Ordinance

(Published in The Lawrence Journal-World on December ____, 2010)

ORDINANCE NO. ____________

AN ORDINANCE AUTHORIZING THE ISSUANCE BY THE CITY OF LAWRENCE, KANSAS OF ITS INDUSTRIAL REVENUE BONDS (The Bowersock Mills & Power Company Project), IN ONE OR MORE SERIES, THE AGGREGATE PRINCIPAL AMOUNT OF ALL SERIES NOT TO EXCEED $27,000,000, TO PROVIDE FUNDS TO ACQUIRE, CONSTRUCT AND EQUIP A PROJECT FOR THE BOWERSOCK MILLS & POWER COMPANY AND AUTHORIZING AND APPROVING CERTAIN DOCUMENTS AND ACTIONS IN CONNECTION WITH THE ISSUANCE OF SAID BONDS, AND REPEALING ORDINANCE NO. 8599.

WHEREAS, the City of Lawrence, Kansas (the “City”) is authorized by K.S.A. 12-1740 to 12-1749d, inclusive, as amended (the “Act”), to issue revenue bonds, the proceeds of which shall be used for the purpose of paying all or part of the cost of purchasing, acquiring, constructing, reconstructing, improving, equipping, furnishing, repairing, enlarging or remodeling facilities for agricultural, commercial, hospital, industrial, natural resources, recreational development and manufacturing purposes and to enter into leases or lease-purchase agreements with any person, firm or corporation for such facilities; and

WHEREAS, pursuant to the Act, the City proposes to issue its Industrial Revenue Bonds (The Bowersock Mills & Power Company Project), in one or more series (the “Bonds”), the aggregate principal amount of all series not to exceed $27,000,000, for the purpose of (1) acquiring, constructing and equipping the Project (as defined in the Bond Indenture), (2) funding a debt service reserve fund for the Bonds, and (3) and paying certain costs of issuance, all as further described in the hereinafter referred to Bond Indenture and Lease Agreement; and

WHEREAS, the Bonds will be issued under a Bond Trust Indenture (the “Bond Indenture”), by and between the City and UMB Bank, N.A., as Bond Trustee (the “Bond Trustee”); and

WHEREAS, simultaneously with the execution and delivery of the Bond Indenture, the City will enter into a Lease Agreement (the “Lease Agreement”), by and between the City, as lessor, and The Bowersock Mills & Power Company (the “Corporation”), as lessee, pursuant to which the City will sublease the Project to the Corporation, and the Corporation will agree to pay Basic Lease Payments (as defined in the Bond Indenture) sufficient to pay the principal of and premium, if any, and interest on, the Bonds; and

WHEREAS, the City further finds and determines that it is necessary and desirable in connection with the issuance of the Bonds that the City execute and deliver certain documents and that the City take certain other actions as herein provided;

NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF LAWRENCE, KANSAS AS FOLLOWS:

Section 1. Findings and Determinations. The City hereby makes the following findings and determinations with respect to the Bonds to be issued by the City, based upon representations made to the City by the Corporation:

(a) The Corporation has properly requested the City’s assistance in financing the costs of the Project;

(b) The issuance of the Bonds for the purpose of providing funds to finance the costs of the Project is in furtherance of the public purposes set forth in the Act; and

Section 2. Authorization of the Bonds. The City is hereby authorized to issue the Bonds in one or more series, the aggregate principal amount of all series of the Bonds not to exceed $27,000,000, which shall be issued under and secured by and shall have the terms and provisions set forth in the Bond Indenture. Any series of Bonds may be issued as taxable or tax-exempt bonds, and may further be designated as Recovery Zone Facility Bonds or Qualified Energy Conservation Bonds to the extent an allocation for the issuance of such bonds has been received from the Kansas Department of Commerce. Any series of the Bonds bearing interest at a fixed rate shall bear interest at rates not to exceed 10.0% per annum. Each series of tax-exempt bonds shall mature in principal installments with a final maturity date not later than the year 2037, and any series of Bonds designated as Qualified Energy Conservation Bonds shall mature in principal installments with a final maturity date not later than the maximum maturity set by the Bureau of Public Debt. Each series of the Bonds shall have such redemption provisions, including premiums, and other terms as set forth in the Bond Indenture. The final terms and number of series of the Bonds shall be specified in the hereinafter referred to Bond Indenture and Placement Agreement relating to each series of Bonds upon the execution thereof, and the signatures of the officers of the City executing such Bond Indenture and Placement Agreement shall constitute conclusive evidence of their approval and the City’s approval thereof.

Any and all purchasers and transferees of the Series 2010 Bonds shall represent that (a) the purchaser/transferee is either (1) an “accredited investor” as defined in Rule 501 of Regulation D of the Securities and Exchange Commission (the “SEC”) or (2) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended), (b) the purchaser/transferee is purchasing the Series 2010 Bonds for its own account for investment and with no present intention of selling or transferring the Series 2010 Bonds, (c) the purchaser/transferee has been provided with or given access to all financial and other information requested relating to the Series 2010 Bonds or which it deems material in connection with the purchase of Series 2010 Bonds, (d) the purchaser/transferee considers that it has such knowledge and experience in financial and business matters as to be independently capable of evaluating the merits and risks of investment in the Series 2010 Bonds and to make an informed decision with respect thereto, and (e) the purchaser/transferee understands that the Series 2010 Bonds are subject to all terms and conditions of the Bond Indenture.

