1999 SUPPLEMENTAL LEASE
BY AND BETWEEN
CITY OF SOUTH HUTCHINSON, KANSAS
AND
XXXXXXX BUS CORPORATION
DATED AS OF JUNE 1, 1999
1999 SUPPLEMENTAL LEASE
This 1999 Supplemental Lease dated as of June 1, 1999 (the
"1999 Supplemental Lease") by and between the City of South
Hutchinson, Kansas, a municipal corporation of the State of
Kansas (the "Issuer"), and Xxxxxxx Bus Corporation, a Kansas
corporation organized under the laws of the State of Kansas (the
"Tenant") and supplements a Lease between the same parties made
as of August 1, 1984, and a 1997 Amended and Restated Lease
between the same parties made as of November 15, 1997.
W I T N E S S E T H:
WHEREAS, the parties have heretofore entered into a Lease
dated as of August 1, 1984 (hereafter called the "Lease") and a
1997 Amended and Restated Lease dated as of November 15, 1997
(the "1997 Amended and Restated Lease") covering the property,
both real and personal, set forth in Schedule I attached hereto
and incorporated herein by reference; and
WHEREAS, the Existing Facilities (as hereinafter defined)
and all rentals due under the Lease are pledged to secure payment
of a series of City of South Hutchinson, Kansas, Industrial
Revenue Bonds, being Series 1984A, in the original aggregate
principal amount of $1,750,000 (hereinafter sometimes called the
"1984 Bonds") which were issued to pay the cost of acquiring a
site and purchasing, constructing and equipping a manufacturing
facility (hereinafter the "1984 Project"); and
WHEREAS, the Existing Facilities and all rentals due under
the 1997 Amended and Restated Lease are also pledged to secure
payment of a series of City of South Hutchinson, Kansas,
Industrial Revenue Bonds, Series 1997 issued in the original
principal amount of $3,500,000 (the "1997 Bonds"), to pay the
cost of acquiring, purchasing, constructing and equipping certain
facilities (the "1997 Improvements"), which the 1984 Project and
the 1997 Improvements are hereinafter referred to collectively as
the "Existing Facilities"; and
WHEREAS, Issuer is an existing municipality, a city of the
third class, with full power and authority to enter into this
1999 Supplemental Lease, acting by and through its governing
body, in the public interest and for a public purpose, by
providing for additional commercial development and employment
opportunities for its citizens and for the citizens of Reno
County, Kansas, to promote the economic stability of the State of
Kansas, all as authorized by K.S.A. 12-1740 to 12-1749d,
inclusive, as amended; and
WHEREAS, to provide funds to pay the costs of acquiring and
installing certain additions to the Existing Facilities (the
"1999 Improvements"), as described in Schedule I attached hereto,
Issuer intends to issue and sell its Industrial Revenue Bonds,
Series 1999-A (Xxxxxxx Bus Corporation) in the aggregate
principal amount of $1,250,000 (the "1999-A Bonds") which 1999-A
Bonds shall be equal in priority to the 1984 Bonds and 1997 Bonds
outstanding. The 1984 Bonds, the 1997 Bonds and the 1999-A Bonds
are hereinafter collectively referred to as the "Bonds".
WHEREAS, payment of the Bonds shall be secured by a pledge
of the Issuer's interests in the Existing Facilities and the 1999
Improvements (collectively the "Project") and by a pledge of all
rentals under the Lease, the 1997 Amended and Restated Lease and
this 1999 Supplemental Lease; and
WHEREAS, Ordinance No. 99-659 of the Issuer, authorizing the
1999-A Bonds (the "1999 Ordinance") authorizes a certain 1999
Supplemental Indenture, dated as of June 1, 1999, between the
City of South Hutchinson, Kansas and The First National Bank of
Xxxxxxxxxx, Hutchinson, Kansas, as Trustee (hereinafter the
"1999 Supplemental Indenture"), which 1999 Supplemental Indenture
supplements a certain Indenture, dated as of August 1, 1984,
executed with respect to the issuance of the 1984 Bonds and a
certain 1997 Amended and Restated Indenture dated as of November
15, 1997, executed with respect to the issuance of the 1997
Bonds; and
NOW, THEREFORE, in consideration of the premises, of other
good and valuable considerations, and of the mutual benefits,
covenants and agreements herein contained, the parties hereto
supplement the Lease and agree as follows:
Section 1. Definitions. Capitalized terms not otherwise
defined in this 1999 Supplemental Lease shall have the meanings
set forth in Appendix B to the 1999 Supplemental Indenture. In
addition to the words, terms and phrases defined in Appendix B to
the 1999 Supplemental Indenture and elsewhere in this 1999
Supplemental Lease, the capitalized words, terms and phrases as
used herein shall have the following meanings, unless some other
meaning is plainly intended:
"Basic Rent Credits" means all funds on deposit in the
Principal and Interest Payment Account and available for the
payment of principal of, redemption premium, if any, and interest
on the 1999-A Bonds on any Payment Date.
