86-9122 IRB School SpecialtyWINTON M. HINKLE, P.A.
FINAL DRAFT
ORDINANCE NO. 86-9122
OF THE
CITY OF SALINA, KANSAS
1
AUI-HORIZING THE ISSUANCE OF
$1,200,000 INDUSTRIAL REVENUE BONDS
SERIES A, 1986
(SCHOOL SPECIALTY SUPPLY, INC.)
DATED AS OF FEBRUARY 1, 1986
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1
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(Published in The Salina Journal, March 24, 1986)
ORDINANCE NO. 86-912.2
AN ORDINANCE AUTHORIZING THE CITY OF SALINA,
KANSAS, 1-0 PURCHASE, CONSTRUCT, IMPROVE AND EQUIP
AN ADDITION TO AN EXISTING MANUFACTURING FACILITY
LOCATED AND TO BE LOCATED ON CERTAIN REAL
PROPERTY OWNED BY THE CITY AND TO BE LEASED TO
SCHOOL SPECIALTY SUPPLY, INC., A KANSAS
CORPORATION, FOR INDUSTRIAL PURPOSES; AUTHORIZING
AND DIRECTING THE ISSUANCE OF $1,200,000
PRINCIPAL AMOUNT OF INDUSTRIAL REVENUE BONDS,
:SERIES A, 1986, OF SAID CITY FOR THE PURPOSE OF
PROVIDING FUNDS TO PAY THE COST OF PURCHASING,
CONSTRUCTING, IMPROVING AND EQUIPPING CERTAIN
BUILDINGS, IMPROVEMENTS, AND EQUIPMENT TO BE
LEASED TO SCHOOL SPECIALTY SUPPLY, INC., FOR
COMMERCIAL PURPOSES; PRESCRIBING THE FORM AND
AUTHORIZING THE EXECUTION OF A SUPPLEMENTAL LEASE
BY AND BETWEEN SAID CITY AND SCHOOL SPECIALTY
SUPPLY, INC.; AND PRESCRIBING THE FORM AND
REQUIRING THE EXECUTION OFA SEPARATE. GUARANTY
AGREEMENT BY SCHOOL SPECIALTY SUPPLY, INC. AND
THE NATIONAL BANK OF AMERICA AT SALINA, SALINA,
KANSAS, AS TRUSTEE.
WHEREAS, the City of Salina, Kansas, a city of the
first class, hereinafter sometimes referred to as the "City"
desires to promote, stimulate and develop the general economic
welfare and prosperity of the City of Salina, Kansas, and its
environs and thereby to further promote, stimulate and develop
t e general economic welfare and prosperity of the State of
K nsas; and
WHEREAS, the City of Salina, Kansas, by Ordinance No.
86, authorized the City to acquire a tract of land in Saline
unty, Kansas, for industrial development purposes, and
thorized the payment of the cost of acquiring a site and to
rchase, construct and equip a manufacturing facility, which
nd and facility is hereafter sometimes called the "Facility";
d further authorized and directed the issuance of $950,000
incipal amount of Industrial Revenue Bonds, Series of 1973,
ted May 1, 1973 (the "1973 Bonds") of the City to pay such
sts; and further authorized the execution of a Lease between
e City, as Landlord, and School Specialty Supply, Inc., as
nant, hereinafter sometimes called the "Lease"; and
WHEREAS, the City of Salina, Kansas did enter into
ch Lease, did acquire such tract of land, did issue the 1973
nds and did commence to acquire, purchase, construct and
uip the Facility; and
WHEREAS, Tenant desires to finance the cost of.
acquiring, constructing, improving and equipping certain
additions to the Facility, hereinafter referred to as the "1986
Additions" from the proceeds of an additional series of bonds
in the principal. amount of $1,200,000.
WHEREAS, Ordinance No. 8286 authorizes the issuance of
additional bonds to be on a parity with and coequal. with the
outstanding 1973 Bonds upon certain conditions; and the City
finds that such specified conditions have been and will be met;
and
WHEREAS, pursuant to the provisions of K.S.A. 12-1740
to 12-1749x, as amended (hereinafter referred to as the "Act"),
said City is authorized to issue Industrial. Revenue Bonds of
the City, and it is hereby found and determined to be. advisable
and in the interest and for the welfare of the City and its
inhabitants. that Industrial Revenue Bonds of the City in the
principal amount of $1,200,000 be authorized and issued, for
the purpose of providing funds to pay the balance of the
aforementioned costs; and
WHEREAS, School Specialty Supply, Inc. (hereinafter
sometimes referred to as "Tenant") is willing to enter into a
supplemental lease agreement and that School Specialty Supply,
Inc. is willing to enter into a guaranty agreement with respect
to additional Industrial Revenue Bonds.
NOW, 1-HERLFORE, BE IT ORDAINI-D BY THE GOVERNING BODY
OF THE CITY OF SALINA, KANSAS:
SECTION 1: Definitions. In addition to the words,
terms and phrases elsewhere defined in this Ordinance, the
Following words, terms and phrases as used herein shall have
the following meanings unless the context or use indicates
another or different meaning or intent:
"Act" means K.S.A. 12-1740 to 12-1749a, inclusive, as
amended.
"Additional Bonds" means any Bonds issued in addition
to the Series A, 1986 Bonds pursuant to the provisions of the
Ordinance.
"Bond Counsel" means the firm of Winton M. Hinkle,
P.A. or any other attorney or firm of attorneys acceptable to
Trustee and Tenant.
"Bondowner" means the registered owner of any fully
registered Series A, 1986 Bond.
"Bonds" means the fully registered Series A, 1986
Bonds and any Additional Bonds.
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"Business Day" means a day which is not a Saturday,
Sunday or any day designated as a holiday by the Congress of
the United States or by the Legislature of the State and on
which Banks in the State are not authorized to be closed.
"Change in Law" means any event not otherwise included
in the definition of the term "Event of Taxability", the effect
of which shall be to render the interest on the Bonds
includible for any period in the gross income of the Bondowners
or former Bondowners or otherwise taxable to the Bondowners
(other than a Bondowner who is a Substantial. User or a Related
Person thereto) for federal income tax purposes, including, but
not limited to, the enactment or adoption (as determined by
Bond Counsel) of any provision or change in the Code, or in the
laws of the State or the regulations of any agency or
instrumentality thereof (regardless of the effective date
thereof) subsequent to the date hereof.
"Change of Circumstances" means the occurrence of any
of the following events:
(1) title to, or the temporary use of, all. or
any part of the Project shall be condemned by any
authority exercising the power of eminent domain;
(2) the Project is damaged or destroyed, in
whole or in part, by fire, theft or other casualty; or
(3) as a result of changes in the Constitution
of the State or of legislative or administrative
action by the State or any political subdivision
thereof, or by the United States, or by reason of any
action instituted in any court, the Lease shall become
void or unenforceable, or impossible of performance
without unreasonable delay, by reason of such changes
or circumstances, unreasonable burdens or excessive
liabilities are imposed upon Tenant.
"City" means the City of Salina, Kansas, a municipal
corporation organized and existing under the laws of the State
of Kansas, and its successors and assigns.
"Code" means the Internal Revenue Code of 1954, as
amended, together with the regulations promulgated thereunder
by the United States Department of the freasury.
"Costs of Issuance" means any and all expenses of
whatever nature incurred in connection with the issuance and
sale of the Bonds, including but not limited to underwriting
fees and expenses, or underwriting discount, bond and other
printing expenses, and legal fees and expenses of counsel.
"Determination of Taxability" means a determination
that an Event of Taxability has occurred, which determination
shall be deemed to have been made upon the occurrence of the
first to occur of the following:
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(a) the date on which the Tenant files with the
Trustee any statement which discloses that an
Event of Taxability has occurred;
(b) the date on which the Tenant is advised in
writing by the Commissioner or any District
Director of the Internal Revenue Service that,
based upon any filings of the Tenant, or upon any
review or audit of th4_ fenant, or upon any other
grounds whatsoever, an Event of Taxability has
occur -red;
(c) the date on which the Tenant receives notice from
the fruste.e in writing that the Trustee has been
advised by any Bondholder or.former Bondholder
that the Internal Revenue Se.rivice has issued a
statutory notice of deficiency or similar notice
to such Bondholder or former Bondholder which
asserts in effect that an Event of Taxability has
occurred; and
(d) the date on which the Tenant is advised in
writing by the Commissioner or any District
Director of the Internal. Revenue Service that
there has been issued a public or private ruling
of the Internal Revenue Service or a technical.
advice memorandum issued bythe national office.
of the Internal. Revenue Service that an Event of
Taxability has occurred; or
(e) the date on which the Tenant is advised in
writing that a final determination, from which na
further right of appeal. exists, has been made by
a court of competent jurisdiction in the United
States of America that there is or has been the
occurrence of an Event of I-axability;
provided, however, no Determination of' Taxability shall. occur
under subparagraph (a), (b), (c) or (d) of this paragraph
unless the Bondholder involved in such proceeding or action (i)
gives the Tenant and the Trustee prompt written notice of the
commencement thereof and (ii) if the Tenant agrees to pay all
expenses in connection therewith and to indemnify such
Bondholder against all liabilities including any additional
income taxes in connection therewith, offers the Tenant the
opportunity to control the defense thereof, and the Tenant
contests such Determination of Taxability to the extent it
deems sufficient or until no further right of appeal exists.
Notwithstanding the foregoing provisions, if any of the events
described in subparagraphs (a), (b), (c), or (d) of this
paragraph are still the subject of a contest or a right of
appeal still exists with respect thereof, it shall nonetheless
be deemed to be final and a Determination of Taxability shall
be deemed to have been two (2) years after receipt by Tenant of
the notice described herein.
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(c) Default in the performance or observance of any
other of the covenants, agreements or conditions on the part of
the Issuer in this Indenture or in the Bonds contained, and the
continuance thereof for a period of 30 days after written
notice. thereof shall have been given to the Issuer and the
Tenant by the Trustee, or to the Trustee, the Issuer and the
Tenant by the Owners of not less than 25% in aggregate
principal amount of Bonds then Outstanding; provided, however,
if any default shall. be such that it cannot be corrected within
such 30 -day period, it shall not constitute an Event of Default
if corrective action is instituted by the Issuer or the Tenant
within such period and diligently pursued until such default is
corrected; or
(d) Default as defined in the Lease shall. have
occurred.
