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CCR2008090-$815,000 GO Notes RESOLUTION NO. 090-2008 RESOLUTION AUTHORIZING THE ISSUANCE OF $815,000 GENERAL OBLIGATION PROMISSORY NOTES AND THE ISSUANCE AND SALE OF $815,000 TAXABLE NOTE ANTICIPATION NOTES IN ANTICIPATION THEREOF WHEREAS, the City of Muskego, Waukesha County, Wisconsin (the "City") is presently in need of the sum of $815,000 for public purposes, including paying costs of site grading, landscaping and other project costs of the City's Tax Incremental District No. 10 (the "Project"); WHEREAS, the Common Council hereby finds and determines that the Project is within the City's power to undertake and therefore serves a "public purpose" as that term is defined in Section 67.04(1)(b), Wisconsin Statutes; WHEREAS, cities are authorized by the provisions of Chapter 67, Wisconsin Statutes, to borrow money and issue general obligation promissory notes for such public purposes; WHEREAS, it is the finding of the Common Council that it is necessary, desirable and in the best interest of the City to authorize the issuance of and covenant to issue general obligation promissory notes (the "Securities") to provide permanent financing for the Project; WHEREAS, the Securities have not yet been issued or sold; WHEREAS, cities are authorized by the provisions of Section 67.12(1)(b), Wisconsin Statutes, to issue note anticipation notes in anticipation of receiving the proceeds from the issuance and sale of the Securities; WHEREAS, it is the finding of the Common Council that it is necessary, desirable and in the best interest of the City to authorize the issuance and sale of note anticipation notes pursuant to Section 67.12(1)(b), Wisconsin Statutes, in anticipation of receiving the proceeds from the issuance and sale of the Securities, to provide interim financing to pay the costs of the Project; WHEREAS, due to certain provisions contained in the Internal Revenue Code of 1986, as amended, it is necessary to issue such note anticipation notes on a taxable rather than tax-exempt basis; and WHEREAS, it is the finding of the Common Council that it is necessary, desirable and in the best interest of the City to sell taxable note anticipation notes (the "Notes") to Hutchinson, Shockey, Erley & Co. (the "Purchaser"), pursuant to the terms and conditions of its note purchase proposal attached hereto as Exhibit A and incorporated herein by this reference (the "Proposal"). NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City that: Section 1. Authorization of General Obligation Promissory Notes. The City hereby authorizes the issuance and declares its intention and covenants to issue general obligation promissory notes pursuant to the provisions of Chapter 67, Wisconsin Statutes, in an amount of $815,000 to retire any outstanding note anticipation notes issued for the purpose of paying costs QBACTIVE\\6189139.1 of the Project (hereinafter, such notes shall be referred to as the "Securities"). There is hereby levied on all the taxable property in the City a direct, annual, irrepealable tax sufficient to pay the interest on said Securities as it becomes due, and also to pay and discharge the principal thereof. Section 2. Authorization and Sale of the Taxable Note Anticipation Notes. For the purpose of paying costs of the Project, there shall be borrowed pursuant to Section 67.12(1)(b), Wisconsin Statutes, the principal sum of EIGHT HUNDRED FIFTEEN THOUSAND DOLLARS ($815,000) from the Purchaser in accordance with the terms and conditions of the Proposal. To evidence the obligation of the City, the Mayor and City Clerk are hereby authorized, empowered and directed to make, execute, issue and sell to the Purchaser for, on behalf of and in the name of the City, the Notes aggregating the principal amount of EIGHT HUNDRED FIFTEEN THOUSAND DOLLARS ($815,000) for the sum set forth on the Proposal, plus accrued interest to the date of delivery. Section 3. Terms of the Notes. The Notes shall be designated "Taxable Note Anticipation Notes"; shall be dated May 1, 2008; shall be in the denomination of $5,000 or any integral multiple thereof; shall be numbered R-1 and upward; shall bear interest at the rate; and shall mature on May 1, 2010 as set forth on the schedule attached hereto as Exhibit B and incorporated herein by this reference (the "Schedule"). Interest is payable semi-annually on May 1 and November 1 of each year commencing on November 1, 2008. Section 4. Redemption Provisions. The Notes shall not be subject to optional redemption. Section 5. Form of the Notes. The Notes shall be issued in registered