"Improvements" means the structures, machinery, equipment
and other property purchased in whole or in part from the
proceeds of the Bonds and were specifically described in Schedule
I hereto and made a part hereof.
"1984 Project" means and includes the interest of Issuer in
the Land and the Improvements acquired, constructed or installed
with the proceeds of the 1984 Bonds, as more specifically
described in the Lease..
"1997 Ordinance" means Ordinance No. 97-634 of the Issuer
adopted November 18, 1997.
"1997 Improvements" means and includes the interest of
Issuer in the Land and the Improvements acquired, constructed or
installed with the proceeds of the 1997 Bonds, as more
specifically described in the 1997 Amended and Restated Lease.
"1999 Project Fund" means the account authorized and
established with the Trustee pursuant to this 1999 Supplemental
Indenture and designated the "City of South Hutchinson, Kansas
1999 Project Fund (Xxxxxxx Bus Corporation)".
"Owner" means the registered owner of any fully registered
1999-A Bond.
"Supplemental Basic Rent" means, collectively, the
Supplemental Basic Rent and any Additional Rent required by the
1997 Amended and Restated Lease.
"State" means the State of Kansas.
"Tenant" means Xxxxxxx Bus Corporation, its successors and
assigns.
"Term" means, collectively, the Basic Term and any
Additional Term of the 1999 Supplemental Lease.
"Yield" shall mean the yield which when used in computing
the present worth of all payments of principal and interest to be
paid on the Bonds produces an amount equal to the issue price as
described in Treas. Reg. 1.103-15AT(b)(3).
Section 2. Representations and Covenants Relating to the
Code.
(i) The Tenant will not make or cause or permit to be
made, whether by the Trustee or otherwise, any use of the
proceeds (as defined in Section 103 of the Code) 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 the Code and further
covenants and agrees that it will comply with and will take all
action reasonably required to insure that the Trustee complies
with all applicable requirements of the Code and the rules and
regulations of the United States Treasury Department thereunder
until all of the bonds, including interest thereon and any
applicable redemption premium, have been paid.
(ii) The weighted average maturity of the 1999-A Bonds
does not exceed the 120 percent of the remaining reasonably
anticipated economic life of the 1984 Project financed in part
from proceeds of the 1984 Bonds.
(iii) Tenant covenants and agrees to furnish to Issuer
prior to issuance and delivery of the 1999-A Bonds, a fully
completed Internal Revenue Service Form 8038 with respect to the
Bonds signed by the preparer thereof. Tenant acknowledges and
agrees that it shall principally be responsible, as between or
among any preparers, for the information set forth in said Form
8038. Tenant further covenants and agrees to indemnify and hold
harmless the Issuer, the Trustee and their respective officers,
agents and employees, Bond Counsel and any purchaser or owner of
the Bonds from and against all liability or consequences of any
material misrepresentation or omission in the computation of Form
8038.
(iv) Tenant covenants and agrees to file or cause to be
filed such periodic supplemental statements or notices with the
Internal Revenue Service or such other designated governmental
agency as may now or hereafter be required by applicable statutes
or regulations, including the Code, if applicable, in order for
the exemption from Federal income taxation of the interest on the
Bonds to continue in full force and effect. Tenant further
covenants and agrees to do such other acts as may be necessary
from time to time to assure the continued tax exempt status of
the Bonds, and to refrain from any or all acts, including without
limitation, the making of capital expenditures with respect to
the Project or otherwise, which may at any time adversely affect
or threaten the tax exempt status of the Bonds.
(v) The Project, and each portion thereof, constitutes
either land or property of a character subject to the allowance
for depreciation under the Code.