"Event of Taxability" means the payment or incurring
of capital expenditures, by Tenant or by any other person in
excess of those permitted in the Code, or any other action by
the Tenant or any other person including, but not limited to,
the use of Bond proceeds in violation of the covenants
contained in the Lease, which has the effect of causing the
interest on the Bonds to become includible for any period in
the gross income. For Federal income tax purposes of any Owner
or former Owner of the Bonds (other than an Owner who is a
Substantial User of the Project or a Related Person thereto).
"Federal. Tax Rate Adjustment" means if the maximum
federal corporate income tax rate is changed and is less than
46%, the Bonds shall bear interest from the effective date of
such change at the per annum rate equal'to the product of the
interest rate then borne by the Bonds multiplied by a fraction,
the denominator of which is 54% and the numerator of which is
100% minus the maximum federal corporate income tax rate in
effect after such change.
"Government Securities" means direct obligations of,
or obligations the payment of the principal of and interest on
which are unconditionally guaranteed by, the United States of
America.
"Guaranty Agreement" means the separate guaranty
agreement dated as of February 1, 1986, of School Specialty
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"Event of Default" means
one of the
following events:
(a) Default in
the due
and punctual
payment of any
interest on any Bond;
(b) Default in
the due
and punctual.
payment of the
principal of or premium,
if any,
on any Bond
on the stated
maturity or accelerated
maturity
date thereof,
or at the
redemption date thereof;
(c) Default in the performance or observance of any
other of the covenants, agreements or conditions on the part of
the Issuer in this Indenture or in the Bonds contained, and the
continuance thereof for a period of 30 days after written
notice. thereof shall have been given to the Issuer and the
Tenant by the Trustee, or to the Trustee, the Issuer and the
Tenant by the Owners of not less than 25% in aggregate
principal amount of Bonds then Outstanding; provided, however,
if any default shall. be such that it cannot be corrected within
such 30 -day period, it shall not constitute an Event of Default
if corrective action is instituted by the Issuer or the Tenant
within such period and diligently pursued until such default is
corrected; or
(d) Default as defined in the Lease shall. have
occurred.
"Event of Taxability" means the payment or incurring
of capital expenditures, by Tenant or by any other person in
excess of those permitted in the Code, or any other action by
the Tenant or any other person including, but not limited to,
the use of Bond proceeds in violation of the covenants
contained in the Lease, which has the effect of causing the
interest on the Bonds to become includible for any period in
the gross income. For Federal income tax purposes of any Owner
or former Owner of the Bonds (other than an Owner who is a
Substantial User of the Project or a Related Person thereto).
"Federal. Tax Rate Adjustment" means if the maximum
federal corporate income tax rate is changed and is less than
46%, the Bonds shall bear interest from the effective date of
such change at the per annum rate equal'to the product of the
interest rate then borne by the Bonds multiplied by a fraction,
the denominator of which is 54% and the numerator of which is
100% minus the maximum federal corporate income tax rate in
effect after such change.
"Government Securities" means direct obligations of,
or obligations the payment of the principal of and interest on
which are unconditionally guaranteed by, the United States of
America.
"Guaranty Agreement" means the separate guaranty
agreement dated as of February 1, 1986, of School Specialty
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Supply, Inc., as Guarantor and in favor of the Trustee for the
benefit of the owners of the Bonds, required by the Ordinance.
".Improvements" means the buildings, structures,
facilities, machinery, equipment and any other property
purchased in whole or in part from the proceeds of the Bonds
and more specifically described in Schedule I attached hereto
and made a part hereof.
"Interest Payment Date" means November 1 and May 1,
commencing as of November 1, 1986, and terminating when the
principal of, redemption premium if any, and interest on the
Bonds have been fully paid.
"Investment Securities" means any of the following
securities, if and to the extent the same are at the time legal
for investment of the Issuer's funds:
(a) Government Obligations or obligations of the
State:
(b) Bonds, notes or other evidences of indebtedness
of any agency or instrumentality of the State of
the United States; and
(c) Investment Contracts (permitted under Section
103(c) of the Internal. Revenue Code), savings
accounts, time deposits, certificates of deposit
and other deposits in any bank, including the
Trustee.
For purposes of investing the amounts on deposit in
the funds established under this Indenture, any deposits or
other evidences of indebtedness listed in subsection (c) above
may be purchased by the Trustee with any bank within or without
the State having a combined capital., surplus and undivided
profits of not less than $5,000,000 and which is acceptable to
the Trustee.
"Land" means the real property described in Schedule I
attached hereto and made a part hereof.
"Lease" means the Lease Agreement by and between the
City and the Tenant, dated May 1, 1973.
"Official Action Date" means February 3, 1986, the
date on which the Governing Body of the Issuer had adopted a
resolution indicating an intent to issue the Bonds.
"Original Proceeds" means all proceeds, including
accrued interest, derived from the sale of the Bonds to the
Original Purchaser.
"Original Purchaser" means The National Bank of
America at Salina, Salina, Kansas.
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"Owner" means the registered owner of any fully
registered bond.
"Payment Date" means any date on which the principal
of or interest on any Bonds is payable.
"Principal. and Interest Account" means the City of
Salina, Kansas Principal and Interest Account, Series A, 1986
(School. Specialty Supply, Inc.), dated February 1, 1986 as
established in the Ordinance.
"Principal Payment Date" means annually commencing as
of May 1, 1987 during which the principal of and redemption
premium, if any, on the Bonds remains Outstanding and unpaid.
"Principal User" means any principal user of the
Project within the meaning of the Code.
"Project-" means and includes the Issuer's interest in
the Land and the Improvements acquired, constructed or
installed with proceeds of the 1973 Bonds and the Bonds.
"Project Costs" means those costs incurred in
connection with the Project, including:
(a) all costs and expenses incident or necessary
to the acquisition of the Land and such of the
improvements as are constructed, installed or in
progress at the date of such acquisition;
(b) fees and expenses of architects, appraisers,
surveyors and engineers for estimates, surveys, soil
borings and soil tests and other preliminary
investigations and items necessary to the commencement
of construction, preparation of plans, drawings and
specifications and supervision of construction, as
well as for the performance of al.l. other duties of
architects, appraisers, surveyors and engineers in
relation to the construction, furnishing and equipping
of the Project or the issuance of the Bonds;
(c) all costs and expenses incurred in
constructing, acquiring, installing, furnishing or
equipping the Project;
(d) payment of interest actually incurred on any
interim financing obtained from a lender unrelated to
the Tenant for performance of work on the Project
prior to the issuance of the Bonds;
(e) the cost of the title insurance policies and
the cost of any insurance and performance and payment
bonds maintained during the Construction Period in
accordance with 6.1 and 6.2 of the 1973 Lease,
respectively;
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(f) interest accruing on the Bonds prior to the
Completion Date, if and to the extent proceeds of the
Bonds set aside and deposited to the credit of the
Principal and Interest. Account are insufficient for
payment of such interest.
(g) Costs of Issuance.
"Rehabilitation Expenditures" means any amount
Froperly chargeable to capital account which is incurred by the
rson acquiring the building for property (or additions or
improvements to property) in connection with the rehabilitation
cf a building. In the case of an integrated operation
ntained in a building before its acquisition, such term
includes rehabilitating existing equipment in such building or
placing it with equipment having substantially the same
function. Any amount incurred by a successor to the person
acquiring the building or by the seller under a sales contract
.th such person shall be treated as incurred by such person.
he term "Rehabiliation Expenditures" does not include any
pendi.ture described in Section 4.8(g)(2)(B) (other than clause
) thereof) of the Code. The term "Rehabilitation
penditures" shall. not include any amount which is incurred
ter the date 2 years after the later of — (I) the date on
ich the building was acquired, or (II) the date on which the
ligation was issued.
"Related Person" means a related person within the
raaning of the applicable section of the Code.
"Series A, 1986 Bonds" means the City of Salina,
nsas, Industrial Revenue Bonds, Series A, 1986 (School
ecial.ty Supply, Inc.) dated February 1, 1986, in the
gregate principal amount of $1,200,000.
"1973 Bonds" means the City of Salina, Kansas,
dustrial Revenue .Bonds (School Specialty Supply, Inc.) in the
iginal principal. amount of $950,000, dated May 1, 1973.
"State" means the State of Kansas.
"Substantial User" means a substantial user of the
oject within the meaning of the applicable section of the
de.
"Supplemental Lease" means the Supplemental Lease
reement by and between the City and the Tenant, dated
bruary 1, 1986, supplementing the Lease dated May 1, 1973.
"Taxability Premium" means if a Determination of
xabi.li.ty occurs, the Tenant shall also pay (in addition to
e redemption price and accrued interest) a premium (the
arability Premium") which shall be equal to interest paid or
yable on the Bonds from the date on which the interest
�comes includable in the gross income of the holder hereof
ther than by reason of the fact that such holder is a
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'substantial user" or "related person" as aforesaid) to the
ext interest payment date or date of redemption established by
he trustee, as applicable, plus any interest and penalties
assessed against Holder in regard to such Determination of
axabi.li.ty. In the event the Bonds shall have been
transferred, the aforesaid Taxability Premium shall.
nevertheless be made entirely to the then holder of the Bonds,
r (if such payment shall be made after payment or redemption
f the Bonds) to the holder of the Bonds when it is paid or
redeemed in full., and any allocation of such Taxability Premium
mong successive holders of the Bonds, if any, shall be
overened solely by their agreements in respect thereof, and no
prior holder of the Bonds shall have any claim under this
paragraph. All. payments due on the Bonds subsequent to such
djustment shall be adjusted appropriately to reflect said
axabil.i.ty Premium.
"Tenant" means School Specialty Supply, Inc., its
uccessors and assigns.
"Test Period Beneficiary" means any person who was an
wrier or principal user of facilities being financed by
roceeds of an industrial development bond issue at any time
uring the 3—year period beginning on the later of (i) the date.
such facilities were placed in service, or (ii) the date of the
slue.