form and shall be executed and delivered in substantially the form attached hereto as Exhibit C and incorporated herein by this reference. Section 6. Security. The Notes shall in no event be a general obligation of the City and do not constitute an indebtedness of the City nor a charge against its general credit or taxing power. No lien is created upon the Project or any other property of the City as a result of the issuance of the Notes. The Notes shall be payable only from (a) any proceeds of the Notes set aside for payment of interest on the Notes as it becomes due, and (b) proceeds to be derived from the issuance and sale of the Securities, which proceeds are hereby declared to constitute a special trust fund, hereby created and established, to be held by the City Clerk and expended solely for the payment of the principal of and interest on the Notes until paid. The City hereby agrees that, in the event such monies are not sufficient to pay the principal of and interest on the Notes when due, if necessary, the City will pay such deficiency out of its annual general tax levy or other available funds of the City; provided, however, that such payment shall be subject to annual budgetary appropriations therefor and any applicable levy limits; and provided further, that neither this Resolution nor any such payment shall be construed as constituting an obligation of the City to make any such appropriation or any further payments. -2- QBACTIVE\\6189139.1 Section 7. Segregated Debt Service Fund Account. (A) Creation and Deposits. There be and there hereby is established in the treasury of the City a separate and distinct fund account designated as the "Debt Service Fund Account for $815,000 Taxable Note Anticipation Notes, dated May 1, 2008" ("Debt Service Fund Account"), and said account shall be maintained until the obligation evidenced by the Notes is fully paid or otherwise extinguished. The City Treasurer shall deposit in the Debt Service Fund Account (i) all accrued interest received by the City at the time of delivery of and payment for the Notes; (ii) any proceeds of the Notes representing capitalized interest on the Notes or other funds appropriated by the City for payment of interest on the Notes, as needed to pay the interest on the Notes when due; (iii) proceeds of the Securities (or other obligations of the City issued to pay principal of or interest on the Notes); (iv) such other sums, including tax monies, as may be necessary at any time to pay principal of and interest on the Notes when due and which are appropriated by the Common Council for that purpose; and (v) surplus monies in the Borrowed Money Fund as specified in Section 9 hereof. (B) Use and Investment. No money shall be withdrawn from the Debt Service Fund Account and appropriated for any purposes other than the payment of principal of and interest on the Notes until all such principal and interest has been paid in full and canceled; provided that such monies may be invested in permitted municipal investments under the pertinent provisions of the Wisconsin Statutes ("Permitted Investments"), which investments shall continue as a part of the Debt Service Fund Account. Said account shall be used for the sole purpose of paying the principal of and interest on the Notes and shall be maintained for such purpose until the Notes are fully paid or otherwise extinguished. (C) Remaining Monies. When all of the Notes have been paid in full and canceled, and all Permitted Investments disposed of, any money remaining in the Debt Service Fund Account shall be transferred and deposited in the general fund of the City, unless the Common Council directs otherwise. Section 8. Covenants of the City. The City hereby covenants with the owners of the Notes as follows: (A) It shall issue and sell the Securities as soon as practicable, as necessary to provide for payment of the Notes; (B) It shall segregate the proceeds derived from the sale of the Securities into the special trust fund herein created and established and shall permit such special trust fund to be used for no purpose other than the payment of principal of and interest on the Notes until paid. After the payment of principal of and interest on the Notes in full, said special trust fund may be used for such other purposes as the Common Council may direct in accordance with law; and, (C) It shall maintain a debt limit capacity such that its combined outstanding principal amount of general obligation bonds, notes, certificates of indebtedness or bond or note anticipation notes and the $815,000 authorized for the issuance of the Securities