(vi) As of the date of issuance of the 1999-A Bonds,
there are not outstanding any obligations (other than the 1984
Bonds and 1997 Bonds) the interest on which is exempt from
Federal income tax by virtue of the provisions of the Code and
the proceeds of which were to be used with respect to the
Existing Project or with respect to other facilities located in
the City of South Hutchinson, Kansas, or facilities contiguous
to, or integrated with, the Existing Facilities or any such
facilities, and the Principal User of which is or will be the
Tenant or any other Principal User.
(vii) The Tenant will not request or authorize any
disbursement by the Trustee pursuant to the Lease (other than for
costs associated with the issuance of the Bonds) which would
result in less than substantially all of the proceeds of the 1999-
A Bonds, including any income thereon, being used to provide
land or property of a character subject to the allowance for
depreciation under the Code (other than any such proceeds or
income used for costs associated with the issuance of the Bonds).
(viii) The amount of industrial revenue bonds (including
the 1999-A Bonds) allocable to either the Tenant or a Related
Person (as defined in the Code) thereto as a Test Period
Beneficiary does not and will not exceed $40,000,000.
(ix) No portion of the proceeds of the 1999-A Bonds is
to be used for the acquisition of land to be used for farming
purposes.
(x) No portion of the proceeds of the 1999-A Bonds is
to be used for the acquisition of any property (or on interest
therein) unless:
(i) the first use of such property is pursuant to
such acquisition, or
(ii) the Rehabilitation Expenditures with respect
to a building (and the equipment therefor) equals or exceeds
15% of the portion of the cost of acquiring such building
(and equipment) financed with the proceeds of the issue, or
(iii) the Rehabilitation Expenditures with respect
to facilities other than a building equals or exceeds 100%
of the portion of the cost of acquiring such facilities.
(xi) No portion of the proceeds of the 1999-A Bonds is
to be used to provide any airplane, skybox, or other private
luxury box, any health club facility, any facility primarily used
for gambling, or any store the principal business of which is the
sale of alcoholic beverages for consumption off premises.
(xii) Tenant will not cause or permit the Project to be
connected with any other facility financed with the proceeds of
industrial development bonds issued in accordance with the Code
through the use of substantial common facilities unless Tenant
first obtains approving opinion of Bond Counsel.
(xiii) The Tenant will not use or cause or allow more
than 25 percent of the Original Proceeds of the 1999-A Bonds to
be used or applied to provide a facility the primary purpose of
which is retail food and beverage services, automobile sales or
service, or the provision of recreation or entertainment.
(xiv) The Tenant will not use or cause or allow any
portion of the Original Proceeds of the 1999-A Bonds to be used
or applied to provide a private or commercial golf course,
country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court),
hot tub facility, suntan facility or racetrack.
Section 3. Ratification and Confirmation of Lease. This
1999 Supplemental Lease is intended to supplement the 1984 Lease,
as amended and restated by the 1997 Amended and Restated Lease
entered into between the Issuer and Tenant. Except as
specifically amended or modified herein, the Lease and the 1997
Amended and Restated Lease are hereby ratified and confirmed by
the parties.
Section 4. Installation of the 1999 Improvements. Tenant
covenants to cause the installation of the 1999 Improvements to
be completed in accordance with the provisions of the Lease as
soon as practicable. The disbursement of funds from the 1999
Project Fund created in the 1999 Supplemental Indenture shall be
in the same manner as provided in the Lease.
If the net proceeds of the 1999-A Bonds are insufficient to
fully pay all sums required to be paid to fully complete the 1999
Improvements and any additions and extras, lien free, Tenant
hereby agrees to pay any such deficiency by making such payments
directly to the contractors, subcontractors, or suppliers, and
Tenant shall save Issuer whole and harmless from any obligation
to pay such deficiency. In addition thereto, Tenant covenants
that it will pay or cause to be paid any and all additional
expenses reasonably required in connection with this 1999
Supplemental Lease, the Bond Ordinance and 1999 Supplemental
Indenture, including but not limited to architects' fees,
attorneys' fees, publication expense, bond printing and all
expenses of the City including the reasonable fees of the City
attorney.
Section 5. Delivery of Possession. Delivery of possession
of the Project, including the 1999 Improvements, shall be as set
out in the Lease.
Section 6. Basic Rent. In addition to the Basic Rent
provided for in Section 1 of the Lease, the Tenant shall also pay
to the Trustee, for the use of the 1999 Improvements,
Supplemental Basic Rent (hereinafter called "Supplemental Basic
Rent") payable in monthly installments beginning as of February
1, 2000, and on the first day of each month thereafter to and
including August 1, 2009.