"Trustee" means The National Bank of America at
alina, in the City of Salina, Kansas, in its capacity as
rustne, bond registrar and insurance trustee and its successor
lr successors and any other corporation or association which at
he time may be substituted in its placepursuant to and at the
ime serving as Trustee under the Ordinance.
SECTION 2: Description of Facility. As used herein,
he term "Facility" shall mean the land, buildings,
mprovements, furnishings and equipment described in Schedule I
ttached hereto and incorporated herein by reference, financed
y the 1973 Bonds and the 1986 Additions financed by the Bonds
ereinafter authorized.
SECTION 3: Authorization and Security for the Bonds.
or the purpose of providing funds to pay the cost of the 1986
dditions to the Facility, there shall. be issued and hereby are
uthorized and directed to be issued a series of Industrial
evenue Bonds, Series A, 1986 of the City of Salina, Kansas, in
he principal amount of $1,200,000 (hereinafter sometimes
eferred as the "Bonds"). The Bonds and all interest thereon
hall be paid solely from the money and revenue received from
he fees charged and rental received for the use of the
acility and not from any other fund or source (except to the
lxtent paid out of the moneys attributable to Bond proceeds or
he income from the temporary investment thereof and, under
ertain circumstances as hereinafter and in the Lease provided,
roceeds of insurance, sale and condemnation awards) and the
ity hereby pledges the Facility and the net earnings therefrom
to the payment of the Bonds and the 1973 Bonds and the interest
thereon. The Bonds shall be equal in priority and lien to the
1973 Bonds.
SECTION 4_. Description and Details of the Bonds,
Desiq_nation of Paving Agent. The Bonds shall be dated February
1, 1986, shall. become due on May 1 in each of the following
years and shall bear interest as set forth below:
PRINCIPAL MATURITY
AMOUNT _ MAY 1
$ 80,000 1987
80,000 1988
80,000 1989
80,000 1990
80,000 1991
80,000 1992
80,000 1993
80,000 1994
80,000 1995
80,000 1996
80,000 1997
80,000 1998
80,000 1999
80,000 2000
80,000 2001
The Bonds shall bear interest from their effective date of
registration as set forth below payable to the Registered Owner
hereto subject to Federal Tax Rate Adjustment semiannually on
November 1 and May 1 in each year, commencing November 1,
1986. The Bonds shall carry a variable tax exempt interest
rate that is equal to 80% of the Base Rate of The National Bank
of America at Salina, Salina, Kansas at the beginning of each
semiannual. interest rate. period. The Base Rate shall be
defined as the base rate quoted in the most recent Weekly
Market Update of The National Bank of America at Salina,
Salina, Kansas, as of the above stated Interest Payment Dates.
If the term "base rate" is discontinued, the Bank shall choose
a substitute rate. If the said Weekly Market Update ceases
publication, The National Bank of America at Salina, Salina,
Kansas shall choose a new rate source.
In the event the deduction for certain financial
institution preference items under Section 291(a)(3) of the
Code is changed from the present rate of 80%, the Bonds shall
also bear interest computed according to the following formula
("Incremental Interest") = (Average Cost of Funds) x (the
Exclusion Factor) x (Marginal Rate) x (Average Principal)
divided by 360 x the actual number of days in the interest
period. For purposes of the formula:
"Average Cost of Funds" means the average cost of
funds to The National Bank of America at Salina, Salina, Kansas
expressed as a decimal for the quarter immediately preceding
-10-
t1le quarter for which Incremental Interest is payable; Average
C st of Funds is determined by dividing Total Interest Expense
bir Total Average Assets of The National Bank of America at
S Lina as reflected on its most recent quarterly unaudited
financial statements;
"Exclusion Factor" means the portion of interest
a locable to purchasing and carrying the Bonds which is not
a lowable as a deduction by The National Bank of America at
Salina, Salina, Kansas in determining its taxable income;
provided, however,the Exclusion Factor shall include only the
e cess of excludable interest over .20 (the percentage of
e cluded interest presently provided for by Section 291 of the
C de for tax years beginning after December 31, 1984); and.
"Average Principal" refers to the daily average
tstanding principal balance of the Bond during the calendar
arter for which the installment of Incremental Interest is
ing computed.
The "Marginal Rate" means the maximum Federal
c rporate income tax rate under Section 11(b) or any successor
P ovisi.on of the Code.
The Bonds shall be fully registered bonds in the
denomination of $5,00.0 or any integral multiple thereof not
exceeding the principal amount of the Bonds maturing on any
Principal Payment Date.
The principal of and interest on the Bonds .are payable
a the principal office of The National Bank of America at
Salina, Salina, Kansas, Kansas (the "Trustee"). The Bonds are
subject to redemption and payment prior to maturity upon the
terms and conditions and at the redemption prices set forth in
t iis Ordinance..
The Bonds shall be subject to redemption and payment
for to the stated maturity thereof only as provided in
ction 5 of this Ordinance.
SECTION 5. Redemption and Payment of Bonds Prior to
turi_y. The.Bonds shall be subject to redemption and payment
for to the stated maturity thereof, after the notice
ecified in Section 5 hereof, as follows:
(a) Mandatory Redemption Upon a Determination of
4xability. Each of the Bonds then outstanding shall be
redeemed and paid on a redemption date established by the City
ii the event the interest on the Bonds is includable in the
g oss income of the recipients thereof for Federal income tax
rposes by reason of failure of the Bonds to qualify for the
e emption provided in Section 103(b)(6)(D) of the Internal
R venue.Code of 1954, as amended, at the principal amount
t ereof, plus accrued interest thereof to the date fixed for
demption and payment, together with a premium which shall be
Five (5%) percent of the principal amount of such outstanding
nds for each full year or fraction of a year which elapsed
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between the date on which interest on such Bonds became taxable
and the date fixed for redemption and payment, but in no event
shall the date fixed for redemption and payment be later than
One Hundred Twenty (120) days after the Internal Revenue
Service, the Tenant or the Trustee hereinafter designated shall
g.ve written notice to the City of the failure of the Bonds to
q alify for such exemption.
(b) Extraordinary Optional Redemption. Each of the
B nds shall be subject to redemption and payment at the option
o the City upon instructions from the. Tenant at any time upon
tie occurrence of any of the following conditions or events,
p ovided all of said Bonds are so redeemed and paid according
t their.terms: (1) if title to or the permanent use or use
f r a limited time of substantially all of the Facility be
c ndemned by any authority having the power of eminent domain;
o (2) if substantially all. of the Facility be damaged or
destroyed by fire or other casualty; or (3) if as a result of
a y changes in. the Constitution of the State of Kansas or any
p litical subdivision thereof, or by the United States, or by
reason of action instituted in any court, the Lease shall. have
become void or unenforceable or impossible of performance.
without unreasonable delay or in any other way by reason of
such change of circumstances, unreasonable burdens or excessive
l abilities shall have been imposed on the Tenant, including.
w thout limitation, Federal, state or other ad valorem,
p operty, income or other taxes not being imposed on the date
o the Lease. If called for redemption in any of such events,
tie Bonds shall be subject to redemption at the principal
a ount thereof, plus accrued interest thereon to the date fixed
f r redemption and payment, without premium.
(c) Optional Redemption. The Bonds shall be subject
redemption and payment prior to maturity, at the option of
e City, as directed by the Tenant, as a whole or in part on
bruary 1, 1987, or on any date thereafter, at the par value
the prinicpal amount of the Bonds called for redemption and
yment, plus accrued interest thereon to the date fixed for
demption and payment.
In the event of a Determination of Taxability which is
e result of a Change in Law, the Bonds then Outstanding may
called for redemption and payment at the election of the
ndholders on a redemption date established by Issuer as
ovided in subparagraph (a) of this Section 5 at a redemption
ice equal to the par value of the principal amount thereof=
us accrued interest to the redemption date, without premium.
. SECTION 6. Notice of Redemption. Notice of the call
r any redemption as provided for by this Ordinance
i entifying the Bonds to be redeemed shall be given by
registered or certified mail or actual delivery to the Paying
Agent herein designated and to the Original Purchaser of the
B nds at least Thirty (30) days prior to the date -fixed for
r demption and payment. Notice of any such redemption shall
a so be given to any holders of the Bonds who have placed their
—12—
names on file with the Trustee, upon mailing a copy of the
redemption notice in the manner hereinbefore specified at least
Thirty (30) days prior to the date fixed for redemption to the
owner of each Bond to be redeemed at the address shown on the
books maintained by the Trustee; provided, however, that
failure to give such notice by mailing as aforesaid, or any
defect therein, shall not affect the validity of any
proceedings for the redemption of the Bonds.
If, because of the temporary or permanent suspension
of the publication or general circulation of any newspaper or
for any other reason, it is impossible or impractical to
publish such notice of call for redemption in the manner herein
provided, then such publication in lieu thereof as shall be
made with the approval. of the Trustee shall constitute a
sufficient publication of notice.
Interest shall cease on any of said Bonds so called
for redemption and payment as of the redemption date, provided
funds are available in the hands of the Paying Agent to pay the
same in accordance with their terms.
SECTION 7. Registration Provisions, Persons Treated
as Owners. The City covenants that it will, as long as any of
the Bonds herein authorized remain outstanding, keep at the
office of the Bond Registrar, books for the registration of
Bonds as herein provided.
Each Bond or Bonds shall. be .transferable only upon the
books maintained by the Bond Registrar, by the registered owner
thereof in person, or by his attorney duly authorized in
writing, upon surrender thereof together with a written
instrument satisfactory to the Bond Registrar duly executed by
the registered owner or his duly authorized attorney. Upon the
transfer of any such Bond and the payment of any fee, tax or
governmental charge, the Bond Registrar shall issue in the name
of the transferee a new Bond or Bonds.