shall at no time exceed its constitutional debt limit. -3- QBACTIVE\\6189139.1 Section 9. Proceeds of the Notes; Segregated Borrowed Money Fund. All monies received by the City upon the delivery of the Notes to the Purchaser thereof, except for accrued interest and premium, if any, shall be deposited by the City Clerk into a special fund (the "Borrowed Money Fund") which shall be maintained separate and distinct from all other funds of the City and shall be used for no purpose other than the purposes for which the Notes are issued. Monies in the Borrowed Money Fund may be temporarily invested in Permitted Investments. Any monies, including any income from Permitted Investments, remaining in the Borrowed Money Fund after the purposes for which the Notes have been issued have been accomplished, and, at any time, any monies as are not needed and which obviously thereafter cannot be needed for such purposes, shall be deposited in the Debt Service Fund Account created herein. Section 10. Execution of the Notes; Closing. The Notes shall be prepared in typewritten or printed form, executed on behalf of the City by the manual or facsimile signatures of the Mayor and City Clerk, authenticated, if required, by its fiscal agent, if any, sealed with its official or corporate seal, if any, or a facsimile thereof and delivered to the Purchaser upon payment to the City of the purchase price thereof, plus accrued interest to the date of delivery (the "Closing"). In the event that either of the officers whose signatures appear on the Notes shall cease to be such officers before the Closing, such signatures shall, nevertheless, be valid and sufficient for all purposes to the same extent as if they had remained in office until the Closing. The aforesaid officers are hereby directed and authorized to do all acts and execute all documents, certificates and acknowledgements as may be necessary and convenient to effectuate the Closing. Section 11. Payment of the Notes. The principal of and interest on the Notes shall be paid in lawful money of the United States of America by the City Clerk or City Treasurer. Section 12. Persons Treated as Owners; Transfer of Notes. The City shall keep books for the registration and for the transfer of the Notes. The persons in whose name any Note shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes and payment of either principal or interest on any Note shall be made only to the registered owner thereof. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Note to the extent of the sum or sums so paid. Any Note may be transferred by the registered owner thereof by surrender of the Note at the office of the City Clerk, duly endorsed for the transfer or accompanied by an assignment duly executed by the registered owner or his attorney duly authorized in writing. Upon such transfer, the Mayor and City Clerk shall execute and deliver in the name of the transferee or transferees a new Note or Notes of a like aggregate principal amount, series and maturity and the City Clerk shall record the name of each transferee in the registration book. No registration shall be made to bearer. The City Clerk shall cancel any Note surrendered for transfer. The City shall cooperate in any such transfer, and the Mayor and City Clerk are authorized to execute any new Note or Notes necessary to effect any such transfer. -4- QBACTIVE\\6189139.1 Section 13. Record Date. The fifteenth day of each calendar month next preceding each interest payment date shall be the record date for the Notes (the "Record Date"). Payment of interest on the Notes on any interest payment date shall be made to the registered owners of the Notes as they appear on the registration book of the City at the close of business on the Record Date. Section 14. Utilization of The Depository Trust Company Book-Entry-Only System. In order to make the Notes eligible for the services provided by The Depository Trust Company, New York, New York ("DTC"), the City agrees to the applicable provisions set forth in the Blanket Issuer Letter of Representations previously executed on behalf of the City and on file in the City Clerk's office. Section 15. Official Statement. The Common Council hereby approves the Preliminary Official Statement with respect to the Notes and deems the Preliminary Official Statement as "final" for purposes of SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission pursuant to the Securities and Exchange Act of 1934 (the "Rule"). All actions taken by officers of the City in connection with the preparation of such Preliminary Official Statement and any addenda to