbursement Bank, if the Letter of Credit is not in full force and effect
(except for the payment to the Reimbursement Bank of any surplus sums and
execution of any documents required hereunder or under the Reimbursement
Agreement after a draw has been made under the Letter of Credit) or if the
Letter of Credit is dishonored after presentment of a draft and submission of
all documentation required under the Letter of Credit.
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Section 14.7 Counterparts.
This Indenture may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 14.8 Limitation of Liability of Issuer and its Officers,
Employees and Agents.
(1) No recourse under or upon any obligation, covenant, warranty or
agreement contained in this Indenture or in the Bonds, or under any judgment
obtained against the Issuer, or the enforcement of any assessment, or any legal
or equitable proceedings by virtue of any constitution or statute or otherwise,
or under any circumstances under or independent of this Indenture, shall be had
against any of the members, officers or employees of the Issuer, as such, past,
present or future of the Issuer, either directly or through the Issuer or
otherwise, for the payment for or to the Issuer or any receiver thereof, or for
or to any Bondholder of the Bonds, or otherwise, of any sum that may be due and
unpaid by the Issuer upon the Bonds. Any and all personal liability of every
nature whether at common law or in equity or by statute or by constitution or
otherwise of any such Board member, officer or employee, as such, by reason of
any act of omission on his or her part or otherwise, for the payment for or to
any Bondholder of the Bonds or otherwise of any sum that may remain due and
unpaid upon the Bonds hereby secured or any of them is, by the acceptance
thereof, expressly waived and released as a condition of and in consideration
for the execution of this Indenture and the issuance of the Bonds. Anything in
this Indenture to the contrary notwithstanding, it is expressly understood by
the parties hereto that (i) the Issuer may rely exclusively on the truth and
accuracy of any certificate, opinion, notice or other instrument furnished to
the Issuer by the Trustee or any Bondholder as to the existence of any fact or
state of affairs; (ii) the Issuer shall not be under any obligation hereunder to
perform any record keeping or to provide any legal services, it being understood
that such services shall be performed or caused to be performed by the Trustee
or by any Bondholder; and (iii) none of the provisions of this Indenture shall
require the Issuer to expend or risk its own funds or otherwise to incur
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers hereunder. The Company has agreed, pursuant to
its Loan Agreement,
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to pay any such costs or expenses or indemnify the Issuer for any liability
which may be incurred by the Issuer.
(2) No recourse for the payment of any part of the principal of,
premium, if any, or interest on the Bonds or for the satisfaction of any
liability arising from, founded upon or existing by reason of the issuance,
purchase or ownership of the Bonds shall be had against any officer, director,
member, agent or employee of the Issuer or the State, as such, all such
liability being hereby expressly released and waived as a condition of and as a
part of the consideration for the execution of this Indenture and the issuance
of the Bonds. No member, officer, agent or employee of the Issuer shall be
individually or personally liable for the payment of the principal or redemption
price of or interest on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof.
Section 14.9 Amounts Remaining in Funds.
Upon expiration or sooner termination of the Loan Agreement as
provided therein or if the Reimbursement Bank elects to purchase Bonds pursuant
to Section 4.9 or the Company elects to purchase Bonds pursuant to Section
3.1(3) and after adequate provision has been made to discharge or purchase the
Bonds in accordance with Articles III, IV or XX and make all other payments
required hereunder and under the Loan Agreement, the Trustee forthwith shall
unless otherwise agreed by the Reimbursement Bank pay all remaining amounts in
the Funds established in Article VI hereof to the Reimbursement Bank to the
extent any sums are owed to the Reimbursement Bank under the Reimbursement
Agreement (as determined and reported to the Trustee by the Reimbursement Bank)
and, after payment of all amounts due or payable to Issuer and Trustee, the
balance to the Company.
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IN WITNESS WHEREOF, the Issuer has caused these presents to be
signed in its name on its behalf by its Executive Director, and to evidence its
acceptance of the trusts hereby created the Trustee has caused these presents to
be signed in its name and behalf by its duly authorized officer, all as of the
1st day of March, 1997.
NEBRASKA INVESTMENT FINANCE
AUTHORITY
(SEAL)
By_______________________________
Its Executive Director
Indenture of Trust dated as of March 1, 1997, by and between the Nebraska
Investment Finance Authority and Norwest Bank Nebraska, National Association.
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NORWEST BANK NEBRASKA,
NATIONAL ASSOCIATION,
As Trustee
By____________________________
Its_________________________
Indenture of Trust dated as of March 1, 1997, by and between the Nebraska
Investment Finance Authority and Norwest Bank, National
Association.
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EXHIBIT A
Legal Description of Project Premises
Lot One (1), Highlands Coalition 2nd Addition, Lincoln,
Lancaster County, Nebraska
A-1
<PAGE> 140
EXHIBIT B-1
[Date]
Nebraska Investment Finance
Authority
200 Commerce Court
1230 O Street
Lincoln, NE 68508
Norwest Bank Nebraska,
National Association
1200 O Street
Lincoln, NE 68508
Norwest Bank Minnesota,
National Association
Sixth & Marquette Avenue
Minneapolis, MN 55402
Re: $2,850,000 Variable Rate Demand Industrial Development Bonds, Series
1997 (Transcrypt International, Inc. Project)
Ladies and Gentlemen:
The undersigned purchaser (the "Purchaser") has agreed to purchase
$2,850,000 aggregate principal amount of the above-referenced securities (the
"Securities"), in a transaction scheduled to close on _____________________ and
in connection therewith represents to each of the above-named addressees the
following:
1. The Purchaser is a duly registered investment company as defined in
Section 3(a) of the Investment Company Act of 1940, as amended, and
is duly and legally authorized to purchase the Securities.
B-1
<PAGE> 141
2. The Purchaser has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and
risks of the Securities.
3. The Purchaser is purchasing the Securities for its own account and
not with a view to distributing the Securities; provided that the
Purchaser may exercise its right to dispose of its investments
consistent with applicable federal and state securities laws. The
Purchaser understands that the transfer of Bonds is restricted and
subject to certain conditions as set forth in the Bonds and the
Indenture.
B-1
<PAGE> 142
You should not construe or interpret any of the foregoing representations
as a waiver or release of any rights, claims or causes of action that the Fund
might have now or in the future under any federal or state securities law or
rule or court decision applicable to its investment in the Securities.
Yours very truly,
______________________________
By: ______________________________
Its __________________________
B-1
<PAGE> 143
EXHIBIT B-2
[Date]
Nebraska Investment Finance
Authority
200 Commerce Court
1230 O Street
Lincoln, NE 68508
Norwest Bank Nebraska,
National Association
1200 O Street
Lincoln, NE 68508
Norwest Bank Minnesota,
National Association
Sixth & Marquette Avenue
Minneapolis, MN 55402
$2,850,000
Nebraska Investment Finance Authority
Variable Rate Demand Industrial Development Revenue Bonds
(Transcrypt International, Inc. Project)
Series 1997
Ladies and Gentlemen:
In connection with the purchase of $________________ of the
above-referenced Bonds (the "Bonds"), the undersigned (the "Purchaser") hereby
certifies as follows:
1. The Purchaser understands that it will not receive from the Nebraska
Investment Finance Authority (the "Issuer"), Kutak Rock, as Bond Counsel and as
Issuer's counsel ("Kutak Rock"), or any of their governing bodies or members or
any of their officers, employees, partners or agents, any information with
respect to the use of the proceeds of the Bonds and the Project (as defined in
the Trust Indenture dated as of March 1, 1997 (the "Trust Indenture") between
the Issuer and Norwest Bank Nebraska,
B-2
<PAGE> 144
National Association, as trustee (the "Trustee"), the Bonds, the provision for
payment thereof, the security therefor or the sufficiency of such provisions for
payment thereof and security therefor, except such information that is contained
in and can be provided by delivery of:
(a) the Indenture;
(b) the Loan Agreement (the "Loan Agreement") dated as of
__________________, 1997 between the Issuer and Transcrypt International,
Inc. (the "Borrower");
(c) the Irrevocable Letter of Credit (the "Letter of Credit")
delivered by Norwest Bank Minnesota, National Association in its capacity
as issuer of the Letter of Credit (the "Letter of Credit Issuer");
(d) the Remarketing Agreement (the "Remarketing Agreement") dated as
of March 1, 1997 between the Borrower and Norwest Bank Minnesota, National
Association, in its capacity as remarketing agent (the "Remarketing
Agent");
(e) the Placement Memorandum (the "Placement Memorandum") prepared
on behalf of the Borrower and made available to the undersigned by Norwest
Bank Minnesota, National Association in its capacity as placement agent or
in its capacity as Remarketing Agent (the "Agent"); and
(f) the Closing Certificate of the Borrower, the Borrower's Cost
Certificate, the opinions of Issuer's Counsel and counsel to the Borrower,
and any other documentation and items to be executed or delivered in
connection with the issuance of the Bonds.
Copies of each of the documents referred to above (the "Transaction
Documents") have been provided to the Purchaser by the Borrower or the Agent or
any of their counsel, and have reviewed by the Purchaser prior to its purchase
of the Bonds (the Transaction Documents, together with any information and
documents incorporated therein by reference, the "Document Information"). In
addition, information, data, financial statements and other matters which have
been specifically requested by the Purchaser from the Letter of Credit Issuer
(or other sources at the direction of the Letter of Credit Issuer), have been
provided to the Purchaser and reviewed by the Purchaser
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prior to its purchase of the Bonds (the "Additional Information").
2. Neither the Issuer, Kutak Rock, their governing bodies, their members
nor any of their officers, employees, partners or agents will have any
responsibility to the Purchaser for the accuracy or completeness of information
obtained by the Purchaser from any source regarding (including, but not limited
to, payment and security information with respect to Bonds), the Project, the
Borrower, the Letter of Credit, or the Letter of Credit Issuer or related
assets, businesses, circumstances, financial condition and properties, or,
regarding the Bonds, the provisions for payment thereof or the sufficiency of
any security therefor and, in each case, including, without limitation, any
information specifically provided by any of such parties contained in the
Document Information. The Purchaser acknowledges that, as between the Purchaser
and such parties: (a) the Purchaser has assumed responsibility for requesting
and obtaining such information and making such review as the Purchaser has
deemed necessary or desirable in connection with its decision to purchase the
Bonds, and (b) the Document Information and the Additional Information
constitute all the information and, with the investigation made by the Purchaser
(including specifically its investigation of the Borrower, the Letter of Credit,
the Letter of Credit Issuer and the Project) prior to its purchase of the Bonds,
all the review that the Purchaser has deemed necessary or desirable in
connection with its decision to purchase the Bonds.
3. The Purchaser has been offered copies of or full access to each of the
Transaction Documents and all documents relating to the terms and conditions of
the offering and the issuance of the Bonds (including, but not limited to,
payment and security information with respect to the Bonds), and all records,
reports, financial statements and other information concerning the Borrower, the
Letter of Credit, the Letter of Credit Issuer and the Project and pertinent to
the source of payment and security for the Bonds which, as a reasonable
investor, the Purchaser has requested and to which, as a reasonable investor,
the Purchaser would attach significance in making investment decisions.
4. The Purchaser has had a reasonable opportunity to meet with a
representative of the Borrower, the Agent and the Letter of Credit Issuer and
has been afforded the opportunity to ask such questions of such representatives
of the Borrower and the
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Letter of Credit Issuer as the Purchaser has deemed necessary in making its
investment decisions, including, but not limited to, the circumstances under
which the Bonds may be redeemed, in whole or in part, prior to its maturity,
credit and reinvestment risks associated with redemption, the procedure for
periodically resetting the interest rate on the Bonds, the credit risks
associated with the sources of payments made on, or with respect to, the Bonds,
the corporate relationship among the Letter of Credit Issuer, the Agent and the
Trustee and the consequences of a "Determination of Taxability" (as such term is
defined in the Trust Indenture) and has based its decision to invest in the
Bonds solely (i) on its own investigation, including, without limitation, its
review of such documents, records, reports, financial statements and other
information concerning the Borrower, the Letter of Credit, the Letter of Credit
Issuer and the Project and discussions with representatives of the Borrower, the
Agent and the Letter of Credit Issuer and (ii) in reliance upon the Document
Information and the Additional Information. The Purchaser is familiar with the
condition, financial and otherwise, of the Borrower and the Letter of Credit
Issuer and the Borrower and the Agent have made available to the Purchaser the
opportunity to request and obtain additional information to verify the accuracy
of the information supplied and to evaluate the merits and risks of an
investment in the Bonds.
5. The Purchaser is either a bank, registered investment company,
insurance company or other "accredited investor" as defined in Rule 501 of
Regulation D of the United States Securities and Exchange Commission. The
Purchaser can bear the economic risk of the purchase of the Bonds and has such
knowledge and experience in business and financial matters, including the
analysis of a participation in the purchase of similar investments, as to be
capable of evaluating the merits and risks of the investment represented by the
purchase of the Bonds and is aware of the intended use of the proceeds and the
risks involved therein.
6. The Bonds have been purchased for the account of the Purchaser for
investment and not with a view to the distribution, transfer or resale thereof.
The Purchaser intends to hold the Bonds for its own account and for an
indefinite period of time and does not intend to dispose of all or any portion
of the Bonds and understands that transfer of the Bonds is restricted pursuant
to the terms of the Trust Indenture (as further described in paragraph 12
below).
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7. The Purchaser is duly and legally authorized to purchase obligations
such as the Bonds and the Bonds are a lawful investment for it under all
applicable laws.
8. The Purchaser has not relied and will not rely on any action taken by
the Issuer, including, but not limited to, issuance of the Bonds, as evidenced
that the Project financed with the proceeds of the Bonds complies with the
provisions of any legislation.
9. The Purchaser has carefully read the Document Information and the
Additional Information in its entirety and understands the risks described
therein and understands and acknowledges that there may exist other risks with
respect to the Bonds that are not described therein and understands, and agrees
to undertake, the action and costs identified in the Trust Indenture to be taken
and incurred by the Purchaser.
10. The Purchaser acknowledges that no credit rating has been sought or
obtained with respect to the Bonds and acknowledges that the Bonds are a
speculative investment and that there is a high degree of risk in such
investment.
11. The Purchaser has read the approving opinion of Kutak Rock, in its
capacity as bond counsel, regarding the Bonds and upon which it is entitled to
reply with respect to the matters contained therein.
12. The Purchaser acknowledges and represents that it has been advised
that the Bonds are not registered under the Securities Act of 1933, as amended
(the "1933 Act"), or any federal or state securities agency or commission, and
that the Borrower is not presently required to register under Section 12 of the
Securities and Exchange Act of 1934, as amended (the "1934 Act"). The
undersigned will not offer, sell or otherwise dispose of all or any part of or
interest in the Bonds, except (i) in full good faith compliance with all
securities applicable state and federal laws, (ii) with full and accurate
disclosure of all material facts to the prospective purchase(s) or
transferee(s), and (iii) either under effective federal and state registration
statements (which neither the Issuer nor the Company shall in any way be
obligated to provide) or pursuant to exemptions from such registrations. The
Purchaser therefore realizes that, if and when the Purchaser wishes to resell
the Bonds, there may not be available current business and financial information
about the
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Borrower or the Project or the Letter of Credit Issuer. Further, no trading
market now exists for the Bonds. Finally, the Purchaser understands that
transfer of the Bonds is restricted pursuant to the terms of the Trust Indenture
and other sections of this Investor Letter, including, but not limited to, the
requirement that each purchaser or transferee of the Bonds sign an investor
letter substantially identical to this letter and otherwise in form satisfactory
to the Issuer and Issuer's counsel prior to the date on which any such sale or
transfer is to be completed. Accordingly, the Purchaser understands that it may
need to bear the risks of this investment for an indefinite time since any sale
or transfer prior to the maturity of the Bonds may not be possible or may be at
a price below that which the Purchaser is paying for the Bonds.
13. The Purchaser is sufficiently knowledgeable and experienced in
financial and business matters, including the purchase and ownership of
municipal and other tax-exempt obligations, to be able to evaluate the risks and
merits of the investment represented by the purchase of the Bonds and is aware
of the use of the proceeds of the Bonds and the risks involved therein.
14. The Purchaser understands that (a) neither the Bonds nor the Loan
Agreement are secured by any obligation or pledge of any moneys received or to
be received from taxation or from the State of Nebraska or any political
subdivision or taxing authority thereof, and that neither the Bonds nor the Loan
Agreement will ever represent or constitute a general obligation, debt, bonded
indebtedness or pecuniary obligation of the Issuer, the State of Nebraska or any
political subdivision thereof, and that no right will exist to have taxes levied
by the State of Nebraska or any political subdivision thereof for the payment of
principal or of interest on the Bonds or the Loan Agreement, (b) the Issuer has
no taxing power, and (c) the Bonds are limited obligations of the Issuer,
payable solely out of and secured by income and revenues related to the Project
and the Letter of Credit, as pledged pursuant to the Trust Indenture.
