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Re: City of Lawrence, Kansas

Industrial Revenue Bonds, Series 1994

(The Lawrence Paper Company)

Dear Mr. Reeb:

On May 19, 1994, the City of Lawrence issued $1,000,000 principal amount of its industrial revenue bonds, Series 1994 (The Lawrence Paper Company) dated May 1, 1994. All bonds maturing through May 1, 2005 have been paid, and the remaining outstanding bonds, due May 1, 2006 in the amount of $110,000, were called for redemption on May 1, 2005.

At the time that the bonds were issued, the City of Lawrence entered into a lease with The Lawrence Paper Company for the bond‑financed property. According to the lease, the basic term of the lease terminates when all principal, redemption premium and interest on outstanding bonds has been paid. This was accomplished on May 1, 2005. Section 17.1 of the lease grants to the tenant the option to purchase the bond‑financed property from the City for a purchase price equal to the amount of principal, redemption premium and interest due on any outstanding bonds, plus $100. Since all principal, redemption premium and interest due on the bonds has been paid, the option price is $100.

On May 9, 2005, the City received a letter from The Lawrence Paper Company advising of its election to exercise its option to purchase the bond‑financed property from the City as soon as possible after May 1, 2005.

At the request of The Lawrence Paper Company, this firm has prepared a resolution for consideration by the City's governing body, tentatively identified as Resolution 6593. This resolution acknowledges payment of the bonds and receipt of notice of exercise of the tenant's option to purchase, and authorizes the mayor and city clerk to sign and deliver, on behalf of the City, a special warranty deed, a bill of sale and a release of the IRB lease. Forms of these documents are attached as exhibits to Resolution 6593.

Upon adoption of the resolution by the city commission, we will supply to your office signature copies of the documents as approved, which, upon signature, should be sent to UMB Bank, N.A., Kansas City, Missouri, the bond trustee, for delivery to The Lawrence Paper Company upon receipt of funds in the amount of the option price of $100. Sending the signed documents to the bond trustee assures the City that all of the bonds have in fact been paid, or payment provided for as described in the bond indenture, before ownership of the bond‑financed property is transferred to the tenant.

The proposed transaction is the customary conclusion of an industrial revenue bond financing, and we would recommend to the City, as its bond counsel, that the city commission adopt the resolution and cause the bond documents to be signed and delivered to the bond trustee.

If you have any additional questions regarding the proposed transaction, please do not hesitate to contact me.

Very truly yours,

Philip C. Lacey

PCL/dd

Attachments

cc: Mr. Justin Hill

Randy Irey, Esq.