The City, the Trustee, the Bond Registrar, the Paying
Agent and the Tenant may deem and treat the person in whose
name any Bond shall be registered as the absolute owner of such
Bond, whether such Bond shall. be overdue or not, for the
purpose of receiving payment of, or on account of, the
principal and redemption price, if any, of and interest on such
Bond and for all other purposes, and all such payments so made
to any such registered owner or upon his order shall be valid
and effectual to satisfy and discharge the liability upon such
Bond to the extent of the sum or sums so paid, and neither the
City, nor the Trustee, nor the Bond Registrar, nor the Paying
Agent nor the Tenant shall be affected by any notice to the
contrary, but such registration may be changed as herein
provided.
In all cases in which the privilege of transferring
Bonds is exercised, the Bond Registrar shall authenticate and
deliver Bonds in accordance with the provisions of this
—13—
1
Ordinance. For every such transfer of Bonds, the Bond
Registrar may make a charge to the registered owner thereof
sufficient to reimburse it for any tax or other governmental
charge required to be paid with respect to such exchange or
transfer. The fees and charges of the Bond Registrar for
making any exchange or transfer provided for by this Ordinance
and the expense of any Bond printing necessary to effect the
subsequent exchange or transfer of any Bond shall be paid by
the Tenant. Neither the City nor the Bond Registrar shall be
required (a) to register, transfer or exchange 1986 Bonds for a
period of Ten (10) days next preceding an interest payment date
on the Bonds or next preceding any selection by lot of Bonds to
be redeemed or thereafter until after the mailing of any notice
of reale+mption; or (b) to register, transfer or exchange any
Bonds called for redemption.
SECTION 8. Method of Execution and Authentication of
the Bonds. The Bonds, including any Bonds issued in exchange
or as substitution for the Bonds initially delivered, shall be
executed for and on behalf of the City by the manual or
facsimile signature of the Mayor or Vice Mayor and the manual.
or facsimile signature of the City Clerk or Deputy.City Clerk,
and the seal. of said City shall be affixed thereto or imprinted
thereon.
The Bonds. shall not be valid obligations under the
provisions of this Ordinance until authenticated by the Bond
Registrar by the execution of an appropriate certificate
appearing on each such Bond:
SECTION 9. Form of Bonds. The Bonds and the
certificates relating thereto shall be in substantially the
following form:
—14—
FACE OF THE BOND
No. $
United States of America
State of Kansas
City of Salina, Kansas
Industrial. Revenue Bond
Series A', 1986
(School Specialty Supply, Inc'.)
Maturity Date: Dated Date:
February 1, 1986
Registered Owner:_ v
Principal Amount: Dollars
rhe City of Salina, Kansas, a municipal corporation
of the State of Kansas (the "City"), for value received,
proinises to pay, but solely from the sources hereinafter
referred to, to the registered owner identified above, or
registered assigns, upon the presentation and surrender of this
Bond, the principal sum identified above on the maturity date
shown, in any coin or currency of the United States of America
which on the date of payment thereof is legal tender for the
payment of public and private debts, at the principal offices
of The National Bank of America at Salina, in the City of
Salina, Kansas (the "Paying Agent" and "Trustee"), and in like
manner to pay to the registered owner ("Owner") hereof, by
check or draft mailed to the Owner at his address as it appears
on the bond registration books of the City kept by the Trustee
under the within mentioned Ordinance, interest on said
principal sum from the effective date of registration of this
Bond (which date is set forth on this Bond) at the rate of
interest shown below until. said principal sum is paid. The
Bonds shall bear interest from their effective date of
registration as set forth below payable to the Registered Owner
hereto subject to Federal Tax Rate Adjustment semiannually on
November 1 and May 1 in each year, commencing November 1,
1986. The Bonds shall carry a variable tax exempt interest
rate that is equal to 80% of the Base Rate of The National Bank
of America at Salina, Salina, Kansas, at the beginning of each
semiannual interest rate period. The Base Rate shall be
defined as the base rate quoted in the most recent Weekly
Market Update of The National Bank of America at Salina,
Salina, Kansas, as of the above stated Interest Payment Dates.
If the term "base rate" is discontinued, the Bank shall choose
a substitute rate. If the said Weekly Market Update ceases
—15—
blicati.on, The National Bank of America at Salina, Salina,
nsas shall choose a new rate source.
In the event the deduction for certain financial
stitution preference items under Section 291(a)(3) of the
de is changed from the present rate of 80°,x, the Bonds.shall
so bear interest computed according to the following formula
('Incremental. Interest") = (Average. Cost of Funds) x (the
Exclusion Factor) x (Marginal Rate) x (Average Principal)
vided by 360 x the actual. number of days in the interest
riod. For purposes of the formula:
"Average Cost of Funds" means the average .cost of
nds to The National Bank of America at Salina, Salina, Kansas
pressed as a decimal for the quarter immediately preceding
e quarter for which Incremental Interest is payable; Average
st of Funds is determined by dividing Total Interest Expense
Total Average Assets of The National Bank of America at
lina as reflected on its most recent quarterly unaudited
nanc.ial statements;
"Exclusion Factor" means the portion of interest
allocable to purchasing and carrying the Bonds which is not
allowable as a deduction by The National Bank of America at
Lina, Salina, Kansas in determining its taxable income;
ovi.ded, however,the Exclusion Factor shall include only the
cess of excludable interest over .20 (the percentage of
eluded interest presently provided for by Section 291 of the
de for tax years beginning after December 31, 1984); and
"Average Principal" refers to the daily average
tstanding principal balance of the Bond during the calendar
arter for which the installment of Incremental Interest is
ing computed.
The "Margi.nal. Rate" means the maximum Federal
rporate income tax rate under Section 11(b) or any successor
ovi.si.on of the Code.
Reference is hereby made to the further provisions of
is Series A, 1986 Bond set forth on the reverse side hereof
d such further provisions shall. for all purposes have the
me effect as if set forth on the face hereof.
It is hereby certified and declared that all acts,
onditions and things required to exist, happen and be
erformed precedent to and in the execution and delivery of the
rdinance and the issuance of this Bond do exist, have happened
and have been performed in due time, form and manner as
required by law.
In witness whereof, the City has caused this Bond to
e executed in its name by the manual or facsimile signature of
—16—
the Mayor and attested by the manual or Facsimile signature of
its City Clerk and its official seal to be affixed hereto or
imprinted hereon, and has caused this Bond to be dated as of
February 1, 1986.
City of Salina, Kansas,
(Facsimile Seal) By__ _
Merle A. Hodges, Mayor
ATTEST:
D. L. Harrison, City Clerk
r.
11
—17—
1
THE NATIONAL BANK OF AMERICA
AT SALINA
Trustee
By
Authorized Officer
—18—
(FORM OF TRUSTEE'S CERTIFICATE
OF AUTHENTICATION)
This Bond is one of the City
of Salina,
Kansas,
Industrial Revenue Bonds, Series A, 1986
(School
Specialty
Supply, Inc.), described in the within
mentioned
Ordinance.
the effective date of registration of
this Bond
is
1
THE NATIONAL BANK OF AMERICA
AT SALINA
Trustee
By
Authorized Officer
—18—
REDEMPTION OF BONDS
Mandatory Redemption Upon a Determination of
REVERSE OF THE BOND
This Bond i.s one of a duly authorized series of Bonds
redeemed and paid on a redemption date established by the City
of the City designated "City of Salina, Kansas, Industrial
in the event the interest on the Bonds is includable in the
Revenue Bonds, Series A, 1986 (School Specialty Supply, Inc.)",
purposes by reason of failure of the Bonds to qualify for the
in the aggregate principal amount of $1,200,000 (the "Series A,
exemption provided in Section 103(b)(6)(D) of the Internal
1986 Bonds"), issued for the purpose of providing funds to pay
thereof, plus accrued interest thereof to the date fixed for
the cost of acquiring, constructing, equipping and remodeling
redemption and payment, together with a premium which shall be
certain facilities (the "Project"), to be leased by the City to
Bonds for each full year or fraction of a year which elapsed
School Specialty Supply, Inc., a Kansas corporation (the
between the date on which interest on such Bonds became taxable
"Tenant"), under the terms of a Supplemental. Lease dated as of
shall the date fixed for redemption and payment be later than
February 1, 1986, between the City and the Tenant (said Lease
Agreement, as amended and supplemented from time to time in
accordance with the provisions thereof, being herein called the
"Lease"), all pursuant to the authority of and in
with the provisions, restrictions and limitations of the
Constitution and statutes of the State of Kansas, including
particularly K.S.A. 12-1740 to 12-1749a, inclusive, as amended,
and pursuant to proceedings duly had by the Governing Body of
the City.
The Series A, 1986 Bonds are issued under and are
equally and ratably secured and entitled to the same protection
and security of Ordinance No. 8286, dated as of May 1, 1973
(said Ordinance, as supplemented by Ordinance No. 86-9122 and
as further supplemented from time to time in accordance with
the provisions thereof). Subject to the terms and conditions
set forth therein, the Ordinances permit the City to issue
Additional Bonds (as defined therein) secured by the Ordinances
ratably secured and on a parity with the Series of 1973 Bonds
and the. Series A, 1986 Bonds (the Series of 1973 and Series A,
1986 Bonds together with such Additional. Bonds being herein
referred to collectively as the. "Bonds"). Reference is hereby
made to the Ordinances for a description of the provisions,
among others, with respect to the nature and extent of the
security for the Bonds, the rights, duties and obligations of
the City, the Trustee and the owners of the Bonds, and the
terms upon which the Bonds are issued and secured.
REDEMPTION OF BONDS
-19-
Mandatory Redemption Upon a Determination of
Taxability. Each of the Bonds then outstanding shall be
redeemed and paid on a redemption date established by the City
in the event the interest on the Bonds is includable in the
gross income of the.,recipients thereof for Federal income tax
purposes by reason of failure of the Bonds to qualify for the
exemption provided in Section 103(b)(6)(D) of the Internal
Revenue Code of 1954, as amended, at the principal amount
thereof, plus accrued interest thereof to the date fixed for
redemption and payment, together with a premium which shall be
Five (5%) percent of the principal amount of such outstanding
Bonds for each full year or fraction of a year which elapsed
between the date on which interest on such Bonds became taxable
and the date fixed for redemption and payment, but in no event
shall the date fixed for redemption and payment be later than
-19-
e Hundred Twenty (120) days after the Internal Revenue
rvice, the Tenant or the Trustee hereinafter designated shall
give written notice to the City of the failure of the Bonds to
q alify for such exemption.