Section 7. Insurance. The amount of fire and extended
coverage insurance shall be increased to the "full insurable
value" of the Project as said term is defined in the Lease.
Section 8. Term of Lease. The term of the Lease shall end
on August 1, 2009, subject to prior termination as specified in
the Lease, but shall continue thereafter until all of the
principal and interest and redemption premium, if any, are paid,
or provision is made therefor, on all 1999-A Bonds.
Section 9. Tenant's Option to Purchase. Notwithstanding
any provision of the Lease to the contrary, the options granted
to Tenant in the Lease to purchase the Project shall not be
exercisable unless and until the 1984 Bonds, the 1997 Bonds and
the 1999 Bonds have been fully paid and retired (or provision is
made therefore), including the principal thereof and interest
thereon and any expenses of payment and redemption.
Section 10. Trustee. The Trustee referred to herein shall
be The First National Bank of Xxxxxxxxxx, Hutchinson, Kansas.
Section 11. Default. In addition to the elements of
default set forth in the Lease, any Event of Default, as such
term is defined by the Lease, under any of the terms of the
Lease, Amended and Restated Lease, or 1999 Supplemental Lease
shall be deemed a default of this 1999 Supplemental Lease, the
Amended and Restated Lease and the Lease, collectively.
Remedies, notices and grace periods on default and the rights of
the respective parties hereto are set forth in the Lease.
Section 12. Other Lease Provisions. Except as may be
specifically set forth herein, all provisions of the Lease shall
be in force and effect and shall be applicable to the Project and
to the Bonds and to this 1999 Supplemental Lease. As used in the
Lease, the term "Bonds" shall have the meaning set forth herein.
Section 13. Completion of 1999 Improvements. Tenant
warrants that the 1999 Improvements, when completed, will be
necessary or useful in its development for use by Tenant for its
purposes. Upon completion of the 1999 Improvements, Tenant shall
cause the Authorized Tenant Representative to deliver a
Certificate of Completion to the Trustee, and the date of such
delivery shall be the Completion Date.
Section 14. Ad Valorem Taxes. The parties acknowledge that
under the existing provisions of K.S.A. 79-201a, as amended, the
property purchased with the proceeds of the 1999-A Bonds is
entitled to exemption from ad valorem taxation provided proper
application is made therefore. Issuer covenants that it will not
voluntarily take any action which may reasonably be construed as
tending to cause or induce the levy or assessment of ad valorem
taxes on the Project so long as any of the 1999-A Bonds are
outstanding and unpaid and should any such levy or assessment be
threatened or occur, issuer shall, at Tenant's request, fully
cooperate with Tenant in all reasonable ways to present any such
levy or assessment. Tenant covenants that it will prepare all
necessary filings regarding the application for such ad valorem
tax exemption which the Issuer shall execute for filing on or
before September 1 in the calendar year following the calendar
year in which the 1999-A Bonds were issued. Tenant will renew
said application from time to time and the Issuer agrees to
cooperate and take any other action as may be necessary to
maintain such ad valorem tax exemption in full force and effect,
in accordance with K.S.A. 79-210, et seq. and the State
Department of Revenue.
IN WITNESS WHEREOF, Issuer being hereunto authorized by
valid and existing ordinances duly adopted, has caused this 1999
Supplemental Lease to be executed and delivered in its name and
behalf by and through its Mayor and City Clerk, and Tenant,
pursuant to valid and subsisting resolutions of its partners has
caused this 1999 Supplemental Lease to be executed and delivered
in its name and behalf by its officers thereunto duly authorized,
all the day and year first above written.
City of South Hutchinson, Kansas
By: /s/ Xxx Xxxxx
Xxx Xxxxx, Mayor
By: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, City Clerk
Xxxxxxx Bus Corporation
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx,
Vice-President of Finance
and Chief Financial Officer
By: /s/Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Secretary
SCHEDULE I
SCHEDULE I TO THE 1999 SUPPLEMENTAL INDENTURE OF TRUST OF THE
CITY OF SOUTH HUTCHINSON, KANSAS, AND THE FIRST NATIONAL BANK OF
HUTCHINSON, AS TRUSTEE, DATED AS OF JUNE 1, 1999, AND TO THE 1999
SUPPLEMENTAL LEASE DATED AS OF JUNE 1, 1999 BY AND BETWEEN SAID
CITY AND XXXXXXX BUS CORPORATION.