15. The Purchaser will not offer, sell or otherwise dispose of the Bonds,
except (i) in full good faith compliance with all applicable state and federal
securities laws, (ii) with full and accurate disclosure of all material facts to
the prospective purchaser(s) or transferee(s), (iii) either under effective
federal and state registration statements (which neither the
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Issuer nor the Borrower shall in any way be obligated to provide) or pursuant to
exemptions from such registrations, (iv) in whole, and not in part and (v) to a
purchaser or transferee who agrees to sign an investor letter substantially
identical to this letter and otherwise in form satisfactory to the Issuer and
Issuer's Counsel.
16. The Purchaser has been informed by the Issuer and agrees that stop
transfer notations may be made on the Bonds or any other documents evidencing
ownership of the Bonds to the effect that the Bonds have not been registered
under the Securities Act of 1933 or the applicable state "Blue Sky" laws and
that the Bonds may not be disposed of unless it is registered thereunder or are
resold or otherwise disposed of pursuant to an exemption from such registration.
17. The Purchaser understands that any liability of the Issuer to the
Purchaser is limited to the Issuer's interest in the Loan Agreement and the
Purchaser shall look exclusively thereto for payment on the Bonds and that no
recourse for the payment of any part of the principal of, premium, if any, or
interest on the Loan Agreement or the Bonds or for the satisfaction of any
liability arising from, founded upon or existing by reason of the issuance,
purchase or ownership of the Bonds shall be had against any officer, director,
member, agent or employee of the Issuer or the State of Nebraska, as such, all
such liability being hereby expressly released and waived as a condition of and
as a part of the consideration for the issuance of the Bonds.
18. The Purchaser understands that not recourse under or upon any
obligations, covenant or agreement contained in the Trust Indenture, the Loan
Agreement or the Bonds, or under any judgment obtained against the Issuer, or by
the enforcement of any assessment or by any legal or equitable proceeding by
virtue of any constitution or statute or otherwise or under any circumstances,
under or independent of the Trust Indenture, the Loan Agreement or the Bonds,
shall be had against the Issuer. Anything in the Trust Indenture, the Loan
Agreement or the Bonds to the contrary notwithstanding, it is expressly
understood by the Purchaser that (a) the Issuer may rely exclusively on the
truth and accuracy of any certificate, opinion, notice or other instrument
furnished to the Issuer by the Purchaser as to the existence of any fact or
state of affairs; (b) the Issuer shall not be under any obligation to perform
any record keeping or to
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provide any legal services, it being understood that such services shall be
performed either by the Purchaser, the Trustee or the Borrower and the Issuer
shall not be under any obligation to perform any duties under the Trust
Indenture or the Loan Agreement except as may be required by the terms thereof
and only upon the written direction to the Issuer by the Purchaser; and (c) none
of the provisions of the Trust Indenture, the Loan Agreement or the Bonds
require the Issuer to expend or risk its own funds or to otherwise incur
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, unless it shall first have been adequately
indemnified by the Purchaser to its satisfaction against the cost, expenses and
liability which may be incurred thereby. The Purchaser agrees to provide, or
cause to be provided, to the Issuer, as requested by the Issuer, information
with respect to the Bonds and the loan pursuant to the Loan Agreement and to
notify the Issuer of any delinquencies or events of default under the Loan
Agreement, the Letter of Credit or under any other agreement executed, or
delivered, by the Borrower in connection with the issuance of the Bonds and of
which the Purchaser is aware; provided, however, that no failure to provide such
information or notice shall be deemed to prejudice the Purchaser's rights or
recourse against the Borrower thereunder.
THE UNDERSIGNED UNDERSTANDS THAT THE BONDS ARE NOT SECURED BY ANY
OBLIGATION OR PLEDGE OF ANY MONEYS RECEIVED OR TO BE RECEIVED FROM TAXATION OR
FROM THE STATE OF NEBRASKA OR ANY POLITICAL SUBDIVISION OR TAXING AUTHORITY
THEREOF, AND THAT THE BONDS WILL NEVER REPRESENT OR CONSTITUTE A GENERAL
OBLIGATION, DEBT, BONDED INDEBTEDNESS OR PECUNIARY OBLIGATION OF THE NEBRASKA
INVESTMENT FINANCE AUTHORITY, THE STATE OF NEBRASKA OR ANY POLITICAL SUBDIVISION
THEREOF AND THAT NO RIGHT EXISTS TO HAVE TAXES LEVIED BY THE STATE OF NEBRASKA
OR ANY POLITICAL SUBDIVISION THEREOF FOR THE PAYMENT OF PRINCIPAL OF OR INTEREST
ON THE BONDS. THE NEBRASKA INVESTMENT FINANCE AUTHORITY HAS NO TAXING POWER.
19. The undersigned acknowledges that it has been advised that Issuer's
counsel has also served as counsel to the Company in connection with certain
matters (not directly related to the Bonds) and the undersigned hereby expressly
releases and waives any conflict of interest reflected in such representation
and any liability of Issuer's counsel or the Issuer as a consequence thereof.
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20. The undersigned acknowledges that it has been advised that Bond
Counsel has also served as counsel to the Company in connection with the
execution and delivery by the Company of the Loan Agreement and the Note and
other matters related to the Bonds and the undersigned hereby expressly releases
and waives any conflict of interest reflected in such representation and any
liability of Bond Counsel or the Issuer as a consequence thereof.
21. It is understood that the Purchaser has undertaken to verify the
accuracy, completeness and truth of any statements made or omitted to be made
concerning any of the material facts relating to this transaction, including
information regarding the business and financial condition of the Letter of
Credit Issuer, the Borrower and the Project, and including, but not limited to,
the circumstances under which the Bonds may be redeemed prior to its maturity,
in whole or in part, and any credit and reinvestment risks associated with
redemption, the procedure for periodically resetting the interest rate on the
Bonds and the credit risks associated with the sources of payments made on, or
with respect to, the Bonds. The Purchaser has conducted its own investigation to
the extent it deems necessary. The Purchaser has been offered an opportunity to
have made available to it any and all such information it might request from the
letter of Credit Issuer, the Borrower and the Agent. On this basis, it is agreed
by acknowledgement of this Investor Letter that the Purchaser hereto is relying
solely on the Borrower and other sources identified by the Borrower and is not
relying on any party or person, including the Issuer or Issuer's Counsel or
Bonds Counsel, to undertake the furnishing or verification of information
relating to this transaction or to evaluate the merits of the investment in the
Bonds.
22. The Purchaser agrees that any government approvals of the Bonds for
the purpose of the federal tax laws do not constitute a review or approval by
any elected official or the State of Nebraska of the credit of the Letter of
Credit Issuer, nor the Borrower, nor any guaranty by an elected official of the
State of Nebraska of repayment of the Bonds.
All confirmations, affirmations, statements and provisions of the
Purchaser in this Investor Letter are made solely and exclusively for the
benefit of the Issuer, Issuer's Counsel and Bond Counsel in connection with its
purchase of the Bonds. In no event shall any other party, including
specifically, without
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limitation, the Borrower, be entitled to rely in any way upon any such
confirmation, affirmation, statement or provision.
The foregoing representation shall survive the execution and delivery to
the Purchaser of the Bonds and the instruments and documents contemplated
thereby.
Very truly yours,
By:__________________________
Purchaser
Received and Acknowledged by
NEBRASKA INVESTMENT FINANCE AUTHORITY
________________________________________
Executive Director
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EXHIBIT 10.33
LOAN AGREEMENT
BETWEEN
NEBRASKA INVESTMENT FINANCE AUTHORITY
AND
TRANSCRYPT INTERNATIONAL, INC.
$2,850,000
VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1997
(TRANSCRYPT INTERNATIONAL, INC. PROJECT)
DATED AS OF: March 1, 1997
The interest of the Nebraska Investment Finance Authority in this Loan
Agreement, except for certain rights retained by the Issuer pursuant to Section
4.6 hereof, has been assigned to Norwest Bank Nebraska, National Association, in
Omaha, Nebraska.
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS, EXHIBITS AND MISCELLANEOUS.................. 1
Section 1.1 Definitions........................................ 1
Section 1.2 Exhibits........................................... 3
Section 1.3 Company's Acts..................................... 3
Section 1.4 Rules of Interpretation............................ 3
ARTICLE II REPRESENTATIONS OF ISSUER AND COMPANY.................... 5
Section 2.1 Representations by the Issuer...................... 5
Section 2.2 Representations by the Company..................... 5
ARTICLE III COMPLETION OF PROJECT.................................... 9
Section 3.1 Acquisition, Construction and
Installation of Project by Company................. 9
Section 3.2 Payment of Costs by Company........................ 9
Section 3.3 Authorization by Issuer............................ 11
Section 3.4 Issuance of Bonds.................................. 12
Section 3.5 Disbursements from Construction Fund............... 12
Section 3.6 Establishment of Completion Date and Use
of Excess Proceeds................................. 13
ARTICLE IV THE LOAN, BASIC PAYMENTS, ADDITIONAL CHARGES
AND LETTER OF CREDIT..................................... 14
Section 4.1 The Loan........................................... 14
Section 4.2 Basic Payments..................................... 14
Section 4.3 Basic Payments on Account of the
Purchase Price of Bonds............................ 15
Section 4.4 Additional Charges................................. 15
Section 4.5 Company's Obligations Unconditional................ 16
Section 4.6 Assignment of Issuer's Rights...................... 17
Section 4.7 Company's Remedies................................. 17
Section 4.8 Letter of Credit................................... 17
ARTICLE V PROJECT COVENANTS........................................ 18
Section 5.1 Project Operation and Maintenance.................. 18
Section 5.2 Sale of Project.................................... 18
Section 5.3 Alterations to the Project and
Removal of Equipment............................... 18
Section 5.4 Taxes and Other Governmental Charges............... 18
Section 5.5 Insurance.......................................... 19
ARTICLE VI DAMAGE, DESTRUCTION AND CONDEMNATION..................... 20
Section 6.1 Damage and Destruction............................. 20
Section 6.2 Condemnation....................................... 20
<PAGE> 3
ARTICLE VII COMPANY'S COVENANTS...................................... 21
Section 7.1 Covenant for the Benefit of the
Trustee and the Bondholders........................ 21
Section 7.2 Inspection and Access.............................. 21
Section 7.3 Certificate of Compliance
and Other Reports.................................. 21
Section 7.4 Indemnification.................................... 22
Section 7.5 Status of Company.................................. 24
Section 7.6 Filing of Financing Statements..................... 24
Section 7.7 Assurance of Tax Exemption......................... 24
Section 7.8 Determination of Taxability........................ 29
ARTICLE VIII COMPANY'S OPTIONS........................................ 31
Section 8.1 Assignment and Transfer............................ 31
Section 8.2 Prepayment......................................... 31
Section 8.3 Direction of Investments........................... 31
Section 8.4 Termination of Loan Agreement...................... 31
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES........................... 34
Section 9.1 Events of Default.................................. 34
Section 9.2 Remedies........................................... 34
Section 9.3 Disposition of Funds............................... 35
Section 9.4 Nonexclusive Remedies.............................. 35
Section 9.5 Attorneys' Fees and Expenses....................... 36
Section 9.6 Effect of Waiver................................... 36
Section 9.7 Waiver of Stay or Extension........................ 36
Section 9.8 Issuer May File Proofs of Claim.................... 36
Section 9.9 Restoration of Positions........................... 37
Section 9.10 Suits to Protect the Project....................... 37
Section 9.11 Performance by Third Parties....................... 37
Section 9.12 Exercise of the Issuer's
Remedies by Trustee................................ 37
ARTICLE X GENERAL.................................................. 38
Section 10.1 Amounts Remaining in Funds......................... 38
Section 10.2 Notices............................................ 38
Section 10.3 Binding Effect..................................... 39
Section 10.4 Severability....................................... 39
Section 10.5 Amendments, Changes, and Modifications............. 39
Section 10.6 Execution Counterparts............................. 39
Section 10.7 Required Approvals................................. 40
Section 10.8 Limitation on Issuer Liability..................... 40
Section 10.9 Representations of Company......................... 41
Section 10.10 Survivorship of Obligations........................ 42
Section 10.11 Administrative Fees, Attorneys' Fees and
Costs.............................................. 42
Section 10.12 Release............................................ 42
<PAGE> 4
EXHIBIT A..................................................................A-1
EXHIBIT B..................................................................B-1
EXHIBIT C..................................................................C-1
<PAGE> 5
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of the 1st day of
March, 1997, by and between the NEBRASKA INVESTMENT FINANCE AUTHORITY, a body
politic and corporate, not a state agency but an independent instrumentality
exercising essential public functions (the "Issuer"), and TRANSCRYPT
INTERNATIONAL, INC., a Delaware corporation (the "Company").
WHEREAS, the Issuer and the Company, each in consideration of the
representations, covenants and agreements of the other as set forth herein,
mutually represent, covenant and agree as follows:
ARTICLE I
DEFINITIONS, EXHIBITS AND MISCELLANEOUS
Section 1.1 Definitions.
The terms used herein, unless the context hereof shall require
otherwise, shall have the following meanings, and any other terms defined in
Section 1.1 of the Indenture (attached hereto as Exhibit A and incorporated
herein by reference) shall have the same meanings when used herein as assigned
them in the Indenture, unless the context or use thereof indicates another or
different meaning or intent.
Agreement: this Loan Agreement between the Issuer and the Company, as the
same may from time to time be amended or supplemented as provided herein and in
the Indenture;
Counted Issuance Expenses: all Issuance Expenses except any Issuance
Expenses that are not amortizable over the term of the Bonds and are treated
either as current expenses or as capital costs that are to be added to the basis
of all or a part of the Project;
Date of this Agreement: as of March 1, 1997;
Event of Default: any of the events set forth in Section 9.1;
Indenture: the Indenture of Trust between the Issuer and the Trustee, of
even date herewith as the same may from time to time be amended or supplemented
as therein provided;
<PAGE> 6
Issuance Expenses: shall mean any and all costs and expenses relating to
the issuance, sale and delivery of the Bonds, including, but not limited to,
underwriter's discount, remarketing fees and expenses, all fees and expenses of
legal counsel, financial consultants, feasibility consultants, underwriters and
accountants, a fee to the Issuer equal to 1/8 of 1% of the original principal
amount of Bonds issued and any other fee to be paid to the Issuer, the
preparation and printing of this Loan Agreement, the Indenture, the
Reimbursement Agreement, any preliminary and final offering memorandum, the
Bonds and all other related closing documents, the costs of rating the Bonds,
and all other expenses relating to the issuance, sale and delivery of the Bonds
required to be paid from the proceeds of the Bonds and any other costs which are
treated as "issuance costs" within the meaning of Section 147(g) of the Code;
Manufacturing Facility: any facility used in the manufacturing or
production of tangible personal property (including the processing resulting in
a change in the condition of such property) within the meaning of Section
144(a)(12)(C) of the Code;
Net Bond Proceeds: Bond proceeds, including any interest earnings thereon,
less such Bond proceeds, including interest thereon, used to pay or reimburse
for the payment of Issuance Expenses and any other neutral costs;
Other Private Activity Bonds: Private Activity Bonds other than the Bonds;
Principal Payment Date: March 1 in each of the years 1998 through 2017;
Principal User: "principal user" within the meaning of Section 144(a) of
the Code;
Prior Bond Redemption Date: March 25, 1997, the date on which the Prior
Bonds have been called for redemption.
Private Activity Bonds: private activity bonds as defined in Section 141
of the Code;
Project Cost or Cost of the Project: means the costs authorized to be paid
from the proceeds of the Bonds pursuant to the provisions of Section 3.2 hereof;
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<PAGE> 7
Related Person: means a "related person" under Section 144(a)(3) of the
Code;
Restricted Construction Funds: any Bond proceeds, including interest
thereon, which are required to be transferred on the Completion Date from the
Construction Fund to the Bond Fund and which the Trustee is required under
Section 6.3(4)of the Indenture to apply towards prepayment of the Bonds;
Substantial User: means with respect to any "facilities" (as the term
"facilities" is used in Section 147(a) of the Code as applied to the Project), a
"substantial user" of such "facilities" within the meaning of Section 147(a) of
the Code;
Term of this Agreement: the period of time commencing on the Date of this
Agreement and terminating on the final maturity date of the Bonds or upon
earlier termination of this Agreement under Section 7.8 or 8.4, whichever date
occurs sooner;
Test-Period Beneficiary: except as may be provided in the Treasury
Regulations, any person who was an owner or a principal user of the Project at
any time during the three (3) year period beginning on the later of (i) the date
on which the Project was placed in service, or (ii) the Bond Closing, treating
all persons who are related to each other within the meaning of Section
144(a)(10) of the Code as one person, all within the meaning of Section 144(a)
of the Code;
Treasury Regulations: all proposed, temporary or permanent federal income
tax regulations then in effect and applicable; and
Working Capital Expense: any (a) Bond proceeds, including interest
thereon, used to pay interest accruing on the Bonds subsequent to the
acquisition and installation period, (b) Bond proceeds, including interest
thereon used to provide a credit against current payments of Basic Payments and
treated by the Internal Revenue Service as a working capital expense under
Section 144(a) of the Code and (c) Project Costs or other expenses which are
paid or reimbursed from Bond proceeds, including interest thereon, and which the
Internal Revenue Service treats as a working capital expense or inventory under
Section 144(a) of the Code.