Extraordinary Optional Redemption. Each of the Bonds
scall be subject to redemption and payment at the option of the
City upon instructions from the Tenant at any time upon the
c.urrence of any of the following conditions or events,
ovided all of said Bonds are so redeemed and paid according
I-) their terms: (1) if title to or the permanent use or use
r a limited time of substantially all. of the Facility be
c ndemned by any authority having the power of eminent domain;
o (2) if substantially all. of the Facility be damaged or
d.stroyed by fire or other casualty; or (3) if as a result of
y changes in the Constitution of the State of Kansas or any
litical subdivision thereof, or by the United States, or by
Cason of action instituted in any court, the Lease shall have
,come void or unenforceable or impossible of performance
.thout unreasonable delay or in any other way by reason of
s ch change of circumstances, unreasonable burdens or excessive
liabilities shal.1. have been imposed on the Tenant, including
without limitation, Federal, state or other ad valorem,
operty, income or other taxes not being imposed on the date
o- the Lease. If called for redemption in any of such events,
tie Bonds shall be subject to redemption at the principal
..anount thereof, plus accrued interest thereon to the date fixed
r redemption and payment, without premium.
Optional Redetion. The Bonds shall be subject to
demption and payment prior to maturity, at the option of the
ty, as directed by the Tenant, as a whole or in part on
bruary 1, 1987, or on any date thereafter, at the par value
the prinicpal amount of the Bonds called for redemption and
yment, plus accrued interest thereon to the date fixed for
demption and payment.
In the event of a Determination of Taxability which is
e result of a Change in Law, the Bonds then Outstanding may
called for redemption and payment at the election of the
ndholde.rs on a redemption date established by Issuer in the
me manner as provided under Mandatory Redemption Upon a
termination of taxability at a redemption price equal to the
r value of the principal amount thereof plus accrued interest
the redemption date, without premium.
In the event any of the Bonds are called for
demption as aforesaid, notice thereof identifying the Bonds
be redeemed will be given by mailing a copy of the
demption notice at least 30 days prior to the date fixed for
demption to the Owner of each Bond to be redeemed at the
dress shown on the registration books maintained by the
ustee; provided, however, that failure to give such notice by
fling as aforesaid, or any defect therein, shall not affect
tie validity of any proceedings for the redemption of Bonds.
A 1 Bonds so called for redemption will cease to bear interest
—20—
on the specified redemption date and shall no longer be secured
by the Ordinance and shall not be deemed to be Outstanding
under the provisions of the Ordinance.
The Series A, 1986 Bonds and the interest thereon are
limited obligations of the City payable exclusively out of the
revenues derived by the City from the Project, including but
not limited to the rents, revenues and receipts under the
Lease, and are secured by a pledge of the Project and a pledge
and assignment of such rents, revenues and receipts, including
all rentals and other amounts to be received by the City under
and pursuant to the Lease, all as provided in the Ordinance.
The Bonds and the interest thereon do not constitute a debt or
general obligation of the City, the State of Kansas or any
municipal corporation thereof, and are not payable in an.y
manner by taxation. The Bonds shall not constitute an
indebtedness within the meaning of any constitutional or
statutory debt limitation or restriction. Pursuant to the
provisions of the Lease, Rental Payments are to be paid by the
Tenant directly to the Trustee for the account of the City and
deposited in a special trust account created by the City and
designated "City of Salina, Kansas, Principal and Interest
Account for Industrial Revenue Bonds (School. Specialty Supply,
Inc.)". The full and prompt payment of the principal of,
redemption premium, if any, and interest on the Bonds is
unconditionally guaranteed by the Tenant and Additional
Guarantors to the Trustee for the benefit of the Owners of the
Bonds, under the terms of separate Guaranty Agreements dated as
of February 1, 1986.
The Owner of this Bond shall have no right to enforce
the provisions of the Ordinance or to institute action to
enforce the convenants therein, or to take any action with
respect to any event of default under the Ordinance, or to
institute, appear in or defend any suit or other proceedings
with respect thereto, except as provided in the Ordinance. In
certain events, on the conditions, in the manner and with the
e.ffect.se.t Forth in the Ordinance, the principal of all the
Bonds issued under the Ordinance and then Outstanding may
become or may be declared due and payable prior to the stated
maturity thereof, together with interest accrued thereon.
Modifications or alterations of this Bond or the Ordinance may
be made} only to the extent and under the circumstances
permitted by the Ordinance.
This Bond is transferable, as provided in the
Ordinance, only upon the registration books of the City kept
for that purpose at the above mentioned office of the Trustee
by the Owner hereof in person or by his duly authorized
attorney, upon surrender of this Bond together with a written
instrument of transfer satisfactory to the Trustee duly
executed by the Owner or his duly authorized attorney, and
thereupon a new Bond or Bonds and in the same aggregate
principal amount, shall be issued to the transferee in exchange
therefor as provided in the Ordinance, and upon payment of the
charges therein prescribed. The Tenant has agreed to pay as
—21—
J
Additional Rent under the Lease all costs incurred in
connection with the issuance, transfer, exchange, registration,
redemption or payment of the Bonds except (a) the reasonable
fees and expenses in connectioogAjith the replacement of the
Bond or Bonds mutilated, stolen, lost or destroyed or (b) any
tax or other governmental charge imposed in relation to the
transfer, exchange, registration, redemption or payment of the
Bonds. rhe City, the Trustee and any Paying Agent may deem and
treat the person in whose name this Bond is registered as the
absolute Owner hereof for the purpose of receiving payment of,
or on account of, the principal or redemption price hereof and
interest due hereon and for all other purposes.
This Bond shall not be valid or becomeobligatory for
any purpose or be entitled to any security or benefit under the
Ordinance until the Certificate of Authentication hereon shall.
have been executed by the Trustee.
—22—
J
(FORM OF' ASSIGNMENT)
For value received, the undersigned hereby sells,
assigns and transfers unto
Print or Type Name and Address of Transferee
the within Bond and all rights thereunder, and hereby
authorizes the transfer of the within Bond on the books kept by
the l-rustee for the registration and transfer of Bonds.
Dated:
NOTICE: The signature to this
assignment must correspond
with the name as it appears
upon the face of the within
Bond in every particular.
Signature Guaranteed By:
By__
Title:
-- _ - _ -
—23—
•
Form of Bond
Counsel's Approving
Opinion
AMOUNT
Bond Counsel's
approving
opinion with respect to the
1987
authorization and issuance
of the
Bonds shall be substantially
in the following form,
with such
modifications, amendments or
80,000
additional provisions
as Bond Counsel
shall approve:
I, the undersigned, City Clerk of the City of Salina,
Kansas hereby certify that the following is a true and correct
copy of the complete final. legal opinion of Winton M. Hinkle,
P.A., Wichita, Kansas, Bond Counsel, on the within Bond and the
series of which said Bond is a part, except that it omits the
date of such opinion, that said legal opinion was manually
executed and was dated and issued as of the date of delivery of
and payment for such Bonds, and is on file with The National
Bank of America at Salina, Salina, Kansas.
(facsimile signatures_ _
City Clerk of the City of
Salina, Kansas
WINTON M. HINKLE, P.A.
Attorney at Law
450 Century Plaza
Wichita, Kansas 67202
I have acted as Bond Counsel in connection with the
issuance by the City of Salina, Kansas (the "City"), of its
Industrial Revenue Bonds, Series A, 1986 (School Specialty
Supply, Inc.), dated February 1, 1986 in the aggregate
principal amount of $1,200,000 (the "Bonds"). The Bonds are
issuable in the form of fully registered bonds in the
denomination of $5,000 or any integral multiple thereof, not
exceeding the principal amount of the Bonds maturing on any
Principal Payment Date. The Bonds will mature on May 1 of each
year in the respective principal amounts, and will bear
interest as set forth below:
—24—
PRINCIPAL
MATURITY
AMOUNT
MAY 1
$ 80,000
1987
80,000
1988
80,000
1989
80,000
1990
80,000
1991
80,000
1992
80,000
1993
80,000
1994
80,000
1995
80,000
1996
80,000
1997
—24—
he Bonds shall. bear interest from their effective date of
egistration as set forth below payable to the Registered Owner
ereto subject to Federal Tax Rate Adjustment semiannually on
ovember 1 and May 1 in each year, commencing November 1,
986. The Bonds shall carry a variable tax exempt interest
ate that is equal to 80% of the Base Rate of The National Bank
f America at Salina, Salina, Kansas, at the beginning of each
emiannual interest rate period. The Base Rate shall be
efined as the base rate quoted in the most recent Weekly
arket Update of The National Bank of America at Salina,
alina, Kansas, as of the above stated Interest Payment Dates.:
f the term "base rate" is discontinued, the Bank shall choose
substitute rate. If the said Weekly Market Update ceases
ublication., The National Bank of America at Salina, Salina,
ansas shall choose a new rate source.
In the event the deduction for certain financial
nstitution preference items under Section 291(a)(3) of the
ode is changed from the present rate of 80%, the Bonds shall
also bear interest computed according to the following formula
"Incremental Interest") _ (Average Cost of Funds) x (the
xclusi.on Factor) x (Margi.nal. Rate) x (Average Principal)
ivided by 360 x the actual number of days in the interest
eriod. For purposes of the formula:
"Auerage Cost of Funds" means the average cost of
unds to The National. Bank of America at Salina, Salina, Kansas
xpressed as a decimal for the quarter immediately preceding
he quarter for which Incremental. Interest is payable; Average
ost of Funds is de:ter•mine.d by dividing Total Interest Expense.
y Total. Average Assets of The National Bank of America at
alina as reflected on its most recent quarterly unaudited
inancial sta.ternents;
"Exclusion Factor" means the portion of interest
llocable to purchasing and carrying the Bonds which is not
l.l.owable as a deduction by The National Bank of America at
alina, Salina, Kansas in determining its taxable income;
rovide:d, however,the Exclusion Factor shall include only the
xcess of excludable interest over .20 (the percentage of
xcluded interest presently provided for by Section 291 of the
ode for tax years beginning after December 31, 1984); and
"Average Principal" refers to the daily average
utstanding principal balance of the Bond during the calendar
uarter for which the installment of Incremental Interest is
eing computed.