PROPERTY SUBJECT TO LEASE
The following property acquired by the City of South
Hutchinson, Kansas, (the "Issuer") in connection with the
issuance by the City of its Industrial Revenue Bonds, Series
1997, (Xxxxxxx Bus Corporation) (the "Series 1997 Bonds"):
(a) The following described real estate in Reno County,
Kansas:
Tract 1: A tract of land in the West half of the Southeast
Quarter of Section 23, Township 23 South, Range 6 West of
the 6th Principal Meridian, all in the City of South
Xxxxxxxxxx, Xxxx County, Kansas: Commencing at the Northeast
corner of the Southeast Quarter of said Section 23; thence
West along the North line of the Southeast Quarter, Section
23, for a distance of 1,979 feet to a point and the place of
beginning; thence turning an angle of 90E37 minutes left and
South along a line for a distance of 300 feet to a point;
thence turning West parallel to the aforementioned North
section line a distance of 125 feet to a point; thence
turning South parallel to the East boundary of said Section
23 for a distance of 535 feet to a point; thence turning
West parallel to the said North section line of Section 23
for a distance of 333 feet to a point; thence turning an
angle of 90E37 minutes left and South for a distance of 100
feet to a point; thence turning an angle of 90E37 minutes
right and West for a distance of 100 feet to a point; thence
turning an angle of 89E23 minutes right and North for a
distance of 25 feet; thence turning an angle of 90E37
minutes left and West for a distance of 12 feet; thence
turning an angle of 89E23 minutes right and North for a
distance of 910 feet to a point; thence turning an angle of
89E23 minutes right and East for a distance of 570 feet to a
point and place of beginning.
Tract 2: Beginning at a point in the South line of vacated
West 0xx Xxxxxx, said point also being the Northeast corner
of Xxx 000, Xxxx 0xx Xxxxxx, in XXXXXXXXX=S THIRD ADDITION
to the City of South Xxxxxxxxxx, as originally platted;
thence Southerly along the East line of said Xxx 000, Xxxx
0xx Xxxxxx, and along the East line of Xxx 000, Xxxx 0xx
Xxxxxx, xxx Xxxx line of Xxx 000, Xxxx 0xx Xxxxxx, and their
extension, a distance of 880 feet to a point for corner,
said corner being in the South line of vacated West 0xx
Xxxxxx; thence right at angle of 90E37 in a Westerly
direction and parallel with said South line of West 4th
Street, a distance of 31.76 feet, more or less, to a point
50.0 feet Easterly from, measured at right angles to the
center line of The Xxxxxxxx, Topeka and Santa Fe Railway=s H
& S District main track, as now located and operated; thence
in a Northerly direction along a line 50.0 feet Easterly
from and parallel with said main track center line, a
distance of 880.0 feet, more or less, to a point in the
North line of Xxx 000, Xxxx 0xx Xxxxxx, xxxx xxxxx also
being in the South line of vacated West 0xx Xxxxxx; thence
East along the North line of said Lots 169 and 167, said
line also being the South line of vacated West 0xx Xxxxxx, a
distance of 36.45 feet, more or less to the point of
beginning;
said real property constituting the "Land" as referred to in the
Indenture and the Lease entered into by the Issuer concurrently
with the issuance of the Series 1997 Bonds (the "Indenture" and
the "Lease").
(b) All buildings, building additions and improvements
constructed or located on the Land at the date of issuance of the
Series 1997 Bonds; all buildings, building additions,
improvements, machinery and equipment constructed, located or
installed on the Land, all or any portion of the costs of which
were paid from the proceeds of the Series 1997 Bonds, and which
constitute Improvements as defined int eh Indenture, together
with any substitutions or replacements therefor, the property
described in paragraphs (a) and (b) of this Schedule I together
constituting the "Project" as referred to in the Indenture and
the Lease.
(c) All buildings, building additions and improvements
constructed or located on the Land at the date of issuance of the
Series 1999-A Bonds; all building additions, improvements,
machinery and equipment constructed, located or installed on the
Land, all or any portion of the costs of which were paid from the
proceeds of the 1999-A Bonds, and which constitute Improvements
as defined in the Indenture, together with any substitutions or
replacements therefor, the property described in paragraphs (a)
and (b) of this Schedule I together constituting the "Project" as
referred to in the Indenture and the Lease.