3
<PAGE> 8
Section 1.2 Exhibits.
The following Exhibits are attached to and by reference made a part
of this Agreement:
(1) Exhibit A: Definitions from Indenture; and
(2) Exhibit B: Other Private Activity Bonds.
(3) Exhibit C: Pending Litigation.
Section 1.3 Company's Acts.
Where the Company is permitted or required to do or accomplish any
act or thing hereunder, the Company may cause the same to be done or
accomplished by a third party selected by the Company with the same force and
effect as if done or accomplished by the Company.
Section 1.4 Rules of Interpretation.
(1) This Agreement shall be interpreted in accordance with and governed by
the laws of the State of Nebraska.
(2) The words "herein" and "hereof" and "hereunder" and words of similar
import, without reference to any particular section or subdivision, refer to
this Agreement as a whole rather than to any particular section or subdivision
of this Agreement.
(3) References in this Agreement to any particular article, section or
subdivision hereof are to the designated article, section or subdivision of this
Agreement as originally executed.
(4) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
and all computations provided for herein shall be made in accordance with
generally accepted accounting principles consistently applied and applied on the
same basis as in prior years.
(5) The Table of Contents and titles of articles and sections herein are
for convenience only and are not a part of this Agreement.
4
<PAGE> 9
(6) Unless the context hereof clearly requires otherwise, the singular
shall include the plural and vice versa and the masculine shall include the
feminine and vice versa.
(7) Articles, sections, subsections and clauses mentioned by number only
are those so numbered which are contained in this Agreement.
(8) Any opinion of counsel required hereunder shall be a written opinion
of such counsel.
(9) References to the Bonds as "tax-exempt" or to the "tax-exempt status
of the Bonds" are to the exclusion of interest from gross income pursuant to
Section 103(a) of the Code, except during any period the Bonds are held by a
Substantial User or Related Person, irrespective of such forms of taxation as
the alternative minimum tax or environmental tax or branch profits tax on
foreign corporations, as is consistent with the approach taken in Section 59(i)
of the Code.
(10) For purposes of this Agreement and the Indenture, a Petition in
Bankruptcy shall be deemed dismissed only if either (a) the petition is
dismissed by order of a court of competent jurisdiction and no further appeal
rights exist from such order or (b) the Company notifies the Trustee that such a
dismissal has occurred.
(11) References in this Loan Agreement to the Letter of Credit,
Reimbursement Agreement, Reimbursement Bank and Bank shall be of no force and
effect during any period that no Letter of Credit secures the repayment of the
Bonds.
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ARTICLE II
REPRESENTATIONS OF ISSUER AND COMPANY
Section 2.1 Representations by the Issuer.
The Issuer makes the following representations and warranties as the
basis for its covenants herein:
(1) The Issuer is a duly organized and existing body politic and
corporate, not a state agency but an independent instrumentality exercising
essential public functions pursuant to the laws of the State of Nebraska and is
issuing the Bonds to finance the costs of the Project pursuant to the Act;
(2) The Project is an authorized project within the meaning of the Act;
(3) The issuance and sale of the Bonds, the execution and delivery of this
Agreement and the Indenture, and the performance of all covenants and agreements
of the Issuer contained in this Agreement and the Indenture have been duly
authorized by a resolution of the governing body of the Issuer adopted at a
meeting thereof duly called and held on March 7, 1997 by the affirmative vote of
not less than a majority of its members;
(4) Except as disclosed in the attached Exhibit C, there is not pending
any suit, action or proceeding against the Issuer before or by any court,
arbitrator, administrative agency or other governmental authority which
materially and adversely affects the validity, as to the Issuer, of this
Agreement or the Indenture, any of its obligations hereunder or thereunder or
any of the transactions contemplated hereby or thereby;
(5) The Bonds are intended to be Private Activity Bonds within the meaning
of Section 141 of the Code, and the Issuer hereby elects to qualify the Bonds
within the exemption provided under subparagraph (4) of Section 144(a) of the
Code with respect to an issue of $10,000,000 or less.
Section 2.2 Representations by the Company.
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The Company makes the following representations and warranties as the
basis for its covenants herein:
(1) The Company is a corporation validly formed under the laws of the
State of Delaware, is duly authorized to conduct its business in the State of
Nebraska, has power to enter into this Agreement, the Remarketing Agreement and
the Reimbursement Agreement and to use the Project for the purpose set forth in
this Agreement and by proper action has authorized the execution and delivery of
this Agreement, the Remarketing Agreement and the Reimbursement Agreement, and
has approved the Indenture;
(2) The execution and delivery of this Agreement, the Remarketing
Agreement and the Reimbursement Agreement, the consummation of the transactions
contemplated thereby, and the fulfillment of the terms and conditions thereof do
not and will not conflict with or result in a breach of any of the terms or
conditions of the Company's articles of incorporation, any restriction or any
agreement or instrument to which the Company is now a party or by which it is
bound or to which any property of the Company is subject, and do not and will
not constitute a default under any of the foregoing, or be in violation of any
order, decree, statute, rule or regulation of any court or any state or federal
regulatory body having jurisdiction over the Company or its properties,
including the Project, and do not and will not result in the creation or
imposition of any lien, charge or encumbrance of any nature upon any of the
property or assets of the Company contrary to the terms of any instrument or
agreement to which the Company is a party or by which it is bound;
(3) The design and plan of the Project comprises a project as contemplated
by the Act and it is presently intended and reasonably expected that the Project
will be permanently located and exclusively used on the Project Premises and
that the Company will operate the Project on the Project Premises throughout the
Term of this Agreement in the normal conduct of the Company's business;
(4) To the best of the Company's knowledge, as of the date hereof, the use
of the Project as designed and proposed to be operated complies, in all material
respects, with all presently applicable development, pollution control, water
conservation and other laws, regulations, rules and ordinances of the federal
government and the State of Nebraska and the respective agencies thereof and the
political subdivisions in which the Project is located;
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(5) The proceeds of the Bonds, together with any other funds to be
contributed to the Project by the Company or otherwise in accordance with this
Agreement, will be sufficient to pay the cost of acquiring and completing the
Project in a manner suitable for operation as required in Article III;
(6) The Bonds are to be issued within the exemption provided under Section
144(a)(4) of the Code with respect to an issue of $10,000,000 or less pursuant
to an election of the Issuer; and at least ninety-five percent (95%) of the Net
Proceeds of the Bonds will be used to provide for the acquisition, construction,
reconstruction, or improvement of land or property of a character subject to the
allowance for depreciation for a Manufacturing Facility within the meaning of
Sections 144(a)(1) and (12) of the Code;
(7) A major inducement to the Company to acquire and construct the Project
was the source of financing provided under the Act and the assurance the Company
received from the Issuer that such financing would be made available to the
Company; and any Project Costs heretofore incurred by the Company for which the
Company will hereafter seek reimbursement as provided in Section 3.5, were
incurred in anticipation of reimbursement from the proceeds of revenue bonds of
the Issuer; and the Company investigated the possibility of such financing prior
to incurring such Project Costs; and the Company did not commence acquisition of
any portion of the Project for which it shall seek reimbursement from the
proceeds of the Bonds hereunder prior to June 28, 1996;
(8) The Company is not in the trade or business of selling properties such
as the Project and acquired the Project for investment purposes only or
otherwise for use by the Company in its trade or business, and the Company has
no intention now or in the foreseeable future to voluntarily sell, surrender or
otherwise transfer, in whole or part, its interest in the Project;
(9) The Cost of the Project is estimated to be at least equal to the face
amount of the Bonds, but the Company acknowledges that the Issuer has made no
warranty or representation, either express or implied, that the amount in the
Construction Fund will be sufficient to pay such Costs or that the Project will
be suitable to the Company's needs;
(10) Neither the Company nor any other Principal User of the Project nor
any Related Person to the Company or such other
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Principal User is a Principal User of facilities located within the jurisdiction
of the Issuer, other than the Project, financed in whole or in part by an issue
of outstanding Private Activity Bonds of a political subdivision, except as
described in Exhibit B;
(11) There are no actions, suits, or proceedings pending or, to the
knowledge of the Company, threatened against the Company or any property of the
Company in any court or before any federal, state, municipal or other
governmental agency, which, if decided adversely to the Company would have a
material adverse effect upon the Company or upon the business or properties of
the Company; and the Company is not in default with respect to any order of any
court or governmental agency;
(12) The Company is not in default in the payment of the principal of or
interest on any indebtedness for borrowed money nor in default under any
instrument or agreement under and subject to which any indebtedness for borrowed
money has been issued;
(13) The Company has filed all federal and state income tax returns which,
to the knowledge of the managers of the Company, are required to be filed and
have paid all taxes shown on said returns and all assessments received by them
to the extent that they have become due;
(14) The Company has reviewed and approved the provisions of the
Indenture;
(15) No officer, member or employee of the Issuer has either a direct or
indirect financial interest in this Agreement nor will any public official
either directly or indirectly benefit financially from this Agreement;
(16) The Prior Bonds have been duly called for redemption, in whole, on
the Prior Bond Redemption Date.
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ARTICLE III
COMPLETION OF PROJECT
Section 3.1 Acquisition, Construction and Installation of Project by
Company.
In connection with the acquisition, construction and installation of
the Project, the Company represents and covenants as follows:
(1) Plans and Specifications. Plans and specifications have been prepared
for the construction and installation of the improvements to the Facility by the
Architect and have been approved by the Company and appropriate public
officials. The plans and specifications may be modified and amended if such
modifications and amendments are agreed to by the Reimbursement Bank.
(2) Construction Contract. The Company has entered into a construction
contract for construction and installation of the Facility. The construction
contract may be amended or supplemented if such amendments or supplements are
agreed to by the Reimbursement Bank.
(3) Installation and Construction. The Company will cause the Facility to
be installed and constructed substantially in accordance with the plans and
specifications and wholly within the boundary lines of the Project Premises and
will provide all other improvements, access roads, utilities, equipment,
furnishing parking facilities, and other items required for a facility fully
operable for use as a Manufacturing Facility.
(4) Completion. The Company will complete the Project as promptly as
practicable with all reasonable dispatch and in any event no later than March 1,
2000, except only as completion may be delayed by strikes, riots or acts of God
or the public enemy, shortages of materials or supplies or any other reason
beyond the reasonable control of the Company, for which a reasonable extension
of the time of completion shall be granted as determined by the Trustee,
provided that if the Project is not completed by that date there shall be no
resulting liability on the part of the Issuer and no abatement or diminution in
the payments required to be made by the Company under Article IV.
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(5) Insurance. The Company will cause adequate insurance to be procured
and maintained during installation of the Project as required by the
Reimbursement Agreement.
Section 3.2 Payment of Costs by Company.
The Company agrees that it will provide any and all money required
for the prompt and full payment of all sums required to complete the Project,
including all of the following items which the Issuer agrees will be
reimbursable from proceeds of the Bonds to the extent and in the manner provided
in Sections 3.5 and 3.6 and subject to the provisions of the Act and Section
7.7(11) limiting Counted Issuance Expenses to be paid from Bond proceeds:
(1) the expenses incurred and to be incurred in connection with the
development, acquisition, construction and installation of the Project,
including but not limited to the contract price of all labor, services,
materials, supplies and equipment included in the Project furnished under any
contract or otherwise incurred in connection therewith, including the cost of
all Project Equipment and all appurtenances thereto, and of all rights-of-way
for access and utility connections to and from the Project;
(2) the expense of preparation of any plans and specifications for the
Project, including utilities, and all other facilities necessary or desirable in
connection therewith, and all other environmental, architectural, engineering
and supervisory services incurred and to be incurred in the planning,
acquisition and completion of the Project;
(3) subject to Section 7.7(11) limiting Counted Issuance Expenses to be
paid from Bond proceeds, all legal fees and expenses (including Bond Counsel and
counsel to the Issuer, Company, Placement Agent, Reimbursement Bank and
Trustee), abstractors', financial and accounting fees and expenses,
administrative and rating agency fees (if any), printing and engraving costs and
other expenses incurred and to be incurred on or before the Completion Date with
respect to (i) the authorization, sale and issuance of the Bonds, (ii) the
preparation of this Agreement, the Reimbursement Agreement, the Indenture, the
Bond Placement Agreement, the Placement Memorandum and all other documents
necessary to the Bond Closing or required by this Agreement, the Reimbursement
Agreement, or the Indenture, or (iii) the establishment of the Completion Date,
including compliance with any
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governmental or administrative rules or regulations on or before such date;
(4) premiums on all insurance (including any title insurance) required to
be taken out and maintained during the period before the Completion Date;
(5) all expenses incurred in seeking to enforce any remedy against any
contractor, or any subcontractor or any supplier with respect to any default
under any contract with such Person;
(6) all recording fees and other taxes, charges and assessments and
license and registration fees of every nature whatsoever incurred and to be
incurred in connection with acquisition or completion of the Project, including
the financing thereof;
(7) the cost of all other labor, services, materials, supplies and
equipment necessary to complete the construction, acquisition and installation
of the Project;
(8) all fees and expenses of the Trustee and Paying Agent under the
Indenture that become due on or before the Completion Date or in connection with
the establishment of the Completion Date;
(9) all interest accruing on money borrowed by the Company for temporary
financing of the Cost of the Project, including interest accruing on the Bonds
during the acquisition period (which acquisition period for purposes of this
subsection will be deemed to end no later than the date on which the Company
begins to depreciate the Project or any portion under the Code) and for six (6)
months thereafter;
(10) subject to Section 7.7(11) limiting Counted Issuance Expenses to be
paid from Bond proceeds, without limitation by the foregoing, all other expenses
which under generally accepted accounting principles constitute necessary
capital expenditures for the completion of the Project or issuance of the Bonds
not including working capital or expendable supplies (all of which are
nevertheless to be supplied by the Company from its own funds without
reimbursement);
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(11) all advances, payments and expenditures made or to be made by the
Issuer, the Trustee and any other person with respect to any of the foregoing
expenses; and
(12) the outstanding principal amount of the Prior Bonds.
All Project Costs may be paid or reimbursed from moneys available in
the Construction Fund to the extent and in the manner permitted in Sections 3.5
and 3.6 hereof. If, however, such moneys are insufficient to pay in full Project
Costs payable therefrom or are otherwise unavailable to pay any Project Costs,
the Company shall nevertheless promptly pay so much of such Costs as may be in
excess of such moneys available in the Construction Fund. The Company shall not
by reason of the payment of such excess Costs be entitled to any reimbursement
from the Issuer in excess of any moneys available therefor in the Construction
Fund or for any abatement or diminution of the Basic Payments or Additional
Charges.
Section 3.3 Authorization by Issuer.
In accordance with the Act, the Company is authorized by the Issuer,
and the Company, pursuant to such authorization, agrees:
(1) to acquire and install the Project as provided in Section 3.1, upon
the Project Premises which are owned by the Company, such acquisition and
installation to be accomplished in a manner consistent with the ordinances and
procedures of the governing body of the city in which the Project is located;
(2) to make, execute, acknowledge and deliver any contracts, orders,
receipts, writings and instructions, with any other persons, firms or
corporations, and in general to do all things which may be requisite or proper
for acquiring, constructing and installing the Project;
(3) pursuant to the provisions of this Agreement, to pay all fees, costs
and expenses incurred in the acquisition and installation of the Project from
funds made available therefor in accordance with this Agreement or otherwise,
subject to the right to contest such fees, costs and expenses; and
(4) so long as the Company is not in default under any of the provisions
of this Agreement, to exercise all authority hereby
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conferred, which is granted and conferred irrevocably until all activities in
connection with the acquisition and installation of the Project shall have been
completed.
Neither the authorization granted in this Section nor any other
provision of this Agreement shall be construed as making the Company an agent
of, or joint venturer with, the Issuer.
Section 3.4 Issuance of Bonds.
The Company has and does approve the terms of the Indenture.
Forthwith upon execution of this Agreement, the Letter of Credit, and the
Indenture, or as soon thereafter as practicable, the Issuer will execute the
Bonds and cause them to be authenticated by the Trustee and delivered to the
Placement Agent for delivery to the Original Purchaser upon payment of the
purchase price and filing with the Trustee of the opinion of Bond Counsel as to
the legality of the Bonds and the furnishing of all other documents required by
this Agreement and the Indenture to be furnished before delivery. The proceeds
of the Bonds shall be transmitted to the Trustee, who is required by the
Indenture to deposit the same in the Construction Fund.
Section 3.5 Disbursements from Construction Fund.