The "Marginal Rate" means the maximum Federal
orporate income tax rate under Section 11(b) or any successor
rovision of the Code.
—25—
80,000 1998
80,000 1999
80,000 2000
80,000 2001
he Bonds shall. bear interest from their effective date of
egistration as set forth below payable to the Registered Owner
ereto subject to Federal Tax Rate Adjustment semiannually on
ovember 1 and May 1 in each year, commencing November 1,
986. The Bonds shall carry a variable tax exempt interest
ate that is equal to 80% of the Base Rate of The National Bank
f America at Salina, Salina, Kansas, at the beginning of each
emiannual interest rate period. The Base Rate shall be
efined as the base rate quoted in the most recent Weekly
arket Update of The National Bank of America at Salina,
alina, Kansas, as of the above stated Interest Payment Dates.:
f the term "base rate" is discontinued, the Bank shall choose
substitute rate. If the said Weekly Market Update ceases
ublication., The National Bank of America at Salina, Salina,
ansas shall choose a new rate source.
In the event the deduction for certain financial
nstitution preference items under Section 291(a)(3) of the
ode is changed from the present rate of 80%, the Bonds shall
also bear interest computed according to the following formula
"Incremental Interest") _ (Average Cost of Funds) x (the
xclusi.on Factor) x (Margi.nal. Rate) x (Average Principal)
ivided by 360 x the actual number of days in the interest
eriod. For purposes of the formula:
"Auerage Cost of Funds" means the average cost of
unds to The National. Bank of America at Salina, Salina, Kansas
xpressed as a decimal for the quarter immediately preceding
he quarter for which Incremental. Interest is payable; Average
ost of Funds is de:ter•mine.d by dividing Total Interest Expense.
y Total. Average Assets of The National Bank of America at
alina as reflected on its most recent quarterly unaudited
inancial sta.ternents;
"Exclusion Factor" means the portion of interest
llocable to purchasing and carrying the Bonds which is not
l.l.owable as a deduction by The National Bank of America at
alina, Salina, Kansas in determining its taxable income;
rovide:d, however,the Exclusion Factor shall include only the
xcess of excludable interest over .20 (the percentage of
xcluded interest presently provided for by Section 291 of the
ode for tax years beginning after December 31, 1984); and
"Average Principal" refers to the daily average
utstanding principal balance of the Bond during the calendar
uarter for which the installment of Incremental Interest is
eing computed.
The "Marginal Rate" means the maximum Federal
orporate income tax rate under Section 11(b) or any successor
rovision of the Code.
—25—
low
The principal of and interest on the Bonds are payable
at the principal office of The National Bank of America at
Salina, in the City of Salina, Kansas (the "Trustee"). The
Bonds are subject to redemption and payment prior to maturity
upon the terms and conditions and at the redemption prices set
forth in the Ordinance.
The Bonds have been authorized and issued under and
pursuant to K.S.A. 12-1740 et seq., as amended (the "Act") and
the Ordinance hereinafter referred for the purpose of providing
Funds to pay the costs of acquiring, constructing, equipping
and remodeling the Project described in the Ordinance (the
"Project").
I have examined a certified transcript of proceedings
relating to the authorization and issuance of the Bonds, which
transcript includes, among other documents and proceedings, the
following:
(i) Ordinance No. 86-9122 adopted by the
governing body of the City on March 3, 1986.
(ii) Supplemental. Lease dated as of February 1,
I also have examined the Constitution and statutes of
the State of Kansas, insofar as the same relate to the
authorization and issuance of the Bonds and the authorization,
execution and delivery of the Ordinance, the Supplemental Lease
and the Guaranty Agreement, and an executed and authenticated
Bond of the issue so authorized.
As of the date hereof, additional restrictions on the
issuance of tax exempt bonds by or on behalf of states and
local governments would be imposed by H.R. 3838, the Tax Reform
Act of 1985 (the "Bill") now pending in the Congress of the
United States. If the Bill becomes law in its present form,
the Bonds will be subject to the new restrictions contained in
the Bill. The City has convenanted to take all actions
necessary to comply with the provisions of the Bill in order to
maintain the Federal tax exempt status of the interest on the
Bonds. I have assumed continuing compliance by the City with
such covenant in rendering my opinion that interest on the
Bonds is exempt from Federal income taxation.
Based upon such examination, I am of the opinion, as
of the date hereof, as follows:
-26-
1986 (the
"Lease"), between the City and
School
Specialty
Supply, Inc., a Kansas corporation
(the
"Tenant").
(iii.)
Guaranty Agreement dated as
of February 1,
1986 (the
"Guaranty Agreement"), between
the School
Specialty
Supply, Inc. (the "Guarantor")
and the
Trustee for
the benefit of the owners of
the Bonds.
I also have examined the Constitution and statutes of
the State of Kansas, insofar as the same relate to the
authorization and issuance of the Bonds and the authorization,
execution and delivery of the Ordinance, the Supplemental Lease
and the Guaranty Agreement, and an executed and authenticated
Bond of the issue so authorized.
As of the date hereof, additional restrictions on the
issuance of tax exempt bonds by or on behalf of states and
local governments would be imposed by H.R. 3838, the Tax Reform
Act of 1985 (the "Bill") now pending in the Congress of the
United States. If the Bill becomes law in its present form,
the Bonds will be subject to the new restrictions contained in
the Bill. The City has convenanted to take all actions
necessary to comply with the provisions of the Bill in order to
maintain the Federal tax exempt status of the interest on the
Bonds. I have assumed continuing compliance by the City with
such covenant in rendering my opinion that interest on the
Bonds is exempt from Federal income taxation.
Based upon such examination, I am of the opinion, as
of the date hereof, as follows:
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1. The City is a municipal corporation duly and
legally organized and validly existing under the laws of the
State of Kansas, and has lawful power and authority to issue
the Bonds and to enter into the Ordinance and the Supplemental
Lease and to perform its obligations thereunder.
2. The Bonds are in proper form and have been duly
authorized and issued in accordance with the Constitution and
statutes of the State of Kansas, including the Act.
4. The. Ordinance has been duly adopted by the City
and the Supplemental Lease and.the Guaranty Agreement have been
duly authorized, executed and delivered by the parties thereto,
and constitute valid and legally binding agreements of the
parties thereto, enforceable in accordance with the respective
provisions thereof.
5. Under existing law, the interest on the Bonds is
exempt from Federal income taxation, except for interest on any
Bond for any period during which it is held by a person who is
a "substantial user" of the. Project or a "related person" as
those terms are used in Section 103(b)(13) of the Internal
Revenue Code. I call your attention to the fact that interest.
on the Bonds may become subject to Federal income taxation in
the event that (i) the Tenant or another person takes action
within three years after the date hereof which causes the
$10,000,000 limitation contained in Section 103(b)(6)(D) of the.
Internal Revenue Code to be exceeded; (ii) more than 25 percent
of the proceeds of the Bonds is used to provide a facility the
primary purpose of which is one of the following: retail food
and beverage services, automobile sales or service, or the
provision of recreation or entertainment; or.(iii) any portion
of the proceeds of the Bonds is used to provide the following:
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
—27—
3. The Bonds are valid and legally binding limited
obligations of the City according to the terms thereof, payable
as to principal, redemption premium, if any, and.interest
solely from, and secured by a valid and enforceable pledge and
assignment of the rents, revenues and receipts derived by the.
City under the Supplemental Lease (except to the extent payable
from proceeds of the Bonds, insurance proceeds, sale or
condemnation awards or payments, if any, received pursuant to
the Guaranty Agreement), all in the manner provided in the
Ordinance. The Bonds are issued on a parity as to lien and
security with the City's Industrial Revenue Bonds, Series of
1973, dated May 1, 1973, in the original principal amount of
$950,000, issued under authority of Ordinance No. 8286 of the.
City. The Bonds do not constitute a debt of the City, the
State of Kansas or any political subdivision thereof and do not
constitute an indebtedness within the meaning of any
constitutional or statutory debt limitation or restriction, and
are not payable in any manner by taxation.
4. The. Ordinance has been duly adopted by the City
and the Supplemental Lease and.the Guaranty Agreement have been
duly authorized, executed and delivered by the parties thereto,
and constitute valid and legally binding agreements of the
parties thereto, enforceable in accordance with the respective
provisions thereof.
5. Under existing law, the interest on the Bonds is
exempt from Federal income taxation, except for interest on any
Bond for any period during which it is held by a person who is
a "substantial user" of the. Project or a "related person" as
those terms are used in Section 103(b)(13) of the Internal
Revenue Code. I call your attention to the fact that interest.
on the Bonds may become subject to Federal income taxation in
the event that (i) the Tenant or another person takes action
within three years after the date hereof which causes the
$10,000,000 limitation contained in Section 103(b)(6)(D) of the.
Internal Revenue Code to be exceeded; (ii) more than 25 percent
of the proceeds of the Bonds is used to provide a facility the
primary purpose of which is one of the following: retail food
and beverage services, automobile sales or service, or the
provision of recreation or entertainment; or.(iii) any portion
of the proceeds of the Bonds is used to provide the following:
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
—27—
acility, suntan facility or racetrack; (iv) more than 5
ercent of the proceeds of the Bonds is used to provide
esidential real property for family units, in any which event
he Ordinance requires that the Bonds be called for redemption
nd payment; (v) the amount of industrial development bonds
including the Bonds) allocable to either the Tenant or a
elated Person (as defined in Section 103 (b)(6)(C) of the
ode) thereto as a Test Period Beneficiary (as defined in the
,ode) exceeds $40,000,000; (vi) any portion of the proceeds of
.he Bonds is used to provide any airplane, skybox, or other
rivate luxury box, any health club facility, any facility
rimarily used for gambling, or any store the principal
usiness of which is the sale of alcoholic beverages for
onsumpti.on off premises; (vii) the Project is connected with
ny other facility financed with the proceeds of industrial
evelopment bonds issued in accordance with Section
03(b)(6)(D) or Section 103(b)(6)(A) of the Code through the
se of substantial common facilities; (viii) more than 25% of
the proceeds of the Bonds is used for the acquisition of land
of to be used for farming purposes; or (ix) any portion of the
roceeds of the Bonds is used for the acquisition of any
roperty (or on interest thereon) unless (a) the first use of
such property is pursuant to such acquisition, or (b) the.