Section 3. Limited Obligations. The Bonds shall be limited obligations of the City payable solely from the sources and in the manner as provided in the Bond Indenture, and shall be secured by a transfer, pledge and assignment of and a grant of a security interest in the Trust Estate (as defined in the Bond Indenture) to the Bond Trustee and in favor of the owners of the Bonds, as provided in the Bond Indenture. The Bonds and interest thereon shall not be deemed to constitute a debt or liability of the City, the State of Kansas (the “State”) or of any political subdivision thereof within the meaning of any State constitutional provision or statutory limitation and shall not constitute a pledge of the full faith and credit of the City, the State or of any political subdivision thereof, but shall be payable solely from the funds provided for in the Lease Agreement and the Bond Indenture. The issuance of the Bonds shall not, directly, indirectly or contingently, obligate the City, the State or any political subdivision thereof to levy any form of taxation therefor or to make any appropriation for their payment. No breach by the City of any such pledge, mortgage, obligation or agreement may impose any liability, pecuniary or otherwise, upon the City or any charge upon its general credit or against its taxing power.

Section 4. Authorization and Approval of Documents. The following documents are hereby approved in substantially the forms presented to and reviewed by the City at this meeting and attached to this Ordinance (copies of which documents shall be filed in the records of the City), and the City is hereby authorized to execute and deliver each of such documents (the “City Documents”) with such changes therein (including the dated date thereof) as shall be approved by the officials of the City executing such documents, such officials’ signatures thereon being conclusive evidence of their approval and the City’s approval thereof:

(a) A Bond Indenture providing for the issuance thereunder of the Bonds and setting forth the terms and provisions applicable to the Bonds, including a pledge and assignment by the City of the Trust Estate to the Bond Trustee for the benefit and security of the owners of the Bonds upon the terms and conditions as set forth in the Bond Indenture;

(b) A Base Lease Agreement under which the Corporation will lease to the City the site on which the Project will be constructed in consideration of the City’s deposit of the proceeds of the Bonds into the funds described in the Bond Indenture;

(c) A Lease Agreement under which the City will make the proceeds of the Bonds available to the Corporation for the purposes herein described in consideration of payments which will be sufficient to pay the principal of, redemption premium, if any, and interest on the Bonds;

(d) A Tax Compliance Agreement among the City, the Corporation and the Bond Trustee, pursuant to which the requirements relating to the federal tax status of the Recovery Zone Facility Bonds are set forth;

(e) A Tax Compliance Agreement among the City, the Corporation and the Bond Trustee, pursuant to which the requirements relating to the federal tax status of the Qualified Energy Conservation Bonds are set forth; and

(f) A Bond Placement Agreement (the “Placement Agreement”) among the City, the Corporation, and Stern Brothers & Co. and Headwaters MB (collectively, the “Agent”), under which the City agrees to sell the Bonds upon the terms and conditions as set forth in the Placement Agreement.

The City authorizes the City Documents in substantially the form as the forms presented to and reviewed by the City at this meeting, with such changes therein as shall be approved by the officials of the City executing such documents, such officials’ signatures thereon being conclusive evidence of their approval and the City’s approval thereof.

Section 5. Approval of Preliminary Private Placement Memorandum; Preliminary Private Placement Memorandum Deemed Final. The Preliminary Private Placement Memorandum relating to the Bonds, a copy of which is on file with the City Clerk, has been submitted to and reviewed by the City on the date hereof, and the final Private Placement Memorandum relating to the Bonds, in substantially the form of the Preliminary Private Placement Memorandum with such changes and additions thereto as are necessary to conform to the transaction, and the public distribution of the Private Placement Memorandum by the Agent is hereby approved for use in connection with the Bonds. The City has not participated in the preparation of the Preliminary Private Placement Memorandum or the final Private Placement Memorandum and has not verified the accuracy of the information therein, other than information respecting the City. Accordingly, such approvals do not constitute approval by the City of such information or a representation by the City as to the completeness or accuracy of the information contained therein.

The Agent shall represent at closing that the Series 2010 Bonds are being offered solely to Qualified Institutional Buyers and Accredited Investors in minimum denominations of $100,000 pursuant to a limited offering of not more than 35 purchasers, each of whom the Agent reasonably believes (a) has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment in the Series 2010 Bonds and (b) is not purchasing for more than one account with a view to distributing the Series 2010 Bonds. Based upon such representations, pursuant to Rule 15c2‑12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “1934 Act”), in reliance on paragraph (d) of the Rule, the offer and sale of the Series 2010 Bonds shall be exempt from the Rule.

Section 6. Execution of Bonds and Documents. The Mayor of the City is hereby authorized and directed to execute the Bonds by manual or facsimile signature and to deliver the Bonds to the Bond Trustee for authentication for and on behalf of and as the act and deed of the City in the manner provided in the Bond Indenture. The Mayor of the City is hereby authorized and directed to execute and deliver the City Documents for and on behalf of and as the act and deed of the City. The City Clerk of the City is hereby authorized and directed to attest, by manual or facsimile signature, to the Bonds, the City Documents and such other documents, certificates and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance.

Section 7. Further Authority. The City shall, and the officials, agents and employees of the City are hereby authorized and directed to, take such further action, and execute such other documents, certificates and instruments, including, without limitation, any credit enhancement and security documents, arbitrage certificate, closing certificates and tax forms, as may be necessary or desirable to carry out and comply with the intent of this Ordinance, and to carry out, comply with and perform the duties of the City with respect to the Bonds and the City Documents.

Section 8. Effective Date. This Ordinance shall take effect and be in full force immediately after its adoption by the Governing Body of the City and publication in the official newspaper of the City.

Section 9. Repeal of Ordinance No. 8599. Ordinance No. 8599 is hereby repealed.

PASSED by the Governing Body of the City of Lawrence, Kansas this 14th day of December, 2010 and APPROVED by the Vice Mayor.

________________________________________

Vice Mayor

[SEAL]

ATTEST:

________________________________

City Clerk