(1) The Trustee shall disburse from the Construction Fund to the trustee
for the Prior Bonds, on the Prior Bond Redemption Date, an amount necessary to
pay the entire outstanding principal on the Prior Bonds on the Prior Bond
Redemption Date.
(2) The Issuer has in the Indenture authorized and directed the Trustee to
disburse the proceeds of the Bonds from the Construction Fund pursuant to the
terms and conditions of Section 3 of the Reimbursement Agreement to or upon the
order of the Company, in payment or reimbursement of all items of Cost
enumerated in Section 3.2 and certified in writing by the Company Representative
to be due and payable or to have been paid by the Company to the persons
entitled thereto.
(3) In no event shall:
(a) any Net Bond Proceeds be used to reimburse for the payment of
the acquisition of any property other than land (or an interest therein)
unless the first use of such property is pursuant to such acquisition ;
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(b) twenty-five percent (25%) or more of Net Bond Proceeds be used
to reimburse for the payment of the acquisition of land; and
(c) more than three percent of Net Bond Proceeds, including earnings
thereon, be used to pay or reimburse for the payment of Working Capital
Expenses.
(4) Project Costs may be reimbursed in full upon receipt by the Trustee of
an Advance Request in the form attached as Exhibit C to the Reimbursement
Agreement and approved by the Reimbursement Bank. The Trustee may conclusively
rely on the Advance Request signed by the Company and approved by the
Reimbursement Bank.
Section 3.6 Establishment of Completion Date and Use of Excess
Proceeds.
(1) The Completion Date shall be that date on which the Trustee shall
acknowledge receipt of the following items, which the Company shall furnish to
the Issuer, the Reimbursement Bank and Trustee no later than thirty (30) days
after completion of the Project:
(A) a certificate signed by the Company Representative and stating
that to its knowledge (i) the acquisition, construction and installation of the
improvements, equipment and all other facilities comprising the Project have
been completed in substantial conformity with the plans and specifications,
(ii) all Project Costs have been paid and (iii) the Project conforms to all
applicable zoning (by special use permit or otherwise), planning and building
regulations and laws, and pollution control laws and regulations and is suitable
and sufficient for efficient operation for the purpose specified in Section
3.1(3);
(B) a temporary or final certificate of occupancy;
(C) if there is any surplus in the Construction Fund to be
transferred to the Bond Fund as provided in Section 3.6(2) below, a statement
from the Company Representative certifying the total amount of Working Capital
Expenses incurred or to be incurred and to be paid for from the proceeds of the
Bonds.
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(2) On the Completion Date, any balance remaining in the Construction
Fund, after disbursement has been made as provided in Section 3.5 hereof, shall
be transferred from the Construction Fund by the Trustee to the Bond Fund and
shall be used to reimburse the Reimbursement Bank for a draw under the Letter of
Credit to redeem the largest possible principal amount of Bonds on the earliest
possible date that Bonds may be optionally redeemed by the Company in accordance
with Section 3.1(1) of the Indenture.
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ARTICLE IV
THE LOAN, BASIC PAYMENTS,
ADDITIONAL CHARGES AND LETTER OF CREDIT
Section 4.1 The Loan.
The Issuer agrees, upon the terms and conditions herein specified,
to lend to the Company the proceeds received by the Issuer from the sale of the
Bonds, excluding any accrued interest, by causing such proceeds to be deposited
with the Trustee for disposition as provided in the Indenture. The obligation of
the Issuer to make the Loan shall be deemed fully discharged upon so depositing
the proceeds of the Bonds with the Trustee.
Section 4.2 Basic Payments.
Subject to the Company's right of prepayment granted in Section 8.2,
the Company agrees to repay the Loan as follows:
(1) As and for repayment of the Loan the Company shall pay to the Trustee
for the account of the Issuer an amount equal to the aggregate principal amount
of the Bonds Outstanding and, as interest on its obligation to pay such amount,
an amount equal to interest on the Bonds, such amounts to be paid in
installments (A) as to interest, on each Interest Payment Date, in the amounts
and in the manner provided in the Indenture for the payment of interest on the
Bonds on that date and (B) as to principal, on each Principal Payment Date in an
amount equal to the principal scheduled to become due on such Principal Payment
Date, all in order that amounts are timely deposited in the Bond Fund for the
payment of the principal of, premium, if any, and interest on the Bonds, whether
at maturity, upon redemption or otherwise; provided, however, that the
obligation of the Company to make any such payment hereunder shall be reduced by
the amount of any reduction under the Indenture of the amount of the
corresponding payment required to be made thereunder.
(2) The Company shall provide for the payment of the principal of the
Bonds, upon maturity, redemption or acceleration, and provide for payment of the
interest on the Bonds, by the delivery of the Original Letter of Credit to the
Trustee simultaneously with the original issuance and delivery of the Bonds. The
Company hereby authorizes and directs the Trustee to
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draw moneys under the Letter of Credit in accordance with the provisions of the
Indenture to the extent necessary to pay the principal of and interest on the
Bonds when due. All moneys drawn under the Letter of Credit to pay the principal
of and interest on the Bonds shall be credited against the obligation of the
Company to make Basic Payments.
(3) Notwithstanding the provisions of subsections (1) and (2) above,
during the Letter of Credit Period, the Company shall pay the amounts required
to be paid to the Trustee pursuant to Section 4.2(1) above directly to the
Reimbursement Bank.
(4) Upon the occurrence of a "Determination of Taxability" the Company
shall make the payment described in Section 7.8 hereof.
Section 4.3 Basic Payments on Account of the Purchase Price of
Bonds.
(1) The Company shall also pay to the Trustee amounts equal to the amounts
to be paid by the Trustee as the purchase price of Bonds pursuant to Section 4.1
and 4.2 of the Indenture, such amounts to be paid by the Company to the Trustee
on the dates such payments are to be made pursuant to Sections 4.1 and 4.2 of
the Indenture; provided, however, that the obligation of the Company to make any
such payment hereunder shall be reduced by the amount of moneys available for
such payment under Section 6.4(2)(A) and (C) of the Indenture.
(2) The Company shall provide for the payment of the amounts to be paid by
the Trustee pursuant to Sections 4.1 and 4.2 of the Indenture, by the delivery
of the Original Letter of Credit to the Trustee simultaneously with the original
issuance and delivery of the Bonds. The Company hereby authorizes and directs
the Trustee to draw moneys under the Letter of Credit in accordance with the
provisions of the Indenture to the extent necessary to provide moneys payable
under Sections 4.1 and 4.2 of the Indenture when due. All moneys drawn under the
Letter of Credit to pay the purchase price of Bonds shall be credited against
the obligation of the Company to make the payments required by paragraph (1) of
this Section 4.3.
Section 4.4 Additional Charges.
The Company agrees to pay, when due, each and all of the following:
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(1) all accrued interest and premium, if any, necessary to redeem the
Prior Bonds on the Prior Bond Redemption Date;
(2) all Issuance Expenses of the Bonds;
(3) to or upon the order of the Trustee, when due, all fees of the Trustee
for services rendered under the Indenture and all fees and charges of the Paying
Agent, registrars, legal counsel, accountants, engineers, public agencies,
rebate analysts and others incurred in the performance on request of the Trustee
of services required under the Indenture for which the Trustee and such other
persons are entitled to payment or reimbursement; provided that the Company may,
without creating a default hereunder, contest in good faith the necessity or
reasonableness of any such services, fees or expenses other than the Trustee's
fees for ordinary services as set forth in the Indenture, Paying Agency fees and
any fees or charges of public agencies;
(4) to the Issuer, an up-front fee on the Closing Date equal to $3,562.50,
and all other expenses incurred by the Issuer in relation to the Project which
are not otherwise required to be paid by the Company under the terms of this
Agreement and all indemnity payments required to be made under Section 7.4; and
(5) to the Issuer, if the Agreement is assumed by or assigned to another
party, an assignment fee equal to the greater of 0.125% of the principal amount
of Bonds outstanding or $1,000; and
(6) upon receipt of an appropriately completed invoice, the annual fee of
the Rebate Expert, if any, as required by Section 148(f) of the Code and all
out-of-pocket expenses of the Rebate Expert; and
(7) The expenses required to be paid to the Issuer or to any payee
designated by the Issuer, incurred by the Issuer at any time related to the
Project which are not paid from the amounts held under the Indenture, including,
without limitation, legal fees and expenses incurred in connection with the
interpretation, performance, enforcement or amendment of the Indenture, Loan
Agreement or any other documents relating to the Project or the Bond or in
connection with any federal or state tax audit, or any questions or other
matters arising under such documents, shall be made by the Company not later
than 30 days after receipt of request for payment thereof.
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Section 4.5 Company's Obligations Unconditional.
All Basic Payments and Additional Charges and all other payments
required of the Company hereunder shall be paid without notice or demand and
without setoff, counterclaim, or defense for any reason and without abatement or
deduction or defense. The Company will not suspend or discontinue any such
payments, and will perform and observe all of its other agreements in this
Agreement, and, except as expressly permitted in Sections 7.8 and 8.4, will not
terminate this Agreement for any cause, including but not limited to any acts or
circumstances that may constitute failure of consideration, destruction or
damage to the Project or Company's business, the taking of the Project or
Company's business by Condemnation or otherwise, the lawful prohibition of the
Company's use of the Project, or Company's business, the interference with such
use by any private person or corporation, the invalidity or unenforceability or
lack of due authorization or other infirmity of this Agreement, or lack of
right, power or authority of the Issuer to enter into this Agreement, eviction
by paramount title, commercial frustration of purpose, bankruptcy or insolvency
of the Issuer or the Trustee, change in the tax or other laws or administrative
rulings or actions of the United States of America or of the State of Nebraska
or any political subdivision thereof, or failure of the Issuer to perform and
observe any agreement, whether express or implied or any duty, liability or
obligation arising out of or connected with this Agreement, or for any other
cause whether similar or dissimilar to the foregoing, any present or future law
to the contrary notwithstanding, it being the intention of the parties hereto
that the Basic Payments and other amounts payable by the Company hereunder shall
be paid in full when due without any delay or diminution whatever.
Section 4.6 Assignment of Issuer's Rights.
As security for the payment of the Bonds, the Issuer will pledge the
amounts payable hereunder and assign, without recourse or liability, to the
Trustee, the Issuer's rights under this Agreement, including the right to
receive payments hereunder (except the right to receive payments corresponding
to its Reserved Rights) and hereby directs the Company to make said payments
directly to the Trustee except as set forth in Section 4.2. The Company herewith
assents to such assignment and will make payments under this Agreement (other
than payments corresponding to Reserved Rights which are payable to the Issuer)
directly to the Trustee
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without defense or setoff by reason of any dispute between the Company and the
Trustee.
Section 4.7 Company's Remedies.
The Company acknowledges and agrees that any pecuniary obligation of
the Issuer created by or arising out of this Agreement shall be payable solely
out of the proceeds derived from this Agreement, the sale of the Bonds, or other
disposition of the Project upon a default by the Company or otherwise.
Section 4.8 Letter of Credit.
(1) The Original Letter of Credit shall be delivered to the Trustee
simultaneously with the initial issuance and delivery of the Bonds. The Company
shall maintain at all times with the Trustee during the Letter of Credit Period,
a Letter of Credit in an amount at least equal to 103% percent of the aggregate
principal amount of Bonds then Outstanding, plus 50 days' interest thereon at
the maximum rate provided in the Indenture during the Variable Rate Period or,
if applicable, plus 215 days' interest thereon at the interest rate on the Bonds
during the Fixed Letter of Credit Rate Period.
(2) During the Letter of Credit Period at least thirty-five (35) days
prior to the Termination Date of any Letter of Credit or upon the exercise by
the Company of its option under the Indenture to direct the Issuer to convert
the interest rate on the Bonds to the Fixed Letter of Credit Rate, the Company
shall deliver to the Trustee an Alternate Letter of Credit. In addition, at any
other time during the Letter of Credit Period the Company may deliver to the
Trustee an Alternate Letter of Credit in substitution for the Letter of Credit
then in effect. An Alternate Letter of Credit shall be an irrevocable letter of
credit, including any extension of the Original Letter of Credit, issued by a
commercial bank organized and doing business in the United States, the terms of
which shall in all material respects be the same as the Original Letter of
Credit. Any Alternate Letter of Credit shall comply with the provisions of
Section 7.4 of the Indenture.
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ARTICLE V
PROJECT COVENANTS
Section 5.1 Project Operation and Maintenance.
The Company shall pay all expenses of the operation and maintenance
of the Project including, but without limitation, adequate insurance thereon and
insurance against all liability for injury to persons or property arising from
the operation thereof, and all taxes and special assessments levied upon or with
respect to the Project and payable during the Term of this Agreement. The
Project shall not be used for purposes which discriminate in access or
employment based on race, creed, sex, handicap, ethnic origin, age or marital
status.
Section 5.2 Sale of Project.
With the prior written consent of the Reimbursement Bank, the
Company may lease, sell, assign, mortgage or otherwise encumber its interests in
the Project, in whole or part, and be released from its obligations under this
Agreement, provided, in the event of a sale or transfer, such transferee entity
shall assume the obligations of the Company hereunder and pay the fee specified
in Section 4.4(5) and that in no event shall such lease, assignment or sale be
permitted if the effect thereof would be to impair the validity or cause the
interest on the Bonds to become includable in gross income for purposes of
federal income taxation.
Section 5.3 Alterations to the Project and Removal of Equipment.
The Company shall, but only with the approval of the Reimbursement
Bank, have the right from time to time at its cost and expense, to remodel and
make additions, modifications, alterations, improvements and changes
(collectively referred to as "alterations") in or to the Project or to remove
any equipment therefrom, provided such alterations or removal do not impair the
character of the Project as a "project" within the meaning of the Act or cause
the interest on the Bonds to become includable in gross income for purposes of
federal income taxation.
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Section 5.4 Taxes and Other Governmental Charges.
The Company will make promptly all payments due during the term of
this Agreement on taxes and special assessments lawfully levied upon or with
respect to the Project Premises and the Project, other charges lawfully made by
any governmental body for public improvements, taxes or governmental charges on
any property of the Company brought in or upon the Project Premises, sales and
other excise taxes on products thereof, and any taxes levied upon or with
respect to income or profits from the operation of the Project. With respect to
governmental charges that may lawfully be paid in installments over a period of
years, with or without interest, the Company shall be obligated to pay only such
installments and interest as are required to be paid during the term of this
Agreement. The Company may, at its own expense, in good faith, contest any such
taxes and other charges and, in the event of such contest, may permit the items
so contested to remain unpaid during the period of the contest and any appeal
therefrom, provided that such contest does not affect the Company's right to
operate the Project.
Section 5.5 Insurance.
The Company shall procure and maintain, or cause to be procured or
maintained, continuously in effect during the term of this Agreement, policies
of insurance with respect to the Project as required by the Reimbursement
Agreement, insuring against such risks and in such amounts as are customary for
properties comparable to those comprising the Project, including, specifically,
insurance against such hazards and in such amounts as reasonably may be required
by the Reimbursement Bank and insurance against all liability for injury to
persons or property arising out of the operation of the Project.
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ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 6.1 Damage and Destruction.
If there are any Outstanding Bonds when the Project is damaged or
destroyed by fire or other casualty, the Company shall either restore the
Project, or if Section 8.4 of this Agreement is applicable, exercise its option
to prepay the Loan pursuant to said Section .
Section 6.2 Condemnation.
If there are any Outstanding Bonds when the Project or any
substantial part thereof is taken by Condemnation, the Company shall either
restore the Project, or if Section 8.4 of this Agreement is applicable, exercise
its option to prepay the Loan pursuant to said Section .
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ARTICLE VII
COMPANY'S COVENANTS
Section 7.1 Covenant for the Benefit of the Trustee and the
Bondholders.
The Company recognizes the authority of the Issuer to assign its
interest in and pledge monies receivable under this Agreement (other than
certain payments required to be made to the Issuer corresponding to its Reserved
Rights) to the Trustee as security for the payment of the principal of and
interest and redemption premiums, if any, on the Bonds, and the payment of all
fees and expenses of the Trustee; and hereby agrees to be bound by, and joins
with the Issuer in the grant of a security interest to the Trustee in any rights
and interest the Company may have in sums held in the Funds described in Article
VI pursuant to the terms and conditions of the Indenture to secure payment of
the Bonds. Each of the terms and provisions of this Agreement is a covenant for
the use and benefit of the Trustee and the Holders of the Bonds, so long as any
thereof shall remain Outstanding; but upon payment in full of the Bonds in
accordance with Article IX of the Indenture and of all fees and charges of the
Trustee and Paying Agent, all references in this Agreement to the Bonds, the
Holders thereof and the Trustee shall be ineffective, and neither the Trustee
nor the Holders of any of the Bonds shall thereafter have any rights hereunder,
save and except those that shall have theretofore vested or that arise from
provisions hereunder which survive termination of this Agreement.