Rehabilitation Expenditures (as. defined in the Code) with
espect to a building (and the equipment therefor) equals or
-.xceeds 15% of the portion of the cost of acquiring such
uilding (and equipment) financed with the proceeds of the
issuer, or (c) the Rehabilitation Expenditures (as defined in
the. Code) with respect to facilities other than a building
qual.s or exceeds 100% of the portion of the cost of acquiring
uch facilities.
6. Under existing law the interest on the Bonds is
xempt from income taxation by the State of Kansas and the
onds aro exempt from intangible personal. property taxes levied
y Kansas counties, cities and townships.
7. Assuming compliance with the above—described,
ovenants, interest on the Bonds will be exempt from Federal
ncome taxes if H.R. 3838 becomes law in the form passed by the
.S. House of Representatives. However, for taxable years
eginni.ng after 1987, the interest on the Bonds may be included
n adjusted net gain for purposes of the minimum tax imposed on
roperty and casualty insurors under 1023 of the Bill.
The rights of the owners of the Bonds and the
enforceability of the Bonds, the Ordinance, the Supplemental
Lease and the Guaranty Agreement may be subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting creditor's rights heretofore or hereafter enacted and
their enforcement may be subject to the exercise of judicial
discretion in accordance with general principles of equity.
This opinion does not extend to documents, agreements,
representations or other materials of any kind concerning the
Bonds not specifically mentioned hereinand should not be
—28—
1
considered as inclusioe of any matters which are not set forth
herein.
WINTON M. HINKLE, P.A.
—29—
SECTION 10, Authentication, Execution and Delivery of
the Bonds. The Mayor and City Clerk are hereby authorized and
directed to prepare and execute the Bonds herein authorized, in
the manner hereinbefore specified, and to obtain their
authentication by the. Trustee and to cause said Trustee to
deliver said Bonds to The National Bank of America at Salina,
Salina, Kansas, the Original Purchaser thereof (the "Original
Purchaser"), on payment of the purchase price therefor. rhe
Trustee shall authenticate said Bonds in the principal amount
of $1,200,000 and deliver the same as provided above.
SECTION 11. Designation of Trustee, Creation of
Construction Fund. The National Bank of America at Salina,
Salina, Kansas, is hereby designated as the City's Trustee
under the provisions of this Ordinance and of said Lease and
the proceeds of the said Bonds shall. be deposited with said
Trustee. There is hereby authorized and ordered to be
established in the custody of said Trustee a separate fund or
account designated "City of Salina, Kansas School Specialty
Supply, Inc. 1986 Construction Fund" (hereinafter referred to
as the "1986 Construction Fund"), which the Trustee shall hold
in trust pursuant to the terms hereof.
SECTION 12. Creation of the Principal and Interest
Payment Account. There is hereby created and ordered
established in the custody of the Trustee a special trust fund
in the name of the Issuer to be designated the "City of Salina,
Kansas, Principal and Interest Payment Account for Industrial
Revenue Bonds, Series A, 1986 (School Specialty Supply, Inc.),
dated February 1, 1986" (herein called the "Principal and
Interest Payment Account").
The Trustee shall deposit into the Principal and
Interest Payment Account, as and when received all Rental
Payments payable by the Tenant to the Issuer specified in
Section 4 of the Supplemental Lease and all interest and other
income derived from investments of Principal and Interest
Payment Account moneys as provided in Section 12 of Ordinance.
No. 8286, dated May 1, 1973. The balance of the proceeds of
the sale of the Bonds shall be deposited in the 1986
Construction Fund.
Except as provided above, moneys in the Principal and
Interest Payment Account shall be expended solely for the
payment of the principal of, premium, if any, and interest on
the Bonds as the same mature and become due or upon the
redemption thereof prior to maturity. The Issuer hereby
authorizes and directs the Trustee to withdraw sufficient funds
from the Principal and Interest Payment Account to pay the
principal of, premium, if any, and interest on the Bonds as the
same become due and payable and to make said funds so withdrawn
available to the Paying Agents for the purpose of paying said
principal, premium, if any, and interest.
SECTION 13. Acquisition, Purchase, Construction and
Equipping of Facility, Use of 1986 Construction Fund. The
—30—
Trustee shall make disbursements from the 1986 Construction
Fund for the acquisition, purchase and construction of the
Facility as provided in the Lease and Supplemental Lease.
Any amount remaining in the 1986 Construction Fund
after the 1986 Additions to the Facility has been fully
completed and paid for, lien free, as provided in Section 3 of
the Lease, shall. be deposited by the Trustee in the Principal
and Interest Payment Account created by Section 12 hereof.
The City covenants and agrees that it will neither
snake nor permit the Trustee or the Tenant to make any use of
the proceeds of the Bonds which, if such use had been
reasonably expected on the date of issuance of the Bonds, would
have caused the Bonds to be arbitrage bonds within the meaning
of Section 103(c) of the -Internal Revenue Code of 1954, as
amended, and the City will. comply with, and will take all
necessary action to cause the Trustee and the Tenant to comply
with, all. applicable requirements of said Section 103(c) and
the rules and regulations of the United States Treasury
Department thereunder for so long as any of the Bonds remain
outstanding and unpaid.
SECTION 14. Certain Covenants of the City. The City
covenants and agrees that From and after the delivery of any of
the Bonds herein authorized and continuing so long as any of
said Bonds shall remain outstanding, said City will direct the
Trustee: to maintain the Accounts created in Ordinance No. 8286
and this Ordinance with the Trustee. All moneys due under the
Lease and Supplemental Lease shall be paid to and deposited
with said Trustee and shall be applied and allocated by said
Trustee when received so long as any of the Bonds herein
authorized remain outstanding and unpaid as follows:
(a) Basic Rent due under the Lease and Supplemental
Basic Rent due under the Supplemental Lease shall be credited
to and deposited in said Principal and Interest Account upon
receipt. The moneys in the. Principal and Interest Account
shall. be used solely and only to pay interest and principal on
the Bonds and the 1973 Bonds when due or to retire the Bonds
and the 1973 Bonds prior to maturity when property subject to
call and when cash funds are available to pay all outstanding
Bonds and 1973 Bonds in full plus interest and call premium, if
any.
SECTION 15., Investments. Except as hereinafter set
forth, moneys in all of the accounts or funds created or
recognized by this Ordinance shall be invested by the Trustee
as provided in, and subject to the provisions of, Section 12
Ordinance No. 8286. Interest earned on all other accounts
shall accrue to and
earnings.
of
become a part of the account generating the
SECTION 16. Bonds Equally Secured Under Ordinance No.
8286. The Bonds authorized herein shall be on a parity with
and shall be entitled to the same benefit and security of
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_
Ordinance No. 8286 and the 1973 Bonds issued thereunder.
Except as specifically provided herein and to the extent
permitted by Ordinance No. 8286, the Bonds herein authorized
are and shall be governed by all of the provisions of Ordinance
No. 82.86 including, without limitation, the provisions with
respect to the collection and disposition of revenues, the
covenants of the City, the nature and extent of the security
for the bonds, the City's right to issue additional bonds, the
rights, duties and obligations of the City, the rights of the
holders of the bonds, and the provisions relating to
amendments, events of default, enforcement, acceleration in the
event of default and defeasance. In case any provisions,
covenant, stipulation, obligation or agreement contained in the
Bonds or in this Ordinance shall for any reason be held to be
in violation of, or contrary to or in conflict with the
provision of Ordinance No. 8286 of the City, then the
provisions of Ordinance No. 8286 shall be deemed to control and
this Ordinance and the Bonds herein authorized shall be
construed and enforced as if such contrary or conflicting
provision had not been contained herein.
SECTION 17. Authorization of Supplemental Lease. The
1986 Additions to be acquired, constructed, equipped and
remodel pursuant to this Ordinance and said Lease and
Supplemental Lease shall be leased to the Tenant under and
pursuant to the Lease dated as of May 1, 1973 and the
Supplemental Lease dated as of February 1, 1986, substantially
in the form attached to this Ordinance, which Supplemental
Lease, including any changes necessary to correct omissions or
ambiguities therein, which the officers executing the same are
hereby authorized to make, the Mayor and City Clerk are hereby
authorized and directed to execute for and on behalf of as as
the act and deed of the City. The Mayor and City Clerk are
further• authorized and directed to execute and acknowledge a
notice or memorandum of said Supplemental Lease in such form as
they may deem adequate and to cause the same to be recorded in
the Office of the. Register of Deeds of Saline County, Kansas.
The Mayor and City Clerk are further authorized and directed to
execute and acknowledge an assignment by the City to the.
Trustee of the City's interest in the Supplemental Lease which
assignment shall be effective to assign to the Trustee all of
the City's rights, duties, responsibilities and obligations
under this Ordinance and the Supplemental Lease excepting only
those rights, duties, responsibilities and obligations which
may only be properly and lawfully exercised by or imposed upon
the City.
SECTION 18. Guaranty Agreement. As and for an
express condition precedent to the issuance and delivery of the
Bonds, there shall be executed and delivered by Tenant to the
Trustee a Guaranty. Agreement dated as of February 1, 1986,
substantially in the form attached to this Ordinance.
SECTION 19. Agreements of the City. All covenants,
stipulations and obligations of the City contained in this
Ordinance and contained in the Lease shall be deemed to be the
—32—
. +
covenants, stipulations, obligations and agreements of the City
to the full extent authorized or permitted by the Act, and all
such covenants, stipulations, obligations and agreements shall
be binding upon the City and its successors from time to time
and upon any board, body or agency to which any powers or
duties, affecting such covenants, stipulations, obligations and
agreements, shall be transferred by or in accordance with law.