it or Final Official Statement are hereby ratified and approved. In connection with the Closing, the appropriate City official shall certify the Preliminary Official Statement and any addenda or Final Official Statement. The City Clerk shall cause copies of the Preliminary Official Statement and any addenda or Final Official Statement to be distributed to the Purchaser. Section 16. Undertaking to Provide Continuing Disclosure. The City hereby covenants and agrees, for the benefit of the holders of the Notes, to enter into a written undertaking (the "Undertaking") required by the Rule to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events in accordance with the Rule. The Undertaking shall be enforceable by the owners of the Notes or by the Purchaser on behalf of such owners (provided that the rights of the owners and the Purchaser to enforce the Undertaking shall be limited to a right to obtain specific performance of the obligations thereunder and any failure by the City to comply with the provision of the Undertaking shall not be an event of default with respect to the Notes). The City Clerk, or other officer of the City charged with the responsibility for issuing the Notes, shall provide a Continuing Disclosure Certificate for inclusion in the transcript of proceedings, setting forth the details and terms of the City's Undertaking. Section 17. Record Book. The City Clerk shall provide and keep the transcript of proceedings as a separate record book (the "Record Book") and shall record a full and correct statement of every step or proceeding had or taken in the course of authorizing and issuing the Notes in the Record Book. Section 18. Bond Insurance. If the Purchaser of the Notes determines to obtain municipal bond insurance with respect to the Notes, the officers of the City are authorized to take all actions necessary to obtain such municipal bond insurance. The Mayor and City Clerk are authorized to agree to such additional provisions as the bond insurer may reasonably request and which are acceptable to the Mayor and City Clerk including provisions regarding restrictions on -5- QBACTIVE\\6189139.1 investment of Note proceeds, the payment procedure under the municipal bond insurance policy, the rights of the bond insurer in the event of default and payment of the Notes by the bond insurer and notices to be given to the bond insurer. In addition, any required reference to the municipal bond insurance policy shall be made in the form of Note provided herein. Section 19. Conflicting Resolutions; Severability; Effective Date. All prior resolutions, rules or other actions of the Common Council or any parts thereof in conflict with the provisions hereof shall be, and the same are, hereby rescinded insofar as the same may so conflict. In the event that any one or more provisions hereof shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provisions hereof. The foregoing shall take effect immediately upon adoption and approval in the manner provided by law. Adopted and recorded April 22, 2008. John R. Johnson Mayor Attest: Janice Moyer City Clerk (SEAL) -6- QBACTIVE\\6189139.1 EXHIBIT A Note Purchase Proposal (See Attached) QBACTIVE\\6189139.1 EXHIBIT B Debt Service Schedule (See Attached) QBACTIVE\\6189139.1 EXHIBIT C (Form of Note) UNITED STATES OF AMERICA REGISTERED STATE OF WISCONSIN DOLLARS WAUKESHA COUNTY NO. R-_ CITY OF MUSKEGO $815,000 TAXABLE NOTE ANTICIPATION NOTE MATURITY DATE: ORIGINAL DATE OF ISSUE: INTEREST RATE: CUSIP: May 1, 2010 May 1, 2008 ____% _______ DEPOSITORY OR ITS NOMINEE NAME: CEDE & CO. PRINCIPAL AMOUNT: EIGHT HUNDRED FIFTEEN THOUSAND DOLLARS ($815,000) FOR VALUE RECEIVED, the City of Muskego, Waukesha County, Wisconsin (the "City"), hereby acknowledges itself to owe and promises to pay to the Depository or its Nominee Name (the "Depository") identified above (or to registered assigns), on the maturity date identified above, the principal amount identified above, and to pay interest thereon at the rate of interest per annum identified above, all subject to the provisions set forth herein regarding redemption prior to maturity. Interest is payable semi-annually on May 1 and November 1 of each year commencing on November 1, 2008 until the aforesaid principal amount is paid in full. Both the principal of and interest on this Note are payable in lawful money of the United States. Interest payable on any interest payment date shall be paid by wire transfer to the Depository in whose name this Note is registered on the Bond Register maintained by the City Clerk or City Treasurer at the close of business on the 15th day