Section 7.2 Inspection and Access.
The Company agrees that the Trustee and Issuer and their duly
authorized agents shall have the right at all reasonable times to examine and
inspect the Project and all books and records of the Company and for that
purpose to enter upon the Project Premises, and shall also have such right of
access thereto as may be reasonably necessary to cause the Project to be
properly maintained in accordance with Article V.
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Section 7.3 Certificate of Compliance and Other Reports.
(1) The Company will at the request of the Trustee or the Issuer, and at
the Company's expense, furnish to the Trustee, Original Purchaser and Issuer at
such times and in such form as the Trustee or the Issuer may reasonably require,
a copy of such reports containing such information as is necessary to comply
with any lawful reporting or continuing registration requirements imposed by any
agency of the State of Nebraska under the Act, the Nebraska Blue Sky Laws or any
other applicable state law as it now exists or may hereafter be amended or any
agency of any other state in which the Bonds have been sold, or such information
as necessary to comply with federal securities law.
Section 7.4 Indemnification.
The Company hereby releases the Issuer and its officers, directors,
agents, members of its governing body, officials, counsel, any person who
controls such party within the meaning of the Securities Act of 1933 and
employees from, and covenants and agrees to indemnify, hold harmless and defend
the Issuer and the Trustee and their respective officers, directors, agents,
members of its governing body, officials, any person who controls such party
within the meaning of the Securities Act of 1933 and employees and each of them
(each an "indemnified party") from and against, any and all losses, claims,
damages, demands, liabilities or expenses (including attorney's fees and
expenses), taxes, causes of action, suits, claims, demands and judgments of any
nature, joint or several, by or on behalf of any person arising from:
(1) any injury to or death of any person or damage to property in or upon
the Project or growing out of or connected with the use, non-use, condition or
occupancy of the Project or any part thereof, including any and all acts or
operations relating to the acquisition or installation of property or
improvements. The foregoing indemnification obligations shall not be limited in
any way by any limitation on the amount or type of damages, compensation or
benefits payable by or for the Company, customers, suppliers or affiliated
organizations under any Workers' Compensation Acts, Disability Benefit Acts or
other employee benefit acts;
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(2) violation of any agreement, provision or condition of this Agreement,
the Bonds or the Indenture, except a violation by the party seeking
indemnification;
(3) violation by the Company of any contract, agreement or restriction
which shall have existed at the commencement of the Term of this Agreement or
shall have been approved by the Company;
(4) violation by the Company of any law, ordinance, court order or
regulation affecting the Project or a part thereof or the ownership, occupancy
or use thereof;
(5) any and all claims arising in connection with the issuance and sale of
any Bond or any certifications or representations made by any person other than
the Issuer or the party seeking indemnification in connection therewith,
including any statement or information in any offering document or materials
regarding the Bonds, the Project or the Company or any certificate executed by
the Company on or as of the date of issuance of the Bonds which, at the time
made, is misleading, untrue or incorrect in any material respect and any untrue
statement or alleged untrue statement of a material fact contained in any
offering material relating to the sale of the Bonds, as from time to time
amended or supplemented, or arising out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or failure to
properly register or otherwise qualify the sale of the Bonds or failure to
comply with any licensing or other law or regulation which would affect the
manner whereby or to whom the Bonds could be sold and the carrying out by the
Company claims arising in connection with the interpretation, performance,
enforcement or amendment of any documents relating to the Project or the Bonds
or in connection with any federal or state tax audit, or any questions or other
matters arising under such documents;
(6) any and all claims arising in connection with the operations of the
Project, or the conditions, environmental or otherwise, occupancy, use,
possession, conduct or management of work done in or about, or from the
planning, design, acquisition, installation or construction of, the Project or
any part thereof, including, but not limited to, the Americans with Disabilities
Act of 1990 (as evidenced by an architect's certificate to such effect);
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(7) any and all claims arising out of or connected with the Trustee's
acceptance or administration of the trusts created by the Indenture and the
exercise of its powers or duties thereunder or under this Loan Agreement or any
other agreements in connection therewith to which it is a party;
(8) any statement or information relating to the expenditure of the
proceeds of the Bonds contained in the "Nonarbitrage Certificate" or similar
document furnished by the Company to the Issuer or Trustee which, at the time
made, is misleading, untrue or incorrect in any material respect; and
(9) any untrue statement or alleged untrue statement of a material fact
contained in any offering material relating to the sale of the Bonds (as from
time to time amended or supplemented) or arising out of or based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or failure to properly register or otherwise qualify the sale of the
Bonds or failure to comply with any licensing or other law or regulation which
would affect the manner whereby or to whom the Bonds could be sold.
Promptly after receipt by any indemnified party of notice of the
commencement of any action with respect to which indemnity may be sought against
the Company under this Section , such person will notify the Company in writing
of the commencement thereof, and, subject to the provisions hereinafter stated,
the Company shall assume the defense of such action (including the employment of
counsel, who shall be counsel reasonably satisfactory to such indemnified party)
and shall assume the payment of all related expenses. Insofar as such action
shall relate to any alleged liability with respect to which indemnity may be
sought against the Company, the Issuer or any such other indemnified person
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the Company unless the employment of such Counsel
has been specifically authorized by the Company. The Company shall not be liable
to indemnify any person for any settlement of any such action effected without
its consent.
The provisions of this Section 7.4 shall survive the payment and
discharge of the Bonds. Notwithstanding any transfer of the Project to another
owner, the Company shall remain obligated to indemnify each indemnified party
pursuant to this Section if
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such subsequent owner fails to indemnify any party entitled to be indemnified
hereunder, unless such indemnified party has consented to such transfer and to
the assignment of the rights and obligations of the Company hereunder.
Section 7.5 Status of Company.
The Company may sell or otherwise transfer to another entity all or
substantially all of its assets as an entirety and thereafter dissolve if (i)
the transfer does not cause the interest on the Bonds to become includable in
gross income for purposes of federal income taxation and the Company shall have
provided the Trustee an opinion of Bond Counsel to the Trustee to such effect,
(ii) the Reimbursement Bank has given its written consent to such transfer, and
(iii) the transferee shall assume the obligations of the Company hereunder.
If a transfer is made as provided in this Section, the provisions of
this Section shall continue in full force and effect and no further
consolidation, merger, sale, or other transfer shall be made except in
compliance with the provisions of this Section .
Section 7.6 Filing of Financing Statements.
The Company agrees that it will, at its sole expense, file or cause
to be filed any financing statements and continuation statements to perfect the
security interest granted to the Trustee under the Indenture in this Agreement
and the payments to be made hereunder granted.
Section 7.7 Assurance of Tax Exemption.
In order to assure that the interest on the Bonds shall at all times
be free from federal income taxation, the Company represents and covenants with
the Issuer, Trustee and all Holders of the Bonds that it will comply with the
applicable provisions of Sections 103 and 141 through 150 of the Code as
follows:
(1) the Company will fulfill all conditions specified in Section 144(a)(4)
of the Code, to qualify the Bonds as a $10,000,000 "small issue" thereunder;
(2) the Company represents that the aggregate amount of any Other Private
Activity Bonds under Section 144(a) of the Code used to finance facilities used
by the Company or a Principal User, or
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any Related Person, and located in Lincoln, Nebraska, when added to the
principal amount of the Bonds, does not cause the aggregate principal amount of
the Bonds to exceed $10,000,000, and the Company hereby covenants that it will
not take any action with respect to its use of other facilities located within
the jurisdiction of the Issuer which would cause the aggregate principal amount
of the Bonds, together with any Other Private Activity Bonds to exceed the
$10,000,000 limitation imposed by Section 144(a) of the Code;
(3) the Company will not use (or permit to be used) the Project or use or
invest (or permit to be used or invested) the proceeds of the Bonds or any other
sums treated as "bond proceeds" under Section 148 of the Code, including
"investment proceeds," "invested sinking funds" and "replacement proceeds," in
such a manner as to cause the Bonds to be classified "arbitrage bonds" under
Section 148 of the Code;
(4) the Company will not cause any Working Capital Expenses to exceed
three percent (3%) of the Net Bond Proceeds; at least ninety-five percent (95%)
of the proceeds of the Bonds will be used for the acquisition or improvement of
land or depreciable property for a "manufacturing facility" as required under
Section 144(a) of the Code; and the proceeds of the Bonds will not be used to
finance any facility which is directly related and ancillary to a "manufacturing
facility" unless: (a) the facilities are located on the same site as the
Manufacturing Facility; (b) not more than 25% of the net proceeds of the Bonds
are used to provide such facilities; (c) manufacturing constitutes substantially
all of the on-site economic activity; and (d) the ancillary facilities are
subordinate and integral to the manufacturing activity;
(5) in addition to the Bonds, no other obligations have been or are
expected to be issued under Section 103 of the Code for sale at substantially
the same time as the Bonds are sold pursuant to a common plan of marketing and
at substantially the same rate of interest as the Bonds and which are payable in
whole or part by the Company or otherwise have with the Bonds any common or
pooled security for the payment of debt service thereon; and the Company has not
permitted and will not permit any obligation or obligations other than the Bonds
to be issued within the meaning of Section 141 of the Code so as to cause such
obligations to otherwise become part of the same "issue of obligations" of the
Bonds as described in Treasury Regulations Section 1.150-1(c)(1), so as to
impair the
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exclusion from gross income under Section 103 of the Code of the interest on the
Bonds;
(6) neither the Company nor any other person who is or will be entitled to
occupy more than ten percent (10%) of the Project measured by value or who is or
will be a Principal User of the Project, has either (a) both (i) guaranteed,
arranged, participated in, or assisted with the issuance or paid any portion of
the cost of issuance of any obligations the proceeds of which are to be used to
finance or refinance any facilities (other than the Project) financed or to be
financed in whole or part from the proceeds of any Private Activity Bonds issued
or sold within three (3) years before or after issuance of, and payable by the
Company or otherwise commonly secured in whole or in part with, the Bonds (the
"Bond Financed Facilities") and (ii) provided any property, or any franchise,
trademark or tradename within the meaning of Section 1253 of the Code, which is
to be used in connection with such Bond Financed Facilities, or (b) acquired a
proprietary interest in or otherwise become entitled to occupy more than ten
percent (10%) (measured by value), or in any other way become a principal user,
of such Bond Financed Facilities; nor shall the Company, nor any other such
Principal User of the Project, or any Related Person thereto, permit such
conditions to occur in the future without first filing with the Trustee an
opinion of Bond Counsel that such conditions will not impair the exclusion from
gross income under Section 103 of the Code of the interest on the Bonds.
Accordingly, neither the Company nor any other such Principal User of the
Project nor any Related Person to the Company or such other Principal User of
the Project is or will, without such prior Bond Counsel opinion, be a Principal
User of any Bond Financed Facilities, other than the Project;
(7) no portion of the Net Bond Proceeds will be used (i) to acquire or
otherwise provide any private or commercial golf course, country club, massage
parlor, tennis club, skating facility (including roller skating, skateboard and
ice-skating), racquet sports facility (including any handball or racquetball
court), hot tub facility, suntan facility or racetrack, land (or interest
therein) to be used for farming purposes, and in no event will more than
twenty-five percent (25%) (or twenty-five percent, 25%, or more in the case of
land) of the Net Bond Proceeds, be used to acquire or otherwise provide a
facility the primary purpose of which is either retail food and beverage
services, automobile sales or service, or the provision of recreation or
entertainment, or land, all within the meaning of Sections 144 and 147(c)(1) of
the
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Code; or (ii) to provide any airplane, skybox or other private luxury box,
health club facility, facility primarily used for gambling, or store the
principal business of which is the sale of alcoholic beverages for consumption
off premises, all within the meaning of Section 147(e) of the Code;
(8) no Net Bond Proceeds are to be used directly or indirectly to provide
residential real property for family units within the meaning of Section
144(a)(5) of the Code;
(9) the average maturity of the Bonds does not exceed one hundred twenty
percent (120%) of the average reasonably expected economic life of the Project
within the meaning of Section 149(e) of the Code;
(10) the Company shall provide the Issuer at the Bond Closing with all
information required to satisfy the informational requirements set forth in
Section 149(e) of the Code, including the information necessary to complete IRS
Form 8038;
(11) Counted Issuance Expenses will not be financed by the proceeds of the
Bonds (including earnings thereon) in excess of two percent (2%) of the proceeds
of the Bonds; and
(12) during the three (3) years immediately preceding Bond Closing, the
aggregate amount of all capital expenditures incurred by a Person with respect
to facilities located in Lincoln, Nebraska, of which the Company, any other
Principal User of the Project or any Related Person to the Company or such other
Principal User, is a Principal User, did not exceed $3,974,958.00;
(13) the Company will promptly comply and cause all other Principal Users
of the Project to comply with all requirements established by Treasury
Regulations pursuant to Section 144(a) of the Code;
(14) the Bonds are not issued as part of an issue of obligations for which
the interest on any other obligations which is part of such issue is excluded
from gross income under any other provision of law other than Section 144(a) of
the Code;
(15) no portion of the proceeds of the Bonds will be used to acquire
property to be leased to the government of the United States of America or to
any department, agency or instrumentality of the government of the United States
of America; and no moneys in
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the Bond Fund or Construction Fund (or other fund created under the Indenture)
shall be invested in investments which cause the Bonds to be federally
guaranteed within the meaning of Section 149(b) of the Code. If at any time the
moneys in such funds exceed, within the meaning of Section 149(b)(3)(B), (i)
amounts invested for an initial temporary period until the moneys are needed for
the purpose for which the Bonds were issued, (ii) investments of a bona fide
debt service fund, and (iii) investments of a reserve which meet the requirement
of Section 148(d) of the Code, such excess moneys shall be invested in only
those Permitted Investments or Government Obligations, as otherwise appropriate,
which are (A) obligations issued by the United States Treasury, (B) other
investments permitted under regulations, or (C) obligations which are (a) not
issued by, or guaranteed by, or insured by, the United States or any agency or
instrumentality thereof or (b) not federally insured deposits or accounts, all
within the meaning of Section 149(b)(3)(B) of the Code;
(16) no portion of the Net Bond Proceeds will be used for the acquisition
of any property (or any interest therein) unless (i) the first use of such
property is pursuant to such acquisition, other than land, or (ii) the property
is a building (and the equipment therefor) and rehabilitation expenditures with
respect to such building equal or exceed fifteen percent (15%) of the portion of
the cost of acquiring such building (and equipment) financed with Net Bond
Proceeds, or (iii) the property is a structure other than a building and
rehabilitation expenditures with respect to such structure equal or exceed one
hundred percent (100%) of the portion of the cost of acquiring such facility
financed with Net Bond Proceeds, all within the meaning of Section 147(d) of the
Code;
(17) the Company is the only Test-Period Beneficiary, and the face amount
of the Bonds allocated to the Company as Test-Period Beneficiary, when increased
by any Other Private Activity Bonds outstanding at the Bond Closing and also
allocated to the Company as Test-Period Beneficiary, does not and will not
exceed $40,000,000; and the Company will not permit any other person or entity
to become an owner or other Principal user of the Project if such person or
entity is or will be a Test-Period Beneficiary to whom is allocated Other
Private Activity Bonds outstanding at the time of the Bond Closing which Other
Private Activity Bonds, together with the face amount of the Bonds allocated to
such Test-Period Beneficiary, exceed $40,000,000, all within the meaning of
Section 144(a)(10) of the Code;
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(18) the Company has not permitted and will not permit any Other Private
Activity Bonds to be issued with respect to a single building, an enclosed
shopping mall, or a strip of offices, stores or warehouses, of which the Project
is a part and which use substantial common facilities, so as to (i) treat the
Bonds and such Other Private Activity Bonds as one (1) issue, within the meaning
of Section 144(a)(9) of the Code and (ii) thereby impair the exclusion from
gross income under Section 103 of the Code of the interest on the Bonds;
(19) at no time during any Bond Year shall the amount invested in taxable
nonpurpose investments with a yield materially higher than the yield on the
Bonds exceed one hundred fifty percent (150%) of the debt service on the Bonds
for the Bond Year, all within the meaning of Section 148(d)(3) of the Code;
provided, however, that the Company may take advantage of exceptions to such
requirement provided for the investment of sums for temporary periods;
(20) it will not use the proceeds of the Bonds in such a manner as to
cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the
Code and applicable Treasury Regulations; and to this end, the Company on behalf
of the Issuer shall pay to the United States, as a rebate, an amount equal to
the sum of (i) the excess of (I) the aggregate amount earned on all nonpurpose
obligations (other than investments attributable to an excess described in this
clause), over (II) the amount which would have been earned if all nonpurpose
obligations were invested at a rate equal to the yield on the Bond plus (ii) any
income attributable to the excess described in clause (i), at the times and in
the amounts required by Section 148 of the Code, all within the meaning of
Section 148 of the Code. The Company and Trustee shall maintain records of the
interest rate borne by the Bonds and the investments of the Construction Fund
and Bond Fund and any cash collateral account created under the Reimbursement
Agreement and earnings thereon in adequate detail to enable the Borrower to
calculate the amount of any rebate required to be made to the United States. The
Company shall pay the rebate to the United States at times and in installments
which satisfy Section 148 of the Code and the regulations, at least once every
five years and within sixty (60) days after the day on which the last of the
Bonds is redeemed. The Company shall retain a Rebate Expert to make calculations
of the amount to be rebated at least every five years, as required by the Code
and the regulations, and the Issuer and Trustee shall be furnished with such
calculations within sixty (60) days of the time they are made. Such calculations
shall be
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retained until six (6) years after the retirement of the Bonds. The rebate shall
be calculated as provided in the applicable Treasury Regulations, including
taking into account the gain or loss on the disposition of nonpurpose
investments. The Company shall acquire nonpurpose obligations at their fair
market value;
(21) it is reasonably expected that at least 85% of the spendable proceeds
of the Bonds will be used to carry out the governmental purpose of the Bonds
within the 3-year period beginning on the date of issuance of the Bonds and that
not more than 50% of the proceeds of the Bonds will be invested in nonpurpose
investments (as defined in Section 148(f)(6)(A) of the Code) having a
substantially guaranteed yield for 4 years or more, and therefore the Bonds are
not "hedge bonds" within the meaning of Section 149(g) of the Code; and
(22) the Company will not otherwise use Bond proceeds, including earnings
thereon, or take, or permit or cause to be taken, any action that would
adversely affect the exemption from federal income taxation of the interest on
the Bonds, nor otherwise omit to take or cause to be taken any action necessary
to maintain such tax exempt status; and, if it should take or permit, or omit to
take or cause to be taken, as appropriate, any such action, the Company shall
take all lawful actions necessary to rescind or correct such actions or
omissions promptly upon having knowledge thereof.