Nothing contained in this Ordinance shall, however, be
construed to impose on said City any duty or obligation to levy
any taxes either contained herein or in the Lease either to
meet any contractual obligation contained herein or to pay any
judgment for damages or to pay the principal of or interest on
the Bonds of the City herein authorized. Except as otherwise
provided in this Ordinance, all rights, powers and priviledges
conferred and duties and liabilities imposed upon the City or
any official thereof by the provisions of this Ordinance or the
Lease shall be exercised or performed by the City or by such
officers as may be required by law to exercise such powers and
to perform such duties. No covenant, stipulation, obligation
or agreement herein contained or contained in the Supplemental.
Lease shall be deemed to be a covenant, stipulation, obligation
or agreement of any official, officer, agent or employee of the
City in his individual capacity, and neither the officials of
the City nor any officer executing the Bonds shall be liable
personally on the Bonds or incur any personal liability or
accountability by reason of the issuance thereof.
SECTION 20. Peformance. of Acts. All acts, conditions
and things required by the Constitution and laws of the State
of Kansas, relating to the passage of this Ordinance, to the
issuance of the Bonds or to the execution of the Lease, to
happen, exist and be performed precedent to and in the
enactment of this Ordinance, and precedent to the issuance of
the Bonds and precedent to the execution of the Supplemental.
Lease have happened, exist and have been performed as so
required by law.
SECTION 21. Ad. Valorem Tax. Exemption. Pursuant to
the provisions of K.S.A. 79-201(a), as amended, Tenant shall
waive any ad valorem property tax exemption, which would be
available for the Project, or will agree to a satisfactory
payment in lieu of taxes.
SECTION 22. Election Pursuant to I.R.C. Section
103(b)(6)(D). The City hereby elects to have the provisions of
Section 103(b)(6)(D) of the Internal Revenue Code of 1954, as
amended, apply to the Bonds. The Mayor is hereby authorized
and directed to sign the Statement of Election and to take such
other action as may be necessary to make effective the election
made herein.
SECTION 23. Further Authority. The officials of the
City, its attorneys, engineers and other agents or employees
are hereby authorized to do all acts and things required of
them by this Ordinance and the Supplemental Lease for the full,
punctual and complete performance of all of the terms,
—33—
covenants and agreements contained in the Bonds, the
Supplemental Lease and this Ordinance.
SECTION 24. Additional Bonds. The City may issue from
time to time additional industrial revenue bonds to pay for all
or a portion of the cost of purchasing, constructing,
reconstructing, remodeling and equipping improvements,
additions or extensions to the Facility, or for refunding bonds
of this issue and the 1973 Bonds to the extent permitted by
law, which additional bonds shall be in all respects on a
parity with the Bonds herein authorized and the 1973 Bonds, and
all such bonds shall be equally and ratably secured by the
pledge and covenants contained in this Ordinance and Ordinance
No. 8286 of the City, provided the following terms and
conditions are met:
(a) The City shall have entered into a lease or
agreement with the Tenant with rentals or payments at least
sufficient to pay the principal of and interest on such
additional bonds as the same become due, on substantially the
same terms and conditions as the Lease and Supplemental Lease
herein authorized; and ,
(b) The City and the Tenant shall have pledged the
Facility, including the additions, improvements and extensions
thereto to be financed by said additional. bonds, to the payment
of the Bonds herein authorized and the 1973 Bonds and the
interest thereon; and
(c) The Tenant is not in default (i) in the payment
of Basic Rent, Supplemental Basic Rent or Additional Rent due
under the Lease or Supplemental Lease, or (ii) in performance
of any other duty or covenant under the Lease or Supplemental
Lease; and
. (d) The issuance of the additional bonds shall not
affect the exemption from Federal income taxation of the
interest on the Bonds herein authorized or the 1973 Bonds; and
(e) The obligations of the Tenant assumed in
connection with the issuance of the additional bonds do not
violate any provisions of the Lease. or Supplemental Lease; and
(f) The Trustee and the Original Purchaser of the
Bonds herein authorized and the 1973 Bonds, shall have given
express written consent to the issuance of such additional
bonds, which consent shall not be unreasonably withheld.
SECTION 25. Pending Federal Legislation. As of the
date hereof, additional restrictions on the issuance of tax
exempt bonds by or on behalf of States and local governments
would be imposed by H.B. 3838, the Tax Reform Act of 1985 (the
"Bill") now pending in the Congress of the United States. If
the Bill becomes law in its present form, the bonds will be
subject to the new restrictions contained in the Bill. The
City consents to take all actions which it can legally do
—34—
necessary to comply with the provisions of the Bill in order to
maintain the Federal tax exempt status of the interest on the
bonds.
SECTION 26. Effective Date. This Ordinance shall take
effect and be in Force from and after its passage, approval and
publication once in the official city paper.
PASSED by the Governing Body of the City of Salina.,
'i Kansas, this 3rd day of March, 1986.
CITY OF SALINA, KANSAS
AT TEST: By
Merle A. Hodges, M or
_ ell cj t-4 i �ylu y
D. L. Harrison, City Clerk
(Seal)
r
—35—
SCHEDULE I
SCHEDULE I TO ORDINANCE NO. 86-9122 OF
THE CITY OF SALINA, KANSAS, AND TO THE
SUPPLEMENTAL LEASE DATED FEBRUARY 1,
1986, BY AND BETWEEN SAID CITY AND
SCHOOL SPECALI:TY SUPPLY, INC.
AUTHORIZED BY SAID ORDINANCE.
PROPERTY SUBJECT TO LEASE
(a) The following described real estate located in
Saline County, to wit:
A TRACT OF LAND IN THE SOUTHWEST QUARTER (SW 1/4)
THENCE N 05 DEGREES 44'25"E PARALLEL WITH SAID
EAST RIGHT-OF-WAY LINE A DISTANCE OF FIVE HUNDRED
(500.00) FEET; THENCE S 89 degrees 40'52"E
PARALLEL WITH THE SOUTH LINE OF SAID SOUTHWEST
QUARTER A DISTANCE OF EIGHT HUNDRED FIFTY AND
FIFTY-SIX HUNDREDTHS (850.56) FEET; THENCE S 00
DEGREES 03'57"W PARALLEL WITH THE WEST LINE OF
THE UNION PACIFIC RAILROAD RIGHT-OF-WAY A
DISTANCE OF FOUR HUNDRED NINETY-SEVEN AND
SEVENTY-SEVEN HUNDREDTHS (497.77) FEET; THENCE N
89 DEGREES 40'52W PARALLEL WITH THE SOUTH LINE OF
SAID SOUTHWEST QUARTER (SW 1/4-) A DISTANCE OF
NINE HUNDRED (900.00) FEET TO THE POINT OF
BEGINNING. SAID TRACT OF LAND CONTAINING TEN
(10.00) ACRES.
said.real property constituting the "Land" as referred to in
said Lease
(b) The following described buildings and improvements now
or hereafter constructed, reconstructed, remodeled or equipped,
-36-
OF SECTION ONE (1), -TOWNSHIP FIFTEEN (15) SOUTH,
RANGE THREE (3) WEST OF THE SIXTH PRINCIPAL
MERIDIAN IN SALINE COUNTY, KANSAS, MORE
PARTICULARLY DESCRIBED AS FOLLOWS: STARTING FROM
THE SOUTHWEST CORNER OF SAID SOUTHWEST QUARTER
(SW 1/4), THENCE N 00 DEGREES 07'06" E ALONG THE
WEST LINE OF SAID SOUTHWEST QUARTER (SW 1/4) A
DISTANCE OF THIRTEEN HUNDRED FIFTY-NINE AND
NINETY-EIGHT HUNDREDTHS (1359.98) FEET; 'THENCE S
89 degrees 4-0'52" E PARALLEL WITH THE SOUTH LINE
OF SAID SOUTHWEST QUARTER (SW 1/4) A DISTANCE OF
ONE HUNDRED SIXTY-FOUR AND FIFTY-SEUEN HUNDREDTHS
(164.57) FEET TO THE POINT OF BEGINNING; SAID
POINT OF BEGINNING BEING A POINT ON THE NORTH
LINE OF AN EXISTING PUBLIC RIGHT-OF-WAY EIGHTY
AND THIRTY-SEVEN HUNDREDTHS (80,37) FEET EAST OF
ITS INTERSECTION WITH THE EAST RIGHT-OF-WAY LINE
OF U.S. HIGHWAY EIGHTY-ONE (81):
THENCE N 05 DEGREES 44'25"E PARALLEL WITH SAID
EAST RIGHT-OF-WAY LINE A DISTANCE OF FIVE HUNDRED
(500.00) FEET; THENCE S 89 degrees 40'52"E
PARALLEL WITH THE SOUTH LINE OF SAID SOUTHWEST
QUARTER A DISTANCE OF EIGHT HUNDRED FIFTY AND
FIFTY-SIX HUNDREDTHS (850.56) FEET; THENCE S 00
DEGREES 03'57"W PARALLEL WITH THE WEST LINE OF
THE UNION PACIFIC RAILROAD RIGHT-OF-WAY A
DISTANCE OF FOUR HUNDRED NINETY-SEVEN AND
SEVENTY-SEVEN HUNDREDTHS (497.77) FEET; THENCE N
89 DEGREES 40'52W PARALLEL WITH THE SOUTH LINE OF
SAID SOUTHWEST QUARTER (SW 1/4-) A DISTANCE OF
NINE HUNDRED (900.00) FEET TO THE POINT OF
BEGINNING. SAID TRACT OF LAND CONTAINING TEN
(10.00) ACRES.
said.real property constituting the "Land" as referred to in
said Lease
(b) The following described buildings and improvements now
or hereafter constructed, reconstructed, remodeled or equipped,
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7�
said improvements constituting the 1986 Additions to the
Facility.
Certain expansion and improvement to the existing facility,
including improvement to the parking area and surrounding
grounds. Certain printing plant equipment together with
miscellaneous computer equipment For use in the expanded
facility .
the property described in paragraphs (a) and (b) of this
Schedule I together constituting the "Project" as referred to
in said Supplemental. Lease and said Ordinance.
—37—