of the calendar month next preceding the semi-annual interest payment date (the "Record Date"). This Note is payable as to principal upon presentation and surrender hereof at the office of the City Clerk or City Treasurer. This Note is one of an issue of Notes aggregating the principal amount of $815,000, all of which are of like tenor, except as to denomination, issued by the City pursuant to the provisions of Section 67.12(1)(b), Wisconsin Statutes, in anticipation of the sale of general obligation promissory notes (the "Securities"), to provide interim financing to pay costs of site grading, landscaping and other project costs of the City's Tax Incremental District No. 10 (the "Project"), all as authorized by a resolution duly adopted by the Common Council at a meeting held on April 22, 2008 (the "Authorizing Resolution"). The Authorizing Resolution is recorded in the official minutes of the Common Council for said date. QBACTIVE\\6189139.1 This Note shall be payable only from (a) any proceeds of the Notes set aside for payment of interest on the Notes as it becomes due, and (b) proceeds to be derived from the issuance and sale of the Securities, which proceeds have been declared to constitute a special trust fund, to be held by the City Clerk and expended solely for the payment of the principal of and interest on the Notes until paid. The City has authorized and covenanted to issue the Securities pursuant to the Authorizing Resolution. THE NOTES ARE NOT A GENERAL OBLIGATION OF THE CITY AND DO NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR PROVISION NOR A CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWER. NO LIEN IS CREATED UPON THE PROJECT OR ANY OTHER PROPERTY OF THE CITY AS A RESULT OF THE ISSUANCE OF THE NOTES. This Note is not subject to optional redemption. It is hereby certified and recited that all conditions, things and acts required by law to exist or to be done prior to and in connection with the issuance of this Note have been done, have existed and have been performed in due form and time. The City has covenanted to issue and sell the Securities, the sale of which this Note anticipates, as soon as practicable and to set aside the proceeds of the Securities into a special trust fund for the payment of the principal of and interest on this Note. This Note is transferable only upon the books of the City kept for that purpose at the office of the City Clerk or City Treasurer, only in the event that the Depository does not continue to act as depository for the Notes, and the City appoints another depository, upon surrender of the Note to the City Clerk or City Treasurer, and thereupon a new fully registered Note in the same aggregate principal amount shall be issued to the new depository in exchange therefor and upon the payment of a charge sufficient to reimburse the City for any tax, fee or other governmental charge required to be paid with respect to such registration. The City shall not be obliged to make any transfer of the Notes after the Record Date. The City may treat and consider the Depository in whose name this Note 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 whatsoever. -2- QBACTIVE\\6189139.1 IN WITNESS WHEREOF, the City of Muskego, Waukesha County, Wisconsin, by its governing body, has caused this Note to be executed for it and in its name by the manual or facsimile signatures of its duly qualified Mayor and City Clerk; and to be sealed with its official or corporate seal, if any, all as of May 1, 2008. CITY OF MUSKEGO, WAUKESHA COUNTY, WISCONSIN By: John R. Johnson Mayor (SEAL) By: Janice Moyer City Clerk -3- QBACTIVE\\6189139.1 ASSIGNMENT FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto __________________________________________________________________________ (Name and Address of Assignee) __________________________________________________________________________ (Social Security or other Identifying Number of Assignee) the within Note and all rights thereunder and hereby irrevocably constitutes and appoints ______________________________________, Legal Representative, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: _____________________ Signature Guaranteed: _____________________________ ________________________________ (e.g. Bank, Trust Company (Depository or Nominee Name) or Securities Firm) NOTICE: This signature must correspond with the name of the Depository or Nominee Name as it appears upon the face of the within Note in every particular, without alteration or enlargement or any change whatever. ____________________________ (Authorized Officer) -4- QBACTIVE\\6189139.1