Section 7.8 Determination of Taxability.
(1) Promptly after the occurrence of a Determination of Taxability, the
Company shall give written notice to the Issuer and Trustee of the Determination
of Taxability and so long as the Letter of Credit is outstanding, a draw shall
be made under the Letter of Credit as provided in Section 7.2 of the Indenture,
or if no Letter of Credit is outstanding, the Company shall provide to the
Trustee in immediately available funds, an amount which when added to the
amounts on deposit in the Funds, will equal 103 percent of the principal amount
of all the Unpaid Bonds plus accrued interest thereon to the redemption date and
the Bonds shall be redeemed pursuant to Article III of the Indenture.
(2) Upon a Determination of Taxability the Company shall also pay to the
Trustee an amount equal to the Paying Agent's and Trustee's fees, accrued and to
accrue until final payment and redemption of the Bonds, and all other advances,
fees, costs and
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expenses reasonably incurred by the Trustee, the Issuer and the Paying Agent,
including Bond Counsel fees and expenses and any other legal fees and expenses.
(3) If this Agreement has not been terminated under Section 8.4 prior to
the redemption date for the Bonds, this Agreement shall be terminated on said
redemption date and the closing for the termination of this Agreement shall be
completed otherwise as provided for termination of this Agreement upon exercise
of the Company's options under Section 8.4.
(4) Neither the Company nor any Holder shall be required to contest or
appeal any notice of deficiency, ruling, decision or legislative enactment which
may give rise to a Determination of Taxability; and the expenses of any such
contest or appeal shall be paid by the party initiating the contest or appeal.
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ARTICLE VIII
COMPANY'S OPTIONS
Section 8.1 Assignment and Transfer.
The Company may, with the Reimbursement Bank's prior written consent
and the prior written consent of the Issuer, assign its rights and obligations
under this Agreement and, as an incident thereto, transfer its interest in the
Project but subject to the provisions of Section 5.2 and 7.5. Notwithstanding
the foregoing, in no event shall the Company be released from its obligations
under Sections 4.4, 7.4, 9.5, 10.8 or 10.11 without the prior written consent of
the Issuer.
Section 8.2 Prepayment.
(1) The Company shall have the option, with the consent of the
Reimbursement Bank, to direct the Trustee to call for redemption and prepayment
of the Outstanding Bonds in whole or in part as provided in Section 3.1(1) of
the Indenture. The Bonds to be redeemed shall be redeemed at a price equal to
their principal amount plus accrued interest, plus premium if any, as set forth
in Section 3.1(1) of the Indenture. In the event the Bonds are called for
redemption in whole or in part, the Trustee shall draw upon the Letter of Credit
as provided in Section 7.2(1) of the Indenture and if necessary, a Basic Payment
shall be made by the Company as provided in Section 4.2 hereof on said
Redemption Date.
(2) If, pursuant to Article IX hereof, the Indenture is discharged, and
the Company has satisfied all of its obligations hereunder, the Trustee and the
Issuer shall execute and deliver to the Company such release and other
instruments as the Company reasonably determines are necessary to terminate this
Agreement. All further obligations of the Company hereunder, except as set forth
in Section 10.10, shall thereupon terminate.
Section 8.3 Direction of Investments.
Except during the continuance of an Event of Default, the Company
shall have the right during the Term of this Agreement to direct the Trustee in
writing to invest or reinvest all monies held for the credit of Funds
established by Article VI of the Indenture, in such securities as are authorized
by law, for such funds,
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subject, however, to the further conditions of Article VIII of the Indenture.
Section 8.4 Termination of Loan Agreement.
Except during the continuance of an Event of Default, the Company
shall have the option of terminating this Agreement subject to the following
conditions:
(1) such option may be exercised only with the prior written consent of
the Reimbursement Bank and only if one of the following events shall have
occurred:
(A) if all Bonds shall have matured or will mature or be subject to
redemption in accordance with their terms on the next succeeding Interest
Payment Date or if provision is otherwise made for payment of all Bonds in such
manner that the Indenture will be discharged under Article IX thereof on or
before the date of termination; or
(B) if the Project shall have been damaged or destroyed to such
extent that in the reasonable judgment of the Company the Project (i) cannot
reasonably be restored within six (6) months to substantially its condition
immediately preceding such damage or destruction, or (ii) cannot reasonably be
used to carry on the normal operations of the Company for six (6) months, or
(iii) the reasonably estimated cost of restoration exceeds twenty percent (20%)
of the original face amount of the Bonds and is also reasonably estimated to
exceed the proceeds of property insurance payable therefor plus any deductible
amount for which the Company is self-insured, provided that such estimates shall
be approved by the Reimbursement Bank; or
(C) if by reason of Condemnation, title shall have been taken to all
or substantially all of the Project or the Project Premises, or so much thereof
that in the reasonable judgment of the Company, (i) the Company will be
prevented from carrying on its normal operations for six (6) months, or (ii) the
reasonably estimated cost of restoration of the Project exceeds twenty percent
(20%) of the original face amount of the Bonds and is also reasonably estimated
to exceed the proceeds of the Condemnation award provided that such estimates
shall be approved by the Reimbursement Bank; or
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(D) if as a result of any changes in the Constitution of the State
of Nebraska or the Constitution of the United States of America, or of any
legislative or administrative action, whether state or federal, or of any final
decree, judgment or order of any court or administrative body, whether state or
federal, entered after the contest thereof by the Company in good faith, the
agreements contained in this Agreement shall have become impossible of
performance in accordance with the intent and purposes of the parties as
expressed herein.
(2) in any of the events stated in subsection (1), clauses (B) through (D)
above, if the Company determines to exercise its option to terminate this
Agreement it must give written notice to the Trustee of its decision to exercise
its option within one hundred twenty (120) days after such event;
(3) the Company shall give written notice to the Issuer and to the Trustee
of its intention to exercise the option, stating therein a termination date not
less than forty-five (45) nor more than ninety (90) days after the date the
notice is mailed, but in no event prior to date on which all Outstanding Bonds
shall be deemed discharged under Article IX of the Indenture; and the Company
shall make arrangements satisfactory to the Trustee for the giving of any notice
required for redemption of all of the Outstanding Bonds on the date on which the
Bonds are to be redeemed;
(4) the Trustee shall draw upon the Letter of Credit as provided in
Section 7.2(1) of the Indenture and, if necessary, a Basic Payment shall be made
by the Company as provided in Section 4.2 hereof on the Redemption Date;
(5) the Company shall pay to the Trustee at least five days prior to the
Discharge Date, an amount equal to the Trustee's and Paying Agent's fees and
expenses under the Indenture, accrued and to accrue until final payment and
redemption of the Bonds and all other advances, fees, costs and expenses,
including but not limited to legal fees, costs and expenses, reasonably incurred
and to be incurred on or before the termination date by the Trustee and Paying
Agent under the Indenture and by the Issuer under this Agreement;
(6) on the termination date, a closing shall be held at the principal
office of the Trustee, or any other office mutually agreed upon.
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At the closing the Issuer and Trustee shall, upon receipt of the sum
set forth in subsections (4) and (5) above, execute and deliver to the Company
such release and other instruments as the Company reasonably determines is
necessary to terminate this Agreement. All further obligations of the Company
hereunder, except under Section 7.4, 7.7, 7.8, 10.8 and 10.11 shall thereupon
terminate, provided, however, that the Company shall also remain obligated to
pay or reimburse the Issuer and Trustee for the payment of all other fees, costs
and expenses unaccounted for in the sum paid in accordance with subsection (5)
above and reasonably incurred before or subsequent to such closing in connection
with the Bonds.
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Events of Default.
Any one or more of the following events is an Event of Default under
this Agreement, and the term "Event of Default," wherever used herein, means any
one of the following events, whatever the reason for such default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body:
(1) if the Company shall fail to pay any Basic Payments due under this
Agreement;
(2) if an Act of Bankruptcy occurs;
(3) if the Company shall fail to pay any Additional Charges on or before
the date that the payment is due, and shall continue to be in arrears for thirty
(30) days after mailing of a notice to it and the Reimbursement Bank by the
Issuer or the Trustee that said Additional Charges have not been received on the
due date;
(4) if the Company shall fail to observe and perform or shall breach any
other covenant, condition or agreement on its part under this Agreement for a
period of sixty (60) days after mailing of a notice to it by the Issuer or the
Trustee, specifying such default or breach and requesting that it be remedied;
provided that such default may be waived by the Holders of not less than 75% of
the principal amount of the Outstanding Bonds;
(5) if the Company shall be dissolved or liquidated (other than when a new
entity assumes the obligations of the Company under the conditions permitting
such action contained in Section 7.5); or
(6) if any representation or warranty made by the Company herein, or by an
officer or representative of the Company in any document or certificate
furnished the Trustee, the Issuer or any Original Purchaser in connection
herewith or therewith or pursuant hereto or thereto, shall prove at any time to
be, in any material respect, incorrect or misleading as of the date made.
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Section 9.2 Remedies.
(1) Whenever any Event of Default specified in Section 9.1(1) hereof shall
have happened and be subsisting the Trustee shall declare all the Basic Payments
payable for the remainder of the Term of this Agreement (an amount equal to that
necessary to pay in full all Outstanding Bonds and the interest thereon upon
acceleration of the Bonds under the Indenture and to pay all other indebtedness
thereunder) to be immediately due and payable whereupon the same shall become
immediately due and payable by the Company; and, so long as the Letter of Credit
is outstanding, under no other circumstances may payment of the Loan be
accelerated on account of an Event of Default unless payment of the Bonds has
also been accelerated under the Indenture;
(2) Whenever any Event of Default shall have happened and be subsisting,
any one or more of the following remedial steps may also be taken to the extent
permitted by law:
(A) the Trustee may take whatever action at law or in equity may
appear necessary or appropriate to collect all sums then due and thereafter to
become due, or to enforce performance and observance of any obligation,
agreement, covenant, representation or warranty of the Company, under this
Agreement, or any related instrument; or to otherwise compensate the Issuer,
Trustee or Bondholders for any damages on account of such Event of Default; and
(B) the Issuer (without the prior written consent of the Trustee if
the Trustee is not enforcing the Issuer's right in a manner to protect the
Issuer or is otherwise taking action that brings adverse consequences to the
Issuer) may take whatever action at law or in equity may appear necessary or
appropriate to enforce its rights of indemnification under Section 7.4 and to
collect all sums then due and thereafter to become due to the Issuer with
respect to its Reserved Rights. Notwithstanding the foregoing, the Issuer is not
precluded from exercising any of its Reserved Rights, even if the Trustee is
exercising the assigned rights of the Issuer hereunder.
The Reimbursement Bank shall have the right, but not the obligation
to cure any Event of Default on the part of the Company hereunder.
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Section 9.3 Disposition of Funds.
Any amounts collected pursuant to action taken under Section 9.2
(other than sums collected for the Issuer with respect to its Reserved Rights)
shall be applied in accordance with the provisions of the Indenture.
Section 9.4 Nonexclusive Remedies.
No remedy herein conferred upon or reserved to the Issuer or Trustee
is intended to be exclusive of any other available remedy or remedies, but each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Agreement or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or power
accruing upon any Event of Default shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Issuer (or the Trustee) to exercise any remedy reserved to it in
this Article, it shall not be necessary to give any notice, other than such
notice as may be herein expressly required or be required by law.
Section 9.5 Attorneys' Fees and Expenses.
If an Event of Default shall exist under this Agreement and the
Issuer or the Trustee should employ attorneys or incur other expenses for the
collection of any amounts due hereunder, or the enforcement of performance of
any obligation or agreement on the part of the Company, the Company will upon
demand pay to the Issuer or the Trustee the reasonable fees and expenses of such
attorneys and such other expenses so incurred.
Section 9.6 Effect of Waiver.
In the event any agreement contained in this Agreement should be
breached by either party and thereafter waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to
waive any other breach hereunder.
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Section 9.7 Waiver of Stay or Extension.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any appraisement, valuation, stay, or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Agreement; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Issuer or the Trustee,
but will suffer and permit the execution of every such power as though no such
law had been enacted.
Section 9.8 Issuer May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or the property of the
Company, the Trustee or the Issuer with the prior consent of the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Issuer and
the Trustee (for itself and on behalf of Bondholders) (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Issuer
and Trustee, their agents and counsel) allowed in such judicial proceeding, and
(2) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same.
Section 9.9 Restoration of Positions.
If the Issuer or the Trustee have instituted any proceeding to
enforce any right or remedy under this Agreement, and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Issuer or the Trustee, then and in every such case the Company and the
Issuer shall, subject to any determination in the proceeding, be restored to the
positions they held prior to commencement of such proceedings, and thereafter
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all rights and remedies of the Issuer shall continue as though no such
proceeding had been instituted.
Section 9.10 Suits to Protect the Project.
If the Company shall fail to do so after thirty (30) days prior
written notice from the Issuer or the Trustee, the Trustee shall have power to
institute and to maintain such proceedings as it may deem expedient to prevent
any impairment of the Project or any portion thereof, by any acts which may be
unlawful or in violation of this Agreement, and such suits and proceedings as
the Trustee may deem expedient to protect its interests in the Project or any
portion thereof, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any governmental enactment, rule
or order that may be unconstitutional or otherwise invalid, if the enforcement
of, or compliance with, such enactment, rule or order would impair or adversely
affect the Project or be prejudicial to the interests of the Bondholders.
Section 9.11 Performance by Third Parties.
The Trustee may permit third parties to perform any and all acts or
take such action as may be necessary for and on behalf of the Company to cure
any Event of Default hereunder. The acceptance by the Issuer or the Trustee of
any such performance by third parties shall not in any way diminish or absolve
the Company of primary liability hereunder.
Section 9.12 Exercise of the Issuer's Remedies by Trustee.
Whenever any Event of Default shall have happened and be subsisting
the Trustee may, but except as otherwise provided in the Indenture shall not be
obliged to, exercise any or all of the rights of the Issuer under this Article
IX. The Issuer shall not have any obligation to exercise any rights under this
Loan Agreement.
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ARTICLE X
GENERAL
Section 10.1 Amounts Remaining in Funds.
Except during the continuance of an Event of Default, any amounts
remaining in the Funds created under Article VI of the Indenture upon expiration
or earlier termination of this Agreement, as provided herein, and after adequate
provision has been made for payment in full of the Bonds and discharge of the
Indenture, in accordance with Article IX of the Indenture, any Additional
Charges payable to the Trustee and the Issuer, including Paying Agent's fees and
expenses, and all other amounts required to be paid under this Agreement and the
Indenture shall forthwith be paid to the Reimbursement Bank to the extent of any
sums are owed to the Reimbursement Bank under the Reimbursement Agreement and
the balance to Company by the Trustee.
Section 10.2 Notices.
All notices, certificates or other communications hereunder shall be
in writing (except as otherwise expressly provided herein) and shall be
sufficiently given and shall be deemed given when mailed by registered or
certified mail or commercially expedited delivery service, with proper address
as indicated below. The Issuer, the Bank, the Reimbursement Bank, the Company
and the Trustee may, by written notice given by each of them to the others,
designate any address or addresses to which notices, certificates or other
communications to them shall be sent when required as contemplated by this
Agreement. Until otherwise provided by the respective parties, all notices,
certificates and communications to each of them shall be addressed as follows:
To the Issuer: Nebraska Investment Finance Authority
200 Commerce Court
1230 O Street
Lincoln, Nebraska 68508
Attn: Chief Operating Officer
To the Company: Transcrypt International, Inc.
4800 Northwest First Street
Lincoln, Nebraska 68521
Attn: President
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To the Trustee: Norwest Bank Nebraska, National
Association
1919 Douglas Street
Omaha, Nebraska 68103
Attn: Corporate Trust Department
Phone: (402) 536-2264
FAX: (402) 536-2285
To the Bank: Norwest Bank Minnesota, National
Association
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota
Attn: Corporation Law Division
Phone: (612) 667-2087
Fax: (612) 667-4399
To the Reimbursement
Bank: Norwest Bank Nebraska, National
Association
1919 Douglas Street
Omaha, Nebraska 68103
Attn: Corporate Trust Department
Phone: (402) 536-2627
Fax: (402) 536-2251
To the Remarketing
Agent: Norwest Bank Minnesota, National
Association
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota
Attn: Structured Finance
Phone: (612) 667-3965
FAX: (612) 667-7266
Section 10.3 Binding Effect.
This Agreement shall inure to the benefit of and shall be binding
upon the Issuer and the Company and their respective successors and assigns.
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Section 10.4 Severability.
In the event any provisions of this Agreement shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 10.5 Amendments, Changes, and Modifications.
Except as otherwise provided in this Agreement or in the Indenture,
subsequent to the issuance of the Bonds and before the lien of the Indenture is
satisfied and discharged in accordance with its terms, this Agreement may not be
effectively amended, changed, modified, altered or terminated without the
written consent of the Trustee, Company and Issuer.
Section 10.6 Execution Counterparts.
This Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 10.7 Required Approvals.
Consents and approvals required by this Agreement to be obtained
from the Company, the Issuer or the Trustee shall be in writing and shall not be
unreasonably withheld or delayed. Notwithstanding any provisions herein to the
contrary any consent or approval otherwise required by this Indenture to be
obtained from the Reimbursement Bank shall not be required, nor shall the
Trustee be obligated hereunder to comply with any request or direction of the
Reimbursement Bank, if the Letter of Credit is not in full force and effect and
no sums are outstanding under the Letter of Credit, or if the Letter of Credit
is dishonored after presentment of a draft and submission of all documentation
required under the Letter of Credit.
Section 10.8 Limitation on Issuer Liability.
(1) It is understood and agreed by the Company and the Holders that no
covenant, provision or agreement of the Issuer herein or in the Bonds or in any
other document executed by the Issuer in connection with the issuance, sale and
delivery of the Bonds, or any obligation herein or therein imposed upon the
Issuer or breach thereof, shall give rise to a pecuniary liability of the
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Issuer or a charge against its general credit or taxing powers or shall obligate
the Issuer financially in any way except with respect to this Agreement and the
application of revenues therefrom and the proceeds of the Bonds. No failure of
the Issuer to comply with any term, condition, covenant or agreement therein
shall subject the Issuer to liability for any claim for damages, costs or other
financial or pecuniary charges except to the extent that the same can be paid or
recovered from this Agreement or revenues therefrom or proceeds of the Bonds. No
execution on any claim, demand, cause of action or judgment shall be levied upon
or collected from the general credit, general funds or taxing powers of the
Issuer. In making the agreements, provisions and covenants set forth herein, the
Issuer has not obligated itself except with respect to this Agreement and the
application of revenues hereunder as hereinabove provided.
(2) All obligations of the Issuer incurred hereunder, under the Indenture
and any other document or agreement relating to the Bonds or the Project shall
be limited obligations of the Issuer from the Project and other property pledged
to the payment of the Bonds. The Bonds shall be payable solely from the revenues
and other funds and property pledged under the Indenture for payment of the
Bonds, and no owner of any Bond shall ever have the right to compel any exercise
of the taxing power of the State or any political subdivision or other public
body thereof, nor to enforce the payment hereof against any property of the
State or any such political subdivision or other public body, including the
Issuer except as provided in the Indenture.
(3) No member, officer, agent, director, employee or attorney of the
Issuer, including any person executing this Loan Agreement on behalf of the
Issuer, shall be liable personally hereunder or for any reason relating to the
issuance of the Bonds. No recourse shall be had for the payment of the principal
of or the interest on the Bonds, or for any claim based therein, or otherwise in
respect thereof, or based on or in respect of this Loan Agreement or any
amendment hereto, against any member, officer, employee, director, agent or
attorney, as such, of the Issuer or any successor whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue of the Bonds, expressly waived and
released.
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(4) It is expressly understood and agreed by the parties to this Loan
Agreement that:
(a) The Issuer may rely conclusively on the truth and accuracy of
any certificate, opinion, notice or other instrument furnished to the
Issuer by the Trustee, any Bondholder or the Company as to the existence
of a fact or state of affairs required hereunder to be noticed by the
Issuer.
(b) The Issuer shall not be under any obligation to perform any
record keeping or to provide any legal service, it being understood that
such services shall be performed or caused to be performed by the Trustee
or the Company.
(c) None of the provisions of this Loan Agreement shall require the
Issuer to expend or risk its own funds (apart from the proceeds of the
bonds issued under the Indenture) or otherwise endure financial liability
in the performance of any of its duties or in the exercise of any of its
rights under this Loan Agreement.
If, notwithstanding the provisions of this Section , the Issuer incurs any
expense, or suffers any losses, claims or damages or incurs any liabilities, the
Company will indemnify and hold harmless the Issuer from the same and will
reimburse the Issuer for any legal or other expenses incurred by the Issuer in
relation thereto, and this covenant to indemnify, hold harmless and reimburse
the Issuer shall survive delivery of and payment for the Bonds.
Section 10.9 Representations of Company.
All representations made in this Agreement by the Company are based
on the Company's independent investigation of the facts and law, and accordingly
no such representations are made in reliance upon any representations made or
legal advice given by the Issuer, its Bond Counsel, or any of its agents,
officers or employees.
Section 10.10 Survivorship of Obligations.
All obligations of the Company under Sections 7.4, 7.7 and 7.8 shall
survive payment of the Bonds or earlier termination of this Agreement under
Section 7.8, 8.2 or 8.4.
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Section 10.11 Administrative Fees, Attorneys' Fees and Costs.
The Company shall reimburse the Issuer, upon demand, for all costs
and expenses, including without limitation attorneys' fees and expenses, paid or
incurred by the Issuer in connection with (i) the discussion, negotiation,
preparation, approval, execution and delivery of the Bonds, the Indenture, this
Agreement, and the documents and instruments related hereto or thereto; (ii) any
amendments or modifications to any of the foregoing documents, instruments or
agreements and the discussion, negotiation, preparation, approval, execution and
delivery of any and all documents necessary or desirable to effect such
amendments or modifications; (iii) the servicing and administration of the Loan
during the term hereof or thereafter; and (iv) the enforcement by the Issuer
during the term hereof or thereafter of any of the rights or remedies of the
Issuer hereunder or under the foregoing documents, or any document, instrument
or agreement related hereto or thereto, including, without limitation, costs and
expenses of collection in the Event of Default, whether or not suit is filed
with respect thereto.
Section 10.12 Release.
The Company hereby acknowledges and agrees that the Issuer shall not
be liable to the Company, and hereby releases and discharges the Issuer from any
liability, for any and all losses, costs, expenses (including attorneys' fees),
damages, judgments, claims and causes of action, paid, incurred or sustained by
the Issuer as a result of or relating to any action, or failure or refusal to
act, on the part of the Trustee or any other party with respect to the Bonds,
the Indenture, this Agreement, or the documents and transactions related hereto
or thereto or contemplated hereby or thereby, including, without limitation, the
exercise by the Trustee or any third party of any of its rights or remedies
pursuant to any of such documents.
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IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed by their duly authorized officers.
NEBRASKA INVESTMENT FINANCE AUTHORITY
(Seal)
By______________________________
Its Executive Director
Loan Agreement dated as of March 1, 1997, between the Nebraska Investment
Finance Authority and Transcrypt International, Inc.
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TRANSCRYPT INTERNATIONAL, INC.
By___________________________
Its Chief Executive Officer
Loan Agreement dated as of March 15, 1997, between the Nebraska Investment
Finance Authority and Transcrypt International, Inc.
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EXHIBIT A
Definitions From Indenture
In this Indenture the following terms have the following meanings
unless the context hereof clearly requires otherwise, and any other terms
defined in the Loan Agreement shall have the same meanings when used herein as
assigned them in the Loan Agreement unless the context or use thereof indicates
another or different meaning or intent:
Act: Sections 58-201 et seq., Reissue Revised Statutes of Nebraska (1993),
as amended;
Act of Bankruptcy: any of the following events:
(a) The Company shall (a) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or the
like of the Company or of all or a substantial part of its property, (b)
commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter
in effect), or (c) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts;
(b) A proceeding or case shall be commenced, without the application or
consent of the Company, in any court of competent jurisdiction, seeking (a) the
liquidation, reorganization, dissolution, winding-up, or the composition or
adjustment of debts, of the Company, (b) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Company or of all or any substantial
part of the assets of the Company, or (c) similar relief in respect of the
Company under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts;
(c) The Issuer shall (a) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or the
like of the Issuer or of all or a substantial part of its property, (b) commence
a voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), or (c) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts; or
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(d) A proceeding or case shall be commenced, without the application or
consent of the Issuer, in any court of competent jurisdiction, seeking (a) the
liquidation, reorganization, dissolution, winding-up, or the composition or
adjustment of debts, of the Issuer, (b) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Issuer or of all or any substantial
part of the assets of the Issuer, or (c) similar relief in respect of the Issuer
under any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts;
Additional Charges: the payments required by Section 4.4 of the Loan
Agreement;
Adjustment Date: Wednesday of each week or the next Business Day
thereafter if such day is not a Business Day;
Adjustment Period: the period beginning on the next day following an
Adjustment Date and ending on the next succeeding Adjustment Date;
Alternate Letter of Credit: any Letter of Credit delivered to the Trustee
in accordance with Section 4.8(2) of the Loan Agreement and Section 7.4 hereof;
Authorized Denominations: $100,000 or any greater amount in $5,000
multiples;
Available Moneys: shall mean (i) moneys held by the Trustee in the
Construction Fund or Bond Fund for a period of at least 92 consecutive days,
during which period no Act of Bankruptcy shall have occurred, or (ii) proceeds
of a drawing under the Letter of Credit;
Bank: Norwest Bank Minnesota, National Association (the issuer of the
Original Letter of Credit), its successors or assigns, including any other
entity which may, from time to time, be the issuer of the Letter of Credit then
in effect, as provided herein;
Bank Insolvency: a decree or order of a court or agency or supervisory
authority, having jurisdiction in the premises for the appointment of a
conservator or receiver or liquidator of any insolvency, readjustment of debt ,
marshalling of assets and liabilities or similar proceeding, or for the
winding-up or
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liquidation of its affairs has been entered against the Bank or the Bank has
consented to the appointment of a conservator or receiver or liquidator in any
such proceedings of or relating to the Bank or relating to all or substantially
all of its property;
Base Rate: the rate of interest publicly announced from time to time by
Bank, or its successor, as its base or prime rate of interest, which rate shall
change when and as such base rate changes;
Basic Payments or Loan Payments: the payments required by Sections 4.2 and
4.3 of the Loan Agreement;
Bond Closing: the date on which there is delivery by the Issuer of, and
payment for, the Bonds;
Bond Counsel: the firm of Rembolt Ludtke & Berger, Lincoln, Nebraska, or
any other nationally recognized bond counsel experienced in tax exempt private
activity bond financing selected by the Trustee and acceptable to the Issuer and
the Company and, during the Letter of Credit Period, the Reimbursement Bank;
Bond Fund: the fund so designated in Section 6.3 from which the principal
of and interest on the Bonds are payable and within which shall be established a
General Account and a Letter of Credit Account;
Bond Purchase Fund: the fund so designated in Section 6.4 and within which
there shall be established a Remarketing Account and a Letter of Credit Account;
Bond Register: the register maintained by the Trustee pursuant to Section
2.11;
Bondholder or Holder: the person in whose name a Bond is registered in the
Bond Register;
Bonds: the $2,850,000 Variable Rate Demand Industrial Development Revenue
Bonds, Series 1997 (Transcrypt International, Inc. Project) to be issued
pursuant hereto;
Bond Year: each twelve (12) month period commencing March 1, and ending on
the last day of the following February, provided that the first Bond Year shall
commence on Bond Closing and end on the last day of February, 1998;
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Business Day: any day other than a Saturday, Sunday, legal holiday or a
day on which banking institutions in Minneapolis, Minnesota or Omaha, Nebraska
are authorized or required by law to close;
Code or Internal Revenue Code: the Internal Revenue Code of 1986, as
amended, and all applicable Treasury Regulations;
Company: Transcrypt International, Inc., a Delaware corporation, its
successors and assigns, and any surviving, resulting or transferee corporation
or other entity which may assume its obligations under, and pursuant to the
terms of, the Loan Agreement;
Company Bonds: any Bond or Bonds purchased by the Trustee for the account
of the Company pursuant to Section 4.1 and 4.2 and held by the Trustee as the
agent of the Reimbursement Bank, pursuant to the Reimbursement Agreement;
Completion Date: the date established under Section 3.6 of the Loan
Agreement;
Computation Date: has the meaning assigned to it in Section 2.4;
Condemnation: the word "Condemnation" or phrase "eminent domain" as used
herein shall include the taking or requisition by governmental authority or by a
person, firm or corporation acting under governmental authority and a conveyance
made under threat of Condemnation, provided such conveyance is made with the
approval of the Reimbursement Bank, and "Condemnation award" shall mean payment
for property condemned or conveyed under threat of Condemnation;
Construction Fund: the fund so designated in Section 6.2, from which fund
Project Costs are reimbursed;
Conversion Date: the date as of which the interest rate on the Bonds
converts from a Variable Rate to a Fixed Rate as such date is established
pursuant to Section 2.4;
Date of Taxability: the date as of which the interest on the Bonds is
deemed includable in gross income for federal income tax purposes under a
Determination of Taxability;
A-4
<PAGE> 62
Defaulted Interest: shall have the meaning stated in Section 2.2 hereof;
Determination of Taxability: a determination that the interest income on
any Bond is includable in gross income for federal income tax purposes under
Section 103 of the Code for any reason, other than during any period the Bonds
are held by a "substantial user" of the Project or a "related person," as
defined in Section 147(a) of the Code, which determination shall be deemed to
have been made upon the occurrence of the first to occur of the following:
(i) the date on which the Company determines that the interest
income on any of the Bonds is includable in gross income for federal
income tax purposes; or
(ii) the date on which any change in law or final Treasury
Regulation becomes effective or on which the Internal Revenue Service has
issued any private ruling, technical advice or any other written
communication to the effect that the interest income on any of the Bonds
is includable in gross income for federal income tax purposes; or
(iii) the date on which the Company shall receive notice from the
Trustee in writing that the Trustee has been advised by any Holder of any
Bond that the Internal Revenue Service has issued a notice which asserts
that the interest on such Bond is includable in gross income for federal
income tax purposes;
(iv) the date on which the Company issues a statement to the effect
that it has exceeded or intends to exceed the maximum capital expenditure
permitted under Section 144(a)(4) of the Code; or
(v) the date of which any Holder receives notice that the Company or
the Trustee has taken any action inconsistent with, or has failed to act
consistently with, the tax-exempt status of the Bonds.
provided that no Determination of Taxability shall be deemed to have occurred as
a result of a determination by the Company pursuant to clause (i) above unless
such determination is supported by a written opinion of counsel in form
satisfactory to the Trustee
A-5
<PAGE> 63
that the interest income on the Bonds is includable in gross income for federal
income tax purposes;
Discharge Date: the date on which all Outstanding Bonds are discharged
under Article IX;
Event of Default: any of the events set forth in Section 10.1;
Facility: the Company's manufacturing facility located on Lot 1, Highlands
Coalition 2nd Addition in Lincoln, Lancaster County, Nebraska and all related
improvements and equipment;
Federal Bankruptcy Code: the United States Bankruptcy Reform Act of 1978,
as amended, or any similar or succeeding federal bankruptcy law;
Fixed Letter of Credit Rate: the Fixed Letter of Credit Rate established
in accordance with Section 2.4;
Fixed Letter of Credit Rate Period: the period from and including the
Conversion Date upon which the interest rate on the Bonds converts from the
Variable Rate to the Fixed Letter of Credit Rate, to and including payment in
full of the Bonds;
Fixed Rate: the Fixed Letter of Credit Rate or the Fixed Non-Letter of
Credit Rate;
Fixed Rate Interest Payment Date: the first March 1 or September 1 next
succeeding the Conversion Date, and each March 1 and September 1 thereafter
until payment in full of the Bonds, and any Redemption Date;
Fixed Rate Period: the period from and including the Conversion Date to
and including payment in full of the Bonds;
Fund: any fund described in Article VI hereof;
Government Obligations: shall mean direct general obligations of, or
obligations the prompt payment of the principal of and the interest is
unconditionally guaranteed by, the United States of America;
Holder or Bondholder: the person in whose name a Bond is registered in the
Bond Register;
A-6
<PAGE> 64
Indenture: this Indenture of Trust by and between the Issuer and the
Trustee, as the same may from time to time be amended or supplemented as herein
provided;
Independent Accountant: a certified public accountant or firm of certified
public accountants registered and qualified to practice as such under the laws
of the State of Minnesota or Wisconsin, and not regularly employed by the Issuer
or the Company, except to perform independent reviews of the books and records
of either or both of them or other similar periodic reviews;
Independent Counsel: any attorney duly admitted to practice law before the
highest court of any state, who may be counsel to the Company or the Issuer but
who may not be an officer or a full time employee of the Company or the Issuer;
Interest Payment Date: each Fixed Rate Interest Payment Date and each
Variable Rate Interest Payment Date;
Internal Revenue Code or Code: the Internal Revenue Code of 1986, as
amended, and all applicable Treasury Regulations;
Issuer: the Nebraska Investment Finance Authority, a body politic and
corporate, not a state agency but an independent instrumentality exercising
essential public functions, its successors and assigns;
Letter of Credit: the Original Letter of Credit or, upon delivery of any
Alternate Letter of Credit to the Trustee in accordance with Section 7.4 hereof
and Section 4.8(2) of the Loan Agreement, such Alternate Letter of Credit;
Letter of Credit Period: the period commencing on the Bond Closing through
the Variable Rate Period and the immediately succeeding Fixed Letter of Credit
Rate Period, if any;
Loan: the loan of Bond proceeds by the Issuer to the Company described in
Section 4.1 of the Loan Agreement;
Loan Payments or Basic Payments: the payments required by Sections 4.2 and
4.3 of the Loan Agreement;
Loan Agreement: the Loan Agreement of even date herewith by and between
the Issuer and the Company, as the same may from time
A-7
<PAGE> 65
to time be amended or supplemented as provided therein and in this Indenture;
Mandatory Redemption Payments: the payments which are required to be made
under Section 3.1(4) to redeem the Bonds in accordance with the Mandatory
Redemption Schedule after appropriate credits, if any, have been made;
Mandatory Redemption Schedule: the mandatory redemption schedule for the
Bonds set forth in Section 3.1(4);
Mandatory Tender Date: shall have the meaning assigned to it in Section
4.2 hereof;
Mandatory Tender Notice: has the meaning assigned to it in Section 4.2(2);
Maturity Date or Maturity: any date on which principal of or interest or
premium, if any, on the Bonds is due, whether at maturity, on a scheduled
interest payment date, or upon redemption or acceleration, or otherwise;
Moody's: Moody's Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, its successors and assigns,
and, if such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a municipal securities rating agency, "Moody's" shall
be deemed to refer to any other nationally recognized municipal securities
rating agency designated by the Issuer (other than Standard & Poor's
Corporation);
Notice by Mail: notice of any action or condition by mail shall mean a
written notice meeting the requirements of this Indenture mailed by first-class
mail, postage prepaid, to the Holders of specified Bonds at the addresses shown
in the Bond Register;
Optional Tender Date: any date on which a Bond is to be purchased pursuant
to Section 4.1;
Optional Tender Notice: the meaning assigned to it in Section 4.1(1)(A);
Original Letter of Credit: the Irrevocable Letter of Credit issued by
Norwest Bank Minnesota, National Association, to the
A-8
<PAGE> 66
Trustee on the Bond Closing contemporaneously with the original issuance of the
Bonds;
Original Purchaser: the original purchaser of the Bonds from the Issuer
who executes an Investor Letter in the form attached as Exhibit B-1;
Outstanding Bonds: as of the date of determination, all Bonds theretofore
issued and delivered under this Indenture except:
(A) Bonds theretofore canceled by the Trustee or Paying Agent or
delivered to the Trustee or Paying Agent canceled or for cancellation;
(B) Bonds for which payment or redemption moneys or securities (as
provided in Article IX) shall have been theretofore deposited with the Trustee
or Paying Agent in trust for the Holders of such Bonds; provided, however, that
if such Bonds are to be redeemed, notice of such redemption shall have been duly
given pursuant to this Indenture or irrevocable action shall have been taken to
call such Bonds for redemption at a stated redemption date; and
(C) Bonds in exchange for or in lieu of which other Bonds shall have
been issued and delivered pursuant to this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Bonds have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Bonds owned by
the Company shall be disregarded and deemed not to be Outstanding Bonds, except
that in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, or waiver, only
Bonds which the Trustee knows to be Bonds owned by the Company shall be
disregarded;
Paying Agent: the Trustee or any other entity designated pursuant to this
Indenture as the agent of the Issuer and the Trustee to receive and disburse the
principal of and premium, if any, and interest on the Bonds;
A-9
<PAGE> 67
Permitted Investments:
(A) Direct general obligations of the United States of America;
(B) Obligations the payment of the principal of and interest on
which is unconditionally guaranteed by the United States of America;
(C) Shares of an investment company registered under the Federal
Investment Company Act of 1940, whose shares are registered under the Federal
Securities Act of 1933, and whose only investments are obligations described in
clauses (A) or (B) above;
(D) Any general obligation of the State of Nebraska or any of its
political subdivisions, provided that securities described in clauses (A) or (B)
above have been irrevocably deposited in escrow to effect discharge of the
general obligations in the same manner and subject to the same conditions
required to effect discharge of the Bonds under Article IX;
(E) Certificates of deposit with fixed maturities, time deposits,
repurchase agreements or any other direct obligation with or of either the Bank
or any other national or state bank or federally chartered savings and loan
association whose senior debt obligations are rated A or better by a Rating
Agency or any other bank if the debt obligations for which such bank's letters
of credit are the primary basis are rated A or better by a Rating Agency which
initially rated the Bonds; and
(F) Prior to the Conversion Date, any other investments permitted by
the Reimbursement Bank;
Person: shall mean any natural person, corporation, joint venture,
cooperative, partnership, trust or unincorporated organization, government or
governmental body or agency, political subdivision or other legal entity, as in
the context may be appropriate.
Placement Agent: Norwest Bank, National Association;
Prior Bonds: Issuers $850,000 Industrial Development Revenue Bonds
(Transcrypt International, Ltd., Project) Series 1994.
A-10
<PAGE> 68
Project: any and all (i) fixtures or tangible personal property now or
hereafter attached or affixed to the Project Premises and acquired from the
proceeds of the Bonds or Prior Bonds, as the case may be, (ii) other tangible
personal property now or hereafter located within or used in connection with the
Project Premises or the Facility and acquired, in whole or part, from proceeds
of the Bonds or Prior Bonds, as the case may be, and (iii) any additions to,
replacements of and substitutions for any of the foregoing which may be
permitted or required by the Reimbursement Bank;
Project Premises: the real estate described on Exhibit A attached hereto;
Rating Agency: Standard & Poor's or Moody's;
Rating Category: one of the generic rating categories of a Rating Agency,
without regard to any refinement or gradation of such Rating Category by a
numerical or other modifier;
Rebate Amounts: the amount determined pursuant to Section 7.7(20) of the
Loan Agreement to be rebated to the United States;
Rebate Expert: Bond Counsel, or any other Person experienced in matters
relating to compliance with the rebate requirements in Section 148(f) of the
Code;
Record Date: means (i) with respect to each Variable Rate Interest Payment
Date, the calendar day next preceding such Variable Rate Interest Payment Date,
whether or not such date is a Business Day, and (ii) with respect to each Fixed
Rate Interest Payment Date, the 15th day of the calendar month next preceding
such Fixed Rate Interest Payment Date, whether or not such day is a Business
Day;
Redemption Date: when used with respect to any Bond to be redeemed shall
mean the date on which it is to be redeemed pursuant hereto;
Redemption Price: when used with respect to any Bond to be redeemed shall
mean the price at which it is to be redeemed pursuant hereto;
Regular Interest Payments: all interest payments on the Bonds, other than
Special Interest Payments;
A-11
<PAGE> 69
Reimbursement Agreement: the Letter of Credit and Reimbursement Agreement
of even date herewith, by and between the Company and the Reimbursement Bank,
and any amendments and supplements thereto and any comparable agreement relating
to any Alternate Letter of Credit;
Reimbursement Bank: Norwest Bank Nebraska, National Association, its
successors and assigns;
Related Documents: the Loan Agreement, the Remarketing Agreement, the
Reimbursement Agreement, the Deed of Trust, the Placement Agreement, the
Placement Memorandum and the Letter of Credit;
Remarketing Agent: Norwest Bank Minnesota, National Association, or any
successor Remarketing Agent appointed and serving in such capacity pursuant to
this Indenture;
Remarketing Agreement: the Remarketing Agreement, dated as of March 15,
1997, between the Company and the Remarketing Agent as the same may be amended
from time to time, and if a successor Remarketing Agent is appointed in
accordance with the Indenture, "Remarketing Agreement" shall mean such other
similar agreement between the Company and such successor Remarketing Agent;
Representative: the Chairperson, Vice Chairperson or Executive Director of
the Issuer or an officer of the Company, or any other person at any time
designated to act on behalf of the Issuer or the Company, as the case may be, as
evidenced by a written certificate furnished to the other party and the Trustee
containing the specimen signature of such person and signed for the Issuer by
its Executive Director or for the Company by an officer thereof;
Reserved Rights: those certain rights of the Issuer under the Loan
Agreement to indemnification and to payment or reimbursement of fees and
expenses of the Issuer and other payments to be made to the Issuer (including,
but not limited to, payments to be made pursuant to Sections 4.4, 7.4, 9.5, 10.8
and 10.11 of the Loan Agreement), including fees and expenses of counsel,
assumption fees and indemnity payments, its right to enforce notice and
reporting requirements and restrictions on transfer of ownership, its right to
inspect and audit the books, records and premises of the Company and of the
Project, its right to collect attorneys' fees and related expenses, its right to
enforce the Company's covenant to
A-12
<PAGE> 70
comply with applicable federal tax law and State law (including the Act and the
rules of the Issuer), and its right to receive notices under the Loan Agreement.
Responsible Agent: any person duly authorized and designated by the
Trustee to act on its behalf in carrying out the applicable duties and powers of
the Trustee as set forth in this Indenture; (any action required by the Trustee
under this Indenture may be taken by a Responsible Agent);
Restricted Obligations: obligations which are issued by the United States
Treasury and any other Permitted Investments, an investment in which will not
cause the Bonds to be federally guaranteed obligations within the meaning of
Section 149(b) of the Code;
Special Interest Payments: all payments of (or with respect to) interest
on the Bonds made upon the acceleration of the Bonds pursuant to Section 10.2;
Special Record Date: the date fixed by the Trustee pursuant to Section 2.2
hereof relating to the payment of any Defaulted Interest;
Standard & Poor's: Standard & Poor's Ratings Services, a division of the
McGraw Hill Companies, Inc., its successors and their assigns, and if such
corporation shall be dissolved or liquidated or shall no longer perform the
functions of a municipal securities rating agency, "Standard & Poor's" shall be
deemed to refer to any other nationally recognized municipal securities rating
agency designated by the Issuer (other than Moody's);
Stated Maturity: when used with respect to any Bond or any installment of
interest thereon shall mean the date specified in such Bond as the fixed date on
which principal of such Bond or such installment of interest is due and payable;
Tender Date: shall mean each Optional Tender Date and the Mandatory Tender
Date;
Termination Date: the date on which a Letter of Credit expires in
accordance with its terms;
Treasury Regulations: all proposed, temporary or permanent federal income
tax regulations then in effect and applicable;
A-13
<PAGE> 71
Trust Estate: the Trust Estate as defined and set forth in the Granting
Clauses hereof;
Trustee: Norwest Bank Nebraska, National Association, Omaha,
Nebraska and any co-trustee or successor trustee appointed,
qualified and then acting as such under the provisions of this
Indenture;
Unpaid Bonds: all Outstanding Bonds and any other Bonds which have neither
matured nor been redeemed or purchased and canceled under this Indenture;
Untendered Bond: shall have the meaning set forth in Section 4.8;
Variable Rate: the Variable Rate established from time to time in
accordance with Section 2.3;
Variable Rate Interest Payment Date: (i) the first Business Day of each
month commencing April 1, 1997, and (ii) the Conversion Date and (iii) the date
of payment in full of the Bonds; and
Variable Rate Period: the period from Bond Closing until the Conversion
Date, during which period the Bonds bear interest at the Variable Rate.
A-14
<PAGE> 72
EXHIBIT B
Other Private Activity Bonds and Industrial Revenue Bonds
$850,000 Nebraska Investment Finance Authority Industrial Development
Revenue Bonds (Transcrypt International, Inc. Project) Series 1994
B-1
<PAGE> 73
EXHIBIT C
PENDING LITIGATION
On May 1, 1991, the interest payment due on Issuer's $200,000,000
Agricultural Revenue Bonds, Series 1986A and 1986B (the "1986 Bonds") on such
date was not made to the owners of the 1986 Bonds. This default in payment on
the 1986 Bonds was as a result of failure by Executive Life Insurance Company
("Executive Life") to remit to the trustee for the 1986 Bonds amounts due under
the investment agreements provided by Executive Life and securing the 1986
Bonds. Certain proceeds from the 1986 Bonds remain unrepaid from Executive Life
under such investment agreements.
On April 11, 1991, the Superior Court of the State of California for
the County of Los Angeles issued an order placing Executive Life in
conservatorship. Under the terms of that and subsequent orders, the court
appointed the Insurance Commissioner of the State of California as conservator,
imposed an immediate moratorium on the payment of any benefits or periodic
payments of any kind by Executive Life (except for certain limited hardship
cases) pending further order of the court, and enjoined the officers and
directors of Executive Life from transacting any business on behalf of Executive
Life without the consent of the conservator. That moratorium prevented payment
by Executive Life of amounts due under the investment agreements and resulted in
a failure to make interest payments due on May 1, 1991 on the 1986 Bonds.
Norwest Bank Minnesota, N.A., the trustee for the 1986 Bonds,
appeared in the conservatorship proceedings and informed the NIFA that it would
take appropriate steps to protect the interest of the holders of the 1986 Bonds.
Among the steps taken was the filing, along with the NIFA, of a complaint for
declaratory relief against Executive Life and the Insurance Commissioner of the
State of California. This action, filed in conjunction with similar complaints
filed by other issuers and trustees with respect to similar bonds, sought a
judgment that the investment agreements issued by Executive Life as investments
of the proceeds of the 1986 Bonds are "insurance policies" and, therefore,
should be treated on a parity with all other insurance policies issued by
Executive Life in a liquidation proceeding. On November 15, 1991, the Superior
Court of California, County of Los Angeles, ruled that the investment agreements
issued by Executive Life (such as the investment agreements issued as
investments of the proceeds of the
C-1
<PAGE> 74
1986 Bonds) are within the class of claims identified by Subdivision (a)(5) of
California Insurance Code Section 1033, as a priority 5 (i.e., equivalent to
other insurance policies, one step above priority 6, the general creditors).
That ruling has been affirmed on appeal and is now final. After a further court
challenge, the rehabilitation plan was modified to treat the bondholders equally
with other policyholders, and, pursuant to that plan, certain payments have been
made to the trustee for the 1986 Bonds on the investment agreements. In the
interim, the trustee has distributed approximately $198.6 million to the 1986
Bondholders. Additional payments to the trustee for the 1986 Bonds may be made
under the rehabilitation plan, but the NIFA is unable to predict either the
likelihood, the amount or the timing of any such payments.
C-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY CONSOLIDATED FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 14,025,895
<SECURITIES> 0
<RECEIVABLES> 5,970,533
<ALLOWANCES> 706,120
<INVENTORY> 2,855,133
<CURRENT-ASSETS> 23,362,980
<PP&E> 7,603,486
<DEPRECIATION> 1,922,599
<TOTAL-ASSETS> 30,803,079
<CURRENT-LIABILITIES> 2,477,006
<BONDS> 2,850,000
0
0
<COMMON> 92,831
<OTHER-SE> 25,383,242
<TOTAL-LIABILITY-AND-EQUITY> 30,803,079
<SALES> 4,728,403
<TOTAL-REVENUES> 4,728,403
<CGS> 1,632,127
<TOTAL-COSTS> 1,632,127
<OTHER-EXPENSES> 1,710,641
<LOSS-PROVISION> 487,001
<INTEREST-EXPENSE> (76,388)
<INCOME-PRETAX> 975,022
<INCOME-TAX> 292,507
<INCOME-CONTINUING> 682,515
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 682,515
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
